Debra Borchardt
Aurora Cannabis Inc. (Nasdaq: ACB) (TSX: ACB) announced its financial results for the third quarter and fiscal year 2023 results. Aurora reported total net revenue was $64 million, which rose sequentially from the second quarter’s revenue of $61.7 million and topping last year’s revenue of $50.4 million. The company attributed the increase to the contribution of $10.8 million from Bevo, which was acquired in August 2022.
All dollar figures are expressed in Canadian dollars.
However, Aurora continues to log high net losses, recording a quarterly loss of $87 million versus $67.2 million in the second quarter. The company blamed the jump in losses to an increase of $60 million in other expenses driven by changes in fair value on derivative investments.
Aurora said that offsetting these mark-to-market changes, the company actually improved gross profit by $34.8 million and decreased operating expenses by $4.1 million.
Cash Burn
Aurora continues to reassure shareholders about its balance sheet noting it has $230 million of cash and cash equivalents on hand and approximately $80 million outstanding in convertible debentures. Still, the company’s cash at the end of June 2022 was a whopping $437 million.
Aurora has burned through more than $200 million in just nine months. Aurora’s working capital has plunged 59% since the third quarter of 2022.
The company said it believes its cash on hand is sufficient to fund operations until the company is cash flow positive, and that it is positioned with financial strength and realistic growth prospects to thrive over the long term as the global cannabis market expands.
“We are proud to have delivered our second sequential quarter of positive Adjusted EBITDA in Q3 2023, demonstrating our commitment to financial discipline,” CEO Miguel Martin said. “Over the last three years, our ongoing business transformation initiatives have delivered ~$400 million in annualized cost savings that have significantly reduced cash used in operating activities.”
Martin continued, “In fact, cash use continues to improve as evidenced by the reduction from $35.5 million in Q2 2023 to $15.1 million in Q3 2023, excluding working capital. This impressive improvement is the launching point for the initiatives that will support our drive to our new financial target of positive free cash flow by end of calendar year 2024.”
The company reported that global medical cannabis and Canadian adult-use cannabis segments were steady at $38 million and $14.5 million, respectively. Adjusted gross profit rose to $30.6 million, which translates to adjusted gross margin of 60%.
The company sought to reassure shareholder concern about the balance sheet by reminding the market that it has access to $650 million under a Base Shelf Prospectus filed on April 27, with $409 million allocated to the potential exercise of currently outstanding warrants issued in financing transactions from 2020 to 2022.
The company’s statement wrote, “As a result, approximately $241 million is available for potential new issuances of common shares, warrants, options, subscription receipts, debt securities or any combination thereof during the 25-month period that the 2023 Shelf Prospectus remains effective. Volatility in the cannabis industry, stock market and the company’s share price may impact the amount and our ability to raise financing under the 2023 Shelf Prospectus.
The stock was selling down slightly in early trading to lately trade at $0.56, not far from the 52-week low of $0.49. Aurora currently has 340 million outstanding shares.
Outlook
Aurora said it expects cannabis net revenue for the fiscal first quarter 2024 to be largely similar to the fiscal third quarter 2023, with the geographical mix slightly weighted towards the international medical segment.
The company said it expects adjusted gross margins to be consistent with the fiscal third quarter 2023 and expects to maintain its stated objective of a quarterly SG&A expense run rate below $30 million.
