Aurora Cannabis Announces Fiscal 2021 Third Quarter Results

Published: May 17, 2021

Aurora Cannabis Announces Fiscal 2021 Third Quarter Results

Aurora Cannabis Inc., the Canadian company defining the future of cannabinoids worldwide, today announced its financial and operational results for the third quarter of fiscal 2021 ended March 31, 2021.

“Consistent with many of our peers, the quarter presented challenges in the Canadian adult-use segment. This reinforces the importance of Aurora’s broadly diversified business model that balances domestic medical, international medical, and adult-use platforms,” stated Miguel Martin, Chief Executive Officer of Aurora Cannabis. “To that point, we delivered the strongest performance in domestic medical and the best results in international medical cannabis of any Canadian LP during the period. This is critical, because we expect being #1 by revenue in Canada’s medical market, the largest federally regulated medical market globally, should translate into global adult-use success in the future as medical regimes evolve to adult-use markets. In addition, being the #2 largest Canadian LP by global cannabis sales this quarter, and a leader across multiple markets and segments, gives Aurora the brand recognition and clout to pursue numerous incremental opportunities around the world.”

“Aurora also announced today that our cost structure transformation continues and we have identified further cost savings of $60 million to $80 million annually that are expected to be achieved within eighteen months and are incremental to the ~$300 million in annual savings already achieved. We anticipate that this initiative will not only allow us to meet our financial objectives while the Canadian adult-use market normalizes over the next several quarters, but will not have any effect on future revenue growth. We have recently added Alex Miller and Lori Schick to the team; two highly respected leaders in the areas of operations and human resources, respectively, to accelerate the execution of our corporate objectives. They each bring 20 plus years of transformative regulated industry experience and are already fully engaged. Lastly, our balance sheet remains strong with approximately $525 million in cash. This will allow us to support organic growth as well as opportunistic M&A, particularly in the U.S.”

Third Quarter 2021 Highlights
(Unless otherwise stated, comparisons are made between fiscal Q3 2021 and Q3 2020 results and are in Canadian dollars)

Q3 2021 total cannabis net revenuebefore provisions was $58.4 million, a 19.5% decrease over Q3 2020 and a 17.0% sequential decline. After accounting for return and price provisions, Q3 2021 total cannabis net revenue was $55.2 million, a 20.8% decrease in cannabis net revenueover fiscal Q3 of the prior year. Reflecting the shift in mix toward our medical businesses, the Q3 2021 average net selling price per gram of dried cannabisincreased to $5.00 per gram from $4.64 in Q3 2020 and $4.45 in Q2 2021.  This excludes the impact of the Q3 2021 bulk wholesale of excess lower-potency cannabis flower at clear-out pricing.

Adjusted gross margin before fair value adjustments on cannabis net revenuewas 44% in Q3 2021, versus 43% in Q3 2020. The increase in adjusted gross margin is due to a significant shift in revenue mix towards our medical markets which command much higher average net selling prices, partially offset by the purposeful reduction in production levels at Sky resulting in charges related to under-utilization of capacity.

Adjusted EBITDA1 loss was $24.0 million in Q3 2021 ($16.7 million loss excluding restructuring charges and product swap provisions) compared to the prior year Adjusted EBITDA loss1 of $49.6 million primarily driven by the substantial decrease in SG&A and R&D expenses and continued healthy gross margins. 


1 These terms are non-GAAP measures, see “Non-GAAP Measures” below.

Medical cannabis:

  • Medical cannabis net revenuewas $36.4 million, a 17% increase from the prior year period. The increase was primarily attributable to a continued strong performance in both the international and Canadian medical businesses. International medical sales grew by 134% over the prior year comparative period.
  • Adjusted gross margin before fair value adjustments on medical cannabis net revenuewas 59% versus 60% in the prior year, remaining strong despite the increase in cost of sales from the under-utilized capacity at Aurora Sky and the continued ramp up of the Aurora Nordic facility in Europe.

Consumer cannabis:

  • Consumer cannabis net revenuewas $18.0 million ($21.3 million excluding provisions), a 53% decrease from the prior year. This was due primarily to Covid-19 related challenges across Canada in both provincial distributors and consumer access to in-store retail shopping. Also impacting the change in Consumer cannabis net revenue in fiscal Q3 were Aurora’s one-time transition to our new contract sales force, and the load-in of 2.0 products and the Daily Special launch in the prior year comparative period.
  • Adjusted gross margin before fair value adjustments on consumer cannabis net revenuewas 21% versus 28% in the prior year period, primarily driven by a $1.8 million increase in cost of sales due to under-utilized capacity as a result of the scaling back production at Aurora Sky (expected to partially reverse in future quarters), and a decrease in the average net selling price per gram of consumer cannabis as a result of price compression.

Selling, General and Administrative (“SG&A”):

  • SG&A, including Research and Development (“R&D”), was $45.1 million ($41.9 million excluding restructuring costs), down $32.8 million or 42% from the prior year period as a result of the Company’s Business Transformation Plan.

Additional Financial Information:

  • Cash balance at May 12, 2021 was approximately $525 million.
  • As previously announced on December 15, 2020, Aurora has aligned production to current demand and reduced network complexity in order to improve its operational flexibility and cashflow. The Company is currently operating Aurora Sky at 25% capacity, and in fiscal Q3 2021 produced 14,484 kilograms of cannabis and achieved net sales of 13,520 kilograms.

Fiscal Q3 2021 Cash Use:

In Q3 2021, despite a decline in Canadian consumer revenue, the Company managed cash flow tightly using $35.9 million in cash to fund operations, excluding working capital investments and restructuring costs and other costs of $5.4 million. Cash used to pay for capital expenditures, net of disposals, in Q3 2021 was $12.2 million versus $83.9 million in Q3 2020 and $8.8 million in Q2 2021. Cash used in operations and for capital expenditures are crucial metrics in Aurora’s drive toward generating sustainable positive free cash flow, and both have improved significantly over the past year. The Company’s ongoing business transformation, with the additional cost efficiency savings described earlier, is expected to move the operating cash flow metric in a positive direction over the coming quarters.

Net working capital used $25.0 million in the quarter, driven by a decrease in accounts payable and an increase in biological assets. Q3 2021 saw Aurora bring production levels into alignment with demand as 14,484 kilograms of cannabis were produced and 13,520 kilograms equivalents were sold, a marked improvement over prior quarters.  The remaining government wage subsidy accrual of $19.7 million initially recorded in December 2020 was collected in April 2021. With the balancing of production with sales, had this wage subsidy accrual been collected in March 2021, the Company’s net investment in working capital would have been approximately $5.3 million in the quarter.

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