Aurora Cannabis Inc. Reports Adjusted EBITDA in Q3 2023

LOS ANGELES– Aurora Cannabis Inc., a Canadian cannabis company released its financial and operational results for the third quarter and fiscal year 2023, demonstrating positive momentum and a commitment to financial discipline. The company’s ongoing business transformation initiatives have resulted in approximately $400 million in annualized cost savings, contributing to improved cash flow.

“We are proud to have achieved our second consecutive quarter of positive Adjusted EBITDA in Q3 2023, showcasing our dedication to financial discipline,” stated Miguel Martin, Chief Executive Officer of Aurora. The company’s cost-saving efforts have yielded positive results, with cash use improving from $35.5 million in Q2 2023 to $15.1 million in Q3 2023, excluding working capital. This positive trend sets the stage for the company’s pursuit of its new financial target of achieving positive free cash flow by the end of calendar year 2024.

During the third quarter, Aurora reported steady revenues of $38 million and $14.5 million in its global medical cannabis and Canadian consumer cannabis segments, respectively. The recent acquisition of Bevo contributed $10.7 million, benefiting from its traditionally strong seasonal period. Adjusted gross profit rose to $30.6 million, with healthy gross margins of 60% in the medical business and 25% in the consumer business.

Aurora differentiates itself from competitors through its high-margin, core global medical business, spanning 12 countries. The company’s strategic progress, coupled with its robust balance sheet and net cash position, positions it for significant value creation in the current market environment.

Key highlights from the third quarter of 2023 include:

Consolidated Results:

• Total net revenue reached $64 million, up from $61.7 million in the previous quarter, primarily driven by the contribution of $10.8 million from the Bevo acquisition.
• Adjusted gross margin before fair value adjustments on cannabis net revenue increased to 51%, surpassing the industry average and up from 49% in the previous quarter.

Medical Cannabis:

• Medical cannabis net revenue was $38 million, accounting for 59% of Aurora’s consolidated net revenue in Q3 2023.
• Despite a temporary supply issue in certain EU markets due to production challenges at the Nordic facility, Aurora remains confident in improving the reliability of supply by transitioning to providing European supply from Canada.
• Adjusted gross margin before fair value adjustments on medical cannabis net revenue remained steady at 60%.

Consumer Cannabis:

• Consumer cannabis net revenue remained stable at $14.5 million, with an adjusted gross margin before fair value adjustments of 25%, a 5% increase from the previous quarter.
• The increase in gross margin was primarily driven by a mix shift to core segment brands and lower per-unit cost of goods sold resulting from manufacturing asset consolidation.

Plant Propagation:

• Plant propagation net revenue, attributed to the Bevo business, reached $10.8 million, reflecting the seasonality of the business that experiences higher revenues during the late winter and spring months.
• Adjusted gross margin before fair value adjustments on plant propagation revenue increased to 36%, compared to 15% in the previous quarter.

Selling, General and Administrative (SG&A) Expenses:

• Adjusted SG&A expenses were $28.4 million in Q3 2023, well-controlled and below the company’s target of $30 million.
• Adjusted research and development (R&D) expenses increased to $1.9 million, primarily due to additional costs related to product innovation.

Net Loss and Adjusted EBITDA:

• Net loss for the three months ended March 31, 2023, was $87 million, primarily driven by changes in fair value on derivative investments.
• Adjusted EBITDA for the same period was $0.3 million, impacted by additional professional fees and consultant costs.

Fiscal Q1 2024 Expectations:

• The company anticipates cannabis net revenue for fiscal Q1 2024 to be similar to Q3 2023, with a slight shift towards the international medical segment.
• Aurora aims to maintain its quarterly SG&A expense run rate below $30 million and expects consistent adjusted gross margins.

Operational Efficiency, Balance Sheet Strength, and Cash Use:

• Aurora successfully completed its strategic transformation plan, leading to significant and sustainable operating cost and SG&A reductions.
• The company aims to reduce operations cash use by at least $5 million per quarter through the elimination of less efficient operations and focus on supplying global markets from efficient production facilities.
• Aurora expects to save approximately $2 million per quarter in interest by settling the remaining $80 million of convertible debt before the end of fiscal year 2024.
• Capital expenditures are targeted to average $2 million quarterly in fiscal 2024, resulting in savings of over $1 million per quarter compared to Q3 2023.

With a robust balance sheet boasting approximately $230 million in cash and cash equivalents, along with access to $650.0 million under a Base Shelf Prospectus, Aurora is positioned to navigate the evolving cannabis market and achieve long-term success.

Please note that all financial figures are stated in Canadian dollars unless specified otherwise.