Aurora Cannabis shares drop as profits show another lack of sales, but cut losses

Aurora Cannabis Inc. shares fell after-hours on Tuesday, after the Canadian jar company again increased revenue less than expected, but showed improvement in results.

Aurora Cannabis ACB,
+ 2.47%
reported a first quarter tax loss of C $ 11.9 million ($ 9.55 million), or 6 cents per share, improving from a loss of 90 cents per share a year ago. Net income totaled C $ 60.1 million, down from C $ 67.8 million a year ago. Analysts on average expected a loss of 26 cents per share on sales of C $ 61.2 million, according to FactSet.

This is the fourth quarter in a row, and the eighth in the last 10, that Aurora has missed sales estimates, according to FactSet records. However, the company has beaten bottom line expectations for the first time since the same quarter in 2019.

U.S.-listed Aurora shares fell 2.4% in after-hours trading after the disclosure, returning gains made during the regular session, when the stock gained 2.5% at $ 7.48. Aurora shares have struggled for more than two years amid a management reshuffle, stock split and heavy losses, losing more than 90% of their value in the past three years and falling 10.3% so far this year.

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The current management team are hoping to cut some of the fat to show improved results for investors, and focus more on high-margin medical cannabis than the Canadian recreational market, which tends to turn to the cheaper pot. . Aurora revealed on Tuesday that medical cannabis revenue increased 23% year-on-year to C $ 41 million, while recreational sales fell 44% to C $ 19.1 million.

The goal of Aurora executives for some time has been to achieve some form of profitability, and the timeline given on Tuesday was about a year before reaching adjusted earnings.

“Our strong adjusted gross margins and reduced loss of Adjusted EBITDA also provide us with a clear path to profitability by the first half of fiscal 2023 as we position ourselves for long-term success,” said CEO Miguel Martin said in a statement included with Tuesday’s announcement.

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Regarding the company’s previously stated ambitions to pursue a potential acquisition of a U.S. marijuana company, Martin appeared evasive on a conference call Tuesday.

“So when you think about our overall goal of Ebitda profitability, we are not going to put it at risk by looking for a non-traditional investment,” he explained after the first question from a retail shareholder, posed on plans for the US market. . “That being said, with the right opportunity, we have the track record and the financial flexibility to be opportunistic when we see the right deal.”

“I think everyone has been [so] focused on the United States that people forget that there is a huge world with evolving positive cannabis laws and regulations, ”Martin said in response to a subsequent question. “We talked about Germany; we talked about the UK; we talked about key markets like Australia. But the reality is that these are very big markets with huge opportunities. “

Analysts have widely warned investors to avoid Aurora as it continues to struggle. As of Tuesday afternoon, none of the 14 institutional analysts FactSet tracked rates the stock as a buy, eight calling it a wait and six rating it as the equivalent of a sell. The average price target was $ 5.80, more than 20% below current trading levels.

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