223% Top Line Annual Revenue Growth – Well
Positioned for Canadian Adult Consumer Use Market - Process
Commenced to List Securities on Senior U.S. Exchange
TSX: ACB
EDMONTON, Sept. 24, 2018 /CNW/ - Aurora Cannabis Inc.
("Aurora" or the "Company") (TSX: ACB) (OTCQB: ACBFF) (Frankfurt: 21P; WKN: A1C4WM), announced today
its financial and operational results for the fourth quarter and
fiscal year ended June 30, 2018.
Q4 2018 Financial and Operational Highlights
|
In thousands ('000s)
unless otherwise noted
|
Q4
2018
|
Q3 2018
|
Change
(%)
|
Q4 2017
|
Change
(%)
|
Financial
Results
|
Revenue
|
$19,147
|
$16,100
|
19%
|
$5,936
|
223%
|
Gross margin on
medical cannabis(1)
|
74%
|
59%
|
25%
|
58%
|
28%
|
Earnings
(loss)
|
79,268
|
(20,795)
|
nm
|
($4,816)
|
nm
|
Earnings (loss)
attributable to common shares
|
79,870
|
(19,215)
|
nm
|
($4,816)
|
nm
|
Operational
Results
|
Cash costs of sales
per gram of dried cannabis
sold(2)
|
$1.87
|
$1.80
|
4%
|
$2.09
|
(11%)
|
Cash costs to produce
per gram of dried cannabis
sold(2)
|
$1.70
|
$1.53
|
11%
|
$1.91
|
(11%)
|
Active registered
patients
|
43,308
|
45,776
|
(5%)
|
16,400
|
164%
|
Average net selling
price of dried cannabis(3)
|
$8.02
|
$7.30
|
10%
|
$6.79
|
18%
|
Average net selling
price of cannabis oil(3)
|
$13.52
|
$12.83
|
5%
|
$17.91
|
(25%)
|
Kilograms
produced
|
2,212
|
1,206
|
83%
|
1,165
|
90%
|
Kilograms
sold
|
1,617
|
1,353
|
20%
|
755
|
114%
|
(1)
|
Represents the gross
margin on medical cannabis before fair value adjustments
|
(2)
|
Represents the cash
cost of sales and cost to produce per gram sold of dried cannabis
produced by Aurora
|
(3)
|
Represents the
average net selling price per gram of dried cannabis
equivalent
|
Q4 2018 Highlights:
- Revenue of $19,147, up 223%
compared to the same period in 2017.
-
- Pro-forma Q4 2018 revenue of $33,117, including MedReleaf
- Gross margin on medical cannabis of 74%, up 28% compared to the
fourth quarter of 2017. This increase was primarily due to a higher
average selling price per gram of dried cannabis, coupled with a
higher proportion of cannabis oil sales in the Company's sales
ratio.
- Cash cost of sales and cash cost to produce per gram of dried
cannabis sold both decreased 11% compared to the same period in
2017. This decrease was primarily due to efficiencies from
automation and yield expertise.
- Active registered patients of 43,308, up 164% compared to the
fourth quarter of 2017.
- Kilograms produced and kilograms sold of 2,212 and 1,617, up
90% and 114% respectively compared to the same period in 2017.
- 7 facilities with production licenses, 5 facilities with sales
licenses
|
|
|
|
In thousands ('000s)
unless otherwise noted
|
FY2018
|
FY2017
|
Change (%)
|
Financial
Results
|
Revenue
|
$55,196
|
$18,067
|
206%
|
Gross margin on
medical cannabis(1)
|
65%
|
56%
|
16%
|
Earnings
(loss)
|
$69,227
|
($12,968)
|
nm
|
Earnings (loss)
attributable to common shares
|
$71,936
|
($12,968)
|
nm
|
Operational
Results
|
Average net selling
price of dried cannabis(2)
|
$7.65
|
$6.47
|
18%
|
Average net selling
price of cannabis oil(2)
|
$13.68
|
$17.91
|
(24%)
|
Kilograms
produced
|
5,632
|
3,037
|
85%
|
Kilograms
sold
|
5,022
|
2,382
|
111%
|
(1)
|
Represents the gross
margin on medical cannabis before fair value adjustments
|
(2)
|
Represents the cash
cost of sales and cost to produce per gram sold of dried cannabis
produced by Aurora
|
Fiscal 2018 Highlights:
- Revenue of $55,196, up 206%
compared to the prior year.
- Gross margin on medical cannabis of 65%, up 16% compared to FY
2017. This increase was primarily due to a higher average selling
price per gram of dried cannabis, coupled with a higher proportion
of cannabis oil sales in the Company's sales ratio.
- Kilograms produced and kilograms sold of 5,632 and 5,022, up
85% and 111% respectively compared to FY 2017.
- 11 strategic acquisitions completed and 1 in progress.
- Total headcount grew to 1,400 from approximately 300 at the end
of FY 2017.
- Pro-forma cannabis inventory and biological assets, including
MedReleaf, of $88.8 million.
A comprehensive discussion of Aurora's financials and operations
are provided in the Company's Management's Discussion &
Analysis ("MD&A") and Financial Statements which will be
filed on SEDAR at www.sedar.com and on the Aurora website.
Management Commentary
"Aurora made substantial progress toward our strategic goal of
becoming the global scale and margin leader in the cannabis
industry, establishing a vertically integrated company with a
broadly diversified product offering with a large global
footprint," said Terry Booth, CEO of
Aurora. "Our high-pace, consistent execution has enabled us to
complete a number of transformative acquisitions, bringing together
industry-leading companies in terms of scale, quality,
efficiencies, plant and medical science, product development and
innovation, brands, and international distribution."
Mr. Booth added, "With coast-to-coast supply arrangements, and
our strategic investment in Alcanna, we are very well positioned to
capitalize on the significant adult consumer use opportunity in
Canada. With reported Q4 revenues
of $19.1 million, pro-forma Q4
revenues of over $33.1 million, and
production capacity scaling up rapidly, we anticipate accelerated
revenue growth during fiscal 2019. We have invested heavily in our
organizational capabilities, including sales, marketing, and
corporate talent and capacity, to ensure we will continue to drive
strong and sustainable long-term growth."
Mr. Booth concluded, "Today, Aurora ticks all the boxes for
sustainable success and leadership in the cannabis industry. Aurora
is capitalizing on a once in a lifetime opportunity, and
establishing new industry standards in terms of execution, science,
cultivation, international expansion and product development that
position us exceptionally well to do so. We are very proud of our
achievements over the past year, and we look forward to fiscal 2019
as we continue to execute."
U.S. Listing
Aurora intends to list its securities on a senior U.S stock
exchange. In advance of a listing on a senior U.S. exchange, Aurora
will file a Form 40-F Registration Statement with the United States
Securities and Exchange Commission. The listing of the Company's
securities remains subject to exchange approval and the
satisfaction of all applicable listing and regulatory requirements.
A trading date will be made public once all regulatory formalities
are satisfied.
Terry Booth, Aurora's CEO added:
"Listing our shares on a senior U.S. exchange reflects the level of
corporate and business maturity and our high-paced execution. This
listing provides access to a broader investor audience who gain the
opportunity to participate in our continued success."
Operational Highlights Subsequent to June 30, 2018
Facilities and Production update
During and subsequent to the quarter, the Company made
significant progress towards increasing its production capacity. As
at September 2018, the annualized run
rate of Aurora's in-service production rooms is 45,000 kgs.
Management anticipates that around calendar year end 2018, the
Company will have a production run rate in excess of 150,000 kg per
annum, with subsequent scale up to over 500,000 kg per annum.
Aurora Sky
Aurora has completed full cycles in its first two licensed grow
rooms and its mother room, and has submitted for final inspection
towards obtaining its sales permit for Aurora Sky. The Company is
pleased to announce that Health Canada has licensed two further
production bays, each with more canopy space than the entire Aurora
Mountain facility. Aurora has commenced populating these additional
bays, bringing the total number of bays now in production
(including mother room) to 5 of 17. The Company is in an ongoing
process of obtaining production licenses as new bays come online,
and anticipates submitting the license applications for the final
rooms in November. Minor construction and commissioning items
remain, which will be completed in advance of new bays coming
online. Consequently, the Company continues on schedule towards
reaching full 100,000 kg per annum production capacity around the
end of calendar 2018.
Aurora Mountain
Continuous process improvement programs have resulted in an
increase in production at Aurora Mountain, one of the Company's EU
GMP certified facilities. Management anticipates production at
Mountain to reach 6,000 kg per annum, up by 25% from the facility's
previously disclosed capacity. The increase in production capacity
at Mountain ensures the Company will be able to allocate more
product to the supply restrained international markets.
Aurora Vie
The Company received its sales license for Aurora Vie in
July 2018. The facility is now at
full capacity, producing at a run rate of 4,000 kg per annum.
In Q4 2018, the Company completed the installation of Capcium
softgel manufacturing equipment at Aurora Vie. The production line
has been commissioned successfully, and the facility is currently
producing high volumes of softgels for the adult consumer-use
market to fulfill with orders received from provincial buyers.
Aurora Eau
Aurora's newest facility received its production license in
September 2018 and is now ramping up
to full capacity at 4,500 kg per annum. Aurora Eau was
purpose-built to EU GMP standards and represents the next evolution
of Aurora's indoor-grow facilities, where novel and exotic strains
will be grown for both the medical and adult consumer-use
markets.
Aurora Nordic, Phase I
Phase I of Aurora Nordic, the Company's Danish facility, has
been populated with genetics propagated from Aurora Mountain. The
facility will ramp up to its full 8,000 kg per annum capacity in
the coming months, increasing product availability for the EU
markets.
MedReleaf Bradford
The MedReleaf Bradford facility is ramping up to full production
capacity of 28,000 kg per annum. Currently, the facility is
producing at a rate of approximately 10,000 kg per annum. The
Bradford facility has large-scale oil production capacity, which
will fuel the Company's ability to produce higher margin
products.
Aurora Sun
On April 16, 2018, the Company
acquired approximately 71 acres of land in Medicine Hat, Alberta, for the construction of
"Aurora Sun", a highly automated cannabis production facility with
ultra-low operating costs. The new facility will be
1.2 million square feet, 50% larger than Aurora's Sky, a
100,000+ kg per annum Health Canada licensed facility at the
Edmonton International Airport.
Construction of Aurora Sun is on
schedule with site preparation works completed and foundation work
commenced.
Product Licensing
In addition to the licensing developments described above,
Aurora reports it has received the following product and
development licenses, broadening the Company's higher-margin
product offering, while facilitating research and exports:
- Capsule Licenses Granted: On July
3, 2018, Aurora's wholly owned subsidiary, CanniMed,
received Health Canada approval to commence sales of CanniMed
Capsules, a line of vegan capsules which became available to
patients on August 22, 2018.
- Aurora Mountain Dealer's License: On July 30, 2018, Aurora obtained a Health Canada
Dealer's License under the Controlled Drugs and Substances Act for
its EU GMP certified Aurora Mountain facility in Alberta. The new license provides Aurora
additional opportunities to produce, assemble, and sell cannabis
oils and future novel, derivative products from Aurora Mountain as
well as import and export cannabis products to and from
international markets, subject to applicable regulations.
- Softgel Capsules: On August 22,
2018, Aurora received Health Canada authorization to produce
cannabis softgel capsules at its state-of-the-art Aurora Vie
facility in Pointe-Claire, Québec.
Immediately following the approval, Aurora started production of
softgel capsules in partnership with Capcium Inc.
Canadian Adult Consumer-Use Market
In preparation for the commencement of legalized adult consumer
use sales in Canada, from
October 17, 2018 onwards, the Company
has entered into supply arrangements with provinces and territories
accounting for over 98% of the Canadian population. Consumer brands
sold by Aurora, its subsidiaries and strategic partners will be
available in Ontario, Québec,
Alberta, British Columbia, Saskatchewan, Manitoba, Nova
Scotia, the Yukon, North
West Territories, Prince Edward
Island, and Newfoundland
and Labrador. During and
subsequent to the quarter, the Company has been able to
significantly increase its inventory. With production from the
Company's licensed facilities ramping up to full capacity, Aurora
anticipates producing at a rate in excess of 150,000 kg per annum
by the end of Q2 2019.
Alcanna Inc. ("Alcanna")
In accordance with our
strategic investment in Alcanna, the largest private sector liquor
retailer in Canada, Alcanna
intends to open 37 retail cannabis stores in Alberta (the maximum number permissible under
AB regulations for year one), and is targeting additional locations
across the country where private retail of cannabis is permissible.
Alcanna, in preparation for the onset of private retail in
Ontario from April 1, 2019 onwards, is in the process of
securing a large number of locations for potential stores in the
Ontario, if permitted under the
regulatory framework, which is yet to be announced.
Acquisitions
The Company continued to execute on its strategy to build a
global scale, science and margin leader. To this end, a number of
acquisitions were completed, further increasing production
capacity, geographic reach, science-driven product and technology
development, and brand strength. Subsequent to the end of Q4
2018, Aurora acquired:
- MedReleaf Corp. ("MedReleaf"): Aurora completed the
world's largest cannabis industry transaction whereby Aurora
acquired MedReleaf. The transaction has created a unified cannabis
industry leader with a combined funded capacity of more than
500,000 kg per annum, broad domestic and international distribution
channels, industry-leading product development capabilities and
strong medical and consumer brands.
- HotHouse Consulting Inc. ("HotHouse"): On
August 7, 2018, the Company entered
into a Letter of Intent to acquire HotHouse, a greenhouse
consulting business with an emphasis on large scale cannabis
production.
- Anandia Laboratories Inc. ("Anandia"): On August 8, 2018, the Company acquired Anandia, a
global leader in cannabis science (genetics, breeding) and
analytical product testing. The transaction enables the Company to
develop new strains with specific terpene/cannabinoid profiles for
targeted product applications, as well as strains with improved
cultivation characteristics. Management believes these activities
will lead both to the development of new, higher-margin products
and a further increase in efficiency of its cultivation
processes.
- ICC Labs Inc. ("ICC"): On September 10, 2018, Aurora entered into an
agreement to acquire ICC for an aggregate purchase price of
$290 million. ICC, the leading
cannabis company in South America,
adds significant low-cost production and processing capacity of
both THC and CBD based products in both Uruguay and Colombia. In Uruguay, the world's first country to legalize
adult consumer use of cannabis, ICC maintains 70% market share and
a broad and well-diversified product portfolio, as well as
extensive distribution channels throughout South America and internationally.
- Agropro UAB ("Agropro") and Borela UAB ("Borela"): On
September 12, 2018, Aurora acquired
Europe's largest producer, processor and supplier of certified
organic hemp and hemp products, Agropro, as well as hemp processor
and distributor Borela. This acquisition is anticipated to yield
significant quantities of CBD for extraction, and is expected to
create further synergies through the Company's CBD and hemp product
value chain, which includes majority ownership of Hempco Food and
Fiber.
Integration
The Company has developed the integration of acquisitions into a
core competency. Under the leadership of Andre Jerome, SVP, Business Integrations, who
formerly implemented global business integrations for Vodafone, a
$65 billion telecommunications
company, the Company has developed a methodology that ensures rapid
integration of acquired companies into the Aurora organization.
Integration of CanniMed was fully completed within the targeted
90-day timeline, and has resulted in an acceleration of its
development, including a significant improvement in production
rates of dried cannabis and cannabis oils.
Integration of MedReleaf into the Aurora organization has
commenced and is progressing according to schedule. Mutual learning
and implementation of best practices is a core aspect of the
MedReleaf integration, and teams at both companies have identified
key performance indicators, based on which the integration program
is being executed.
Strategic Investments & Agreements
During and subsequent to the quarter, the Company made a number
of strategic investments in both public and private companies. As
at June 30, 2018, the unrealized
gains on its public investments made to date stood at $372.0 million. Significant strategic investments
made subsequent to June 30, 2018
consist of:
- Evio Beauty Group Ltd. ("Evio"): On July 10, 2018, Aurora entered into a Product
Development and Distribution Agreement with Evio to develop and
manufacture a line of co-branded topical cosmetic products
formulated with a cannabinoid or cannabinoids.
- CannaRoyalty Corp. ("CannaRoyalty"): On August 1, 2018, the Company entered into an
agreement with CannaRoyalty whereby CannaRoyalty assigned to Aurora
all of its right, title, and interest in an exclusive license for a
technology for creating machine-rolled cannabis developed by Wagner
Dimas Inc. ("Wagner"). The Wagner technology has now been installed
at Aurora, and the large-scale production of pre-rolled product has
commenced in preparation to filling orders received from provincial
buyers who will be supplying the adult consumer user market.
International Developments
Aurora continues to expand its international footprint and
capitalize on its early mover advantage in key growth markets:
- Malta: Aurora entered
into a Letter of Intent with Malta Enterprises concerning the
establishment of the first seed-to-pharma cannabis facility in
Malta, subject to certain
conditions. The Company anticipates the facility, to be designed by
Aurora Larssen Projects, to be focused on the production of higher
margin derivative products, aimed at the Maltese and Southern
European markets.
- EU GMP Certification: • EU GMP Certification: Aurora's
wholly-owned subsidiary MedReleaf received full EU GMP
certification for its Markham
facility. The certification of the Markham facility will increase product
availability for the rapidly growing, higher-margin and heavily
regulated EU market. All of the Company's facilities are being
designed and built to EU GMP standards, including Aurora Nordic
Phase I, which currently is in production and ramping up to full
capacity.
- Establishing Aurora
Europe: Aurora established a pan-European company,
Aurora Europe GmbH, headquartered in Berlin, Germany. Pedanios GmbH, Europe's
largest distributor of cannabis, now operates as Aurora Deutschland
GmbH, while the Company has also formed Aurora Italia, Aurora Nordic (Denmark) and a number of other local
companies.
- Australis Capital Inc. ("ACI"): On September 19, 2018, the Company completed the
spin-out of ACI, an independent company, and distributed to Aurora
shareholders, as a return of capital, units of ACI on the basis of
one unit for every 34 Aurora shares. The units commenced trading on
the CSE on September 19, 2018. ACI is
an investment company with a focus on the U.S. cannabis market,
which is characterized by large fragmentation and limited access to
capital. ACI's management, board and advisory teams have deep
experience and relationships within the cannabis industry, and
believe they will be able to secure investments to build
significant shareholder value.
- Cayman Islands: sales
of CanniMed oils to the Cayman
Islands continue to grow in line with patient demand. The
Company signed a supply agreement
- International hemp: Through the acquisitions of Agropro
and Borela, as well as the planned acquisition of ICC, the Company
is well positioned to capitalize on the rapidly growing hemp-based
food product markets. Agropro and Borela products are currently
available in 27 countries. Going forward, the Company intends to
create further integration with its majority owned Hempco Food and
Fiber, further increasing market reach and product development
capabilities.
- MED Colombia: through
the acquisition of MedReleaf, the Company now owns MED Colombia, a
licensed cannabis company in Colombia with substantial grow potential and a
strong portfolio of genetics. Upon successful completion of the ICC
acquisition, MED Colombia will become part of Aurora's South
American platform.
- Australia: Aurora
recently exported oil products to Australia, which were supplied to patients
through its partially-owned strategic partner Cann Group. Cann
Group has announced it will be constructing an ALPS (Aurora Larssen
Projects) designed high-technology, hybrid cultivation facility at
the Melbourne International
Airport. Aurora and its wholly-owned subsidiary Anandia have also
successfully exported plant tissue culture derived genetics for
Cann Group to enhance its cultivation program.
Financing
- Bank of Montreal ("BMO")
Debt Facility: the Company finalized a $200,000 Debt Facility (the "Facility") with BMO
consisting of a $150,000 term loan
and a $50,000 revolving credit
facility, both of which will mature in 2021. The Company also has
the option to upsize the Facility to a total of $250,000, subject to certain conditions. The
Facility will be primarily secured by Aurora's production
facilities and can be repaid without penalty at Aurora's
discretion. The Facility with BMO is the largest of its kind in the
cannabis industry with a tier one bank and a validation, management
believes, of the quality and economic value of Aurora's facilities
and of the Company's prospects.
Q4 2018 Operational Highlights
Strategic Investments
- Hempco Food and Fiber Inc. (Hempco): The Company
purchased an additional 10.8 million shares to increase its
ownership interest to 52.3%. Hempco plays an important role in the
Company's strategy to secure access to low-cost material for the
potential production of CBD extracts.
- CTT Pharmaceuticals Inc. ("CTT"): The Company acquired a
9.41% interest in CTT, who have developed fast-dissolving oral thin
wafers that provide dose-specific, smoke-free delivery of medical
cannabis with a rapid onset of action. The companies are jointly
working towards approval by Health Canada for market
introduction.
- Choom Holdings Inc. ("Choom"): The Company subscribed to
an investment representing an 8% ownership interest in Choom,
extending the Company exposure to the emerging craft cultivation
market, and expanding its reach into the cannabis retail
market.
- Capcium Inc. ("Capcium"): The Company acquired a 19.99%
ownership interest in Capcium, a leading softgel manufacturer in
the cannabis industry. The Capcium technology has been installed at
Aurora Vie and the Company has commenced the large-scale production
of softgels in response to orders from provincial buyers to service
the Canadian adult consumer-use market.
- Green Organic Dutchman Holdings Ltd. ("TGOD"): The
Company holds approximately 17% of TGOD. In addition to securing
20% of the output of TGOD's Ancaster and Valleyfield facilities, the latter of which is
constructed with the assistance from Aurora Larssen Projects, the
value of the Company's investment has appreciated significantly.
The Company has options to increase its ownership in TGOD to over
50%.
Supply Agreements and Partnerships
- Pharmasave: On April 4,
2018, CanniMed, a wholly-owned subsidiary of Aurora, entered
into a Letter of Intent with Pharmasave, a network of over 650
independently-owned pharmacies, to become a preferred supplier of
medical cannabis.
- Société des Alcools du Québec ("SAQ")": On April 11, 2018, the company completed a final
agreement with SAQ to supply cannabis for the Quebec consumer market, once legalized.
Acquisitions
- CanniMed Therapeutics Inc. ("CanniMed"): On May 1, 2018, the Company completed the
acquisition of CanniMed. The transaction creates strong strategic
synergies, in particular for the domestic and international medical
cannabis markets, in terms of distribution, product development,
and branding. Integration of CanniMed into Aurora is complete and
acceleration of CanniMed's production and other operations has
commenced.
International Developments
- Italy: Aurora completed
the successful delivery of the first ever batch of privately
exported medical cannabis from Canada to the Italian government through its
wholly-owned German subsidiary Aurora Deutschland GmbH ("Aurora
Deutschland", formerly Pedanios GmbH)
- Germany: Aurora,
through Aurora Deutschland, signed a collaboration agreement with
Heinrich Klenk GmbH & Co. KG ("Klenk"), one of Europe's largest
medicinal plant companies. Klenk's products are carried in over
25,000 pharmacies throughout Germany and Europe. Under the terms of the
agreement, Aurora launched a new cannabis brand in Germany called "Cannabis Klenk" which is
produced in Canada, imported by
Aurora Deutschland, and sold to German pharmacies through Klenk's
existing and wide-reaching pharmaceutical wholesale distribution
network.
- Malta: Aurora, through
its wholly-owned European subsidiary Aurora Deutschland, became the
first licensed supplier of medical cannabis to patients in
Malta, the third country in the
European Union where Aurora Deutschland currently sells medical
cannabis.
Outlook
Aurora is exceptionally well‑positioned in all of its markets,
including adult consumer-use market, Canadian medical and the
international medical markets, with compelling brands and strong
patient and consumer recognition.
In fiscal 2019, the Company will continue to focus on expanding
capacity and sales growth in all its markets, in addition to
further product development, continued international expansion and
realization of acquisition synergies.
Aurora is rapidly accelerating production out of its newly
licensed facilities, starting with Aurora Sky, which is expected to
ramp to full 100,000 kg per annum capacity around calendar year end
2018. The Company anticipates to reach a production run rate of
approximately 150,000 kg per annum around year end, scaling up
subsequently to over 500,000 kg per annum through further "Sky
Class" facilities, Aurora Sun and
Aurora Nordic. The high degree of automation, and customized and
fully controlled growing conditions at the Sky Class
facilities are anticipated to result in production costs well below
one dollar per gram. Management
believes these factors together will deliver high growth and
continuously improving margins.
While the historic milestone of Canada becoming the first G7 nation to
legalize the adult consumer-use market creates a very significant
growth opportunity, the Company maintains its position that the
international medical has the most significant growth prospects,
and is expected to grow to 10 million kilograms per annum. The
Company has established significant early mover advantage, has a
presence on five continents, and is Europe's largest distributor of
medical cannabis. Aurora also owns two of only six facilities in
the world that are EU GMP certified, ensuring continued access to
restrictive markets. This early mover advantage, management
believes, will enable the Company to establish significant market
share in the global medical market.
Financial review Q4 2018
Revenue
In the fourth quarter of 2018 ("Q4 2018") cannabis revenue grew
to $14.9 million, a 38% increase
compared to the third quarter of 2018 ("Q3 2018") and a 113%
increase compared to the fourth quarter of 2017 ("Q4 2017"). Total
revenue grew to $19.1 million, representing a 19% increase
compared to Q3 2018 and a 223% increase compared to Q4 2017.
Revenue growth compared to the same quarter in the prior year was
attributable mainly to higher patient numbers following the
acquisition of CanniMed, increased product availability through
scale up of operations and the CanniMed acquisition, an increase in
the average net selling price of dried cannabis, development of
international markets, and product diversification.
Average price of product sold was $9.20 per gram in Q4 2018, an increase of 15%
compared to Q3 2018 and 23% compared to Q4 2017 as a result of an
increase in cannabis oils sold. Total product sold was 1,617
kilograms of dried cannabis and cannabis oils in Q4 2018, an
increase of 19% as compared to Q3 2018, and 114% compared to Q4
2017.
Total cannabis inventory and biological assets increased 248% to
$41.0 million in Q4 2018 compared to
Q4 2017 as Aurora chose to constrain international sales in order
to continue servicing the Canadian medical market, while building
inventory in preparation for the Canadian adult consumer-use
market. This onetime constraint on international sales has been
alleviated by the rapid completion of Aurora's Canadian production
facilities (including Sky, Vie & Eau), as well as the EU GMP
certification of MedReleaf's Markham facility, and ongoing yield
improvements at CanniMed.
Operating Expenses
Throughout 2018, Aurora continued to make significant
investments in its infrastructure and talent, scaling the
organization to better realize the tremendous opportunity ahead in
the domestic and international medical cannabis markets, and the
upcoming Canadian adult consumer-use market.
As a result, general and administration costs ("G&A")
increased to $22.6 million in Q4
2018, compared to $9.8 million in Q3
2018. Sales and marketing costs (S&M) in Q4 2018 increased to
$14.8 million dollars, from
$5.9 million in Q3 2018, as a result
of investments in our overall brand strategy which included certain
one-time activities in preparation for the impending adult
consumer-use recreational market in Canada. The integration
of CanniMed accounted for 25% of the increase to G&A and 19% of
the increase to S&M.
Cost of sales
Cash cost of sales per gram of dried cannabis sold and cash cost
to produce per gram of dried cannabis sold increased by
$0.07 and $0.17 respectively from the prior quarter, mainly
due to the inclusion of CanniMed's higher per unit production
costs, partially offset by lower utility costs in the summer
months. Aurora continues to drive yield and efficiency improvements
at CanniMed in line with Aurora's other operating facilities, and
anticipates production costs to come down further.
Gross Profit
Q4 2018 gross profit was $20.6
million, compared to a $5.8
million in Q4 2017. The increase in gross profit during the
period was partially attributable to the net effect of changes in
fair value of biological assets and a decrease in the cost of sales
for medical cannabis on a per gram basis.
Net Income
Q4 2018 net income increased to $79.3
million, compared to a net loss of $20.8 million in Q3 2018 and $4.8 million in Q4 2017. The increase was
primarily attributable to the unrealized non-cash gain on
derivatives and marketable securities, which was partially offset
by increased finance costs, share-based payments, acquisition and
project evaluation costs.
Cash Position, Cash Flows, and Working Capital
Net cash and cash equivalents on hand decreased from
$159.7 million at the end of Q4 2017
to $89.2 million as at Q4 2018.
Non-cash working capital at the end of Q4 2018 was $56.4 million, as compared to $10.4 million at the end of Q4 2017. The change
in working capital was largely attributable to an increase in
marketable securities and the planned buildup of inventory,
partially offset by accounts payable and accrued liabilities
related to construction of our production facilities.
Additionally, as at September 21,
2018, the market value of the Company's investments in
public companies exceeded $700
million.
The Company anticipates that it has sufficient liquidity and
capital resources to meet all of its currently planned expenditures
for the next twelve months.
Pro-Forma Reconciliation
For the three months ended June 30,
2018, pro-forma revenue, including the results of MedReleaf,
would have been $33.1 million. As at
June 30, 2018, cash and cash
equivalents would have been $255.2
million and cannabis inventory and biological assets would
have been $88.8 million.
About Aurora
Headquartered in Edmonton, Alberta,
Canada with funded capacity in excess of 500,000 kg per
annum and sales and operations in 18 countries across five
continents, Aurora is one of the world's largest and leading
cannabis companies. Aurora is vertically integrated and
horizontally diversified across every key segment of the value
chain, from facility engineering and design to cannabis breeding
and genetics research, cannabis and hemp production, derivatives,
high value-add product development, home cultivation, wholesale and
retail distribution.
Highly differentiated from its peers, Aurora has established a
uniquely advanced, consistent and efficient production strategy,
based on purpose-built facilities that integrate leading-edge
technologies across all processes, defined by extensive automation
and customization, resulting in the massive scale production of
high quality product at ultra-low costs. Intended to be replicable
and scalable globally, these production facilities are designed to
produce cannabis of significant scale, with high quality,
industry-leading yields, and ultra-low per gram production costs.
Each of Aurora's facilities is built to meet EU GMP standards, and
its first production facility, the recently acquired MedReleaf
Markham facility, and its wholly owned European medical cannabis
distributor Aurora Deutschland (formerly Pedanios), have achieved
this level of certification.
In addition to the Company's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 companies
– MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora
Deutschland (formerly Pedanios), H2 Biopharma, Urban Cultivator, BC
Northern Lights, Larssen Greenhouses, CanniMed Therapeutics,
Anandia Labs, HotHouse Consulting, Agropro, Borela, and the pending
acquisition of ICC Labs – Aurora is distinguished by its reputation
as a partner and employer of choice in the global cannabis sector,
having invested in and established strategic partnerships with a
range of leading innovators, including: The Green Organic Dutchman
Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI),
Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX:
CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings
Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty
Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC:
CTTH), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX under the symbol "ACB",
and are a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor
website, investor.auroramj.com, Twitter, Facebook or Instagram
Terry Booth, CEO
Aurora Cannabis Inc.
Forward looking statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable
securities law ("forward-looking statements"). Forward-looking
statements are frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other
similar words, or statements that certain events or conditions
"may" or "will" occur and include, but are not limited to the
variety of cannabis products that Aurora will supply to the adult
use market.. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made, and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law.
Neither TSX nor its Regulation Services Provider (as that term
is defined in the policies of Toronto Stock Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Aurora Cannabis Inc.