260% Revenue Growth to $29.7 Million - Pro-Forma Revenues up 333% to
$35.8 Million
Strong Adult Consumer Roll-out and Continued
Production Scale Up
TSX | NYSE: ACB
EDMONTON, Nov. 12, 2018 /CNW/ - Aurora Cannabis Inc.
("Aurora" or the "Company") (TSX | NYSE: ACB) (Frankfurt: 21P; WKN: A1C4WM), announced today
its financial and operational results for the first quarter ended
September 30, 2018.
Q1 2019 Financial and Operational Highlights
|
|
|
|
|
|
In thousands
('000s) unless otherwise noted
|
Q1
2019
|
Q4
2018
|
%
Change
|
Q1
2018
|
%
Change
|
Financial
Results
|
|
|
|
|
|
Revenue
|
$ 29,674
|
$ 19,147
|
55%
|
$ 8,249
|
260%
|
Cannabis revenue
(1)
|
$ 24,596
|
$ 14,880
|
65%
|
$ 7,315
|
236%
|
Gross margin on
cannabis sales (2)
|
70%
|
74%
|
(4%)
|
58%
|
12%
|
General and
administration expense
|
$ 35,943
|
$ 22,557
|
59%
|
$ 2,993
|
1,101%
|
Sales and marketing
expense
|
$ 29,376
|
$ 14,761
|
99%
|
$ 3,668
|
701%
|
Earnings
|
$ 104,181
|
$ 79,268
|
31%
|
$ 3,560
|
2,826%
|
Earnings attributable
to common shares
|
$ 105,462
|
$ 79,870
|
32%
|
$ 3,560
|
2,862%
|
|
|
|
|
|
|
Operational
Results
|
|
|
|
|
|
Cash cost of sales
per gram of dried cannabis sold(3)
|
$ 1.90
|
$ 1.87
|
2%
|
$ 2.16
|
(12%)
|
Cash cost to produce
per gram of dried cannabis sold(3)
|
$ 1.45
|
$ 1.70
|
(15%)
|
$ 1.87
|
(22%)
|
Active registered
patients
|
67,484
|
43,308
|
56%
|
19,280
|
250%
|
Average net selling
price of dried cannabis (4)
|
$ 8.39
|
$ 8.02
|
5%
|
$ 7.32
|
15%
|
Average net selling
price of cannabis extracts (4)
|
$ 12.12
|
$ 13.52
|
(10%)
|
$ 16.41
|
(26%)
|
Kilograms
produced
|
4,996
|
2,212
|
126%
|
1,010
|
395%
|
Kilograms
sold
|
2,676
|
1,617
|
65%
|
890
|
201%
|
(1)
|
Cannabis revenue for
Q1 2019 was comprised of revenues from both medical and adult-use
markets (adult use revenues of $0.6 million reflect only Aurora's
initial shipments received by provinces in final days of September
2018 and took place prior to Aurora Sky receiving its sales license
on October 17, 2018). Q4 2018 and Q1 2018 cannabis revenues were
comprised solely of revenues from medical cannabis
|
(2)
|
Represents the gross
margin on cannabis sales before fair value adjustments
|
(3)
|
Represents the cash
cost of sales and cost to produce per gram sold of dried cannabis
produced by Aurora
|
(4)
|
Represents the
average net selling price per gram of dried cannabis or per gram of
dried cannabis equivalent.
|
Commencement of Sales to Canadian Adult Consumer Use
Market
On October 17, 2018,
sales of cannabis for adult consumer use in Canada, legalized through Bill C45, commenced.
Aurora recorded a strong performance, ranking top or among the top
selling products and brands in many of the provinces the Company
committed to supplying, for the first two weeks to October 31, 2018.
Provincial Highlights (for the period up to October 31, 2018):
- ON (Source: Ontario Cannabis Store (OCS) website)
-
- Aurora brands accounted approximately 30% of the total market
supplied through the OCS
- San Rafael was the top selling brand in ON with Aurora
supplying two of the three top selling products
- BC (Source BC government website – data current as of
Nov 2nd)
-
- Top 4 best-selling dried flower products in BC
- 2 of top 5 and 3 of top 8 best-selling oil and capsule products
in BC
- PEI (Source: PEI government sales report – data current as of
Nov 2)
-
- Aurora and MedReleaf are 2 of the 6 top best-selling LPs in the
province
- 2nd largest for overall revenue
- More than 450 unique SKUs launched across Canada
Q1 2019 Highlights:
- Revenue of $29,674, up 260%
compared to the same period in 2018.
-
- Pro-forma Q1 2019 revenue of $35,752, including MedReleaf (consolidated as of
July 25, 2018), Anandia (consolidated
as of August 8, 2018) and Agropro
(consolidated as of September 10,
2018)
- Gross margin on cannabis of 70%, up 12% points compared to the
first quarter of 2018, and down slightly by 4% points compared to
Q4 2018. The increase versus Q1 2018 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 mix
ratio. The slight decrease from Q4 2018 was due to higher average
packaging costs related to the inclusion of MedReleaf's relatively
higher packaging costs and an overall increase in packaging costs
due to the stringent regulatory requirements of the Cannabis
Act.
- Cash cost of sales decreased by 12.0% compared to Q1 2018 and
increased slightly by 1.6% compared to Q4 2018. Cash cost to
produce per gram of dried cannabis sold decreased 22.5% compared to
Q1 2018 and fell by 14.7% compared to Q4 2018. This decrease was
primarily due to more efficient production processes rapidly
implemented post-acquisition at the Company's subsidiary
CanniMed.
- Active registered medical patients of 67,484, up 250% compared
to the first quarter of 2018.
- Kilograms produced and kilograms sold of 4,996 and 2,676, up
395% and 201%, respectively, as compared to the same period in
2018.
- 8 facilities with production licenses, 6 facilities with sales
licenses, including Aurora Sky.
- Introduced Aurora Cloud, making
Aurora the first and, to the company's knowledge, only LP supplying
a vape-ready CBD oil cartridge to the market.
Management Commentary
"We continue to successfully execute our differentiated and
diversified strategy committed towards domestic and international
expansion in the medical cannabis market, adult consumer use sales,
production scale-up, innovation, plant and medical research, and
product development," said Terry
Booth, CEO of Aurora. "The commencement of adult consumer
use sales in Canada has been very
successful for Aurora, with strong performance across all product
categories and brands. Our initial roll-out success demonstrates
how our high-quality Aurora Standard
products and well-positioned brands have resonated strongly with
the consumer market and our preparedness for the logistical
challenges in effectively bringing our products to market.
Given the strong unmet consumer demand evident across
Canada, we are confident that our
rapidly increasing production capacity will result in continued
acceleration of revenue growth."
Mr. Booth added, "We also continue to perform well in our
international medical business. With the acquisition of ICC Labs,
which we expect to close in the coming weeks, we are establishing
leadership in Latin America. In
addition to ongoing international growth and expansion led by our
team at Aurora Europe, we were also the first non-government
organization to export medical cannabis to Poland, a medical market with a population
roughly equal to Canada. Across
our international activities, we have established significant early
mover advantage and market leadership. With the scale-up of
our domestic and international production facilities, we anticipate
increased availability of product to service these developing
markets which will drive further global growth for the
Company."
Glen Ibbott, CFO, added, "In Q1
2019, we continued to propel Aurora's growth making critical
investments in our corporate, sales, and marketing talent and
capabilities. A significant portion of our Q1 2019 marketing spend
was in preparation for the adult consumer use market with numerous
branding and market awareness initiatives. With more restrictive
marketing regulations in effect as of October 17th, we will see a significant reduction
in average marketing spend over the remainder of the fiscal
year. We also anticipate a reduction in other one-off
expenditures, such as the integration costs related to the
MedReleaf, CanniMed, and Anandia acquisitions."
Mr. Booth concluded, "As a science, medical and patient focused
organization, we are committed to continue serving our patients
with the products they require. As we built up inventory levels in
anticipation of the adult consumer use market, we prioritized
product availability for our over 67,000 existing patients. With
production ramping up, we anticipate once again pro-actively
driving additional growth in this core medical segment, both
domestically and internationally."
Q1 2019 and Subsequent Operational Highlights
Facilities and Production update
During and subsequent to the quarter, the Company made
significant progress towards increasing its production capacity,
including receipt of various sales and production licenses. Based
on grow rooms in production, the Company currently is running at an
annualized run rate of 70,000 kg. Management anticipates that
around calendar year end 2018 into the beginning of calendar 2019,
Aurora will have a production run rate in excess of 150,000 kg per
annum based on grow rooms in production, with subsequent scale up
to over 500,000 kg per annum (excluding additional capacity through
the acquisition of ICC Labs).
Aurora Sky
On October 17, 2018, the Company
received its Health Canada sales license for Aurora Sky, allowing
Aurora to increase product availability across Canada. Facility construction is now
materially complete, including exterior structure, landscaping,
commissioning, and harvest and waste rooms.
Aurora continues to populate additional bays at the facility,
with all 17 rooms anticipated to be ready to receive plants within
the coming month, and the facility fully planted around calendar
year end, ramping up to full capacity. The recently planted rooms
were populated using the successfully commissioned automation
systems, which function as anticipated, resulting in substantially
increased facility efficiencies as compared to traditional
greenhouses or indoor grow facilities.
Aurora Sky is a technologically highly sophisticated facility,
built to deliver exceptional operational efficiencies, including
energy, water and nutrient use. In addition to harnessing the power
of the sun through the use of highly specialized glass with strong
light diffusing characteristics, the Company captures the excess
heat generated in the facility during the day, storing it in the
successfully commissioned heat sink to be reused when additional
heat energy is required, usually during night time hours. The
facility is also set up to harness the higher ambient temperatures
during the warmer months to supply additional free heat, while the
colder months provide free additional cooling capacity.
The electricity consumed by the facility is supplied through two
independent sub-stations, which feed two independent electrical
rings. The rings have interconnects, as well as a back-up
independent power generator, to ensure full redundancy.
Furthermore, the electrical rings are monitored and controlled by a
digitalized management system with switch gear to move power
through the facility quickly and efficiently.
The measures described above ensure a very significant reduction
in energy use compared to more traditional facilities that yield a
similar production output on an annual basis.
Aurora Mountain
On July 30, 2018, the Company
received a Health Canada dealer's license for its Mountain Facility
in Cremona, Alberta. This license
allows Aurora to expand research and product development activities
with cannabinoids and their derivatives not covered under the
Cannabis Act, as well as import and export cannabis products to and
from international markets, subject to applicable regulations.
On September 28, 2018,
Aurora Mountain also received its
Health Canada production license to produce encapsulated oils.
Aurora is producing unique, integral hard-shell capsules for the
medical and adult consumer use markets.
Aurora Vie
The Company received its sales license for Aurora Vie in
July 2018. The facility is now
operating at full capacity, producing at a run rate of 4,000 kg per
annum.
On August 22, 2018, the Company
received Health Canada authorization to begin production of
cannabis softgel capsules at its Aurora Vie facility in
Pointe-Claire, Quebec. On
October 17, 2018, the Company
received its Health Canada softgel sales license. The Company
utilizes technology it has exclusively licensed from strategic
partner Capcium, in which Aurora has a strategic investment. High
volume production of softgels at Vie has started, resulting in
greater availability of this higher margin product.
Aurora Eau
On September 7, 2018, Aurora
received a Health Canada production license for its Eau facility in
Lachute, Quebec. 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 Eau, which is fully planted with first harvest anticipated
shortly, was officially opened on November
5, 2018.
Aurora Nordic, Phase I and II
On August 13, 2018, the Company
successfully shipped cultivars from Aurora
Mountain to Odense, Denmark
to commence populating the Aurora Nordic Phase I facility, named
"Base One". The facility is ramping up to its full 8,000 kg per
annum capacity, increasing product availability for the EU markets.
The Company has commenced with a 54,000 square feet expansion of
Base One, anticipated to be fully completed towards the end of the
first calendar quarter of 2019. Pharma-grade processing equipment
will be moved into the facility, with completion and full
commission anticipated for early 2019.
Construction of Aurora Nordic Phase II, named "Nordic Sky", has
commenced with site preparation, ground and drainage work.
MedReleaf Markham
On August 13, 2018, Aurora,
through its wholly-owned subsidiary MedReleaf, received EU GMP
certification on its facility in Markham,
Ontario. This certification will allow MedReleaf Markham to
access rapidly growing, higher margin, heavily regulated EU
markets.
MedReleaf Bradford
On September 7, 2018, the Company,
through its wholly-owned subsidiary MedReleaf, received its Health
Canada oils production license for its facility located in
Bradford, Ontario. This license
allows MedReleaf Bradford, a 210,000 square foot facility which
features a high-volume CO2 extraction facility, to significantly
increase the production of oils in fiscal 2019. MedReleaf Bradford
continues to produce oils, a higher-margin product, in anticipation
of the receipt of its oils sales license.
To date, Bradford has completed
13 cultivation rooms, 5 drying rooms, 2 trim rooms, an extraction
room, packaging area and the vault. Two additional grow rooms were
recently commissioned with only two grow rooms remaining to be
licensed.
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 1.2 million square foot, highly automated cannabis
production facility with ultra-low operating costs. Construction of
Aurora Sun is on schedule with site
preparation, backfilling, and 80% of pilings completed to date.
Aurora expects to commence erecting the buildings metal frame in
the beginning of calendar year 2019. Near completion of the piling
work is a major milestone as it ensures greater efficiency of
construction work during the winter months.
CanniMed
On July 3, 2018, the Company,
through its wholly-owned subsidiary, CanniMed, received Health
Canada authorization to commence sales of CanniMed capsules, a line
of vegan capsules which became available to patients on
August 22, 2018. Facility upgrades
are continuing, and increased yields and efficiencies are already
being realized.
Innovation
The Company is successfully executing on a comprehensive
innovation strategy that covers the entire cannabis industry value
chain from breeding and genetics, through facility development to
medical research product development and post production analytics.
Objective of the innovation strategy is to yield industry leading
operational efficiencies, as well as the development of a broad
portfolio of high-margin, targeted medical and consumer use
products.
Medical Research
- Through the combination of the science teams at Aurora,
CanniMed, MedReleaf and Anandia, the Company is engaged in industry
leading medical research in multiple therapeutic areas, which
management anticipates will yield marketable IP and fuel product
development with targeted therapeutics. Therapeutic areas include
pain, cancer, epilepsy, PTSD, anxiety, opioid sparing and
neurodegeneration, as well as other areas. To date, Aurora and its
subsidiaries have:
-
- 40 clinical trials and case studies completed or in
progress
- 7 pre-clinical trials in progress
- A multitude of studies under preparation
Product Development
- Launch of Vape-Ready, High-Potency CBD Oil Cartridges
On October 16, 2018, the Company
announced that it had received necessary compliance verification
from Health Canada to sell its innovative, high-potency, vape-ready
CBD oil product line under the brand Aurora Cloud. The first Aurora Cloud products released contain over
550mg of CBD and less than 30mg of THC, making them the only
vape-ready CBD products legally available in Canada.
- The Company is developing a strong pipeline of new products
under development, as well has entered into a number of strategic
partnerships, with companies such as Capcium (production of
softgels, underway at Aurora Vie), Wagner Dimas (pre-rolls,
underway, SKUs being delivered to the adult usage market) and CTT
Pharmaceuticals (sub-lingual wafers, working jointly towards
obtaining approval for market introduction).
Acquisitions
Aurora has been executing successfully on developing a fully
vertically integrated company. This strategy combines both organic
initiatives and M&A. To date the Company has completed over 25
transactions (acquisitions and strategic investments), covering the
entire spectrum of the cannabis industry value chain. Consequently,
Aurora has been successful in establishing leadership across its
activities and is exceptionally well positioned to capitalize on
its early mover advantage globally, across its medical, wellness,
and adult consumer use market segments.
- Acquisition of MedReleaf Corp. ("MedReleaf")
On
July 25, 2018, the Company completed
the acquisition of MedReleaf, creating a vertically integrated
cannabis industry leader, with a total funded capacity of more than
500,000 kg per year. Together with MedReleaf, Aurora now has two EU
GMP certified production facilities, as well as an EU GMP certified
distribution facility. Establishing an early mover advantage in the
large European medical market.
- Acquisition of Anandia Laboratories Inc.
("Anandia")
On August 8, 2018,
the Company acquired all issued and outstanding shares of Anandia,
a leading research and science focused company specializing in
plant genetics and breeding, as well as providing analytical
testing services to producers and patient-cultivators. This
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 to
the development of new higher-margin products and a further
increase in efficiency of the Company's cultivation process.
- Acquisition of ICC Labs Inc. ("ICC")
On September 10, 2018, the Company entered into a
definitive agreement to acquire all the issued and outstanding
shares of ICC, whose shareholders voted in favour of the
transaction at a special meeting of shareholders on November 6, 2018. ICC is a licensed producer,
developer, and vendor of recreational and medical cannabis products
and industrial hemp in Uruguay.
Once completed, this acquisition will create a strong foundation
for expansion and will leverage ICC's first mover advantage in
South America, bringing
significant low-cost production capacity of both THC and CBD based
products in both Uruguay and
Colombia. ICC has extensive
distribution channels throughout South
America and internationally, and will play an important role
in the execution of the Company's strategy focused on the wellness
market segment.
- Acquisition of UAB Agropro ("Agropro") and UAB Borela
("Borela")
On September 10,
2018, the Company acquired all issued and outstanding shares
of Agropro, Europe's largest
producer, processor, and supplier of certified organic hemp and
hemp products, as well as sister company Borela, a European hemp
processor and distributor. This acquisition is anticipated to yield
significant quantities of CBD for extraction and create further
synergies through the Company's CBD and hemp product value chain,
which includes Aurora's majority ownership of Hempco Food and
Fiber.
- Acquisition of HotHouse Consulting Inc.
("HotHouse")
On August 7,
2018, the Company entered into a Letter of Intent to acquire
HotHouse, a provider of advanced greenhouse consulting services,
specializing in hybrid greenhouse growing techniques. HotHouse
founder and industry veteran, Laust Dam, has joined Aurora's
wholly-owned subsidiary, Aurora Larssen Projects ("ALPS") as VP of
Horticultural Development. This acquisition will allow Aurora to
expand ALPS post-construction services offerings and provide
customers with ongoing support and consulting by HotHouse crop
specialists.
Strategic Investments
- Spin-out of Australis Capital Inc. ("ACI")
On
September 19, 2018, the Company
successfully completed the spin-out of ACI, an investment company
that intends to acquire ownership interest in a variety of
opportunities and asset classes in the cannabis and real estate
sectors in the United States.
Shares and warrants of ACI trade on the Canadian Securities
Exchange ("CSE") under the ticker symbol "AUSA". Eligible Aurora
shareholders received one unit of ACI for every 34 Aurora shares
outstanding as at August 24, 2018.
Each unit consists of one common share and one warrant exercisable
at $0.25 per warrant for a period of
one-year. Following the distribution, Aurora has no direct
ownership interest in ACI. Aurora, however, maintains strategic
flexibility with share purchase warrants allowing the Company to
acquire a significant ownership interest at such time in the future
(within 10 years) when holding investments in U.S. cannabis assets
will become legally permissible.
To date, ACI's management, board,
and advisory teams have completed the following strategic
investments and financing activities:
- October 3, 2018: Finalized a
definitive agreement to purchase 2,200,000 shares of Wagner Dimas,
a market leader in the development of unique, patented technology
and proprietary processes that enable large-scale production for
the higher-margin pre-rolled segment of the cannabis market.
- October 26, 2018: Completed a
$30 million private placement
- November 5, 2018: Completed the
acquisition of Rthm Technologies Inc., the number one health app in
26 countries, which holds several brand-associated trademarks and
has developed the world's first mobile genetics and circadian
rhythm mapping platform for both iOS and Android devices.
- November 5, 2018: Completed an
investment agreement with Body and Mind Inc. ("BaM"), a publicly
traded company that invests in high quality medical and
recreational cannabis cultivation and production and retail. BaM
products include dried flower, edibles, topicals, extracts as well
as GPEN Gio cartridges.
- License for Pre-Roll Technology with CannaRoyalty Corp.
("CannaRoyalty")
On August 1,
2018, the Company entered into an Assignment and Assumption
Agreement with CannaRoyalty, whereby CannaRoyalty assigned to
Aurora all its rights, title and interest in an exclusive license
for pre-rolled cannabis technology developed by Wagner Dimas Inc
("Wagner Dimas"). This technology allows Aurora to target the
high-volume, high-margin pre-rolled segment of the cannabis
market.
The Wagner Dimas technology has
now been installed at Aurora, and the large-scale production of
pre-rolled product has commenced in order to fulfill orders
received from provincial buyers who have begun supplying the
Canadian adult-use market.
- Strategic Partnership with Evio Beauty Group Ltd.
("Evio")
On July 10, 2018, the
Company entered into a strategic partnership with Evio to
collaborate on a line of co-branded hemp seed oil products
("non-infused products") and CBD-infused cosmetic products
("infused products"). Aurora anticipates that this partnership will
result in greater brand recognition and cross-selling opportunities
to customers of both companies.
- Strategic Investment in Choom Holdings Inc.
("Choom")
On November 5, 2018,
the Company announced it had completed an additional $20 million investment in Choom. Through this
strategic investment, Aurora further diversifies its retail
strategy, with additional retail opportunities across Western
Canada, and future potential opportunities in
the Ontario market.
International Expansion
- Aurora Europe
On
August 13, 2018, Aurora established a
pan-European company, Aurora Europe GmbH ("Aurora Europe"),
headquartered in Berlin, Germany.
The Company has also incorporated and ramped up hiring at Aurora
Deutschland GmbH (formerly Pedanios GmbH), Aurora Italia (Italy), Aurora Nordic (Denmark), and several other local companies
under Aurora Europe.
- Letter of Intent for Production of Medical Cannabis in
Malta
On July 24, 2018, the Company announced that it
received a Letter of Intent from Malta Enterprise, the Maltese
government's economic development agency, to establish a facility
focused on the production of high margin oils and cannabis
derivative products in Malta.
Aurora will be a majority shareholder in a newly established
subsidiary, Aurora Malta, through a
joint venture with a local Maltese partner, Cherubino Ltd.
- MedColombia SAS ("MedColombia")
Through the
acquisition of MedReleaf, Aurora acquired MedColombia, a licensed
cannabis company based in Colombia
with a strong portfolio of genetics. The Company's South American
activities will be further integrated upon the completion of the
ICC transaction.
- Exports to Australia
During the first quarter of
2019, Aurora successfully completed its first export of cannabis
oil products to Australia. The
products were supplied to medical patients through its partner,
Cann Group Ltd. ("Cann Group"), which Aurora maintains 22.9%
ownership. Aurora and its wholly-owned subsidiary, Anandia, have
also successfully exported plant tissue culture derived genetics
which were used to enhance Cann Group's cultivation program. Cann
Group is constructing an ALPS designed facility at the Melbourne International Airport.
- First Cannabis Import Permit from Polish Ministry of
Health
On October 25, 2018,
the Company announced that it was granted approval from the Polish
Ministry of Health to ship medical cannabis to a pain treatment
center and a hospital in Warsaw,
Poland. This is believed to be the first time a
non-government run business has been granted approval to supply
medical cannabis products in Poland, which have now been successfully
shipped from Germany.
Financing and Capital Market Activities
- Bank of Montreal ("BMO")
Debt Facility
On August 29,
2018, the Company closed its previously announced debt
facility with BMO, consisting of a $150
million term loan and $50
million revolving credit facility, both of which mature in
2021. The debt facility bears interest at a set margin over BMO CAD
Prime Rate, or a Bankers' Acceptance of appropriate term.
The Company has the option to
upsize the facility to $250 million,
subject to certain conditions. The debt facility is primarily
secured by Aurora's production facilities and can be repaid without
penalty at Aurora's discretion.
- New York Stock Exchange ("NYSE") Listing
On
October 23, 2018, the Company's
common shares commenced trading on the NYSE under the ticker symbol
"ACB". This milestone reflects Aurora's commitment to continue
advancing domestic and internal growth initiatives, which includes
expanding the Company's base of global institutional and retail
investors.
Financial Review Q1 2019
The Company primarily operates in the cannabis market which
includes auxiliary support functions such as CanvasRX patient
counselling services; ALPS design, engineering and construction
services; and cannabis analytical product testing services through
the Company's recent acquisition, Anandia Laboratories Inc.
("Anandia"). With the Cannabis Act effected as of October 17, 2018, Aurora made its first shipments
to provinces across Canada at the
end of September 2018.
|
|
|
|
In thousands
('000s)
|
Q1
2019
|
Q4
2018
|
Q1
2018
|
Cannabis segment
revenue
|
|
|
|
Medical cannabis
|
|
|
|
Canadian dried
cannabis
|
$ 13,752
|
$ 7,529
|
$ 4,641
|
Canadian cannabis extracts
(1)
|
7,488
|
4,710
|
1,439
|
European dried
cannabis
|
2,803
|
2,641
|
1,235
|
Total medical
cannabis revenue
|
24,043
|
14,880
|
7,315
|
Adult-use cannabis
revenue
|
553
|
-
|
-
|
Design, engineering
and constructions services
|
1,489
|
1,239
|
-
|
Patient counselling
services
|
1,242
|
1,553
|
923
|
Analytical testing
services
|
447
|
-
|
-
|
Other
|
542
|
85
|
11
|
Total cannabis
segment revenue
|
$
28,316
|
$ 17,757
|
$ 8,249
|
Other segment
revenues
|
1,358
|
1,390
|
-
|
Total
revenue
|
$
29,674
|
$ 19,147
|
$ 8,249
|
(1)
|
Cannabis extracts
revenue includes cannabis oil revenue and cannabis capsule revenue
in Q1 2019. Cannabis extracts revenue for Q4 2018 and Q1 2018
comprised solely of cannabis oil revenue.
|
In the first quarter of 2019 ("Q1 2019") total medical cannabis
revenue grew to $24.0 million, a 62%
increase compared to the fourth quarter of 2018 ("Q4 2018") and a
229% increase compared to the first quarter of 2018 ("Q1 2018").
With the Cannabis Act in effect as of October 17, 2018, the Company completed its first
shipments to Canadian provincial wholesalers of the adult-use
market just prior to the end of the current quarter and recorded
$0.6 million in adult-use cannabis
sales.
Total revenue grew to $29.7 million in Q1 2019,
representing a 55% increase compared to Q4 2018 and a 260% increase
compared to Q1 2018. Revenue growth compared to the same quarter in
the prior year was attributable mainly to higher patient numbers
following the acquisition of CanniMed and MedReleaf, increased
product availability through scale up of operations from the
CanniMed and MedReleaf acquisitions, an increase in the average net
selling price of dried cannabis, development of international
markets, the commencement of the Canadian adult-use market, and
product diversification.
The average net selling price of cannabis sold was $9.19 per gram in Q1 2019, consistent with Q4
2018, and a 12% increase compared to Q1 2018 as a result of an
increase in cannabis extracts sold. Total product sold was 2,676
kilograms of dried cannabis and cannabis extracts in Q1 2019, an
increase of 65% as compared to Q4 2018, and 201% compared to Q1
2018.
Total cannabis inventory and biological assets increased 97% to
$80.8 million in Q1 2019 compared to
Q4 2018 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. The increase reflects the addition of MedReleaf's inventory
and biological assets and Aurora's efforts to bolster its inventory
levels to serve the medical markets and prepare for the high demand
of the Canadian adult consumer-use market.
Cost of sales
Cash cost of sales per gram of dried cannabis sold increased by
$0.03 to $1.90 in Q1 2019 as compared to the prior quarter
(Q4 2018), mainly due to higher packaging costs from the inclusion
of MedReleaf's results and increased overall packaging costs of the
Company resulting from stringent regulatory requirements of the
Cannabis Act. Cash cost to produce per gram of dried cannabis sold
decreased by $0.25, or 15%, to
$1.45 in Q1 2019 as compared to Q4
2018, and by 22% as compared to Q1 2018, mostly due to integration
of Aurora's yield expertise at CanniMed facilities. Production
costs per gram are expected to decrease significantly once Aurora
Sky is fully operational and the efficiencies from automation,
scale and yield expertise are realized at all Aurora
facilities.
Gross Profit
Q1 2019 gross profit was $8.1
million, compared to a $20.6
million in Q4 2018. The change in gross profit during the
period was partially attributable to higher sales of inventory and
lower fair value gains on changes in biological assets, which were
partially offset by higher gross profits before fair value
adjustments.
Operating Expenses
Aurora continues to make significant investments in its
infrastructure and skilled talent, scaling the organization to
better realize the tremendous opportunities ahead in the global
medical cannabis markets and the Canadian adult consumer-use
market.
As a result, general and administration costs ("G&A")
increased to $35.9 million in Q1
2019, compared to $22.6 million in Q4
2018. Sales and marketing costs (S&M) in Q1 2019 increased to
$29.4 million dollars, from
$14.8 million in Q4 2018, mainly as a
result of certain one-time activities and programs specifically for
the period leading up to the October 17,
2018 Cannabis Act effective date in Canada. The integration of CanniMed accounted
for 17% of the increase to G&A and 12% of the increase to
S&M.
Net Income
Q1 2019 net income increased to $104.2
million, compared to a net income of $79.3 million in Q4 2018 and $3.6 million in Q1 2018. 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 increased from
$89.2 million at the end of Q4 2018
to $147.8 million as at Q1 2019.
Working capital at the end of Q1 2019 was $548.4 million, as compared to $144.5 million at the end of Q4 2018. The change
in working capital was largely attributable to an adjustment to the
Company's investment in The Green Organic Dutchman ("TGOD"), which
was previously treated as an investment in associate and was
reported at cost; the investment is now treated as a marketable
security and reported at fair value. The inclusion of MedReleaf's
balances accounted for $57.6 million
in additional working capital.
The Company also has strategic investments in a number of
publicly-traded companies. Based on the closing prices at
November 9, 2018, the value of the
common shares and "in-the-money" warrants held by the Company was
$407.57 million.
The Company anticipates that it has sufficient liquidity and
capital resources to meet all of its currently planned expenditures
for at least the next twelve months.
Pro-Forma Reconciliation
For the three months ended June 30,
2018, pro-forma revenue, including the results of MedReleaf,
Anandia Labs, and Agropro/Borela, would have been $35.8 million.
Outlook
Aurora is exceptionally well‑positioned in all of its active
markets, including adult consumer-use market, Canadian medical and
the international medical markets, with compelling brands, a broad
and expanding product portfolio, 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
exploiting further product development and innovation, medical
research, 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 over the coming months.
The Company anticipates reaching a production run rate of
approximately 150,000 kg per annum early in calendar 2019, scaling
up subsequently to over 500,000 kg per annum (excluding additional
capacity through the pending ICC Labs acquisition) 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 long
term the international medical market has the most significant
growth prospects, and is expected to grow to 10 million kilograms
per annum according to industry observers. The Company has
established significant early mover advantage, has a presence on
five continents, and is currently Europe's largest distributor of medical
cannabis. Aurora also currently owns
two of the seven cannabis production facilities
in the world that are EU GMP certified, and additionally owns one
EU GMP certified distribution facility in Germany, ensuring continued access to
restrictive markets. Management believes this early mover
advantage, coupled with the strength of its growing international
management teams, will enable the Company to continue expanding its
significant market share in the global medical market.
Option Grant
The Company granted a total of 250,000
options to purchase common shares of Aurora to Officers of the
Company. The options vest annually over 36 months and are
exercisable at $9.94 per common share.
Conference Call
Aurora will host a conference call
today, November 12, 2018, to discuss these results. Terry
Booth, Chief Executive Officer, Glen
Ibbott, Chief Financial Officer, and Cam Battley, Chief Corporate Officer, will
host the call starting at 10:30 a.m. Eastern time. A question
and answer session will follow management's presentation.
Date:
|
Monday, November
12th, 2018
|
Time:
|
10:30 a.m. Eastern
Time | 8:30 a.m. Mountain Time
|
Webcast:
|
https://bit.ly/2yX5sMk
|
Taped
Replay:
|
(416) 849-0833 or
(855) 859-2056
|
|
Available until 12:00
midnight Eastern Time Monday November 19, 2018
|
Reference
Number:
|
1792668
|
About Aurora
Headquartered in Edmonton, Alberta,
Canada with funded capacity in excess of 500,000 kg per
annum and sales and operations in 19 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 low cost. Intended to be replicable and
scalable globally, our production facilities are designed to
produce cannabis of significant scale, with high quality,
industry-leading yields, and 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, have achieved this level of
certification.
In addition to Aurora's rapid organic growth and strong
execution on strategic M&A, which to date includes 15 wholly
owned subsidiary companies – MedReleaf, CanvasRX, Peloton
Pharmaceutical, Aurora Deutschland, H2 Biopharma, Urban Cultivator,
BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics,
Anandia Labs, HotHouse Consulting, MED Colombia, Agropro, Borela,
and the pending acquisition of ICC – 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: 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), Capcium Inc.
(private), Evio Beauty Group (private), Wagner Dimas (private), CTT
Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).
Aurora's Common Shares trade on the TSX and NYSE 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
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 NYSE, nor their Regulation Services Provider (as
that term is defined in the policies of Toronto Stock Exchange and
the New York Stock Exchange) accept responsibility for the adequacy
or accuracy of this release.
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SOURCE Aurora Cannabis Inc.