Aurora Cannabis announced a shake-up of its board of directors and is eyeing tens of millions of dollars in additional cost savings as the Alberta, Canada-based company reported another large quarterly loss amid sharp drops in its adult-use and international sales.
Aurora reported a net loss for its quarter ended March 31 of 164.7 million Canadian dollars ($136 million), an improvement over the previous quarter’s CA$293 million loss.
That brings the company’s loss to CA$1.4 billion through nine months of its fiscal year.
Aurora’s net revenue fell 18% from the previous quarter to CA$55 million, short of analysts’ expectations.
In a phone interview, CEO Miguel Martin acknowledged Aurora’s tough quarter.
Recreational cannabis sales “for everybody, not just us, came in under expectations,” he said.
The CEO also cited Canada’s COVID-19 challenges, including Ontario stores closed to physical shoppers as well as some provinces changing order systems.
In a news release, Aurora disclosed that Michael Singer is stepping back from the executive chair position he has occupied on the company’s board since 2016. He is being replaced by lead independent director Ronald Funk, effective immediately.
Aurora wouldn’t say whether the approximately CA$5 billion the company lost while Singer chaired the board influenced the decision.
In a statement to MJBizDaily, Aurora said the change reflects the board’s “planned governance enhancements to include an independent chairman.”
Singer, who also served as interim CEO from February to September 2020, will revert to his role as a director.
He will not be considered an independent board member for three years, in accordance with regulatory requirements.
Medical cannabis sales strong
Aurora experienced continued weakness in recreational cannabis sales in its latest quarter, but its medical marijuana division showed some strength relative to competitors.
The company’s net revenue in the quarter by channel:
- Adult-use cannabis: CA$18 million (down 37% from the previous quarter).
- Canadian medical: CA$27 million (unchanged from the previous quarter).
- International medical: CA$9.4 million (down 26%).
- Wholesale cannabis sales: CA$760,000 (up 210%).
The company also announced planned cost savings of CA$60 million to CA$80 million annually over the next 18 months.
Those are on top of previous cost-cutting moves, which included corporate office closures in Italy, Portugal and Spain as well as significant layoffs and facility closures in Canada. Among those closures is the Aurora Sun cultivation facility, which is currently for sale.
In a regulatory filing, Aurora also said it entered into agreements to sell two of its production facilities for an aggregate of CA$24.6 million.
In December, MJBizDaily first reported that the company had struck an agreement in principle to sell at least two cultivation facilities in Canada that had been closed earlier that year.
‘Redundancies’ a problem
In the phone interview, Martin said Aurora still has a lot of redundancies and the planned cuts would lead to break-even status within 18 months, notwithstanding any revenue increases.
Asked about the company’s recent history in significant cost-cutting as well as cost savings, the CEO said he is not concerned about cutting too close to the bone.
“Aurora has a lot of redundancies,” he said.
“I say this with all due respect. We have a lot of facilities, a lot of production. We’d be crazy to do anything to impact the medical business. Zero percent (of cuts) will have an impact on our ability to produce high-quality cannabis for patients or rec consumers.
“This is about complexities, redundancies, a new facility in Europe coming online and using third parties so we don’t have to do that internally.”
He sees medical cannabis as a crucial part of the business, including in the United States when federal law changes.
“I don’t think medical gets as much attention as it should,” he said.
“It’s almost always the entry point for a country (to regulated cannabis sales). It’s the same regulators, it’s the same compliance systems.
“I would believe that the U.S., at a federal level, starts with medical.”
Shares of Aurora trade as ACB on the Toronto Stock Exchange and the Nasdaq
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at email@example.com.