Aurora Cannabis eked out a third consecutive quarter of revenue growth on the back of rising medical sales, but the Alberta-based licensed producer still reported a loss of 75.1 million Canadian dollars ($59 million) in its second quarter.
Aurora’s net sales for the three-month period ended Dec. 31, 2021, were CA$60.6 million – above analysts’ expectations and a slight improvement over the previous two quarters.
The sequential growth was largely driven by Aurora’s surging medical marijuana sales at home and overseas.
“International is where the growth is,” CEO Miguel Martin said in a conference call with analysts.
“Medical cannabis is the fastest-growing segment of cannabis internationally. And you’re seeing huge markets being put on the path of thoughtful legislative process to bring cannabis forward.”
Aurora’s medical net sales in Canada and overseas amounted to CA$45.8 million in the third quarter, representing steady growth over the previous two quarters of CA$41 million and CA$35 million, respectively.
Almost half of Aurora’s medical sales, CA$26 million, occurred in Canada, where Martin said the company maintains a clear No. 1 market share position.
In contrast, Canopy Growth, Aurora’s main competitor in medical cannabis, recorded Canadian medical sales of CA$12.9 million in its latest quarter.
In an interview with MJBizDaily, Martin said Aurora’s share of Canada’s medical market was 19% one year ago, rising to 23% today.
He said the key components to its medical strategy are better margins, less competition, higher barriers to entry and the availability of addressable sales today.
“These medical margins are sticky,” he said. “You only compete against a couple of companies (overseas), unlike Canada, where we have 250.
“So these are real, they’re today. They’re great economics.”
Aurora serves roughly 60,000 active medical cannabis patients in Canada.
Asked whether Aurora has any plans to spin off its adult-use business, the CEO said the recreational cannabis sector still serves a purpose for the company, even though its sales there are steadily falling.
“There are items we sell in both the rec channel and medical channel, so there’s efficiencies, and it wouldn’t make sense just to pull out,” he said.
“Secondly, there are significant learnings that we get from participating in the rec business, and that will help us in the Netherlands.”
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Martin said Canada’s recreational market will take time to mature into a profitable sector.
“It might take a year-plus to get there, and you can’t just pull everything out and then try to put it all back in,” he said, pledging that Aurora will get out of categories that aren’t profitable, such as the 28-gram flower segment.
“But getting out completely, I don’t think makes sense. And I don’t know how to spin it off. You’d just have to close it down. It’s not worth anything to anybody as a stand-alone.
“Everything we’re doing is focused on being profitable.”
Aurora recorded a third consecutive quarter of sales growth by volume, selling 13,043 kilograms (28,755 pounds) of cannabis, up from 12,484 kilograms in the first quarter and 11,346 kilograms in the fourth quarter of 2021.
However, the average net selling price of the company’s dried cannabis declined to CA$4.20 per gram, down from CA$4.67 and $5.11 per gram in the previous quarters, respectively.
Matt Lamers can be reached at email@example.com.