Aurora Cannabis Announces Financial Results for the Second Quarter of Fiscal 2019

83% Sequential Net Revenue Growth to $54.2 Million


EDMONTON, Feb. 11, 2019 /PRNewswire/ - Aurora Cannabis Inc. (the "Company" or "Aurora") (NYSE: ACB) (TSX: ACB) (Frankfurt: 21P; WKN: A1C4WM), announced today its financial and operational results for the second quarter ended December 31(st), 2018.

Q2 2019 Financial and Operations Highlights

              ($ thousands)                            
        Q2 2019 
       Q1 2019  
     % Change   
     Q2 2018   % Change


              Financial Results


       Gross revenue                                              $62,000        $29,674           109%       $11,700        430%

       Net revenue (1)                                            $54,178        $29,674            83%       $11,700        363%

       Cannabis net revenue (2)                                   $47,577        $24,596            93%        $9,773        387%

       Gross margin on cannabis net revenue (2)                       54%           70%         (23)%           63%      (15)%

       Selling, general and administration expense                $66,362        $65,319             2%       $12,704        422%

       (Loss) earnings attributable to common shareholders     ($237,752)      $105,462         (325%)        $7,722    (3,179)%

              Balance Sheet


       Working capital                                           $274,629       $548,446          (50%)      $302,526        (9)%

       Cannabis inventory and biological assets                   $79,924        $75,944             5%       $17,073        368%

       Total assets                                            $4,875,884     $4,955,361           (2%)      $732,394        566%

              Operational Results - Cannabis


       Cash cost of sales per gram produced (2)                     $1.92          $1.45            33%         $1.41         36%

       Active registered patients                                  73,579         67,484             9%        21,718        239%

       Average net selling price of dried cannabis (2)              $6.23          $8.39          (26)%         $7.86       (21)%

       Average net selling price of cannabis extracts (2)          $10.00         $12.12          (18)%        $13.35       (25)%

       Kilograms produced                                           7,822          4,996            57%         1,204        550%

       Kilograms sold                                               6,999          2,676           162%         1,162        502%


                (1)              Net revenue represents our
                                               total gross revenue exclusive
                                               of excise taxes levied by the
                                               Canada Revenue Agency ("CRA")
                                               on the sale of medical and
                                               recreational cannabis
                                               products effective October
                                               17, 2018.

                (2)              These terms and non-GAAP
                                               measures are defined or
                                               reconciled in Aurora's Q2
                                               2019 MD&A.

Q2 2019 and Subsequent Highlights

    --  Net revenue of $54.2 million, up 83% sequentially, and up 363% compared
        to the same period in 2018, driven by Aurora's strong performance in the
        launch of the Canadian consumer market with sales of $21.6 million, and
        the Company's continued strength in the Canadian and international
        medical markets with sales of $26.0 million, up 8% in revenue and 23% in
        volume sold.
    --  Average selling prices were impacted by the introduction of excise taxes
        across all Canadian sales channels on October 17, 2018, as well as lower
        wholesale pricing realized in the Canadian consumer market. Going
        forward, Aurora intends to continue prioritizing medical patients in
        Canada and globally where margins continue to exceed those achieved on
        the wholesale consumer market.
    --  Q2 2019 kilograms produced and kilograms sold of 7,822 and 6,999 were up
        57% and 162%, respectively, driven by continued and significant scale-up
        of Aurora's cultivation operations and strong demand across all the
        Company's markets.
    --  Gross margin on cannabis sales of 54% was temporarily down from 70% in
        the prior quarter.  The decrease was primarily due to a lower average
        selling price per gram of dried cannabis, the impact of excise taxes on
        medical cannabis net revenues, and a temporarily lower proportion of
        cannabis oil sales in the Company's sales mix ratio.   Also impacting
        gross margin were increased packaging requirements under the Cannabis
        Act and one-time ramp up and optimization costs as our Sky facility was
        brought up to full production. The Company anticipates that the launch
        of new derivative product lines, once allowed under Health Canada
        regulations, will contribute to improving margins.
    --  The company is performing well in the Canadian consumer market,
        recording $21.6 million of revenue in Q2 2019. Based on available data
        released by Health Canada for the Q2 2019 period, Aurora accounted for
        approximately 20% of all consumer sales across the country.
    --  Cash cost to produce per gram of dried cannabis sold temporarily
        increased from $1.45 in the previous quarter to $1.92 in Q2 2019. This
        change was primarily due to ramp-up and optimization costs as the
        Company scaled-up Aurora Sky to full production.  One-time additional
        costs incurred related to the launch of the Canadian consumer market, as
        the Company waited for its Sky sales licence (received October 17,
        2018), also contributed to the increase.
    --  Aurora Sky is now fully complete and commissioned, and is expected to
        reach its full production capacity, based on Health Canada approved
        planted rooms, shortly. Recent harvests completed to date at the
        facility have exceeded targeted yields, reflecting that the facility's
        commissioning has been successful, all environmental and nutrition
        systems, and operating protocols are dialed in, and technology
        components are functioning well.
    --  Q2 2019 SG&A remained steady compared to the prior quarter as lower
        sales and marketing costs were offset by one-time public company and
        acquisition costs, as well as the absorption of a full quarter of SG&A
        costs from recently acquired companies, including MedReleaf.
    --  Non-cash expenses including the December 31, 2018 mark-to-market
        adjustments of approximately $190 million primarily on the Company's
        derivative investments contributed significantly to a net loss of $240
    --  In January 2019, Aurora completed a US$345 million convertible note
        offering, with the proceeds earmarked predominantly to drive the
        Company's continued high pace of growth in Canada and internationally.


The most significant driver of Aurora's revenue growth over the next twelve to eighteen months is the Company's scale-up of high-quality production available for sale to the Canadian consumer market and the Canadian and international medical markets. Aurora is now operating at an annualized production rate of approximately 120,000 kgs, based on Health Canada approved planted rooms, and expects to reach in excess of 150,000 kgs by March 31, 2019. Management reiterates previous guidance that based on the Company's current confirmed production results, Aurora will have approximately 25,000 kgs available for sale in Q4 (April to June 2019).

The Company anticipates that with Aurora Sky operating at full capacity, as well as continued reduction in operating costs, the cash cost to produce per gram will trend significantly lower. Management reiterates its expectation that the sustainable long-term operating cost at its Sky Class facilities will be well below $1 per gram.

Ongoing disciplined cost management is expected to result in SG&A costs growing modestly as compared to revenue growth over the remainder of the fiscal year.

Consequently, and consistent with previous guidance, management believes that the combination of substantial revenue growth, low cost of production, and disciplined operating cost management will position Aurora to achieve sustained positive EBITDA beginning in fiscal Q4 2019 (calendar Q2 2019).

Longer term, the Company expects that the launch of new higher value-added derivative product lines in relation to anticipated changes in Health Canada regulations, as well as the introduction of derivative products to international markets, will contribute to further revenue growth and margin expansion.

Management Commentary

"Aurora continues to execute strongly across all of its market segments, as demonstrated by the 83% revenue growth over last quarter and the significant increase in confirmed production results," said Terry Booth, CEO of Aurora. "Our brands continue to resonate extremely well in the consumer market, our patient numbers continue to increase steadily, and we have maintained our market leadership in Germany and other key international markets. We are experiencing exceptional demand for our Canadian medical and consumer products, as well as sustained strong demand internationally. With our Aurora Sky and MedReleaf Bradford facilities ramping up production as anticipated and our other licensed facilities operating at full capacity, we are reiterating our earlier guidance of achieving sustained EBITDA positive results from the second calendar quarter of this year (our fiscal Q4)."

Glen Ibbott, CFO of Aurora added, "We are also very pleased with our recent placement of US$345 million in convertible notes. These convertible notes were subscribed by high-quality US, Canadian, and international institutions and offer Aurora the flexibility and optionality to settle the entire principal amount of the notes in the future for cash, shares, or any combination thereof. This funding sufficiently supports the global opportunity for us to continue our commitment to growth in the legal, regulated medical and consumer cannabis systems across the globe. This is a unique time and position as we maintain a high cadence of increasing product supply and international market expansion."

Mr. Booth concluded, "With our strong performance in the Canadian medical and consumer markets, our early mover advantage in a growing list of important international markets, together with our leadership in high-quality, CBD-rich hemp production, Aurora is strategically positioned across the entire cannabis industry value chain to further extend our rapid growth."

Q2 2019 and Subsequent Operational Highlights

International Expansion

As the global cannabis market continues to mature, Aurora has secured a distinct first-mover advantage by attaining valuable import and export agreements with markets that have a high barrier to entry, reinforcing the Company's commitment to serving the global cannabis industry. New supply agreements this quarter have expanded the Company's sales and operations to 23 countries.

    --  Exports to Poland In October 2018, Aurora Deutschland GmbH shipped
        products to a pain treatment center and hospital in Warsaw, making
        Aurora's high-quality medical products available for Polish patients.
        This shipment is believed to be the first time a non-government run
        business has been granted approval to supply medical cannabis products
        in the country.

    --  Exports to Czech RepublicDuring Q2, the Company secured export permits
        and completed its first shipment of medical cannabis to Czech Medical
        Herbs s.r.o. ("CMH"), a Czech pharmaceutical wholesaler.

    --  Export to Luxembourg In December 2018, the Company was selected by the
        Luxembourg Health Ministry for the supply of medical cannabis to the
        country and an initial purchase order for approximately 20 kilograms was
        received from Luxembourg officials. To date, Aurora is the only company
        supplying the Luxembourg medical cannabis system.

    --  Exports to MexicoOn December 7, 2018, prior to Aurora entering into a
        Letter of Intent to acquire Farmacias, the Company entered into
        discussions with the Mexican pharmaceutical manufacturer to import
        Aurora THC products for distribution to the Mexican medical cannabis
        market. The Company believes that Farmacias is the only company in
        Mexico with the required licenses to import and distribute products with
        a THC content greater than 1%.

    --  Exports to United KingdomOn February 11, 2019, the Company announced
        that it had completed its first commercial export of cannabis oil to the
        United Kingdom (the "UK"), which was subsequently dispensed from a
        pharmacy. UK authorities have recently granted Aurora approval for its
        first shipment under the new legal framework that came into effect
        November 1, 2018 and the Company is enhancing its UK operations to
        ensure patient access to a range of cannabis-based medicines.

Product Developments

During the quarter, the Company maintained its focus on product development and continued to execute on its strategy to generate a broad portfolio of high-margin, targeted medical and consumer products.

    --  Launch of Canada's First Legal Vape-Ready CBD Oil Cartridges On October
        16, 2018, Aurora received all necessary compliance verifications from
        Health Canada to commence sales of the first product from the Company's
        innovative, high-potency, vape-ready CBD oil product line, Aurora Cloud.
        To date, Aurora Cloud products are the only vape-ready CBD products
        legally available in Canada. The initial product release is the first of
        a broader line of full-spectrum cannabinoid-based, vape ready cartridge
        products, which the Company intends to launch in the near future.

    --  Launch of Softgel CapsulesOn December 3, 2018, the Company commenced
        shipments of cannabis softgel capsules to the Canadian medical and
        consumer markets from its state-of-the-art Aurora Vie facility. As an
        alternative drug delivery method, Aurora intends to make this
        high-volume, smoke-free product available to key domestic and
        international markets where legally permissible.

    --  Ongoing Scientific Trials and StudiesAurora currently has 40 clinical
        trials and case studies completed or in progress, 7 pre-clinical trials
        in progress, and 6 new partnerships with leading academic institutions
        in development.


The Company has continued to execute on its aggressive growth strategy to build a strong business that incorporates all aspects of the cannabis value chain from greenhouse construction and cultivation to plant science research and consumer branding. During Q2 2019, Aurora has strengthened the scale of its operations, expanded its market reach, and diversified its expertise across the value chain through a number of highly strategic acquisitions and investments.

    --  Acquisition of ICC Labs ("ICC")On November 22, 2018, Aurora acquired ICC
        Labs Inc., a leading producer and distributor of CBD and cannabinoid
        products in South America, a continent with over 420 million people.
        With over 70% market share in Uruguay and licenses to produce medical
        cannabis in Colombia, the acquisition of ICC Labs has established Aurora
        as the industry leader in South America.

    --  Acquisition of Whistler Medical Marijuana Corporation ("Whistler")On
        January 31, 2019, the Company entered into a definitive agreement to
        acquire Whistler. Based in Whistler, British Columbia, Whistler is one
        of Canada's most iconic cannabis brands, providing Aurora with a
        premium-priced and differentiated organic certified product suite to
        expand its medical and consumer offerings in Canada and internationally.

    --  Acquisition of Farmacias Magistrales S.A. ("Farmacias)On December
        10(th), 2018, the Company entered into a Letter of Intent to acquire
        Farmacias, Mexico's first and only federally licensed importer of raw
        materials containing THC, with all necessary licenses, facilities, and
        permissions to import raw THC material, and manufacture, store, and
        distribute medical cannabis products containing over 1% THC. The
        acquisition firmly establishes Aurora's first-mover advantage in Mexico,
        where more than 130 million people will have legal access to a range of
        Aurora's THC containing medical cannabis products.

Investments in Canadian Consumer Retailers

    --  During Q2 2019, the Company increased its investment in Choom Holdings,
        a consumer cannabis company that has secured one of the largest retail
        networks in Canada, and invested in High Tide Inc, an Alberta-based,
        retail-focused cannabis and lifestyle accessories company.
    --  Through these strategic investments, Aurora further diversified its
        retail "pull" strategy, with additional retail opportunities across

Financing and Capital Market Activities

    --  New York Stock Exchange ("NYSE") ListingOn October 23, 2018, the Company
        commenced trading on the NYSE under the ticker symbol ACB, exposing the
        company to a broader institutional investor base and larger liquidity

    --  Australis Capital Inc. ("Australis") Distribution On November 28, 2018,
        Aurora, through a selling broker, completed the sale of Australis
        Capital Inc. units on behalf of non-resident shareholders as a part of a
        spinoff of capital for Aurora Shareholders. In total, 11,222,349 units
        of Australis were sold in the public markets by an independent
        custodian, and the funds were paid to non-resident shareholders net of
        applicable taxes and fees.

    --  Private Offering of Convertible Senior NotesOn January 24, 2019, the
        Company issued US$345 million in aggregate principal amount of
        convertible senior notes. The net proceeds will be used to support
        Canadian and international expansion initiatives. The notes bear cash
        interest semi-annually at a fixed rate of 5.5% per annum, and will be
        convertible by holders into Aurora common shares at a conversion price
        of US$7.23. Upon conversion, the notes will be settled in cash, Aurora
        common shares or a combination of both, at Aurora's election.  The notes
        are unsecured and will mature by February 28, 2024.

Financial Supplement Q2 2019

                     ($ thousands)                  Three months ended


                              December 31,             September 30,

                2018                           2018


                     Medical cannabis net revenue

        Canada dried cannabis                                   15,410 13,752

       EU dried cannabis                                        2,853  2,803

        Cannabis extracts (1)                                    7,731  7,488


                     Total medical cannabis net
                      revenue                                   25,994 24,043


                     Adult-use cannabis net revenue

       Dried cannabis                                          18,796    533

        Cannabis extracts (1)                                    2,787     20


                     Total adult-use cannabis net
                      revenue                                   21,583    553


                     Total Cannabis net revenue                 47,577 24,596


              (1)              For the three months ended
                                  December 31, 2018, cannabis
                                  extracts revenue includes
                                  cannabis oils, capsules,
                                  softgels and topical
                                  revenue. For the three
                                  months ended September 30,
                                  2018, cannabis extracts
                                  revenue included cannabis
                                  oil and capsules.

                     ($ thousands)               Three months ended                Six months ended


                        December                 December                 December             December

                        31, 2018                 31, 2017                 31, 2018             31, 2017


        Net revenue                 54,178   11,700                    83,852                19,949

         engineering and
         services                                                   (1,489)

         services                  (1,926)   (874)                  (3,576)              (1,800)

         services                  (1,232)                          (1,814)

         revenues                  (3,443) (1,053)                  (4,800)              (1,053)

                     Cannabis net
                      revenue       47,577    9,773                    72,173                17,096


Conference Call

Aurora will host a conference call today, February 11, 2019, to discuss these results. Terry Booth, Chief Executive Officer, Glen Ibbott, Chief Financial Officer, Cam Battley, Chief Corporate Officer, and Michael Singer, Chairman of the Board, will host the call starting at 6:00 p.m. Eastern time. A question and answer session will follow management's presentation.

     Monday, February 11th, 2019

     6:00 p.m. Eastern Time | 4:00 p.m. Mountain Time


     (416) 849-0833 or (855) 859-2056

     Available until 12:00 midnight Eastern Time Monday February 18, 2019

      Number:                                                                          2474319

About Aurora

Headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 500,000 kg per annum and sales and operations in 23 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 the Company'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 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: 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,

Terry Booth, CEO
Aurora Cannabis Inc.

Forward looking statements

This news release makes reference to certain non-IFRS measures, including certain industry metrics. These metrics and measures are not recognized measures under IFRS do not have meanings prescribed under IFRS and are as a result unlikely to be comparable to similar measures presented by other companies. These measures are provided as information complimentary to those IFRS measures by providing a further understanding of our operating results from the perspective of management. As such, these measures should not be considered in isolation or in lieu of review of our financial information reported under IFRS. This news release uses non-IFRS measures including "EBITDA", "production capacity", "production available for sale", "cash cost to produce per gram" and "SG&A". Production capacity and production available for sale are commonly used operating measures in the industry but may be calculated differently compared to other companies in the industry. These non-IFRS measures, including the industry measures, are used to provide investors with supplementary measures of our operating performance that may not otherwise be apparent when relying solely on IFRS metrics. Definitions of the non-IFRS measures can be found in our MD&A and in this news release. This news release also 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. 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. These risks include, but are not limited to, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of our products, customer experience and retention, the development of third party government and non-government adult-use sales channels, managements estimation of consumer demand in Canada and in jurisdictions where the Company exports, expectations of future results and expenses, the availability of additional capital to complete construction projects and facilities improvements, the risk of successful integration of acquired business and operations, management's estimation that SG&A will grow only in proportion of revenue growth, the ability to expand and maintain distribution capabilities, the impact of competition, and the possibility for changes in laws, rules, and regulations in the industry, as well as the risks identified under the heading "Risk Factors" in the company's Annual Information Form for the financial year ended June 30, 2018 filed in Canada on SEDAR at and in the United States on Edgar under Form 40-F at 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.

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.

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