Aurora(US:ACB)2025-11-05 14:00Financial Data and Key Metrics Changes - Net revenue increased by 11% to $90 million, with record global medical cannabis revenue rising 15% and international revenue up 22% [5][16] - Consolidated adjusted gross margin improved by 700 basis points to 61%, with medical cannabis adjusted gross margin reaching 69% [5][17] - Adjusted EBITDA rose more than 52% to $15 million, significantly outpacing top-line growth [5][16] Business Line Data and Key Metrics Changes - Medical cannabis net revenue grew by 15% to $70.5 million, accounting for 78% of total net revenue [17] - Consumer cannabis net revenue decreased to $6.9 million from $10.4 million, reflecting a strategic focus on higher-margin medical cannabis [17] - Bevo's plant propagation net revenue increased by 34% to $11.6 million, driven by higher orchid sales [18] Market Data and Key Metrics Changes - Australia is the largest medical cannabis market outside Canada, with a market opportunity of AUD 1 billion [9] - In Germany, imports of medical cannabis have increased from 8 metric tons in 2018 to 72 metric tons in 2024, with expectations to double in 2025 [10] - Poland's medical cannabis market size has more than doubled from over 2 tons in 2023 to approximately 5 tons in 2025 [11] Company Strategy and Development Direction - The company focuses on global medical cannabis, emphasizing operational execution and a strong cash position without cannabis-related debt [4] - Aurora aims to strengthen its leadership in Canada, Europe, and Australia through consistent revenue generation and positive adjusted EBITDA growth [24] - The company is investing in science and technology to support patient access and physician engagement, building a foundation for long-term success [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate potential regulatory changes in Germany and Poland, citing a strong track record [10][12] - The company anticipates continued strength in adjusted gross margins and higher global medical cannabis revenue growth, leading to annual adjusted EBITDA growth [21] - Management highlighted the importance of maintaining a high-quality supply of medical cannabis to meet patient and practitioner needs [35] Other Important Information - The company ended the quarter with $142 million in cash and cash equivalents and no cannabis business debt [16][19] - Free cash flow was negative $42.3 million, reflecting expected cash outflows typical for the second quarter [20] Q&A Session Summary Question: What is a realistic goal for medical gross margins? - Management indicated that production costs are decreasing, and efficiencies in execution are contributing to higher margins [26][30] Question: What is the status of cannabis import permits in Germany? - Management confirmed that the company maintained strong relationships with regulators and was not disrupted by import limits [56][58] Question: How will proposed changes to reimbursement for medical cannabis veterans in Canada impact the business? - Management expressed disappointment over the lack of consultation and indicated that the changes could disrupt patient care [41][46] Question: What is the timeline for potential regulatory changes in Germany and Australia? - Management noted that changes in Germany could take until spring for clarity, while Australia has a more open-ended timeline [95][102]