Aurora Cannabis Inc. (NASDAQ:ACB) reported financial and operational results late Thursday for the third quarter of fiscal 2022 ended March 31, 2022.
For the quarter, the marijuana giant disclosed total cannabis net revenue of $50.4 million, down 17% sequentially.
Adjusted gross margin before fair value adjustments on cannabis net revenue was 54% in Q3 2022 versus 53% in the prior quarter and 44% in Q3 2021. The increase in adjusted gross margin compared to the prior-year period is due to increased sales in the company’s international medical markets which command significantly higher average net selling prices and margins.
Adjusted EBITDA loss declined to $12.3 million in Q3 2022 versus $9.0 million in Q2 2022 but narrowed from $20.9 million in the prior-year period.
The Analyst
Cantor Fitzgerald’s Pablo Zuanic kept a ‘Neutral’ rating on Aurora’s stock, lowering the price target to CA$3.90 ($3.003) from CA$7.60.
The Thesis
Zuanic lowered the price target to address reduced estimates and overall sectoral derating.
According to the analyst, Aurora’s increased cash cost-saving targets provide it with more reliability in becoming EBITDA positive by December on a run-rate basis.
“We think the company’s top 2 global cannabis exporter status is a reason to keep an eye on the stock, although question marks remain about lack of profitability and cash flows (it raised CA$139 million in new equity in the March quarter, but free cash flow was -$45 million).”
What about Q3 results?
If counted from the first quarter of fiscal 2021, the third quarter is the second-lowest of the last seven quarters, the analyst noted.
“In that context, we do not think this was such a great quarter.”
Furthermore, domestic medical sales were the lowest of the seven last quarters. However, nearly $15 million in exports for the quarter is solid, and second only to Tilray’ (NASDAQ:TLRY) $20 million in exports in their last reported quarter.
The Price Action
Aurora shares traded 7.42% higher at $2.6 per share at the time of writing Friday.
Photo: Courtesy of Esteban Lopez on Unsplash
