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Aurora Cannabis third-quarter earnings miss analyst expectations

The firm reported net revenues of C$65.2 million (US$48.44 million) in the quarter, lower than analyst estimates of C$67.5 million (US$51 million)
cannabis plant
Aurora reported it nearly doubled production to 15,590 kg, with the majority of the volume harvested in the last part of the quarter

Aurora Cannabis Inc (TSE:ACB) (NYSE:ACB) released much-anticipated fiscal third-quarter earnings results late on Tuesday, with the company reporting lower-than-expected third-quarter revenues and notable net losses, however, the company nearly doubled production in the quarter. 

The firm reported net revenues of C$65.2 million (US$48.44 million) in the quarter, up from C$16.1 million in the year-ago period but lower than analyst estimates of C$67.5 million (US$51 million). Between 2Q 2019 and 3Q 2019, the firm said revenue was up 20% across key markets, which is notable as it is when the company sold its first recreational cannabis in Canada. 

Aurora's net loss came in at $158.4 million in the third quarter, while analysts were predicting a net loss of around $52.6 million. The loss per share was C$0.16 cents, compared to average analyst estimates of $0.05 per share. In the year-ago quarter, the firm reported a net loss of C$20 million or C$0.04 per share. 

Aurora shares fell 5.8% to US$7.91 in pre-market trading Wednesday but recovered as the day went on. By Wednesday midday, shares were down 0.4% at C$11.27 in Canadian trading and up 0.6% at US$8.43.

READ: Buds & Duds: Cannabis stocks perk up; CannTrust shares soar on strong 1Q earnings results

Aurora's convertible debentures were primarily to blame for the loss. As its share price rises, the company has to re-evaluate the convertible debt it has on its books, resulting in losses of C$101.5 million in the quarter.

Aurora's earnings are being watched very closely as the numbers give insight into the legalized cannabis sales in the Canadian recreational market. Health Canada has been reporting slower-than-expected sales of recreational cannabis in the country.

Nearly doubles production

On the production front, Aurora reported it nearly doubled production to 15,590 kg, with the majority of the volume harvested in the last part of the quarter. The company reported that it sold 9,160 kilos in the third quarter, a significant bump from 6,999 kg sold in the second quarter. The firm reported it sold C$29.1 million of medical cannabis and C$29.6 million of recreational cannabis in the quarter.

"We achieved solid revenue growth and strong operating results in a quarter proven challenging across the industry. We are laser focused on building a long-term sustainable business," said Terry Booth, CEO. 

The company said it lost C$77.6 million from operations in fiscal 3Q, about double what it lost in the year-ago period

Selling price falls

A key figure being watched was the average net selling price. In the third quarter, the company reported the selling price for dried cannabis fell 6% to C$6.40 per gram, as compared to C$6.80 in 2Q 2019.  

The company noted the drop was due to a range of factors including higher contribution from wholesale consumers, extraction capacity constraints resulting in extract-based products comprising 18% of net cannabis sales, and the first full quarter impact of excise tax on medical cannabis.

The cash cost per gram was down 7% at C$1.42 compared to C$1.53 in the year-ago period. 

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Contact Katie Lewis at [email protected]

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