VANCOUVER, Sept. 26, 2017 /CNW/ – Aurora Cannabis Inc. (TSX: ACB) today announced its financial and operational results for the fourth quarter and full financial year ended June 30, 2017.
Q4 2017 Financial and Operational Highlights
Recorded $5.9 million in revenues, reflecting growth in patient numbers and an increase in the average price per gram of product sold, which now includes high margin cannabis oils.
Continued to progress on schedule and on budget with the construction of the Aurora Sky facility.
Completed the acquisition of Pedanios GmbH, Germany’s largest distributor of cannabis. This acquisition provides access to the single largest federally-legal medical cannabis market in the world, as well as a gateway to the rapidly-developing EU market. Increasing momentum in the EU towards the adoption of medical cannabis legislation has the potential to create a market of several hundred million people.
Completed the acquisition of Peloton Pharmaceuticals, a 40,000 square foot facility, which Aurora currently is completing, with first harvest anticipated shortly after calendar-year end.
Completed its cornerstone investment in the IPO of Cann Group Limited, Australia’s first licensed cannabis company, and now holds a 19.9% ownership stake.
Announced its intention to make a strategic investment in Hempco Food and Fiber Inc., providing further product differentiation and access to a potential source of low-cost raw CBD material for extraction.
Reported positive results on its research joint venture with Radient Technologies Inc. on the use of Radient’s innovative, proprietary technology for the extraction of cannabinoids from dried cannabis – validating the technology’s high efficiency and significantly enhanced throughput compared to standard extraction technologies.
Strengthened its senior management team with the appointments of Allan Cleiren as COO, Glen Ibbott as CFO, Debra Wilson, PhD as VP of Human Resources, and Andrea Paine as Director of Quebec Affairs.
Strengthened its balance sheet with $76.7 million in new financing
$75 Million Bought Deal Convertible Debentures
$1.6 Million on Exercise of Securities
Developments subsequent to the quarter
Continued Strong Patient and Revenue Growth
Aurora registered over 3,500 patients since fiscal year end, and as of the date of this release, the Company has surpassed 20,000 active and pending registered patients.
August 2017 was a record month with gross product sales in excess of 328,322 grams, and gross revenues exceeding $3.1 million from the sale of medical cannabis.
CanvasRx, which now operates 25 facilities nationwide, remains the leading Canadian network of cannabis counseling and outreach centres, with more than 29,000 registered patients. Over 8,400 medical doctors across Canada have referred patients to CanvasRx or its affiliated medical clinics.
The construction of the Aurora Sky facility at the Edmonton International Airport in Alberta is progressing well. At 800,000 square feet, with modern technology and automation, Aurora Sky is expected to produce over 100,000 kilograms annually and deliver significant economies of scale for Aurora. Located on Edmonton International Airport land, with access to ample power, Aurora Sky is ideally positioned for increased domestic and international distribution. To date, over 290,000 square feet of structure has been erected, 80% of which has its specialty glass installed and many sub-systems have been delivered to the site. The Company anticipates the planting of cannabis in the first completed bays before the end of calendar 2017, with the first harvest in early 2018, and full completion of the construction project by mid-2018.
Construction upgrades are nearly complete at the Company’s Pointe-Claire, Quebec Facility. The Company expects that planting of cannabis at this 40,000 square foot facility will commence before the end of calendar 2017 with the first harvest early in 2018.
Significant International Expansion Advancement
Having received all necessary permits, Aurora commenced shipping of cannabis products produced at its Mountain Facility to its wholly owned German subsidiary Pedanios. A first shipment of 50kg was completed in mid-September, with further regular shipments planned. Germany, with over 82 million people is currently the largest single federally-legal medical cannabis market in the world, and is experiencing a significant shortage of supply. Pedanios also provides access to the potentially very substantial developing EU market.
Pedanios passed the first stage of the tender application process to become a licensed producer of medical cannabis in Germany and has entered the second and final stage of the application process. Results of the tender process are expected before the end of 2017.
The Company entered into a technical services agreement with Australia’s first licensed cannabis company, Cann Group, in which the Company holds a 19.9% stake. Cann Group announced its first harvest of cannabis, and signed a distribution agreement with CannaKorp to import and sell CannaKorp’s proprietary vaporizing system.
Continued Capital Markets Progress
Graduated from TSX Venture Exchange to Toronto Stock Exchange (TSX) on July 24, 2017.
Approximately $87 million in additional gross cash proceeds remain available from the future exercise of warrants, stock options and compensation options/warrants.
Financial Review Financial Year 2017
Revenues for the year ended June 30, 2017 came in at $18.1 million, as compared to $1.4 million for the prior year, attributable to growing sales of dried cannabis products and cannabis extracts (oils), as well as increased revenues from the Company’s subsidiary CanvasRx and contributions from its newly acquired German subsidiary Pedanios. Total product sold for the year was 2,381,832 grams of dried cannabis and cannabis oils at an average selling price of $6.68 per gram. The increase in revenues also reflects an increase in the average price per gram of product sold.
Since commencement of sales of product in January 2016 to August 31, 2017, the Company has sold a total of 3,263,161 grams of medical cannabis at an average selling price of $6.89 per gram.
Gross profit of $16.1 million was recorded for the full year 2017, as compared to $2.2 million for the prior financial year. The gross profit during the periods was partially attributable to the net effect of changes in fair value of biological assets.
General and Administrative expense increased by $3.8 million for the year as compared to 2016, attributable to the over-all increase in corporate and general administrative activities as Aurora scaled up its business operations, completed various equity and debt financings, as well as other costs incurred related to ongoing negotiations for additional financings and investment opportunities.
Acquisition and project evaluation costs increased by $1.5 million during the period, attributable to legal, consulting and advisory fees relating to business acquisitions, investments and due diligence activities as part of its domestic and international expansion. These costs were reclassified from professional fees during the fourth quarter.
Sales and Marketing expense increased by $8.6 million, attributable primarily due to increases in service fees, selling and client care expenses and finance and other related costs.
Service fees of $3.7 million were paid to Canadian Cannabis Clinics pursuant to an agreement to provide operational, administrative and consulting services to CanvasRx. No such expense was incurred in the prior periods. Since the acquisition of CanvasRx in August 2016, the Company has increased its number of active and pending registered patients from approximately 5,000 to over 20,000, of which approximately 7,000 are CanvasRx patients that have registered with Aurora.
Selling and client care expenses increased by $3.5 million, directly related to the increase in sales during the year and the expansion of the client care centre.
Finance and other costs for the year were $6.6 million, as compared to $1.4 million for 2016.
Net loss of $13.0 million was recorded, as compared to $5.7 million for the prior year. The increase from the previous year was attributable to greater expenditures relating to the increase in production at the Company’s Mountain View County facility, expansion of its client care centre and related sales costs resulting directly from registration of new patients, as well as acquisition and due diligence expenditures relating to the Company’s domestic and international expansion strategy.
Continue accelerating its penetration of the Canadian medical cannabis market, leverage its Health Canada sales license for derivative products (cannabis oils), expedite the completion of the Aurora’sPointe-Claire facility in Quebec, and complete the Aurora Sky facility in Alberta for additional production capacity. Upgrades are also being undertaken to the Company’s first facility in Cremona, Alberta, to further enhance production.
In preparation for the anticipated mid-2018 Canadian federal legalization of adult consumer use of cannabis, the Company is building organizational and production capacity to capture a share of the adult use market.
Innovation and integration of technology are key components in Aurora’s growth strategy. Going forward, Aurora will continue to leverage new technologies, aimed at:
Improving the customer experience, e.g. via further enhancements to Aurora’s unique mobile application – the world’s only mobile app for ordering legal medical cannabis;
Delivering industry-leading per square foot production capacity, while reducing operational expenses at its production facilities, and
Substantially increasing the production of cannabis concentrates through the Company’s collaboration with Radient.
The Company is also focusing on delivering further product differentiation, including through Aurora’s intended strategic investment in Hempco.
Finally, the Company is executing a significant international expansion, as evidenced by the lead participation in the May 2017 Cann Group IPO in Australia, and the May 2017 acquisition of Pedanios, Germany’s largest distributor of medical cannabis. The Company is actively pursuing further international opportunities.