Aurora Cannabis loses $237.7 million in Q2 even as revenues surge

Source New Cannabis Ventures

Source New Cannabis Ventures

"The Canadian consumer market provides an extremely good opportunity for us".

Canadian cannabis producer Aurora Cannabis Inc.

Net revenues for the three months ended December 31 increased from $11.7 million in the second quarter of 2017.

The increase was driven by $21.6 million in consumer sales in Canada and $26 million in Canadian and global medical marijuana sales. "We are going to have to see a better retail infrastructure in provinces across the country in order to see the level of sales that I think everybody is anticipating, but it's going to take some a couple of more quarters". "Consumer response to the legalization of cannabis has been strong", Cameron Battley, chief corporate officer, said in a conference call after markets closed.

It said the company's Edmonton facility will soon reach full production capacity and a recent harvest completed at the facility exceeded targeted yields. The increase was due to ramp-up and optimization costs at one of Aurora's facilities and is temporary, the company said.

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During Q2, Aurora produced 7,822 kilograms of cannabis and sold 6,999 kilograms, representing sequential increases of 57 percent and 162 percent, respectively.

With much of the investor and analyst focus heading into Aurora's Monday earnings call on the nascent recreational market, the company vowed to continue to prioritize its medical cannabis business - a segment that remained larger and more profitable for the company. The average price for a gram of legal dried cannabis across Canada was $9.70, almost 50 per cent more than the black market price of $6.51 per gram, according to the most recent data from Statistics Canada.

The licensed producer also said that its priority in terms of product allocation, was to ensure its Canadian and worldwide medical markets were fully supplied, before focusing on the domestic recreational market. "We are primarily a medical company and we are not going to be dumping all additional production that comes out from Aurora Sky and our Brantford facility to the domestic recreational market", Battley said.

Aurora Cannabis Inc.'s revenue surged as the company sold a record amount of cannabis in a quarter, but the pot producer's selling price fell sharply as it entered the competitive recreational market. Hours before its earnings were reported, the company announced it had completed the first commercial export of cannabis oil to the United Kingdom for medical use, under a new legal framework that took effect November 1. The company attributed the loss to "operating inefficiencies" that led to higher labour costs and unrealized fair value losses on derivatives.

Last month, Aurora signed a deal to buy Whistler Medical Marijuana Corp.in an all-stock deal worth up to $175-million, giving it access to premium and organic-certified products from the privately held company that operates two indoor licensed production facilities.

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