Aurora Cannabis Q1 Earnings Call Highlights

Key Points

• International medical cannabis drove growth: Revenue rose to C$67.6 million, with international medical sales up 17% to C$43 million and accounting for 64% of total revenue, led by Germany. This growth offset weaker Canadian medical revenue and Aurora’s planned exit from lower-margin Canadian consumer operations.
• Profitability and cash flow weakened: Adjusted EBITDA fell to C$3.4 million from C$10.8 million, while free cash flow swung to a C$5.8 million outflow. Still, adjusted gross margin held at 58%, and Aurora ended the quarter with nearly C$150 million in cash and short-term investments and no debt.
• Aurora reaffirmed its outlook and expansion strategy: Management expects second-quarter revenue and adjusted EBITDA to improve sequentially, supported by Germany, Poland, Australia and New Zealand. The Safari Flower acquisition and Leuna expansion are intended to increase EU GMP-certified production capacity for international markets.

Aurora Cannabis NASDAQ: ACB reported fiscal first-quarter 2027 net revenue of C$67.6 million, as growth in international medical cannabis sales was offset by lower Canadian medical revenue following reimbursement changes and the company’s planned exit from lower-margin Canadian consumer cannabis operations.

For the quarter ended June 30, 2026, international medical cannabis net revenue increased 17% year over year to C$43 million, driven primarily by Germany. About 64% of Aurora’s total net revenue came from outside Canada, compared with 50% a year earlier, Chief Executive Officer Miguel Martin said.

Adjusted EBITDA was C$3.4 million, down from C$10.8 million in the prior-year period, while adjusted net income was C$3.8 million, compared with C$6.6 million. Chief Financial Officer Simona King said the year-over-year declines primarily reflected lower adjusted gross profit before fair-value adjustments, partly offset by lower selling, general and administrative expenses and higher other income.

Margins Hold at High End of Guidance Range

Consolidated adjusted gross margin was 58%, at the high end of Aurora’s annual guidance range. King said the margin result reflected strong contributions from international markets, while changes in Canadian medical pricing weighed on comparisons with the prior year.

Adjusted selling, general and administrative expenses fell to C$35.1 million from C$36.1 million a year earlier. The C$1 million reduction was driven mainly by lower general and administrative spending, partly offset by somewhat higher selling costs.

Free cash flow was an outflow of C$5.8 million, compared with an inflow of C$6.8 million in the prior-year quarter. King attributed the shift mainly to a C$9.7 million reduction in gross profit before fair-value adjustments.

Aurora ended the quarter with nearly C$150 million in cash equivalents and short-term investments and no debt. King said the company believes its liquidity provides flexibility to invest in its operations and consider additional acquisitions.

International Expansion Centers on GMP Capacity

Martin said Aurora is prioritizing international medical cannabis markets, including Germany, Poland, Australia, New Zealand and the U.K. The company holds leading market-share positions in Canada, Germany, Poland and Australia, according to management.

The company recently acquired Safari Flower Company, which operates a 59,000-square-foot indoor cultivation and manufacturing facility in Ontario. Aurora said Safari’s EU GMP certification provides additional capacity to serve international medical markets, including Germany, Poland and the U.K.

Martin said the acquisition contributed to adjusted EBITDA in the first quarter. He added that Aurora intends to apply its plant-science and operational capabilities at Safari to improve yields, reduce manufacturing costs and increase the supply of EU GMP-certified flower. The company did not provide a separate financial contribution from Safari.

Aurora also cited genetics as a source of production efficiency. Martin said genetic differences can produce yield improvements of up to 40% on the same cost base, while potentially improving product potency and other quality measures.

Germany Remains Largest International Growth Market

Germany remains Aurora’s largest and fastest-growing international market, Martin said. Two of the company’s proprietary cultivars ranked among the top five products by sales in the country during the quarter, according to management.

The company operates primarily in Germany’s premium and core product tiers, while broadening its portfolio with more value offerings. Martin said pricing pressure has been concentrated in the value segment, while pricing in core and premium categories has held up relatively well amid increasingly stringent GMP requirements.

Aurora is nearing completion of an expansion at its Leuna facility in Germany. The company said the project, together with the introduction of proprietary cultivars, is expected to double the site’s annual flower output. Aurora is one of three active in-country medical cannabis producers with a production and research-and-development license under German cannabis law, Martin said.

Management said it continues to monitor possible regulatory and legislative changes in Germany. Martin said the company believes stricter standards and potential changes to telehealth provisions could favor established operators with experience navigating regulated medical markets.

In Poland, Aurora said it holds the No. 1 market-share position and is encouraged by increases in annual import limits. Management also pointed to France, Ukraine, Switzerland, Spain and Austria as emerging regulated markets where its cultivation, wholesale and regulatory capabilities could be applied.

Canadian Reimbursement Changes Weigh on Results

The fiscal first quarter marked the first full period following revisions to Canada’s federal reimbursement program, which took effect April 1. King said the program involved a 30% reduction in reimbursement rates and affected Canadian medical revenue as expected.

Martin said the company has observed little change in patient behavior, product selection or purchasing cadence among affected patients, adding that most or all of the pricing impact has been absorbed by licensed producers serving those patients.

Aurora said it expects to pursue market-share gains as new patients enter the Canadian medical market, while international growth helps offset the near-term impact of lower reimbursement rates.

Company Reaffirms Fiscal 2027 Outlook

King reaffirmed Aurora’s fiscal 2027 outlook and described the year as transitional because of Canadian medical changes. The company expects international growth to partially offset those changes as it invests in sales initiatives and EU GMP capacity expansion.

For the fiscal second quarter, Aurora expects revenue and adjusted EBITDA to be sequentially higher than in the first quarter. Management said Germany represents the largest opportunity, while it also expects opportunities in Poland, Australia and New Zealand.

Martin also said Aurora is monitoring U.S. regulatory developments, including potential federal rescheduling. He identified potential future opportunities in research collaboration, partnerships involving GMP and medical-grade manufacturing, and longer-term import and export activity, while noting the company is awaiting further regulatory clarity.

About Aurora Cannabis (NASDAQ:ACB)

Aurora Cannabis Inc NASDAQ: ACB is a Canadian licensed producer of medical and consumer cannabis products headquartered in Edmonton, Alberta. Established in 2013, the company operates under Health Canada's regulations to cultivate, process and distribute a range of cannabis-based offerings. Since its initial public listing in 2017, Aurora has grown into one of the country's largest growers by cultivation capacity and production output.

The company's core business spans the cultivation of dried flower, the extraction of cannabis oils and the development of value-added products such as softgels, capsules and topical treatments.

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