CANADA| Aurora sees cannabis revenues soar on German exports

Aurora Cannabis Inc. saw revenues jump more than 200 per cent year-over-year in the second quarter, buoyed by strong patient growth and increased sales into Germany.

In the three months leading up to Dec. 31, Aurora, the second-largest Canadian cannabis company both by revenue and market cap, sold $9.7 million worth of cannabis and a further $1.9 million in products and services, according to the company’s financial statements, released on Thursday.

That compares with only $3.8 million in total revenue in the second quarter of 2017.

As with all cannabis companies, which have seen the value of their shares skyrocket in the past several months, Aurora’s earnings per share, on a net income of $7.2 million, remain minuscule. Likewise, due to accounting inconsistency across the industry, it’s hard to compare Aurora’s reported gross margin, 73.8 per cent, with its competitors.

Nonetheless the company’s strong growth in sales and medical patient numbers shows it solidifying its front-row position in the burgeoning industry.

Over the last year, Aurora nearly doubled its number of patients, from 12,200 to just shy of 22,000. With more patients, the company nearly doubled the amount sold to 1.16 million grams in the second quarter, compared with 538,045 grams in the year ago period.

Along with quantity, revenue growth came from an increased average price per gram sold, which jumped to $8.36 from $5.96 in the same quarter last year. That increase was thanks in large part to exports to Germany, where medical cannabis prices are significantly higher, through its subsidiary Pedanios GmbH.

“The big mover here is Germany, and that’s a huge validation of the acquisition of Pedanios, which cost about $23 million,” said Cam Battley, Aurora’s chief corporate officer.

“Some other companies that are selling into Germany are getting a wholesale price of $5 or $6 a gram. We’re getting about double that, because we get the price paid by pharmacies to Pedanios, because we own the distributor,” he added.

All told, Aurora more than doubled its German sales between the first and second quarter, selling $2.5 million worth of dried cannabis in German pharmacies in the second quarter. That accounted for fully 20 per cent of the company’s total revenue.

“That’s an incredibly valuable market for us, and it’s growing at an incredible pace. We cannot keep up with the supply demands from Pedanios,” said Battley.

The company also ramped up its sales of higher-margin cannabis oil, selling $1.5 million worth of oil in the quarter compared with $804,000 six months earlier.

The most recent results put Aurora at the front of the pack, trailing only Canopy Growth Corp. in terms of revenue. Aphria Inc., which reported second quarter earnings in January, made $8.5 million in the period. MedReleaf sold $9.8 million worth of cannabis in the first quarter of 2018; it will be releasing its next results on Tuesday.

Canopy, which is set to release its second quarter results on Wednesday, made $17.6 million in the first quarter, giving it a clear lead on competitors. However, with Aurora’s acquisition of CanniMed, which the company expects to close in March, that gap will significantly narrow.

“Add CanniMed at about $5 million in their last quarter, and then us at a little under $12 million in this quarter, and we’re almost where Canopy was in their last quarter,” said Battley.

“Bear in mind, we got our licenses 18 months behind Mettrum, Tweed and Bedrocan, which is Canopy. When I joined the company in March of 2016, they were 10 times bigger than we were. What we’ve done is essentially knocked down their lead to one quarter.”

Original article published February 09, 2018 at 12:10PM Source:

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