Aurora Cannabis Inc. (ACB.TO) reported revenue that came in above analyst expectations while providing the first real look of how recreational pot has fared in Canada in its first full quarter of legal sales.
The Edmonton-based cannabis producer reported $54.2 million in revenue in the second quarter, up 363 per cent from the same period last year. Analysts polled by Bloomberg expected the company to report $52.6 million in revenue in the quarter. The company sold $21.6 million of legal recreational cannabis in the quarter and accounted for approximately 20 per cent of all consumer sales across the country.
“Our brands continue to resonate extremely well in the consumer market, our patient numbers continue to increase steadily, and we have maintained our market leadership in Germany and other key international markets,” said Terry Booth, Aurora’s chief executive officer, in a statement. “We are experiencing exceptional demand for our Canadian medical and consumer products, as well as sustained strong demand internationally.”
Aurora also reported a $237.7-million net loss in its second quarter, compared to a $7.7-million net profit a year earlier. The company attributed the loss to “operating inefficiencies” that led to higher labour costs and unrealized fair value losses on derivatives.
Aurora shares have climbed 41 per cent since the beginning of the year amid a broad rally in cannabis stocks, following increased interest in the sector with the legalization of industrial hemp in the U.S.
Still, the company’s gains are below those of rivals Canopy Growth Corp. (WEED.TO) and The Cronos Group (CRON.TO). Aurora reported on Jan. 8 that its second-quarter revenue would come in between $50 million to $55 million, below the $67.4 million analysts expected at the time.
Aurora reiterated in its forecast that it will achieve at least 150,000 kilograms of annual production capacity within the first calendar quarter of 2019, but said its current annualized operating capacity is 120,000 kilograms. The company produced 7,822 kilograms in the quarter and sold 6,999 kilograms, up 57 per cent and 162 per cent respectively from the same periods a year earlier.
Analysts said legal recreational sales are still likely running below market demand due to several issues stemming from the industry’s supply chain.
“Although the implementation of recreational sales should result in significant sequential top-line growth, due to limited product forms and retail infrastructure throughout Canada, adult use sales are likely running at only a fraction of their future potential at maturity,” said Canaccord Genuity Corp. analyst Matt Bottomley in a recent research note previewing Aurora’s quarterly results.
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