Aurora Cannabis says it’s still on track to turn cash flow positive in the September quarter—at least in terms of adjusted earnings before interest, taxes, depreciation, and amortization.
The Canadian grower’s shares jumped in after-market trading Thursday, after the company reported better-than-expected March quarter revenue.
The company reported revenue of 75.5 million Canadian dollars (US$53.8 million), which topped analysts’ consensus estimate at C$66.7 million. The company reported an adjusted Ebitda loss of C$45.9 million.
“I am incredibly proud of the Aurora team for working through these challenging times in order to maintain uninterrupted operations at all of our production facilities and ensure we continue to meet the needs of our patients and consumers,” interim CEO Michael Singer said in the news release.
Singer said the quarterly results were in line with Aurora’s expectations, and the company is “firmly on track” with its cost-savings and capital expenditure goals announced in February.
Aurora stock (ticker: ACB) is fresh off a 12:1 reverse stock split on Monday. That brought Aurora back above the $1 line to be in compliance with New York Stock Exchange listing standards.
MKM Partners analyst Bill Kirk called the report “a step in the right direction” in a note on Thursday. Still, given uncertainty about how revenue will shake out amid the Covid-19 crisis, he’s not yet confident the company will be able to rely on cost-cutting measures to hit positive adjusted Ebitda by the September quarter.
He’s waiting for industry sales growth greater than production growth, and the majority of existing inventory to take complete write-downs before he turns more bullish on the broader industry. For Aurora, he expects C$1 billion in write-downs.
“Once this equilibrium is reached, real business models can emerge. The industry has been evolving toward this equilibrium (new inventory slowing), but existing inventories still suggest irrational pricing activity is ahead,” he wrote
Aurora stock was up 17% to $7.75 in after-market trading Thursday. That may say more about how far shares have fallen, as the stock is still down more than 90% from a year ago (accounting for the reverse split).
Write to Connor Smith at connor.smith@barrons.com
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