Aurora Cannabis Inc. (ACB) Earnings

Management highlights

### Strategic Pillars - Core strategic focus on global medical cannabis leadership, with market-leading positions in the four largest regulated medical cannabis markets: Canada, Germany, Australia, and Poland - Disciplined financial management to drive cost efficiencies, expand gross margins, and maintain a strong, debt-free balance sheet - Purpose-built GMP-certified production infrastructure that meets the strict regulatory requirements of major international medical markets, a high barrier to entry for new competitors ### 2026 Full Year Operational Highlights - Full year 2026 net revenue exceeded the top end of management's guided range by $8 million; adjusted EBITDA grew 32% year-over-year to $54 million, full year adjusted gross margin reached 64% - Ended the year with $165 million in cash, cash equivalents and short-term investments, with no debt outstanding, giving the company ample liquidity for strategic investment and acquisitions - Initiated exit from the low-margin Canadian consumer cannabis segment (expected completion by end of September 2026) and divested the lower-margin plant propagation business via sale of its controlling stake in Bevo, to reallocate resources to higher-margin global medical cannabis opportunities - Completed the $26.5 million acquisition of Safari Flower Company, an established Ontario-based EU GMP-certified cannabis cultivator and manufacturer, adding 59,000 square feet of indoor cultivation capacity. This acquisition expands the company's EU GMP flower supply for international export, and is expected to deliver positive adjusted EBITDA starting in fiscal 2027 - Expanded medical cannabis product portfolio (dried flower, pre-rolls, edibles) across Canada, Europe, Australia, and New Zealand to meet growing patient and prescriber demand for high-quality consistent products ### Regional Market Progress - Germany: Largest contributor to double-digit international revenue growth in 2026; the company is one of three licensed in-country medical cannabis producers under German law. The Loina facility expansion is on track to complete in H1 fiscal 2027, which will double annual flower output at the site. Pricing pressure is concentrated in the value segment, while core and premium segments (which represent most of Aurora's volume) remain stable - Australia: Holds a leading market position, actively shifting sales mix toward higher-margin core and premium products in response to growing patient and prescriber demand - Poland: Holds the number one market share position, was the second largest contributor to 2026 international growth. Successfully navigated the shift from telehealth to clinic-based prescribing, and recent increases to annual import limits strengthen future growth outlooks - United States: Management is monitoring ongoing cannabis rescheduling developments; if enacted, it would open new market opportunities, and the company is evaluating its U.S. strategy but has no definitive announcements to make at this time due to ongoing regulatory uncertainty - Canada: Canadian medical cannabis revenue grew annually, driven by higher sales to insured patients. Changes to the federal Veterans Affairs Canada (VAC) reimbursement program that took effect April 1, 2026 will impact top line and gross margins starting in fiscal 2027

Guidance

- Fiscal 2027 is expected to be a reset year, as the negative impact of reduced Canadian medical reimbursement can only be partially offset by international growth - Total net revenue is expected to decline, and align more closely with 2025 total cannabis net revenue levels, following exit from low-margin consumer businesses and the Canadian reimbursement cut - Adjusted gross margins are expected to land in the mid-to-high 50% range. The exit from lower-margin businesses and higher contribution from European markets will offset part of the margin pressure from reduced Canadian medical reimbursement rates - Adjusted SG&A is expected to remain broadly in line with fiscal 2026 levels - Annual adjusted EBITDA is expected to be lower than fiscal 2026, with quarter-over-quarter variability, driven by lower net revenue and gross profit contribution from the Canadian reimbursement change - The Safari Flower acquisition is expected to deliver positive adjusted EBITDA starting in fiscal 2027, with increasing incremental contributions in 2028 and beyond

Segment performance

For the full fiscal year 2026 ending March 31, 2026: Total net revenue grew 11% year-over-year to $321 million, with 55% of total revenue generated outside of Canada. For the fourth quarter of 2026: Total net revenue increased 10% year-over-year to $84.8 million, with 58% of total revenue generated outside of Canada. The Medical Cannabis segment: In Q4 2026, net revenue rose 14% year-over-year to $77.1 million, including 19% international growth. This segment represented 91% of total Q4 2026 net revenue (up from 88% in the prior year quarter), and delivered an adjusted gross margin of 66%. The Consumer Cannabis segment: In Q4 2026, net revenue was $3.6 million, down from $8.2 million year-over-year, as the company actively winds down this low-margin segment to reallocate capacity to higher-margin medical cannabis.

Risks & headwinds

- Increasing competition and pricing pressure in international medical cannabis markets, with pricing compression concentrated in the value segment of the German market - Potential regulatory changes in Germany that could require face-to-face patient interactions instead of broad telehealth access, or prohibit current direct mail delivery of medical cannabis products - Regulatory change to Canadian federal medical cannabis reimbursement, which reduced reimbursed rates by 30% effective April 1, 2026, negatively impacting fiscal 2027 revenue and gross margins - Ongoing regulatory uncertainty for cannabis in the United States, which delays potential market entry opportunities - Evolving and strict GMP certification and product registration requirements in international markets that create ongoing operational and compliance burdens

Analyst Q&A

• Q: Can you isolate the impact of the reduced Canadian reimbursement rate on revenue, gross profit, and margins? How is the Safari Flower acquisition expected to perform in fiscal 2027, and what synergies are expected?

  A: The VAC reimbursement change delivered a 30% direct reduction to top line revenue for affected products. Exit from consumer cannabis and the Bevo divestment also reduce total revenue, partially offset by ongoing international growth. The lower Canadian reimbursement rate is the primary driver of the mid-to-high 50% adjusted gross margin guidance for 2027. Safari Flower is already EU GMP-certified and operates in the large, fast-growing German market, making it immediately accretive. The company will integrate its proprietary genetics and proven cultivation practices to boost output of high-quality GMP flower, creating multiplier upside for the existing business.

• Q: What is your potential U.S. market entry strategy following cannabis rescheduling?

  A: Management expects to see finalized regulations within two months, and is evaluating multiple opportunity buckets. First, rescheduling opens new U.S. medical cannabis research opportunities, and Aurora's decade of medical experience makes it an attractive partner for U.S. academic and private sector entities. Second, partnerships for GMP-compliant medical product production and delivery to U.S. patients are possible. Third, cross-border import/export opportunities may emerge. As a non-U.S. domestic company, Aurora would not be subject to the 280E tax code that impacts U.S. domestic cannabis operators.

• Q: What early changes in patient behavior have you observed following the Canadian reimbursement cut? Could U.S. medical cannabis product exports to Germany impact Aurora, and what is the outlook for U.S. imports of Canadian medical cannabis?

  A: It is still early days, but so far no meaningful changes in patient product choice or format preference have been observed; the primary change is a reduced reimbursement rate to producers, not changed patient out-of-pocket costs or access. Pricing in European medical markets is far more compelling than current U.S. pricing, so large-scale exports to the U.S. are not economically attractive in most scenarios. The largest near-term opportunity from U.S. rescheduling is research collaboration, not cross-border product trade. U.S. GMP certification for cannabis is still less prevalent and consistent than the European standards Aurora already meets.

• Q: What is your outlook for the German medical cannabis market, and what is your strategy for downstream acquisitions in Europe?

  A: Germany is a large, healthy, well-regulated market with solid growth, and pricing pressure is almost entirely limited to the value segment while core and premium segments remain stable. Potential regulatory changes coming this fall could require more face-to-face patient interactions or restrict mail delivery, but Aurora successfully navigated a similar shift in Poland and expects it can manage any changes. Aurora's core competitive advantage is in genetics, GMP cultivation, and product registration, which are upstream of downstream distribution/retail. Downstream assets like telehealth or retail are not core competencies, and Aurora avoids competing with its wholesale customers, so it will not pursue downstream acquisitions as a general strategy.