Aurora Cannabis Inc. Q1 FY2026 earnings call

Key Highlights - Net revenue up 17% to $98 million, with global medical cannabis revenue up 37% and international revenue up 85%. - Adjusted gross margin improved 1,000 basis points to 52%. - Adjusted EBITDA more than doubled to $11 million. - Leading global medical cannabis with strong positions in Canada, Australia, Germany, Poland, U.K. - Executing strategy in global medical cannabis for sustained profitable growth. - Navigating complex international regulations with scientific expertise and proven track record. - Launched new proprietary cultivars in Poland and expanded product offerings in U.K. - Canadian operations leading market share, expanded compassionate pricing program, and continued heroes initiative.

Net revenue rose 17% to $98 million. Global medical cannabis revenue grew 37%, with international revenue up 85%. Medical cannabis net revenue was $64.8 million (37% growth), comprising 66% of net revenue, with an adjusted gross margin of 69% (up from 67%). Consumer cannabis net revenue was $7.9 million (down from $11.5 million), with an adjusted gross margin of 33% (up from 20%). Plant propagation (Bevo) net revenue was $23.9 million (4% growth), but adjusted gross margin was 6% due to nonrecurring costs. Adjusted gross margin improved 1,000 basis points to 52%. Adjusted EBITDA more than doubled to $11 million. Free cash flow was $9.2 million (42% increase from year ago). Cash balance was $186 million at quarter end, and cannabis business is debt-free.

Q2 2026 Outlook - Consolidated net revenue expected to increase year-over-year, driven by 8%-12% growth in Global Medical Cannabis. - Plant propagation revenue expected in line with traditional seasonal trends. - Consolidated adjusted gross margins expected to increase, with cannabis business margin growth of 250-475 basis points. - Adjusted EBITDA expected positive and growing versus Q1. - Free cash flow expected positive annually but with Q2 cash outflows due to historical trends.

Risks - Bevo's loan facilities had a covenant breach related to not providing audited financials, but working through it and expected to be resolved quickly. - Potential regulatory changes in Germany, though no immediate significant rollback expected, with established operators like Aurora well-positioned. - Higher SG&A due to variable costs tied to revenue growth and M&A integration, but expected to be appropriate levels moving forward.

Q: Touch on higher SG&A in the quarter, specifically freight, logistics, and M&A-related charges.

A: Variable costs tied to revenue growth, M&A integration costs (some one-time), with SG&A levels expected appropriate moving forward.

Q: Comments on Germany's potential regulatory changes and impact.

A: New government in Germany, potential changes, but more clarity by end of year; impact not expected similar to Poland, as Germany is a bigger market with different dynamics.

Q: Bevo's loan covenant breach.

A: Accounting treatment moved loan to current, Bevo working through loan mechanisms, expected to be resolved quickly.

Q: 2Q adjusted EBITDA guidance.

A: Expected positive and growing versus Q1.

Q: Supply chain and vertical integration.

A: 90% of production is Aurora products, with facilities in Canada and Germany; using third-party network situationally; working with trade programs in markets for alignment with partners.