Aurora Cannabis Inc. Q2 FY2026 earnings call

• Aurora's strategic focus on global medical cannabis, the highest margin segment, led to standout financial results. • Canada's largest medical cannabis company, leading exporter with GMP facilities in Canada and Germany. • Market leaders in Germany, Australia, Poland, and the U.K. • GMP-certified facilities in Canada and Germany enable high-quality product supply. • In Australia, transitioning from value to core/premium products. • In Germany, increased revenue with broad product range, awaiting regulatory changes. • In Poland, market leader with robust revenue growth from proprietary cultivars. • In the U.K., expanding distribution and clinic relationships with successful proprietary vape launches. • Plant propagation revenue up due to higher orchid sales but affected by inventory write-offs.

Net revenue was $90.4 million. Medical cannabis net revenue rose 15% to $70.5 million, comprising 78% of net revenue with an adjusted gross margin of 69%. Consumer cannabis net revenue was $6.9 million with an adjusted gross margin of 27%. Plant propagation net revenue increased to $11.6 million, up 34% from the prior year quarter, with an adjusted gross margin of 10%.

• Q3 2026 consolidated net revenue expected to increase year-over-year, driven by 8%-12% growth in global medical cannabis. • Plant propagation revenue expected to perform in line with seasonal trends. • Consolidated adjusted gross margins expected to remain strong. • Adjusted EBITDA expected to grow year-over-year. • Free cash flow expected to be positive in Q3 2026.

• Potential regulatory changes in Germany, including modifications to telehealth framework and home delivery regulations. • Price compression in Germany's value side despite core/premium products being less affected. • Challenges in Australia's value segment transition due to inundation of value products. • Impact of proposed changes to Canadian reimbursement for medical cannabis veterans, risking continuity of care.

Q: What's a realistic goal for medical gross margins and why are margins better than expected?

A: It's a mix of production costs going down, higher margins in non-North American markets, and execution efficiencies using common medicinal cultivars.

Q: Status of production assets in Germany and delays for competitors?

A: Aurora's German facilities are GMP certified, providing vertical integration advantage with no disruption. Competitors face issues with product certification.

Q: Impact of proposed budget change in Canada for medical cannabis veterans reimbursement?

A: Disappointed with lack of consultation, potential impact on continuity of care; evaluating impact.

Q: Impact of Germany's import permit halt and price compression?

A: No impact on Aurora, as permits were staged fine; pricing compression mostly on value side, core/premium less affected.

Q: German investment announcement and market impact?

A: Doubling production in Leuna facility with innovative systems, serves as showcase for key market.

Q: Australia sales softness?

A: Australia's value segment inundated with products; transitioning to core/premium, bullish but takes time.

Q: Downstream integration in U.K. and Poland?

A: In Poland, not allowed to be wholesaler, partner with clinics; in U.K., flexible with partnerships, may acquire vertical if beneficial.

Q: Timeline for Germany and Australia regulatory changes?

A: Germany's proposal needs parliament alignment, timeline unclear; Australia's timeline open-ended, focus on regulatory testing.