Aurora cannabis shares fell 1.7% on Monday after the marijuana company made fiscal gains in the second quarter slightly above Wall Street estimates, roughly in line with the company's most recent projections corresponded.
Auroro's report is the first of a series expected by pegs this week and could set the tone for what industry expects in this round of quarterly results.
The background story. It was an eventful year for 2019
(ACB). Its share rose 43% in January, even after second-quarter revenue guidance for the second quarter reached $ 50-55 billion. This was below the forecasts of the two analysts covering the stock. They expected $ 60 million and $ 74.8 million. It helped that Aurora announced last month the acquisition of medical marijuana maker Whistler Medical Marijuana for $ 175 million in an all-stock deal. Despite this, Aurora declined 35% in 2018 as concerns over rising costs were incurred as production and acquisition costs exceeded sales growth. On top of that, there is concern: a loss of production that has made cannabis unable to meet the demand for weeds across Canada once the pot has been legalized.
The plot change: On Monday after The Bell, Aurora reported net sales of $ 54.2 million, an increase of 363% over the same period in 2018. Sales are at the upper end of the range this forecast from Aurora last month.
However, the company reported losses of $ 239.6 million compared to a profit of $ 7.2 million in the prior year. The net profit figure is complicated by non-cash losses related to the company's investment in other pot industry players. On an operating basis, Aurora lost $ 80 million in the fourth quarter.
A closely watched number, the Aurora production of cannabis, was well ahead of Wall Street consensus. Aurora produced 7.8 million kilograms in the quarter compared to the expected 6.6 million. Production was 550% higher than a year ago.
One pleat, however: Aurora's selling price for cannabis in grams per gram fell 21% from a year ago to $ 6.23, a decline largely due to a new excise duty, as well as the "wholesale price structure" in the Canadian consumer "market. "
In a press release to the earnings announcement Aurora pointed to a strong market share.
"Based on available data released by Health Canada for the second quarter of 2019, Aurora accounted for approximately 20% of all consumer sales across the country," the company said in the release.
The Next Step: Prior to the report, the Aurora share closed the day down 5.5% to $ 7.17. From here, Wall Street is looking for clues that the company can profitably support its emerging business. Investors may want to see more than just the numbers of expansion costs under control, while new products such as soft gels and vape-ready CBD oil are improving profit margins.
Competing Canadian manufacturers Tilray (TLRY) and Cronos Group (CRON) will report on their findings on Tuesday. Canopy Growth (CGC) reports Wednesday.
Write to Alessandra Freitas at email@example.com