Aurora shares tumble after Q4 results miss analyst expectations, company’s own guidance
It was another tough quarter for one of Canada’s biggest cannabis companies after Aurora Cannabis reported fourth-quarter results that came in below analyst expectations, while missing its own revenue guidance. Shares of the Edmonton-based cannabis producer slumped on the Toronto Stock Exchange on Thursday as Aurora said it made $98.9 million in net revenues for the quarter ended June 30, lower than the range of between $100 million and $107 million predicted in company estimates released last month. Aurora also reported an adjusted EBITDA loss of $11.7 million, better than the $36.6-million loss in the prior quarter, but not in positive territory, which company executives earlier in the year were hopeful of reaching. BMO Capital Markets analyst Tamy Chen warned in a note to clients that the company’s costs may rise in the coming quarters as “the costs to manufacture value-add formats, which are higher relative to current product formats, could be further exacerbated during the initial ramp period.
More pot shops needed to drive Aurora to profitability: Executive chairman
Aurora Cannabis’ executive chairman said the company may become profitable in the second half of 2020 — but only if there’s enough retail stores across the country to sell its product. “If [there is a] rollout of additional retail outlets in Canada and a successful rollout by Health Canada with regards to the derivative market, we anticipate that going into the second half of this year, we should be able to deliver positive EBITDA,” said Michael Singer in a television interview with BNN Bloomberg Thursday.
The rollout of Canada’s legal cannabis stores has been a sticking point for several cannabis producers, which have seen softer-than-expected revenues as a result of a lack of available outlets to reach customers. The fragmentation of various policies governing the nationwide rollout of pot shops has also made it difficult for some stores to open, notably in B.C. and Ontario which have opened a fraction of the stores that Alberta (at nearly 300) has licensed.
Valens, Iconic Brewing sign five-year deal to develop cannabis-infused drinks
Cannabis extractor Valens GroWorks announced a deal with Toronto-based Iconic Brewing Company to develop pot-infused beverages together. The deal will see Valens provide cannabis extracts, formulation services, and emulsification for the upcoming lineup of cannabis-infused beverages, while Iconic will brand and market the final product across Canada. Terms of the agreement state the companies will develop a minimum of 2.5 million cannabis-infused beverages over the next five years. Financial terms were not disclosed.
Ryan Macdonell, an analyst with GMP Securities, said in a note to clients the deal could represent $8.75 million in total sales, assuming a sale price of $3.50 per beverage, with Valens generating up to $1.5 million of revenue. More deals for Valens are expected after the company said in previous statements it is currently negotiating over 50 white label opportunities, Macdonell said.
There are 2,835 illegal cannabis dispensaries operating in California: Audit
California’s cannabis black market is three times the size of the state’s legal pot industry, according to a recent audit conducted by the United Cannabis Business Association. There are approximately 2,835 unlicensed dispensaries and delivery services operating in California, compared to only 922 potentially licensed cannabis sellers in the state, the audit found. Using Weedmaps, an application that shows what retail stores sell cannabis, Californians are almost three times more likely to shop at an unlicensed retailer than a licensed one, the association said in a statement. Based on those figures, California could levy fines against Weedmaps of up to US$85 million per day for disclosing the location of the black market retail outlets. The Daily Hampshire Gazette reports that the Bureau of Cannabis Control has been “diligent in trying to combat the state’s sprawling illegal marketplace.”
-- The amount of CBD oil that Toronto-based cannabis producer 48North has secured from an Oregon-based supplier for its upcoming U.S. venture.