Aurora Cannabis (NYSE:ACB) has been one of the big failure stories in the cannabis market. What was once one of the most promising pot giants in the market with plenty of prestige ended up plummeting all the day down to a penny stock, with many analysts considering the company’s shares to be almost worthless. However, despite all of this, Aurora Cannabis managed to surprisingly impressive analysts on Thursday when the company reported better than expected fiscal third-quarter financial results.
That’s not to say that things are doing great financially. Aurora still reported just $75.5 million in revenue, up 35% from the previous quarter. However, net losses for the company remain significant, coming in at $137.4 million. While that’s still pretty bad, it’s a drastic improvement from the $1.3 billion loss reported just three months ago, which sent cannabis investors reeling in surprise.
“I am incredibly proud of the Aurora team for working through these challenging times in order to maintain uninterrupted operations at all of our production facilities and ensure we continue to meet the needs of our patients and consumers,” said interim CEO Michael Singer in a press release. “I am also pleased that our third quarter 2020 financial results were in-line with our expectations, and that we remain firmly on track with the cost-savings and capex goals we detailed during our business transformation plan in February 2020.”
The main reason why Aurora’s financial results were so bad last quarter was due to a one-time goodwill adjustment that saw the company lose over a billion in goodwill/intangible assets. Back in 2018 and early 2019, Aurora was on an acquisition spree, buying out as many other marijuana companies that it can. As a result, Aurora’s balance sheet has seen its goodwill figures grow to around $3 billion, representing more than the company’s entire market cap. While this recent adjustment has whittled that figure down a bit, there’s still a good chance that further goodwill adjustments might be on the horizon.
Aurora also announced that it had sold one of its major Ontario greenhouses as well as some other assets. Earlier this year following the resignation of long-time CEO Terry Booth, Aurora said that it would be laying off around 500 employees, around 10% of its workforce, in an effort to save money and get its costs under control once and for all.
Shares of Aurora shot up as much as 14% over the course of the day, although the company’s market cap is still around $1 billion. In order to meet listing requirements, Aurora was forced to undergo a reverse stock split to push its shares above the penny stock range. However, if further goodwill adjustments are announced, the cash-strapped cannabis giant could see its share plummet even further.
Aurora Cannabis Company Profile
Aurora Cannabis Inc., headquartered in Edmonton, Canada, cultivates and sells medicinal and recreational cannabis through a portfolio of brands that include Aurora, CanniMed, MedReleaf, and San Rafael ’71. Although the company primarily operates in Canada, Aurora has expanded internationally through medical cannabis exporting agreements or cultivation facilities in more than 25 countries. – Warrior Trading News
