Pot stock to watch Aurora Cannabis (ACB Stock Report) has released a dismal Q2 2020 result just days after the cannabis operator announced major job cuts, including letting go of its long-time CEO. The bad results were expected because of the measures the company has taken in recent times. And with these measures it shows things are not good. This marijuana stock reported a 26% quarter-over-quarter drop in revenue, with total net revenue dropping to CA$56 million from CA$70 million. Aurora reported an Adjusted EBITDA loss of around CA$80.2 in the quarter, which is worse than the adjusted EBITDA loss of CA$39.7 million reported in Q1 2020.
Q2 revenue dropped as a result of a decline in wholesale sales
The company’s Q2 revenue took a hit. This hit to wholesale cannabis net revenue dropp 77% quarter-over-quarter to CA$2.4 million in Q2 from CA$10.3 million in Q1. The company’s former Chief Corporate Officer Cam Battley indicated that the wholesale market represents a significant opportunity for Aurora. He added that the company is in a better position to enhance its market share, going forward with bulk sale opportunities and potential white labeling strategies.
Another reason behind the dismal performance of Aurora is the product returns and price adjustments. In Q2, the company reported CA$6.1 million in returns and price adjustments and also booked a provision of CA$4.5 million for future product returns and price adjustments. As a result, this caused Aurora’s net revenue to be around CA$10.6 million, which is lower than expected.
However, Battley indicated that the company was not facing the same issues affecting returns that its peers were facing. Despite uncertainties, Battley is optimistic that they will not be facing those issues.
Suspension of medical cannabis license in Germany
The other challenge Aurora faced in Q2 was its debacle in Germany, where it temporarily lost its medical cannabis license. The EU market is very important to Aurora. Not long ago it lost the license for selling irradiated medical cannabis without the necessary permissions to use radiation in preventing contamination. As a result, its international medical cannabis revenue dropped from CA$5 million in Q1 to CA$1.8 million in Q2.
