‘our transformation plan is on track’

Aurora Cannabis Inc (NASDAQ: ACB) is up 10% after-hours on better-than-expected sales for the fiscal second quarter. It’s the first time in over a year that the cannabis company topped sales estimates.

We had a great quarter. Our transformation plan is on track. Our efficiency initiative came in on the high end. We’re the #1 Canadian LP internationally, there’s plenty of profitability there. Our playbook is the same country after country; great products, great regulatory expertise, and it’s portable.

Important points in the Q2 report

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Aurora said it remained in C$75.1 million in loss ($59 million) and generated C$60.6 million in net revenue. In the same quarter last year, it had posted a much broader over C$300 million in net loss on $67.7 million in revenue.

According to FactSet, experts had forecast a narrower C$45.4 million in quarterly loss but a lower C$59.1 million in sales. In the trailing ten quarter, Aurora has topped sales expectations only two times. On CNBC’s “Closing Bell”, CEO Miguel Martin said:

We recognized early on that we had to focus on areas where we can make money. It’ll take another 9-12 months for the Rec market to stabilise. When that happens, there’ll be fewer LPs and right pricing. And at that point, we’ll be in a strong position.

Aurora is focusing on medical cannabis

After a 75% hit to the stock price in the past twelve months related to declining demand driven losses, reverse stock split and an executive shake-up, the new management is focusing more on medical cannabis (high-margin) to boost profits.

Recreational sales were down 48% in the recent quarter offset by an 18% increase in the high-margin medical cannabis sales. Sales of medical cannabis internationally were up 67% YoY and 24% versus the previous quarter, as per the earnings press release. The chief executive added:

In the medical business, you’re seeing steady margins and growth, only a handful of companies that can successfully navigate. So, none of those pressures. That’s why we’re pleased to be the number one Canadian medical company. Canadian medical is the bright spot of cannabis globally.