September 12, 2019
Aurora Cannabis stocks dropped Thursday after the Canadian cannabis giant released its disappointing Q4 earnings report, which showed it failed to turn a profit this fiscal year, but Chief Corporate Officer Cam Battley says the company is working hard to turn that around.
"We've had some companies saying profitability doesn't matter. What we heard from important institutions, and we heard it very clearly, is, 'No, you have to show some credible pathway to profitability for us to take you seriously,' and that's what we've done," Battley told Cheddar.
Aurora ($ACB) missed analysts' ー and its own ー expectations on revenue when the Canadian cannabis giant reported fourth quarter earnings on Wednesday. Shares plunged more than 9 percent on the back of news that the company did not expect to achieve positive adjusted EBITDA until 2020, despite guidance in January that indicated profitability by the end of 2019.
"When we put out that guidance initially in January, we anticipated that there would be more retail cannabis stores in Canada than have actually been rolled out, so we are constrained a little bit, a little bit ー and temporarily ー by the lack of retail infrastructure and that will continue to get better," Battley explained.
Achieving profitability is no small feat in today's cannabis industry, where many companies continue to rack up massive losses in the name of rapid growth. Canopy Growth CEO Bruce Linton was famously dismissed after a set of earnings that Canopy's largest shareholder Constellation deemed disappointing. In the aftermath, Linton defended what he calls "90 month" thinking ー or a longer timeline when it comes to achieving profitability.
Battley, however, said he understands companies must at least chart a path to profitability, and he believes Aurora will be among the first to lead the way.
"We went from a period of very rapid M&A to a period of extremely focused, disciplined execution, and you can see the results in our last few quarters," Battley said. "We feel it's necessary to start showing some leadership in the sector."
Battley also touched on Aurora's plans in the U.S. The company in late August closed its acquisition of Hempco Food and Fiber, which will grant it access to raw hemp for extracting CBD. The company also has a partnership with the Ultimate Fighting Championship (UFC), which aims to advance clinical research on CBD. But, as Battley said, the company has ambitions for the U.S. that extend far beyond CBD, when the time comes for THC to become "federally permissible."
"We are making it a top priority, because if you plan to be the world's largest cannabis company, as well as the best one ー and we do plan to be that ー you can't do that without having a significant presence in the United States. So we have to be leaders in the U.S. and we will be," he said.