Since Aurora Cannabis (NASDAQ:ACB) embarked on a spending binge, the firm is prepared to reduce its production capacity to save money. Thrive Cannabis’ purchase of Aurora Cannabis Inc. (ACB) has necessitated the closure of Aurora Sky, the company’s main growth facility.
Due to Canada’s challenging financial climate, the company said that it would not use all available capacity. Business transformation efforts are expected to result in annualized cost savings of up to $1.3 billion in the first half of 2015 as part of the company’s goal.
It’s part of Aurora Cannabis’ corporate transformation strategy to put its Edmonton grow facility up for sale. Aurora has declared a C$1 billion ($780 million) loss for the third quarter ending March 31, even though some find it strange that the business would contemplate selling its Edmonton, Alberta, flagship grow facility.
Problems with Aurora’s Capacity
Aurora reported in 2020 that Sky’s production capacity was 150,000 kilos per year. Third-quarter sales of 9,722 kg of cannabis were much lower than the previous quarter’s total.
Aurora has just admitted that it will close its Valley facility and its outdoor cannabis farm in Westwold, British Columbia, which it formerly referred to as one of the largest in the world. Aurora said that the site was no longer needed for business purposes.
The margin of Medical Marijuana
Aurora’s medicinal marijuana division boasts profit margins above 60%. Aurora has operations in seven European nations as of the third quarter, including Germany, the United Kingdom, France, and the Netherlands. In the third quarter, medical revenue increased by 55% over the previous year due to an increase in patients seeking cannabis-based therapies.
In the third quarter, medicinal cannabis accounted for about ninety percent of Aurora’s income. Because of this, Ibbott said $480 million in cash and no-term debt is still accessible. During the first half of fiscal 2023, Aurora intends to have a positive Ebitda run rate.
As a result of Aurora’s announcement that it would expand the amount of its financing from $125 million to $150 million on May 27, its stock price fell by more than 40%. In addition to Canaccord Genuity and BMO Capital Markets, the loan will be funded by a consortium that includes Canaccord Genuity and BMO Capital Markets. Aurora intends to utilize the funds for general company needs.
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