EDMONTON, AB – Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB), a Canada-based leading global medical cannabis company, today announced its financial and operational results for the third quarter of fiscal year 2024. As the fiscal year 2023 consisted of three quarters, the year-over-year comparison quarter for Q3 2024 ending December 31, 2023, is Q2 2023 ending December 31, 2022.

“Fiscal 2024 is on track to be our strongest to date, driven by the continued strength of our differentiated business model and our focus on profitable global medical cannabis markets. Our international medical net revenue1 grew 41% year-over-year in Q3, demonstrating Aurora’s ability to meet diverse patient needs in markets across the world.” stated Miguel Martin, Chief Executive Officer of Aurora.

Mr. Martin added. “The acquisition of MedReleaf Australia will make Aurora the largest global medical cannabis company in nationally legal markets and will allow us to leverage our success in providing pharmaceutical grade cannabis across 15 countries. MedReleaf Australia is expected to be immediately accretive to Adjusted EBITDA1, while accelerating our path to generate positive free cash flow1 this calendar year.”

Mr. Martin continued, “Q3 marks our fifth consecutive quarter of positive adjusted EBITDA1, driven by consistent performance in our Canadian business and substantial revenue growth internationally. We are now on the cusp of achieving positive adjusted EBITDA1 on an annualized basis for the first time in fiscal 2024, a critical milestone for us, supported by our previously announced goal of realizing $40 million in annualized cost efficiencies by the end of the fiscal year.”

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1 This press release includes certain non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP financial measures. See “Non-GAAP Measures” below for reconciliations of non-GAAP financial measures to GAAP financial measures.

2 The Pennington Institute, “Cannabis in Australia 2023.”  (Estimated revenue of AUD$210m for January to June 2023 has been annualized)

Third Quarter 2024 Highlights

(Unless otherwise stated, comparisons are made between fiscal Q3 2024, Q2 2024, and Q2 2023 results and are in Canadian dollars)

Consolidated Revenue and Adjusted Gross Profit

Total net revenue1 was $64.4 million, as compared to $61.1 million in the prior year period. The increase from the prior period is mainly due to growth in our global medical cannabis business and higher quarterly revenue in our plant propagation business, partially offset by a decline in our consumer cannabis net revenue.

Consolidated adjusted gross margin before fair value adjustments1 was 50% in Q3 2024 compared 46% in the prior year quarter. Adjusted gross profit before FV adjustments1 was $32.4 million in Q3 2024 (vs  $28.0  prior year quarter, an increase of 15.7%.

Medical Cannabis

Medical cannabis net revenue1 was $45.1 million, a 16% increase from the prior year quarter, delivering 70% of Aurora’s Q3 2024 consolidated net revenue1 and 86% of Adjusted gross profit before fair value adjustments1.

The increase in net revenue1 of $6.2 million was primarily due to higher sales to Australia and Europe in the current period following the success of newly launched innovative cultivars in these markets.

Adjusted gross margin before fair value adjustments1 on medical cannabis net revenue remained strong at 62% for the three months ended December 31, 2023, compared to 63% in the prior year quarter and within the Company’s target range of 60% and above. The adjusted gross margins before fair value adjustments held steady through sustainable cost reductions and improved efficiency in production operations with a partial shift to supplying Europe from Canada as the impact of closing our Nordic production facility begins to flow through, partially offset by slightly higher mix towards the international export market which average a slightly lower adjusted gross margin before fair value adjustments than the Canadian and EU medical markets.

Consumer Cannabis

Aurora’s consumer cannabis net revenue1 was $11.6 million, compared to $14.6 million in the prior year quarter. The decrease was due to the decision to allocate product to higher margin markets.

Adjusted gross margin before fair value adjustments1 on consumer cannabis net revenue1 was 26%, increasing from 20% compared to the prior year quarter. The increase from the prior year comparative quarter is largely due to higher efficiency in production operations and product sales with higher margins relative to the comparative prior periods.

Plant Propagation

Plant propagation net revenue1 was wholly comprised from the Bevo business, contributing $7.3 million of net revenue1 compared to $6.6 million in the prior year quarter. Historically, approximately 65-75% of plant propagation revenue and up to 80% of EBITDA has been earned in the first half of the calendar year.

Adjusted gross margin before fair value adjustments1 on plant propagation revenue was 18% for the Q3 2024 period and 15% for the prior year quarter, due to the seasonality of the business and sales mix of vegetables and ornamental plants.

Selling, General and Administrative (“SG&A”)

Adjusted SG&A1 was $27.5 million in Q3 2024, which excludes $6.8 million of restructuring and non-recurring, costs. Adjusted SG&A1 continues to be well controlled and in line with the Company’s current target of $30 million.

Adjusted R&D1, was $0.8 million in Q3 2024, which is relatively consistent as compared to the prior year quarter.

Net Loss

Net loss from continuing operations for the three months ended December 31, 2023 was $25.2 million compared to net loss of $62.4 million for the same period in the prior year. The decrease in net loss of $37.2 million compared to the same period in the prior year is primarily due to an increase in gross profit of $32.7 million, a decrease in operating expenses of $10.4 million, offset with an increase in other expenses of $5.9 million.

Adjusted EBITDA

Adjusted EBITDA1 was $4.3 million for the three months ended December 31, 2023, as compared to $3.0 million in the prior year quarter.

Fiscal Q4 2024 Expectations

In fiscal Q4 2024, the Company expects revenue from Canadian medical and consumer segments to be steady quarter over quarter, while Europe and Australia should provide modest growth in their regions.

For plant propagation, we expect to see seasonally higher revenues and gross profit that should be in-line with historical performance in the comparable prior year period.

Revenue increases combined with ongoing cost control are expected to result in continued positive Adjusted EBITDA1 in Q4 2024.

Aurora’s achievement of significant and sustainable operating cost and SG&A reductions has now resulted in five consecutive quarters with positive adjusted EBITDA1. Continuing growth in positive adjusted EBITDA1 paves the path towards positive free cashflow in calendar year 2024.

During the three months ended December 31, 2023, the Company repurchased approximately $23.1 million (U.S.$17.0 million) in principal amount of convertible debentures at a 0.08% average discount to par value, for total approximate consideration of $23.2 million (U.S.$17.1 million), including accrued interest of approximately $0.1 million (U.S.$0.1 million). The remaining convertible debenture balance as of the date hereof is approximately $7.3 million (U.S.$5.3 million) and will be settled in cash at maturity in late February 2024, at which point Aurora’s cannabis business will be debt free.

(1) Includes the impact of actual and expected product returns and price adjustments (Q3 2024 – nil; Q2 2024 – nil; Q3 2023 – $2.0 million).

(2) These terms are defined in the “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” section of this MD&A. Refer to the following sections for reconciliation of Non-GAAP Measures to the IFRS equivalent measure:

a.    Refer to the “Revenue” and “Cost of Sales and Gross Margin” section for a reconciliation of cannabis net revenue to the IFRS equivalent.

b.    Refer to the “Adjusted Gross Margin” section for reconciliation to the IFRS equivalent.

c.    Refer to the “Adjusted EBITDA” section for reconciliation to the IFRS equivalent.

d.    Refer to the “Operating Expenses” section for reconciliation to the IFRS equivalent.

e.    “Working capital” is defined as Current Assets less Current Liabilities as reported on the Company’s Consolidated Statements of Financial Position.

f.    Current Liabilities includes the current portion of convertible debentures. As at December 31, 2023, the remaining balance of convertible debentures outstanding is included in current liabilities.

g.    Net selling price of dried cannabis excluding bulk sales is comprised of revenue from dried cannabis excluding bulk sales (Q3 2024 – $42.7 million;  Q2 2024 – $43.1 million; Q3 2023 – $40.9 million) less excise taxes on dried cannabis revenue excluding bulk sales (Q3 2024 – $4.6 million; Q2 2024 – $4.9 million; Q3 2023 – $5.7 million).

(3) Represents total biological assets and inventory, exclusive of merchandise, accessories, supplies, consumables and plant propagation biological assets.

(4) The kilograms sold, net of returns during the period.

(5) Prior period comparatives were adjusted to include the adjustments for markets under development, business transformation costs, and non-recurring charges related to non-core bulk cannabis wholesales to be comparable to the current period presentation.

(6) Comparative information has been re-presented due to discontinued operations.

(7) Working capital for the three months ended September 30, 2023 has been adjusted. Refer to discussion under “Liquidity and Capital Resources” section of this MD&A.

About Aurora

Aurora is opening the world to cannabis, serving both the medical and consumer markets. Headquartered in Edmonton, Alberta, Aurora is a pioneer in global cannabis, dedicated to helping people improve their lives. The Company’s adult-use brand portfolio includes Aurora Drift, San Rafael ’71, Daily Special, Tasty’s, Being and Greybeard. Medical cannabis brands include MedReleaf, CanniMed, Aurora and Whistler Medical Marijuana Co, as well as international brands, Pedanios, Bidiol and CraftPlant. Aurora also has a controlling interest in Bevo Farms Ltd., North America’s leading supplier of propagated agricultural plants. Driven by science and innovation, and with a focus on high-quality cannabis products, Aurora’s brands continue to break through as industry leaders in the medical, performance, wellness and adult recreational markets wherever they are launched. Learn more at www.auroramj.com and follow us on X and LinkedIn.

Aurora’s common shares trade on the NASDAQ and TSX under the symbol “ACB” and is a constituent of the S&P/TSX Composite Index.

Forward Looking Statements

Forward-looking statements made in this news release include, but are not limited to, statements regarding pro forma measures including revenue, cash flow, Adjusted gross margin before fair value adjustments, and expected SG&A run-rates; ongoing cost efficiencies, the Company’s path and timing to achieve positive free cash flow, and expectations for the achievement of positive adjusted EBITDA on an annualized basis in fiscal 2024; the Company’s continued focus on profitable global medical cannabis markets; the acquisition of MedReleaf Australia and associated benefits to the Company, including, but not limited to, the expected positive impact on EBITDA and the generation of positive free cash flow in calendar 2024, the Company’s leadership in the global medical cannabis market, and the creation of future opportunities; statements under the heading “Fiscal 2024 Expectations” including, but not limited to, those with respect to expectations for cannabis and plant propagation revenues, the impact of the acquisition of MedReleaf Australia on revenue in future quarters, expectations related to gross profit in the plant propagation segment, and expectations for an increase in Adjusted EBITDA in Q4 as compared to Q3; plans to repay the remaining balance of convertible debt at maturity; and timing for a conference call to discuss the Q3 fiscal 2024 results. These forward-looking statements are only predictions. Forward looking information or statements contained in this news release have been developed based on assumptions management considers to be reasonable. Material factors or assumptions involved in developing forward-looking statements include, without limitation, publicly available information from governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which the Company believes to be reasonable. Forward-looking statements are subject to a variety of risks, uncertainties and other factors that management believes to be relevant and reasonable in the circumstances could cause actual events, results, level of activity, performance, prospects, opportunities or achievements to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of our products, customer experience and retention, the development of third party government and non-government consumer sales channels, management’s estimates of consumer demand in Canada and in jurisdictions where the Company exports, expectations of future results and expenses, the risk of successful integration of acquired business and operations, management’s estimation that SG&A will grow only in proportion of revenue growth, the ability to expand and maintain distribution capabilities, the impact of competition, the general impact of financial market conditions, the yield from cannabis growing operations, product demand, changes in prices of required commodities, competition, and the possibility for changes in laws, rules, and regulations in the industry, epidemics, pandemics or other public health crises, including the current outbreak of COVID-19, and other risks, uncertainties and factors set out under the heading “Risk Factors” in the Company’s annual information form dated June 14, 2023 (the “AIF”) and filed with Canadian securities regulators available on the Company’s issuer profile on SEDAR at www.sedarplus.com and filed with and available on the SEC’s website at www.sec.gov. The Company cautions that the list of risks, uncertainties and other factors described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such information. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.

Non-GAAP Measures

This news release contains reference to certain financial performance measures that are not recognized or defined under IFRS (termed “Non-GAAP Measures”). As a result, this data may not be comparable to data presented by other licensed producers of cannabis and cannabis companies. Non-GAAP Measures should be considered together with other data prepared in accordance with IFRS to enable investors to evaluate the Company’s operating results, underlying performance and prospects in a manner similar to Aurora’s management. Accordingly, these non-GAAP Measures are intended to provide additional information and to assist management and investors in assessing financial performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The information included under the heading “Cautionary Statement Regarding Certain Non-GAAP Performance Measures” in the Company’s management’s discussion and analysis for the three months ended September 30, 2023, and 2022 (the “MD&A”) is incorporated by reference into this news release. The MD&A is available on the Company’s issuer profile on SEDAR at www.sedarplus.com.

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