What is Next for Aurora Cannabis???

Less than a month after Aurora Cannabis Inc. (Nasdaq: ACB) (TSX: ACB) raised $172.5 million for general corporate purposes, the Canadian Licensed Producer (LP) fired 12% of its workforce as part of a global reorganization cost cutting initiative.

During the last two years, the Canadian LP has closed several facilities to cut costs and we are not surprised by the decision to fire part of the workforce. After Aurora Cannabis released third quarter financial results, the management team said the restructuring strategy should result in approx. $70 to $90 million of cost savings.

Earlier this year, Aurora Cannabis closed three facilities to lower costs and we believe the strategy has become a normal trend for the business. One of the facilities that were closed accounted for 13% of the company’s global workforce and we expect to see additional facility closures in the back half of the year.

The Canadian LP’s management team believes the restructuring of the company will allow it to operate in a more flexible manner. In future quarters, we will be monitoring how the strategy impacts the company’s profit margins and believe our readers should be aware of this metric. During the third quarter conference call, the leadership team said it was highly focused on becoming profitable which is goal that every Canadian LP seems to have.

2022 has been an especially challenging year for Aurora Cannabis and we do not expect the trend to change in the near-term. The stock has fallen almost 80% from its highs in January and several broker-dealers have lowered price targets on it.

Although we are favorable on the management team’s plans to make the business profitable, the company has already gone through several restructurings and is still not profitable. From closing facilities to repurchasing convertible notes, Aurora Cannabis is doing anything it can to cut costs and we will be monitoring how the market responds to the changes.

Going forward, we will remain on the sidelines with Aurora Cannabis and continue to prefer other operators to it. If you are interested in learning more about the embattled Canadian LP, please send an email to support@technical420.com with the subject “Aurora Cannabis” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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