Why Aurora Cannabis Looks Cheaper Than Its International Growth Suggests – Quarterly Update Report

International Medical Growth Absorbs Much of Canadian Pricing Reset; Safari and Germany Momentum Strengthen the Medium-Term Growth Outlook. Attractively Valued.

• Key Takeaways:

  • International aesculapian cannabis gross accrued 17% to C$43.3 cardinal successful 1Q FY27, reinforcing ACB's enactment crossed planetary aesculapian markets.

  • Adjusted gross borderline reached 58%, the precocious extremity of FY27 guidance, contempt the afloat archetypal interaction of the ~30% Canadian reimbursement cut.

  • Safari contributed positively to adjusted EBITDA successful its archetypal quarter, portion three-year EU-GMP certification expands interior proviso for high-margin planetary markets.

  • Management expects higher 2Q gross and adjusted EBITDA, portion Street estimates constituent to FY28 maturation and affirmative FCF arsenic planetary standard and efficiencies build.

  • Valuation remains charismatic astatine 0.92x FY27E P/S and 4.95x FY27E EV/EBITDA contempt strengthening planetary fundamentals and a debt-free equilibrium sheet.

• International aesculapian cannabis maturation continued to fortify ACB's planetary medical-first level and reenforce the durability of its maturation strategy. ACB reported 1Q FY27 (q/e June 30, 2026) nett gross of C$67.6 million, down 9% from C$74.1 cardinal successful the prior-year play and down 20% sequentially from C$84.8 cardinal successful 4Q FY26. The diminution was principally attributable to the April 1 simplification successful Canadian national aesculapian reimbursement rates and the planned wind-down of the user cannabis concern alternatively than weakening planetary demand. Medical cannabis gross was broadly unchangeable astatine C$64.0 cardinal versus C$64.8 cardinal y/y, arsenic a C$6.2 cardinal summation successful International aesculapian gross offset C$7.0 million of Canadian aesculapian pressure. Medical cannabis represented astir 95% of consolidated net revenue, up from 87% successful the prior-year 4th and 91% successful 4Q FY26, demonstrating that the Bevo divestiture and user wind-down person substantially precocious ACB's modulation into a focused planetary aesculapian cannabis company.

  • International aesculapian cannabis remained the superior maturation engine, expanding 17% to C$43.3 cardinal from C$37.1 million, driven by higher income successful Germany. International aesculapian gross represented 64% of full nett gross compared with astir 50% successful the prior-year play and 58% successful 4Q FY26, reflecting some organic growth abroad and the contraction of lower-return Canadian channels. Germany remained ACB's largest and fastest-growing planetary market, supported by accrued diligent demand, 2 proprietary cultivars ranking among the 5 highest-selling products, and continued spot successful the halfway and premium terms tiers. Pricing unit remains concentrated successful the worth segment, portion halfway and premium pricing has held relatively well because progressively stringent GMP requirements constrain qualified supply. ACB has responded by selectively expanding its worth offering without abandoning the halfway and premium categories that comprise most of its German volume.

• Strong operating subject kept adjusted EBITDA affirmative contempt the afloat archetypal interaction of the Canadian reimbursement reset. Adjusted EBITDA was C$3.4 million, down 68% from C$10.8 cardinal y/y and 63% from C$9.2 cardinal successful 4Q FY26, with the adjusted EBITDA borderline declining to 5.1% from 14.6% a twelvemonth agone and 10.8% sequentially. The C$7.4 cardinal y/y diminution chiefly reflected an C$8.3 cardinal simplification successful adjusted gross profit, partially offset by C$1.0 cardinal of adjusted SG&A savings. Adjusted SG&A declined 3% to C$35.1 cardinal from C$36.1 million, arsenic little wide and administrative spending much than offset an 8% summation successful income and selling to C$15.6 million. The higher selling concern was directed toward planetary maturation markets, portion the broader outgo basal remained controlled done the transition.

  • Adjusted gross borderline reached the precocious extremity of FY27 guidance, supported by planetary premix and continued manufacturing discipline. Consolidated adjusted gross borderline declined from 64% successful the prior-year 4th and 60% successful 4Q FY26, portion adjusted gross nett decreased 17% to C$39.5 cardinal from C$47.7 million. Medical cannabis adjusted gross borderline declined to 61% from 69%, reflecting the astir 30% Canadian reimbursement reduction, though the beardown publication from International aesculapian markets kept consolidated performance wrong the guided range. Gross nett earlier fair-value adjustments was C$29.2 cardinal versus C$38.8 cardinal y/y, with the reported 43% borderline down from 52%. Reported gross nett accrued to C$35.6 cardinal from C$33.5 million, reflecting higher biological-asset fair-value gains; adjusted gross nett remains the much applicable measurement of underlying performance.

  • Cost power and higher different income preserved affirmative adjusted nett income contempt little gross profit. Adjusted nett income fell to C$3.8 million from C$6.6 million y/y, driven by an C$8.3 million diminution successful adjusted gross nett earlier just worth adjustments, partially offset by C$1.0 million little adjusted SG&A and C$3.4 million higher different income.

  • Free currency travel turned antagonistic arsenic little gross nett flowed done currency generation. Free currency travel was an outflow of C$5.8 million successful 1Q FY27, compared with an inflow of C$6.8 million successful the prior-year period. The C$12.6 million y/y diminution was chiefly driven by a C$9.7 million simplification successful gross nett earlier just worth adjustments.

  • Genetics and integrated accumulation supply further levers for borderline betterment and operating efficiency. Proprietary genetics tin amended yields by up to 40% connected the aforesaid outgo basal portion enhancing merchandise quality, lowering accumulation costs, and supporting pricing. Combined with ACB's vertically integrated accumulation exemplary and the rollout of proprietary cultivars crossed Safari and Leuna, absorption expects higher interior utilization and continued manufacturing efficiencies.

• Liquidity remains a meaningful competitive advantage, with C$149.1 cardinal of cash, restricted cash, and short-term investments and nary loans oregon borrowings. Cash and currency equivalents were C$69.3 million, restricted currency was C$49.1 million, and short-term investments were C$30.7 million at June 30. Approximately C$46.4 million of restricted currency is expected to go unrestricted pursuing the wind-up of the company's segregated self-insurance compartment by 3Q FY27, materially increasing immediately deployable liquidity without requiring outer financing. On a pro forma basis, unrestricted currency and short-term investments would emergence from approximately C$100.0 million to C$146.4 million, taxable to movements earlier completion. This liquidity gives ACB the quality to complete Safari and Leuna investments, sorb the Canadian reset, and pursue additional medical-cannabis acquisitions without adding fiscal debt.