Q3 2025 Aurora Cannabis Inc Earnings Call
Speaker Change: Greetings and welcome to the Aurora Cannabis, Inc. third quarter 2025 results conference call. All participants will be in a listen-only mode and a question and answer session will follow the formal presentation.
Speaker Change: Thanks, Kevin we're pleased to report a record third quarter for medical cannabis revenue net income adjusted EBITDA and free cash flow and sincerely. Thank our team for making these results possible.
Speaker Change: Our three pronged strategy serves as our foundation and guides US forward as we seek to further strengthen the word cannabis over the coming years.
Speaker Change: First is the world's largest medical cannabis company, we will continue to leverage our EU GMP and T. G. A GMP manufacturing facilities unparalleled scientific knowledge genetics, and regulatory expertise and rapidly evolving global medical cannabis opportunities.
Speaker Change: Today, we proudly serve patients across multiple countries, including Canada, Australia, Germany, Poland, and the U K with an eye on future opportunities as they emerge.
Speaker Change: Second we will work to sustain our medical cannabis margins through operational excellence and our continued focus on this space.
Speaker Change: Third we will look to achieve a steady stream of revenue and adjusted EBITDA contributions and build a track record of positive free cash flow all while maintaining a strong balance sheet.
Speaker Change: Our successful execution of the points I just made has enabled us to differentiate ourselves from our peers and achieve the results that we reported today.
Speaker Change: Some highlights from the quarter.
Speaker Change: Overall net revenue grew 37% driven by 51% year over year growth in global medical cannabis.
Speaker Change: Within global medical cannabis International revenue increased 112%.
Speaker Change: For the second consecutive quarter International revenue surpassed Canadian medical cannabis, comprising 60% of global medical cannabis net revenue of 300 basis points sequentially from last quarter.
Speaker Change: This intentional shift in our business validates how we've capitalized on opportunities across the globe, while still maintaining a stable foundation in Canada.
Speaker Change: Medical cannabis our flagship business segment generated 77% of total net revenue and 90% of adjusted gross profit and while the majority of growth was sourced internationally Canadian medical increased 6% and we held onto a significant leadership position.
Speaker Change: Are you fully on vivo our plant propagation business segment, we generated a revenue increase of 22% year over year through organic growth and enhanced facility utilization.
Speaker Change: In terms of profitability net income and adjusted EBITDA.
Speaker Change: Both reached all time highs and we generated $27 million of positive free cash flow another record.
Speaker Change: Ill now discuss our canvas business in greater detail.
Speaker Change: Our Canadian medical business, which is known for its scientific knowledge and approached innovation provides our patients access to a broad selection of superior offerings.
Speaker Change: The Aurora Coast, our World Class Research and genetics facility, we can earn as solutions to provide patients the very best medical cannabis.
Speaker Change: On that note, we recently announced a series of new cultivars developed at Aurora coast and grown across our EU GMP and T. G. A GMP certified facilities.
Speaker Change: We also partner with several other Canadian licensed producers, who grow our cultivars, enabling us to create more value.
Speaker Change: Internationally, our largest market after Canada is Australia. We currently have the number two share in this highly regulated market and we are optimistic about our expanded distribution and broadened product portfolio.
Speaker Change: Turning to Europe, let's start with Germany, a country that we've been operating in since 2018, and where we continue to maintain our leadership position.
Speaker Change: Germany has experienced rapid growth since the onset of cannabis D scheduling last year as more patients registered and pharmacies, our intern expanding to support higher prescription volumes. We are determined to maintain a consistent and reliable supply of our high quality EU GMP manufactured products through our pharmacy partners.
Speaker Change: And we're doing that through our EU GMP facilities in Canada and in Germany.
Speaker Change: We also recently announced the launch of our first German cultivated medical cannabis product under the brand into Madden manufactured locally further cementing our commitment to growth in this dynamic market.
Speaker Change: We strongly believe that the changes in Germany will ultimately reverberate across Europe through expanded acceptance of medical cannabis. Our intention is therefore to gain a strong foothold in these emerging countries through our agility and unique capabilities, including regulatory and cultivation expertise.
Speaker Change: Now discuss two of these markets, Poland, and the U K, which both generated record revenue this quarter.
Speaker Change: Poland is our second largest European market benefiting from patients seeking high quality medical cannabis in the U K revenue increased as a result of our latest product innovations and widened distribution channels.
Speaker Change: Similar to last quarter and across all international markets. We saw an increase in demand for EU and TGI GMP manufactured flower this aligns well with 90% of our internal manufacturing capacity being EU and TGI GMP certified.
Speaker Change: The expansion of our latest genetics offer higher yields and a lower cost per gram to produce which has given us the ability to significantly increase our output capacity, especially as these new cultivars begin to establish themselves.
Speaker Change: Now on Canadian rack, while we did see a decline in revenue. This is still an important segment for us and it is where we gain a lot of consumer insights about products preferences pricing among other things by maintaining an active presence.
Speaker Change: We also see interactions between recreational sales and medical sales in our home market.
Speaker Change: Internationally at some point environments could evolve for medical direct and if so this would offer us another advantage.
Speaker Change: We recently announced our latest innovations from our Gray Beard, San Raphael 71, and taste. These brands with a continued focus on premium science driven offerings. This expanded lineup represents our commitment to delivering exceptional high quality cutting edge and diverse options to consumers. So they can enjoy unforgettable.
Speaker Change: Canvas experiences.
Speaker Change: So to sum up with only one quarter left to go in the fiscal year. We are pleased to be executing at a high level and intend to finish the year strong through profitable growth.
Speaker Change: I would now like to turn the call over to Simona for a detailed financial overview.
Simona: Thank you Miguel we had an exceptionally strong quarter wherever we reached all time highs across several key financial metrics.
Simona: Net revenue of $88 2 million, representing a 37%.
Simona: By record net revenue of $68 1 million from our global medical cannabis segment.
Simona: Second quarterly profitability consistent have record consolidated adjusted gross margin at 65% 130 basis points higher than last gerrick, resulting in record adjusted gross profit at $56 million.
Simona: Adjusted EBITDA grew 316% to a record $23 1 million and this was our ninth consecutive quarter of positive adjusted EBITDA.
Simona: Net income was $31 2 million another record outcome compared to a net loss of $18 1 million a year ago period and.
Simona: And finally, we ended the quarter with $182 million in cash and cash equivalents and no cannabis business that.
Simona: Now, let's go into greater detail.
Simona: In medical cannabis on a key strategic focus net revenue rose by 51% to $68 1 million, which consisted of 6% growth in Canada, and 112% growth internationally.
Simona: Medical candidates comprised 77% of net revenue and 90% of adjusted gross profit during the quarter.
Simona: This marked an increase from 70% of net revenue and 84% of adjusted gross profit from the year ago period, a result of higher medical revenue and higher medical margins in the current year quarter.
Simona: The increase in Canadian medical revenue was due to our continuing to focus on the Canadian patient experience.
Simona: Commercial collaboration with Victor Carton announced earlier in the fiscal year also contributed to this growth.
Simona: The increase in international medical cannabis revenue was primarily due to the full recognition of revenue in Australia. After the acquisition of <unk>, Australia in February 2024, and then scheduling in Germany.
Simona: We also experienced higher sales in other European countries.
Simona: Adjusted gross margin for medical cannabis was 74% up from 63% in the year ago period, most of which far exceeded our 60% target.
Simona: Several factors drove the year over year increase including larger revenue contributions from higher margin markets.
Simona: Favorable cost reduction and improved efficiency in our manufacturing operations with our chefs to supplying into European markets from Canada.
Simona: Consumer cannabis net revenue was $9 9 million down from $11 6 million in the year ago period, with adjusted gross margins of 26% compared to 29% did your sales of higher margin products.
Simona: Year over year decline was the expected result of our decision to focus on the higher margin medical cannabis business.
Simona: Steve Wallach plant propagation net revenue increased to $8 9 million up from $7 3 million in the Europe out period with adjusted gross margins at 40% up from 28%.
Simona: This year over year improvement is due to a combination of increased plant propagation capacity and product offerings.
Simona: Recall that vivo historically delivers lower revenue in the summer and fall months with about 25% to 35% of plant propagation revenue and up to 20% of EBITDA earned in the second half of the calendar year.
Simona: Consolidated adjusted SG&A increased by 12, 6% to $31 3 million compared to the year ago period, and supported year over year net revenue growth of 37%.
Simona: Adjusted EBITDA rose to $23 1 million from $5 5 million last year.
Simona: The record of improvement over the prior year period was due to a substantial increase in gross profit, resulting from higher net revenue before fair value adjustments required under Ifr asked.
Simona: Net income increased to $31 2 million compared to a net loss of $17 1 million for the year ago period.
Simona: The increase relates to higher gross profit, partially offset with the decrease in other income.
Simona: The increase in gross profit includes an increase in unrealized gain on changes in fair value of biological assets.
Please note that there may be quarter over quarter variability on this line item because of these inventory adjustments per ifr asked.
Our balance sheet remains one of the strongest in the global cannabis industry.
Simona: We held $180 2 million in cash and cash equivalents at December 31.
Simona: And our cannabis operations are completely debt free.
Simona: However, our <unk> business holds $57 $9 million in non recourse debt that is secured by a significant fixed asset base held at depot.
Simona: Cash provided by operating activities was $28 8 million compared to cash used of $5 3 million in the year ago period.
Simona: Excluding changes in noncash working capital and discontinued operations cash provided by operating activities improved by $25 2 million to delivered $13 8 million in operating cash compared to cash used of $11 4 million in the prior year period.
Simona: This improvement reflects a combination of increased net revenue and improved profit margins.
Simona: Free cash flow was positive $27 4 million compared to a negative free cash flow of $4 7 million in the year ago period.
Simona: The $32 1 million increase is due to higher net revenue and contribution margin along with an increase in working capital of $8 2 million.
Simona: Let me now provide some thoughts on what we expect for next quarter.
Simona: Continued revenue growth across our cannabis business supported by year over year growth in Europe and Australia.
Simona: Generally higher revenues for vivo in our plant propagation segment in line with historical seasonal trends.
Simona: Margins to hold strong and positive adjusted EBITDA to continue while continued spend discipline on capex and expected revenue growth will support improved operating cash used.
Positive free cash flow based upon the following first continued increases in global medical cannabis driven in part by the full recognition of revenue announced Dahlia and growth in our key European markets.
Simona: Second operating expenditure in adjusted gross margins in line with previous results and third disciplined working capital management.
Simona: Thank you for your time I'll now turn the call back to Miguel.
Miguel: Thanks, Simona by any measure was a record breaking quarter and we think <unk> future is incredibly bright.
Simona: Say that based on a few important points.
Simona: Several years ago, we made an intentional pivot to align our resources behind a medical cannabis first growth strategy and concentrate on high margin opportunities outside of North America.
Simona: Our viewpoint is that the regulatory environments in Europe, and Australia are better fit for us given our core strengths and regulatory affairs and that these countries will be more accepting of medical cannabis in the near term, especially as U S. Federal legalization is taking longer to materialize.
Simona: Second patient access to medical cannabis continues to grow around the world, creating a stronger secular trend where Aurora is a key beneficiary in our view the market could easily exceed 5 billion in the next few years and we have an important role to play in that opportunity.
Simona: Third we are well positioned versus many of our peers through our first mover advantage and key capabilities, which gives us a material advantage in existing and new markets and finally, our focus on profitable business segments and opportunities is matched by our financial flexibility and balance sheet strength. This.
Simona: Combination gives us an advantage and allows us to be opportunistic and generate returns that position us to drive long term shareholder value.
Simona: With that we'd be happy to take your questions. Operator, Please open the lines.
Simona: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question can you.
Simona: You May press star two if you'd like to remove your question from Nikhil for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question comes from the line of Bill Kirk with Roth Capital Partners. Please proceed with your question.
Bill Kirk: Good morning, everybody.
Bill Kirk: I had a question you know given the inflection in sales here.
Speaker Change: Are you running into any supply constraints in any way or do you still have some room to continue to meet these opportunities and find more growth from here.
Yes, Bill good morning, and thanks for the thoughtful question I think you raise sort of two points and first is we feel good about where we are from a supply standpoint now supplying these international markets is a bit complicated because of the variety of different regulatory challenges in there.
There, it's not just the certifications <unk> and T. G. I G. M. P. T J is the Australian designation.
Speaker Change: On the.
Speaker Change: Causes some complexities the other part is the registration process and the testing process. So all of that has to work together enable do consistently supply those four key markets, which are Poland and Germany.
Speaker Change: Australia and the U K.
Speaker Change: But we feel really good about where we're at in terms of being able to meet that need.
And.
Speaker Change: We think it's a real core competitive advantage for war.
Speaker Change: And then if I can follow up.
Speaker Change: Were there any like unique or opportunistic items, maybe load in in particular country that benefited <unk> that just arent as repeatable <unk> going forward is there any way you know.
Speaker Change: Maybe you could quantify if things like that impacted <unk> in a positive way.
Bill Kirk: Yes, Bill we didn't see anything that was sort of out of the norm now I will say.
Bill Kirk: The international markets because of permitting they do go a little hot and cold and I think over fiscal year Youll see that smooth out, but there was nothing specific in the quarter that we're reporting that was sort of a one time or that was sort of out of the norm in terms of what we would see over a broader time period.
Bill Kirk: Wonderful I'll pass it along thank you.
Bill Kirk: Thank you Bill I appreciate the questions.
Speaker Change: Thank you. Our next question comes from the line of battery Coke almost with ATV capital markets. Please proceed with your question.
Speaker Change: Hi, good morning. Thanks, Thanks for taking my questions Congrats on the great quarter.
Speaker Change: First question just on competition Indeed, the international medical cannabis markets, we've seen a lot of order lp's trying to enter those markets and exports from Canada.
How do you see that competition impacting those markets this year, putting impact prices and margins.
Speaker Change: Or are not just market Deborah faisel.
Speaker Change: How do you look at competition at this point.
Speaker Change: Yes, Fred good morning, and thanks for the question I think you know if you compare and contrast, North America, where youre competing against hundreds of companies.
Speaker Change: Particularly in Canada in the rack business, we don't see that internationally now that doesn't mean, they're not some very strong and decent number of competitors, but it is a more consolidated business and let me sort of take them.
Speaker Change: Sort of an order.
Speaker Change: Obviously, Germany has garnered a lot of attention, but because of the requirements of the EU GMP plus the testing.
Speaker Change: The registration process, you do see more consolidation. So as an example, as you well know in Canada. The top five rec companies don't even represent 50% of the business and what we see is in most of the big European markets.
Speaker Change: The top five companies will represent two thirds of three quarters of the total business. So it's a more consolidated.
Speaker Change: The business in advantages those companies like Aurora that have made significant investments both in.
Speaker Change: Product innovation and registration and on the ground infrastructure and it is a.
Speaker Change: It is portable and many cases, what you have to do in Germany will be a little bit different in Poland is the same thing and so I would say the competition is.
Speaker Change: Is no less competitive but it is from a smaller group of competitors because it is a different skill set than maybe what you would find say in Canada.
Speaker Change: Perfect. Thanks for that.
Speaker Change: Second question is on capital allocation now that you've reached to free cash flow positive obviously in generating substantial amount of free cash flow.
Speaker Change: How are you looking at the balance sheet here your capital location options in terms of growth internationally.
Speaker Change: Or maybe Canada capacity expansion et cetera.
Speaker Change: How do you look at the different options that you have in terms of allocating that capital. Thanks.
Speaker Change: I mean listen it's a great question and we've worked incredibly hard to have no debt on our canvas business and as Simone of detailed having what we think is one of the strongest balance sheets out there.
Speaker Change: As you well know is a very fluid environment and valuations continue I think to get more reasonable we.
Speaker Change: Expect to be able to use that to be opportunistic as the right things come to bear now we've also been very cautious and patient, which I think is incredibly benefited us in this environment and so anything that we would do we would look to be accretive from a profitability standpoint and be additive to our core comp.
Speaker Change: I didn't see routes is really medical cannabis and so I think if you look at our overall path of the way, we leveraged the balance sheet and what we've done over the last couple of years I think you'd see more of the same and we're proud that <unk> resulted in the results that we're reporting today.
Speaker Change: Thank you that's it all.
Thank you Fred.
Speaker Change: Thank you. Our next question comes from the line of Derek Lessard with TD Cowen. Please proceed with your question.
Derek Lessard: Hey, good morning, everybody and congrats on a great quarter.
Derek Lessard: I just wanted to hit on your on the margin side of the business and maybe two parts.
Derek Lessard: Starting with the medical maybe just add some color around that 74% gross margin performance and then.
Derek Lessard: Kind of get a sense of what your thoughts are on the sustainability of that margin and then secondly on the plant propagation side again strong results. There. So I just wanted to get some additional color on the growth.
Derek Lessard: Derek Let me, let me talk a little just broadly about margin and then I'll turn it over Simona, who can give you some more details on both of your questions.
Derek Lessard: Unlike say Canadian rack, what you see in Europe, which was obviously a huge part of the revenue increase that we had plus the impact on the margin as you don't see as much compression in the medical cannabis space, the wholesale list price or the pricing, which we sell to our wholly.
Derek Lessard: Taylor's dictate the margin downstream both from them from a tax standpoint, and for our pharmacies, which some would describe as our retailers. So you don't see a lot of sort of intrinsic compression in baseline pricing and because it's in a pharmaceutical system. While these margins are.
Derek Lessard: Our high for candidates Theyre, not particularly I.
Derek Lessard: For pharmaceutical so I don't think you have that structural piece secondly, when you have both you know an insured NFL patient parts. You also have a little more consistency in that and since we operate mostly.
And the premium and.
Derek Lessard: And of course actions youre going to see higher margins than you might see say in the value segment, but I don't know someone or if you want to pick up on that and maybe talk a little bit about Bureau.
Derek Lessard: Yeah. So we generally do see higher margins in our medical and especially the international market So as more.
Derek Lessard: More and more of our revenue has shifted our has grown in those sectors that overall contributes to the increase down increased margins, we're seeing not only through the medical cannabis channel, but then implications of total company as well.
Derek Lessard: And we're also seeing operational efficiencies, which has an impact on our cost of goods sold so that combination of favorable prices as well as managed costs. It is contributing to our margin here and we are too much of your second part of your question.
Derek Lessard: We do expect these margins to continue to say favorable in the coming quarters.
Derek Lessard: And then in terms of vivo, but wed seen with vivo and keeping in mind that vivo is a seasonal business and we've seen growth in vivo.
The prior of prior year quarter.
Derek Lessard: We've also seen improved margins and deep in the vivo business due to increased capacity under a production site.
Derek Lessard: That's that's helped our overall total company margins go up as well.
Speaker Change: Okay. That's super helpful guys, and maybe just one more for me before I re queue on in Germany, now that I guess, we're about nine months into the scheduling what are you seeing I guess in terms of.
Speaker Change: Patient <unk> and sales growth, there and maybe as a follow up as well you recently launched your first cultivar.
Speaker Change: Just wondering if you could speak to any of the potential cost savings in terms of transportation or anything else.
Speaker Change: Yes.
Speaker Change: You're right, we're nine months into the scheduling the biggest impact has been patient growth and so their ability to get into the system and we've seen that continue to grow one of the problems. We have in Germany is not strong as syndicated data.
IRI and Nielsen or maybe even some other stuff we see in some other markets. So it's hard to give you.
Speaker Change: And the exact percentage of what we're seeing in overall growth I think.
Speaker Change: Double digit we see it so growing I think one of the questions connected to that we get is given where the elections may go in Germany do we see a real change we do most of what they've talked about has been on the rack side, whether these scheduling there so we see Germany.
Speaker Change: Without giving you precision on the growth.
Speaker Change: <unk> going to grow and we see a small subset of companies being able to take advantage of it.
Speaker Change: Now as it pertains to.
Speaker Change: The growing in country. We're one of only three manufacturers that have facilities in the country of Germany in our facilities and Lorna and we are launching our first cultivar there and we'll be launching many more that will be some of the best in the world from there I think people are excited about the German growing cultivar.
Speaker Change: Being available in that market and other areas.
Speaker Change: In terms of overall efficiencies, while you do pick up.
Speaker Change: Some because of where it's at and from shipping it is offset a bit by higher energy costs and some of the other cogs costs that we are there. So it's early days for that for that facility. It's a very small and what I would say sort of emerging facility as it pertains to our global.
Speaker Change: Our production footprint and so more to follow on lineup, but we're really excited about having something in Europe.
Speaker Change: And that is GMP that can service, both Germany, and the rest of the G&P markets.
Speaker Change: Thanks for that and again, thanks, everybody can be very welcomed Eric Thank you.
Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad. Our next question comes from the line of Matt Bottomley with Canaccord Genuity. Please proceed with your question.
Matt Bottomley: Good morning, everyone I wanted to stick on the sort of the international contribution obviously, it's done very well for you guys.
Matt Bottomley: And it's something that more Lps and even some of the Msos are starting to talk about with respect to those opportunities. So I guess first I know you've touched on this a little bit, but maybe sort of two ways to look at it one is what's kind of the breakdown on average of sort of innovative products there versus maybe more bulk ore.
Matt Bottomley: Flower I know you guys are more in the higher quality segment of the market, but just trying to get an understanding of the types of products on average that make up of your revenues and then if you could also give any color as to what percentage of your customer bear patient base, there or maybe just your revenues are.
Matt Bottomley: Our attributable to.
Matt Bottomley: Patients that have coverage.
Speaker Change: Well good morning, and thanks for the question. So let me try to break it down a little bit.
Speaker Change: In Germany, it's all flower and oil with exception of a couple of other small products.
Speaker Change: Similar situation in Poland, The U K and Australia allow for a broader portfolio. So you do see edibles, you do see vape products in a variety of others, but regardless of the ability to sell those products in Australia.
And in the U K the vast majority of the.
Speaker Change: Sales in all of those international markets as flower.
And from that.
Speaker Change: Again, the ability to get compliant products into those markets that can meet the registration of stability.
Speaker Change: The testing and all of it and so I think as we look at that you are starting to see some distinction between the value segment.
Speaker Change: More of where we operate on the top side.
Speaker Change: Which is people willing to pay for that for years now in terms of segmentation.
Speaker Change: Lack of syndicated data and a lot of those markets. The biggest market in Europe is the German market. We are seeing the fastest growth is happening in the south payer market and probably today is the majority of sales now whether that 51% or 89%, we don't have that type of precision.
Speaker Change: But we are seeing expansion in all of that that being said.
Speaker Change: The insurance coverage continues to be there and is actually expanding as more and more insurers are getting comfortable with a broad and list of what we call as indications and so I think to be successful you have to do both now the good news is that a patient whether they're ourself here or in the insurance segment wants.
Speaker Change: The same things and the experience that a company like Aurora has been almost a decade of experience in Canada that really resonates because unlike other markets. This is a patient going to a doctor get.
Speaker Change: Adding a specific prescription for a specific item being serviced by a pharmacy and so it really is a much more conservative medical framework than most people are accustomed to and so a company like Aurora our history our approach our medical first in everything that goes along with it.
Speaker Change: Resonates and Thats why you see why we're doing so well in many of these markets.
Speaker Change: Why a smaller subset of companies, we believe will be successful long term in those markets.
Speaker Change: Got it and maybe yeah.
Speaker Change: Yes, correct.
Speaker Change: With that said.
Speaker Change: These are finished good product not not bulk and we do believe we have a strong brand and reputation in these international markets.
Speaker Change: Okay got it and then just a quick one on consumer cannabis, obviously not not core to the strategy. So not a lot of color on it but I'm just curious on how you look at that that segment going forward in the more medium term. So we're seeing more decreases in that segment as you put more supply into the GMP manufactured products as you want to put in your prepared statements that.
Speaker Change: 26% gross margin does that flow down to like breakeven on a cash flow. If you look at kind of at a four wall and if it does is there any sort of indication from a strategic standpoint, if theres any more investment into that segment or is this just business as usual focusing on the higher margin international and focusing on Canada, when maybe the regulations change.
Speaker Change: From an adult use standpoint.
Speaker Change: Yeah, Let me take the first part and I'll, let Mark talk about the modeling on the cash flow piece I think it was and I get a lot of credit to the Canadian government a lot of people are banging on them about you know.
Speaker Change: Advancements in the five year plan and all of these different days, Canada has done more on rack than anybody else.
Speaker Change: <unk> right now is it is a real challenge to extract value for high quality products in Canada, and while that would be a significant issue for any company. Since we have the opportunity to take those same finite high quality inputs and sell them at a significant profit around the world. It makes the decision very easy for us to focus.
Speaker Change: On that.
Speaker Change: Now Canada is getting better we are.
Speaker Change: We're encouraged by some of the actions from the provincial.
Speaker Change: Folks have taken and it's going in the right direction, we've even seen some price increases, including some that we've taken on some of our products, but again when you've got these incredibly high value.
Speaker Change: Articulated finished goods of Simona mentioned products that you can sell around the world you don't do there now it's important for us to stay in that market, though because you learn a lot and there's a lot of innovation and there was a lot of connectivity between the Canadian medical and Canadian Rec market that will exist at some point in the other parts of the world and so that's why.
Speaker Change: I would say there I mean, some on any comments on the modeling of profitability.
Speaker Change: Yes, I mean, as we mentioned you know, we're supporting our growing global medical cannabis business and in prioritizing supply towards that which are at the higher margins.
Speaker Change: But we're still active in the consumer segment and and we see we continue to focus on profitable growth opportunities and I would say the change in margin is primarily from the prior year ago period. This is primarily driven by the change in the sales mix and not related to pricing.
Speaker Change: Pricing compression has been flowing into Canadian the Canadian market is switching back again, that's that's a rationale behavior. So sometimes it's hard to predict.
Speaker Change: Okay got it thanks for all the details guys.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from the line of Doug <unk> with RBC capital markets. Please proceed with your question.
Speaker Change: Yeah.
Speaker Change: Thank you good morning.
Speaker Change: You did talk about the potential for M&A given better pricing.
Speaker Change: But you'd released your knitting with respect to that.
Speaker Change: The medical side of the business is there.
Speaker Change: Part of your existing portfolio were.
Speaker Change: You do see a need for a specific type of company or are you talking more about incremental supply.
Speaker Change: For the growth of the market in various countries as they come on.
Speaker Change: Yes, I mean, Doug is it's a great question I think first and foremost we look to invest internally, which we've done.
Speaker Change: Simona mentioned, our cost of production per Gram continues to go down significantly so we make a significant investment.
Speaker Change: And what we consider to be one of the best genetics facilities in cannabis and the West Coast. We've made significant investments in our production facilities to not only align with EU GMP, but also the expansion of production and we also invest in.
Speaker Change: In markets now it's not it's just almost a year that we made a significant acquisition to the rest of <unk>, Australia, one of the fastest growing markets in the world.
Speaker Change: I think as sort of indicative of what we like we've been with that business in Australia. Since 2017. So we knew a lot about it we knew a lot about the team down there and we did that I think we've worked incredibly hard to have no debt on our cannabis business and have worked incredibly.
Speaker Change: Hard to be profitable, so as things come up and yes, we see things from a value standpoint, getting more reasonable as time goes along we have the ability to be opportunistic and we will be I think.
Speaker Change: What I would say is what you've seen us do in the past is probably indicative of what we're going to do going forward, which is can continue to be patient.
Speaker Change: But opportunistic when it makes sense and continue to grow a profitable global medical cannabis business, which is really what were best at and I think that's been our playbook and it's worked extremely well and I think we'll continue with it.
Speaker Change: Okay, perfect and then as a follow up it's more of a housekeeping on the taking over of all that.
Speaker Change: Relief, but.
Would you be able to delineate exactly what the contribution was from full consolidation in terms of absolute.
Speaker Change: Growth.
Speaker Change: Later this quarter versus last year.
Speaker Change: So do you want to take that one.
Speaker Change: Yeah, I guess, one way to think about that is as we have in the prior quarter. So our fiscal Q2 2025, and this quarter, we were able to record the full revenue recognition for the business.
Speaker Change: And as we've worked through the existing inventory earlier earlier last year and so that's probably a good way to think about it when you compare it to the prior quarter periods. So in 2028 December 2023, where that contribution comes in because the full revenue recognition coming into play.
Speaker Change: These last two quarters.
Speaker Change: Okay, but you can be more specific than that in terms of a number.
Speaker Change: Yes, we don't breakout the markets like that yeah.
Speaker Change: Okay.
Speaker Change: That's great. Thank you.
Speaker Change: Thank you for your question.
Mr. Martin: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Martin for any final comments.
Speaker Change: Robert Thank you very much unless we want to thank everybody.
Speaker Change: On the call today, we are incredibly proud of this quarter, but more importantly excited about the bright future that Aurora has.
Speaker Change: Thank everyone. That's still all in we really appreciate your interest and attention to Aurora Autodesk.
Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.