Q4 2025 Aurora Cannabis Inc Earnings Call

Unknown Executive: Greetings.

Kevin Niland: Welcome to Aurora Cannabis Incorporated fiscal fourth quarter 2025 results conference call. All participants will be in a listen only mode.

Greetings and welcome to the Aurora cannabis incorporated fiscal fourth quarter 2025 results conference call.

Speaker Change: Participants will be in a listen only mode. A question and answer session will follow the formal presentation. The conference is being recorded today Wednesday June 18th 2025, I would now like to turn the conference over to your House, Kevin Island Director of strategic Finance and Investor Relations. Please go ahead Sir.

Unknown Executive: A question and answer session will follow the formal presentation. Conference is being recorded today, Wednesday, June 18, 2025.

Kevin Niland: I would now like to turn the conference over to your host, Kevin Niland, Director of Strategic Finance and Investor Relations. Please go ahead.

Kevin Niland: Hello, and thank you for joining us. With me are Miguel Martin, Executive Chairman and CEO, and Simona King, CFO. Earlier this morning, we followed our financials for the full fiscal year, fiscal fourth quarter 2025 period, ending March 31st, 2025, and issued a news release containing these results. This news release, along with our financial statements and MD&A, are available on our IR website, as well as via CDAR Plus and EDGAR.

Speaker Change: Hello, and thank you for joining us with me on the Gilmartin Executive Chairman and CEO, That's gonna King CFO earlier. This morning, we filed their financials for the full fiscal year fiscal fourth quarter 2025 period, ending March 31, 2025 and.

And issued a news release containing these results.

News release, along with our financial statements and MD&A are available on our IR website as well as here at SEDAR and Edgar.

Kevin Niland: Our discussion today gives us a reminder that certain matters could constitute forward-looking statements that are subject to risks and uncertainties relating to our future financial or business performance. Actual results could differ materially from those anticipated in those forward-looking statements. Risk factors that may affect actual results are detailed in the annual information form and other periodic filings and registration statements. These documents may similarly be accessed via CDAR Flow and EDGAR.

Our discussion today. It gives us the reminder, certain matters could could constitute forward looking statements are subject to risks and uncertainties relating to our future financial or business performance actual results could differ materially from those anticipated in those forward looking statements risk factors that may affect actual results are detailed in our annual information form.

And other periodic filings and registration statements. These.

These documents may simply be active SEDAR and Edgar.

Kevin Niland: Following prepared remarks by Miguel and Simona, we'll conduct a question-and-answer session with our covering analysts.

Speaker Change: Following prepared remarks by Magellan Simona, we'll conduct a question answer session, we're covering Albert.

Miguel Martin: With that, I'll turn the call over to Miguel. Please go ahead. Thanks, Kevin.

Miguel: With that I'll turn the call over to Miguel. Please go ahead.

Speaker Change: Thanks, Kevin would you learn you this year of <unk> results today, showcasing a record setting year and global medical net revenue adjusted EBITDA and positive free cash flow.

Miguel Martin: We're delighted to share Aurora's results today, showcasing a record-setting year in global medical net revenue, adjusted EBITDA, and positive free cash. This performance is anchored by a strong and flexible balance sheet, exemplified by a sizable cash balance of $185 million and a debt-free cannabis business. We believe that's a significant advantage relative to the industry.

Speaker Change: Performance is anchored by a strong and flexible balance sheet exemplified by a sizable cash balance of $185 million and a debt free cannabis business. We believe that's a significant advantage relative to the industry.

Miguel Martin: Here are some key highlights from fiscal 2025. First, net revenue rose 27% to a record $343 million, which included global medical cannabis revenue increasing 39%. International revenue generation eclipsed the strong contribution from Canadian medical and comprised over half of total global medical cannabis, up from 41% in fiscal 2024. Second, adjusted gross margin improved to 55% compared to 49% as we benefited from both higher cannabis and plant propagation margin. And finally, we generated record adjusted EBITDA of almost $50 million with record positive free cash flow of about $10 million. Aurora is already the largest company in the world focused on medical cannabis, the highest margin segment of the industry.

Speaker Change: Here are some key highlights from fiscal 2025.

Speaker Change: First net revenue rose, 27% to a record $343 million, which included global medical cannabis revenue increasing 39%.

Speaker Change: International revenue generation eclipsed the strong contribution from Canadian medical and comprised over half of total global medical cannabis up from 41% in fiscal 2024.

Speaker Change: Second adjusted gross margin improved to 55% compared to 49% as we benefited from both higher candidates and plant propagation margins.

Speaker Change: And finally, we generated record adjusted EBITDA of almost $50 million with record positive free cash flow of about $10 million.

Speaker Change: The war is already the largest company in the world focused on medical cannabis the highest margin segment of the industry and we have scientific knowledge genetics breeding and regulatory expertise that are second to none.

Miguel Martin: And we have scientific knowledge, genetics, breeding, and regulatory expertise that are second to none. Notably, we are one of the select few cannabis companies with two manufacturing facilities certified under both Australian TGA good manufacturing practice and EU GMP standards. These facilities represent 90% of our annual manufacturing capacity, allowing us to be the largest Canadian exporter of medical cannabis.

Speaker Change: Notably we are one of the select few cannabis companies with two manufacturing facilities certified under both Australian T. G. A good manufacturing practice and EU GMP standards.

Speaker Change: These facilities represent 90% of our annual manufacturing capacity, allowing us to be the largest Canadian export of medical cannabis.

Miguel Martin: And through our leading market positions in Canada, Australia, Germany, Poland, and the U.K., we are best able to capitalize on global medical cannabis opportunities in other countries as they emerge.

Speaker Change: And through our leading market positions in Canada, Australia, Germany, Poland and the U K, we are best able to capitalize on global medical cannabis opportunities in other countries as they emerge.

Miguel Martin: Let's now dive into our global cannabis business, beginning with updates to our international operations, where we are experiencing an increase in demand for EU and TGA GMP manufactured flower, and particularly high potency THC cultivars with intensely aromatic profiles. Our second largest market after Canada is Australia, where we currently have the number two share. Although Australia is a highly regulated market for medical cannabis, it is rapidly growing and attracting new We remain optimistic with our positioning and ability to grow through expanded patient accessibility and our broad product line. We expanded our product portfolio with three new medical pastilles and two new cultivars.

Speaker Change: Let's now dive into our global cannabis business, beginning with upgrades to our international operations, where we are experienced an increase in demand for E. U N T. G E. G. M P manufactured flower and particularly high potency THC cultivars within intensely aromatic profiles.

Speaker Change: Our second largest market after Canada as Australia, where we currently have the number two share.

Speaker Change: Although Australia is a highly regulated market for medical cannabis is rapidly growing and attracting new entrants.

Speaker Change: We remain optimistic with our positioning and ability to grow through expanded patient accessibility and our broad product line.

Speaker Change: We expanded our product portfolio with three new medical past deals and two new cultivars.

Miguel Martin: Medical pastilles offer patients several key benefits, including long-lasting and extended relief and easy oral intake that is discreet, portable, and convenient. Our new cultivars add to our comprehensive flower offerings, offering patients a greater range of potency and treatment options. And to further support prescribers in Australia and facilitate more seamless and simplified prescribing options, we expanded access to our diverse range of high-quality in-demand products, enabling greater access for Australian patients.

Speaker Change: Medical past deals offer patients several key benefits, including long lasting and extended relief and easy oral intake that is discrete portable and convenient.

Speaker Change: Our new cultivars added to our comprehensive flower offerings offering patients a greater range of potency and treatment options.

Speaker Change: And to further support prescribers in Australia, and facilitate more seamless and simplified prescribing options, we expanded access to our diverse range of high quality internet products, enabling greater access for Australia in patients.

Miguel Martin: Turning to our European markets where we have a longstanding presence and leadership position. Look into Germany first, the continent's largest market. It has now just been over a year since cannabis de-scheduling, and since then, the German market has experienced rapid growth, from which we have benefited greatly, as more patients register and pharmacies work to support higher prescription volumes. To fully capitalize on this long-term opportunity, our high-quality EU GMP manufactured products must remain consistently in stock, a commitment we uphold through reliable supply from our Canadian and German facilities. This includes our recently launched Indomed products, which are our first medical cannabis products cultivated in Germany, further cementing our commitment to growth in that country.

Speaker Change: Turning to our European markets, where we have a long standing presence and leadership position.

Speaker Change: Look into Germany, first the continent's largest market.

Speaker Change: It has now just been over a year since cannabis the scheduling and since then the German market has experienced rapid growth from which we have benefited greatly as more patients register in pharmacies work to support higher prescription volumes.

Speaker Change: To fully capitalize on this long term opportunity are high quality EU GMP manufacture products. Most remained consistently in stock a commitment we uphold through reliable supply from our Canadian and German facilities. This includes our recently launched into med products, which are our first medical canvas product cultivated in.

Speaker Change: Any further cementing our commitment to growth in that country.

Miguel Martin: Positive developments in Germany also have far-reaching effects across Europe, and we anticipate they will ultimately pave the way for legalization of medical cannabis in neighboring countries where there is already broad acceptance. Leveraging our agility and unique strengths, such as regulatory and cultivation expertise, we are confident in our ability to establish a strong foothold as favorable conditions develop in these markets.

Speaker Change: Positive developments in Germany, also a far reaching effects across Europe, and we anticipate they will ultimately pave the way for legalization of medical cannabis and neighboring countries, where there is already broad acceptance.

Speaker Change: Leveraging our agility and unique strengths such as regulatory and cultivation expertise. We are confident in our ability to establish a strong foothold as favorable conditions develop in these markets.

Miguel Martin: Let's now discuss Poland and the UK. In Poland, we have experienced some headwinds following a change in regulations that impacted the volume of prescriptions being issued. We believe this to be a temporary issue and continue to be optimistic about this market due to its longer production registration timelines, limited competition, and continued strong demand for Aurora's high-quality product offer. In the UK, we broadened our distribution and launched medical cannabis concentrates beginning in April. Following the success of these formats in Canada and Australia, we leveraged our operational and regulatory expertise to bring these proprietary cultivar specific inhalable cannabis extracts to British patients.

Speaker Change: Let's now discuss Poland and the U K.

Speaker Change: In Poland, we have experienced some headwinds following the change in regulations that impacted the volume of prescriptions being issued we believe this to be a temporary issue and continue to be optimistic about this market due to its longer production registration timelines limited competition and continued strong demand for Aurora is high quality product.

Speaker Change: Offerings.

Speaker Change: In the U K, we broadened our distribution and launch medical cannabis concentrates beginning in April following the success of these formats in Canada, and Australia, we leveraged our operational and regulatory expertise to bring these proprietary cultivar specific inhalable cannabis extracts to British patients. This.

Miguel Martin: This new product category represents another step forward in expanding the variety of high-quality medical cannabis available in this growing market.

Speaker Change: New product category represents another step forward in expanding the variety of high quality medical cannabis available in this growing market.

Miguel Martin: Turning to Canadian operations, Canadian medical grew 4% annually, and we continue to lead this market with the number one market share. This strong performance is a result of our continued investment in innovation, operational excellence, and high quality patient care. As we continue to invest and prioritize growing our high-margin global medical cannabis business, we remain active in the Canadian recreational market by delivering exceptional, high-quality, cutting-edge, and diverse options to consumers. There are clear interactions between recreational sales and medical sales in our home market, which, if international environments evolve from medical to recreational, would provide us with another advantage over our peers.

Speaker Change: Turning to Canadian operations Canadian Medical grew 4% annually and we continue to lead this market with the number one market share.

Speaker Change: This strong performance is a result of our continued investment in innovation operational excellence and high quality patient experience.

Speaker Change: As we continue to invest and prioritize growing our high margin global medical cannabis business, we remain active in the Canadian recreational market by delivering exceptional high quality cutting edge and diverse options to consumers.

Speaker Change: There are clear interactions between recreational sales and medical sales in our home market, which are international environments evolve from medical to recreational would provide us with another advantage over our peers.

Miguel Martin: In addition to signing new strategic external supply agreements, we continue to invest in our world-class manufacturing facilities to maximize production efficiency and increase annual manufacturing capacity. It is these initiatives, along with our continued investment in science and innovation, through our dedicated research and development facility, Aurora Coast, that enable us to benefit from both international and domestic growth opportunities.

Speaker Change: In addition to signing new strategic external supply agreements, we continue to invest in our world class manufacturing facilities to maximize production efficiency and increased annual manufacturing capacity.

Speaker Change: It is these initiatives along with our continued investment in science and innovation through our dedicated research and development facility Aurora coast that enable us to benefit from both international and domestic growth opportunities. We had an incredible year with record global medical net revenue adjusted EBITDA and <unk>.

Miguel Martin: We had an incredible year with record global medical net revenue, adjusted EBITDA and positive free cash flow and are excited for what lies ahead.

Speaker Change: Their free cash flow and are excited for what lies ahead.

Simona King: Let me now turn the call over to Simona for a detailed financial review of Q4 2025, followed by a discussion of our outlook for Q1 2026. Thank you, Miguel. We are very pleased with our performance in fiscal 2025, characterized by record annual results in global medical cannabis revenue of $244.4 million, combined with adjusted EBITDA of $49.7 million, and free cash flow of $9.9 million. I would like to thank our team for their many contributions to these excellent results.

Speaker Change: Now I'll turn the call over to Simona for a detailed financial review of Q4 of 2025, followed by a discussion of our outlook for Q1 2026.

Simona: Thank you Miguel we are very pleased with outperformance in fiscal 2025 characterized by record annual results in global medical cannabis revenue of $244 $4 million combined with adjusted EBITDA of $49 $7 million and free cash flow of $9 <unk>.

Simona: $9 million I would like to thank our team for their many contributions to these excellent results.

Simona King: Our plan for fiscal 2026 is to continue executing on our global medical first cannabis strategy, deliver sustainable improvements in our financial performance, and create more value for our shareholders. Let's now delve deeper into Q4 2025 results before discussing our outlook for Q1 2026. First, net revenue of $90.5 million represented 34% growth, supported by record net revenue from both our global medical cannabis and plant propagation sector. Second, quarterly profitability consisted of consolidated adjusted gross margin at 62%, 1,200 basis points higher than the year-ago period, resulting in record adjusted gross profit of $54.2 million. All segments generated higher margins than the year-ago period.

Simona: Our plan for fiscal 2020 is to continue executing on our global medical first cannabis strategy.

Simona: Liver sustainable improvements in our financial performance and create more value for our shareholders.

Simona: Let's now dive deeper into Q4 2025 results before discussing our outlook for Q1 2026.

Simona: First net revenue of $95 million represented 34% growth supported by record net revenue from both our global medical cannabis and plant propagation segment.

Simona: Second quarterly profitability consisted of consolidated adjusted gross margin at 62% 200 basis points higher than the year ago period, resulting in record adjusted gross profit of $54 $2 million.

Simona: All segments generated higher margins than the year ago period.

Simona King: Third, adjusted EBITDA grew 619% to a record $16.7 million from $2.3 million in the year-ago period. And fourth, we ended the quarter and fiscal year with $185.3 million in cash and cash equivalents and no cannabis business debt. Medical cannabis, our key strategic focus, net revenue rose 48% to $67.8 million due to 114% growth internationally, combined with continuous strong contributions from Canadian medical. Medical cannabis comprise 75% of net revenue, compared to 68% in the year-ago period, and approximately 90% of adjusted gross profit in both periods. Adjusted gross margin for medical cannabis was 70%, up from 66% in the year-ago period.

Simona: Alright, adjusted EBITDA grew 619% to a record $16 $7 million from $2 $3 million in the year ago period.

Simona: And fourth we ended the quarter and fiscal year with $185 $3 million in cash and cash equivalents.

Simona: No cannabis business that.

Simona: Medical cannabis or keeps from teams had <unk>.

Simona: Net revenue rose, 48% to $67 $8 million due to a 114% growth internationally combined with continued strong contributions from Canadian medical med.

Simona: Medical cannabis comprised 75% of net revenue compared to 6% to 8% in the year ago period, and approximately 90% of adjusted gross profit in both periods.

Simona: Adjusted gross margin for medical cannabis was 70% up from 66% in the year ago period.

Simona King: Several factors drove the year-over-year increase, including larger revenue contributions from higher margin markets, sustainable cost reduction, and improved efficiency in our manufacturing operation. Consumer cannabis net revenue was $8.2 million, down from $10.2 million in the year ago period. The year-over-year decline was the expected result of our continued decision to focus on portfolio optimization and prioritization of sales to our higher-margin medical cannabis business. Adjusted gross margins for consumer cannabis was 27% compared to 16% in the year-ago period. The margin increase was due to sales of higher margin products and cost improvements through spend efficiency. Feeble's plant propagation net revenue increased to $13.8 million, up 32% from $10.4 million in the year-ago period.

Simona: Several factors drove the year over year increase including larger revenue contributions from higher margin market sustainable cost reduction and improved efficiency in our manufacturing operation.

Simona: Consumer cannabis net revenue was $8 $2 million down from $10 $2 million in the year ago period.

Simona: The year over year decline, what's the expected result of our continued decision to focus on portfolio optimization and prioritize the prioritization of cells to our higher margin medical cannabis business.

Simona: Adjusted gross margin for our consumer cannabis was 27% compared to 16% and a year ago period.

Simona: The margin increase was due to sales of higher margin products and cost improvement and efficiencies.

Simona: Peoples plant propagation net revenue increased to $13 $8 million up 32% from $10 $4 million in the year ago period.

Simona King: This year-over-year improvement is due to a combination of increased plant propagation capacity and product offerings. Bebo historically delivers higher revenue in the winter and spring months, with about 65 to 75% of plant propagation revenue and up to 80% of EBITDA earned in the first half of the calendar year. Adjusted Gross Margin for Plant Propagation Revenue was 37% compared to 25% in the year-ago period. The increase was related to favorable product mix and higher capacity at Bebo's Greenhouse. Consolidated Adjusted SG&A increased 17% to $36.7 million compared to the year-ago period and supported year-over-year net revenue growth of 34%.

Simona: This year over year improvement is due to a combination of increased plant propagation capacity and product offerings.

Simona: People historically delivers higher revenue in the winter and spring months with about 65% to 75% of plant propagation of revenue and up to 80% of EBITDA earned in the first half of the calendar year.

Simona: Adjusted gross margin from plant propagation revenue was 37% compared to 25% in the year ago period.

Simona: The increase was related to a favorable product mix and higher capacity at people screened houses.

Simona: Consolidated adjusted SG&A increased 17% to $36 $7 million compared to the year ago period, and supported year over year net revenue growth of 34%.

Simona King: The increase compared to the prior year period relates to higher freight and logistics costs, notably from sales to Europe with the increase in sourcing from Canada, and incremental costs following the acquisition of MetRelief Australia. Adjusted EBITDA increased to $16.7 million from $2.3 million last year. The meaningful improvement from the year-ago period was due to a substantial increase in gross profit resulting from higher net revenue before fair value adjustments required under IFRS.

Simona: The increase compared to the prior year period relates to higher freight and logistics costs, notably from sales to Europe with the increase in sourcing from Canada and incremental costs. Following the acquisition of <unk> Australia.

Simona: Adjusted EBITDA increased to $16 $7 million from $2 $3 million last year.

Simona: The meaningful improvement from the year ago period was due to a substantial increase in gross profit, resulting from higher net revenue before fair value adjustments to require under Ifr S.

Simona King: Our balance sheet remains one of the strongest in the global cannabis industry. We held $185.3 million in cash and cash equivalents as of March 31st, and our cannabis operations are completely debt free. Our plant propagation business holds non-recourse debt that is secured by a significant fixed asset base held at Bebo. Pre cash flow was positive $2.5 million compared to a negative pre cash flow of $21.9 million in the year ago period. The $24.4 million increase is due to higher net revenue and contribution margin, along with an increase in working capital of $17.3 million.

Simona: Our balance sheet remains one of the strongest in the global cannabis industry, we held $185 $3 million in cash and cash equivalents as of March 31st.

Simona: And our cannabis operations are completely debt free.

Simona: Plant propagation business holds nonrecourse debt that is secured by a significant fixed asset base how that female.

Simona: Free cash flow was positive $2 $5 million compared to a negative free cash flow of $21 $9 million in the year ago period.

Simona: The $24 $4 million increase is due to higher net revenue and contribution margin along with an increase in working capital of $17 $3 million.

Simona King: Let me now provide some thoughts on what we expect for Q1 2026, which ends on June 30th. First, continued strong global cannabis revenue driven by improved performance in Canadian medical, consistent performance in consumer, offset by temporary declines in some of our international markets. Taken together, global cannabis should be slightly lower compared to Q4 2025 and is expected to improve further in later quarters due to increased distribution and further innovation.

Simona: Let me now provide some thoughts on what we expect for Q1 2026, which ends on June 30th.

Simona: First continued strong global cannabis revenue driven by improved performance in Canadian medical consistent performance in consumer offset by temporary declines in some of our international markets.

Simona: Taken together global cannabis should be slightly lower compared to Q4 2025 and is expected to improve further in later quarters due to increased distribution and further innovation.

Simona King: Second, seasonally higher revenues for plant propagation as they complete their peak quarter in line with historical seasonal trends. Third, margins should hold strong and adjusted EBITDA is projected to be sequentially below Q4 Fiscal 2025 due to lower revenue contributions from the higher margin international markets.

Simona: Second seasonally higher revenues for our plant propagation as they complete their peak quarter in line with historical seasonal trends.

Simona: Third margin should hold strong and adjusted EBITDA is projected to be sequentially below Q4 fiscal 2025 due to lower revenue contribution from the higher margin international markets.

Simona King: And finally, free cash flow is expected to remain positive due to continued strong performance and improved operating cash flow.

Simona: And finally free cash flow is expected to remain positive due to continued strong performance and improved operating cashes.

Simona King: Thank you for your time.

Miguel Martin: I'll now turn the call back to Miguel. Thanks, Simona. Our proven commitment to medical cannabis and our strong execution in seizing global opportunities resulted in excellent strategic and financial performance in fiscal 2025. Our medical cannabis first strategy is working, providing us with meaningful high margin growth opportunities in what we believe is a $5 billion plus market. We will continue to concentrate primarily on Europe and Australia, which are both vastly underpenetrated. Our focus outside of North America has given Aurora a first mover advantage and has allowed us to build a strong moat backed by scientific expertise and expanding product portfolio and our ability to navigate global regulatory frameworks.

Macau: Thank you for your time I'll now turn the call back to Macau.

Macau: Thanks Simona.

Speaker Change: <unk> commitment to medical cannabis and our strong execution in season global opportunities resulted in excellent strategic and financial performance in fiscal 2025.

Speaker Change: Our medical cannabis first strategy is working providing us with meaningful high margin growth opportunities and what we believe is a 5 billion plus market.

Speaker Change: We will continue to concentrate primarily on Europe, and Australia, which are both vastly underpenetrated or.

Speaker Change: Our focus outside of North America has given Aurora first mover advantage and has allowed us to build a strong moat backed by scientific expertise and expanding product portfolio and our ability to navigate global regulatory frameworks. This strategy supported by our continued strong financial performance serves a further.

Miguel Martin: This strategy supported by our continued strong financial performance serves to further differentiate us from our peers.

Speaker Change: Perenchio us from our peers.

Miguel Martin: Aurora is positioned for sustainable, profitable growth in fiscal 2026, and we look forward to providing business development updates as we work to create long-term value for our shareholders.

Speaker Change: <unk> is positioned for sustainable profitable growth in fiscal 2026, and we look forward to providing business development updates as we work to create long term value for our shareholders.

Unknown Executive: Thank you for listening to us this morning, and we would now be happy to answer your questions. Operator, please open the line. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question . You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. We ask that you limit to one question and re-queue for additional questions.

Speaker Change: Thank you for listening to us this morning, and we'd now be happy to answer your questions. Operator, Please open the lines.

Speaker Change: Thank you as he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.

Speaker Change: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: That's it you limit to one question and re queue for additional questions one moment, while we poll for questions.

Unknown Executive: One moment while we pull for questions.

Derek Lessard: Our first question is from Derek Lessard with TD Cowan. Please proceed. Yeah, good morning, everybody. Great quarter and great year, everyone. Congratulations.

Speaker Change: Our first question is from Derek Lazard with T D. Cowen. Please proceed.

Derek Lazard: Yes, good morning, everybody, a great quarter and great year already one congratulations.

Miguel Martin: Miguel, I just maybe I just want to talk about the Q1 guide on the international side. And I think you did touch on it in your, your open your prepared remarks, and you said temporary declines in some markets, which I assume is Poland. Maybe could you could you add some meat to those bones? Sure, and good morning, Derek. Nice to talk to you. Yes, I mean, I think, you know, we saw some regulatory changes in Poland that affected the ability of our patients to access, you know, prescriptions and generally the size of the market. We view that to be temporary.

Derek Lazard: Miguel I, just maybe I just wanted to talk about the Q1 guide on the international side and I think you did touch on it in your you open your prepared remarks, you said temporary declines in some markets, which I assume is Poland. Maybe could you could you have some meat to those bones.

Miguel: Sure and good morning Derek.

Derek Lazard: Talk to you, yes, I mean I think.

Derek Lazard: We saw some regulatory changes in Poland that affected the ability of our patients.

Derek Lazard: Access you know prescriptions and generally the size of the market, we view that to be temporary.

Miguel Martin: We are excited about the long-term, you know, aspects of Poland. Coming back, I think there's a couple of things there. One is we have two very important launches, which we believe will be some of the highest quality cultivars that Poland has seen, which will allow us to grow our market share and regain business that way. And secondly, we do see positive developments with the regulators in Poland, embracing a very thoughtful long-term approach. And so we view that as a temporary disruption. Germany continues to deliver, you know, at a high level and as a growth market for us, not only growing overall, but also from a market share standpoint.

Derek Lazard: We are excited about the long term you know aspects of Poland coming back I think Theres a couple a couple of things. There. One is we have two very important launches, which we believe will be some of the highest quality cultivars that Poland has seen which will allow us to grow our market share and regain business that way and secondly, we do see positive developments with the regulators and <unk>.

Derek Lazard: Colin embracing a very thoughtful long term approach and so we view that as a temporary disruption in Germany continues to deliver.

Derek Lazard: At a high level. It is a growth market for us not only growing overall, but also from a market share standpoint in the U K, which is the other key market.

Derek Lessard: And the UK, which is the other key market of size in that, you know, part of the world is also growing. Awesome.

Derek Lazard: Size and a.

Derek Lazard: Part of the World is also growing.

Derek Lessard: That's a good color there.

Derek Lazard: Awesome.

Miguel Martin: And maybe one last one for me before I recue. And again, you touched on it, but it does feel like there's a bit more incoming competition into the international space these days. So maybe talk about how you feel about, I guess, your positioning and any initial pressures on either the revenue or the margin structure at this point. Yeah, you know, it's a great question. You know, these markets, you know, whether it's Australia or Western or even parts of Eastern Europe, you know, are, you know, great high margin markets, and we've seen other competitors, you know, take an interest in them and try to get into them.

Derek Lazard: Color there and then maybe one last one for me before I requeue.

Derek Lazard: And again, you touched on it but it does feel like there's a bit more incoming competition into the international space. These days. So maybe talk about how you feel about I guess your your positioning and any initial pressures on either the revenue or the margin structure at this point.

Derek Lazard: Yeah. It's a great question you know these markets, whether it's australia or western or even parts of eastern Europe.

Derek Lazard: Our great high margin markets and we've seen other competitors you know taken interest in them and try to get into them now they are not easy to get into most of them require GMP certification, which is a very challenging certification to get Australia. As we mentioned has their own certification.

Miguel Martin: Now, they're not easy to get into. Most of them require GMP certification, which is a very challenging certification to get. Australia, as we mentioned, has their own certification protocol called TGA. So first, there's a barrier in terms of that. Secondly, you know, you have to have resources and infrastructure in those markets, which we have, you know, we've been almost, you know, a decade in Australia. We've got, you know, almost six, seven plus years in Germany, we have a production facility there. So while there is a lot of interest because of the growth and size of those markets, they're not easy to execute in.

Derek Lazard: Protocol called T. G. A so first there's a barrier in terms of of that secondly, you know you have to have resources and infrastructure in those markets, which we have you know we've been in almost a decade in Australia. We've got almost 67 plus years in Germany, we have a production facility there so.

Derek Lazard: While there is a lot of interest because of the growth in size of those markets, they're not easy.

Derek Lessard: And so I think, you know, there are a lot of people looking at it, it still is a small subset. And it is a concentrated piece of business from a market share standpoint, much more so than what we see in Canada. Thanks for letting me go.

Derek Lazard: To execute it and so I think while there are a lot of people looking at it. It still is a small subset and it is a concentrated piece of business from a market share standpoint, much more so than say, what we see in Canada.

Derek Lazard: Yes, Thanks for letting me go thank.

Unknown Executive: Thank you, Derek. We appreciate it.

Derek Lazard: Thank you Derek we appreciate it.

William Kirk: Our next question is from Bill Kirk with Roth Capital Partners. Please proceed. Hey, good morning, everyone. So I had a question on gross margin. I mean, obviously, it's already industry leading. I think it was said each segment gross margin still expanding. Where do you think margins can go? And maybe what would be the major drivers to get there?

Speaker Change: Our next question is from Bill Kirk with Roth Capital Partners. Please proceed.

Bill Kirk: Hey, good morning, everyone. So I had a question on gross margin I mean, obviously, it's already industry, leading I think it was said each segment gross margins still expanding where do you think margins can go and maybe what would be the major drivers to get there.

Miguel Martin: Yeah, Bill, let me make a top-line comment, and then I'll let Simona dive down into it a little bit. So, yes, and we appreciate your comment on margins. It's something, you know, we work hard at, and it's an industry that doesn't talk a lot about, you know, gross margins, but clearly, if you're going to, you know, focus on free cash flow, which we had, you know, a record quarter, and you have to focus on gross margins. So, I think, you know, there's two drivers for us. One is the cost of production, and we think we have some of the most compelling production costs out there, particularly for GMP products that allow us, you know, to start that process at a low point.

Speaker Change: Yes, Bill let me make a topline comment and then I'll, let some other dive down into it a little bit.

Speaker Change: So yes, and we appreciate your comment on margins, it's something we work hard at and it's an industry that doesn't talk a lot about you know gross margins, but clearly if youre going to focus on free cash flow, which we had a record quarter and you have to focus on gross margins. So I think theres two drivers for US one is the.

Bill Kirk: Cost of production and we think we have some of the most compelling.

Bill Kirk: Production costs out there, particularly for GMP products that will allow us to start that process that are at a low point secondly, because we sell so much premium products and the quality of our products are so high we will eat we're able to garner what we.

Miguel Martin: Secondly, because we sell so much premium products, and the quality of our products are so high, we're able to garner, you know, what we think are top-tier margins and pricing, particularly to wholesale, which is our customer. So, I think those are the big drivers.

Bill Kirk: Thank our top tier margins and pricing, particularly the wholesale which is our customer. So I think those are the big drivers, but simona any other pieces you want to unpack.

Simona King: But, Simona, any other pieces you want to unpack?

Simona King: Yeah, no, thanks, Miguel. And to add a little bit more. And so we focused over the years on yield improvement and cost efficiencies in our operation. So that's definitely contributed to our improved margins over the over the quarters and compared to last year as well. And the other part that impacting our margin in a favorable way is our portfolio mix, where we're selling more and more in the medical cannabis space and especially in the international markets, which have higher margins. And so putting these two factors together has, you know, contributed to the increase that you've seen over the quarters, and also on an annual basis.

Simona: Yeah, no, thanks, Miguel and chat a little bit more and so we focused on over the years on yield improvement and cost efficiencies in our operations. So that definitely contributed to our improved margins over the over the quarter than compared to last year as well.

Simona: And the other part of that impacting our margin in a favorable way is our portfolio mix, where we're selling more and more in the medical cannabis space and especially in the international markets the cap higher margin and so putting these two factors together have contributed to the increase that you've seen.

Simona: Scene over the quarters and also on an annual basis.

Simona King: And we provide this breakdown in terms of margin impact coming from our medical cannabis and the other business segments that we have.

Simona: And we provide this breakdown in terms of margin impact coming from our medical cannabis and the other business segments that we have.

Simona King: So we believe these margins, you know, will continue to be strong.

Simona: So we believe these margins will continue to be strong.

William Kirk: Thank you. And then Miguel, when you were talking about Germany, you mentioned a key was remaining in stock. And so I guess my question is, have you experienced out of stocks there? And if you have, what could sales have been if supply better met demand in Germany? And there was a separate comment about increasing capacity. And I was just wondering if the two were related. Yeah, I mean, listen, you know, it is easy to forget that this is medicine and medicine needs to be in stock for our patients and for prescribing physicians. We've not had issues.

Speaker Change: Thank you and then Mikael when you were talking about Germany, you mentioned a key was remaining in stocks and then so I guess my question is how have you experienced out of stocks there and if you have.

Speaker Change: What could sales had been if supply better met demand in Germany, and there was a separate comment about increasing capacity and I was just wondering if the two are related.

Simona: Yes, I mean listen.

Speaker Change: It is easy to forget that this is Madison and medicine needs to be in stock for our patients and for our prescribing physicians, we've not had issues. It's something that we really focus on the comment that you've heard us talk about with rack reallocating. These inputs most of the products that we sell we sell globally and so the <unk>.

Miguel Martin: It's something that we really focus on. The comment that you heard us talk about with REC reallocating these inputs, most of the products that we sell, we sell globally. And so the great products that we develop in Canada were able to launch around the world. Said differently, we advantage those markets, particularly our medical markets, over REC. And so we've not seen an out of stock. But it is a key component to growth. Both prescribing physicians and patients advantage those brands that are in stock. It is a hard thing to do when you see rapid growth in a market like Germany, and it's something that we work really hard at and we think is a point of differentiation for Perfect.

Simona: Great products that we develop in Canada, we're able to launch around the world said differently, we advantage those markets.

Simona: Our medical markets over rack and so we've not seen an out of stock, but it is a key component to growth both prescribing physicians and patients advantage. Those brands that are in stock. It is a hard thing to do when you see rapid growth in a market like Germany, and its something that we work really hard at and we think has appointed differentiation.

Derek Lazard: And for Us.

William Kirk: Thank you.

Derek Lazard: Perfect. Thank you.

Unknown Executive: Thank you, Bill.

Derek Lazard: Thank you Bill.

Frederico Gomes: Our next question is from Frederico Gomes with ATB Capital Markets. Hi, good morning. Thanks for taking my questions.

Speaker Change: Our next question is further frederico Gomez with <unk> capital markets. Please proceed.

Frederico Gomez: Hi, Good morning, Thanks for taking my questions first question, just going back to that comment on bulk.

Miguel Martin: First question, just going back to that comment about supply, I guess, are you in any way constrained by supply as those international markets grow? I mean, if your project continued to grow for the next year or so, do you anticipate that you'd have to meaningfully expand your own conservation? Or would there be any interest, I guess, in you doing that or the strategy to maybe get that additional supply from third parties, cultivators? Thanks.

Frederico Gomez: Supply I guess are you in any way constrained by supply as those international markets growing if you project continued drill for the next year or so.

Frederico Gomez: Do you anticipate that you would have to meaningfully expand your own cultivation or.

Frederico Gomez: Would there be any interest I guess and you're doing that or orange is the strategy to maybe get that additional supply from third parties.

Frederico Gomez: Cultivators.

Miguel Martin: Yeah, Fred, we've not had, you know, to date, any sort of supply constraints. So Simona mentioned, you know, our yield improvements, we've been able, been able through our genetic facility out at coast, to develop proprietary cultivars that significantly have improved our yields at our own facilities. If you look at some of our CAPEX usage and our investment, you know, a lot of that has gone into whether it's new lighting or nutrient systems or upgrading our current facilities to meet those demands. As we've announced previously, and you mentioned in your question, we've also, you know, announced some very strong partnerships with third parties that allow us, you know, to schedule, you know, that demand.

Speaker Change: Yes, Fred we have not had to date any sort of supply constraints. So simona mentioned.

Speaker Change: Yield improvements, we've been able been able through our genetic facility out of coast to develop proprietary called of ours that have significantly improved our yields at our own facilities. If you look at some of our capex usage in our investment.

Speaker Change: A lot of that has gone into whether it's new lighting, a nutrient systems or upgrading our current facilities to meet those demands as we've announced previously and you mentioned in your question. We've also announced some very strong partnerships with third parties that allow us to schedule that demand. So we feel good about where we are.

Miguel Martin: So we feel good about where we're at. We'll continue to, you know, look at opportunities. But it has not impeded our ability to service any of our patients or Perfect, thank you.

Speaker Change: <unk>.

Frederico Gomez: We will continue to look at opportunities, but it has not impeded our ability to service any of our patients internationally.

Frederico Gomez: Perfect. Thank you.

Miguel Martin: My second question, just a big picture here in terms of international markets that could become more meaningful over the coming years. I know that you are in Australia, Germany, Poland and the UK, so the big markets, but in terms of new markets opening up, do you see anything happening near term? And if so, which markets are we looking at? Yeah, I think in the short term is defined by say the next, you know, year or so, it's going to be the expansion of the current markets, you know, there were questions about the new government in Germany, you know, their take on medical cannabis, and we've not seen any indication that there's going to be a rollback there.

Frederico Gomez: My second question, just big picture here in terms of.

Frederico Gomez: International markets that could become more meaningful over the coming years I know that you are in Australia, Germany, Poland and the K So the big markets.

Frederico Gomez: In terms of new markets opening up.

Frederico Gomez: Do you see anything happening near term and if so which markets are we looking at.

Frederico Gomez: Yeah, I think in the short term as defined by say the next year or so it's going to be the expansion of the current markets. You know there were questions about the new government in Germany.

Frederico Gomez: Their take on medical cannabis and we've not seen any indication that there's going to be a rollback. There. So we see Germany, which is the largest continuing to grow at a rapid rate as we mentioned our view on the Poland situation is that it's temporary and that that market will advantage high quality cultivar.

Miguel Martin: So we see, you know, Germany, which is the largest, continuing to grow at a rapid rate. As we mentioned, you know, our view on the Poland situation is that it's temporary, and that that market will advantage high quality cultivars like the ones we're launching. And the UK, you know, is going to continue to expand, which is a nice market, because you can also launch other formats much easier there, which we've done with our inhalable extracts. You mentioned Australia, Australia is going to continue to grow, right next to it is New Zealand, and there's a lot of efficiencies in there.

Frederico Gomez: <unk> like the ones, we're launching in the U K is going to continue to expand which is a nice market. He's going to also launch other formats much easier there, which we've done with our in herbal extracts you mentioned, Australia, Australia is going to continue to grow right next to it as New Zealand and Theres a lot of efficiencies in.

Miguel Martin: And, you know, beyond that, we are seeing new markets come online, like Switzerland and Austria. We've talked a little bit about some interest from countries like Ukraine, but, you know, short term will be these big, large markets continuing to grow and opportunities to grow share, because of the, you know, sort of unique interest in that GMP flower, which is, you know, a limited commodity, but we continue to see positive developments internationally, all around the world, with governments looking at medical cannabis.

Speaker Change: In there and B.

Frederico Gomez: Beyond that we are seeing new markets come online like Switzerland, and Austria.

Frederico Gomez: Talked a little bit about some interest from countries like Ukraine.

Frederico Gomez: But short term will be these big large markets continuing to grow and the opportunities to grow share because of the city unique interest in that GMP flower, which as you know a limited commodity but we continue to see positive developments internationally all around the world with governments looking at medical cannabis.

Frederico Gomes: Perfect.

Unknown Executive: Thank you.

Frederico Gomez: Perfect. Thank you.

Unknown Executive: Thank you, Fred.

Speaker Change: Thank you Brad.

Matt Bottomley: Our next question is from Matt Bottomley with Kennecourt Genuity. Please proceed.

Speaker Change: Our next question is from that Bottomley with Canaccord Genuity. Please proceed.

Matt Bottomley: Good morning, everyone. Thanks for the questions and congrats on a very strong fiscal year. Just first, this is sort of a follow-up question to Simona, some of the other comments you had on margins. Apologies if I missed this in the prepared remarks, but I'm trying to get an indication on a quarter-over-quarter basis. It looks like the shift in revenues was mainly just more plant propagation, less adult use relative to last quarter. Everything else kind of flat. So just trying to get a better indication of why adjusted EBITDA kind of took a step back there.

Speaker Change: Hi, good morning, everyone. Thanks for the questions and congrats on a very strong fiscal year, just first as sort of a follow up question to some of the other comments you had on margins I apologize if I missed this in the prepared remarks, but I'm trying to get an indication on a on a quarter over quarter basis. It looks like the shift in revenues was mainly just more plant propagation less adult use relative to last.

Frederico Gomez: Everything else kind of flat so I'm, just trying to get a better indication of why adjusted EBITDA kind of took a step back there and then just a secondary question on Australia, if I have time after that.

Matt Bottomley: And then just a secondary question on Australia if I have time after that.

Simona King: Sure, Simona, why don't you take the first one and I'll be happy to answer Australia unless it's a modeling question. Sure. So, to provide a little bit more context on the adjusted EBITDA margin, what we've also seen in Q4 is an increase in adjusted SG&A, and that's due to an increase in, of course, supporting the revenue side, but also expected year-end expenses that we don't expect them to be recurring. So, the increase in SG&A has also impacted our adjusted EBITDA margin, but, of course, that's been offset by the increased overall net revenue and the adjusted gross margin impacts that we saw in Q4.

Frederico Gomez: Sure So what I want to take the first one and I'll be happy to answer Australia, unless it's a modeling question.

Frederico Gomez: Sure so to provide a little bit more context on the adjusted EBITDA margin, but we've also seen in Q4 is an increase in our adjusted SG&A and that's due to that's due to an increase and of course supporting that revenue side, but also XP.

Frederico Gomez: At year end expenses that we don't we.

Frederico Gomez: We don't expect them to be recurring so the increase in SG&A has has also impact that our adjusted EBITDA margin, but of course that's been.

Frederico Gomez: All set by the increase overall in net revenue and adjusted gross margin impacts that we saw in Q4.

Matt Bottomley: Okay, got it. Thanks for that.

Speaker Change: Okay got it thanks for that and then I guess more broadly just on Australia. So we heard a little bit about some of the issues in Poland from some of your peers when they had reported earlier in.

Miguel Martin: And then, yeah, I guess more broadly just on Australia. So, you know, we heard a little bit about some of the issues in Poland from some of your peers when they had reported earlier in the prior weeks and months. So, Australia, we're getting a lot of positive commentary there. So, just given that you have the number two market share, can you just give us an indication on how much there is growth just relative to the, you know, strong performance versus or in addition to just the growth prospects there? Obviously, it's a very relevant market going back to the early days of the Canadian LPs.

Speaker Change: In the prior weeks and months, so Australia, we're getting a lot of positive commentary. There. So just given that you have the number two market share can you just give us an indication on how much there is growth just relative to the strong performance versus or in addition to.

Speaker Change: Just the growth prospects there.

Speaker Change: A very relevant market going back to the early days of the Canadian Lps and it seems like the traction starting to gain there. So maybe just a little more macro commentary on usage or what doctors are doing there would be helpful for our modeling.

Miguel Martin: And it seems like the traction is starting to gain there. So, maybe just a little more macro commentary on usage or what doctors are doing there would be helpful for our modeling. Yeah, I mean, I think overall, you know, we see Australia growing, it's hard without syndicated data to understand exactly, you know, so it's hard for me to give you a percentage, but we don't see anything sort of structural changing. Now, with all new regulatory environments, you know, you're going to see scrutiny in different areas. And so it's not going to be a straight line, say quarter over quarter.

Frederico Gomez: Yeah.

Frederico Gomez: I think overall you know, we see Australia growing its hard without syndicated data to understand it exactly.

Frederico Gomez: Hard for me to give you a percentage, but we don't see anything sort of structural changing now with all new regulatory environments.

Frederico Gomez: You're going to see scrutiny in different areas and so it's not going to be of a straight line and say quarter over quarter, but it is a market where we think you can garner large market share. So said differently, it's not a market.

Miguel Martin: But it is a market where, you know, we think you can garner large market share. So said differently, it's not a market, you know, where you're going to be sort of susceptible for, you know, 1000 players coming in, you have to have feet on the ground, you have to have a relationship with the distributors, you have to have a relationship with the pharmacies and the pharmacies particularly, you know, have a lot of influence, particularly with the patients and in that category. So we like that market a lot.

Frederico Gomez: Where you're gonna be susceptible for a 1000 players coming in you have to have feet on the ground you out to have a relationship with the distributors you have to have a relationship with the pharmacies and the pharmacies, particularly.

Frederico Gomez: Have a lot of influence, particularly with the patients and in that category. So we like that market a lot I think your other.

Miguel Martin: I think your other, you know, point of sort of inflection for Australia is the introduction of other formats beyond flour and oil. And we've seen that as we've launched past deals, or as they're known in the, you know, North America gummies. And we also see other items, you know, such as inhalables coming online. And so that, you know, all comes together, I think, for, you know, a subset of companies to be very successful in a growing market. And it's also one where we don't see, you know, a tremendous amount you know, of sort of price compression.

Frederico Gomez: Point of sort of inflection for Australia.

Frederico Gomez: Is the introduction of other formats beyond flower and oil and we've seen that as we've launched past deals or as they're known in the North America Gummies and we also see other items such as inhalable is coming online and so that all comes together I think for <unk>.

Frederico Gomez: Subset of companies to be very successful in a growing market and it's also one where we don't see a tremendous amount.

Miguel Martin: There's definitely a lot of input coming in on the low end, but there's good pricing at the middle and on the premium side.

Frederico Gomez: So the price compression there are definitely a lot of input coming in on the low end, but theres good pricing at the middle and on the premium side and as I mentioned earlier don't go to sleep on New Zealand I know, it's smaller but there is a lot of opportunity. There. It is a very very long and challenging registration.

Miguel Martin: And as I mentioned earlier, don't go to sleep on New Zealand. I know it's smaller, but there is a lot of opportunity there. It is a very, very long and challenging registration process, and one that we've been working on for a while. And so that is probably going to be an even more consolidated market in terms of market share. But it's got a long history with medical cannabis and is a really good market. So the combination of the two, while, you know, challenging from a distance standpoint, and the amount of investment you have to make, we think is, you know, will be a very, very strong markets going forward.

Frederico Gomez: Process and one that we've been working on for a while and so that is probably going to be an even more consolidated market in terms of market share, but it's got a long history with medical cannabis and its a really good market. So the combination of the two while challenging from a distance standpoint, and the amount of investment you have to make we think is will be a very very strong.

Frederico Gomez: Markets going forward.

Unknown Executive: Okay, thanks all. Appreciate it. Thank you. As a reminder, there's star one on your telephone keypad if you would like to ask a question.

Frederico Gomez: Okay. Thanks I appreciate it.

Frederico Gomez: Yeah.

Speaker Change: As a reminder, this star one on your telephone keypad, if he would like to ask a question. Our next question is from Populus suite.

Pablo Zuanic: Our next question is from Pablo Zuanic with Zuanic and Associates. Please proceed. Thank you.

Speaker Change: With fitness and associates. Please proceed.

Miguel Martin: Good morning, everyone. Miguel, just one quick question in terms of Germany, you know, when we compare with some of the US states, 4% population penetration, in the case of Germany, only probably 0.4. What do you think are the structural impediments on the demand and supply side for Germany to continue to grow in terms of penetration? 0.4 still seems very low to me, with the potential, you know, that we see in other US states. But just talk about the impediments, the structural impediments. Thank you.

Speaker Change: Thank you good morning, everyone. Maybe I'll just one quick question in terms of Germany, when we compare with somewhat U S states, 40% population penetration.

Speaker Change: So, Germany, only probably suitable for what do you think are the structural impediments on the demand and supply side for Germany to continue to grow in central penetration suitably enforced it seems very low to me.

Speaker Change: Potential you know that we see another other U S states, but just talk about it the impediments of structural impediments. Thank you.

Miguel Martin: Yeah, you know, Pablo, and good morning. It's a great question. You know, it's an interesting one, because if you look at, you know, the way you would describe its structural impediments, you know, at face value, Germany doesn't have a lot of them, they've got a, you know, a permissive regulatory regime, you have a relatively easy ability for patients to get prescriptions, there is a very strong telemedicine, you know, program there that allows the shipment of metal cannabis through the mail throughout Germany. I think, you know, it's probably three primary areas.

Speaker Change: Pablo and good morning, it's a great question.

Speaker Change: One because if you look at you know the way we describe it structural impediments.

Speaker Change: At face value, Germany doesn't have a lot of them they've got a.

Speaker Change: Permissive regulatory regime, you have a relatively easy ability for patients to get prescriptions. There was a very strong telemedicine.

Speaker Change: Our program there that allows the shipment of medical cannabis through the mail throughout Germany, I think it's.

Speaker Change: Probably three primary areas one is education.

Miguel Martin: One is education. You know, there is a strict market in terms of what you can communicate and how you can communicate it is the first one. Secondly, it takes a while, particularly in that market for doctors to get educated on the category. And therefore, since you need a specific prescription for a specific item, get there. Thank you.

Speaker Change: There's a strict market in terms of what you can communicate and how you can communicate it as the first one secondly.

Speaker Change: It takes a while particularly in that market for doctors to get educated on the category and therefore since you need specific prescription for a specific item get there and then I think third is because it is very difficult in that market to have anything other than flower and oil some of the other formats.

Speaker Change: Even though there are some inhalable as registered arent. There. So you are correct that <unk> four is less than the 1% of Canada, but again, Canada has got almost eight years on Germany from a timing standpoint, and people should remember the size of the German economy and.

Speaker Change: And how quickly cannabis is grown there and we don't see any step back some medical candidates. So while the overall penetration number may be low.

Speaker Change: It is one of the countries globally that everybody should keep an eye on and as I mentioned in my prepared remarks, there were a lot of eyes on Germany from other European countries, both in Western Europe, and Eastern Europe. So it is a tremendous amount of influence and by all accounts. The medical Canada system is going very well and we think we will continue to influence its neighbors.

Speaker Change: <unk>.

Pablo Zuanic: And just one quick follow up, you know, obviously, you have a very strong sales force talking to the doctors, they're a very pharmaceutical, medical approach. But I could make the argument that the way the market is developing is more from the cash payers more quality, you know, maybe pseudo rec, and maybe the way to go to market and promote your products is very different. In that case, that sales force is less of a strength. Can you talk about that? How you balance it to the cash payers versus, you know, the ones that are more influenced by the doctors?

Speaker Change: Thank you and just one quick follow up obviously you have a very strong sales force talking to the doctors there are very pharmaceutical medical approach, but like when they their argument that the way the market is developing it's more from the cash payers modem Paula you know maybe Stuart Rick.

Speaker Change: Maybe the way to go to market and promote your books is very different and up gauge that salesforce is less of a strength can you talk about how you balance the two the cash payers versus you know the ones that are more influenced by the doctors. Thank you yeah. I mean, so you're describing so what you've got there we would we would call that segment to self pairs, so yourself pairs and reimburse them.

Miguel Martin: Thank you. Yeah, I mean, you know, so you're describing so what you have there, we would we would call that segment the self payers, your self payers and the reimbursed. And yes, the self payer segment does operate, you know, a little bit differently. We have resources on both sides of that. But at the end of the day, whether you are paying for the medication yourself, or whether you are coming in through a reimbursed model, a doctor has to prescribe it, and there has to be a certain amount of education. And we think there's a lot of overlap there.

Speaker Change: And yes, the self payer segment does operate.

Speaker Change: Bit differently, we have resources on both sides of that but.

Speaker Change: But at the end of the day, whether you are paying for the medication yourself or whether you are coming in through a reimbursed model a doctor has to prescribe it and there has to be a certain amount of education, and we think theres a lot of overlap there I think secondarily, because we operate in Canada in both medical and rack environments and we are utilizing the.

Miguel Martin: I think secondarily, because we operate in Canada, in both medical and rec environments, and we are utilizing the same products, both in Canada and Germany, it gives us a significant advantage, you know, because we know this product well, we've interacted with doctors and patients in Canada, and we can translate that into Germany. And the best selling Canadian products that we have are the ones that we're launching in Germany, and that's going very well. So it's a great point in terms of the different ways you have to execute, but we've been successful on both sides. Got it.

Speaker Change: Same products, both in Canada, and Germany, It gives us a significant advantage.

Speaker Change: Because we know those product well, we've interacted with doctors and patients in Canada.

Speaker Change: We can translate that into Germany, and the best selling Canadian products that we have are the ones that we're launching in Germany, and that's going very well so far so it's a great point in terms of the different ways you have to execute but we've been successful on both sides of it.

Pablo Zuanic: Thank you. Thank you, Pablo.

Speaker Change: Got it thank you.

Speaker Change: No problem.

Unknown Executive: With no further questions, I would like to turn the conference back over for closing remarks. Thank you very much. We appreciate that.

Speaker Change: With no further questions I would like to turn the conference back over for closing remarks.

Speaker Change: Thank you very much we appreciate that it was a great year for Aurora and we were terribly excited about of the euro in front of US. We appreciate your interest and we look forward to updating everyone. As we move forward and thank you all the best.

Unknown Executive: It was a great year for Aurora, and we are terribly excited about the year in front of us. We appreciate your interest, and we look forward to updating everyone as we move forward. Thank you. All the best. Thank you.

Unknown Executive: This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

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