Aurora's stock falls, while profits show that cannabis company's investments are still the biggest income

The massive demand for marijuana and the need to capitalize on the legalization of adult entertainment in Canada has generated more revenue for Aurora Cannabis Inc., but cost the company millions of dollars, according to quarterly results released Monday.

Dawn

CBA -4.53%

CBA -1.71%

stock fell 4.5% to $ 6.96 during the normal trading on Monday and remained steady during the extended session.

Cannabis-based Canadian company reported first-quarter net income for the fiscal year increased from C $ 3.6 million to C $ 105.5 million, compared to C $ 79.9 million in the quarter previous. This net profit is essentially non-monetary, however, thanks to Aurora's investments in other cannabis-related businesses, such as Green Organic Dutchman Holdings Ltd.

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among others, who have benefited from huge gains on the price of their shares in recent months.

Pots stock profile: Investments in Aurora Cannabis could be more valuable than its pot

Total revenues increased 260 per cent over the previous year and 55 per cent over the previous quarter, while cannabis-related revenues jumped 236 per cent over the previous year and 65 per cent over the previous year. in the previous quarter to reach $ 24.6 million. The company said it had fetched about C $ 500,000 from its adult leisure sales during the quarter and that at this point, the demand from provincial buyers – Canadian weed companies are selling pot to wholesalers managed by the government – far exceeded the available supply. In total, Aurora sold 2,676 kilograms of jar during the quarter, although much of it went to medical patients.

"Our production team told me that we could sell every gram we produced until the end of June, that is to say every gram we produce here, if we wished, in the market for use by adults, "said Cam Battley, general manager teleconference.

For more information: Cannabis is now legal in Canada, but marijuana companies are waiting for a difficult start

Battley stated that the company was in demand for all of its products, but that pre-rolled cannabis cigarettes exceeded company expectations – these are higher margin products and the company is charging much more than Marijuana flowers that consumers drive and smoke.

Prior to legalization in Canada, Aurora production was increased to about 5,000 kg, an increase of 126% from the previous quarter, and about four times the same period last year. At the conference call, executives said the company was counting on an "annualized rate of return" of 70,000 kilograms. A number of production managers believe that the company should be able to meet by the end of the second quarter.

During the teleconference, Aurora executives said the company was supplying 30% of its cannabis to the country's most populous province, Ontario. PI Financial analyst Jason Zandberg wrote in a note to customers last Monday that it was a "surprising" figure and that his team had planned a smaller share for Aurora. Zandberg also noted that the company's average wholesale price, at $ 5.50 Canadian per gram, was higher than the Canadian $ 5 price he had modeled.

The average selling price per gram of dried cannabis increased 15% over the previous year to $ 8.39 Canadian, while the cash cost per gram fell 12% to $ 1.90. For cannabis extracts, the net selling price per gram decreased by 26% to C $ 12.12 while costs decreased by 22% to C $ 1.45.

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The company's expenditures to legalize the Canadian pot on October 17 have increased significantly. The executives said the company doubled its sales and marketing expenses to C $ 29.4 million in the quarter, as strict advertising and marketing rules came into effect on October 17 and society would not continue to spend at these levels.

"On October 17, the cannabis law dramatically reduced the reach of commercialization," said Glen Ibbott, chief financial officer, during the teleconference, adding that 80% of the increase in marketing spend was related to Canadian legalization. "But in the future, we expect our sales and marketing expenses to be fairly small until regulations change, if and when they will."

General and administrative expenses also increased 59% to $ 35.9 million, largely as a result of increased staffing levels and the rental of new office space. At the end of the quarter, Aurora had approximately 1,600 people.

See also: All Potential Red Flags for Investors in IGC, Pot Inventory Rising 1,000% in Three Months

The company has also seen an increase in the number of registered medical cannabis patients, and Aurora reported Monday that the number had increased by 250% to 67,484. Analysts had previously speculated that the legalization of the drug for adult use could lead to a decline in the number of medical patients, but Aurora executives have stated that this has not been the case so far.

Prior to Monday's losses, Aurora shares rose 58% in the last three months, while the MG Alternative Harvest ETF

MJ -1.97%

climbed 22% and the S & P 500 index

SPX, -1.97%

slipped 1.8%.