Aurora making way more money in vegetable seedlings than it did in cannabis

By Medicine Hat News on June 21, 2024.

Aurora Cannabis made more money on growing vegetable seedlings than on recreational cannabis over the last 12 months, but improved its largest segment, medical sales, by 20 per cent, the company reported Thursday.

“Our business model is centred on our medical cannabis leadership in national legal markets,” Miguel Martin, CEO of the firm that built the Aurora Sun greenhouse in the Hat, told investors on a conference call discussing fiscal year-end results as of March 31.

“This (2024) is the first time in the company’s history that we’ve recorded positive (unadjusted) earnings on an annual basis,” said Martin. “We’re in a strong financial position heading into 2025.”

Overall, the company that struggled as the cannabis sector contracted sharply in years after legalization, posted a 21 per cent increase in revenue last year with a gross margin of 49 per cent.

It has also fully repaid $540 million in debt on an accelerated repayment schedule over the last three years, officials said.

Aurora also maintained its relatively new position in the horticulture market through subsidiary, Bevo Farms, which is now repurposing the 1.4-million square-foot Sun greenhouse.

That wasn’t in operation in fiscal 2024, but Bevo as a whole earned $10.4 million in fourth-quarter revenue, down slightly, though full-year $44.7 million in sales, compares to $20.6 million over six months in 2023.

BC-based greenhouse starter and flower producer Bevo was acquired by Edmonton-based Aurora in August 2022 as the cannabis company provided two large Alberta greenhouses – Sky in Leduc and Sun in Medicine Hat – to the partnership.

The company informed Medicine Hat city council this spring that it will appeal its 2024 tax assessment based on the fact it will convert the facility to grow vegetable seedlings that will be sold wholesale to other growers. Operations in one-third of the space began in April, which assessors say was after a December deadline to change tax classification.

Financial reports show that Aurora’s Bevo segment holds existing debt of $57.3 million.

Company officials said the change in recreational sales was the result of the company prioritizing medical production, which sells at higher margins.