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| Statement |
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| The consistently high margin as the result of sustainable cost reductions and improved efficiency in our production operations |
| So Germany is obviously a key market for us is, as I said, we're one of three companies that have domestic production, which is a significant advantage |
| Our highlights include: first, strong revenue of over $64 million, up several percentage points inclusive of 41% growth in our international medical cannabis segment |
| Second, industry leading adjusted gross margin of 50%, also up from the year ago period |
| Third, a record adjusted EBITDA, representing our fifth consecutive quarter of positive adjusted EBITDA |
| So momentum builds momentum, particularly in that part of the world, and we're thrilled about that progress and looking forward to seeing the regulations when they come out |
| We continue to believe medical cannabis is the best place to be in cannabis globally, and we’ve demonstrated our leadership there |
| We are very supportive, though, of these actions and have found that the German regulators whether it's been the approval process, the testing process, the certification process have all done a really good job with this, and these things take time |
| Acquiring MedReleaf Australia positions us to deliver double-digit increases to the profitability of our Australian business model through higher revenue contributions and higher gross margins |
| And so, we're thrilled about having a foothold and having such a great acquisition that will be margin accretive day one in that key market |
| But we've had great success in this market on multiple brands and we're really excited about it |
| Our performance in our medical channels was largely due to the positive market reaction to our Canadian growing high potency cultivars in key European markets and to the continued rapid growth of the Australian medical market |
| So listen, we are thrilled about our leadership in the Canadian market and being a Canadian medical cannabis company |
| We are extremely excited about our opportunity within the rapidly growing AUD400 million market |
| We are so excited about where we are |
| In Canada, we maintained our number one position in the medical market and continue to grow our market share through a broad and attractive product assortment, positive sales mix and most importantly, product innovation |
| And I think that’s why we’re so excited about it, and I think why we do so well there |
| But clearly, we get great advantages out of leveraging that exact same system all around the world |
| We fully intend to make good on our commitments for top line growth and continued and sustainable adjusted EBITDA generation, $200 million of cash on hand, we're in a strong position as we work towards our goal of generating positive free cash flow this calendar year |
| And for that reason, you see good margins |
| And so because the economics and the efficiencies of being able to do that in a centralized place like Canada, which is such an incredible place for us to grow, we can leverage the same genetics, the same process at very low energy costs and production costs and ship it around the world, that's a significant advantage for us |
| We are very supportive of this effort and uniquely well positioned to benefit as the number one supplier of flower to patients outside the public insurance system |
| We are excited about the opportunities that this growing market presents |
| In the U.K., patients are responding favorably to the launches of our next generation cultivars, which has led to a significant increase in sales in Q3 compared to Q2 |
| And we've demonstrated great flexibility, whereas in some markets, we are both the manufacturer and the wholesaler and the sales organization |
| All-in-all, medical cannabis adjusted gross margin remained strong at 62%, as we benefit from sustainable cost reductions and improved efficiency in production operations |
| Still our adjusted gross margin improved substantially versus the year ago period because of our higher efficiency in production operations and a more favorable product mix |
| Finally, we exhibited the inherent benefits of a diversified model as we are expanding our reach in the controlled environment agricultural industry through VIVO |
| If there's one takeaway for our investors, it would be that strategically and financially, we are in the best shape ever |
| In the upcoming two to three years, we think that our shareholders are benefiting the value creation coming from this segment, as we expect the acceleration of Vivo's business plan to continue to drive revenue and EBITDA growth |
| Statement |
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| Consumer cannabis net revenue was $11.6 million, down from $14.6 million a year ago |
| Adjusted gross margin for medical cannabis was 62% in Q3, down 1% versus the year ago period |
| Our decision is to strategically allocate product, the higher margin medical markets resulted in a modest and expected year-over-year revenue decline in the consumer cannabis systems |
| And like I said, people can get a little frustrated about the pace sometimes of progress |
| and develop great efficiencies for us, so it's difficult |
| So yes, we believe that the roughly $400 million a year of Canadian revenue is declining slightly |
| And so our margins were lower |
| The high regulatory standards of the Therapeutic Goods Authority makes Australia a challenging market for new entrants, while providing advantage to companies like Aurora, who are able to meet them |
| And obviously, it impacted the margin when you're just a manufacturer thus the trigger to buy the rest of it so that we could experience the same margins that we see in other parts of the world |
| And as I said earlier, we've never been in better shape |
| So there's -- sometimes there's tension between the federal legalization and what happens at the state level, we have not seen that in Australia |
| I just wanted to revisit this part, like, what has really caused the Australian market to experience such rapid growth, like, we see some other medical markets that legalize, but the growth just isn't as significant |
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