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Analysts pointed to weak European sales and cash risks as key factors
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January 10, 2020 • • January 10, 2020 • • Read for 2 minutes Photo by Jason Franson / Bloomberg
The company faced further problems after the eagerly anticipated sale of medical cannabis in Germany was suspended until a review by German health authorities was carried out “until further notice”.
“Aurora built its large capacity in Canada with the expectation of exporting a significant amount internationally, but those sales have been very slow,” Lavery wrote in the note. “German sales were the most expensive and high-margin product, so suspending sales hurts the mix of sales and margins,” he added.
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Lavery noted that he doesn’t expect Aurora to see positive cash flow from its production by the end of 2021. Meanwhile, a $ 200 million cash deficit is projected, which will likely force the cannabis giant to refinance its whopping $ 360 million debt due for repayment in August 2021.
That would leave the company with just $ 30 million in cash and $ 800 million in debt in the second quarter of fiscal 2022.
Investor short-term hopes are now leaning on the second wave LP’s cannabis offerings, despite the fact that the launch of liquid vape products has been suspended indefinitely.
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