Greetings. Welcome to the Aurora Cannabis Inc. Fiscal Fourth Quarter 2025 Results Conference Call. The conference is being recorded today, Wednesday, June 18, 2025. I now turn the call over to your host, Kevin Niland, Director of Strategic Finance and Investor Relations. Please go ahead, sir.

Hello, and thank you for joining us. With me are Miguel Martin, Executive Chairman and CEO; and Simona King, CFO. Earlier this morning, we filed our financials for the full fiscal year, fiscal fourth quarter 2025 period ending March 31, 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 SEDAR+ and EDGAR. 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 our annual information form and other periodic filings and registration statements. These documents may similarly be accessed via SEDAR+ and EDGAR. Following prepared remarks by Miguel and Simona, we'll conduct a question-answer session with our covering analysts. With that, I'll turn the call over to Miguel. Please go ahead.

Thanks, Kevin. 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 flow. This performance is anchored by a strong and flexible balance sheet, exemplified by a sizable cash balance of $185 million in a debt-free cannabis business. We believe that's a significant advantage relative to the industry. 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 margins. 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. 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. 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. 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 #2 share. Although Australia is a highly regulated market for medical cannabis, it is rapidly growing and attracting new entrants. We remain optimistic about our positioning and ability to grow through expanded patient accessibility and our broad product line. We expanded our product portfolio with 3 new medical pass deals and 2 new cultivars. Medical pass deals offer patients several key benefits, including long-lasting and extended relief and easy oral intake that is discrete, 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. Turning to our European markets, where we have a long-standing presence and leadership position. Looking to Germany first, the continent's largest market has now just been over a year since cannabis descheduling. 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 IndiMed products, which are our first medical cannabis products cultivated in Germany, further cementing our commitment to growth in that country. 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. Let's now discuss Poland and the U.K. 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's high-quality product offerings. In the U.K., 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. This new product category represents another step forward in expanding the variety of high-quality medical cannabis available in this growing market. Turning to Canadian operations. Canadian medical grew 4% annually, and we continue to lead this market with the #1 market share. This strong performance is a result of our continued investment in innovation, operational excellence, and high-quality patient experience. 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. 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. 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. 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. 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 segments. 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. 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 continued strong contributions from Canadian medical. Medical cannabis comprised 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. Several factors drove the year-over-year increase, including larger revenue contributions from higher-margin markets, sustainable cost reductions, and improved efficiency in our manufacturing operations. 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 were 27% compared to 16% in the year-ago period. The margin increase was due to sales of higher-margin products and cost improvements through spending efficiencies. Bevo's plant propagation net revenue increased to $13.8 million, up 32% from $10.4 million in the year-ago period. This year-over-year improvement is due to a combination of increased plant propagation capacity and product offerings. Bevo 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 VIVO greenhouses. 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%. 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 MedReleaf 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. 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 31, and our cannabis operations are completely debt-free. Our plant propagation business holds nonrecourse debt that is secured by a significant fixed asset base held at Bevo. Free cash flow was positive $2.5 million compared to a negative free 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. Let me now provide some thoughts on what we expect for Q1 2026, which ends on June 30. 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. Second, seasonally higher revenues for plant propagation, as they complete their peak quarter inline 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. And finally, free cash flow is expected to remain positive due to continued strong performance and improved operating cash use. Thank you for your time. I'll now turn the call back to Miguel.

Thanks, Simona. Our proven commitment to medical cannabis and our strong execution and seasoned 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 first-mover advantage and has allowed us to build a strong moat backed by scientific expertise and an expanding product portfolio, and our ability to navigate global regulatory frameworks. This strategy is supported by our continued strong financial performance serves to further differentiate us from our peers. 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. Thank you for listening to us this morning, and we would now be happy to answer your questions. Operator, please open the lines.

Our first question is from Derek Lessard with TD Cowen.

Great quarter and a fantastic year. Congratulations everyone. Miguel, I would like to discuss the Q1 guidance regarding international markets. I believe you mentioned a temporary decline in some markets, which I assume refers to Poland. Could you provide more details on this?

Sure, Derek, nice to talk to you. Yes, I mean, I think we saw some regulatory changes in Poland that affected the ability of our patients to access prescriptions and generally the size of the market. We view that to be temporary. We are excited about the long-term 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 at a high level, it is a growth market for us, not only growing overall, but also from a market share standpoint. And the U.K., which is the other key market of size in that part of the world is also growing.

Awesome. That's a good color there. And maybe one last one for me before I requeue. 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?

Yes, it's a great question. These markets, whether it's Australia or Western or even parts of Eastern Europe, are great, high-margin markets, and we've seen other competitors take interest in them and try to get into them. 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 its own certification protocol called TGA. So first, there's a barrier in terms of that. Secondly, you have to have resources and infrastructure in those markets, which we have. We've been almost a decade in Australia. We've got almost 6, 7-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. 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 what we see in Canada.

Our next question is from Bill Kirk with ROTH Capital Partners.

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 is still expanding, where do you think margins can go? And maybe what would be the major drivers to get there?

Yes. 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 we work hard at, and it's an industry that doesn't talk a lot about gross margins. But clearly, if you're going to focus on free cash flow, which we had a record quarter, and you have to focus on gross margins. So I think 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 to start that process at a low point. Secondly, because we sell so many premium products, and the quality of our products is so high, we're able to garner what we think our top-tier margins and pricing, particularly to wholesale, which is our customer. So I think those are the big drivers. But Simona, any other pieces you want to unpack?

Yes. 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 operations. So that's definitely contributed to our improved margins over the quarters and compared to last year as well. And the other part that's 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 market, which has higher margins. And so putting these two factors together has contributed to the increase that you've seen over the quarters and also on an annual basis, and we provide this breakdown in terms of margin impact coming from our medical cannabis and the other business segments that we have. So we believe these margins will continue to be strong.

And then, Miguel, when you were talking about Germany, you mentioned the 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 are related.

Yes, it's important to remember that this is medicine, and we need to ensure that it is available for both our patients and prescribing physicians. We have not encountered issues in this regard, as it is a major focus for us. The discussion around RAC reallocating inputs is relevant here. Most of the products we sell are available globally, and we can launch the high-quality products developed in Canada around the world. In other words, we prioritize markets, especially our medical markets, over RAC, and we have not experienced stock shortages. Maintaining stock is essential for growth, as both physicians and patients prefer brands that are readily available. This is particularly challenging in rapidly growing markets like Germany, but we are committed to tackling this, and we believe it sets us apart from our competitors.

Our next question is from Frederico Gomes with ATB Capital Markets.

First question, just going back to that comment about supply. I guess, are you in any way constrained by supply as those international markets growing? And if you project continued growth over the next year. So do you anticipate that you would have to meaningfully expand your own cultivation, or would there be any interest, I guess, in you doing that? Or is the strategy to maybe get that additional supply from third parties' cultivators?

Yes. Fred, we've not had to date any sort of supply constraints. So Simona mentioned our yield improvements. We've been able through our genetic facility out of coast to develop proprietary cultivars that significantly have improved our deals at our own facilities. If you look at some of our CapEx usage and our investment, 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 announced some very strong partnerships with third parties that allow us to schedule that demand. So we feel good about where we're at. We'll continue to look at opportunities, but it has not impeded our ability to service any of our patients internationally.

Perfect. My second question is about the potential of international markets becoming more significant in the coming years. I know you're present in Australia, Germany, Poland, and the U.K., which are major markets. Are there any new markets opening up in the near term? If so, which ones are we considering?

Yes. 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. There were questions about the new government in Germany, 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 market will advantage high-quality cultivars like the ones we're launching. And the U.K. is going to continue to expand, which is a nice market because it's going to 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. And 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 short term, we'll be these big, large markets continuing to grow and opportunities to grow share. Because of the sort of unique interest in that GMP flower, which is a limited commodity, but we continue to see positive developments internationally all around the world with governments looking at medical cannabis.

Our next question is from Matt Bottomley with Canaccord Genuity.

And congrats on a very strong fiscal year. Just first as 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 and 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. And then just a secondary question on Australia, if I have time after that.

Sure. Well, Simona, why don't you take the first one, and I'll be happy to answer about Australia unless it's a modeling question.

Sure. To give you more context on the adjusted EBITDA margin, we've observed an increase in adjusted SG&A in Q4, which is partly due to supporting their revenue and also due to expected year-end expenses that we anticipate won't be recurring. This rise in SG&A has affected our adjusted EBITDA margin, but it has been counterbalanced by the increase in overall net revenue and the impacts of adjusted gross margin that we experienced in Q4.

Okay. Got it. And then, yes, 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 the prior weeks and months. So Australia, we're getting a lot of positive commentary there. So just given that you have the #2 market share, can you just give us an indication of how much there is growth just relative to the 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, 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.

Yes, we see positive growth in Australia. Without syndicated data, it's challenging to provide an exact percentage, but we don't anticipate any structural changes. With new regulatory environments, we expect some scrutiny, and the market won't grow linearly quarter-over-quarter. However, it's a market where significant market share can be obtained. It’s not easy for newcomers, as having a local presence and strong relationships with distributors and pharmacies is crucial. Pharmacies, in particular, have significant influence over patients. We're very optimistic about this market. An important development for Australia is the introduction of formats beyond flower and oil, such as gummies and inhalables. These innovations could lead to success for a select group of companies in a growing market. We also don't foresee major price compression; while there are low-end inputs, solid pricing exists at middle and premium levels. Additionally, we shouldn't overlook New Zealand. Although smaller, it presents considerable opportunities despite its lengthy and challenging registration process. This market will likely consolidate further, but it has a strong history with medical cannabis. Overall, the combination of both markets, despite the investment required, suggests they will be very strong in the future.

Our next question is from Pablo Zuanic with Zuanic and Associates.

Miguel, I have a quick question regarding Germany. When we look at the comparison with some U.S. states, Germany has a 4% population penetration while the U.S. states are around 0.4%. What do you see as the structural challenges on both the demand and supply sides that are hindering Germany's growth in penetration? The 0.4% figure seems very low to me considering the potential we observe in other U.S. states. Please discuss these structural challenges.

Yes. Pablo, it's a great question. It's an interesting one because if you look at the way you would describe it, structural impediments. At face value, Germany doesn't have a lot of them. They've got a permissive regulatory regime. You have a relatively easy ability for patients to get prescriptions. There was a very strong telemedicine program there that allows the shipment of medical cannabis through the mail throughout Germany. I think it's probably three primary areas. One is education. It 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. 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, even though there are some inhalables registered aren't there. So you are correct that 0.4% 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 how quickly cannabis has grown there, and we don't see any step backs on medical cannabis. So while the overall penetration number may be low, I think it is one of the countries globally that everybody should keep an eye on. And as I mentioned in my prepared remarks, there are a lot of eyes on Germany from other European countries, both in Western Europe and in Eastern Europe. So it has a tremendous amount of influence. And by all accounts, the medical cannabis system is going very well, and we think will continue to influence its neighbors.

I have a quick follow-up. You have a strong sales force engaging with doctors, reflecting a pharmaceutical approach. However, it seems the market is shifting more towards cash payers, perhaps through the RAC. This may require a different strategy for promoting your products, suggesting that the sales force is not as advantageous in this context. Can you discuss how you balance the needs of cash payers versus those influenced by doctors?

Yes. I mean, so you're describing what we call that segment of self-payers. So self-payers and the reimbursed. And yes, the self-payer segment does operate 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 into 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. I think secondarily, because we operate in Canada, in both medical and RAC environments, and we are utilizing the same products, both in Canada and Germany, it gives us a significant advantage because we know those products 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 of it. Thank you very much. We appreciate that. 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. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.