Greetings, and welcome to Aurora Cannabis Inc. Fiscal Second Quarter 2026 Results Conference Call. The conference is being recorded today, Wednesday, November 5, 2025. I would now like to turn the conference over to your host, Simona King, Chief Financial Officer of Aurora Cannabis. Please go ahead.

Hello, and thank you for joining us. With me is Miguel Martin, Executive Chairman and CEO. Earlier this morning, we filed our financials for the fiscal second quarter 2026 period ending September 30, 2025, and issued a news release containing these results. This news release, along with our financial statements and MD&A is available on our IR website as well as via SEDAR and EDGAR. We have also posted an investor presentation to our IR website for reference purposes. Our discussion today serves as 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 our prepared remarks, we'll conduct a question-and-answer session with our covering analysts. With that, I'll turn the call over to Miguel. Please go ahead.

Thanks, Simona. Aurora's sustained strategic focus on global medical cannabis, the highest margin segment of the industry, combined with exceptional operational execution has once again delivered standout financial results. This performance is further reinforced by a strong cash position and the absence of cannabis business-related debt. In our view, Aurora is highly differentiated for the following reasons: First, we are Canada's largest medical cannabis company. Second, we are Canada's leading exporter of medical cannabis with world-class GMP facilities in Canada and Germany that enable us to supply global markets with high-quality premium products. Third, we are market leaders in Germany, Australia, Poland and the U.K., the four biggest nationally legal medical cannabis markets outside of Canada. And fourth, we are best positioned to gain a strong foothold in emerging markets as they develop, drawing on our proven successful commercial execution and global regulatory expertise. We will explore these themes in greater detail momentarily. But first, here are key highlights from Q2 2026 compared to Q2 2025. Net revenue rose 11% to $90 million, which included record global medical cannabis revenue increasing 15% and record international revenue increasing 22%. Consolidated adjusted gross margin improved 700 basis points to 61% as we benefited from higher cannabis margins due to increased international revenue. Note that we had originally set a 60% adjusted gross margin target for our medical cannabis business and have consistently exceeded that target over the last three years, reaching 69% during the second quarter. And finally, adjusted EBITDA rose more than 52% to $15 million, exceeding our top-line growth by a factor of five. Stepping back from the quarter, we have grown our net revenue over the last five years from $68 million to $90 million with adjusted EBITDA increasing $73 million from negative $58 million to a positive $15 million. These results illustrate our continued focus on profitable and sustainable growth. Over the past decade, we have built a competitive moat that continues to fuel international revenue gains and adjusted gross margin expansion, momentum we expect to sustain well into the future. Traction in global medical cannabis is a long-term proposition, and through our investment in science, technology and people, coupled with supporting patient access and physician engagement, we have built the foundation for continued success. The capital we have invested in our European and Australian GMP-certified manufacturing and distribution facilities positions us to lead amongst the select few cannabis companies with both regulatory certifications that most markets require. Ninety percent of our annual manufacturing capacity is within multiple GMP-certified facilities, and our products comply with these increasingly stringent international standards. Beyond manufacturing our own products, we are also able to distribute them compliantly and profitably around the world. We view vertical integration as a structural advantage for us, primarily for two reasons. First, we sell medical products, and consistency of supply is critical. Being out of stock or substituting cultivars due to fragmented sourcing is neither optimal for prescribers nor patients. Longevity with cultivars, quality and reliability build confidence with both constituencies. Second, we have lower production costs than others, made possible by our focus on yield, potency improvement and operational efficiencies. At our manufacturing site in Germany, we are doubling production as we prepare for further growth in the market and adjacent countries. This investment will allow us to significantly increase capacity while also targeting yield and operational efficiencies to more closely align that facility with our Canadian sites. The bar for recertification keeps rising, especially in Germany, and we are pleased to have recently been GMP certified for another three years. Having EU GMP production in Central Europe provides regulators and stakeholders the ability to depend on the same genetics and product consistency that we have in Canada. Let's now dive into a discussion on individual medical cannabis markets. Australia is our largest medical cannabis market outside of Canada, where we currently hold the second largest share. The Australian market offers one of the broadest ranges of product formats beyond North America, allowing us to fully leverage our diverse portfolio. Over the past two years, it has experienced rapid expansion, now representing a $1 billion market opportunity according to the Pennington Institute. Turning to Europe, Germany is the largest market and is growing with expanding mainstream acceptance. We increased our revenue during the second quarter, supported by a broad set of core and premium products and are gaining share based upon our strong reputation amongst wholesalers, distributors and pharmacists. Imports, as reported by the German regulators, have increased rapidly from 8 metric tons in 2018 to 72 metric tons in 2024 and is currently on track to more than double in 2025. The new German government is exploring changes to the descheduling of cannabis first enacted about 18 months ago with the potential for modifications to the current telehealth framework. We support reasonable access to high-quality medical cannabis and await further details of the proposal. We are confident in our ability to adapt to potential changes in the telehealth framework, drawing on our successful experience in Poland. However, modifications to home delivery regulations could present greater challenges, particularly for patients in rural areas. Ultimately, we believe that established operators with a proven track record like Aurora will be able to successfully navigate any potential regulatory changes. Germany is also carefully observed across Europe and its potential impact on neighboring European countries is significant. Let's now discuss Poland, where we are already the established leader in advancing medical cannabis. This market size has more than doubled from a little over 2 tons annually in 2023 to approximately 5 tons in 2025. Further growth is expected following the increase in annual import limits. We generated robust revenue growth during the second quarter as we benefited from our launch of two proprietary cultivars a few months ago. To our knowledge, these are the highest potency medical cannabis products available in the country. We look forward to continuing to deliver a sustained pipeline of innovative, high-quality and premium products for the Polish market, all manufactured in our GMP-certified Canadian facilities. Poland's regulatory standards include a lengthy registration process, which has concentrated 80% to 90% of the market share in four cannabis companies, including Aurora. We have a dedicated commercial and regulatory team on the ground there focused on executing on our growth strategies while also maintaining solid relationships with the regulatory authorities, which has enabled us to navigate the shift in prescriptions from telehealth platforms to clinics. Our experience and expertise in the market have benefited us compared to others as we were better prepared to succeed in this evolving marketplace. Success in both Germany and Poland will influence surrounding countries. As medical cannabis succeeds, more countries will establish their own frameworks. Our facility in Leuna, Germany and our regulatory engagement across the EU represent differentiated advantages for us to capitalize on these opportunities. The U.K. is an exciting and growing market where we are expanding our distribution and clinic relationships through new partnerships and successfully launched proprietary cultivar-specific inhalable cannabis extracts, also known as vapes that are performing well. The U.K. permits products other than dried flower and oil, which has enabled us to expand the variety of high-quality medical cannabis available. There is also a strong subset of prescribing physicians and lighter competition in the premium and super premium segments where we operate. Let me now talk about other opportunities across Europe where there is already broad support for legalization of medical cannabis. In Spain, applications are very restricted, but slowly opening up, which we view positively. In France, we have partnered with the government since the start of its tender. A permanent medical framework is expected to take shape in 2026, and we stand ready to serve patients from day one. Both Switzerland and Austria are now online, while Turkey and Ukraine are showing positive developments for medical cannabis as well. Interestingly, more than half of EU member countries are integrating medical cannabis into healthcare, including reimbursement. So the momentum is promising. These developments are leading towards greater international alignment on regulatory approaches, an obvious advantage for compliant EU GMP-certified companies like Aurora. Physicians and patients increasingly recognize and appreciate our medicinal quality, and our Leuna facility in Germany has provided us with the opportunity to host regulatory and governmental visits. Turning to Canada, we are number one in medical cannabis and the largest provider to Canadian veterans. Net revenue grew year-over-year as we benefited from higher revenue from both insurance covered and self-paying patients. While the overall market is relatively steady, we have grown market share as we have benefited from investments in world-class talent, facilities and experience. Our priorities remain enhancing our online marketplace, product innovation and increased product assortment, operational excellence and, of course, ensuring a high-quality patient experience, especially for our veteran communities. To sum up, we are pleased to have reported yet another great quarter at Aurora that illustrates our steadfast execution of our strategic priorities. We feel confident about our future because we believe we are ideally positioned for profitable growth as the leader in global medical cannabis. Let me now turn the call over to Simona for a detailed financial overview of fiscal Q2, followed by a discussion of our fiscal Q3 outlook.

Thank you, Miguel. The profitable growth achieved in Q2 is a strong testament to the strength of our medical cannabis strategy and our consistent ability to translate vision into results. Let's review Q2 2026 compared to the prior year quarter and then discuss our Q3 2026 outlook. First, net revenue of $90.4 million represented 11% growth, supported by significant contributions from our global medical cannabis and plant propagation segment. Second, consolidated adjusted gross margin rose to 61%, 700 basis points higher, while adjusted gross profit increased to $51.8 million, a 22% increase. Both our global medical cannabis and consumer cannabis segments generated higher margins than the prior year quarter. Third, adjusted EBITDA grew 52% to $15.4 million from $10.1 million. And fourth, we ended the quarter with $142 million in cash and cash equivalents and no cannabis business debt. In medical cannabis, net revenue rose 15% to $70.5 million due to 22% growth internationally, combined with continued strong contributions from Canadian Medical. Medical cannabis comprised 78% of net revenue compared to 76% in the prior year quarter and approximately 94% of adjusted gross profit. Adjusted gross margin for medical cannabis was 69%, up from 68%, driven by increased revenue in higher-margin international markets. Consumer cannabis net revenue was $6.9 million, down from $10.4 million. The year-over-year change was the expected result of our continued decision to prioritize sales to our higher-margin medical cannabis business. Adjusted gross margin for consumer cannabis was 27% compared to 15% in the prior year quarter. The margin increase was due to sales of higher-margin products and cost improvements through spending efficiency. VIVO's plant propagation net revenue increased to $11.6 million, up 34% from $8.6 million in the prior year quarter. This improvement is due to higher orchid sales, which is an exciting and evolving market in North America that offers strong margins. Adjusted gross margin for plant propagation revenue was 10% compared to 19% in the prior year quarter. This decrease is from costs incurred related to inventory write-offs caused by nonrecurring quality issues as well as some surplus crops that were not sold during the first quarter of fiscal 2026. Consolidated adjusted SG&A increased 12% to $35.5 million compared to the prior year quarter and supported year-over-year net revenue growth of 11%. The increase relates to higher freight and logistics costs, notably from increasing sales to Europe and investments in our commercial teams in Europe and Australia. Adjusted EBITDA increased to $15.4 million from $10.1 million. This 52% improvement from the prior year quarter was due to a substantial increase in gross profit resulting from higher net revenue before fair value adjustments required under IFRS. Adjusted net income was $7.1 million compared to $3 million in the prior year period. The improvement relates to an increase in adjusted gross profit before fair value adjustments of $9.2 million, partially offset by an increase in adjusted SG&A of $3.8 million. Our balance sheet remains one of the strongest in the global cannabis industry. We held $142 million in cash and cash equivalents as of September 30, 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 VIVO. Free cash flow was negative $42.3 million compared to negative $26.4 million in the prior year quarter, reflecting the expected cash outflows that typically occur in the second quarter of the fiscal year as referenced in our last earnings call. Let me now provide some thoughts on what we expect for Q3 2026, which ends on December 31. Consolidated net revenue is expected to increase year-over-year, driven primarily by 8% to 12% growth in our global medical cannabis segment. Plant propagation revenue is expected to perform in line with traditional seasonal trends as 25% to 35% of revenues are normally earned in the second half of the calendar year. Consolidated adjusted gross margins are expected to remain strong, driven primarily by industry-leading margins in our cannabis business with plant propagation adjusted gross margins expected to mostly perform in line with historical trends. Continued strength in our adjusted gross margins and higher global medical cannabis revenue should lead to year-over-year annual adjusted EBITDA growth. And finally, free cash flow is expected to be positive in Q3 2026 due to continued strong performance and improved operating cash yield. Thank you for your time. I'll now turn the call back to Miguel.

Thanks, Simona. The global medical cannabis market is expected to exceed $9 billion, and we have built a strong competitive position around the world based upon our proven commercial execution, combined with our regulatory and scientific expertise. Our near-decade of investment and march to profitability has given us a considerable head start in fully capitalizing on this opportunity. We are fully committed to strengthening our leadership position in Canada, Europe and Australia through consistent revenue generation and positive adjusted EBITDA growth. These advantages are the building blocks to enhance long-term value for our shareholders. We look forward to sharing further developments and strategic plan updates with you. Operator, please open the lines for questions.

Your first question comes from Bill Kirk with ROTH Capital Partners.

Miguel, you talked about the previous goal of 60% medical gross margins and obviously, how you're running well above that at 69% in recent quarters. What do you think a realistic goal is? And I guess, why are the margins structurally better than you expected? Is it less competition than you envisioned? Is it better demand for your offerings? Or are there perhaps surprises in the cost to produce?

It's a bit of all of the above. So let me start where you ended. Our production costs continue to go down. Yield in genetics and what we're getting out of our facilities has created an advantage. I think the second part is increasingly business outside of North America or in Europe or in different parts of the world where you do have higher margins. Now the discrepancy between the target and where it's at, we do see different markets getting a little bit more expensive, whether that's funding for partners in the distribution network or telehealth or even on the clinic side, where I see some investments. But I think it's a mix of all the above. And then lastly, and you did mention it, is execution. We are finding efficiencies in our execution using common medicinal cultivars around the world, which gives us production efficiencies. The execution that we have of similar execution, say, in Poland, Germany and the U.K., creates some efficiencies. So I think all of that comes together for these industry-leading margins.

And then you mentioned the production assets in Germany as an advantage. Right now, are you enjoying those advantages with competitors maybe having some difficulties getting some product through Portugal into Germany? And what is the status of some of those delays and investigations that folks are experiencing in that route to Germany?

Yes. I mean, the first thing is, as you mentioned, Germany is a very difficult place to get certified product into and increasingly so. So it's an EU GMP standard with audits. We just had ours, as we mentioned, so we're good for three years. Others have had different issues. I'm not here to sort of speak negatively about that situation. I can tell you, though, that our Canadian facilities and the German facilities that are certified are solid. That vertical integration that we have, growing the vast majority of the products we sell in certified EU GMP facilities creates an advantage for us. I mean, there's no disruption. And as we mentioned in our comments, this is medicine. And for patients and practitioners, they value that consistency of high-quality certified supply. And more and more so, so are the regulators and other key stakeholders. So I think that advantage is going to continue to grow for us and not only be in Germany, but also in other markets.

And if I could sneak one more in for Simona. There was a big drop in accounts payable in Q2 from Q1. And as far as I can tell, it's the lowest absolute level in a long time. So why the change quarter-over-quarter in accounts payable and why so low?

Yes. Thank you for the question. Typically, what we see in Q2 is that a lot of the cash outflows occur in that quarter as a result of various activities that historically have occurred in Q2. So that's the reason that the accounts payable has gone down. Again, this is in line with historical trends that we generally see in the second quarter of the fiscal year.

Next question, Frederico Gomes with ATB Capital Markets.

First question is on the proposed change to the budget in Canada regarding the, I guess, the price ceiling for reimbursement for medical cannabis for veterans. So how do you see that? What could be the impact on your business in Canada?

So let me first say that this came out last night, but we're disappointed that the federal government has proposed these changes without consultation from the cannabis industry or medical cannabis companies like Aurora. Importantly, veteran patients depend on a clinically supported system that ensures safe, consistent access to their cannabis medications. Lowering and this potential lowering of the reimbursement rate puts that entire support system at risk, could disrupt continuity of care, clinical oversight or even push patients to higher-risk alternatives. Given the newness of this announcement and the uncertainty of the timelines of implementation and lack of consultation, which hasn't happened yet, we're in the process of evaluating the impact and our next steps. It would be premature for me to comment, but it's early days. It just came out last night, and a lot is going to happen until we see where this lands.

Perfect. I guess one other question: Did you see any impact in Germany regarding that period in which I think they halted the cannabis import permits there because they had reached their quota? Did you see any impact in the market, or for Aurora specifically? And secondly, just to follow up on Germany. Could you comment on price compression in that market?

Yes. I mean, what you're referencing is that the German government had hit their import limit, and they had to get it raised, which is very common, and it happens throughout the year as they want to raise the overall limit. It was about a three or four-week process. It didn't disrupt us. We have a great relationship with the regulators, and the staging of our permits for that market were fine and started back in January. Everything should return to the higher number. I can't speak to others. In terms of pricing in Germany, like a lot of markets, we're seeing compression mostly on the value side, and so we operate mostly in the core and the premium segment. Baseline pricing for where we operate really hasn't been that affected. As I mentioned with Bill's question, the implementation of telehealth and some other aspects of that distribution chain are bringing in additional costs. But overall, we've been pretty happy with the way the pricing has landed for core and premium products.

Next question, Derek Lessard with TD Cowen.

Congrats on a very solid quarter there. Miguel, just a question on the German investment that you recently announced. Curious what you're seeing in the market that led to that decision.

Yes. I assume you're talking about the Leuna production facility? Yes. We've got two very large EU GMP facilities in Ontario. We built a facility in Leuna, Germany. For indoor GMP, with similar genetics and a similar setup to what we do in Canada, we've been really happy with it, leading to the decision to double production. Even with a bit of higher energy costs, it's still a very compelling proposition to have that facility straight up producing. So we added upgrades to very innovative lighting and irrigation systems to mirror what we're doing in Canada, again, using the same world-class practices and genetics in that facility, doubling the overall production there. And importantly, having an EU GMP certified modern indoor facility in Mainland Europe has been great. We've had delegations from countries that are in the cannabis system and those that are not visit that facility, and it's been very additive for us. So we like it. It works as a standalone production facility, but it works even better as a showcase of everything that we're doing in that key market.

Okay. And maybe just one question on Australia. It looks like sales were a little bit softer in the quarter. Can you just perhaps talk about that?

Yes. So Australia is the only market we have where a majority of our sales are in the value segment. That goes back to the history of the company before we bought the remaining 90%. The majority of those sales were in a concession system for value products. That market has been inundated with a lot of value products, and that's had a bit of an impact on our business there. We are transitioning that market to the same world-class core and premium products we sell everywhere else, and we're very bullish on that. But it's going to take a little time before that portfolio is properly allocated to value as a smaller segment and into core and premium. We're still very bullish on it. It's the biggest market outside of Canada. There are advantages because you can sell other formats beyond just flower and oil, and we've launched edibles and some other things there. So we're optimistic about it. It's just as we work through this transition in the portfolio, there's been a little bit of pressure.

Next question comes from Pablo Zuanic with Zuanic & Associates.

Miguel, two questions related and the same type of question related to the U.K. and Poland. I think you said you're the market leader in both markets. Do you need to invest downstream there? For example, buying clinics or online pharmacies or brick-and-mortar pharmacies in the U.K. It seems that market is forward integrated like Australia, and that may be necessary to win in that market. But correct me if I'm wrong. And in the case of Poland, is downstream integration even a possibility or do the regulations not allow that? If you can talk about that, please.

Sure. We're not the market leader in the U.K., just for clarification. We're one of the top companies but not the market leader. Let me talk about Poland first. So in Poland, we are not allowed to be the wholesaler or distributor. So we can be the manufacturer. There are some companies that also own or have relationships with clinics. As the telehealth system in Poland changed, clinics became very important. We partner with clinics, and we continue to look at that. Each and every market, we do look at whether we need to own pieces of that vertical structure or can we partner? There are a lot of great partners that want premium, high-quality products from Aurora. So we have many advantages in being able to do that. Right now in Poland, we're the manufacturer. We've got a very substantive team on the ground from selling to prescribing physicians and interacting with key stakeholders. We are not the wholesaler, and we work with clinics. In the U.K., it's a similar situation. Clinics are very important as a way to onboard and connect with patients, both those coming into the system. So today, we produce the products. We have a very strong network of partnering with wholesalers that's actually expanding. We have a network of clinics that service it. If it looks like there's an opportunity to change that and actually acquire one part of that vertical, we will. But in some cases, you don't want to compete against your customers. So I think you sort of have to be careful. But we're very flexible. We have different models in different countries depending on what works for us. As evidenced by our margin structure and the results, it's working, but we stay flexible.

That's good color. Look, I'm just following up in terms of the timeline for the potential changes in Germany and Australia. In the case of Germany, the way I understand it, the cabinet already approved the changes that have been proposed. Now that has to go through parliament. What's the timeline there? How long could that take? And the same question regarding Australia, the TGA is going through a consultation period. How long could that take? I'm not asking in terms of how things play out, but what are the key milestones that we should be looking for?

Well, I mean, it's a proposal in Germany from the Health Minister. It needs a lot of alignment from a lot of different constituencies. So in terms of timing, we'll know more at the end of this month in terms of what gets put forth. There will be a lot of debate on it. So you're going to go into the spring until you know anything about where that's going to land. As we've talked about, there are two parts of it. The first part has a lot less impact, which is a change in the telehealth components, not dissimilar to Poland. The second component potentially around the prohibition of delivery of these products, which contradicts how all other medical products are delivered, and the impact this could have on rural patients is the more controversial one. So we'll see, but end of November, then into the spring in terms of Germany. In Australia, there really isn't a timeline. You've got two regulatory agencies that are looking at a variety of different things. I will say we recently saw an interest by the regulatory authorities in Australia to start testing products and looking at some of the adulteration that may be happening in that market to these medical products, and as a company, we take the regulatory responsibilities and production responsibilities seriously. We look forward to that. So Australia is a little bit more open-ended, but you're not hearing things that have, say, the same impact on the prohibition of delivery through the mail like you hear in Germany.

I would like to turn the floor over to Miguel for closing remarks.

Well, listen, we're really excited about communicating this quarter to everyone and sharing the work that we're doing. We want to thank everyone for their interest in Aurora, and we wish everyone a great day. All the best.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.