Older News ArticleAurora Cannabis: An Execution Story Sep. 16, 2016 8:51 AM ET | 63 comments | About: Aurora Cannabis Inc. (ACBFF), Includes: OGRMF, TWMJF Michael Berger Michael Berger Follow (79 followers) Long/short equity Send Message | Technical420 Summary Aurora Cannabis continues to see industry leading growth in the number of registered patients. The market has recently taken notice of Aurora's potential as shares are up more than 100% in the last three months. The company's strong management team continues to position Aurora for continued success. Although the United States cannabis sector offers investors a lot of upside, it offers even more risk. The Canadian cannabis industry on the other hand is less risky because medical cannabis is legal at the federal level. The Canadian medical cannabis industry is also growing at an impressive 10% per month and it now has more than 95,000 patients. These two factors make the Canadian cannabis sector a very hot pocket of opportunity for investors. Do Your Due Diligence When investors ask what we look for in a cannabis company before investing, at a minimum we suggest that investors look into: 1) its management team, 2) its financial structure, 3) the exchange it trades on, 4) its track record, and 5) recent insider activity. Investors need to be cautious and focus on companies that are well capitalized, led by a management team with a proven track record, have a sound financial structure, act in the best interests of shareholders, and continue to execute on business initiatives. We believe that Aurora Cannabis Inc. (OTCQB:ACBFF) (ACB.CN: Canadian Securities Exchange) represents an attractive investment as it possesses the right traits and continues to execute on initiatives while registering new medical cannabis patients at industry leading rates. About Aurora Cannabis Aurora Cannabis is one of the 35 federally licensed medical cannabis producers in Canada under Health Canada's Marihuana for Medical Purposes Regulations (MMPR). Aurora Cannabis trades on both the Canadian and United States stock exchange. The company's Canadian symbol is ACB.CN and its United States symbol is ACBFF. The company is the only licensed producer of medical cannabis in the province of Alberta, which has a population of 4.1 million people, and has registered patients across Canada, which has a population of 35 million. Aurora's business strategy is to continue and accelerate its penetration of the Canadian cannabis market, receive a sales license from Health Canada for derivative products (i.e. cannabis oils), start to sell medical cannabis derivative products, transition to profitability in the short-term, and undergo a major expansion of its production capacity. Catalysts for Growth Aurora Cannabis has been selling cannabis products for less than six months and continues to register new patients at industry leading rates. The company received its license to sell medical cannabis on November 27, 2015, and started generating revenue from the sale of medical cannabis on January 5th. Earlier this month, Aurora announced that it exceeded 7,700 active registered patients and management believes that this represents the fastest organic growth rate in patient registration when compared to any Canadian Licensed Producer. CEO Terry Booth said that based on its current organic growth rate, Aurora is moving rapidly toward achieving cash flow positive operations. Improving Financial Position The state of the global economy has caused world-renowned investors and economists to expect a recession within the next year. At the same time, an increased amount of capital continues to enter the cannabis industry. This level of capital entering the industry is not only larger but smarter too; these investors and firms are long-term holders who see the bigger picture. Aurora Cannabis has been a beneficiary of the increased focus on the cannabis sector and its improving fundamentals helped the company complete a $23 million capital raise in August. In the month of July, Aurora Cannabis achieved another milestone after gross revenue for the month reached $1 million. The company's numbers will continue to improve as it continues to onboard new patients and we expect to see growth on a quarter-over-quarter basis going forward. Launches Same-Day Delivery Aurora has been able to set itself apart from the competition by focusing on providing not only a great product but even better customer service. The company recently closed the acquisition of CanvasRx, Canada's largest medical cannabis patient outreach service which has 17 locations and more than 10,000 registered patients. In May, Aurora announced that the company would start providing same-day delivery to its registered patients, a service that further sets the company apart from the competition. Aurora launched this service in Calgary and adjacent areas, covering an urban area with over 1.2 million people. The company plans to expand this service to Edmonton and Red Deer, Alberta in June. Strengthened Management Team Aurora is taking not only market share from other licensed producers, but human capital as well, in the form of new management and in its board of directors. In August, Aurora appointed Amy Stephenson as its new CFO. Stephenson has been working with Aurora on a consulting basis since June, 2016. In the previous quarter, the company appointed Michael Singer to its Board of Directors. Singer has a proven track record of success as an experienced CFO in the pharmaceutical sector and former CFO of licensed producer Bedrocan Cannabis Corp., which is now part of Canopy Growth Corporation (OTCPK:TWMJF) (CGC.V). Singer will provide Aurora with financial leadership and further strengthen corporate governance. Aurora improved the strength of its management team in March through the addition of Cam Battley as Senior Vice-President of Communications and Medical Affairs. He is responsible for business development, external communications, investor relations, government relations, and medical and patient stakeholders. Battley is also a member of the Board of Directors of Cannabis Canada, the trade association of licensed producers, and Chair of its Advocacy Committee. He previously served as Vice President, Communications and Corporate Development for Bedrocan. Prior to moving into the cannabis sector, he had built his career as an executive and management consultant in the biopharmaceutical industry In addition, in September of last year, Aurora hired Neil Belot, the former Executive Director of the Canadian Medical Cannabis Industry Association (now Cannabis Canada) to join the executive team as Chief Brand Officer, overseeing brand image and client experience - which the company has dubbed the "Aurora Standard". Technology in a League of its Own Aurora possesses several traits that set them apart from the competition. The company has brand new state-of-the-art facilities that are fully licensed for production and can produce over 7,000 kg of cannabis per year. Not only can it produce a lot of cannabis, but Aurora can produce pharmaceutical-grade cannabis at a cost that is significantly lower than its competitors. Many cannabis producers incur high energy and water costs, which impacts the bottom line. Aurora, however, has access to electricity at a fraction of the cost of its competitors based in Ontario and other provinces, as well as the rights to fresh mountain water on its 160-acre property in the foothills of the Rocky Mountains. As such, they do not incur any water costs. Aurora also has an automated cultivation process which maximizes efficiency and increases its yield. Continues to Execute and Position itself for Growth Earlier this year, Health Canada approved Aurora's request to start producing derivative cannabis products (cannabis oils) through a Section 56 exemption to the Controlled Drugs and Substances Act. Since then, three additional production rooms received full Health Canada approval, including an additional extraction room for the production of cannabis oils through its GMP-compliant CO2 supercritical fluid extraction unit. A Buy Opportunity Recent developments at Aurora Cannabis have made the company a leader in a country that is leading the cannabis reform movement. One of the reasons why we are so favorable on Aurora Cannabis is on account of one specific factor: margins. The company benefits from its strategic geographic placement and its state-of-the-art facility which achieves the lowest production costs per gram in the cannabis industry. Although we are favorable on Aurora's long-term outlook, the shares are up more than 100% in the last month and ACB and ACBFF are trading at elevated levels. The recent decision by Health Canada to allow patients to grow medical cannabis for themselves presents a risk to the pace of client on-boarding and we will be monitoring how the company continues to grow. We expect the company to report to be cash flow positive during the back half of the 2016 calendar year and this should serve as a catalyst for shares, similar to the way it did for OrganiGram (OTCQB:OGRMF) (OGI.V) during April. Sources Operational Update: Aurora Cannabis Surpasses 6,500 Registered Patients, Achieves $1 Million Gross Revenue for Month of July Aurora Cannabis Closes $23 Million Financing and Signs Definitive Agreement to Acquire CanvasRx Aurora Announces Management Change Operational Update: Aurora Cannabis Exceeds 7,700 Registered Patients, Continues Rapid Sales Growth Aurora to Construct World's Most Advanced Cannabis Production Facility Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. 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