MedReleafs operating profitability
Reading Note 12a last paragraph of the 2019Q1 financials, I note MedReleaf's consolidated contribution is anything but positive.
"For the three months ended September 30, 2018, MedReleaf accounted for $11,121 in revenues and a loss of $11,610 in net income since July 25, 2018. If the acquisition had been completed on July 1, 2018, the Company estimates it would have recorded an increase of $4,522 in revenues and a decrease of $17,605 in net income for the three months ended September 30, 2018."
Looking at the first sentence, MedReleaf accounted for $11,121 in revenues between July 25 and Sept 30th but accounted for a loss of $11,610 in net income over that same period. Because net income = revenues - expense, we can deduce the expense due to MedReleaf is net income + revenues = $11,610 + $11,121 = $22,731. The operating ratio over this period (expense/revenues) is therefore $22,731/$11,610 = 1.96. Stated more simply, it cost MedReleaf $1.96 to earn $1 in revenue.
The last sentence attempts to prorate the revenues and net income over the full quarter and is ambiguous as to its meaning. For example, if revenues would increase by $4,522 I assume they mean from the base contribution of $11,121 (11,121 + 4,522 = 15,643). If this is what is meant, the parallel meaning with respect to net income would be a further decrease of $17,605 from the already stated loss of $11,610 (17,605 + 11,610 = 29,215). Again, if this is what is meant through parallel wording, then expense contribution for the full quarter is 29,215 + 15,643 = 44,858. This means full quarter expense ratio is 44,858/15.643 = 2.87. Again stated more simply, it cost MedReleaf $2.87 to make $1.
This is worth a call to Aurora to find out if this is the inteded text to the note.