Proactive Investors - The impact of cannabis companies’ cost-cutting measures was in focus as Aurora Cannabis Inc (TSX:ACB), Canopy Growth (TSX:WEED) Corporation, Trulieve Cannabis Corp (CSE:TRUL) and Curaleaf (CSE:CURA) Hldgs Inc. handed down their latest quarterly results this week.
Over recent quarters, North American cannabis multi-state operators (MSOs) have been selling off assets, scaling back production, and slashing their headcounts among other initiatives in response to rising expenses, such as ballooning labor costs, in the current high-inflation environment.
During the three-month period ending in September, Canopy Growth reduced its costs by C$54 million, having eliminated C$226 million in costs since the start of fiscal 2023.
Aurora confirmed that it is on track to make C$40 million in cost savings during the fiscal year and continues to expect to achieve positive free cash flow during the 2024 calendar year.
Its cost-cutting efforts saw it swing from a loss of C$45.5 million to a profit of C$0.3 million during the quarter ending in September.
Canopy Growth improved its core loss from C$56.4 million to C$11.9 million and Florida-based Trulieve’s adjusted loss of US$14.7 million or US$0.08 per share was significantly ahead of Wall Street estimates of US$0.17 loss per share.
Curaleaf’s quarterly loss was greater than expected by analysts, but it still demonstrated that its cost-cutting measures were working. It reduced its inventory by US$18 million and improved its gross margin sequentially, adding 60 basis points to 45.7% during the September quarter.
Growth in medical cannabis markets internationally was another bright spot.
Aurora saw its total revenue increase 30% year-over-year driven by a 42% increase in its medical cannabis business to C$43.8 million.
Canopy Growth’s Canadian medical cannabis revenue rose 6% from C$14.2 million in the year-ago quarter to C$15 million, marking its fourth quarter in a row of revenue growth.
It began shipping five new products to international markets during the quarter and said it is increasing its focus on the growing Australian medical cannabis market, which has generated 10 consecutive quarters of sales growth.
The launch of recreational adult-use in the state of Maryland starting July 1, 2023, was another tailwind for cannabis MSOs.
Curaleaf reported that it saw triple-digit sequential revenue growth across its Maryland stores and wholesale and Trulieve said it saw a 235% quarter-over-quarter increase in foot traffic at its dispensaries after adult-use launched.
Following their financial reports, Canopy Growth shares were down about 21% week-over-week, Curaleaf shares were down 3.8% and Aurora lost 6%, while Trulieve had added 5.3% week-over-week as of early Friday afternoon.