Hello, everyone, and welcome to the Aurora Cannabis Incorporated Fiscal First Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] This conference call is being recorded today, Wednesday, August 7, 2024. [Operator Instructions]. I will now turn the conference over to your host, Kevin Niland, Director, Strategic Finance and Investor Relations. Please go ahead.

Hello, everyone, and thank you for joining us. On the line with me are Miguel Martin, CEO; and Simona King, CFO. This morning, Aurora issued a news release announcing our fiscal 2025 first quarter financial results. Financial statements, MD&A and this news releases are available on our IR website can also be accessed via SEDAR+ and EDGAR. For today's conference call, listeners are reminded that certain matters could constitute forward-looking statements and are subject to risks and uncertainties related to our future financial or business performance. Actual results could differ materially from those anticipated in those forward-looking statements. The risk factors that may affect actual results are detailed in our annual information form and other periodic filings and registration statements. These documents may similar be access via SEDAR+ and EDGAR. Following prepared remarks by Miguel and Simona, 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.

Thank you, Kevin. Having reported our previous fiscal quarter just a few weeks ago, we will be relatively brief in our prepared remarks. Q1 2025 was a milestone period for Aurora, and we cannot be more pleased with the results that we'll be sharing with you today. We grew our top line to $83.4 million, which included record revenue in Canadian medical cannabis, international medical cannabis implant propagation during VIVO's seasonally strongest quarter. We take great pride in Aurora being the global medical cannabis leader within nationally legal markets. This enables us to capitalize on rapidly evolving opportunities in countries around the world. And through our investment in VIVO two years ago, we have also become an important player within North America's controlled environment agricultural industry. This generates a steady, predictable financial performance on a seasonal cadence, and we foresee more value creation through an acceleration of VIVO's business plan. Turning back to Q1, we also generated substantial growth in adjusted EBITDA to a near record high and reached positive free cash flow six months earlier than we had projected, both incredible outcomes. Note that our ability to maintain free cash flow is not linear. And as Simona will explain, we do not foresee reaching positive free cash flow in Q2, but expect to be positive again in the third quarter. We also maintained our balance sheet strength through a large cash balance and no debt on our cannabis business, which provides us with maximum flexibility. These accomplishments in Q1 position us to have a record year at Aurora, led by our flagship Global Medical business. Let me now highlight some specific metrics related to our quarterly performance. First, net revenue rose 12% and compared to the same period last year, inclusive of 24% growth in international medical cannabis. Second,…

Thank you, Miguel, and good morning, everyone. Q1 is certainly indicative of how we are fulfilling the mission that Miguel laid out as I will now discuss in detail. Revenue of $83.4 million represented 12% growth versus the year ago period and included a $47.2 million contribution from our high-margin medical cannabis segment. Quarterly profitability consisted of consolidated adjusted gross margin at 43%, resulting in adjusted gross profit of $36 million compared to $32.6 million in the year ago period. Medical cannabis comprised 57% of total net revenue and 91% of total adjusted gross profit during the quarter. This marks an increase from 56% of net revenue and 77% for adjusted gross profit from the year ago period, reflecting higher medical margins in the current year quarter. Adjusted EBITDA was $4.9 million for the quarter, resulting in our seventh consecutive quarter of positive adjusted EBITDA and grew 87% compared to the year ago period. Let's now discuss the results in more detail. Medical cannabis net revenue rose by 13% to $47.2 million, which consisted of nearly 7% growth in the Canadian medical cannabis and more than 24% growth in international medical cannabis. The increase in Canadian medical revenue was due to increased sales to both insurance covered and self-paying patients. The increase in international medical cannabis revenue was primarily due to higher sales in Australia and Germany driven by significant overall growth in those markets as well as increased distribution in the U.K. Adjusted gross margin for medical cannabis was 69%, up from 61% in the year ago period. This was the highest margin we have ever generated, far exceeding our 60% target and the result of several factors. First, sustainable cost reduction; second, higher selling prices in Australia, which represents a growing component of our international business; and third,…

Thank you, Simona. Aurora is firmly in growth mode, ready and able to capitalize on the opportunity for global medical cannabis, the most attractive segment of our industry as patient access is increasing at a rate like never before. The openings provided by evolving regulatory environments in key international markets positions just a few companies like Aurora to take advantage of this once-in-a-generation opportunity. As we expand and deepen our presence in these markets, we will not only benefit from an increase in our top line, but also from the high-margin contribution that flows from the medical cannabis segment. This will result in long-term EBITDA and free cash flow growth for the benefit of our shareholders. And with that, thank you for your interest in Aurora, and we will now take your questions. Operator, please open the lines.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Pablo Zuanic with Zuanic & Associates. Please go ahead.

Miguel, can we just discuss Germany, if you can just -- it's a two-part question. First, if you can give some sense of underlying trends, right? Like some people have talked about growth from April to July, local companies there have talked about doubling or tripling in doctor visits, scripts. Any color you can give about underlying trends would help? And the second part of the question is really, remind us of the strength of your franchise in Germany because from outside, sometimes we wonder about the barriers to entry. There seems to be a lot of companies there, wholesalers, importers. So just remind us of the strength of your franchise and why we should assume that you will continue to benefit from strong market share there?

So, when we look at Germany and you look at the passing of the Cannabis Act, which took effect in April 1st, really, there are sort of three aspects of it that we're encouraged by. First has been the increased access to patients, the ease in which patients can get a prescription through a variety of means, say, telemedicine and others. And so, it has dramatically grown the sort of the overall pie of available patients and the ease in which that process is, say, compared to what it used to be. Secondly, as you're well aware of, the ease of distribution there because now you can ship cannabis products like other pharmaceutical products through the mail, which allows an expansion beyond what was the traditional face-to-face interaction that you would see at a pharmacy. And then third is, we have not seen margin or pricing compression. And the reason for that is that the wholesale list price of the manufacturer drives the economics for both the wholesaler and the retailer which, in this case, is the pharmacy. So now as to projections of 2x or 3x of the German market, I think that is a bit premature. I think roughly 30% on an annualized basis is still very healthy, but we'll have to see given the overall sort of recency of that and the trends that we're going to see not only in the registrations, but in the overall sort of pharmacies and what's happening with the actual prescriptions themselves. I think in terms of what are the strengths for Aurora, what people, I think, need to understand is that medical cannabis operates like traditional pharmaceutical product. You have a clinician or a doctor prescribing a specific product for a need of a specific patient. And once they find…

This concludes our question-and-answer session. I would like to turn the conference back over to Miguel Martin for any closing remarks.

Thank you very much. And listen, we appreciate everybody's interest in Aurora. As we said, this was a milestone quarter, and we're incredibly excited about the future, and we look forward to sharing those results with you as the year goes along. All the best. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.