Greetings, and welcome to Aurora Cannabis Inc. Fiscal Second Quarter 2026 Results Conference Call. [Operator Instructions] 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 4 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 3 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 5. Stepping back from the quarter, we have grown our net revenue over the last 5 years from $68 million to $90 million with adjusted EBITDA increasing $73 million from negative $58 million to a positive…

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…

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.

[Operator Instructions] 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% 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 is it maybe 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, 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 I guess, what's 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 3 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, is lost, this is medicine. And so 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 be in other markets.

And if I could sneak one more in for Simona. There was a big drop in accounts payable in 2Q from 1Q. 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. And typically, what we see in Q2, a lot of the outflows, 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. And 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 veterans. So how do you see that? What could be the impact to 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 for them 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. So given the newness of this announcement and really 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, and 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, so what you're referencing is that the German government had hit their import limit and they had to get -- which is very common, and it happens throughout the year as they want to raise the overall limit. And so it was about a 3 or 4-week process. 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, it will go back to the higher number and everything should be there. 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 piece and so baseline pricing for where we operate really hasn't been that affected. Now as I mentioned with Bill's question, with the implementation of telehealth and some other sort of aspects of that distribution chain, there are some additional costs that are coming in on that side. 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.

Yes. So we've got 2 very large EU GMP facilities in Ontario. We built a facility in Leuna, Germany. And for indoor GMP, similar genetics, similar setup to what we do in Canada. We've been really happy with it, and thus, the announcement 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, being able to use the same world-class practices and genetics in that facility, doubling the overall production in 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. We have had delegations from countries that are not in the cannabis system. Regulators and a lot of other key stakeholders visit that facility, and it's been very additive for us. And so we like it. It works as a stand-alone production facility, but it works even better as sort of 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 maybe talk about that?

Yes. So Australia is the only market we have where a majority of our sales are in the value segment. And that goes back to the history of the company before we bought the remaining 90%. And the majority of those sales were in a concession system for value products. That's a market where it's been inundated with a lot of value products. And so 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 bit of time before that portfolio is properly allocated to value being 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 there because you can sell other formats beyond flower and oil, and we've launched edibles and some other things there. So we're bullish on 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, 2 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 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 the regulations do 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 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. And so we partner with clinics, and we continue to look at that. Each and every market, we do look at do we need to own pieces of that vertical structure or can we partner? And there are a lot of great partners out there that want premium, high-quality products from Aurora. So we have a lot of advantages in being able to do that. So 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., similar situation. To your point, 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. And 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. And 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. Obviously, by our margin structure and the results, it's working, but we stay flexible.

That's good color. Look, I mean, just a follow-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, 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's going to 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's 2 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 is completely contrary to how all other medical products are delivered and the impact to rural patients, that's going to be 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 2 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, takes 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 would 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. And obviously, we'll continue to do that. 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.