Amid increasing expenses by almost four times the sales, Aurora Cannabis Inc (NYSE:ACB) downsizes the workforce and assumes impairment charges of $752.79 million. The company has cut 500 jobs that include 25% of the corporate positions.
Aurora Cannabis maintains 3,400 employees in 34 nations worldwide. A majority of the announced job cuts are from the contract workforce. The company expects to save $9 million CAD through cost-cutting measures. Aurora Cannabis has posted an EBITDA loss of $40 million CAD in Q1 2020. The company has to post quarterly revenues of $140 million CAD to reach the breakeven. According to analysts, Aurora Cannabis may reach the breakeven by Q4 2021.
Michael Singer becomes an interim CEO
Terry Booth, the present chief executive officer of Aurora Cannabis, will retire, and Michael Singer will act as an interim CEO. Singer assumed the role of executive chairman last year. Co-founder, Booth will act as an advisor and continues on the board. The company is searching for a permanent CEO. Its shares declined by 13% in the after-hours trading.
The net revenues of Aurora Cannabis in Q2 is expected to be in the range of CAD 50 million and CAD 54 million. Its revenues in the same period last year are CAD 54.2 million.
Aurora Cannabis made changes to certain credit facilities that include removing some covenants and options for refinancing at maturity. According to analysts, the company may not be able to pay the loan of CAD 360 million, which is due in August 2021. Aurora Cannabis is criticized for aggressive expansion worldwide amid uncertain demand. The company has not set any timeframe when it will become profitable.
Executive changes at other firms
Aurora Cannabis joins the league of companies (Sundial Growers, Supreme Cannabis, and Canopy Growth) that made executive change. The change is on the backdrop of disappointing sales and mounting costs.
An analyst at New York based O’Neill, Andrew Kessner, said we need not expect a major change from Singer as an adviser because he is already at the helm of the company. It is only an indication to the market that the company is making changes.