• Aurora Cannabis fires 18 percent of its workforce as it keeps restructuring to stanch losses
  • Its CEO recently resigned
  • The cannabis industry in Canada is hurting as profitability wanes

Still hurting from weak sales due to high inventory and cheap black market prices, Aurora Cannabis, Inc. is implementing "sweeping changes" that's seen the firing of 500 employees. The restructuring has also led to the “retirement” of CEO Terry Booth, the co-founder who helped build the company over the past seven years into the second largest cannabis company in the world by market capitalization.

Michael Singer has temporarily replaced Booth as interim CEO. Booth, however, will remain a strategic adviser to the board. The search for his permanent successor is underway, said Aurora. In addition, two independent directors will join Aurora’s board, bringing the total to 10 members, including seven independents.

Aurora Cannabis is bent on slashing costs amid a painful cash crunch besetting the ailing industry, which only began taking-off a few years ago. The 500 full-time employees it let go represent about 18 percent of its workforce.

Aurora said the painful moves were forced on it by the slower growth for pot companies and what it calls “current cannabis market conditions,” meaning an oversupply and cheap prices on the black market. It reviewed “all business operations and concluded that certain assets and goodwill values as at Dec. 31, 2019 exceed current fair-market valuations.”

Chief Financial Officer Glen Ibbott said the noncash assets impaired are mostly in South America and Denmark. On the other hand, the company’s “core Canadian cannabis assets are not impacted by these noncash asset impairment charges.”

To restore growth, Aurora said it will focus on “core areas” such as the Canadian consumer market, the Canadian medical marijuana market, established international medical markets, and the U.S. Analysts noted these moves really mean Aurora is withdrawing from its international expansion plans to focus solely on the still vibrant North American markets of Canada and the U.S. Company operations in Europe and South America will eventually be de-emphasized or shut down altogether.

“We believe that the long-term opportunity for Aurora remains very compelling, despite a slower-than-anticipated rate of industry growth in the near-term,” according to Ibbott. “We also believe our approach to rationalizing the business and conservatively improving our balance sheet positions Aurora in a more stable position for sustainable growth going forward.”

Analysts reveal Aurora has lost 74 percent of its value over the past 12 months, after repeatedly failing to meet its own financial targets. Also adding to the company's list of woes are analyst downgrades, a controversial convertible bond exchange that angered shareholders and reports of insider selling. One analyst blasted Aurora for losing the trust of investors after repeatedly promising one course of action and then immediately choosing another.

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