Aurora CEO Steps Down; Stocks Fall and Layoffs Are Announced
Things are not looking great for Aurora Cannabis. On Thursday afternoon, the company announced a dramatic restructuring that involves the departure of its CEO and 500 employees.
Former CEO Terry Booth, the man who helped turn the Edmonton-based company into one of the biggest players on the cannabis market, will remain on the company’s board and serve as a strategic advisor. Aurora’s executive chairman, Michael Singer, will take over as interim CEO until a permanent replacement is found.
Booth’s “retirement” is the latest departure of CEOs in the weed industry, following the dismissal of Canopy Growth’s Bruce Linton in July, and last week’s resignation of MedMen Enterprises’ CEO Adam Bierman. Also on the list: former Aphria’s CEO Vic Neufeld and Sundial Growers CEO Torsten Kuenzlen. In addition to Booth, Aurora will cut around 500 jobs, 25% of which are corporate positions, or roughly about 17 to 18% of its full workforce
Sadly, there is more bad news in store for Aurora Cannabis.
The company revealed that it will take cumulate impairment charges ranging between $190 million to $225 million on property, plant, and equipment, as well as goodwill write-downs — ranging from $740 million to $775 million. This adds up to almost $1 billion in write-downs. According to Aurora Chief Financial Officer, Glen Ibbott, the assets impaired are mainly in South America and Denmark, while core Canadian assets are not affected by impairment charges.
Aurora is set to release Q2 results on February 12. The company announced on Thursday that it expects $50 to $54 million in net revenue, which is significantly lower than the $61 million experts were projecting. The company has been performing below expectations in previous quarters as well and has lost a staggering 74% of its value in the past 12 months.
Aurora shares went down 13% in after-hours trading following Thursday’s announcement. This slump is just the latest in a string of declining cannabis stock prices — Tilray stock went down by 5%, Canopy Growth by 7%, and Aphria shares fell by 4%.
Can Aurora’s cost-cutting plan keep the business afloat? Or is downgrading the Aurora stock from buy to hold a sign of more trouble ahead?