ACB Q4 2025: Medical Cannabis Revenue Jumps 48% as International Margins Expand
Aurora Cannabis delivered a transformative quarter, with international medical cannabis now driving the majority of segment profit and revenue. The company’s strategy to prioritize high-margin global medical markets over Canadian adult use is accelerating margin expansion and cash generation, even as select international regulatory headwinds emerge. Investors should watch for how Aurora’s scale and regulatory expertise convert into further global market share and sustainable profitability in fiscal 2026.
Summary
- International Medical Shift: Overseas medical cannabis now delivers more than half of segment revenue, reflecting a decisive portfolio pivot.
- Margin Expansion Engine: Product mix and operational efficiency are driving industry-leading gross margins, with medical cannabis at 70%.
- Regulatory Navigation: Aurora’s ability to manage complex certification and supply dynamics is a key differentiator as new markets open.
Performance Analysis
Aurora’s Q4 results underscore its evolution into a global medical cannabis leader, with net revenue up 34% year-over-year, fueled by 48% growth in medical cannabis—now 75% of total revenue and approximately 90% of segment gross profit. International medical revenue soared 114%, overtaking Canadian medical for the first time, and demonstrating the strength of Aurora’s global-first strategy. Gross margin improvement was significant, climbing to 62% at the consolidated level and 70% for medical cannabis, as higher-margin international sales and cost reductions took hold.
Consumer cannabis revenue declined as expected, reflecting a deliberate deprioritization in favor of medical. Meanwhile, the Bevo, plant propagation, business delivered 32% revenue growth and a 12-point margin improvement, supporting cash flow seasonality. Adjusted EBITDA reached a record $16.7 million, up 619% year-over-year, while free cash flow turned positive, driven by both higher contribution margins and working capital discipline. Aurora ended the quarter with $185 million in cash and no cannabis business debt, reinforcing balance sheet flexibility.
- Medical Mix Uplift: Higher-margin medical cannabis drove both top-line and profitability gains across geographies.
- Plant Propagation Leverage: Bevo’s peak seasonal quarter contributed meaningfully to margin and cash flow.
- SG&A Investment: Operating expenses increased to support international growth and integration of MedRelief Australia, but were offset by revenue scale and margin expansion.
Performance was anchored by a decisive strategic shift toward international medical markets, with operational execution and capital allocation aligned to high-return opportunities.
Executive Commentary
"Aurora is already the largest company in the world focused on medical cannabis, the highest margin segment of the industry… Through our leading market positions in Canada, Australia, Germany, Poland, and the UK, we are best able to capitalize on global medical cannabis opportunities in other countries as they emerge."
Miguel Martin, President and CEO
"Our plan for fiscal 2026 is to continue executing on our global medical-first cannabis strategy, deliver sustainable improvements in our financial performance, and create more value for our shareholders."
Simona, Chief Financial Officer
Strategic Positioning
1. Global Medical-First Focus
Aurora’s business model is now anchored in global medical cannabis, a segment defined by higher margins, regulatory complexity, and durable demand. The company’s dual EU GMP and Australian TGA certifications, which cover 90% of its annual manufacturing capacity, underpin its ability to supply regulated international markets where barriers to entry are high. These certifications, which require rigorous quality and process controls, are a critical moat as new entrants struggle to scale.
2. Portfolio and Geographic Diversification
International expansion is delivering both revenue growth and risk diversification. Germany and Australia are now the largest and fastest-growing medical markets, with Aurora holding leading share and introducing new products such as medical pastilles and inhalable extracts. The company is also investing in Poland and the UK, launching proprietary cultivars and broadening distribution, despite temporary regulatory headwinds in Poland. Canadian medical remains stable, while recreational is intentionally deprioritized.
3. Operational Efficiency and Supply Chain Resilience
Yield improvement, cost discipline, and selective third-party supply partnerships are driving margin expansion. Aurora’s genetics R&D at Aurora Coast and targeted CapEx in lighting and nutrients have boosted yields and reduced per-unit costs. The company’s approach balances internal capacity upgrades with external supply agreements to flexibly meet international demand, avoiding supply constraints that could limit growth.
4. Regulatory and Market Agility
Deep regulatory expertise positions Aurora to navigate shifting global policy landscapes and unlock new market opportunities. The company’s ability to maintain product availability in tightly regulated markets like Germany, and to adapt to changes in Poland, demonstrates operational agility. Management highlighted ongoing expansion opportunities in underpenetrated markets and the potential for further legalization across Europe.
Key Considerations
This quarter marks a clear inflection point in Aurora’s business model evolution, with international medical cannabis now the primary driver of growth, margin, and cash flow. The company’s strategic priorities are tightly focused on high-barrier, high-return opportunities, with operational and financial resources aligned accordingly.
Key Considerations:
- International Market Depth: Aurora’s share gains in Australia and Germany provide a template for expansion as other European and Asia-Pacific markets liberalize.
- Margin Sustainability: The durability of 70% medical cannabis gross margins will depend on continued product mix optimization and cost control as competition intensifies.
- Regulatory Risk Management: Navigating evolving rules in Poland and other markets will require ongoing investment in compliance and advocacy.
- Capital Allocation Discipline: Management is prioritizing free cash flow and balance sheet strength, with CapEx and SG&A targeted at the highest-return international opportunities.
Risks
Regulatory volatility in international markets remains the most significant risk, as seen with Poland’s temporary prescription disruption. Rising competition in high-growth medical markets could compress pricing and margins over time, especially if new entrants secure GMP certification. Currency fluctuations, supply chain constraints, and evolving patient access models add further uncertainty, though Aurora’s scale and balance sheet provide some mitigation.
Forward Outlook
For Q1 2026, Aurora guided to:
- Continued strong global cannabis revenue, with temporary international headwinds offset by growth in Canada and consumer stability.
- Seasonally peak revenues for plant propagation, supporting margin and cash flow.
- Margins remaining strong, but adjusted EBITDA expected to be sequentially lower due to less contribution from higher-margin international markets.
- Positive free cash flow sustained, driven by operating performance and working capital efficiency.
For full-year 2026, management reaffirmed its medical-first strategy and highlighted ongoing investment in product innovation, market expansion, and operational leverage as key drivers of sustained profitable growth.
Takeaways
Aurora’s pivot to international medical cannabis is reshaping its financial profile, with margin and cash flow inflection supporting a stronger balance sheet and long-term value creation.
- Medical Revenue Dominance: International medical now drives the majority of segment profit and positions Aurora as a top-tier global player.
- Margin Leadership: Industry-leading gross margins are a function of product mix, operational efficiency, and regulatory expertise, but will require vigilance as competition grows.
- Watch Market Expansion Pace: Investors should monitor the pace of new market openings, regulatory shifts, and Aurora’s ability to capture share without sacrificing margin or capital discipline.
Conclusion
Aurora’s Q4 results reflect a decisive strategic shift toward high-margin, global medical cannabis, with operational execution and capital discipline supporting sustainable profitability. The company’s ability to scale in complex international markets, while maintaining margin and cash flow, positions it well for further expansion in fiscal 2026.
Industry Read-Through
Aurora’s results highlight the increasing importance of international medical cannabis markets for global cannabis operators, with EU GMP and local certifications emerging as critical barriers to entry. Margin leadership is achievable through disciplined product mix and operational excellence, but regulatory agility remains essential as markets like Poland and Germany evolve. The shift away from commoditized Canadian adult use toward global medical segments is likely to accelerate industry consolidation, with scale and compliance capabilities determining long-term winners. Other cannabis firms should assess their international readiness and margin structure in light of these dynamics.