Aurora Cannabis: A High-Conviction Play in a Scaling Global Medical Cannabis Platform

Aurora Cannabis (ACB) has emerged as a standout in the evolving cannabis sector, leveraging disciplined operational execution, margin expansion, and strategic diversification to position itself as a high-conviction growth catalyst. With a 41% year-over-year increase in medical cannabis revenue, a 57% international contribution to global medical sales, and a 210% surge in adjusted EBITDA, the company is demonstrating the scalability of its global platform. Coupled with Bevo Farms Ltd.'s role in insulating Aurora from sector volatility and driving free cash flow sustainability, the case for Aurora as a must-own cannabis stock is compelling.

Strategic Operational Execution: Scaling Global Medical Cannabis

Aurora's second-quarter 2025 results underscore its ability to execute on a global scale. Medical cannabis net revenue hit $61.3 million, a 41% YoY increase, with international markets contributing $35 million—93% higher than the prior year and 57% of total global medical revenue. This shift reflects Aurora's strategic pivot to high-margin international operations, particularly in Australia, Germany, Poland, and the UK. By prioritizing these markets over lower-margin consumer cannabis sales, Aurora has not only diversified its revenue base but also capitalized on favorable pricing dynamics and regulatory tailwinds.

The company's adjusted gross margin before fair value adjustments on medical cannabis improved to 68% in Q2 2025, up from 63% in the prior year. This margin expansion was driven by cost reductions, higher selling prices in Australia, and operational efficiencies, including sourcing European demand from Canada. These improvements highlight Aurora's ability to balance growth with profitability, a critical factor for investors seeking sustainable returns.

Margin Expansion and Free Cash Flow Momentum

Aurora's adjusted EBITDA surged to $10.1 million in Q2 2025, a 210% increase from $3.3 million in the prior year. This leap in profitability is a testament to the company's disciplined cost controls and strategic focus on high-margin segments. The results align with Aurora's target of achieving positive free cash flow by year-end, supported by a robust balance sheet with $152 million in cash and a debt-free cannabis business (excluding $57.5 million in non-recourse Bevo-related debt).

The company's free cash flow momentum is further bolstered by its Bevo Farms Ltd. segment, which contributed $23.9 million in net revenue in Q1 2026—a 4% YoY increase. While Bevo's adjusted gross margin dipped to 6% in Q1 2026 due to non-recurring inventory write-offs, underlying performance remains resilient. Excluding these costs, Bevo's margin would have been 14%, reflecting its ability to generate stable cash flows in a volatile cannabis landscape.

Diversification Through Bevo: Mitigating Sector Volatility

Bevo Farms Ltd., North America's leading supplier of propagated agricultural plants, is a cornerstone of Aurora's risk-mitigation strategy. By diversifying beyond cannabis, Bevo insulates Aurora from regulatory, pricing, and demand fluctuations that plague the consumer cannabis segment. In Q1 2026, Bevo's operations generated $9.2 million in positive free cash flow—a 42% YoY increase—while maintaining a debt structure of $59.8 million in non-recourse financing.

Aurora's balance sheet strength, with $186 million in cash as of June 30, 2025, underscores the financial flexibility to invest in infrastructure and operational efficiency. This stability is critical for long-term growth, particularly as the company scales its global medical cannabis platform. Bevo's role in this ecosystem is not just about diversification—it's about creating a buffer that allows Aurora to navigate sector headwinds while maintaining profitability.

Investment Case: A Must-Own Catalyst

Aurora's strategic focus on international expansion, margin expansion, and Bevo-driven diversification positions it as a must-own cannabis stock. The company's ability to generate 41% YoY medical revenue growth, 57% international contribution, and 210% adjusted EBITDA growth demonstrates its operational prowess and scalability. Meanwhile, Bevo's free cash flow sustainability and low-volatility business model provide a critical hedge against sector-specific risks.

For investors, Aurora represents a rare combination of growth and stability. With a strong balance sheet, disciplined cost controls, and a clear path to positive free cash flow, the company is well-positioned to capitalize on the global medical cannabis boom. As the sector matures, Aurora's strategic execution and diversified revenue streams will likely drive outsized returns for long-term holders.

In conclusion, Aurora Cannabis is not just a participant in the cannabis industry—it is a leader shaping its future. For those seeking a high-conviction play on a global medical cannabis platform with disciplined execution and diversified resilience, Aurora is a compelling addition to any portfolio.