Greetings and welcome to the Aurora Cannabis Inc. 2025 Annual General and Special Meeting. I will now turn it over to Ron Funk, who will act as Chairman of this meeting. Please go ahead.
Thank you, Operator. Ladies and gentlemen, my name is Ron Funk, and I am the Lead Independent Director of Aurora Cannabis Inc. and will remain in that capacity until the conclusion of this meeting. I welcome you all to our annual general and special meeting for the company's financial year ended March 31, 2025. I will act as Chairman of this meeting. Joining me today is Miguel Martin, Executive Chairman and Chief Executive Officer, and Nathalie Clark, General Counsel and Corporate Secretary at Aurora. I now call the meeting to order and will commence with the formal proceedings to appoint a recording secretary and a scrutineer for the meeting. I appoint Nathalie Clark to act as Recording Secretary for the meeting, and Vanessa Lee of Computershare Trust Company of Canada as Scrutineer for this meeting.
This meeting is being held in a virtual-only format, which is being conducted via live audio webcast. In terms of formal procedures at today's meeting, as Chairman of this meeting, I will propose motions and, in accordance with the articles of the company, no motion proposed by me need be seconded. We will conduct the votes on the matters before us via a poll on the virtual platform. On a poll, every shareholder entitled to vote on the matter has one vote for each share entitled to be voted on the matter and held by that shareholder. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until the conclusion of the discussion on each resolution prior to casting your vote.
Due to the format, there will not be an opportunity to address the meeting in real time during the formal proceedings. However, registered holders, shareholders, or duly appointed proxy holders will be able to enter questions to be addressed during the Q&A session following the conclusion of the formal portion of the meeting. As is the case with an in-person meeting, due to time constraints, we may not have the time to address all questions through the platform and would ask that you follow up with our investor relations team if your question is not answered today. There is an online presentation that you will be able to view during the course of the meeting, and viewers are asked to please refer to the disclaimer with regards to forward-looking statements I set out in the presentation.
In addition, certain matters discussed during this meeting that are not statements of historical fact could constitute forward-looking statements, which are also subject to risks and uncertainties related to our future financial or business performance. Viewers and listeners are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are based on certain assumptions that management considers to be reasonable. Material factors or assumptions involved in developing forward-looking statements include, without limitation, publicly available information from governmental sources, as well as from market research and industry analysis, and on assumptions based on data and knowledge of this industry, which the company believes to be reasonable. Actual results could differ materially from those anticipated in these forward-looking statements, and the risk factors that may affect actual results are detailed in our annual information form and other periodic filings and registration statements.
These documents may be accessed via SEDAR+ and EDGAR. I now declare the polls open on all resolutions. The notice calling this meeting and all proxy-related materials were delivered to shareholders by notice and access, with the materials posted on the company's website. All registered and beneficial shareholders received the notice and access notification. I have a declaration as to the notice and access meeting mailing for this meeting, which is available for inspection by any shareholder. In view of this, I will dispense with calling for a reading of the notice, and I will ask the recording secretary to file the declaration of the notice and access meeting mailing with the minutes of this meeting. Does the recording secretary have the scrutineer's report on attendance?
Yes, I do. The scrutineer's preliminary written report on attendance states as follows: Two shareholders in person representing 86 shares, 166 shareholders by proxy representing 17,736,521 shares, 521 shares. 167 total shareholders holding 17,736,540 shares for a total shares represented of 56,246,404 shares. The percentage of outstanding shares represented at the meeting is 31.53%. This attendance meets the quorum requirements for the meeting.
Thank you, Nathalie. The notice of the meeting having been given as required and a quorum being present, I declare this meeting to be duly called and constituted for the transaction of business. The minutes of the last annual general meeting of the company held on August 9, 2024, are filed in the company's record book. I now put forward a motion that the reading of the minutes of the last general meeting of the company be dispensed with and that the minutes be taken as read and approved. May I please have a motion that the minutes be taken as read, approved, and adopted as tabled?
So moved.
Thanks, Miguel. Motion carried. I will now table the financial statements for the company's financial year ended March 31, 2025, the report of Ernst & Young LLP, and the related management's discussion and analysis thereon. These financial statements have been filed by the company on SEDAR+. I would like to propose that we dispense with reading the financial statements. Please note that there will be a Q&A session after the formal portion of this meeting to discuss the company's financial situation and prospects. May I please have a motion that we dispense with reading the financial statements?
So moved.
Thanks again, Miguel. Motion carried. Accordingly, I confirm that the financial statements of the company for the financial year ended March 31, 2025, the report of the auditor and related management's discussion and analysis thereon have been submitted and shall be included by the recording secretary as part of the formal records of this meeting. The next item of business is to fix the number of directors for the ensuing year. Management proposes to fix the number of directors to be elected to the board at six. I move that the number of directors for the ensuing year be fixed at six. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using the virtual platform to vote on this matter, you may do so now.
If you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in the system? The next item of business is the election of directors for the ensuing year. Management proposes to nominate six persons for election to the board. These persons are all described in the proxy materials and all of the nominees have agreed to stand for election. The company's articles include advance notice provisions, which provide for advance notice to the company in circumstances where nominations of persons for election to the board are made by shareholders of the company. The company has not received notice of any nominations and, as such, any nominations other than nominations disclosed in the proxy materials for this meeting may be disregarded.
Therefore, I nominate the following six persons as directors for the ensuing year: Miguel Martin, Michael Singer, Chitwan Kohli, Teresa Firestone, Norma Beauchamp, and Rajesh Uttamanfandi. The six persons nominated are management's nominees for election, as was stated in the information circular for this meeting. I move that the nominations be closed. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using the virtual platform to vote on this matter, you may do so now. If you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in the system? The next item of business is the appointment of the auditor for the ensuing year.
The company proposes that Ernst & Young LLP be appointed as auditor of the company for the ensuing year. I now ask for a vote on the motion that Ernst & Young LLP, Chartered Professional Accountants, with offices at Suite 1900, 1133 Melville Street, Vancouver, British Columbia, be appointed as auditor of the company. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using the virtual platform to vote on this matter, you may do so now. If you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in the system? The next item of business is to consider an amendment to certain provisions of the company's restricted share unit plan as described in the information circular.
To pass, the resolution must be greater than a 50% majority of the votes cast by shareholders voting in person or by proxy here at the meeting. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using the virtual platform to vote on this matter, you may do so now. If you have previously voted on this matter and don't wish to change your vote, no further action is required. Would all voting delegates please enter your votes in the system? The next item of business is to consider an amendment to certain provisions of the company's performance share unit plan as described in the information circular. To pass, the resolution must be greater than a 50% majority of the votes cast by shareholders voting in person or by proxy here at the meeting.
I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using the virtual platform to vote on this matter, you may do so now. If you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in the system? The next item of business is to consider an amendment to certain provisions of the company's share option plan, again as described in the information circular. To pass, the resolution must be greater than a 50% majority of the votes cast by shareholders voting in person or by proxy here at the meeting. I now call for a vote on the motion before the meeting.
Again, if you are a shareholder or a voting delegate who is using the virtual platform to vote on this matter, you may do so now. If you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in the system? The next item of business is to consider the non-binding advisory vote on executive compensation, also known as say on pay, as described in the information circular. To pass, the resolution must be greater than a 50% majority of the votes cast by shareholders voting in person or by proxy here at the meeting. I now call for a vote on the motion before the meeting. If you are a shareholder or a voting delegate who is using the virtual platform to vote on this matter, you may do so now.
If you have previously voted on this matter and do not wish to change your vote, no further action is required. Would all voting delegates please enter your votes in the system? I'll now pause briefly and ask that all shareholders and voting delegates finish voting on all items presented, as we will be closing the voting shortly. Thank you. I confirm that voting has now been closed. I will pause briefly again to allow our scrutineer to advise that sufficient votes have been cast in favor of the items that were presented today. I have received the results of the votes cast on each item of business. The scrutineer confirms that the company has received sufficient votes in favor of each item of business to carry each motion other than two items.
Firstly, on the election of directors, the numbers of votes withheld against nominee Teresa Firestone exceed the number of votes cast in her favor. Accordingly, in accordance with the company's majority voting policy, Ms. Firestone must submit a written resignation. The independent members of the board will then consider Ms. Firestone's resignation and make a determination on whether or not such a resignation should be accepted. The company will promptly disclose in a press release the determination made by the board. Secondly, the company did not receive sufficient votes to pass the non-binding advisory vote on executive compensation. Although this say on pay vote is an advisory vote and the results are not binding upon the board, the board will take into account the results of this vote together with other shareholder feedback and best practices in compensation and governance. Otherwise, I hereby confirm that all other motions were carried.
Full voting results will be available on SEDAR after this meeting. As all the business for the meeting has been concluded, I declare this meeting terminated. Thank you for attending. We will now move to the informal part of the meeting, and before turning it over to Miguel, I'd like to say a few words as I reflect on my time with Aurora. I joined the board seven years ago through the acquisition of MedReleaf and right before Canada's legalization of cannabis. It has been an incredible journey to be part of, and as Aurora navigated through the various hurdles that come with operating in a newly regulated industry, I'm immensely grateful to have been entrusted on the board to help guide the organization through these challenges and to celebrate many wins along the way.
Today, Aurora is a completely different company, and I consider myself fortunate to speak to you today at the conclusion of my tenure and say that I am very proud of my time on the board and of the team that will continue to drive Aurora's success story. Whether it be my fellow board members, the executive leadership team, or those within the broader organization, I can say for certain that the people of Aurora are truly talented, and their collective expertise, drive, and commitment to the company's success gives me the utmost confidence in the company now and for the future. Now, before I hand it over to Miguel for his remarks, I'd like to say a heartfelt thank you to Aurora shareholders for your support over the years. Without it, the company would not be where it is today. Thank you all very much. Over to you, Miguel.
Thank you so much, Ron. Fiscal 2025 represented a record-setting year in global medical net revenue, adjusted EBITDA, and positive free cash flow. This performance is anchored by a strong and flexible balance sheet, exemplified by a sizable cash balance of CAD 185 million, combined with a debt-free cannabis business, which we believe is a significant advantage relative to the industry. Here are some key highlights from fiscal 2025. First, net revenue rose 27% to a record CAD 343 million, which included global medical cannabis revenue increasing 39%. International revenue generation eclipsed the strong contribution from Canadian medical and comprised over half of total global medical cannabis, up from 41% in fiscal 2024. Second, adjusted gross margin improved to 55% compared to 49%, as we benefited from both higher cannabis and plant propagation margins.
Finally, we generated record-adjusted EBITDA of almost CAD 50 million, with record positive free cash flow of about CAD 10 million. Aurora is a leader of global medical cannabis, the industry's highest margin segment. We are best positioned to deliver high-quality products to patients worldwide. Our products meet and exceed the highest international standards through our unparalleled scientific knowledge, genetics, breeding, and regulatory expertise. With leading market positions in Canada, Australia, Germany, Poland, and the U.K., we could also quickly capitalize on new medical cannabis opportunities as they emerge in other markets. We are the largest Canadian exporter of high-quality medical cannabis, with multiple GMP-certified facilities representing 90% of our annual manufacturing capacity. It is these world-class manufacturing facilities, which give us the flexibility and consistency of supply, to successfully compete in the rapidly expanding high-margin international medical cannabis market.
Aurora's differentiation is also reflected through our lower production costs, made possible by our focus on yield improvement and operational efficiencies. Additionally, we've invested in new cultivation technology to meet product demand while establishing strong third-party partnerships that enable us to optimize our production planning to meet demand. Our proven commitment to medical cannabis and our strong execution in seizing global opportunities resulted in excellent strategic and financial performance in fiscal 2025. Our medical cannabis-first strategy is working, providing us with meaningful high-margin growth opportunities in what we believe is a CAD 5 billion-plus market. We will continue to concentrate primarily on Europe and Australia, which are both vastly underpenetrated. Aurora is positioned for sustainable, profitable growth in fiscal 2026, and we look forward to providing business development updates as we work to create long-term value for shareholders.
We appreciate your time and your continued support in Aurora, and now would be happy to move to our Q&A session. In addition to responding to questions that have been submitted through the platform, we would also like to address the most common questions we are receiving through our investor mailbox.
Thank you, Miguel. I'm going to start with the most common questions we receive from our shareholders. I may also select questions received through our virtual platform during our AGM today. The first question we'd like to start with is, following your annual adjusted EBITDA of approximately CAD 50 million in 2025, what can we expect from adjusted EBITDA patterns moving forward? Are recent trends expected to be, or will there be further improvements?
Thank you, Kevin. Fiscal 2025 represented a record year for Aurora Cannabis Inc., not only for adjusted EBITDA, but also revenue and free cash flow. We're very encouraged by our recent profitability trends, and we're committed to delivering sustainable, profitable growth. Looking at fiscal year 2026, quarter one, which we just reported on a few days ago, we saw over 200% year-on-year growth in adjusted EBITDA. While we're not saying that we expect this significant growth year-over-year, it does show that our strategy is working. If we look back over the last few years, we've been focused on growing our high-margin global medical cannabis business while also looking at operational efficiencies and continued spend discipline to support both top-line and bottom-line growth.
This focus is clearly paying off, as while we've been able to grow our revenue, we've also seen meaningful improvements to our adjusted gross margins, which contributes directly to our improved annual profitability. The global cannabis industry is constantly evolving, and we will continue to focus on identifying the right opportunities to generate sustainable, profitable growth for the future.
The second question we have is, as a shareholder, why should I look to continue to invest in your company?
Aurora has been able to consistently identify and deliver on our strategic priorities, whether it's strengthening our balance sheet, delivering profitable growth, or positive free cash flow generation. We're focused on delivering sustained, profitable growth and do not need to raise capital through an ETM program, which is dilutive to shareholders. Aurora is an established leader of global medical cannabis, the industry's highest margin segment. We're best positioned to deliver high-quality products to patients worldwide. Our products meet and exceed the highest international standards through our unparalleled scientific knowledge, genetics, breeding, and regulatory expertise. With leading market positions in Canada, Australia, Germany, Poland, and the U.K., we can also quickly capitalize on new medical cannabis opportunities as they emerge in other markets. Finally, our high level of operational execution and industry leadership has positioned Aurora for sustainable, profitable growth in fiscal 2026 and beyond.
Thank you. Our third question relates to free cash flow generation. Can you walk us through what we can expect to see from free cash flow moving forward? You achieved annual positive free cash flow for the first time last year. Will it improve in FY 2026? If so, by how much?
We expect to be free cash flow positive for a second consecutive year, and this is thanks to our continued strong performance in operating cash use and discipline regarding working capital and CapEx expenditures. Looking at 2025, we were very happy to hit this milestone, as it is seen as a key differentiator in this industry, and it is a metric that we expect to continue to deliver on. We're very encouraged by the CAD 9 million in free cash flow we generated in fiscal 2026 Q1, as it is a 42% increase on the prior year, which was our first quarter generating positive free cash flow. While there may be some seasonality quarter-over-quarter, we are encouraged by our annual outlook for fiscal 2026 and beyond.
Thanks, Miguel. Our final question relates to the international markets. Near year-end earnings refer to some headwinds in international medical revenue. Do these headwinds still exist, and what kind of growth can we expect from international medical revenue moving forward?
If we look at our most recent quarter, Q1 of fiscal 2026, which we reported on earlier this week, we had another strong quarter for our international medical cannabis business, with revenue increasing to CAD 37 million, which is up 85% from last year. These results were driven primarily by strong performance in Germany and Poland, further supported by contributions from Australia, New Zealand, and the U.K.. In terms of the headwinds mentioned during our year-end earnings call, this was primarily referencing Poland, and we are no longer seeing those headwinds now that the market has adapted following the regulatory changes that impacted the prescription process. In Q2 of fiscal 2026, the quarter ending September 30, consolidated net revenue is expected to increase year-over-year, driven primarily by 8% - 12% growth in our global medical cannabis segment.
While there are some headwinds impacting near-term growth, global medical cannabis is estimated to become a CAD 5 billion-plus global market, so there is considerably more room to grow, particularly in Europe and Australia. We've now concluded our question and answer session, and thank you for attending and participating at the meeting. If you have any additional questions or would like to follow up on any questions presented to the meeting, which were not addressed, please email our investor relations team at ir@auroramj.com. Thank you very much.
This concludes today's meeting. You may now disconnect.