Aurora Cannabis Inc. said late Thursday that Chief Executive Terry Booth is retiring and Executive Chairman Michael Singer has been appointed interim CEO effective immediately, making the Canadian licensed producer the latest in the sector to move to cut costs to conserve cash and stay afloat.
The company also announced “a business transformation plan” to “better align” costs and capital expenditures with current market conditions.
Booth will remain a strategic adviser to the board, and a search for a permanent successor is underway, the company said in a statement. Two independent directors will join Aurora’s board for a total of 10 members, including seven independents, it said.
“These combined changes are consistent with, and evidence of Aurora’s commitment to, achieving positive EBITDA and cash flow as rapidly as possible, while still maintaining the ability to capitalize on longer-term Canadian and global cannabis market opportunities,” the company said.
The news of Booth’s departure comes less than two months after the company announced the departure of Chief Commercial Officer Cam Battley, the man widely viewed as the face of the company.
Aurora, which is the most widely held stock on Robinhood, has lost 74% of its value in the last 12 months, after repeatedly failing to meet its own financial targets. Analyst downgrades, a controversial convertible bond exchange that was highly dilutive for shareholders and reports of insider selling have further weighed on sentiment.
Jefferies analyst Owen Bennett downgraded the stock to hold from buy after Battley’s departure and said the company has lost the trust of investors after repeatedly promising one course of action and then immediately choosing another.
Like its rivals, Aurora has struggled to become profitable following a rocky rollout for legal cannabis in Canada, with red tape hampering the creation of a network of retail stores and allowing the black market to thrive.
With companies unable to get their product to customers, revenue numbers have disappointed investors and cash piles have dwindled, forcing companies into some desperate measures to raise capital. Many have resorted to measures such as the sale and lease-backs of real estate, or have canceled or revised the terms of previously-agreed deals.
The job cut news comes just days after rival Tilray Inc. said it was laying off 10% of its workforce, a move that Bennett welcomed on Thursday.
“Both companies have a relatively clouded path to profitability right now, very large operational footprints, a history of aggressive investments, and will likely need to raise capital in the near future (in our view),” Bennett and Jefferies analyst Ryan Tomkins wrote in a note to clients. “With many factors impacting sales/gross margins arguably less able to be controlled, opex (operating expense) rigor can be a key to profitability.”
Booth’s departure is yet another management shake-up in the sector, coming after Canopy Growth Corp.’s CGC, -2.31% WEED, -2.16% Bruce Linton was ousted in July and Aphria Inc.’ APHA, -4.77% APHA, -5.20% ormer CEO Vic Neufeld was forced to step down.
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