You probably expected that Aurora Cannabis (NYSE:ACB) would have announced its fiscal 2020 fourth-quarter results by now. After all, it's been nearly four months since the Canadian cannabis producer reported its fiscal Q3 results. However, Aurora's Q4 results won't be officially announced until Sept. 22.

But on Tuesday, the company did provide a sneak peek at some of its forthcoming results. Here's what to like -- and what to loathe -- in Aurora's latest business update. 

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Image source: Getty Images.

What to like

Unfortunately, there wasn't much to like in Aurora's business update. Arguably the most important positive for the company was that it reached an agreement with banks to amend its secured credit agreement. These changes include:

  • Adjusting the total funded debt-to-equity covenant to 0.28:1 for fiscal 2020 Q4 and fiscal 2021 Q1
  • Reducing adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) milestones for the trailing 12-month period ending June 30, 2021, to 20 million in Canadian dollars from CA$51 million
  • Reducing the size of the company's revolving credit facility to CA$15 million from CA$43 million

These amendments are good for Aurora because they increase the company's already limited financial flexibility. The reduction in the revolving facility also helps Aurora reduce fees.

Another bright spot in Aurora's business update was that the company said it's now operating at a quarterly sales, general, and administrative (SG&A) expense run rate in the low CA$40 million range. That's a significant improvement from the company's fiscal 2020 Q3 results. Aurora also stated that it expects further cost reductions of up to CA$10 million per quarter beginning in the second half of fiscal 2021.

We should also include Aurora's other major news item on Tuesday: the naming of Miguel Martin as its new CEO. Martin has been the company's chief commercial officer since July. He previously served as CEO of U.S. CBD company Reliva, which Aurora acquired earlier this year. His experience in the consumer packaged goods industry could be a good fit for the direction the company wants to pursue.

What to loathe

There were plenty of things for investors to absolutely loathe with Aurora's business update. Let's start with revenue. Aurora expects to report fiscal Q4 net revenue of between CA$70 million and CA$72 million, with cannabis net revenue between CA$66 million and CA$68 million. These ranges are below the company's results in fiscal Q3, when Aurora generated net revenue of CA$75.5 million, with cannabis net revenue of $69.6 million.

Aurora also said that it will record up to CA$1.8 billion in goodwill impairment charges in Q4. The company didn't provide full details on these impairment charges. However, it did state that the previously announced fixed asset impairment charges related to cutting back its production facilities were expected to reach up to CA$90 million. Aurora also said that around CA$140 million of the impairment charges related to the carrying value of inventory.

These impairment charges didn't include, however, the impact of some more bad news for Aurora. The company announced that it and the Ultimate Fighting Championship (UFC) had agreed to "mutually terminate their partnership" forged last year to determine if CBD products have potential benefits for mixed martial arts (MMA) fighters. Aurora anticipates recording a one-time charge of US$30 million in fiscal 2021 Q1 to terminate the contract. 

Some investors might recall that Aurora has previously committed to generated adjusted EBITDA profitability in fiscal 2021 Q1. That's not going to happen. The company now says that it will achieve this goal in the second quarter of fiscal 2021.

What to wonder about

Aurora's business update leaves investors with plenty to wonder about. For example, will the company really deliver positive adjusted EBITDA in fiscal Q2 of 2021? Will the company have to resort to more dilution in the near future? Will Miguel Martin be up to the task of leading the beleaguered company?

The biggest question of all is this: When will the marijuana stock rebound? Aurora's share price is now down close to 70% year to date. There's not much in the company's update that gives investors any confidence that a huge comeback is right around the corner.