Aurora Cannabis (ACB -2.85%) is coming off a horrible 2022, in which its share price plummeted 83%. That's what a lack of sales growth and consistent losses will do to a business.

This year is off to a decent start with the company reporting some encouraging results already. And management is optimistic. Investors might want to watch for more mergers and acquisitions, now that the business is in stronger financial shape.

The company finally posted an adjusted profit

In Aurora Cannabis' most recent quarterly results, for the period ending Dec. 31, the company finally delivered on a long-awaited goal: reaching profitability on the basis of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

While not a true accounting profit, adjusted EBITDA earnings are what many cannabis companies strive for. And last quarter, adjusted EBITDA swung to a positive 1.4 million Canadian dollars ($1.03 million), compared with a loss of CA$7.4 million in the previous period. Its net loss, however, was CA$67.2 million, higher than the CA$51.9 million loss it incurred three months earlier.

The company now says it has "one of the strongest balance sheets in the Canadian cannabis industry" with cash on hand totaling CA$310 million as of Feb. 8. While its cash position isn't bad, the company continues to burn through it during its day-to-day operations.

ACB Cash from Operations (Quarterly) Chart
Data by YCharts.

Management hints at mergers and acquisitions ahead

Although Aurora isn't flush with cash, management believes that it's in a much stronger position now than it has been in the past. And in a recent interview with Reuters, CEO Miguel Martin said that its net cash position gives it the opportunity for mergers and acquisitions.

But investors shouldn't expect anything massive or groundbreaking, since Martin also said, "Something that's additive to medical would be more interesting to us than maybe others."

Focusing on medical marijuana has certainly helped improve Aurora's financials. In the past quarter, the company's adjusted gross margin before fair value adjustments was 61% for medical marijuana versus only 20% for consumer cannabis.

The positive takeaway for investors is that a potential acquisition might be one in the medical segment that helps strengthen Aurora's margins and gives it the opportunity to further improve on its bottom line.

Aurora needs a growth catalyst

Aurora has done a good job of improving its bottom line, but the problem remains that this isn't much of a growth stock. Net revenue of CA$61.7 million was barely up from the CA$60.6 million in the prior-year period. The company has been struggling to generate strong, consistent growth, and acquiring a business might be one way to achieve that.

The keys are the scope of the deal and how much of a game changer it will be. After all, while its cash position has improved, having CA$310 million isn't a terribly large amount to work with. And any significant deals will likely have to involve stock, thereby diluting shareholders in the process.

Investors should remain cautious 

Shares of Aurora are down 78% in the past 12 months, and although the company has hit adjusted EBITDA profitability, that's not enough of a reason to take a chance on this beaten-down pot stock. There's still lots of risk for Aurora investors today as the losses and cash burn remain.

Any deal that the company will pursue will likely be modest; investors shouldn't get their hopes up for a large transaction that gets the company back to generating high levels of growth. That's why this remains a stock worth watching -- but not buying.