Restructuring and changes in strategy are moves that businesses often deploy when they're facing challenges and headwinds. But that doesn't mean the end result will be a better, more investable company. While Aurora Cannabis (ACB -5.67%) has been slashing costs and changing its operations in recent years, the company isn't out of the woods by any stretch. It's not a safe buy -- and it may never be. Here's why investors should tread carefully with this beaten-down pot stock.

The company's pivot toward medical marijuana has resulted in an adjusted earnings profit

Among the biggest moves that Aurora has made in recent years has been to shift its business more toward medical marijuana. Margins are better there, and competition isn't as intense. For the last three months of 2022, the company's medical cannabis net revenue totaled 39.5 million Canadian dollars -- more than double the CA$14.7 million it reported in consumer cannabis net revenue. Four years earlier, in 2018, the gap was much closer, with medical net revenue for the same period totaling just under CA$26 million, while consumer cannabis net revenue was CA$21.6 million.

And the move toward medical may appear to have paid off for the company, as seen in its most recent results, Aurora Cannabis reported a profit under adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). That was an important goal for the company to hit.

It's a big improvement from 2019 when then-CEO Terry Booth promised, "sustained positive EBITDA beginning in fiscal Q4 2019." The company has often failed to come through on its promises, so meeting any kind of goal is a positive for the business. Current CEO Miguel Martin has been cutting costs and has helped get the company to a positive adjusted EBITDA figure.

Aurora has improved, but not nearly enough

Investors should be careful to assign too much importance to adjusted EBITDA because it includes many adjustments and isn't reflective of the company's true profitability. Aurora still posted a loss of CA$67.2 million during the period. A good number for investors to focus on is gross profit, as that tells you how much revenue is left over after paying the cost of sales and what's available to cover overhead.

Last quarter, Aurora's gross profit before fair value adjustment totaled just CA$2.1 million. While its consumer cannabis business dragged that number down as its gross margin was negative, even on the medical cannabis side, Aurora generated a gross profit of just CA$13.1 million on net revenue of CA$39.5 million, for a margin of 33%. 

That's simply far too low of a gross profit when you consider that Aurora incurred more in sales and marketing expenses than that -- CA$13.2 million -- during the period. And that's not even factoring in general and admin costs, which were more than double that figure, at CA$27.1 million.

Investors need to be careful with the company's adjusted calculations, because they aren't standardized accounting numbers, meaning there's a lot of leeway for Aurora to adjust them how it deems fit. But by doing so, it can paint a misleading picture of how the business is doing.

The business is still facing big risks ahead

Aurora looks to be moving away from the consumer cannabis business because of low margins. But by doing so, it's going to be more difficult for the business to generate growth. International cannabis markets are still fairly small and won't offer Aurora the type of growth it needs to attract many investors. At the same time, the company is still burning through cash and incurring losses along the way.

Even if you can stomach the risk and are willing to buy Aurora's stock, there's simply not a whole lot of reason to do so. There are better, high-risk stocks out there that at least have a decent chance of making you a good profit. In the case of Aurora, it isn't likely to become a better buy anytime soon. It has lost 94% of its value in three years, and although it has restructured its business, there are still plenty of reasons to steer clear of this pot stock.