Greetings, and welcome to Aurora Cannabis Q2 2022 results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Ananth Krishnan, Vice President, Strategic Finance. Thank you. You may begin. Thank you, Diego, and we appreciate you all joining us this afternoon. With me today, our CEO, Miguel Martin, and CFO, Glen Ibbott. After the market closed, Aurora issued a news release announcing our financial results for the Q2 2022. The release and accompanying financial statements and MD&A are available on our IR website and via SEDAR and EDGAR. In addition, you can find the supplemental information deck on our IR website. Listeners are reminded that certain matters discussed on today's Conference Call could constitute forward-looking statements that are subject to risks and uncertainties related to our future or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. 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. Following prepared remarks by Miguel and Glenn, we will conduct a question-and-answer session. For retail investors, we have compiled questions submitted to us prior to the call. For street analysts, we will ask you to limit yourselves to one question and then get back in the queue. With that, I will turn over the call to Miguel. Please go ahead, Miguel. Thank you, Ananth. We're very pleased with our transformation plan, and we're tracking with adjusted EBITDA profitability in the first half of fiscal 2023, and that's less than a year away. Here's why. First, we remain the number one Canadian LP in global medical cannabis, with strong sequential sales growth and margins exceeding 60%, roughly twice that of our competition. We continue to see growth in a number of countries, including the U.K., Israel, Australia, and Poland, and our experience and process-driven approach gives Aurora a leg up to profit from the significant opportunity. Second, and this is great news, we continue to rationalize our expenses to the current environment and manage the company with far greater efficiency. Through Q2, we achieved annualized run rate savings of CAD 60 million. That is nearly double the CAD 33 million we referenced back in November. I'm pleased to report that we now believe that we will achieve the higher- end of our targeted CAD 60 million-CAD 80 million savings annually by the first half of fiscal 2023. Importantly, none of these cost savings will impact planned growth investments. Third, our balance sheet remains one of the strongest in the industry, and we continue to be smart in allocating capital. Moreover, our capital structure supports both organic growth and provides us with the resources to evaluate strategic M&A. Fourth, we recently launched our science and innovation business known as Occo, which we intend to use to deliver a continuous stream of innovation to the market. This business already has one of the largest catalogs of high-quality and high-potency genetics and IP and biosynthesis available for licensing. We have already commercialized several of the cultivars with other LPs, as well as launched 3 under our own San Rafael '71 brand. We currently have more than 30 high-quality cultivars not available anywhere else in the market that are ready for immediate trial and exclusive licensing. Botto- line, this is a capital-light, long-term revenue growth opportunity that we're really excited about. Let's now discuss our medical business, which is number one by revenue internationally and in Canada. I'm proud of the team for continuing to find ways to profitably grow the medical cannabis market globally. What sets us apart from the competition in international medical is our regulatory expertise, supported by our compliance protocols, testing, and science that are recognized and highly regarded worldwide. These attributes put us in the pole position for success when these markets open recreationally. During Q2, we demonstrated exceptional growth of 24% in international medical revenue compared to Q1, with success stories in the EU, Israel, and Australia. In Poland, we delivered a total of 290 kilograms in the quarter, which included the largest shipment of any LP into the country to date, according to the Chief Pharmaceutical Inspectorate. We expect for this success to continue as we look to launch new cultivars there in Q3, accompanied by a marketing push. In Australia, our revenues have doubled year-over-year. Through our exclusive supply agreement with MedReleaf Australia, we offer medical patients an EU GMP certified range of products, including dry flower, oils, soft gels, and plan to shortly expand our offering to include vapes and gummies. 2021 was an excellent year for the Australian market, driven by more mainstream acceptance from patients and doctors and ongoing growth in authorized prescribers. We anticipate continued growth in 2022 as Australia has strengthened import requirements, which Aurora already qualifies for, and continues to ease patient access regulations. In the U.K., we continue to surpass expectations with our revenues increasing more than 5-fold compared to Q2 last year, with the growth driven by a rapid increase in patient numbers. We've already built a leading position in the flower segment and continue to see growth in patient numbers with no erosion in pricing. While the U.K., Australia, and Poland are still in their earliest stages of development, we would expect all these countries to bear more significant profit drivers for us in the future. In Germany, we have the number one and number two best-selling products in dry flower for all of the last calendar year, and a growing share of its oil market following the recent launch of our balanced extract. While we did experience some softness in Q2 due to some competitive pressures and slower than expected market size growth, Germany remains the largest market in the EU, with 83 million citizens, and we are extremely bullish on our future there, given the new coalition's plans to legalize adult rec cannabis and improve medical patient accessibility. While the timelines and regulatory framework are yet to be announced, our leadership position in medical puts us in a very strong position when that milestone occurs. In France, we are preparing our third shipment for the pilot program, where we are the exclusive supplier of dry flower, having secured all three of the available dry flower tenders in the French medical cannabis pilot program. In the Netherlands, we invested in Growery, one in 10 license holders involved in selling only legally produced cannabis in approximately 80 out of 6,600 coffee shops in the country. We expect to recognize revenue beginning in calendar 2023, and over time, this is predicted to be a $2.8 billion market. We continued our success in Israel by shipping over $10 million of cannabis to our partners there in Q2. As of today, we do not expect to recognize revenue from Israel in Q3, but we remain committed to the Israeli market and our partners there as they grow their business in the coming quarters. In these developing markets, predictability of revenue can be affected by regulatory complexities, such as timing of government approvals and import permits. However, our reach into multiple jurisdictions hedges us against this. I want to be clear here. We believe the growth story of the next several years in cannabis will be that of international medical and recreational, and we expect a domino-like effect as acceptance grows. Where there is money to be made in a federally regulated structure, Aurora will be there, and we will win because of our agility and unique set of capabilities, which I mentioned earlier. Some estimates put the cannabis market in the EU alone at $5 billion by 2025, and we expect to grab a sizable piece of this. This will ultimately help drive us to sustain profitability and generate shareholder values as markets develop. Turning now to the Canadian medical market, which we see as a competitive advantage for Aurora and is our most profitable business segment. Our overall revenue was flat in Q2 compared to Q1, although our market share expanded to 23.4%, up from 19.8% in the same period last year. Most importantly, our insured patients made up 72.7% of our domestic medical sales, up from 70.6% in Q1. We are excited to see some opportunities for growth in attracting union groups, employer insurance programs, as well as opportunities to pick up market share with our best-in-class patient experience. We have also launched a number of products and innovations that we believe will appeal to patients. Regarding Canadian adult rec, our Q2 revenue decline reflects the ongoing macro challenges. There's a lot of excess inventory and increased pressure on older SKUs, which together has resulted in price compression. This irrational market is unsustainable in our view, and we're not gonna chase unprofitable market share at any cost. Our focus is on how to maximize profitability by leveraging our low-cost production facilities and selectively entering categories that have higher- margins. We have the scale and resources to outlast the current environment, and once the market consolidates, we will be in a strong position. In Q3, our innovation pipeline consists of 25 new SKUs, which benefit both rec and medical channels. Highlights include three new cultivars from our breeding program, launched under our refreshed Drift brand, our first offering of infused pre-rolls and hash, and a bevy of new vape, edible, and concentrate flavors, which we expect to hit the market in March. Our full- year 2022 innovation calendar includes over 80 new and high-potency SKUs, which would be our most significant and successful innovation push since legalization. I would now like to turn the call over to Glenn so he can provide his financial review. Thanks, Miguel. Good afternoon, everyone. I will now review our fiscal Q2 2022 financials. These results clearly demonstrate the inherent strengths of our business model and how well we are executing our transformation program, which is ahead of schedule. Let's begin with a few key highlights. We have one of the strongest balance sheets among Canadian LPs, including approximately CAD 445 million in cash as of yesterday, no term debt, and access to a $1 billion US dollar shelf prospectus. This prospectus includes a $300 million US dollar ATM, from which we have recently drawn down nearly $90 million US dollars, meant to position us to take advantage of strategic M&A opportunities in the future. Our cash flow continues to improve, with CAD 20.3 million used in operations and working capital in Q2, compared to CAD 67.3 million in the same period of last year. We continue to progress towards our EBITDA positive milestone, reducing our loss this quarter by over 20% from last quarter to CAD $9 million as we begin to see the cost savings from our business transformation plan flowing through the P&L. In short, we have more than sufficient cash on hand to fund operations, and we are moving closer to profitability. Q2 net cannabis revenue was CAD $60.6 million, a slight increase from last quarter. Net revenue would have been 4% higher, but was reduced for a CAD $2.4 million provision reflecting past and current international shipments that had batches that were outside a targeted potency range. This provision is not expected to recur regularly. Our leadership in medical cannabis continued to deliver robust overall growth, along with consistently strong margins above 60%. This enviable margin profile has held steady over the past few quarters and is the key gross profit driver for our business that both distinguishes us from our competitors and is critical for us in reaching positive EBITDA during the first half of fiscal 2023. SG&A and R&D also remain well- controlled, down 10% quarter- over- quarter as we continue rightsizing costs. These expenditures are already a fraction of what they were in years past and will be reduced further as we proceed through the implementation of our business transformation plan. Clearly, our overall Q2 results benefited from Aurora's broad diversification across the international medical, Canadian medical and adult rec segments. Now let me address each of our core businesses in a bit more detail. Our leading medical businesses in Canada and Europe continued to perform exceptionally well, generating CAD 45.7 million in sales and a gross margin of 62%. Medical represented about 75% of our Q2 revenue and about 89% of our gross profit. Canadian medical revenue was CAD 26 million in Q2, up slightly, but really reflecting a consistent performance compared to Q1, even as the consumer retail market continues to roll out. As we have said previously, our Canadian medical patients can be segmented into two groups, those with cost reimbursement coverage and those without a reimbursement program. Our success in Canadian medical cannabis is really driven by our insured patient groups, whose reimbursement makes them consistent and high-volume buyers. While we have seen some migration of price-sensitive non-reimbursement patients from the medical channel to the adult rec channel, we have been able to attract more insured patients, resulting in a steady sequential revenue and an overall market share increase. Our international medical revenue was CAD 19.8 million and reflected 67% growth versus the prior year and 24% sequentially. Q2 revenue included slightly over CAD 10 million in sales to Israel in what is believed to be the largest export of medical cannabis into the Israeli market. Excluding the one-time CAD 2.4 million provision, international medical revenue was up 87% year-over-year. Sales to Israel do not recur every quarter. To give you a sense of the underlying international business, excluding the impact of Israel sales in Q1 and Q2, international revenue was up 41% sequentially. Recall that BDS Analytics estimated a market size of about $3.2 billion by 2025 for just the medical markets in Germany, Poland, U.K., France and Israel. Clearly, Aurora's leadership internationally is an important driver of long-term shareholder value creation. Our Q2 consumer revenue was CAD 14.8 million, which reflected a 22% decline compared to last quarter. Consumer cannabis represented about 24% of our Q2 revenue and about 11% of our gross profit. The revenue decline is primarily attributed to price adjustments in our core and premium products, intended to improve sales velocity by reflecting the continuing price compression in the market. The average selling price decrease was partially offset by a 5% positive shift in the company's brand mix from Daily Special to San Rafael '71 as Aurora continues to pivot towards premium offerings. In fact, San Rafael '71 pre-roll and flower revenue is up 18% over the last 2 quarters, driven mainly by the new cultivars launched in our Q1. While we saw an increase in mix towards our premium brands, our consumer gross margins declined to 24% in Q2 from 32% last quarter. This was driven by downward pricing pressure of 6%, partially offset by 2% improvement from the shift toward premium. Also negatively impacting margins this quarter were opportunistic bulk sales, which depressed margins in the quarter by 4%. Turning now to SG&A, which includes R&D. It remains well- controlled, coming in at CAD 44.6 million in Q2, which included approximately CAD 3.7 million in restructuring and other one-time costs. SG&A is CAD 40.9 million excluding those costs. We already made progress in driving down SG&A, but are certainly not done. In fact, we expect our quarterly run rate will be well below CAD 40 million by the time we exit this fiscal year. In Q2, we also recorded a CAD 31.6 million inventory provision as a result of facility consolidation and clearing out of obsolete inventory balances. This provision included a non-cash net realizable value adjustment of CAD 11.5 million, driven by price compression in the market. Pulling all of this together, we generated an adjusted EBITDA loss in Q2 2022 of CAD 9 million. The CAD 2.5 million improvement in adjusted EBITDA loss as compared to last quarter was primarily driven by the CAD 3.1 million decrease in SG&A. While revenue and adjusted gross margins remained relatively steady on a consolidated basis. Let's review our path to adjusted EBITDA profitability. Approximately 60% of cash savings under the business transformation program, now estimated to be close to CAD 80 million, will be reflected within our cost of goods as inventory is drawn down following the implementation of our lower production cost structure. We would expect to see those savings in our gross margins and logistics costs beginning late fiscal 2022 and into next year. The remaining 40% of cash savings will show up in SG&A as they are executed, and we see that now beginning in Q2. We exited Q2 having executed plans that result in annualized run rate cash cost savings of CAD 60 million. We're well on our way. To conclude my remarks, there are three key takeaways from this financial review. First, our balance sheet remains strong, supported by a healthy cash balance and improved working capital and cash flow. Second, our medical businesses in Canada and internationally, so clearly differentiating us from our competitors, are a critical part of Aurora's target of sustainable profitability, having delivered 89% of gross profit this quarter. Finally, we're ahead of schedule with our transformation plan and now expect to be at the high- end of our CAD 60 million-CAD 80 million total annual cost savings range. This reinforces our already clear path to adjusting positive adjusted EBITDA in the first half of fiscal 2023 and through actions that are within our control. Now I'll turn the call back to Miguel. Thanks, Glenn. Before Q&A, let me share some final takeaways. Aurora is laser-focused on EBITDA profitability and long-term growth, and we're making significant progress on both. First, we're getting to the high- end of our cost reductions, which is great news. Our medical cannabis revenue growth globally shows tremendous promise given our regulatory expertise and the trend of medical converting to rec. In Canada, the rec market will eventually correct, likely with fewer players, which will provide us with added opportunity. Our science and innovation program adds another capital-light opportunity to our portfolio. Lastly, our balance sheet is in the best place it has ever been, which positions us for continued organic growth and strategic M&A, and the transformation plan is firmly on track. We appreciate your interest and time today. Before we take questions from the analysts that cover our stock, I'll turn the call over to Ananth so we can ask a few questions from our retail shareholders who are invited to submit questions ahead of today's call. Ananth, please go ahead. Thanks, Miguel. Our first question is regarding the stock price. What are your plans to improve the stock price and perhaps reassure shareholders? Well, Ananth, you know, obviously it's a question we get a lot. I think first and foremost, you got to go back a little bit in time and understand that there was incredible exuberance about the growth of the global cannabis business. That starts with the US. We've been saying for a year that the US. is a ways off. We also believe, and strongly, and I've spent my entire career working in the US. with regulated agencies, that it's gonna be a medical focus with the FDA regulating the product, with decriminalization, and then we'll see a pathway towards rec. That's what we're seeing in other markets, and we'll see it there. Canada and the challenges in Canada around the rec business. I know many people are incredibly focused on the rec business as opposed to the medical business, which I'll talk about in a second. The rec business in Canada is only three years old. You've got roughly half of that business still in the legacy market, and you've got, you know, rational marketplaces we've spoken about. There are 250 LPs today. That's twice as many as there were a year ago. You've got excess inventories and people having negative gross margins on key products. That's not sustainable, and that's gonna turn around. We, quicker than almost anybody else, right-sized that rec business so that we could be in a situation to not have that, you know, overshadow the incredible success that we've had in medical. I think first and foremost for investors is really focusing on the long- term versus the short- term. The long- term for cannabis is incredibly bright. If you look at key markets such as Germany and France and U.K. and Israel and on and on and on, those are big markets where you're seeing medical cannabis grow, you know, in a significant place. Also, you're seeing the same companies win time after time after time. Secondly, we've done the things we said we were going to do. We are focused on shareholder value. We're focused on being profitable, and this was another good quarter of making progress. You know, the EBITDA progress was a 22% improvement over last quarter, and we are reaffirming the guidance to be EBITDA positive by the second half of our fiscal 2023. Things that we've done are setting up, you know, for shareholder value in the future. We've talked about the balance sheet, we've talked about the cash position, and we are properly allocating the capital to high-growth, high-margin opportunities. Lastly, when you think about long-term benefits, Aurora has significant assets that haven't been monetized yet, IP, biosynthetics, genetics, all which play a significant role in agriculture products all around the world. I understand the question, and I understand the history, but I think if you look forward and take a longer view, you see that there are a lot of things, traditionally that you'd look at most companies that Aurora has. Great. Thank you. Our next and last question pertains to our path to profitability, Miguel. What gives you confidence that we're on track to meet our stated EBITDA timelines? Well, I think anytime, you know, you're looking at a company and seeing, you know, can you believe what they're saying, it's what have they done. If you look at our history of announcing additional CAD 60 million-CAD 80 million in cost efficiencies, we're already at CAD 60 million and we're, you know, really commenting today that we're gonna be a high- side of that. Second, is there progress been made so far? EBITDA does not, you know, positive EBITDA doesn't happen overnight, and we've made progress once again this quarter. When you look at, you know, aspects of what would be a drag on that projection, we've quickly moved out of those less than profitable areas, such as key components of the adult rec business in Canada, markets that we may have participated in that didn't have upside, and yet still found, you know, the cash and the investment to do innovative deals such as the grower in Netherlands, where even though legally we can't have a majority position, we can consolidate and recognize the revenue as early as 2023. We're on track. We've demonstrated that what we say we're gonna do, we do. I think, you know, we're always keeping the shareholder in mind as we make key decisions. That's great, Miguel. Thanks. Operator, that concludes the retail Q&A session. I turn it over to you to open up to the phone lines. Thank you. We'll now open our question and answer session on the phone. If you'd like to ask a question on the telephone, please press star one on your telephone keypad. Please note, you will be limited to one question per each time that you queue. If you'd like to ask a follow-up question, you must get back in the queue and press star one. You may press the star key followed by the number two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Vivien Azer with Cowen. Please state your question. Hi, good evening. Good evening, Vivien. I wanted to focus on medical, no surprise there, very strong results, but in particular, your Canadian medical business, Miguel. The call-outs during the prepared remarks around the benefits of insurance coverage were really interesting to me, and I would love for you and Glenn to expand on that. One question, two parts. First, can you just level set on the scope of insurance reimbursement as it stands today? Part two, what are the opportunities to expand patient coverage from a reimbursement standpoint? Thank you. You got it. First, I'm gonna talk, you know, more of sort of a macro level, and I'll address your point on opportunity. I'll let Glenn walk you through the reimbursement numbers, the percentages and sort of the key stats, and we can obviously follow- up for all about key components in that. The medical business in Canada, you know, is a really good business. I again would remind people, you know, I know it's a bit older than the rec business, but it really is starting to develop a sophistication. It really is a DTC business. It's a direct to consumer. We've done a lot of things that I think most people would expect out of a customary DTC business, but it's harder to do in a medical cannabis. All of these things have really been focused on not only increasing the basket size, but also acquiring new patients. While our overall revenue was flat, as we mentioned, we grew market share. We have almost a 23.5% market share today of the medical business, up from 19%. Next closest is half of that. After that, it gets pretty diluted. First and foremost, we've added significantly to the portfolio of products and premium products, and we have found that our patients are particularly interested in premium cannabis products. I think most people would understand that with medication, but it's coming a little bit later to the overall cannabis business. Secondly, the service for not only the patients, but the clinicians and the physicians has consistently improved. When you look at that, there are a lot of reasons to think that we will continue to grow share in that critical category. The other two points I'll make on that is that the infrastructure to service a medical patient, both acquire, retain, and move through that process is incredibly expensive, requires an incredible amount of effort, which is why you see so few competitors doing well. The other part is it is completely portable. A lot of that same infrastructure and knowledge and experience with patients in the Canadian market is directly applicable in why we are dominating in other key markets such as U.K. and Germany and France. The other point is the regulators have a common set of understanding. Health Canada has an outsized impact on the regulations in Western Europe, as well as in Israel and other markets. Again, muscle memory, expertise, portability, all play in to grow the overall medical business, not only in Canada, but internationally. Now, in terms of growing the pie, I would mention a couple things. You're just starting to see clinical trials, peer-reviewed science, and many of the customary metrics that you would see in medications and prescriptions that expand the pie for medical cannabis companies. Clearly, like with other medications and with prescriptions, products that have been on the market for a longer period of time and have a longer, what we call efficacy ladder, would be advantage in that type of situation. We think there's upside to that. We talked a little bit about our genetics and science business, which clearly is of interest not only to our own patients, but those of other LPs that get there, so we can grow the pie that way. Then lastly, you're seeing a growth in insurers and union groups and the overall portfolio of companies that are considering cannabis for those patients. Right now, it's 1% of the adult population in Canada participates in that system. That's quite low. In Germany, just for perspective, is 0.1%. There's upside to grow the pie, both in Canada and internationally. Glenn, maybe you can touch on some of the key metrics to answer Viv's question. Yeah. Thanks, Miguel. It's a great question. First of all, I'd say a minority of our patients do the majority of the ordering and deliver the majority of the gross profits. They're the reimbursed patients. Now, there's a significant portion of our patients. I think we've got the highest number of veterans and first responders in the country, and they're a critical group. Obviously, this is a really important medical treatment for them dealing with PTSD, whether it's you've been in a war zone, you've been on the front lines of healthcare or on the front lines of policing. This is a really important treatment for you. Through some of the coverage programs that some of these folks qualify for, they are reimbursed, and you know, what we're working on is that it's direct reimbursement. They are reimbursed for up to high single- digits CAD per gram on cannabis. They become a little less price sensitive and much more choosy in getting the right medicine, which is a really critical component of this. I think they're a great group. They, you know, it's an important treatment for them. You know, strictly financially, they really drive you know, repeat orders at a high average CAD per gram. For the growth that Miguel was alluding to, we've told you in the past that we've invested in technology to support our medical business. This is a key part of it. As employee or employer benefit programs and some of the insurance providers that run those programs offer up medical cannabis as an option, and they do under health spending accounts. We've got the infrastructure now to connect directly into their system so a patient can order medical cannabis, not have to go out of pocket on it and be directly covered through the insurance program through their work. If you had CAD 500 a year through a health spending account or alternative treatments account, we've become positioned as an I'd say, a supplier of choice. That's an opportunity for us to continue to work in the reimbursed or the insured patient group, which we think, probably provides the best, stickiest, highest value patients and also, quite frankly, is near and dear to our hearts in that we actually are making a difference in their lives. Thanks for the question. Thank you. Our next question comes from Michael Lavery with Piper Sandler. Please state your question. Thank you. Good evening. Good evening, Michael. You've touched before on how medical and international medical is attractive in part because of the high- margins and price points. Can you just help me reconcile? You talked about how international sales were up 24% sequentially in the quarter, but then your company-wide average selling price was down 10% sequentially. Was any of that pressure from international, or what are some of the pricing dynamics there? How should we understand what that looks like? Yeah, I mean, Michael, the pressure was not international. You know, it was domestic. I'll let Glenn walk you through the numbers, but we had pressure from some opportunistic wholesale selling, which, as opposed to, you know, destroying product, we sold it at a very low point. We also had some pressure in the rec business, and some of that was offset by mix. But the international margins are, you know, really haven't moved at all, and they're incredibly strong. That's not there. I mean, the reason why, and I'm always surprised there's not more interest in it, you know, medical cannabis is the fastest-growing, you know, segment of cannabis internationally. You're seeing huge markets really being put on the path of thoughtful, you know, legislative process to bring cannabis forward. And we... I don't need to list off all the countries. We're in 12 countries and some big ones. The margin set up because it's really, you know, medications and runs through a federal construct, does not have the same market pressures and clearly is a much more of a challenge to get into the business. I mentioned that a year ago in Canada, there were 125 LPs. Today, there's 250. There's only a handful of cannabis companies that can meet the incredibly strict requirements internationally. I mean, Germany, as an example, you have to be within 10% of spec for both potency and terp levels. People will say, "Well, geez, Miguel, that's pretty broad spec." It's not when you have, like, a balanced product that only has a 10%, you know, THC number. A 1% variance on an agricultural product on a core item is really hard. International is where the growth is. International is really hard to do well. Same companies are winning time after time. The margins are great, they're not moving, and you're seeing steady progression and a consistency in how the countries look at it. I mean, Glenn, anything I missed on the margin? No. Great, talking about the margins or insight into the margins. Mike, specifically about average selling price, yeah, there's a little bit of pressure in the consumer market. Our average price in our Canadian medical market came down as we sort of proactively adjusted a couple of key products down to that reimbursement level I talked about, just to make sure that there is no impediments to these first responders and veterans ordering. It actually picked up the velocity, even though the ASP was down slightly on an overall. Internationally, you know, listen, we had some very high ASP markets come on this quarter, but the Israeli sales are bulk sales, and so the way they show up in our average selling prices, they may actually look like they're decreasing the ASP, but the margins are extremely high because we're just shipping a big bale of cannabis, where there's no post-harvest handling, there's no bottling, none of that kind of stuff. So the margin's great even though the average selling price per gram, if you will, is down. I think, you know, for... It's a great question because I think in the future, we'll have to peel that out a little bit for you to give you the transparency on the impact of large international bulk sales in our ASP, because quite frankly, if we pulled that out, you'd see our ASP going up. Thank you. Our next question comes from Pablo Zuanic with Cantor Fitzgerald. Please state your question. Thank you, Miguel, and congratulations on the quarter. Look, it's just along the same lines in terms of international markets. Can you talk more about the stickiness that you're talking about, right? Because when I hear bulk shipments to Israel, I wonder, you know, that buyer there could switch to another supplier next quarter, right? I'm sure they cannot buy from Colombia yet due to regulatory issues, so I want to understand, you know, the control that you have of the supply chain there, whether are they selling your brand? Do you have your own salespeople on the ground? Or you're pretty much shipping from Canada, and then they take control of the value chain. Because that means that it would not be so sticky. The second point, you know, when you talk about this unique ability to navigate complex regulatory environments, I'm quoting from press release, that sounds great, you know, but it's in Germany, when only 0.1% of the population are patients, I wonder, you know, how unique is that really? I mean, I suppose other companies, as domestic patients grow in Germany could also have that skill set. If you can expand on those two points. Thank you, Miguel. Sure. I'd be happy to. Israel is unique, and I've spent a lot of time with that situation. What you have today in Israel is you've got roughly 100 local growers, including growers that are on the kibbutzim, and they hold really an outsized political influence. The situation in Israel right now, a country of 9 million people and a tremendous hub of all things, you know, cannabis right now, is that locally, they've not been able to grow the quality of cannabis that they need in that market, and it's a very high-margin market. I mean, a 10-gram increment is going for about ILS 360. Pablo, what you're referencing is the least sticky of all the markets. Why is that? Because right now, Canadian LPs and others that can meet the spec. Now, the spec is incredibly hard to meet. CUMCS, the IMCA, which is the regulatory agency in Israel, a very thoughtful agency led by a wonderful man named Yuval Landschaft, has created what may be one of the strictest, if not the strictest, barriers to get into pesticide testing that no one else sees. If you can meet that standard, you can get your product in, and import permits go sort of hot and cold. Because cannabis is so hot right now, there's not a lot of brand, what I would call equity, with the possible exception of a local grower, you know, such as maybe InterCure, Alexander Rabinovich or someone like that. There's not, you know, there's not that much stickiness for the Canadian LPs because the brands haven't developed themselves. If you can meet the standard, you can get your product in, and because there's such demand, you can get there. I think over time, Israel will get stickier. I also think over time, the local growers who really are wonderful and are getting better each and every quarter will have a larger percentage, if not the majority of the sales in Israel. Which is why, you know, we talk a lot about to be successful internationally, you have to diversify your business. In the early days, you know, you're gonna see quarters like we had, you know, this quarter where we shipped the largest shipment ever in Israel. We held the other record too. We're saying that in the quarter we're currently in, we're not gonna have a shipment. It's gonna go hot and cold. Now, stickiness outside of Israel is absolutely sticky. You know, getting into Germany is a year-plus challenge, and it requires a significant investment in filings, in packaging, in product production, in naming conventions, and those clinicians are pretty steady with what they've picked. Australia's another one. If you have a new SKU in Australia, it takes 6-8 months even to get it registered. That's not the case in Israel. France is gonna be a very sort of thoughtful process. Israel is unique. The other markets are absolutely sticky. People cannot get in. I think if you look at the concentration of those companies that are successful, it's the same companies, France, U.K., Germany, on and on and on, and they all have the same common elements, history in medical, strong product portfolio, exceptional regulatory excellence, and a commitment, you know, to a significant amount of investment that takes a couple of years to return. That's not unlike other regulated markets and other categories. I think, you know, Israel is a bit of a one-off, but, you know, all the other markets are there. You also don't see the margin degradation, you know, as we've talked about in these medical markets, because there's just really no incentive to do it. Thank you. Our next question comes from Andrew Carter with Stifel. Please go ahead. Hey, thanks. Good afternoon or good evening. I guess instead I want to ask about the Canadian consumer business. You've reiterated the positive EBITDA. What does that consumer business have to do? Does it have to stabilize? Or conversely, you know, could you just go with a 100% medical focus and would you be able to, with some incremental savings and be profitable? Thanks. Great question. Right now, you know, as we mentioned, the Canadian rec business is completely irrational. You're seeing core SKUs that are selling at a significant negative gross margin. You're seeing exceptional amount of over inventory, and you're seeing, you know, a situation like with Quebec right now with the vaccine mandate, where you're seeing 16%-20% drop in sales. It's a weird market. I talked about the 250 LPs that are there. The question becomes, you know, why stay in it? I believe, and, you know, we were one of the first companies to recognize that overall market share was not the arbiter of success in the Canadian rec business. It's the share of the profit pool, which is something I was always trained. The issue in exiting the rec is that there are other ancillary benefits that we opt out. I want to stay in the rec business, albeit at a proper size for a couple reasons. First, it's gonna get there. It might take nine or 12 months, but it's not sustainable. When that happens, it's gonna be, you know, for a smaller group of companies, and we're gonna be in a really, you know, strong position. Secondly, that experience in the largest federally regulated rec market is invaluable in other places, i.e., the Netherlands, where we're gonna be going into a rec market there and at some point the US. There are a lot of learnings that you only get by staying there. It's only four years old. We've talked about that. You know, when you think about the market potential, there's gonna be a slowing of that legacy market. Right now, the legal market represents 53% of sales, and, you know, the legacy market is 47%. That continues to move. I think with all of that, there are still some places where you can find some profitability, premium flower, concentrates, extracts, and all of those make sense. The other point is we get efficiencies from being able to share products, share facilities, share regulatory, share genetics, and some of that overall fixed overhead for our medical business by having at least some of the rec business. Now, right now, we have roughly a 4% share of the rec business. It's about, you know, right. I think share of profit pool is more important. Those are all the reasons why you just don't get out of it. You don't chase unprofitable share, and you don't rent unprofitable share, and you use your resources, you know, to spend against growth areas, which for us is Canadian medical and more importantly, international medical. Thank you. You're welcome. Our next question comes from Frederico Gomes with ATB Capital Markets. Please state your question. Hi, good evening, guys. Thanks for taking my question. I just have a question, your ATM. You guys finished the quarter with over CAD 200 million in cash. You have one of the strongest balance sheets in the sector. Could you just, you know, provide some more color on the rationale for raising that much money after quarter end? You know, do you have any specific use in mind for those proceeds? You know, is it M&A, or was it more about building that war chest further? Thank you. Sure, Federico. Thanks for the great question. Just a couple things. I'm gonna tack a point on to your question. First, I also wanna highlight that we also bought back about CAD 20 million, CAD 20.5 million in convertible debt. You know, that was, I think, important for us, and we're gonna continue, you know, to be opportunistic when we can do that. We bought it below par, and we'll continue to monitor the convertible market. Why is that important? As you mentioned, the balance sheet. As I talked historically, just to go back in time, when I first got in the seat, I thought it was critically important that the company had a proper cash position to really, you know, be there and sort of weather the storm of this whole situation, and clearly we did that. You mentioned the specifics of us raising it to over CAD 440 million. What we've said, you know, previously, I'm gonna restate, so it's gonna be a bit of an unsatisfying answer for you, Federico, but I think it will get to it. We consider the ATM to be utilized for strategic purposes. We're always looking for deals that are accretive on an EBITDA basis. Everything that I'm focused on is the sustainability and the focus on this being a profitable and sustainably profitable company. That EBITDA is always important. The cash also looking at significant strategic or operational upside. This is an important line, and I know people always wanna hear it, but I think it's important for people to hear it from me constantly. We do not expect to use any of the cash from our ATM program to pay for the day-to-day operational expenses of the business. We're in a strong position today to consider strategic M&A, but I think our restraint, particularly as it pertains to the US., should give shareholders a good indication. I mean, the valuation of assets that people have purchased in the US. are a fraction of what they were a year ago. We're cognizant of that, and we're gonna continue to be sensitive to purchase price, valuation, and always making sure that there's a strong strategic rationale in any potential target. Things are moving fast. We wanna be able to be opportunistic, and that's really, you know, why the cash position currently. Thank you. Our next question comes from John Zamparo with CIBC. Please state your question. Thank you very much. I wanted to ask about the new science program and your ability to license genetics and IP to others. Specifically, have you started monetizing this to date? If not, when do you anticipate that might happen? Can you give us a sense of how material that might be for the business? Thanks. Sure. John, it's a great question. You know, we have started to monetize it, albeit in a small way, and we expect that to accelerate. Let me give you some specifics around that. First, you saw the announcement about our biosynthetic assets and the partnership with Cronos. We're thrilled about that. We believe that we have the most efficient pathway as it pertains to biosynthetics. Those IP assets pertain both to in the plant and outside the plant. There was compensation connected to that. Secondly, we have had some small deals with some smaller craft companies. We announced North 40, which is an extremely well-known, high-quality craft grower, which we sold genetics under the cultivar name Farm Gas. We utilized that both as a sale as well as a marketing tool, and we're now selling Farm Gas under the San Rafael '71 tool. We'll continue to announce the sale of genetics. We believe we have one of the largest, if not the largest genetics library, and many people are looking for high- quality, high- potency genetics. We'll continue to do that in a variety of different ways, and I think you'll see that. We also, you know, have the ability through our facilities to grow for others at economic scale, and so we'll continue to do that. You know, the short answer is we've had a couple deals. If you look at other folks and you look at the people that we brought on to staff up Occo, they come from other categories where it's clearly a relevant and material piece of their overall financial profile. Clearly, the margins will be significant given that we've already made all those investments. That's where we are today, a lot more to follow. We'll continue to announce deals, both large and small as they come out, but genetics will be a big piece. The only thing, the other piece I will just add to that, John, is there a misconception, let me say amongst growers and LPs, both domestically and internationally, that you cannot protect or own the genetics around a particular cultivar. That's completely untrue. We are licensing unique genetic markers of these cultivars that we develop, and we are able to identify those, you know, that are infringing upon that. Clearly, the law is very clear on this issue, and we'll have a very strong case. You'll start to see litigation around that, as well as those that we believe have infringed on some of our biosynthetic assets, and that's also an additional revenue stream for the company. Thank you. Our next question comes from Tamy Chen with BMO Capital Markets. Please state your question. Hi. Thanks. I was just wondering, just that one question on the consumer business. Your volumes, I think the press release said, was down 18% sequentially. I'm just thinking back, you know, I think the last two, maybe two quarters, your consumer business was holding in decently. I was just wondering if you could elaborate on what drove the 18% sequential decline in volume. Thank you. Tammy, I think the simple answer is we're not gonna chase. You're seeing acceleration of irrational pricing, particularly on discount flower. We've made the determination that we're gonna get out of certain categories that don't make sense and lose money, and we're also not gonna chase. If you look at the ASP, and I know you follow all that, and you can see through Buddi Data or Headset Data, the average pricing, you've seen that dramatic decline across some key categories, particularly in the value segment. Again, you know, overall market share is not as much of a focus for us. We're gonna really, you know, spend most of our time in looking at those categories that are problem, where there's margin. Where we see certain categories where it's single- digit or in certain provinces like Ontario, where you see negative margins, you're not gonna get there. Because that accelerated in the quarter and we didn't chase, that's why you'll continue to see that. You know, listen, if people want us to sell a lot of cannabis and lose more, I think we're the wrong company. I'm not saying that's what others are doing, but it is gonna take a bit longer for these inventories to right size. In that place, I think you see a lot of folks willing to sell stuff at a significant loss as opposed to just tossing it out or giving it away. Yeah. I'll tell you, Tammy, I'll just add a second to that. I said in my prepared remarks at San Rafael, I mean, I think I'm using it as an example of investing in the right places. San Rafael is quite profitable for us, and we saw an 18% increase in pre-rolls and flower over the last two quarters because we launched some nice new cultivars into that. As Miguel stated in his remarks, we've got a lot of innovation coming, a number of new cultivars under a bunch of different brands, and then profitable categories. We'll focus there where the profit pools are. If that means, you know, market share going away, fine, but gross profit is what's gonna drive us to profitability overall, and that's our focus. I think we're trying to get away from the, what's the market share and what's happening on the revenue side, and really focusing on driving in the areas and winning in the areas that allow us to be profitable in the Canadian consumer market and add that to the existing really strong portfolio we've got in the medical market and create quite a company here. Thank you. Our next question comes from Glenn Mattson with Ladenburg Thalmann. Please state your question. Hi. Yeah, thanks for taking the question. Just building on some of that stuff on consumer. You talked about why you wanna be there, you know, for a variety of reasons or for when you move into new markets or when the market turns around. More maybe to this, one of the second parts of Andrew's question was like, can you give us some sense of like how you see that market just kind of shaping up over the medium term? I know it's maybe irrational now, but you lay out kind of the idea for profitability in fiscal 2023 first half in your forecast that you have internally. Do you have that segment kind of growing or still shrinking or what's your general sense for how long this continues? Sure. Glenn, I think first and foremost, let me highlight that a critical province for Canadians is Quebec. They have a vaccine mandate in order to go in either an alcohol store or a cannabis store, and sales in Quebec are down 16%-20%. Now, the province has indicated by the end of the month, some of that stuff will be lifted. The current market is continued to be impacted by COVID. Obviously the LPs also have impacts because of labor. Short- term as defined by the next three to six months, you're seeing an acceleration of pricing downward. You're seeing that in discount flower, you're seeing that in vapor, you're seeing that in a lot of the core segments. Now, as Glenn mentioned, there are bright spots. Premium flower, you know, is holding up and concentrates and resins and rosins and things like that. There is still, you know, decent margin to be made as defined by, I don't know, 35%-45%. I think this market, given we just went through the harvest and a variety of different things, I think you're gonna probably see this go on for the next 6-9 months. You know, it will only be with the absence of capital, which we're starting to see for some of the, you know, mid-size to smaller LPs and with some repricing. Again, 250 LPs, 125 a year ago, you know, that's a bit of a challenge. There's really no barriers to entry. Now, I would also mention that the provinces are making some substantive changes. We've been encouraged by what we've heard out of the interim CEO, out of the OCS. David Lobo is a good guy about where Ontario is starting to go. We are seeing, you know, some acknowledgment about some different aspects of, on the retail side that will create a bit of a healthy environment. Until pricing gets normalized, and you're not seeing big brands that have 100 basis points or 200 basis points of sale being sold at a negative margin, I think you're gonna be in this irrational sort of situation. You know, our methodology, and I've been really pleased to hear some of our competitors echo this, that people are gonna start to focus on profitability and thoughtfulness. Now, why do I have hope that any of this is gonna turn around? Because it's not dissimilar to what you saw in California and Colorado, you know, in the early days. By all indicators, they seem to be 18 months ahead of us. You're seeing brands articulate, brand equity scores go up in those markets. You're seeing premium market shares be much more relevant. You're seeing manufacturers, you know, make money, and I know the economics are different in the US. I think the Canadian rec business is gonna get there. It's just too big a business. It's growing too much to not get there. I just think through all of those things, plus a greater focus on the legacy market, and you're gonna see a probability. The point is timing, and I think chasing right now doesn't make any sense. You're seeing market shares move 100 and 200 basis points, you know, in a week. I'm used to seeing that move in a quarter. In that market, you don't need to be first. You can wait a little bit, and so we're right-sizing our effort. We're focusing on those things that we can bring to both a patient and a rec consumer, as well as internationally. We're gonna have our spots. You know, when we come out of it, there'll be a much smaller subset of LPs, there'll be much better operators, and there'll be a really large, you know, market where people can make money. It's just gonna take a bit longer than I think some would hope. Thank you. That's all the time we have for questions today. I'll turn the floor back to Miguel Martin for closing remarks. First and foremost, let me thank everybody for taking the time and the coverage that you provide to our stock. We really appreciate it. We're really pleased with the quarter. You know, once again, we've put a plan out. Our transformation plan has three key components, which is, you know, growth in the markets where we can make money, particularly in medical. We've done that. Focus our cost structure on the opportunities as they present itself, and we've done that, raising our guidance on the CAD 60-CAD 80. Three, everything we're doing focused on being sustainably EBITDA positive, and you've seen that progress with the 22% progression from last quarter to this quarter. We really appreciate it. I hope everyone is safe and well, and I look forward to seeing people in person in the near future. All the best. Thank you. This concludes today's conference. All parties may disconnect. Have a good evening.