Pomerantz Appointed Co-Lead Counsel in Aurora Cannabis Securities Litigation

On August 27, 2021, U.S. District Judge Renée Marie Bumb of the District of New Jersey (Camden Vicinage) appointed Pomerantz LLP as Co-Lead Counsel on behalf of the Aurora Investor Group, the Lead Plaintiffs in Lawless v. Aurora Cannabis Inc., 20-cv-13819 (D.N.J.), a securities action brought on behalf of a class of defrauded investors concerning allegations related to Aurora Cannabis, Inc.’s (“Aurora” or the “Company”) “business transformation plan” to address issues with previous acquisitions and degradation of assets, including production facilities and inventory.

Aurora is a producer and distributor of medical cannabis products worldwide. The Company is vertically integrated and horizontally diversified across various segments of the cannabis value chain, including facility engineering and design, cannabis breeding, genetics research, production, derivatives, high value-add product development, home cultivation, wholesale, and retail distribution.

Allegations against Aurora include that: (i) the Company had significantly overpaid for previous acquisitions and experienced degradation in certain assets, including its production facilities and inventory; (ii) Aurora’s purported “business transformation plan” and cost reset failed to mitigate the foregoing issues; and (iii) accordingly, it was foreseeable that the Company would record significant goodwill and asset impairment charges.

On February 6, 2020, Aurora announced that they were implementing a “business transformation plan,” to “better align the business financially with the current realities of the cannabis market in Canada while maintaining a sustainable platform for long-term growth.” Specifically, the press release touted that the plan was “expected to include significant and immediate decreases in selling, general & administrative expenses and capital investment plans.”

On September 8, 2020, Aurora announced that it was updating its “business operations along with certain unaudited preliminary fiscal fourth quarter 2020 results.” Specifically, the Company expected to record up to $1.8 billion in goodwill impairment charges in the fourth quarter of 2020. Aurora also announced that “previously announced fixed asset impairment charges [were] now expected to be up to $90 million, due to production facility rationalization, and a charge of approximately $140 million in the carrying value of certain inventory, predominantly trim, in order to align inventory on hand with near term expectations for demand.”

On this news, Aurora’s share price fell $0.99 per share, or 11.6%, to close at $7.52 per share on September 8, 2020.