Aurora is seeing medical cannabis profit margins in excess of 60%.

Aurora Cannabis  (ACB) - Get Aurora Cannabis Inc. Report is leaning into its profitable medical cannabis business, both at home in Canada and internationally, while it looks for acquisition opportunities. 

The Canadian cannabis company isn't waiting for federal legalization of the drug in the U.S. Instead, officials on the company's earnings call this week focused on medical cannabis growth opportunities in the European Union. 

“We believe the growth story over the next several years in cannabis will be that of international medical and recreational, and we expect a domino-like effect as acceptance grows," Chief Executive Miguel Martin said. 

International medical cannabis revenue jumped 24% in the fiscal second quarter ended Dec. 31 sequentially from fiscal Q1. The company is seeing a global medical cannabis business with margins that exceed 60%. 

All told, the company's medical division generated revenue of C$45.7 million (US$36 million), about 75% of its revenue in the quarter, and a gross margin of 62%. Medical cannabis accounted for 89% of its gross profit in the quarter. 

Aurora's' Bright Spots in the EU

Aurora shares started Friday trading lower and recently were 3% higher. The company reported a second-quarter loss from continuing operations of C$75.1 million. Revenue of C$60.6 million fell 10% from C$67.7 million a year earlier.

In Germany, Aurora has the top-two best selling flower products. The company notes that Germany is the largest cannabis market in the EU, with 83 million citizens, and the new leadership in the country favors recreational legalization. 

In France, Aurora is the exclusive supplier of dry flower after securing all three of the available dry flower tenders in the French medical cannabis pilot program. 

In the Netherlands, the company has invested in one of the 10 license holders selling legally produced cannabis in the country. 

Canada Insurance Apparatus a Boon for Aurora

Aurora's Canadian medical business remains the company's bedrock. And that business is bolstered by Canada's insurance apparatus. 

Insured patients made up 73% of its medical sales in its most recent quarter, up from the nearly 71% in the previous quarter.

"I'd say a minority of our patients do the majority of the ordering and deliver the majority of the gross profit. And they're the reimbursed patients," Aurora Chief Financial Officer Glen Ibbott said about the Canadian medical market. 

Through some of the coverage programs, patients are reimbursed for their cannabis purchases for up to high-single digits per gram. That reimbursement makes them "less price sensitive," according to Ibbott. 

"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," Ibbott said.

On the deal hunt, the company had C$445 million of cash on hand at Dec. 31. The company also has a US$1 billion shelf filing, from which it has drawn $90 million for prospective acquisitions.

"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," CEO Martin said.