Debra Borchardt
Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) delivered its results for the second fiscal quarter ended February 28, 2022. Organigram reported that its net revenue increased 117% to $31.8 million, from $14.6 million for the same time period in 2021. The company attributed the increase to growth in adult-use recreational revenue and international revenue, partly offset by a lower average net selling price due to product mix and a decrease in medical revenue. The company trimmed its net losses to $4 million versus last year’s net loss of $66.4 million. The drop in the net loss was primarily due to the higher sales and gross margins in the current quarter.
“The culture of innovation and consumer focus we are building at Organigram has enabled us to not only create brands that are embraced by consumers, but continually innovate within those brands and across multiple product lines. We expect that leveraging these brands will allow us to continue to drive market share,” said Beena Goldenberg, Chief Executive Officer. “In addition to our continued success at building beloved brands, our ability to increase sales in international markets and capitalize on our accretive acquisitions, such as Laurentian and EIC, continue to contribute to our solid gains in market presence and sales growth.”
Revenue Growth Expected
Organigram said it currently expects revenue to be higher in the third fiscal quarter. The company said in a statement, “This expectation is largely due to ongoing sales momentum, stronger forecasted market growth, the company’s expanded product line in multiple segments, greater capacity to meet demand at the Moncton Campus, increased throughput at the Winnipeg facility and the Laurentian acquisition.”
Organigram said it also expects to realize additional revenue through the recent acquisition of Laurentian and will make growth-focused capital expenditures at Laurentian which have the potential to further increase EBITDA generation. Since the acquisition, Organigram has accelerated the distribution and sale of Tremblant Cannabis, its flagship hash brand in Ontario, increasing distribution from 25% to 40% of retail stores and growing quarterly sales by 21% compared to Laurentian’s sales in the three months ended November 30, 2022. By leveraging Organigram’s industry-leading national distribution and field sales network, Laurentian products will be available in all Canadian provinces in Fiscal 2022.
No Cash Problems
Organigram reported that the net cash used in operating activities for the quarter was $5.3 million and that this was primarily driven by the increase in inventories. In 2021, the fiscal second-quarter net cash used in operating activities was $10.4 million, which was primarily driven by the loss from operations. As of February 28, 2022, the company said it had unrestricted cash and short-term investments balance of $151 million compared to $184 million on August 31, 2021.
“We are also progressing well with the Laurentian integration. In less than three months we have been able to significantly increase distribution and begin to implement the synergies planned at the acquisition. Automation to optimize production is also underway and expected to be complete by the end of Fiscal 2022,” added Goldenberg.
