SmallCapPower | April 27, 2018: Organigram Holdings Inc. (TSXV:OGI), a producer of medical marijuana, posted healthy growth for Q2 2018. The Company's net sales for the three months ended February 28, 2018 were $3.69 million (from 237,650 grams of dried flower and 552,250 ml of oil sold), versus negative net sales of $0.58 million for Q2 2017 on sales of 141,640 grams of dried flower and 139,200 ml of oil. Organigram reported a gross profit (which includes changes in the fair value of biological assets and inventory) of $6.52 million for Q2 2018 compared to gross loss of $3.98 million for Q2 2017.
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Organigram Holdings’ net income for the quarter came in at $1.08 million, or $0.009 per share (basic) and $0.008 per share (diluted), versus a net loss of $5.76 million, or $0.059 per share (basic and diluted), during the same period last year. The strong hike in net income is on the back of positive fair value adjustment to the Company’s inventories, reduction in indirect production expense, and recovery of unused credits previously issued via a client care program.
Organigram CEO Greg Engel said, “We are incredibly proud of what we have achieved in Q2 as we registered record sales and a profit for the quarter but we have also significantly bolstered our balance sheet and from an operational and sales and marketing perspective we are well positioned to take full advantage of not only the medical market but also the burgeoning adult recreational and international opportunities as well.”
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In the quarter ended February 28, 2018, Organigram Holdings closed two key financings - an equity financing (with units issued consisting of one common share and 1/2 share purchase warrant) that closed on December 18, 2017, raising gross proceeds of $57.5 million and a convertible debenture offering (unsecured 6% coupon with a conversion option at $5.42/share) that closed on January 31, 2017 raising aggregate gross proceeds of $115 million. Furthermore, Organigram opened its Phase 2 expansion, filling six rooms by the end of Q2 2018 and the remaining 17 to be filled after the quarter.
Organigram Holdings started its first harvest of more than 1500 plants from Phase 2 on April 20, 2018. The Company anticipates Phase 3 expansion to be complete by June 2018 for the start of filling of rooms with the first cannabis plants. Also, Organigram Holdings plans to launch its adult-recreational brand strategy on or about May 15, 2018. Its stock trades at a market capitalization of $495.4 million on the TSXV with price-to-book multiple of 4.89x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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