OrganiGram Holdings (TSX-V:OGI, NASDAQ:OGI) has reported second-quarter revenue and earnings that fell short of analyst estimates, sending its shares lower in Wednesday pre-market trade.
However, the cannabis producer noted that its gross profit margins improved as it increased efficiencies and sold more product, including higher international sales.
Over the quarter, the company said it introduced 18 stock-keeping units (SKUs) and shipped $10.7 million of high-margin flower to Australia and Israel. Other achievements included holding its #1 position in milled flower, the #1 position in hash, and the #3 position in gummies in the Canadian market.
Net revenue for the three months to February 28, 2023, rose 24% to $39.5 million, below the $43.5 million pencilled in by analysts. Its adjusted gross margin increased to $13.4 million, or 34%, compared to $8.3 million, or 26%, in 2Q 2022. Adjusted underlying earnings (EBITDA) of $5.6 million were up from $1.6 million in the same prior-year period.
Its net loss widened to $7.49 million, or $0.02 per share, from $4.05 million, which it attributed to the change in fair value of derivative warrant liabilities as movements in its share price had a greater absolute impact than in the prior-year period. Analysts had expected a $0.01 loss per share.
“We are pleased with our results in a quarter with typical seasonality. Our market position remains competitive, supported by our leading brand portfolio, strong international sales and customer-focused innovation,” Organigram CEO Beena Goldenberg said in a statement.
“In the quarter, we continued to see aggressive pricing pressure in our markets, particularly in large format flower SKUs. While this impacted revenue in the quarter, we are confident that our branding and marketing expertise, proven track record of innovation and operational efficiency will deliver long-term success and leadership in the cannabis industry."
After quarter end, the company said it struck agreements with Greentank to exclusively access new vape cartridge technology, including the development of a custom all-in-one device that will be proprietary to Organigram.
The company’s shares traded 14% lower in pre-market trading in New York.
Contact the author at stephen.gunnion@proactiveinvestors.com