Organigram reported a net loss of $15.8 million in Q1 2024 and a 16% decrease in net revenue compared to the same period last year.
The New Brunswick cannabis producer attributes the decline in net revenue to a reduction in international revenue and medical sales and a “reduction in the gain on fair value of biological assets.”
It wasn’t all bad news, though, as Organigram also achieved positive adjusted EBITDA and positive cash flow from operations of $7.7 million and improved sequential quarter-over-quarter adjusted gross margin from 17% in Q4 Fiscal 2023 to 31% in Q1 Fiscal 2024.
Organigram says they maintained the number two market position in Canada for the last five consecutive months as of the end of Q1 Fiscal 2024, and held the top position in milled flower and concentrates, the number two position in edibles, and the number three position in pre-rolls. Market position is based on data from multiple sources like Hifyre, Weedcrawler, provincial board data, and internal modelling.
The company also closed the first $41.5 million tranche of a previously announced $124.6 million investment from British American Tobacco.
It also reintroduced its Edison Jolts to the market, with $2.9 million in sales in Q1 2024, which was previously removed from shelves following orders from Health Canada. The company recently relaunched the product in several provincial markets. In a previous quarterly report, Organigram complained of lower net revenue and margins due to the declining price of cannabis flower, as well as a higher cost of sales, THC inflation, and Health Canada no longer allowing the sale of “ingestible extracts” like the Edison Jolts.
Organigram also launched 22 new SKUs in the quarter, completed its first craft harvest from the newly completed expansion of its Lac-Supérieur facility, and completed planting the first grow room using seed-based production resulting from technology acquired from the strategic investment in US-based Phylos Bioscience Inc.
In May of 2023, Organigram made its first investment into the US cannabis market by issuing a strategic convertible loan to Phylos, intending to help Organigram accelerate the launch of products containing THCV in the Canadian market.
Organigram continues to wait for EU-GMP certification of its Moncton facility.
The company also continues to maintain it has lost market share due to other companies engaging in THC inflation.
“We believe that the cannabis industry in Canada has begun to reach an inflection point that will remove supplies in the market and accelerate consolidation,” said Organigram CEO Beena Goldenberg. “Companies engaging in THC inflation who have dubiously enjoyed temporary competitive advantages to artificially inflating their labelled THC content are facing more pressure as Health Canada and the OCS have announced random THC testing protocols.
“We have also seen the CRA begin to garnish companies who are in arrears on their excise taxes and many companies are already stretching their payables to preserve cash. As capital markets have dried up and increased enforcement removes unfair advantages and penalizes those who don’t contribute to the health of our sector, the Canadian market will experience a shakeout. As this materializes, Organigram stands to cement itself as a long-term industry leader, owing to its strong balance sheet, increasing production efficiency, industry-leading R&D and reinvigorated focus on international expansion supported by Project Jupiter.”
Organigram says Project Jupiter will target investments in emerging cannabis opportunities internationally to help Organigram reach new markets.
The company’s gross revenue in Q1 2024 was $56.3 million, compared to $60.8 million in the previous quarter. It paid $19.8 million in excise taxes for a net revenue of $36.5 million.
Featured image via investors.organigram.ca
