Organigram Holdings Inc. (OGRMF) reported its highest quarterly net sales to date in its earnings results for the fiscal first quarter ending November 30, 2017. Net sales rose to $2.7 million in Q1-2018 an increase sequentially over the fourth quarter’s $2.1 million and beating last year’s $2.2 million for the same time period. Still, Organigram delivered a net loss and comprehensive loss of $1.4 million for Q1-2018 trimming the losses from the previous quarter of $2 million in Q4-2017, but more than last year’s loss of $0.8 million.
The company sold approximately 195,000 grams of dried flower in the first quarter, lower than the approximately 260,000 sold last year for the same quarter, but a slight improvement over the previous quarter’s 187,000 grams. The Company’s registered patients increased to approximately 10,700 by the end of the first quarter up 169% from a year ago.
“What is clear is that through a dogged commitment to product quality and innovation, we have built and are sustaining tremendous momentum,” says Greg Engel, CEO of Organigram. “We have been patient but determined in building a world-class facility imagined and supported by a world-class team.”
Organigram did report significant growth in its sales of cannabis oil. Cannabis oil sales were approximately 419,000 ml in the quarter versus the previous quarter’s approximately 178,000 ml and 77,000 ml for the previous year’s same time period. The Company’s growth in cannabis oil sales was fuelled by its Shubie Cannabis Oil 50ml bottle containing high CBD content.
Organigram continues to work towards recovering from a product recall it faced last year. New quality controls have caused the company’s expenses to rise, but sales and patient counts have improved.
Last month, Organigram closed on a bought deal offering for net proceeds of more than $54 million as well as entering into a Letter of Intent with Farm Credit Canada for a loan in the amount of $10 million. Last week, the company filed a final short form prospectus for a $100 million bought deal convertible debenture financing previously announced on January 10, 2018. The company anticipates closing to occur on or about January 31, 2018.
Organigram said in a statement that it continues to make significant headway in increasing its overall production capacity and ensuring that it is prepared to be a market leader in the proposed adult recreational market which is anticipated for a July 2018 launch date.
Its Phase 2 expansion is set to be completed by end of January 2018 and the company has submitted all required documentation to Health Canada in order to begin its vegetation cycle in February, making this expansion available for cannabis harvest and sale in time for the adult recreational market. When the Phase 2 expansion is fully operational, the Company’s total run-rate production will be increased to 16,000 kg/year in total.
Phase 3 expansion continues to move ahead on schedule. Upon completion of Phase 3 construction in May 2018, the Company will have further increased its estimated production capacity from approximately 16,000 kg/year to 25,000 kg/year.
Phase 4, which is in the final planning stages and is fully funded, will help increase the Company’s production capacity to 65,000 kg/year. These expansions will make Organigram one of the top indoor cannabis producers in Canada.
“As a country and as a company, we are at the starting line of an unprecedented opportunity to lead the world in our understanding and approach to the production and legal use of cannabis,” said Engel. “Organigram remains committed to thoughtful, trusted and effective leadership in the industry at home and abroad and we stand ready to meet the needs of our current and future customers.”
The stock was lately trading at $4.19 on the OTC Marketplace, down slightly from its 52-week high of $4.56, but much higher than its 52-week low of $1.35.