Organigram Holdings Financial Results Wow Investors

Organigram Holdings Inc. (TSXV:OGI), one of the Canadian marijuana stocks, said its Q1 revenue soared more than 400%

SmallCapPower | February 4, 2019: Organigram Holdings Inc. (TSXV:OGI), one of the Canadian cannabis stocks, recently reported first-quarter 2019 financial results, with revenue up over 400% along with a significant jump in gross and net margins. The performance was driven primarily by first sales from adult-use cannabis that was legalized in October 2018. Out of the $12.4 million net revenues for the quarter, $9.2 million, or 74%, was contributed by adult-use cannabis sales, with the remainder generated by medical cannabis. Organigram noted that adult-use sales reflected for only a part of the quarter (about 10 weeks) since they were launched in late September. OGI remains upbeat for its second quarter, guiding for a doubling of revenues as it will be the first full quarter of adult-use cannabis sales. With inventories of $91.4 million as at the first quarter end, the sales target seems easily achievable.

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Gross margins improved to 71% for the first quarter compared to 25% during the same period last year. Adjusted gross profit (including bio assets and inventories) increased to $51.7 million versus $1.3 million in Q1 2018, while operating income came in at $46.2 million versus a loss of $1.3 million last year. Owing to the above factors, net income came in at $29.5 million, or $0.195 per diluted share, up from a net loss of $1.2 million, or $0.012 per diluted share, in Q1 2018 and net income of $18.0 million, or $0.152 per diluted share, in Q4 2018. Strong growth in net income helped the Company to report free cash flow for the first time, at $2.9 million for Q1 2019.

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For full-year fiscal 2019, Organigram looks firmly set to report strong growth in earnings as it continues to move aggressively with its Phase 4 expansion at the Moncton campus to serve the recreational market across 10 Canadian provinces. Expected to be completed in fall 2018, the expansion will increase the Company’s total production capacity to 113,000 kg/yr.

Following the release of its first-quarter results, shares of Organigram soared nearly 24% in two days, closing at $7.40 on Tuesday. Organigram stock currently trades at a market cap of $1.02 billion.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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