Organigram Holdings Corp. saw net revenue decline on a quarterly basis in the second quarter of its fiscal year, from 25.2 million Canadian dollars ($18.1 million) in Q1 2020 to CA$23.2 million in the quarter ended Feb. 29.
Organigram’s net medical cannabis revenue for the period was CA$2.4 million. Wholesale market revenue was CA$5.6 million, and international revenue was CA$226,000.
The net revenue decline came even as revenue from adult-use cannabis grew by 16% on a quarterly basis, from CA$12.9 million in the first quarter to CA$15 million in the second quarter.
Second-quarter revenue also shrank on an annual basis, down from CA$26.9 million in the same quarter last year.
The company attributed the year-over-year decline in net revenue to lower adult-use flower and oil sales compared to the same time last year, “when the timing of large pipeline fill orders to Alberta and Ontario occurred to fulfill supply shortages following the legalization of adult-use recreational cannabis sales.”
Organigram “no longer formulates recreational cannabis oil,” the company said in a regulatory filing.
Organigram also cited lower average net selling prices due to increased competition, as well as “evolving consumer preferences” that led to returns and price adjustments in the most recent quarter, “mostly related to cannabis oil.”
Dried cannabis flower sales made up 80% of Organigram’s net revenue in the second quarter. The average selling price for Organigram flower decreased by CA$0.38 per gram to CA$4.56 on a quarterly basis.
Hits to Organigram’s net revenue were partly offset by the launch of new vape and edible cannabis products in the second quarter of 2020, the company said.
Organigram posted a net loss of CA$6.8 million for the quarter, representing a 7% annual increase from a net loss of CA$6.4 million ($4.6 million) in Q2 2019.
The second-quarter results “will ultimately go down as a miss, though we highlight significant variability in financials, likely driven by wider market dynamics, harvest timings, wholesale shipments, and province ordering patterns,” wrote Jefferies equity analyst Owen Bennett in a note to clients Tuesday morning.
“Less the quarterly noise, (Organigram appears) to remain on a steadily positive trajectory, where key company decisions are ones that we ultimately believe are the correct ones in the current environment.”
Organigram reported CA$41.2 million cash on hand at the end of the second quarter.
That cash and available credit facilities “should give the market relative comfort that (Organigram is) not being drawn in an industry cash crunch,” Bennett added.
Last week, Organigram announced it was temporarily laying off about 400 employees due to COVID-19.
Organigram trades as OGI on the Toronto Stock Exchange.
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Originally posted on via Cannabis Industry News
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