Higher plant yields helped New Brunswick-based Organigram slash its “all-in” cost of cultivation to 85 Canadian cents per gram (63 cents) – among the lowest in the industry – on gross revenues of CA$33.4 million in its second fiscal quarter results.
The results for the period December to February take into account the company’s first full quarter of legal cannabis sales in Canada.
Net revenue from adult-use dried flower and oil was CA$24.4 million.
Organigram is one of only three cannabis companies with distribution agreements in all 10 Canadian provinces.
Net revenue for the medical and adult-use markets was CA$26.9 million, compared with CA$3.4 million for the same period a year ago.
Adjusted gross margin rose to CA$16 million – or 60% of net revenue – from CA$1.8 million or 52% in the previous quarter.
Dried flower inventories fell in the quarter to 6,680 kilograms (14,727 pounds) from 7,010 kilograms at the end of fiscal first quarter.
However, Organigram is building up its stockpile of biological assets in preparation for the expanded extraction market in Canada, which will launch in late 2019.
The company’s material for extraction reached roughly 9,000 kilograms at the end of the quarter, up from 1,917 kilograms as of Aug. 31, 2018. The material can be used for vape pens, edibles, oil formulation, beverages or other permitted products, the company said.
“We are prepared and planning to launch vaporizable pens and a number of different product lines in the fall,” CEO Greg Engel said in a conference call with investors.
“We expect – as per the sunshine provision in the Cannabis Act – that the regulations will allow for the launch of those products on Oct. 17, 2019. We are working on a number of different edibles products, however, we do not feel we will have sufficient inventory to launch those on Oct. 17.”
Engel expects to have initial products from that line available by the end of 2019.
Other Organigram highlights include:
- Net loss was CA$6.4 million for the quarter, compared with CA$1.2 million in profit from the first quarter.
- Earnings before interest, tax, depreciation and amortization (EBITDA) was CA$13.3 million, or 49% of net revenue.
Organigram’s shares are listed on the Toronto Venture Exchange under the ticker symbol OGI.