Shares of OrganiGram (OGI) are on fire today, up 46%, after the company reported fiscal first-quarter revenue that doubled, crushing Wall Street estimates.
Net revenues more than doubled to $25.2 million from $12.4 million seen in the same quarter last year. Gross margins before fair value changes to biological assets and inventory came in at $9.3 million or 37% of net revenue compared to $8.8 million or 71% of net revenue in Q1 2019.
OrganiGram (OGI) recorded a small net loss of $0.9 million this quarter. In Q1 2019 they recorded net income from continuing operations of $29.5 million but this was largely due to non-cash fair value changes to biological assets and inventories in the prior-year quarter. EBITDA came in at $4.9 million compared to $6.8 million in Q1 2019.
The company started shipping Trailblazer Torch vape cartridges on December 17, 2019, and also expects to start shipping Edison + Feather ready-to-go distillate pens before the end of this month. They will also ship followed by Edison + PAX ERA distillate cartridges in the second quarter of 2020. The company also made progress regarding the cannabis 2.0 market.
They also received licensing for chocolate production and packaging areas last month. OrganiGram (OGI) remains on track for its initial sales of its cannabis-infused chocolates this quarter.
Their CEO Greg Engel had some positive remarks regarding this quarter, “Despite ongoing industry challenges, we are pleased with solid Q1 2020 results and our return to positive adjusted EBITDA during the quarter. Our team was also successful in shipping the first of our Rec 2.0 products as planned and on schedule in December of 2019.”
He was also very enthusiastic about the cannabis 2.0 market launch and mentioned that “We also look forward to the launch of the remainder of our vape pen portfolio followed soon after by our premium cannabis-infused chocolate products. In addition to an exciting line-up of 2.0 products, we are rolling out a couple of new core strains, such as our high THC Edison Limelight, across the country following their success as limited-time-offers in smaller markets.”
With shares of most cannabis companies trading at multi-year lows, we can see that companies who can deliver results will be rewarded. If OrganiGram (OGI) continues to deliver results like these, this stock could have a great chance of becoming one of the major players in the Canadian market. It’s not always the biggest companies that do the best, sometimes it’s the lean companies with an efficient business model that deliver market-beating results. It’s safe to say the market was pleased with OrganiGram’s (OGI) results and we will see if this trend can continue as we move into earnings season.
OGI shares were trading at $3.18 per share on Wednesday afternoon, up $1.02 (+47.22%). Year-to-date, OGI has gained 29.80%, versus a 2.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...