Organigram Q1 Revenue Rises 57%, Loss Shrinks

Organigram Holdings (TSE: OGI) posted higher sales and a smaller loss in the first quarter of 2022 as compared to a year ago.

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Organigram is focused on producing high-quality indoor cultivated cannabis for patients and adult recreational consumers in Canada, as well as developing international business partnerships to expand the company’s global footprint.

Revenue & Earnings

Net revenue for Q1 2022 came in at C$30.4 million, up 57% from C$19.3 million in Q1 2021. This net revenue is a record for Organigram as it consolidates its No. 4 market-share position nationally among Canadian LPs with a 7.5% market share, up from a 4.4% share in Q1 2021.

The company posted a net loss of C$1.3 million in the first quarter compared with a loss of C$34.3 million a year ago.

Following the end of the quarter, Organigram acquired Laurentian Organic Inc., a private Quebec-based producer of hash and craft cannabis. This instantly profitable transaction gives the company a broad product portfolio focused on premium quality products and a presence in the important Quebec market.

Management Commentary

Organigram CEO Beena Goldenberg said, “Our positive outlook for 2022 is further bolstered by the addition of Laurentian’s premium products to our portfolio, with an increased presence in Quebec and the resumption of international sales, which will continue through the year.”

Organigram Chief Financial Officer Derrick West said, “Our strong balance sheet and cash position will ensure that we are well-positioned to execute on our key growth initiatives for fiscal 2022. These include the expansion of our growing facility in Moncton to an annual capacity of 75,000 kilograms of flower from its current capacity of 55,000 kilograms, and the build out of our Centre of Excellence in collaboration with BAT. These initiatives will further enhance our ability to drive innovation and solidify our position as a leading Canadian LP.”

Wall Street’s Take

On January 6, Alliance Global Partners analyst Aaron Grey kept a Hold rating on OGI and lowered its price target to C$2.25 (from C$4). This implies 2.7% upside potential.

Grey attributes the discounted price target to a supposedly lower multiple based on the company’s lower gross margin profile relative to other limited partnerships and continued unprofitability, as well as continued pricing in the Canadian market.

Consensus among analysts is that OGI is a Hold based on four Holds.

The average Organigram Holdings price target of C$2.94 implies 34.2% upside potential to current levels.

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