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Organigram: Strong Earnings Secure Elite Status In Canada

Feb. 11, 2019 1:59 PM ETOrganigram Holdings Inc. (OGI), OGI:CA28 Comments
Cornerstone Investments profile picture
Cornerstone Investments


  • Organigram reported Q1 fiscal 2019 (Nov 30, 2018) results and sales increased 287% to $12.4 million driven by legalization sales.
  • Management guided next quarter's sales to at least double from this quarter which would imply a sales of >$25 million.
  • Organigram remains one of the best low-key executors in the industry and we reiterate our favorable long-term view of the stock.

Welcome to our Cannabis Earnings series where we break down the latest earnings to help you focus on the most important topics.


Organigram (OTCQX:OGRMF) announced its first quarter results for the 2019 fiscal 2019 year which ended on November 30, 2018. The stock jumped 30% last week on the back of a strong quarter and optimistic guidance from the management. We think Organigram remains one of the best executors in the industry and it is building a leading market share in the Canadian market. We rate the stock Buy and included it in our Top 2019 Cannabis Picks.

Image result for organigram logo

We reviewed Organigram's last quarter here. All amounts in C$.

F2019 Q1 Review

The company reported net sales (net of excise tax) of $12.4 million which represents an increase of 419% from last year and 287% from last quarter. Gross margin came in at 71% which represented a material improvement from prior quarters. Management guided next quarter's revenue to be at least twice that of the current quarter which would imply a range of ~$25 million, benefiting from the full inclusion of legalization sales.

(Author based on public information)

The increase in sales was driven by the addition of recreational sales since October 17, 2018, which was combined with continued softness on the medical segment. Recreational sales accounted for $9.2 million of the sales last quarter which means medical sales remained stagnant at $3.2 million. Medical patients declined from 15,730 to 13,505 which was caused by the likely migration of existing medical patients to the recreational market for lower prices. We have seen similar trends of weakening medical business at Aurora (ACB) and Canopy (CGC) and we expect this trend to continue as patients continue to switch to the recreational market due to higher costs for medical cannabis.

(Company Filing)


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