Organigram stock is making a solid move this morning despite Organigram Holdings (TSX:OGI) (NASDAQ:OGI) reporting a wider than estimated loss and lower sales growth for its fourth quarter.
Reports Q4 Loss
Many quarterly earnings reports have been rather disappointing for the cannabis industry, and the trend continued today as Organigram’s earnings proved to be a disappointment for the company as well. In the fiscal fourth quarter, Organigram Holdings posted a net loss of as much as $22.5 million or 14 cents a share. Many companies have reported poor earnings primarily due to the slow rollout of retail outlets in Ontario, and Organigram blamed its poor performance on the same factor. The company went on to state that sales are expected to remain ‘volatile’ in the coming quarters as well.
In its report, Organigram Holdings stated that the absence of a strong retail network and the slow rollout of stores in Ontario were the primary reasons. The oversupply of cannabis has also been cited as a reason for the poor performance.
Organigram recorded sales of $16.3 million for the quarter, which is a significant drop from the $24.8 million in sales that it had recorded in the previous quarter.
In the previous quarter, it had generated positive EBITDA of $7.7 million, but in the latest quarter, the EBITDA stood at negative $7.9 million.
At the time of writing, Organigram stock is up 7% at $3.74 on the TSX.
That being said, it is important to point out that the company’s numbers were largely aligned with its earlier projections. Organigram went on to add that compared to the year-ago period, it had actually shipped more products in the latest quarter. The Chief Executive Officer of the company, Greg Engel, also warned that there could be volatility in sales in the coming quarters:
“Quarter-to-quarter revenue is expected to continue to be volatile due to the timing of large pipeline order for Ontario, in particular, where there is a centralized distribution model.”
For the FY2019, total revenue stood at $80.4 million, which reflects a rise of as much as 547% year-on-year. Organigram Holdings also stated that it expects the number of stores in Ontario to go up threefold from its current count of 25.
Organigram stock has jumped almost 37% over the past week as the broader cannabis sector has been witnessing a strong bounce from the recent slump.
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