Organigram stock made solid gains last week after Organigram Holdings (TSX:OGI) (NASDAQ:OGI) announced that it had reached a supply deal with Medical Cannabis by Shoppers, the online medical cannabis platform by Shoppers Drug Mart.
Shoppers Deal Boosts Organigram Stock
The terms of the deal dictate that Organigram Holdings will supply the Canadian pharmacy chain with an extensive range of products, including dried flower, oils, and other future derivative products as they become available. The deal is over a three-year term, with the option to extend for an additional two years. No financial information has been disclosed by Organigram, and Shoppers has yet to comment on the deal. Organigram stock is currently trading for $3.96.
“We are extremely proud to partner with Shoppers and believe that our complementary approach to the medical cannabis market will offer the full strength of our combined national networks to Canadian patients,” says Tim Emberg, Senior Vice President of Sales at Organigram Holdings. “We are pleased that we will now be able to offer medical cannabis patients across the country even greater access to our growing portfolio of high-quality products.”
Organigram shares popped as much as 55% last week as investor optimism returns to the New Brunswick-based cannabis producer in the wake of strong quarterly earnings. For the three months ended November 30, Organigram saw revenue grow by 102% to C$25.2 million, beating consensus estimates of C$21 million. The company also achieved several key milestones during the quarter, the most notable of which was gaining licensing approval for 16 grow rooms, bringing its total production capacity to almost 90,000 kilograms.
Looking to the future, Organigram Holdings says it plans to expand its retail footprint in Canada with the opening of more stores in Ontario and Quebec. Today’s announcement will see the company’s adult-use and medical products, which accounted for about C$16 million in sales last quarter, reach a significantly larger consumer base via Shoppers’ online marketplace. After losing over 75% of its value in 2019, but gaining 50% so far in 2020, has Organigram stock finally turned a corner?
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