Organigram Holdings (TSX:OGI) (NASDAQ:OGI) is regarded as one of the most efficient cannabis companies in the industry, and it was only natural that there was a lot of anticipation with regards to its fiscal second-quarter financial results.
However, the company’s quarterly results proved to be a disappointment as it missed analysts’ estimates, and in addition to that, the costs for manufacturing cannabis 2.0 products proved to be higher as well. The revenues for the quarter stood at $23.2 million for OrganiGram, which is significantly lower than the $26.9 million that it had generated in the year-ago period.
In addition to that, the revenue for the quarter is also down sequentially from the previous quarter, when OrganiGram generated $25.2 million. The company blamed the poor performance on the lower sales of popular products like cannabis oil products and dried flowers.
On top of that, OrganiGram also had to settle for lower prices for many of its products, and the company attributed that to higher competition in the cannabis industry at this point. While the write-downs with regards to inventory provisions of $1.3 million were another major factor, OrganiGram also suffered from spending more on certain cannabis 2.0 products.
OrganiGram, which is well known in the industry for running a tight ship, announced that the cost of producing vapes and cannabis-based chocolate touched $15.8 million in the quarter. In the year-ago period, the costs of producing those products had stood at $10.9 million. The adjusted earnings before EBITDA stood at $2.83 million for the quarter.
The Chief Executive Officer of the company, Greg Engel, stated that the performance in the quarter reflects the fact that the company executed well despite the challenge in the cannabis market during the period in question. The company, which has gone into cannabis 2.0 products in a big way, announced that the sales from those products constituted 13% of its revenues.