TORONTO — Organigram Holdings Inc., a leading licensed producer of cannabis, released its results for the first quarter ended December 31, 2024 (“Q1 Fiscal 2025”). The Q1 Fiscal 2025 results include the financial results of Motif Labs Ltd. from December 6, 2024 to December 31, 2024, following the vompany’s acquisition of Motif.
Q1 fiscal 2025 highlights
- Net revenue increased 17% to $42.7 million from $36.5 million in the same prior year period.
- International sales increased $2.3 million versus the same prior year period.
- Adjusted gross margin increased to $14.3 million or 33%, from $11.2 million or 31% in the same prior year period.
- Adjusted EBITDA increased to $1.4 million from $0.1 million in the same prior year period.
- Pro-forma cash position of approximately $113 million and negligible debt.
- 21% of harvests came from higher efficiency seed-based cultivation, up from 9% in the prior quarter.
- Integration of Motif progressing as planned, with over $10 million in annual run-rate synergies expected to be realized within the next 24 months.
- Flagship brands SHRED and BOXHOT reached over $385 million in retail sales over last 12 months.
- #1 market position in Canada holding the #1 position in vapes, #1 in pre-rolls, #1 in milled flower, #1 in hash, #1 in pure CBD gummies, #3 in edibles, #3 in dried flower.
“This is an exciting time for Organigram as we kick off Fiscal 2025 as Canada’s largest recreational cannabis company by market share,” said Beena Goldenberg, Chief Executive Officer. “Our strategic priorities for the fiscal year focus on integrating Motif to maximize operational synergies, continuing to expand our presence in international markets, and driving even more innovation—both in our product portfolio to delight our consumers, and also within our operations to enhance value for our shareholders.”
Q1 fiscal 2025 financial overview
Net revenue increased 17% to $42.7 million, from $36.5 million in the first quarter ended December 31, 2023 (“Q1 Fiscal 2024”), primarily due to an increase in recreational cannabis sales and international sales, as well as contributions from Motif sales.
Gross margin: Cost of sales increased 6% to $28.6 million, from $26.9 million in Q1 Fiscal 2024, primarily driven by higher sales. Adjusted gross margin was $14.3 million, or 33% of net revenue, compared to $11.2 million, or 31%, in Q1 Fiscal 2024. The increase is attributable to several factors, including lower cultivation and post-harvest costs, reduced inventory provisions, and sales mix.
Selling, general & administrative (“SG&A”) expenses increased 7% to $17.0 million from $15.9 million in Q1 Fiscal 2024. The increase was attributable to higher trade investments to support the growth of the business as well as expenses from Motif.
Net loss was $23.0 million compared to a net loss of $15.8 million in Q1 Fiscal 2024. The increase in net loss from the prior period is primarily attributable to a higher fair value loss recognized in relation to top-up-rights of BAT, which was partially offset by an increase in gross margin and fair value gain on other financial assets.
Adjusted EBITDA was $1.4 million compared to $0.1 million in adjusted EBITDA in Q1 Fiscal 2024. The increase was primarily attributable to higher revenue and operational efficiency gains.
Net cash used in operating activities before working capital changes was $6.3 million, compared to $8.1 million cash used in Q1 Fiscal 2024. The decrease was primarily attributable to higher adjusted gross margin4 in Q1 Fiscal 2025.
“Organigram’s year-over-year performance highlights the long-term benefits of our investments in efficiency, disciplined capital deployment, and market-leading research and innovation,” said Greg Guyatt, chief financial officer. “With one of the strongest balance sheets in the industry, we look forward to showcasing the full impact of our consolidated Organigram-Motif earnings in Q2. In addition, the anticipated $41.5 million final BAT follow-on investment tranche, which is expected to close in late February, further strengthens our balance sheet and fuels our international expansion goals.”
Research and product development
Organigram and BAT continue to work together through their PDC on new work streams to develop innovative technologies in the edible, vape and beverage categories in addition to new disruptive inhalation formats aimed at addressing the biggest consumer pain points that exist in the category today.
The first commercialized product resulting from PDC research is the Edison Sonics – gummies utilizing Organigram’s Fast Acting Soluble Technology (FASTT).
On November 6, 2023, Organigram announced a $124.6 million follow-on investment from BAT and the creation of “Jupiter”, a strategic investment pool designed to expand Organigram’s geographic footprint and capitalize on emerging growth opportunities.
The first two $41.5 million tranches of the follow-on investment were closed in calendar 2024, with the final $41.5 million tranche expected to close in February 2025.
International investments and Jupiter pool
Organigram made its first significant European strategic investment to expand its presence in the European cannabis market with a $21 million investment in Sanity Group GmbH (“Sanity Group”), a leading German cannabis company. Our investment in Sanity Group was supported by an expanded supply agreement, making it one of our largest customers. Since the April 1, 2024 expansion of Germany’s medical cannabis program, the market has grown at least 4x and continues to show strong growth potential. Sanity is uniquely positioned, having already submitted applications for adult-use recreational pilot projects in Berlin, Frankfurt, Düsseldorf, and Bremen. Approval is pending from the Institute of Food & Nutrition, which oversees the pilot projects.
Jupiter has also deployed US$2 million into Steady State LLC (d/b/a Open Book Extracts), a U.S.-based company specializing in hemp-derived cannabinoid ingredients.
Prior to the establishment of Jupiter, Organigram had already made a US$7 million strategic investment in U.S.-based Phylos Bioscience Inc., a leader in seed-based technology. The Company achieved 21% of its cannabis harvest from seeds in Q1 Fiscal 2025, contributing to a reduction in cultivation costs and increased cultivation capacity. The Company expects to further leverage lower-cost seed-based technology over time.
Organigram is exploring additional U.S. and international investment opportunities that align with the Company’s strategy to establish itself as a global leader and enhance profitability, with the goal of delivering long-term shareholder value.
International sales
Organigram has supply agreements with partners in Germany, U.K., Australia and Israel and is evaluating additional global partnership opportunities.
Organigram’s investment in Sanity Group resulted in the expansion of their previous supply agreement. The agreement is expected to be further expanded upon Organigram receiving EU-GMP certification of its Moncton facility, expected in spring of 2025.
In Q1 Fiscal 2025, Organigram achieved $3.3 million in international sales and expects international sales to increase throughout fiscal year 2025.
Balance sheet and liquidity
As of December 31, 2024, the Company had cash (including restricted cash and short-term investments) of $71.2 million
On a pro-forma basis, Organigram will have a cash position of approximately $113 million upon closing of the final tranche of BAT’s follow-on strategic investment.
The Company’s EU-GMP audit was completed in November 2024. If successful in obtaining certification, the Company expects its international sales to increase.
About Organigram Holdings Inc.
Organigram Holdings Inc. is a NASDAQ Global Select Market and TSX listed company whose wholly-owned subsidiaries include Organigram Inc., a licensed cultivator or cannabis and manufacturer of cannabis-derived goods in Canada, and recently acquired Motif Labs Ltd., a licensed cannabis processor.
Organigram is focused on producing indoor-grown cannabis for patients and adult recreational consumers in Canada, as well as developing international business partnerships to extend the Company’s global footprint. Organigram has also developed a portfolio of legal adult-use recreational cannabis brands, including Edison, Big Bag O’ Buds, SHRED, Monjour and Trailblazer. Organigram operates facilities in Moncton, New Brunswick and Lac-Supérieur, Québec, with a dedicated manufacturing facility in Winnipeg, Manitoba. As a result of the acquisition of Motif Labs Ltd. on December 6, 2024, the Company now operates two additional cannabis processing facilities in Southwestern Ontario; one in Aylmer and the other in London. The facility in Aylmer houses best-in-class CO2 and Hydrocarbon extraction capabilities, and is optimized for formulation refinement, post-processing of minor cannabinoids, and pre-roll production. The facility in London will be optimized for labelling, packaging, and national fulfillment. The company is regulated by the Cannabis Act and the Cannabis Regulations (Canada).
