Organigram Holdings Inc. (OGI) stock prices were up 12.83% shortly after the trading day commenced on July 13th, 2021, bringing the price per share up to USD$2.99 early on in the trading day.
Net Revenue Reports
Net revenues for the third quarter of fiscal 2021 were up 13% from the prior-year quarter, resulting primarily from higher adult-use recreational net revenue and higher wholesale revenue reported for the 2021 quarter. The third quarter of fiscal 2020 reported a reduction in adult-use recreational net revenue, stemming from a provision for product returns and pricing adjustments in the amount of USD$3 million. This, in turn, was largely motivated by slow-moving oil and certain flower products.
Gross Revenue
The same factors contributed to gross revenues for the third quarter of fiscal 2021 also increasing, up 31% as compared to the third quarter of 2020. Cost of sales for the quarter were down from the previous year, with the year-over-year difference being largely attributable to USD$30 million in inventory write-offs and provisions. Further compounding the difference were changes in the workforce in the 2020 quarter, instigated by the onset of the global pandemic.
Improvements in Gross Margin
Gross margin for Q3 2021 was up a significant 104% from the negative Q3 2020 gross margin, largely driven by fair value changes to biological assets and the sale of inventory. Net non-cash positive fair value changes to biological assets and inventories sold in the third quarter of 2021, as compared to the negative changes reported for the prior year quarter.
Solid Liquidity Position
The company reported a significant year-over-year improvement of 163% in their liquidity position. April 1st 2021 saw the company having repaid the entirety of its outstanding balances, in the amount of almost USD$58.5 million, as per its credit agreement with BMO and a cohort of lenders. This move is expected to save the company USD$2.7 million in annual interest savings. The company currently has a solid liquidity position of USD$222 million in cash and short-term investments.
Future Outlook for OGI
Armed with a solid liquidity position and the disclosure of healthy financials, OGI is poised to capitalize on the momentum generated by its success in Q3 2021. Current and potential investors are keen to see the company leverage the resources at its disposal to continue its trajectory of success, in order to usher in long term increases in shareholder value.
