After a dismal stock performance in 2020, OrganiGram Holdings (OGI 0.33%) has been on fire this year. The Canadian cannabis producer's shares have soared more than 80% year to date coming into this week. OrganiGram stock even skyrocketed more than 350% at one point earlier this year. 

OrganiGram announced its second-quarter results before the market opened on Tuesday. The marijuana stock was slightly lower in early trading. Here are the highlights from the company's Q2 update.

Cannabis growing in a greenhouse

Image source: Getty Images.

By the numbers

OrganiGram reported gross revenue in the second quarter of 19.2 million Canadian dollars, a 29% year-over-year decline. The consensus analysts estimate called for gross revenue of CA$19.6 million. The company's Q2 net revenue after excise taxes totaled CA$14.6 million, down 37% year over year.

The cannabis producer announced a net loss in Q2 of CA$66.4 million. In the prior-year period, the company posted a much smaller net loss of CA$6.8 million.

OrganiGram's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the second quarter looked somewhat better. The company recorded an adjusted EBITDA loss of CA$8.6 million in Q2, compared to an adjusted EBITDA loss of CA$59,000 in the prior-year period.

Behind the numbers

OrganiGram CEO Greg Engel acknowledged that the company's Q2 results "were challenged by industry dynamics, COVID-19 and staffing limitations at our facility." All three issues weighed on the company's financial performance.

Q2 net revenue fell mainly because of the company's much lower wholesale revenue and a lower average selling price. The strong wholesale revenue in the second quarter of 2020 especially impacted year-over-year comparisons. The lower average selling price reflected the intense price competition in the Canadian cannabis market.

However, OrganiGram's net revenue also slipped because of the COVID-19 pandemic. Several employees tested positive for COVID-19, resulting in missed sales opportunities. In addition, some provinces reduced their inventory levels in Q2, which translated to fewer product orders.

OrganiGram's gross margin fell into negative territory because of a higher cost of sales. This in turn caused the company's adjusted EBITDA to slide. The company's much greater net loss in Q2 stemmed in part from the negative gross margin. A change in the fair value of derivative warrant liabilities also weighed on OrganiGram's bottom line.

Looking ahead

Engle stated that the company is "currently tracking to generate higher revenue in Q3 2021 as our new product portfolio continues to gain traction and we become better staffed to fulfill demand." However, OrganiGram remains cautious because of the uncertainties related to COVID-19.

OrganiGram's recent acquisition of The Edibles & Infusions Corporation should boost its cannabis edibles revenue. Arguably the most important thing to watch with the company over the longer term, though, is its relationship with British American Tobacco. The tobacco giant recently bought a stake in OrganiGram. Engle said that the company is "extremely excited about developing innovative and appealing products to consumers in collaboration with BAT."