What happened
Shares of Canadian cannabis company OrganiGram Holdings (OGI 4.64%) jumped 20.9% this week, according to data from S&P Global Market Intelligence. The stock opened Monday at $1.47, then reached a high of $1.82 on Wednesday. OrganiGram has a 52-week low of $1.27 and a 52-week high of $3.52. It is one of the few cannabis companies whose shares have stayed relatively steady this year, with the stock down only 0.29% in 2022.
Image source: Getty Images.
So what
Investors liked what they saw in the company's second-quarter results, which were released Tuesday morning.
The biggest deal was that the cannabis company had adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.6 million, two quarters ahead of the company's earlier estimates about when it would reach positive adjusted EBITDA.
OrganiGram also reported revenue climbing by 117% year over year to $31.8 million, which represented a rise of 5% sequentially. The company said it maintained its No. 1 position in dried flower sales in Canada, representing roughly half of the country's cannabis market.
NASDAQ: OGI
Key Data Points
It also reported a gross profit margin of 26% and a net loss of $4.05 million, down from a loss of $66.4 million in the same period a year ago. CEO Beena Goldenberg said OrganiGram's purchase of Quebec-based artisanal craft cannabis and hash producer Laurentian Organic late last year is already paying off.
"In less than three months we have been able to significantly increase distribution and begin to implement the synergies planned at acquisition," Goldenberg said in the second-quarter release. "Automation to optimize production is also underway and expected to be complete by the end of fiscal 2022."
Now what
The company is showing momentum with increased net revenue, adjusted gross margin, and adjusted EBITDA the past three quarters. The key for investors will be continued progress in these three areas. Cannabis investors haven't had much to cheer this year, so the company's positive news comes at an opportune time for adding investors from other cannabis companies whose shares have plummeted.
OrganiGram's cultivation facility in Moncton, New Brunswick, has a capacity of 40,000 kilograms of cannabis, but the company is spending $38 million to increase that to 80,000 kilograms, which should help it keep up with increased demand.
