Organigram Holdings Loses $89.9 Million In Third Quarter, Revenues Fall

Revenue at Organigram Holdings (TSX: OGI) (NASDAQ: OGI) continues to fall. The company this morning reported net revenue of $18.0 million, a decline from last quarters figure of $23.2 million, and the previous years figure of $24.8 million. The company also posted a net loss of $89.9 million, despite “generating net positive cash flow from operations of $8.5 million.”

Things continue to get worse for the once darling of the sector, with the company denoting a cost of sales of $44.4 million over the course of the quarter, a result of write downs over the course of the quarter of $28.7 million.

Outside of writedowns included in cost of sales, the company wrote off the following:

  • Inventories of $19.3 million during the quarter related to excess and unsaleable inventories, of which $11.9 million were related to concentrated extract and product destined for extraction.
  • Inventories of $2.7 million related to adjustments to net realizable value.
  • Inventories of $5.0 million related to abnormal plant waste due to COVID-19.
  • The company also had additional charges of $2.9 million related to the reduced workforce as a result of the pandemic.

Operating expenses came in at a whopping $49.1 million over the quarter, a function of total impairments of property, plant and equipment of $37.7 million over the three month period. General and administrative expenses were the second largest expense, at $6.0 million. The company overall managed to lose $89.9 million in the three month period.

Despite the losses, the company managed to post a net improvement over the quarter in their cash position, from $41.1 million to $44.6 million. Accounts receivable fell significantly over the quarter, from $20.6 million to $12.9 million, while biological assets and inventories were slashed from $27.4 million and $113.4 million to $5.6 million and $95.1 million respectively. Total current assets tumbled from $208.3 million to $162.6 million.

Current liabilities however also fell, with accounts payable reducing from $26.7 million to $25.0 million. The significant fall comes from the current portion of long term debt, which declined from $84.9 million to $6.6 million. Rather than being from debt repayment however, the reduction is due to managing to get covenants related to certain debt modified, of which the company was previously in violation. The debt as a result returned to long term liabilities. Overall, current liabilities declined to $31.6 million from $111.6 million.

Organigram Holdings last traded at $1.52 on the Nasdaq.

Information for this briefing was found via Sedar and Organigram Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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