Organigram Holdings Inc. (TSX: OGI) has reported its financial results for fiscal year 2024, ending September 30, 2024, posting annual net revenue of $159.8 million, up 6% compared to $150.4 million in fiscal 2023.

This modest growth stemmed primarily from increased recreational cannabis sales and expanding international revenues. While the increase is noteworthy in a challenging market, it pales in comparison to the 22% year-over-year increase in net revenue in Q4 alone, which totaled $44.7 million. Sequentially, Q4 revenue rose 10% from the previous quarter, showing consistent improvement.

On the cost side, fiscal 2024’s cost of sales decreased 13% year-over-year to $111.4 million from $128.1 million. This decline contributed to a gross margin before fair value adjustments of $48.5 million, more than doubling the $22.3 million reported in fiscal 2023. This surge in gross margin was largely attributable to reduced cultivation and post-harvest costs, alongside higher-margin international sales.

The adjusted gross margin for fiscal 2024 climbed to 34%, up from 25% in fiscal 2023, reflecting a strategic pivot toward efficiency and product mix optimization. For Q4, adjusted gross margin jumped to 37%, compared to just 20% in the same quarter of fiscal 2023, underscoring significant quarter-over-quarter improvement.

The net loss for fiscal 2024 was $45.4 million, a substantial improvement over the staggering $247.0 million loss recorded in fiscal 2023. This reduction was driven by improved gross margins, fewer impairment charges, and cost-control measures. The Q4 net loss was $5.4 million, a significant reduction from $26.6 million in the same quarter last year, but still raises concerns about the company’s ability to achieve consistent profitability in the near term.

Adjusted EBITDA for fiscal 2024 was $8.4 million, a 56% increase from $5.4 million in fiscal 2023. While this growth is substantial, it underscores the relatively low baseline profitability of the prior year. In Q4, adjusted EBITDA reached $5.9 million, a jump from $3.5 million in the previous quarter and an exponential increase compared to just $0.1 million in Q4 fiscal 2023.

The company ended fiscal 2024 with $133.4 million in cash and short-term investments, up from $51.8 million at the end of fiscal 2023. This improvement was largely due to a follow-on investment from British American Tobacco (BAT) totaling $83.1 million across two tranches, with an additional $41.5 million expected in early 2025. However, subsequent to year-end, the cash position was reduced by approximately $55 million due to the acquisition of Motif Labs, a move that bolstered production capacity but simultaneously strained liquidity.

In addition to these financial metrics, operational efficiency initiatives generated $9.1 million in annual cost savings, while selling, general, and administrative (SG&A) expenses decreased 3% year-over-year to $65.7 million in fiscal 2024. These efforts have helped lower SG&A as a percentage of revenue to 41%, compared to 45% in fiscal 2023, reflecting better cost discipline. Q4 SG&A expenses followed a similar trend, dropping 9% year-over-year to $14.3 million.

International sales were a critical growth driver throughout the year, with the customer base expanding from five to eight supply partners and sales growing sequentially each quarter. The company’s $21 million investment in Germany’s Sanity Group underscores its commitment to the European market, which could offer higher-margin opportunities, particularly as Organigram’s Moncton facility awaits EU-GMP certification.

The company’s acquisition of Motif Labs, completed post-year-end for $50 million in cash and $5 million in transaction costs, positions Organigram as the top cannabis producer by market share in Canada. While this is a significant milestone, integrating Motif’s operations will be key to realizing the expected benefits.

Organigram Holdings last traded at $2.28 on the TSX.

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.