Organigram Holdings Corp. saw net revenue decline on a quarterly basis in the second quarter of its fiscal year, from 25.2 million Canadian dollars ($18.1 million) in the first quarter of 2020 to CA$23.2 million in the quarter ended Feb. 29.
Organigram’s net medical cannabis revenue for the period was CA$2.4 million. Wholesale market revenue was CA$5.6 million, and international revenue was CA$226,000.
The net revenue decline came even as revenue from adult-use cannabis grew by 16% on a quarterly basis, from CA$12.9 million in the first quarter to CA$15 million in the second.
Second-quarter revenue also shrank on an annual basis, down from CA$26.9 million in the same quarter in 2019.
The company attributed the year-over-year decline in net revenue to lower adult-use flower and oil sales compared to the same time last year, “when the timing of large pipeline fill orders to Alberta and Ontario occurred to fulfill supply shortages following the legalization of adult-use recreational cannabis sales.”
Organigram “no longer formulates recreational cannabis oil,” the company said in a regulatory filing.
Organigram also cited lower average net selling prices because of increased competition, as well as “evolving consumer preferences” that led to returns and price adjustments in the most recent quarter, “mostly related to cannabis oil.”
Dried cannabis flower sales made up 80% of Organigram’s net revenue in the second quarter. The average selling price for Organigram flower decreased by CA$0.38 per gram to CA$4.56 on a quarterly basis.
Hits to Organigram’s net revenue were partly offset by the launch of new vape and edibles cannabis products in the second quarter of 2020, the company said.
Organigram posted a net loss of CA$6.8 million for the quarter, representing a 7% annual increase from a net loss of CA$6.4 million ($4.6 million) in the second quarter of 2019.
The second-quarter results “will ultimately go down as a miss, though we highlight significant variability in financials, likely driven by wider market dynamics, harvest timings, wholesale shipments and province ordering patterns,” Jefferies equity analyst Owen Bennett wrote in a note to clients Tuesday.
“Less the quarterly noise, (Organigram appears) to remain on a steadily positive trajectory, where key company decisions are ones that we ultimately believe are the correct ones in the current environment.”
Organigram reported CA$41.2 million cash on hand at the end of the second quarter.
That cash and available credit facilities “should give the market relative comfort that (Organigram is) not being drawn in an industry cash crunch,” Bennett added.
Organigram announced last week it was temporarily laying off about 400 employees because of the COVID-19 outbreak.
The company trades as OGI on the Toronto Stock Exchange.