Organigram Reports Third Quarter Fiscal 2021 Results

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Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent company of Organigram Inc. (together, the “Company” or “Organigram”), a leading licensed producer of cannabis, announced its results for the third quarter ended May 31, 2021 (“Q3 2021”).

“We are pleased with the growth in revenue in Q3 as we were better staffed to fulfill the demand for our revitalized product portfolio, which continues to resonate well with consumers,” said Paolo De Luca, Chief Strategy Officer. “The ongoing investment in our genetics and cultivation program has yielded some exciting new dried flower products with more genetics and derivative product launches planned for the near term. Sales are trending higher to date in Q4 supported by a strong outlook for the industry as the number of cannabis retail stores continues to grow and existing stores are permitted to re-open their doors to customers.”

Select Key Financial Metrics (in $000s unless otherwise indicated)Q3 2021Q3 2020% Change
Gross revenue29,105 22,241 31%
Excise taxes(8,781) (4,220) 108%
Net revenue20,324 18,021 13%
Cost of sales23,381 44,375 -47%
Gross margin before fair value changes to biological assets & inventories sold(3,057) (26,354) 88%
Fair value changes to biological assets & inventories sold5,176 (23,862) 122%
Gross margin2,119 (50,216) 104%
Adjusted gross margin*(722)4,114 -118%
Adjusted gross margin %*-4% 23% -27%
Selling (including marketing), general & administrative expenses**13,559 10,258 32%
Adjusted EBITDA*(10,182) (2,138) -376%
Net loss(4,008) (89,871) 96%
Net cash provided by (used in) operating activities(10,754) 313 -3536%

* Adjusted gross margin, adjusted gross margin % and adjusted EBITDA are non-IFRS financial measures not defined by and do not have any standardized meaning under IFRS; please refer to the Company’s Q3 2021 MD&A for definitions and a reconciliation to IFRS.


** Excluding non-cash share-based compensation.

Select Balance Sheet Metrics (in $000s)2021-05-312020-08-31% Change
Cash & short-term investments196,44674,728163%
Biological assets & inventories46,63871,759-35%
Other current assets22,06023,717-7%
Accounts payable & accrued liabilities19,27617,48610%
Current portion of long-term debt8011,595-99%
Working capital245,788141,12374%
Property, plant & equipment247,698247,4200%
Long-term debt247103,671-100%
Total assets576,715435,12733%
Total liabilities73,536135,600-46%
Shareholders’ equity503,179299,52768%

“On the expense front, we are encouraged by the progress we have made in reducing cultivation costs and capturing economies of scale as we ramp up cultivation,” said Derrick West, Chief Financial Officer. “In combination with commercial strategic initiatives, we have also identified a number of additional cost efficiency opportunities focused on enhancing our gross margin profile. We anticipate starting to see the benefits from these cost reductions during Q4 Fiscal 2021.”

Key Financial Results for the Third Quarter Fiscal 2021

  • Net revenue:
    • Q3 2021 net revenue increased from Q3 2020 primarily due to higher adult-use recreational net revenue and higher wholesale revenue (from other licensed producers) in Q3 2021. Q3 2020 adult-use recreational net revenue was reduced by a provision for product returns and pricing adjustments of $3.0 million (net of excise) of which the majority was largely due to slow moving oil and certain flower products.
  • Gross revenue:
    • Q3 2021 gross revenue increased from Q3 2020 largely due to similar factors impacting net revenue described above.
  • Cost of sales:
    • Q3 2021 cost of sales decreased from Q3 2020 primarily due to almost $30.0 million in inventory write-offs and provisions as well as charges related to a reduced workforce due to COVID-19 which were all incurred in Q3 2020.
  • Gross margin before fair value changes to biological assets, inventories sold, and other charges:
    • Gross margin improved in Q3 2021 from Q3 2020 largely due to higher net revenue and lower cost of sales as described above.
  • Gross margin:
    • Q3 2021 gross margin increased to a positive result from negative Q3 2020 gross margin largely due to higher Q3 2021 gross margin before fair value changes to biological assets and inventories sold as described above, as well as net non-cash positive fair value changes to biological assets and inventories sold in Q3 2021 versus negative changes in Q3 2020.
  • Adjusted gross margin3:
    • Q3 2021 adjusted gross margin was negative compared to positive Q3 2020 gross margin primarily due to value offerings comprising a larger proportion of revenue in Q3 2021.
  • Selling, general & administrative (SG&A) expenses:
    • Q3 2021 SG&A increased from Q3 2020 largely due to increased staffing and office costs related to the establishment of the CoE as well as the EIC acquisition, higher cultivation related research and development costs as well as higher audit fees (in connection with the Company’s regulatory requirement to obtain an integrated audit opinion for the first time for its Fiscal 2021 annual financial statements).
  • Adjusted EBITDA4:
    • Q3 2021 negative adjusted EBITDA increased from Q3 2020 largely due to lower adjusted gross margin in Q3 2021 as discussed above and due to certain higher general and administrative costs as described above.
  • Net loss:
    • Q3 2021 net loss improved from Q3 2020 net loss largely due to the higher gross margin in Q3 2021 described above and the impairment to property, plant and equipment recorded in Q3 2020.
  • Net cash used in operating activities:
    • Q3 2021 net cash used in operating activities compared to net cash provided by operating activities in Q3 2020 (despite higher gross margin in Q3 2021) largely due to the increase in working capital assets as the Company ramped up cultivation activities in Q3 2021.

Canadian Adult-Use Recreational Market

Rec 1.0 new launches

Higher margin Edison and Indi dried flower strains

  • In late March 2021, Organigram launched the Edison Black Cherry PunchI.C.C. and Slurricane strains in a package of three half-gram pre-rolls.
  • In late April 2021, the Company announced the launch of another two new high potency Edison dried flower strains, GMO Cookies and MAC-1, with a THC range of 20-26% and available in 3.5g format or a package of three half-gram pre-rolls. Both strains feature a distinct phenotypic profile, flavour and aroma as a result of being grown in one of Organigram’s strain specific micro-climates.
  • Also, in late March, the Company introduced Indi, one of Canada’s only cannabis brands dedicated exclusively to indica cultivars. Skyway Kush is the first strain in the Company’s Indi portfolio and currently offers THC in the range of 20% to 23%.
  • Subsequent to quarter-end in June 2021, Organigram introduced two new Indi dried flower strains available in 3.5g formats, Biscotti Gelato with a THC range of 20-26% and Gelato #33 with a THC range of 17-23%.

Value segment offerings

  • In March 2021, the Company announced that it expanded the successful SHRED brand with the introduction of a Jar of Joints, a convenient jar of 14 half gram pre-rolls in SHRED’s Tropic Thunder.
  • In late May 2021, Organigram announced the launch of Big Bag o’ Buds, indoor-grown, strain specific dried flower in a 28g value format. The Big Bag o’ Buds strains include existing cultivars, such as the Company’s industry-leading Ultra SourLimelight, along with new cultivars and a rotation of one-time strain offers. Big Bag o’ Buds contain a minimum of 17% THC and one-time offer cultivar selection will include Grapefruit GG4Original Glue, and Lemon Tree strains.

Rec 2.0 new launches


  • Subsequent to quarter-end in June 2021, Organigram launched Edison’s popular Limelight cultivar, the country’s top selling Ultra Sour, in a 1g Feather® 510 vape cartridges and 0.3g Feather® ready-to-use vape pens featuring a high THC potency range of 80-85%.

Research and Product Development

  • The Company announced the CoE was officially launched at its Moncton facility. The CoE has been established to focus on developing the next generation of cannabis products with an initial focus on CBD. As Organigram and BAT ramp up plans for the CoE, a number of initial positions have been created, including innovation-focused roles such as scientists and product developers and over time, the employee count is expected to increase. The CoE is governed and supervised by a steering committee consisting of an equal number of senior members from both companies.
  • Both Organigram and BAT have access to certain of each other’s intellectual property (“IP”) and, subject to certain limitations, have the right to independently, globally commercialize the products, technologies and IP created by the CoE.
  • Approximately $31 million of BAT’s investment in the Company has been reserved for its portion of its funding obligations under a mutually agreed initial budget for the CoE and costs for the CoE will be funded equally by Organigram and BAT.


Net revenue

  • Organigram currently expects Q4 2021 revenue to be higher than Q3 2021 largely due to: stronger forecasted market growth as COVID-19 restrictions lift (permitting cannabis retail stores to reopen to foot traffic) and the number of retail stores continues to grow; and the Company is better able to fulfill demand for its revitalized product portfolio with increased staffing.
  • Revenues to date and purchase orders received from customers support the Company’s expectation of revenue growth from Q3 2021 to Q4 2021; however actual results could vary from estimates from the date hereof until year-end.
  • In addition, the Company expects to generate a new and incremental revenue stream from the first sales of soft chews expected in Q4 2021.

Adjusted gross margins

  • The Company expects to begin to see a sequential improvement in adjusted gross margins in Q4 2021 largely due to lower product cultivation costs (from higher plant yields) and other economies of scale as it continues to ramp up cultivation and realizes the benefit of ongoing cost efficiency improvements including increased automation such as the new pre-roll machine which reduces the reliance on manual labour.
  • The overall level of Q4 2021 adjusted gross margins versus Q3 2021 adjusted gross margins will also be dependent on other factors including, but not limited to, product category and brand sales mix.
  • Although the sequential improvement to adjusted gross margins is anticipated to be marginal in Q4 2021, the Company has identified the following opportunities which it believes have the potential to further improve adjusted gross margins over time:
    • The Company expects to gain further economies of scale and efficiencies as it continues to scale up cultivation.
    • The Company is also planning changes to its growing and harvesting methodologies as well as design improvements at the Moncton Campus which are expected to result in higher quality flower and reduced production costs. The expenditures associated with this work (as well as the completion of Phase 4C) are anticipated to be incurred starting in Q4 2021 with completion targeted in Fiscal 2023. See the “Liquidity and Capital Resources” section of this press release.
    • The recent launches of new higher margin dried flower cultivars under the Edison and Indi brands with more expected to come have the potential to positively impact gross margins over time as these products gain traction in the market and are expected to comprise a greater proportion of the Company’s overall revenue.
    • International sales have historically attracted higher margins and are anticipated to represent a greater proportion of the Company’s revenues once the Company resumes shipments to Canndoc Ltd. (currently expected in Q1 2022 – see “International” section below).
    • The Company continues to launch more multi-pack pre-rolls and 1g vape cartridges and these higher volume SKUs attract higher margins.
    • The Company continues to invest in automation to drive cost efficiencies and reduce dependence on manual labour.

SG&A expenses

  • Q4 2021 SG&A is expected to be higher than Q3 2021 largely due to more research and development work at the CoE and increased selling and marketing expenses as stores reopen to foot traffic and the retail network expands.


  • In Q1 Fiscal 2021, the Israeli Ministry of Health amended its quality standards for imported medical cannabis. In early Q4 2021, the Company received the Good Agricultural Practice certification from Control Union Certifications under Control Union Medical Cannabis Standard (CUMCS). Shipments to Canndoc Ltd. are expected to resume in Q1 2022 contingent upon the timing and receipt of regulatory approval from Health Canada, including obtaining an export permit.

Liquidity and Capital Resources

  • On April 1, 2021, the Company repaid all outstanding balances (approximately $58.5 million) under its credit agreement with BMO and a syndicate of lenders, which will result in annual interest savings of $2.7 million (based on the outstanding balance at the time of repayment).
  • Currently, the Company has $222 million in cash and short-term investments (including restricted funds).
  • Organigram believes it has sufficient cash and short-term investments to support its current plans, including the budget of $38 million6 for the completion of Phase 4C and the Moncton Campus design improvements, and to also support the corresponding growth to its working capital assets and still maintain sufficient liquidity and financial flexibility.

Capital Structure

in $000s2021-05-312020-08-31
Current and long-term debt327115,266
Shareholders’ equity503,179299,527
Total debt and shareholders’ equity503,506414,793
in 000s
Outstanding common shares298,645194,511
Top-up rights6,570
Restricted share units1,192912
Performance share units481120
Total fully-diluted shares331,494204,807

Outstanding basic and fully diluted share count as at July 11, 2011 is as follows:

in 000s2021-07-11
Outstanding common shares298,773
Top-up rights6,611
Restricted share units1,186
Performance share units472
Total fully-diluted shares331,828

Third Quarter Fiscal 2021 Conference Call

The Company will host a conference call to discuss its results with details as follows:

Date: July 13, 2021

Time: 8:00am Eastern Time

To register for the conference call, please use this link:

To ensure you are connected for the full call, we suggest registering a day in advance or at minimum 10 minutes before the start of the call. After registering, a confirmation will be sent through email, including dial in details and unique conference call codes for entry. Registration is open through the live call.

To access the webcast:

A replay of the webcast will be available within 24 hours after the conclusion of the call at and will be archived for a period of 90 days following the call.

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