Is OrganiGram Holdings Inc (OTCMKTS:OGRMF) Starting to Outgrow Expectations?

Is OrganiGram Holdings Inc (OTCMKTS:OGRMF) Starting to Outgrow Expectations?

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As we press on inexorably toward full recreational legalization for Canadians, set to go into place this fall, traders watching OrganiGram Holdings Inc (OTCMKTS:OGRMF) are starting to see some good news. First off, the company just reported record quarterly data and some upbeat guidance on production footprint expansion.

Specifically, the company just announced its financial results for the three and nine-months ended May 31, 2018. “Our fiscal third quarter was transformational for the Company. Our production capabilities have increased exponentially, we launched our adult recreational brand strategy and have signed agreements with a number of provinces and private retailers as well as announcing key significant investments from both a strategic and international perspective. As we head into the launch of the adult use recreational market we believe Organigram is well positioned to build upon its domestic medical business into becoming a national player in the adult recreational market and a global player in the medical market.”

OrganiGram Holdings Inc (OTCMKTS:OGRMF) trumpets itself as a company that produces and sells medical marijuana in Canada. The company was founded in 2013 and is based in Moncton, Canada.

According to company materials, OrganiGram Holdings Inc. is a TSX Venture Exchange listed company whose wholly owned subsidiary, OrganiGram Inc., is a licensed producer of medical marijuana in Canada. OrganiGram is focused on producing the highest quality, condition-specific medical marijuana for patients in Canada.

OGRMF’s facility is located in Moncton, New Brunswick and the Company is regulated by the Access to Cannabis for Medical Purposes Regulations.

According to company materials, “From the day we started back in 2013, it’s been about making lives better – for our clients, our people, and our community. We’re based in Moncton, New Brunswick, the heart of the Maritimes, but at OrganiGram Holdings we’re committed to improving the quality of life for Canadians across the country. For us, this means working with health-care providers and industry organizations, supporting research and education, and providing a safe, effective product. To be effective in that last goal, we made a decision to produce organic cannabis. Growing certified organic medical cannabis isn’t easy, in fact, most licensed producers won’t take this on. It means more care, more testing, more rules… but in the end, it means a product that we feel delivers on our goals in the best way. And improving the quality of life for Canadians is not just about getting safe, quality product to them effectively. It’s about creating jobs, being good neighbors and contributing to our community.”

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The chart shows a relatively strong player in the cannabis patch over the past 5 months. But the action has been basically flat over the past week of action. The past 24 hours have been strong due to “record net sales for both the three-months and nine-months ended May 31, 2018 of $3.7 million and $10.1 million respectively vs. $1.9 million and $3.6 million respectively for 2017.”

According to the release, the company expects “Phase 4a (26 grow rooms) and 4b (27 grow rooms) construction expansions began in Q4 including a substantially complete 40-megawatt (peak capacity) substation worth $4 million – total cost of Phases 4a and 4b (including the $4 million spent on the substation) estimated to be $70 million bringing target production capacity to 89,000 kg/annum;” and “Phase 4c (24 grow rooms) which has an estimated cost of $40 million would bring target production capacity to 113,000 – construction scheduled to begin in January 2019.”

Earning a current market cap value of $461M, OGRMF has a significant war chest ($53.7M) of cash on the books, which compares with about $398K in total current liabilities. OGRMF is pulling in trailing 12-month revenues of $10.4M. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 37.3%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $OGRMF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $OGRMF, either long or short, and we have not been compensated for this article.

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