Is OrganiGram Holdings Inc (OTCMKTS:OGRMF) the Best Cannabis Growth Play?

Is OrganiGram Holdings Inc (OTCMKTS:OGRMF) the Best Cannabis Growth Play?

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As we have outlined in the past, OrganiGram Holdings Inc (OTCMKTS:OGRMF) has been one of our favorites in the Canadian cannabis space for 2018 and 2019. Shares continue to perform well. To add further flesh to the story, the company just announced its results for the second quarter ended February 28, 2019, including Q2-2019 gross revenue of $33.5 million and net revenue of $26.9 million (less excise taxes) increased exponentially from the same prior year period (Q2-2018) as Q2 2019 included the first full quarter of adult-use recreational sales, and cash cost of cultivation of $0.65 and “all-in” cost of cultivation of $0.85 (including non-cash depreciation and share-based compensation) per gram of dried flower harvested3 decreased from $1.24 and $1.48, respectively, in Q2-2018 largely due to higher yields per plant, according to statements made by the company in its release.

In addition, according to the release, the Q2 2019 includes the first full quarter of adult-use recreational sales for the company. “We executed very well again this quarter and have established Organigram as one of the leaders in the Canadian adult-use recreational market,” said Greg Engel, Chief Executive Officer.

OrganiGram Holdings Inc (OTCMKTS:OGRMF) casts itself as a company that produces and sells medical marijuana to individuals and physicians in Canada. It offers marijuana plants, seeds, and cuttings; cannabis oil; and dried flower and cannabis.

The company sells its products through phone and online store. It also operates healing centers that offer treatments for post-traumatic stress disorders, chronic pain, and trauma therapy. In addition, the company exports its products.

OrganiGram Holdings Inc. was founded in 2013 and is based in Moncton, Canada.

Moreover, 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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As noted above, OGRMF just announced its results for the second quarter ended February 28, 2019, amounting to some strong results with record financial data.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action OGRMF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -4% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.

“For the second consecutive quarter, our results reflected operational excellence which translated into record revenue for the Company, industry-leading adjusted gross margin, and positive adjusted EBITDA, all of which differentiates us from most of the Canadian industry today.  Our team has already progressed several key initiatives in preparation for the derivative and edibles launch in the fall of 2019. We are excited about the significant growth ahead expected from these new products, our expanding capacity, our strategic partnerships, and our relentless focus on continuous improvement to consistently deliver high quality product to our customers.”

Earning a current market cap value of $994.07M, OGRMF has a significant war chest ($95.9M) of cash on the books, which is balanced by about $15.8M in total current liabilities. One should also note that debt has been growing over recent quarters. OGRMF is pulling in trailing 12-month revenues of $23.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 363%. You can bet we will update this one again as new information comes into view. 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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