It is almost an understatement to say that the coronavirus pandemic has been highly damaging for most industries. Although the cannabis industry has been a bit of an exception, it should be noted that some companies have continued to struggle. One such company is Canada based OrganiGram (NASDAQ:OGI) and its performance in the most recent quarter painted a picture of a struggling company. Here is a closer look at Organigram.
Third Quarter Disappointment
For quite some time, Organigram suffered since its revenues did not grow enough to allow the company to make a profit and it continued in the third quarter. Revenues for the third quarter were nosedived by as much as 27% to hit C$ 18 million. The performance was for the period that ended on May 31 this year.
It goes without saying that the performance does not bode well for investors. Organigram revealed that the poor performance was due to the steadily declining sales of dried cannabis flower.
The rising competition was one of the reasons why Organigram failed to ratchet up its sales satisfactorily. The EBITDA loss for the quarter stood at C$24.7 million due to rising expenses. It is particularly alarming since, in Q3 2019, the company had made an EBITDA profit of C$ 7.7 million.
Failure with Cannabis 2.0
On the other hand, it is also necessary to point out that unlike many of its peers, Organigram failed to cash in on the legalization of cannabis derivative products.
The products had been legalized last year. However, due to the onset of the coronavirus pandemic, the company had to make cuts to its workforce, and in the process; the launch of Cannabis 2.0 products got delayed.
This is a significant blow to the company since Organigram had been one of the early movers into this space and had launched vape products back in December 2019.
Silver Lining
While the latest developments might have upset investors, it should be noted that Organigram has made a big move into the biosynthesized cannabis product space.
Last month the company announced that it was upping its investment in biosynthesized CBD manufacturing biotech company Hyasynth Biologicals. The new investment is worth as much as $2.5 million.
This is the second of the three tranches of investment about which Organigram reached an agreement with Hyasynth. The first investment was made by Organigram back in 2018 and it was worth as much as $5 million.
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