Organigram Holdings Inc. (OTCMKTS: OGRMF) recorded single-week sales of over $250,000 for the first time in its history for the period March 5-11, 2017. Taken by itself, this may seem like “Good News.” However, the fact that this news comes only three months subsequent to the news of a voluntary recall of cannabis products due to pesticide contamination, speaks volumes about the quality of the company, and management’s ability to deal with a crisis.Before we get into the details, first some background on Organigram Holdings Inc. It 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. Organigram's facility is located in Moncton, New Brunswick, and the Company is regulated by the Access to Cannabis for Medical Purposes Regulations ("ACMPR").As of March 13, 2017, Greg Engel assumed his new role of CEO of Organigram Holdings Inc. He succeeds Denis Arsenault who stepped up to the newly created executive chairman's position. Engel was most recently CEO of an early medical marijuana company, and the first Canadian company to export medical cannabis products to Europe. He has served in a number of senior-level and executive positions in related industries over the past 25 years in Canada, US and Internationally.On Mar 29, 2017, Organigram Holdings Inc. announced that its wholly-owned subsidiary, Organigram Inc., received a renewal of its license to produce and sell dried marijuana and cannabis oil pursuant to the Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The renewal was granted after Health Canada's recent inspection of Organigram's facilities and cultivation methodologies. In light of the recent product recalls, the company has taken the concept of "Canada's Safest Cannabis" as an internal mantra, rolling out several multi-departmental initiatives as a strategy to commit to full transparency and quality control.Organigram Holdings Inc. announced on April 10, 2017 that it entered into a letter of intent to acquire all of the issued and outstanding shares of Trauma Healing Centers Incorporated. Trauma Healing Centers specializes in medical cannabis assessment and prescribing. Trauma Healing Centers is the only organization designated as multi-disciplinary with Blue Cross for military and RCMP veteran clients, and sees patients on a referral basis to offer a multi-disciplinary approach to healing chronic conditions. THC currently services over 3,500 patients across seven Canadian locations with plans to open seven more locations.On Apr 28, 2017, Organigram Holdings Inc. announced the financial results for the quarter ending February 28, 2017. Significant progress was made by the company in the quarter toward increasing the production capacity of medical marijuana, cannabis oil and related products in preparation for the legalization of recreational use of marijuana in Canada. The C$40 million in proceeds from the bought deal financing that the company closed during the quarter will provide sufficient capital to complete the designed onsite expansion to approximately 26,000 kg per year prior to the expected launch of recreational cannabis in Canada during the summer of 2017. Progress continues, in collaboration with TGS International LLC ("TGS"), on the construction and implementation of the planned 15,000 square foot commercial scale oils and extracts manufacturing facility.The company also provided an update regarding its voluntary recall of cannabis products announced in December 2016. The impact on the financial statements included the recognition of a C$2.0 million sales credit to uninsured customers for credits issued through a client credit program. The company also reported an indirect production expenses of C$1.3 million related to inventory destruction, and a loss of C$1.7 million in the change in fair value of biological assets. The company also incurred an increase in cost per gram sold during the quarter as 59% of the dried flower grams sold were from outsourced production. As a result, the company generated adjusted EBITDA of (C$4.7) million and cash flow of (C$4.3) million. In order to avoid the pesticide issue from reoccurring, the company implemented new operating protocols which includes testing all harvested product to ensure the product’s purity. Greg Engel, Chief Executive Officer of Organigram commented:
"While the product recall was obviously an unfortunate event for the Company and the patients who rely on Organigram for access to their medicine, I am pleased with the way our team has dealt with this challenge. It forced us to re-examine our quality assurance practices and implement new procedures that will help us achieve our goal of producing Canada's Safest Cannabis. I anticipate a return to growth in coming quarters and believe the outlook for our company has never been brighter."
OGRMF stock has been Trading in a range with resistance at about US$2.71, and Support at about US$1.75. The stock is currently trading at US$1.90. Current market capitalization stands at US$191.73 million, on 100.91 million shares outstanding as of March 12, 2017. We will be updating our subscribers as soon as we know more. For the latest updates on OGI/OGRMF, sign up below!Disclosure: We have no position in OGI/OGRMF and have not been compensated for this article.
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