Company Performance - OrganiGram reported a quarterly loss of $0.13 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, representing an earnings surprise of -333.33% [1] - The company posted revenues of $29.76 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 29.59%, compared to revenues of $27.91 million a year ago [2] - Over the last four quarters, OrganiGram has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Outlook - OrganiGram shares have declined approximately 26.7% since the beginning of the year, while the S&P 500 has decreased by -3.8% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $45.73 million, and for the current fiscal year, it is -$0.16 on revenues of $166.74 million [7] - The estimate revisions trend for OrganiGram is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Medical - Products industry, to which OrganiGram belongs, is currently in the bottom 33% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact OrganiGram's stock performance [5]

[Introduction](index=2&type=section&id=INTRODUCTION) This section provides an overview of the report and the financial standards used, including IFRS and Non-IFRS Measures, and their intended use and limitations [Overview of Report and Financial Standards](index=2&type=section&id=Overview%20of%20Report%20and%20Financial%20Standards) This MD&A analyzes Organigram's Q2 Fiscal 2025 financial performance under IFRS, detailing Non-IFRS Measures and their limitations - Financial data is prepared in accordance with **International Financial Reporting Standards (IFRS)** as issued by the IASB[2](index=2&type=chunk) - The MD&A includes **Non-IFRS Measures** like **Adjusted gross margin**, **Adjusted gross margin %**, and **Adjusted EBITDA**, which management uses to evaluate operating results and performance[4](index=4&type=chunk)[8](index=8&type=chunk) - **Non-IFRS Measures** are not standardized and may not be directly comparable to those used by other companies; they should be considered as additional information, not a substitute for IFRS measures[5](index=5&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section outlines forward-looking information, emphasizing its inherent uncertainties and risks that could cause actual results to differ materially [Nature and Scope of Forward-Looking Information](index=3&type=section&id=Nature%20and%20Scope%20of%20Forward-Looking%20Information) This section outlines the nature of forward-looking information, including expectations about future events, operational capacities, strategic collaborations, market demand, and regulatory changes, emphasizing that such statements are not historical facts and involve inherent uncertainties and risks that could cause actual results to differ materially - Forward-looking information includes expectations regarding production capacity, facility licensing, collaboration with BAT, demand for cannabis products, and changes in legislation[10](index=10&type=chunk) - Statements are based on management's beliefs about future events, which are inherently uncertain and beyond control, and do not guarantee future performance[9](index=9&type=chunk)[11](index=11&type=chunk) - Factors that could cause actual results to differ materially include financial risks, industry competition, global events, regulatory changes, supply risks, and the ability to maintain licenses or certifications[12](index=12&type=chunk) [Cautionary Statement Regarding Certain Non-IFRS Measures](index=5&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20CERTAIN%20NON-IFRS%20MEASURES) This section defines key Non-IFRS Measures like Adjusted Gross Margin and Adjusted EBITDA, explaining their utility and reiterating they are not standardized or substitutes for IFRS results [Definitions and Utility of Non-IFRS Measures](index=5&type=section&id=Definitions%20and%20Utility%20of%20Non-IFRS%20Measures) This section defines key Non-IFRS Measures used by Organigram, including Adjusted Gross Margin and Adjusted EBITDA, explaining their calculation methodologies and why management considers them useful indicators of operating performance, reiterating that these measures are not standardized and should not be viewed in isolation from IFRS results - **Adjusted gross margin** is calculated by subtracting cost of sales before specific non-cash fair value adjustments and inventory charges, providing a normalized view of operational profitability[17](index=17&type=chunk) - **Adjusted EBITDA** is calculated as net income (loss) excluding various non-operating and non-cash items, serving as a proxy for operating cash flow and future financial performance[17](index=17&type=chunk)[18](index=18&type=chunk) - Management changed the calculation of **Adjusted EBITDA** in Q2 Fiscal 2024 to include provisions for expected credit losses, conforming prior quarters for consistency[17](index=17&type=chunk) [Business Overview](index=6&type=section&id=BUSINESS%20OVERVIEW) This section provides an overview of Organigram's business as a licensed cannabis cultivator and producer, detailing its facilities and recent entry into the U.S. hemp-derived THC beverage market [Nature of the Company's Business](index=6&type=section&id=NATURE%20OF%20THE%20COMPANY%27S%20BUSINESS) Organigram is a licensed cannabis cultivator and producer of consumer packaged goods in Canada, distributing to recreational and medical markets, and exporting internationally, operating five facilities across Canada and recently acquiring CPL to enter the U.S. hemp-derived THC beverage market - Organigram is a licensed cannabis cultivator and producer of consumer packaged goods, authorized to manufacture and distribute to Canadian recreational and medical markets, and export internationally[21](index=21&type=chunk) - The company operates five facilities across Canada: Moncton Campus, Winnipeg Facility, Lac-Supérieur Facility, Aylmer Facility, and London Facility[23](index=23&type=chunk)[26](index=26&type=chunk) - On March 31, 2025, Organigram acquired CPL, marking its commercial entry into the U.S. hemp-derived THC beverage market and fast-tracking its entry into the Canadian cannabis beverage category[23](index=23&type=chunk) [Strategy](index=6&type=section&id=STRATEGY) Organigram's corporate strategy focuses on increasing market share, driving profitability, expanding internationally, and delivering long-term shareholder value through four pillars: Innovation, Consumer Focus, Efficiency, and Market Expansion, including product development with BAT, maintaining market leadership in key categories, optimizing operations, and pursuing strategic acquisitions and international exports - Organigram's strategy is built on four pillars: **Innovation**, **Consumer Focus**, **Efficiency**, and **Market Expansion**, aiming to increase market share, drive profitability, and expand internationally[24](index=24&type=chunk)[27](index=27&type=chunk) - Innovation is driven by a **Product Development Collaboration (PDC)** with BAT, establishing a 'Centre of Excellence' (CoE) for next-generation cannabis products, with Organigram holding a worldwide, royalty-free license for developed IP[25](index=25&type=chunk) - The company holds the **1 market position** as of Q2 Fiscal 2025, with product category leadership in **SHRED**, **Hash**, **SHRED'ems**, **Monjour**, and **Boxhot**, demonstrating strong consumer appeal[28](index=28&type=chunk)[35](index=35&type=chunk) - Efficiency initiatives include three-tier cultivation, proprietary IT tracking, automation in post-harvest production, and strategic investments in facilities like Motif and Phylos for seed-based production and cost reduction[29](index=29&type=chunk)[32](index=32&type=chunk) - Market expansion is pursued through domestic acquisitions, international exports to Germany, Australia, and the UK, the 'Jupiter Pool' investment fund with BAT for international opportunities, and entry into the U.S. hemp-derived THC beverage market via CPL acquisition[34](index=34&type=chunk)[36](index=36&type=chunk) [Key Quarterly Financial and Operating Results](index=8&type=section&id=KEY%20QUARTERLY%20FINANCIAL%20AND%20OPERATING%20RESULTS) This section summarizes Organigram's Q2 Fiscal 2025 financial and operating performance, highlighting key metrics like net revenue, gross margin, and Adjusted EBITDA compared to the prior year [Summary of Q2 Fiscal 2025 Performance](index=8&type=section&id=Summary%20of%20Q2%20Fiscal%202025%20Performance) Organigram reported significant financial improvements in Q2 Fiscal 2025 compared to Q2 Fiscal 2024, with net revenue increasing by 74% to $65.6 million and Adjusted EBITDA turning positive at $4.9 million from a loss, while gross margin before fair value adjustments remained stable at 30%, Adjusted Gross Margin improved to 33%, and dried flower kilograms sold also increased by 17% Key Quarterly Financial and Operating Results (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2-2025 ($ thousands) | Q2-2024 ($ thousands) | Change ($ thousands) | % Change | | :----------------------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | Net revenue | 65,600 | 37,628 | 27,972 | 74 % | | Cost of sales | 45,813 | 26,366 | 19,447 | 74 % | | Gross margin before fair value adjustments | 19,787 | 11,262 | 8,525 | 76 % | | Gross margin % before fair value adjustments | 30 % | 30 % | — % | — % | | Operating expenses | 26,001 | 24,747 | 1,254 | 5 % | | Adjusted EBITDA | 4,908 | (1,045) | 5,953 | nm | | Net income (loss) | 42,456 | (27,075) | 69,531 | nm | | Net cash used in operating activities | (16,585) | (13,217) | (3,368) | 25 % | | Adjusted Gross Margin | 21,921 | 11,609 | 10,312 | 89 % | | Adjusted Gross Margin % | 33 % | 31 % | 2 % | | | Kilograms harvested - dried flower | 21,133 | 20,962 | 171 | 1 % | | Kilograms sold - dried flower | 19,701 | 16,811 | 2,890 | 17 % | [Revenue](index=8&type=section&id=REVENUE) Net revenue for Q2 Fiscal 2025 increased by 74% year-over-year to $65.6 million, primarily driven by a significant increase in recreational cannabis revenue, boosted by contributions from Motif, and higher international sales, with the volume of dried flower sales also rising by 17% - Net revenue for Q2 Fiscal 2025 was **$65.6 million**, a **74% increase** from Q2 Fiscal 2024[39](index=39&type=chunk) - Recreational cannabis sales accounted for **87% ($56.7 million)** of net revenue, international sales for **9% ($6.1 million)**, and other revenues for **4% ($2.9 million)**[39](index=39&type=chunk) - The increase in net revenue was primarily due to a **$23.5 million increase** in recreational cannabis revenue (driven by Motif) and a **$3.9 million increase** in international sales[39](index=39&type=chunk) - Volume of flower sales increased by **17% to 19,701 kg** in Q2 Fiscal 2025, attributed to large format value products, increased international sales, and higher infused pre-roll sales[40](index=40&type=chunk) [Cost of Sales](index=8&type=section&id=COST%20OF%20SALES) Cost of sales for Q2 Fiscal 2025 increased to $45.8 million, mirroring the 74% rise in net revenue, and includes $0.5 million in inventory provisions for unsaleable items - Cost of sales increased to **$45.8 million** in Q2 Fiscal 2025 from **$26.4 million** in Q2 Fiscal 2024, a **74% increase**, primarily due to the corresponding increase in net revenue[41](index=41&type=chunk) - Included in Q2 Fiscal 2025 cost of sales are **$0.5 million** of inventory provisions for unsaleable inventories, compared to **$0.3 million** in Q2 Fiscal 2024[41](index=41&type=chunk) [Gross Margin Before Fair Value Adjustments and Adjusted Gross Margin](index=8&type=section&id=GROSS%20MARGIN%20BEFORE%20FAIR%20VALUE%20ADJUSTMENTS%20AND%20ADJUSTED%20GROSS%20MARGIN) Gross margin before fair value adjustments for Q2 Fiscal 2025 was $19.8 million, maintaining a 30% margin, while Adjusted gross margin improved to $21.9 million, or 33% of net revenue, up from 31% in the prior year, driven by higher sales volumes and lower per-unit costs, with Organigram's standalone margin (excluding Motif) at 37% - Gross margin before fair value adjustments for Q2 Fiscal 2025 was **$19.8 million**, or **30% of net revenue**, consistent with Q2 Fiscal 2024[42](index=42&type=chunk) - Adjusted gross margin for Q2 Fiscal 2025 was **$21.9 million**, or **33% of net revenue**, an increase from **31%** in Q2 Fiscal 2024[43](index=43&type=chunk) - The improvement in adjusted gross margin was largely due to higher overall sales volumes and a lower cost of sales per unit[43](index=43&type=chunk) - Organigram's standalone adjusted gross margin, excluding Motif, was **37%** in Q2 Fiscal 2025[43](index=43&type=chunk) [Operating Expenses](index=9&type=section&id=OPERATING%20EXPENSES) Total operating expenses increased by 5% to $26.0 million in Q2 Fiscal 2025, with sales and marketing expenses rising by 39% due to increased trade investment, while general and administrative and R&D costs remained flat, and share-based compensation decreased by 53% due to the timing of equity award vesting Operating Expenses (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Expense Category | Q2-2025 ($ thousands) | Q2-2024 ($ thousands) | Change ($ thousands) | % Change | | :----------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | General and administrative | 14,967 | 14,929 | 38 | nm | | Sales and marketing | 7,523 | 5,403 | 2,120 | 39 % | | Research & development | 2,662 | 2,606 | 56 | nm | | Share-based compensation | 849 | 1,809 | (960) | (53)% | | **Total operating expenses** | **26,001** | **24,747** | **1,254** | **5 %** | - Sales and marketing expenses increased by **39% to $7.5 million**, but decreased as a percentage of net revenue from **14% to 11%**[46](index=46&type=chunk) - Share-based compensation decreased by **53% to $0.8 million**, primarily due to the timing of equity award vesting, with no new awards granted in Q2 Fiscal 2025[48](index=48&type=chunk) [Other (Income) / Expenses](index=10&type=section&id=OTHER%20(INCOME)%20/%20EXPENSES) Other (income)/expenses shifted significantly from an expense of $12.0 million in Q2 Fiscal 2024 to an income of $49.9 million in Q2 Fiscal 2025, primarily driven by a substantial gain from changes in the fair value of derivative liabilities, preferred shares, and other financial assets, as well as a gain from contingent consideration revaluation Other (Income)/Expenses (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Item | Q2-2025 ($ thousands) | Q2-2024 ($ thousands) | Change ($ thousands) | % Change | | :---------------------------------------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | Investment income, net of financing costs | (179) | (650) | (471) | (72)% | | Acquisition and transaction costs | 974 | (170) | (1,144) | nm | | Change in fair value of contingent consideration | (3,899) | — | 3,899 | (100)% | | Change in fair value of derivative liabilities, preferred shares and other financial assets | (47,155) | 12,529 | 59,684 | nm | | **Total other (income)/expenses** | **(49,933)** | **11,958** | **(61,891)** | **(518)%** | - A gain of **$47.2 million** was recognized from the change in fair value of derivative liabilities, preferred shares, and other financial assets in Q2 Fiscal 2025, compared to a **$12.5 million loss** in Q2 Fiscal 2024[54](index=54&type=chunk) - A gain of **$3.9 million** was recorded from the revaluation of contingent consideration related to the Motif acquisition in Q2 Fiscal 2025[53](index=53&type=chunk) - Acquisition and transaction costs increased to **$1.0 million**, primarily due to costs associated with the Motif and CPL acquisitions[51](index=51&type=chunk) [Adjusted EBITDA](index=10&type=section&id=ADJUSTED%20EBITDA) Adjusted EBITDA significantly improved to a positive $4.9 million in Q2 Fiscal 2025, a $6.0 million increase from a loss of $1.0 million in Q2 Fiscal 2024, with this turnaround primarily driven by higher net flower revenue, increased international sales, and improved adjusted gross margins - Adjusted EBITDA was **$4.9 million** in Q2 Fiscal 2025, compared to a loss of **$1.0 million** in Q2 Fiscal 2024, representing a **$6.0 million increase**[55](index=55&type=chunk) - The increase in Adjusted EBITDA is primarily attributed to higher net flower revenue, increased international sales, and improved adjusted gross margins[55](index=55&type=chunk) [Net Income (Loss)](index=10&type=section&id=NET%20INCOME%20(LOSS)) Organigram achieved a net income of $42.5 million in Q2 Fiscal 2025, a substantial improvement from a net loss of $27.1 million in Q2 Fiscal 2024, with this positive shift mainly due to higher adjusted gross margins and significant fair value gains on derivative liabilities, contingent considerations, preferred shares, and other financial assets - Net income for Q2 Fiscal 2025 was **$42.5 million**, a significant improvement from a net loss of **$27.1 million** in Q2 Fiscal 2024[55](index=55&type=chunk) - The increase in net income is primarily due to higher adjusted gross margins and higher fair value gains on derivative liabilities, contingent considerations, preferred shares, and other financial assets[55](index=55&type=chunk) [Key Developments During the Quarter and Subsequent to March 31, 2025](index=10&type=section&id=KEY%20DEVELOPMENTS%20DURING%20THE%20QUARTER%20AND%20SUBSEQUENT%20TO%20MARCH%2031%2C%202025) This section outlines key strategic investments and corporate actions, including the final BAT Investment tranche, company rebranding, and the CPL acquisition for U.S. hemp-derived THC beverage market entry [Strategic Investments and Corporate Actions](index=10&type=section&id=Strategic%20Investments%20and%20Corporate%20Actions) Organigram completed the final tranche of the $124.6 million Follow-on BAT Investment in February 2025, securing approximately $41.5 million, rebranded to Organigram Global Inc., and entered the U.S. and Canadian beverage categories through the acquisition of CPL in April 2025, with CPL beverages already available in multiple states and provinces - In February 2025, Organigram closed the third and final tranche of the **$124.6 million Follow-on BAT Investment**, receiving approximately **$41.5 million**[56](index=56&type=chunk) - In March 2025, shareholders approved the company's name change and rebranding to **Organigram Global Inc.**, reflecting its market leadership and international presence[57](index=57&type=chunk) - In April 2025, Organigram acquired CPL for an upfront consideration of approximately **$6.2 million**, entering the U.S. hemp-derived THC beverage market and the Canadian cannabis beverage category[58](index=58&type=chunk) - CPL beverages are currently available in **six Canadian provinces** and **10 U.S. states**, with further expansion planned by the end of calendar 2025[58](index=58&type=chunk) [Discussion of Operations](index=10&type=section&id=DISCUSSION%20OF%20OPERATIONS) This section details Organigram's operational facilities, production capabilities, and ongoing research and product development initiatives, including the Centre of Excellence collaboration with BAT [Operational Facilities and Production Capabilities](index=10&type=section&id=Operational%20Facilities%20and%20Production%20Capabilities) Organigram operates five key facilities, each specialized for different aspects of cannabis production, with the Moncton Campus harvesting 21,133 kg of dried flower in Q2 Fiscal 2025, the Winnipeg Facility producing over 4 million gummies monthly, Lac-Supérieur focusing on craft flower and hash, the Aylmer Facility handling advanced extraction and pre-roll production, and the London Facility serving as a centralized distribution hub - Moncton Campus, the flagship facility, harvested **21,133 kg of dried flower** in Q2 Fiscal 2025, equipped for in-house extraction, testing, and automated production[59](index=59&type=chunk)[61](index=61&type=chunk) - Winnipeg Facility is highly automated, capable of producing over **4 million gummies monthly**, including products utilizing nanoemulsion technology[62](index=62&type=chunk) - Lac-Supérieur Facility produces **2,400 kg of flower** and over **2 million packaged units of hash annually**, including SHRED X Rip Strip Hash[63](index=63&type=chunk) - Aylmer Facility has advanced extraction capabilities (hydrocarbon and CO2) and an estimated monthly production capacity of **1,200 kg of distillate**, **600 kg of hydrocarbon extract**, and **1.6 million pre-rolls**[64](index=64&type=chunk) - London Facility is a centralized warehouse and distribution hub in Ontario, aimed at optimizing fulfillment and reducing logistics costs[65](index=65&type=chunk) [Research and Product Development](index=11&type=section&id=RESEARCH%20AND%20PRODUCT%20DEVELOPMENT) Organigram emphasizes product innovation through R&D, including a collaboration with BAT at the Centre of Excellence (CoE) for next-generation cannabis products and fundamental science, which has developed nanoemulsion technology, clinically validated for faster onset in edibles, and is exploring minor cannabinoids and novel formulations, while plant science R&D focuses on unique, high-terpene, and high-THC cultivars, supported by a collaboration with Phylos - The **Centre of Excellence (CoE)**, a collaboration with BAT, focuses on R&D for next-generation cannabis products and fundamental cannabis science, with costs funded equally by Organigram and BAT[67](index=67&type=chunk) - The CoE's BioLab conducts advanced plant science research, leading to the introduction of minor cannabinoids into the product portfolio and the development of emulsions, vapor formulations, and flavor innovations[68](index=68&type=chunk) - A pharmacokinetics (PK) study validated **nanoemulsion technology (FAST™)**, enabling the commercial launch of Edison Sonics gummies with faster onset and higher peak cannabinoid levels, with plans to extend to beverages[69](index=69&type=chunk) - Plant science R&D in Moncton focuses on developing unique, high-terpene, and high-THC cultivars, leveraging the BioLab for quality, potency, and disease-resistance marker discovery, supported by Phylos collaboration[70](index=70&type=chunk) [Outlook](index=11&type=section&id=OUTLOOK) This section provides Organigram's market outlook, including projected cannabis sales, international export growth, and the rapidly expanding U.S. hemp-derived beverage market, alongside business strategy and industry trends [Market Size](index=11&type=section&id=Market%20Size) Organigram maintains a positive outlook on the cannabis market, projecting Canada-wide legal sales to reach $5.3 billion by 2028, with Canadian cannabis exports significantly growing to $218 million in 2024, driven by global reform and the pursuit of higher margins, and the company also entered the rapidly growing U.S. hemp-derived beverage market, projected to reach $4 billion by 2028 - Canada-wide legal cannabis sales are expected to total **$5.3 billion** in calendar 2028[72](index=72&type=chunk) - Canada's cannabis exports increased from **$8 million** in 2020 to approximately **$218 million** in 2024, driven by global cannabis reform and the pursuit of higher margins[72](index=72&type=chunk) - The U.S. hemp-derived beverages market is experiencing rapid growth, generating over **$1 billion** in retail sales and projected to reach **$4 billion** by 2028[73](index=73&type=chunk) [Business Outlook](index=12&type=section&id=Business%20Outlook) Organigram anticipates revenue growth from innovative products, particularly FAST™ nanoemulsion technology in gummies and future beverages, offering a competitive edge, with international sales expected to increase, supported by investments in Sanity Group and anticipated EU-GMP certification, and the company targets an average adjusted gross margin of 35% for Fiscal 2025, aiming for 40% in H2 Fiscal 2026, along with positive full-year Adjusted EBITDA and cash flow from operations - Organigram expects revenue growth from innovative products, especially through the commercialization of **FAST™ nanoemulsion technology** in Edison Sonics gummies, which offer faster onset and higher cannabinoid concentration[74](index=74&type=chunk) - International sales are projected to increase throughout Fiscal 2025, driven by diversified supply partners, investment in Germany's Sanity Group, and anticipated **EU-GMP certification** for the Moncton Campus[74](index=74&type=chunk) - The company expects adjusted gross margin to average approximately **35% for Fiscal 2025**, targeting **40% in the second half of Fiscal 2026**[75](index=75&type=chunk) - Organigram anticipates **positive full-year Fiscal 2025 Adjusted EBITDA**, surpassing Fiscal 2024 levels, and **positive cash flow from operations** before working capital changes[75](index=75&type=chunk) - Margin improvement opportunities include increased sales of higher-margin ready-to-consume products, growth in high-margin international sales (especially Germany), and continued operational efficiencies from Motif integration and seed-based production[77](index=77&type=chunk) [Industry Trends](index=13&type=section&id=Industry%20Trends) The cannabis industry remains highly competitive but is seeing stabilizing supply-demand dynamics due to consolidation and international market diversion, with consumer preferences favoring large-format value products, high THC potency, and innovation in formats like infused pre-rolls, vapes, and beverages, while regulatory scrutiny on THC potency labeling is increasing, pushing for greater transparency, and Organigram holds strong market positions in flower, pre-rolls, hash, and vapes, and is expanding into beverages - The cannabis industry is highly competitive, but supply and demand dynamics are stabilizing due to industry consolidation and diversion of surplus cultivation to international markets[78](index=78&type=chunk) - Consumer preferences show sustained demand for large-format value products, higher THC potency (especially in dried flower), and innovation in formats like infused pre-rolls, vapes, beverages, and edibles[78](index=78&type=chunk) - Regulatory efforts are intensifying to address inflated THC potency labeling, with initiatives from CSAC, Health Canada, and OCS to establish consistent testing protocols and verify potency claims[79](index=79&type=chunk) - Organigram holds the **3 market share in the flower category**, **2 in infused pre-rolls**, **1 in all pre-rolls**, **1 in hash**, and **3 in the gummy category** as of March 31, 2025[80](index=80&type=chunk)[81](index=81&type=chunk) - Through the Motif acquisition, Organigram leads in the vape category and is leveraging Greentank technology, while the CPL acquisition has given Organigram **5.6% of the Canadian beverage category** and entry into the U.S. hemp-derived THC beverage market[82](index=82&type=chunk)[84](index=84&type=chunk) [International Market](index=14&type=section&id=International%20Market) Organigram serves international medical supply customers in Australia, Germany, and the UK, with a strategic investment in Germany's Sanity Group to establish a foothold in the European market, and has submitted its EU-GMP certification application for its Moncton Campus, while the $124.6 million Follow-on BAT Investment includes $83 million earmarked for the 'Jupiter Pool' investment fund for future international expansion - Organigram serves international medical supply customers in Australia, Germany, and the UK, with a strategic investment in Germany's Sanity Group to establish a foothold in the European market[86](index=86&type=chunk) - The company submitted its **EU-GMP certification application** for its Moncton Campus in Q1 Fiscal 2024, completed the audit in November 2024, and is awaiting final certification[87](index=87&type=chunk) - The **$124.6 million Follow-on BAT Investment** includes **$83 million** earmarked for the 'Jupiter Pool' investment fund, with approximately **$23 million** already deployed into OBX and Sanity Group, and **$59 million** remaining for future international expansion[88](index=88&type=chunk)[89](index=89&type=chunk) [Financial Results and Review of Operations](index=15&type=section&id=FINANCIAL%20RESULTS%20AND%20REVIEW%20OF%20OPERATIONS) This section provides a detailed review of Organigram's financial results for the six months ended March 31, 2025, covering net revenue, gross margin, operating expenses, and net income, with a cautionary note on Non-IFRS Measures [Cautionary Note Regarding Non-IFRS Financial Measures](index=15&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20NON-IFRS%20FINANCIAL%20MEASURES) This section reiterates the cautionary statement regarding Non-IFRS Measures like Adjusted EBITDA and adjusted gross margin, emphasizing that these are not IFRS-compliant, may not be comparable across companies, and should be used as supplementary information, not as substitutes for IFRS measures - **Non-IFRS Measures** (Adjusted EBITDA, adjusted gross margin) are not calculated in accordance with IFRS and may not be comparable to similar data from other companies[91](index=91&type=chunk) - These measures are intended to provide additional information and should not be considered in isolation or as a substitute for IFRS performance measures[91](index=91&type=chunk) [Financial Highlights (Six Months Ended March 31, 2025 vs. 2024)](index=15&type=section&id=FINANCIAL%20HIGHLIGHTS) For the six months ended March 31, 2025, Organigram reported a significant increase in net revenue by 46% to $108.3 million and a turnaround to net income of $19.5 million from a loss, with Adjusted Gross Margin improving to 32%, Adjusted EBITDA turning positive at $6.3 million, and total assets growing by 62% to $537.9 million Financial Highlights (Six Months Ended March 31, 2025 vs. 2024) | Financial Results | 2025 ($ thousands) | 2024 ($ thousands) | $ Change | % Change | | :------------------------------------ | :----------------- | :----------------- | :------- | :------- | | Gross revenue | 169,569 | 113,695 | 55,874 | 49 % | | Net revenue | 108,330 | 74,083 | 34,247 | 46 % | | Cost of sales | 74,428 | 53,310 | 21,118 | 40 % | | Gross margin before fair value adjustments | 33,902 | 20,773 | 13,129 | 63 % | | Gross margin % before fair value adjustments | 31 % | 28 % | 3 % | | | Gross margin | 32,232 | 16,300 | 15,932 | 98 % | | Operating expenses | 46,616 | 46,786 | (170) | nm | | Net income (loss) | 19,499 | (42,825) | 62,324 | nm | | Net earnings (loss) per common share, basic | 0.161 | (0.497) | 0.658 | nm | | Net cash used in operating activities | (20,765) | (1,291) | 19,474 | 1,508 % | | Adjusted Gross Margin | 34,614 | 22,805 | 11,809 | 52 % | | Adjusted Gross Margin % | 32 % | 31 % | 1 % | | | Adjusted EBITDA | 6,318 | (909) | 7,227 | nm | | **Financial Position** | | | | | | Working capital | 182,879 | 138,228 | 44,651 | 32 % | | Inventory and biological assets | 115,049 | 83,264 | 31,785 | 38 % | | Total assets | 537,903 | 331,778 | 206,125 | 62 % | | Non-current financial liabilities | 43,266 | 34,439 | 8,827 | 26 % | [Net Revenue](index=16&type=section&id=NET%20REVENUE) For the six months ended March 31, 2025, net revenue increased by 46% to $108.3 million, primarily due to higher international and recreational cannabis sales, including contributions from the Motif acquisition, with the average selling price of recreational flower also increasing to $1.72 per gram, reflecting a more balanced supply and demand - Net revenue for the six months ended March 31, 2025, was **$108.3 million**, a **46% increase** from **$74.1 million** in the comparative period[96](index=96&type=chunk) - The increase was primarily driven by higher international revenue, recreational revenue, and contributions from Motif's sales post-acquisition[96](index=96&type=chunk) - The average selling price (ASP) of recreational flower increased to **$1.72 per gram** from **$1.65 per gram**, indicating a more balanced supply and demand dynamic[97](index=97&type=chunk) - Sales volumes of all flower in grams increased by **17% to 36,961 kg**, primarily due to increased adult-use recreational and international sales[98](index=98&type=chunk) [Revenue Composition](index=16&type=section&id=REVENUE%20COMPOSITION) For the six months ended March 31, 2025, recreational flower remained the largest revenue category at $46.4 million, while recreational vapes saw a substantial increase to $22.5 million, and international flower and oil sales nearly tripled to $9.4 million, with recreational edibles and ingestible extracts/oil experiencing declines Net Revenue Composition by Product Category (Six Months Ended March 31, 2025 vs. 2024) | Product Category | 2025 ($ thousands) | 2024 ($ thousands) | | :------------------------------------ | :----------------- | :----------------- | | Recreational Flower, net of excise duty | 46,402 | 39,401 | | Recreational Vapes, net of excise duty | 22,488 | 1,832 | | Recreational Hash, net of excise duty | 5,622 | 5,694 | | Recreational Infused Pre-rolls, net of excise duty | 9,905 | 5,794 | | Recreational Edibles, net of excise duty | 10,453 | 11,398 | | Recreational Ingestible Extracts and Oil, net of excise duty | 348 | 3,426 | | Medical, net of excise duty | 1,206 | 894 | | International Flower and Oil | 9,399 | 3,209 | | Wholesale and Other | 2,507 | 2,435 | | **Total Net Revenue** | **108,330** | **74,083** | - Recreational Vapes revenue saw a significant increase from **$1.8 million** in 2024 to **$22.5 million** in 2025[99](index=99&type=chunk) - International Flower and Oil revenue nearly tripled from **$3.2 million to $9.4 million**[99](index=99&type=chunk) [Cost of Sales and Gross Margin](index=17&type=section&id=COST%20OF%20SALES%20AND%20GROSS%20MARGIN) Gross margin for the six months ended March 31, 2025, nearly doubled to $32.2 million, driven by higher recreational cannabis and international sales, lower cultivation costs, and increased unrealized gains on biological assets, however, Motif's sales contributed lower margins post-acquisition, and the adjusted gross margin for Q2 Fiscal 2025 was 33%, with Organigram's standalone margin at 37% - Gross margin for the six months ended March 31, 2025, was **$32.2 million**, a **98% increase** from **$16.3 million** in the comparative period[100](index=100&type=chunk) - Key factors impacting gross margin include higher recreational cannabis revenue, increased international sales, lower cultivation and post-harvest costs, and higher unrealized gains on biological assets[100](index=100&type=chunk) - Unrealized gain on changes in the fair value of biological assets was **$25.6 million** for the six months ended March 31, 2025, up from **$18.5 million**[101](index=101&type=chunk) - Adjusted gross margin for Q2 Fiscal 2025 was **33%**, reflecting Motif's margin before full synergy realization, while Organigram's standalone margin was **37%**[105](index=105&type=chunk) [Operating Expenses](index=17&type=section&id=OPERATING%20EXPENSES) Total operating expenses for the six months ended March 31, 2025, remained flat at $46.6 million, with sales and marketing expenses increasing by 33% due to higher trade investments, while R&D costs decreased by 29% due to reduced activity under the BAT PDC Agreement and Motif acquisition synergies, and share-based compensation also decreased by 41% due to fewer immediate vesting equity awards Operating Expenses (Six Months Ended March 31, 2025 vs. 2024) | Expense Category | 2025 ($ thousands) | 2024 ($ thousands) | Change ($ thousands) | % Change | | :----------------------- | :----------------- | :----------------- | :------- | :------- | | General and administrative | 26,200 | 26,206 | (6) | nm | | Sales and marketing | 13,327 | 9,998 | 3,329 | 33 % | | Research and development | 5,031 | 7,073 | (2,042) | (29)% | | Share-based compensation | 2,058 | 3,509 | (1,451) | (41)% | | **Total operating expenses** | **46,616** | **46,786** | **(170)** | **nm** | - Sales and marketing expenses increased by **33% to $13.3 million**, driven by higher trade investments with retail partners[108](index=108&type=chunk) - R&D costs decreased by **29% to $5.0 million**, primarily due to reduced activity under the PDC Agreement with BAT and headcount reductions from Motif acquisition synergies[109](index=109&type=chunk) - Share-based compensation expense decreased by **41% to $2.1 million**, mainly due to the absence of immediate vesting equity awards granted in the prior period[110](index=110&type=chunk) [Other (Income) Expenses](index=18&type=section&id=OTHER%20(INCOME)%20EXPENSES) Other (income)/expenses shifted from a $12.4 million expense in the prior six-month period to a $33.8 million income for the six months ended March 31, 2025, with this significant change primarily driven by a substantial fair value gain on derivative liabilities, preferred shares, and other financial assets, despite increased acquisition and transaction costs Other (Income)/Expenses (Six Months Ended March 31, 2025 vs. 2024) | Item | 2025 ($ thousands) | 2024 ($ thousands) | Change ($ thousands) | % Change | | :---------------------------------------------------- | :----------------- | :----------------- | :------- | :------- | | Investment income, net of financing costs | (1,004) | (1,172) | (168) | (14)% | | Acquisition and transaction costs | 5,478 | 420 | 5,058 | 1,204 % | | Change in fair value of contingent consideration | (3,899) | (50) | 3,849 | 7,698 % | | Change in fair value of derivative liabilities, preferred shares and other financial assets | (32,660) | 12,985 | 45,645 | nm | | **Total other (income)/expenses** | **(33,777)** | **12,369** | **(46,146)** | **nm** | - A fair value gain of **$32.7 million** was recognized on derivative liabilities, preferred shares, and other financial assets, a significant improvement from a **$13.0 million loss** in the prior period[116](index=116&type=chunk) - Acquisition and transaction costs increased substantially to **$5.5 million**, mainly due to due diligence, regulatory filings, and integration expenses for the Motif and CPL acquisitions[115](index=115&type=chunk) [Net Income](index=18&type=section&id=NET%20INCOME) Organigram reported a net income of $19.5 million for the six months ended March 31, 2025, a significant turnaround from a net loss of $42.8 million in the prior year, with this primarily driven by higher gross margins and substantial fair value gains on derivative liabilities, preferred shares, and other financial assets - Net income for the six months ended March 31, 2025, was **$19.5 million ($0.161 per Common Share basic)**, compared to a net loss of **$42.8 million ($0.497 per Common Share basic and diluted)** in the comparative period[117](index=117&type=chunk) - The increase in net income is primarily attributable to higher gross margins and higher fair value gains recognized on Top-Up-Rights, preferred shares, share warrants, and other financial assets[117](index=117&type=chunk) [Summary of Quarterly Results](index=19&type=section&id=SUMMARY%20OF%20QUARTERLY%20RESULTS) This section summarizes Organigram's quarterly financial and operational trends, including net revenue, net income, and Adjusted EBITDA, highlighting fluctuations and key drivers over the past eight quarters [Quarterly Financial and Operational Trends](index=19&type=section&id=Quarterly%20Financial%20and%20Operational%20Trends) Organigram's net revenue showed fluctuations, with Q2 Fiscal 2025 reaching the highest level in eight quarters at $65.6 million, driven by record international sales and increased recreational revenue, while net income also saw a significant positive shift to $42.5 million in Q2 Fiscal 2025, primarily due to higher gross margins and fair value gains on financial instruments, contrasting with prior quarters' losses Summary of Quarterly Financial and Operational Results | Metric | Q3-F23 | Q4-F23 | Q1-F24 | Q2-F24 | Q3-F24 | Q4-F24 | Q1-F25 | Q2-F25 | | :------------------------------------ | :----- | :----- | :----- | :----- | :----- | :----- | :----- | :----- | | Recreational cannabis revenue (net of excise) ($ thousands) | 29,202 | 44,596 | 34,425 | 33,118 | 36,467 | 38,839 | 38,558 | 56,658 | | Medical, international, wholesale and other revenue ($ thousands) | 3,583 | 1,444 | 2,030 | 4,510 | 4,593 | 5,859 | 4,172 | 8,942 | | Net revenue ($ thousands) | 32,785 | 46,040 | 36,455 | 37,628 | 41,060 | 44,698 | 42,730 | 65,600 | | Net income (loss) ($ thousands) | (213,451) | (32,991) | (15,750) | (27,075) | 2,818 | (5,433) | (22,957) | 42,456 | | Net earning (loss) per common share, basic ($) | (2.708) | (0.420) | (0.194) | (0.297) | 0.027 | (0.050) | (0.202) | 0.329 | | Harvest (kg) - dried flower | 18,604 | 28,071 | 19,946 | 20,962 | 21,420 | 23,323 | 21,087 | 21,133 | | Employee headcount () | 923 | 935 | 984 | 987 | 914 | 875 | 1,241 | 1,150 | - Net revenue in Q2 Fiscal 2025 reached its **highest level** in the preceding eight quarters, driven by record international sales and increased recreational net revenue[119](index=119&type=chunk) - Net income in Q2 Fiscal 2025 was **$42.5 million**, a significant increase from a net loss of **$22.9 million** in Q1 Fiscal 2025, primarily due to higher gross margins and fair value gains on derivative liabilities and other financial assets[120](index=120&type=chunk) [Adjusted EBITDA](index=21&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA showed a positive trend, reaching $4.9 million in Q2 Fiscal 2025, up from $1.4 million in Q1 Fiscal 2025 and a loss in Q2 Fiscal 2024, with this improvement primarily due to higher international sales and improved adjusted gross margins, following periods of losses and fluctuations Adjusted EBITDA Reconciliation (Quarterly) | Metric | Q3-F23 | Q4-F23 | Q1-F24 | Q2-F24 | Q3-F24 | Q4-F24 | Q1-F25 | Q2-F25 | | :------------------------------------ | :----- | :----- | :----- | :----- | :----- | :----- | :----- | :----- | | Net (loss) income as reported ($ thousands) | (213,451) | (32,991) | (15,750) | (27,075) | 2,818 | (5,433) | (22,957) | 42,456 | | Adjusted EBITDA ($ thousands) | (2,914) | (1,890) | 136 | (1,045) | 3,465 | 5,860 | 1,410 | 4,908 | | Adjusted EBITDA Margin % | (9)% | (4)% | — % | (3)% | 8 % | 13 % | 3 % | 7 % | - Adjusted EBITDA increased to **$4.9 million** in Q2 Fiscal 2025, driven by higher international sales and improved adjusted gross margins[126](index=126&type=chunk) - The company returned to a positive Adjusted EBITDA position in Q1 Fiscal 2024 due to higher adjusted gross margin from lower cultivation costs and Edison Jolts sales[126](index=126&type=chunk) [Balance Sheet, Liquidity and Capital Resources](index=21&type=section&id=BALANCE%20SHEET%2C%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section reviews Organigram's financial position, including cash flows, working capital, and total assets as of March 31, 2025, highlighting changes due to acquisitions and financing activities [Financial Position and Cash Flows](index=21&type=section&id=Financial%20Position%20and%20Cash%20Flows) As of March 31, 2025, Organigram's total cash decreased to $83.4 million, primarily due to $64.9 million in cash payments for the Motif and CPL acquisitions, while total assets increased by 32% to $537.9 million, and working capital decreased by 12%, with cash used in operating activities increasing significantly, mainly due to working capital investments for anticipated business requirements Selected Balance Sheet Highlights (March 31, 2025 vs. September 30, 2024) | Metric | March 31, 2025 ($ thousands) | September 30, 2024 ($ thousands) | % Change | | :------------------------------------ | :--------------------------- | :----------------------------- | :------- | | Cash, restricted cash and short-term investments | 83,373 | 133,426 | (38)% | | Inventories | 101,341 | 67,351 | 50 % | | Working capital | 182,879 | 208,897 | (12)% | | Total assets | 537,903 | 407,860 | 32 % | | Total current and long-term debt | 55 | 85 | (35)% | | Non-current financial liabilities | 43,266 | 34,439 | 26 % | | Total shareholders' equity | 390,566 | 305,989 | 28 % | - Total cash (including restricted cash and short-term investments) decreased by **38% to $83.4 million**, primarily due to a **$64.9 million cash payment** for the Motif and CPL acquisitions[128](index=128&type=chunk) - Cash used in operating activities after working capital changes increased to **$16.6 million** for the three months and **$20.8 million** for the six months ended March 31, 2025, mainly due to incremental working capital investments[132](index=132&type=chunk) - Cash provided by financing activities was **$40.7 million** for the three months and **$40.5 million** for the six months, primarily from the Follow-on BAT Investment[133](index=133&type=chunk) - Cash used in investing activities increased significantly to **$71.9 million** for the six months, mainly due to **$59.2 million** in cash consideration for subsidiary acquisitions[134](index=134&type=chunk) [Off Balance Sheet Arrangements](index=22&type=section&id=OFF%20BALANCE%20SHEET%20ARRANGEMENTS) This section confirms the absence of any off-balance sheet arrangements for Organigram during the three and six months ended March 31, 2025 [Absence of Off-Balance Sheet Arrangements](index=22&type=section&id=Absence%20of%20Off-Balance%20Sheet%20Arrangements) Organigram reported no off-balance sheet arrangements during the three and six months ended March 31, 2025 - There were no off-balance sheet arrangements during the three and six months ended March 31, 2025[135](index=135&type=chunk) [Related Party Transactions](index=22&type=section&id=RELATED%20PARTY%20TRANSACTIONS) This section details Organigram's related party transactions, including key management compensation and significant transactions with associates like BAT under the Product Development Collaboration Agreement [Management and Board Compensation](index=22&type=section&id=MANAGEMENT%20AND%20BOARD%20COMPENSATION) Total key management compensation decreased for both the three and six months ended March 31, 2025, primarily due to a reduction in share-based compensation as fewer equity awards were granted compared to the prior year Key Management and Board of Directors Compensation | Compensation Type | Three Months Ended March 31, 2025 ($ thousands) | Three Months Ended March 31, 2024 ($ thousands) | Six Months Ended March 31, 2025 ($ thousands) | Six Months Ended March 31, 2024 ($ thousands) | | :------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Salaries and bonus | 1,324 | 1,479 | 2,626 | 3,050 | | Share-based compensation | 646 | 1,450 | 1,421 | 2,387 | | **Total key management compensation** | **1,970** | **2,929** | **4,047** | **5,437** | - Share-based compensation for key management decreased significantly, with no stock options, RSUs, or PSUs granted in the three months ended March 31, 2025, compared to the prior year[137](index=137&type=chunk) [Significant Transactions with Associates and Joint Operations](index=23&type=section&id=SIGNIFICANT%20TRANSACTIONS%20WITH%20ASSOCIATES%20AND%20JOINT%20OPERATIONS) Organigram engages in transactions with related parties, including BAT under the Product Development Collaboration (PDC) Agreement, with both companies contributing equally to the Centre of Excellence (CoE), and Organigram's direct expenses for the CoE decreasing in the current period, while the final tranche of the $124.6 million Follow-on BAT Investment was closed in February 2025, resulting in the issuance of Common and Preferred Shares to BAT - Under the PDC Agreement with BAT, Organigram incurred **$1.5 million** (three months) and **$2.9 million** (six months) in direct expenses for the Centre of Excellence (CoE) in 2025, a decrease from 2024[140](index=140&type=chunk) - The balance receivable from BAT as at March 31, 2025, was **$2.0 million**[141](index=141&type=chunk) - In February 2025, Organigram closed the third and final tranche of the **$124.6 million Follow-on BAT Investment**, issuing **7,562,447 Common Shares** and **5,330,728 Preferred Shares** to BAT[142](index=142&type=chunk) [Fair Value Measurements](index=23&type=section&id=FAIR%20VALUE%20MEASUREMENTS) This section explains Organigram's fair value measurements for financial instruments and biological assets, detailing the three-level hierarchy and unobservable inputs used for valuation models [(i) Financial Instruments](index=23&type=section&id=(i)%20Financial%20Instruments) Organigram classifies financial instruments at fair value using a three-level hierarchy, with many key valuations (e.g., investments in WHC, Phylos, OBX, Sanity Group, Top-up Rights, Motif's contingent consideration, CPL contingent consideration, Preferred Shares) relying on Level 3 unobservable inputs and complex models like binomial lattice and Monte Carlo, while derivative warrant liabilities are classified as Level 1 and 2, with fair value changes recognized in the statement of operations - Fair value measurements are classified into a three-level hierarchy: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (unobservable inputs)[143](index=143&type=chunk)[148](index=148&type=chunk) - Investments in WHC, Phylos, OBX, Sanity Group, Top-up Rights, and contingent considerations for Motif and CPL are primarily based on **Level 3 unobservable inputs**, using models like market-based approach, Cox-Ross-Rubinstein binomial lattice, and Monte Carlo pricing[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Derivative warrant liabilities are based on **Level 1 and 2 inputs** using a Black-Scholes option pricing model, with fair value changes recognized in the statement of operations[151](index=151&type=chunk)[159](index=159&type=chunk) - The fair value of Top-up Rights for BAT was revalued to **$4.8 million** as of March 31, 2025, with a decrease in estimated fair value change of **$20.5 million** for the three months[168](index=168&type=chunk) - The commitment to issue Preferred Shares and the Preferred Shares themselves are classified as derivative liabilities and liabilities, respectively, measured at FVTPL, with fair value gains recognized in the current period[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [(ii) Biological Assets](index=27&type=section&id=(ii)%20Biological%20Assets) Biological assets, consisting of cannabis plants, are measured at fair value less costs to sell up to harvest, forming the basis for finished goods inventory cost, with the fair value determined using a model that estimates harvest yield, average selling price, wastage, post-harvest costs, and stage of completion, all relying on Level 3 unobservable inputs, and as of March 31, 2025, expected yield was 28,651 kg, with an unrealized gain on fair value changes of $25.6 million - Biological assets (cannabis plants) are measured at fair value less costs to sell up to harvest, which then becomes the cost basis for finished goods inventories[180](index=180&type=chunk) - The fair value model uses **Level 3 unobservable inputs**: average selling price per gram (**$1.63**), expected average yield per plant (**169 grams**), wastage, post-harvest costs, and stage of completion[183](index=183&type=chunk)[184](index=184&type=chunk) - As of March 31, 2025, the expected yield from biological assets is **28,651 kg**, and an unrealized gain on changes in fair value of biological assets of **$25.6 million** was recognized[181](index=181&type=chunk)[182](index=182&type=chunk) [Outstanding Share Data](index=28&type=section&id=OUTSTANDING%20SHARE%20DATA) This section summarizes Organigram's outstanding share data, including common shares, preferred shares, options, warrants, and other securities, as of March 31, 2025, and May 7, 2025 [(i) Outstanding Shares, Warrants and Options and Other Securities](index=28&type=section&id=(i)%20Outstanding%20Shares%2C%20Warrants%20and%20Options%20and%20Other%20Securities) As of March 31, 2025, Organigram had 133.8 million Common Shares issued and outstanding, along with 13.8 million Preferred Shares, with the total fully diluted shares standing at 177.4 million, including options, warrants, Top-up Rights, RSUs, and PSUs Outstanding Shares, Warrants and Options and Other Securities | Security Type | March 31, 2025 | May 7, 2025 | | :------------------------------------ | :------------- | :---------- | | Common shares issued and outstanding | 133,835,963 | 133,883,932 | | Preferred shares | 13,794,163 | 13,794,163 | | Options | 2,621,774 | 2,595,099 | | Warrants | 4,450,500 | 4,450,500 | | Top-up Rights | 17,533,616 | 17,498,926 | | Restricted share units | 3,505,128 | 3,443,280 | | Performance share units | 1,704,931 | 1,679,640 | | **Total fully diluted shares** | **177,446,075** | **177,345,540** | - Preferred shares are eligible for conversion into Common Shares, with **13,794,163 original preferred shares** converting into one common share each, plus accretion amounts[186](index=186&type=chunk) [Critical Accounting Estimates and Judgments](index=28&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES%20AND%20JUDGMENTS) This section discusses Organigram's critical accounting estimates and judgments, noting no significant changes except for the Motif acquisition, and the non-material impact of recent IFRS amendments [Accounting Estimates and New Pronouncements](index=28&type=section&id=Accounting%20Estimates%20and%20New%20Pronouncements) The preparation of financial statements requires management to make significant judgments and estimates, which are reviewed continuously, with no changes to critical accounting estimates in Q2 Fiscal 2025, except for a new estimate related to the Motif acquisition, and recent IFRS amendments regarding liability classification (IAS 1) and lease liability in sale and leaseback (IFRS 16) did not materially impact the company, nor did amendments to IAS 7 and IFRS 7 on supplier finance arrangements - No changes in critical accounting estimates occurred during the three months ended March 31, 2025, except for a new estimate and judgment related to the Motif acquisition[189](index=189&type=chunk) - Amendments to **IAS 1 (Classification of Liabilities)** and **IFRS 16 (Lease Liability in Sale and Leaseback)** did not have a material impact on the Company's interim financial statements[191](index=191&type=chunk)[192](index=192&type=chunk) - Amendments to **IAS 7 and IFRS 7 (Supplier Finance Arrangements)** are not expected to impact the Company's consolidated financial statements[194](index=194&type=chunk) [Product Development Collaboration](index=29&type=section&id=PRODUCT%20DEVELOPMENT%20COLLABORATION) This section details Organigram's Product Development Collaboration (PDC) with BAT, outlining the joint operation for the Centre of Excellence (CoE) and equal funding contributions [BAT Product Development Collaboration](index=29&type=section&id=BAT%20Product%20Development%20Collaboration) Organigram's Product Development Collaboration (PDC) with BAT involves a joint operation for the Centre of Excellence (CoE), with both companies contributing equally to costs, and a portion of BAT's initial investment is reserved for Organigram's funding obligations, with Organigram recognizing $1.1 million and $2.1 million, respectively, in CoE expenses for the three and six months ended March 31, 2025 - The **PDC Agreement with BAT** involves a joint operation for the **Centre of Excellence (CoE)**, with costs funded equally by Organigram and BAT[195](index=195&type=chunk)[196](index=196&type=chunk) - A balance of **$7.3 million** in restricted funds related to the CoE remained as of March 31, 2025[195](index=195&type=chunk) - Organigram recognized **$1.1 million** (three months) and **$2.1 million** (six months) of CoE expenses within research and development in the interim statements of operations[196](index=196&type=chunk) [Acquisition of Subsidiaries](index=29&type=section&id=ACQUISITION%20OF%20SUBSIDIARIES) This section details Organigram's acquisitions of Motif and CPL, outlining the consideration, assets, liabilities, and goodwill, along with their strategic implications [i. Acquisition of Motif](index=29&type=section&id=i.%20Acquisition%20of%20Motif) On December 6, 2024, Organigram acquired Motif for $90 million upfront ($50 million cash, $40 million in common shares), plus potential contingent consideration of $10 million, with this acquisition aiming to leverage combined competitive advantages and generate economies of scale, and Motif contributed $42.8 million in gross revenue and $1.2 million in net income for the three months ended March 31, 2025 - Organigram acquired **100% of Motif** on December 6, 2024, for **$90 million upfront ($50 million cash, $40 million in common shares)**, plus potential contingent consideration of **$10 million**[197](index=197&type=chunk) - Motif contributed **$42.8 million in gross revenue** and **$1.2 million in net income** to consolidated results for the three months ended March 31, 2025[198](index=198&type=chunk) - The fair value of the **17,233,950 Common Shares** issued was **$39.1 million**[199](index=199&type=chunk) Provisional Recognition of Motif Assets Acquired and Liabilities Assumed | Item | Fair Value on Acquisition ($ thousands) | | :------------------------------------ | :------------------------------------ | | **Assets** | | | Accounts and other receivable | 21,618 | | Cash | 5,055 | | Inventories | 24,474 | | Property, plant and equipment | 19,864 | | Right-of-use assets | 5,744 | | Intangible assets | 34,330 | | Prepaid expenses and deposits | 1,338 | | **Total assets** | **112,423** | | **Liabilities** | | | Accounts payable and accrued liabilities | 27,708 | | Lease liability | 5,681 | | Other liabilities | 12,056 | | Loan payable | 236 | | Deferred income taxes | 10,100 | | **Total liabilities** | **55,781** | | **Total identifiable net assets at fair value** | **56,642** | | **Consideration transferred** | | | Cash consideration | 52,171 | | Equity instruments (17,233,950 Common Shares) | 39,121 | | Contingent consideration | 4,472 | | Settlement of pre-acquisition relationship | (89) | | Working capital adjustment | (541) | | **Total consideration transferred** | **95,134** | | **Goodwill arising on acquisition** | **38,492** | - Goodwill of **$38.5 million** arose from the acquisition, representing expected synergies, future income, and growth[201](index=201&type=chunk) - A gain of **$3.9 million** was recognized from the change in fair valuation of Motif's contingent consideration during the three and six months ended March 31, 2025[203](index=203&type=chunk) [ii. Acquisition of CPL](index=30&type=section&id=ii.%20Acquisition%20of%20CPL) On March 31, 2025, Organigram acquired CPL for $6 million upfront, with potential additional contingent consideration of up to $24 million tied to sales milestones and earnout targets, with this acquisition representing a business combination under IFRS 3, bringing in formulations, distributor relationships, and an organized workforce, and goodwill of $11.3 million arose from the acquisition - Organigram acquired **100% of CPL** on March 31, 2025, for **$6 million upfront**, with potential contingent consideration of up to **$24 million** based on sales milestones and earnout targets[204](index=204&type=chunk)[205](index=205&type=chunk) - The acquisition was determined to be a business under **IFRS 3**, including inputs (formulations), distributor relationships, and an organized workforce[206](index=206&type=chunk) Provisional Recognition of CPL Assets Acquired and Liabilities Assumed | Item | Fair Value on Acquisition ($ thousands) | | :------------------------------------ | :------------------------------------ | | **Assets** | | | Accounts and other receivable | 1,243 | | Cash | 118 | | Inventories | 1,072 | | Intangible assets | 15,166 | | Prepaid expenses and deposits | 13 | | **Total assets** | **17,612** | | **Liabilities** | | | Accounts payable and accrued liabilities | 1,119 | | Deferred income taxes | 3,564 | | **Total liabilities** | **4,683** | | **Total identifiable net assets at fair value** | **12,929** | | **Consideration transferred** | | | Cash consideration | 4,893.199 | | Contingent consideration | 18,397 | | Working capital adjustment | 957 | | **Total consideration transferred** | **24,247** | | **Goodwill arising on acquisition** | **11,318** | - Goodwill of **$11.3 million** arose from the acquisition, representing expected synergies, future income, and growth[208](index=208&type=chunk) - The contingent consideration includes milestone payments of **$2 million each** for achieving **US$500** and **US$1 million** in cumulative U.S. hemp-derived beverage sales by June 30, 2025, and September 30, 2025, respectively[209](index=209&type=chunk)[210](index=210&type=chunk) - Earnout payments are based on **2.5 times trailing twelve months' net revenue** to September 30, 2025, and September 30, 2026, with **50% payable in cash** and **50% in company shares**[218](index=218&type=chunk) [Contingent Liabilities](index=32&type=section&id=CONTINGENT%20LIABILITIES) This section describes Organigram's policy for recognizing and estimating loss contingency provisions, emphasizing the use of reasonable estimates and continuous review at each reporting date [Recognition and Estimation of Loss Contingencies](index=32&type=section&id=Recognition%20and%20Estimation%20of%20Loss%20Contingencies) Organigram recognizes loss contingency provisions for probable losses when a reasonable estimate can be made, using the best estimate within a range or the mid-point if no single amount is better, with these estimates reviewed and revised at each reporting date - Loss contingency provisions are recognized for probable losses when management can reasonably estimate the loss[213](index=213&type=chunk) - Estimates are based on the best probable loss within a range, or the mid-point if no single amount is superior, and are reviewed and revised at each reporting date[213](index=213&type=chunk) [Disclosure Controls and Procedures and Internal Control Over Financial Reporting](index=32&type=section&id=DISCLOSURE%20CONTROLS%20AND%20PROCEDURES%20AND%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) This section reports on the ineffectiveness of Organigram's Disclosure Controls and Procedures (DCP) and Internal Control Over Financial Reporting (ICFR) due to material weaknesses, particularly in general IT controls, and ongoing remediation efforts [Effectiveness of Controls and Remediation Efforts](index=32&type=section&id=Effectiveness%20of%20Controls%20and%20Remediation%20Efforts) Organigram's Disclosure Controls and Procedures (DCP) and Internal Control Over Financial Reporting (ICFR) were deemed ineffective as of March 31, 2025, due to identified material weaknesses, particularly in general IT controls, and while a material weakness related to biological assets and inventory spreadsheets was remediated, efforts continue to address the remaining IT control deficiencies, with full remediation expected by the end of Fiscal 2025 - The Company's independent registered public accounting firm, PKF O'Connor Davies, issued an **adverse report** on the effectiveness of ICFR for the year ended September 30, 2024[215](index=215&type=chunk) - Management concluded that **DCP were not effective** as of March 31, 2025, due to material weaknesses in ICFR[216](index=216&type=chunk) - A material weakness was identified in **ineffective general IT controls** related to security, administration, and monitoring of service organizations[224](index=224&type=chunk) - A material weakness related to management review controls over biological assets and inventory complex spreadsheets was successfully **remediated in Q1 Fiscal 2025**[222](index=222&type=chunk)[226](index=226&type=chunk) - Remedial activities for remaining material weaknesses are in progress, with full remediation expected before the end of Fiscal 2025[225](index=225&type=chunk)[228](index=228&type=chunk) - The scope of evaluation for DCP and ICFR excluded controls over recently acquired entities: Motif (acquired December 6, 2024), CPL, and CPL USA (both acquired March 31, 2025)[219](index=219&type=chunk) [Risk Factors](index=35&type=section&id=RISK%20FACTORS) This section outlines Organigram's key risk factors, including credit, liquidity, market, and concentration risks, as well as risks related to trade policies, third-party data, international operations, and information systems [(i) Credit Risk](index=35&type=section&id=(i)%20Credit%20Risk) Organigram faces credit risk from deposits, investments, and receivables, but mitigates this by dealing with financially sound counterparties and obtaining guarantees for other receivables, with the maximum exposure to credit risk for cash, investments, and receivables being approximately $180.9 million as of March 31, 2025 - Credit risk arises from deposits, short-term investments, trade and other receivables, and restricted cash[232](index=232&type=chunk) - Risk is mitigated by dealing with financially sound counterparties and obtaining guarantees for non-trade receivables[232](index=232&type=chunk) - Maximum exposure to credit ri

Group 1 - Alan Brochstein is a pioneer in the cannabis investment sector, having focused exclusively on this industry since 2007 [1] - He founded AB Analytical Services to provide independent consulting to registered investment advisors and has been managing partner of New Cannabis Ventures since 2015, which offers financial information in the cannabis industry [1] - Alan has been leading the investing group 420 Investor since 2013, which focuses on publicly-traded cannabis stocks and moved to Seeking Alpha in 2023 [2] Group 2 - The 420 Investor group covers 23 cannabis stocks, providing investment news, earnings report previews, and post-report analyses [2] - Features of the group include 2 model portfolios, 10 weekly videos with chart analysis, 3 weekly summary pieces, a monthly newsletter, and a chat service for questions [2] - A sub-service called The Big Picture is offered to help investors stay updated on the cannabis sector [2]

Financial Data and Key Metrics Changes - The company reported a net revenue increase of 17% to $42.7 million compared to Q1 of the previous year, driven by growth in flagship brands SHRED and BOXHOT [32][34] - Adjusted gross margin increased to $14.3 million or 33%, up from 31% in the prior year, attributed to increased international sales and operational efficiencies [34] - The net loss for the quarter was $23 million compared to a net loss of $15.8 million in Q1 fiscal 2024, with adjustments indicating a net loss of $4.1 million when excluding fair value losses [40][41] Business Line Data and Key Metrics Changes - The recreational business grew by 15%, with significant contributions from both core and newly acquired product lines [32][33] - The company expanded its national market share by 500 basis points year-over-year, with notable growth in vapes and pre-rolls, where it achieved the number one position [11][12] - Supporting brands like Big Bag O' Buds and Debunk saw impressive growth, doubling their market share compared to Q1 last year [10][11] Market Data and Key Metrics Changes - The Canadian cannabis industry grew by 7.7% year-over-year in Q1, driven by strong demand in pre-rolls and vapes [11] - International sales reached $3.3 million, reflecting a 2.3 times year-over-year increase [34] - The company anticipates continued growth in international sales throughout fiscal 2025, supported by strategic investments and partnerships [30] Company Strategy and Development Direction - The integration of the Motif acquisition is a key focus, with expected operational synergies of $10 million over 24 months [22][38] - The company is investing in seed-based cultivation to enhance efficiency and reduce costs, with plans to increase flower output significantly [20][25] - International expansion remains a priority, particularly in the German market, with a $21 million investment in Sanity Group to capitalize on growth opportunities [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving operational efficiencies and market position improvements, anticipating a stabilization of adjusted gross margin around 35% in fiscal 2025 [35][44] - The company is optimistic about the international market growth, particularly in Germany, and plans to leverage its EU GMP certification to enhance margins [29][72] - Management highlighted the potential for favorable changes in government policy regarding cannabis regulation and taxation, which could benefit the industry [76][81] Other Important Information - The company plans to invest $8 million to $10 million in sustaining capital expenditures during fiscal 2025, alongside an additional $16 million for capacity enhancement projects [42] - Cash position as of December 31 was $71.2 million, with negligible debt, indicating a strong balance sheet [41][43] Q&A Session Summary Question: Insights on international market growth and investment opportunities - Management highlighted the growth of the German medical market and the potential for increased demand through strategic partnerships, particularly with Sanity Group [51][72] Question: Pro-forma financials and profitability trends - Management indicated that consolidated EBITDA is expected to exceed last year's figures, with significant synergies anticipated in the back half of the year [61][62] Question: Strength of international markets and EU GMP certification timing - Management noted that the EU GMP certification will enhance margins and demand, despite increased competition in the international market [70][72] Question: Potential impacts of government changes on the cannabis industry - Management discussed the potential for favorable regulatory changes under a new government, which could support industry growth and reduce excise taxes [76][81]

Financial Performance - OrganiGram reported a quarterly loss of $0.05 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, representing an earnings surprise of -66.67% [1] - The company posted revenues of $30.54 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 10.57%, compared to year-ago revenues of $26.78 million [2] - Over the last four quarters, OrganiGram has surpassed consensus EPS estimates only once and topped consensus revenue estimates two times [2] Stock Performance and Outlook - OrganiGram shares have increased approximately 7.5% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is -$0.03 on revenues of $46.67 million, and -$0.09 on revenues of $177.82 million for the current fiscal year [7] Industry Context - The Medical - Products industry, to which OrganiGram belongs, is currently in the top 30% of over 250 Zacks industries, indicating a favorable industry outlook [8] - The performance of OrganiGram's stock may be influenced by the overall industry outlook, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - For Q1 Fiscal 2025, Organigram reported an adjusted gross margin of 45% compared to 40% in Q1 Fiscal 2024, indicating a 5 percentage point improvement year-over-year[8]. - The company achieved an adjusted EBITDA of $10 million for the quarter, reflecting a significant increase from $5 million in the same period last year, representing a 100% growth[8]. - Gross revenue for Q1-2025 was $66,806 million, an increase of 19% from $56,270 million in Q1-2024[72]. - Net revenue for Q1-2025 reached $42,730 million, up 17% from $36,455 million in Q1-2024, driven by increased international and recreational revenue[75]. - Adjusted EBITDA for Q1-2025 was $1,410 million, a significant increase of 937% compared to $136 million in Q1-2024[72]. - The gross margin for Q1-2025 was $13,814 million, representing a 106% increase from $6,700 million in Q1-2024[72]. - The net loss for the three months ended December 31, 2024, was $22,957 or $0.202 per Common Share, compared to a net loss of $15,750 or $0.194 per Common Share for the same period in 2023[97]. - The company reported a net loss of $22,957 million in Q1-2025, a 46% increase from a net loss of $15,750 million in Q1-2024[72]. Production and Capacity - Organigram's production capacity is expected to increase with the licensing of new facilities, including the Moncton Campus and Winnipeg Facility, which are projected to enhance overall output by 30%[10]. - The company harvested 21,087 kg of dried flower in Q1 Fiscal 2025, an increase from 19,946 kg in Q1 Fiscal 2024, reflecting improved operational efficiency[40]. - The Lac-Supérieur Facility was expanded to 33,000 square feet, increasing its capacity to produce 2,400 kilograms of flower and over 2 million packaged units of hash annually[42]. - The Winnipeg Facility is capable of producing over 4 million gummies monthly, showcasing the company's capacity for high-volume production[41]. - The Aylmer Facility produces approximately 1,350 kg of distillate, 400,000 kg of hydrocarbon extract, 750,000 pre-rolls, and has the capacity to fill one million vapes monthly[44]. - The Company anticipates increasing its flower output by approximately 12,000 kg annually through expansion initiatives in Fiscal 2025 and 2026[58]. Strategic Initiatives and Collaborations - Organigram is focusing on the commercialization of its FAST nanoemulsion technology, which is expected to provide a competitive edge in the gummy product category[10]. - The company is in the process of integrating Motif Labs Ltd., with expected synergies projected to enhance operational efficiency and reduce costs by approximately 15%[10]. - Organigram's collaboration with British American Tobacco is expected to yield strategic benefits, including access to new markets and enhanced product development capabilities[10]. - The company has established a "Centre of Excellence" in collaboration with BAT to focus on developing next-generation cannabis products[26]. - The Company expects to yield 27,129 kg of cannabis from its biological assets as of December 31, 2024, down from 28,889 kg as of September 30, 2024[162]. Market Position and Growth - The company anticipates a revenue growth of 20% for Fiscal 2025, driven by increased demand for both medical and recreational cannabis products[13]. - Organigram's market share in the Canadian cannabis sector is projected to grow by 5% due to increased distribution and product offerings[10]. - SHRED brand achieved $230 million in annual retail sales as of the end of Q1 Fiscal 2025, maintaining a strong market position[36]. - Organigram holds the 3 market share position in the flower category and the 1 market position in all pre-rolls as of December 31, 2024[59]. - The cannabis market in Canada is projected to reach $5.3 billion by 2028, with exports increasing from $8 million in 2020 to approximately $218 million in 2024[51]. Financial Position and Investments - Total assets increased by 60% to $479,207 million in Q1-2025 from $299,014 million in Q1-2024[72]. - Working capital increased by 32% to $162,532 million in Q1-2025 from $122,823 million in Q1-2024[72]. - The Company expects to generate over $10 million in annual run-rate synergies from the Motif acquisition within 24 months[33]. - The Company completed its EU-GMP audit in November 2024, which is expected to drive growth in international revenue[66]. - The Follow-on BAT Investment includes $83 million earmarked for the Jupiter Pool investment fund to support international expansion initiatives[67]. Challenges and Risks - The company is actively monitoring the impact of geopolitical events, such as the ongoing conflict in Israel, on its supply chain and market demand[13]. - The company has identified material weaknesses in internal control over financial reporting, which have not been fully remediated as of December 31, 2024[193]. - Management is committed to remediating the identified weaknesses by the end of Fiscal 2025[200]. - The company engaged PKF O'Connor Davies for an integrated audit, which resulted in an adverse report on the effectiveness of internal control over financial reporting[186].

Financial Data and Key Metrics Changes - In Q4, net revenue grew by 10% sequentially and 22% year-over-year to $44.7 million, driven by increased international sales and growth in the domestic recreational business [50][51] - Adjusted EBITDA for Q4 was $5.9 million, a 69% increase from $3.5 million in Q3, with full-year adjusted EBITDA increasing 55% to $8.4 million from $5.4 million in fiscal 2023 [55][56] - Adjusted gross margin rate improved to 37% in Q4 compared to 36% in Q3 and 20% in Q4 of the previous year, marking a 17 percentage point year-over-year improvement [52] Business Line Data and Key Metrics Changes - The flower business returned to growth, gaining 0.4 percentage points in market share to reach 9.5% overall flower share, driven by the Big Bag O' Buds brand which grew 25% year-over-year [34][38] - The pre-roll business expanded significantly, moving from the number six position in fiscal 2023 to number three in fiscal 2024, gaining 2.4 percentage points in market share [39] - The company maintained dominant positions in gummies and hash with market shares of 20.9% and 22.6% respectively in fiscal 2024 [40] Market Data and Key Metrics Changes - Organigram finished the fiscal year with a 7.6% market share in the Canadian cannabis market, achieving year-over-year growth in recreational shipments of 17.6%, significantly outpacing market growth [17][34] - In Quebec, the company reached its highest market share ever of 9.9% in September, while in Saskatchewan, market share more than doubled from 3.2% to 7.9% [43] - In British Columbia, market share increased from number 11 to number five, with a 1.4 percentage point overall increase [44] Company Strategy and Development Direction - The company aims to focus on the continued growth of its domestic business, expansion of international sales, increased production efficiency, and margin expansion [24] - The acquisition of Motif is expected to enhance net revenue and earnings potential, with anticipated cost synergies of $10 million identified [19][59] - The company plans to leverage its strong balance sheet and relationships to capture market share from struggling competitors [79] Management's Comments on Operating Environment and Future Outlook - Management anticipates slower growth in the Canadian cannabis market, forecasting a 4% growth rate for the industry in the next year [76] - The company expects to stabilize gross margins above 35% and generate positive adjusted EBITDA in most future reporting periods, with fiscal 2025 adjusted EBITDA expected to exceed that of fiscal 2024 [60][61] - The company sees significant opportunities in the international market, particularly in Germany, despite increased competition [84][88] Other Important Information - The company harvested over 23,000 kilograms of flower in Q4, representing a 10% year-over-year increase [27] - The company achieved a record-breaking yield of 187 grams per plant in Q4, contributing to better unit economics and cultivation efficiency [51] - The company is actively investing in international cannabis growth opportunities through its $83 million Jupiter fund [12][14] Q&A Session Summary Question: Can you elaborate on the potential synergies from the Motif acquisition? - Management highlighted leveraging Motif's credibility in the vape category and centralized warehousing for faster fulfillment as key synergies [66][70] Question: What is the outlook for the overall Canadian market growth? - Management expects the Canadian market to grow about 4% in the next year, with opportunities to capture market share from smaller players [76][79] Question: How does the company view competition in international markets? - Management acknowledged increased competition but emphasized the opportunity presented by EU GMP certification to command higher prices [84][88] Question: What feedback has been received regarding the FAST technology? - Early feedback has been positive, with consumers responding well to the technology, and the company is exploring opportunities to leverage it in the U.S. market [91][93] Question: Why is the company focusing on hemp-derived products in the U.S.? - Management indicated that hemp-derived products present a compliant entry into the U.S. market, while keeping an eye on THC opportunities as regulations evolve [100][102]

Group 1 - Alan Brochstein is a pioneer in the cannabis investment sector, starting his career in the securities industry in 1986 and founding AB Analytical Services in 2007 to provide consulting for investment advisors [1] - He has been managing the investing group 420 Investor since 2013, focusing on publicly-traded cannabis stocks and moving the group to Seeking Alpha in 2023 [2] - The 420 Investor group covers 23 stocks, providing investment news, earnings report previews, and post-report analyses, along with model portfolios, weekly videos, summaries, and a monthly newsletter [2] Group 2 - The Big Picture is a sub-service of 420 Investor that helps investors stay informed about the cannabis sector [2]

Core Viewpoint - Organigram (NASDAQ:OGI) has shown significant stock performance, increasing 22% since the last analysis, while the broader cannabis market has declined, indicating strong relative performance [1][2] Financial Performance - For fiscal Q3, Organigram reported revenue of C$41.1 million, a 25% increase year-over-year, surpassing expectations of C$38 million [6] - Adjusted EBITDA for Q3 was C$3.5 million, compared to a loss of C$2.9 million a year earlier, indicating a positive turnaround [6] - The company has improved its cash position significantly, reporting C$80.1 million in cash and short-term investments, up 136% from the previous year-end [6] Market Position - Organigram has outperformed many of its peers, with a 42% increase in 2024, while the Global Cannabis Stock Index rose only 5.1% and the Canadian Cannabis LP Index fell 17.5% [2][3] - The company is heavily focused on the adult-use market in Canada, which accounted for 89% of its net revenue, growing 42% year-over-year [6] Analyst Expectations - Analysts have revised their FY25 revenue projections for Organigram from C$165 million to C$176 million, with adjusted EBITDA expectations increasing from C$5 million to C$9 million [7] - The consensus for FY26 adjusted EBITDA has also improved, with estimates rising from C$18 million to C$19 million [7] Valuation Insights - Organigram is currently trading at a small discount to tangible book value at 0.9X, which is considered attractive for a cash-rich and debt-free company [8] - The target price for the end of the year has been adjusted to C$2.45 (US$1.80), reflecting a potential gain of 21% [8] Future Opportunities - Potential favorable changes in Canadian cannabis taxation could benefit the entire sector, including Organigram [9] - There is speculation about a possible acquisition by British American Tobacco, which has shown interest in increasing its stake in Organigram [10]

Core Insights - Organigram Holdings reported Q3-2024 results showing a 25.3% year-over-year increase in net revenue to CA$41.1 million, driven by higher recreational cannabis sales [4][9] - The company achieved a significant improvement in net income, reporting CA$2.8 million compared to a loss of CA$213.5 million in the same quarter last year [4][9] - Organigram's stock has increased by 33% over the past twelve months and is currently trading below its net asset value (NAV) per share, indicating potential undervaluation [1][5] Current Operations - Organigram operates three grow facilities and one manufacturing facility, focusing on both adult recreational and medical cannabis markets [2] - The company holds the 3 market share position in Canada, with leading positions in milled flower, hash, and CBD gummies [2] - Organigram has expanded its international exports, supplying dried cannabis flower to countries including the UK, Germany, Australia, and Israel [2] Financial Performance - Q3-2024 net revenue was CA$41.1 million, up from CA$32.8 million in Q3-2023, with a gross margin increase from 19% to 36% [4][5] - The company reported a significant reduction in net loss, improving from CA$213.5 million to a net income of CA$2.8 million [4][5] - Cash and short-term investments increased to CA$80.1 million, while total liabilities stood at CA$58.9 million [5][7] Valuation and Market Position - The current price per share is US$1.88, with a book value per share of US$2.12, indicating the stock is undervalued [5][7] - Organigram's total enterprise value to revenue ratio is 0.82x, suggesting it is trading below its intrinsic value compared to peers [5][7] - The company has a median target price of US$3.26, reflecting potential upside [7] Competitive Landscape - Compared to peers, Organigram has lower liabilities relative to assets and has shown an improving net loss trend [7] - The company is positioned similarly to SNDL, with a strong market share in the Canadian cannabis sector [7] - Organigram's performance metrics indicate it is on par with other Canadian licensed producers, but future revenue growth remains a key focus [7][9] Future Outlook - The company is exploring international expansion and has invested CA$21 million in Sanity Group to enhance its European presence [2][9] - Organigram is updating its growing operations to improve yield and efficiency, with an average THC potency of 25.5% [2] - Investors are keenly awaiting further details on Organigram's potential US market entry strategy [9]