40-F/A: Organigram Reports Fiscal 2024 Results, Achieves Record Adjusted EBITDA in Q4

Organigram Holdings Inc. reports a 6% increase in fiscal 2024 net revenue and a record adjusted EBITDA of $5.9 million in Q4, becoming Canada's largest cannabis company by market share after acquiring Motif Labs.

Summary

• Organigram Holdings Inc. announced its financial results for the fourth quarter and fiscal year ended September 30, 2024.
• The company's fiscal 2024 net revenue increased by 6% to $159.8 million compared to $150.4 million in the comparative fiscal 2023 period.
• Adjusted EBITDA for fiscal 2024 increased by 55% to $8.4 million compared to $5.4 million in the comparative fiscal 2023 period.
• In Q4 Fiscal 2024, net revenue increased by 22% to $44.7 million compared to $36.7 million in the comparative Q4 Fiscal 2023 period.
• Q4 Fiscal 2024 adjusted EBITDA reached a record $5.9 million, a significant increase from $0.1 million in the comparative Q4 Fiscal 2023 period.
• The company achieved an adjusted gross margin of 37% in Q4 Fiscal 2024.
• Organigram realized $9.1 million in annual cost savings through efficiency initiatives in fiscal 2024.
• The company's international sales grew sequentially throughout fiscal 2024, expanding its customer base from five to eight supply partners.
• Organigram completed a $21 million strategic investment in Sanity Group, a German cannabis company, and expanded its investments in the U.S.
• The company completed its EU-GMP audit in November 2024 and is awaiting certification.
• Organigram enhanced its balance sheet by closing two tranches of a $124.6 million follow-on investment from BAT for gross proceeds of $83.1 million, with the final $41.5 million tranche expected to close in February 2025.
• The company also completed a $28.8 million overnight marketed offering in April 2024.
• Subsequent to year end, Organigram became Canada's largest cannabis company by market share following the acquisition of Motif Labs.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic investments, and a leading market position. The company's focus on efficiency and innovation is also encouraging. However, the company still has a net loss and is subject to risks, which prevents a perfect score.

Positives

• Organigram's net revenue increased by 6% in fiscal 2024, indicating growth in sales.
• The company's adjusted EBITDA increased by 55% in fiscal 2024, demonstrating improved profitability.
• The company achieved a record adjusted EBITDA of $5.9 million in Q4 Fiscal 2024, showing strong quarterly performance.
• The adjusted gross margin of 37% in Q4 Fiscal 2024 indicates efficient operations and cost management.
• The company realized $9.1 million in annual cost savings, highlighting successful efficiency initiatives.
• Organigram's international sales grew sequentially throughout fiscal 2024, expanding its global reach.
• The strategic investment in Sanity Group positions the company for growth in the German market.
• The completion of the EU-GMP audit is expected to support further international sales growth.
• The follow-on investment from BAT strengthens the company's financial position.
• The acquisition of Motif Labs has made Organigram the largest cannabis company in Canada by market share.

Negatives

• The company's net loss for fiscal 2024 was $45.4 million, although this is an improvement from the $247 million loss in the comparative fiscal 2023 period.
• The company's cash on hand decreased by approximately $55 million due to the acquisition of Motif Labs.

Risks

• The company's ability to maintain its market position and profitability is subject to competitive pressures.
• The company's international sales are subject to regulatory risks and market fluctuations.
• The company's ability to achieve its strategic objectives is dependent on the successful integration of Motif Labs.
• The company's ability to maintain its listing on the TSX and NASDAQ is subject to compliance with listing requirements.
• The company's ability to obtain the final tranche of the follow-on investment from BAT is subject to certain conditions.
• The company's operations are subject to regulatory risks and changes in laws and regulations.
• The company's operations are subject to risks inherent in the agricultural business, such as crop failures and plant diseases.
• The company's operations are subject to risks related to cyber security and data breaches.
• The company's operations are subject to risks related to the war in Israel and surrounding regions and its impact on the supply of product and collection of accounts receivable in the market and the demand for product in Israel.
• The company's operations are subject to risks related to the outcome of the final determination in the Anti-Dumping Investigation.

Future Outlook

Organigram expects continued growth in fiscal 2025, driven by efficiency improvements, consumer-centric innovation, and international expansion. The company anticipates adjusted gross margin to exceed 35% for fiscal 2025 and positive full-year adjusted EBITDA surpassing fiscal 2024 levels, along with positive cash flow from operations.

Management Comments

• Beena Goldenberg, Chief Executive Officer, stated that Fiscal 2024 was a transformative year with significant funding from BAT, strategic investments, and expansion of the international footprint.
• Greg Guyatt, Chief Financial Officer, noted that efficiency improvements supported strong adjusted gross margin in Q4 and that the acquisition of Motif has laid the foundation for continued growth in Fiscal 2025.

Industry Context

The announcement highlights Organigram's position in the competitive Canadian cannabis market, where it has become the largest LP by market share after acquiring Motif Labs. The company's focus on international expansion and product innovation aligns with broader industry trends.

Comparison to Industry Standards

• Organigram's adjusted gross margin of 37% in Q4 Fiscal 2024 is a strong result compared to other Canadian LPs, many of which have struggled with profitability.
• The company's focus on efficiency and cost savings is in line with industry trends as companies seek to improve their financial performance.
• The strategic investment in Sanity Group and expansion into international markets is a move that is being pursued by other Canadian LPs to diversify revenue streams.
• The acquisition of Motif Labs is a significant move that positions Organigram as a leader in the Canadian market, similar to other consolidation efforts seen in the industry.
• The company's focus on product innovation, particularly with the FAST technology, is a key differentiator in a competitive market.

Management Changes

Legal Proceedings

• A class action lawsuit was filed against the company, which was settled in August 2022.
• The company received a dispute notice from the Laurentian vendors regarding earnout payments.

Related Party Transactions

• The company has a product development collaboration with BAT, with costs funded equally by both parties.
• The company has a supply agreement with Sanity Group, a German cannabis company, in which it has also made a strategic investment.

Stakeholder Impact

• Shareholders will benefit from the company's improved financial performance and strategic investments.
• Employees will benefit from the company's growth and expansion.
• Customers will benefit from the company's focus on product innovation and quality.
• Suppliers will benefit from the company's increased production and sales.
• Creditors will benefit from the company's improved financial stability.

Next Steps

• The company expects to close the final tranche of the follow-on investment from BAT in February 2025.
• The company is awaiting EU-GMP certification for its Moncton facility.
• The company will continue to integrate Motif Labs into its operations.
• The company will continue to explore additional U.S. and international investment opportunities.

Key Dates

Keywords

cannabis, Organigram, Motif Labs, adjusted EBITDA, net revenue, international sales, EU-GMP, BAT, strategic investment, market share, cost savings, product innovation, financial results, cannabis market, seed-based technology