Organigram (OGI.TO)(OGI) missed analyst expectations in its third quarter as a reduced workforce delayed the launch of the company’s first value-priced pot products, weighing on sales as bargain-seeking consumers purchased from rivals.
The Moncton, N.B.-based cannabis producer brought in $18.0 million in net sales, down from $24.8 million a year earlier, and down from the $23.2 million in the previous quarter. The weaker revenue was attributed to lower sales volumes and a lower average selling price, as well as $3 million in returns and price adjustments for “slow-moving aged product.”
Organigram reported a net loss of $89.9 million, or $0.51 per diluted share, compared to a net loss of $10.2 million, or $0.07 per share in the same quarter last year.
The company said it wrote off $19.3 million worth of unsaleable inventory, wrote down $2.7 million in inventory due to declining prices, and incurred $7.9 million in charges related to a reduced workforce due to COVID-19.
Organigram reported adjusted earnings before interest, taxes, depreciation, and amortization loss (EBITDA) of $24.7 million, compared to Q3 2019 adjusted EBITDA of $7.7 million.
Analysts polled by Bloomberg expected the company to report $22.2 million in revenue and negative adjusted EBITDA of about $93,000.
“The priority for us has been protecting the health and safety of our employees,” CEO Greg Engel said in a news release on Tuesday.
“This prioritization led to a significantly reduced workforce which contributed to a number of product launch delays, including our initial large format value offering, which affected opportunities to potentially capture significant market share and sales in dried flower, the largest product segment of the recreational market.”
Earlier this month, Organigram warned investors to expect weakness in the quarter citing COVID-19 and “changing market dynamics.”
Organigram recently eliminated 220 positions, about 25 per cent of its workforce, citing the COVID-19 pandemic and “continuing evolution of the Canadian cannabis industry.” That followed the temporary layoff of about 400 employees in April. The company said on Tuesday that it believes it has “right-sized the business.”
Organigram said it had about $78.2 million in cash and short-term investments as of July 17.
NASDAQ-listed shares fell 4.61 per cent to $1.45 in pre-market trading at 7:40 a.m. ET on Tuesday.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.