Cannabis grower Organigram Holdings Inc. (NASDAQ:OGI) reported third-quarter 2025 net sales of $51.14 million, approximately $70.8 million Canadian dollars (CAD), up 72% year-over-year, beating the consensus of $48.33 million.
$59.92 million (85%) was attributable to recreational cannabis sales.
The increase was primarily driven by contributions from the acquisition of Motif Labs and increased international sales. Gross revenue increased 73% to $110.2 million.
The volume of flower sales in grams increased 24% to 23,290 kg in the quarter, compared to 18,785 kg a year ago. This growth was primarily driven by the success of the company’s large-format value products, a significant increase in international sales, and higher sales of infused pre-rolls.
OrganiGram reported a loss of 3 cents, missing the consensus of a loss of one cent.
Adjusted gross margin was $24.2 million, or 34% of net revenue, compared to $14.6 million, or 36% a year ago.
Organigram’s standalone adjusted gross margin excluding Motif was approximately 37% in the quarter.
Management expects adjusted gross margin to improve as Motif acquisition-related synergies are realized over the coming quarters.
“As our business continues to scale domestically and abroad, and the realization of cost synergies related to our Motif acquisition begin to positively impact future earnings, we are confident in our trajectory toward sustained profitability and free cash flow in the near-term,” said Greg Guyatt, CFO of Organigram.
Motif synergies reached $4.2 million to date, approximately $11 million annualized; on track to hit the $15 million target within 24 months of acquisition.
During Q2, the company made "incremental investments" into Motif, allowing Organigram to further increase the expected synergy realization to $15 million annually from its prior estimate of $10 million, said Guyatt.
Guidance:
Organigram forecasts adjusted gross margin to average approximately 35% for fiscal 2025, and expects adjusted gross margin to approach 40% in the second half of fiscal year 2026.
The company also anticipates that its full-year fiscal 2025 adjusted EBITDA will surpass that of fiscal 2024. It expects full-year fiscal 2025 cash flow from operations before working capital changes to be at or near breakeven, and positive after working capital changes.
In the third quarter, the company generated free cash flow of $5 million and expects to generate positive free cash flow in the fourth quarter of 2025 and fiscal 2026.
Price Action: OGI stock is down 5.03% at $1.510 during the premarket session at the last check on Wednesday.
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