Organigram Holdings Had A Pretty Strong 2021 And Are Full Steam Ahead Going Into 2022

Earlier this year, Organigram Holdings Inc. (TSX: OGI) (Nasdaq: OGI) received a large investment from a leading tobacco conglomerate and we saw a spike in interest in the Canadian Licensed Producer (LP) after the announcement.

From capturing more market share of Canada’s cannabis 2.0 vertical to making major changes to the management team, 2021 has been a busy year for Organigram and we will monitor how the story advances in 2022.

In this article, we highlighted 7 major announcements from Organigram so far this year. We consider these developments to be the most significant for the Canadian LP and believe our readers should be aware of these aspects of the story.

1. During the first calendar quarter of 2021, Organigram announced a major development and reported to have received a C$220+ million investment from British American Tobacco plc (NYSE: BTI) for 19.9% of the company. At the time of the announcement, the companies entered into a product development collaboration agreement to focus on the development of the next generation of cannabis products. Initially, the companies will focus on cannabidiol (CBD) and we will monitor how the relationship evolves in 2022.
2. Last month, Organigram published a corporate update and reported impressive market share growth. According to HyFire data from September 2021, the Canadian LP’s national market share position increased to 7.7% in September from 3.9% in January. At this level, Organigram would have the fourth largest position when compared to other Canadian LPs (according to HyFire’s data for September 2021). We consider the increase to be a bullish indicator for the company and will monitor how its market share changes in 2022.
3. A few weeks after British American Tobacco made an investment in Organigram, Greg Engel stepped down from his role as Chief Executive Officer (CEO). A few months later, Beena Goldenberg was appointed as the new CEO and we are favorable on how the business has evolved under her leadership. From making accretive bolt-on acquisitions to capturing additional market share, we are favorable on the direction that Organigram is heading and are favorable on the experience Beena brings to the organization. Previously, she was the President and CEO of The Supreme Cannabis Company and has more than 30 years of experience in consumer packaged goods (CPG), manufacturing, and marketing. We consider this to be a significant change to the leadership team and will monitor how the business continues to perform.
4. The month after Organigram formed a partnership with and received an investment from British American Tobacco, the Canadian LP acquired The Edibles and Infusions Corporation (EIC). Through the acquisition, Organigram plans to broaden its product line and expand its manufacturing footprint into Western Canada. A few months after the acquisition, the company has developed, produced, and shipped three new high-quality soft chew products under the SHRED’ems brand and we are favorable on the growth prospects that are associated with this vertical of the cannabis industry. We believe the acquisition has quickly proved to be accretive and will monitor how revenue from cannabis 2.0 products increase in 2022.
5. 2021 has been an important year for Organigram’s leverage to certain international cannabis markets. After the granting of the required import and export permits, the Canadian LP has shipping product to Canndoc, an Israeli cannabis company. We are bullish on the growth prospects that are associated with this market and expect the relationship with Canndoc to play a key role in how Organigram is able to capitalize on it. Canndoc’s patients in Israel have access popular cultivars from the Canadian LP and will monitor how international cannabis markets support the growth of the business in 2022.
6. When it comes to the Canadian medical and recreational cannabis market, Organigram has an attractive geographic footprint and consider this to be an underappreciated aspect of the story. Earlier this year, the Canadian LP signed a supply agreement with the Yukon Liquor Corporation. The development marked an important milestone for Organigram as it now has a presence in all 10 Canadian provinces, and one territory. We are bullish on the geographic reach of the company and will monitor how revenue numbers from Canada change in 2022.
7. Last month, Organigram published fourth quarter and full-year financial results (for the period that ended on August 31^st ) and recorded a more than 20% increase in revenue on a year-over-year basis. When compared to the same period last year, Organigram reported a spike in the adjusted gross margin as a percentage of revenue (from -4% to 12%) and we consider the improvement to be significant. Although the company attributed the higher revenue to Canada’s recreational cannabis market, it recorded lower revenue from international markets on a comparative basis. In 2022, we will monitor how Organigram capitalizes on both the domestic and international markets and consider the ability to execute on the global level to be a core pillar of the long-term opportunity.

If you are interested in learning more about Organigram’s 2022 growth prospects, please send an email to support@technical420.com with the subject “Organigram’s 2022 Growth Prospects” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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