Prospects for the cannabis industry in 2020 are not based on hype as it was in the previous years. The sector is maturing, and it is taking the shape of a business like any other. As John de Vreugd stated, cannabis companies are asked to make some revenue, as shareholders are asking to see some profits. He also said that only a small number of companies eventually recorded positive results last year. Now, also Organigram and Aphria are to be added to that list, according to the last financial reports they have issued.
Organigram is anticipating that consumers seeking non-smokable cannabis will help to further boost its revenues that more than doubled to $25.2 million in the first quarter. The company based in Moncton, N.B., says revenues were up from $12.4 million a year earlier.
Chief executive Greg Engel anticipates many opportunities ahead as demand for vapes, chocolates and powdered products accelerates in the coming months. "The feedback we're hearing from the retailers is that the consumer that's coming in today, many of them are consumers who have not come into retail stores because they don't want to look for a dried flower product in the past," he said.
Revenues during the first quarter included $16.7 million of sales to the adult-use recreational market and about $9.5 million to medical markets, partly offset by a $1.1 million provision for product returns and price adjustments. Organigram's net loss was $863,000 or less than a cent per share, compared with a loss of $29.5 million or 19.5 cents per share in the prior year. That large loss was largely due to non-cash fair value changes to biological assets and inventories. However, this definitely exceeded the expectations as the company was expected to lose $ 3.9M.
Engel said he's pleased with the solid quarterly results and positive adjusted EBITDA, but wouldn't say when it will become profitable. "We're at the point where it's a marginal loss, but it is in part because the market really has not grown and we expect that to shift."
On the other hand, Aphria has slashed its outlook after a delay in opening additional cannabis stores and a ban on vape products in Alberta, Aphria CFO, Carl Merton, said. Now, the company expects net revenue for 2020 to be between $575M and $625M.
Aphria was also affected by the necessity to buy third-party cannabis to ‘meet current market demands’, as the company didn’t receive the license for Aphria Diamond until November. The company recorded a net loss of $7.9M for the quarter ended Nov. 30, while net revenue was $120.6M.