TORONTO - Organigram Holdings Inc. (NASDAQ:OGI) (TSX:OGI), a prominent cannabis producer, has announced a three-year agreement to supply medical cannabis to Avida Medical in the United Kingdom, marking its second international customer in this market. Organigram will deliver 1,700 kilograms of high-quality, indoor-grown dried cannabis flower to Avida Medical over the contract period, with 500 kilograms slated for the first year.
The deal also grants Avida Medical exclusive UK rights to three specific cannabis strains, bolstering Organigram's strategy to expand its global market presence. Organigram's Chief Commercial Officer, Tim Emberg, expressed the company's enthusiasm for the partnership, highlighting the UK market's significant potential and the aim to provide patients with consistent, high-quality medical cannabis.
Avida Medical's CEO, Paul Parkinson, emphasized the importance of product quality in the burgeoning UK medicinal cannabis market, which is one of the largest in Europe and expected to grow rapidly in the coming years. Parkinson sees the collaboration with Organigram as a step towards establishing Avida Medical as a leading medicinal cannabis product manufacturer in the UK.
This business move aligns with Organigram's broader international strategy, which has already led to supply agreements with seven medical cannabis customers across Australia, Germany, Israel, and the UK. Organigram operates out of Moncton, New Brunswick (NYSE:BC), and Lac-Supérieur, Quebec, with a dedicated edibles manufacturing facility in Winnipeg, Manitoba. The company is known for its diverse portfolio of legal adult-use recreational cannabis brands, including Edison and Trailblazer.
InvestingPro Insights
As Organigram Holdings Inc. (NASDAQ:OGI) (TSX:OGI) forges ahead with its expansion into the UK medical cannabis market, the company's financial metrics provide a mixed outlook. Organigram's market capitalization stands at a moderate $187.35 million, reflecting the company's position in the competitive cannabis industry. While the company showcases a significant price increase of 43.31% over the last six months, indicating investor optimism or market dynamics that may favor the company's growth strategy, it is important to note that Organigram is not expected to be profitable this year, as analysts have revised their earnings downwards for the upcoming period.
The financial data from the last twelve months as of Q4 2023 reveals a gross profit margin of 23.51%, suggesting that while the company is able to maintain a reasonable margin on its products, it is operating at a loss with an operating income margin of -32.7%. Organigram has also been quickly burning through cash, which could impact its ability to sustain operations without additional financing. On a positive note, the company's liquid assets exceed its short-term obligations, indicating a degree of financial resilience in the near term.
For investors seeking a deeper dive into Organigram's financial health and future prospects, there are additional InvestingPro Tips available, including insights on the company's lack of dividend payments to shareholders and further earnings projections. Interested readers can explore these tips to gain a more comprehensive understanding and make informed investment decisions. Don't forget to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. With seven more tips available on InvestingPro, investors have ample information at their fingertips to assess Organigram's potential in the fast-growing UK medicinal cannabis market.
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