OrganiGram Holdings Inc (NASDAQ:OGI) stock plunges 16.02% (As on July 14, 11:51:04 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the third quarter of FY 23. Q3 Fiscal 2023 cost of sales increased to $32.3 million, from $29.4 million in Q3 Fiscal 2022, primarily as a result of a $2.8 million net realizable value adjustment on low potency flower repurposed as inputs to Organigram’s growing derivatives business and a $2.8 million provision for excess and unsaleable inventories. Q3 Fiscal 2023 adjusted gross margin was $6.1 million, or 19% of net revenue, compared to $9.3 million, or 24%, in Q3 Fiscal 2022. The decline is attributable to lower net flower revenue, a higher cost of sales, and the impact due to the restriction of sale imposed by Health Canada on Edison JOLTS. Q3 Fiscal 2023 net loss was $213.5 million, compared to a net loss of $2.8 million in Q3 Fiscal 2022 as a result of the recorded impairment. Q3 Fiscal 2023 Adjusted EBITDA was negative $2.9 million compared to $0.6 million Adjusted EBITDA in Q3 Fiscal 2022. The decline is primarily attributable to lower net flower revenue, lower adjusted gross margin, and higher SG&A expenses. Q3 Fiscal 2023 net cash used in operating activities was $5.5 million, compared to $6.4 million cash used in Q3 Fiscal 2022, which was primarily due to favorable changes in working capital, partially offset by lower adjusted EBITDA.

OGI in the third quarter of FY 23 has reported the adjusted loss per share of 15 cents, missing the analysts’ estimates for the adjusted earnings per share of 5 cents, according to analysts surveyed by Zacks Investment Research. The company had reported 14 percent decline in the adjusted revenue to $24.1 million in the third quarter of FY 23, missing the analysts’ estimates for revenue of $31.3 million. The decrease was primarily due to a reduction recreational flower sales.

On the other hand, in March Organigram had entered into a product purchase agreement with Greentank a leading vaporization technology company and a subscription agreement with Greentank’s parent company, Weekend Holdings Corp. Organigram’s investment combined with the Purchase Agreement is expected to transform the Company’s current and future vapour hardware lineup across its portfolio of recreational brands.

In addition, the company has announced its first strategic U.S. investment in Phylos, a cannabis genetics company and provider of production ready seeds, based in Portland, Oregon, to initiate a wide-ranging technical and commercial relationship in Canada.