VIVO Cannabis Announces First Quarter 2022 Results
Newsfile Corp.
10 min read
Net revenue for Q1 2022 was $6.9 million
VIVO continues to pursue its international expansion strategy which now represents >50% of cannabis revenue
Canadian Launch of Canna Farms Single-strain Oils, Infused Pre-rolls, Top Cola Signature Series and Fireside CBD Canna Bliss 510 Vape Cartridge and 10 pack CBD Chocolates
Harvest Medicine study on medical cannabis outcomes in anxiety & depression accepted for publication in Psychiatric Research
Toronto, Ontario--(Newsfile Corp. - May 16, 2022) - VIVO Cannabis Inc. (TSX: VIVO) (OTCQX: VVCIF) ("VIVO" or the "Company") today released its first quarter 2022 financial and operating results.
Management Commentary
"In the first quarter, we focused on continuing to integrate our manufacturing operations and expanding our international footprint," said Ray Laflamme, CEO of VIVO. "We achieved a significant inflection point wherein international cannabis sales now exceed our domestic cannabis sales and we look forward to ongoing international growth."
Financial Summary
Net revenue for the first quarter of 2022 was $6.9 million which represents a 25% increase compared to the same period for 2021.
General and administrative expenses remained flat at $4.0 million for the three months ended March 31, 2022, compared to the same period for 2021.
The Company's Adjusted EBITDA decreased by $0.6 million during the three months ended March 31, 2022, compared to the prior year driven by higher adjusted cost of sales, offset by higher net revenues.
Key Performance Indicators
KPI (P&L amounts in millions)
Q1 2022
Quarter-over-Quarter Change
Q4 2021
Net Revenue
$6.9
-
$6.9
SG&A
$4.1
32%
$3.1
Adjusted EBITDA (1)
($3.0)
19%
($3.7)
Cash and equivalents
$7.5
(34%)
$11.3
(1) Adjusted EBITDA is not a measure of financial performance under IFRS. For the Company's definition of Adjusted EBITDA, see the Company's management's discussion and analysis for the quarter-ended March 31, 2022, available under the Company's profile at www.sedar.com.
Business Update
General and administrative expenses remained flat at $4.0 million for the three months ended March 31, 2022, compared to the same period for 2021. Sales and marketing expenses remained flat at $0.1 million in the three months ending March 31, 2022, compared to the same period in 2021. Finance expenses remained flat during the three months ending March 31, 2022, at $0.2 million compared to the same period in 2021.
VIVO also saw amortization expense decrease by $0.5 million to $0.6 million in the three months ending March 31, 2022, compared to $1.1 million for the same period in the prior year. This decrease was largely driven by impairment of $3.1 million recognized on depreciable intangible assets in the prior year.
The Company had gains on other financial assets, comprised of marketable securities of other issuers held by the Company. In 2021, the Company had an unrealized gain of $0.1 million combined with a realized gain of $1.2 million from the liquidation of a number of these securities, providing for a cash inflow of $7.8 million. The remaining securities were liquidated during the year ended December 31, 2021, and no gain or loss was recognized in 2022. The securities underlying the gains were acquired by the Company in 2018 and 2019.
Strategic Priorities
VIVO remains focused on executing against its strategic priorities in the medical cannabis market in Canada and internationally. The Company has made significant progress in enhancing supply and production capabilities, expanding its customer network in the Canadian and European markets, increasing its focus on providing patient focused medical cannabis products and services, and accelerating its international medical business. VIVO believes focusing on these core priorities will generate long-term shareholder value and accelerate the path to profitability.
Patient Care Expertise
The Company has provided educational consultants and medical cannabis care in over 150,000 patient interactions through its HMED clinics (as defined below) since 2017. Canna Farms' best-in-class, award-winning, Patient Care Team has been providing patient services since 2014 and has firsthand expertise in product ordering, and patient support. With patient-centricity at its core, in 2021 the Company widened its product offerings and enhanced its best-in-class support programs including Compassionate Care, Veterans, and First Responders, so that all patients have access to affordable quality cannabis as medicine.
The Company expanded its Canna Farms' Patient Care Team to offer a wider range of bilingual and 12-hour call support for patients from coast to coast.
In Q1, Canna Farms partnered with HelloMD to offer complimentary virtual consultation services directly to potential Canna Farms website visitors seeking medical guidance from a licensed healthcare practitioner.
Quality Production
Canna Farms was established in 2013, as the first licensed producer in British Columbia, and since that time has established deep roots in the medical cannabis community. It is now a respected and recognized cannabis brand with thousands of positive patient self-reported outcomes, and today Canna Farms is one of the top medical brands in Canada. Canna Farms was BC's first licensed producer and proudly holds itself to the highest cultivation standards of the industry, to the extent that in 2020, it was recognized by Brightfield Group as the brand with the 4th highest Brand Awareness.
Canna Farms operates an industry-leading online medical cannabis platform, (https://www.cannafarms.ca/product-medical) that combines the Company's brands with products from third-party cultivators in one on-line medical store. There are currently over 10 brands and 100 curated products, from cannabis flowers to medical suppositories, offered on the Canna Farms medical store.
Since January, Canna Farms medical store launched several new strain-specific products for Canadian medical patients including Canna Farms oils (CBD, THC and balanced options), Lumina Skylight balanced oil, Canna Farms Pink Kush Bubble Rolls infused pre-rolls, and Fireside Full-Spectrum CBD Vape with Canna Bliss in a 510 Cartridge. The vape and oils were made with single strain, full-spectrum extract from Canna Farms' medical craft whole flower.
The Company also launched its limited-run Canna Farms Signature Series with 7g Top Colas that are specially cultivated, cured, hand-trimmed and hand-packed. Canna Farms' Master Grower and team took immense pride in producing the Top Cola project, where a large cluster of buds grow tightly together, producing cannabinoid and terpene-rich flowers.
The Company also launched Fireside CBD Chocolates in 10 packs for both dark and milk chocolate salted caramel flavours as a result of positive patient feedback and demand for a larger size option.
In addition, Assuage vaginal and rectal suppositories were launched to support patients requiring an alternative to inhalable and ingestible product formats. Additional third-party flower strains and CBD gummies were also added in an effort to continually enhance the product portfolio for medical patients.
Canna Farms operations focus on indoor cannabis cultivation, packaging, solventless extraction and concentrate production.
ABcann Medicinals' operations in Napanee, Ontario focus on ethanol extraction, product formulation, and EU-GMP related processes. This operation's ethanol extraction suite produces high quality cannabis extracts and distillates for use in many of VIVO's products including quality oils, distillates, concentrates and more advanced formulations of VIVO's current and anticipated portfolio of medical products, as well as edibles and topicals.
With all operating facility expansion projects completed, VIVO's capital expenditures for 2022 will be minimal. Disciplined investments in product development, facility optimization and international market commercialization are expected to continue to facilitate future profitable growth.
International Markets
VIVO continues to pursue its international expansion strategy, leveraging its experience and leadership to enter new high-growth markets. The Company's initial focus is on the German and Australian markets, which, combined, have a population of over 100 million people.
The Company has a strong medical cannabis market leadership established in Australia and leverages its Canadian knowledge base to accelerate product efficacy, cannabis medical information sharing, and sales growth in that market. Australia's Therapeutics Goods Administrator ("TGA") continues to report a record number of new patient approvals and the growth in the market has been matched by the growth in VIVO's Beacon Medical Australia business. VIVO currently sells five products under the Beacon Medical brand in Australia.
Starting October 2021, the Company, through its ABcann Medicinals subsidiary, exported EU-GMP dry flower to Germany and in December of 2021 VIVO successfully completed its first sale of dry flower in the German Market.
With the Company's recent EU-GMP certification, and initial few shipments sent to Germany, the Company is leveraging its knowledge and expertise and working towards greater success in Germany, it is now in a position to repeat its Australian success in Germany and in other global markets, all of which are exclusively medically focused. The Company's products and brands prove their value in Canada first, and this success is then replicated in international markets, as regulations allow.
Clinical Care
The Company purchased its Harvest Medicine ("HMED") operations in 2018 and since the acquisition has leveraged clinical insights from tens of thousands of HMED patients to research patient outcomes, to publish observational clinical studies, to educate and increase health care prescriber adoption, to improve market access, and to direct future product development within its medical channels. Harvest Medicine utilizes a virtual platform, "HMED Connect" and has recently added pharmacy consultations as a service for patients as part of their medical cannabis care offering.
The portfolio consists of four education-focused, patient-centric, cannabis discovery clinics, including two clinics located in Alberta and two additional clinics in the provinces of New Brunswick and Nova Scotia. HMED has conducted more than 150,000 registered patient visits through its clinics, clinic-in-clinic partnerships and via its telemedicine platform, making it one of the top clinic networks in Canada. In the first half of 2021, Harvest Medicine began offering pharmacy consultations as an additional service offering for patients as part of their medical cannabis care.
VIVO is committed to pursuing innovation throughout its value chain. The Company uses data insights gained from Harvest Medicine's clinics and from Canna Farms' medical cannabis platform as a foundation for the development of products that more effectively meet patients' needs.
The Company has reopened all clinics with a hybrid model to support both in-person and virtual visits. The Company's HMED Connect telemedicine platform proved to be of increased service to the medical cannabis market with patients preferring to conduct appointments online during the pandemic. HMED's telemedicine platform brings medical cannabis information and services to patients across Canada, allowing them to access the same patient-centric services they would receive in HMED clinics, online.
In Q1, Harvest Medicine's first study on anxiety and depression was accepted for publication by Psychiatry Research. With 7,362 patients included, it is the largest study to date examining the impact of anxiety & depression on GAD-7 and PHQ-9 scores (clinically validated questionnaires) using medical cannabis with guidance from a healthcare practitioner.
About VIVO Cannabis
VIVO Cannabis® is recognized for trusted, premium cannabis products and services. Through its Canna Farms and ABcann business units, VIVO holds production and sales licences from Health Canada and operates world-class indoor cultivation facilities. VIVO has a collection of premium brands, each targeting different customer segments, including Canna Farms™, Beacon Medical®, Fireside™, and Lumina™. Harvest Medicine™.For more information visit: www.vivocannabis.com
For further information: VIVO Investor Relations Michael Bumby, Chief Financial Officer ir@vivocannabis.com
All dollar amounts in this news release are in Canadian dollars. Certain statements in this news release are forward-looking statements, which are statements that are not purely historical, including statements regarding the beliefs, plans, expectations or intentions of VIVO and its management regarding the future. Forward-looking statements in this news release include statements regarding: the Company's expected catalysts to deliver profitable growth, including entry into domestic and international markets; the development and launch of innovative products and services and the financial impact thereof; the integration of its facilities; redefining the Company's strategy; accelerating its path to profitability; the Company's expectation that focusing on the medical cannabis segment will generate long-term shareholder value and accelerate the path to profitability; the factors that VIVO believes will drive significant growth in medical cannabis utilization; and the ability of the Company's growth initiatives to drive future profitable sales beyond 2022. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the forward‐looking statements, including: that the medical cannabis market may not grow to the extent, within the time, or for the reasons expected by the Company; changes to the recreational market; that the COVID‐19 pandemic may last longer and have a more significant impact on the Company's operations, the Canadian cannabis industry, or the global economy generally, than currently expected; that the Company faces competition against new market entrants and participants; that the Company may not be able to launch new products in the time expected or at all and that patients may not receive the expected benefits therefrom; that the Company may not be able to achieve competitive margins; that new products, if launched, may not be accepted by the market or may become subject to product liability claims; that the Company may not be able to obtain necessary licences; that demand for the Company's products may not meet management's expectations; that the Company may be unable to retain its key talent; that the Company may not be able to execute on its strategic partnerships; that the Company may not obtain any other necessary regulatory approvals as required from time to time; that the Company may be unable to protect its intellectual property; and other factors beyond the Company's control. No assurance can be given that any of the events anticipated by the forward‐looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully, and the more extensive risk factors included in the Company's management's discussion and analysis for the quarter-ended March 31, 2022, which is available on SEDAR, in evaluating the forward‐looking statements contained in this news release, and are cautioned not to place undue reliance on such forward‐looking statements, which are qualified in their entirety by these cautionary statements. The forward‐looking statements in this news release are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any such forward‐looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.
