VIVO Cannabis Announces Fourth Quarter 2021 Results
March 31st, 2022
News, Top News
- Net revenue for Q4 2021 was $6.9 million; Net revenue for 2021 was $25 million.
- In February 2021, closed a $7.2 million equity raise to help fund VIVO’s growth
- In July 2021, the Company elected a new Board of Directors, announced the appointment of Ray Laflamme as CEO and Chairman of the Board and later welcomed the Former President of McCain Foods Canada and CEO of Zenabis Global, and Former CFO of Cronos Group, to the Board of Directors.
- In July 2021, announced that its EU-GMP licensed subsidiary, Beacon Medical Germany GmbH, received its first import permit from Germany’s BfArM, the Federal Institute for Drugs and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte), allowing for the import of Canadian grown dried flower medical cannabis from the Company’s EU-GMP-certified Napanee, Ontario site, into Europe.
- In December 2021, recorded first significant revenues of Canadian produced EU-GMP product by VIVO’s German business
- In mid 2021 the Company refined its strategy and is now focused primarily on medical cannabis
- The Company continues to have market leadership in Australia and leveraged its Canadian knowledge base to accelerate product efficacy, cannabis medical information sharing, and sales growth
- With the Company’s EU-GMP certification, 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
- Over 350% year-over-year sales growth in Australia
Toronto, Ontario–(Newsfile Corp. – March 31, 2022) – VIVO Cannabis Inc. (TSX: VIVO) (OTCQX: VVCIF) (“VIVO” or the “Company“) today released its fourth quarter 2021 financial and operating results.
“We continue to be laser focused on growth, profitability, and the medical cannabis channels in Canada and Internationally,” said Ray Laflamme, CEO of VIVO. “The Board recently approved our 2022 Business Plan in which we are targeting significant international growth along with continued success in domestic markets. We look forward to striving to achieve industry leading metrics as we track our progress towards meeting our objectives. We are confident that VIVO will continue to strengthen its core businesses in 2022.”
Net revenue for the fourth quarter of 2021 was $6.9 million which represents an 11% increase quarter-over-quarter as compared to Q3 2021. This increase is primarily due to increased sales to Australia balanced by modest decreases in adult-use sales reflecting the Company’s change in focus away from the adult-use recreational market.
Net revenue for 2021 was $25 million, a decrease of about 24% compared with the same period last year, driven largely by a decrease in adult-use sales and a shift in focus to domestic and international medical channels.
General and administrative expenses decreased to $14.3 million for the year ended December 31, 2021, compared to $18.7 million for 2020. The decrease was primarily driven by a reduction in salaries and wages of $3.2 million and a reduction in consulting and professional fees of $1 million.
The Company’s Adjusted EBITDA increased by $1.1 million to a loss of $11.1 million during the year ended December 31, 2021 compared with the same prior year period, mainly due to lower operating expenses.
During the year-end audit, an annual asset impairment test was performed, and the Company determined an impairment charge of $71.5 million was required as Canna Farms’ carrying value was found to exceed its recoverable amount. This was offset by a reduction in the Company’s deferred tax liability of $18.2 million.
Key Performance Indicators
|KPI (P&L amounts in millions)
|Adjusted EBITDA (1)
|Cash and equivalents
(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 year-ended December 31, 2021, available under the Company’s profile at www.sedar.com.
General and administrative expenses decreased by 24% for the year ended December 31, 2021, compared to 2020. Sales and marketing expenses decreased by 15% in 2021, reflecting the reallocation of external sales agency costs internally and focusing on medical cannabis growth. Finance expenses decreased during the year ended December 31, 2021, by 75% compared to the same period in 2020 driven by the Company eliminating its $5.3 million of convertible debentures, resulting in a decrease in accretion and interest expenses on the debt.
The Company had gains (losses) on other financial assets, comprised of marketable securities of other issuers held by the Company. In 2021 the Company realized gains of $1.0 million on these assets and proceeds from the sale of these financial assets of $8.2 million. During the year, the Company raised $7.2 million of equity (net of listing fees). In 2021, the Company also generated proceeds of $1.0 million from the sale of property. As of December 31, 2021, the Company had working capital of $18.3 million including cash and cash equivalents of $11.3 million.
In July 2021, at the Annual General Meeting, the shareholders elected Holly Workman and Eric Shipman as new Directors to the Board, announced the appointment of Ray Laflamme, founder of Canna Farms, as CEO and Chairman of the Board and in December 2021, appointed Glen A. Huber, former CFO of Cronos Group and Shai Altman, former President of McCain Foods and former CEO of Zenabis Global, to the Board of Directors.
VIVO remains focused on executing against its strategic priorities and focusing on the medical cannabis market in Canada and internationally. The Company has made significant progress in enhancing supply and production capabilities, expanding its customer network, increasing its focus on providing patient focused medical cannabis products and services, and accelerating its international medical business. VIVO believes focusing on its 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.
Canna Farms and ABcann Medicinals together have more than fifteen years of experience supporting cannabis medical patients with a wide range of conditions and symptoms and together have amassed a deep understanding of patient motivations and needs.
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. 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. In 2020, it was recognized by Brightfield Group as the brand with the 4th highest Brand Awareness.
Canna Farm has many thousands of patients who have tracked themselves and self-reported their outcomes using the Strainprint app in over 650,000 sessions. Due to this, Canna Farm has the largest data set within the mobile app and the efficacy of specific strains used for various conditions have been published in several independent academic peer-reviewed articles. 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 offered on the Canna Farms medical store.
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 anticipates capital expenditures for 2022 to be minimal. Disciplined investments in product development, facility optimization and international market commercialization are expected to continue to facilitate future profitable growth.
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.
On March 11, 2021, VIVO’s Vanluven facility in Napanee, Ontario received EU-GMP (European Union Good Manufacturing Practices) certification from Germany’s Brandenburg health authority, the Landesamt für Arbeitsschutz, Verbraucherschutz und Gesundheit (“LAVG”). The certification enables VIVO, through its ABcann Medicinals subsidiary, to export product for sale into European and other markets requiring products to be manufactured under EU-GMP standards.
On July 29, 2021, the Company announced that its EU-GMP licensed subsidiary, Beacon Medical Germany GmbH, received its first import permit from Germany’s BfArM, the Federal Institute for Drugs and Medical Devices (Bundesinstitut für Arzneimittel und Medizinprodukte), allowing for the import of Canadian grown dried flower medical cannabis from the Company’s GMP-certified Napanee, Ontario site, into Europe.
Starting October 2021, the Company, through its ABcann Medicinals subsidiary, exported EU-GMP dry flower to Germany. This was an enormous milestone for the Company.
With the Company’s recent EU-GMP certification, 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.
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.
During 2021 the Company had to temporarily suspend in-clinic visits at its Harvest Medicine clinics (the majority of these have been reopened). 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.
About VIVO Cannabis®
VIVO Cannabis® is recognized for trusted, premium cannabis products and services. It holds production and sales licences from Health Canada and operates world-class indoor and seasonal airhouse cultivation facilities. VIVO has a collection of premium brands, each targeting different customer segments, including Canna Farms™, Beacon Medical®, Fireside™, and Lumina™. Harvest Medicine™, VIVO’s patient-centric, scalable network of medical cannabis clinics, has serviced over 150,000 patient visits. VIVO is pursuing several partnership and product development opportunities and is focusing its international efforts on Germany and Australia. For more information visit: www.vivocannabis.com
For further information:
VIVO Investor Relations
Michael Bumby, Chief Financial Officer
Disclaimer for Forward-Looking Information
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 2021. 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 year-ended December 31, 2021, 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.
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