- Net revenue $6.2 million
- Net loss reduced to $1.1 million; EBITDA loss reduced to $2.1 million
- First shipment to Germany completed; Australia sales $2.2 million
Toronto, Ontario–(Newsfile Corp. – November 15, 2021) – VIVO Cannabis Inc. (TSX: VIVO) (OTCQX: VVCIF) (“VIVO“ or the “Company“) today released its third quarter 2021 financial and operating results.
At the start of the third quarter of 2021, significant changes were made to focus VIVO’s strategy on the medical cannabis segment in Canada, Australia and Germany, and to fully leverage the efforts and investments the Company has made in medical cannabis in these geographies over the years. We expect that shareholders and patients alike will be pleased as the business becomes more focused on medical products, services and profitability. The Company has many assets and capabilities that position it as a strong player in the medical cannabis market. By developing these assets, the Company intends to establish itself as a global medical leader focused on enhancing the lives of its patients.
Net revenue for Q3 2021 was $6.2 million, representing a 3% decline quarter-over-quarter as compared to Q2 2021.
Sales, general and administrative expenses were $3.4 million in Q3 2021, compared to $4.3 million in Q2 2021, a decrease of 21% driven by reductions in salaries and wages, and in professional fees.
The Company’s adjusted EBITDA(1) was ($2.1) million for the quarter, compared to ($3.0) million in Q2 2021, a 30% improvement. The improvement in EBITDA is driven by diligent expense reductions.
Cash and cash equivalents decreased from $15.7M in Q1 2021 to $12.4M in Q3 2021, driven by the Company’s operating losses and changes in working capital.
Key Performance Indicators
|KPI (P&L amounts in millions)||Q3 2021||Quarter-over-
|Adjusted EBITDA (1)||($2.1)||30%||($3.0)|
|Cash and equivalents||$12.4||-21%||$15.7|
|Net flower price per gram (Canada only)||$6.18||+13%||$5.46|
(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 three- and nine-months ended September 30, 2021, available under the Company’s profile at www.sedar.com.
In Q3 2021, VIVO began to focus on leveraging its assets to create value in the medical cannabis segment in Canada, Australia and Germany. VIVO believes that leveraging these assets will generate long-term shareholder value and accelerate its path to profitability. The Company’s assets, highlighted below, support its strategy of focusing on the medical cannabis segment.
Canna Farms and ABcann Medicinals
Canna Farms and ABcann Medicinals together have more than fifteen years of experience supporting tens of thousands of cannabis medical patients with a wide range of conditions and symptoms and together have amassed a deep understanding of patient motivations.
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. According to Vivintel’s Spring 2021 Canadian Cannabis Consumer Study, Canna Farms™ is one of the top health and wellness 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 Farms has many thousands of patients who have tracked themselves and self-reported their outcomes using the Strainprint app on nearly 100 different Canna Farms™, Beacon Medical™, Fireside™ and Lumina™ products in over 200,000 sessions. Due to it being the first licensed producer to partner with Strainprint, Canna Farms 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 online medical store. In this way patients can access a broad selection of medical cannabis products from some of the largest medical cannabis suppliers in Canada.
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 oils, distillates, concentrates and more advanced formulations of VIVO’s current and anticipated portfolio of medical products, as well as edibles and topicals.
Australia, Germany and other International Markets
VIVO continues to make headway with 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 currently has a strong medical brand established in Australia and leverages its Canadian knowledge base to accelerate product efficacy, cannabis medical information sharing, and sales growth in that market. 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.
On July 29, 2021, the Company announced that its EU-GMP/GDP 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 ABcann Medicinal affiliate’s GMP-certified Napanee, Ontario site, into Europe. This followed the March 11, 2021 announcement that VIVO’s Vanluven facility in Napanee, Ontario had 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 took effect immediately and has enabled 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. ABcann has harvested and bottled its first lot of whole-flower to Germany under EU-GMP production conditions. In October 2021 30 kgs of dry flower was successfully shipped to Germany. This was an enormous milestone for the company and paves the way for higher volumes to be shipped in the near future.
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.
The Company purchased its Harvest Medicine (“HMED”) operations in 2018 and since the acquisition has leveraged clinical insights from thousands of HMED patient interactions 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 novel products that meet patients’ needs and give VIVO a competitive edge.
As noted below under the heading “Current Outlook – COVID-19 Pandemic”, the Company temporarily suspended in-clinic visits at its Harvest Medicine clinics. The Company’s HMED Connect telemedicine platform is proving 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.
Patient Care Expertise
The Company has provided service in over 150,000 patient interactions. Canna Farms’ best-in-class, award-winning, Patient Care Team has been providing patient services since 2014 and has firsthand expertise in education consultations, dosage guidance, product ordering, and long-term medication management. With patient-centricity at its core, Canna Farms is committed to widening its product offerings and providing best-in-class support programs including Compassionate Care, Veterans, and First Responders, so that all patients have access to affordable quality cannabis as medicine.
Innovation-Driven Branded Organization
VIVO has a commitment to pursuing innovation throughout its value chain. The Company is also using its robust data insights as a foundation for the development of novel products that provide patient benefits and that bring a strong competitive edge and high margins.
In the third quarter, VIVO launched several new products on its online medical marketplace based on patient feedback including Canna Farms™ Brick Hash, Canna Farms™ Pink Kush 28-gram large format flower, Canna Farms™ multi-pack pre-rolls, and Beacon Medical™ Bal | T balanced topical cream.
VIVO continues to advance its product development of a unique line of specific medical cannabis formulations produced under pharmaceutical quality standards. VIVO believes that a significant catalyst to increased medical cannabis use is the introduction of new medical-grade, precise-dosed, stable formulations.
In 2020 and early 2021, the global economy, and society generally, was in a state of upheaval as a result of the COVID-19 pandemic. This crisis continues to have an unprecedented impact on the markets, employees, customers, patients, and business partners. Although these impacts were severe, things appear to be improving, and VIVO continues to forge ahead developing its strategies and redefining its core values.
Harvest Medicine continues to limit in-clinic visits while expanding the use of its HMED Connect telemedicine platform for phone and video consultations. Harvest Medicine continues to monitor and assess the reopening of its locations.
Despite the foregoing, VIVO continues to monitor COVID-19 developments and has implemented enhanced personal safety and sanitation measures at all its facilities. VIVO’s production sites have continued operations throughout the pandemic.
VIVO coordinated an internal vaccination clinic at its Hope facility for frontline essential workers and has conducted a series of internal mental health & wellness sessions to support employees with managing stress and building resilience during the pandemic.
Q3 2021 Results Video
An earnings overview video will be available on the VIVO Cannabis website (www.vivocannabis.com).
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
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; the ability of the Company’s growth initiatives to drive future profitable sales beyond 2021; and that the products generated from the Company’s partnership with Pharmascience Inc. are intended to maximize therapeutic benefit to patients. 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 three- and nine-months ended September 30, 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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