Net revenue for Q2 2022 was $5.2 million
Company announced that Canna Farms received a Research Licence from Health Canada in June, 2022
Canadian Launch of Fireside™ Pink Kush and Girl Scout Cookies Full-Spectrum 510 Vapes
Australian sales delayed due to new regulatory requirements
Company announces cost savings workforce reductions focused on its Hope, BC Canna Farms facility
Company continues to grow sales in Germany completing the 5th export of dry flower from its EU-GMP certified facility in Napanee, ON
Toronto, Ontario--(Newsfile Corp. - August 15, 2022) - VIVO Cannabis Inc. (TSX: VIVO) (OTCQX: VVCIF) ("VIVO" or the "Company") today released its second quarter 2022 financial and operating results.
Net revenue for the second quarter of 2022 was $5.2 million which represents a 19% decrease compared to the same period for 2021, and a decrease of 25% vs Q1 2022 sales. The decline in sales was driven by a delay in Australia shipments due to the Australian regulatory requirements for all imported dry flower cannabis. Continued pricing compression, increased competition, and a decline in Health Canada medical client registrations contributed to downward pressure on revenue in the Canadian medical and rec markets.
General and administrative expenses remained flat for the three months ended June 30, 2022, compared to the same period for 2021.
The Company's Adjusted EBITDA increased by $0.7 million during the three months ended June 30, 2022, compared to the prior year driven by lower cost of sales, and partially offset by lower sales.
Key Performance Indicators
|KPI (P&L amounts in millions)||Q2 2022||Quarter-over-Quarter|
|Adjusted EBITDA (1)||($2.3)||(23%)||($3.0)|
|Cash and equivalents||$4.5||(40%)||$7.5|
(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 June 30, 2022, available under the Company's profile at www.sedar.com.
The Company's net loss decreased to $40.6 million and $44.9 million for the three and six months ended June 30, 2022, compared to the net loss of $5.5 million and $9.0 million for the three and six months ended June 30, 2021. This was driven by impairment charges in the three and six months ended June 30, 2022, of $44.7 million on intangible assets and $4.9 million on goodwill, offset by increases in income tax recovery - deferred of $12.6 million and $13.0 million respectively for the three and six months ended June 30, 2022. The Company is working to continue to manage expenses and improve margins while it focuses on growing revenue in the medical cannabis market.
In Q2 2022, the Company continued to sharpen the focus of its business activities on the medical market. It has utilized its enhanced supply and production capabilities resulting from the EU-GMP certification of its Vanluven Facility to begin to grow sales in Germany. It launched a range of strain-specific Fireside™ 510 vapes (CBD Canna Bliss, Pink Kush and Girl Scout Cookies) on its online medical marketplace.
In June 2022, the Company announced that Canna Farms received a Research Licence from Health Canada allowing it to possess cannabis for the purpose of conducting research. The Research Licence allows Canna Farms to evaluate its medical cannabis products based on taste, smell, feel and visual appeal for research purposes prior to the sale of these products. The Research Licence also allows Canna Farms to evaluate the products of strategic partners and third-party manufacturers sold on its curated medical e-commerce marketplace. VIVO feels that the use of this license will allow it to more quickly adjust its own cultivation practices and provide timely feedback to its supply partners, to ensure the on-going improvement of the quality of its product offerings.
VIVO remains focused on executing against its strategic priorities: the medical cannabis market in Canada and internationally. The Company has made significant progress in enhancing its internal supply and production capabilities, expanding its customer network, increasing its patient focused medical cannabis products and services, and accelerating its international medical business. VIVO believes focusing on its key priorities will generate long-term shareholder value and result in profitability.
As part of its continued effort to ensure cost efficiencies throughout the Company, including its internal supply and production capabilities, VIVO downsized its Hope, BC based Canna Farms facility, eliminating approximately 20% of its positions, as well as making some other changes to its commercial team. These changes are steps to improve efficiencies across the Company in light of challenging market conditions. VIVO is grateful for the efforts and dedication that the departing employees demonstrated during their tenure with the Company.
Patient Care Expertise
The Company has provided educational consultants and medical cannabis care in over 200,000 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 first-hand expertise in product selection and patient support. With patient-centricity at its core, in 2022 HMED launched several new educational materials for both patients and healthcare professionals.
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 proudly holds itself to the highest cultivation standards.
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 platform.
At the O'Cannabiz Industry Awards in June 2022, the Company was recognized for its Beacon Medical CBD topical cream product, winning the Best CBD Topical category. The successful launch of its Fireside CBD Canna Bliss 510 Vape was followed by the launch of single-strain Pink Kush and Girl Scout Cookies THC 510 Vapes.
Canna Farms launched GMO 91 as a new dry flower strain demonstrating potencies above 25% THC. Canna Farms operations in Hope, BC, 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. Its 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.
With all planned 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 medical cannabis market leadership established in Australia where it leverages its Canadian knowledge base to accelerate product efficacy, cannabis medical information sharing, and sales growth. 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. The Company has now sent five shipments of EU-GMP dry flower to Germany. The Company hopes to leverage its knowledge and expertise gained in other markets, to achieve success in Germany. 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 200,000 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.
The Harvest Medicine research team continues to evaluate real-world evidence patient outcomes across different medical conditions. In July, Harvest Medicine's first observational research study was published in Psychiatry Research, the largest study to date examining the impact of medical cannabis in anxiety & depression in over 7,362 patients.
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 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 network of medical cannabis clinics, has serviced over 200,000 patient visits. VIVO is pursuing focuses 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 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 June 30, 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.
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