Q4 2021 net revenue increased by 66%
year-over-year
HempFusion Wellness Inc. (TSX:CBD.U) (OTCQB:CBDHF) (FWB:8OO)
(“HempFusion” or the “Company”), a leading health and wellness
Company offering premium probiotic supplements and products
containing CBD, announces its preliminary and unaudited Q4 and
Annual 2021 results.
Fourth Quarter 2021 Business and Unaudited Financial
Highlights:
- Q4 2021 net revenue of $3.7 million increased approximately 66%
over Q4 2020 pro-forma net revenue of $2.2 million and 19% versus
Q3 2021.
- Gross Profit was $1.6 million or 43% of net revenue in Q4
unchanged from the prior quarter, representing no decline even
though rising production and material costs were experienced.
- After quarter end, the Company implemented a strategic price
increase that is expected to drive gross margins directionally
towards its goal of 50% or greater for 2022.
- Cost savings initiatives announced during the quarter helped
reduce operating expenses by over $1.1 million.
- The quarter included only a partial impact from recent cost
savings initiatives, and the Company now expects its ongoing
efficiency efforts will drive at least a $6 million reduction in
operating expenses in 2022 versus prior expectations of $4
million.
2021 Preliminary and Unaudited Annual Results:
- 2021 net revenue of $9.1 million increased 36% over the prior
year. Including the impact of acquisitions, consolidated pro-forma
net revenue for 2021 was $12.1 million.
- Preliminary gross profit margin for 2021 more than doubled from
16% to 36%, mainly due to the addition of the higher margin
acquisitions.
- Prelim operating expenses for the year increased 12% on a
pro-forma basis. Cost savings initiatives implemented late in Q4
resulted in a 15% OPEX reduction during the quarter with cost
savings expected to carry into 2022 and beyond.
Other Key Highlights:
- Due to Organic expansion and through the Acquisition, the
Company and its family of brands can be found in more than 18,000
retail locations.
- The Company’s brand Probulin Probiotics achieved MOH (Ministry
of Health) Registration and assigned DDC’s (Dubai Drug Code)
numbers authorizing four of its products to be sold as drugs in the
UAE. This is a significant accomplishment, making these products
eligible to be prescribed by physicians, dispensed by pharmacists,
and paid for by health insurance.
- On December 31, 2021, HempFusion’s exclusive and proprietary
hemp-derived CBD extract achieved self-affirmed Generally
Recognized as Safe (GRAS) status making the Company one of the
select few that stand fully prepared to meet or exceed US &
global compliance standards. The Company expects this status to
drive significant incremental revenue growth at retail.
- Probulin Probiotics finished 2021 as the fastest growing
probiotic company in the top 12 brands according to SPINS data and
has achieved this for approximately three years in a row.
- Sagely Naturals maintained its #1 spot in Drug with over 25%
market share and #1 in MULO (Multi Outlet) with an over 14% market
share, according to SPINS IRI data.
Because the Company’s auditors experienced unavoidable capacity
challenges with a reduction of available auditors and support
manpower, along with the complexity of the audit given the
consolidation of two acquisitions during the year that previously
had not been audited, the filing of the Company’s audited financial
statements and related management discussion and analysis, related
CEO and CFO certifications and annual information form for the year
ended December 31, 2021 have been delayed (collectively, the
“Annual Financial Filings”). The Company anticipates that it
will be able to file the Annual Financial Filings by or before
April 29, 2022.
Due to the delay in the filing of the 2021 Annual Financial
Filings, Pursuant to National Policy 12-203 Management Cease Trade
Orders (“NP 12-203”) the Company has voluntarily applied to
the applicable securities regulatory authorities and been approved
for a management cease trade order related to the Company’s
securities to be imposed against the Chief Executive Officer and
Chief Financial Officer of the Company to trade securities of the
Company (the “MCTO”). The MCTO will be in effect until the
Annual Financial Filings are filed. All other securityholders will
still be able to trade in the securities of the Company in
accordance with applicable securities laws.
Until the Annual Financial Filings are filed and the MCTO has
been revoked, the Company intends to continue to satisfy the
provisions of the alternative information guidelines specified in
NP 12-203 by issuing default status reports in the form of further
press releases every two weeks.
About HempFusion Wellness Inc.
One of a select few hemp-derived CBD companies that are today
fully prepared to meet or exceed expected global guidance,
HempFusion Wellness Inc. is a leading health and wellness company
whose family of premium consumer brands include HempFusion™, Sagely
Naturals™, Apothecanna™, and Probulin Probiotics™, one of the
fastest-growing probiotics companies in the United States according
to SPINS reported data.
Among the handful of CBD companies who have achieved
Self-Affirmed GRAS status, the HempFusion family of brands’ product
portfolio comprises 112 SKUs including USDA Organic Certified
Tinctures, proprietary FDA Drug Listed Over-The-Counter (OTC)
Topicals, probiotic supplements and skin care products, a White
Label division and more. With a strong focus on research and
development, HempFusion Wellness has 43 products under
development.
Available from more than 18,000 US retail locations across all
50 states, HempFusion Wellness products are also available in
China, Mexico, Ireland, United Kingdom, United Arab Emirates, South
Korea and Canada and may be purchased online from each brand’s
website, The Probulin Store on Amazon.com, Alibaba’s Tmall.com, the
world’s largest cross-border online marketplace, and a multitude of
additional e-commerce sites.
For more information, visit www.hempfusion.com.
Follow HempFusion on Twitter, Facebook and Instagram.
Notes: (1) Preliminary and unaudited financial results are
subject to customary financial statement procedures by the Company
and its auditors. Actual results could be affected by subsequent
events or determinations. While the Company believes there is a
reasonable basis for these preliminary financial results, the
results involve known and unknown risks and uncertainties that may
cause actual results to differ materially. These preliminary fiscal
results represent forward-looking information. See "Forward-Looking
Statements".
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements and
forward-looking information within the meaning of Canadian
securities legislation (collectively, “forward-looking
statements“) that relate to HempFusion’s current expectations
and views of future events. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always,
through the use of words or phrases such as “will likely result”,
“are expected to”, “expects”, “will continue”, “is anticipated”,
“anticipates”, “believes”, “estimated”, “intends”, “plans”,
“forecast”, “projection”, “strategy”, “objective” and “outlook”)
are not historical facts and may be forward-looking statements and
may involve estimates, assumptions and uncertainties which could
cause actual results or outcomes to differ materially from those
expressed in such forward-looking statements. No assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not
be unduly relied upon. These statements speak only as of the date
of this news release. In particular and without limitation, this
news release contains forward-looking statements relating to the
anticipated timing of filing the Annual Financial Filings,
anticipated reduction in operating expenses in the Company’s fiscal
2022, the Company providing updates with respect to the Annual
Financial Filings, statements in respect of the Company’s financial
results for the three months ended March 31, 2021, and the filing
of the financial statements and related management’s discussion and
analysis in respect thereof and the Company’s other plans, focus
and objectives.
Forward-looking statements are based on a number of assumptions
including that the Company will be able to complete the Annual
Financial Filings and file them with the securities regulatory
authorities when anticipated. The forward-looking statements are
subject to a number of risks and uncertainties, many of which are
beyond the Company’s control, which could cause actual results and
events to differ materially from those that are disclosed in or
implied by such forward-looking statements. Such risks and
uncertainties include, but are not limited to, that there may be
continued delays with respect to preparation of and filing of the
Annual Financial Filings, the duration of the MCTO, the impact and
progression of the COVID-19 pandemic and other factors set forth
under “Cautionary Note Regarding Forward-Looking Statements” and
“Risk Factors” in the annual information form of the Company dated
March 31, 2021, and available under the Company’s profile on SEDAR
at www.sedar.com. HempFusion undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by law. New factors emerge from time to time, and it is not
possible for HempFusion to predict all of them or assess the impact
of each such factor or the extent to which any factor, or
combination of factors, may cause results to differ materially from
those contained in any forward-looking statement. Any
forward-looking statements contained in this news release are
expressly qualified in their entirety by this cautionary
statement.
Financial Outlook
This press release contains a financial outlook within the
meaning of applicable Canadian securities laws. The financial
outlook has been prepared by management of the Company to provide
an outlook for the Company's forecasted revenue for the three-month
period ending March 31, 2021, and may not be appropriate for any
other purpose. The financial outlook has been prepared based on a
number of assumptions including the assumptions discussed under the
heading "Forward-Looking Statements" above and assumptions with
respect to market conditions, pricing, and demand. The actual
results of the Company's operations for any period will likely vary
from the amounts set forth in these projections and such variations
may be material. The Company and its management have approved the
financial outlook in this press release and believe that it has
been prepared on a reasonable basis and such financial outlook is
being provided for the purpose of providing further information
about the Company's future business operations. However, because
this information is highly subjective and subject to numerous
risks, including the risks discussed under the heading
"Forward-Looking Statements" above, it should not be relied on as
necessarily indicative of future results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220404005343/en/
Investor Relations: Eric Balshin +1 437-826-9911
eric@sophiccapital.com Company Contact: Jason Mitchell, N.D. Chief
Executive Officer and Director ir@hempfusion.com
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