Lifeist Wellness Inc. (“Lifeist” or the “Company”) (TSXV:
LFST) (FRANKFURT: M5B) (OTCMKTS: NXTTF), a health-tech
company that leverages advancements in science and technology to
build breakthrough companies that transform human wellness, today
reported its financial results for year ended November 30, 2021.
All financial figures are in Canadian dollars unless otherwise
indicated.
Fourth Quarter 2021
Highlights
- While net revenue decreased 11% to
$6.4 million in the fourth quarter ended November 30, 2021 (“Q4
2021”) (compared to $7.2 million in the same period last year (“Q4
2020”)), this was mainly due to declines in hardware sales in
Europe and medical cannabis sales in Canada, both operations having
since been discontinued1. Indeed, the Company demonstrated
continued growth of its Canadian recreational cannabis businesses,
and subsidiary businesses Australian Vaporizers Pty Ltd
(“Australian Vapes”) and Findify AB (“Findify”), such that core
Company net revenue, (in other words excluding European hardware
sales and medical cannabis sales in Canada), increased 4% in Q4
2021 (compared to Q4 2020).
- Gross profit and margin increased
to $0.7 million and 11% of net revenue in Q4 2021 compared to Q4
2020, the second highest result in two years, including $0.5
million gross margin from the Company’s Canadian recreational
cannabis business, compared to $0.3 million negative margin from
the same business in Q4 2020.
- EBITDA improved substantially by
narrowing losses to $2.8 million in Q4 2021 (compared to a $5.7
million loss in Q4 2020 and a $5.4 million loss in the third
quarter ended August 30, 2021) noting that Q4 2021 EBITDA loss
results are net of incremental investments into emerging businesses
including nutraceuticals.
- Working capital position of $16.4
million at year end remains strong.
"The past year was one of transitioning to
wellness, sharpening our strategic focus, and investing to drive
sustainable growth," said Meni Morim, CEO of Lifeist. "As a
portfolio of wellness companies, Lifeist is growing its B2B
recreational cannabis distribution and manufacturing business, and
expanding its new nutraceutical division. We believe these
opportunities provide the most direct and viable path to value
creation, enabling Lifeist to leverage its capabilities and
expertise to differentiate itself in the growing wellness
economy.”
Added Mr. Morim, “With Mikra’s first
nutraceuticals product, CELLF, a novel cellular therapeutic
compound targeting systemic fatigue, already in pre-orders and our
distribution, logistics and CannMart Labs businesses driving growth
in our recreational B2B cannabis business, we believe we have the
platform for sustainable growth."
Operating Highlights
Cannabis (CannMart Inc. (“CannMart”) and
CannMart Labs Inc. (“CannMart Labs”))
- Recreational cannabis continues to
be Lifeist’s largest driver of performance accounting for 58% of
the Company’s net revenue in Q4 2021, with growing gross margins,
improved inventory management, an expanded distribution network,
and bringing an award-winning brand to market.
- The cannabis B2B gross margin has
trended positively throughout 2021: Q1 -$0.9 million, Q2 -$0.4
million, Q3 $0.2 million, Q4 $0.5 million.
- As a result of more efficient
inventory management, Inventory Days on hand improved from 109 days
in Q4 2020 to 87 days in Q4 2021, a decrease of 22 days.
- After establishing a supply
agreement in Société québécoise du cannabis (“SQDC”) in March 2022,
CannMart is now approved for the sale of cannabis and
cannabis-derived products from provincial and territorial bodies in
Ontario, Alberta, British Columbia, Quebec, Manitoba, New
Brunswick, Saskatchewan, Yukon, Nunavut and North West Territories,
which provides it with access to 95% of Canada’s population.
- CannMart Labs’ state-of-the-art BHO
extraction facility commenced, manufacturing and shipping product
in November 2021, and in January 2022, its in-house brand “Roilty”,
launched earlier in 2021, won the prestigious “Canadian LP Brand of
the Year” award at the 2021 ADCANN Awards. Roilty product is now
live in Alberta, Saskatchewan, Manitoba, Yukon, Northwest
Territories and Nunavut with purchase orders in place for
distribution in Ontario.
- Subsequent to Q4 2021, CannMart
completed the successful transfer of registered medical patients to
Medicibis, operators of Mendocannabis.ca. The agreement is part of
the Company’s strategic initiative to sharpen its focus on B2B
recreational cannabis and nutraceuticals.
Nutraceuticals (Mikra)
- Lifeist launched
biosciences and consumer wellness company Mikra, Cellular Sciences
Inc. (“Mikra”), incorporated in the U.S., which expands the
Company’s total addressable market to include the growing $105
billion nutraceutical market2.
- As part of the nutraceuticals
endeavor, the Company entered into a wide ranging collaboration
with baseball legend Jose Bautista who joined as an advisor to and
investor in Lifeist and Mikra. The collaboration includes launching
with Bautista, on an exclusive basis, cellular health products and
accessories, the first of which is targeted for distribution in the
U.S. by mid-2022.
- Mikra filed a patent application
with the U.S Patent and Trademark Office to improve walls and moats
around its business with a view to improving shareholder value
through IP creation, and partnered with InVivo Biosystems, Inc. for
pre-clinical genomic trials to further strengthen its patent
claim.
- Mikra launched
its first product, CELLF, a novel cellular therapeutic compound
targeting systemic fatigue, and began pre-sales in March 2022 with
a waitlist of over 40,000 people.
Australian Vapes
- Australian Vapes
continued to generate solid financial performance in Q4 2021
characterized by strong website traffic growth and positive unit
economics, which drove record revenue of $1.9 million in Q4 2021
compared to $1.6 million in Q4 2020, representing an increase of
15%.
- The team is in
the process of negotiating lease terms for a larger improved
location, upgrading from its recently flood-damaged premises, with
a view to resuming optimized and improved operations by the end of
April 2022. The Company is confident for a quick and full recovery
on account of superior customer service, a high repeat customer
rate, and measures already put into place to maintain customer
loyalty.
Findify
- Findify delivered
its highest revenue quarter ever, with revenue of $470 thousand in
Q4 2021 compared to $405 thousand in Q4 2020, representing an
increase of 16%.
- Since Findify was acquired by
Lifeist in 2018, Findify has taken the time to identify the
appropriate consumer market, reorient its sales strategy and retain
the appropriate talent to make long-term growth stable and
scalable. Findify has since completed changes to its customer mix
from an emphasis on small businesses to medium sized
businesses.
- In 2022,
Findify expects more of its growth to come from continued product
innovation. The most significant product release is Active Sync,
released in March 2022, which is a new infrastructure that allows
for real-time synchronization of any product data with Shopify.
Active Sync solves a major pain point for online merchants, which
is sync time.
Financial Summary of Q4
2021
Net revenue decreased 11% to $6.4 million in Q4
2021 compared to $7.2 million in Q4 2020. The decrease was driven
by declines in hardware sales in Europe through Lifeist Bahamas and
declines in medical cannabis sales in Canada through CannMart, all
such operations having effectively ceased in 2022. This was
partially offset by the continued growth in sales of Canadian
recreational cannabis, Australian Vapes hardware revenue which
increased 15%, and Findify SaaS revenue which increased 16%.
Excluding Lifeist Bahamas hardware and CannMart medical cannabis,
net revenue increased 4%.
Gross margin was 11% of net revenue in Q4 2021
compared to a negative 1.1% in Q4 2020. The improvement was due to
production efficiencies across all segments and the focus on higher
value-added revenue streams in the B2B and recreational markets.
Within recreational cannabis, gross margins improved to $0.5 in Q4
2021 compared to a $0.3 million negative margin in Q4 2020, an
improvement of $0.8 million.
EBITDA loss narrowed to $2.8 million in Q4 2021
compared to $5.7 million in Q4 2020, due to higher gross margins
and improved performance across most business units, and
represented the fifth consecutive quarter of EBITDA loss
improvements. The reduced EBITDA loss was net of approximately $1
million of investments in emerging businesses including CannMart
Labs and Mikra.
Net loss was $4.0 million in Q4 2021 compared to
$6.4 million in Q4 2020, due to improved gross margins and a gain
of fair value of a convertible note receivable.
Financial Summary of Fiscal
2021
Net revenue decreased 9% to $22.8 million for
the year ended November 30, 2021 (“FY2021”) compared to $25.1
million for the year ended November 30, 2020 (“FY2020”). The
decrease was driven by declines in hardware sales in Europe through
Lifeist Bahamas and declines in medical cannabis sales in Canada
through CannMart, all such operations having effectively ceased in
2022. This was partially offset by the continued growth in FY2021
of Canadian recreational cannabis revenue which increased 25%,
Findify SaaS revenue which increased 16%, and Australian Vapes
hardware revenue which increased 10%, in each case in comparison to
FY2020. Excluding Lifeist Bahamas hardware and medical cannabis,
net revenue increased 19% compared to FY 2020.
Gross margin was 7% of net revenue in FY2021
compared to 6% in FY2020. The improvement was due to improved
efficiencies across all segments.
EBITDA loss narrowed to $21.6 million in FY2021
compared to $23.5 million in FY2020, due to higher gross margins
and a decrease in expenses as a result of management focus on more
profitable business units.
Net loss improved to $23.8 million in FY2021
compared to $26.4 million in FY2020.
Balance Sheet and Cash Flow
Cash and cash equivalents were $12.7 million as
of November 30, 2021, compared to $10.3 million as of November 30,
2020.
Inventories decreased to $5.4 million at
November 30, 2021 compared to $8.1 million at November 30, 2020,
reflecting the lower exposure related to the Company’s B2B business
focus, partially offset by initial inventory levels for
nutraceutical products.
Net cash used in operations was $5.2 million in
Q4 2021 compared to $4.0 million in Q4 2020.
Other Item
Subsequent to Q4 2021, on December 9, 2021, Fire
& Flower Holdings Corp. (“Fire & Flower”) entered into a
definitive agreement to acquire Pineapple Express Delivery Inc.
(“PED”), a holder of the Company’s convertible loan payable. On
January 25, 2022, Fire & Flower completed the acquisition of
PED, and, as part of the purchase, Fire & Flower assumed and
repaid a $2,040,077 convertible loan receivable owed to the Company
by PED. In addition, the Company received 75,100 common shares in
Fire & Flower on completion of the acquisition, with a further
258,478 common shares in Fire & Flower having been placed into
escrow pending completion of customary working capital adjustments
and subject to achievement of certain performance-based milestones
in its fiscal 2022 year.
Additional Information
The Company’s complete financial statements and
management’s discussion & analysis (“MD&A”) for FY2021 are
available on Lifeist’s website (www.lifeist.com) and SEDAR
(www.sedar.com).
About Lifeist Wellness Inc.
Sitting at the forefront of the post-pandemic
wellness revolution, Lifeist leverages advancements in science and
technology to build breakthrough companies that transform human
wellness. Portfolio business units include: CannMart, which
operates a B2B wholesale distribution business facilitating
recreational cannabis sales to Canadian provincial government
control boards; CannMart Labs, a BHO extraction facility for the
production of high margin cannabis 2.0 products; the CannMart.com
marketplace, which provides U.S. customers with access to
hemp-derived CBD and smoking accessories; Australian Vapes,
Australia’s largest online retailer of vaporizers and accessories;
Findify, a leading AI-powered search and discovery platform; and
Mikra, a biosciences and consumer wellness company seeking to
develop innovative therapies for cellular health.
Information on Lifeist and its businesses can be
accessed through the links below:
www.lifeist.comwww.cannmart.comwww.australianvaporizers.com.auwww.wearemikra.com
ContactsLifeist Wellness
Inc.Meni Morim, CEOMatt Chesler, CFA, Investor RelationsPh:
647-362-0390Email: ir@lifeist.com
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release or has in any way approved
or disapproved of the contents of this press release.
Non-IFRS Financial Measures
Management evaluates the Company’s performance
using a variety of measures, including “Net loss before income tax,
depreciation and amortization” and “Adjusted EBITDA”. The non-IFRS
measures discussed below should not be considered as an alternative
to or to be more meaningful than revenue or net loss. These
measures do not have a standardized meaning prescribed by IFRS and
therefore they may not be comparable to similarly titled measures
presented by other publicly traded companies and should not be
construed as an alternative to other financial measures determined
in accordance with IFRS.
The Company believes these non-IFRS financial
measures provide useful information to both management and
investors in measuring the financial performance and financial
condition of the Company.
Management uses these and other non-IFRS
financial measures to exclude the impact of certain expenses and
income that must be recognized under IFRS when analyzing
consolidated underlying operating performance, as the excluded
items are not necessarily reflective of the Company’s underlying
operating performance and make comparisons of underlying financial
performance between periods difficult. From time to time, the
Company may exclude additional items if it believes doing so would
result in a more effective analysis of underlying operating
performance. The exclusion of certain items does not imply that
they are non-recurring.
(i) Current and deferred income taxes,
depreciation and amortization, and share-based compensation were
excluded from the Adjusted EBITDA calculation as they do not
represent cash expenditures.(ii) Other income consisting of gain on
disposal of subsidiary, interest income, realized gain on
disposition of AFS investments, unrealized gain on derivatives and
other miscellaneous non-recurring income were excluded from
Adjusted EBITDA calculation.(iii) Non-recurring costs related to
restructuring and legacy issues were excluded from Adjusted EBITDA
calculation.(iv) Impairment loss relating to goodwill, customer
list, domains and brand names were excluded from Adjusted EBITDA
calculation.(v) Impairment loss relating to receivable is a
provision for expected credit loss to an associate and was excluded
from Adjusted EBITDA calculation.(vi) Share of associates loss, net
of tax, is excluded due to lack of control.
Forward Looking Information
This news release contains “forward-looking
information” within the meaning of applicable securities laws. All
statements contained herein that are not historical in nature
contain forward-looking information. Forward-looking information
can be identified by words or phrases such as “may”, “expect”,
“likely”, “should”, “would”, “plan”, “anticipate”, “intend”,
“potential”, “proposed”, “estimate”, “believe” or the negative of
these terms, or other similar words, expressions and grammatical
variations thereof, or statements that certain events or conditions
“may” or “will” happen.
The forward-looking information contained
herein, including, without limitation, statements related to: the
growth of Lifeist’s B2B recreational cannabis distribution and
manufacturing business and the expansion of its new nutraceutical
division and such businesses sustained growth, the expected date of
distribution of the first nutraceutical product to be developed in
collaboration with Bautista, and the timeline relating to
Australian Vapes resuming full operations are made as of the date
of this press release and is based on assumptions management
believed to be reasonable at the time such statements were made,
including, without limitation, Lifeist’s ability to continue to
increase revenue through its B2B recreational cannabis business and
to maintain momentum of expanding its nutraceutical business, its
ability to broaden its total addressable market and to evolve into
a recognized wellness company, the Company’s expectation that the
nutraceutical and wellness market will develop as currently
anticipated, the nutraceutical market will continue to be a
multi-billion dollar high-margin market, the introduction of new
products and brands will generate additional revenue, expectations
that CELLF and other cellular health products and accessories to be
developed by the Company will gain market acceptance along with the
expansion of the market for nutraceutical products, as well as
other considerations that are believed to be appropriate in the
circumstances. While we consider these assumptions to be reasonable
based on information currently available to management, there is no
assurance that such expectations will prove to be correct. By its
nature, forward-looking information is subject to inherent risks
and uncertainties that may be general or specific and which give
rise to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct and that objectives, strategic goals
and priorities will not be achieved. A variety of factors,
including known and unknown risks, many of which are beyond our
control, could cause actual results to differ materially from the
forward-looking information in this press release. Such factors
include, without limitation: the inability of the Company to
develop its business as anticipated and to increase revenues and/or
its profitable margin on such revenues, unanticipated changes to
current regulations that would adversely impact the Company’s
businesses, the unanticipated decline in demand for cannabis
products, unforeseen developments that would delay Mikra’s ability
to sell CELLF and any other developed nutraceutical product as
anticipated and in a timely manner, the risk that pre-clinical
trials relating to CELLF are not as successful as anticipated and
do not demonstrate the expected therapeutic benefits and/or fail to
strengthen the Company’s patent claim, the risk that the expected
demand for nutraceutical products in general and those of Mikra in
particular does not develop as anticipated, the failure to convert
the current number of subscribers on the pre-sales waitlist to
actual sales, regulatory risk, risks relating to the Company’s
ability to execute its business strategy and the benefits
realizable therefrom and risks specifically related to the
Company’s operations. Additional risk factors can also be found in
the Company’s current MD&A and annual information form, both of
which have been filed under the Company’s SEDAR profile at
www.sedar.com. Readers are cautioned not to put undue reliance on
forward-looking information. The Company undertakes no obligation
to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by applicable law. Forward-looking statements contained in
this news release are expressly qualified by this cautionary
statement.
Source: Lifeist Wellness Inc.
1 The Company has made a decision to discontinue
operations of: CannMart Inc.’s medical cannabis business including
online sales of hardware and accessories in Canada; CannMartMD Inc.
(booking platform for Canadian medical cannabis consultations); and
Lifeist Bahamas (hardware sales in Europe), as part of its strategy
to focus resources on growing existing businesses and its new
nutraceuticals and biosciences division. 2 Global Industry
Analysts, Inc., “Nutraceuticals - Global Market Trajectory &
Analytics”, July 2021.
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