- Net revenue of $5.1 million,
compared to $5.8 million in Q4 2018 –
Q4 2018 sales benefited from initial product stocking by provincial
distributors
- Adjusted EBITDA of ($2.2M),
compared to ($7.3M) in Q4 2018
- Cash and short-term investments (excluding strategic equity
investments) of $68.4 million as at
March 31, 2019
- Net selling price of VIVO's premium cannabis dry flower
products was $7.70 per gram (top-tier
in the industry), up from $7.51 in Q4
2018
- B.C. and Ontario facility
expansions received Health Canada approval in March 2019 and are expected to add over 4,000
kilograms per year of premium cultivation, with initial packaged
product entering the market in the second half of 2019
NAPANEE, ON, May 29, 2019 /CNW/ - VIVO Cannabis Inc.
(TSX-V: VIVO, OTCQX: VVCIF) ("VIVO" or the
"Company"), a leading provider of premium cannabis products
and services for the medical and adult-use markets and licensed
producer of cannabis under the Cannabis Act through
its wholly-owned subsidiaries, Canna Farms Limited ("Canna
Farms") and ABcann Medicinals Inc. ("ABcann"), and its
medical cannabis clinic network operated by Harvest Medicine Inc.
("Harvest Medicine"), today released its Q1 2019 financial
and operating results.
"The first half of 2019 has been focused on increasing VIVO's
production capacity. With the recent doubling of capacity at both
our Canna Farms and Vanluven facilities, we have been very
successful in that regard," said Barry
Fishman, President and Chief Executive Officer of VIVO. "Our
goal has always been to increase long-term shareholder value by
establishing ourselves as a premium provider of cannabis products
and services. We are lowering our cost per kilogram through
increased production capacity, thereby realizing economies of
scale."
Strategic Overview
VIVO has developed its strategic plan for growth and is focusing
its resources on execution and communicating its progress to its
stakeholders. The key priorities are as follows:
- Expanding capacity and increasing production
capability – In Q1 2019, VIVO doubled its annual
production capacity at both its Canna Farms facility in
Hope, B.C., and its Vanluven
facility in Napanee, Ontario, and
commenced construction on Phase 5 of the Canna Farms facility. VIVO
has also acquired additional properties to further expand – 2 acres
in Hope, B.C., adjacent to the
Canna Farms facility, and 16 acres zoned for cannabis cultivation
within 15 minutes of the Canna Farms facility. This is in addition
to the 65 acres already owned by the Company minutes from the
Vanluven facility in Napanee,
Ontario, where VIVO is completing the construction of its
new Kimmett facility.
- Leadership in the Canadian medical market – VIVO
has continued to build upon the Canna Farms medical cannabis
platform (https://www.cannafarms.ca), where patients can access the
widest selection of cannabis strains, and where cannabis
cultivators can enter the medical marketplace, make a fair return
on their quality products, and avoid having to implement the
processes necessary to navigate the complexities of the medical
cannabis fulfillment space. The platform now provides patients
access to products cultivated by four separate licensed producers.
Harvest Medicine's business continues to expand, with the roll out
of the HMED Connect telemedicine platform bringing medical cannabis
information to the wide patient population that can benefit from
being educated about the applications and proper use of medical
cannabis.
- Innovation and product development – VIVO's
GMP-designed Vanluven facility is conducting ongoing research
related to the development of optimized indoor, seasonal greenhouse
and outdoor grown cannabis cultivars, as well as developing as a
center of excellence for extraction via multiple methodologies, and
for formulation expertise in the development of cannabis infused
edibles and beverages. VIVO expects to receive Health Canada
approval of its supercritical CO2 extraction facility in
Q2 2019 and additional extraction capacity is expected to come
on-line in Q3 2019. The seasonal greenhouses, which represent Phase
I of VIVO's innovative new Kimmett facility, are currently
undergoing a pre-licensing review by Health Canada and, pending
approval, are expected to produce up to 3,000 kilograms of cannabis
for extraction in 2019. The Company has multiple products in
development in anticipation of the opening of the edibles,
concentrates and beverages market in late 2019, as well as multiple
cannabis-based medical products in development.
- International market growth – VIVO continues to
focus on targeted international expansion activities and intends to
expand into select markets in which medical cannabis can be legally
prescribed, leveraging the strong pharmaceutical background of its
leadership team, its experience operating the Harvest Medicine
clinics, and its work with patients that have benefited from
medical cannabis, to increase its global footprint as a leader in
the medical cannabis sector. One of the Company's partners is
currently propagating VIVO cultivars in a GMP facility in
Europe. The Company's Australian
strategy is also developing along multiple lines in step with the
expansion of the Australian medical market. VIVO has shipped
product to Australia from both its
Canna Farms and Vanluven facilities as of Q1 2019.
VIVO's revenue decreased in the first quarter of 2019 as
compared to the fourth quarter of 2018, as expected, as Q4 2018
sales benefited from initial product stocking for the adult-use
market by provincial distributors. VIVO's net income of
$5.0 million (basic and diluted
income of $0.02 per share) for the
first quarter of 2019, as compared to its net loss of $8.0 million for the fourth quarter of 2018, was
primarily attributable to an unrealized gain on financial assets of
$8.9 million related to an increase
in the market value of certain equity investments held by the
Company, which is anticipated to be reversed in Q2 2019.
As at March 31, 2019, cash and
cash equivalents and short-term investments were $68.4 million, as compared to $74.8 million at December
31, 2018.
Additional details with respect to VIVO's financial results are
available in the Company's management's discussion and analysis and
interim financial statements for the period ended March 31, 2019, both of which can be found on
SEDAR at www.sedar.com.
Key Financial
Results
|
|
( $ millions
except per share amounts)
|
Three Months Ended
March 31, 2019
|
Three Months Ended
December 31, 2018
|
Three Months Ended
March 31, 2018
|
Net
revenue
|
5.1
|
5.8
|
0.5
|
Net income
(loss)
|
5.0
|
(8.0)
|
(7.0)
|
Basic and diluted
income (loss) per share
|
0.02
|
(0.03)
|
(0.08)
|
Adjusted
EBITDA(1)
|
(2.2)
|
(7.3)
|
(3.2)
|
(1) Adjusted EBITDA is not a measure
of financial performance under IFRS. The definition for Adjusted
EBITDA, which excludes unrealized gains and losses related to
strategic investments, can be found in the Company's management's
discussion and analysis for the three months ended March 31, 2019,
which is available under the Company's profile at
www.sedar.com.
|
Business Segment Overview
VIVO's mission is to create long-term shareholder value by
focusing on achieving its strategic priorities as outlined above,
through the operation of its three primary business segments in the
cannabis sector, being:
-
Premium Cannabis Product Segment operated
by Canna Farms and ABcann, through which the Company produces and
sells cannabis and cannabis-derived products for medical purposes
and for the adult-use market
- Medical Cannabis Clinic Segment, under which the
Company operates education-focused, patient-centric, cannabis
discovery clinics under its Harvest Medicine brand
- Corporate and International Segment, which relates
to VIVO's non-production related corporate activities, as well as
the Company's international operations
Premium Cannabis Product Segment
Canna Farms
In March 2019, Canna Farms,
located in Hope, B.C., received
Health Canada approval for the expansion of its Yale Road facility.
Over 30,000 clones have been propagated to fill the space, which is
expected to result in over 3,000 kilograms of additional annual
production capacity – doubling the previous capacity in B.C. Canna
Farms also recently received municipal approval for the
construction of Phase 5 of its facility, which, following its
expected completion in Q1 2020 and the receipt of Health Canada
approval, is expected to result in additional internal annual
production capacity of 2,500 kilograms.
The Canna Farms medical cannabis platform continues to grow, and
now offers the largest variety of medical cannabis products in
Canada. The platform now provides
patients access to premium products cultivated by four separate
licensed producers as, subsequent to March
31, 2019, VIVO announced the addition of GTEC Holdings Ltd.
to the list of licensed producers selling product to medical
patients via the platform.
Canna Farms continues to receive the strong support of its
clients, winning the People's Choice Award for "Best LP Customer
Service" at the O'Cannabiz Industry Gala in April 2019.
ABcann
In March 2019, ABcann, located in
Napanee, Ontario, received Health
Canada approval to begin cultivation in the expansion of its
Vanluven facility, which includes production space built to GMP
standards and a recently commissioned supercritical CO2
extraction suite to produce concentrates. This approval more than
doubles the facility's annual production capacity.
ABcann continues to invest in initiatives focused on novel
genetics and growing techniques to maximize yields. In March 2019, it received an amendment to its
production license allowing for the sale of cannabis oil, which
will allow it to significantly expand its product lines for both
medical cannabis patients and adult-use consumers. It intends to
use its processing license, which also allows the manufacturing and
preparation of other concentrates, to manufacture new products for
the edibles and beverage segments when those markets open in late
2019. The Vanluven facility also houses a world class cannabis
R&D lab, where the Company is developing proprietary
cultivation techniques in partnership with the University of Guelph. ABcann is working towards
obtaining EU-GMP certification of the Vanluven facility in late
2019 to allow for the export of medical cannabis to international
markets.
Construction is nearing completion at Phase 1 of ABcann's
Kimmett facility, consisting of four seasonal greenhouses and an
associated header house, which are expected to be completed in Q3
2019. Following receipt of Health Canada approval, this first phase
of the Kimmett facility is expected to provide an additional 3,000
kilograms of annual production capacity at one of the lowest
capital and operating costs per gram in the industry.
Medical Cannabis Clinic Segment
Harvest Medicine operates five medical cannabis clinics in the
provinces of Alberta, New Brunswick, Nova
Scotia and Ontario,
including a 3,500 square foot clinic in Northland Village Mall in
Calgary, Alberta, and a 3,000
square feet clinic in the St. Albert Centre in St. Albert, Alberta.
In October 2018, Harvest Medicine
launched its HMED Connect telemedicine platform, which
allows patients across Canada,
where permitted, to access Harvest Medicine's class-leading
education and patient-centric model at any time. HMED
Connect is expected to create significant partnership
opportunities with pharmacies, long-term care facilities and
insurance companies.
Through its clinics and HMED Connect, Harvest Medicine
serves over 27,000 registered patients, making it one of the top
clinic networks in Canada. It
continues to evaluate new clinic locations throughout Canada.
Corporate and International Segment
VIVO has increased its international operations in recent months
through its wholly-owned subsidiaries, ABcann Germany GmbH
("ABcann Germany"), which is focused on the European market,
and Beacon Medical Australia Pty Ltd. ("Beacon Australia"), which provides an entry point
to the Asia-Pacific market.
In the first quarter of 2019, VIVO exported three of its
proprietary cultivars, covering a broad range of cannabinoid
profiles, to Europe. These
cultivars are now being propagated in a GMP-designed facility to
form VIVO's genetic basis for commercial cultivation in
Europe and are intended to be sold
through German pharmacies pursuant to a supply agreement with
VIVO's distribution partner.
In March 2019, ABcann Germany
received its pharmaceutical wholesale license and GDP-certificate
from the regulatory authorities of the state of Brandenburg,
Germany. The Company is currently
awaiting its narcotic and import license approvals in Germany to facilitate imports of products to
the European medical market from other countries, including
Canada.
VIVO is active in the Australian medical cannabis market through
Beacon Australia and has provided its products to Australian
patients with a variety of medical conditions. The market in
Australia is expected to grow and
the Company believes it will benefit from the extensive
opportunities evolving there.
Beacon Australia has partnered
with Australian Medical Cannabis Services and is currently
conducting an observational study on the use of cannabinoids as
therapy for chronic pain. Led by a group of well-known pain
specialists in Melbourne, Australia, the study is expected to provide
long-term data that helps evaluate the efficacy of medical cannabis
in treating pain and further support the development of VIVO's
portfolio of medical cannabis products.
Subsequent to March 31, 2019, VIVO
signed a distribution agreement with Burleigh Heads Cannabis Pty
Ltd., one of Australia's leading
medicinal cannabis distributors. The agreement is expected to
increase the ability of Australian patients to access VIVO's
high-quality medicinal cannabis flower, oil and other products via
approved channels.
About VIVO Cannabis™
VIVO, based in Napanee,
Ontario, 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 with proprietary plant-growing technology at its Canna
Farms facility in Hope, B.C., and
at its Vanluven facility in Napanee,
Ontario. VIVO has a collection of premium brands targeting
unique customer segments, including Beacon Medical™, Fireside™,
Canna Farms™ and Lumina™. The Company is significantly expanding
its production capacity and distribution channels; growing its
domestic medical cannabis platform, including Harvest Medicine, its
patient-centric, highly scalable network of specialty medical
cannabis clinics and services; promoting production and cultivation
innovation and pursuing partnership and product development
opportunities; and actively focusing on growth in select
international markets, including Germany and Australia. VIVO has a healthy balance sheet
and is well-positioned to accelerate its growth in Canada and internationally. For more
information visit: www.vivocannabis.com
ON BEHALF OF THE BOARD OF DIRECTORS
Barry Fishman
CEO and Director
Neither 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.
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 plans to expand
capacity and expected future capacity; expected timing of
completion of expansion projects and GMP certification; expected
timing of receipt of regulatory approvals; proposed future product
lines; the Company's objectives to grow its product line and
distribution network, including through the creation of key
strategic partnerships; and the Company's intent to pursue
opportunities domestically and internationally. 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
Company may not be able to achieve its production capacity targets
at some or all of its facilities; that the Company may not be able
to launch new products in the time expected or at all; that the
Company may not be able to achieve competitive margins; that the
Company may not be able to increase the sales of its products in
the current domestic market or to successfully launch new product
lines in the time expected or at all; 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 licenses; that the Company may not be able to
serve larger and broader markets as a result of its production
increase; that the Company may be unable to retain its key talent;
that the Company's expansion plans may not be completed in the time
expected or at all; that the Company may not obtain necessary
regulatory approvals; 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, and the more extensive
risk factors included in the Company's annual information form for
the year ended December 31, 2018,
which is available on SEDAR, carefully 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.
SOURCE VIVO Cannabis Inc.