Lifeist Wellness Inc. (
“Lifeist” or the
“Company”)
(TSXV: LFST) (FRANKFURT: M5B) (OTCMKTS:
NXTTF), a wellness company that leverages advancements in
science and technology to enable you to find your path to wellness,
today reported its financial results for the three and nine months
ended August 31, 2021. All financial figures are in Canadian
dollars unless otherwise indicated.
Third Quarter 2021 Financial
Highlights
- Gross revenue increased 12%
year-over-year to $7.1 million, led by cannabis growth of 34%.
- Gross profit and margin more than
doubled year-over-year to $0.9 million and 15% of Net revenue (23%
before inventory adjustment), the fourth consecutive quarterly
improvement.
- EBITDA loss narrowed to $5.4
million compared to $7.3 million in Q3 2020 and $5.9 million in Q2
2021, even with incremental investments into emerging businesses
including nutraceuticals.
- Net cash used in operating
activities decreased from $5.7 million in Q2 2021 to $4.9 million
in Q3 2021.
- Inventory management continues to
improve with reduced turnover days and lower holdings of
inventory.
- Working capital position of $19.5
million at quarter end remains strong.
"Our improved third quarter results reflect
ongoing positive trends: higher revenue, lower costs, and better
cash flow," said Meni Morim, CEO of Lifeist. "We are seeing the
early payoff from our focus on where we can deliver more profitable
growth, operate more efficiently, and optimize working capital
within our current portfolio of businesses while we invest in the
future. We are pressing forward with our plans to develop
nutraceuticals products with a new business unit launching this
quarter, enabling Lifeist to transition to sustainable
profitability. The improved performance in our cannabis business
while we invest in this emerging opportunity reinforces our
confidence in our strategy and we expect continued top-line growth
and improvements in profitability as we navigate through this
transformation. Overall, there has been a significant amount of
work done across the Company laying the foundations for growth as
we continue our company's evolution to wellness.”
Added Mr. Morim, “In particular, the financial
turnaround is being led by our cannabis subsidiary, CannMart, Inc.,
which is experiencing strong demand for its portfolio of products
from consumers, retailers and provincial wholesalers across Canada
as evidenced by the 34% growth in cannabis revenue in the quarter.
What makes CannMart unique is its ability to bring brands to market
quickly, whether it be via the increasing number of master
distribution agreements that we are signing where we act as the
middleman, or via the expansion of our product portfolio with the
launch of our limited-edition SKUs made at our subsidiary CannMart
Labs’s state-of-the-art BHO extraction facility."
Operational Highlights
- CannMart Inc. continues to enter
into partnerships with third parties to be their wholesale and
logistics partner in order to take advantage of the trend where
Canadian licensed producers (LPs) and manufacturers are looking to
outsource parts of their operations that are not core. During the
third quarter, CannMart Inc. signed Master Distribution Agreements
with several companies including with Rapid Dose Therapeutics Corp.
(“RDT”) (CSE: DOSE) to exclusively distribute RDT's innovative RDT
branded products across Canada.
- CannMart Inc. received its first
purchase orders from the provinces of Manitoba, and Saskatchewan
for its 2.0 consumer-focused recreational house brand “Roilty”
concentrates.
- As part of its focus on the broader
wellness space, the Company changed its corporate name from Namaste
Technologies Inc. to Lifeist Wellness Inc. effective September 9,
2021, and changed its stock ticker symbol on the TSXV to its
current symbol “LFST”.
- Lifeist continues to look for ways
to operate more efficiently, including subleasing its former
Toronto office headquarters which is expected to generate annual
run rate savings of approximately $138,000 until expiry of its
lease in October 2024, as well as consolidating headcount, software
and marketing costs across divisions in order to reduce costs and
reallocate resources more efficiently across the Company, and
implementing inventory control measures on the cannabis business to
reduce carrying costs.
Financial Summary of Q3 2021 and
Comparative Periods
|
Q3 2020 |
Q2 2021 |
Q3
2021 |
|
YTD 2020 |
YTD
2021 |
|
|
|
|
|
|
|
Gross revenue |
$ |
6,281,875 |
|
$ |
6,266,808 |
|
$ |
7,067,091 |
|
|
$ |
19,099,640 |
|
$ |
19,482,586 |
|
Net
revenue |
$ |
5,684,847 |
|
$ |
5,275,779 |
|
$ |
5,787,750 |
|
|
$ |
17,918,313 |
|
$ |
16,578,264 |
|
Gross profit
(before inventory adjustment) |
$ |
552,381 |
|
$ |
753,613 |
|
$ |
1,305,806 |
|
|
$ |
1,915,159 |
|
$ |
2,513,468 |
|
Gross profit
% (before inventory adjustment) |
|
10 |
% |
|
14 |
% |
|
23 |
% |
|
|
11 |
% |
|
15 |
% |
Net
loss |
$ |
(7,833,495 |
) |
$ |
(6,369,642 |
) |
$ |
(6,053,422 |
) |
|
$ |
(20,067,533 |
) |
$ |
(19,804,507 |
) |
Net loss per
share (basic and diluted) |
$ |
(0.02 |
) |
$ |
(0.02 |
) |
$ |
(0.02 |
) |
|
$ |
(0.06 |
) |
$ |
(0.06 |
) |
Total
assets |
$ |
46,481,236 |
|
$ |
46,328,594 |
|
$ |
41,221,145 |
|
|
$ |
46,481,236 |
|
$ |
41,221,145 |
|
Cash used in
operating activities |
$ |
(5,262,843 |
) |
$ |
(5,674,692 |
) |
$ |
(4,909,845 |
) |
|
$ |
(20,506,989 |
) |
$ |
(13,051,970 |
) |
Gross revenue increased 12% to $7.1 million in
Q3 2021, as compared to $6.3 million in Q3 2020. This growth was
driven by the Company’s cannabis business which increased 34% due
to increased volume of orders from provincial customers, enhanced
product selection and a new dropship revenue stream added in Q3
2021. In addition, SaaS revenue increased 9% as compared to Q3
2020.
Adjusted gross margin, before inventory
write-down, was 23% of Net revenue in Q3 2021 compared to 10% in Q3
2020 and 14% in Q2 2021. The 1,300-basis point improvement
year-over-year was due to improved production efficiencies across
all segments.
EBITDA loss narrowed to $5.4 million in Q3 2021
compared to $7.3 million in Q3 2020, due to improved performance
across most business units. The reduced EBITDA loss was net of
approximately $1 million of investments in emerging businesses
including CannMart Labs and nutraceuticals.
Net loss in Q3 2021 was $6.1 million, largely
impacted by increased Salaries and Selling and Marketing costs, as
a result of a strategic investment in the growth of core business
segments as well as an upfront investment in the nutraceutical
segment.
Balance Sheet and Cash Flow
Cash and cash equivalents were $17.9 million as
of August 31, 2021, compared to $23.0 million as of May 31, 2021,
which is sufficient to fund planned growth initiatives.
Demonstrating continued improved inventory
management practices, inventories decreased to $4.9 million
compared to $5.2 million in Q2 2021 and $6.0 million in Q1
2021.
Net cash used in operations was $4.9 million for
the quarter. This is the third consecutive quarter in which the
Company demonstrated EBITDA loss improvements.
A photo accompanying this announcement is
available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/6542334e-7ea0-427f-8ea9-a73412adcc5d
Additional Information
Financial results and analysis are available on
Lifeist’s website (www.lifeist.com) and SEDAR (www.sedar.com).
About Lifeist Wellness Inc.
Lifeist is at the forefront of the post-pandemic
wellness revolution requiring smart solutions. Lifeist is a
portfolio wellness company leveraging advancements in science and
technology to enable you to find your path to wellness. Portfolio
business units include: CannMart.com that provides Canadian medical
customers with a diverse selection of cannabis products from a
multitude of federally licensed cultivators and its U.S. customers
with access to hemp-derived CBD and smoking accessories; and
CannMart’s Canadian recreational cannabis distribution business
facilitating recreational sales to a number of provincial
government control boards. The Company is set to launch a new
nutraceuticals division in the fourth quarter with disruptive
products in wellness. For more information, visit www.lifeist.com,
Cannmart.com and everyonedoesit.co.uk.
Contacts
Lifeist Wellness Inc.Meni Morim, CEOMatt
Chesler, CFA, Investor RelationsPh: 647-362-0390Email:
ir@lifeist.com
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 the Company’s continued evolution into a wellness
company, the anticipated launch of a nutraceutical division in the
fourth quarter of 2021 and certain actions the Company expects to
take to operate more efficiently are only predictions and are made
as of the date of this news release. Various assumptions were used
in developing the forward-looking information throughout this news
release which management believed to be reasonable at the time such
statements were made, including expectations that the introduction
of a new nutraceutical division, products and brands will generate
additional revenue, management’s perceptions of Lifeist’s standing
in the online marketplace for wellness, cannabis and related
products and accessories, Lifeist’s beliefs regarding the expected
demand for wellness, cannabis and related products and accessories
and the expected growth of that market, results of operations,
operational matters, historical trends, current conditions and
expected future developments, 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: unforeseen developments that would
delay the Company’s ability to launch its nutraceutical division as
anticipated an in a timely manner, risks relating to the Company’s
ability to develop and execute its business strategy and to
implement its various cost cutting measures as anticipated and in a
timely manner and the benefits realizable therefrom, risks
specifically related to the Company’s operations, and risks
relating to the Company’s ability to successfully operate
everywhere in a virtual environment. 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.
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.
Source: Lifeist Wellness Inc.
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