- 2018 gross and net revenue of $13.3 and $9.7
million, respectively
- 2018 pro-forma gross and net revenue of $22.7 and $17.3
million, respectively, which includes acquired companies for
all of 2018
- Q4 2018 gross and net revenue of $8.1 and $5.8
million, respectively, a 152% increase compared to net
revenue in Q3 2018
- 2018 year-end cash and short-term investments (excluding
strategic equity investments) of $74.8
million
NAPANEE, ON, April 30, 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
holder of licenses under the Cannabis Act through its
wholly-owned subsidiaries, Canna Farms Limited ("Canna
Farms"), ABcann Medicinals Inc. ("ABcann") and Harvest
Medicine Inc. ("Harvest Medicine"), today announced the
release of its fourth quarter and 2018 annual financial and
operating results.
"The VIVO team achieved significant milestones in 2018, leading
to substantial growth in net revenue, cash position, production
capacity, organizational effectiveness and customer development,"
said Barry Fishman, Chief Executive
Officer of VIVO. "The strategic acquisitions of Canna Farms and
Harvest Medicine were important drivers of our improved financial
results. Through the acquisition of Canna Farms, we have added an
award-winning BC craft brand, are leveraging best practices, and
have dramatically increased production capacity. Harvest Medicine
provides a scalable network of medical cannabis clinics offering
industry-leading patient care and access to critical data to shape
our innovative product development efforts. VIVO remains
committed to changing the way people view cannabis and to ensuring
medical patients and adult-use consumers have access to our premium
cannabis products and services."
2018 and Subsequent Highlights:
- Sales: 2018 net revenue of $9.7 million, compared to $0.9 million in 2017, and 2018 pro-forma net
revenue of $17.3 million
- EBITDA: 2018 adjusted EBITDA of ($17.7) million, compared to ($11.1) million in 2017
- Cash: 2018 year-end cash and short-term investments
(excluding equity investments) of $74.8
million
- M&A: Completed accretive strategic acquisitions of
Canna Farms, an award-winning brand and licensed producer, and
Harvest Medicine, an innovative, patient-centric medical clinic
operator
- Patients: 18,000 active medical cannabis
patients registered with Canna Farms and Beacon Medical™ at
the end of 2018
- Clinics: Harvest Medicine acquired Trauma Healing
Centers and introduced the HMED Connect™ platform. The overall
network currently services more than 27,000 active medical cannabis
patients
- Awards: In April 2019,
Canna Farms won the O'Cannabiz People's Choice Award for Best LP
Customer Service
- Partnerships: Entered strategic partnerships with
six provincial/territory cannabis distributors and leading Canadian
cannabis retailers, Choom Holdings, National Access Cannabis Corp.
and Westleaf Cannabis Inc.
- Research: Initiated an innovative product development
agreement with Pharmascience, a global pharmaceutical company based
in Montréal, Quebec, to create
novel precise-dosage formats for medical patients
- Capacity: Received Health Canada approval for
expansion of facilities in Hope,
BC, and Napanee, ON,
doubling current internal cultivation capacity to more than 8,000
kilograms. Total annualized capacity is targeted to exceed 15,000
kilograms by early 2020
- Share: Based on data supplied by Health Canada for
Q4 2018, the Company estimates that it supplied approximately 4% of
the overall net value of the Canadian medical and adult-use dried
cannabis market
- Talent: Strengthened leadership team, including the
recent appointments of Gary
McMullen, new VP, Napanee Operations, and Andreas Sander, President, European
Operations
- International: In March
2019, ABcann Germany received its pharmaceutical wholesale
license and GDP-certificate and partnered with Australian Medical
Cannabis Services on an observational study on the use of
cannabinoids as therapy for chronic pain
- Store: Launched an integrated online medical
cannabis store under the Canna Farms banner, offering one-stop
purchasing of Canna Farms and Beacon Medical™ brands, along with
products from other cultivators
Mr. Fishman continued, "VIVO's cultivation strategy includes
indoor cultivation of premium dry flower as well as the planned
cost-effective seasonal greenhouse and outdoor cultivation of
cannabis for extraction. Following completion and regulatory
approval of our additional indoor, seasonal greenhouse and outdoor
expansion plans, we expect our 2019 financial performance to be
materially higher in the second half of 2019. We are also actively
pursuing strategic acquisitions and partnerships to grow our
business and expand our premium products and services, both in
Canada and internationally. It is
a very exciting time for the VIVO team, who have been working
tirelessly to execute our strategic priorities and drive long-term
shareholder value."
Key Financial Metrics
(CAD
millions)
|
Year Ended
December 31, 2018
|
Three Months
Ended
December 31, 2018
|
2018
|
2017
|
2018
|
2017
|
Gross
Revenue
|
13.3
|
1.2
|
8.1
|
0.4
|
Net
Revenue
|
9.7
|
0.9
|
5.8
|
0.3
|
Adjusted
EBITDA(1)
|
(17.7)
|
(11.1)
|
(7.3)
|
(4.7)
|
(1)
|
Adjusted EBITDA is
not a measure of financial performance under IFRS. The definition
for Adjusted EBITDA can be found in the Company's management's
discussion and analysis for the year ended December 31, 2018 at
www.sedar.com.
|
Business Highlights
Canna Farms (Hope, British
Columbia)
On August 31, 2018, VIVO completed
the immediately accretive acquisition of Canna Farms, BC's first
licensed producer of medical cannabis. A solid track record of
execution contributed to Canna Farms being one of the first
licensed producers to achieve positive operating cash flow. In
January 2019, Daniel Laflamme, President of Canna Farms, was
appointed Chief Operations Officer of VIVO, a role that provides a
unique opportunity to leverage his strong leadership skills and
deep knowledge of cannabis cultivation and production
operations.
Canna Farms is a producer and purveyor of premium quality,
award-winning, craft cannabis, with wide-spread brand recognition
and appeal, as evidenced by its award for Top Reviewed Licensed
Producer of the Year at the 2018 Canadian Cannabis Awards. In
April 2019, Canna Farms won the
People's Choice "Best LP Customer Service" award at the O'Cannabiz
Industry Awards Gala.
In March 2019, Canna Farms
received Health Canada approval for the expansion of its Yale Road
facility, and more than 30,000 clones have been propagated to
fill the space, expected to result in over 3,000 kilograms of
annual production capacity – doubling the previous capacity in BC.
It also recently received municipal approval for the
construction of Phase 5, which, following expected completion in
late 2019 to early 2020 and receipt of Health Canada approval, is
expected to result in additional internal production capacity of
2,500 kilograms.
Canna Farms also recently launched an integrated online medical
cannabis website (cannafarms.ca), creating one of the largest
online platforms for medical cannabis users across Canada, with an industry-leading offering of
brands and products, offering one-stop shopping for Canna Farms and
Beacon Medical™ brands along with medical cannabis products from
other licensed producers.
ABcann Medicinals (Napanee,
Ontario)
ABcann Medicinals, located in Napanee,
Ontario, is primarily focused on the production of
pharmaceutical-grade cannabis for medical cannabis markets in
Canada and internationally under
its Beacon Medical™ label. It also produces products for the
Canadian adult-use market under its Lumina™ and Fireside™
brands.
Under the leadership of Gary
McMullen, the Company's recently appointed Vice-President,
Napanee Operations, the team in Napanee have increased yields and implemented
a number of operational efficiencies. Mr. McMullen was the
co-founder of Muskoka Brewery, and has a high level of expertise in
best-in-class manufacturing processes and a proven track record of
successfully marketing craft products.
In March 2019, ABcann 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. ABcann is working towards
obtaining EU-GMP certification of the Vanluven facility in 2019 to
allow for the export of medical cannabis to international
markets. The Vanluven facility also houses a world-class
cannabis R&D lab, where the Company is developing proprietary
technology and advanced growing techniques in partnership with some
of the brightest minds in agriculture at the University of
Guelph.
ABcann continues to invest in product development initiatives
focused on novel genetics and growing techniques to maximize yields
and efficiently extract cannabis derivatives. 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. ABcann also
intends to use its processing license, which allows for the sale of
cannabis oil as well as the manufacturing and preparation of other
concentrates, to manufacture new products for the edibles and
beverage segments when that market opens in late 2019. To this end,
ABcann has purchased a number of capital assets, which are expected
to be commissioned on-site by the end of Q2 2019.
Construction is also nearing completion of Phase 1 of the
Kimmett Road facility in Napanee,
consisting of four seasonal greenhouses and an associated header
house, which is expected to be completed in mid-2019. Following
receipt of Health Canada approval, this facility is expected to
provide an incremental 4,000 kilograms of annual production
capacity at one of the lowest capital and operating costs per gram
in the industry.
Harvest Medicine
In January 2018, VIVO acquired
Harvest Medicine, an innovative, patient-centric medical clinic
operator headquartered in Alberta,
and in October 2018 subsequently
acquired Trauma Healing Centres, a veteran-focused medical clinic
network operating in Atlantic
Canada. Harvest Medicine operates five clinics in
Alberta, Ontario, New
Brunswick and Nova Scotia,
serving more than 27,000 registered patients.
Harvest Medicine recently launched the HMED
Connect™ telemedicine service, which provides patients
in certain provinces access to Harvest Medicine's class-leading
education and patient-centric model at any time, from
anywhere.
In 2019, the Company appointed Dr. Richa
Love, Harvest Medicine's primary physician who has
spearheaded research exploring the effects of medical cannabis for
a variety of conditions, to VIVO's Scientific Advisory Board as
Chief Medical Officer. Dr. Love helps guide product development and
innovation and serves as a valuable resource for both patients and
healthcare professionals.
Commercial and Product Development
The Company's key objectives include growth of a broad but
targeted product line and a wide distribution network that includes
the establishment of key strategic partnerships. VIVO is currently
working to develop several new novel medical cannabis products as
well as a variety of cannabis edibles and beverages in preparation
for the opening of this market in Q4 2019.
The Company has entered into adult-use supply agreements with
British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and the Yukon, and anticipates it will have secured
agreements with all ten provinces by the end of 2019. To satisfy
the growing demand for VIVO products, the Company has also entered
into third-party multi-year supply agreements with two Ontario-based cultivators.
In the fourth quarter of 2018, VIVO's net average selling prices
(excluding excise tax and sales deductions) for dried cannabis were
$7.54 per gram for adult-use
consumers and $7.48 per gram for
medical patients.
A research agreement to investigate and develop innovative
processes for the extraction and formulation of cannabis oil has
been entered into with Loyalist College's Applied Research Centre
for Natural Products and Medical Cannabis (ARC), and a product
development agreement has been entered into with Pharmascience, a
global pharmaceutical company based in Montréal, Quebec, to develop a line of specific medical
cannabis formulations intended to maximize therapeutic benefits to
patients through the use of pharmaceutical-grade quality and
allowing for precise dosing.
International Operations
VIVO has increased its international operations in recent months
through its wholly-owned subsidiaries, ABcann Germany GmbH
("ABcann Germany"), which is focussed on the European
market, and Beacon Medical Australia Pty Ltd. ("Beacon
Australia"), which provides an
entry point to the Asia-Pacific
market.
In January 2019, Andreas Sander was appointed President, European
Operations, and Managing Director of ABcann Germany. Mr. Sander has
more than 25 years of pharmaceutical experience, including regional
leadership roles in western and eastern Europe. In Q1 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-certified environment
to form VIVO's genetic basis for commercial cultivation in
Europe and are intended to be sold
through German and other European pharmacies pursuant to a supply
agreement with a European partner.
In March 2019, ABcann Germany
received its pharmaceutical wholesale license and
GDP-certificate from the responsible authorities of the state of
Brandenburg, Germany. VIVO is
currently awaiting its narcotic and import license approvals in
Germany to facilitate imports of
higher-margin products to the European medical market from other
countries, including Canada.
In addition, VIVO has entered the Australian medical cannabis
market through Beacon Australia, which has included servicing
Australian patients with a variety of medical conditions. The
market in Australia is expected to
grow and the Company believes it will benefit from its early entry
advantage.
Beacon Australia has partnered
with Australian Medical Cannabis Services and is currently
implementing 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 with which to evaluate the efficacy of medical
cannabis in treating pain and further support the development of
VIVO's portfolio of medical cannabis products.
Financial Highlights
VIVO reported net sales of $9.7
million for 2018 (2017: $0.9
million), and adjusted EBITDA of ($17.7) million (2017: ($11.1) million).
As at December 31, 2018, the
Company had $74.8 million in cash and
short-term investments (excluding strategic equity investments)
(2017: $70.8 million), total assets
of $273.8 million (2017: $86.0 million), total liabilities of $56.4 million (2017: $40.0
million), and 291.0 million common shares outstanding
(undiluted) (2017: 155.6 million).
Net Revenue
Net revenue for the fourth quarter was $5.8 million, compared to $0.3 million in the fourth quarter of 2017. Net
revenue for the 2018 fiscal year was $9.7
million, compared to net revenue of $0.9 million in 2017. The growth in revenue and
net revenue for the quarter and fiscal year was primarily a result
of revenues earned by Canna Farms and Harvest Medicine following
their respective acquisitions by the Company.
Adjusted EBITDA
Adjusted EBITDA was ($17.7)
million for the year ended December
31, 2018 (2017: ($11.1)
million) and ($7.3)
million for the fourth quarter of 2018 as compared to
($4.7) million in the fourth quarter
of 2017.
Annual General Meeting
The Company also announces that its 2019 annual general and
special meeting of shareholders will be held at 10:00 a.m. (EST) on June
4, 2019 in Toronto,
Ontario. Aaron Keay has
decided not to stand for re-election to pursue other
opportunities.
"On behalf of the Board of Directors and senior leadership team
I would like to extend our sincere thanks and appreciation to Mr.
Keay for his service as both a director and past Chief Executive
Officer of the Company," stated Paul
Lucas, Chairman of VIVO. "He played an integral role in
bringing ABcann public and successfully executing on strategic
acquisitions, capital raises and retail partnerships, and we wish
him all the best in his future endeavors."
Additional details with respect to the Company's results of
operations are available in its management's discussion and
analysis and condensed interim consolidated financial statements
for the year ended December 31, 2018,
both of which can be found on SEDAR at www.sedar.com.
New Corporate Website
VIVO's newly designed website is now available
at www.vivocannabis.com
About VIVO Cannabis™
VIVO, based in Napanee,
Ontario, is recognized for trusted, high-quality products
and services. It holds production and sales licences from Health
Canada and operates world-class indoor cultivation facilities with
proprietary plant-growing technology. VIVO has a collection of
premium brands targeting unique customer segments, including Beacon
Medical™, Fireside™, Canna Farms™ and Lumina™. In August 2018, VIVO acquired Canna Farms, a premium
cannabis company based in Hope, British
Columbia. Canna Farms was B.C.'s first Licensed Producer and
has several years of craft cultivation experience and expertise, as
well as a significant patient base and positive cash flow. The
Company is significantly expanding its production capacity and
pursuing partnership and product development opportunities
domestically, as well as in select international markets, including
Germany and Australia. VIVO also operates Harvest
Medicine, a patient-centric and highly scalable network of
specialty medical cannabis clinics as well as a free telemedicine
service. VIVO has a healthy balance sheet and is well-positioned to
accelerate its growth in Canada
and internationally.
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 production capacity and
expected future production 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; expected timing of provincial distribution and supply
agreements; and the Company's intent to pursue partnership and
product development 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 production
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 a distribution/import license or
a cultivation license for Germany
or other emerging markets it is targeting; 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.