VIVO Cannabis™ announces significant revenue growth for 2018

CNW Group - finance.yahoo.com Posted 5 years ago
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  • 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.

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"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 Medicalâ„¢ at the end of 2018
  • Clinics: Harvest Medicine acquired Trauma Healing Centers and introduced the HMED Connectâ„¢ 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 Medicalâ„¢ 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.

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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 Medicalâ„¢ 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 Medicalâ„¢ label. It also produces products for the Canadian adult-use market under its Luminaâ„¢ and Firesideâ„¢ 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 Connectâ„¢ 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.

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