VIVO Cannabis™ Reports Q1 2019 Financial Results

• 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:

1. Expanding capacity and increasing production capability â€“ 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. 
   
   
2. 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.
   
   
3. Innovation and product development â€“ 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.
   
   
4. International market growth â€“ 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.

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:

1. 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
   
   
2. Medical Cannabis Clinic Segment, under which the Company operates education-focused, patient-centric, cannabis discovery clinics under its Harvest Medicine brand
   
   
3. 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.

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