Lifeist Wellness Inc. (“Lifeist” or the “Company”) (TSXV:
LFST) (FRANKFURT: M5B) (OTCMKTS: NXTTF), a health-tech
company that leverages advancements in science and technology to
build breakthrough companies that transform human wellness, today
reported its financial results for the three months ended February
28, 2022 (“Q1 2022”) compared to the same period last year (“Q1
2021”). All financial figures are in Canadian dollars unless
otherwise indicated.
First Quarter 2022
Highlights
- Net revenue decreased 1% to $5.45
million in Q1 2022 (compared to $5.51 million in Q1 2021), entirely
due to declines in hardware sales in Europe and medical cannabis
sales in Canada, both operations having since been discontinued1.
Excluding these two businesses, revenue increased 20% in Q1 2022
(compared to Q1 2021), led by Canadian recreational cannabis,
Australian Vaporizers Pty Ltd (“Australian Vapes”) and Findify AB
(“Findify”).
- Gross profit before inventory
adjustment tripled to $1.4 million in Q1 2022 as compared to $0.5
million in Q1 2021, the highest in the past two years, with margins
expanding to 26% from 8%.
- EBITDA improved substantially by
narrowing losses to $4.2 million in Q1 2022 (compared to a $7.0
million loss in Q1 2021), representing the sixth consecutive
quarter of EBITDA loss improvements. The Q1 2022 EBITDA loss was
net of incremental investments into emerging businesses including
approximately $650,000 in nutraceuticals.
- Working capital position of $12.4
million at quarter end remains strong.
“Our first quarter results reflect progress and
momentum in our transition to a wellness-driven company,” said Meni
Morim, CEO of Lifeist. “We have sharpened our focus within cannabis
on our B2B platform and this in turn is fueling meaningful
increases in gross profit for all of Lifeist. We accomplished a
tripling of gross profit versus the same quarter last year while
simultaneously winding down unprofitable businesses and investing
in our wellness future. This includes scaling our innovative
health-tech company Mikra, which is going after the large and
growing nutraceuticals market, and seeing promising early consumer
interest for its first product which commenced pre-sales last
month.”
Mr. Morim continued, “We have also been
optimizing the wellness portfolio with moves designed to improve
our financials and provide value for shareholders. In addition to
exiting the consumer-focused medical cannabis by transferring
patients to a third-party, we formally ceased operations of Lifeist
Bahamas which sold hardware in Europe through the everyonedoesit.uk
ecommerce website. As we execute on our wellness strategy, we are
confident that the assets at the heart of the Lifeist value
proposition will deliver sustained and tangible shareholder
value.”
Operating Highlights
Cannabis (CannMart Inc. (“CannMart”) and
CannMart Labs Inc. (“CannMart Labs”))
- Recreational cannabis continues to
be Lifeist’s largest driver of performance accounting for 58% of
the Company’s net revenue in Q1 2022, with growing gross margins,
improved inventory management, an expanded distribution network,
and bringing an award winning brand to market.
- CannMart completed the successful
transfer of registered medical patients to Medicibis, operators of
Mendocannabis.ca, in February 2022. The agreement is part of the
Company’s strategic initiative to sharpen its focus on B2B
recreational cannabis and nutraceuticals.
- The cannabis B2B gross margin
increased to $0.7 million in Q1 2022 as compared to a negative
gross margin of $0.9 million in Q1 2021, continuing the positive
trend seen throughout 2021 (Q1 -$0.9 million, Q2 -$0.4 million, Q3
$0.2 million, Q4 $0.5 million), driven by sales of higher-margin
Roilty products and improved overhead efficiencies.
- After establishing a supply
agreement with the Société Québécoise du Cannabis (“SQDC”) in March
2022, CannMart is now approved for the sale of cannabis and
cannabis-derived products from provincial and territorial bodies in
Ontario, Alberta, British Columbia, Quebec, Manitoba, New
Brunswick, Saskatchewan, Yukon, Nunavut and the Northwest
Territories, which provides it with access to 95% of Canada’s
population.
- CannMart Labs’ state-of-the-art BHO
extraction facility commenced manufacturing and shipping product in
November 2021, and in January 2022, its in-house brand “Roilty”,
launched earlier in 2021, won the prestigious “Canadian LP Brand of
the Year” award at the 2021 ADCANN Awards. Roilty product is now
live in Alberta, Saskatchewan, Manitoba, Yukon, the Northwest
Territories and Nunavut with purchase orders in place for
distribution in Ontario.
Nutraceuticals (Mikra)
- Mikra launched its
first product, CELLF, a novel cellular therapeutic compound
targeting systemic fatigue, and after launching pre-sales in March
2022, began shipping and deliveries in April 2022. In partnership
with InVivo Biosystems, Mikra has commenced its genomic and
transcriptomic clinical studies to gather evidence for CELLF™ at a
molecular and cellular level. These in vivo studies will
demonstrate how CELLF™ impacts healthy aging and inflammation
pathways at a cellular level.
- In April 2022,
Mikra expanded its professional athlete roster with Olympic
medalists Ashley Wagner and Cullen Jones. Ashley and Cullen join
baseball hero Jose Bautista who joined Mikra in November 2021 to
ideate and launch a new athletic therapeutic.
Australian Vapes
- The major flooding
that significantly disrupted Australian Vapes did not occur until
the final days of February such that the business continued to have
another strong quarter in Q1 2022. The solid performance was
characterized by website traffic growth and positive unit
economics, which drove the highest Q1 revenue ever of $1.7 million
compared to $1.5 million in Q1 2021, representing an increase of
12%, with EBITDA margins expanding to 14% from 9% in Q1 2021.
- Australian
Vapes has moved quickly to restore normal operations after the
flooding rendered its leased warehouse facility in Brisbane
unviable. On April 1, the team executed a five-year lease at a new
location in Banyo, Queensland, which is larger, has an improved
layout, delivery bay and overall condition, and re-launched sales
on April 25, 2022. Results in the few days since the re-launch have
seen average order values (AOVs) and conversion rates return to
pre-shutdown levels, supporting our view that Australian Vapes will
quickly resume its highly stable, predictable financial
performance.
Findify
- Findify delivered
another record quarter, with revenue of $588,000 in Q1 2022
compared to $401,000 in Q1 2021, representing an increase of 47%.
The accelerated growth is coming from the strategic plan, which was
launched in mid-2021, sharpening Findify’s focus on product
innovation and catering to higher tier customers. The most
significant release is a new infrastructure that allows for real
time synchronization of any product data with Shopify.
- EBITDA loss
increased to $447,000 in Q1 2022 as compared to $265,000 in Q1 2021
due to strategic investments in various innovation initiatives to
help drive long-term revenue growth.
Financial Summary of Q1
2022
Net revenue decreased 1% to $5.45 million in Q1
2022 compared to $5.51 million in Q1 2021. The decrease was driven
by the planned wind down of hardware sales in Europe through
Lifeist Bahamas and medical cannabis sales in Canada through
CannMart, with these operations effectively ceasing in 2022. This
was offset by the continued growth in sales of Canadian
recreational cannabis, Findify SaaS revenue which increased 47%,
and Australian Vapes hardware revenue which increased 12%.
Excluding Lifeist Bahamas hardware and CannMart medical cannabis,
net revenue increased 20%.
Gross margin was 26% of net revenue in Q1 2022
compared to 8% in Q1 2021. The improvement was due to production
efficiencies across all segments and the focus on higher
value-added revenue streams in the B2B and recreational markets.
Within recreational cannabis, gross margins improved to $1.4
million in Q1 2022 compared to a $0.5 million negative margin in Q1
2021, particularly due to Roilty product sales.
EBITDA loss narrowed to $4.2 million in Q1 2022
compared to $7.0 million in Q1 2021, due to higher gross margins
and improved performance across most business units, and
represented the sixth consecutive quarter of EBITDA loss
improvements. The reduced EBITDA loss was net of incremental
investments in emerging businesses including approximately $650,000
in nutraceuticals.
Net loss was $4.6 million in Q1 2022 compared to
$7.4 million in Q1 2021, due to improved gross margins and lower
non-operating write-downs, as compared to Q1 2021.
Balance Sheet and Cash Flow
Cash and cash equivalents were $9.2 million as
of February 28, 2022, compared to $12.7 million as of November 30,
2021.
Inventories increased to $6.4 million at
February 28, 2022 compared to $5.4 million at November 30, 2021,
mainly due to new inventory purchased for CannMart Labs and Mikra,
both which started their own production in Q1 2022.
Net cash used in operations was $3.4 million in
Q1 2022 compared to $2.5 million in Q1 2021. The increase was
largely due to investments in emerging businesses including
CannMart Labs and Mikra.
Other Item
During the quarter, Fire & Flower Holdings
Corp. (“Fire & Flower”) purchased Pineapple Express Delivery
Inc. (“PED”), a holder of the Company’s convertible loan payable.
As part of the purchase, Fire & Flower assumed and repaid a
$2,040,077 convertible loan receivable owed to the Company by PED.
In addition, the Company received 75,100 common shares in Fire
& Flower, with a further 258,478 common shares in Fire &
Flower having been placed into escrow pending completion of
customary working capital adjustments and subject to achievement of
certain performance-based milestones in its fiscal 2022 year.
Additional Information
The Company’s complete financial statements and
management’s discussion & analysis (“MD&A”) for Q1 2022 are
available on Lifeist’s website (www.lifeist.com) and SEDAR
(www.sedar.com).
About Lifeist Wellness Inc.
Sitting at the forefront of the post-pandemic
wellness revolution, Lifeist leverages advancements in science and
technology to build breakthrough companies that transform human
wellness. Portfolio business units include: CannMart, which
operates a B2B wholesale distribution business facilitating
recreational cannabis sales to Canadian provincial government
control boards; CannMart Labs, a BHO extraction facility for the
production of high margin cannabis 2.0 products; the CannMart.com
marketplace, which provides U.S. customers with access to
hemp-derived CBD and smoking accessories; Australian Vapes,
Australia’s largest online retailer of vaporizers and accessories;
Findify, a leading AI-powered search and discovery platform; and
Mikra, a biosciences and consumer wellness company seeking to
develop innovative therapies for cellular health.
Information on Lifeist and its businesses can be
accessed through the links below:
www.lifeist.comwww.cannmart.comwww.australianvaporizers.com.auwww.wearemikra.com
ContactsLifeist Wellness
Inc.Meni Morim, CEOMatt Chesler, CFA, Investor RelationsPh:
647-362-0390Email: ir@lifeist.com
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.
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, without limitation, statements related to: the
Company’s continuing focus on B2B recreational cannabis and
nutraceuticals and its expectations from such businesses to deliver
sustained and tangible shareholder value are made as of the date of
this press release and is based on assumptions management believed
to be reasonable at the time such statements were made, including,
without limitation, Lifeist’s ability to continue to increase
revenue through its B2B recreational cannabis business and to
maintain momentum of expanding its nutraceutical business, its
ability to broaden its total addressable market and to evolve into
a recognized wellness company, the Company’s expectation that the
nutraceutical and wellness market will develop as currently
anticipated, the nutraceutical market will continue to be a
multi-billion dollar high-margin market, the introduction of new
products and brands will generate additional revenue, expectations
that CELLF and other cellular health products and accessories to be
developed by the Company will gain market acceptance along with the
expansion of the market for nutraceutical products, 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: the inability of the Company to
develop its business as anticipated and to increase revenues and/or
its profitable margin on such revenues, unanticipated changes to
current regulations that would adversely impact the Company’s
businesses, the unanticipated decline in demand for cannabis
products, competition from others, unforeseen developments that
would delay Mikra’s ability to sell CELLF and any other developed
nutraceutical product as anticipated and in a timely manner, the
risk that pre-clinical trials relating to CELLF are not as
successful as anticipated and do not demonstrate the expected
therapeutic benefits and/or fail to strengthen the Company’s patent
claim, the risk that the expected demand for nutraceutical products
in general and those of Mikra in particular does not develop as
anticipated, the failure to convert the current number of
subscribers on the pre-sales waitlist to actual sales, regulatory
risk, risks relating to the Company’s ability to execute its
business strategy and the benefits realizable therefrom and risks
specifically related to the Company’s operations. 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.
Source: Lifeist Wellness Inc.
1 The Company has discontinued operations of: CannMart Inc.’s
medical cannabis business including online sales of hardware and
accessories in Canada; CannMartMD Inc. (booking platform for
Canadian medical cannabis consultations); and Lifeist Bahamas
(hardware sales in Europe), as part of its strategy to focus
resources on growing existing businesses and its new nutraceuticals
and biosciences division.
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