VIVO Cannabis Announces First Quarter 2020 Results
Thursday, May 14, 2020, 6:15 PM ET
Net revenue was $8.2 million, an increase of 24% over Q4 2019
Initiated spring planting in Napanee airhouses
Additional production and extraction capacity expected to be operational in Q2 2020
NAPANEE, ON, May 14, 2020 /CNW/ - VIVO Cannabis Inc. (TSX: VIVO, OTCQX: VVCIF) ("VIVO" or the "Company") today released its first quarter 2020 financial and operating results.
Management Commentary
"Our positive first quarter 2020 results were fueled by a net revenue increase of 24% compared with the previous quarter," said Barry Fishman, CEO of VIVO. "Several of our Canna Farms(TM) and Fireside(TM) cannabis 2.0 products are showing strong momentum, and the VIVO team continued to execute well on plans related to our four strategic priorities, despite COVID-19 related challenges. In April, we started planting in our airhouses in Napanee, are awaiting Health Canada approval to begin production in our Phase 5 expansion in Hope B.C. and expect to commission our new ethanol extraction suite in Napanee in Q2 2020. During the quarter we also entered into new supply and processing agreements, which are expected to result in the launch of several exciting new products."
Financial Summary
Gross and net revenue for the first quarter of 2020 were $11.5 million and $8.2 million respectively. On a net basis this represents a 24% increase quarter-over-quarter, driven largely by the successful launch of the first phase of VIVO's cannabis 2.0 products. When compared to Q1 2019, net revenue during the quarter grew by 62%.
VIVO continued to sustain top-tier prices for its medical and adult-use dry flower products, with a net average selling price of $6.67 per gram in Q1 2020.
The Company's adjusted EBITDA(1) was ($2.6) million for the first quarter, which was a slight improvement over the fourth quarter of 2019. VIVO's Q1 2020 adjusted EBITDA(1) from Domestic Cannabis Operations was ($1.7) million. The additional ($0.9) million of adjusted EBITDA(1) in the quarter is related to Growth Initiatives (International Operations and Product Development) which represent current investments that are expected to drive future profitable sales beyond 2020.
Sales, general and administrative (SG&A) expenses were $5.5 million, compared to $5.1 million in the fourth quarter of 2019.
VIVO continues to maintain a healthy balance sheet through prudent management of operational expenses and a measured approach to capital expenditures. Cash and cash equivalents (including short term investments but excluding strategic equity investments) as at March 31, 2020 were $35.2 million.
Subsequent to quarter-end, VIVO announced it had repurchased certain of its outstanding 6% unsecured convertible debentures in the aggregate principal amount of $10.9 million, for a discounted purchase price of $10.1 million (plus accrued and unpaid interest thereon). As a result of the repurchase, the Company will save approximately $1.35 million in interest and principal, leaving remaining debentures in the aggregate principal amount of $27.1 million.