VIVO Cannabis™ Announces Third Quarter 2020 Results

Published: November 16, 2020

VIVO Cannabis™ Announces Third Quarter 2020 Results

VIVO Cannabis Inc. released its third quarter 2020 financial and operating results.

“During the past few months, VIVO’s business fundamentals continue to strengthen, well-positioning the Company for future profitable growth,” said Barry Fishman, CEO of VIVO. “Some notable successes include the completion of the largest harvest in our company’s history in Napanee, Ontario and the delivery of our first shipment to Medical Cannabis by Shoppers™. Our entire team is dedicated to delivering differentiated cannabis products and services and to adapting our business to align with the evolution of the cannabis market.”

Financial Summary

Gross and net revenue for Q3 2020 were $10.4 million and $7.5 million, respectively. On a net basis this represents a 20% decrease quarter-over-quarter as compared to Q2 2020. This decline is primarily due to the timing of re-orders post initial stocking of cannabis 2.0 products earlier in the year and a COVID-driven shift in market demand to lower priced products.

VIVO continued to sustain premium prices for its medical and adult-use dry flower products, with a net average selling price (net of excise) of $5.38 per gram in Q3 2020 down 11% from Q2 2020 due to product mix (including the Company’s new entry into the value segment) and select price reductions to match other premium market competitors.

Sales, general and administrative expenses were $4.3 million in Q3 2020, compared to $4.7 million in the second quarter, a reduction of 9%. The Company has undertaken a concerted effort to contain costs across the organization.

The Company’s adjusted EBITDA(1) was ($2.6) million for the quarter, compared with ($2.2) million, the difference primarily due to an inventory write-down. VIVO’s Q3 2020 adjusted EBITDA(1) derived from Domestic Cannabis Operations was ($2.1) million. The additional ($0.5) million of adjusted EBITDA(1) in the quarter was related to Growth Initiatives (International Operations and New Product Development), which represent current investments that are expected to drive future profitable sales.

Key Performance Indicators

KPI (P&L amounts in millions)

Q3 2020

Quarter Change

  Q2 2020

Gross Revenue




Net Revenue








Adjusted EBITDA (1)




Cash and equivalents




Active patients (2)




Net flower price per gram




Product formats





Adjusted EBITDA is not a measure of financial performance under IFRS. For the Company’s definition of Adjusted EBITDA, see the Company’s management’s discussion and analysis for the three and nine months ended September 30, 2020, available under the Company’s profile at


Represents active patients (as of the end of the quarter) who purchase medical cannabis directly from the Company, including the temporary six-month extensions post March 13, 2020 based on Health Canada’s amendment due to COVID-19.

Business Update

During Q3 2020 the Company restructured $27 million in current liabilities, with the remaining 6% convertible debt of $6.6 million extended to September 15, 2022. The Company had a cash balance of $3.3 million at the end of the quarter with another $3.3 million held in equity investments.

In October 2020, VIVO filed a short form base shelf prospectus with securities regulatory authorities. The Shelf Prospectus will enable the Company to offer common shares, debt securities, convertible securities, subscription receipts, warrants, units or any combination thereof for aggregate gross proceeds of up to $50 million during the 25-month period the Shelf Prospectus is effective.

During October 2020, VIVO announced several measures to streamline operations in order to achieve positive adjusted EBITDA in the first half of 2021 and accelerate the timeframe to achieve positive operating cash flow. The Napanee-based organization has been re-purposed to focus on low-cost cultivation (airhouse-grown) and the extraction and manufacturing of VIVO’s growing line of Cannabis 2.0 concentrates. To allow VIVO to capitalize on economies of scale and reduce costs, certain other activities (i.e. packaging and distribution) will be centralized at the Canna Farms facility in Hope B.C. VIVO will also be monetizing non-core assets, and capital expenditures will be curtailed as all major facility projects have been completed. These streamlined and consolidated operations are expected to result in increased economies of scale and expected cost savings of over $1 million per quarter.

Strategic Priorities

VIVO remains focused on executing against its four strategic priorities. The Company has made significant progress in enhancing supply and production capabilities, expanding its customer network, increasing product innovation and accelerating its international medical business. VIVO believes focusing on these four priorities will generate long-term shareholder value and accelerate the path to profitability.

1. Enhance Supply and Production Capabilities

VIVO continues to adhere to a measured and disciplined approach to capacity expansion and production capabilities by ensuring initiatives pursued are cost effective and will be capable of meeting growing patient and consumer demand.

  • A new pre-roll machine in Hope has been commissioned which is expected to result in increased output with significant cost reduction.

  • Approximately 10,000 plants were harvested from four airhouses at VIVO’s Kimmetts facility, the largest in the Company’s history. The use of airhouse technology results in more reliable cannabis compared with outdoor growing as it mitigates the risk of weather and pest events that can easily destroy an entire outdoor crop. Its benefits over outdoor grow also include improved light quality, controlled air flow and humidity, and the ability to use supplemental heat to extend the growing season as required.

2. Create a Broad and Loyal Customer Network

VIVO has a strong portfolio of brands in both the medical and adult-use markets. Its Canna Farms™ brand has been noted as the fourth most recognized Cannabis brand in a recent Brightfield survey. Canna Farms is known for producing award-winning, BC indoor-grown, craft cannabis flower and newly launched solvent-less extracts and edibles.

  • VIVO completed its first medical cannabis product shipment under the terms of its product supply agreement with Medical Cannabis by Shoppers™.

  • After beginning to ship products under the Canadian Bud Collection™ brand in Q2 2020, VIVO introduced the first value-priced concentrate product (bubble hash) under the brand, which is directed at the popular value segment of the market.

  • HMED has effectively pivoted during COVID-19 to meet the needs of existing patients and continues to attract new patients. In Q3 2020, Harvest Medicine surpassed 150,000 patients and broadened its reach helping patients in the majority of provinces and territories across Canada. Harvest Medicine re-opened the Cole Harbour, Nova Scotia, clinic as part of its phased approach to provide in-clinic cannabinoid-based therapy consultations and education services for patients. VIVO has also increased its focus on servicing the Veteran segment, a high value part of the market.

  • In honour of Remembrance Day, VIVO donated a portion of sales from November 11th & 12th in support of the Veterans for Healing Charity. Veterans for Healing is powered by the Global Alliance Foundation Fund (GAFF), a non-profit Veteran organization, focused on increasing the quality of life of their members by assisting the healing journey. Through a unique four pillar system, GAFF has seen countless trauma patients connect to their spirit and thrive in a quest to find purpose again. VIVO’s donation helped support this year’s GAFF Remembrance Day Ceremony in Cape Breton, Nova Scotia and to provide food & shelter for Veterans.  

  • VIVO continues to expand distribution across Canada, including its recent shipment of Canna Farms™ Kief to Quebec.

3. Build an Innovation-Driven Branded Organization

VIVO has a strong commitment to pursuing innovation throughout its value chain. The Company is also using its robust data insights as a foundation for the development of novel products with a strong competitive edge and high margins.

  • During the third quarter 2020, VIVO introduced Beacon Medical softgel capsules, available through its Canna Farms on-line medical marketplace. Beacon softgel capsules provide patients with a convenient format to ingest cannabis in a precise-dosed format, increasing choice for the Company’s more than 25,000 registered patients.

  • VIVO began producing active emulsions using Vertosa Inc.’s infusion technology for the cannabis beverage market during the third quarter of 2020 and subsequently concluded its first sale and shipment in the fourth quarter of 2020.

  • The Company’s wide line of concentrate product formats continue to be well received in the market. VIVO’s diverse line includes Fireside vape cartridges and shatter, and Canna Farms’ bubble hash, kief and live rosin.

  • VIVO remains on track to introduce a unique line of specific medical cannabis formulations produced under pharmaceutical quality standards with its partner, Pharmascience Inc. to the Canadian market by the end of Q1 2021. VIVO believes that a significant catalyst to increased medical cannabis use is the introduction of new medical-grade, precise-dosed, stable formulations.

4. Accelerate International Medical Business Growth

VIVO continues to pursue its international expansion strategy, leveraging its experience and leadership to enter new high-growth markets. The Company’s initial focus is on the German and Australian markets, which, combined, have a population of over 100 million people.

  • VIVO’s Australian business continues to advance as the Therapeutics Goods Administrator (TGA) reported a record number of new patient approvals in the third quarter of 2020 and triple digit growth in patient approvals year over year. VIVO is well positioned to capitalize on this rapidly growing market.

  • VIVO continued to advance its European expansion strategy through its partnership with Linneo Health, a Spanish-based EU-GMP certified supplier of pharma-grade cannabis. VIVO’s subsidiary, Beacon Medical Germany, is expecting final approval of Linneo product for import to Germany once successful quality results are obtained.

  • EU-GMP certification of VIVO’s Vanluven Facility continues to advance, with a follow-up audit having recently been completed. The follow-up audit is an important step towards EU GMP-certification and is a requirement to import medical cannabis products from Canada for sale in Germany and other European countries.