Lifeist Wellness Inc., 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 May 31, 2023 (“Q2 2023”) compared to the same period last year (“Q2 2022”). All financial figures are in Canadian dollars unless otherwise indicated.
Second Quarter Highlights
- Net revenue for Q2 2023 increased 51% from the same quarter last year to $6.2 million compared to $4.1 million in Q2 2022. The improvement was mainly driven by a year-over-year increase of $1.2 million in Aus Vapes hardware revenue, due to a two-months shut-down in 2022. CannMart cannabis revenue and Mikra nutraceutical revenue also contributing to the growth with year-over-year revenue growth of $580,000 and $255,000 respectively.
- The success of CannMart’s in-house Roilty brand and the launch of the Mikra nutraceuticals business is driving growth, leading to a 22.5% increase in North American sales for Q2 2023 versus Q2 2022.
- The strategic focus on high margin activities and operational efficiency continues to pay off in Q2 2023 with a $1.1 million improvement in gross profit, a $2.1 million reduction in Adjusted EBITDA losses, and gross margins of 29% as Lifeist drives toward profitability.
“Our ongoing journey to transform Lifeist into a diversified wellness company with high-margin business units remains on track,” affirmed Meni Morim, CEO of Lifeist. “In our second quarter results, we experienced growth across all our key metrics, including achieving another historic high gross profit. Though the path has been challenging, we are making continuous improvements and efficiencies are having an impact as we move toward our goal of profitability and positive cash flow.”
“The growth in second quarter 2023 revenue was led by our Aus Vapes business which experienced a significant rebound in revenue having introduced new product categories, a new marketing strategy, and successfully relocated warehouse operations into a larger and more modern facility improving efficiencies after devastating spring floods. In addition, both of our main wellness businesses CannMart and Mikra continue to deliver solid results. CannMart has successfully established itself a leading cannabis brand within a short span of two years. Through innovation, strategic partnerships with provincial buyers, and unwavering support from our retailers, we are driving distribution and enhanced sell-through of our expanding portfolio of premium and mid-range concentrate products.”
“Mikra too has undergone a transformation and is now selling multiple products through our own website and through Amazon.com, the largest online direct-to-consumer platform in the world. Looking ahead, we anticipate accelerated growth as we shift our focus towards our partnership with Jose Bautista and launching new products and expanding our range of SKUs through these and other established channels. We continue to execute our strategy with our vision for Lifeist to becoming a leading player in the wellness industry. We remain committed to delivering exceptional products, pursuing innovation, and driving sustainable growth for our valued customers and shareholders.”
Second Quarter Operating Highlights
Cannabis: CannMart Inc. (“CannMart”) and CannMart Labs Inc. (“CannMart Labs”)
- Lifeist’s cannabis business continued to make progress on its path to profitability in Q2 2023, highlighted by expanding gross profit and a narrowing of Adjusted EBITDA losses. The improved profitability is being driven by the shift to in-house brand Roilty.
- Recreational cannabis revenue (net of exercise taxes) grew 16.3% to $4.1 million in Q2 2023 compared to $3.6 million in Q2 2022, driven largely by Roilty through increased distribution and retail sell-through of an expanding portfolio of premium and mid-range concentrate products in all of Canada’s provincial markets.
- Adjusted EBITDA loss for CannMart improved to $625,363 in Q2 2023 compared to $1.1 million in Q2 2022. The reduced loss was due to higher gross margins and better operational efficiency.
Nutraceuticals: Mikra Cellular Sciences, Inc. (“Mikra”)
- Mikra took several significant steps to expand its product portfolio and open new distribution channels over the past several months, which is bolstering the platform for future revenue growth.
- Mikra reported revenue of $361,049 in Q2 2023 compared to $106,262 in Q2 2022. Results were driven by sales of flagship product CELLF, with additional contribution from RESCUE which was launched in mid-December.
- Mikra sales in Q2 2023 have been generated on www.wearemikra.com.
- Adjusted EBITDA loss for Mikra improved to $280,047 in Q2 2023 compared to $733,077 in Q2 2022.
Australian Vaporizers Pty Ltd. (“Aus Vapes”)
- Aus Vapes revenue increased by 271% to $1.7 million in Q2 2023, due to the Aus Vapes team introducing new product categories and a new marketing strategy, plus the successful relocation of warehouse operations into a larger and more modern facility improving efficiencies and product assortment, after a shutdown in 2022 due to flooding.
Financial Summary
Net revenue increased 50.6% to $6.2 million in Q2 2023 compared to $4.1 million in Q2 2022 due mainly to a $1.3 million increase in Aus Vapes hardware revenue in Q2 2023, as compared to Q2 2022. Also contributing to the increase was a 16.3% increase or $579,750 in cannabis revenue and $254,787 increase in revenue generated by Mikra.
Gross profit before inventory adjustment increased 167% to $1.8 million compared to $667,118 in Q2 2022, with margins expanding to 29% from 16%.
The increase in Gross Profit in Q2 2023 as compared to the same period prior year reflects the Company’s resilience and confirms the success of its strategic focus on individual segments, geographies, and products, as well as a continuous effort to improve production efficiencies across all segments.
Adjusted EBITDA loss improved to $2.4 million in Q2 2023 compared to $4.5 million in Q2 2022. Net loss from continuing operations was $2.2 million, or ($0.01) per diluted share, in Q2 2023 compared to a loss of $4.6 million, or ($0.01) per share, in Q2 2022.
CannMart
CannMart continues to make strides establishing itself as the leading business-to-business intermediary for Canadian LPs and brands, and their recreational consumers across Canada. Growth across key business drivers including store penetration, product expansion and market share has been reported across all categories in the first half of 2023.
With the recent acquisition of Zest Cannabis, CannMart has two in-house brands it can call its own: Roilty, CannMart’s brand for high-quality concentrates serving everything from shatter to sugar wax, resin, vape cartridges and wax; and now Zest which offers premium quality extract-infused pre-roll and Liquid Diamond vape products. These leading brands are joined by Rilaxe, LOT 420, and Apothecary Labs rounding out CannMart’s portfolio of cannabis brands.
In addition, CannMart launched a new business-to business (“B2B”) platform to facilitate wider wholesale distribution for its exclusive partnership with award-winning Hamilton Devices. Leveraging its existing wholesale distribution channel, the portal makes these award-winning products available to a wider range of customers, including head shops, vape and smoke shops, convenience stores, including gas stations, and other retailers that sell cannabis accessories.
Aus Vapes
After a challenging 2022, Aus Vapes has emerged as a stronger, more versatile company. The company has made significant changes due to the changing landscape in the local market including devastating floods of spring 2022. The Aus Vapes team have worked incredibly hard introducing new product categories, executing a new marketing strategy, plus successfully relocated warehouse operations into a larger and more modern facility improving efficiencies and product assortment, which has led to a significant rebound in business year-over-year.
Corporate Update
The Company reports that Slava Klems, CFO at Lifeist, is transitioning to a fractional CFO position. Having established a robust financial structure and a strong and efficient team that handles day to day operations, Slava will continue to lead the Company’s financial strategy and oversee financial operations focused on optimizing revenues and reducing costs. This decision aligns with the Company’s ongoing efforts to optimize resources, track and measure business metrics while maintaining financial stability.
The Company also announces a correction to its press release entitled “Lifeist Wellness Closes on Zest Acquisition” issued on July 21, 2023 (the “Initial Press Release”). The Initial Press Release incorrectly stated that the Acquisition was completed pursuant to the terms of an amended and restated share purchase agreement, dated July 19, 2023. The Acquisition was completed on July 20, 2023. This correction does not change any other information reported in the Initial Press Release.
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; Aus Vapes, Australia’s largest online retailer of vaporizers and accessories; 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.com
www.cannmart.com
www.australianvaporizers.com.au
www.wearemikra.com
