Harvest One Reports Fourth Quarter and Year End Financial Results for 2019
VANCOUVER, Oct. 28, 2019 /PRNewswire/ - Harvest One Cannabis Inc. ("Harvest One" or the "Company") (TSX-V: HVT; OTCQX: HRVOF) today announced the release of its financial and operating results for the three and twelve months ended June 30, 2019.
Fourth Quarter Highlights
- Achieved net revenue of $3.0 million and $11.5 million for the three and twelve months ended June 30, 2019, respectively, representing a 489% and 1,479% increase from the same periods in 2018;
- Reported sequential growth of 76% and 1,809%, respectively, over the previous period in the Consumer and Medical and Nutraceutical segments;
- Entered into an agreement to distribute Satipharm's proprietary 10mg CBD GelPell® capsules through Holland & Barrett, Europe's largest retailer of nutritional supplements and wellness products with over 145 years of experience in the health and wellness industry;
- Appointed Deb Milimaka Miles as Chief Administrative Officer and Chief People Officer of the Company.
Subsequent to June 30, 2019
- Completed the acquisition of Delivra Corp. ("Delivra") and its LivRelief™ brand, accelerating the growth of Harvest One's Consumer segment and future product development;
- Entered into a supply agreement with GenCanna Global USA ("GenCanna") whereby GenCanna will supply the Company with GMP Certified CBD oil and finished products for distribution in regulated markets around the globe;
- Published positive results of Satipharm's Phase 2 clinical trial of its CBD GelPell® capsules in the management of Treatment Resistant Epilepsy in Epilepsy & Behaviour, a bimonthly peer-reviewed medical journal covering behavioural aspects of epilepsy;
- Obtained a cultivation licence from Health Canada for Phase 1 of United Greeneries' new Mission Road facility;
- Appointed Aaron Wong as Chief Financial Officer of the Company and Andy Bayfield as Chief Commercial Officer of the Company;
- Entered into a supply agreement with 9869247 Canada Limited ("Stevens Green") whereby Stevens Green will cultivate and harvest United Greeneries' premium cannabis genetics at their facility in Ontario;
- Completed Phase 1 of a pilot program in conjunction with Shoppers Drug Mart and TruTrace Technologies Inc. designed to increase the transparency and validation of products within the medical cannabis industry;
- Obtained an amendment to United Greeneries' licence from Health Canada to allow for the sale of cannabis oil products;
- Expanded Satipharm's product portfolio with the launch of CBD oil online, with brick and mortar distribution to follow with major retailers throughout Europe.
Management Commentary
"We are delighted with the Company's progress throughout the fourth quarter and fiscal 2019 as we build a platform for long-term growth across all our segments," said Grant Froese, Chief Executive Officer of Harvest One. "In the fourth quarter, we showed strong revenue growth within our consumer and medical segments while our cultivation segment remained steady prior to adding the necessary scale through the expansions of our facilities. We have developed excellent and trusted relationships with our provincial partners ensuring a valuable route to market. We have also made the necessary investments to ensure we are one of the first to market with derivative cannabis products following the recent legislation changes in Canada."
Mr. Froese continued, "Our first quarter fiscal 2020 revenues look promising for growth across all our divisions, with the addition of new Satipharm wholesale agreements and the addition of Delivra revenue to our consumer segment. Although current capital market conditions remain challenging, the Company remains focused on delivering on our strategic priorities and building a successful company for the long-term based on solid fundamentals."
Summary of Key Financial Results
Three months ended June 30 |
Year ended June 30 |
||||||
Select Financial Information |
2019 |
2018 |
2019 |
2018 |
|||
($000's, except share and per share amounts) |
$ |
$ |
$ |
$ |
|||
Net revenue |
3,021 |
513 |
11,465 |
726 |
|||
Gross profit |
1,095 |
100 |
3,008 |
924 |
|||
Expenses |
15,085 |
4,951 |
31,144 |
11,522 |
|||
Loss from operations |
(13,990) |
(4,852) |
(28,136) |
(10,598) |
|||
Net loss attributable to common shareholders |
(13,594) |
(4,952) |
(27,852) |
(12,607) |
|||
Net loss per share – basic and diluted |
(0.07) |
(0.03) |
(0.15) |
(0.11) |
|||
Weighted average number of common shares |
185,749,496 |
162,531,303 |
179,774,376 |
120,056,383 |
|||
Adjusted EBITDA(1) |
(5,258) |
(4,937) |
(14,939) |
(10,686) |
|||
(1) |
Adjusted EBITDA is a non-GAAP measure defined as loss from operations before interest, taxes, depreciation and amortization adjusted for additional fair value items and other non-cash items, as reconciled in Harvest One's fiscal 2019 MD&A. |
Operational Highlights
Consumer Segment
In July 2019, Harvest One closed the acquisition of Delivra further developing its consumer segment. Delivra is focused on increasing distribution in Canada and preparing for launch in the United States in calendar Q1 2020. This acquisition also ensures that Harvest One will be amongst the first movers on cannabinoid-infused topicals in Canada later this year and globally, where regulations allow.
Dream Water continues to sign new agreements with major retailers across North America and is available in over 30,000 stores. Product innovation is key to building a successful consumer brand and this period Dream Water launched a beauty SKU containing collagen and biotin with a successful trial in CVS.
Medical and Nutraceutical Segment
Satipharm has seen significant retail growth in the past few months and is now on shelves in over 2,000 stores across the UK and Europe. Following the initial agreement in May 2019 with Holland & Barrett, Europe's largest retailer of nutritional supplements and wellness products, Satipharm continues to sign new supply agreements with major European retailers. Satipharm's CBD GelPell® capsules and products can now be found on the shelves of household retailers such as LloydsPharmacy, Boots and online through Chemist Direct, the UK's largest online pharmacy. Satipharm also signed a global agreement with GenCanna, one of the largest Hemp producers and extractors in the United States. Under the terms of the agreement, GenCanna will supply GMP certified CBD oil and finished products for distribution in regulated markets in the United States, Europe and around the globe.
Cultivation Segment
United Greeneries remains on track to secure a capacity target of 20,000 kgs of premium flower in 2020. Construction is ongoing at both the Mission Road and Lucky Lake facilities. In October 2019, United Greeneries received its cultivation licence for Phase 1 of the new Mission Road facility which, when fully completed, will triple the production capacity in Duncan and increase operational efficiency. To supplement supply, United Greeneries signed a cultivation agreement with Stevens Green that will provide additional supply while maintaining the quality associated with the Royal High brand. The first harvest is scheduled for this month which will immediately boost supply for provincial partners. United Greeneries is one of three Licensed Producers to complete a pilot program with Shoppers Drug Mart and TruTrace Technologies, focused on improving product verification and quality assurance in the industry. In September 2019, United Greeneries received an amendment to its licence to allow for the sale of cannabis oil products. This is an important step towards launching a variety of vape and infused products therefore ensuring United Greeneries is one of the first to market with derivative cannabis products following the recent legislation changes in Canada.
Corporate Segment
Over the past few months, the Company has made key strategic additions to the senior management team including the addition of Deb Milimaka Miles as Chief Administrative Officer and Chief People Officer. Mrs. Milimaka Miles brings extensive experience gained from previous senior HR executive positions at Loblaw and SMART Technologies and most recently was awarded a Woman of Inspiration award which recognizes her active mentorship that paves the road to empower women in leadership roles. Aaron Wong was recently appointed Chief Financial Officer after serving as the Company's Corporate Controller since December 2017. Andy Bayfield was recently appointed Chief Commercial Officer after a successful career focused on consumer-packaged goods with internationally recognized companies such as Cadbury, Coca-Cola, and Canada Dry Mott's, a division of Keurig Dr. Pepper. This appointment shows Harvest One's commitment to building out its consumer segment globally.
Burb represents the Company's initial investment in the retail space. Burb recently received its first two cannabis retail licences in September 2019. For Harvest One these licences represent an essential milestone and ensure shareholders gain exposure across the entire value chain of cannabis. Burb intends to expand rapidly across Canada and into the United States. Harvest One continues to monitor the commercial retail opportunities in Canada and will make appropriate investments once there is further clarity on a provincial level.
2020 Outlook
Management anticipates sales volumes, net revenues, and adjusted EBITDA to improve in fiscal 2020 due to increased capacity, the introduction of new cannabis derivative products to the Canadian market, improvements in gross margin, and disciplined spending across all segments.
The Company remains on track to add significant production capacity in 2020 with construction at both the Mission Road and Lucky Lake facilities ongoing. Harvest One continues to scale up to achieve an annual capacity target of 20,000 kgs of premium flower. The increased production capacity will allow the Company to enter into additional provincial markets. Harvest One is currently in advanced discussions with several other provinces to enter into supply agreements.
The Company is poised to be one of the first to market in Canada with cannabis derivative products under new legislation, initially with both vape products and infused topicals. The Company is in advanced stages of product development through third party partners with its vape strategy and already has both THC and CBD formulations in place with its LivRelief™ brand in Canada.
Launching full-scale production of Satipharm CBD Gelpell® capsules in Canada remains a high priority for the Company. Harvest One recently received permission from Health Canada to import Satipharm CBD Gelpell® capsules for research and development purposes. This import permit allows the Company to begin compliance testing and analysis for the Canadian market.
Formulations of CBD-infused Dream Water continue to advance and are currently undergoing stability testing. The Company expects to launch this line extension throughout its significant distribution channels in Canada and the United States when regulations permit. Dream Water is also formulating international compliant SKUs for global markets.
The acquisition of Delivra immediately adds revenue to the Company through existing distribution with major retailers across Canada. Launching LivRelief™ in the United States is on track for calendar Q1 2020. The Company currently has two FDA approved SKUs and plans to roll out LivRelief™ under the same established distribution network as Dream Water.
International expansion remains a key priority for Harvest One. The Company has built a robust distribution platform throughout North America, Europe, and Australia. Harvest One will utilize this platform to launch its portfolio of brands into new regions internationally.
The Company intends to raise additional capital which together with cash generated from operations will fund the on-going capital expenditure plans and operational needs of the Company. Raising capital in the current capital markets remains challenging for all cannabis issuers. While the Company has been successful in obtaining financing in the past there can be no assurance that it will be able to obtain additional financing in the future.
About Harvest One
Harvest One is a global cannabis company that develops and provides innovative health, wellness, and self-care products to consumers and patients in regulated markets around the world. The Company's range of solutions is designed to enhance quality of life. Shareholders have significant exposure to the entire cannabis value chain through four wholly owned subsidiaries: United Greeneries, a Licensed Producer (cultivation); Satipharm (medical and nutraceutical); Dream Water Global and Delivra (CPG); and a minority interest in Burb Cannabis (retail operations). For more information, please visit www.harvestone.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The forward-looking information contained in this press release is made as of the date hereof, and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.
Neither TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accept responsibility for the adequacy or accuracy of this release.
SOURCE Harvest One Cannabis Inc.
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