Lifeist Wellness Inc has reported its financial results for the three and nine months ended August 31, 2021, showing a 12% year-over-year increase in 3Q 2021 gross revenue to $7.1 million, led by cannabis growth of 34%
The company said its gross profit and margin more than doubled year-over-year to $0.9 million and was 15% of net revenue - 23% before inventory adjustment- the fourth consecutive quarterly improvement.
In a statement, Meni Morim, CEO of Lifeist commented: "Our improved third-quarter results reflect ongoing positive trends: higher revenue, lower costs, and better cash flow. We are seeing the early payoff from our focus on where we can deliver more profitable growth, operate more efficiently, and optimize working capital within our current portfolio of businesses while we invest in the future.
"We are pressing forward with our plans to develop nutraceuticals products with a new business unit launching this quarter, enabling Lifeist to transition to sustainable profitability. The improved performance in our cannabis business while we invest in this emerging opportunity reinforces our confidence in our strategy and we expect continued top-line growth and improvements in profitability as we navigate through this transformation. Overall, there has been a significant amount of work done across the Company laying the foundations for growth as we continue our company's evolution to wellness.”
Morim added: “In particular, the financial turnaround is being led by our cannabis subsidiary, CannMart, Inc., which is experiencing strong demand for its portfolio of products from consumers, retailers and provincial wholesalers across Canada as evidenced by the 34% growth in cannabis revenue in the quarter. What makes CannMart unique is its ability to bring brands to market quickly, whether it be via the increasing number of master distribution agreements that we are signing where we act as the middleman, or via the expansion of our product portfolio with the launch of our limited-edition SKUs made at our subsidiary CannMart Labs’s state-of-the-art BHO extraction facility."
Lifeist saw its Q3 2021 EBITDA loss narrow to $5.4 million compared to $7.3 million in Q3 2020 and $5.9 million in Q2 2021, even with incremental investments into emerging businesses including nutraceuticals. Net cash used in operating activities decreased from $5.7 million in Q2 2021 to $4.9 million in Q3 2021, while the company's working capital position of $19.5 million at quarter-end remained strong.
Operational Highlights
- CannMart continues to enter into partnerships with third parties to be their wholesale and logistics partner in order to take advantage of the trend where Canadian licensed producers (LPs) and manufacturers are looking to outsource parts of their operations that are not core. During the third quarter, CannMart Inc. signed Master Distribution Agreements with several companies including with Rapid Dose Therapeutics Corp to exclusively distribute RDT's innovative RDT branded products across Canada
- CannMart received its first purchase orders from the provinces of Manitoba, and Saskatchewan for its 2.0 consumer-focused recreational house brand 'Roilty' concentrates
- As part of its focus on the broader wellness space, the company changed its corporate name from Namaste Technologies to Lifeist Wellness effective September 9, 2021, and changed its stock ticker symbol on the TSXV to its current symbol LFST.
Lifeist said it continues to look for ways to operate more efficiently, including subleasing its former Toronto office headquarters which is expected to generate annual run-rate savings of approximately $138,000 until expiry of its lease in October 2024, as well as consolidating headcount, software and marketing costs across divisions in order to reduce costs and reallocate resources more efficiently across the company, and implementing inventory control measures on the cannabis business to reduce carrying costs.
Lifeist is a portfolio of wellness companies leveraging advancements in science and technology to enable individuals to find their personalized path to wellness.
The company's portfolio business units include CannMart, which operates a B2B wholesale distribution business facilitating recreational sales to Canadian provincial government control boards and the CannMart.com marketplace which provides Canadian medical customers with a diverse selection of cannabis products from a multitude of federally licensed cultivators and its US customers with access to hemp-derived CBD and smoking accessories.
It also owns Australian Vapes, the country’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 and recovery.
Contact the author at jon.hopkins@proactiveinvestors.com