Lifeist Reports Fourth Quarter 2023 Financial Results

Lifeist Reports Fourth Quarter 2023 Financial Results
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Published Apr 01, 2024  •  8 minute read

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Focus on efficiencies and delivering high-quality products drives improvements in gross margins

TORONTO, April 01, 2024 (GLOBE NEWSWIRE) — Lifeist Wellness Inc. (“Lifeist” or the “Company”) (TSXV: LFST) (FRANKFURT: M5B) (OTCMKTS: LFSWF), 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 and 12 months ended November 30, 2023 (“Q4 2023”) compared to the same period last year (“Q4 2022”). All financial figures are in Canadian dollars unless otherwise indicated.

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Fourth Quarter Highlights

Net revenue from continued operations of $4.7 million in Q4 2023 compared to $6.2 million in Q4 2022. Gross profit before inventory adjustment of $2.0 million in Q4 2023, representing gross margin of 42%, compared to $1.9 million, or 31% gross margin, in Q4 2022. Q4 2023 gross profit was the highest quarterly gross profit in the company’s history as the strategic focus on high margin activities and operational efficiency continues to have a positive impact. Operating costs and professional fees increased to $5.6 million in Q4 2023 compared to $5.5 million in Q4 2022. Adjusted EBITDA loss improved to $5.0 million in Q4 2023 compared to $5.5 million in Q4 2022.

Full-Year 2023 Highlights

Net revenue from continued operations was $21.7 million in 2023 compared to $22.1 million in 2022. Gross profit before inventory adjustment increased to $6.6 million in 2023 compared to $5.9 million in 2022, with margins expanding from 27% to 31%. Adjusted EBITDA loss improved to $13.8 million in 2023 compared to $18.5 million in 2022. Working capital position of negative $0.3 million at year end.

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“Our performance in the fourth quarter of 2023 reflects our strategic focus on high-margin activities and operational efficiency, resulting in the highest quarterly gross profit in our company’s history,” said Meni Morim, CEO of Lifeist. “Though accompanied by unique hurdles, our focus towards enhancing gross profit has produced promising results. We are looking at more cost and operational efficiency measures in 2024. We continue to work to position the Company to navigate industry fluctuations, drive profitability, and ensure sustainable growth. Despite the challenging landscape, we are committed to building Lifeist into a diversified wellness company with high-margin business units.”

Financial Summary

Net revenue was $4.7 million in Q4 2023 compared to $6.2 million in Q4 2022 due to continued supply chain challenges impacting CannMart’s cannabis revenue in Q4 2023, as compared to Q4 2022.

Gross profit before inventory adjustment increased to $2.0 million in Q4 2023 versus $1.9 million in the same period last year, with margins expanding to 42% in Q4 2023 from 31% in Q4 2022. The increase in margins in Q4 2023 as compared to Q4 2022 reflects the success of the Company’s strategic focus on individual segments, geographies, and products, as well as a continuous effort to improve production efficiencies across all segments.

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Adjusted EBITDA loss improved to $5.0 million in Q4 2023 compared to $5.5 million in Q4 2022 and net loss from continuing operations was $6.3 million, or ($0.005) per diluted share, in Q4 2023 compared to a loss of $8.1 million, or ($0.005) per diluted share, in Q4 2022. The improvement in both adjusted EBITDA loss and net loss was due largely to operational efficiencies resulting in higher gross profit before inventory adjustment and a reduction in operating costs of $2.0 million in 2023 versus 2022, plus an earn-out share charge recorded in 2022.

Balance Sheet and Cash Flow

Cash and cash equivalents were $1.5 million at November 30, 2023, compared to $3.8 million at November 30, 2022.

Inventories were $4.5 million at November 30, 2023 compared to $4.5 million at November 30, 2022.

The working capital position was negative $0.3 million at November 30, 2023.

Net cash used in operations was $0.6 million in Q4 2023 compared to $0.1 million in Q4 2022, due in part to lower revenue from CannMart and an increase in overall operating costs.

Leadership Change

Lifeist regrets to announce that Faraaz Jamal has officially stepped down from his leadership position with Mikra Cellular Sciences due to health reasons.

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“Faraaz has played an instrumental role in building Lifeist and the Mikra brands, and his dedication and commitment have been invaluable,” said Meni Morim, CEO of Lifeist. “On behalf of everyone at Lifeist and Mikra I wish to extend our heartfelt thanks to Faraaz for his outstanding contributions and wish him all the best.”

Additional Information

The Company’s complete financial statements and management’s discussion & analysis (“MD&A”) for the financial year ended November 30, 2023 are available on Lifeist’s website (www.lifeist.com) and SEDAR+ (www.sedarplus.ca).

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.

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Information on Lifeist and its businesses can be accessed through the links below:

www.lifeist.comwww.wearemikra.comwww.cannmart.comwww.australianvaporizers.com.au

ContactsMeni Morim, CEO Lifeist Wellness Inc.Tel: 647-362-0390Email: ir@lifeist.com

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this press release.

Non-IFRS Financial Measures

Management evaluates the Company’s performance using a variety of measures, including “Net loss before income tax, depreciation and amortization” and “Adjusted EBITDA”. The non-IFRS measures discussed below should not be considered as an alternative to or to be more meaningful than revenue or net loss. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.

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The Company believes these non-IFRS financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company.

Management uses these and other non-IFRS financial measures to exclude the impact of certain expenses and income that must be recognized under IFRS when analyzing consolidated underlying operating performance, as the excluded items are not necessarily reflective of the Company’s underlying operating performance and make comparisons of underlying financial performance between periods difficult. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of certain items does not imply that they are non-recurring.

Current and deferred income taxes, depreciation and amortization, and share-based compensation were excluded from the Adjusted EBITDA calculation as they do not represent cash expenditures. Other income consisting of gain on disposal of subsidiary, interest income, realized gain on disposition of AFS investments, unrealized gain on derivatives and other miscellaneous non-recurring income were excluded from Adjusted EBITDA calculation. Non-recurring costs related to restructuring and legacy issues were excluded from Adjusted EBITDA calculation. Impairment loss relating to goodwill, customer list, domains and brand names were excluded from Adjusted EBITDA calculation. Impairment loss relating to receivable is a provision for expected credit loss to an associate and was excluded from Adjusted EBITDA calculation. Share of associates loss, net of tax, is excluded due to lack of control.

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Forward Looking Information

This news release contains “forward-looking information” within the meaning of applicable securities laws. All statements contained herein that are not historical in nature contain forward-looking information. Forward-looking information can be identified by words or phrases such as “may”, “expect”, “likely”, “should”, “would”, “plan”, “anticipate”, “intend”, “potential”, “proposed”, “estimate”, “believe” or the negative of these terms, or other similar words, expressions and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen.

The forward-looking information contained herein, including, without limitation, statements related to: the Company’s continuing focus and future actions to foster profitability and deliver sustainable growth through additional cost and efficiency measures, and its expectations from such actions to increase revenue growth and profitability are made as of the date of this press release and is based on assumptions management believed to be reasonable at the time such statements were made, including, without limitation, Lifeist’s ability to implement cost cutting measures and efficiencies and to realize the anticipated benefits from focusing on gross profit enhancement, the Company’s expectation that the nutraceutical and wellness market will continue to develop as currently anticipated, the nutraceutical market will continue to be a multi-billion dollar high-margin market, the introduction of new products and brands will generate additional revenue, expectations that the Company’s current and future products will gain market acceptance, as well as other considerations that are believed to be appropriate in the circumstances. While we consider these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct. By its nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking information in this press release. Such factors include, without limitation: the inability of the Company to develop its business as anticipated and to increase revenues and/or its profitable margin on such revenues, unanticipated changes to current regulations that would adversely impact the Company’s businesses, the unanticipated decline in demand for cannabis products, competition from others, the risk that the expected demand for nutraceutical products in general and those of Mikra in particular does not develop as anticipated, regulatory risk, risks relating to the Company’s ability to execute its business strategy and the benefits realizable therefrom and risks specifically related to the Company’s operations. Additional risk factors can also be found in the Company’s current MD&A which has been filed under the Company’s SEDAR+ profile at www.sedarplus.ca. Readers are cautioned not to put undue reliance on forward-looking information. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Source: Lifeist Wellness Inc.

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