Canadian cannabis company VIVO Cannabis Inc. (TSX: VIVO) (OTCQB: VVCIF) posted financial results that show it managed to find a bit of sales growth in 2022, despite incurring steeping losses as it prepares for a merger with MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ) within the next set of weeks.
The company posted $7.1 million in revenue, a 3% rise, during the fourth quarter and $25.5 million for the whole year. The growth over the quarter was due to strong sales in international markets. Most of the revenue in 2022 came from selling medical and recreational cannabis products, but $2.8 million came from its Harvest Medicine clinic operations.
VIVO’s full-year net loss fell from $69.6 million in 2021 to $48.4 million in 2022, while its adjusted EBITDA also improved as a result of efforts to streamline operations and focus on domestic and international medical markets.
The company lost around $3.8 million in the quarter, adding to the company’s total debt of $276.2 million, according to a going concern statement listed in its filings.
Although VIVO has enough cash for now, the runway is unclear. The company’s future depends on becoming more profitable or receiving an injection of funds from its scheduled merger.
The company raised some money and made operational changes to manage its funds better, in addition to extending a debt repayment deadline to 2024. Despite these efforts, there’s still significant uncertainty about the company’s ability to survive long-term.
The new company, which will keep the MediPharm Labs name, expects to make $36.5 million a year and become profitable by the second half of 2024.
MediPharm Labs’ CEO, David Pidduck, said that the new company will focus on global medical markets instead of Canadian recreational ones.
“Both VIVO and MediPharm saw the future in cannabis wellness products and in pharmaceutical drugs containing cannabis,” Pidduck said in a release at the time, adding that combining the businesses would save money and increase revenue.
The company has invested time and resources to enter these markets and develop new cannabis-based medical products. In 2022, its international sales reached $12.5 million. The company expects growth in this area, after its Vanluven facility in Ontario, Canada, received EU-GMP certification, which should help increase sales in Europe and Australia.
In addition to international expansion, VIVO utilized data insights from its Harvest Medicine clinics and Canna Farms’ medical cannabis platform to develop products and services that better cater to patients’ needs. VIVO said it has a research team actively evaluating real-world patient outcomes across various medical conditions.