Vancouver, British Columbia--(Newsfile Corp. - February 22, 2023) - Delivra Health Brands Inc. (TSXV: DHB) (OTCQB: DHBUF) (formerly, Harvest One Cannabis Inc.) ("Delivra Health" or the "Company"), a consumer packaged goods company uniquely positioned in the health and wellness sector, is pleased to announce its financial and operating results for the three and six months ended December 31, 2022.
Management Commentary
"The second quarter of fiscal 2023 ("Q2 2023") reflects the start of a new phase in our history as Delivra Health has now become a profitable business," said Gord Davey, President and Chief Executive Officer of Delivra Health. "In Q2 2023, the Company reported positive adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA")(1). Since the start of our strategic reorganization in March 2020, the Delivra Health team has worked diligently on its customer mix, margins and achieving a responsible level of selling, general and administrative expenses ("SG&A"). These positive Q2 2023 results demonstrate that our business model is effective and scalable without burning significant cash going forward. With the sale of our Lucky Lake facility, Delivra Health's balance sheet is now well positioned for future growth. The Company will be increasing its investment in further innovation projects, customer programs and marketing campaigns."
Financial Highlights for the Quarter Ending December 31, 2022
Net revenue: The Company reported total net revenue from continued operations of $2.39 million in the second quarter of fiscal 2023 as compared to $1.74 million in same period last year, representing an approximate 37% increase. This increase was primarily due to higher sales of Dream Water in US to international distributors and higher sales of the Company's licensed LivRelief cannabis-infused topical creams in Canada.
Gross profit and gross profit margin: The Company reported for the 3 months ended December 31, 2022 gross profit of $0.98 million and a gross profit margin of 41% from continued operations as compared to $0.64 million and 37% in same period last year. The increase in gross profit and gross profit margin was the result of increased sales volume of the Company's licensed 2.0 LivRelief products and higher margin sales from the US and international distributors.
Expenses including SG&A and excluding non-cash items: For the three months ended December 31, 2022, the Company reported expenses of $0.96 million as compared to $1.75 million in the same period last year, representing a 45% reduction. The reduction was mainly driven by the implementation of certain operational improvements and cost reduction measures identified in the Company's strategic review, which was completed on March 29, 2021 (the "Strategic Review"), and which resulted in lower sales and marketing expenses.
Adjusted EBITDA(1): For the three months ended December 31, 2022, the Company reported Adjusted EBITDA of $0.14 million as compared to $(0.95) million in the same period last year, representing a $1.09 million year over year improvement from continued operations. This increase in EBITDA resulted from management's focus on customer mix, gross profit margin improvement and efficient administrative and selling support functions.
Financial Highlights for the Six Months Ending December 31, 2022
Net revenue: The Company reported total net revenue from continued operations of $4.12 million compared to $3.87 million in same period last year which is approximately a 6% increase. This increase was due to higher sales of Dream Water in US to international distributors and higher sales of the Company's licensed LivRelief cannabis-infused topical creams in Canada as a result of the timing of customer ordering patterns experienced and expressed by management in the first quarter of fiscal 2023.
Gross profit and gross profit margin: The Company reported year-to-date gross profit of $1.86 million and a gross profit margin of 45% from continued operations as compared to $1.35 million and 35% in same period last year. The increase in gross profit and gross profit margin was the result of increased sales volume and improved customer mix supported by well-controlled operational costs.
Expenses including SG&A and excluding non-cash items: For the six months ended December 31, 2022, the Company reported expenses of $2.01 million compared to $3.24 million in the same period last year, representing a 38% reduction. As noted previously, the reduction was mainly driven by the implementation of certain measures identified in the Company's Strategic Review, which resulted in lower sales and marketing expenses to conserve cash.
Adjusted EBITDA(1): For the six months ended December 31, 2022, the Company reported Adjusted EBITDA of $(0.015) million compared to $(1.73) million in the same period last year, representing a $1.74 million year over year improvement from continued operations. This increase in EBITDA was driven by management's efforts in focusing on the right customer mix, margin improvement supported by efficient administrative and selling support functions.
Summary of Key Financial Results
| For the three months ended December 31 | For the six months ended December 31 | |||
| ($000's, except share and per share amounts) | 2022 | 2021 | 2022 | 2021 |
| Continued operations: | $ | $ | $ | $ |
| Net revenue | 2,392 | 1,746 | 4,121 | 3,876 |
| Cost of sales | 1,284 | 941 | 2,124 | 2,362 |
| Inventory write-down | 121 | 161 | 132 | 161 |
| Gross profit | 987 | 644 | 1,865 | 1,353 |
| Expenses excluding non-cash expenses | 968 | 1,759 | 2,012 | 3,246 |
| Depreciation and amortization and share based compensation | 410 | 614 | 781 | 1,300 |
| Total Expenses | 1,378 | 2,373 | 2,793 | 4,546 |
| Loss from Operations | (391) | (1,729) | (928) | (3,193) |
| Other (expense) income | 1,281 | 99 | 1,434 | 110 |
| Net gain (loss) from continued operations | 890 | (1,630) | 506 | (3,083) |
| Net gain (loss) per share - basic and diluted | 0.004 | (0.01) | 0.002 | (0.01) |
Adjusted EBITDA(1) (non-IFRS measure)
| For the three months ended December 31 | For the six months ended December 31 | |||
| ($000's, except share and per share amounts) | 2022 | 2021 | 2022 | 2021 |
| Loss from operations | (391) | (1,729) | (928) | (3,193) |
| Inventory write-down | 121 | 161 | 132 | 161 |
| Depreciation and amortization | 332 | 527 | 664 | 1,064 |
| Share-based compensation | 78 | 87 | 117 | 236 |
| Adjusted EBITDA(1) | 140 | (954) | (15) | (1,732) |
| (1) Defined as loss from operations before interest, taxes, depreciation and amortization and adjusted for share-based compensation, common shares issued for services, asset impairment and write-downs, discontinued operations and other non-cash items, and is a non-IFRS measure discussed in the "Adjusted EBITDA" section. | ||||
Expenses excluding non-cash items
| For the three months ended December 31 | For the six months ended December 31 | |||
| ($000's, except share and per share amounts) | 2022 | 2021 | 2022 | 2021 |
| General and administration | 888 | 1,157 | 1,853 | 2,232 |
| Sales and marketing | 80 | 602 | 159 | 1,014 |
| Total | 968 | 1,759 | 2,012 | 3,246 |
About Delivra Health Brands Inc.
Helping people take control of their health with alternative wellness solutions is what energizes the Delivra Health team! The Delivra Health portfolio features innovative brands like Dream Water and LivRelief, which deliver relief from common everyday issues like chronic pain, anxiety, and sleeplessness. Delivra Health products have allowed millions of customers to reclaim their mobility, energy, and in turn, quality of life. The websites of the Company's two subsidiaries are Dream Water and LivReliefTM. For more information, please visit www.delivrahealthbrands.com.
Non-IFRS Measures, Reconciliation and Discussion
This press release contains references to "Adjusted EBITDA" which is a non-IFRS financial measure. Adjusted EBITDA is a measure of the Company's loss from operations before interest, taxes, depreciation, and amortization and adjusted for share-based compensation, common shares issued for services, fair value effects of accounting for biological assets and inventories, asset impairment and write-downs, and other non-cash items, and is a non-IFRS measure.
This measure can be used to analyze and compare profitability among companies and industries, as it eliminates the effects of financing and capital expenditures. It is often used in valuation ratios and can be compared to enterprise value and revenue. This measure does not have any standardized meaning according to IFRS and, therefore, may not be comparable to similar measures presented by other companies.
There are no comparable IFRS financial measures presented in Delivra Health's financial statements. Reconciliations of the supplemental non-IFRS measure are presented in the Company's Management Discussion and Analysis for the three and six months ended December 31, 2022. This non-IFRS financial measure is presented because management has evaluated the financial results both including and excluding the adjusted items and believes that the non-IFRS financial measure presented provides additional perspective and insights when analyzing the core operating performance of the business. The Company believes that the supplemental measure provides information which is useful to shareholders and investors in understanding the Company's performance and may assist in the evaluation of the Company's business relative to that of its peers.
The non-IFRS financial measure should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with the IFRS financial measures presented in the Company's financial statements. For more information, please see "Adjusted EBITDA (non-IFRS measure)" and "Non-IFRS Measures" in the Company's Management Discussion and Analysis for the three and six months ended December 31, 2022, which is available under the Company's System for Electronic Document Analysis and Retrieval ("SEDAR") profile on www.sedar.com.
Notes:
- This is a non-IFRS reporting measure. For a reconciliation of this measure to the nearest IFRS measure, see "Adjusted EBITDA (non-IFRS measure)" and "Non-IFRS Measures" in the Company's Management Discussion and Analysis for the three and six months ended December 31, 2022.
Cautionary Note Regarding Forward-Looking Statements
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements include, among other things, statements with respect to the Company's growth objectives, planned investment activities, management of expenses, increasing revenues and profitability, growth in new markets, and new distribution partners.
These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: implications of the COVID-19 pandemic on the Company's operations; fluctuations in general macroeconomic conditions; fluctuations in securities markets; expectations regarding the size of the cannabis markets where the Company operates; changing consumer habits; the ability of the Company to successfully achieve its business objectives; plans for expansion; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; employee relations and the presence of laws and regulations that may impose restrictions on cultivation, production, distribution, and sale of cannabis and cannabis-related products in the markets where the Company operates. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Additional information regarding this and other risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in the Company's annual information form dated March 2, 2021, and under the heading "Risks and Uncertainties" in the Company's management's discussion and analysis dated February 22, 2023, for the year ended June 30, 2022, filed under the Company's profile on SEDAR at www.sedar.com.
Neither the TSX Venture Exchange ("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.
Investor Relations:
Jack Tasse
Chief Financial Officer
IR@delivrahealth.com
1-877-915-7934
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/155687
