VIVO Cannabis Announces Third Quarter 2022 Results

• Net revenue for Q3 2022 was $6.2 million, a 19% increase from prior quarter
• International sales reach $2.5 million
• Beacon Medical continues to be the leading medical cannabis flower brand in Australia
• The Company entered into a third supplement to the indenture for its debentures to extend their maturity to 2024
• Subsequent to the quarter-end, the Company recognized $8.8 million of deferred revenue as Other income as part of a dismissed arbitration matter

Toronto, Ontario--(Newsfile Corp. - November 14, 2022) - VIVO Cannabis Inc. (TSX: VIVO) (OTCQX: VVCIF) ("VIVO" or the "Company") today released its third quarter 2022 financial and operating results.

Financial Summary

Net revenue for the third quarter of 2022 was $6.2 million which was unchanged compared to the same period for 2021, and an increase of 19% vs. Q2 2022 sales. The increase in sales was driven by increased sales in the Company's international operations.

The Company had a net loss of $3.9 million for the three months ended September 30, 2022, compared to $1.1 million the same period in 2021, driven by changes in income tax of $2 million and CEWS payments received in 2021.

General and administrative expenses increased to $4.0 million for the three months ended September 30, 2022, compared to $3.2 million for the same period for 2021 and $4.3 million for Q2 2022. The reduced general and administrative expenses compared to 2021 reflect payments made to the Company under the federal CEWS program. Sales and marketing expenses decreased to $0.1 million for the three months ended September 30, 2022, compared to $0.3 million for the same period in 2021.

The Company's Adjusted EBITDA increased by $0.3 million during the three and nine months ended September 30, 2022, compared to the prior year driven by continued efforts to streamline operations and an enhanced focus on the domestic and international medical markets.

Key Performance Indicators

⁽¹⁾ Adjusted EBITDA is not a measure of financial performance under IFRS. For the Company's definition of Adjusted EBITDA, see the Company's management's discussion and analysis for the quarter-ended September 30, 2022, available under the Company's profile at www.sedar.com.

Business Update

The Company recorded revenue of $6.2 and $18.3 million in the three and nine months ended September 30, 2022. Quarter-over-quarter growth was driven from strength in the international markets. All revenue earned in the three and nine months ending September 30, 2022 was derived from the sale of medical and adult-use cannabis products except $0.7 million and $2.1 million derived from VIVO's Harvest Medicine clinic operations.

Gross revenue, net of excise taxes and discounts, from the sale of dried cannabis into the Canadian medical market for the three and nine months ended September 30, 2022, was $1.6 million and $5.1 million ($1.8 million and $6.3 million for the same prior year periods), reflecting continued Canadian medical market competition and pricing pressures.

In Q3 2022, the Company continued to sharpen the focus of its business activities on the medical market. In July, the Company entered into a supply agreement with High Hopes Foundation to provide safe and legal quality medical cannabis to patients in Vancouver's Downtown East Side (DTES) through the Overdose Prevention Society as part of a cannabis harm reduction program.

In January 2019, the parties entered into an arbitration process as detailed in its financial statements. Subsequent to the quarter-end the Company and the claimant to the arbitration signed a full and final release of all obligations under the agreement and an order was signed dismissing the arbitration process. The Company will recognize $8,800,000 of deferred revenue as earned through Other income in Q4 2022.

Strategic Priorities

VIVO remains focused on executing against its strategic priorities: the domestic and international medical cannabis markets. The Company has made significant progress in enhancing its internal supply and production capabilities, expanding its customer network, increasing its patient focused medical cannabis products and services, and accelerating its international medical business. VIVO believes focusing on its key priorities will generate long-term shareholder value and result in profitability.

As part of its continued effort to ensure cost efficiencies, effective September 15, 2022, the Company entered into a third supplement to the debenture indenture with respect to the remaining balance outstanding for the February 2018 Debentures. The third supplement to the debenture indenture provides for:

1. (i) The extension of the maturity date form September 15, 2022 to September 15, 2024;

2. (ii) An increase of the interest payable on the Debentures from 6.0% to 10.0%; and

3. (iii) The prepayment of Debentures in the aggregate principal amount of $3 million, on a pro rata basis, in $500,000 installments, with the first such payment to be made within 30 days after the date of the Supplemental Indenture (with the last such payment expected to occur on or about February 28, 2023).

Patient Care Expertise

The Company has provided educational consultants and medical cannabis care in over 200,000 patient interactions through its HMED clinics (as defined below) since 2017. Canna Farms' best-in-class, award-winning, Patient Care Team has been providing patient services since 2014 and has first-hand expertise in product selection and patient support. With patient-centricity at its core, in 2022 HMED launched several new educational programs for both patients and healthcare professionals.

Quality Production

Canna Farms was established in 2013, as the first licensed producer in British Columbia, and since that time has established deep roots in the medical cannabis community. It operates an industry-leading online medical cannabis platform, (https://www.cannafarms.ca/product-medical) that combines the Company's brands with products from third-party cultivators in one on-line medical store. There are currently over 10 brands and 100 curated products offered on the Canna Farms medical platform.

With all planned operating facility expansion projects completed, VIVO anticipates capital expenditures for the remainder of 2022 to be minimal. Disciplined investments in product development, facility optimization and international market commercialization are expected to continue to facilitate future profitable growth.

International Markets

VIVO continues to pursue its international expansion strategy, leveraging its experience and leadership to enter new high-growth markets. The Company's initial focus is on the German and Australian markets, which, combined, have a population of approximately 100 million people.

The Company has spent significant time and resources preparing for its entry into international markets, as well as developing innovative cannabis based medical products for those markets. Total sales for international focused operations for the three months ended September 30, 2022, was $2.5 million. The contribution coming from the international segment is expected to grow as the benefits of the EU-GMP certification of the Company's Vanluven facility in Napanee, Ontario begin to materialize in the form of European and Australian sales.

Clinical Care

The Company purchased its Harvest Medicine ("HMED") operations in 2018 and since the acquisition has leveraged clinical insights from tens of thousands of HMED patients to conduct research on patient outcomes, to publish observational clinical studies, to educate and increase health care prescriber adoption, to improve market access, and to direct future product development within its medical channels. Harvest Medicine utilizes a virtual platform, "HMED Connect" and has recently added pharmacy consultations as a service for patients as part of their medical cannabis care offering.

The HMED portfolio consists of three education-focused, patient-centric, cannabis discovery clinics, including two clinics located in Alberta and one clinic in Nova Scotia. HMED has conducted more than 200,000 registered patient visits through its clinics, clinic-in-clinic partnerships, and via its telemedicine platform, making it one of the top clinic networks in Canada. In September, HMED closed its brick-and-mortar clinic in Moncton, New Brunswick, and continues to service those patients through HMED Connect.

VIVO is committed to pursuing innovation throughout its value chain. The Company uses data insights gained from Harvest Medicine's clinics and from Canna Farms' medical cannabis platform as a foundation for the development of products and services that more effectively meet their patients' needs.

The Harvest Medicine research team continues to evaluate real-world evidence patient outcomes across different medical conditions. In September, Harvest Medicine's second observational research study on fibromyalgia was presented at the 80^th International Pharmaceutical Federation (FIP) World Congress in Seville, Spain.

About VIVO Cannabis

VIVO Cannabis® is recognized for trusted, quality medical cannabis products and services. It holds production, sales and research licences from Health Canada and operates world-class indoor cultivation facilities. VIVO has a collection of brands, each targeting different customer segments, including Canna Farms™, Beacon Medical®, Fireside™, and Lumina™. Harvest Medicine™, VIVO's patient-centric network of medical cannabis clinics, has serviced over 200,000 patient visits. VIVO focuses its international efforts on Germany and Australia. For more information visit: www.vivocannabis.com

For further information:
VIVO Investor Relations
Michael Bumby, Chief Financial Officer
ir@vivocannabis.com

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Disclaimer for Forward-Looking Information

All dollar amounts in this news release are in Canadian dollars. Certain statements in this news release are forward-looking statements, which are statements that are not purely historical, including statements regarding the beliefs, plans, expectations or intentions of VIVO and its management regarding the future. Forward-looking statements in this news release include statements regarding: the Company's expected catalysts to deliver profitable growth, including entry into domestic and international markets; the development and launch of innovative products and services and the financial impact thereof; the integration of its facilities; redefining the Company's strategy; accelerating its path to profitability; the Company's expectation that focusing on the medical cannabis segment will generate long-term shareholder value and accelerate the path to profitability; the factors that VIVO believes will drive significant growth in medical cannabis utilization; and the ability of the Company's growth initiatives to drive future profitable sales beyond 2022. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the forward‐looking statements, including: that the medical cannabis market may not grow to the extent, within the time, or for the reasons expected by the Company; changes to the recreational market; that the COVID‐19 pandemic may last longer and have a more significant impact on the Company's operations, the Canadian cannabis industry, or the global economy generally, than currently expected; that the Company faces competition against new market entrants and participants; that the Company may not be able to launch new products in the time expected or at all and that patients may not receive the expected benefits therefrom; that the Company may not be able to achieve competitive margins; that new products, if launched, may not be accepted by the market or may become subject to product liability claims; that the Company may not be able to obtain necessary licences; that demand for the Company's products may not meet management's expectations; that the Company may be unable to retain its key talent; that the Company may not be able to execute on its strategic partnerships; that the Company may not obtain any other necessary regulatory approvals as required from time to time; that the Company may be unable to protect its intellectual property; and other factors beyond the Company's control. No assurance can be given that any of the events anticipated by the forward‐looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully, and the more extensive risk factors included in the Company's management's discussion and analysis for the quarter-ended September 30, 2022, which is available on SEDAR, in evaluating the forward‐looking statements contained in this news release, and are cautioned not to place undue reliance on such forward‐looking statements, which are qualified in their entirety by these cautionary statements. The forward‐looking statements in this news release are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any such forward‐looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.

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