- Reports revenues of $9.1 million
in the first half of 2022, up 62% year-over-year, reflecting
continued medical cannabis momentum in target markets
- Recorded its lowest ever Adjusted EBITDA loss in Q2 2022 at
($2.3) million, down 30%
quarter-over-quarter and 39% year-over-year
- Net loss of ($2.2) million for Q2
2022 represents a 60% decrease quarter-over-quarter and 55%
year-over-year
- Net cash used in operating activities in the first half of 2022
was the Corporation's lowest ever at ($4.8)
million, compared to ($10.4)
million in 2021
- Recorded gross margin in the medical cannabis segment of 76% in
Q2 2022, driven by Khiron's unique patient-oriented medical
cannabis model in Latin America
and Europe
- Ongoing progress in core market and refined strategic focus
provide strong foundation for growth in second half of the
year
TORONTO, Aug. 29,
2022 /CNW/ - Khiron Life Sciences Corp. ("Khiron" or
the "Corporation") (TSXV: KHRN) (OTCQX: KHRNF) (Frankfurt: A2JMZC), a global leader in medical
cannabis throughout Latin America
and Europe, announced today its
financial results for the quarter ended June
30, 2022. These filings are available for review on the
Corporation's SEDAR profile at www.sedar.com. All financial
information in this press release is reported in Canadian dollars,
unless otherwise indicated.
Summary of Key Financial
Results:
|
3 Months Ended
June 30 2022
|
3 Months Ended
June 30 2021
|
3 Months Ended
March 31 2022
|
Canadian dollars
('000s)
|
|
$
|
$
|
$
|
Revenues
|
4,473
|
2,803
|
4,643
|
Medical
Cannabis
|
2,607
|
826
|
2,650
|
Gross profit
(1) before fair value
adjustments
|
2,246
|
1,046
|
2,137
|
Gross profit
(1) from Medical Cannabis
before FV
|
1,993
|
727
|
1,973
|
General and
administrative costs
|
3,799
|
5,740
|
5,550
|
Net loss
|
(2,171)
|
(4,796)
|
(5,412)
|
Adjusted
EBITDA (1)
|
(2,288)
|
(3,774)
|
(3,057)
|
Net loss per share
(basic and diluted)
|
(0.01)
|
(0.03)
|
(0.03)
|
Weighted average shares
outstanding ('000)
|
186,444
|
151,027
|
179,395
|
|
6 Months Ended
June 30 2022
|
6 Months Ended
June 30 2021
|
3 Months Ended
March 31 2022
|
Net cash used in
operating activities
|
(4,803)
|
(10,382)
|
(2,803)
|
(1)
|
"Gross profit" and
"Adjusted EBITDA" do not have a standardized meaning prescribed by
International Financial Reporting Standards ("IFRS") and are
therefore unlikely to be comparable to similar measures. The
Corporation calculates Adjusted EBITDA as net loss before tax as
reported under IFRS and adding back share-based compensation
expense, transaction fees, unrealized gain on changes in fair value
of biological assets, interest, depreciation, amortization,
impairments, unrealized gain or loss in warrants, and non-recurring
items. The Corporation calculates gross profit as revenue less cost
of revenue, changes in fair value of inventory sold, and unrealized
gain (loss) on changes in fair value of biological assets. Please
refer to the section entitled "Non-IFRS Financial Measures"
in this press release.
|
Q2 2022 operating highlights and
subsequent events:
- Khiron has developed a proven clinic business model with highly
profitable medical cannabis sales in Colombia, United
Kingdom, Peru, Brazil, and Germany.
- Recently, the Corporation has continued to add to its medical
cannabis platform in Europe with
the acquisition of Pharmadrug GmbH, an EU-GMP & GDP certified
manufacturer and distributor in Germany. This acquisition marks a
transformational inflection point for the Corporation in
Europe, as it will allow Khiron
direct access to: a) Dedicated pharmacy sales team with established
network to the more than 18,000 pharmacies in Germany, generating proprietary data to
understand evolving market preferences, b) Revenue diversification
through distribution of different product portfolios, c) Ability to
control last mile manufacturing steps and quality control to the
point of sale, and d) Potential entry into other European markets
as cannabis continues to be legalized across the region.
- In Q2 2022, the Corporation continued to deploy its unique
medical cannabis clinic model in Brazil, by opening its first Zerenia clinic in
the city of Rio de Janeiro. The
clinic is positioned to become a global model for treatment of
patients with medical cannabis in Brazil, serving the needs of patients and
prescribers in Rio de Janeiro,
generating data and evidence to complement Khiron's growing body of
knowledge in the medical cannabis field.
- Total revenue for Q2 2022 was $4.5
million, up 60% year-over-year, driven by growth in the
medical cannabis segment in Colombia and the United Kingdom. Medical cannabis now
represents 58% of the Corporations' revenues, compared to 29% in Q2
2021.
- The decrease of 4% in total revenue for Q2 2022 compared to Q1
2022, is attributed to the reduction in medical cannabis sales in
Germany while the Corporation was
closing its acquisition of Pharmadrug. Having obtained all permits
and approvals from the German regulators, Pharmadrug will become
Khiron's principal European distribution hub for its cannabis
product portfolio, starting in late Q3 2022.
- Gross profit before fair value adjustments for Q2 2022 was
$2.2 million, up 5%
quarter-over-quarter and 114% year-over-year, despite the lack of
sale in Germany. In Q2 2022, the
medical cannabis segment represented 89% of Khiron's total gross
profits, compared to 70% a year ago.
- Total gross margin before fair value adjustments for Q2 2022
increased to 50%, driven by growth in the highly profitable medical
cannabis segment. Gross margin in medical cannabis segment
increased to 76%. Total gross margin for Khiron's Health Services
segment for Q2 2022 was 13%, up from 8% in Q1 2022, due to
improvements in margins in Colombia's Zerenia operations, and offset by
the losses incurred in the early stages of Zerenia Clinics UK.
- In Q2 2022, the Corporation continued its cost reduction
initiatives to streamline its operations. Expenses in Q2 2022
decreased by 16% to $5.5 million from
Q2 2021. The expenses reduction was driven by cost savings efforts
mainly in corporate governance, salaries, investor relations,
offset by an increase in selling and marketing expenses in the
growing UK cannabis market.
- At the end of Q2 2022, the Corporation had $40 million in total assets, with $13.7 million in property, plant and equipment,
high-quality medical cannabis inventory of $8.2 million, healthy Accounts Receivables with
credit-worthy clients in Colombia
and Europe of $4.4 million and $0.6
million in financial debt.
- The Corporation ended Q2 2022 with net cash of $5.8 million, having spent $2.0 million on operating activities during the
quarter and a total of $4.8 million
in the first half of the year. This compared to operating spend of
$10.4 million in first half of 2021.
This is a result of actively managing the working capital cycle,
improving collection times for the Corporation's accounts
receivable and extending payment terms on its accounts
payables.
Management commentary:
Alvaro Torres, Khiron CEO and
Director, comments, "The results of the first half of the year and
Q2 2022 demonstrate that we are a disciplined company building
sustainable growth, reducing costs and optimizing cashflow, able to
reach profitability in the near term. During Q2 2022, we made key
decisions to continue to build our global platform with the
strategic acquisition of Pharmadrug in Germany, the opening of our new flagship
clinic in Rio de Janeiro in
Brazil, as well as our new
mid-sized clinic and pharmacy in Bogota in one of the city's busiest shopping
centres. These steps, coupled with the growing patient loyalty we
experience across our bigger markets, will continue to drive
Khiron's leadership in Latin
America and Europe. This is
possible because of an incredible team across many countries and
continents who are committed to improving the quality of life of
patients, and who continue to work very diligently to ensure we
become indispensable to our patients in every market."
Webcast Details:
Khiron invites individual and institutional investors, as well
as advisors and analysts, to attend the Corporation's Second
Quarter 2022 Conference Call, followed by a Q&A session.
DATE: Monday, August 29th,
2022
TIME: 10:00am ET
PRESENTERS: Alvaro Torres, Khiron
Chief Executive Officer and Director, Helen
Bellwood, Khiron Chief Financial Officer, and Franziska
Katterbach, President of Khiron Europe.
FORMAT: Live 45 minute presentation & Q&A session
REGISTER LINK:
https://us06web.zoom.us/webinar/register/WN__FTApr4DQlOgncpkV1YAvw
Grant of Options and Restricted
Unit Shares
On August 25, 2022, the Board of
Directors granted a total of 2,345,000 stock options ("Options")
and 650,000 restricted share units ("RSUs") to certain officers of
the Corporation. Certain of the Options and RSUs are subject to
performance-based vesting conditions. The Options are exercisable
at a price of $0.15 per share and
will expire on August 24, 2032.
Unvested RSUs will expire on December 15,
2025.
Participant
|
Position(s)
|
Equity-Based
Compensation
|
Price
|
Expiry Date
|
Chris
Naprawa
|
Director,
Chairman
|
250,00
Options
|
CAD $0.15
|
24/08/2032
|
Alvaro Yañez
|
Director
|
75,000
Options
|
CAD $0.15
|
24/08/2032
|
Vicente Fox
|
Director
|
75,000
Options
|
CAD $0.15
|
24/08/2032
|
Juan Carlos
Echeverry
|
Director
|
75,000
Options
|
CAD $0.15
|
24/08/2032
|
Franziska
Katterbach
|
President Khiron
Europe
|
1,200.000 Options
and
650,000 RSUs
|
CAD $0.15
|
Options:
24/08/2032
RSUs:
15/12/2025
|
Helen
Bellwood
|
Interim CFO
|
200,000
Options
|
CAD $0.15
|
24/08/2032
|
Juan Diego
Alvarez
|
VP Corporate
Affairs
|
300,000
Options
|
CAD $0.15
|
24/08/2032
|
Rodrigo
Duran
|
VP Pharma
|
70,000
Options
|
CAD $0.15
|
24/08/2032
|
María Jimena
Ochoa
|
VP Human Resources and
Sustainability
|
70,000
Options
|
CAD $0.15
|
24/08/2032
|
Angela
Acosta
|
Corporate
Secretary
|
30,000
Options
|
CAD $0.15
|
24/08/2032
|
About Khiron Life Sciences
Corp.
Khiron is a leading global medical cannabis company with core
operations in Latin America and
Europe. Leveraging wholly-owned
medical health clinics and proprietary telemedicine platforms,
Khiron combines a patient-oriented approach, physician education
programs, scientific expertise, product innovation, and focus on
creating access to drive prescriptions and brand loyalty with
patients worldwide. The Corporation has a sales presence in
Colombia, Germany, UK, Peru, and Brazil and is positioned to commence sales in
Mexico. The Corporation is led by
Co-founder and Chief Executive Officer, Alvaro Torres, together with an experienced and
diverse executive team and Board of Directors.
Visit Khiron online at investors.khiron.ca
Linkedin
https://www.linkedin.com/company/khiron-life-sciences-corp/
Non-IFRS Financial
Measures
This press release includes references to "Adjusted EBITDA" and
"gross profit", which are financial measures that do not have a
standardized meaning prescribed by IFRS. Investors are cautioned
that non‑IFRS measures should not be considered in isolation or
construed as an alternative to the measurements of performance
calculated in accordance with IFRS, because given the
non-standardized meaning of non-IFRS measures, they may not be
comparable to similar measures presented by other issuers.
Adjusted EBITDA
Adjusted EBITDA is calculated as reported under IFRS and adding
back share-based compensation expense, transaction fees, unrealized
gain on changes in fair value of biological assets, interest,
depreciation, amortization, impairments, unrealized gain or loss in
warrants, and non-recurring items. Adjusted EBITDA provides an
indication of the results generated by the Corporation's principal
business activities prior to how these activities and assets are
financed (including mark-to-market movements of the warrant value),
depreciated and amortized or how the results are taxed in various
jurisdictions, impairment of property, plant, and equipment,
impairment of intangible assets, changes in fair value of
inventory, unrealized changes in fair value of biological assets,
prior to the effect of foreign exchange, other income and expenses,
and non-cash share-based payment expense. The term Adjusted
EBITDA does not have any standardized meaning and therefore may not
be comparable to similar measures presented by other issuers. The
Corporation believes Adjusted EBITDA is useful for comparing
results from one period to another, as Adjusted EBITDA normalizes
earnings to exclude certain non-operating, non-cash, and
extraordinary amounts. Existing Adjusted EBITDA is not necessarily
predictive of the Corporation's future performance or the Adjusted
EBITDA of the Corporation as at any future date.
The following table provides a reconciliation of net loss to
Adjusted EBITDA.
For the three months ending June
30,
($
Cdn thousands)
|
2022
|
2021
|
Net loss
|
(2,171)
|
(4,796)
|
Add back (deduct):
|
|
|
Interest expense
|
33
|
97
|
Taxes
|
(35)
|
(7)
|
Depreciation and amortization
|
653
|
325
|
Net fair value
adjustment on biological assets and cannabis product sales
|
(107)
|
(781)
|
Foreign
exchange loss
|
653
|
(1)
|
Impairment on other items
|
(6)
|
76
|
Share-based
compensation
|
338
|
1,312
|
Unrealized gain on warrants
|
(1,646)
|
-
|
|
(2,288)
|
(3,774)
|
For the six months ending
June 30,
($
Cdn thousands)
|
2022
|
2021
|
Net loss
|
(7,583)
|
(10,290)
|
Add back (deduct):
|
|
|
Interest expense
|
188
|
191
|
Taxes
|
(41)
|
(14)
|
Depreciation and amortization
|
1,249
|
622
|
Net fair value
adjustment on biological assets and cannabis product sales
|
535
|
(1,252)
|
Foreign
exchange loss
|
404
|
(47)
|
Impairment on other items
|
(3)
|
76
|
Share-based
compensation
|
647
|
2,033
|
Amortization of signing bonus
|
-
|
840
|
Unrealized gain on warrants
|
(960)
|
-
|
|
(5,564)
|
(7,840)
|
Gross profit
Gross profit is defined as revenue less cost of revenue, changes
in fair value of inventory sold, and unrealized gain (loss) on
changes in fair value of biological assets. Management believes
that gross profit is a useful supplemental measure of operations
and is used by management to analyze overall and segmented
operating performance. Gross profit is not intended to represent an
alternative to net earnings or other measures of financial
performance calculated in accordance with IFRS.
The following table provides the gross profit for the three
months and six months ending on June 30,
2022:
For the three months
ended
June 30
|
For the six months
ended
June 30
|
|
Note
|
2022
|
2021
|
2022
|
2021
|
|
|
$´000
|
$´000
|
$´000
|
$´000
|
Revenues
|
|
|
|
|
|
Service
revenues
|
|
1,862
|
1,944
|
3,842
|
4,182
|
Medical
Cannabis
|
|
2,607
|
826
|
5,257
|
1,389
|
Wellness
products
|
|
4
|
33
|
17
|
68
|
|
|
4,473
|
2,803
|
9,116
|
5,639
|
Cost of sales
|
|
|
|
|
|
Service
revenues
|
|
1,611
|
1,650
|
3,442
|
3,329
|
Medical
Cannabis
|
|
614
|
99
|
1,291
|
157
|
Wellness
products
|
|
2
|
9
|
-
|
18
|
|
|
2,227
|
1,757
|
4,733
|
3,503
|
Gross profit before fair value
adjustments
|
|
2,246
|
1,046
|
4,383
|
2,136
|
Changes in fair value
of inventory sold
|
|
(428)
|
(137)
|
(1,527)
|
(177)
|
Unrealized gain on
changes in fair value of biological
assets
|
6
|
535
|
917
|
992
|
1,428
|
Fair value (loss)/gain on biological
assets
|
|
107
|
781
|
(535)
|
1,252
|
|
|
|
|
|
|
Gross profit
|
|
2,353
|
1,826
|
3,848
|
3,387
|
Cautionary Statement Regarding
Forward-Looking Statements
This press release may contain "forward-looking information"
within the meaning of applicable securities legislation. All
information contained herein that is not historical in nature
constitutes forward-looking information. Forward-looking
information contained in this news release include, without
limitation, statements pertaining to the Corporation's business
plans and goals, including its goal of achieving profitability in
the near future, management's expectations regarding the synergies
of acquiring Pharmdrug GmbH (including access to a dedicated
pharmacy sales team and revenue diversification, manufacturing and
quality control improvements and potential for entry to other
European markets), expectations regarding the Corporation's Zerenia
clinic becoming a global model for treatment of patients with
medical cannabis, expectations that Pharmadrug will become the
Corporation's European distribution hub for its cannabis portfolio
and timing thereof. Forward-looking information and statements
contained in this news release reflect management's current beliefs
and is based on information currently available and on assumptions
that management believes to be reasonable. These assumptions
include, but are not limited to, assumptions regarding the future
regulatory developments and economic conditions, expected synergies
resulting from acquisitions, and the Corporation's ability to
continue its growth and reduce costs.
Although management believes that its expectations and
assumptions to be reasonable, forward-looking information is always
subject to known and unknown risks, uncertainties and other
factors, many of which are beyond the control of management, that
may cause actual results to differ materially from those expressed
or implied in such forward-looking information. Such risks and
uncertainties include but are not limited to the following: risks
relating to general economic conditions and capital markets; risks
relating to the availability of financing on satisfactory terms;
risks relating to the COVID-19 pandemic or other health crises;
risks relating to regulatory, legislative, competitive and
political conditions, business integration risks; as well as those
other risk factors discussed in Khiron's most recent annual
information form which is available on Khiron's SEDAR profile at
www.sedar.com.
As a result of the foregoing and other risks and uncertainties,
readers are cautioned not to place undue reliance on
forward-looking information contained in this press release.
Readers are further cautioned that the foregoing risks and
uncertainties is not exhaustive, and there may be other risks and
uncertainties, presently unknown to management of the Corporation,
that may cause actual results to differ materially from those
expressed or implied in forward-looking statements contained in
this press release. The forward-looking information contained in
this press release is expressly qualified by this cautionary
statement. Khiron disclaims any intention to update or revise any
forward-looking information disclosed herein, whether as a result
of new information, future events or otherwise, except as required
by law.
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SOURCE Khiron Life Sciences Corp.