Summary of Key Financial Results
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3 Months
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3 Months
|
3 Months
|
|
ended Mar
|
ended Mar
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ended Dec
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|
Canadian dollars
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31 2021
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31 2020
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31 2020
|
|
$
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$
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$
|
|
Revenues (‘000s)
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2,837
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1,901
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2,518
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Medical Cannabis
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563
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1
|
234
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Gross profit before fair value adjustments (‘000s)
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1,090
|
437
|
402
|
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General and administrative costs (‘000s)
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5,592
|
5,847
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5,157
|
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Net loss (‘000s)
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(5,494)
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(9,237)
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(2,374)
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Adjusted EBITDA (1) (‘000s)
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(4,019)
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(5,865)
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(4,335)
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Net loss per share (basic and diluted)
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(0.04)
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(0.08)
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(0.01)
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Weighted average shares outstanding (‘000s)
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150,718
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116,607
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130,292
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(1)
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Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization or in this case loss) is a non-International Financial Reporting Standards (“IFRS“) measure calculated 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, depreciation and non-recurring items. Refer to the “Non-IFRS Measures” note below for further information and the Company’s MD&A for a reconciliation.
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Q1 2021 operating highlights and subsequent events
- Insurance coverage in Colombia continues to be a catalyst for growth, with more than 7,500 prescriptions filled in Q1 2021 and over 19,000 prescriptions filled to date. With continued month-over-month growth, Q2 2021 continues to build on the achievements of Q1 2021.
- Insurance coverage continues to improve patient access to medical cannabis, with the percentage of prescriptions issued and covered by insurance increasing from over 40% in Q4 2020 to over 60% in Q1 2021.
- Returning medical cannabis patients in Colombia reached nearly 50% in Q1 2021, as compared to approximately 20% in Q3 2020, providing a more stable Medical Cannabis revenue base.
- Khiron real-world evidence is improving physician engagement, patient outcomes and strategic decision-making.
- Initial analysis of Khiron medical cannabis patient data for various neuropathic conditions shows a significant reduction in the intake of other medications (including opioids), improved quality of life, and material annual savings. Khiron’s patient data continues to mount and will provide real-world evidence for pharmacoeconomic studies intended to support the Company’s goal of reaching more patients.
- Following the initial success of its Medellin satellite clinic, the Company opened five additional satellite clinics in Colombia in 2021, for a total of nine clinics including the three health centres in Bogota and six satellite clinics across the country.
- Khiron recently partnered with the Colombia Cancer League to deliver an additional 3,000 medical cannabis patient consultations during the month of June, in collaboration with 21 leading medical institutions in 11 cities throughout Colombia.
- Q1 2021 medical cannabis sales in Peru increased by over 175% compared to sales in 2020 (which began late in Q3 2020). Given the positive reception to Khiron products in Peru, the Company expects to open its first international Zerenia™ satellite clinic in Peru in the coming weeks.
- The Company plans to deploy its Zerenia™ medical cannabis clinic and telehealth strategy in Mexico and Brazil, building on the success of its vertical integration strategy in Colombia.
- In March 2021, the Company successfully exported its Colombian-registered cannabis strains, in the form of live clones, from Colombia to Europe.
- In March 2021, Khiron commenced sales in Germany with the successful delivery of EU-GMP medical cannabis products. Khiron 1/14 (High CBD flower) has been used to treat indications such as anxiety, substance-use disorder and migraines.
- The Company continues to advance its operations in the UK. In April 2021, the Company introduced Khiron 1/14 (High CBD flower) in addition to 5-gram jars of flower products. In addition, the Company’s medical cannabis e-learning certification, Khiron Academy, recently received accreditation for Continuing Professional Development credits in the UK.
Discussion of Operations for the Three Months Ending March 31, 2021
During the first quarter of 2021, the Company reported record revenues of $2.8 million, a 49% increase as compared to Q1 2020 due to normalized clinic operations and the growth of medical cannabis sales. Relative to Q4 2020, first quarter revenues increased 13% due to a 141% increase in Medical Cannabis Product sales, which reached $563,000 in the quarter, as the Company benefited from medical cannabis insurance coverage in its core market of Colombia.
At $1.1 million, or 38% of revenues, the Company achieved record gross profits due to increasing Medical Cannabis Product sales and margin improvements within the Health Services segment. Notably, Medical Cannabis margins remained high at 90% of revenues, while Health Service margins increased to 26% of revenues in Q1 2021, from 7% in Q4 2020.
In Q1 2021, the Company incurred lower general and administrative costs as compared to Q1 2020 due cost cutting measures implemented in the second quarter of 2020 and the devaluation of the Colombian peso. Overall, the Company recorded a net loss of $5.5 million in Q1 2021, which compares to a net loss of $9.2 million in Q1 2020 and $2.4 million in Q4 2020. Adjusted EBITDA losses of $4.0 million compared to losses of $5.9 million in Q1 2020 due to ongoing cost management initiatives and improved sales and margins.
Management Commentary
“Q1 was a record quarter for the company, in terms of both revenues and gross profits, driven by strong results in our Medical Cannabis segment, which achieved another quarter of more than 100% growth. Insurance coverage for medical cannabis in Colombia continues to have a positive impact, providing greater revenue stability as returning patients reached 50% of medical cannabis patient volumes in Q1. I am also happy to report that our gross profits were well above Q4 2020, driven by strong clinic performance and growth from our vertical integrated medical cannabis strategy. As of April, prescriptions in Colombia were already equal to 44% of those filled in Q1, positioning us for another record quarter in Q2,” comments Alvaro Torres, Chief Executive Officer and Director of the Company.
“In Europe, our world-class team continues to execute, recently delivering first sales in Germany and a strategic partnership with Cellen Therapeutics, a leader in digital healthcare in the UK and fellow founding member of Project Twenty21. We also received UK CPD accreditation for our global medical cannabis education platform, Khiron Academy, and imported the first ever live cannabis clones from Colombia to Europe. Collectively, these achievements will help us deliver on our mission of improving patients’ lives by increasing access to medical cannabis products both at home and abroad,” continued Alvaro Torres.
Cautionary Notes
Forward-Looking Statements
This press release may contain certain “forward-looking information” and “forward-looking statements” within the meaning of applicable securities legislation. All information contained herein that is not historical in nature may constitute forward-looking information. Khiron undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of Khiron, its securities, or financial or operating results (as applicable). Although Khiron believes that the expectations reflected in forward-looking statements in this press release are reasonable, such forward-looking statement has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond Khiron’s control, including the risk factors discussed in Khiron’s Annual Information Form which is available on Khiron’s SEDAR profile at www.sedar.com. The forward-looking information contained in this press release is expressly qualified by this cautionary statement and is made as of the date hereof. Khiron disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release. |
