Earlier this week, Khiron Life Sciences Corp. (TSX Venture: KHRN) (OTCQX: KHRNF) (Frankfurt: A2JMZC) released second quarter financial results that showed impressive growth on a number of key metrics.

During the quarter, the vertically integrated cannabis company generated $2.8 million of revenue which is 68% higher than the same quarter from last year. Khiron recorded a substantial increase in revenue from the sale of medical cannabis and the margins associated with the revenue was impressive (88% profit margin).

One of the most exciting aspects of the Khiron story is related to its leverage to the European Union (EU) and we expect this region to continue to serve as a major growth driver. When compared to the same period last year, the revenue from the EU increased by 280% and accounted for 25% of total medical cannabis revenue.

Another key metric provided in the earnings report is related to guidance for future quarters. The management team expects medical cannabis to become the dominant revenue stream for the business and forecasted monthly revenues to increase to over $1 million by the first quarter of 2022. When you combine this with the projection for $1 million of revenue from health services, you have a business with an attractive growth platform and we will monitor how the management team is able to accomplish this feat.

Following the closing of a private placement in July, Khiron has more than $20 million of cash on hand. We are favorable on the strength of the balance sheet and expect the management to use resources in ways that help grow the business and capture additional market share in Latin America and the EU.

Khiron’s Medical Cannabis Business Reaches an Inflection Point

We believe the results show how transformative the medical cannabis industry can be for Khiron and consider this to be an important part of the long-term growth story. During the second quarter, the company’s medical cannabis division accounted for 29% of revenues and 70% of gross profits. In future quarters, we expect these percentages to increase and consider this to be an important trend for the business.

Going forward, we expect Khiron to benefit from its multi-national expansion and expect revenue from markets like Brazil to serve as a catalyst for the business. The company has expanded its sales presence to five of its six target markets and we consider this to be an important growth driver for the entire company.

Another major potential growth driver is related to the plan to open a Zerenia™ clinic in Mexico before the end of the year. By receiving a high-THC extract export quota from Colombia, the company has advanced its entry into Mexico by several months and this is a market that we are bullish on.

In June, Khiron opened its first clinic in Lima, Peru, which is the first clinic outside of Colombia. The clinic is forecasted to have a positive impact on prescription volumes and we expect the company to record stronger growth as a result of the opening of the clinic.

An Execution Story that is Flying Under the Radar

We believe that Khiron has attractive near and long-term growth catalysts and believe that the marketing is discounting the potential value that is associated with its expansion strategy. Below, we have highlighted 5 key points from the earnings report and believe that our readers need to be aware of these developments:

Sales in the UK and Germany increased significantly, up 475% and 265%, respectively, from the prior quarter
Filled more than 10,000 prescriptions in the quarter (more than 24,000 prescriptions filled year-to-date)
The percentage of prescriptions issued in Colombia and covered by insurance increased to over 50%
Khiron partnered with the Colombia Cancer League to deliver an additional 3,000 medical cannabis patient consultations in June
In the UK, the company’s medical cannabis e-learning certification received accreditation for Continuing Professional Development credits in the UK

If you are interested in learning more about Khiron Life Sciences, please send an email to support@technical420.com with the subject “Khiron Life Sciences” to be added to our distribution list.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.