Khiron Life Sciences Corp. (TSXV: KHRN) (OTCQX: KHRNF) posted results that showed healthy margins despite revenues slightly slumping over the quarter amid the company’s international bid. The pharmaceutical cannabis company announced today its financial results for the second quarter ending June 30, 2022.
Khiron’s second-quarter revenues totaled $4.47 million, down 3% versus $4.6 million in the same period last year; and $2.8 million sequentially, according to the SEDAR filings. The company recorded a net loss of $2.2 million versus $4.8 million in the same quarter last year; and $4.5 million sequentially. Earnings went from a loss of one cent per share versus a loss of 3 cents per share in the same period last year.
“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,” said CEO Alvaro Torres. “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.”
Gross profit before fair value adjustments for the second quarter was $2.2 million, up 5% quarter-over-quarter and 114% year-over-year, despite the lack of sales in Germany. The medical cannabis segment represented 89% of Khiron’s total gross profits, versus 70% a year ago.
Total gross margin before fair value adjustments for the second quarter increased to 50%, driven by growth in the highly profitable medical cannabis segment. The gross margin in the medical cannabis segment increased to 76%. The total gross margin for Khiron’s Health Services segment for the second quarter was 13%, up from 8% in the previous quarter due to improvements in margins in Colombia’s Zerenia operations; offset by the losses incurred in the early stages of Zerenia Clinics UK.
The company also recorded its lowest ever Adjusted EBITDA loss of $2.3 million, down 30% quarter-over-quarter and 39% year-over-year.
Khiron continued its cost-cutting initiatives to streamline its operations. Expenses in the second quarter fell by 16% to $5.5 million from the same period last year. The company said the expense reduction was driven by cost savings efforts mainly in corporate governance, salaries, and investor relations; offset by an increase in selling and marketing expenses in the growing U.K. cannabis market.
Khiron had $40 million in total assets, with $13.7 million in property, plant, and equipment, a high-quality medical cannabis inventory of $8.2 million, as well as healthy bookkeeping with credit-worthy clients in Colombia and Europe of $4.4 million, and $600,000 in financial debt.
The company also ended the quarter 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, versus $10.4 million in the first half of last year. The company attributed the savings as a result of actively managing the working capital cycle, improving collection times for the company’s accounts receivable, and extending payment terms on its accounts payables.
“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,” said Torres. “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.”