Khiron Life Science Q3 Earnings Update


Dec. 3 2019, Published 6:50 p.m. ET

Toronto-based cannabis player Khiron Life Science (KHRN) announced its third-quarter fiscal 2019 earnings results on November 26. Since the time of the announcement, the stock fell by more than 7%. Currently, it’s trading at $0.90.

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Khiron Life Science financial highlights

Khiron Life Science reported revenue of $2.8 million in the third quarter. The revenue consists of ILANS sales and Kuida cosmeceutical product sales. Sales from ILANS increased by 23% from last quarter. The increase in revenue is mainly due to increasing surgical procedures.

However, KHRN recorded a loss of $5.5 million in the adjusted EBITDA. This implies a decline of 52% from the last year’s third quarter. This is mainly because of $1.0 million in operating costs as the company is producing the company’s first batch of medical cannabis extracts. These products are expected to be available in the market in January 2020.

Also, the company recorded $10.6 million in net loss for the quarter. This implies a net loss per share of $0.09. As compared to last year’s third quarter, the net loss increased by 103%. The company’s cash and short-term investment balance stands at $47.9 million. As the clinics’ traffic is likely to slow down, KHRN’s fourth-quarter results may not record revenues like the third quarter.

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Business highlights

Khiron Life Science ended the quarter with strong financials. However, future revenue growth is subject to cannabis-related laws. Presently, the company focuses on capital allocation towards countries that might get faster approvals. The company is expanding its low-cost production facilities in Colombia.

Also, it is improving its energy sources. The company expects the costs for these operations to be approximately $3.7 million for the rest of the year. As the license is still pending, KHRN temporarily halted the construction of the cultivation facility in Uruguay.

The company advanced with a multi-country strategy with TSX-V approval. This approval allows the distribution and sale of CBD products from Kuida. Recently, Khiron launched Kuida CBD products in the US market. Also, the company received all the necessary approvals to launch Aceso hemp CBD products in Colombia. The products are expected to be launched in 2020 first quarter.

The company also fulfilled all the regulatory requirements for launching union cosmetic products in Europe. The sale of these products is anticipated to commence at the start of next year. KHRN successfully harvested some of the registered cannabis strains in the third quarter and converted it to extracts. The company expects to manufacture the final products in the next quarter.

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Management’s take

Khiron Life Science currently has a strong cash position. This management believes this will help the company to continue the momentum. Further, the management is focusing on allocating the company’s funds on cash requirements and growth plans. As the awareness for the company’s Kuida CBD brand products is growing through marketing, revenues are expected to strengthen in the following quarters.

Alvaro Torres, Khiron CEO and director, said, “We continue our positive momentum in executing our strategic initiatives. Revenues are improving at ILANS, we are adding SKUs to our Kuida CBD line and expanding into new markets, including our recent launch in the US.”

The company also achieved many firsts in the recent quarter. Khiron received authorization for selling THC cannabis products in the domestic and the US market. In addition, KHRN became the only Latin American company to provide for Europe’s largest research on medical cannabis, Project Twenty21. Management is continuously working on increasing its market presence.


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