First phase of optimization was focused on streamlining Colombian operations, resulting in a moving forward annualized cost reduction of CAD 5.0 million, representing overall cost savings of more than 45% compared to 20221.
Khiron has completed the wind down of its Colombian cultivation and extraction activities, to focus on its clinics business and its high-margin B2C medical cannabis model in Colombia.
Similar to the Company’s European production model, Khiron Colombia will outsource the production of Khiron-branded medical cannabis products to a reputable contract manufacturer, resulting in higher operational margins.
Toronto, Ontario--(News - April 20, 2023) - Khiron Life Sciences Corp. (TSXV: KHRN) (OTCQX: KHRNF) (FSE: A2JMZC) ("Khiron" or the "Company"), today announces the completion of its first phase of business optimization in Colombia, to focus on its unique high-margin B2C business model, centered around its clinic operations.
The Company's focus in Colombia is to continue to generate demand through the increase of insurance coverage for medical cannabis in its ZereniaTM clinic network and expanding access to Khiron's medical cannabis products in other clinics and hospitals across the country.
At the same time, Khiron is reducing non-core, cash-intensive activities. As part of this initiative, the Company began wind-down of its cultivation and extraction operations in Colombia in early 2023 and has now ceased all its own upstream activities. As a result, the Company has reduced total direct labour headcount by more than 70% in Khiron Colombia SAS from June 2022 to April 2023, as well as a reduction in senior executive compensation and positions by more than 50%.
The Company has entered into a partnership with an accredited 3rd Party contract manufacturing organization (CMO) in Colombia to outsource the production of Khiron-branded medical cannabis products. Under this agreement, Khiron's partner has: i) purchased Khiron's extraction and laboratory equipment, ii) stored the Company's existing inventory of dried flower and full spectrum extracts to manufacture final product for the Company. In addition, Khiron's partner will distribute products to Khiron and Zerenia's patients across Colombia. Through this partnership, Khiron will also be able to leverage the partner's established network of over 300 hospitals and pharmacies across Colombia to increase product sales.
Moving forward, Khiron will continue to implement initiatives to simplify the Company's overall group structure in Latin America, focusing on business operations with a clear short-term positive cashflow outlook.
Alvaro Torres, CEO of Khiron, comments: "Since we started Khiron, our core focus has always been to generate patient demand with a unique B2C business model centered around our clinics and selling products at high margins. Our long-term intention has never been to be fully vertically integrated, but this was necessary for the Company to gain the first mover advantage and needed to become a leader in Colombia and Latin America. With this and upcoming optimization initiatives, we continue to demonstrate our strict discipline on spending while ensuring a proper growth trajectory. The partnership with our CMO ensures complete regulatory compliance, safety of our high-quality inventory, agile operations, and access to a strong network of pharmacies and clinics."
This is forward-looking information and based on a number of assumptions. See "Cautionary Statement Regarding Forward-Looking Information". Based on cost opportunities identified by Khiron management. This target, and the related assumptions, involve known and unknown risks and uncertainties that may cause actual results to differ materially. While Khiron believes there is a reasonable basis for this target, such target may not be met. Actual results may vary and differ materially from the targets. Certain financial information included in this press release is neither audited nor reviewed. Where possible, the information has been constructed by management from available audited or audit reviewed financial statements. Where no audited or audit reviewed information has been available, additional management accounting information has been utilized to construct financial information. Readers are cautioned not to place undue reliance on such information.
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 Company has a sales presence in Colombia, Germany, the United Kingdom, Switzerland, Peru, and Brazil. The Company is led by its co-founder and Chief Executive Officer, Alvaro Torres, together with an experienced and diverse executive team and board of directors.
Visit Khiron online at .
Cautionary Statement Regarding Forward-Looking Information
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 may include statements pertaining to the expected synergies and benefits to the Company from the acquisition of the Target as well as statements as to business strategy. 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, the expected benefits to be realized by Khiron's business as a result of the acquisition of the Target, and assumptions regarding market opportunities in the jurisdictions in which the Company operates and where it seeks to operate.
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: general economic conditions, adverse conditions in capital markets, political uncertainties, counterparty risk, failing to obtain required regulatory requirements and approvals, failure to maintain required permits and licences, 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 pro .
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 Company, 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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