Clinics as a strategic cornerstone

This month marks the two-year anniversary of clinic operations at Khiron following our acquisition of the Latin American Institute of Neurology and the Nervous System (“ILANS”). Back in 2018, Khiron Co-founder and CEO Alvaro Torres stated, "After the closing of the ILANS agreement, we will generate immediate revenue and greatly reduce patient acquisition costs. We are positioned to leverage the existing ILANS patient base to grow the Khiron Clinics business unit throughout Colombia and across Latin America."

This year, we continued to execute on this strategy with the addition of Khiron’s wholly owned Zerenia™ clinic in January 2020, the launch of telehealth in Q2/20, numerous education agreements across the world, more than 15 clinic partnerships and over 6,000 prescriptions filled!

In our latest Investor Insights note, we will provide a deeper look into our medical facilities (including our new Zerenia Medellin small format clinic), the strategic benefits of our clinic network, and how we intend to grow medical cannabis revenues through clinic expansions.

Our clinics

While the clinic model has expanded and evolved over the past two years, the strategy remains the same: to provide cost-effective access to patients, at a scale that allows Khiron to generate meaningful patient data and deliver an unparalleled physician and patient experience.  Click here to see Zerenia

Through our ILANS and Zerenia branded clinics, we own and operate a network of medium complexity health centres that offer a suite of health, medical, and surgical services in partnership with insurance companies. In addition, we recently announced the launch of small format satellite clinics to provide increased access for patients, while leveraging the strengths of the core clinics and the Zerenia brand.

Clinics as a strategic cornerstone

Some key facts about these world-class medical facilities are as follows:

  • Our ILANS clinic was acquired on November 30, 2018, while Zerenia opened in January 2020. At the time of our ILANS acquisition, the two Bogota-based clinics were conducting 100,000 patient transactions/year, generating ~C$10.5M in gross revenue and C$1.8M of EBITDA (Source: 2017 Audited Financial Statements).
  • Patient transactions at ILANS have increased steadily from 100,000 in 2017, to 119,000 in 2018 and 150,000 in 2019. Patient growth is largely associated with insurance referrals and our relationships with insurance providers is expected to fuel growth in expansion cities.
  • Currently, ILANS has over 60 physicians and is staffed by a team of health professionals and clinical leaders representing different, in-demand specialties. Additionally, most patients at ILANS (>80%) have conditions with medical cannabis applications. These include chronic pain, anxiety, insomnia, depression, headache, epilepsy, and Parkinson's. Khiron is also authorized to dispense medical cannabis through its in-house pharmacy at ILANS.
  • Prior to the pandemic, clinic gross margins increased by 158% between Q1/19 and Q4/19 as we optimized operations. While COVID-19 has placed physical limitations on clinic capacity, patient volumes have steadily increased since April 2020 and began to exceed pre-pandemic levels effective September 2020.
  • The grand opening of first Zerenia clinic in April 2020 increased our clinical capacity by 75%. Zerenia is a 15,000 sq. ft. medical facility in Bogota's prime medical services district which offers integrative medical care designed to treat “body, mind and spirit” with medical cannabis and other services. Zerenia’s medical units include pain management, mental health, surgical, neurology and dentistry, and are supported by rehabilitation, complementary medicine and diagnostic technology. Zerenia also houses a third-party Locatel pharmacy to better serve patients. We expect that the convenience of a one-stop clinic will help build patient loyalty, while providing improved patient outcomes.
  • Khiron’s three existing wholly owned clinics are currently billing ~10,000 medical transactions per month with capacity to increase to ~20,000 per month with telehealth. Telehealth services were introduced on April 1, 2020 and the Doctor Zerenia telehealth app launched in Q3/20. Currently, more than 15% of our consultations are conducted through our telehealth platform, while 55% of cannabis prescriptions are obtained through telemedicine channels. Telehealth also allows us to serve patients from all across Colombia (including the Amazon jungle!) from Bogota with minimal overhead investments.
  • In December 2020, we opened our first small format Zerenia clinic in the Colombian city of Medellin, gaining access to a region of more than 6 million residents. This capital light addition will provide in-person care, along with teleconsultation services. The clinic is conveniently located in the San Diego sector of the city, minutes from downtown with access to public transit and walking distance to major business and residential areas.
  • Khiron has also signed more than 15 third-party clinics and health centres to improve patient access to Khiron medical cannabis across Colombia. These reciprocal partnerships focus on physician training related to medical cannabis and Khiron branded products.
  • Recently, the Colombian government added THC and CBD to its list of insured medical products, based on economic and efficacy data presented by Khiron. To date, Khiron has prescribed more than 1,500 prescriptions approved for reimbursement by the Colombian government, dramatically improving the affordability of medical cannabis products.

Clinic benefits

The clinic network has proven invaluable on numerous fronts. In short, a large clinic network creates a funnel of high margin patients, while increasing efficiencies in distribution, virtual care, follow up care, data collection, and administration. Read on to dive into the benefits of a clinic presence!

Patient funnel

  • Khiron’s network of large-scale clinics created an instant pool of potential cannabis patients, including many not directly seeking cannabis therapy but with conditions that can be treated with medical cannabis. Given the underlying conditions of our patient base, ~25% of patients currently receive a cannabis prescription.  
  • Thus far, clinical results have been very positive with 92% of patients reporting an improvement in their primary conditions after four months of treatment.

Higher margins

  • A key benefit of a clinical presence is that Khiron has minimal competition within its own clinics, which helps attract and retain patients. Currently, Khiron enjoys a very high market share in Colombia.
  • Khiron’s patient acquisition costs, which are measured internally, are very low for patients referred to Khiron by insurance providers.
  • Khiron is licensed to dispense medical cannabis at its ILANS clinic, resulting in higher prices and margins, along with improved patient service. In fact, over 90% of patients receive their prescriptions via delivery within 1-2 days.

Attractive marketing channel

  • Khiron is permitted to market its clinics to a broad audience with relatively few restrictions, which is in stark contrast to medical cannabis products. Longer term, we also hope to leverage our partnership with Rappi to promote our telemedicine platform.
  • Owing to patient data and a culture of medical cannabis acceptance, physician buy-in at ILANS and Zerenia continues to climb; currently, over 70% of our internal physicians are prescribing KhironMed products versus 38% in June! Notably, our top prescribers issue an average of more than 30 prescriptions per day!

Scale advantages

  • Data. A large data set means we can collect statistically significant patient data to convince both physicians and insurance providers about the benefits of KhironMed cannabis products. By monitoring and tracking patient outcomes, we have demonstrated the efficacy of medical cannabis to both the government and insurance providers.
  • Our real-life data also transcends borders and is expected to become a core pillar of our international education strategy; as we train doctors in partnership with Tecnologico de Monterrey in LATAM and the Medical Cannabis Clinicians Society (MCCS) in the UK, our patient data continues to build trust within the medical community.
  • Insurance. The data we are generating has resulted in consultations and medical cannabis now being covered by insurance companies. With 94% of Colombians having insurance coverage, we view medical cannabis insurance coverage as a major near-term catalyst for growth.
  • Education. We view our clinics as both medical and education facilities and recently launched a program that allows doctors to intern with our highly experienced ILANS and Zerenia physicians. Leveraging patient data from our clinics in Colombia, along with our highly trained medical team, we are providing doctors with a differentiated continuing education experience that bridges the gap between theoretical education and the practical aspects of prescribing medical cannabis.
  • Telemedicine. Throughout the ongoing pandemic, Khiron’s physical and virtual presence has allowed doctors to reach patients in their homes throughout Colombia; thanks to our telemedicine platform, 25% of cannabis prescriptions have been written for patients outside of Bogota. The platform has also increased both our network of physicians and our ability to provide virtual 1x1 training for doctors.
  • Plug and play. We plan to accelerate growth by leveraging our core clinics with the launch of small format satellite clinics throughout Colombia (and eventually LATAM). The objective of these clinics is to improve patient and physician access, while gaining a better understanding of cultural nuances within the region. Although this strategy is will be refined over time, we expect small-format clinics to be much less capital intense while leveraging the strengths of our larger clinics.
  • Clinic partnerships. In our view, education, data, telemedicine, insurance relationships, and product distribution allow Khiron to form attractive, win/win partnerships with external clinics. To date, 15 clinic partnerships have been announced.

Clinics as a strategic cornerstone 

Proven growth strategy

In a country that does not allow cannabis dispensaries, our clinics offer a one-stop shop where patients can obtain a prescription, product recommendations, delivery service and follow up care. We believe  clinic expansion will drive growth and that many of the strategies we’ve deployed have proven effective in other markets. 

Case in point, Trulieve Cannabis, which has a ~50% market share in the Florida market, is focused on physician education and outreach, superior customer service, patient loyalty and retention, brand development, multi-channel distribution, patient loyalty programs, and technological innovation. Its next leg of growth is expected to come from entries into new markets; as Trulieve has executed on this strategy, sales have increased from US$161,000 in Q4/16 to US$136 million in Q3/20!

We believe our clinics have enabled us to effectively deliver on these priorities as well, as evidenced by the following achievements:

  • Over 6,000 prescriptions written (as of Dec 4, 2020)
  • Over 1,800 patients enrolled in Khiero, our patient retention and loyalty program
  • ~25% of Khiron Health patients receiving a medical cannabis prescription
  • 92% of patients reporting an improvement in their primary condition after 4 months of treatment
  • 556 physicians having subscribed to our Tecnologico de Monterrey medical cannabis training program, including 219 that are fully certified and nearly 40 that are prescribing
  • 15% of patient consultations performed through telehealth, with 55% of prescriptions being issued through the telemedicine platform
  • Close to 20% of the UK medical cannabis prescribers participating in Khiron’s education program with MCCS have completed their training.

With that in mind, we look forward to expanding our patient base through satellite clinics in Colombia and internationally. In that regard, we recently announced the launch of our first Zerenia satellite clinic in Medellin, along with plans to deploy our clinic strategy in Mexico.

Clinics as a strategic cornerstone


On November 27, 2020, we announced plans to deploy our Zerenia clinic strategy in Mexico, pending regulatory developments for medical cannabis in Mexico. Mexico represents one of the largest potential markets for medical cannabis in the world and is anticipated to reach $1.2bn USD by 2028 (Prohibition Partners). Khiron has had a presence in Mexico since 2018 and recently partnered with Tecnologico de Monterrey to bring our medical cannabis education platform to doctors working in clinics and health centres across Mexico and LATAM.

The clinic model has proven highly successful in Colombia. As we look ahead to the coming months, we plan to take advantage of the data, education platforms, insurance provider relationships and distribution expertise developed through our Zerenia and ILANS clinics in Colombia. As medical cannabis regulations continue to evolve, we look forward to helping more patients as we expand our Zerenia medical cannabis clinic and telehealth strategy in Mexico!