While Psychedelics Wait, Ketamine Revenues Roll On
November 30th, 2021
App, Exclusive, Psychedelics, Top Story
The nature of the psychedelic market today means that public company investors are making largely speculative investments. Though there are plenty of studies demonstrating the efficacy of substances ranging from LSD to psilocybin to MDMA, the fact remains they are Schedule 1 controlled substances and have not been approved for therapeutic use. Companies seeking such approvals have a long, uncertain path toward their ultimate goal of commercialization.
Ketamine, however, is one psychedelic substance that is in widespread use across the country and around the world. It was first synthesized in 1962, approved for use in the United States in 1970, and is commonly used, for everyone from the very young to the elderly, as an anesthetic and for pain relief. More recently, ketamine has shown to be a powerful tool in the treatment of severe depression and PTSD, especially in cases that have shown resistance to other treatments. As a result, many psychiatric treatment centers offer ketamine infusions or nasal sprays as treatment alternatives, and several hundred clinics devoted solely to the drug have sprung up throughout the US.
Revitalist Lifestyle and Wellness Ltd. (CSE: CALM) (OTC: RVLWF) (FSE: 4DO) recently went public with the goal of establishing a broad network of psychedelic-assisted psychotherapy clinics. Revitalist has seven clinics up and running across four states. The company’s plan is to have more than 40 clinics running by the end of 2022 and more than 150 by 2025.
Revenue Generation Now
Revitalist’s founder and CEO Katie Walker started the first Revitalist clinic in 2018. The success of that operation, both financially and clinically, led her to the idea she could assemble a team and replicate the model across the country. She saw first hand the benefits not only of ketamine treatments but of a variety of other regimens including vitamin infusions and transcranial magnetic stimulation (TMS). Realizing that many of her patients needed more than an occasional visit to the clinic, she and her team developed intensive outpatient programs to address addictions, depression, eating disorders, and other dependencies.
The model has proven replicable, and Revitalist is charting a high growth present while pointing to a future with even more potential. For now, the company reported revenue of $1.55 million for the ten months ended October 31, 2021, compared to $789,000 for the same period last year. With a few clinics only recently opening, and more on track to open in the coming quarters, the growth should only accelerate from this point.
Importantly, it’s a fairly high-margin business. The company estimates gross margin on the $1.55 million will come in around $1.17 million when it reports year-end results, which equates to about 75%.
Growth for Revitalist could be catalyzed by several factors. First, its flagship location in Knoxville, TN has already shown a high level of organic growth in its three years of existence. Revitalist has been fine tuning its marketing strategy, and successful treatments over time in any given market will naturally lead to more business. Second, the company is replicating its success through an aggressive strategy to create or acquire many more locations across the country.
In a recent press release announcing the opening of its seventh location, Revitalist estimated the annual revenue capacity of all of its clinics combined at $51.55 million. Though its flagship location in Knoxville, a few years into its business, has shown a higher margin, the company used a lower range to estimate the gross margin on the projected revenue in the $28 – $32 million range. The addition of more clinics, with more than 40 projected by the end of 2022, would significantly increase these numbers.
Revitalist is also involved with several collaborations, programs, and government agencies. The company recently announced a contract with the US Department of Defense Veterans Affairs whereby veterans can be referred to Revitalist and the services are reimbursed by the VA. Revitalist also recently launched a division dedicated to helping law enforcement officers. Both of these programs take advantage of ketamine’s proven effectiveness in treating PTSD. The company doesn’t rely solely on ketamine for its programs, however. Revitalist clinics apply a broad range of psychotherapeutic approaches to increase efficacy over a ketamine-only treatment regimen.
Revitalist also recently announced a telemedicine counselling operation, and a clinical research collaboration with MYND Diagnostics. Initiatives like these only serve to broaden Revitalist’s reach throughout the psychotherapeutic market.
A longer term catalyst for company growth could be the eventual discovery and approval of further psychedelic-assisted psychotherapies. Should further treatments prove effective and become available, Revitalist will be ready for the new offerings with its extensive network of treatment centers in place.
Overall, Revitalist is an innovative and revenue-producing operator in the psychedelic space. The company uses proven techniques to help patients with hard-to-treat depressive disorders. Depression is, unfortunately, a massive market that shows no signs of shrinking any time soon. Revitalist’s business model is repeatable, featuring low overhead and high margins to accompany its effectiveness. Keep an eye out over the coming quarters as Revitalist reports results and executes on its expansion plans.
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