Delic to Acquire Ketamine Wellness Centers Inc, Becoming Largest Psychedelic Wellness Chain in United States

Delic Holdings Corp (“Delic” or the “Company“) (CSE: DELC) (OTCQB: DELCF) (FRA: 6X0), the leading psychedelic wellness platform today announced it has entered into a binding merger agreement (the “Merger Agreement“) with Ketamine Wellness Centers Arizona LLC (“KWC“). KWC is a limited liability corporation formed under the laws of Arizona, which operates 10 ketamine infusion treatment clinics, across ArizonaColoradoFloridaIllinoisMinnesotaNevadaTexas, and Washington. KWC is the largest national chain of ketamine infusion clinics in the United States and will add to Delic’s existing portfolio of two clinics operated by Ketamine Infusion Centers in California and Arizona, cementing its position as the leading and largest health provider in the country. Delic expects to open 15 additional clinics across the country over the coming 18 months, further expanding access to millions who can benefit from psychedelic treatment for a variety of mental health conditions. Supported by clinical trials and peer reviewed studies, FDA-approved ketamine infusions have emerged as a promising treatment option for chronic diseases and pain disorders.

Transaction Highlights

  • The Transaction (defined below) establishes Delic as the largest psychedelic organization operating in the United States.
  • KWC has been operating profitably and expanding significantly with 2020 revenues in excess of USD$3.5MM, on track for USD$4.5MM in 2021. Joining Ketamine Infusion Centers LLC (“KIC“) (acquired June, 2021), which has grown steadily with revenues in excess of USD$4.2MM since 2019.
  • KWC and KIC have been focused on opening locations in Secondary cities with considerable demand, in an effort to provide access to the most patients.
  • KWC will be strategically positioned to leverage the Delic platform and diversified brands: Delic expects to drive considerable patients to KWC through its media platform and build on the existing national leadership position already in place.
  • Established history of providing ketamine infusion services: The management team at KWC has been in ‎business for 6 years expanding services throughout the United States.
  • Management expertise: The acquisition of KWC will add a team of 60+ medical professionals and ‎employees bringing a wealth of industry ‎experience and knowledge to Delic.

Matt Stang, co-founder and CEO of Delic commented, “This is a game changer for the future of health and psychedelic wellness in America. We will be able to bring the highest quality and safest treatment options to tens of millions of Americans suffering from a range of pain and mental health conditions. KWC is the leading and largest network of trusted health clinics operating in our space, and we have architected Delic to scale their efforts and contribute to their position through our existing portfolio of clinics and media properties which can drive patient count and demand. KWC brings a world-class management team to the Delic family with decades of experience in operating clinics and hospitals and have had incredible success in their treatment outcomes for patients. Adding KWC will ensure our existing patients and many more in the future will receive the best medical treatment and care. We are thrilled to partner with KWC and bring accessibility and psychedelic wellness to millions today through ketamine infusions and in the near future through all FDA approved treatment options, which we expect to include MDMA and psilocybin.”

Kevin Nicholson, CEO of KWC stated: “We have been fortunate to earn the trust of a diverse patient base as the largest chain of clinics in the country and were looking for a partner that could help scale our efforts to reach the greatest number of those who can benefit from psychedelic wellness treatments. Delic is a proven leader in the psychedelic space and operates with the highest of standards across their existing portfolio and through their commitment to science and effective treatments with their Medical Advisory Board and licensed Delic Labs in Canada. We knew this partnership was in the best interest of our community and the larger American populace who can benefit greatly from affordable access to effective treatment for a large number of conditions. Combining Delic’s media platforms to drive patient count with our existing footprint will set the standard for psychedelic wellness and mean the world to millions who suffer from debilitating conditions.”

This acquisition demonstrates Delic’s growth and evolution into the leading, most diversified company operating in the psychedelic wellness space. By acquiring KWC, Delic expands from its existing portfolio of clinics into the largest chain in the country and adds to their position as a central hub of psychedelic education, media, and information with the addition of patients with psychedelic therapy. Delic is uniquely positioned to drive digital awareness to its various holdings under the Delic umbrella, and drive online users to our brick and mortar holdings, including KWC and KIC’s physical psychedelic clinics.

Over the last six years, the team at KWC has expanded across the country, from Arizona to Florida, while overseeing 60,000 treatments delivered to date, and generating 2020 revenue of USD$3.5MM, trending toward USD$4.5MM in 2021. Prior to this Transaction, KWC has grown without taking outside capital. KWC will operate under the Delic umbrella, under the direction and guidance of Kevin Nicholson.

Delic is focused on bringing psychedelic wellness to the mainstream. The company does this through an umbrella of related owned and operated businesses to support scaling the impact and reach of treatment, including 1) trusted media platforms and in-person events to market the services directly to patients and consumers and gain data, 2) a licensed lab to develop IP, R&D and innovative high quality and safe product lines and 3) the largest [5] and most accessible network of physical clinics to administer effective treatments.

Under the terms of the MergerAgreement, Delic will acquire all of the membership interests of KWC through a reverse triangular merger between KWC and a newly organized wholly-owned subsidiary of Delic (the “Transaction“). Subject to customary adjustment terms, Delic has agreed to issue subordinate voting shares in the capital of Delic (“Consideration Shares“) to the members of KWC (the “Members“), having an aggregate value of USD$5,000,000 with the number of Consideration Shares to be issued determined based on a price per share equal to the ten trading day volume weighted average trading price (“VWAP“) of the Consideration Shares on the Canadian Securities Exchange (the “Exchange“) immediately prior to closing of the Transaction. Delic will further pay to the Members an amount equal to US$5,000,000 in cash (the “Cash Consideration“) with $3,500,000 of such Cash Consideration to be paid on the closing date, US$750,000 to be paid on the date that is 12 months after the closing date, and US$750,000 on the date that is 24 months after the closing date. In addition, the Members will be eligible to receive additional Consideration Shares in an amount equal to US$100,000 upon KWC opening up further clinics that each post three consecutive months of profitability and minimum revenue of US$135,000 for a period of three consecutive months after opening. The Members may earn up to an aggregate cap of US$3,000,000 in Consideration Shares pursuant to such new clinic milestones, based on a price per share equal to the 10 trading day VWAP of the Consideration Shares on the Exchange immediately prior to the date such milestone is achieved.

The Members have agreed that any Consideration Shares issued will be ‎subject to a contractual hold ‎‎period, with 10% of the share consideration to be released on the date that is six months and one day following closing, ‎and 15% ‎released every six months thereafter over a period ‎of 36 months. In addition, Members have agreed to enter into voting support agreements with Delic having a term of two years, pursuant to which the Members will ‎vote as directed by the board of directors of Delic, subject to customary carve-outs.

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