DOC CloudMD Software & Services Inc

CloudMD Software & Services Inc. (TSXV: DOC, OTCQB: DOCRF, Frankfurt: 6PH) (the “Company” or “CloudMD”), a healthcare technology company revolutionizing the delivery of care, announced its financial results for the first quarter ended March 31, 2021. All financial information is presented in Canadian dollars unless otherwise indicated.

Dr. Essam Hamza, CEO of CloudMD commented, “We are excited to share our record Q1 2021 financial results that continue to improve quarter over quarter. Q1 was a transformative period for CloudMD, as we closed 5 acquisitions, adding $13 million in annualized revenue and establishing the foundation for our Enterprise Health Solutions division. I am very proud of the strategic roadmap we have built and the team’s ability to execute on our growth strategy. We identified key acquisition targets that were synergistic to our overall vision and we remain focused on building a complete healthcare ecosystem, providing connected, holistic care. We continue to integrate all of our capabilities into one comprehensive platform, which is the foundation for scale and expansion. Within our Enterprise Health Solutions division, we have already seen significant early adoption and through cross-selling opportunities, attained over $5 million in new multi-year contracts in the first quarter. Equally exciting is that CloudMD already has a revenue run rate of over $120 million, and through highly profitable acquisitions coupled with organic growth and realization of cost synergies, we expect to be profitable in the second half of 2021.”

First Quarter 2021 Financial Highlights

• Q1 2021 revenue was $8.8 million, compared to $5.8 million in Q4 2020 and $3.1 million in Q1 2020. The increase is primarily attributable to acquisition growth with 5 acquisitions completed in the quarter, and 11 acquisitions completed in the last twelve months. Excluding the impact of Q1 business acquisitions, the Company achieved organic growth from its existing businesses.
• Q1 2021 gross margin was 41%, compared to 40% in Q4 2020 and 37% in Q1 2020. The increase is primarily attributable to revenue mix where higher margin revenues from Enterprise Health Solutions (“EHS”) and Digital Services made up a stronger percentage of overall revenues.
• Net comprehensive loss attributable to equity holders of the Company in Q1 2021 was $5.3 million or $0.03 per share, compared to $5.2 million or $0.04 per share in Q4 2020 and $1.6 million or $0.02 per share in Q1 2020. In the quarter, the Company completed numerous strategic initiatives, including the completion of 5 acquisitions in the quarter and raising $58.2 million in gross proceeds from a bought deal short form prospectus offering, which the Company expects will contribute to strong future growth of the Company.
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) was a loss of $1.5 million in Q1 2021, compared to a loss of $1.5 million in Q4 2020 and a loss of $0.8 million in Q1 2020. The Adjusted EBITDA calculation adjusts for share-based compensation, costs related to financing, acquisitions, integration, litigation including associated loss provisions, and change in fair value of contingent consideration. Adjusted EBITDA is used by management to evaluate the Company’s cash operating performance, and a complete definition and calculation are provided further below.
• Cash and cash equivalents were $99.2 million as at March 31, 2021, compared to $59.7 million at December 31, 2020. In Q1 2021, the Company raised gross proceeds of $58.2 million in a bought deal short form prospectus offering in March 2021 and the Company’s current cash balance is approximately $95 million.

First Quarter & Subsequent Highlights

• During January 2021, the Company closed the previously announced acquisitions of HumanaCare, Medical Confidence and Canadian Medical Directory, strengthening the Company’s EHS division by adding a leading Employee Assistance Program and healthcare navigation platform.
• On February 8, 2021 the Company closed the acquisition of 51% of West Mississauga Medical Clinic, expanding the Company’s hybrid clinic footprint in Ontario.
• On February 16, 2021, the Company announced that it signed a binding term sheet to acquire VisionPros, a rapidly growing digital eyecare platform with a robust suite of digital vision care tools.
• In March 2021, the Company closed the short form prospectus offering, on a bought deal basis, including the full over-allotment option for total gross proceeds of $58.2 million.
• On March 18, 2021, the Company provided an update on the rapid growth of its Enterprise Health Solutions division, realizing over $5 million in new multi-year contracts since the beginning of 2021.
• On March 23, 2021, the Company announced that it closed the acquisition of IDYA4, the technology platform used to integrate all of our healthcare solutions, providing a fully automated, seamless patient experience.
• On April 6, 2021, the Company announced that it closed the acquisition of Aspiria, adding another leading Employee and Student-focused assistance program to the Company’s EHS division.
• On April 8, 2021, the Company announced that it entered into a binding term sheet to acquire Oncidium, creating one of the largest providers to the employer market in Canada.
• On May 12, 2021, the Company announced that it closed the acquisition of Rxi, a proprietary specialty drug management and patient support platform.

Outlook

The Company is focused on revolutionizing the healthcare industry by leveraging technology to digitalize its delivery in providing more efficient access to care and achieving better health outcomes. CloudMD is integrating its health technology solutions to build one, connected healthcare ecosystem that addresses all points of a patient’s care from one platform. The Company remains on track to launch a fully automated, connected solution later in 2021. This connected platform is the foundation for scale and growth and the Company will continue expanding its footprint across North America and strategically in Europe.

CloudMD’s current revenue run rate is over $120 million which does not take into consideration any expected organic growth or cross-selling synergies. CloudMD expects to see continued organic growth across all divisions of its business largely due to the integration of its health technology solutions and cross-selling synergies in the EHS division.

The Company has a strong cash position with approximately $95 million on hand, and approximately $35 million remaining after the closing of the acquisitions of VisionPros and Oncidium, which both are expected to close in June 2021. With a strong balance sheet, CloudMD is able to seek debt financing options to conserve cash and equity. The Company is on track to be profitable and expects to be Adjusted EBITDA-positive in the second half of 2021.

CloudMD will continue to focus on delivering meaningful shareholder value by executing on its growth strategy through accretive, synergistic acquisitions, achieving organic growth across all divisions, and the full integration of its healthcare solutions to provide one, connected platform that addresses all points of care for patients.

Selected Financial Information

All results were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

(in thousands of Canadian dollars)	Three months ended
	March 31,
	2021			2020			(%)
Revenue	$	8,775		$	3,057		187	%
Cost of sales		(5,184	)		(1,933	)	168	%
Gross profit (1)		3,591			1,124		219	%
Gross margin		40.9	%		36.8	%
Expenses		9,132			2,765		230	%
Loss before other items		(5,541	)		(1,641	)	238	%
Other items, taxes, non-controlling interest		254			18
Net comprehensive loss attributable to equity holders of the Company		(5,307	)		(1,623	)	227	%
Loss per share, basic and diluted	$	(0.03	)	$	(0.02	)	50	%

(1)   Gross profit is a non-GAAP measure as described in the Non-GAAP Financial Measures section of this News Release.

(in thousands of Canadian dollars)	Three months ended
	March 31,
	2021			2020			(%)
Net comprehensive loss attributable to equity holders of the Company	$	(5,307	)	$	(1,623	)	227	%
Add:
Interest and accretion expense		92			61		50	%
Income taxes		40			-		100	%
Depreciation and amortization		689			202		242	%
EBITDA(1) for the period		(4,486	)		(1,360	)	230	%
Share-based compensation		1,595			445		258	%
Financing-related costs		749			65		1052	%
Acquisition-related and integration costs, net		812			20		4053	%
Litigation costs and loss provision		103			-		100	%
Change in fair value of contingent consideration		(315	)		-		-100	%
Adjusted EBITDA for the period	$	(1,542	)	$	(830	)	86	%

(1)   EBITDA is a non-GAAP measure as described in the Non-GAAP Financial Measures section of this News Release.

First Quarter Earnings Conference Call

CloudMD invites all interested parties to join the conference call or webinar:

CloudMD Q1 2021 Earnings CallDate: Today, May 27, 2021Time: 2:00 pm PT / 5:00 pm ET

Toll-Free Dial-In Number: (833) 562-0117 International Dial-In Number: (661) 567-1009Conference ID: 7655837 

Webcast Link: https://edge.media-server.com/mmc/p/ozdza9aq

Financial Statements and Management’s Discussion and Analysis

This news release should be read in conjunction with the Company’s condensed interim consolidated financial statements and related notes, and management’s discussion and analysis for the three months ended March 31, 2021 and 2020, copies of which can be found at www.sedar.com.

Non-GAAP Financial Measures

In addition to the results reported in accordance with IFRS, the Company uses various non-GAAP financial measures, which are not recognized under IFRS, as supplemental indicators of the Company’s operating performance and financial position. These non-GAAP financial measures are provided to enhance the user’s understanding of the Company’s historical and current financial performance and its prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of the Company’s core operating results and ongoing operations and provide a more consistent basis for comparison between quarters and years. Details of such non-GAAP financial measures and how they are derived are provided below as well as in conjunction with the discussion of the financial information reported.

Since non-GAAP financial measures do not have any standardized meanings prescribed by IFRS, other companies may calculate these non-IFRS measures differently and our non-GAAP financial measures may not be comparable to similar titled measures of other companies. Accordingly, investors are cautioned not to place undue reliance on them and are also urged to read all IFRS accounting disclosures presented in the audited consolidated financial statements and the accompanying notes for the years ended December 31, 2020 and 2019.

EBITDAEBITDA is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. EBITDA referenced herein relates to earnings before interest, taxes, depreciation and amortization. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the cash operating income (loss) of the business. Please refer to section on EBITDA for reconciliation.

Adjusted EBITDAAdjusted EBITDA is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Adjusted EBITDA referenced herein relates to earnings before interest; taxes; depreciation; amortization; share-based compensation; financing-related costs; acquisition-related and integration costs, net; litigation costs and loss provision; change in fair value of contingent consideration; and loss from discontinued operations. This measure does not have a comparable IFRS measure and is used by the Company to evaluate its cash operating income (loss) of the business, adjusted for factors that are unusual in nature or factors that are not indicative of the operating performance of the Company. Please refer to section on Adjusted EBITDA for reconciliation.

Gross ProfitGross Profit is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross Profit referenced herein relates to revenues less cost sales. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the business.

Gross MarginGross Margin is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross Margin referenced herein is defined as gross profit as a percent of total revenue. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the business.

About CloudMD Software & Services

CloudMD is digitizing the delivery of healthcare by providing a patient-centric approach, with an emphasis on continuity of care. By leveraging healthcare technology, the Company is building one, connected platform that addresses all points of a patient’s healthcare journey and provides better access to care and improved outcomes. Through CloudMD’s proprietary technology, the Company delivers quality healthcare through a holistic offering including hybrid primary care clinics, specialist care, telemedicine, mental health support, educational resources and artificial intelligence (AI). CloudMD’s Enterprise Health Solutions Division includes one of the top 4 Employee Assistance Programs in Canada and offers one comprehensive, digitally connected platform for corporations, insurers and advisors to better manage the health and wellness of their employees and customers.

CloudMD currently services a combined ecosystem of over 7,000 psychiatrists, approximately 4,500 therapists and counsellors, approximately 4,000 psychologists, over 22,000 family physicians, over 34,000 medical specialists, over 1,500 allied health professionals, over 500 clinics, and over 5 million individuals across North America. For more information visit: https://investors.cloudmd.ca.

ON BEHALF OF THE BOARD OF DIRECTORS

“Dr. Essam Hamza, MD"Chief Executive Officer

FOR ADDITIONAL INFORMATION CONTACT:

Julia BeckerVP, Investor Relations julia@cloudmd.ca(604) 785-0850

Forward Looking Statements

This news release contains forward-looking statements that are based on CloudMD’s expectations, estimates and projections regarding its business and the economic environment in which it operates, including with respect to its business plans. Although CloudMD believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements. These forward-looking statements speak only as of the date on which they are made, and CloudMD undertakes no obligation to update them publicly to reflect new information or the occurrence of future events or circumstances, unless otherwise required to do so by law.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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1 Gross margin and Adjusted EBITDA are non-GAAP measures as described in the Non-GAAP Financial Measures section of this News Release.