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, 2022. All financial
information is presented in Canadian dollars unless otherwise
indicated.
“In Q1 we delivered strong performance aligned
with a company commitment to generating synergies, profitable
execution, and continued growth. Innovation remains a key Company
focus with the launch of our newly branded integrated personalized
connected health platform, Kii. This is a milestone as we transform
the way individuals receive healthcare. We are seeing momentum in
client acquisition as Employers recognize the positive impact of
our connected health ecosystem, starting with our unique nurse-led
in-take. We are providing measurable improvements in employees’
health and wellness and reductions in absenteeism, driving
significant return on investment,” said Karen Adams,
Interim CEO and President of CloudMD. “As you’ve heard
from us repeatedly, we remain focused on cost control, realizing
synergies, and profitable execution. We have a strategic plan that
focuses on leveraging our core assets, maximizing returns for our
clients and shareholders, and achieving sustained
profitability.”
First Quarter 2022 Financial
Highlights
- Q1 2022 revenue was $41.4 million,
compared to $38.7 million in Q4 2021 and $8.8 million in Q1 2021.
The growth compared to Q4 2021 is primarily attributable to the
consolidation of MindBeacon into CloudMD’s results, organic growth
from the Employee Health Solutions (“EHS”) division offset by a
decline in Digital Health Solutions (“DHS”) due to Vision Pros
supplier issues. The increase compared to Q1 2021 is primarily
attributable to organic and acquisition growth from the
acquisitions completed in the last 12 months.
- Q1 2022 gross profit margin1 was
32.5%, compared to 30.0% in Q4 2021 and 40.9% in Q1 2021. The lower
year over year gross profit margin was primarily due to revenue mix
in the periods. The Company’s online vision care platform and
patient support programs are lower-margin businesses and were not
in the comparative period. The Company expects its gross profit
margin to increase over the course of 2022 with the ongoing efforts
to integrate its acquisitions and increase its operational
efficiency.
- Net loss in Q1 2022 was $5.6
million or $0.02 per share, compared to a loss of $15.1 million or
$0.06 per share in Q4 2021 and a loss of $5.3 million or $0.03 per
share in Q1 2021. The year over year increase in net loss was
primarily due to additional expenses incurred to support the
Company’s growth strategy, including acquisition integration costs.
The Company is highly focused on profitable growth and generating
positive net profit is a key objective for the Company.
- Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization (“Adjusted
EBITDA”) was a loss of $1.6 million in Q1 2022, compared
to a gain of $0.6 million in Q4 2021 and a loss of $1.6 million in
Q1 2021. The Company had a step back in the quarter due to the
slightly higher run rate costs of MindBeacon which was acquired in
January 2022; however, it has have made significant progress
towards exceeding the planned acquisition synergies.
- Cash and cash equivalents were
$46.9 million as of March 31, 2022, compared to $45.1 million on
December 31, 2021. The increase is related to the completion of the
MindBeacon acquisition and net cash acquired.
First Quarter and Subsequent Corporate
Highlights
- On January 14, 2022, the Company
announced the closing of the MindBeacon acquisition, creating one
of North America’s most comprehensive integrated health
offerings.
- In Q1 2022, CloudMD announced
Daniel Lee resigned as CFO and Sean Carr was appointed as Interim
CFO. Subsequently, the Company announced Dr. Essam Hamza was
resigning effective May 2, 2022, and Karen Adams would be appointed
interim CEO. The Board has initiated a process to identify the
permanent CEO and CFO.
- On March 3, 2022, the Company
announced its new Public Sector division. Operating within EHS,
this division will focus on the investments being made in
navigation of healthcare, an important part of our organic growth
strategy across North America. In addition, this division will
manage recently acquired customer contracts awarded from various
state, local, and public sector organizations across North
America.
- On March 31, 2022, the Company
announced its cost optimization and operational integration
activities. In a desire to simplify operations and improve
execution, the Company eliminated $7.5 million of annualized
run-rate costs from its business. This is aligned with the
Company’s focus on driving sustainable profitability.
- On May 26, 2022, the Company
announced the launch of Kii, Personalized & Connected Care, the
new brand identity for its integrated, health services offering.
Kii, is the company’s flagship offering which integrates several of
its best-in-class technologies and services into one exceptional,
connected, and personalized experience for employees that will
continue to disrupt the traditional employer healthcare
industry.
Outlook
The Company continues to deliver on the value
proposition of offering comprehensive solutions that create access
to care, leading to better health outcomes. Through its team-based,
personalized care approach, CloudMD provides comprehensive
solutions to patients, healthcare practitioners, individuals, and
enterprise clients through our call center, digitally or in
person. The Company has a multi-pronged growth strategy which
focuses on organic growth, cost optimization, leveraging of
our core assets and accretive mergers and acquisitions.
The Company remains focused on a number of key
priorities in 2022 including: (1) Organic growth by continuing to
diversify and grow its client base within its EHS and DHS divisions
through cross selling capabilities, geographic expansion and
providing innovative and best-in-class customer service; (2)
Driving continuous operational excellence across the organization
to improve productivity, product quality and consistency, and lower
customer acquisition costs; (3) delivering a diligent path to
profitable financial sustainability and focus on delivering
consistent financial performance across all divisions of the
organization; and (4) continuing to develop corporate governance to
support the Company’s growth.
The Company has a near-term focus on
streamlining operations, with a plan to profit from the core and
leverage its strength as a leader in the employer health markets.
CloudMD is focused on driving profitable growth in the markets
where we have scale, and strong differentiators in proven service
delivery and that have the most attractive growth and profit
potential. As such, the Company will undertake a strategic review
of some smaller, non-core assets to determine how best to maximize
shareholder value.
The Company will continue to deploy its capital
prudently and will make investments that support growth in core
areas of the business.
_____________1 Gross profit margin is a non-GAAP
ratio. Refer to the “Non-GAAP Financial Measures” section of this
news release for further information.
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, except per share amounts) |
|
Three months ended |
|
|
March 31, |
|
|
2022 |
|
|
2021 |
|
(%) |
Revenue |
$ |
41,378 |
|
$ |
8,775 |
|
372 |
% |
Cost of sales |
|
(27,912 |
) |
|
(5,184 |
) |
438 |
% |
Gross profit (1) |
|
13,466 |
|
|
3,591 |
|
275 |
% |
Gross margin |
|
32.5 |
% |
|
40.9 |
% |
|
|
|
|
|
|
|
Expenses |
|
21,310 |
|
|
9,132 |
|
133 |
% |
Loss before other items |
|
(7,844 |
) |
|
(5,541 |
) |
42 |
% |
Other items, taxes |
|
2,196 |
|
|
251 |
|
775 |
% |
Net loss |
|
(5,648 |
) |
|
(5,290 |
) |
7 |
% |
Loss per share, basic and diluted |
$ |
(0.02 |
) |
$ |
(0.03 |
) |
(33 |
%) |
(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, |
|
|
2022 |
|
|
2021 |
|
(%) |
Net loss |
$ |
(5,648 |
) |
$ |
(5,290 |
) |
7 |
% |
Add: |
|
|
|
|
|
Finance costs |
|
497 |
|
|
88 |
|
465 |
% |
Income taxes |
|
85 |
|
|
40 |
|
113 |
% |
Depreciation and amortization |
|
3,012 |
|
|
689 |
|
337 |
% |
EBITDA(1)
for the period |
|
(2,054 |
) |
|
(4,473 |
) |
54 |
% |
Share-based compensation |
|
490 |
|
|
1,595 |
|
(69 |
%) |
Financing-related costs |
|
- |
|
|
749 |
|
(100 |
%) |
Acquisition-related and integration costs, net |
|
2,524 |
|
|
812 |
|
211 |
% |
Litigation costs and loss provision |
|
2 |
|
|
81 |
|
(98 |
%) |
Change in fair value of liability to non-controlling interests |
|
129 |
|
|
- |
|
100 |
% |
Change in fair value of contingent consideration |
|
(2,735 |
) |
|
(315 |
) |
768 |
% |
Adjusted EBITDA for the period
(1) |
$ |
(1,644 |
) |
$ |
(1,551 |
) |
(6 |
%) |
(1) EBITDA and Adjusted EBITDA are non-GAAP
measures as described in the Non-GAAP Financial Measures section of
this news release.
First Quarter 2022 Earnings Conference
Call
CloudMD invites all interested parties to join
the conference call or webinar:
CloudMD Q1 2022 Earnings CallDate: May 31,
2022Time: 9:00 am ET (6:00 am PT)
Toll-Free Dial-In Number: (833) 562-0117 International Dial-In
Number: (661) 567-1009
Webcast
Link: https://edge.media-server.com/mmc/p/2popizyz
Non-GAAP Financial Measures
In addition to the results reported in
accordance with IFRS, the Company uses various non-GAAP financial
measures and ratios which are not recognized under IFRS, as
supplemental indicators of the Company’s operating performance and
financial position. These non-GAAP financial measures and ratios
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 ratios 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 related notes for the year ended
December 31, 2021 and 2020.
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, impairment, and depreciation and amortization. This measure
does not have a comparable IFRS measure and is used by the Company
to assess its capacity to generate profit from operations before
taking into account management’s financing decisions and costs of
consuming intangible and tangible capital assets, which vary
according to their vintage, technological currency, and
management’s estimate of their useful life.
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; loss on sale of subsidiary; and change in fair
value of contingent consideration. This measure does not have a
comparable IFRS measure and is used by the Company to assess its
capacity to generate profit from operations before taking into
account management’s financing decisions and costs of consuming
intangible and tangible capital assets, which vary according to
their vintage, technological currency, and management’s estimate of
their useful life, adjusted for factors that are unusual in nature
or factors that are not indicative of the operating performance of
the Company.
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 ratio that has Gross Profit, which is a non-GAAP
financial measure as a component. 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.
The following table provides a reconciliation of
net loss for the periods to EBITDA and Adjusted EBITDA for the
three months March 31, 2022 and 2021:
(In thousands of Canadian dollars) |
|
Three months ended |
|
|
March 31, |
|
|
2022 |
|
|
2021 |
|
(%) |
Net loss |
$ |
(5,648 |
) |
$ |
(5,290 |
) |
7 |
% |
Add: |
|
|
|
|
|
Finance costs |
|
497 |
|
|
88 |
|
465 |
% |
Income taxes |
|
85 |
|
|
40 |
|
113 |
% |
Depreciation and amortization |
|
3,012 |
|
|
689 |
|
337 |
% |
EBITDA(1)
for the period |
|
(2,054 |
) |
|
(4,473 |
) |
54 |
% |
Share-based compensation |
|
490 |
|
|
1,595 |
|
(69 |
%) |
Financing-related costs |
|
- |
|
|
749 |
|
(100 |
%) |
Acquisition-related and integration costs, net |
|
2,524 |
|
|
812 |
|
211 |
% |
Litigation costs and loss provision |
|
2 |
|
|
81 |
|
(98 |
%) |
Change in fair value of liability to non-controlling interests |
|
129 |
|
|
- |
|
100 |
% |
Change in fair value of contingent consideration |
|
(2,735 |
) |
|
(315 |
) |
768 |
% |
Adjusted EBITDA for the period
(1) |
$ |
(1,644 |
) |
$ |
(1,551 |
) |
(6 |
%) |
(1) EBITDA and Adjusted EBITDA are non-GAAP
measures as described in the Non-GAAP Financial Measures section of
this news release.Stock Options and Restricted Share Units
Grant
CloudMD granted 550,000 stock options to acquire
550,000 common shares of the Company to certain officers and
directors pursuant to the Company’s stock option plan effective as
of market close on June 6, 2022, at an exercise price equal to the
5-day VWAP as of June 6, 2022, for a period of 10 years, subject to
vesting requirements and any necessary regulatory approvals.
CloudMD also granted 250,000 restricted share units (“RSUs”), plus
that number of RSUs equal to $265,375 divided by the greater of the
5-day VWAP and the closing price as of June 6, 2022, to certain
directors and officers of the Company pursuant to the Company’s RSU
plan effective as of market close on June 6, 2022, each RSU
entitling the holder to acquire one common share the Company in
certain circumstances, subject to vesting requirements and any
necessary regulatory approvals.
About CloudMD Software & Services
CloudMD is transforming the delivery of
healthcare using technology and 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, healthcare navigation, educational resources, and
artificial intelligence (AI). CloudMD’s business is separated into
three main divisions: Clinics and Pharmacies, Digital Solution and
Enterprise Health Solutions, the Company’s fastest growing
division. CloudMD’s Enterprise Health Solutions Division has built
a leading employer healthcare solutions, including its
Comprehensive Integrated Health Services Platform, which offers one
comprehensive, digitally connected platform for educational
institutions, corporations, insurers, and advisors to better manage
the health and wellness of their students, employees, and
customers.
CloudMD currently services a direct ecosystem of
over 5,700 clinicians including, 1,800+ mental health
practitioners, 1,600+ allied health professionals, 1,400+ doctors
and nurses and covers 12 million individual lives across North
America. For more information
visit: https://investors.cloudmd.ca.
ON BEHALF OF THE BOARD OF DIRECTORS
“Karen Adams”Interim Chief Executive Officer
FOR ADDITIONAL INFORMATION, CONTACT:
Julia BeckerVP, Investor
Relations julia@cloudmd.ca(604) 785-0850
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward Looking Statements
This news release contains “forward-looking
statements” and “forward-looking information” within the meaning of
Canadian securities laws. Forward-looking statements in this news
release include, but are not limited to, statements regarding: the
new Public Sector division; key focuses in 2022; deployment of
strategic capital and the impact of integration of its
acquisitions; and options to recover amounts owed to the Company in
connection with the acquisition of VisionPros. These statements are
based upon information currently available to CloudMD’s management.
All information that is not clearly historical in nature may
constitute forward‐looking statements. In some cases,
forward‐looking statements may be identified by the use of terms
such as “forecast”, “assumption” and other similar expressions or
future or conditional terms such as “anticipate”, “believe”,
“could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”,
“project”, “will”, “would”, and “should”. Forward-looking
statements contained in this news release are based on certain
factors and assumptions made by management of CloudMD based on
their current expectations, estimates, projections, assumptions and
beliefs regarding their business and CloudMD does not provide any
assurance that actual results will meet management’s expectations.
While management considers these assumptions to be reasonable based
on information currently available to them, they may prove to be
incorrect. Such forward‐looking statements are not guarantees of
future events or performance and by their nature involve known and
unknown risks, uncertainties and other factors, including those
risks described in the Company’s MD&A (which is filed under the
Company’s issuer profile on SEDAR and can be accessed at
www.sedar.com), that may cause the actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward‐looking statements. Although CloudMD has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward‐looking statements, other factors may cause actions, events
or results to be different than anticipated, estimated or intended.
There can be no assurance that such statements will prove to be
accurate as actual results and future events could vary or differ
materially from those anticipated in such forward‐looking
statements. Accordingly, readers should not place undue reliance on
forward‐looking information. CloudMD does not undertake to update
any forward-looking information, whether as a result of new
information or future events or otherwise, except as may be
required by applicable securities laws.
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