CloudMD Software & Services Inc. (TSXV: DOC, OTCQX: DOCRF,
Frankfurt: 6PH) (the “
Company” or
“
CloudMD”), an innovative health services company
transforming the delivery of care, is pleased to announce its
financial results for the fourth quarter and year ended December
31, 2022. All financial information is presented in Canadian
dollars unless otherwise indicated.
“2022 was a pivotal year for CloudMD as we
focused on the divestment of non-core assets, cost alignment and
revenue growth. Throughout the year, we had strong sales activity
based on our team’s ability to strengthen the unique value
proposition of our integrated health and wellness program, Kii,
however it was overshadowed by the end of one-time COVID related
contracts and lower revenues from the divestment of non-core
assets,” said Karen Adams, CEO of
CloudMD “The actions taken by the team in 2022 will
accelerate organic revenue growth both in new customer acquisition
and in growing wallet share with long term clients. By operating as
one integrated company we have a structure that we expect will
enable us to generate positive adjusted EBITDA and cash flow in the
near future. We have been able to bring to market a comprehensive
set of services, all connected by a common focus on empowering
healthier living. The combination of the expertise of our people,
our robust set of evidence-based services, and our laser focus on
executing our strategic plan is what will enable sustainable
revenue growth in 2023 and beyond.”
“Exiting 2022, we had established a new baseline
for our business in Q4. We expect revenue growth through the
adoption of our full suite of health and wellness services going
forward, and on the cost side, our work streamlining the
organization is resulting in reduced cash operating expenses,”
said John Plunkett, CFO
of CloudMD. “As we continue to streamline the business, we
expect more efficiencies to be realized in 2023 and expansion of
gross and operating margins. We exited the year with $24 million in
cash, and we expect positive improvement in cash use in the back
half of 2023.”
Fourth Quarter 2022 Financial
Highlights
- Q4 2022 revenue of $25.9 million, compared to $28.1 million in
Q4 2021 and $27.5 million in the previous quarter. Compared to the
previous quarter, revenue was down by $1.6 million, driven by a
$1.5 million impact from the Ontario Health contract and
seasonality in our assessment business which tends to be higher in
the first half of the year.
- Q4 2022 gross profit margin was 34.8% compared to 34.5% in Q3
2022 reflecting an improvement in service delivery costs. The
improvement compared to 36.8% in Q4 2021 driven by a change in the
revenue mix.
- Adjusted EBITDA2 for Q4 was
($2.6) million, compared to ($0.1) million in the prior year
period. Adjusted EBITDA2 improved by $0.5 million from Q3 to Q4
2022. The improvement in Adjusted EBITDA2 from Q3 2022 is due
to the continued cost optimization efforts.
- Net loss in Q4 2022 was $13.0 million, or $0.04 per share,
compared to a loss of $13.0 million or $0.06 per share in Q4,
2021.
- The Company identified and actioned approximately $5.0 million
of annualized cost reductions in Q4 2022, the impact of which
was realized in part in Q4 with the full run-rate impact
expected in Q1 2023.
- Use of cash
in Q4 was $3.4 million. Normalized cash outflow Q4 was
$4.6 million. As of December 31, 2022, the Company had $24.1
million of cash and cash equivalents. During the fourth quarter the
Company repaid an incremental $4.4 million of debt, in part due to
the divestiture of its pharmacy businesses.
Fourth Quarter & Subsequent
Corporate Highlights
- On October 11, 2022, CloudMD announced the divestment of its
Primary Care Clinics and Cloud Practice to Well
Health Technologies Corp., with closing of this transaction
announced on November 2, 2022.
- On October 31, 2022, CloudMD announced the divestment of its
pharmacies to Neighbourly Pharmacy. On December 19, 2022, CloudMD
announced that the transaction had closed.
- On February 13, 2023, CloudMD announced the launch of Spanish
language TAiCBT in the United States.
- On March 27, 2023, CloudMD announced that Bram Lowsky had
joined the Company as the new Head of Health and Wellness
Services.
- On April 3, 2023, CloudMD announced the launch of its online
prescription renewal in the United States.
- On April 4, 2023, CloudMD announced its partnership with Mohawk
Medbuy to offer its full suite of services to hospitals across
Canada.
- On April 10, 2023, CloudMD announced that Dhruv Chandra had
joined the Company as the new Chief Technology Officer.
- On April 12, 2023, CloudMD announced an expanded partnership
with Benefits Alliance to offer its full suite of Kii services to
employee benefits plans across Canada.
Outlook
2022 was a year of transition as the Company
focused on operationalizing, aligning, and rationalizing the large
number of acquisitions completed over the last two years. The
Company has been focused on the integration of its previous
acquisitions and products to create an innovative market leadership
position and deliver profitable results.
To this end, during the fourth quarter of
2022, the Company completed the sale of its BC-based primary care
clinics, Cloud Practice and two pharmacy assets, all of which were
considered non-core. Along with divestitures, the Company had three
non-recurring headwinds during 2022; the end of contracts for COVID
testing support; a change in the contract from the Ontario
government for COVID-19 Mental Health Support and lower
volumes from VisionPros. The Company views Q4 as a good baseline
for its business, with the majority of revenue being recurring.
The Company expects low double digit revenue
growth in 2023 off the fourth quarter baseline. The Company sold
$12.2 million in multi-year contracts in 2022 and has a robust
pipeline that will continue to drive revenue growth in 2023.
During the fourth quarter, the Company
identified and actioned approximately $5.0 million in annual cost
reductions to realign its cost base. After year end, during Q1
2023, the Company realized additional annualized cost reductions of
$1.0 million. In addition, the Company is expecting to action
another $4.0 million of annual net cost savings in Q2 2023.
These synergies will come with a cost of severance, or working
notice, which will impact cash flows in the first three quarters of
2023.
The cost savings achieved in the fourth quarter
of 2022, in addition to the savings realized in the first quarter
of 2023 and expected reductions in the second quarter of 2023, will
bring the Company closer to Adjusted EBITDA breakeven. As of
the date of this MD&A, the Company expects to achieve this
milestone in the fourth quarter of 2023.
The Company believes its cash position of $24.1
million, will provide sufficient liquidity to fund its
obligations and fund organic growth. The Company will continue to
prudently manage expenditures and seek further efficiencies in
its cost structure.
Select Financial
Information
All results were prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board.
|
Selected Financial Information |
Three months endedDecember
31 |
Year endedDecember 31 |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
Revenue |
$ |
25,861 |
|
$ |
28,112 |
|
$ |
114,456 |
|
$ |
70,055 |
|
|
Cost of sales |
|
16,856 |
|
|
17,769 |
|
|
74,258 |
|
|
43,397 |
|
|
Gross profit |
$ |
9,005 |
|
$ |
10,343 |
|
$ |
40,198 |
|
$ |
26.658 |
|
|
Gross profit % |
|
34.8 |
% |
|
36.8 |
% |
|
35.1 |
% |
|
38.1 |
% |
|
Indirect Expenses |
|
|
|
|
|
Sales and marketing |
|
1,971 |
|
|
1,507 |
|
|
8,942 |
|
|
5,496 |
|
|
Research and development |
|
336 |
|
|
(141 |
) |
|
3,954 |
|
|
1,604 |
|
|
General and administrative |
|
9,414 |
|
|
9,136 |
|
|
39,139 |
|
|
21,667 |
|
|
Share-based compensation |
|
(22 |
) |
|
647 |
|
|
1,273 |
|
|
5,223 |
|
|
Depreciation and amortization |
|
3,467 |
|
|
2,277 |
|
|
14,106 |
|
|
5,687 |
|
|
Financing-related costs |
|
16 |
|
|
(12 |
) |
|
16 |
|
|
859 |
|
|
Acquisition and divestiture-related, integration
and restructuring costs |
|
2,313 |
|
|
2,391 |
|
|
11,545 |
|
|
7,838 |
|
|
Impairment |
|
6,441 |
|
|
2,736 |
|
|
119,593 |
|
|
2,736 |
|
|
Operating loss |
$ |
(14,931 |
) |
$ |
(8,198 |
) |
$ |
(158,370 |
) |
$ |
(24,452 |
) |
|
Other income |
|
144 |
|
|
75 |
|
|
627 |
|
|
411 |
|
|
Change in fair value of contingent consideration |
|
(250 |
) |
|
505 |
|
|
6,564 |
|
|
1,471 |
|
|
Finance costs |
|
(678 |
) |
|
(76 |
) |
|
(2,270 |
) |
|
(931 |
) |
|
Loss on sale of joint venture |
|
- |
|
|
- |
|
|
(221 |
) |
|
- |
|
|
Current and deferred income tax recovery/(expense) |
|
4,037 |
|
|
194 |
|
|
4,779 |
|
|
(355 |
) |
|
Net loss for the period from continuing
operations |
|
(11,678 |
) |
|
(7,500 |
) |
|
(148,891 |
) |
|
(23,856 |
) |
|
Net loss after tax from discontinuing
operations |
|
(1,300 |
) |
|
(5,529 |
) |
|
(8.800 |
) |
|
(6,882 |
) |
|
Net loss for the period |
$ |
(12,978 |
) |
$ |
(13,029 |
) |
$ |
(157,691 |
) |
$ |
(30,738 |
) |
|
Add: |
|
|
|
|
|
Depreciation and amortization |
|
3,467 |
|
|
2,277 |
|
|
14,106 |
|
|
5,687 |
|
|
Finance costs |
|
678 |
|
|
76 |
|
|
2,270 |
|
|
931 |
|
|
Impairment |
|
6,441 |
|
|
2,736 |
|
|
119,593 |
|
|
2,736 |
|
|
Current and deferred income tax recovery/(expense) |
|
(4,037 |
) |
|
(194 |
) |
|
(4,779 |
) |
|
355 |
|
|
EBITDA (1) |
$ |
(6,429 |
) |
$ |
(8,134 |
) |
$ |
(26,501 |
) |
$ |
(21,029 |
) |
|
Share-based compensation |
|
(22 |
) |
|
647 |
|
|
1,273 |
|
|
5,223 |
|
|
Financing-related costs |
|
16 |
|
|
(12 |
) |
|
16 |
|
|
859 |
|
|
Acquisition and divestiture-related, integration and restructuring
costs |
|
2,313 |
|
|
2,391 |
|
|
11,545 |
|
|
7,838 |
|
|
Litigation costs |
|
- |
|
|
- |
|
|
555 |
|
|
83 |
|
|
Change in fair value of contingent consideration |
|
250 |
|
|
(505 |
) |
|
(6,564 |
) |
|
(1,471 |
) |
|
Net loss after tax from discontinuing operations |
|
1,300 |
|
|
5,529 |
|
|
8,800 |
|
|
6,882 |
|
|
Loss on sale of joint venture |
|
- |
|
|
- |
|
|
221 |
|
|
- |
|
|
Adjusted EBITDA (1) |
$ |
(2,572 |
) |
$ |
(84 |
) |
$ |
(10,655 |
) |
$ |
(1,615 |
) |
|
Loss per share, basic and diluted |
|
(0.04 |
) |
|
(0.06 |
) |
|
(0.55 |
) |
|
(0.15 |
) |
|
Loss per share from continuing operations, basic and diluted |
|
(0.04 |
) |
|
(0.03 |
) |
|
(0.52 |
) |
|
(0.11 |
) |
Fourth Quarter 2022 conference call and
webinar details:
Date and Time: Tuesday, April
25, 2023, at 9:30 am Eastern Time (6:30 am Pacific Time)
Webcast link:
https://edge.media-server.com/mmc/p/pc9ezqtm
Financial Statements and Management’s
Discussion and Analysis
This news release should be read in conjunction
with the Company’s audited consolidated financial statements and
accompanying notes, and management’s discussion and analysis
(“MD&A”) for the three months and year ended December 31, 2022,
and 2021, copies of which can be found under the Company’s profile
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 reader’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 the MD&A 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, 2022 and 2021.
EBITDA
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. 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 EBITDA
Adjusted 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,
impairment, depreciation, amortization, share-based compensation,
financing-related costs, acquisition and divestiture-related,
integration and restructuring costs, litigation costs, change in
fair value of contingent consideration, net loss after tax from
discontinuing operations and loss on sale of joint venture. 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.
The following table provides a reconciliation of
net loss for the periods to EBITDA and Adjusted EBITDA for the
three months and years ended December 31, 2022 and 2021.
|
|
Three months endedDecember 31, |
Variance |
Year endedDecember 31, |
Variance |
|
|
|
2022 |
|
|
2021 |
|
$ |
% |
|
2022 |
|
|
2021 |
|
$ |
% |
|
Net loss |
$ |
(12,978 |
) |
$ |
(13,029 |
) |
51 |
|
0 |
% |
$ |
(157,691 |
) |
$ |
(30,738 |
) |
126,953 |
|
413 |
% |
|
Add: |
|
|
|
|
|
|
|
|
|
Interest and accretion expense |
|
678 |
|
|
76 |
|
602 |
|
792 |
% |
|
2,270 |
|
|
931 |
|
1,339 |
|
144 |
% |
|
Current deferred and income tax expense/(recovery) |
|
(4,037 |
) |
|
(194 |
) |
(3,843 |
) |
1,943 |
|
|
(4,779 |
) |
|
355 |
|
(5,134 |
) |
(1,446 |
%) |
|
Impairment |
|
6,441 |
|
|
2,736 |
|
3,705 |
|
135 |
% |
|
119,593 |
|
|
2,736 |
|
116,857 |
|
4,271 |
% |
|
Depreciation and amortization |
|
3,467 |
|
|
2,277 |
|
1,190 |
|
52 |
% |
|
14,106 |
|
|
5,687 |
|
8,419 |
|
148 |
% |
|
EBITDA(1) for the
period |
$ |
(6,429 |
) |
$ |
(8,134 |
) |
1,705 |
|
21 |
% |
$ |
(26,501 |
) |
$ |
(21,029 |
) |
(5,472 |
) |
(26 |
%) |
|
Share-based compensation |
|
(22 |
) |
|
647 |
|
(669 |
) |
(103 |
%) |
|
1,273 |
|
|
5,223 |
|
(3,950 |
) |
(76 |
%) |
|
Financing-related costs |
|
16 |
|
|
(12 |
) |
28 |
|
(233 |
%) |
|
16 |
|
|
859 |
|
(843 |
) |
(98 |
%) |
|
Acquisition and divestiture-related, integration and restructuring
costs |
|
2,313 |
|
|
2,391 |
|
(78 |
) |
(3 |
%) |
|
11,545 |
|
|
7,838 |
|
3,707 |
|
47 |
% |
|
Litigation costs and loss provision |
|
- |
|
|
- |
|
- |
|
NM |
|
555 |
|
|
83 |
|
472 |
|
569 |
% |
|
Change in fair value of contingent consideration |
|
250 |
|
|
(505 |
) |
755 |
|
(150 |
%) |
|
(6,564 |
) |
|
(1,471 |
) |
(5,093 |
) |
346 |
% |
|
Net loss from discontinuing operations |
|
1,300 |
|
|
5,529 |
|
(4,229 |
) |
(76 |
%) |
|
8,800 |
|
|
6,882 |
|
1,918 |
|
28 |
% |
|
Loss on sale of joint venture |
|
- |
|
|
- |
|
- |
|
NM |
|
221 |
|
|
- |
|
221 |
|
100 |
% |
|
Adjusted EBITDA(1) for
the period |
$ |
(2,572 |
) |
$ |
(84 |
) |
(2,488 |
) |
2962 |
% |
$ |
(10,655 |
) |
$ |
(1,615 |
) |
(9,040 |
) |
560 |
% |
|
|
(1) |
EBITDA,
Adjusted EBITDA, Financing-related costs, Acquisition and
divestiture-related and integration costs, litigation costs and
loss provision are non-GAAP measures. Refer to the Non-GAAP
Financial Measures section of the MD&A for further
information. |
About CloudMD Software &
Services
CloudMD is an innovative North American
healthcare service provider focused on empowering healthier living
by combining leading edge technology with an exceptional national
network of healthcare professionals. Every day, our employees and
health care providers live our values of delivering excellence,
collaboration, connected communication and accountability to solve
complex health problems. CloudMD’s industry leading workplace
health and wellbeing solution, Kii, supports members and their
families with a personalized and connected healthcare experience
across mental, physical and occupation health. Kii delivers
superior clinical health outcomes, consistent high engagement, and
measurable ROI for payers such as employers, educational
institutions, associations, government, and insurers. CloudMD is
also a market leader in workplace absence management through
data-driven prevention, intervention and return to work
programs.
In addition, the Company sells health and
productivity tools to hospitals, clinics, and other healthcare
service providers to empower them to deliver better care. Visit
www.cloudmd.ca to learn more about the Company’s comprehensive
healthcare offerings.
“Karen Adams”Chief Executive Officer
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, including statements about the Company’s
growth strategy and profitability. 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.
1 Adjusted EBITDA is a non-GAAP measure. Refer to the “Non-GAAP
Financial Measures” section of this news release for further
information and the detailed reconciliation to the most
directly comparable measure under IFRS set out above.
2 Adjusted EBITDA is a non-GAAP ratio. Refer to the “Non-GAAP
Financial Measures” section of this news release for further
information.
FOR ADDITIONAL INFORMATION, CONTACT:
Investor Relations
Investors@cloudmd.ca
CloudMD Software & Servi... (TSXV:DOC)
Historical Stock Chart
From Mar 2024 to Apr 2024
CloudMD Software & Servi... (TSXV:DOC)
Historical Stock Chart
From Apr 2023 to Apr 2024
