- Continued top line momentum, with revenue for the first six
months of 2022 up 5% compared to the prior-year period
- Record participant engagement of 76,000 for the first half
of 2022 up 20% compared to the prior-year period
- Launches New Engagement Platform to Increase Participant
Stickiness and Improve Operational Efficiencies and
Margins
- Reconfirms year-over-year revenue growth with expected
strong back half to 2022
- Q2 2022 conference call scheduled for August 10, 2022 at 5 PM
ET
TORONTO, Aug. 10,
2022 /CNW/ - Newtopia Inc. ("Newtopia" or the
"Company") (TSXV: NEWU) (OTCQB: NEWUF), a tech-enabled whole
health platform creating sustainable habits that prevent, slow, and
reverse chronic disease, today announced its second quarter 2022
financial results for the three months ended June 30, 2022. All amounts are expressed in
Canadian dollars, unless otherwise noted.
Second Quarter 2022 Financial Highlights (vs. Q2
2021):
- Revenue of $2.5 million,
consistent with the previous year
- Gross profit margin1 of 47% compared to 42% for
the prior-year period
"Newtopia had a solid second quarter in which we made notable
progress with both current and prospective clients," said
Jeff Ruby, Founder and CEO of
Newtopia. "Revenue for the quarter was in line with our
expectations. On a year-to-date basis, revenue improved and was up
5% compared to the prior-year period. With a large and growing
pipeline of new business opportunities in front of us, we enter the
third quarter on solid footing and anticipate even stronger
performance in the back half of the year. We see particular
traction in the health plan space for Medicare Advantage and
fully-insured populations, where we are in active proof of concept
discussions with six leading innovators that we anticipate will
have a positive impact on our top line as we exit the year."
Mr. Ruby continued, "Newtopia is sitting at an inflection point.
We have a new set of health plan clients on the horizon and an
opportunity to enhance execution with our new and existing clients
using our upgraded technology, which will improve overall
participant experience, increase the degree of digital engagement
and yield operational and financial efficiencies. We enter the
second half of 2022 as optimistic about the future of Newtopia as
we have ever been."
________________________
|
1
|
Gross profit is defined
as revenue which is comprised of onboarding welcome revenue,
ongoing engagement fees and success fees, less cost of sales which
is comprised of Welcome Kit costs, compensation expense for
Inspirators and care specialists and genetic testing costs. Gross
margin percentage is calculated by dividing gross profit by total
revenue for the defined period. Gross profit is considered by
management to be an integral measure of financial performance and
represents the amount of revenues retained by the Company after
incurring direct costs. However, gross profit is not a recognized
measure of profitability under IFRS.
|
Second Quarter 2022 Financial Results
Revenue for the three months ended June
30, 2022 was $2.5 million,
consistent with the same period the previous year. On a
year-to-date basis, for the six month period ending June 30, 2022, revenue totaled $5.4 million, up 5% compared to $5.1 million in the first half of 2021. The
increase in revenue during the six month period ended June 30, 2022 can be attributed to stronger
participant enrollments during the first quarter of 2022 and the
ensuing growth in recurring engagement revenue from the build up of
the participant base. Moreover, participant engagement was a record
at 76,000 for the first half of 2022, up 20% from 63,000 for the
same prior-year period.
Gross profit for the second quarter 2022 totaled $1.2 million, an increase of 11% from the
prior-year period. Gross profit is comprised of Newtopia's revenue
less direct expenses, which include the cost of Welcome Kits sold
to new participants as well as labour costs associated with hiring
and training of the Company's coaching team of Inspirators (health
coaches). As a percentage of revenue, gross profit totaled 47%,
compared to 42% in the prior-year period.
Adjusted operating expenses2 for the three
months ended June 30, 2022 totaled
$3.1 million, compared to
$3.0 million in the prior-year
period. On a non-adjusted basis, operating expenses declined
year-over-year, however greater stock base compensation in Q2 2021
resulted in a slight increase in adjusted operating expenses by
comparison in Q2 2022.
For the quarter, the Company had an adjusted operating
loss3 of $1.9
million, consistent with the prior-year period.
The Company ended the second quarter 2022 with approximately
$0.7 million in cash and an
outstanding loan balance of $2.9
million against its $7.5
million credit facility. In April, at the start of the
second quarter, Newtopia successfully closed a brokered private
placement facility offering of 16,950,000 units at a price of
$0.20 per Unit, for aggregate
proceeds of $3,390,000. The Company
also concurrently completed a non-brokered private placement of
550,000 units for aggregate gross proceeds of $110,000.
2022 Outlook
The Company continues to anticipate achieving full year revenue
growth for 2022 over full year 2021. This top-line improvement will
be more heavily weighted towards the second half of the year. With
an expanded business development effort and a more efficient
tech-enabled platform in place, Newtopia is currently at an
inflection point in its growth trajectory. In the coming quarters,
the Company will look to onboard a new set of health plan clients
in addition to growing organically with its current set of
self-insured employer customers, positioning Newtopia strongly for
continued revenue improvements in 2023.
In July 2022, the Company
announced the launch of its new engagement platform. This new and
improved platform includes a state-of-the-art participant
experience for habit change and enhanced participant communications
and nudges which help create and enable the personalized programs
that are core to Newtopia. By improving operational and
technological efficiencies, this new platform is expected to lead
to improved Inspirator-to-participant service ratios which will in
turn enhance gross margin.
Grants of Stock Options
Newtopia further announced today that its Board of Directors has
approved the grant of 606,140 stock options to certain directors
and tenured employees. The options will be at an exercise price of
$0.20 per common share and will
expire five years from the grant date.
__________________
|
2
|
Adjusted
operating expenses consist of all cash-based technology, sales and
marketing and administrative expenses including employment expenses
for these functions excluding equity-settled share-based
compensation. Adjusted operating expense is not a measure of
financial performance under IFRS and should not be considered a
substitute for total operating expenses, which we believe to be the
most directly comparable IFRS measure.
|
3
|
Adjusted operating loss
consists of gross profit less adjusted operating income. Adjusted
operating loss is not a measure of financial performance under IFRS
and should not be considered a substitute for loss from operations
which we believe to be the most directly comparable IFRS
measure.
|
Conference Call
The Company will host a conference call today at 5:00 p.m. Eastern Time to discuss the second
quarter 2022 results in further detail. To access the conference
call, please dial (877) 407-3982 (U.S.) or (201) 493-6780
(International) ten minutes prior to the start time and reference
Conference ID number 13730415. The call will also be available via
live webcast on the investor relations portion of the Company's
website located at investor.newtopia.com.
A replay of the conference call will be available through
Wednesday, August 24, 2022 which can
be accessed by dialing (844) 512-2921 (U.S.) or (412) 317-6671
(International) and entering the passcode 13730415. The webcast
will also be archived on the Company's website.
About Newtopia
Newtopia is a tech-enabled whole health platform helping people
create positive lifelong habits that prevent, slow, or reverse
chronic disease while reducing healthcare costs. The platform
leverages genetic, social and behavioural insights to create
individualized prevention programs with a focus on metabolic
disease, diabetes, mental health challenges, hypertension, weight
management and musculoskeletal disorders. With a person-centered
approach that combines virtual care, digital tools, connected
devices and actionable data science, Newtopia delivers sustainable
clinical and financial outcomes. Newtopia serves some of the
largest nationwide employers and health plans and is currently
listed in Canada on the Toronto
Stock Exchange (TSXV: NEWU) and is quoted in the US on the OTCQB®
Venture Market (OTCQB: NEWUF). To learn more, visit newtopia.com,
LinkedIn or Twitter.
Forward Looking Information
This press release contains forward-looking information and
forward-looking statements, within the meaning of applicable
Canadian securities legislation, and forward looking statements,
within the meaning of applicable United
States securities legislation (collectively,
"forward-looking statements"), which reflects management's
expectations regarding Newtopia's future growth, results from
operations (including, without limitation, future production and
capital expenditures), performance (both operational and financial)
and business prospects and opportunities. Wherever possible, words
such as "predicts", "projects", "targets", "plans", "expects",
"does not expect", "budget", "scheduled", "estimates", "forecasts",
"anticipate" or "does not anticipate", "believe", "intend" and
similar expressions or statements that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved, or the negative or grammatical variation or other
variations thereof, or comparable terminology have been used to
identify forward-looking statements. All statements other than
statements of historical fact may be forward-looking information.
Such statements reflect Newtopia's current views and intentions
with respect to future events, based on information available to
Newtopia, and are subject to certain risks, uncertainties and
assumptions, including without limitation, the Company's
successful completion of its strategic technology projects
(including on budget), continued and sustained high levels of
client engagement and low client churn, the expansion of client
relationships, the rollout of new clients, the conversion of pilot
projects into full blown rollouts, the Company's ability to
continue to grow its sales pipeline, and current financial trends
remaining at or above the current levels in respect of revenue,
gross profit, gross margin percentage and adjusted operating
expenses. Material factors or assumptions were applied in providing
forward-looking information. While forward-looking statements are
based on data, assumptions and analyses that Newtopia believes are
reasonable under the circumstances, whether actual results,
performance or developments will meet Newtopia's expectations and
predictions depends on a number of risks and uncertainties that
could cause the actual results, performance and financial condition
of Newtopia to differ materially from its
expectations.
Certain of the "risk factors" that could cause actual
results to differ materially from Newtopia's forward-looking
statements in this press release include, without limitation: the
termination of contracts by clients, risks related to COVID-19
including various recommendations, orders and measures of
governmental authorities to try to limit the pandemic, including
travel restrictions, border closures, non-essential business
closures, quarantines, self-isolations, shelters-in-place and
social distancing, disruptions to markets, economic activity,
financing, supply chains and sales channels, and a deterioration
of general economic conditions including a possible national or
global recession; and other general economic, market and business
conditions and factors, including the risk factors discussed or
referred to in Newtopia's disclosure documents, filed with the
securities regulatory authorities in certain provinces of
Canada and available at
www.sedar.com.
Should any factor affect Newtopia in an unexpected manner or
should assumptions underlying the forward-looking information prove
incorrect, the actual results or events may differ materially from
the results or events predicted. Any such forward-looking
information is expressly qualified in its entirety by this
cautionary statement. Moreover, Newtopia does not assume
responsibility for the accuracy or completeness of such
forward-looking information. The forward-looking information
included in this press release is made as of the date of this press
release, and Newtopia undertakes no obligation to publicly update
or revise any forward-looking information, other than as required
by applicable law.
Non-GAAP Financial Measures
The Company's financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS").
Management uses certain non-GAAP measures, which are defined in the
appropriate sections of this press release, to better assess the
Company's underlying performance. These measures are reviewed
regularly by management and the Company's Board of Directors in
assessing the Company's performance and in making decisions about
ongoing operations. In addition, we use certain non-GAAP measures
to determine the components of management compensation. We believe
that these measures are also used by investors as an indicator of
the Company's operating performance. Readers are cautioned that
these terms are not recognized GAAP measures and do not have a
standardized GAAP meaning under IFRS and should not be construed as
alternatives to IFRS terms, such as net income.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Key Financial Measures and Schedule of Non-GAAP
Reconciliations
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue
|
|
2,531,986
|
|
2,529,021
|
|
5,398,700
|
|
5,148,192
|
Cost of
sales
|
|
(1,341,941)
|
|
(1,457,764)
|
|
(2,859,777)
|
|
(2,758,631)
|
Gross profit
|
|
1,190,045
|
|
1,071,257
|
|
2,538,923
|
|
2,389,561
|
Gross
margin
|
|
47 %
|
|
42 %
|
|
47 %
|
|
46 %
|
Reconciliation of Total Operating Expenses to Adjusted
Operating Expenses [2]
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Total
expenses
|
|
3,421,786
|
|
3,528,542
|
|
6,398,357
|
|
7,123,334
|
Add
(Subtract)
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
(131,290)
|
|
(337,123)
|
|
(263,798)
|
|
(886,943)
|
Depreciation of
property and equipment
|
|
(13,403)
|
|
(16,803)
|
|
(27,783)
|
|
(34,775)
|
Depreciation of
right-of-use asset
|
|
(46,192)
|
|
(46,192)
|
|
(92,387)
|
|
(92,387)
|
Interest on lease
obligations
|
|
(20,283)
|
|
(29,046)
|
|
(43,262)
|
|
(60,314)
|
Interest and accretion
expense
|
|
(100,431)
|
|
-
|
|
(197,721)
|
|
-
|
Finance
charges
|
|
(40,437)
|
|
(15,812)
|
|
(77,547)
|
|
(20,948)
|
Amortization of
deferred finance charges
|
|
(64,970)
|
|
(46,120)
|
|
(123,770)
|
|
(85,036)
|
Foreign exchange
(gain)/loss
|
|
38,497
|
|
(39,142)
|
|
23,464
|
|
(66,938)
|
Change in value of
derivative liability
|
|
-
|
|
2,989
|
|
-
|
|
47,508
|
Capitalized borrowing
costs
|
|
38,000
|
|
-
|
|
67,000
|
|
-
|
Adjusted operating
expenses
|
|
3,081,277
|
|
3,001,293
|
|
5,662,553
|
|
5,923,501
|
Adjusted Operating Loss
[3]
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Gross profit
|
|
1,190,045
|
|
1,071,257
|
|
2,538,923
|
|
2,389,561
|
Adjusted operating
expenses
|
|
(3,081,277)
|
|
(3,001,293)
|
|
(5,662,553)
|
|
(5,923,501)
|
|
|
(1,891,232)
|
|
(1,930,036)
|
|
(3,123,630)
|
|
(3,533,940)
|
NEWTOPIA INC.
Condensed Interim Statements of
Financial Position (Unaudited)
As at June 30, 2022 and December 31, 2021
(Expressed in Canadian Dollars)
|
|
|
June 30,
2022
|
December
31, 2021
(Audited)
|
|
|
|
$
|
$
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash
|
|
|
661,630
|
811,584
|
Trade and other
receivables
|
|
|
886,815
|
1,381,977
|
Contract
asset
|
|
|
143,000
|
‑
|
Prepaid expenses and
deposits
|
|
|
353,015
|
330,992
|
Inventories
|
|
|
276,142
|
131,000
|
Deferred
costs
|
|
|
85,033
|
162,872
|
|
|
|
2,405,635
|
2,818,425
|
|
|
|
|
|
Property and
equipment
|
|
|
42,193
|
66,147
|
Right‑of‑use
asset
|
|
|
277,151
|
369,538
|
Intangible
asset
|
|
|
3,217,747
|
2,251,852
|
|
|
|
5,942,726
|
5,505,962
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Trade and other
payables
|
|
|
2,449,010
|
1,965,420
|
Credit
facility
|
|
|
2,890,126
|
2,331,314
|
Lease
obligations
|
|
|
332,540
|
300,555
|
Deferred
revenue
|
|
|
51,484
|
59,549
|
Contract
liability
|
|
|
‑
|
144,034
|
|
|
|
5,723,160
|
4,800,872
|
Non‑current lease
obligations
|
|
|
190,336
|
367,001
|
Debentures
|
|
|
2,278,324
|
2,182,403
|
|
|
|
8,191,820
|
7,350,276
|
Equity/Deficit
|
|
|
|
|
Common
shares
|
|
|
47,718,385
|
45,177,120
|
Contributed
surplus
|
|
|
12,565,589
|
11,652,200
|
Deficit
|
|
|
(62,533,068)
|
(58,673,634)
|
|
|
|
(2,249,094)
|
(1,844,314)
|
|
|
|
5,942,726
|
5,505,962
|
NEWTOPIA INC.
Condensed Interim Statements of
Loss and Comprehensive Loss (Unaudited)
Three and Six Months Ended June 30,
2022 and 2021
(Expressed in Canadian Dollars)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
$
|
$
|
|
$
|
$
|
Revenue
|
|
|
2,531,986
|
2,529,021
|
|
5,398,700
|
5,148,192
|
Cost of
revenue
|
|
|
1,341,941
|
1,457,764
|
|
2,859,777
|
2,758,631
|
Gross profit
|
|
|
1,190,045
|
1,071,257
|
|
2,538,923
|
2,389,561
|
Operating expenses
|
|
|
|
|
|
|
|
Technology and
development
|
|
|
844,105
|
982,214
|
|
1,650,400
|
1,712,221
|
Sales and
marketing
|
|
|
868,934
|
923,051
|
|
1,513,145
|
1,899,533
|
General and
administrative
|
|
|
1,368,238
|
1,096,028
|
|
2,499,008
|
2,311,747
|
Share‑based
compensation
|
|
|
131,290
|
337,123
|
|
263,798
|
886,943
|
|
|
|
3,212,567
|
3,338,416
|
|
5,926,351
|
6,810,444
|
Other expenses
(income)
|
|
|
|
|
|
|
|
Depreciation of
property and equipment
|
|
|
13,403
|
16,803
|
|
27,783
|
34,775
|
Depreciation of
right‑of‑use asset
|
|
|
46,192
|
46,192
|
|
92,387
|
92,387
|
Interest and accretion
expense
|
|
|
100,431
|
‑
|
|
197,721
|
‑
|
Interest on lease
obligations
|
|
|
20,283
|
29,046
|
|
43,262
|
60,314
|
Finance
charges
|
|
|
40,437
|
15,812
|
|
77,547
|
20,948
|
Amortization of
deferred finance charges
|
|
|
64,970
|
46,120
|
|
123,770
|
85,036
|
Foreign exchange
(gain)/loss
|
|
|
(38,497)
|
39,142
|
|
(23,464)
|
66,938
|
Capitalized borrowing
costs
|
|
|
(38,000)
|
‑
|
|
(67,000)
|
‑
|
Change in value of
derivative liability
|
|
|
‑
|
(2,989)
|
|
‑
|
(47,508)
|
|
|
|
209,219
|
190,126
|
|
472,006
|
312,890
|
Net loss and
comprehensive loss
|
|
|
(2,231,741)
|
(2,457,285)
|
|
(3,859,434)
|
(4,733,773)
|
NEWTOPIA INC.
Condensed Interim Statements of Changes
in Equity (Deficit) (Unaudited)
Six Months Ended June 30, 2022 and
2021
(Expressed in Canadian Dollars)
|
Common
Shares
|
Shares
To
Be
Issued
|
Contributed
Surplus
|
Deficit
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
Balance, December
31, 2021
|
45,177,120
|
‑
|
11,652,200
|
(58,673,634)
|
(1,844,314)
|
Net loss and
comprehensive loss
|
‑
|
‑
|
‑
|
(3,859,434)
|
(3,859,434)
|
Share‑based
compensation
|
‑
|
‑
|
263,798
|
‑
|
263,798
|
Private Placement
Offering of Units, net of issuance costs
|
2,624,495
|
|
511,839
|
|
3,136,334
|
Compensation options
issued to brokers
|
(83,230)
|
‑
|
83,230
|
‑
|
‑
|
Settlement of related
party payable
|
‑
|
‑
|
54,522
|
‑
|
54,522
|
Balance, June 30,
2022
|
47,718,385
|
‑
|
12,565,589
|
(62,533,068)
|
(2,249,094)
|
Balance, December
31, 2020
|
44,648,952
|
528,168
|
10,046,621
|
(51,023,880)
|
4,199,861
|
Net loss and
comprehensive loss
|
‑
|
‑
|
‑
|
(4,733,773)
|
(4,733,773)
|
Share‑based
compensation
|
‑
|
‑
|
886,943
|
‑
|
886,943
|
Issuance of
shares
|
528,168
|
(528,168)
|
‑
|
‑
|
‑
|
Settlement of related
party payable
|
‑
|
‑
|
159,875
|
‑
|
159,875
|
Balance, June 30,
2021
|
45,177,120
|
‑
|
11,093,439
|
(55,757,653)
|
512,906
|
|
|
|
|
|
|
|
|
|
|
NEWTOPIA INC.
Condensed Interim Statements of Cash
Flows (Unaudited)
Six Months Ended June 30, 2022 and
2021
(Expressed in Canadian Dollars)
|
|
|
Six Months Ended
June 30,
|
|
|
|
2022
|
2021
|
|
|
|
$
|
$
|
Cash flows used in
operating activities:
|
|
|
|
|
Net loss and
comprehensive loss
|
|
|
(3,859,434)
|
(4,733,773)
|
Items not involving
cash:
|
|
|
|
|
Depreciation of
property and equipment
|
|
|
27,783
|
34,775
|
Depreciation of
right‑of‑use asset
|
|
|
92,387
|
92,387
|
Amortization of
deferred finance charges
|
|
|
123,770
|
85,036
|
Capitalized borrowing
costs
|
|
|
(67,000)
|
‑
|
Share‑based
compensation
|
|
|
263,798
|
886,943
|
Accretion
expense
|
|
|
95,921
|
‑
|
Interest on lease
obligations
|
|
|
43,262
|
60,314
|
Change in value of
derivative
liability
|
|
|
‑
|
(47,508)
|
|
|
|
(3,279,513)
|
(3,621,826)
|
Net change in non‑cash
working capital
|
|
|
|
|
Trade and other
receivables
|
|
|
495,162
|
(258,776)
|
Contract
asset/liability
|
|
|
(287,034)
|
349,000
|
Inventories
|
|
|
(145,142)
|
30,177
|
Prepaid expenses and
deposits
|
|
|
(22,023)
|
98,947
|
Trade and other
payables
|
|
|
538,112
|
(601,890)
|
Deferred
revenue
|
|
|
(8,065)
|
‑
|
|
|
|
(2,708,503)
|
(4,004,368)
|
Cash flows used in
investing activities
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(3,829)
|
‑
|
Intangible asset
development costs
|
|
|
(898,895)
|
(912,152)
|
|
|
|
(902,724)
|
(912,152)
|
Cash flows from
(used in) financing activities:
|
|
|
|
|
Credit facility
withdrawals
|
|
|
5,633,116
|
1,279,189
|
Credit facility
repayments
|
|
|
(5,074,304)
|
(207,914)
|
Credit facility
financing
costs
|
|
|
(45,931)
|
(10,990)
|
Repayment of lease
obligations
|
|
|
(187,942)
|
(179,590)
|
Proceeds from private
placement issuance of Units, net of issuance costs
|
|
|
3,136,334
|
‑
|
|
|
|
3,461,273
|
880,695
|
Decrease in
cash
|
|
|
(149,954)
|
(4,035,825)
|
Cash, beginning of
period
|
|
|
811,584
|
4,673,683
|
Cash, end of
period
|
|
|
661,630
|
637,858
|
Supplemental
disclosure of cash flow information
|
|
|
Non‑cash settlement of
related party
payable
|
|
54,522
|
159,875
|
Interest
paid
|
|
217,072
|
60,314
|
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SOURCE Newtopia Inc.