ARCpoint Inc. (TSXV: ARC) (the “
Company” or
“
ARCpoint”) will host a conference call at 4:45pm
Eastern time, Wednesday, September 4, 2024 to review the Company’s
Q2 financial results for the period ending June 30, 2024. The
Company will also discuss new opportunities as a result of the
transaction with Any Lab Tests Now and creation of CRESSO Brands,
LLC., as announced August 20, 2024.
The dial-in number for the conference call is as follows:
Canada / USA Toll Free
1-844-763-8274International Toll +1-647-484-8814
Callers should dial in 5 – 10 min prior to the scheduled start
time and ask to join the ARCpoint call:
ARCpoint President and CEO, John Constantine
commented “Over the past year and a half, we have made tremendous
progress in broadening our business and expanding our distribution
footprint with the deployment of our MyARCpointLabs technology
platform. This has transformed our business and outlook, as
exemplified by the recently announced transaction with Any Lab Test
Now and the creation of CRESSO Brands.”
On August 20, 2024, the Company announced that
it had entered into a transaction with Any Lab Test Now (“ALTN”) to
bring together the franchise operations of both ALTN and ARCpoint
into a new joint venture company, CRESSO Brands, LLC. (“CRESSO”).
By combining the two franchise operations, the companies created
the largest franchise network of its kind in the United States.
Any Lab Test Now, based in Atlanta, Georgia, was
founded in 1992 and at the time of the August 20, 2024 transaction,
had more than 235 U.S. franchise locations providing direct access
to clinical, DNA, and drug and alcohol lab testing services, as
well as phlebotomy and other specimen collection services, through
its retail storefront business model.
Mr. Constantine concluded, “As our relationship
with Any Lab Test Now and CRESSO Brands evolves, we look forward to
reporting how we are able to leverage MyARCPointLabs to create a
healthcare ecosystem that will drive more business to the CRESSO
franchisees and expand our distribution network even further
through new partnerships”.
On July 10, 2023 the Company reported that it
had launched its new consumer e-commerce platform, MyARCpointLabs.
(“MAPL”) MAPL was developed to make it easier for the Company’s
franchisees to attract and better serve individual healthcare
consumers and for a greater number of consumers to purchase the
Company’s products and services more easily. By year end of 2023,
every ARCpoint franchised location had MAPL integrated into their
location and interfaced with their local website.
MAPL provides interface support with various
other healthcare organizations and acts as the operations tool
within the franchise system. The technology virtualizes the
Company’s consumer business model allowing for the expansion of the
Company’s footprint to other entities beyond its traditional
franchisee facilities and enabling franchisees to generate revenue
prior to having a brick and mortar facility. MAPL also allows for
the linking of diagnostic testing services and information with
virtual physicians, telehealth organizations and other healthcare
system constituents, such as independent pharmacies.
On November 21, 2023, the Company further
announced that it had implemented a new application programming
interface (“API”) with MD Care Group LLC, (“MD Care Group”) a
telehealth company, which provides consumers with cost-effective,
virtual access to health care through a national network of
thousands of board-certified physicians and health care providers.
This allows ARCpoint customers to connect with MD Care Group's
doctors, through MAPL, to discuss results from ARCpoint diagnostic
tests or other medical concerns they may have. This opens the door
for future opportunities for the creation of virtual primary care
and urgent care centers anywhere CRESSO Brand services can be
accessed.
All results below are reported under
International Financial Reporting Standards and in US
dollars.
As at June 30, 2024, the Company had total cash
on hand of approximately US$0.2 million, comprised of US$0.19
million in unrestricted cash and cash equivalents and US$3,668 in
Brand Fund restricted cash. Use of Brand Fund restricted cash is at
the Company’s discretion and is used to increase sales and the
brand presence of the Company’s entities and franchisees.
Summary of 2024 Q2 Financial
Results
- The Company notes that as of Q2,
2024, it has substantially reduced costs on a year over year
(“YoY”) basis, as demonstrated in the reductions YoY reductions in
net loss, negative operating cash flow, negative EBITDA and
negative adjusted EBITDA of approximately 42%, 68%, 41% and 45%,
respectively and as summarized below.
- Total revenues for the three months
ended June 30, 2024, were $1.6 million compared to $1.5 million for
the three months ended June 30, 2023. The increase in revenue for
Q2 2024 versus Q2 2023 was primarily due to increased royalty and
franchising revenues.
- Net loss for the three months ended
June 30, 2024, was $1.4 million compared to a net loss of $2.4
million for the three months ended June 30, 2023. The decrease in
loss for Q1 2024 versus Q1 2023 was primarily due to a decrease in
cost of revenue of $0.33 million, a decrease in salary and wages of
$0.11 million, a decrease in software development expenses of $0.17
million and a decrease in sales and marketing costs of $0.12
million.
- Operating cash flow for the three
months ended June 30, 2024 was negative $0.6 million compared to
negative $1.9 million for the three months ended June 30,
2023.
- EBITDA for the three months ended
June 30, 2024, was negative $1.1 million compared to negative $2.0
million for the three months ended June 30, 2023.
- Adjusted EBITDA for the three
months ended June 30, 2024, was negative $1.0 million compared to
negative $1.7 million for the three months ended June 30,
2023.
Summary of 2024 Year to Date Financial
Results
- Total revenues for the six months
ended June 30, 2024, were $3.3 million compared to $3.2 million for
the six months ended June 30, 2023. The increase in revenue for Q1
and Q2 2024 versus Q1 and Q2 2023 was primarily due to an increase
in support service revenues provided to franchisees and lab
services.
- Net loss for the six months ended
June 30, 2024, was $2.9 million compared to a net loss of $4.5
million for the six months ended June 30, 2023. The decrease in
loss for the six months ended June 30, 2024 versus the comparative
period was primarily due to a decrease in cost of revenue of $0.35
million, a decrease in salary and wages of $0.89 million, a
decrease in software development expenses of $0.17 million and a
decrease in sales and marketing costs of $0.16 million.
- Operating cash flow for the six
months ended June 30, 2024 was negative $1.9 million compared to
negative $3.1 million for the six months ended June 30, 2023.
- EBITDA for the six months ended
June 30, 2024, was negative $2.2 million compared to negative $3.8
million for the six months ended June 30, 2023.
- Adjusted EBITDA for the six months
ended June 30, 2024, was negative $2.0 million compared to negative
$2.8 million for the six months ended June 30, 2023.
DEFINITION AND RECONCILIATION OF
NON-IFRS FINANCIAL MEASURESThe Company reports certain
non-IFRS measures that are used to evaluate the performance of its
businesses and the performance of their respective segments.
Securities regulators require such measures to be clearly defined
and reconciled with their most comparable IFRS measures.
As non-IFRS measures generally do not have a
standardized meaning, they may not be comparable to similar
measures presented by other issuers. Rather, these are provided as
additional information to complement those IFRS measures by
providing further understanding of the results of the operations of
the Company from management’s perspective. Accordingly, these
measures should not be considered in isolation, nor as a substitute
for analysis of the Company’s financial information reported under
IFRS. Non-IFRS measures used to analyze the performance of the
Company’s businesses include “EBITDA” and “Adjusted EBITDA”.
The Company believes that these non-IFRS
financial measures provide meaningful supplemental information
regarding the Company’s performances and may be useful to investors
because they allow for greater transparency with respect to key
metrics used by management in its financial and operational
decision-making. These financial measures are intended to provide
investors with supplemental measures of the Company’s operating
performances and thus highlight trends in the Company’s core
businesses that may not otherwise be apparent when solely relying
on the IFRS measures. These non-IFRS measures are calculated as
follows:
“EBITDA” is comprised as income (loss) less
interest, income tax and depreciation and amortization. Management
believes that EBITDA is a useful indicator for investors, and is
used by management, in evaluating the operating performance of the
Company. See “Consolidated EBITDA and Adjusted EBITDA
Reconciliation” appended to this press release for a quantitative
reconciliation of EBITDA to the most directly comparable financial
measure.
“Adjusted EBITDA” is comprised as income (loss)
less interest, income tax, depreciation, amortization, share-based
compensation, Brand Fund revenue and expense timing difference,
change in fair value of warrant liability, foreign exchange gain
(loss) and other income / expenses not attributable to the
operations of the Company. Management believes that EBITDA is a
useful indicator for investors, and is used by management, in
evaluating the operating performance of the Company. See
“Consolidated EBITDA and Adjusted EBITDA Reconciliation” appended
to this press release for a quantitative reconciliation of Adjusted
EBITDA to the most directly comparable financial measure.
A reconciliation of how the Company calculates
EBITDA and Adjusted EBITDA is provide in the table appended to this
press release.
For more information, please see the
unaudited interim Financial Statements (the “Financial Statements”)
and the interim Management Discussion & Analysis of the Company
(MD&A”) under the Company’s profile at
www.sedarplus.ca.
About ARCpoint Inc. ARCpoint is
a leading US-based franchise system that leverages technology along
with brick-and-mortar locations to give businesses and individual
consumers access to convenient, cost-effective healthcare
information and solutions with transparent, up-front pricing, so
that they can be proactive and preventative with their health and
well-being. ARCpoint is based in Greenville, South Carolina, USA.
ARCpoint Franchise Group LLC, formed under the laws of the state of
South Carolina in February 2005, is the franchisor of ARCpoint Labs
and supports over 130 independently owned locations. ARCpoint sells
franchises to individuals throughout the United States and provides
support in the form of marketing, technology and training to new
franchisees. ARCpoint Corporate Labs LLC develops corporate-owned
labs committed to providing accurate, cost-effective solutions for
customers, businesses and physicians. AFG Services LLC serves as
the innovation center of the ARCpoint group of companies as it
builds a proprietary technology platform and a physician network to
equip all ARCpoint labs with best-in-class tools and solutions to
better serve their customers. The platform also digitalizes and
streamlines administrative functions such as materials purchasing,
compliance, billing and physician services for ARCpoint franchise
labs and other clients.
For more information, please contact:
ARCpoint Inc.Jason Tong, Chief Financial
OfficerPhone : (604) 889-7827E-mail : invest@arcpointlabs.com
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION :
Forward-Looking Information – this news
release contains “forward-looking information” within the meaning
of applicable Canadian securities laws which are based on
ARCpoint’s current internal expectations, estimates, projections,
assumptions and beliefs and views of future events. Forward-looking
information can be identified by the use of forward-looking
terminology such as “expect”, “likely”, “may”, “will”, “should”,
“intend”, “anticipate”, “potential”, “proposed”, “estimate” and
other similar words, including negative and grammatical variations
thereof, or statements that certain events or conditions “may”,
“would” or “will” happen, or by discussions of
strategy.
The forward-looking information in this
news release is based upon the expectations, estimates,
projections, assumptions and views of future events which
management believes to be reasonable in the circumstances.
Forward-looking information includes estimates, plans,
expectations, opinions, forecasts, projections, targets, guidance
or other statements that are not statements of fact.
Froward-looking information necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse industry events; loss of markets;
future legislative and regulatory developments; inability to access
sufficient capital from internal and external sources, and/or
inability to access sufficient capital on favourable terms; the
ability of the Company to implement its business strategies, the
COVID-19 pandemic; competition and other risks.
Any forward-looking information speaks
only as of the date on which it is made, and except as required by
law, the Company does not undertake any obligation to update or
revise any forward-looking information, whether as a result of new
information, future events or otherwise. New factors emerge from
time to time, and it is not possible for the Company to predict all
such factors. When considering the forward-looking information
contained herein, readers should keep in mind the risk factors and
other cautionary statements in the Company’s disclosure documents
filed with the applicable Canadian securities regulatory
authorities on SEDAR at www.sedar.com. The risk factors and other
factors noted in the disclosure documents could cause actual events
or results to differ materially from those described in any
forward-looking information.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the Exchange) accepts responsibility for the adequacy
or accuracy of this Press release.
ARCpoint
Inc.Consolidated EBITDA and Adjusted EBITDA
Reconciliation(Expressed in United States
Dollars)
(a) Finance expense comprised
of interest on bank loans, notes payable and lease liabilities (see
Financial Statements).(b) Share-based compensation
expense comprised of non-cash compensation (see Financial
Statements).(c) Other income comprised of
government assistance benefit received pertaining to the COVID-19
pandemic.(d) The Group operates a Brand Fund
established to collect and administer funds contributed for use in
advertising and promotional programs designed to increase sales and
enhance the reputation of the Group and its franchisees. The Group
reports contributions and expenditures on a gross basis on the
Group’s statement of profit and loss. Brand Fund contributions are
recognized as revenue when invoiced, as the Group has full
discretion on how and when the Brand Fund revenues are spent. Brand
Fund revenue received may not equal advertising expenditures for
the period due to timing of promotions and this difference is
recognized to earnings. This adjustment is made to normalize for
the timing difference of the Brand Fund revenues and Brand Fund
expenditures.
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