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 fourth quarter and year ended December 31, 2020.
All financial information is presented in Canadian dollars unless
otherwise indicated.
Dr. Essam Hamza, CEO of CloudMD
commented, “I am very pleased with our fourth quarter and full year
2020 financial results which are consistent with our internal and
consensus estimates. The fourth quarter was a foundation-building
quarter for CloudMD with the completion of five strategic
acquisitions and the launch of our Enterprise Health Solutions
Division. I am proud that we have seen healthy organic growth
across all verticals of our business despite the long closures due
to COVID-19. As we see communities starting to re-open, in addition
to the majority of the acquisitions closing in first quarter 2021
and the roll out of our fully connected healthcare ecosystem, we
expect to see significant revenue growth in the upcoming quarters.”
Dr. Hamza continued, “We have a current revenue run rate of over
$120 million, which does not account for any of the organic growth
and cross selling synergies we are anticipating this year. In
addition, we are also expecting to be Adjusted EBITDA-positive in
the latter half of 2021 with healthy gross margins. We are
well-positioned as leaders in the digital healthcare space and I am
very excited to see the continued growth of our business in
2021.”
Fourth Quarter 2020 Financial
Highlights
- Q4 2020 revenue was $5.8 million,
compared to $2.4 million in Q4 2019. The increase is primarily
attributable to acquisition growth with 5 acquisitions completed in
the quarter. Excluding the impact of business acquisitions, the
Company achieved organic growth across all of its businesses, aided
by: (1) market adoption of telehealth services; (2) new product
features and enhancements to the Company’s digital platforms; and
(3) positive impact from marketing campaigns.
- Q4 2020 gross margin was 40%,
compared to 44% in Q4 2019. In the current year, the Company
reclassified certain expenses within its income statement to cost
of sales, which resulted in an overall decrease in gross margin as
compared to Q4 2019. Excluding the impact of the reclassification,
gross margin for the underlying businesses remained healthy and
stable.
- Net comprehensive loss attributable
to equity holders of the Company in Q4 2020 was $5.2 million or
$0.05 per share, compared to $1.5 million or $0.02 per share in Q4
2019. In the quarter, the Company completed numerous strategic
initiatives, including the completion of 5 acquisitions in the
quarter and raising $37.3 million in a bought deal short form
prospectus offering, which it expects to result in strong future
growth of the Company.
- Adjusted EBITDA was a loss of $1.5
million for Q4 2020, compared to a loss of $0.6 million in Q4 2019.
The Adjusted EBITDA calculation adjusts for share-based
compensation, costs related to financing, acquisitions and
litigation including associated loss provisions, change in fair
value of contingent consideration and loss from discontinued
operations. 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 as at
December 31, 2020 were $59.7 million. Subsequent to December 31,
2020, the Company raised $58.2 million in a bought deal short form
prospectus offering in March 2021, and the Company’s current cash
balance is approximately $100 million.
Fourth Quarter Operational
Highlights
- On October 8, 2020, the Company
launched CloudMD on-Demand, an online, virtual care service for
companies, insurers and pharmacies to offer their customers easier,
more convenient access to virtual telemedicine.
- On October 15, 2020, the Company
announced that it closed the acquisition of Snapclarity Inc., an on
demand, digital platform that provides an assessment for mental
health disorders.
- On October 19, 2020, the Company
announced that it appointed Mena Beshay to Global Head, Corporate
Development, and Daniel Lee as Chief Financial Officer.
- On October 26, 2020, the Company
announced that it closed the acquisition of an 87.5% interest in
Benchmark Systems Inc.
- On October 26, 2020, the Company
announced that it closed the acquisition of a US-based medical
clinic as part of a comprehensive strategy to provide end to end
healthcare services for chronic care patients.
- On November 9, 2020, the Company
announced that it closed a $37.3 million oversubscribed, bought
deal financing.
- On November 12, 2020, the Company
launched its new EHS division, which provides one connected
healthcare platform for corporations, insurers and advisors to
address the comprehensive health and wellness of their employees
and their families.
- On November 18, 2020, the Company
announced that it closed the acquisition of iMD Health Group Corp.,
a novel award winning, education platform.
- On November 19, 2020, the Company
announced that it closed the acquisition of Re:Function Health
Group Inc., a profitable rehabilitation clinic network of 8 clinics
and 37 specialists and allied health professionals across British
Columbia.
- On December 7, 2020, the Company
announced that it is expanding its already established relationship
with Save-On-Foods, Western Canada’s largest grocery chain.
Key Highlights Subsequent to the Quarter
- During January 2021, the Company
closed the previously announced acquisitions of HumanaCare, Medical
Confidence and Canadian Medical Directory.
- On January 26, 2021, the Company
announced that it entered into a binding agreement to acquire RXI
Group of companies, an established one-stop patient support
logistics company and leading customer relationship management
technology provider.
- On February 6, 2021 the Company
announced that it closed the acquisition of West Mississauga
Medical Clinic.
- On February 16, 2021, the Company
announced that it entered into a binding agreement 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 previously announced bought deal financing, including the full
over-allotment option for a total of $58 million.
- On March 18, 2021, the Company
provided an update on the rapid growth of its EHS division,
realizing over $5 million of organic growth since the beginning of
2021.
- On March 23, 2021, the Company
announced that it closed the acquisition of IDYA4; and subsequently
on April 6, 2021, the Company announced that it closed the
acquisition of Aspiria Corp.
- On April 8, 2021, the Company
announced that it entered into a binding agreement to acquire
Oncidium, creating one of the largest providers to the employer
market in Canada.
Outlook
The Company is focused on revolutionizing the
healthcare industry by leveraging technology to digitalize its
delivery to provide better access to care, which leads to better
health outcomes. CloudMD is building one, connected healthcare
ecosystem that addresses all points of a patient’s care from one
platform. CloudMD has already started the integration of its
health-tech solutions, and plans to launch a fully automated,
connected platform later in 2021. CloudMD’s organic growth will be
largely driven by its hybrid clinic network, digital services and
EHS division. Through its recent acquisitions, there are
opportunities for cross-functional synergies and cross selling that
will drive further organic growth. CloudMD expects to see continued
organic growth across all divisions of its business largely due to
an increase in virtual healthcare visits, an increase in digital
services and cross selling synergies in the EHS division. The
Company has already seen over $5 million in organic revenue growth
since January 2021 and has actualized cost synergies of over
$500,000. Furthermore, the Company is on the road to profitability
and expects to be Adjusted EBITDA-positive starting in Q3 2021.
CloudMD’s current revenue run rate is over $120
million which does not take into consideration any expected organic
growth or cross selling synergies. The Company has a strong cash
position with approximately $100 million, and approximately $35
million left after the closing of the three outstanding
acquisitions. With a strong balance sheet, CloudMD has an
opportunity to look at debt facility options to conserve cash and
decrease dilution.
CloudMD will continue to focus on delivering
meaningful shareholder value by executing on its growth strategy
through accretive, synergistic acquisitions, achieving meaningful
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. CloudMD is positioned as
a leader in digital healthcare and a leading provider to the
employer healthcare market in Canada. The Company will continue
expanding its footprint across North America and strategically in
Europe. CloudMD anticipates reporting its Q1 2021 financial
statements at the end of May 2021.
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 |
|
|
Year ended |
|
|
December 31, |
|
|
December 31, |
|
|
2020 |
|
|
2019 |
|
(%) |
|
2020 |
|
|
2019 |
|
(%) |
Revenue |
$ |
5,810 |
|
$ |
2,443 |
|
138 |
% |
$ |
15,016 |
|
$ |
6,770 |
|
122 |
% |
Cost of sales |
|
(3,464 |
) |
|
(1,380 |
) |
151 |
% |
|
(9,256 |
) |
|
(3,731 |
) |
148 |
% |
Gross profit (1) |
|
2,346 |
|
|
1,063 |
|
121 |
% |
|
5,760 |
|
|
3,039 |
|
90 |
% |
Gross margin |
|
40.4 |
% |
|
43.5 |
% |
|
|
38.4 |
% |
|
44.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
8,336 |
|
|
2,443 |
|
241 |
% |
|
18,471 |
|
|
7,417 |
|
149 |
% |
Loss before other items |
|
(5,990 |
) |
|
(1,380 |
) |
334 |
% |
|
(12,711 |
) |
|
(4,378 |
) |
190 |
% |
Other items, taxes, non-controlling interest |
|
786 |
|
|
(94 |
) |
-936 |
% |
|
372 |
|
|
(340 |
) |
-209 |
% |
Net comprehensive loss attributable to equity holders of the
Company |
|
(5,224 |
) |
|
(1,474 |
) |
254 |
% |
|
(12,339 |
) |
|
(4,718 |
) |
162 |
% |
Loss per share, basic and diluted |
$ |
(0.04 |
) |
$ |
(0.02 |
) |
150 |
% |
$ |
(0.11 |
) |
$ |
(0.07 |
) |
57 |
% |
(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 |
|
|
Year ended |
|
|
December 31, |
|
|
December 31, |
|
|
2020 |
|
|
2019 |
|
(%) |
|
2020 |
|
|
2019 |
|
(%) |
Net comprehensive loss attributable to equity holders of
the Company |
$ |
(5,224 |
) |
$ |
(1,474 |
) |
254 |
% |
$ |
(12,339 |
) |
$ |
(4,718 |
) |
162 |
% |
Add: |
|
|
|
|
|
|
|
|
|
|
Interest and accretion expense |
|
66 |
|
|
57 |
|
16 |
% |
|
256 |
|
|
209 |
|
22 |
% |
Income taxes |
|
104 |
|
|
- |
|
100 |
% |
|
123 |
|
|
- |
|
100 |
% |
Deferred tax recovery |
|
(1,628 |
) |
|
- |
|
-100 |
% |
|
(1,628 |
) |
|
- |
|
100 |
% |
Depreciation and amortization |
|
701 |
|
|
297 |
|
136 |
% |
|
1,374 |
|
|
546 |
|
151 |
% |
EBITDA(1) for the
period |
|
(5,981 |
) |
|
(1,120 |
) |
434 |
% |
|
(12,214 |
) |
|
(3,963 |
) |
208 |
% |
Share-based compensation |
|
2,134 |
|
|
530 |
|
303 |
% |
|
3,642 |
|
|
1,756 |
|
107 |
% |
Financing-related costs |
|
573 |
|
|
97 |
|
491 |
% |
|
1,078 |
|
|
97 |
|
1011 |
% |
Acquisition and other related costs, net |
|
783 |
|
|
32 |
|
2347 |
% |
|
1,092 |
|
|
140 |
|
680 |
% |
Litigation costs and loss provision |
|
1,115 |
|
|
- |
|
100 |
% |
|
1,582 |
|
|
21 |
|
7433 |
% |
Change in fair value of contingent consideration |
|
(140 |
) |
|
- |
|
-100 |
% |
|
(140 |
) |
|
- |
|
-100 |
% |
Loss from discontinued operations |
|
- |
|
|
(140 |
) |
-100 |
% |
|
- |
|
|
(163 |
) |
-100 |
% |
Adjusted EBITDA(1) for
the period |
$ |
(1,516 |
) |
$ |
(601 |
) |
152 |
% |
$ |
(4,960 |
) |
$ |
(2,112 |
) |
135 |
% |
(1) EBITDA and Adjusted EBITDA
are non-GAAP measures as described in the Non-GAAP Financial
Measures section of this News Release.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
related notes, and management’s discussion and analysis for the
years ended December 31, 2020 and 2019, 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 and
other related 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 Profit 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 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. 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. 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.
1 Gross margin is a non-GAAP measure as described in the
Non-GAAP Financial Measures section of this News Release.2
Enterprise Health Solutions Division plus Re:Function Health Group,
a rehabilitation clinic network for enterprise clients, insurers
and corporations.3 Adjusted EBITDA is a non-GAAP measure as
described in the Non-GAAP Financial Measures section of this News
Release.
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