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 third quarter ended September 30, 2021. All
financial information is presented in Canadian dollars unless
otherwise indicated.
“This was a milestone quarter for CloudMD as
it’s the first quarter we recognized full revenue contributions
from all the recently closed acquisitions and clearly demonstrated
that our whole-person, patient-centric approach to healthcare is
working. We’ve onboarded 560,000 individuals onto our Comprehensive
Integrated Health Platform and are providing valuable data-driven
outcomes, which is proven by our successful program with Sun Life
where 89% of those experiencing depression and 91% of those
experiencing anxiety noticed major improvements. We’ve also
achieved positive client outcomes across engagement, attachment
rate, and net promoter scores,” said Dr.
Essam Hamza, CEO of CloudMD. “I am extremely proud of the
Company’s progress and the team’s ability to execute on our growth
strategy across all divisions, which is evident by new clients
wins, rapid growth and improved profitability. Our unique,
proprietary healthcare offering is an industry first, and I’m
confident that we will be able to continue our North American and
global expansion.”
Third Quarter 2021 Financial Highlights
- Q3 2021 revenue was $39.2 million,
compared to $15.7 million in Q2 2021 and $3.4 million in Q3 2020.
The increase is primarily attributable to acquisition growth with 4
acquisitions completed in the preceding quarter, and 14
acquisitions completed in the last 12 months.
- Q3 2021 gross margin1 was 34.0%,
compared to 35.5% in Q2 2021 and 37.5% in Q3 2020. The decrease is
due to revenue mix where the Company’s patient support programs and
online eyewear platform, currently lower-margin businesses,
represented 32% of revenues for the current quarter. The Company
expects its gross margin to increase due to ongoing efforts to
integrate its acquisitions and increase its operational
efficiency.
- Net comprehensive loss attributable
to equity holders of the Company in Q3 2021 was $4.2 million or
$0.02 per share, compared to $6.2 million or $0.03 per share in Q2
2021 and $2.7 million or $0.02 per share in Q3 2020.
- Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization (“Adjusted
EBITDA1”) was $0.8
million in Q3 2021, compared to a loss of $0.7 million in Q2 2021
and a loss of $1.3 million in Q3 2020.
- Cash and cash equivalents were
$53.7 million as at September 30, 2021, compared to $60.9 million
at June 30, 2021 and $59.7 million at December 31, 2020. The
decrease for the period was primarily attributable to payments
related to the acquisitions completed near the end of June 2021,
which will not reoccur in the future.
Third Quarter & Subsequent Corporate
Highlights
- On September 14, 2021, the Company
announced a partnership with 19 new post-secondary institutions
across Canada to provide its Aspiria Student Assistance Program and
multi-layered mental health resources to over 167,000 additional
students.
- On September 28, 2021, the Company
announced the appointment of KPMG LLP as the Company’s independent
auditors to hold office until the end of the next annual general
meeting of shareholders.
- On October 5, 2021, the Company
announced the appointment of Angel Paravicini as Senior Vice
President of Business Development and Customer Success to drive
expansion in the United States and globally.
- On October 27, 2021, the Company
announced that through one of its subsidiaries, it has received
U.S. Patent Approval for its Real Time Intervention Platform
(“RTIP”) which is the technology backbone for CloudMD’s
comprehensive healthcare platform that addresses all points of a
patients care from one, connected platform.
- On November 9, 2021, the Company
announced the appointment of Duncan Hannay and Karen Adams to the
Board of Directors of CloudMD.
- On November 15, 2021, the Company
announced it had entered into a definitive agreement (the
“Arrangement Agreement”) with MindBeacon Holdings
Inc. (“MindBeacon”) pursuant to which CloudMD
agreed to acquire all of MindBeacon’s issued and outstanding common
shares for cash and shares of the Company. Under the terms of the
Arrangement Agreement, each common share of MindBeacon will be
exchanged for $1.22 cash and 2.285 common shares of CloudMD.
Closing of the transaction is subject to a number of customary
closing conditions, including approval by at least two-thirds of
the votes cast at a special meeting of MindBeacon’s shareholders,
as well as court and regulatory approval. The MindBeacon
shareholder meeting is expected to be held on or about January 10,
2022 and, subject to the satisfaction or waiver of the other
closing conditions, closing is expected to occur shortly
thereafter, on or about January 14, 2022.
- On November 29, 2021, the Company
announced it has partnered with Sun Life to expand the seven month
pilot program and start rolling out its Mental Health Coach as part
of Sun Life’s Group Benefits offering. Findings from the pilot
include (1) 89% of those experiencing depression and 91% of those
experiencing anxiety noticed ‘major improvements’; (2) 82% said
they would recommend the service based on their own experience;
and, (3) 46% increase in plan members utilizing their mental health
benefits for the first time.
Outlook
CloudMD is creating innovation in the delivery
of healthcare services, by leveraging technology to improve access
to care leading to better health outcomes. Through its team-based,
patient-centric approach, CloudMD provides one, connected platform
for patients, healthcare practitioners, and enterprise clients to
address whole-person, coordinated care. The Company has a
multi-pronged growth strategy which focuses on organic growth,
accretive mergers and acquisitions and leveraging assets across all
divisions.
The Company’s long term growth will be largely
driven by: (1) continuing to integrate all its proprietary health
technology solutions into its ecosystem, including the recently
announced proposed acquisition of MindBeacon; (2) realizing cost
savings and cross-selling opportunities to new and existing
customers across CloudMD; (3) winning new customers with its unique
healthcare offering and providing meaningful data driven outcomes;
and (4) continuing to execute on its defined expansion strategy
across North America and Globally.
CloudMD has proven out its integration strategy
and by leveraging its proprietary technology, has successfully
integrated all its recent acquisitions into one connected platform.
In respect of the recently announced proposed acquisition of
MindBeacon, CloudMD has already identified cost savings of
approximately $2 million and cross-sell synergies and has started
to plan the integration of MindBeacon’s synergistic healthcare
solutions into its mental health services offerings. In addition,
the Company believes there are an additional $2 million in
potential synergies available over time through the integration of
MindBeacon and its other acquisitions.
CloudMD’s proprietary Comprehensive Integrated
Health Platform continues to see impressive adoption rates within
the Enterprise Health Solutions division, and the Company has
onboarded 560,000 employees and family members on the platform who
are receiving individualized care. CloudMD has achieved positive
client outcomes including a Net Promoter Score of 80, 98%
satisfaction rate and 164 new clients added in the third
quarter.
CloudMD continues to win new clients and
customers including Sun Life and other large organizations in
retail, transportation, and financial sectors with its
industry-leading approach that delivers important outcomes that
measure the patient success and engagement of its connected
platform.
The technology that underpins the platform is
scalable and the Company will continue looking at opportunities to
expand its unique offering to clients across North America and
globally. CloudMD has built an experienced sales team, and with the
recent addition of Angel Paravicini, expects to drive sales and
business development to open new distribution channels and attract
new clients in the United States.
Upon close of the proposed acquisition of
MindBeacon, CloudMD will have a strong balance sheet with over $60
million in cash and cash equivalents. The Company will continue to
deploy capital towards a robust pipeline of accretive, synergistic
acquisitions, focused on products, capabilities, clinical
specialties, and technologies that are highly scalable and rapidly
growing.
CloudMD will continue to focus on delivering
meaningful shareholder value by executing on its growth strategy
through the continued integration of its comprehensive healthcare
offering, winning new business and clients with its unique,
Comprehensive Integrated Health Platform, expansion of its scalable
product across new geographies including the United States, and
strategic capital allocation to drive its rapid growth.
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 |
|
|
Nine months ended |
|
|
September 30, |
|
|
September 30, |
|
|
2021 |
|
|
2020 |
|
(%) |
|
2021 |
|
|
2020 |
|
(%) |
Revenue |
$ |
39,162 |
|
$ |
3,359 |
|
1066% |
|
$ |
63,596 |
|
$ |
9,205 |
|
591% |
|
Cost of sales |
|
(25,866) |
|
|
(2,100) |
|
1132% |
|
|
(41,152) |
|
|
(5,792) |
|
610% |
|
Gross
profit (1) |
|
13,296 |
|
|
1,259 |
|
956% |
|
|
22,444 |
|
|
3,413 |
|
558% |
|
Gross
margin |
|
34.0% |
|
|
37.5% |
|
|
|
35.3% |
|
|
37.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
17,138 |
|
|
3,918 |
|
337% |
|
|
37,803 |
|
|
10,001 |
|
278% |
|
Loss
before other items |
|
(3,842) |
|
|
(2,659) |
|
44% |
|
|
(15,359) |
|
|
(6,588) |
|
133% |
|
Other items, taxes, non-controlling interest |
|
(379) |
|
|
(65) |
|
483% |
|
|
(305) |
|
|
(527) |
|
-42% |
|
Net
comprehensive loss attributable to equity holders of the
Company |
|
(4,237) |
|
|
(2,724) |
|
56% |
|
|
(15,694) |
|
|
(7,115) |
|
121% |
|
Loss per share, basic and diluted |
$ |
(0.02) |
|
$ |
(0.02) |
|
0% |
|
$ |
(0.08) |
|
$ |
(0.07) |
|
14% |
|
(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 |
|
|
Nine months ended |
|
|
September 30, |
|
|
September 30, |
|
|
2021 |
|
|
2020 |
|
(%) |
|
2021 |
|
|
2020 |
|
(%) |
Net comprehensive loss attributable to equity holders of
the Company |
$ |
(4,237) |
|
$ |
(2,724) |
|
56% |
|
$ |
(15,694) |
|
$ |
(7,115) |
|
121% |
|
Add: |
|
|
|
|
|
|
|
|
|
|
Interest
and accretion expense |
|
774 |
|
|
64 |
|
1109% |
|
|
974 |
|
|
190 |
|
413% |
|
Income
taxes |
|
445 |
|
|
19 |
|
2242% |
|
|
600 |
|
|
19 |
|
3058% |
|
Depreciation and amortization |
|
1,083 |
|
|
262 |
|
313% |
|
|
2,601 |
|
|
673 |
|
286% |
|
EBITDA(1) for the
period |
|
(1,935) |
|
|
(2,379) |
|
-19 |
% |
|
(11,519) |
|
|
(6,233) |
|
85% |
|
Share-based compensation |
|
1,543 |
|
|
559 |
|
176% |
|
|
4,576 |
|
|
1,508 |
|
203% |
|
Financing-related costs |
|
- |
|
|
245 |
|
-100 |
% |
|
871 |
|
|
505 |
|
72% |
|
Acquisition-related and integration costs, net |
|
1,802 |
|
|
190 |
|
848% |
|
|
5,474 |
|
|
310 |
|
1666% |
|
Litigation costs and loss provision |
|
37 |
|
|
64 |
|
-42 |
% |
|
83 |
|
|
467 |
|
-82% |
|
Change in fair value of contingent consideration |
|
(640) |
|
|
- |
|
-100 |
% |
|
(966) |
|
|
- |
|
-100% |
|
Adjusted EBITDA for the period |
$ |
807 |
|
$ |
(1,321) |
|
-161 |
% |
$ |
(1,481) |
|
$ |
(3,443) |
|
-57% |
|
(1) EBITDA is a non-GAAP measure as
described in the Non-GAAP Financial Measures section of this news
release.
Third Quarter 2021 Earnings Conference
Call
CloudMD invites all interested parties to join
the conference call or webinar:
CloudMD Q3 2021 Earnings CallDate: Today,
November 29, 2021Time: 2:00 pm PT / 5:00 pm ET
Toll-Free Dial-In Number: (833) 562-0117 International Dial-In
Number: (661) 567-1009Conference ID: 1743143
Webcast
Link: https://edge.media-server.com/mmc/p/nsy2gzh9
Financial Statements and Management’s
Discussion and Analysis
This news release should be read in conjunction
with the Company’s condensed interim consolidated financial
statements and related notes, and management’s discussion and
analysis (“MD&A”) for the three and nine months ended September
30, 2021, and 2020, 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 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 condensed interim
consolidated financial statements and the related notes for the
three and nine months ended September 30, 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, 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 the “Overall Performance and Discussion of Operations –
EBITDA and Adjusted EBITDA” section of the MD&A for a detailed
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-related and integration 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 the “Overall Performance and Discussion of Operations –
EBITDA and Adjusted EBITDA” section of the MD&A for a detailed
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 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.
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, healthcare navigation,
educational resources and artificial intelligence (AI). 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.
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. 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” 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:
North American and global expansion; expectations regarding gross
margin increasing; payments attributable to acquisitions completed
in June 2021 not reoccurring; the acquisition of MindBeacon,
including anticipated timing for completion of the transaction and
expected benefits, including cost savings, cross-sell and
integration synergies; the Company’s growth strategy, including its
focus and key drivers; results of expanded sales team and business
development initiatives; its expectations in respect of its balance
sheet following the transaction with MindBeacon and its capital
deployment plans; and its plans to deliver meaningful shareholder
value. These statements are based upon information currently
available to CloudMD. 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 MD&A and the Company’s most recent Annual Information Form
(which has been 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.
Neither TSX Venture Exchange nor its Regulation
Service Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
1 Adjusted EBITDA and Gross Margin are non-GAAP measures as
described in the Non-GAAP Financial Measures section of this news
release.
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