- Second quarter 2022 revenues came in at $2.8 million and were up approximately 9%
sequentially over the first quarter 2022.
- The Company entered into a $1.0
million bridge loan in the second quarter that rolled into a
$3.5 million revolving line of credit
subsequent to quarter end.
- The Company has applied for a non-possession sales license
that is currently under review with Health Canada.
TORONTO, Aug. 25,
2022 /CNW/ - Pathway Health Corp. (TSXV: PHC)
(Frankfurt: KL1) (formerly Colson Capital Corp.) ("Pathway" or the
"Company"), a Canadian leader in chronic pain solutions and
management services, is pleased to report its financial results for
the three and six-month period ended June
30, 2022. Unless otherwise noted, all amounts are in
Canadian dollars and are prepared in accordance with International
Financial Reporting Standards ("IFRS").
"With the $3.5 million line of
credit in place, Pathway can continue building a solid foundation
to support its future growth. In the second half of fiscal 2022, we
will remain focused on ways to control costs, streamline and
leverage our existing business assets (including our partnerships
with approximately 2,000 pharmacies), establish new partnerships,
develop new integrated programs targeted to better serve patient
groups such as veterans, first responders, and contractors, and
exploring international opportunities where we can leverage our
experience, know-how and existing partnerships," said Ken Yoon, Pathway's Chief Executive
Officer.
Recent Highlights
- Revenues were $2.8 million this
quarter, up approximately 9% from Q1 2022 ($2.5 million), showing signs of recovery from the
COVID-19 restrictions experienced in various provinces.
- The Company entered into a bridge loan with a related party for
available proceeds of up to $1.0
million. This facility was rolled into a larger $3.5 million revolving line of credit subsequent
to quarter end.
- The Company has applied for a non-possession sales license
(Cannabis license Class-Federal sale for medical purposes without
possession), which is currently under review with Health Canada.
The Company believes this license will help it deliver more
efficient patient care, potentially assist in its international
initiatives, and provide insights to inform future Cannabis Health
Product ("CHP") strategy.
- The recent recommendations by the Science Advisory Committee to
Health Canada on over-the-counter CBD based cannabis health
products (CHPs) that included potentially having the CHPs only
available in pharmacies are in-line with Pathway's CHP
strategic direction and should allow the Company to leverage its
relationship with over 2,000 pharmacies should the recommendations
be implemented.
- Subsequent to quarter end, the Company added Dr. Rakesh Jetly and Mark
Goldhar to the Board of Directors. Dr. Jetly is a retired
Colonel and former Chief of Psychiatry for the Canadian Armed
Forces. The Company looks to leverage his expertise and insights in
mental health as it continues to expand the services offered to
their patients. Mr. Goldhar is a finance professional with a strong
background raising capital and leading companies through rapid
growth phases.
Summary of the Results for the Three Months Ended
June 30, 2022 (Q2 2022) compared to
the Three Months Ended June 30, 2021
(Q2 2021), unless otherwise noted
Revenues were $2.8 million and
$2.9 million for the three months
ended June 30, 2022, and 2021,
respectively. Cannabis education revenues were impacted by a
reduction in marketing fees previously provided by licensed
producers as clinics moved to a telemedicine platform. However,
revenues for Q2 2022 were $2.8
million, a 9% growth over Q1 2022, showing signs of recovery
from COVID-19 restrictions in the first quarter.
Gross margins were $1.3 million
and $1.5 million for the three months
ended June 30, 2022, and 2021, which
represented 47% and 53% of gross revenues, respectively. The
variance is mainly a result of the increase in products and
provincially insured and non-insured physician services as a total
percentage of overall revenue.
Selling, general and administrative expenses ("SG&A") were
$3.1 million and $2.9 million for the three months ended
June 30, 2022, and 2021,
respectively. The $0.1 million
increase in wages and benefits over the prior year period are
consistent with inflationary pressures in the economy and the
growth of the operations of the Company as it explores other
potential avenues of business including cannabis health products
and the international cannabis markets. Public company costs and
insurance have increased by $0.1
million each over the prior year as the Company began
trading on the TSXV on June 17, 2021,
and have incurred additional expense related to listing fees,
investor relations, and directors' and officers' insurance. This is
offset by a $0.1 million reduction in
professional and consulting fees, which were unusually high in the
prior year as they reflected the additional listing fees, legal and
professional fees related to the Reverse Takeover transaction which
closed on May 31, 2021. General
office expenses also decreased by $0.1
million over the prior year period as the Company looks to
reduce costs and streamline processes.
The Company incurred a net loss of $2.4
million and had a basic and diluted loss per share of
$0.03 for the three months ended
June 30, 2022, compared to a net loss
of $3.1 million and a basic and
diluted loss per share of $0.05 for
the same period prior year.
Earnings before interest, tax, depreciation, and amortization
("EBITDA")1 was a loss of $2.1
million and adjusted EBITDA1 was a loss of
$1.7 million for the three months
ended June 30, 2022, compared to an
EBITDA and adjusted EBITDA loss of $2.5
million and $0.6 million
respectively in the prior year.
Cash as of June 30,
2022, was $0.2 million compared with $2.6 million on December
31, 2021. As of June 30, 2022,
the Company had drawn down $0.2
million from the bridge loan. On July
29, 2022, the Company entered into an agreement with a
related party to establish a $3.5
million credit facility, inclusive of the amounts advanced
under the bridge loan.
About Pathway Health
Pathway Health is an integrated healthcare company that provides
products and services to patients suffering from chronic pain and
related conditions. The Company owns and operates eleven
community-based clinics across four provinces where its team of
health professionals work together to help patients through a
variety of evidence-based approaches and products, including
medical cannabis. Pathway Health's patient care programs utilize an
interdisciplinary approach that is guided by trained pain
specialists, physical and occupational therapists, psychologists,
nurses, and other healthcare providers. Pathway is also the leading
provider of medical cannabis services in Canada and has established itself as the
leading partner with national and regional pharmacy companies for
the delivery of medical cannabis services to their customers. The
Company is working with several pharmacy companies on the
development of Cannabis Health Products (CHPs) for OTC product
distribution through retail pharmacy locations across the country
following anticipated changes to the Cannabis Act.
For more information, visit Pathway Health's website:
www.pathwayhealth.ca
1Non-IFRS financial
measures
The non-IFRS measures included in this MD&A are not recognized
measures under IFRS, and do not have a standardized meaning
prescribed by IFRS and may not be comparable to similar measures
presented by other issuers. When used, these measures are defined
in such terms as to allow the reconciliation to the closest IFRS
measure. These measures are provided as additional information to
complement those IFRS measures by providing further understanding
of the Company's results of operations from its perspective.
Accordingly, they should not be considered in isolation nor as a
substitute for analysis of the Company's financial information
reported under IFRS. Despite the importance of these measures to
management in goal setting and performance measurement, these are
non-IFRS measures that may be limited in their usefulness to
investors.
Management uses non-IFRS measures, such as EBITDA and Adjusted
EBITDA to provide investors with a supplemental measure of the
Company's operating performance and thus highlight trends in the
Company's core business that may not otherwise be apparent when
relying solely on IFRS financial measures. Management also believes
that securities analysts, investors, and other interested parties
frequently use non-IFRS measures in the valuation of issuers.
Management also uses non-IFRS measures to facilitate operating
performance comparisons from period to period, prepare annual
operating budgets, and to assess the Company's ability to meet its
future debt service, capital expenditure and working capital
requirements. The definition and reconciliation of EBITDA and
Adjusted EBITDA used and presented by the Company to the most
directly comparable IFRS measures follows below:
EBITDA and Adjusted EBITDA
EBITDA is defined as net (loss)/income adjusted for income tax,
depreciation of property and equipment, amortization of intangible
assets, interest on long-term debt and other financing costs,
interest income, and changes in fair values of derivative financial
instruments. Management uses EBITDA to assess the Company's
operating performance. Adjusted EBITDA is defined as EBITDA
adjusted for, as applicable, share-based compensation, loss of
control of related company, fair value loss of guarantee,
impairment of intangible assets, impairment of goodwill, gain on
remeasurement of contingent consideration, reverse takeover
transaction costs and additional professional fees due to the
reverse takeover transaction and Asset Acquisition Transaction
costs. We use Adjusted EBITDA as a key metric in assessing our
business performance when we compare results to budgets, forecasts,
and prior years. Management believes Adjusted EBITDA is a good
alternative measure of cash flow generation from operations as it
removes cash flow fluctuations caused by non-cash expenses, or
extraordinary and non-recurring items, including changes in working
capital. A reconciliation of net (loss)/income to EBITDA (and
Adjusted EBITDA) is set out below:
|
|
|
|
|
|
|
|
|
For the three months
ended
June 30,
|
|
For the six months
ended
June 30,
|
|
|
2022
|
2021
|
|
2022
|
2021
|
Net (loss) attributable
to shareholders
|
$
(2,375,703)
|
$
(3,076,636)
|
|
$
(4,314,544)
|
$
(4,104,409)
|
Adjustments:
|
|
|
|
|
|
|
Amortization of
intangible assets
|
35,490
|
22,976
|
|
70,980
|
54,636
|
|
Depreciation
|
184,484
|
192,834
|
|
371,511
|
357,563
|
|
Finance
expense*
|
78,898
|
360,143
|
|
149,364
|
452,468
|
EBITDA
|
$
(2,076,831)
|
$
(2,500,683)
|
|
$
(3,722,689)
|
$
(3,239,742)
|
|
|
|
|
|
|
|
Share-based
compensation
|
99,125
|
164,099
|
|
231,259
|
260,878
|
Loss of control of
related company
|
6,108
|
76,539
|
|
12,216
|
76,539
|
Fair value (gain) loss
of guarantee
|
-
|
100,001
|
|
-
|
100,001
|
Impairment of
intangible assets
|
102,920
|
-
|
|
102,920
|
-
|
Impairment of
goodwill
|
225,046
|
-
|
|
225,046
|
-
|
Gain on remeasurement
of contingent consideration
|
(21,943)
|
(50,534)
|
|
(21,943)
|
(74,534)
|
Reverse takeover
transaction cost
|
-
|
1,251,608
|
|
-
|
1,251,608
|
Additional professional
fees due to RTO Transaction
|
-
|
365,770
|
|
-
|
652,715
|
Additional professional
fees due to Asset Acquisition Transaction
|
-
|
3,285
|
|
-
|
125,591
|
Adjusted
EBITDA
|
$
(1,665,575)
|
$
(589,915)
|
|
$
(3,173,191)
|
$
(846,944)
|
*this figure includes
interest expense, financing expense, fair value of financing
facilities and accretion expense.
|
|
|
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
This news release includes certain "forward-looking statements"
under applicable Canadian securities legislation. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable, are subject to known
and unknown risks, uncertainties, and other factors that may cause
the actual results and future events to differ materially from
those expressed or implied by such forward-looking statements. Such
factors include, but are not limited to: general business,
economic, competitive, political, and social uncertainties; delay
or failure to receive applicable approvals; and the results of
operations. There can be no assurance that such statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements. Pathway disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
NEITHER THE 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.
THE TSX VENTURE EXCHANGE INC. HAS IN NO WAY PASSED UPON THE MERITS
OF THE PROPOSED TRANSACTION AND HAS NEITHER APPROVED NOR
DISAPPROVED THE CONTENTS OF THIS PRESS RELEASE.
Pathway Health Corp.
(formerly Colson Capital Corp.)
|
|
|
Interim Condensed
Consolidated Statement of Financial Position
|
(Unaudited)
|
|
|
|
|
June 30,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Current
|
|
|
|
Cash
|
$
189,309
|
|
$
2,603,429
|
Restricted
cash
|
75,000
|
|
75,000
|
Accounts and other
receivables
|
1,058,540
|
|
811,587
|
Deferred
cost
|
42,762
|
|
54,978
|
Inventory
|
330,579
|
|
340,340
|
Prepaids
|
259,863
|
|
249,579
|
|
1,956,053
|
|
4,134,913
|
|
|
|
|
Due from related
parties
|
51,847
|
|
117,362
|
Property and
equipment
|
2,606,084
|
|
2,914,078
|
Intangible
assets
|
517,547
|
|
691,447
|
Goodwill
|
279,855
|
|
504,901
|
Investment in related
company
|
308,789
|
|
475,824
|
|
3,764,122
|
|
4,703,612
|
|
|
|
|
Total
assets
|
$
5,720,175
|
|
$
8,838,525
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' equity
|
|
|
|
Current
|
|
|
|
Acccounts payable and
accrued liabilities
|
$
2,544,528
|
|
$
1,585,558
|
Bridge loan
|
180,029
|
|
-
|
Current portion of
lease liability
|
567,548
|
|
545,515
|
Due to related
parties
|
43,540
|
|
20,459
|
|
3,335,645
|
|
2,151,532
|
|
|
|
|
Lease
liability
|
2,054,415
|
|
2,292,993
|
Government loan
payable
|
73,474
|
|
67,574
|
|
2,127,889
|
|
2,360,567
|
|
|
|
|
Total
liabilities
|
5,463,534
|
|
4,512,099
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
42,644,224
|
|
42,630,724
|
Warrants
|
1,866,866
|
|
1,866,866
|
Contributed surplus
(deficiency)
|
(30,699,149)
|
|
(30,930,408)
|
Deficit
|
(13,555,300)
|
|
(9,240,756)
|
|
256,641
|
|
4,326,426
|
|
|
|
|
Total liabilities
and shareholders' equity
|
$
5,720,175
|
|
$
8,838,525
|
Pathway Health Corp.
(formerly Colson Capital Corp.)
|
|
|
|
|
Interim Condensed
Consolidated Statements of Loss and Comprehensive Loss
|
|
For the three and six
months ended June 30, 2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
June 30,
|
|
For the six months
ended
June 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
2,769,375
|
$
2,934,258
|
|
$
5,307,529
|
$
5,562,465
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
|
|
Consultants
|
1,110,573
|
1,055,161
|
|
2,101,895
|
2,012,138
|
Cost of goods sold
|
207,309
|
197,180
|
|
399,492
|
344,536
|
Clinic and medical supplies
|
148,808
|
133,553
|
|
270,853
|
221,940
|
Total cost of
sales
|
1,466,690
|
1,385,894
|
|
2,772,240
|
2,578,614
|
|
|
|
|
|
|
Gross
margin
|
1,302,685
|
1,548,364
|
|
2,535,289
|
2,983,851
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
3,073,282
|
2,922,517
|
|
5,947,269
|
5,240,666
|
Loss before other
items
|
(1,770,597)
|
(1,374,153)
|
|
(3,411,980)
|
(2,256,815)
|
|
|
|
|
|
|
Other expenses
(income)
|
|
|
|
|
|
Reverse takeover
transaction cost
|
-
|
1,251,608
|
|
-
|
1,251,608
|
Finance
expense
|
78,898
|
360,143
|
|
149,364
|
452,468
|
Impairment of
intangible assets
|
102,920
|
-
|
|
102,920
|
-
|
Impairment of
goodwill
|
225,046
|
-
|
|
225,046
|
-
|
Share-based
compensation
|
99,125
|
164,099
|
|
231,259
|
260,878
|
Amortization of
intangible assets
|
35,490
|
22,976
|
|
70,980
|
54,636
|
Share of loss of
equity-accounting investment
|
79,462
|
32,979
|
|
132,722
|
32,979
|
Loss of control of
related company
|
6,108
|
76,539
|
|
12,216
|
76,539
|
Fair value loss of
guarantee
|
-
|
100,001
|
|
-
|
100,001
|
Government
grant
|
-
|
-
|
|
-
|
(25,558)
|
Gain on remeasurement
of contingent consideration
|
(21,943)
|
(50,534)
|
|
(21,943)
|
(74,534)
|
Gain on disposal of
intangible assets and goodwill
|
-
|
(255,328)
|
|
-
|
(255,328)
|
|
605,106
|
1,702,483
|
|
902,564
|
1,873,689
|
|
|
|
|
|
|
Loss before income
taxes
|
(2,375,703)
|
(3,076,636)
|
|
(4,314,544)
|
(4,130,504)
|
|
|
|
|
|
|
Income tax
expense
|
-
|
-
|
|
-
|
-
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
(2,375,703)
|
(3,076,636)
|
|
(4,314,544)
|
(4,130,504)
|
|
|
|
|
|
|
Net loss
attributable to:
|
|
|
|
|
|
Shareholders
|
(2,375,703)
|
(3,076,636)
|
|
(4,314,544)
|
(4,104,409)
|
Non-controlling
interest
|
-
|
-
|
|
-
|
(26,095)
|
|
$
(2,375,703)
|
$
(3,076,636)
|
|
$
(4,314,544)
|
$
(4,130,504)
|
|
|
|
|
|
|
Basic and diluted loss
per share
|
$
(0.03)
|
$
(0.05)
|
|
$
(0.05)
|
$
(0.13)
|
Weighted average shares
outstanding
|
|
|
|
|
|
Basic and diluted
|
93,722,085
|
62,562,816
|
|
93,715,455
|
31,467,493
|
SOURCE Pathway Health Corp.