- Adjusted EBITDA loss improved by 20% from previous quarter
to $1.3 million compared to
$1.7 million in the previous
quarter
- Entered into a $3.5
million revolving line of credit to support working capital
and expansion requirements
- Expanded services to veterans, RCMP and first responders
with the acquisition of the operating assets of IRP Health
Ltd.
TORONTO, Nov. 24,
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 nine-month period ended September 30, 2022. Unless otherwise noted, all
amounts are in Canadian dollars and are prepared in accordance with
International Financial Reporting Standards ("IFRS").
"We remain committed to our goals to support a patient's journey
to wellbeing through a comprehensive suite of services and products
from both traditional and alternative sources of medicine. In
the third quarter, we have taken another step toward achieving
these goals with the acquisition of the operating assets of IRP
Health Ltd., a multidisciplinary pain management and physical
therapy program that will allow us to better serve at-risk patient
groups such as veterans, RCMP and first responders," said
Ken Yoon, Pathway's Chief Executive
Officer. "We are excited about the Company's path forward, as
it looks to continue to expand its service offerings to these
patient groups in need throughout Canada and potentially international
markets."
Recent Highlights
- Adjusted EBITDA loss improved by 20% from previous quarter to
$1.3 million compared to $1.7 million in the previous quarter, reflecting
management's continued focus on streamlining operations and cash
conservation measures.
- The Company expanded its MCMS (Medical Cannabis Management
System) program with the addition of Sunshine Drugs family of 15
community pharmacies, bringing it's collaborative agreements to
over 2,000 pharmacies.
- In the second quarter 2022, 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 in the third quarter 2022, providing the Company a
foundation to support operations and future growth.
- Acquired IRP Health Ltd., expanding services to at risk patient
groups, including veterans, RCMP and first responders. This
acquisition is a key step forward in the Company's strategy to
focus on providing services and products to specialty groups of
patients.
- The Company appointed MNP LLP as its new auditors in
anticipation of future key changes to the business, including the
approval of a non-possession sales license which is currently under
review with Health Canada and potential international
expansion.
Summary of the Results for the Three Months Ended
September 30, 2022 (Q3 2022) compared
to the Three Months Ended September 30,
2021 (Q3 2021), unless otherwise noted
Revenues were $2.4 million and
$2.7 million for the three months
ended September 30, 2022, and 2021,
respectively. Cannabis education revenues were partially impacted
by a reduction in marketing fees previously provided by licensed
producers as clinics moved to a telemedicine platform. The decline
in revenue also reflects the continued downward trend in the
Canadian medical cannabis market. However, the Company hopes
to offset this by focusing on specialty group markets and offering
more comprehensive services to these targeted markets.
Gross margins were $1.2 million
and $1.3 million for the three months
ended September 30, 2022, and 2021,
which represented 50% and 53% of gross revenues, respectively. The
difference is mainly a result of the increase in products and
provincially insured and non-insured physician services as a total
percentage of overall revenue compared to the same prior year
period.
Selling, general and administrative expenses ("SG&A") were
$2.7 million and $2.8 million for the three months ended
September 30, 2022, and 2021,
respectively. The combined decrease in wages and benefits,
marketing, public company costs and expenses totaled $0.2 million as a result of continued cost
cutting and streamlining measures taken on by management.
This was offset by a $0.04 million
increase in professional fees due to additional costs related to
the change in auditors and an increase of $0.03 million in rent and utilities reflecting
the physical expansion in 2022.
The Company incurred a net loss of $1.9
million and had a basic and diluted loss per share of
$0.02 for the three months ended
September 30, 2022, compared to a net
loss of $1.6 million and a basic and
diluted loss per share of $0.02 for
the same period prior year.
Earnings before interest, tax, depreciation, and amortization
("EBITDA")1 was a loss of $1.5
million and adjusted EBITDA1 was a loss of
$1.3 million for the three months
ended September 30, 2022, compared to
an EBITDA and adjusted EBITDA loss of $1.3
million and $1.4 million
respectively in the prior year.
Cash as of September 30,
2022, was $0.3 million compared with $2.6 million on December
31, 2021. As of September 30,
2022, the Company had a principal balance of $1.9 million outstanding from its Credit
Facility. As of November 23, 2022,
the Company had a principal balance of $2.8
million outstanding from its Credit Facility.
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
September 30,
|
|
For the nine months
ended
September 30,
|
|
|
2022
|
2021
|
|
2022
|
2021
|
Net (loss) attributable
to shareholders
|
$
(1,923,469)
|
$
(1,597,308)
|
|
$
(6,238,013)
|
$
(5,701,717)
|
Adjustments:
|
|
|
|
|
|
|
Amortization of
intangible assets
|
34,378
|
25,878
|
|
105,358
|
80,514
|
|
Depreciation on
property and equipment
|
177,743
|
189,654
|
|
549,254
|
547,217
|
|
Finance
expense*
|
189,411
|
76,074
|
|
338,775
|
528,542
|
EBITDA
|
$
(1,521,937)
|
$
(1,305,702)
|
|
$
(5,244,626)
|
$
(4,545,444)
|
|
|
|
|
|
|
|
Share-based
compensation
|
181,331
|
125,856
|
|
412,590
|
386,734
|
Loss of control of
related company
|
6,108
|
6,108
|
|
18,324
|
82,647
|
Related party bad debt
expense
|
-
|
(25,001)
|
|
-
|
75,000
|
Impairment of
intangible assets
|
-
|
-
|
|
102,920
|
-
|
Impairment of
goodwill
|
-
|
-
|
|
225,046
|
-
|
Gain on remeasurement
of contingent consideration
|
-
|
-
|
|
(21,943)
|
-
|
Reverse takeover
transaction cost
|
-
|
-
|
|
-
|
1,251,608
|
Additional professional
fees due to RTO Transaction
|
-
|
(143,463)
|
|
-
|
509,252
|
Additional professional
fees due to Asset Acquisition Transaction
|
-
|
(12,699)
|
|
-
|
112,891
|
Adjusted
EBITDA
|
$
(1,334,498)
|
$
(1,354,901)
|
|
$
(4,507,689)
|
$
(2,127,312)
|
*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: the Company's ability to
continue as a going concern, 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Current
|
|
|
|
Cash
|
$
271,995
|
|
$
2,603,429
|
Restricted
cash
|
75,000
|
|
75,000
|
Accounts and other
receivables
|
832,149
|
|
811,587
|
Deferred
cost
|
36,654
|
|
54,978
|
Inventory
|
313,456
|
|
340,340
|
Prepaids
|
206,936
|
|
249,579
|
|
1,736,190
|
|
4,134,913
|
|
|
|
|
Due from related
parties
|
70,827
|
|
117,362
|
Property and
equipment
|
2,428,931
|
|
2,914,078
|
Intangible
assets
|
483,169
|
|
691,447
|
Goodwill
|
279,855
|
|
504,901
|
Investment in related
company
|
254,059
|
|
475,824
|
|
3,516,841
|
|
4,703,612
|
|
|
|
|
Total
assets
|
$
5,253,031
|
|
$
8,838,525
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders'
equity
|
|
|
|
Current
|
|
|
|
Accounts payable and
accrued liabilities
|
$
2,293,994
|
|
$
1,585,558
|
Credit
facility
|
1,837,701
|
|
-
|
Current portion of
lease liability
|
582,933
|
|
545,515
|
Due to related
parties
|
44,368
|
|
20,459
|
|
4,758,996
|
|
2,151,532
|
|
|
|
|
Lease
liability
|
1,902,864
|
|
2,292,993
|
Government loan
payable
|
76,668
|
|
67,574
|
|
1,979,532
|
|
2,360,567
|
|
|
|
|
Total
liabilities
|
6,738,528
|
|
4,512,099
|
|
|
|
|
Shareholders' (deficiency)
equity
|
|
|
|
Share
capital
|
42,644,224
|
|
42,630,724
|
Warrants
|
1,866,866
|
|
1,866,866
|
Contributed surplus
(deficiency)
|
(30,517,818)
|
|
(30,930,408)
|
Deficit
|
(15,478,769)
|
|
(9,240,756)
|
|
(1,485,497)
|
|
4,326,426
|
|
|
|
|
Total liabilities
and shareholders' (deficiency) equity
|
$
5,253,031
|
|
$
8,838,525
|
Pathway Health Corp. (formerly Colson Capital
Corp.)
|
|
|
|
|
Interim Condensed Consolidated Statements of Loss and
Comprehensive Loss
|
|
For the three and nine months ended September 30,
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended
September 30,
|
|
For the nine months ended
September 30,
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
2,418,886
|
$
2,663,249
|
|
$
7,726,415
|
$
8,225,714
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
Consultants
|
879,965
|
942,444
|
|
2,981,860
|
2,954,582
|
Cost of goods
sold
|
219,339
|
199,514
|
|
618,831
|
544,050
|
Clinic and medical
supplies
|
105,174
|
108,243
|
|
376,027
|
330,183
|
Total cost of
sales
|
1,204,478
|
1,250,201
|
|
3,976,718
|
3,828,815
|
|
|
|
|
|
|
Gross margin
|
1,214,408
|
1,413,048
|
|
3,749,697
|
4,396,899
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
2,671,919
|
2,762,453
|
|
8,619,188
|
8,003,119
|
Loss before other items
|
(1,457,511)
|
(1,349,405)
|
|
(4,869,491)
|
(3,606,220)
|
|
|
|
|
|
|
Other expenses (income)
|
|
|
|
|
|
Reverse takeover
transaction cost
|
-
|
-
|
|
-
|
1,251,608
|
Finance
expense
|
189,411
|
76,074
|
|
338,775
|
528,542
|
Impairment of
intangible assets
|
-
|
-
|
|
102,920
|
-
|
Impairment of
goodwill
|
-
|
-
|
|
225,046
|
-
|
Share-based
compensation
|
181,331
|
125,856
|
|
412,590
|
386,734
|
Amortization of
intangible assets
|
34,378
|
25,878
|
|
105,358
|
80,514
|
Share of loss of
equity-accounting investment
|
54,730
|
56,796
|
|
187,452
|
89,775
|
Loss of control of
related company
|
6,108
|
6,108
|
|
18,324
|
82,647
|
Fair value loss of
guarantee
|
-
|
(25,001)
|
|
-
|
75,000
|
Government
grant
|
-
|
-
|
|
-
|
(25,558)
|
Gain on remeasurement
of contingent consideration
|
-
|
(17,808)
|
|
(21,943)
|
(92,342)
|
Gain on disposal of
intangible assets and goodwill
|
-
|
-
|
|
-
|
(255,328)
|
|
465,958
|
247,903
|
|
1,368,522
|
2,121,592
|
|
|
|
|
|
|
Loss before income taxes
|
(1,923,469)
|
(1,597,308)
|
|
(6,238,013)
|
(5,727,812)
|
|
|
|
|
|
|
Income tax
expense
|
-
|
-
|
|
-
|
-
|
|
|
|
|
|
|
Net loss and comprehensive loss
|
(1,923,469)
|
(1,597,308)
|
|
(6,238,013)
|
(5,727,812)
|
|
|
|
|
|
|
Net loss attributable to:
|
|
|
|
|
|
Shareholders
|
(1,923,469)
|
(1,597,308)
|
|
(6,238,013)
|
(5,701,717)
|
Non-controlling
interest
|
-
|
-
|
|
-
|
(26,095)
|
|
$
(1,923,469)
|
$
(1,597,308)
|
|
$
(6,238,013)
|
$
(5,727,812)
|
|
|
|
|
|
|
Basic and diluted loss
per share
|
$
(0.02)
|
$
(0.02)
|
|
$
(0.07)
|
$
(0.14)
|
Weighted average shares
outstanding
|
|
|
|
|
|
Basic and
diluted
|
93,722,085
|
93,187,251
|
|
93,717,689
|
42,018,337
|
SOURCE Pathway Health Corp.