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CloudMD Reports Q2 2022 Financial Performance; Net Loss Rises Sharply YoY to $44.2 Million
Wednesday, August 31, 2022Company Profile | Follow Company
CloudMD Reports Q2 2022 Financial Performance; New Leadership Enforces Strategic Priorities to Drive Further Cost Optimization and Profitability
Victoria, BC, August 31, 2022--(T-Net)--CloudMD Software & Services Inc. (TSXV: DOC, OTCQX: DOCRF), a healthcare technology company, announced its financial results for the second quarter ended June 30, 2022.
All financial information is presented in Canadian dollars unless otherwise indicated.
"Our Q2 results reflect the strength of our core Enterprise Health Solutions ("EHS") business in the face of headwinds and distractions from our non-core business and overhang from previously made acquisitions. There is an incredible opportunity for our EHS division as industry trends converge with our differentiated product offering. We are taking the necessary steps to enable the performance of our core business to shine," said Karen Adams, CEO of CloudMD.
"We will continue to execute on our strategic priorities of driving additional organic growth, integrating and optimizing our cost structure, and achieving financial sustainability and profitability with an emphasis on prudent cash management."
John Plunkett, CFO of CloudMD, added, "As a team, we are focused on reaching profitability and positive operating cash flow. We are taking steps across the organization to align costs with each division's revenue and to divest non-core assets which will provide some near-term capital. The team has made progress in cleaning up our cost structure, balance sheet, and outstanding issues from past transactions. We will continue to focus on further optimization for the remainder of the year. There is work to be done, but I'm encouraged by the steps taken to date and am pleased with the organic growth that our EHS business is starting to generate which will provide positive contributions in the second half of the year."
Second Quarter 2022 Financial Highlights
Second Quarter & Subsequent Corporate Highlights
Outlook
The Company says it continues to deliver on the value proposition of offering comprehensive solutions that create access to care, leading to better health outcomes. Through its team-based, patient-centric approach, CloudMD provides a connected platform for patients, healthcare practitioners, and enterprise clients to address whole-person, coordinated care.
CloudMD remains focused on its strategic priorities for the remainder of the year:
(1) through its strong sales pipeline, continuing to diversify and grow its client base within its EHS and DHS divisions by direct sales to new customers, enhancing relationships with channel partners and cross selling its established suite of products;
(2) driving continuous operational excellence and improvement across the organization to improve productivity, product quality and consistency, and lower customer acquisition costs;
(3) delivering a diligent path to profitable financial sustainability and focus on delivering consistent financial performance across all divisions of the organization; and
(4) continuing to develop the Company's corporate governance to support the it's growth.
For the remainder of the year, the Company will remain focused on driving profit from the core business, aligning costs to its revenue profile, and identifying further cost optimization to improve Adjusted EBITDA and gross margins. The Company is working on divesting its Clinics and Pharmacies business which will provide some near-term capital. It expects to provide an update on progress next month.
CloudMD says it has a robust sales pipeline and will continue to drive organic growth and client adoption, through direct sales to new clients, expanding distribution partners and cross selling its connected suite of products. The Company expects to achieve consistent double digit organic growth rates in its core business moving forward, as previously guided.
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 | ||||
June 30, | |||||
2022 | 2021 | (%) | |||
Revenue | $ | 40,301 | $ | 15,659 | 157% |
Cost of sales | (27,813) | (10,102) | 175% | ||
Gross profit (1) | 12,488 | 5,557 | 125% | ||
Gross margin (1) | 31.0% | 35.5% | |||
Expenses | 26,526 | 12,156 | 118% | ||
Loss before other items | (14,038) | (6,599) | 113% | ||
Other items and taxes | (30,176) | (33) | |||
Net loss | (44,214) | (6,632) | 567% | ||
Loss per share, basic and diluted | $ | (0.15) | $ | (0.03) | 400% |
Note:
(In thousands of Canadian dollars) | Three months ended | ||||
June 30, | |||||
2022 | 2021 | (%) | |||
Net loss for the period | $ | (44,214) | $ | (6,632) | 567% |
Add: | |||||
Interest and accretion expense | 564 | 112 | 404% | ||
Income taxes | (32) | 115 | (128%) | ||
Depreciation and amortization | 4,723 | 1,452 | 225% | ||
Impairment | 33,109 | 0 | 100% | ||
EBITDA (1) for the period | (5,940) | (4,953) | 20% | ||
Share-based compensation | 532 | 1,438 | (63%) | ||
Financing-related costs | - | 122 | (100%) | ||
Acquisition-related, integration and restructuring costs | 5,049 | 2,860 | 77% | ||
Litigation costs | 452 | (57) | 893% | ||
Change in fair value of liability to NCI | 39 | - | 100% | ||
Change in fair value of contingent consideration | (3,315) | 11 | NM (2) | ||
Adjusted EBITDA for the period (1) | $ | (3,183) | $ | (579) | 450% |
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Notes:
The cash outflows in the second quarter of 2022 were unusually high and are not expected to recur in the third quarter or fourth quarter of 2022. The table below provides a reconciliation of the one-time cash outflows in the three months ended June 30, 2022:
(In thousands of Canadian dollars) | (unaudited) | |
Cash and cash equivalents as at March 31, 2022 | $ | 46,889 |
Cash and cash equivalents as at June 30, 2022 | 29,703 | |
Cash outflow (1) | 17,196 | |
Net Cash used in operating activities | (13,249) | |
Adjustments | ||
Net changes in non-cash working capital | 3,599 | |
Adjustments to EBITDA | 5,501 | |
Adjusted net cash used in operating activities | (4,149) | |
Net cash used in investing activities | (2,121) | |
Adjustments | ||
Payment of contingent consideration | 1,183 | |
Adjusted Net cash used in investing activities | (938) | |
Net cash used in financing activities | (1,818) | |
Normalized cash outflow (1) | $ | 6,905 |
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Note:
About CloudMD Software & Services
CloudMD is transforming the delivery of healthcare using technology and 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 business is separated into three main divisions: Clinics and Pharmacies, Digital Solution and Enterprise Health Solutions, the Company's fastest growing division. CloudMD's Enterprise Health Solutions Division has built a leading employer healthcare solutions, including its Comprehensive Integrated Health Services Platform, which offers one comprehensive, digitally connected platform for educational institutions, corporations, insurers, and advisors to better manage the health and wellness of their students, employees, and customers.
CloudMD currently services a direct ecosystem of over 5,700 clinicians including, 1,800+ mental health practitioners, 1,600+ allied health professionals, 1,400+ doctors and nurses and covers 12 million individual lives across North America.
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 six months ended June 30, 2022 and 2021, 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 and ratios which are not recognized under IFRS, as supplemental indicators of the Company's operating performance and financial position. These non-GAAP financial measures and ratios 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 ratios 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 related notes for the year ended December 31, 2021 and 2020.
EBITDA
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. EBITDA referenced herein relates to earnings before interest, taxes, impairment, and depreciation and amortization. This measure does not have a comparable IFRS measure and is used by the Company to assess its capacity to generate profit from operations before taking into account management's financing decisions and costs of consuming intangible and tangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life.
Adjusted EBITDA
Adjusted 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 change in fair value of contingent consideration. This measure does not have a comparable IFRS measure and is used by the Company to assess its capacity to generate profit from operations before taking into account management's financing decisions and costs of consuming intangible and tangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life, adjusted for factors that are unusual in nature or factors that are not indicative of the operating performance of the Company.
Gross Profit
Gross 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 Margin
Gross Margin is a non-GAAP financial ratio that has Gross Profit, which is a non-GAAP financial measure as a component. 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.
Cash outflow and Normalized cash outflow
Cash outflow and Normalized cash outflow are non-GAAP financial measures that do not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Cash outflow, as referenced herein, is defined as the decrease in cash and cash equivalents for the applicable period. Normalized cash outflow, as referenced herein, is defined as cash outflows, adjusted for certain unusual expenditures. For the purpose of calculating Normalized cash flow, unusual expenditures include non-operational one-time payments and payments related to EBITDA adjustments. These measures do not have a comparable IFRS measure and are used to ensure that we have sufficient liquidity to meet our liabilities as they become due.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. FORWARD-LOOKING STATEMENTS This press release contains "forward-looking statements" and "forward-looking information" within the meaning of Canadian securities laws. Forward-looking statements in this press release include, but are not limited to, statements with respect to the impact and benefits of the transaction, the mailing of the information circular, anticipated timing for completion of the transaction and receiving the required regulatory, court and shareholder approvals. [ MORE ] |
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