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CloudMD Reports First Quarter 2023 Results, Revenue Falls 15.8% YoY to $26.1 Million, Net Loss Rises
Wednesday, June 7, 2023Company Profile | Follow Company
Vancouver, BC, June 7, 2023--(T-Net)--CloudMD Software & Services Inc. (TSXV: DOC), an innovative health services company transforming the delivery of care, announced today its financial results for the first quarter ended March 31, 2023.
"We had strong performance in our Employer Health and Wellness services with new partnerships with Benefits Alliance, Mohawk Medbuy, and XTM. This will bring our Kii service offering to potentially hundreds of thousands of new users these organizations represent," said Karen Adams, CEO of CloudMD.
"Our pipeline in the United States in our Health Productivity Solutions division continues to grow with focus on remote patient monitoring which includes our life and health application technology. The combination of organic growth, operational improvement and cost efficiencies in both divisions is driving our performance in this quarter."
"We are starting to see the improvement in our financial results because of cost optimization efforts in 2022. In Q1 2023, we saw our financial KPIs trend in the right direction with revenue growth, lower operating expenses, and improvement in Adjusted EBITDA," said John Plunkett, CFO of CloudMD. "We are focused on continuing to drive organic growth and identifying further cost efficiencies with the target of reaching Adjusted EBITDA positive in the fourth quarter of this year."
First Quarter 2023 Financial Highlights
Fourth Quarter & Subsequent Corporate Highlights
Outlook
2022 was a year of transition as the Company focused on operationalizing, aligning, and rationalizing the large number of acquisitions completed over the preceding two years. The Company has been focused on the integration of its previous acquisitions and products to create an innovative market leadership position and deliver profitable results.
During Q1 2023, the Company started to see positive trends in its financial KPIs, with revenue, Adjusted EBITDA and normalized cash flow all improving.
The Company expects low double digit revenue growth in 2023 from the fourth quarter 2022 baseline. The Company sold $2.9 million in multi-year contracts in Q1 2023 and has a robust growing pipeline that will continue to drive revenue growth in 2023.
During the first quarter, the Company identified and actioned approximately $1.0 million in annual cost reductions. In addition, the Company is expecting to action another $4.0 million of annual net cost savings between the second and third quarter of 2023. These synergies will come with a cost of severance, or working notice, which will impact cash flows in the first three quarters of 2023.
The cost savings achieved in the fourth quarter of 2022, in addition to the savings realized in the first quarter of 2023 and expected reductions in the second and third quarter of 2023, will bring the Company closer to adjusted EBITDA breakeven. The Company expects to achieve this milestone in the fourth quarter of 2023.
The Company believes its cash position of $18.8 million, will provide sufficient liquidity to fund its obligations and organic growth. The Company will continue to prudently manage expenditures and seek further efficiencies in its cost structure.
Management Update
The Company announces the resignation of Chief Commercial Officer, Adam Kelly, effective June 23, 2023. Mr. Kelly's responsibilities will be divided between Bram Lowsky, Head of Health and Wellness Services and Nathan Lane, Head of Health and Productivity Solutions.
The Company also announces the granting of stock options to purchase an aggregate of 200,000 common shares of the Company at an exercise price equal to the 5-day VWAP as of June 7, 2023 per share for a five year term. The stock options were granted pursuant to the Company's Stock Option Plan to certain officers of the Company.
Select Financial Information
All results were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.
Selected Financial Information (unaudited) | Three months ended
March 31 |
|
2023 | 2022(2) | |
Revenue | $ 26,139 | $ 31,048 |
Cost of sales | 16,701 | 19,643 |
Gross profit (1) | $ 9,438 | $ 11,405 |
Gross profit % | 36.1% | 36.7% |
Indirect Expenses | ||
Sales and marketing | 1,480 | 2,205 |
Research and development | 590 | 992 |
General and administrative | 9,175 | 10,012 |
Share-based compensation | 30 | 490 |
Depreciation and amortization | 3,421 | 2,605 |
Acquisition and divestiture-related, integration and restructuring costs | 950 | 2,474 |
Operating loss | $ (6,208) | $ (7,373) |
Other income | 160 | 139 |
Change in fair value of contingent consideration | - | 2,736 |
Change in fair value of liability to non-controlling interest | (549) | (129) |
Finance costs | (661) | (439) |
Share in profit of joint venture | - | 12 |
Income tax recovery/(expense) | 255 | (85) |
Net loss for the period from continuing operations | (7,003) | (5,139) |
Net loss after tax from discontinuing operations | (143) | (509) |
Net loss for the period | $ (7,146) | $ (5,648) |
Add: | ||
Depreciation and amortization | 3,421 | 2,605 |
Finance costs | 661 | 439 |
Income tax recovery/(expense) | (255) | 85 |
EBITDA (1) | $ (3,319) | $ (2,519) |
Share-based compensation | 30 | 490 |
Acquisition and divestiture-related, integration and restructuring costs | 950 | 2,474 |
Change in fair value of contingent consideration | - | (2,736) |
Change in fair value of liability to non-controlling interest | 549 | 129 |
Net loss after tax from discontinuing operations | 143 | 509 |
Adjusted EBITDA (1) | $ (1,647) | $ (1,653) |
Loss per share, basic and diluted | (0.02) | (0.02) |
Loss per share from continuing operations, basic and diluted | (0.02) | (0.02) |
Financial Statements and Management's Discussion and Analysis
About CloudMD Software & Services
CloudMD is an innovative North American healthcare service provider focused on empowering healthier living by combining leading edge technology with an exceptional national network of healthcare professionals. Every day, our employees and health care providers live our values of delivering excellence, collaboration, connected communication and accountability to solve complex health problems.
CloudMD' s industry leading workplace health and wellbeing solution, Kii, supports members and their families with a personalized and connected healthcare experience across mental, physical and occupation health. Kii delivers superior clinical health outcomes, consistent high engagement, and measurable ROI for payers such as employers, educational institutions, associations, government, and insurers. CloudMD is also a market leader in workplace absence management through data-driven prevention, intervention and return to work programs.
In addition, the Company sells health and productivity tools to hospitals, clinics, and other healthcare service providers to empower them to deliver better care. Visit www.cloudmd.ca to learn more about the Company's comprehensive healthcare offerings.
This news release should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements and accompanying notes, and management's discussion and analysis ("MD&A") for the three months ended March 31, 2023, and 2022, 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 reader'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 the MD&A 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, 2022 and 2021.
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, 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 and divestiture-related, integration and restructuring costs, change in fair value of contingent consideration, change in fair value of liability to non-controlling interest, and net loss after tax from discontinuing operations. 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.
The following table provides a reconciliation of net loss for the periods to EBITDA and Adjusted EBITDA for the three months ended March 31, 2023, and 2022.
Three months ended March 31, | Variance | |||
2023 | 2022 | $ | % | |
Net loss | $ (7,146) | $ (5,648) | (1,498) | (27%) |
Add: | ||||
Finance costs | 661 | 439 | 222 | 51% |
Income tax expense/(recovery) | (255) | 85 | (340) | 400% |
Depreciation and amortization | 3,421 | 2,605 | 816 | 31% |
EBITDA(1) for the period | $ (3,319) | $ (2,519) | (800) | 32% |
Share-based compensation | 30 | 490 | (460) | (94%) |
Acquisition and divestiture-related, integration and restructuring costs | 950 | 2,474 | (1,524) | (62%) |
Change in fair value of contingent consideration | - | (2,736) | 2,736 | (100%) |
Change in fair value of liability to non-controlling interest | 549 | 129 | 420 | 326% |
Net loss from discontinuing operations | 143 | 509 | (366) | (72%) |
Adjusted EBITDA(1) for the period | $ (1,647) | $ (1,653) | 6 | -% |
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(1) EBITDA and Adjusted EBITDA are non-GAAP measures. Refer to the Non-GAAP Financial Measures section of the MD&A (1) EBITDA and Adjusted EBITDA are non-GAAP measures. Refer to the Non-GAAP Financial Measures section of the MD&A
Forward-Looking Information and Statements This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. [ MORE ] |
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