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CloudMD Reports 2022 Results for the Full Year and Fourth Quarter, Annual Revenue up 63% to $114.4M, but Net Loss Rises
Friday, April 28, 2023Company Profile | Follow Company
Victoria, BC, April 27, 2023--(T-Net)--CloudMD Software & Services Inc. (TSXV: DOC), a health services company transforming the delivery of care, announced its financial results for the fourth quarter and year ended December 31, 2022. All financial information is presented in Canadian dollars unless otherwise indicated.
"2022 was a pivotal year for CloudMD as we focused on the divestment of non-core assets, cost alignment and revenue growth. Throughout the year, we had strong sales activity based on our team's ability to strengthen the unique value proposition of our integrated health and wellness program, Kii, however, it was overshadowed by the end of one-time COVID related contracts and lower revenues from the divestment of non-core assets," said Karen Adams, CEO of CloudMD
"The actions taken by the team in 2022 will accelerate organic revenue growth both in new customer acquisition and in growing wallet share with long term clients. By operating as one integrated company we have a structure that we expect will enable us to generate positive adjusted EBITDA and cash flow in the near future. We have been able to bring to market a comprehensive set of services, all connected by a common focus on empowering healthier living. The combination of the expertise of our people, our robust set of evidence-based services, and our laser focus on executing our strategic plan is what will enable sustainable revenue growth in 2023 and beyond."
"Exiting 2022, we had established a new baseline for our business in Q4. We expect revenue growth through the adoption of our full suite of health and wellness services going forward, and on the cost side, our work streamlining the organization is resulting in reduced cash operating expenses, said John Plunkett, CFO of CloudMD. "As we continue to streamline the business, we expect more efficiencies to be realized in 2023 and expansion of gross and operating margins. We exited the year with $24 million in cash, and we expect positive improvement in cash use in the back half of 2023."
Fourth Quarter 2022 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 last 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.
To this end, during the fourth quarter of 2022, the Company completed the sale of its BC-based primary care clinics, Cloud Practice and two pharmacy assets, all of which were considered non-core. Along with divestitures, the Company had three non-recurring headwinds during 2022; the end of contracts for COVID testing support; a change in the contract from the Ontario government for COVID-19 Mental Health Support and lower volumes from VisionPros. The Company views Q4 as a good baseline for its business, with the majority of revenue being recurring.
The Company expects low double digit revenue growth in 2023 off the fourth quarter baseline. The Company sold $12.2 million in multi-year contracts in 2022 and has a robust pipeline that will continue to drive revenue growth in 2023.
During the fourth quarter, the Company identified and actioned approximately $5.0 million in annual cost reductions to realign its cost base. After year end, during Q1 2023, the Company realized additional annualized cost reductions of $1.0 million. In addition, the Company is expecting to action another $4.0 million of annual net cost savings in Q2 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 quarter of 2023, will bring the Company closer to Adjusted EBITDA breakeven. As of the date of this MD&A, the Company expects to achieve this milestone in the fourth quarter of 2023.
The Company believes its cash position of $24.1 million, will provide sufficient liquidity to fund its obligations and fund organic growth. The Company will continue to prudently manage expenditures and seek further efficiencies in its cost structure.
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 | Three months ended December 31 |
Year ended December 31 |
||
2022 | 2021 | 2022 | 2021 | |
Revenue | $ 25,861 | $ 28,112 | $ 114,456 | $ 70,055 |
Cost of sales | 16,856 | 17,769 | 74,258 | 43,397 |
Gross profit | $ 9,005 | $ 10,343 | $ 40,198 | $ 26.658 |
Gross profit % | 34.8% | 36.8% | 35.1% | 38.1% |
Indirect Expenses | ||||
Sales and marketing | 1,971 | 1,507 | 8,942 | 5,496 |
Research and development | 336 | (141) | 3,954 | 1,604 |
General and administrative | 9,414 | 9,136 | 39,139 | 21,667 |
Share-based compensation | (22) | 647 | 1,273 | 5,223 |
Depreciation and amortization | 3,467 | 2,277 | 14,106 | 5,687 |
Financing-related costs | 16 | (12) | 16 | 859 |
Acquisition and divestiture-related, integration and restructuring costs | 2,313 | 2,391 | 11,545 | 7,838 |
Impairment | 6,441 | 2,736 | 119,593 | 2,736 |
Operating loss | $ (14,931) | $ (8,198) | $ (158,370) | $ (24,452) |
Other income | 144 | 75 | 627 | 411 |
Change in fair value of contingent consideration | (250) | 505 | 6,564 | 1,471 |
Finance costs | (678) | (76) | (2,270) | (931) |
Loss on sale of joint venture | - | - | (221) | - |
Current and deferred income tax recovery/(expense) | 4,037 | 194 | 4,779 | (355) |
Net loss for the period from continuing operations | (11,678) | (7,500) | (148,891) | (23,856) |
Net loss after tax from discontinuing operations | (1,300) | (5,529) | (8.800) | (6,882) |
Net loss for the period | $ (12,978) | $ (13,029) | $ (157,691) | $ (30,738) |
Add: | ||||
Depreciation and amortization | 3,467 | 2,277 | 14,106 | 5,687 |
Finance costs | 678 | 76 | 2,270 | 931 |
Impairment | 6,441 | 2,736 | 119,593 | 2,736 |
Current and deferred income tax recovery/(expense) | (4,037) | (194) | (4,779) | 355 |
EBITDA (1) | $ (6,429) | $ (8,134) | $ (26,501) | $ (21,029) |
Share-based compensation | (22) | 647 | 1,273 | 5,223 |
Financing-related costs | 16 | (12) | 16 | 859 |
Acquisition and divestiture-related, integration and restructuring costs | 2,313 | 2,391 | 11,545 | 7,838 |
Litigation costs | - | - | 555 | 83 |
Change in fair value of contingent consideration | 250 | (505) | (6,564) | (1,471) |
Net loss after tax from discontinuing operations | 1,300 | 5,529 | 8,800 | 6,882 |
Loss on sale of joint venture | - | - | 221 | - |
Adjusted EBITDA (1) | $ (2,572) | $ (84) | $ (10,655) | $ (1,615) |
Loss per share, basic and diluted | (0.04) | (0.06) | (0.55) | (0.15) |
Loss per share from continuing operations, basic and diluted | (0.04) | (0.03) | (0.52) | (0.11) |
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.
1 Adjusted EBITDA is a non-GAAP measure. Refer to the "Non-GAAP Financial Measures" section of this news release for further information and the detailed reconciliation to the most directly comparable measure under IFRS set out above.
2 Adjusted EBITDA is a non-GAAP ratio. Refer to the "Non-GAAP Financial Measures" section of this news release for further information.
Financial Statements and Management's Discussion and Analysis
This news release should be read in conjunction with the Company's audited consolidated financial statements and accompanying notes, and management's discussion and analysis ("MD&A") for the three months and year ended December 31, 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 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, 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, impairment, depreciation, amortization, share-based compensation, financing-related costs, acquisition and divestiture-related, integration and restructuring costs, litigation costs, change in fair value of contingent consideration, net loss after tax from discontinuing operations and loss on sale of joint venture. 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 and years ended December 31, 2022 and 2021.
Three months ended December 31, | Variance | Year ended December 31, | Variance | |||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | |
Net loss | $ (12,978) | $ (13,029) | 51 | 0% | $(157,691) | $ (30,738) | 126,953 | 413% |
Add: | ||||||||
Interest and accretion expense | 678 | 76 | 602 | 792% | 2,270 | 931 | 1,339 | 144% |
Current deferred and income tax expense/(recovery) | (4,037) | (194) | (3,843) | 1,943 | (4,779) | 355 | (5,134) | (1,446%) |
Impairment | 6,441 | 2,736 | 3,705 | 135% | 119,593 | 2,736 | 116,857 | 4,271% |
Depreciation and amortization | 3,467 | 2,277 | 1,190 | 52% | 14,106 | 5,687 | 8,419 | 148% |
EBITDA(1) for the period | $ (6,429) | $ (8,134) | 1,705 | 21% | $ (26,501) | $ (21,029) | (5,472) | (26%) |
Share-based compensation | (22) | 647 | (669) | (103%) | 1,273 | 5,223 | (3,950) | (76%) |
Financing-related costs | 16 | (12) | 28 | (233%) | 16 | 859 | (843) | (98%) |
Acquisition and divestiture-related, integration and restructuring costs | 2,313 | 2,391 | (78) | (3%) | 11,545 | 7,838 | 3,707 | 47% |
Litigation costs and loss provision | - | - | - | NM | 555 | 83 | 472 | 569% |
Change in fair value of contingent consideration | 250 | (505) | 755 | (150%) | (6,564) | (1,471) | (5,093) | 346% |
Net loss from discontinuing operations | 1,300 | 5,529 | (4,229) | (76%) | 8,800 | 6,882 | 1,918 | 28% |
Loss on sale of joint venture | - | - | - | NM | 221 | - | 221 | 100% |
Adjusted EBITDA(1) for the period | $ (2,572) | $ (84) | (2,488) | 2962% | $ (10,655) | $ (1,615) | (9,040) | 560% |
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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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