Landmark contract for our EAP, $90 million in ARR, and member count in excess of
2 million highlight another strong quarterly performance
MONTREAL, May 9, 2022
/CNW Telbec/ - Dialogue Health Technologies Inc. (TSX: CARE)
("Dialogue" or the "Company"), Canada's premier health and wellness virtual
healthcare platform, announced today its financial and operational
results for the three months and three months ended March 31, 2022. Financial references are in
Canadian dollars unless otherwise indicated.
"The team is executing very well on our growth strategy,
building a robust and unparalleled integrated health platform that
is resonating deeply with customers," said Cherif Habib, Chief
Executive Officer of Dialogue. "In the first quarter, we continued
to gain market share with our virtual EAP and signed more than 60%
of our new customers to multiple services. With the recent
acquisition of Tictrac, we are adding a wellness component to our
platform that will allow us to engage members more frequently
throughout their journey to better health and well-being. As in
years past, 2022 is shaping up to be our most exciting one
yet."
Navaid Mansuri, Chief Financial
Officer, added: "We exceeded two million members during the quarter
and ended the period with more than $90
million in ARR. On the heels of many large customer wins in
the last two quarters, we invested in our operations to ensure that
we can successfully support our customers with best-in-class
service, as we always have. We are well positioned for growth ahead
and expect that our margins and operating leverage will continue to
improve in the coming quarters, putting us well on track to achieve
our profitability objectives in the second half of 2023."
Q1 2022 Financial Highlights
(All capitalized terms
not defined herein, shall have the meaning and usefulness ascribed
to them in the Management's Discussion and Analysis for the three
months ended March 31, 2022.
Comparison periods in each case are the three months ended
March 31, 2021, unless otherwise
stated.)
- Annual Recurring and Reoccurring Revenue ("ARR") grew 38.4%
year-over-year to $90.3 million,
driven by new Customer wins. In addition to our previously
announced agreement with Scotiabank, these wins also include a
leading retailer of optical products, a large healthcare consulting
services firm, a multinational computer software technology
corporation, and a digital media and internet company. We also saw
several important program expansions and the addition of new
services by existing Customers, including a large video game
company and a global provider of e-commerce software.
- Revenue in the first quarter of 2022 increased by 35.8%
year-over-year to $20.7 million, due
to growth in Members, both Direct and from agreements with
strategic distribution partners, and an increase in the Attach Rate
as existing Customers add more services over time.
- Members grew to more than 2.0 million, an increase of nearly
800,000, or 61.4%, year-over-year, and approximately 200,000, or
10.7%, compared to the fourth quarter of 2021.
- Attach Rate grew to 1.51 from 1.08 in the first quarter last
year, mainly due to the addition of our internet-based cognitive
and behavioural therapy ("iCBT") to Canada Life's Consult+
platform.
- Member-Service Units, which we define as total Members
multiplied by the Attach Rate, rose 125.6% year-over-year to just
under 3.1 million from approximately 2.0 million in the first
quarter last year. This meaningful increase demonstrates the
success of Dialogue's land and expand strategy, as both existing
and new Customers continue to leverage our Integrated Health
PlatformTM.
- 61% of new direct Members signed up for two services or more in
the first quarter of 2022. Combined with current Customer
expansions, the cumulative number of direct Members with two or
more services was 22% at the end of the first quarter of 2022,
compared to 16% at the same time last year and 21% at the end of
the fourth quarter of 2021.
- Average Monthly Net Retention Rate ("NRR") was 101% for the
first quarter of 2022, marking another quarter of NRR greater than
100%. During the period, we experienced a low churn of
approximately 0.24%, or 4,400 members, within our mid-market and
enterprise customer categories. Furthermore, we communicated and
successfully implemented pricing increases to many customers whose
contracts were renewing at the start of the year.
- Gross Margin increased to 42.3%, compared to 41.5% in the first
quarter of 2021, as we realized efficiencies in our operations,
mainly due to the continued scaling of our Mental Health service
and Employee Assistance Program ("EAP") as well as to the migration
of Optima Customers to our Dialogue EAP. This was offset in part by
the timing of investments to support the planned onboarding of
several large customers in the second quarter of 2022, prior to the
recognition of revenue from those customers.
- Adjusted EBITDA1 loss was $5.7 million, compared to a loss of $5.0 million in the same period last year. The
increase was due mainly to a planned increase in operating expenses
year-over-year to support our growth, to launch and promote new
services, to develop our technology platform, and to sustain a
public company structure, partially offset by higher gross
profit.
- Net loss was $7.1 million,
compared to $231.2 million in the
same period last year. The decrease was primarily due to the
accounting charge in the first quarter of 2021 related to the
increase in the fair market value conversion feature of the Class B
preferred shares as well as an increase in operating expenses,
partially offset by higher gross profit.
- Cash and Cash Equivalents were $96.0
million as of March 31, 2022,
compared to $104.3 million as of
December 31, 2021. The decrease was
the result of cash used in operations during the quarter.
______________________________
|
1 Adjusted EBITDA is a
Non-IFRS financial measure. Refer to the reconciliation contained
in the Non-IFRS Financial Measures section, beginning on page 3 of
this earnings release.
|
Q1 2022 Business Highlights and Subsequent Events
- On January 11, 2022, we published
our 2nd annual Canadian Attitudes on Health and
Virtual Care Report, a joint study with Environics Research.
Key findings provide strong evidence that working Canadians support
the provision of virtual care services through their benefit
plans.
- On February 22, 2022, we
announced an agreement to offer our virtual EAP to more than 38,000
employees at Scotiabank, beginning on April
1, 2022. This represented our largest direct customer win to
date for that service.
- On March 17, 2022, we published a
report that we co-sponsored with Sun Life, which analyzed the
economic impact of telemedicine on Canada's healthcare system. The Economic
Impact of Telemedicine in Canada report, compiled by AppEco,
estimates that governments across Canada could save up to $1 billion per year by 2025 with the adoption of
telemedicine platforms.
- Subsequent to quarter end, on April 13,
2022, we acquired London,
UK-based Tictrac Ltd. for up to $56
million (£35 million), subject to certain earn-out
conditions. Tictrac is a SaaS-based provider of a global health and
wellness platform that enables healthier living for everyone. The
transaction was closed successfully on April
30, 2022.
- Subsequent to quarter end, on April 21,
2022, we launched Mental Health+, building on the success of
our stress management and well-being service and iCBT. This
comprehensive offering will be available to all new clients and to
existing clients who wish to transition from their existing
program.
- We have been recognized by Great Place to Work® in the Best
WorkplacesTM for Women Canada 2022 category.
Upcoming events
- Roth Canada Corporate Access Day in New York City on May
17, 2022.
- RBC Capital Markets 2022 Global Healthcare Conference in
New York City on May 18, 2022.
- CIBC Capital Markets Technology and Innovation Conference 10.0
in Toronto on May 26, 2022.
- National Bank Financial 12th Annual Quebec
Conference in Toronto on
June 9, 2022.
Notice of Conference Call
Dialogue will host a live video webinar on Tuesday, May 10,
2022 at 9:00 a.m. ET to discuss its
financial results. Cherif Habib, CEO, and Navaid Mansuri, CFO, will co-chair the call. All
interested parties can join the event at the following link, which
is also available in the Events and Presentations section of the
Company's website. The presentation will be accompanied by slides,
which will be available on the screen view and will be made
available prior to the start of the webinar on the Company's
website. Please connect at least 15 minutes prior to the event to
ensure adequate time for any software download of Zoom that may be
required to attend the event. Listeners that prefer to dial in by
phone may do so by accessing the same web link and the dial in
details will be provided by email upon registration.
Non-International Financial Reporting Standards ("IFRS")
Financial Measures
This press release makes reference to certain non-IFRS measures,
such as "EBIT" represents net profit or loss before net
financing (income) expenses and income taxes, "EBITDA"
(which stands for net profit or loss before net financing (income)
expenses, income taxes, depreciation of property and equipment,
amortization of intangible assets, and amortization of right-of-use
assets) and "Adjusted EBITDA" (which stands for net
profit or loss before net financing (income) expenses, income
taxes, depreciation of property and equipment, amortization of
intangible assets, amortization of right-of-use assets, transaction
costs, acquisition costs, change in fair value of conversion
feature, share-based payments expense, change in fair value of
contingent consideration, severance costs, and foreign exchange
gain or loss). These measures are not recognized under IFRS and do
not have a standardized meaning prescribed by IFRS and are
therefore unlikely to be comparable to similar measures presented
by other companies. Rather, these measures are provided as
additional information to complement those IFRS measures by
providing further understanding of our results of operations from
management's perspective. Accordingly, these measures should not be
considered in isolation nor as a substitute for analysis of our
financial information as reported under IFRS. Management also
believes that other users, such as securities analysts, investors
and other interested parties, frequently use non-IFRS measures,
particularly in the evaluation of issuers.
Management also uses non-IFRS measures in order to facilitate
operating performance comparisons from period to period, to prepare
annual operating budgets and forecasts and to determine components
of management compensation. Where applicable, we provide a clear
quantitative reconciliation from the non-IFRS financial measures to
the most directly comparable measure calculated in accordance with
IFRS.
The following table reconciles net loss to Adjusted EBITDA loss
for the three months ended March 31,
2022 and 2021:
DIALOGUE HEALTH TECHNOLOGIES
INC.
ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED
MARCH 31, 2022 and 2021
(in thousands of
CAD)
|
|
Three months
ended March
31,
|
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
|
|
|
|
Net loss
|
|
(7,068)
|
|
(231,235)
|
Net financing (income)
expenses
|
|
(25)
|
|
188
|
Current income tax
expense
|
|
—
|
|
—
|
Deferred income tax
recovery
|
|
(85)
|
|
(105)
|
EBIT
|
|
(7,178)
|
|
(231,152)
|
Depreciation of
property and equipment
|
|
148
|
|
109
|
Amortization of
intangible assets
|
|
402
|
|
330
|
Amortization of
right-of-use assets
|
|
150
|
|
148
|
EBITDA
|
|
(6,478)
|
|
(230,565)
|
Share-based payments
expense
|
|
568
|
|
97
|
Acquisition
costs
|
|
94
|
|
43
|
Change in fair value of
conversion feature
|
|
—
|
|
225,417
|
Change in fair value of
contingent consideration
|
|
91
|
|
—
|
Adjusted
EBITDA
|
|
(5,725)
|
|
(5,008)
|
About Dialogue
Incorporated in 2016, Dialogue is
Canada's premier virtual
healthcare and wellness platform, providing affordable, on-demand
access to quality care. Through our team of health professionals,
we serve employers and organizations who have an interest in the
health and well-being of their employees, members and their
families. Our Integrated Health Platform™ is a one-stop healthcare
hub that centralizes all of our programs in a single, user-friendly
application, providing access to services 24 hours per day,
365 days per year from the convenience of a smartphone, computer or
tablet.
Forward-Looking Information
This release includes "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
statements") within the meaning of applicable securities laws.
Forward-looking information may relate to our financial outlook
(including revenues and Adjusted EBITDA), and anticipated events or
results and may include information regarding our financial
position, business strategy, growth strategies, addressable
markets, budgets, operations, financial results, taxes, dividend
policy, plans and objectives.
In some cases, but not necessarily in all cases, forward-looking
statements can be identified by the use of forward-looking
terminology such as "plans" "targets", "expects" or "does not
expect", "is expected", "an opportunity exists", "is positioned",
"estimates", "intends", "assumes", "anticipates" or "does not
anticipate" or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might", "will" or "will be taken", "occur" or "be
achieved". In addition, any statements that refer to expectations,
projections or other characterizations of future events or
circumstances contain forward-looking statements. Forward-looking
statements are not historical facts, nor guarantees or assurances
of future performance but instead represent management's current
beliefs, expectations, estimates and projections regarding future
events and operating performance.
Forward-looking statements are necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by Dialogue as of the date of this release, are subject
to inherent uncertainties, risks and changes in circumstances that
may differ materially from those contemplated by the
forward-looking statements. Important factors that could cause
actual results to differ, possibly materially, from those indicated
by the forward-looking statements include, but are not limited to,
the risk factors identified under "Risk Factors" in the Company's
latest annual information form, and in other periodic filings that
the Company has made and may make in the future with the securities
commissions or similar regulatory authorities in Canada, all of which are available under the
Company's SEDAR profile at www.sedar.com. These factors are not
intended to represent a complete list of the factors that could
affect Dialogue. However, such risk factors should be considered
carefully. There can be no assurance that such estimates and
assumptions will prove to be correct. You should not place undue
reliance on forward-looking statements, which speak only as of the
date of this release. Dialogue undertakes no obligation to publicly
update any forward-looking statement, except as required by
applicable securities laws.
Although we have attempted to identify important risk factors
that could cause actual results to differ materially from those
contained in forward-looking information, there may be other risk
factors not currently known to us or that we currently believe are
not material that could also cause actual results or future events
to differ materially from those expressed in such forward-looking
information. There can be no assurance that such information will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information.
Accordingly, you should not place undue reliance on forward-looking
information. The forward-looking information represents our
expectations as of the date of this earnings release (or as the
date it is otherwise stated to be made) and is subject to change
after such date. However, we disclaim any intention or obligation
or undertaking to update or revise any forward-looking information
whether as a result of new information, future events or otherwise,
except as required under applicable Canadian securities laws. All
of the forward-looking information contained in this earnings
release is expressly qualified by the foregoing cautionary
statements.
DIALOGUE HEALTH TECHNOLOGIES
INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF NET LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31,
2022 AND 2021
(in thousands of CAD
except share and per share data)
|
|
Three months
ended March
31,
|
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
|
|
|
|
Revenue
|
|
20,686
|
|
15,238
|
Cost of
services
|
|
11,926
|
|
8,908
|
Gross profit
|
|
8,760
|
|
6,330
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
General and
administrative
|
|
9,445
|
|
7,583
|
Sales and
marketing
|
|
3,227
|
|
2,398
|
Product and
development
|
|
2,675
|
|
1,987
|
Share-based payments
expense
|
|
568
|
|
97
|
|
|
15,915
|
|
12,065
|
|
|
|
|
|
Operating
loss
|
|
(7,155)
|
|
(5,735)
|
|
|
|
|
|
Other
expenses
|
|
|
|
|
Change in fair value of
conversion feature
|
|
—
|
|
225,417
|
Net financing (income)
expenses
|
|
(25)
|
|
188
|
|
|
(25)
|
|
225,605
|
|
|
|
|
|
Net loss before
income taxes
|
|
(7,130)
|
|
(231,340)
|
Current income tax
(expense)
|
|
(23)
|
|
—
|
Deferred income tax
recovery
|
|
85
|
|
(105)
|
Net
loss
|
|
(7,068)
|
|
(231,235)
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to net loss
|
|
|
|
|
Foreign currency
translation gain
|
|
360
|
|
311
|
|
|
|
|
|
Total comprehensive
loss
|
|
(6,708)
|
|
(230,924)
|
|
|
|
|
|
Loss per share -
basic and diluted
|
|
(0.11)
|
|
(3.55)
|
DIALOGUE HEALTH TECHNOLOGIES INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT MARCH 31, 2022 AND
DECEMBER 31, 2021
(in thousands of
CAD)
|
March
31,
|
|
December
31,
|
|
2022
|
|
2021
|
|
$
|
|
$
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and
cash equivalents
|
96,017
|
|
104,296
|
Trade and
other receivables
|
15,464
|
|
13,659
|
Prepaid
expenses
|
1,683
|
|
1,811
|
|
113,164
|
|
119,766
|
|
|
|
|
Property and
equipment
|
1,252
|
|
1,137
|
Right-of-use
assets
|
1,404
|
|
1,568
|
Intangible
assets
|
5,421
|
|
5,819
|
Goodwill
|
7,007
|
|
6,963
|
Investment
|
1,004
|
|
—
|
|
129,252
|
|
135,253
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
Trade
payable and accrued liabilities
|
9,401
|
|
9,534
|
Unearned
revenue
|
584
|
|
68
|
Current
portion of contingent consideration payable
|
760
|
|
718
|
Current
portion of long-term debt
|
400
|
|
400
|
Current
portion of lease liabilities
|
482
|
|
541
|
|
11,627
|
|
11,261
|
|
|
|
|
Non-current portion of
lease liabilities
|
768
|
|
911
|
Non-current portion of
long-term debt
|
974
|
|
1,074
|
Non-current portion of
contingent consideration payable
|
1,378
|
|
1,300
|
Deferred income tax
liability
|
685
|
|
766
|
|
15,432
|
|
15,312
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
458,983
|
|
458,962
|
Equity
reserve
|
4,080
|
|
3,514
|
Cumulative translation
adjustment
|
707
|
|
347
|
Deficit
|
(349,950)
|
|
(342,882)
|
|
113,820
|
|
119,941
|
|
129,252
|
|
135,253
|
DIALOGUE HEALTH TECHNOLOGIES INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
2022 AND 2021
(in thousands of
CAD)
|
Three months
ended March
31,
|
|
2022
|
|
2021
|
|
$
|
|
$
|
Operating
activities
|
|
|
|
Net loss
|
(7,068)
|
|
(231,235)
|
Items not affecting
cash
|
|
|
|
Change in
fair value of the contingent consideration- eHH
|
91
|
|
—
|
Income tax
recovery
|
(85)
|
|
(105)
|
Change in
conversion feature on preferred shares
|
—
|
|
225,417
|
Depreciation of property and equipment
|
148
|
|
109
|
Amortization of right-of-use assets
|
150
|
|
148
|
Net
financing (income) expenses
|
(25)
|
|
254
|
Amortization of intangible assets
|
402
|
|
330
|
Share-based payments
|
568
|
|
97
|
|
(5,819)
|
|
(4,985)
|
Net changes in non-cash
operating working capital items
|
|
|
|
Trade and
other receivables
|
(1,804)
|
|
(1,240)
|
Prepaid
expenses
|
128
|
|
(455)
|
Trade and
other payables
|
(133)
|
|
2,093
|
Unearned
revenue
|
516
|
|
499
|
Interest
paid
|
(30)
|
|
(14)
|
Interest
income
|
68
|
|
—
|
|
(7,074)
|
|
(4,102)
|
|
|
|
|
Investing
activities
|
|
|
|
Investment
|
(1,004)
|
|
—
|
Purchase
of property and equipment
|
(268)
|
|
(187)
|
Purchase
of intangible assets
|
—
|
|
(18)
|
Sale of
asset held for sale
|
—
|
|
910
|
Acquisition of Botfront
|
—
|
|
(292)
|
|
(1,272)
|
|
413
|
Financing
activities
|
|
|
|
Issuance
of shares
|
—
|
|
100,008
|
Share
issue costs
|
—
|
|
(9,371)
|
Options
exercised
|
20
|
|
392
|
Repayment
of liability related to asset held for sale
|
—
|
|
(430)
|
Repayment
of long-term debt
|
(100)
|
|
(100)
|
Repayment
of lease liabilities
|
(213)
|
|
(166)
|
|
(293)
|
|
90,333
|
Effect of foreign
currency translation
|
360
|
|
311
|
Net (decrease) increase
in cash and cash equivalents
|
(8,279)
|
|
86,955
|
Cash and cash
equivalents, beginning of the period
|
104,296
|
|
42,067
|
Cash and cash
equivalents, end of the period
|
96,017
|
|
129,022
|
SOURCE Dialogue Health Technologies Inc.