Strong performance fueled by $6 million
in new ARR, 52% growth in the digital business, and significant
progress towards profitability objectives
MONTREAL, Nov. 14,
2022 /CNW/ - 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 and nine months ended September 30, 2022. Financial references are in
Canadian dollars unless otherwise indicated.
"Dialogue delivered solid performance across all services. We
generated 37% growth in revenue year-over-year, improved our gross
margin significantly, and demonstrated strong cost discipline.
Importantly, our core business, the Dialogue Integrated Health
PlatformTM, was particularly robust with growth of 52%
year-over-year," said Cherif Habib, Chief Executive Officer of
Dialogue. "Despite the challenging macroeconomic environment,
the employment backdrop remains healthy in Canada, and organizations continue to invest
in their employee benefits and support. At the same time, we are
maintaining our focus on improving the member experience,
delivering better health and wellness outcomes, and making
high-quality care more convenient and more accessible to
all."
Navaid Mansuri, Chief Financial
Officer, added: "We delivered a solid quarter for shareholders
and continued to invest responsibly towards the execution of our
long-term strategy. We focused on driving growth, adding
$6 million of new Annual Recurring
Revenue, and made steady improvements in our platform and business.
We stayed the course with our profitability objectives, reducing
the adjusted EBITDA loss to $3.9
million, and, through strong working capital management,
used less than $2.5 million of cash.
We remain excited by the opportunities we see ahead and confident
in our ability to maintain our leadership position in the
market."
Q3 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 and nine months ended September
30, 2022. Comparison periods in each case are the three and
nine months ended September 30, 2021,
unless otherwise stated.)
- Annual Recurring and Reoccurring Revenue ("ARR") grew 29.7%
year-over-year to $97.8 million,
driven by new Customer wins and by our acquisition of Tictrac Ltd.
("Tictrac"), but offset in large part by a decline in foreign
currencies and by the non-renewal of a customer in our legacy
Optima business. Dialogue's core digital business in Canada, which represents nearly 80% of the
overall ARR, increased 51% year-over-year. New customer wins in the
third quarter of 2022 include a global packaging equipment
manufacturer and a national fashion retail chain. Moreover, our
relationship with a leading provider of student health plans in
Canada continues to expand, as
many colleges and universities take important steps to support the
health and well-being of their students. We also saw the addition
of new services by several existing Customers, including a leading
distributor of automotive parts.
- Revenue in the third quarter of 2022 increased by 37.0%
year-over-year to $23.6 million, due
to growth in Members, both Direct and from agreements with
strategic distribution partners, an increase in the Attach Rate as
existing Customers add more services, and the acquisition of
Tictrac.
- Members grew to more than 2.7 million, an increase of
approximately 950,000, or 53.9%, year-over-year, and nearly
320,000, or 13.2%, compared to the second quarter of 2022.
Excluding the contribution from Tictrac, Members grew 38.5%
year-over-year to more than 2.4 million.
- Attach Rate grew to 1.53 from 1.11in the third quarter last
year.
- Member-Service Units ("MSUs"), which we define as total Members
multiplied by the Attach Rate, rose 112.1% year-over-year to nearly
4.2 million from approximately 2.0 million in the third quarter
last year. Excluding the contribution from Tictrac, MSUs grew 98.5%
year-over-year to nearly 3.9 million. This increase demonstrates
the success of Dialogue's land & expand strategy, as both
existing and new Customers continue to leverage our integrated
services.
- 65% of new direct Members signed up for two services or more in
the third quarter of 2022. Combined with current Customer
expansions, the cumulative number of direct Members with two or
more services was 30% at the end of the third quarter of 2022,
compared to 17% at the same time last year and 21% at the end of
the fourth quarter of 2021.
- Average Monthly Net Retention Rate ("NRR") was 101.5% for the
third quarter of 2022, marking another consecutive quarter of NRR
greater than 100%. Churn within our mid-market and enterprise
customer segments remained low in the period at approximately 2,800
members.
- Gross Margin increased to 52.2%, compared to 42.6% in the third
quarter of 2021, as we realized efficiencies in our operations,
continued to implement pricing increases to eligible Customers,
continued to scale our Mental Health service and Employee
Assistance Program ("EAP"), and integrated Tictrac's higher margin
Wellness service.
- Adjusted EBITDA1 loss was $3.9 million, compared to a loss of $4.9 million in the same period last year. The
smaller loss was due to higher gross profit and strong cost
control, partially offset by a deficit at Tictrac.
- Net loss was $6.0 million,
compared to $6.3 million in the same
period last year. The smaller loss in the third quarter of 2022 was
primarily due to a larger deferred income tax recovery compared to
the third quarter of 2021.
- Cash and Cash Equivalents were $58.7
million as of September 30,
2022, compared to $104.3
million as of December 31,
2021. The decrease was the result of cash used in operations
during the first nine months of the year as well as the initial
cash outlay to close the acquisition of Tictrac.
Q3 2022 Business Highlights and Subsequent
Events
- On July 4, 2022, Sun Life added
Dialogue's Mental Health service to their Lumino Health Virtual
Care platform. On September 1, 2022,
Canada Life added Dialogue's Mental Health service and EAP to the
Consult+ app. In both cases, these additional service are available
to plan sponsors on an opt-in basis and now permit our largest
insurance partners to offer more services from Dialogue's
Integrated Health PlatformTM.
- On September 2, we surpassed the
1 million member milestone in our Direct customer channel.
- Subsequent to quarter end, on October 2,
2022, Sterling Capital Brokers, Canada's largest independent benefits
consultant, partnered with Dialogue to promote health living by
offering our Wellness program to its current and prospective
customers.
- Subsequent to quarter end, on October
11, 2022, myHSA Ltd., an employee benefits platform,
announced a partnership with Dialogue that allows advisors to offer
Dialogue's full suite of services, including Wellness, to
organizations in Canada, through
an easy-to-use central application.
- On November 1, 2022, Dialogue
became the first virtual care company to receive the Accreditation
Canada Primer award, recognizing a high level of quality and safety
of care.
- We were recognized by Great Place to Work® in the 2022 Best
WorkplacesTM in Healthcare.
- We were ranked #29 on the 2022 Report on Business list of
Canada's Top Growing Companies
with a three-year revenue growth of 1,596%.
Financial Outlook
Dialogue is providing an outlook based on current market
conditions and expectations. For the fourth quarter of 2022, we
expect:
- Revenue to be in the range of $24.5
million to $25.0 million.
- Gross profit margin to be in the range of 51.0% to 53.0%.
- Adjusted EBITDA to be in the range of ($3.0) million to ($2.5)
million.
Upcoming Events
- National Bank Financial Technology Conference in Toronto on December 7,
2022.
Notice of Conference Call
Dialogue will host a live video webinar on Tuesday,
November 15, 2022 at 8:30 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" (which stands for 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, restructuring 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. We also believe 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 and nine months ended September 30, 2022 and 2021:
DIALOGUE HEALTH TECHNOLOGIES
INC.
ADJUSTED EBITDA
FOR THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2022
and 2021
(in thousands of CAD)
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(5,992)
|
|
(6,305)
|
|
(21,446)
|
|
(244,211)
|
Net financing
income
|
|
(276)
|
|
(217)
|
|
(470)
|
|
(155)
|
Current income tax
expense
|
|
36
|
|
—
|
|
84
|
|
—
|
Deferred income tax
recovery
|
|
(538)
|
|
(90)
|
|
(789)
|
|
(244)
|
EBIT
|
|
(6,770)
|
|
(6,612)
|
|
(22,621)
|
|
(244,610)
|
Depreciation of
property and equipment
|
|
52
|
|
81
|
|
456
|
|
347
|
Amortization of
intangible assets
|
|
669
|
|
421
|
|
1,575
|
|
1,125
|
Amortization of
right-of-use assets
|
|
223
|
|
150
|
|
574
|
|
448
|
EBITDA
|
|
(5,826)
|
|
(5,960)
|
|
(20,016)
|
|
(242,690)
|
Share-based payments
expense
|
|
1,090
|
|
997
|
|
2,612
|
|
1,384
|
Acquisition
costs
|
|
356
|
|
49
|
|
990
|
|
230
|
Change in fair value of
conversion feature
|
|
—
|
|
—
|
|
—
|
|
225,417
|
Change in fair value of
contingent consideration
|
|
133
|
|
—
|
|
267
|
|
—
|
Restructuring
costs
|
|
39
|
|
—
|
|
53
|
|
—
|
Foreign exchange loss
(gain)
|
|
275
|
|
—
|
|
1,609
|
|
87
|
Adjusted EBITDA
|
|
(3,933)
|
|
(4,914)
|
|
(14,485)
|
|
(15,572)
|
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 (LOSS)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(in thousands of CAD
except share and per share data)
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
|
|
|
|
|
|
Revenue
|
23,614
|
|
17,235
|
|
67,338
|
|
49,133
|
Cost of
services
|
11,295
|
|
9,891
|
|
34,814
|
|
28,550
|
Gross profit
|
12,319
|
|
7,344
|
|
32,524
|
|
20,583
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
General and
administrative
|
12,084
|
|
7,955
|
|
35,201
|
|
23,788
|
Sales and
marketing
|
3,116
|
|
2,940
|
|
9,505
|
|
8,337
|
Product and
development
|
2,799
|
|
2,064
|
|
7,827
|
|
6,267
|
Share-based payments
expense
|
1,090
|
|
997
|
|
2,612
|
|
1,384
|
|
19,089
|
|
13,956
|
|
55,145
|
|
39,776
|
|
|
|
|
|
|
|
|
Operating
loss
|
(6,770)
|
|
(6,612)
|
|
(22,621)
|
|
(19,193)
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
Change in fair value of
conversion feature
|
—
|
|
—
|
|
—
|
|
225,417
|
Net financing
income
|
(276)
|
|
(217)
|
|
(470)
|
|
(155)
|
|
(276)
|
|
(217)
|
|
(470)
|
|
225,262
|
|
|
|
|
|
|
|
|
Net loss before income taxes
|
(6,494)
|
|
(6,395)
|
|
(22,151)
|
|
(244,455)
|
Current income tax
expense
|
36
|
|
—
|
|
84
|
|
—
|
Deferred income tax
recovery
|
(538)
|
|
(90)
|
|
(789)
|
|
(244)
|
Net loss
|
(5,992)
|
|
(6,305)
|
|
(21,446)
|
|
(244,211)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss)
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to net
loss
|
|
|
|
|
|
|
Foreign currency
translation (loss) gain
|
(352)
|
(94)
|
|
261
|
|
535
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
(6,344)
|
|
(6,399)
|
|
(21,185)
|
|
(243,676)
|
|
|
|
|
|
|
|
|
Loss per share - basic and
diluted
|
(0.09)
|
|
(0.10)
|
|
(0.32)
|
|
(4.62)
|
DIALOGUE HEALTH TECHNOLOGIES INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT SEPTEMBER 30, 2022 AND
DECEMBER 31, 2021
(in thousands of
CAD)
|
September 30,
|
|
December 31,
|
|
|
|
2022
|
|
2021
|
|
|
|
$
|
|
$
|
|
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash
equivalents
|
58,738
|
|
104,296
|
|
|
Trade and other
receivables
|
19,932
|
|
13,659
|
|
|
Prepaid
expenses
|
3,121
|
|
1,811
|
|
|
|
81,791
|
|
119,766
|
|
|
|
|
|
|
|
|
Investment
|
1,004
|
|
—
|
|
|
Property and
equipment
|
1,181
|
|
1,137
|
|
|
Right-of-use
assets
|
1,571
|
|
1,568
|
|
|
Intangible
assets
|
8,548
|
|
5,819
|
|
|
Goodwill
|
27,426
|
|
6,963
|
|
|
Deferred income tax
asset
|
3,464
|
|
—
|
|
|
|
124,985
|
|
135,253
|
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Trade payable and
accrued liabilities
|
14,783
|
|
9,534
|
|
|
Unearned
revenue
|
489
|
|
68
|
|
|
Current portion of
contingent consideration payable
|
3,977
|
|
718
|
|
|
Current portion of
long-term debt
|
400
|
|
400
|
|
|
Current portion of
lease liabilities
|
798
|
|
541
|
|
|
|
20,447
|
|
11,261
|
|
|
|
|
|
|
|
|
Non-current portion of
lease liabilities
|
573
|
|
911
|
|
|
Non-current portion of
long-term debt
|
807
|
|
1,074
|
|
|
Non-current portion of
contingent consideration payable
|
716
|
|
1,300
|
|
|
Deferred income tax
liability
|
764
|
|
766
|
|
|
|
23,307
|
|
15,312
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
Share
capital
|
459,446
|
|
458,962
|
|
|
Equity
reserve
|
5,952
|
|
3,514
|
|
|
Cumulative translation
adjustment
|
608
|
|
347
|
|
|
Deficit
|
(364,328)
|
|
(342,882)
|
|
|
|
101,678
|
|
119,941
|
|
|
|
124,985
|
|
135,253
|
|
|
|
|
|
|
|
|
DIALOGUE HEALTH TECHNOLOGIES INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2022 AND 2021
(in thousands of
CAD)
|
Nine months ended
September 30,
|
|
2022
|
|
2021
|
|
$
|
|
$
|
Operating activities
|
|
|
|
Net loss
|
(21,446)
|
|
(244,211)
|
Items not affecting
cash
|
|
|
|
Increase on contingent
consideration
|
267
|
|
(358)
|
Foreign Exchange gain
on contingent consideration
|
(38)
|
|
—
|
Deferred income tax
recovery
|
(789)
|
|
(244)
|
Change in conversion
feature on preferred shares
|
—
|
|
225,417
|
Depreciation of
property and equipment
|
456
|
|
347
|
Amortization of
right-of-use assets
|
574
|
|
448
|
Net financing
income
|
(470)
|
|
(155)
|
Amortization of
intangible assets
|
1,575
|
|
1,125
|
Loss on intangible
assets write-off
|
115
|
|
—
|
Share-based
payments
|
2,612
|
|
1,384
|
|
(17,144)
|
|
(16,247)
|
Net changes in non-cash
operating working capital items
|
|
|
|
Trade and other
receivables
|
(6,273)
|
|
(470)
|
Prepaid
expenses
|
(1,310)
|
|
(1,657)
|
Trade and other
payables
|
5,249
|
|
1,328
|
Unearned
revenue
|
421
|
|
(266)
|
Interest
paid
|
(138)
|
|
(113)
|
Interest
income
|
519
|
|
544
|
|
(18,676)
|
|
(16,881)
|
Investing activities
|
|
|
|
Purchase of property
and equipment
|
(442)
|
|
(473)
|
Purchase of intangible
assets
|
—
|
|
(87)
|
Sale of asset held for
sale
|
—
|
|
910
|
Acquisition of
Botfront
|
—
|
|
(292)
|
Acquisition of e-hub
Health Pty Ltd. net of cash acquired
|
—
|
|
(3,138)
|
Investment
|
(1,004)
|
|
—
|
Payment of Optima
contingent consideration
|
—
|
|
(1,500)
|
Payment of Botfront
contingent consideration
|
—
|
|
(199)
|
Payment of e-Hub
Health Pty Ltd. contingent consideration
|
(849)
|
|
—
|
Acquisition of Tictrac
Ltd. net of cash acquired
|
(24,253)
|
|
—
|
|
(26,548)
|
|
(4,779)
|
Financing activities
|
|
|
|
Issuance of
shares
|
—
|
|
100,008
|
Share issue
costs
|
—
|
|
(9,371)
|
Performance share
units settled in cash
|
(172)
|
|
—
|
Options
exercised
|
484
|
|
537
|
Repayment of liability
related to asset held for sale
|
—
|
|
(430)
|
Repayment of long-term
debt
|
(200)
|
|
(300)
|
Repayment of lease
liabilities
|
(707)
|
|
(507)
|
|
(595)
|
|
89,937
|
Effect of foreign
currency translation
|
261
|
|
535
|
Net (decrease) increase
in cash and cash equivalents
|
(45,558)
|
|
68,812
|
Cash and cash
equivalents, beginning of the period
|
104,296
|
|
42,067
|
Cash and cash equivalents, end of the
period
|
58,738
|
|
110,879
|
SOURCE Dialogue Health Technologies Inc.