CloudMD Software & Services Inc. (TSXV: DOC, OTCQB: DOCRF,
Frankfurt: 6PH) (the “
Company” or
“
CloudMD”), a telehealth company revolutionizing
the delivery of healthcare to patients, announced its financial
results for the third quarter ending September 30, 2020. All
financial information is presented in Canadian dollars unless
otherwise indicated.
Dr. Essam Hamza, CEO of CloudMD
commented, “I am very pleased with our third quarter results, which
have provided us a strong foundation for continued aggressive
growth. We are well-funded after raising almost $60 million over
the last few months, which will allow us to deploy capital on a
robust pipeline of acquisition targets. Based on our Q3 results,
combined with recently completed and announced acquisitions, we
currently have a solid annualized revenue run rate of $35 million;
through planned accretive acquisitions and organic growth, we are
confident that this run rate will continue to grow in 2021. We
recently closed a number of key acquisitions in Q4 including
Snapclarity, iMD, Benchmark and Re:Function which will provide
meaningful revenue and are fundamental to our new Enterprise Health
Solutions Division. These acquisitions were transformational for us
as we are now one of the only healthcare technology companies to
provide comprehensive primary and specialist care, mental health
support, and educational resources on our proprietary platforms to
healthcare practitioners, patients and enterprise clients. We are
extremely proud that CloudMD has positioned itself as a leader in
this space. Our focus on engaging patients and empowering
practitioners has created a transformational shift on how
healthcare is delivered and proven to have better outcomes for all
members involved. We’d like to thank our loyal shareholders and
look forward to the next phase of this exciting journey.”
Q3 2020 Financial
Highlights
- Q3 2020 total revenue was $3.4 million, compared to $2.2
million in Q3 2019, an increase of 55%. The revenue generated from
Software-as-a-Service (“SaaS”) model digital services was $0.5
million compared to $0.4 million in Q3 2019, an increase of 22%
primarily attributable to organic growth. The revenue generated
from clinic services and pharmacies was $2.9 million compared to
$1.8 million in Q3 2019, an increase of 62%.
- Q3 2020 gross margin was 42%, compared to 46% in Q3 2019. Gross
margin for the underlying businesses remained stable, and overall
gross margin decreased due to the revenue mix. In the past year,
the business acquisitions completed were primarily clinic services
and pharmacies, which attracts a lower margin as compared to SaaS
model digital services. Subsequent acquisitions have been more
focused on SaaS model digital services and Enterprise Health
Solutions which should have a positive impact on overall
margins.
- Net loss and comprehensive loss in Q3 2020 was $2.7 million or
$0.02 per share, compared to $0.8 million or $0.01 per share in Q3
2019. In the quarter, the Company made strategic investments in
numerous marketing initiatives to build awareness of the Company
and its products and services, which it expects to result in strong
future organic growth.
- Adjusted EBITDA was a loss of $1.3 million for Q3 2020,
compared to a loss of $0.1 million in Q3 2019. The Adjusted EBITDA
calculation was refined in the quarter to adjust for costs related
to financing, acquisitions and litigation including associated loss
provisions, for management to better evaluate its cash operating
performance. A complete definition and calculation are provided
further below, and the calculation has been retroactively
applied.
- Cash and cash equivalents as at September 30, 2020 were $33.9
million.
Third Quarter Business
Highlights
- On August 5, 2020, the Company
announced it closed the acquisition of South Surrey Medical Inc.,
an integrated medical clinic based in Metro Vancouver, BC.
- On August 11, 2020, the Company
appointed Patrick Lo, a leading expert on data protection and
regulatory privacy matters for the healthcare sector in North
America, as a Strategic Advisor.
- On August 13, 2020, the Company
signed a share purchase agreement to acquire majority interest in
West Mississauga Medical Ltd., a comprehensive family medicine and
specialist medical clinic.
- On September 9, 2020, the Company
announced it has appointed experienced healthcare executive, Karen
Adams as Chief Health Innovation Officer.
- On September 16, 2020, the Company
announced it has appointed experienced industry leaders to its
newly formed Chairman’s Advisory Board, all with records of
building successful high growth organizations with an international
outlook.
- On September 22, 2020, the Company
closed a $20.8 million oversubscribed, bought deal financing.
Highlights Subsequent
to Third Quarter
- On October 8, 2020, the Company
launched CloudMD on Demand, an online, virtual care service for
companies, insurers and pharmacies to offer their customers easier,
more convenient access to virtual telemedicine.
- On October 15, 2020, the Company
announced it has closed the acquisition of Snapclarity Inc., an on
demand, digital platform that provides an assessment for mental
health disorders which includes a personalized care plan, access to
online resources, a clinical healthcare team and the ability to
match to the right therapists.
- On October 19, 2020, the Company
announced it has appointed Mena Beshay to a newly created, more
focused role of Global Head, Corporate Development, and Daniel Lee,
an experienced capital markets and technology financial executive,
as Chief Financial Officer.
- On October 21, 2020, the Company
announced it has signed a binding term sheet to acquire Canadian
Medical Directory, Canada’s largest, most trusted, directory of
medical professionals including 91,000 practicing physicians and
10,000 residents and nurse practitioners across the country.
- On October 22, 2020, the Company
announced it has signed a binding term sheet to acquire Medical
Confidence Inc., a revolutionary healthcare navigation platform
with proven results in wait time reduction and patient
satisfaction.
- On October 26, 2020, the Company
announced it has closed the acquisition of an 87.5% interest in
Benchmark Systems Inc., a leading cloud-based provider of fully
integrated solutions that automate healthcare workflow processes
including revenue management, practice management and electronic
records management.
- On October 26, 2020, the Company
announced it has closed the acquisition of a US-based medical
clinic as part of a comprehensive strategy to provide end to end
healthcare services for chronic care patients.
- On October 28, 2020, the Company
announced it has signed a binding term sheet to acquire HumanaCare
Inc., an integrated, Employee Assistance Program (“EAP”) solution
which provides holistic, physical and mental health support for
employees and their family members.
- On November 9, 2020, the Company
announced that it closed a $37.3 million oversubscribed, bought
deal financing.
- On November 12, 2020, the Company
launched a new Enterprise Health Solutions division, which provides
a one-stop-shop for corporations, insurers and advisors to address
the comprehensive health and wellness of their employees and their
families.
- On November 18, 2020, the Company
announced it has closed the acquisition of iMD Health Group Corp.,
a novel award winning platform designed for healthcare
professionals at every level of care to better engage, inform and
educate patients about their conditions and treatment
plans.
- On November 19, 2020, the Company
announced that it has closed the acquisition of Re:Function Health
Group Inc., a profitable rehabilitation clinic network of 8 clinics
and 37 specialists and allied health professionals across British
Columbia.
Outlook
The Company is focused on revolutionizing the
healthcare industry by leveraging technology to digitalize its
delivery to provide both better access to care which leads to
better health outcomes. CloudMD has a strong balance sheet with
approximately $60 million in cash, which will allow it to continue
deploying capital on a robust pipeline of accretive, synergistic
acquisitions. Subsequent to the quarter, the Company completed five
strategic acquisitions which enhances its portfolio of SaaS model
digital services and clinic services offering. The Company also
announced another four acquisitions, primarily focused on its newly
created Enterprise Health Solutions Division, which are expected to
close by December 31, 2020.
CloudMD’s organic growth will be largely driven
by its network of hybrid clinics, pharmacy partnerships, SaaS
solutions and enterprise partnerships. Through its recent
acquisitions, there are opportunities for cross-functional
synergies and cross selling that will drive further organic
growth.
With our Q3 2020 financial performance, combined
with organic growth, and completed and announced acquisitions,
CloudMD is on track to achieve (i) annualized revenue run rate
exceeding $35 million, (ii) gross margin exceeding 50%, and (iii)
improved Adjusted EBITDA performance.
CloudMD will continue to focus on delivering
meaningful shareholder value by executing on its growth strategy
through accretive acquisitions, strategic capital allocation and
continuing to achieve organic growth across all divisions.
Selected Financial
Information
All results were prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board.
|
|
Three months ended |
|
|
Nine months ended |
|
Selected Financial
Information |
|
September 30, |
|
|
September 30, |
|
|
|
2020 |
|
|
2019 |
|
(%) |
|
2020 |
|
|
2019 |
|
(%) |
Revenue |
$ |
3,358,955 |
|
$ |
2,165,217 |
|
55 |
% |
$ |
9,205,671 |
|
$ |
4,327,116 |
|
113 |
% |
Physician
fees |
|
(1,086,731 |
) |
|
(494,340 |
) |
120 |
% |
|
(2,812,916 |
) |
|
(1,677,598 |
) |
68 |
% |
Cost of goods sold |
|
(857,573 |
) |
|
(671,929 |
) |
28 |
% |
|
(2,552,531 |
) |
|
(671,929 |
) |
280 |
% |
Gross
profit (1) |
|
1,414,651 |
|
|
998,948 |
|
42 |
% |
|
3,840,224 |
|
|
1,977,589 |
|
94 |
% |
Gross
profit % |
|
42.1 |
% |
|
46.1 |
% |
|
|
41.7 |
% |
|
45.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
4,094,284 |
|
|
1,752,735 |
|
134 |
% |
|
10,561,582 |
|
|
4,924,384 |
|
114 |
% |
Loss
before other items |
|
(2,679,633 |
) |
|
(753,787 |
) |
255 |
% |
|
(6,721,358 |
) |
|
(2,946,795 |
) |
128 |
% |
Other items and taxes |
|
(44,440 |
) |
|
(55,888 |
) |
-20 |
% |
|
(393,826 |
) |
|
(296,725 |
) |
33 |
% |
Net and
comprehensive loss |
|
(2,724,073 |
) |
|
(809,675 |
) |
236 |
% |
|
(7,115,184 |
) |
|
(3,243,520 |
) |
119 |
% |
Loss per share, basic and diluted |
$ |
(0.02 |
) |
$ |
(0.01 |
) |
100 |
% |
$ |
(0.02 |
) |
$ |
(0.05 |
) |
-66 |
% |
(1) Gross profit is a non-GAAP
measure as described in the Non-GAAP Financial Measures section of
this News Release.
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2020 |
|
|
2019 |
|
(%) |
|
2020 |
|
|
2019 |
|
(%) |
Net loss for the period |
$ |
(2,724,073 |
) |
$ |
(809,675 |
) |
236 |
% |
$ |
(7,115,184 |
) |
$ |
(3,243,520 |
) |
119 |
% |
Add: |
|
|
|
|
|
|
|
|
|
|
Interest
and accretion expense |
|
63,001 |
|
|
49,841 |
|
26 |
% |
|
189,557 |
|
|
152,555 |
|
24 |
% |
Income
taxes |
|
18,964 |
|
|
- |
|
100 |
% |
|
18,964 |
|
|
- |
|
100 |
% |
Depreciation and amortization |
|
262,128 |
|
|
134,373 |
|
95 |
% |
|
673,468 |
|
|
249,305 |
|
170 |
% |
EBITDA(1) for the
period |
|
(2,379,980 |
) |
|
(625,461 |
) |
281 |
% |
|
(6,233,195 |
) |
|
(2,841,660 |
) |
119 |
% |
Stock-based compensation |
|
558,603 |
|
|
459,934 |
|
21 |
% |
|
1,507,930 |
|
|
1,225,841 |
|
23 |
% |
Financing-related costs |
|
245,123 |
|
|
- |
|
100 |
% |
|
504,637 |
|
|
- |
|
100 |
% |
Acquisition-related costs |
|
191,380 |
|
|
29,083 |
|
558 |
% |
|
308,899 |
|
|
108,093 |
|
186 |
% |
Litigation costs and loss provision |
|
63,154 |
|
|
482 |
|
12992 |
% |
|
466,632 |
|
|
20,932 |
|
2129 |
% |
Loss from discontinued operations |
|
- |
|
|
- |
|
0 |
% |
|
- |
|
|
(22,967 |
) |
-100 |
% |
Adjusted EBITDA(1) for
the period |
$ |
(1,321,720 |
) |
$ |
(135,962 |
) |
872 |
% |
$ |
(3,445,097 |
) |
$ |
(1,509,761 |
) |
128 |
% |
(1) EBITDA and Adjusted EBITDA
are non-GAAP measures as described in the Non-GAAP Financial
Measures section of this News Release. The calculation of Adjusted
EBITDA has been amended this quarter to exclude financing-related
costs, acquisition-related costs, litigation costs and loss
provision, which are not operational in nature.
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 for the three and nine months ended September 30, 2020 and
2019, copies of which can be found 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 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 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 unaudited condensed interim
consolidated financial statements and the accompanying notes for
the three and nine months ended September 30, 2020 and 2019, and
the consolidated financial statements and the accompanying notes
for years ended December 31, 2019 and 2018.
EBITDAEBITDA 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, depreciation and amortization. This measure does not have a
comparable IFRS measure and is used by the Company to manage and
evaluate the cash operating income (loss) of the business. Please
refer to section on EBITDA for reconciliation.
Adjusted EBITDAAdjusted 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,
stock-based compensation, financing-related costs,
acquisition-related costs, litigation costs and loss provision, and
loss from discontinued operations. This measure does not have a
comparable IFRS measure and is used by the Company to evaluate its
cash operating income (loss) of the business, adjusted for factors
that are unusual in nature or factors that are not indicative of
the operating performance of the Company. Please refer to section
on Adjusted EBITDA for reconciliation.
Gross ProfitGross 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
physician fees and cost of goods sold. 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.
About CloudMD Software &
Services
CloudMD is digitizing the delivery of healthcare
by providing a patient centric approach, with an emphasis on
continuity of care. The Company offers SAAS based health technology
solutions to healthcare providers across North America and has
developed proprietary technology that delivers quality healthcare
through a holistic offering including hybrid primary care
clinics, specialist care, telemedicine, mental health support,
educational resources and artificial intelligence (AI). CloudMD
currently services a combined ecosystem of over 500
clinics, almost 4000 licensed practitioners and 8 million patient
charts across North America.
ON BEHALF OF THE BOARD OF DIRECTORS
“Dr. Essam Hamza, MD"Chief Executive Officer
FOR ADDITIONAL INFORMATION CONTACT:
Julia BeckerVP, Investor
Relations julia@Cloudmd.ca
Forward Looking Statements
This news release contains forward-looking
statements that are based on CloudMD’s expectations, estimates and
projections regarding its business and the economic environment in
which it operates, including with respect to its business plans.
Although CloudMD believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and
involve risks and uncertainties that are difficult to control or
predict. Therefore, actual outcomes and results may differ
materially from those expressed in these forward-looking statements
and readers should not place undue reliance on such statements.
These forward-looking statements speak only as of the date on which
they are made, and CloudMD undertakes no obligation to update them
publicly to reflect new information or the occurrence of future
events or circumstances, unless otherwise required to do so by
law.
The TSX Venture Exchange does not accept
responsibility for the adequacy or accuracy of this release.
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