CloudMD Software & Services Inc. (TSXV: DOC, Frankfurt: 6PH)
(the “
Company” or “
CloudMD”), an
innovative health services company transforming the delivery of
care, announces its financial results for the fourth quarter and
year ended December 31, 2023. All financial information is
presented in Canadian dollars unless otherwise indicated.
Fourth Quarter 2023 Financial
Highlights
- Q4 2023 revenue
of $21.9 million, compared to $22.9 million in the prior quarter
and $22.3 million in Q4 2022. Adjusting for one-time Covid-19
mandates, the Company generated 4.4% organic revenue growth year to
date compared to the prior period.
- Q4 2023 gross
profit margin1 was 39.7% compared to 39.8% in the prior quarter and
35.9% in Q4 2022. Gross margin was relatively flat quarter over
quarter and improved 380 bps compared to the same period in 2022
due to realized efficiency gains in the cost of delivery.
- Q4 2023
Adjusted EBITDA1 was a loss of $1.4 million, compared to Adjusted
EBITDA1 of $0.6 million in the prior quarter and ($1.9) million in
Q4 2022. The decrease in Adjusted EBITDA1 from Q3 2023 was largely
driven by one time out of period adjustments and non-cash charges
taken in the fourth quarter. The improvement from the prior year
was driven by continued improvements of margins across the business
and continued cost control.
- Net loss from
continuing operations in Q4 2023 was $60.4 million compared to a
loss from continuing operations of $7.6 million in the prior year,
largely driven by an impairment charge of $59.9 million in the
quarter.
- Total cash used
Q4 2023 was $1.7 million. Normalized cash inflow1 in Q4 2023 was
$1.5 million, and Adjusted net cash provided by operating
activities was $1.6 million. As of December 31, 2023, the Company
had $11.4 million of cash and cash equivalents, including $2.5 of
restricted cash.
- Additional
annualized cost reductions of $1.0 million actioned in Q4 2023,
resulting in $21.1 million in total savings captured in 2023 from
all initiatives since the start of 2022.
The Company performed an impairment test and
recorded a non-cash impairment charge of $59.9 million as at
December 31, 2023, which includes the write-off of goodwill. The
carrying value of the Company’s assets, after impairment, is
consistent with the value implicit in the transaction with CPS
Capital announced on May 15, 2024 (the
“Transaction”). The timing of the Transaction
contributed to the delay in filing its Annual Financial Filings (as
defined below), which the Company announced on April 29, 2024. The
failure-to-file cease trade order that was issued by the Ontario
Securities Commission on May 7, 2024, is expected to be revoked
following the filing of the Annual Financial Filings with trading
of the Company’s common shares on the TSX Venture Exchange expected
to resume thereafter.
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 |
|
Twelve months ended December
31 |
|
|
2023 |
|
2022(2) |
|
2023 |
|
2022(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ 21,887 |
|
|
$ 22,318 |
|
|
$ 90,905 |
|
|
$ 99,454 |
|
|
Cost of sales |
13,203 |
|
|
14,309 |
|
|
55,782 |
|
|
64,683 |
|
|
Gross profit (1) |
$ 8,684 |
|
|
$ 8,009 |
|
|
$ 35,123 |
|
|
$ 34,771 |
|
|
Gross profit % |
39.7 |
% |
|
35.9 |
% |
|
38.6 |
% |
|
35.0 |
% |
|
Indirect Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
1,529 |
|
|
1,351 |
|
|
4,288 |
|
|
6,505 |
|
|
Research and development |
236 |
|
|
258 |
|
|
1,536 |
|
|
3,612 |
|
|
General and administrative |
8,817 |
|
|
8,527 |
|
|
33,354 |
|
|
35,726 |
|
|
Share-based compensation |
367 |
|
|
(22 |
) |
|
867 |
|
|
1,273 |
|
|
Depreciation and amortization |
3,421 |
|
|
3,282 |
|
|
13,989 |
|
|
13,459 |
|
|
Acquisition and divestiture-related, integration andrestructuring
costs |
598 |
|
|
2,175 |
|
|
3,411 |
|
|
11,358 |
|
|
Impairment |
59,888 |
|
|
408 |
|
|
59,888 |
|
|
81,275 |
|
|
Operating loss |
$ (66,172 |
) |
|
$ (7,970 |
) |
|
$ (82,210 |
) |
|
$ (118,437 |
) |
|
Other income |
536 |
|
|
142 |
|
|
1,142 |
|
|
446 |
|
|
Change in fair value of contingent consideration |
545 |
|
|
(482 |
) |
|
687 |
|
|
6,564 |
|
|
Change in fair value of liability to non-controlling interest |
- |
|
|
232 |
|
|
(549 |
) |
|
- |
|
|
Change in contingent liability |
- |
|
|
- |
|
|
760 |
|
|
- |
|
|
Finance costs |
(60 |
) |
|
(556 |
) |
|
(1,713 |
) |
|
(2,097 |
) |
|
Loss on sale of joint venture |
- |
|
|
- |
|
|
- |
|
|
(221 |
) |
|
Income tax recovery |
4,800 |
|
|
985 |
|
|
5,326 |
|
|
1,727 |
|
|
Net loss for the period from continuing
operations |
(60,351 |
) |
|
(7,649 |
) |
|
(76,557 |
) |
|
(112,018 |
) |
|
Net loss after tax from discontinuing
operations |
(3,085 |
) |
|
(4,643 |
) |
|
(6,277 |
) |
|
(45,989 |
) |
|
Net loss for the period |
$ (64,436 |
) |
|
$ (12,292 |
) |
|
$ (82,834 |
) |
|
$ (158,007 |
) |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
3,421 |
|
|
3,282 |
|
|
13,989 |
|
|
13,459 |
|
|
Finance costs |
60 |
|
|
556 |
|
|
1,713 |
|
|
2,097 |
|
|
Impairment |
59,888 |
|
|
408 |
|
|
59,888 |
|
|
81,275 |
|
|
Income tax recovery |
(4,800 |
) |
|
(985 |
) |
|
(5,326 |
) |
|
(1,727 |
) |
|
EBITDA (1) |
$ (4,867 |
) |
|
$ (9,031 |
) |
|
$ (12,570 |
) |
|
$ (62,903 |
) |
|
Share-based compensation |
367 |
|
|
-22 |
|
|
867 |
|
|
1,273 |
|
|
Acquisition and divestiture-related, integration andrestructuring
costs |
598 |
|
|
2,175 |
|
|
3,411 |
|
|
11,358 |
|
|
Litigation costs |
- |
|
|
- |
|
|
- |
|
|
555 |
|
|
Change in fair value of contingent consideration |
(545 |
) |
|
482 |
|
|
(687 |
) |
|
(6,564 |
) |
|
Change in fair value of liability to non-controlling interest |
- |
|
|
(232 |
) |
|
549 |
|
|
- |
|
|
Change in contingent liability |
- |
|
|
- |
|
|
(760 |
) |
|
- |
|
|
Loss on sale of joint venture |
- |
|
|
- |
|
|
- |
|
|
221 |
|
|
Net loss after tax from discontinuing operations |
3,085 |
|
|
4,643 |
|
|
6,277 |
|
|
45,989 |
|
|
Adjusted EBITDA (1) |
$ (1,362 |
) |
|
$ (1,986 |
) |
|
$ (2,913 |
) |
|
$ (10,071 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share, basic and diluted |
(0.20 |
) |
|
(0.03 |
) |
|
(0.28 |
) |
|
(0.55 |
) |
|
Loss per share from continuing operations, basic and diluted |
(0.01 |
) |
|
(0.02 |
) |
|
(0.26 |
) |
|
(0.39 |
) |
|
|
|
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 months
ended December 31, 2023, and 2022 (collectively, the
“Annual Financial Filings”), which can be found
under the Company’s profile on SEDAR+ at www.sedarplus.ca.
Officer Changes
The Company also announces that Bram Lowsky,
EVP, Head, Health and Wellness Services, has resigned as an officer
of CloudMD and that Dhruv Chandra, Chief Technology Officer, will
depart from the Company on May 23, 2024.
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 the Company’s
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, 2023, and 2022.
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, 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 December 31, 2023, and 2022.
|
Three months endedDecember 31, |
Variance |
Year endedDecember 31, |
Variance |
|
2023 |
|
2022 |
|
$ |
|
% |
|
|
2023 |
|
2022 |
|
$ |
|
% |
|
|
Net loss |
$ (63,436 |
) |
$ (12,292 |
) |
$ (51,145 |
) |
416 |
% |
|
$ (85,834 |
) |
(158,007 |
) |
$ 75,173 |
|
(47 |
%) |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
60 |
|
556 |
|
(496 |
) |
(89 |
%) |
|
1,713 |
|
2,097 |
|
(384 |
) |
(18 |
%) |
|
Income tax expense/(recovery) |
(4,800 |
) |
(985 |
) |
(3,815 |
) |
(387 |
%) |
|
(5,326 |
) |
(1,727 |
) |
(3,599 |
) |
208 |
% |
|
Impairment |
59,888 |
|
408 |
|
59,480 |
|
- |
|
|
59,888 |
|
81,275 |
|
(21,387 |
) |
(26 |
%) |
|
Depreciation and amortization |
3,421 |
|
3,282 |
|
139 |
|
4 |
% |
|
13,989 |
|
13,459 |
|
530 |
|
4 |
% |
|
EBITDA(1) for the
period |
$ (4,867 |
) |
$ (9,031 |
) |
4,164 |
|
(46 |
%) |
|
$ (12,570 |
) |
(62,903 |
) |
50,333 |
|
(80 |
%) |
|
Share-based compensation |
367 |
|
(22 |
) |
389 |
|
(1770 |
%) |
|
867 |
|
1,273 |
|
(406 |
) |
(32 |
%) |
|
Acquisition and divestiture-related,integration and restructuring
costs |
598 |
|
2,175 |
|
1,577 |
|
(73 |
%) |
|
3,411 |
|
11,358 |
|
(7,947 |
) |
(70 |
%) |
|
Litigation costs |
- |
|
- |
|
- |
|
- |
|
|
- |
|
555 |
|
(555 |
) |
(100 |
%) |
|
Change in fair value of contingentconsideration |
(545 |
) |
482 |
|
(1,027 |
) |
(213 |
%) |
|
(687 |
) |
(6,564 |
) |
5,877 |
|
(90 |
%) |
|
Change in fair value of liability to non-controlling interest |
- |
|
(232 |
) |
232 |
|
(100 |
%) |
|
549 |
|
- |
|
549 |
|
100 |
% |
|
Change in contingent liability |
- |
|
- |
|
- |
|
- |
|
|
(760 |
) |
- |
|
(760 |
) |
100 |
% |
|
Share in profit of joint venture |
- |
|
- |
|
- |
|
- |
|
|
- |
|
221 |
|
(221 |
) |
(100 |
%) |
|
Net loss from discontinuing operations |
3,085 |
|
4,643 |
|
(1,558 |
) |
(34 |
%) |
|
6,277 |
|
45,989 |
|
(38,712 |
) |
(86 |
%) |
|
Adjusted EBITDA(1) for
the period |
$ (1,362 |
) |
$ (1,985 |
) |
$ 623 |
|
(31 |
%) |
|
$ (2,913 |
) |
$ (10,071 |
) |
$ 7,158 |
|
(71 |
%) |
|
|
(1) EBITDA, Adjusted EBITDA, Gross Profit, Gross
Profit Margin, Cash flow, and Normalized cash outflow are
non-GAAP measures. Refer to the
Non-GAAP Financial Measures section of the MD&A for further
information. |
|
Gross Profit
Gross 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 is defined as revenues less cost of sales. 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.
Gross Margin
Gross Margin is a non-GAAP financial ratio that
has Gross Profit, which is a non-GAAP financial measure as a
component. Gross Margin referenced herein is defined as gross
profit as a percent of total revenue. 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.
Cash outflow and Normalized cash
outflow
Normalized cash outflow 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. Cash
outflow, utilized in the calculation of normalized cash outflow, is
defined as the decrease in cash and cash equivalents for the
applicable period. Normalized cash outflow, as referenced herein,
is defined as cash outflow adjusted for expenditures that are not
expected to be recurring, net of changes in non-cash working
capital, discontinuing operations, payment of contingent
consideration, and net proceeds from business divestitures. For the
purpose of calculating Normalized cash flow, expenditures that are
not expected to be recurring include cash-related adjustments to
EBITDA. Management believes that normalized cash outflow, in
addition to other conventional financial measures prepared in
accordance with IFRS, provides information that is helpful to
understand the financial condition of the Company. The objective of
using normalized cash outflow is to present readers with a view of
the Company from management’s perspective by interpreting the
material trends and activities that affect the Company’s use of
cash. These measures do not have a comparable IFRS measure and are
used to ensure that we have sufficient liquidity to meet our
liabilities as they become due.
Annual Recurring Revenue
(“ARR”)
ARR is defined as the average annualized
contract value for closed sales. This measure does not have a
comparable IFRS measure and is used by the Company to assess the
impact of closed sales on future period revenue projections.
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
healthcare 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 occupational health. Kii delivers
superior clinical health outcomes, consistent high engagement, and
measurable ROI for payers such as employers, educational
institutions, associations, governments, 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.
“Karen Adams”Chief Executive Officer
FOR ADDITIONAL INFORMATION, CONTACT:
Investor
RelationsInvestors@cloudmd.ca1-647-484-1405
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 news release contains “forward-looking
statements” and “forward-looking information” within the meaning of
Canadian securities laws, including statements about the revocation
of the failure-to-file cease trade order and resumption of trading
on the TSX Venture Exchange. These statements are based upon
information currently available to CloudMD’s management. All
information that is not clearly historical in nature may constitute
forward‐looking statements. In some cases, forward‐looking
statements may be identified by the use of terms such as
“forecast,” “assumption,” and other similar expressions or future
or conditional terms such as “anticipate,” “believe,” “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “predict”,
“project”, “will”, “would,” and “should”. Forward-looking
statements contained in this news release are based on certain
factors and assumptions made by management of CloudMD based on
their current expectations, estimates, projections, assumptions,
and beliefs regarding their business, and CloudMD does not provide
any assurance that actual results will meet management’s
expectations. While management considers these assumptions to be
reasonable based on information currently available to them, they
may prove to be incorrect. Such forward‐looking statements are not
guarantees of future events or performance and by their nature
involve known and unknown risks, uncertainties, and other factors,
including those risks described in the Company’s MD&A (which is
filed under the Company’s issuer profile on SEDAR+ and can be
accessed at www.sedarplus.ca), that may cause the actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
such forward‐looking statements. Although CloudMD has attempted to
identify important factors that could cause actual actions, events,
or results to differ materially from those described in
forward‐looking statements, other factors may cause actions,
events, or results to be different than anticipated, estimated, or
intended. There can be no assurance that such statements will prove
to be accurate as actual results and future events could vary or
differ materially from those anticipated in such forward‐looking
statements. Accordingly, readers should not place undue reliance on
forward‐looking information. CloudMD does not undertake to update
any forward-looking information, whether as a result of new
information, future events, or otherwise, except as may be required
by applicable securities laws.
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