Record Q1 2023 revenue of $21.8M and Adjusted EBITDA of $1.1M
Signed a minimum 5-year SaaS agreement expected to generate a
minimum $40M over the term
ARR increased by 53% to $22.0
million as of the end of the quarter
TORONTO, May 29, 2023
/CNW/ - Think Research Corporation (TSXV: THNK)
("Think" or the "Company"), a company focused on
transforming healthcare through digital health software solutions,
is pleased to announce First Quarter 2023 results. The Company's
Management Discussion and Analysis (MD&A) along with Audited
Financial Statements for Q1 2023 results are available on SEDAR and
on Think's website.
Think's three core business lines, including Software and
Data Solutions (SaaS solutions), Clinical Research
(clinical trial, studies and data services) and Clinical
Services (physical clinics), collectively drive its financial
performance and results.
Sachin Aggarwal, Chief
Executive Officer of Think Research said, "2023 started
off strong with a major SaaS contract for our Software & Data
division and continuing strength in our Clinical Research division.
Q1 2023 marks the second quarter in a
row of positive Adjusted EBITDA, which meets our objective of
maintaining persistent positive Adjusted EBITDA for the foreseeable
future. Think is in a great position to help constrained healthcare
delivery systems improve access to high quality health services and
best practices where and when they are needed. Our strong and
growing pipeline reflects the urgency of this problem."
Think's Software and Data solutions are increasingly relied on
by acute care and community care doctors, nurses and pharmacists to
support their practices. Think solutions now reach more than
320,000 clinicians. In certain jurisdiction-wide deployments,
Think's platform connects clinicians to the health-care networks
that employ them, to patients for virtual care, and to each other
for referrals.
Think currently licenses its solutions to approximately 14,200
facilities with over 3 million patients and residents annually
receiving better care due to the essential data that Think
produces, manages and delivers.
Business Outlook
Think's primary revenue streams of Software and Data
Solutions and Clinical Research are built on recurring and
re-occurring multi-year contracted commitments by government
agencies and large enterprise clients such as global pharmaceutical
companies. Accordingly, Think's management believes that the
Company's financial performance has some protection in the
short-term against uncertain macroeconomic conditions.
Think's Software and Data Solutions are currently solving both
challenging and urgent healthcare service conditions, such as long
wait times for care, staff shortages, and limited access to both
urgent and primary care. As a result, the 2023 revenue pipeline is
robust, with significant revenue growth potential existing in the
Canadian market and internationally.
The Company plans to grow revenue and improve margins by
becoming an increasingly essential data solutions provider for
healthcare practitioners globally, supporting them to deliver the
best outcomes for patients. To fulfill this objective, the focus of
operations is twofold:
- Execute licenses with new flagship enterprise and government
customers for Think's core suite of data and software solutions,
including its Learning Management System ("LMS") and Digital Front
Door solutions.
- Add more users to current customer agreements by promoting
further adoption and daily usage. Currently, more than 320,000
clinicians, including doctors, nurses and pharmacists can access
Think's solutions. As more users are converted, and more users
increase usage, Think's solutions become more essential to health
systems and customers.
In support of these strategies, the product and business
development teams are focused on:
- Strengthening the utility of Think's software and data
solutions through ongoing product development, platform
integration, and content development.
- Expanding Think's solutions footprint via new enterprise and
government licenses in the countries where Think has market
presence.
As organic revenue expands, recent cost optimization initiatives
have positioned the company for persistent positive Adjusted EBITDA
and a path to positive cash flow. Management will continue to seek
efficiencies in operations for the foreseeable future.
In support of Think's objective to gain more users while
positioning the Data and Software solutions business to become an
increasingly essential tool for healthcare practitioners,
government agencies and large enterprises, management will continue
to review high-value, opportunistic tuck-in acquisitions.
Notable Contracts and Events in
2023
- On February 13, 2023, Think
announced the expansion of the original $6.4
million contract with a global pharmaceutical company,
announced on September 8, 2022, by
approximately $3.5 million, bringing
the total contract value up to approximately $10 million.
- On March 7, 2023, Think announced
a minimum 5-year SaaS and services agreement that is expected to
total more than $40 million of
revenue over its term. Through this agreement, Think will provide
its Digital Front Door and LMS solutions to help the client address
its urgent healthcare access and delivery challenges.
- On March 31, 2023 the Bank of
Nova Scotia extended its credit
agreement with Think for an additional year to September 10, 2024.
Consolidated Q1 2023 Financial
Highlights
- The Company achieved record revenue of $21.8M for Q1 2023, up by $1.6M or 8% compared to $20.2M for the first quarter of 2022. This
year-over-year growth reflects the impact of organic growth in
Software and Data Solutions and Clinical Research revenues.
Sequentially, revenue for Q1 2023 increased by $0.2M or 1% compared to $21.6M in the three months ended December 31, 2022 reflecting growth in Think's
Software and Data Solutions business, primarily as a result of the
large SaaS contract announced on March 17,
2023, offset by declines in the Clinical Research
business.
- Increased Annual Recurring Revenue (ARR) to $22.0M at the end of Q1 2023, up by 53% compared
to $14.3M at the end of March 2022 and by 49% compared to $14.8M at December 31,
2022. This growth in ARR stemmed primarily from signing the
minimum 5-year SaaS agreement headlined above. ARR is derived
exclusively from the Software & Data business line and is
defined in the section below titled "Non-IFRS Financial
Measures".
- Generated gross profit of $11.4M
in Q1 2023 compared to $9.1M for the
same period in the prior year, an increase of 25%. The increase in
gross profit was primarily related to the increase in revenue
combined with the lower cost of sales as a result of Think's
implementation of its cost optimization program. The Company
generated gross margin of 52% in Q1 2023 compared to 45% for the
same period in the prior year. This improvement in gross margin was
primarily affected by the change in revenue mix as a result of the
higher proportion of Software and Data Solutions revenue in the
quarter.
- Realized Adjusted EBITDA of $1.1M
for Q1 2023 compared to an Adjusted EBITDA loss of $(0.3M) for the same period a year ago. Adjusted
EBITDA for Q1 2023 was $0.5M lower
compared sequentially to the Adjusted EBITDA of $1.6M in Q4 2022. Adjusted EBITDA Margin was 5%
in Q1 of 2023 compared to (1%) in Q1 of 2022. This improvement in
Adjusted EBITDA was driven primarily by earnings contributions from
organic revenue growth combined with cost optimization and
operational synergies realized during the period. Adjusted EBITDA
and Adjusted EBITDA Margin are defined in the section below titled
"Non-IFRS Financial Measures".
- Net income (loss) was ($3.6M) for
the three months ended March 31, 2023
compared to $(6.2M) for the
comparable period in the prior year and to ($5.6M) sequentially when compared to Q4 2022. The
decrease in net loss over Q1 2022 is primarily due to higher
revenue coupled with lower operating costs as a result of Think's
cost optimization plan while lower Net Loss compared to Q4 2022 is
due to multiple factors, including lower acquisition, restructuring
and other costs.
Q1 2023 Revenue Performance
Highlights by Line of Business:
Software and Data Solutions business line revenue grew by
$1.0M or 11% to $9.5M compared to $8.5M in Q1 2022 primarily due to organic growth
associated with the launch of the new Digital Front Door initiative
set out in the Notable Contracts described earlier. In Q1 2023,
Software & Data revenue represented 43% of total revenue
compared to 42% of total revenue in Q1 of the previous year.
In Q1 2023, on an annual run-rate basis, ARR represented 58% of
total Software & Data revenue with the remaining total revenue
in the segment primarily being re-occuring revenue.
Clinical Research revenue grew by $1.4M, or 17% to $9.4M in Q1 2023 compared to $8.0M in Q1 of 2022. Revenue in the comparable
period last year was depressed due to the operational impacts of
COVID-19, which were only fully resolved in late Q3 2022. A
significant portion of Clinical Research revenue is re-occurring in
nature.
Clinical Services revenue declined by $0.7M or 19% in Q1 2023 compared to the
comparable period in 2022 due to specific operational challenges
that have since been addressed. Clinical Services revenue in Q1
2023 was flat compared to the immediately preceding quarter.
Revenue Streams
|
Q1 FY 23
|
Q1 FY23 % of
Revenue
|
Q1 FY 22
|
Q1 FY22 % of
Revenue
|
Software and Data
Solutions1
|
9,439
|
43.2 %
|
8,479
|
42.0 %
|
Clinical
research2
|
9,415
|
43.1 %
|
8,042
|
39.8 %
|
Clinical
services3
|
2,972
|
13.6 %
|
3,683
|
18.2 %
|
Total
|
21,826
|
100 %
|
20,204
|
100 %
|
|
Notes:
|
(1)
|
"Software and Data
solutions" revenue consists of SaaS and related professional
services revenue from Think and Pharmapod, and re-occurring revenue
from MDBriefCase,
|
(2)
|
"Clinical Research"
revenue consists of revenue from BioPharma.
|
(3)
|
"Clinical Services"
revenue consists of revenue from the clinics owned by
Think.
|
Consolidated Expense
Details:
In Q1 2023, operating expenses excluding depreciation,
amortization and stock-based compensation increased by 20% to
$10.3M compared sequentially to
$8.6M in Q4 2022. These expenses
increased to 47% of revenue in Q1 compared to 40% of revenue in Q4
2022. Think recorded certain one-time annual cost adjustments in
the fourth quarter of 2022 such that the total operating expenses
recorded for that period were below the expected baseline operating
expenses in future quarters. Compared to Q1 2022, these selected
operating expenses increased by 9% or $0.9M up from $9.4M.
General and administration expenses of $6.4M in Q1 2023 were 2% higher compared to
$6.2M in Q1 2022 and 3% higher than
the $6.2M reported in the immediately
preceding quarter.
Research and development expenses increased by 9% to
$2.1M in Q1 2023 compared to
$1.9M in Q1 2022 as Think increased
investment in its Software and Data Solutions to address future
market opportunities for its Digital Front Door and LMS
solutions.
Sales and marketing expenses in Q1 2023 grew by 2% year over
year to $2.4M compared to
$2.3M in Q1 2022. Think's focus for
marketing continues to be on lead generation and related branding
activities.
Selected Financial Information
|
|
Q1 2023
|
Q4 2022
|
Q3 2022
|
Q2 2022
|
(in thousands of Canadian dollars, except per share
data)
|
$
|
$
|
$
|
$
|
Revenue
|
|
21,826
|
21,587
|
18,371
|
18,442
|
Net Income
|
|
(3,594)
|
(5,602)
|
(6,459)
|
(7,484)
|
EBITDA1
|
|
197
|
(1,185)
|
(2,426)
|
(4,024)
|
Adjusted EBITDA1
|
|
1,078
|
1,607
|
(696)
|
(1,579)
|
Adjusted EBITDA margin2 (% of
revenue)
|
4.9 %
|
7.4 %
|
-3.8 %
|
-8.6 %
|
Basic and diluted EPS
|
|
(0.05)
|
(0.09)
|
(0.11)
|
(0.13)
|
|
|
Q1 2022
|
Q4 2021
|
Q3 2021
|
Q2 2021
|
(in thousands of Canadian dollars, except per share
data)
|
$
|
$
|
$
|
$
|
Revenue
|
|
20,204
|
19,117
|
10,083
|
10,224
|
Net Income
|
|
(6,198)
|
(7,596)
|
(10,828)
|
(5,583)
|
EBITDA1
|
|
(2,399)
|
(4,187)
|
(8,290)
|
(3,814)
|
Adjusted EBITDA1
|
|
(290)
|
(189)
|
(3,403)
|
(1,349)
|
Adjusted EBITDA margin2 (% of
revenue)
|
4.9 %
|
-1.4 %
|
-1.0 %
|
-33.7 %
|
Basic and diluted EPS
|
|
(0.11)
|
(0.13)
|
(0.24)
|
(0.13)
|
|
Notes:
|
1.
|
"EBITDA" and "Adjusted
EBITDA" are non-GAAP financial measures, are not standardized
measures under IFRS and may not be comparable to similar financial
measures disclosed by other issuers. See "Non-IFRS Financial
Measures".
|
2.
|
"Adjusted EBITDA
Margin" is a non-GAAP ratio, is not a standardized measure under
IFRS and may not be comparable to similar financial measures
disclosed by other issuers. See "Non-IFRS Financial
Measures".
|
The tables above and below include non-IFRS financial measures and
non-IFRS ratios. See the "Cautionary Note Regarding Non-IFRS
Financial Measures" section of this press release for the relevant
definition of each non-IFRS financial measure and non-IFRS
ratio.
|
Three months ended
March 31,2023
|
Three months ended
March 31,2022
|
|
$
|
$
|
Net loss
|
(3,594)
|
(6,198)
|
Depreciation and
amortization
|
3,153
|
3,636
|
Finance
costs
|
1,224
|
1,076
|
Income tax expense
(recovery)
|
(586)
|
(913)
|
EBITDA1
|
197
|
(2,399)
|
Acquisition,
restructuring and other2
|
346
|
1,062
|
Stock-based
compensation3
|
535
|
1,047
|
Adjusted EBITDA
|
1,078
|
(290)
|
|
Notes:
|
(1)
|
"EBITDA" and "Adjusted
EBITDA" are non-GAAP financial measures, are not standardized
measures under IFRS and may not be comparable to similar financial
measures disclosed by other issuers. See "Non-IFRS Financial
Measures".
|
(2)
|
"Acquisition,
restructuring and other" expenses relate to costs incurred in
connection with business combinations, reorganization of the
Company's capital structure and workforce, and legal, advisory and
banking expenses.
|
(3)
|
"Stock-based
compensation" relates to expenses recognized for equity awards
issued under the Company's Omnibus Equity Incentive
Plan.
|
Conference Call Details:
CEO Sachin Aggarwal and CFO
John Hayes with host a conference
call to discuss the results, with a Q&A session to follow.
TIME: 8:30AM EST, Tuesday May 30th, 2023
Conference Call
Participant Details: To join the conference call without
operator assistance, you may register and enter your phone number
HERE to receive an instant automated call back. Participants can
also dial direct to be entered to the call by an
Operator:
Toronto: 416-764-8659
North
American Toll Free: 1-888-664-6392
Webinar
URL: https://app.webinar.net/qBYZ3lEXxMG
Conference Replay
Local: 416-764-8677
North American Toll Free: 1-888-390-0541
Replay Entry Code: 318592 #
Expiration Date: 06/06/2023
About Think Research
Corporation
Think Research Corporation is an industry leader in delivering
knowledge-based digital health software solutions. The Company's
focused mission is to organize the world's health knowledge so
everyone gets the best care. Its evidence-based healthcare
technology solutions support the clinical decision-making process
and help to standardize care, to facilitate better health care
outcomes. The Company gathers, develops, and delivers
knowledge-based solutions globally to customers which typically
includes enterprise clients, hospitals, health regions, healthcare
professionals, and / or governments. The Company has gathered a
significant amount of data by building its repository of knowledge
through its network and group of companies, including acquired
companies.
Think licenses its solutions to over 14,200 facilities for over
320,000 primary care, acute care, and long-term care doctors,
nurses and pharmacists that rely on the content and data provided
by Think to support their practices. Over 3 million patients and
residents annually receive better care due to the essential data
that Think produces, manages and delivers.
In addition, the Company collects and manages pharmaceutical and
clinical trial data via the BioPharma Services entity that Think
acquired on September 10, 2021.
BioPharma Services is a leading provider of bioequivalence and
Phase 1 clinical research services to pharmaceutical companies
globally. Think's other services include a network of digital-first
primary care clinics and medical clinics that provide elective
surgery. Visit: www.thinkresearch.com.
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 news release.
Non-IFRS Financial Measures
This MD&A makes reference to certain non-GAAP financial
measures and non-GAAP ratios. These measures and ratios are not
recognized measures under International Financial Reporting
Standards ("IFRS"), 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 and
ratios are provided as additional information to complement those
IFRS measures by providing further understanding of the Company's
results of operations from management's perspective. Non-IFRS
measures and ratios have limitations as analytical tools and should
not be considered in isolation nor as a substitute for analysis of
the Company's financial information reported under IFRS and should
be read in conjunction with the consolidated financial statements
for the periods indicated. The Company uses non-IFRS financial
measures and ratios, including "ARR", "EBITDA", "Adjusted EBITDA"
and "Adjusted EBITDA Margin" to provide investors with supplemental
measures of its operating performance and to eliminate items that
have less bearing on operating performance or operating conditions
and thus highlight trends in its core business that may not
otherwise be apparent when relying solely on IFRS financial
measures. Specifically, the Company believes that Adjusted EBITDA
and Adjusted EBITDA Margin, when viewed with the Company's results
under IFRS and the accompanying reconciliations, provides useful
information about the Company's business by removing potential
distortions that may arise from transactions that are not
operational in nature. By eliminating potential differences in
results of operations between periods caused by factors such as
restructuring, transaction, impairment and other charges, the
Company believes that Adjusted EBITDA and Adjusted EBITDA Margin
can provide a useful additional basis for comparing the current
performance of the underlying operations being evaluated. The
Company's agreements with lenders include certain financial
performance covenants which include EBITDA (as defined in the
Company's credit agreement with its lenders) as a component of the
covenant calculations and require the Company to maintain certain
levels of EBITDA on a consolidated basis. ARR is used by some
investors and analysts as a predictor of future revenues because it
reflects new sales, renewals and lost customers. The Company
believes that securities analysts, investors and other interested
parties frequently use non-IFRS financial measures and ratios in
the evaluation of issuers. The Company's management also uses
non-IFRS financial measures and ratios in order to facilitate
operating performance comparisons from period to period.
Non-GAAP financial measures and non-GAAP ratios used by the
Company include:
Annual Recurring Revenue ("ARR"), means revenue
associated with software and services contracts that are expected
to have a duration of more than one year, normalized to a one-year
period.
"EBITDA" means net income (loss) before amortization
and depreciation expenses, finance and interest costs, and
provision for income taxes.
"Adjusted EBITDA" adjusts EBITDA for non-cash
stock-based compensation expense, gains or losses arising from
redemption of securities issued by the Company, asset impairment
charges, gains or losses from disposals of property and equipment,
foreign exchange gains or losses, impairment charges on property
and equipment, business acquisition costs, and restructuring
charges.
"Adjusted EBITDA Margin" means Adjusted EBITDA
divided by revenue of the Company for the applicable period.
A reconciliation of EBITDA and Adjusted EBITDA to IFRS net
income (loss) is presented under "Select Information and
Reconciliation of Non-IFRS Measures" in the Company's MD&A
filed on SEDAR.
For more
information: https://www.thinkresearch.com/ca/investors/
SOURCE Think Research Corporation