- Q4 2020 revenue of $5.8 million; up 138% compared to Q4 2019 and 73% compared to Q3 2020
- Q4 2020 gross margin1 of over 40% attributable to strong revenue mix
- Strong balance sheet with current cash position of approximately $100 million
- Fast growing Enterprise Health Solutions (“EHS”) Division2 has current revenue run rate of $53 million and over 10% Adjusted EBITDA3
- Achieved annual organic growth across all businesses including medical clinics during COVID-19 shutdowns
- Continued growth by adding over $92 million in annualized revenue already in 2021 through strategic M&A
- Strong 2021 expectations with annualized revenue run rate exceeding $120 million and positive Adjusted EBITDA
VANCOUVER, British Columbia, April 28, 2021 (GLOBE NEWSWIRE) — CloudMD Software & Services Inc. (TSXV:DOC)(OTCQB:DOCRF)(Frankfurt: 6PH) (the “Company” or “CloudMD”), a healthcare technology company revolutionizing the delivery of care, announced its financial results for the fourth quarter and year ended December 31, 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 fourth quarter and full-year 2020 financial results which are consistent with our internal and consensus estimates. The fourth quarter was a foundation-building quarter for CloudMD with the completion of five strategic acquisitions and the launch of our Enterprise Health Solutions Division. I am proud that we have seen healthy organic growth across all verticals of our business despite the long closures due to COVID-19. As we see communities starting to re-open, in addition to the majority of the acquisitions closing in first quarter 2021 and the roll-out of our fully connected healthcare ecosystem, we expect to see significant revenue growth in the upcoming quarters.” Dr. Hamza continued, “We have a current revenue run rate of over $120 million, which does not account for any of the organic growth and cross-selling synergies we are anticipating this year. In addition, we are also expecting to be Adjusted EBITDA-positive in the latter half of 2021 with healthy gross margins. We are well-positioned as leaders in the digital healthcare space and I am very excited to see the continued growth of our business in 2021.”
Fourth Quarter 2020 Financial Highlights
- Q4 2020 revenue was $5.8 million, compared to $2.4 million in Q4 2019. The increase is primarily attributable to acquisition growth with 5 acquisitions completed in the quarter. Excluding the impact of business acquisitions, the Company achieved organic growth across all of its businesses, aided by: (1) market adoption of telehealth services; (2) new product features and enhancements to the Company’s digital platforms; and (3) positive impact from marketing campaigns.
- Q4 2020 gross margin was 40%, compared to 44% in Q4 2019. In the current year, the Company reclassified certain expenses within its income statement to cost of sales, which resulted in an overall decrease in gross margin as compared to Q4 2019. Excluding the impact of the reclassification, gross margin for the underlying businesses remained healthy and stable.
- Net comprehensive loss attributable to equity holders of the Company in Q4 2020 was $5.2 million or $0.05 per share, compared to $1.5 million or $0.02 per share in Q4 2019. In the quarter, the Company completed numerous strategic initiatives, including the completion of 5 acquisitions in the quarter and raising $37.3 million in a bought deal short form prospectus offering, which it expects to result in the strong future growth of the Company.
- Adjusted EBITDA was a loss of $1.5 million for Q4 2020, compared to a loss of $0.6 million in Q4 2019. The Adjusted EBITDA calculation adjusts for share-based compensation, costs related to financing, acquisitions, and litigation including associated loss provisions, change in fair value of contingent consideration, and loss from discontinued operations. Adjusted EBITDA is used by management to evaluate the Company’s cash operating performance, and a complete definition and calculation are provided further below.
- Cash and cash equivalents as of December 31, 2020 were $59.7 million. Subsequent to December 31, 2020, the Company raised $58.2 million in a bought deal short form prospectus offering in March 2021, and the Company’s current cash balance is approximately $100 million.
Fourth Quarter Operational Highlights
- 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 that it closed the acquisition of Snapclarity Inc., an on-demand, a digital platform that provides an assessment for mental health disorders.
- On October 19, 2020, the Company announced that it appointed Mena Beshay to Global Head, Corporate Development, and Daniel Lee as Chief Financial Officer.
- On October 26, 2020, the Company announced that it closed the acquisition of an 87.5% interest in Benchmark Systems Inc.
- On October 26, 2020, the Company announced that it 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 November 9, 2020, the Company announced that it closed a $37.3 million oversubscribed, bought deal financing.
- On November 12, 2020, the Company launched its new EHS division, which provides one connected healthcare platform 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 that it closed the acquisition of iMD Health Group Corp., a novel award winning, education platform.
- On November 19, 2020, the Company announced that it 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.
- On December 7, 2020, the Company announced that it is expanding its already established relationship with Save-On-Foods, Western Canada’s largest grocery chain.
Key Highlights Subsequent to the Quarter
- During January 2021, the Company closed the previously announced acquisitions of HumanaCare, Medical Confidence and Canadian Medical Directory.
- On January 26, 2021, the Company announced that it entered into a binding agreement to acquire RXI Group of companies, an established one-stop patient support logistics company and leading customer relationship management technology provider.
- On February 6, 2021 the Company announced that it closed the acquisition of West Mississauga Medical Clinic.
- On February 16, 2021, the Company announced that it entered into a binding agreement to acquire VisionPros, a rapidly growing digital eyecare platform with a robust suite of digital vision care tools.
- In March 2021, the Company closed the previously announced bought deal financing, including the full over-allotment option for a total of $58 million.
- On March 18, 2021, the Company provided an update on the rapid growth of its EHS division, realizing over $5 million of organic growth since the beginning of 2021.
- On March 23, 2021, the Company announced that it closed the acquisition of IDYA4; and subsequently on April 6, 2021, the Company announced that it closed the acquisition of Aspiria Corp.
- On April 8, 2021, the Company announced that it entered into a binding agreement to acquire Oncidium, creating one of the largest providers to the employer market in Canada.
Outlook
The Company is focused on revolutionizing the healthcare industry by leveraging technology to digitalize its delivery to provide better access to care, which leads to better health outcomes. CloudMD is building one, connected healthcare ecosystem that addresses all points of a patient’s care from one platform. CloudMD has already started the integration of its health-tech solutions and plans to launch a fully automated, connected platform later in 2021. CloudMD’s organic growth will be largely driven by its hybrid clinic network, digital services and EHS division. Through its recent acquisitions, there are opportunities for cross-functional synergies and cross-selling that will drive further organic growth. CloudMD expects to see continued organic growth across all divisions of its business largely due to an increase in virtual healthcare visits, an increase in digital services and cross-selling synergies in the EHS division. The Company has already seen over $5 million in organic revenue growth since January 2021 and has actualized cost synergies of over $500,000. Furthermore, the Company is on the road to profitability and expects to be Adjusted EBITDA-positive starting in Q3 2021.
CloudMD’s current revenue run rate is over $120 million which does not take into consideration any expected organic growth or cross selling synergies. The Company has a strong cash position with approximately $100 million, and approximately $35 million left after the closing of the three outstanding acquisitions. With a strong balance sheet, CloudMD has an opportunity to look at debt facility options to conserve cash and decrease dilution.
CloudMD will continue to focus on delivering meaningful shareholder value by executing on its growth strategy through accretive, synergistic acquisitions, achieving meaningful organic growth across all divisions, and the full integration of its healthcare solutions to provide one, connected platform that addresses all points of care for patients. CloudMD is positioned as a leader in digital healthcare and a leading provider to the employer healthcare market in Canada. The Company will continue expanding its footprint across North America and strategically in Europe. CloudMD anticipates reporting its Q1 2021 financial statements at the end of May 2021.
Selected Financial Information
All results were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.
| (in thousands of Canadian dollars) | Three months ended | Year ended | ||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2020 | 2019 | (%) | 2020 | 2019 | (%) | |||||||||||
| Revenue | $ | 5,810 | $ | 2,443 | 138 | % | $ | 15,016 | $ | 6,770 | 122 | % | ||||
| Cost of sales | (3,464 | ) | (1,380 | ) | 151 | % | (9,256 | ) | (3,731 | ) | 148 | % | ||||
| Gross profit (1) | 2,346 | 1,063 | 121 | % | 5,760 | 3,039 | 90 | % | ||||||||
| Gross margin | 40.4 | % | 43.5 | % | 38.4 | % | 44.9 | % | ||||||||
| Expenses | 8,336 | 2,443 | 241 | % | 18,471 | 7,417 | 149 | % | ||||||||
| Loss before other items | (5,990 | ) | (1,380 | ) | 334 | % | (12,711 | ) | (4,378 | ) | 190 | % | ||||
| Other items, taxes, non-controlling interest | 786 | (94 | ) | -936 | % | 372 | (340 | ) | -209 | % | ||||||
| Net comprehensive loss attributable to equity holders of the Company | (5,224 | ) | (1,474 | ) | 254 | % | (12,339 | ) | (4,718 | ) | 162 | % | ||||
| Loss per share, basic and diluted | $ | (0.04 | ) | $ | (0.02 | ) | 150 | % | $ | (0.11 | ) | $ | (0.07 | ) | 57 | % |
(1) Gross profit is a non-GAAP measure as described in the Non-GAAP Financial Measures section of this News Release.
| (in thousands of Canadian dollars) | Three months ended | Year ended | ||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2020 | 2019 | (%) | 2020 | 2019 | (%) | |||||||||||
| Net comprehensive loss attributable to equity holders of the Company | $ | (5,224 | ) | $ | (1,474 | ) | 254 | % | $ | (12,339 | ) | $ | (4,718 | ) | 162 | % |
| Add: | ||||||||||||||||
| Interest and accretion expense | 66 | 57 | 16 | % | 256 | 209 | 22 | % | ||||||||
| Income taxes | 104 | – | 100 | % | 123 | – | 100 | % | ||||||||
| Deferred tax recovery | (1,628 | ) | – | -100 | % | (1,628 | ) | – | 100 | % | ||||||
| Depreciation and amortization | 701 | 297 | 136 | % | 1,374 | 546 | 151 | % | ||||||||
| EBITDA(1) for the period | (5,981 | ) | (1,120 | ) | 434 | % | (12,214 | ) | (3,963 | ) | 208 | % | ||||
| Share-based compensation | 2,134 | 530 | 303 | % | 3,642 | 1,756 | 107 | % | ||||||||
| Financing-related costs | 573 | 97 | 491 | % | 1,078 | 97 | 1011 | % | ||||||||
| Acquisition and other related costs, net | 783 | 32 | 2347 | % | 1,092 | 140 | 680 | % | ||||||||
| Litigation costs and loss provision | 1,115 | – | 100 | % | 1,582 | 21 | 7433 | % | ||||||||
| Change in fair value of contingent consideration | (140 | ) | – | -100 | % | (140 | ) | – | -100 | % | ||||||
| Loss from discontinued operations | – | (140 | ) | -100 | % | – | (163 | ) | -100 | % | ||||||
| Adjusted EBITDA(1) for the period | $ | (1,516 | ) | $ | (601 | ) | 152 | % | $ | (4,960 | ) | $ | (2,112 | ) | 135 | % |
(1) EBITDA and Adjusted EBITDA are non-GAAP measures as described in the Non-GAAP Financial Measures section of this News Release.
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 related notes, and management’s discussion and analysis for the years ended December 31, 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 audited consolidated financial statements and the accompanying notes for the years ended December 31, 2020 and 2019.
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 manage and evaluate the cash operating income (loss) of the business. Please refer to section on EBITDA for reconciliation.
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 other related costs, net; litigation costs and loss provision; change in fair value of contingent consideration; 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 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 relates to revenues less cost 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 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 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.
About CloudMD Software & Services
CloudMD Software & Services Inc. (TSXV:DOC)(OTCQB:DOCRF)(Frankfurt: 6PH) (the “Company” or “CloudMD”) is digitizing the delivery of healthcare by providing a patient-centric approach, with an emphasis on continuity of care. By leveraging healthcare technology, the Company is building one, connected platform that addresses all points of a patient’s healthcare journey and provides better access to care and improved outcomes. Through CloudMD’s proprietary technology, the Company 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 7,000 psychiatrists, approximately 4,500 therapists and counsellors, approximately 4,000 psychologists, over 22,000 family physicians, over 34,000 medical specialists, over 1,500 allied health professionals, over 500 clinics, and over 5 million individuals across North America. CloudMD’s Enterprise Health Solutions Division includes one of the top 4 Employee Assistance Programs in Canada and offers one comprehensive, digitally connected platform for corporations, insurers and advisors to better manage the health and wellness of their employees and customers. For more information visit: www.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.
