CloudMD Software and Services Inc. (DOCRF)

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CloudMD Reports First Quarter 2023 Results Closing the Gap on Path to Profitability.

Source
https://finance.yahoo.com/news/cloudmd-reports-first-quarter-2023-203000089.html

May 29, 2023

- Q1 2023 revenue of $26.1 million compared to $25.9 million in Q4 2022
- Q1 2023 gross profit margin of 36.1%, 130 bps improvement from the previous quarter
- Q1 2023 Adjusted EBITDA loss of $1.6 million, $0.9 million improvement from the previous quarter. Net loss of $7.1 million in Q1 2023.
- Cash and cash equivalents of $18.8 million at the end of Q1 2023
- Multi year contract signings of $2.9 million in annual recurring revenue in Q1 2023

CloudMD Software & Services Inc. (TSXV: DOC, OTCQX: DOCRF, Frankfurt: 6PH), an innovative health services company transforming the delivery of care, is pleased to announce its financial results for the first quarter ended March 31, 2023. All financial information is presented in Canadian dollars unless otherwise indicated.

“We had strong performance in our Employer Health and Wellness services with new partnerships with Benefits Alliance, Mohawk Medbuy, and XTM. This will bring our Kii service offering to potentially hundreds of thousands of new users these organizations represent,” said Karen Adams, CEO of CloudMD “Our pipeline in the United States in our Health Productivity Solutions division continues to grow with focus on remote patient monitoring which includes our life and health application technology. The combination of organic growth, operational improvement and cost efficiencies in both divisions is driving our performance in this quarter.”

“We are starting to see the improvement in our financial results because of cost optimization efforts in 2022. In Q1 2023, we saw our financial KPIs trend in the right direction with revenue growth, lower operating expenses, and improvement in Adjusted EBITDA,” said John Plunkett, CFO of CloudMD. “We are focused on continuing to drive organic growth and identifying further cost efficiencies with the target of reaching Adjusted EBITDA positive in the fourth quarter of this year.”

First Quarter 2023 Financial Highlights
- Q1 2023 revenue of $26.1 million, compared to $31.0 million in Q1 2022 and $25.9 million in the previous quarter. Compared to Q4 2022, revenue was up by $0.2 million, driven by organic growth from the start of previously announced annual recurring revenue contracts offset by lower revenues in VisionPros and some attrition in the Occupational Health business.

- Q1 2023 gross profit margin was 36.1% compared to 34.8% in Q4 2022, and lower compared to 36.7% in Q1 2022. Changes are due to the revenue mix in the respective periods.

- Adjusted EBITDA for the first quarter was ($1.6) million, in-line with the prior year comparative period. Adjusted EBITDA4 improved by $0.9 million from Q4 2022. The improvement in Adjusted EBITDA from Q4 2022 is due to the continued cost optimization efforts.

- Net loss in Q1 2023 was $7.1 million, or $0.02 per share, compared to a loss of $5.6 million or $0.02 per share in Q1, 2022.

- The Company identified and actioned approximately $1.0 million of annualized cost reductions in the first quarter, the impact of which was realized in part in the first quarter with the full run-rate impact expected in Q2 2023. Subsequent to the first quarter of 2023, the Company has identified approximately $4.0 million annually of cost reductions that will be realized in the second and third quarter of 2023.

- Cash outflow in the fourth quarter was $5.3 million. Normalized cash outflow for the first quarter was $3.9 million. As of March 31, 2023, the Company had $18.8 million of cash and cash equivalents.

Fourth Quarter & Subsequent Corporate Highlights
- On February 13, 2023, CloudMD announced the launch Spanish language TAiCBT in the United States.
- On March 27, 2023, CloudMD announced that Bram Lowsky had joined the Company as the new Head of Health and Wellness Services.
- On April 3, 2023, CloudMD announced the launch of its online prescription renewal in the United States.
- On April 4, 2023, CloudMD announced its partnership with Mohawk Medbuy to offer its full suite of services to hospitals across Canada.
- On April 10, 2023, CloudMD announced that Dhruv Chandra had joined the Company as the new Chief Technology Officer.
- On April 12, 2023, CloudMD announced an expanded partnership with Benefits Alliance to offer its full suite of Kii services to employee benefits plans across Canada.
- On May 11, 2023, CloudMD announced a partnership with XTM to bring EAP and Telemedicine to service industry workers.

Outlook
- 2022 was a year of transition as the Company focused on operationalizing, aligning, and rationalizing the large number of acquisitions completed over the preceding two years. The Company has been focused on the integration of its previous acquisitions and products to create an innovative market leadership position and deliver profitable results.

- During Q1 2023, the Company started to see positive trends in its financial KPIs, with revenue, Adjusted EBITDA and normalized cash flow all improving.

- The Company expects low double digit revenue growth in 2023 from the fourth quarter 2022 baseline. The Company sold $2.9 million in multi-year contracts in Q1 2023 and has a robust growing pipeline that will continue to drive revenue growth in 2023.

- During the first quarter, the Company identified and actioned approximately $1.0 million in annual cost reductions. In addition, the Company is expecting to action another $4.0 million of annual net cost savings between the second and third quarter of 2023. These synergies will come with a cost of severance, or working notice, which will impact cash flows in the first three quarters of 2023.

- The cost savings achieved in the fourth quarter of 2022, in addition to the savings realized in the first quarter of 2023 and expected reductions in the second and third quarter of 2023, will bring the Company closer to adjusted EBITDA breakeven. The Company expects to achieve this milestone in the fourth quarter of 2023.

- The Company believes its cash position of $18.8 million, will provide sufficient liquidity to fund its obligations and organic growth. The Company will continue to prudently manage expenditures and seek further efficiencies in its cost structure.

Management Update
The Company announces the resignation of Chief Commercial Officer, Adam Kelly, effective June 23, 2023. Mr. Kelly’s responsibilities will be divided between Bram Lowsky, Head of Health and Wellness Services and Nathan Lane, Head of Health and Productivity Solutions.

The Company also announces the granting of stock options to purchase an aggregate of 200,000 common shares of the Company at an exercise price equal to the 5-day VWAP as of June 7, 2023 per share for a five year term. The stock options were granted pursuant to the Company’s Stock Option Plan to certain officers of the Company.

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https://finance.yahoo.com/news/cloudmd-reports-first-quarter-2023-203000089.html