Landmark contract for our EAP, $90 million in ARR, and member count in excess of 2 million highlight another strong quarterly performance

MONTREAL, May 9, 2022 /CNW Telbec/ - Dialogue Health Technologies Inc. (TSX: CARE) ("Dialogue" or the "Company"), Canada's premier health and wellness virtual healthcare platform, announced today its financial and operational results for the three months and three months ended March 31, 2022. Financial references are in Canadian dollars unless otherwise indicated.

Dialogue Logo (CNW Group/Dialogue Health Technologies Inc.)

"The team is executing very well on our growth strategy, building a robust and unparalleled integrated health platform that is resonating deeply with customers," said Cherif Habib, Chief Executive Officer of Dialogue. "In the first quarter, we continued to gain market share with our virtual EAP and signed more than 60% of our new customers to multiple services. With the recent acquisition of Tictrac, we are adding a wellness component to our platform that will allow us to engage members more frequently throughout their journey to better health and well-being. As in years past, 2022 is shaping up to be our most exciting one yet."

Navaid Mansuri, Chief Financial Officer, added: "We exceeded two million members during the quarter and ended the period with more than $90 million in ARR. On the heels of many large customer wins in the last two quarters, we invested in our operations to ensure that we can successfully support our customers with best-in-class service, as we always have. We are well positioned for growth ahead and expect that our margins and operating leverage will continue to improve in the coming quarters, putting us well on track to achieve our profitability objectives in the second half of 2023."

Q1 2022 Financial Highlights
(All capitalized terms not defined herein, shall have the meaning and usefulness ascribed to them in the Management's Discussion and Analysis for the three months ended March 31, 2022. Comparison periods in each case are the three months ended March 31, 2021, unless otherwise stated.)

  • Annual Recurring and Reoccurring Revenue ("ARR") grew 38.4% year-over-year to $90.3 million, driven by new Customer wins. In addition to our previously announced agreement with Scotiabank, these wins also include a leading retailer of optical products, a large healthcare consulting services firm, a multinational computer software technology corporation, and a digital media and internet company. We also saw several important program expansions and the addition of new services by existing Customers, including a large video game company and a global provider of e-commerce software.
  • Revenue in the first quarter of 2022 increased by 35.8% year-over-year to $20.7 million, due to growth in Members, both Direct and from agreements with strategic distribution partners, and an increase in the Attach Rate as existing Customers add more services over time.
  • Members grew to more than 2.0 million, an increase of nearly 800,000, or 61.4%, year-over-year, and approximately 200,000, or 10.7%, compared to the fourth quarter of 2021.
  • Attach Rate grew to 1.51 from 1.08 in the first quarter last year, mainly due to the addition of our internet-based cognitive and behavioural therapy ("iCBT") to Canada Life's Consult+ platform.
  • Member-Service Units, which we define as total Members multiplied by the Attach Rate, rose 125.6% year-over-year to just under 3.1 million from approximately 2.0 million in the first quarter last year. This meaningful increase demonstrates the success of Dialogue's land and expand strategy, as both existing and new Customers continue to leverage our Integrated Health PlatformTM.
  • 61% of new direct Members signed up for two services or more in the first quarter of 2022. Combined with current Customer expansions, the cumulative number of direct Members with two or more services was 22% at the end of the first quarter of 2022, compared to 16% at the same time last year and 21% at the end of the fourth quarter of 2021.
  • Average Monthly Net Retention Rate ("NRR") was 101% for the first quarter of 2022, marking another quarter of NRR greater than 100%. During the period, we experienced a low churn of approximately 0.24%, or 4,400 members, within our mid-market and enterprise customer categories. Furthermore, we communicated and successfully implemented pricing increases to many customers whose contracts were renewing at the start of the year.
  • Gross Margin increased to 42.3%, compared to 41.5% in the first quarter of 2021, as we realized efficiencies in our operations, mainly due to the continued scaling of our Mental Health service and Employee Assistance Program ("EAP") as well as to the migration of Optima Customers to our Dialogue EAP. This was offset in part by the timing of investments to support the planned onboarding of several large customers in the second quarter of 2022, prior to the recognition of revenue from those customers.
  • Adjusted EBITDA1 loss was $5.7 million, compared to a loss of $5.0 million in the same period last year. The increase was due mainly to a planned increase in operating expenses year-over-year to support our growth, to launch and promote new services, to develop our technology platform, and to sustain a public company structure, partially offset by higher gross profit.
  • Net loss was $7.1 million, compared to $231.2 million in the same period last year. The decrease was primarily due to the accounting charge in the first quarter of 2021 related to the increase in the fair market value conversion feature of the Class B preferred shares as well as an increase in operating expenses, partially offset by higher gross profit.
  • Cash and Cash Equivalents were $96.0 million as of March 31, 2022, compared to $104.3 million as of December 31, 2021. The decrease was the result of cash used in operations during the quarter.

______________________________

1 Adjusted EBITDA is a Non-IFRS financial measure. Refer to the reconciliation contained in the Non-IFRS Financial Measures section, beginning on page 3 of this earnings release.

Q1 2022 Business Highlights and Subsequent Events

  • On January 11, 2022, we published our 2nd annual Canadian Attitudes on Health and Virtual Care Report, a joint study with Environics Research. Key findings provide strong evidence that working Canadians support the provision of virtual care services through their benefit plans.
  • On February 22, 2022, we announced an agreement to offer our virtual EAP to more than 38,000 employees at Scotiabank, beginning on April 1, 2022. This represented our largest direct customer win to date for that service.
  • On March 17, 2022, we published a report that we co-sponsored with Sun Life, which analyzed the economic impact of telemedicine on Canada's healthcare system. The Economic Impact of Telemedicine in Canada report, compiled by AppEco, estimates that governments across Canada could save up to $1 billion per year by 2025 with the adoption of telemedicine platforms.
  • Subsequent to quarter end, on April 13, 2022, we acquired London, UK-based Tictrac Ltd. for up to $56 million (£35 million), subject to certain earn-out conditions. Tictrac is a SaaS-based provider of a global health and wellness platform that enables healthier living for everyone. The transaction was closed successfully on April 30, 2022.
  • Subsequent to quarter end, on April 21, 2022, we launched Mental Health+, building on the success of our stress management and well-being service and iCBT. This comprehensive offering will be available to all new clients and to existing clients who wish to transition from their existing program.
  • We have been recognized by Great Place to Work® in the Best WorkplacesTM for Women Canada 2022 category.

Upcoming events

  • Roth Canada Corporate Access Day in New York City on May 17, 2022.
  • RBC Capital Markets 2022 Global Healthcare Conference in New York City on May 18, 2022.
  • CIBC Capital Markets Technology and Innovation Conference 10.0 in Toronto on May 26, 2022.
  • National Bank Financial 12th Annual Quebec Conference in Toronto on June 9, 2022.

Notice of Conference Call

Dialogue will host a live video webinar on Tuesday, May 10, 2022 at 9:00 a.m. ET to discuss its financial results. Cherif Habib, CEO, and Navaid Mansuri, CFO, will co-chair the call. All interested parties can join the event at the following link, which is also available in the Events and Presentations section of the Company's website. The presentation will be accompanied by slides, which will be available on the screen view and will be made available prior to the start of the webinar on  the Company's website. Please connect at least 15 minutes prior to the event to ensure adequate time for any software download of Zoom that may be required to attend the event. Listeners that prefer to dial in by phone may do so by accessing the same web link and the dial in details will be provided by email upon registration.

Non-International Financial Reporting Standards ("IFRS") Financial Measures

This press release makes reference to certain non-IFRS measures, such as "EBIT" represents net profit or loss before net financing (income) expenses and income taxes,  "EBITDA" (which stands for net profit or loss before net financing (income) expenses, income taxes, depreciation of property and equipment, amortization of intangible assets, and amortization of right-of-use assets) and "Adjusted EBITDA" (which stands for net profit or loss before net financing (income) expenses, income taxes, depreciation of property and equipment, amortization of intangible assets, amortization of right-of-use assets, transaction costs, acquisition costs, change in fair value of conversion feature, share-based payments expense, change in fair value of contingent consideration, severance costs, and foreign exchange gain or loss). These measures are not recognized under IFRS and 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 are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information as reported under IFRS. Management also believes that other users, such as securities analysts, investors and other interested parties, frequently use non-IFRS measures, particularly in the evaluation of issuers.

Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. Where applicable, we provide a clear quantitative reconciliation from the non-IFRS financial measures to the most directly comparable measure calculated in accordance with IFRS.

The following table reconciles net loss to Adjusted EBITDA loss for the three months ended March 31, 2022 and 2021:

DIALOGUE HEALTH TECHNOLOGIES INC.
ADJUSTED EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2022 and 2021

(in thousands of CAD)


Three months ended
March 31,



2022


2021



$


$






Net loss


(7,068)


(231,235)

Net financing (income) expenses


(25)


188

Current income tax expense



Deferred income tax recovery


(85)


(105)

EBIT


(7,178)


(231,152)

Depreciation of property and equipment


148


109

Amortization of intangible assets


402


330

Amortization of right-of-use assets


150


148

EBITDA


(6,478)


(230,565)

Share-based payments expense


568


97

Acquisition costs


94


43

Change in fair value of conversion feature



225,417

Change in fair value of contingent consideration


91


Adjusted EBITDA


(5,725)


(5,008)

About Dialogue
Incorporated in 2016, Dialogue is Canada's premier virtual healthcare and wellness platform, providing affordable, on-demand access to quality care. Through our team of health professionals, we serve employers and organizations who have an interest in the health and well-being of their employees, members and their families. Our Integrated Health Platform™ is a one-stop healthcare hub that centralizes all of our programs in a single, user-friendly application, providing access to services 24 hours per day, 365 days per year from the convenience of a smartphone, computer or tablet.

Forward-Looking Information

This release includes "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking information may relate to our financial outlook (including revenues and Adjusted EBITDA), and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives.

In some cases, but not necessarily in all cases, forward-looking statements can be identified by the use of forward-looking terminology such as "plans" "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding future events and operating performance.

Forward-looking statements are necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by Dialogue as of the date of this release, are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, the risk factors identified under "Risk Factors" in the Company's latest annual information form, and in other periodic filings that the Company has made and may make in the future with the securities commissions or similar regulatory authorities in Canada, all of which are available under the Company's SEDAR profile at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect Dialogue. However, such risk factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Dialogue undertakes no obligation to publicly update any forward-looking statement, except as required by applicable securities laws.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not currently known to us or that we currently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, you should not place undue reliance on forward-looking information. The forward-looking information represents our expectations as of the date of this earnings release (or as the date it is otherwise stated to be made) and is subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities laws. All of the forward-looking information contained in this earnings release is expressly qualified by the foregoing cautionary statements.

DIALOGUE HEALTH TECHNOLOGIES INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF NET LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(in thousands of CAD except share and per share data)


Three months ended
March 31,



2022


2021



$


$






Revenue


20,686


15,238

Cost of services


11,926


8,908

Gross profit


8,760


6,330






Operating expenses





General and administrative


9,445


7,583

Sales and marketing


3,227


2,398

Product and development


2,675


1,987

Share-based payments expense


568


97



15,915


12,065






Operating loss


(7,155)


(5,735)






Other expenses





Change in fair value of conversion feature



225,417

Net financing (income) expenses


(25)


188



(25)


225,605






Net loss before income taxes


(7,130)


(231,340)

Current income tax (expense)


(23)


Deferred income tax recovery


85


(105)

Net loss


(7,068)


(231,235)











Other comprehensive income










Items that may be reclassified subsequently to net loss





Foreign currency translation gain


360


311






Total comprehensive loss


(6,708)


(230,924)






Loss per share - basic and diluted


(0.11)


(3.55)

DIALOGUE HEALTH TECHNOLOGIES INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2022 AND DECEMBER 31, 2021

(in thousands of CAD)

March 31,


December 31,


2022


2021


$


$

Assets




Current assets




   Cash and cash equivalents

96,017


104,296

   Trade and other receivables

15,464


13,659

   Prepaid expenses

1,683


1,811


113,164


119,766





Property and equipment

1,252


1,137

Right-of-use assets

1,404


1,568

Intangible assets

5,421


5,819

Goodwill

7,007


6,963

Investment

1,004



129,252


135,253

Liabilities




Current liabilities




   Trade payable and accrued liabilities

9,401


9,534

   Unearned revenue

584


68

   Current portion of contingent consideration payable

760


718

   Current portion of long-term debt

400


400

   Current portion of lease liabilities

482


541


11,627


11,261





Non-current portion of lease liabilities

768


911

Non-current portion of long-term debt

974


1,074

Non-current portion of contingent consideration payable

1,378


1,300

Deferred income tax liability

685


766


15,432


15,312

Commitments and contingencies








Shareholders' equity




Share capital

458,983


458,962

Equity reserve

4,080


3,514

Cumulative translation adjustment

707


347

Deficit

(349,950)


(342,882)


113,820


119,941


129,252


135,253

DIALOGUE HEALTH TECHNOLOGIES INC.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(in thousands of CAD)

Three months ended
March 31,


2022


2021


$


$

Operating activities




Net loss

(7,068)


(231,235)

Items not affecting cash




   Change in fair value of the contingent consideration- eHH

91


   Income tax recovery

(85)


(105)

   Change in conversion feature on preferred shares


225,417

   Depreciation of property and equipment

148


109

   Amortization of right-of-use assets

150


148

   Net financing (income) expenses

(25)


254

   Amortization of intangible assets

402


330

   Share-based payments

568


97


(5,819)


(4,985)

Net changes in non-cash operating working capital items




   Trade and other receivables

(1,804)


(1,240)

   Prepaid expenses

128


(455)

   Trade and other payables

(133)


2,093

   Unearned revenue

516


499

Interest paid

(30)


(14)

Interest income

68



(7,074)


(4,102)





Investing activities




   Investment

(1,004)


   Purchase of property and equipment

(268)


(187)

   Purchase of intangible assets


(18)

   Sale of asset held for sale


910

   Acquisition of Botfront


(292)


(1,272)


413

Financing activities




   Issuance of shares


100,008

   Share issue costs


(9,371)

   Options exercised

20


392

   Repayment of liability related to asset held for sale


(430)

   Repayment of long-term debt

(100)


(100)

   Repayment of lease liabilities

(213)


(166)


(293)


90,333

Effect of foreign currency translation

360


311

Net (decrease) increase in cash and cash equivalents

(8,279)


86,955

Cash and cash equivalents, beginning of the period

104,296


42,067

Cash and cash equivalents, end of the period

96,017


129,022

 

SOURCE Dialogue Health Technologies Inc.

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