MCI Onehealth Technologies Inc. (“MCI” or the “Company”) (TSX:
DRDR), a clinician-led healthcare technology company focused on
increasing access to and quality of healthcare, today released its
financial results for the three months ended June 30, 2021. A
summary of MCI’s financial and operational highlights for the
quarter are set out below, and more detailed information is
contained in the financial statements and related management
discussion and analysis, which are available on MCI’s SEDAR page at
www.sedar.com.
“We are continuing to ramp up our growth engine
coming out of our IPO earlier this year, having completed a number
of exciting investments and acquisitions in the second quarter of
2021,” said Dr. Alexander Dobranowski, CEO of MCI. “We continue to
pursue strong accretive acquisitions and innovative partnerships
that leverage cutting-edge technology to improve access, quality
and cost of healthcare services, while building on organic growth
through the expansion of MCI Connect and the launch of our MCI
Onehealth innovation initiatives.”
Second Quarter 2021 Financial Highlights
Significant financial highlights for MCI during the second
quarter of 2021 included:
- Revenue Growth
Quarter-over-Quarter: Revenue for the second quarter of 2021
increased 53% over the same period in 2020, driven by the ongoing
recovery of publicly insured health services and robust growth from
corporate health services driven by a broader array of services
offered to corporate health customers. Total revenue for the three
months ended June 30, 2021 was $11.2 million, compared to total
revenue of $7.3 million in Q2 2020.
- Growth from
Corporate Customers: The performance of MCI’s corporate
health services business continued to see significant growth, with
nearly 500 corporate customers on board at the end of the second
quarter. Second quarter revenues from corporate health services
were $1.87, a 102% increase over the same quarter last year, and a
44% increase over the first quarter of 2021.
- Liquidity:
Cash and cash equivalents were $19.7 million at the end of the
quarter, compared to $2.3 million in the same quarter last year,
providing the capital required to meet short- and medium-term
capital requirements while continuing to pursue new strategic
acquisitions and to develop and implement the Company’s data-driven
healthcare initiatives.
- Adjusted
EBITDA: Adjusted EBITDA for the quarter was negative
$691,000, down $1.9 million as compared to the same period last
year.
- Net
Losses: Net losses for the quarter were $2.8 million, a
difference of negative $3.3 million from the same quarter in the
previous year. Losses were driven primarily by physician fees (up
$2.5 million over the same quarter last year), increased salary,
wage and benefits expenses (up $2.0 million over the same quarter
last year), corporate expenses (up $0.8 million over the same
quarter last year) and expenses relating to share based
compensation granted to key employees (up $1.4 million over the
same quarter last year) as the company expands its team to match
the pace of its aggressive growth strategy and continues to adjust
to increased compliance and administrative costs following its IPO
earlier this year.
Second Quarter 2021 Operational Highlights
Significant operational highlights for MCI during the second
quarter of 2021 included:
- Investment in Regen
Scientific Inc. (“ReGen”) On April 12, 2021, MCI entered into
a share exchange agreement with ReGen, a personalized,
preventative, and regenerative health provider in Canada. Under the
terms of the arrangement, MCI acquired approximately 9% of the
issued and outstanding shares of ReGen in exchange for the issuance
of 800,000 Class A Subordinate Voting Shares of MCI (“MCI
Shares”).
- Investment in Ariel
Precision Medicine, Inc. (“Ariel”) On April 23, 2021, MCI
invested US$250,000 in a convertible promissory note issued by
Ariel, whose business focuses on precision diagnosis and targeted
therapeutics. The transaction agreements provide MCI with the right
(but not the obligation) to participate, on a pro-rata basis, in
any issuances by Ariel of equity securities or any security
convertible into equity securities occurring after a qualified
financing.
- Acquisition of
Khure Health Inc. (“Khure”) On April 26, 2021, MCI acquired
100% of the outstanding common shares of Khure for aggregate
consideration of up to $12.6 million. Khure’s technology platform
harnesses clinical data, enabling physicians to rapidly screen and
identify patients with rare diseases and facilitate more
personalized treatment. The details of the acquisition are set out
in MCI’s press release dated April 27, 2021.
- Investment in Acorn
Biolabs Inc. (“Acorn”) On June 7, 2021, MCI entered into a
share exchange agreement to acquire common shares of Acorn in
exchange for the issuance of 380,953 MCI Shares, with the result
that the Company now owns a minority interest in Acorn. Acorn is a
healthcare technology company with a focus on regenerative
medicine, which offers a non-invasive live cell collection,
analysis and cryopreservation service.
- Chief Innovation
Officer: The addition of Saleema Khimji, a champion of
innovation with a proven track-record of advancing science and
technology initiatives across the globe, as Chief Innovation
Officer of the Company gives MCI the strong leadership and
expertise required to drive its MCI Onehealth Labs business unit,
which is tasked with building a long-term pipeline of intellectual
property and contributions to clinical research.
Events Subsequent to Second Quarter 2021
Following the end of the second quarter, MCI has
continued to implement its strategic plan with a number of
significant new developments, including:
- Investment in
ORO Health Inc. (“ORO”): On July 12, 2021, MCI invested
$250,000 to purchase an interest in ORO, an innovating telehealth
service provider, through the acquisition of Series 1 Class Seed
Preferred Shares of ORO.
- Acquisition of
the Polyclinic Group: On July 15, 2021, MCI entered into an
agreement to purchase an 80% interest in the “Polyclinic Group of
Companies” for total consideration of $5.8 million. The Polyclinic
Group of Companies include The Quit Clinic Inc., Executive Medical
Concierge Canada Ltd. and Canadian Phase Onward Inc. MCI
subsequently closed the acquisition on July 30, 2021. The details
of the acquisition are set out in MCI’s press releases dated July
15, 2021 and August 4, 2021
Outlook
MCI expects continued growth in total company
revenue in the second half of fiscal 2021 as it executes its
strategic plan on multiple fronts including:
- Organic growth
of government insured health services from its omnichannel network
of clinics, telehealth and the MCI Connect virtual platform.
- Continued
organic growth in health services provided to corporate customers,
as it expands its customer base and increases the number of
available service offerings.
- New technology
business ventures and acquisitions to accelerate its technology
roadmap.
- Acquisitions of
specialty clinics to expand its health service offerings and enter
new markets by leveraging technology to deliver more services to
its large and growing patient and physician base.
- Exploration of
commercial relationships that leverage expressed interest in Khure
Health’s AI-drive clinical evidence around rare diseases to
accelerate patient recruitment for clinical trials, accelerate
patient access to treatment, support regulatory decision-making
through the application of real world evidence and set the
foundations for new AI technologies.
Conference Call Details
MCI will hold a conference call to discuss
progress on its key strategic initiatives and financial results for
the second quarter of 2021, on August 16, 2021 at 5:30 pm EDT.
Participants are encouraged to access the call at least 10 minutes
prior to start.
Date: |
Monday August
16, 2021 |
Time: |
5:30 pm (EDT) |
Duration: |
60 minutes |
|
|
Dial-in Canada/US: |
(833) 540-1153 (Toll-free) |
|
(918) 922-6528 (International) |
|
|
Conference Call ID: |
4586008 |
|
|
Webcast link: |
https://edge.media-server.com/mmc/p/h35jabsz |
Selected Unaudited Financial
Information(In thousands of dollars, except percentages
and per share amounts)
|
Quarter ended |
|
Period over |
|
Six months ended |
|
Period over |
|
|
June 30 |
|
period Change |
|
June 30 |
|
period Change |
|
|
|
2021 |
|
|
2020 |
|
|
$ |
|
% |
|
|
2021 |
|
|
2020 |
|
|
$ |
|
% |
|
|
($ in thousands except percentages) |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
11,208 |
|
|
7,312 |
|
$ |
3,896 |
|
53 |
|
$ |
21,238 |
|
$ |
17,753 |
|
$ |
3,485 |
|
20 |
|
Expenses |
|
|
|
|
|
|
|
|
Physicians’ fees |
|
7,244 |
|
|
4,755 |
|
|
2,489 |
|
52 |
|
|
13,877 |
|
|
11,769 |
|
|
2,108 |
|
18 |
|
Salary, wages, and benefits |
|
2,534 |
|
|
491 |
|
|
2,043 |
|
416 |
|
|
4,690 |
|
|
2,524 |
|
|
2,166 |
|
86 |
|
Occupancy costs |
|
477 |
|
|
781 |
|
|
(304 |
) |
(39 |
) |
|
1,327 |
|
|
1,557 |
|
|
(230 |
) |
(15 |
) |
Office expense |
|
1,115 |
|
|
498 |
|
|
617 |
|
124 |
|
|
2,004 |
|
|
1,066 |
|
|
938 |
|
88 |
|
Corporate expenses |
|
854 |
|
|
30 |
|
|
824 |
|
2,747 |
|
|
1,387 |
|
|
65 |
|
|
1,322 |
|
2,034 |
|
Sales and marketing expenses |
|
79 |
|
|
- |
|
|
79 |
|
NM |
|
|
100 |
|
|
- |
|
|
100 |
|
NM |
|
Research expenses |
|
66 |
|
|
- |
|
|
66 |
|
NM |
|
|
67 |
|
|
- |
|
|
67 |
|
NM |
|
Income from investments |
|
12 |
|
|
- |
|
|
12 |
|
NM |
|
|
12 |
|
|
- |
|
|
12 |
|
NM |
|
Expected credit losses |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
56 |
|
|
- |
|
|
56 |
|
NM |
|
Other income |
|
(458 |
) |
|
(458 |
) |
|
- |
|
NM |
|
|
(904 |
) |
|
(1,051 |
) |
|
147 |
|
(14 |
) |
|
|
11,899 |
|
|
6,097 |
|
|
5,802 |
|
95 |
|
|
22,592 |
|
|
15,930 |
|
|
6,662 |
|
42 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
(691 |
) |
|
1,215 |
|
|
(1,906 |
) |
(157 |
) |
|
(1,354 |
) |
|
1,823 |
|
|
(3,177 |
) |
174 |
|
|
|
|
|
|
|
|
|
|
Shares based compensation |
|
1,400 |
|
|
- |
|
|
1,400 |
|
NM |
|
|
2,648 |
|
|
- |
|
|
2,648 |
|
NM |
|
Finance costs |
|
107 |
|
|
149 |
|
|
(42 |
) |
(28 |
) |
|
232 |
|
|
312 |
|
|
(80 |
) |
(26 |
) |
Interest income on subleases |
|
(14 |
) |
|
(17 |
) |
|
3 |
|
(18 |
) |
|
(25 |
) |
|
(34 |
) |
|
9 |
|
(26 |
) |
Depreciation and amortization |
|
967 |
|
|
730 |
|
|
237 |
|
32 |
|
|
1,683 |
|
|
1,470 |
|
|
213 |
|
14 |
|
Gain (loss) On sublease |
|
- |
|
|
- |
|
|
- |
|
NM |
|
|
|
(10 |
) |
|
10 |
|
(100 |
) |
Acquisition related legal expenses |
|
238 |
|
|
- |
|
|
238 |
|
NM |
|
|
238 |
|
|
- |
|
|
238 |
|
NM |
|
|
|
2,698 |
|
|
862 |
|
|
1,836 |
|
213 |
|
|
4,776 |
|
|
1,738 |
|
|
3,038 |
|
175 |
|
|
|
|
|
|
|
|
|
|
Income (loss) before taxes |
|
(3,389 |
) |
|
358 |
|
|
(3,742 |
) |
(1,060 |
) |
|
(6,130 |
) |
|
85 |
|
|
(6,215 |
) |
(7,312 |
) |
Income taxes |
|
(556 |
) |
|
(120 |
) |
|
(436 |
) |
363 |
|
|
(835 |
) |
|
(52 |
) |
|
(783 |
) |
1,506 |
|
Net Income (loss) |
|
|
|
|
|
|
|
|
|
|
(2,833 |
) |
|
473 |
|
|
(3,306 |
) |
(699 |
) |
|
(5,295 |
) |
|
137 |
|
|
(5,432 |
) |
(3,965 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of |
|
|
|
|
|
|
|
|
Shares outstanding: Basic and diluted |
|
48,163,664 |
|
|
38,004,750 |
|
|
|
|
46,932,118 |
|
|
38,004,750 |
|
|
|
Net income (loss) per share - Basic and diluted |
$ |
(0.06 |
) |
$ |
0.01 |
|
|
|
$ |
(0.11 |
) |
$ |
0.00 |
|
|
|
* NM means not meaningful.
Selected Statement of Financial Position
Data
|
June 30, 2021 |
December 31, 2020 |
|
|
Cash |
19,680 |
894 |
Accounts receivable |
4,490 |
3,637 |
Accounts payable and accrued liabilities |
5,756 |
6,998 |
Net investment in subleases |
1,498 |
1,685 |
Lease liabilities |
12,577 |
13,833 |
Related party loan |
- |
1,210 |
Loan receivable |
600 |
- |
Other liabilities |
130 |
80 |
Liability for contingent consideration |
5,438 |
- |
Reconciliation of Adjusted
EBITDA
|
Quarter ended |
|
Six months ended |
|
|
June 30 |
|
June 30 |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
$ in thousands |
|
|
|
|
|
Total Revenue |
$ |
11,208 |
|
$ |
7,312 |
|
$ |
21,238 |
|
$ |
17,753 |
|
|
|
|
|
|
Net income (loss) |
|
(2,833 |
) |
|
473 |
|
|
(5,295 |
) |
|
137 |
|
Add back (deduct) |
|
|
|
|
Depreciation and amortization |
|
967 |
|
|
730 |
|
|
1,683 |
|
|
1,470 |
|
Share-based payment expense |
|
1,400 |
|
|
- |
|
|
2,648 |
|
|
- |
|
Finance charges |
|
107 |
|
|
149 |
|
|
232 |
|
|
312 |
|
Interest income |
|
(14 |
) |
|
(17 |
) |
|
(25 |
) |
|
(34 |
) |
Gain (loss) on sublease contracts |
|
- |
|
|
- |
|
|
- |
|
|
(10 |
) |
Acquisition related legal expenses |
|
238 |
|
|
- |
|
|
238 |
|
|
- |
|
Income taxes |
|
(556 |
) |
|
(120 |
) |
|
(835 |
) |
|
(52 |
) |
Adjusted EBITDA |
|
(691 |
) |
|
1,215 |
|
|
(1,354 |
) |
|
1,823 |
|
Adjusted EBITDA Margin |
|
(6.2 |
)% |
|
16.6 |
% |
|
(6.4 |
)% |
|
10.3 |
% |
* Non-IFRS
Metrics: “Gross Profit”, “Gross Margin”, “EBITDA” and
“Adjusted EBITDA” do not have any standardized meaning under IFRS
and therefore may not be comparable to similar measures presented
by other issuers. MCI defines adjusted gross profit as revenue less
cost of sales (excluding depreciation and amortization) and
adjusted gross margin as adjusted gross profit as a percentage of
revenue. MCI defines Adjusted EBITDA as net income (loss) before
adjusting for acquisition costs, share-based payment expense,
depreciation and amortization foreign exchange (gain) loss, finance
income, finance costs and income taxes. The Adjusted EBITDA figures
noted herein have not been adjusted for non-controlled interests.
MCI believes that these metrics may be helpful to the reader in
assessing MCI’s financial performance and operational efficiency,
however, these measures should
not be considered as alternatives to net
income/loss determined in accordance with IFRS.
About MCI
MCI is a healthcare technology company focused
on empowering patients and doctors with advanced technologies to
increase access, improve quality, and reduce healthcare costs. As
part of the healthcare community for over 30 years, MCI operates
one of Canada’s leading primary care networks with 25 clinics,
serves over 850,000 patients annually and had over 200,000
telehealth visits last year. MCI additionally offers an expanding
suite of occupational health service offerings that support a
growing list of nearly 500 corporate customers. Led by a proven
management team of doctors and experienced executives, MCI remains
focused on executing a strategy centered on acquiring technology
and health services that complement MCI’s current roadmap. For more
information, visit mcionehealth.com
For IR enquiries please
contact:Fernando Massalin | ir@mcionehealth.com | +1
(416) 440-4040 ext 155
For media enquiries please contact:Nolan Reeds
| nolan@mcionehealth.com | +1 (416) 440-4040 ext 158
Forward Looking Statements
Certain statements in this press release,
constitute “forward-looking information” and “forward looking
statements” (collectively, “forward looking statements”) within the
meaning of applicable Canadian securities laws and are based on
assumptions, expectations, estimates and projections as of the date
of this press release. Forward-looking statements include
statements with respect to projected revenues, earnings, growth
rates, targets, revenue mix, product plans, use of proceeds, new
business ventures and potential acquisitions, as well as MCI’s
future growth, strategic transformation plan, results of
operations, performance and business prospects and opportunities.
The words “plans”, “expects”, “projected”, “estimated”,
“forecasts”, “anticipates”, “intend”, “guidance”, “outlook”,
“potential”, “prospects”, “seek”, “aim”, “strategy”, “targets” or
“believes”, “for use in”, “growth”, “expansion”, “to pursue”, “to
develop”, “future”, “later” or variations of such words and phrases
or statements that certain future conditions, actions, events or
results “will”, “may”, “could”, “would”, “should”, “might” or
“can”, or negative versions thereof, “occur”, “continue” or “be
achieved”, and other similar expressions, identify forward-looking
statements. Forward-looking statements are necessarily based upon
management’s perceptions of historical trends, current conditions
and expected future developments, as well as a number of specific
factors and assumptions that, while considered reasonable by MCI as
of the date of such statements, are outside of MCI’s control and
are inherently subject to significant business, economic and
competitive uncertainties and contingencies which could result in
the forward-looking statements ultimately being entirely or
partially incorrect or untrue. Forward looking statements contained
in this press release are based on various assumptions, including,
but not limited to the following: MCI’s ability to achieve its
growth strategy; the demand for MCI’s products and fluctuations in
future revenues; the availability of future business venture and
acquisition targets or opportunities and MCI’s ability to
consummate them; the effects of competition in the industry; the
requirement for increasingly innovative product solutions and
service offerings; trends in customer growth; sufficiency of
current working capital to support future operating and working
capital requirements; the stability of general economic and market
conditions; currency exchange rates and interest rates; equity and
debt markets continuing to provide MCI with access to capital;
MCI’s ability to comply with applicable laws and regulations; MCI’s
continued compliance with third party intellectual property rights;
the anticipated effects of COVID-19; and that the risk factors
noted below, collectively, do not have a material impact on MCI’s
business, operations, revenues and/or results. By their nature,
forward-looking statements are subject to inherent risks and
uncertainties that may be general or specific and which give rise
to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct and that objectives, strategic goals
and priorities will not be achieved.
Known and unknown risk factors, many of which
are beyond the control of MCI, could cause the actual results of
MCI to differ materially from the results, performance,
achievements or developments expressed or implied by such
forward-looking statements. Such risk factors include, but are not
limited to those factors which are discussed under the section
entitled “Risk Factors” in MCI’s final prospectus dated December
29, 2020 and in MCI’s annual information form dated March 31, 2021,
each of which is available under MCI’s SEDAR profile at
www.sedar.com. The risk factors are not intended to represent a
complete list of the factors that could affect MCI and the reader
is cautioned to consider these and other factors, uncertainties and
potential events carefully and not to put undue reliance on
forward-looking statements. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Forward-looking statements are
provided for the purpose of providing information about
management’s expectations and plans relating to the future. MCI
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise, or to explain any material difference
between subsequent actual events and such forward-looking
statements, except to the extent required by applicable law. All of
the forward-looking statements contained in this press release are
qualified by these cautionary statements.
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