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 and year ended December 31, 2021.

“We are continuing to deliver on the strategy that we laid out for investors during our initial public offering,” said Dr. Alexander Dobranowski, CEO of MCI. “We are making excellent progress towards achieving our vision of empowering patients and doctors with advanced technologies to increase access to and improve the quality of healthcare while reducing healthcare costs. The early success of our first major acquisitions, Khure and Polyclinic, and the significant growth in MCI Corporate Health Solutions, with its rapidly expanding customer base, are key examples. Corporate Health revenue is now 400% of what it was in 2019. We’ve also taken great strides in the implementation of our data-driven, precision medicine roadmap, including the launch of MCI Connect and a number of key strategic investments and commercial partnerships.”

A summary of MCI’s financial and operational highlights for the quarter and year 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. Financial measures described as “Adjusted” in this news release are non-IFRS financial measures and may not be comparable to other similar measures disclosed by other companies. Please see Non-IFRS Financial Measures below for more information.

Fiscal 2021 Annual Highlights

Significant financial and operational highlights for MCI during the year ended December 31, 2021 included:

  • Revenue Growth Year-on-year: Revenue for the year ended December 31, 2021 increased 24% over the same period in 2020, driven by the ongoing recovery of publicly-insured health services, ongoing growth from corporate health services, and revenue contributed by recently acquired businesses. Total revenue for 2021 was $47.8 million, compared to total revenue of $38.6 million in 2020. Revenue contributions from 2021 acquisitions of Khure and Polyclinic accounted for approximately 42% of the growth, and their contributions are expected to continue to increase as the businesses continue to be integrated into MCI’s operations and revenue synergy opportunities continue to develop.
  • Increased Patient Volumes: Patient volumes grew approximately 12%, year-on-year, excluding increases from acquired businesses in 2021, and 15% if acquisitions are included. Patient volumes continued to improve despite continuing COVID-19 restrictions as patients and physicians become more comfortable with virtual channels and pent-up demand for health services continues to grow.
  • Growth in Corporate Customers: The Company added 87 new corporate health customers in 2021, with the Company now serving more than 500 corporate health customers. Notable corporate customers include Gerdau Ameristeel, Durham Region Police Services, Destination Toronto, Metrolinx, Canadian Broadcast Corporation, Intact Insurance, Coca Cola Ltd. and MHI Aerospace. The numerous protocols established around COVID-19 greatly increased the need for efficient and reliable testing processes, which MCI Corporate Health Solutions was able to facilitate and manage for a growing number of clients.
  • Acquisition of Polyclinic: On July 30, 2021, MCI acquired an 80% interest in Polyclinic for total consideration of $7.1 million. Polyclinic is comprised of The Quit Clinic Inc., Executive Medical Concierge Canada Ltd. and Canadian Phase Onward Inc. Polyclinic provides onsite integrated health services including primary care, specialist care, concierge medicine, lab services, and an in-house clinical research organization. Executive Medical Concierge Canada Ltd., one of the acquired companies, experienced a record year in 2021, with year-over-year revenue growth in excess of 80%.
  • Acquisition of 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. Khure experienced a record year in 2021, with year-over-year revenue growth in excess of 70%. Khure has successfully secured strategic partnership agreements with 2 of the top 4 electronic medical record companies in English-speaking Canada, has deployed AI-enabled algorithms to screen more than 80 rare diseases and has completed more than five million patient screenings.
  • Strategic Investments & Commercial Partnerships: MCI completed a number of strategic investments throughout 2021 with existing and potential future commercial partners, including: Regen Scientific Inc., a personalized, preventative, and regenerative health provider in Canada, Ariel Precision Medicine, Inc., whose business focuses on precision diagnosis and targeted therapeutics, Acorn Biolabs Inc., a healthcare technology company with a focus on regenerative medicine, which offers a non-invasive live cell collection, analysis and cryopreservation service, and ORO Health Inc., a dermatologically-focused, specialized telemedicine and virtual health care provider and is the developer of the DermaGo platform.
  • Financing & Liquidity: On January 6, 2021, the Company completed its initial public offering, raising net proceeds of $27.6 million. Following a series of significant acquisitions and investments, and a year of expenses relating to the Company’s transformation into a public company, cash remained at $7.1 million at the end of 2021, compared to $0.9 million at the end of 2020.
  • Telehealth & Virtual Care: On February 17, 2021, the Company announced the launch of MCI Connect, its first-of-its-kind telemedicine service in Ontario, offering patients Ontario Health Insurance Plan covered appointments through an intuitive and easy-to-use platform. The Company set a record year for telehealth sessions in 2021, with nearly 300,000 patients accessing MCI’s high-performance healthcare network via telephone consults and MCI Connect, up from 200,000 in 2020.
  • Net Losses: Net losses for the year were $15.5 million, as compared to net losses of $1.0 million in the previous year, heavily driven by investments in resources supporting data-driven technology efforts and reflecting increased expenses relating to expansion of personnel, share-based compensation and transaction-related expenses as the Company continues to focus on rapid growth and expansion.
  • Adjusted EBITDA: Adjusted EBITDA(1) for the year was negative $4.6 million, as compared to an Adjusted EBITDA of positive $2.3 million in the previous year.

Fourth Quarter 2021 Highlights

Significant financial and operational highlights for MCI during the fourth quarter of 2021 included:

  • Revenue Growth Year-on-year: Revenue for the fourth quarter of 2021 increased 27% over the same period in 2020, driven by the ongoing recovery of publicly-insured health services, ongoing growth from corporate health services, and revenue contributed by recently acquired businesses. Total revenue for the three months ended December 31, 2021 was $13.9 million, compared to total revenue of $11.0 million in the comparable period in 2020.
  • Data-Driven Initiatives: The Company has entered into a three-year agreement with a global leader in data science and security to enable a data backbone that will facilitate access to the health information over which the Company has custody, including its fast-growing database of more than 2.5 million health records, and provide the foundation for the Company’s smart referral system to dramatically shorten the time between primary care visits and specialist referral visits for patients. The partnership will significantly accelerate MCI’s data strategy in disease screening, novel referral optimization, and other custom data and precision medicine initiatives.
  • Khure Health Momentum: In the fourth quarter of 2021, Khure reached its first earn-out milestone related to its acquisition by the Company, while having a record year for revenue.
  • Growth in Corporate Customers: The Company added 31 new corporate health customers in the three months ended December 31, 2021, and began offering corporate health services through its five Calgary clinics.
  • Net Losses: Net losses for the quarter were $4.8 million, as compared to net losses of $2.1 million for the same quarter in the previous year.
  • Adjusted EBITDA: Adjusted EBITDA(1) for the quarter was negative $1.5 million, as compared to an Adjusted EBITDA of negative $1.8 million in the same period last year.

Outlook

MCI expects to accelerate total company revenue growth in fiscal 2022 as it executes its strategic plan on multiple fronts including:

  • Organic growth of government insured health services from its omnichannel network of clinics, telehealth, the MCI Connect virtual platform and a substantial increase in its physician base from new physician recruiting efforts.
  • Continued organic growth in health services provided to corporate customers, as it expands its customer base, increases the number of available service offerings and ramps up its efforts to service National and Calgary-based customers.
  • New technology partnerships and strategic acquisitions to accelerate its technology roadmap.
  • Technology revenue is expected to increase, without the need for any material additional investment: the Company has more than 15 clinical trial and screening engagements with global pharma companies actively underway, as the Company continues momentum targeting the $300 billion North America data and analytics market segment opportunity, with its AI-enabled SaaS platform that provides advanced analytics to third parties. Concrete opportunities are being explored with top pharmaceutical companies, pharmaceutical marketing companies, precision medicine companies and top-tier university centres.
  • The Company is further scaling development of its data analytics platform BrightOS, which is expected to become broadly available to the Company’s physicians as a tool to aid in their daily operations as well to external customers later in 2022. Versions of MCI Connect for mobile phones and connected wearables such as Apple iWatch are expected to launch in early 2022.
  • 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’s AI-driven 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, and the launch of Khure’s cloud-based version.

Conference Call Details

MCI will hold a conference call to discuss progress on its key strategic initiatives and financial results for fiscal 2021 on March 31, 2022 at 5:00 pm ET. Participants are encouraged to access the call at least 10 minutes prior to start.

Date: Thursday, March 31, 2022
Time: 5:00 pm (ET)
Duration: 60 minutes
   
Dial-in Canada/US: (833) 540-1153 (Toll-free)
Dial-in International: (918) 922-6528
   
Conference Call ID: 5633887
   
Webcast link: https://edge.media-server.com/mmc/p/c7j85u55

Selected Unaudited Financial Information(In thousands of dollars, except percentages and per share amounts)

  Three months ended Period over Year ended Period over
  December 31 period Change December 31 period Change
    2021     2020   $ %   2021     2020 $ %
  ($ in thousands except percentages)
Revenues $ 13,936   $ 10,983   2,953   27   $ 47,817   $ 38,573   $ 9,244   24  
Cost of sales   8,986     7,687   1,299   17     32,806     25,649     7,157   28  
Gross profit   4,951     3,296   1,655   50     15,011     12,924     2,087   16  
                 
                 
Research and developmentGeneral and administrative   74     -   74   NM     155     -     155   NM  
Sales and marketingGeneral and administrative   437     35   402   1,149     1,115     125     990   792  
General and administrative   9,619     5,827   3,792   65     30,181     13,614     16,567   122  
    10,130     5,862   4,189   71     31,451     13,739     17,712   129  
                 
Net finance costs   146     128   18   14     484     543     (59 ) (11 )
Income from investments   3     -   3   NM     -     -     NM  
FV changes-contingent consideration   (608 )   -   (608 ) NM     (608 )   -     (608 ) NM  
Gain (loss) On sublease   (28 )   (10 ) (18 ) 176     (28 )   (19 )   (9 ) 47  
    (487 )   118   (605 ) 513     (152 )   524     (676 ) 129  
                 
Income (loss) before taxes   (4,692 )   (2,684 ) (1,930 ) 72     (16,288 )   (1,339 )   (14,949 ) 1,116  
Income taxes   119     (627 ) 767   NM     (747 )   (312 )   (435 ) NM  
                 
Net Income (loss)   (4,811 )   (2,057 ) (2,754 ) 134     (15,541 )   (1,027 )   (14,514 ) 1,413  
                 
Adjusted gross profit (2)   5,113     3,296   1,817   55     15,438     12,924     2,514   19  
Adjusted gross margin (2)   36.7     30.1 %       32.3 %   33.5 %    
Adjusted EBITDA (1)   (1,514 )   (1,832 ) 317   (17 )   (4,644 )   2,342     (6,986 ) (298 )
Adjusted EBITDA margin (1)   (10.9 %)   (16.7 %)       (9.7 %)   6.1 %    
Weighted average number of                
     Of Share outstanding: Basic and diluted   49,635,306     38,306,000         47,998,837     38,332,737      
Net income (loss) per share -Basic and diluted $ (0.10 ) $ (0.05 )     $ (0.33 ) $ (0.03 )    

(1), (2) Financial measures described as “Adjusted” in the table above are non-IFRS financial measures and may not be comparable to other similar measures disclosed by other companies, please see Non-IFRS Financial Measures below for more information.

Selected Statement of Financial Position Data(In thousands of dollars, except percentages and per share amounts)

  Year ended December 31  
  2021   2020  
  $ in thousands
     
Cash 7,142   894  
Accounts receivable 6,328   3,637  
Related party loan -   1,210  
Accounts payable and accrued liabilities (9,527 ) (6,998 )
Lease liabilities (14,347 ) (13,833 )
Other liabilities (130 ) (80 )
Non-controlling interest redeemable liability (1,305 ) -  
Liability for contingent consideration (3,122 ) -  

Non-IFRS Financial Measures

The terms Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit and Adjusted Gross Margin used in this document do not have any standardized meaning under IFRS, may not be comparable to similar financial measures disclosed by other companies and should not be considered a substitute for, or superior to, IFRS financial measures. Readers are advised to review the section entitled “Non-IFRS Financial Measures” in the Company’s management discussion and analysis for the three months and year ended December 31, 2021, available on MCI’s SEDAR page at www.sedar.com, for a detailed explanation of the composition of these measures and their uses.

(1) The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to net income (loss) for the three months and year ended December 31, 2021 and December 31, 2020:

  Three months ended Year ended
  December 31 December 31
    2021     2020     2021     2020  
  $ in thousands
         
Total Revenue $ 13,936   $ 10,983   $ 47,817   $ 38,573  
         
Net income (loss)   (4,811 )   (2,057 )   (15,541 )   (1,027 )
Add back (deduct)        
Depreciation and amortization   1,296     733     4,309     2,955  
Net finance charges   163     142     542     607  
Loss from investments   3     -     -     -  
Expected credit losses   330     1     696     202  
Income taxes expense (recovery)   120     (627 )   (747 )   (312 )
Gain on sublease contracts   (28 )   (10 )   (28 )   (19 )
Share-based payment expense   1,741     -     6,111     -  
Lease interest revenue   (16 )   (14 )   (58 )   (64 )
Acquisition related legal expenses   296     -     679     -  
Fair value changes in contingent consideration   (608 )   -     (608 )   -  
Adjusted EBITDA $ (1,514 ) $ (1,832 ) $ (4,644 ) $ 2,342  
Adjusted EBITDA Margin   (10.9 %)   (16.7 %)   (9.7 %)   6.1 %

(2) The following table reconciles Adjusted Gross Profit and Adjusted Gross Margin to revenue and cost of sales for the three months and year ended December 31, 2021 and December 31, 2020:

  Three months ended Period over Year ended Period over
  December 31 period Change December 31 period Change
  2021   2020   $ % 2021   2020   $ %
  ($ in thousands except percentages)
                 
Revenue 13,936   10,983   2,953   27 % 47,817   38,573   9,244   24 %
                 
Cost of sales 8,986   7,687   1,299   17 % 32,806   25,649   7,157   28 %
Less:                
Depreciation and amortization (163 ) -   (163 ) NM   (427 ) -   (427 ) NM  
  8,823   7,687   1,136   15 % 32,379   25,649   6,730   26 %
                 
Adjusted gross profit 5,113   3,296       15,438   12,924      
Adjusted gross margin 36.7 % 30.1 %     32.3 % 33.5 %    

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 one million patients annually and had nearly 300,000 telehealth visits last year. MCI additionally offers an expanding suite of occupational health service offerings that support a growing list of over 550 corporate customers. Led by a proven management team of doctors and experienced executives, MCI is executing a strategy centered on acquiring technology and health services that complement MCI’s current roadmap. For more information, visit mcionehealth.com

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, commercial arrangements 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, commercial arrangement and acquisition targets or opportunities and MCI’s ability to consummate them; MCI’s ability to effectively integrate existing and future acquisition targets into its platform; 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, 2022, 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.

MCI Onehealth Technologies (TSX:DRDR)
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