VHI Vitalhub Corp

Vitalhub Corp. (the “Company” or “VitalHub”) (TSX:VHI) (OTCQX:VHIBF) announced today it has filed its Interim Condensed Consolidated Financial Statements and Management's Discussion and Analysis report for the three and nine months ended September 30, 2024, with the Canadian securities authorities. These documents may be viewed under the Company’s profile at www.sedarplus.com.

“We are pleased to report strong third quarter 2024 results, continuing our path of driving stable revenue and cash flow growth,” said Dan Matlow, CEO of VitalHub. “Financial highlights include $16.5 million of revenue, 28% adjusted EBITDA ⁽²⁾ margin, and $1.1 million of sequential net new organic ARR ⁽¹⁻²⁾ in the seasonally quieter summer quarter. We are continuing to build on the success of our diversified portfolio, from a product and geographic perspective.”

“Subsequent to the quarter, we closed the acquisitions of MedCurrent and Strata Health, bringing our third quarter 2024 pro forma ARR ⁽¹⁻²⁾ to $68.0 million. Both of these acquisitions expand the functionality of our patient flow platform. The technologies are innovative and will increase our growth potential as healthcare systems increasingly embrace digitization.”

“Inclusive of these transactions, we closed the quarter with a September 30, 2024 pro forma cash balance of over $50 million and no debt. In combination with our stable quarterly cash generation, we are in a strong position to continue on our M&A path. We have record activity in our deal pipeline. We will continue to exercise discipline to transact only on the opportunities that enhance the value of the VitalHub suite for our healthcare partners and our shareholders.”

VitalHub’s quarterly investor conference call will take place on Thursday, November 14, 2024, at 9:00AM EST.

To register for the call, please visit:

https://us06web.zoom.us/webinar/register/WN_b6XzLByVR0yOqO4IN-9UiQ

Third Quarter 2024 Highlights

• Revenue of $16,509,135 as compared to $13,224,264 in the equivalent prior year period, an increase of $3,284,871 or 25%.
• Gross profit as a percentage of revenue was 81% compared to 82% in the equivalent prior year period.
• ARR ⁽¹⁻²⁾ at September 30, 2024 was $53,452,108 as compared to $51,283,570 at June 30, 2024, an increase of $2,168,538 or 4%.
  • ARR ⁽¹⁻²⁾ growth was due to organic growth of $1,081,181 or 2%, and an increase of $1,087,357 or 2% due to the fluctuations in foreign exchange rates during the quarter.

• Net income before income taxes of $2,360,258 as compared to net income before income taxes of $1,820,543 in the equivalent prior year period, an increase of $539,715 or 30%.
• EBITDA ⁽²⁾ of $3,004,034 compared to $2,928,358 in the equivalent prior year period, an increase of $75,676 or 3%.
• Adjusted EBITDA⁽²⁾ of $4,554,597 or 28% of revenue, compared to $3,411,871 or 26% of revenue in the equivalent prior year period, an increase of $1,142,726 or 33%.
• On October 4, 2024, the Company acquired all of the issued and outstanding shares of MedCurrent Corporation and its subsidiaries (“MedCurrent”). MedCurrent integrates evidence-based guidelines at the point of care, serving over 80 customers in Canada, the UK, the US, and Australia. Total closing consideration for the acquisition was $8.3 million in cash after working capital adjustments.
• On October 29, 2024, the Company acquired all of the issued and outstanding shares of Strata Health Solutions Inc. (“Strata Health”). Strata Health designs, builds, and deploys software that improves access and navigation to care for customers internationally. Total closing consideration for the acquisition was $32.3 million, composed of a cash payment of $18.6 million and the issuance of 1,480,726 common shares of VitalHub.
• With the addition of the ARR⁽¹⁻²⁾ of MedCurrent and Strata Health subsequent to the quarter, the Company’s pro forma ARR ⁽¹⁻²⁾ would be approximately $68.0 million.

Nine Month 2024 Highlights

• Revenue of $48,003,531 as compared to $38,904,879 in the equivalent prior year period, an increase of $9,098,652 or 23%.
• Gross profit as a percentage of revenue was 81% compared to 81% in the equivalent prior year period.
• ARR ⁽¹⁻²⁾ at September 30, 2024 was $53,452,108 as compared to $42,612,166 at September 30, 2023, an increase of $10,839,942 or 25%.
  • ARR ⁽¹⁻²⁾ growth was primarily due to organic growth of $5,826,248 or 14%, acquisition growth of $3,311,500 or 8%, and a gain of $1,702,194 or 4% due to fluctuations in foreign exchange rates.

• Net income before income taxes of $5,722,758 as compared to net income before income taxes of $3,343,487 in the equivalent prior year period, an increase of $2,379,271 or 71%.
• EBITDA ⁽²⁾ of $8,075,502 compared to $6,895,569 in the equivalent prior year period, an increase of $1,179,933 or 17%.
• Adjusted EBITDA ⁽²⁾ of $12,793,514 or 27% of revenue, compared to $9,305,973 or 24% of revenue in the equivalent prior year period, an increase of $3,487,541 or 37%.
• Cash on hand at September 30, 2024 was $81,438,615 compared to $33,480,018 as at December 31, 2023.
  • The increase is primarily due to a bought deal offering of approximately $37 million in net proceeds, plus cash generated from operations.
• Cash from operations before changes in working capital was $8,135,174 as compared to $8,536,603 for the same period last year.

(1) The Company defines annual recurring revenue (“ARR”) as the recurring revenue expected based on yearly subscriptions of the renewable software license fees and maintenance services.(2) Non-IFRS measure. Disclaimers and reconciliations can be found in SEDAR filings.

SELECTED FINANCIAL INFORMATION
	Three months ended										Nine months ended
	September 30, 2024		% Revenue		September 30, 2023		% Revenue		Change		September 30, 2024		% Revenue		September 30, 2023		% Revenue		Change
	$				$				%		$				$				%
Revenue	16,509,135		100%		13,224,264		100%		25%		48,003,531		100%		38,904,879		100%		23%
Cost of sales	3,215,845		19%		2,392,707		18%		(34%)		9,258,338		19%		7,333,455		19%		(26%)
Gross profit	13,293,290		81%		10,831,557		82%		23%		38,745,193		81%		31,571,424		81%		23%
Operating expenses
General and administrative	3,555,539		22%		2,683,879		20%		(32%)		10,008,360		21%		8,853,440		23%		(13%)
Sales and marketing	1,562,915		9%		1,466,675		11%		(7%)		5,081,213		11%		4,488,319		12%		(13%)
Research and development	3,943,697		24%		3,167,468		24%		(25%)		11,037,178		23%		8,981,113		23%		(23%)
Depreciation of property and equipment	93,687		1%		84,202		1%		(11%)		252,691		1%		242,370		1%		(4%)
Depreciation of right-of-use assets	108,905		1%		100,951		1%		(8%)		326,912		1%		298,600		1%		(9%)
Share-based compensation	636,177		4%		266,784		2%		(138%)		1,660,430		3%		838,425		2%		(98%)
Deferred share-based compensation	0		0%		0		0%		0%		0		0%		97,560		0%		100%
Foreign currency loss (gain)	(323,458	)	(2%)		103,766		1%		412%		(175,072	)	(0%)		(55,319	)	(0%)		216%
Other income and expenses
Amortization of intangible assets	1,197,953		7%		1,066,767		8%		(12%)		3,418,794		7%		3,191,228		8%		(7%)
Business acquisition, restructuring and integration costs	841,454		5%		216,729		2%		(288%)		2,652,758		6%		1,228,094		3%		(116%)
Loss on change in fair value of contingent consideration	72,932		0%		0		0%		(100%)		404,824		1%		246,325		1%		(64%)
Interest expense and accretion (net of interest income)	(766,046	)	(5%)		(160,917	)	(1%)		376%		(1,680,448	)	(4%)		(237,272	)	(1%)		608%
Interest expense from lease liabilities	9,277		0%		16,812		0%		45%		34,795		0%		57,156		0%		39%
Current and deferred income taxes	1,131,871		7%		(1,006,534	)	(8%)		(212%)		3,510,958		7%		(267,209	)	(1%)		(1414%)
Net income	1,228,387		7%		2,827,077		21%		(57%)		2,211,800		5%		3,610,696		9%		(39%)
EBITDA (Non-IFRS measure)	3,004,034		18%		2,928,358		22%		3%		8,075,502		17%		6,895,569		18%		17%
Adjusted EBITDA (Non-IFRS measure)	4,554,597		28%		3,411,871		26%		33%		12,793,514		27%		9,305,973		24%		37%
Annual recurring revenue (Non-IFRS measure)	53,452,108				42,612,166				25%		53,452,108				42,612,166				25%
Term licences, maintenance and support revenue	13,892,323		84%		10,821,758		82%		28%		39,396,754		82%		31,029,887		80%		27%
							As at
							September 30, 2024		December 31, 2023
							$		$
	Cash balance						81,438,615		33,480,018
	Deferred revenue						29,506,802		21,049,975

About VitalHub

Software for Health and Human Services providers designed to simplify the user experience and optimize outcomes.

VitalHub is a leading software company dedicated to empowering Health and Human Services providers. Our clients include hospitals, regional health authorities, mental health and addictions services providers for children and adults, long-term care facilities, home health agencies, correctional services, and community and social services providers. 

VitalHub’s comprehensive suite of SaaS solutions include:

• Electronic Health Record (EHR), Case Management, Care Coordination, and Optimization
• Patient Flow, Operational Visibility, and Patient Journey Optimization
• Workforce Automation

The Company has a robust two-pronged growth strategy, targeting organic growth opportunities within its product suite, and pursuing an aggressive M&A plan. Currently VitalHub serves more than 1,000 clients across Canada, USA, UK, Australia, the Middle East, and Europe.

VitalHub is based in Toronto, Canada, with an offshore development hub in Sri Lanka. The VitalHub team comprises more than 500 team members globally. The Company is publicly traded on the Toronto Stock Exchange (TSX) under the symbol "VHI" and on the OTC Markets OTCQX Exchange under the symbol "VHIBF".

https://www.vitalhub.com/

Contact Information

Christian Sgro, CPA, CA, CFAHead of IR and M&A Specialist(416) 277-3776christian.sgro@vitalhub.com

Dan MatlowChief Executive Officer, Director(416) 727-9061dan.matlow@vitalhub.com

Cautionary Statement

Certain statements contained in this news release may constitute "forward-looking information" or "financial outlook" within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information or financial outlook. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of each entity and are based on assumptions and subject to risks and uncertainties. Although the management of each entity believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.