- Q3 revenue of $18.4 million
grew 82% over the same period in 2021
- 99% revenue growth to $57.0
million in the first nine months of 2022 compared to the
same period in 2021
- Q3 Adjusted
EBITDA1 nearing breakeven at
($0.7) million compared to
($3.4) million for the same period in
the prior year
![THNK Logo (CNW Group/Think Research Corporation) THNK Logo (CNW Group/Think Research Corporation)](https://mma.prnewswire.com/media/1956102/Think_Research_Corporation_Think_Research_Announces_Third_Quarte.jpg)
TORONTO, Nov. 28,
2022 /CNW/ - Think Research Corporation
(TSXV: THNK) ("Think" or the "Company"), an
innovative disruptor focused on transforming healthcare through
knowledge-based digital health software solutions, today reported
unaudited financial results for the third quarter and nine month
period ended September 30, 2022. With
over 13,000 enterprise healthcare facilities under license, Think
solutions enable more than 300,000 doctors, nurses and pharmacist
users to leverage its essential data service to help ensure
everyone gets the best possible care. Additional information
concerning the Company, including its unaudited consolidated
interim financial statements and related Management's Discussion
and Analysis ("MD&A") for the periods ended
September 30, 2022, can be found under the Company's
profile on SEDAR at www.sedar.com and on its website.
"Think's Q3 and first nine months of 2022 have built momentum
for our path forward, evidenced by significant revenue increases
despite summer's seasonal impact which affects both clinical and
education operations. Multiple new study wins were secured into Q4
by our BioPharma subsidiary, which have increased the backlog of
studies and provided Think with greater visibility into our future
quarterly revenue potential," said Sachin Aggarwal, Think
Research, CEO. "This backlog also supports our confirmation of
Think's annualized Q4 2022 run rate revenue guidance range of
between $84 million and $90 million and $21
million to $22.5 million
guidance for Q4. Given our recent success winning increasingly
larger deals combined with a more streamlined cost structure, the
Company is well positioned to continue enhancing our revenue growth
and advancing near and longer-term expectations for profitability,
all of which we believe will translate into value creation for our
shareholders."
The Company's Q3 results reflect the efforts undertaken by the
Company over the past 12 months to successfully integrate several
key acquisitions, while also identifying opportunities to optimize
operations, streamline costs, and position Think's unique and
critical offering in a post-COVID environment. Based on initiatives
undertaken to date, along with enhanced sales and marketing
programs, Think has greater visibility into improving revenue with
reduced costs, supported by its core focus on increasing
profitability and financial flexibility in order to drive
shareholder value.
_____________________________
1 "EBITDA" and "Adjusted EBITDA" are non-GAAP financial
measures, are not standardized measures under IFRS and may not be
comparable to similar financial measures disclosed by other
issuers. See the "Cautionary Note Regarding Non-IFRS Financial
Measures" section of this press release.
|
.Key Financial Highlights:
- Q3 revenue of $18.4 million was
82% higher than Q3 2021, while revenue for the first nine months of
2022 grew 99% to $57.0 million over
the same period in 2021, with the Q3 2022 contributions from each
of Think's primary revenue streams as follows:
-
- Software and Data Solutions revenue totaled $6.3 million (34.0% of revenue), compared to
$6.9 million (37.4% of revenue) in Q2
2022, reflecting lower utilization of the Company's education
offerings during the summer months.
- Clinical Research Operations revenue totaled
$8.9 million (48.3% of revenue),
compared to $7.3 million in Q2 2022
(39.3% of revenue), attributable to new study wins that have
afforded visibility into higher revenue for clinical research in Q4
and into 2023.
- Clinical Services revenue totaled $3.2 million (17.6% of revenue) compared to
$4.3 million (23.3% of revenue) in Q2
2022, reflecting revenue seasonality as fewer procedures are
conducted during the summer months, and the impacts of staff
turnover related to a tight labour market.
- Realized gross profit totaling $8.7
million and $27.2 million in
Q3 and the first nine months of 2022, respectively, representing
increases of 104% and 78% over the comparable periods in 2021,
primarily related to higher revenue stemming from acquisitions
supplemented by organic revenue growth.
- Generated gross margin of 48.0% for the nine months ended
September 30, 2022, compared to 53.3%
for the same period the prior year, which reflects the change in
revenue mix arising from various acquisitions completed in 2021 in
general, and BioPharma Services Inc. clinical research operations
in particular.
- Adjusted EBITDA2 has continued to
improve through 2022, with Q3 reflecting a loss of $0.7 million compared to a loss of $3.4 million in Q3 2021 and a loss of
$1.6 million in Q2 2022. The
quarter-over-quarter improvement directly reflects the impact of
reduced operating expenses and efforts to further improve remain a
priority. See "Cautionary Note Regarding Non-IFRS Financial
Measures" for further information.
- Adjusted EBITDA Margin3 (as defined
herein) reflected the same improvement and was negative 4% in Q3
compared to negative 34% in Q3 2021. For the first nine months of
2022, Adjusted EBITDA margin was negative 4.5% compared to negative
22.3% for the first nine months of 2021, with improvements
attributable to realized cost synergies and overall revenue scale
relative to last year. See "Cautionary Note Regarding Non-IFRS
Financial Measures" for further information.
___________________________
2 "EBITDA" and "Adjusted EBITDA" are non-GAAP financial
measures, are not standardized measures under IFRS and may not be
comparable to similar financial measures disclosed by other
issuers. See the "Cautionary Note Regarding Non-IFRS Financial
Measures" section of this press release.
|
3 Adjusted
EBITDA Margin" is a non-GAAP ratio, is not a standardized measure
under IFRS and may not be comparable to similar financial measures
disclosed by other issuers. See the "Cautionary Note Regarding
Non-IFRS Financial Measures" section of this press
release.
|
|
- Think continued to focus on reducing cash operating expenses
through realized cost synergies, which had an annualized value of
$5.8 million in FY2021 and an
additional $5.7 million in the first
nine months of FY2022, and which management believes will enable
Think to realize significant expense leverage over larger revenue
streams going forward.
- Other expense items related to activities and initiatives
associated with the growth of Think's business, particularly via
acquisitions, include:
-
- General and administration expenses of $6.6 million and $20.7
million for Q3 and the first nine months of 2022 increased
by 6% and 32%, respectively, reflecting higher overall personnel
costs as the business grows, partially offset by recognized
synergies.
- Sales and marketing expenses associated with awareness-raising
and other activities to elevate the Think brand totaled
$2.3 million and $7.0 million in Q3 and the first nine months of
2022, reflecting increases of approximately 12% and 15%,
respectively,
- Net loss decreased by $4.4
million for Q3 2022, and by $1.3
million in the first nine months of 2022 compared to the
same periods in 2021, with decreases primarily attributable to
higher revenue coupled with lower operating, acquisition and
restructuring related costs and a non-cash recovery of tax expenses
due to a reduction in Think's deferred tax liability.
- Cash balance at September 30,
2022, totaled $4.4 million,
compared to $6.3 million as at
December 31, 2021. In Q2 2022 the
Company borrowed $10 million from
Beedie Investments Ltd. as a convertible loan (net $8.9 million after considering transaction
costs). Cash allocations during the first nine months of 2022
included payments of $2.4 million on
lease liabilities and $2.3 million
for finance costs, investments of $2.9
million in intangible assets, $0.4
million in property and equipment, with $0.4 million of cash consideration paid related
to a 2021 acquisition.
Corporate and Other Highlights
- BioPharma signed multiple new contracts totaling approximately
$12.8M in future revenue during the
third quarter, with these project-based study contracts averaging
approximately 12 months in duration and spanning several health
disciplines from neurology to oncology to gastrointestinal
treatments.
- An Amended and Restated Credit Facility agreement was announced
during the quarter with Scotiabank to harmonise the terms of its
existing credit facilities with the terms of the credit agreement
with Beedie Investments Ltd., including Scotiabank covenant
amendments foregoing the testing of certain covenants until
December 1, 2022.
- Given Think's Scotia Credit Facility has a term of two years,
maturing on September 10, 2023, the
total outstanding amount has been reclassified as a current
liability on the balance sheet for the period ended September 30, 2022. The Company is in active
discussions to renegotiate the terms of the Scotia Credit Facility
and anticipates it will be extended beyond its September 2023 maturity date.
Events Subsequent to Quarter End
- On October 14, 2022, Think
announced revisions to its deferred consideration payable to the
former shareholders of BioPharma, amending certain terms relating
to the deferred consideration of $6.5
million owed to the sellers of BioPharma Services Inc.
- On November 22,2022, the Company
drew down an additional $3M of its
$25M convertible debt facility with
Beedie Capital, with a conversion price of $0.43 per share.
(See the note titled "Subsequent events" in Think's September 30, 2022 financial statements)
Selected Financial Information
In thousands of
Canadian Dollars
|
Three months
ended
September 30, 2022
|
Three months
ended
September 30, 2021
|
Increase
(Decrease)
|
Revenue
|
18,371
|
10,083
|
82 %
|
Net
Income
|
(6,459)
|
(10,828)
|
-40 %
|
EBITDA
|
(2,426)
|
(8,349)
|
-71 %
|
Adjusted
EBITDA
|
(696)
|
(3,403)
|
-80 %
|
Adjusted EBITDA
margin (% of
revenue)
|
-4 %
|
-34 %
|
|
Basic and diluted
EPS
|
(0.11)
|
(0.24)
|
|
|
|
|
|
In thousands of
Canadian Dollars
|
Nine months
ended
September 30, 2022
|
Nine months
ended
September 30, 2021
|
Increase
(Decrease)
|
Revenue
|
57,017
|
28,674
|
99 %
|
Net
Income
|
(20,141)
|
(21,453)
|
-6 %
|
EBITDA
|
(8,849)
|
(15,959)
|
-45 %
|
Adjusted
EBITDA
|
(2,565)
|
(6,394)
|
-60 %
|
Adjusted EBITDA
margin (% of
revenue)
|
-4 %
|
-22 %
|
|
Basic and diluted
EPS
|
(0.34)
|
(0.50)
|
|
Note - Includes non-IFRS financial measures and non-IFRS ratios.
See the "Cautionary Note Regarding Non-IFRS Financial Measures"
section of this press release for the relevant definition of each
non-IFRS financial measure and non-IFRS ratio and a reconciliation
of each non-IFRS financial measure to net loss, the most directly
comparable IFRS measure.
Business Outlook
Management is pleased to confirm its annualized fourth-quarter
FY2022 run rate of between $84
million and $90 million, or
$21 million to $22.5 million for the three months ending
December 31, 2022. Management also
confirms its annualized fourth-quarter run rate Adjusted
EBITDA4 target of between $6 million and $9
million, or $1.5 million to
$2.3 million for the three months
ending December 31, 2022.
_____________________________
4 "EBITDA" and "Adjusted EBITDA" are non-GAAP financial
measures, are not standardized measures under IFRS and may not be
comparable to similar financial measures disclosed by other
issuers. See the "Cautionary Note Regarding Non-IFRS Financial
Measures" section of this press release.
|
Following an active year of acquisitions in 2021, Think has
completed nearly a full year of integration of the assets and
businesses and believes that a foundation has been set to establish
solid go-forward revenue generation and to achieve sustainable
profitability. Think plans to grow revenue and improve margins by
becoming an increasingly essential data solutions provider for
healthcare practitioners globally, with the goal of delivering the
best outcomes for patients and compelling returns for
shareholders.
To fulfill this objective, Think's operational focus is
threefold:
- Expand the user base of current licenses by promoting adoption
and usage. Currently, more than 300,000 clinicians, including
doctors, nurses and pharmacists, use Think's solutions. As the
Company adds more users, it becomes more essential – and more
integrated - to health systems and licensees, resulting in 'sticky'
revenue that creates obstacles to change.
- Increase per user revenue by increasing the number of content
services and data solutions that are adopted and used by a licensed
user regularly.
- Monetize licensed users directly, in addition to those acquired
through facilities licenses. For example, an opportunity exists to
access users through Think's direct-to-user clinical education
offerings.
Think believes the outcomes of its operational focus, both in
the short and longer- term, will be the generation of organic
revenue growth, stronger margins, positive Adjusted EBITDA and
lasting enhancements to the Company's financial flexibility and
long-term sustainability.
The Company has obtained waivers of covenants under the Beedie
Credit Agreement and amendments to the Scotia Credit
Facility. Copies of the Credit Agreement and Scotia Credit
Facility are available under the Company's profile on SEDAR
at www.sedar.com.
Conference Call Notification
Think will be holding a conference call via webcast on
November 28, 2022, at 9:00 a.m. EST, hosted by CEO Sachin Aggarwal and CFO John Hayes, with a Q&A session to follow. To
register for the conference call, please click here.
Conference call dial-in:
Toronto: 416-764-8659
North American Toll-Free: 1-888-664-6392
Conference ID: 70791013
Subsequent Advance Closed
Further to the Company's press release dated November 21, 2022, the Company is pleased to
confirm that it has now closed the second advance of $3 million (the "Second Advance") from Beedie
Investments Ltd. ("Beedie Capital"), under the Company's
non-revolving term convertible loan facility (the "Convertible
Facility"). Under the terms of the Credit Facility, Beedie Capital
is not permitted to convert outstanding amounts under the
Convertible Facility to the extent it would result in Beedie
Capital owning 20% or more of the outstanding common shares of the
Company without prior shareholder and TSXV approval. For
further information, see the Company's press releases dated
November 21, 2022.
About Think Research Corporation
Think Research Corporation is an industry leader in delivering
knowledge-based digital health software solutions. The Company's
focused mission is to organize the world's health knowledge so
everyone gets the best care. Its evidence-based healthcare
technology solutions support the clinical decision-making process,
and standardize care, to facilitate better health care outcomes.
The Company gathers, develops, and delivers knowledge-based
solutions globally to customers which typically includes enterprise
clients, hospitals, health regions, health care professionals, and
governments. The Company has gathered a significant amount of data
by building its repository of knowledge through its network and
group of companies (including acquired companies).
Think licenses its solutions to over 13,000 facilities for over
300,000 primary care, acute care, and long-term care doctors,
nurses and pharmacists that rely on the content and data provided
by Think to support their practices. Millions of patients and
residents annually receive better care due to the essential data
that Think produces, manages and delivers.
In addition, the company collects and manages pharmaceutical and
clinical trial data via the BioPharma entity that Think acquired on
September 10, 2021. BioPharma
is a leading provider of bioequivalence and Phase 1 clinical
research services to pharmaceutical companies globally. Think's
other services include a network of digital-first primary care
clinics and medical clinics providing elective surgery. Visit:
www.thinkresearch.com.
Caution Regarding Forward-Looking Statements
This press release contains "forward-looking information" within
the meaning of applicable securities laws. Forward-looking
information may be identified by statements including words such
as: "anticipate," "intend," "plan," "budget," "believe," "project,"
"estimate," "expect," "scheduled," "forecast," "strategy,"
"future," "likely," "may," "to be," "could,", "would," "should,"
"will" and similar references to future periods or the negative or
comparable terminology, as well as terms usually used in the future
and the conditional. Statements including forward-looking
information may include, without limitation, statements regarding
the Company's Revenue and Adjusted EBITDA in 2022, the expected
term and value of contracts entered into in fiscal year 2021 and
2022, the funding of the Initial Advance and the availability of
Subsequent Advances, the Company's strategies and growth
objectives, and statements made in the "Outlook" section of this
press release.
Forward-looking information reflects management's current
beliefs and is based on assumptions that may prove to be incorrect,
including but not limited to the Company's business objectives,
results of operations, financial results and trading activity in
the Common Shares. The Company considers these assumptions to be
reasonable in the circumstances. However, there can be no assurance
that such assumptions will reflect the actual outcome of such items
or factors. By its nature, forward-looking information involves
known and unknown risks, uncertainties, changes in circumstances
and other factors that are difficult to predict and many of which
are outside of the Company's control which may cause the Company's
actual results, performance or achievements, or other future
events, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking information. The Company's actual results may
differ materially from those indicated in the forward-looking
information. Important factors that could cause actual results to
differ materially from those indicated in the forward-looking
information include, among others, the risk factors described under
the heading "Caution Regarding Forward Looking Information" in the
Company's Management's Discussion & Analysis for the year ended
December 31, 2021, which is available
on the Company's profile at www.sedar.com. The Company has
assumed that the risk factors referred to above will not cause such
forward-looking statements and information to differ materially
from actual results or events. 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.
Other than as specifically required by applicable Canadian law,
the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which such statement is made, whether as a result of new
information, future events or results, or otherwise.
This press release contains financial outlook information within
the meaning of applicable securities laws. The financial outlook
includes but is not limited to: the Company's target revenue and
Adjusted EBITDA for the fourth quarter of 2022, the expected
revenues to be realized from contracts entered into in fiscal year
2022, the Company's objective to grow revenue with improving
margins and with positive Adjusted EBITDA. The financial outlook
set out in this press release is subject to the same assumptions,
risk factors, limitations and qualifications set out in these
cautionary statements. The financial outlook contained in this
press release was approved by management as of the date of the
Company's MD&A for the period ended September 30, 2022 and was provided for the
purpose of providing an outlook of the Company's activities and
results and may not be appropriate for other purposes. Management
believes that the financial outlook has been prepared on a
reasonable basis, reflecting reasonable assumptions, estimates and
judgments; however, actual results of the Company's operations may
vary from those described herein. The Company disclaims any
intention or obligation to update or revise any financial outlook
contained in this press release, whether as a result of new
information, future events or results or otherwise, unless required
pursuant to applicable Canadian law. Readers are cautioned that the
financial outlook contained in this press release should not be
used for purposes other than for which it is disclosed herein.
Additional information about the risks and uncertainties of the
Company's business and material factors or assumptions on which
information contained in forward‐looking statements is based is
provided in its disclosure materials, including the Company's
MD&A for the year ended December 31,
2021, which is available under the Company's profile on
SEDAR at www.sedar.com.
Cautionary Note Regarding Non-IFRS Financial Measures
This press release makes reference to certain non-GAAP financial
measures and non-GAAP ratios. These measures and ratios are not
recognized measures under International Financial Reporting
Standards ("IFRS"), 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 and
ratios are provided as additional information to complement those
IFRS measures by providing further understanding of the Company's
results of operations from management's perspective. Non-IFRS
measures and ratios have limitations as analytical tools and should
not be considered in isolation nor as a substitute for analysis of
the Company's financial information reported under IFRS and should
be read in conjunction with the consolidated financial statements
for the periods indicated. The Company uses non-IFRS financial
measures and ratios, including "EBITDA", "Adjusted EBITDA" and
"Adjusted EBITDA Margin" to provide investors with supplemental
measures of its operating performance and to eliminate items that
have less bearing on operating performance or operating conditions
and thus highlight trends in its core business that may not
otherwise be apparent when relying solely on IFRS financial
measures. Specifically, the Company believes that Adjusted EBITDA
and Adjusted EBITDA Margin, when viewed with the Company's results
under IFRS and the accompanying reconciliations, provides useful
information about the Company's business by removing potential
distortions that may arise from transactions that are not
operational in nature. By eliminating potential differences in
results of operations between periods caused by factors such as
restructuring, impairment and other charges, the Company believes
that Adjusted EBITDA and Adjusted EBITDA Margin can provide a
useful additional basis for comparing the current performance of
the underlying operations being evaluated. The Company's agreements
with lenders include certain financial performance covenants which
include EBITDA (as defined in the Company's credit agreement with
its senior lender and with Beedie Capital) as a component of the
covenant calculations and require the Company to maintain certain
levels of EBITDA on a consolidated basis. The Company believes that
securities analysts, investors and other interested parties
frequently use non-IFRS financial measures and ratios in the
evaluation of issuers. The Company's management also uses non-IFRS
financial measures and ratios in order to facilitate operating
performance comparisons from period to period.
Non-GAAP financial measures and non-GAAP ratios used in this
press release include:
"EBITDA" means net income (loss) before amortization and
depreciation expenses, finance and interest costs, and provision
for income taxes.
"Adjusted EBITDA" adjusts EBITDA for non-cash stock-based
compensation expense, gains or losses arising from redemption of
securities issued by the Company, asset impairment charges, gains
or losses from disposals of property and equipment, foreign
exchange gains or losses, impairment charges on property and
equipment, business acquisition costs, and restructuring
charges.
"Adjusted EBITDA Margin" means Adjusted EBITDA divided by
revenue of the Company for the applicable period.
A reconciliation of EBITDA and Adjusted EBITDA to IFRS net
income (loss) is presented under "Select Information and
Reconciliation of Non-IFRS Measures" in the MD&A and press
release below
|
Three
months
ended
September
30,2022
|
Three
months
ended September
30,2021
|
Nine
months
ended
September
30,2022
|
Nine
months
ended
September
30,2021
|
|
$
|
$
|
$
|
$
|
Net loss
|
(6,459)
|
(10,828)
|
(20,141)
|
(21,453)
|
Depreciation and
amortization
|
3,562
|
1,665
|
10,806
|
3,888
|
Finance
costs
|
804
|
799
|
2,637
|
1,586
|
Income tax expense
(recovery)
|
(333)
|
15
|
(2,151)
|
20
|
EBITDA1
|
(2,426)
|
(8,349)
|
(8,849)
|
(15,959)
|
Acquisition,
restructuring and other2
|
581
|
2,801
|
2,353
|
4,368
|
Stock-based
compensation3
|
1,149
|
2,145
|
3,931
|
5,197
|
Adjusted
EBITDA
|
(696)
|
(3,403)
|
(2,565)
|
(6,394)
|
Notes:
- "EBITDA" and "Adjusted EBITDA" are non-GAAP financial measures,
are not standardized measures under IFRS and may not be comparable
to similar financial measures disclosed by other issuers. See
"Non-IFRS Financial Measures".
- "Acquisition, restructuring and other" expenses relate to costs
incurred in connection with business combinations, reorganization
of the Company's capital structure and workforce, and legal,
advisory and banking expenses.
- "Stock-based compensation" relates to stock-based compensation
expense recognized for equity awards issued under the Company's
Omnibus Equity Incentive Plan
For more
information: https://www.thinkresearch.com/ca/investors/
SOURCE Think Research Corporation