CloudMD Reports 163% Year-Over-Year Q2 Results, Growth Driven by Telehealth and Acquisitions

By AIT News Desk On Sep 1, 2020

Revenue of $2.8 million and Gross Margins of 42%

CloudMD Software & Services Inc., a telehealth company revolutionizing the delivery of healthcare to patients, announced its financial results for the second quarter ending June 30, 2020. All financial information is presented in Canadian dollars unless otherwise indicated.

Dr. Essam Hamza, CEO of CloudMD commented, “We are currently in the worst public health crisis of our lifetime and as a front line physician for over 20 years I acutely understand the toll it is taking on our healthcare system and the importance of access to quality health care. Our CloudMD platform is well equipped to increase access through the availability of our seamless virtual care solutions that allow patients to access quality health care from anywhere. I am pleased with our Q2 results which was highlighted by an oversubscribed $15 million bought deal financing and continued growth across our telemedicine platform. Q2 was a strong quarter for CloudMD and positioned us for increased momentum in Q3 and Q4 of this year. Despite the devastating impact of COVID-19 on the global economy, our revenue and margins were consistent with consensus expectations and we ended the quarter with a very strong cash position. The funds raised provide a warchest of capital which we have already started deploying on accretive acquisitions both on synergistic technologies and brick and mortar practices across North America. We are well funded to capitalize on the significant growth of the sector and will continue to engage patients and empower health practitioners across North America with the back-to-school and flu season ahead.”

“On behalf of the Board, we congratulate Dr. Hamza and his team for their exceptionally energetic and purposeful efforts these past months, and for bringing phenomenal progress to our Company as reflected in these financial disclosures. The advent of the oversubscribed bought deal equity financing and its completion in June 2020, has also now armed our Company with a strong cash position and the foundation on which we will continue to allocate capital towards those growth opportunities that will deliver the highest returns for our shareholders,” stated Mark Kohler, CloudMD’s Chairman of the Board.

Q2 2020 Financial Highlights

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Q2 2020 total revenue was $2,789,987, compared to $1,061,569 in Q2 2019, an increase of 163%. The revenue generated from SAAS model digital services was $459,575 compared to $340,014 in Q2 2019, an increase of 35% primarily attributable to organic growth. The revenue generated from medical clinics and pharmacies was $2,330,412 compared to $721,555 in Q2 2019, an increase of 223% primarily attributable to the Company’s acquisitions over the past year.
Q2 2020 gross margin was 42%, compared to 50% in Q2 2019. Gross margins remained stable as the Company increased the revenue generated from higher margin digital services and telehealth but incurred higher than usual variable costs primarily due to the Company’s expansion into Ontario and short term effects of COVID-19. The Company expects the gross margin to improve as efficiencies are realized and to remain strong for the remainder of 2020 as it begins to recognize additional revenue from high margin sources like digital services, pharmacy kiosk partnerships and telehealth visits.
Net loss and comprehensive loss in Q2 2020 was $2,768,117, resulting in a net loss per share (basic and diluted) of $0.03. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss was $1,989,242 for Q2 2020, compared with adjusted EBITDA loss of $602,646 in Q2 2019. The Adjusted EBITDA for Q2 2020 would have been a loss of 999,402 when removing the elevated levels of marketing, consulting, and legal expenses related to launching services in Ontario and increased acquisition activities and the contingent liabilities recorded in Q2.
CloudMD ended Q2 2020 with a strong balance sheet with cash and cash equivalents of $13.8 million and a working capital balance of approximately $12.6 million.

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Other Q2 Highlights and Events Subsequent to the Quarter

On April 7, 2020 the Company announced that CloudMD reached over 100,000 registered users on its telemedicine platform.
On April 30, 2020, the Company announced that its Livecare telehealth platform has been added to preferred vendor lists of leading Government associations across Canada which represent over 20,000 practitioners. Livecare offers health professionals a complete virtual healthcare solution to complement traditional practices by streamlining records management, scheduling, consultations and appointments and offering secure patient/physician communication.
On May 4, 2020, CloudMD announced a partnership with Save-On-Foods and Pure Integrative Pharmacies, Western Canada’s largest grocery chain and part of the Jimmy Pattison Group, to pilot on demand virtual care by integrating telemedicine Kiosks in Pharmacies across BC.
On May 7, 2020, CloudMD partnered with innovative U.S. based technology leader IDYA4 Corp. to expand its telemedicine solutions to its current and future customer base including the Department of Defense, Homeland Security, Deloitte and the Bureau of Justice Assistance.
On May 12, 2020, CloudMD announced a $10 million bought deal public offering and subsequently upsized it to $13 million on May 13th. The Underwriters agreed to purchase, on a bought deal basis pursuant to the filing of a short form prospectus, an aggregate of 18,572,000 units (the “Units”) at a price of C$0.70 per Unit for aggregate gross proceeds to the Company of approximately $13 million. The Company anticipates the financing will close on June 2, 2020.
On May 14, 2020, CloudMD appointed Mark Kohler as Chairman of the Board.
On June 2, 2020, CloudMD closed $13 million oversubscribed bought deal financing, including the full exercise of the underwriters’ over-allotment option. The Company issued a total of 21,357,800 units at the price of $0.70 per Unit for aggregate gross proceeds of $14,950,460. The offering was led by Canaccord Genuity Corp. and Beacon Securities Limited on behalf of a syndicate of underwriters including Paradigm Capital Inc. and Echelon Wealth Partners Inc.
On June 4, 2020, CloudMD commenced trading its common shares on the TSX Venture Exchange (the “TSXV”) under the symbol “DOC”.
On June 11, 2020, CloudMD announced a binding term sheet to acquire integrated cash flow positive medical clinic with 12 physicians servicing over 60,000 patients. In 2019, the business generated approximately $3 million and the innovative clinic is already using online booking and telemedicine, which makes integrating into CloudMD’s Electronic Medical Records (EMR) software efficient.
On June 14, 2020, CloudMD secured footprint in Ontario with binding term sheet to acquire majority interest in West Mississauga Medical Clinic, a comprehensive family medicine and specialist medical clinic with 8 family doctors and 4 specialists serving over 100,000 patients. West Mississauga generated 1.8 million revenue in 2019 with EBITDA margins of 11%.
On June 18, 2020, CloudMD appointed Dr. Sohal Goyal as Head of Corporate Development in Ontario. Dr. Goyal is currently the Medical Director of West Mississauga Medical and a respected healthcare thought leader in Ontario and over his 18-year career has established a vast network of healthcare relationships.
On July 16, 2020 – CloudMD announced that it signed a binding term sheet to acquire Snapclarity Inc., a mental health care pioneer. Their on-demand digital platform provides an assessment for an individual’s personal risk of mental health disorders resulting in a personalized care plan, access to online resources, a clinical health care team and the ability to match to the right therapists. Snapclarity’s product offering is a connected, collaborative model that leaves individuals feeling empowered, motivated and supported throughout their entire treatment journey.
On July 28, 2020, CloudMD signed a Share Purchase Agreement to acquire South Surrey Medical Inc., an integrated medical clinic based in Metro Vancouver, BC. South Surrey is a premier provider of integrated medical solutions and an early adopter of telemedicine delivery, with 12 physicians servicing over 60,000 patients.
On August 5, 2020, CloudMD closed the acquisition of South Surrey Medical Inc.
On August 6, CloudMD announced the acquisition of a U.S. based chronic care medical clinic as part of a comprehensive strategy to provide end-to-end health care services for complex care patients. The clinic is managed by Dr. Fred Roh and Curtis Gibson. Dr. Roh has over 30 years’ experience in the U.S healthcare market having been founder of Healthcare Networks of America, LLC, a 15,000 member physician organization that provides services to 24 million patients across the U.S. Dr. Roh will also help with expansion plans to build a network of telehealth powered satellite clinics covering large areas of under serviced areas across the U.S.
On August 11, 2020, CloudMD appointed Patrick Lo, a leading expert on data protection and regulatory privacy matters for the healthcare sector in North America, as a Strategic Advisor. Patrick will act as a Strategic Advisor to the Company’s Corporate Development and Risk Management Committee, which was recently formed to ensure customers and patients are provided with the very best in critical oversight of data protection and privacy matters.
On August 13, 2020, CloudMD signed a Definitive Agreement to acquire majority interest in West Mississauga Medical Clinic.
On August 24, 2020, CloudMD signed a binding term sheet to acquire Re:Function Health Group, a Profitable Seven Location Rehabilitation Clinic Network generating $5.8 Million in Annual Revenue with over 19% EBITDA margins. Re:Function is a leading integrated clinic network offering various rehabilitation services with 35 Specialists & Allied Professionals including: Occupational Therapists, Physiotherapists, Kinesiologists, Psychologists, Psychiatrists, and Counsellors.

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Certain information provided in this news release is taken from the unaudited interim Financial Statements and Management’s Discussion & Analysis (“MD&A”) of the Company for the six months ended June 30, 2020 and should be read in conjunction with them. It is only in the context of the fulsome information and disclosures contained in the unaudited interim Financial Statements and MD&A that an investor can properly analyze this information. The Financial Statements and MD&A can be found under CloudMD’s profile on www.sedar.com.