Record Q4 2022 revenue of $21.6M and Adjusted EBITDA of $1.6M
Record full-year 2022 revenue of $78.6M and a full-year Adjusted EBITDA loss of
$1.0M
Signed a minimum 5-year SaaS agreement subsequent to
year-end, expected to generate a minimum $40M over the term
TORONTO, May 1, 2023
/CNW/ - Think Research Corporation (TSXV: THNK) ("Think" or
the "Company"), a company focused on transforming
healthcare through digital health software solutions, is pleased to
announce Fourth Quarter and Full-Year 2022 results. The Company's
Management Discussion and Analysis (MD&A) along with Audited
Financial Statements for Q4 and FY2022 results are posted to SEDAR
and are available for further details.
Sachin Aggarwal, Chief
Executive Officer of Think Research said "We are excited
to report record fourth quarter and full-year results for 2022. The
hard work and dedication of the Think team to integrate our recent
acquisitions into an essential SaaS data and research platform has
culminated in the record revenue performance that we reported for
Q4 2022 and adjusted EBITDA of $1.6
million. And we are just getting started. Multi-year SaaS
contracts signed subsequent to year-end, along with our strong
pipeline, position Think for continued growth and improving
profitability for the foreseeable future."
Think's Software and Data solutions are increasingly relied on
by acute care and community care doctors, nurses and pharmacists to
support their practices. Think solutions now reach more than
320,000 clinicians, an increase of 7% compared to 300,000 reported
at the end of fiscal 2021. As Think solutions become
increasingly essential to clinicians, the opportunities to convert
reach into users are expanding. In certain jurisdiction-wide
deployments, Think's platform connects clinicians to the
health-care networks that employ them, to patients for virtual
care, and to each other for referrals.
Think currently licenses its solutions to approximately 14,200
facilities with over 3 million patients and residents annually
receiving better care due to the essential data that Think
produces, manages and delivers. Facilities under license increased
by 9% compared to 13,000 in the previous year.
Business Outlook
Think's primary revenue streams of Software and Data
Solutions and Clinical Research are built on recurring and
re-occurring multi-year contracted commitments by government
agencies and large enterprise clients such as global pharmaceutical
companies. Accordingly, Think's management believes that the
Company's financial performance should be sufficiently
protected in the short-term against uncertain
macroeconomic conditions.
Think's Software and Data Solutions are currently solving
both challenging and urgent healthcare service conditions, such as
long wait times for care, staff shortages, and limited access to
both urgent and primary care. As a result, the FY2023 revenue
pipeline is robust, with significant revenue growth potential
existing in the Canadian market and internationally.
The Company plans to grow revenue and improve margins by
becoming an increasingly essential data solutions provider for
healthcare practitioners globally, supporting them to deliver the
best outcomes for patients. To fulfill this objective, the focus of
operations is twofold:
- Execute licenses with new flagship enterprise and government
customers for Think's core suite of data and software solutions,
including its Learning Management System ("LMS") and Digital Front
Door solutions.
- Add more users to current customer agreements by promoting
further adoption and daily usage. Currently, more than 320,000
clinicians, including doctors, nurses and pharmacists can access
Think's solutions. As more users are converted, and more
users increase usage, Think's solutions become more essential to
health systems and customers.
In support of these strategies, the product and business
development teams are focused on:
- Strengthening the utility of Think's software and data
solutions, through ongoing product development, platform
integration, and content development.
- Expanding Think's solutions footprint via new enterprise and
government licenses in the countries where Think has market
presence.
The Company has optimized operations to gain $11.3 million of annualized synergies, which
management believes have permanently improved financial
performance. As organic revenue expands, this cost optimization has
positioned the company for positive Adjusted EBITDA and a path to
positive cash flow. Management will continue to seek efficiencies
in operations for the foreseeable future.
In support of Think's objective to gain more users while
positioning the Data and Software solutions business to become an
increasingly essential tool for healthcare practitioners,
government agencies and large enterprises, management will continue
to review high-value, potential opportunistic tuck-in
acquisitions.
Notable Contracts and Events During FY2022
February 9, 2022: Selected by the
Children and Youth Mental Health lead agency consortium to provide
a mental health platform for improving access to services for
children, youth and their families across Ontario. The contract has a minimum term of 3
years through which Think will realize a minimum of $2 million of revenue.
May 19, 2022: Executed a
$4.1 million contract with Moderna to
deploy education solutions to clinicians. Subsequent to the first
announcement, the contract has expanded to approximately
$12.6 million, which will continue to
be recognized in FY2023, starting in Q1.
June 28, 2022: Contracted by a
major U.S.-based pharmacy to deliver business intelligence and
support solutions to more than 1,700 pharmacies servicing 5.5
million patients throughout the United
States.
September 20, 2022: Announced that
its clinical research organization, BioPharma Services, had signed
multiple new contracts in the third quarter worth approximately
$12.8 million, spanning several
health disciplines.
Think completed three financings in 2022:
- May 10, 2022: Closed an initial
advance of $10 million from Beedie
Investments Ltd ("Beedie Capital") under a convertible term loan
facility with a total principal amount of up to $25 million;
- November 21, 2022: Drew down an
additional $3 million under the
convertible term loan facility with Beedie Capital; and
- December 19, 2022: Raised
$2.5 million through a non-brokered
private placement of its common shares
Events Subsequent to December 31,
2022
- On March 7, 2023, Think announced
a minimum 5-year SaaS and services agreement that is expected to
total more than $40 million of
revenue over its term. Through this agreement, Think will provide
its Digital Front Door and LMS solutions to help the client
address its urgent healthcare access and delivery challenges.
- On April 4, 2023 Think announced
the extension of its existing credit agreement with the Bank of
Nova Scotia for an additional year
to September 10, 2024.
Consolidated Financial Highlights
- The Company achieved record revenue of $21.6 million and $78.6
million for the three months ended December 31, 2022 and FY2022 compared to
$19.1 million for the three months
ended December 31, 2021 and
$47.8M for FY2021. Revenue for the
three months ended December 31, 2022
increased by 13% compared to the three months ended December 31, 2021 due primarily to organic
growth. Revenue for Q4 of FY2022 increased by $3.2 million or 18% compared to the prior quarter
due to stronger performance in Think's Clinical Research and
Software and Data Solutions business lines which was partially
offset by a decline in Clinical Services revenue.
- Think's gross profit grew by $13.0
million to $37.4 million, or
53% year-over-year, reflecting revenue growth derived from a full
year of operations of companies acquired in 2021 combined with
continued organic growth. During the three months ended
December 31, 2022, the Company
generated gross profit of $10.2
million compared to $9.1
million for the same period in the prior year, an increase
of 11%, reflecting higher revenue in Q4 FY2022. The Company's gross
profit in Q4 of FY2022 was $10.2
million, a 17% increase over the prior quarter due primarily
to higher revenue.
- Adjusted EBITDA, a non-IFRS financial measure, increased to a
record $1.6 million and
$(1.0) million for Q4 and FY2022
respectively, compared to $(0.2)
million in Q4 of the previous year and $(6.6) million in FY2021. Sequentially,
Adjusted EBITDA in Q4 of FY2022 increased by $2.3 million compared to Adjusted EBITDA of
($0.7) million in Q3 2022. Adjusted
EBITDA margin was 7% in Q4 of 2022 compared to (4%) in Q3 2022.
This improvement in operating results was driven primarily by
revenue growth in Think's Software and Data Solutions and Clinical
Research business lines paired with cost and operational synergies
realized during the period. See "Non-IFRS Financial Measures" below
for further details.
- Net loss was $(5.6) million and
$(25.7) million for Q4 and
FY2022 respectively compared to $(7.6)
million for Q4 2021 and $(29.0)
million for FY2021. The decrease in net loss for Q4 of
FY2022 is primarily due to an increase in revenue combined with
reduced operating expenses due to realized operating synergies in
FY2022. Net loss for Q4 of FY2022 decreased by $0.9 million compared to Q3 of FY2022 due to
higher revenue and lower operating costs in Q4 of FY2022 being
offset by an additional $1.6 million
of acquisition, restructuring and other charges booked in Q4 of
FY2022.
Revenue Performance Highlights by Line of Business:
- Software and Data Solutions Revenue grew by 22% and 18%
compared to the fourth quarter of FY2021 and the third quarter of
FY2022 respectively, reflecting overall growth in recurring and
re-occurring revenue, partially offset by the variability of the
timing of milestones associated with professional services revenue.
ARR grew from $13.5 million on
December 31, 2021 to $14.8 million on December
31, 2022 due to organic growth in Think's SaaS
solutions.
- Clinical Research Operations revenue grew by 22% in Q4 of
FY2022 compared to Q4 of FY2021 and by 27% compared to Q3 of
FY2022. Revenue in the comparable periods was depressed due to the
operational impacts of COVID-19, which were only fully resolved in
late Q3 of FY2022.
- Clinical Services revenue declined by 24% in Q4 of FY2022
compared to the comparable period in FY2021 due to specific
operational challenges that have since been addressed. Clinical
services revenue in Q4 of FY2022 was 9% below the immediately
preceding quarter due primarily to the seasonal impacts of fewer
surgeries in December.
![Segmented Revenue Table (CNW Group/Think Research Corporation) Segmented Revenue Table (CNW Group/Think Research Corporation)](https://mma.prnewswire.com/media/2066673/Think_Research_Corporation_Think_Research_Corporation_Announces.jpg)
Notes:
|
|
(1)
|
"Software and Data
solutions" revenue consists of SaaS and related professional
services revenue from Think and Pharmapod, and re-occurring revenue
from MDBriefCase,
|
(2)
|
"Clinical Research"
revenue consists of revenue from BioPharma.
|
(3)
|
"Clinical Services"
revenue consists of revenue from the clinics owned by
Think.
|
|
|
Consolidated Expense Details:
- In the fourth quarter of FY2022, operating expenses excluding
depreciation, amortization and stock-based compensation fell to
$8.6 million or 40% of revenue
compared to $9.3 million, or 49% of
revenue for the same period of FY2021. The comparative figures for
the third quarter of FY2022 were $9.4
million and 51% of revenue.
- Think continued to focus on reducing cash operating expenses
through realized cost synergies, which had an annualized value of
11.3 million in FY2022, and which management believes will enable
Think to realize significant expense leverage over larger revenue
streams going forward.
- General and administration expenses increased to $27.0 million for FY2022 compared to $21.6 million for the previous year, an increase
of 25% or $5.4 million. This increase
was driven primarily by including a full year of expenses for the
BioPharma acquisition in FY2022, higher vendor costs to support
increased revenue, and lower government support associated with the
COVID-19 pandemic that was unavailable in FY2022. General and
administration expenses for Q4 2022 decreased by $0.6 million to $6.2
million compared to $6.8
million in Q4 FY2021 due primarily to lower stock-based
compensation that was partially offset by higher levels of spending
on other items such as information technology and insurance costs.
Sequentially, general and administration expenses decreased by
$0.2 million from $6.6 million in Q3 FY2022. This decrease was
primarily attributable to lower stock-based compensation recognized
in the fourth quarter compared to the third quarter of FY2022.
- Research and development expenses for FY2022 decreased by
$0.5 million to $6.8 million compared to $7.3 million in FY2021 driven by a reduction in
personnel costs associated with Think's cost synergy plan during
the year. Research and development expenses in Q4 FY2022 declined
to $0.8 million compared to
$1.7 million in Q4 FY2021 due
primarily to recording annual government support programs in Q4
FY2022, when Think received approval for expenses that included
prior periods. Sequentially, research and development expenses
declined by 54% from $1.7 million in
Q3 of FY2022 to $0.8 million in Q4,
again due to the recording of government support programs in Q4
FY2022.
- Sales and marketing expenses for FY2022 decreased by 3% to 9.1
million compared to $9.4 million in
FY2021, reflecting a reduction in personnel costs associated with
Think's cost synergy plans that was partially offset by recording a
full year of expense related to acquisitions during the previous
year. Sales and marketing costs declined for Q4, 2022 by 27%, or
$0.8 million, to $2.1 million compared to $2.9 million recorded in Q4 FY2021, due primarily
to lower personnel costs in FY2022 from realized cost synergies
during the first half of FY2022. Sales and marketing expenses of
$2.1 million in Q4 of FY2022 were
approximately equal to expenses of $2.3
million incurred in Q3 of FY2022 due to the continuation of
activities to elevate the Think brand along with lead generation
activities to support future sales.
Selected Financial Information
Notes:
|
|
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 "Non-IFRS Financial
Measures".
|
2.
|
"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 "Non-IFRS Financial
Measures".
|
|
|
The tables above and below include 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.
Notes:
|
|
(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 "Non-IFRS Financial
Measures".
|
(2)
|
"Acquisition,
restructuring and other" relate to costs incurred in connection
with business combinations, reorganization of the Company's capital
structure and workforce, and legal, advisory and banking
expenses.
|
(3)
|
"Stock-based
compensation" relates to expenses recognized for equity awards
issued under the Company's Omnibus Equity Incentive
Plan.
|
(4)
|
"Impairment Loss"
relates to a loss on impairment of intangibles.
|
|
|
Conference Call Details:
CEO Sachin Aggarwal and CFO
John Hayes with host a conference
call to discuss the results, with a Q&A session to follow.
TIME: 8:30AM EST, Monday May 1st, 2023
Conference Call Participant Details:
To join the conference call without operator assistance, you may
register and enter your phone number HERE to receive an
instant automated call back.
Participants can also dial direct to be entered to the call by an
Operator:
Toronto:
416-764-8659
North American Toll Free:
1-888-664-6392
Webinar URL:
https://app.webinar.net/3Vv24ZxgO0d
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, healthcare professionals, and /
or 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 14,200 facilities for over
320,000 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. Over 3 million 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 Services entity that Think
acquired on September 10, 2021.
BioPharma Services 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 that provide elective
surgery. Visit: www.thinkresearch.com.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
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 lenders) 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
MD&A 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 Company's MD&A
filed on SEDAR.
For more
information: https://www.thinkresearch.com/ca/investors/
SOURCE Think Research Corporation