- Record Q2 2023 revenue of $22.5
million and Adjusted EBITDA of $1.3
million
- Annual Recurring Revenue increased by 67% to $25.0 million as of the end of the
quarter
TORONTO, Aug. 29,
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 Second Quarter 2023 results. The Company's
Management Discussion and Analysis (MD&A) along with unaudited
consolidated interim financial statements for Q2 2023 are available
on SEDAR at www.sedar.com and on Think's website.
Think's three core business lines, including Software and Data
Solutions (SaaS solutions), Clinical Research (clinical trial
studies) and Clinical Services (physical clinics), collectively
drive its financial performance and results.
Sachin Aggarwal, Chief Executive
Officer of Think Research said, "With record revenue and positive
Adjusted EBITDA, the second quarter continued the strong
performance trend set in the last two quarters. Strong 67% Annual
Recurring Revenue growth was driven by SaaS licensing in our
Software & Data Division and reached $25
million at the end of the quarter. Think is in a great
position to help constrained healthcare delivery systems improve
access to high quality health services and best practices where and
when they are needed. Our strong and growing pipeline reflects the
urgency of this problem."
Think's Software and Data solutions are increasingly relied upon
by acute care and community care doctors, nurses and pharmacists to
support their practices. Think solutions now reach more than
326,000 clinicians. 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 16,000
facilities with over 3 million patients and residents annually
receiving better care due to the essential data that Think
produces, manages and delivers.
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 from governmental agencies and
large enterprise clients such as global pharmaceutical companies.
Accordingly, Think's management believes that the Company's
performance should be adequately protected in the short-term
against uncertain macroeconomic conditions.
Moreover, Think's Software and Data solutions business is
currently solving urgent short-term health care service conditions,
as well as looming long-term demographic challenges for health
systems in Canada and abroad,
including:
- Rapid changes in medical research and treatment options;
- Limited access to primary care and critically long wait times
in emergency rooms;
- Increasing demand for health care services as populations age
and people live longer, with increasing health complexity; and
- A long-term shortage of health care workers, including doctors,
nurses and pharmacists, and a flight of these critical health care
workers to higher paying urban jurisdictions.
As a result, Think's sales pipeline for its SaaS solutions shows
significant revenue growth potential in the Canadian market and
internationally.
The Company plans to grow predictable and recurring revenue with
improving margins by becoming an essential data solutions provider
for healthcare systems globally so they can deliver the best
outcomes for patients. Think's Digital Front Door (" DFD")
solution can provide additional capacity for healthcare systems
through third-party care providers, such as doctors, nurses and
care navigators from outside the client's network.
To fulfill this objective, Think's focus is to:
- Execute long-term agreements with new flagship enterprise and
government customers for Think's core suite of Software and Data
solutions, including its Digital Front Door, Learning Management
System ("LMS"), and Pharmapod solutions;
- Add more users to current customer agreements by promoting
further adoption and usage. Currently, more than 326,000
clinicians, including doctors, nurses and pharmacists, can access
Think's solutions;
- Extend the functionality of Think's platform through internal
development and through partnerships with care and technology
providers. As more users, care providers and functionality are
added, Think's solutions become more essential to health systems
and customers; and
- Continue to manage costs to ensure sustainable
profitability.
Think's rapid improvements in financial performance, including
three sequential quarters of positive Adjusted EBITDA is helping to
offset higher financing charges related to Think's floating
interest rate associated with its long-term debt. Although Think
has yet to consistently achieve sufficient positive cash flow from
operations to cover all non-operating expenses, Think is actively
managing costs, while demonstrating improvements in revenue
growth.
Notable Contracts and Events in Q2 2023
- On June 1, 2023, June 21, 2023, and July
18, 2023, Think announced that its Pharmapod system was
selected by an Ontario long-term
care chain, an expansion of a long-term care implementation into
New Brunswick, and a pharmacy
chain with approximately 300 locations across Canada to help them manage medication
incidents.
- On June 12, 2023, Think raised a
non-convertible loan from Beedie Capital amounting to
$1.8 million proceeds of which
were used to paydown the deferred and contingent consideration for
prior year acquisitions to avoid dilution to shareholders.
Q2 2023 Financial Highlights
- The Company achieved record revenue of $22.5M for the three months ended June 30, 2023, up by $4.1M or 22% compared to $18.4M for the second quarter of 2022. Year to
date revenue of $44.3M was up
$5.7M, or 15% from $38.6M in the first half of the prior year. This
year-over-year growth reflects the impact of organic growth in
Software and Data Solutions and Clinical Research that was offset
by a decline in Clinical Services revenue. Sequentially, revenue
for Q2 of 2023 increased by $0.7M or
3% compared to $21.8M in the three
months ended March 31, 2023,
reflecting growth in Think's Software and Data Solutions business,
primarily as a result of the large SaaS contract announced on
March 7, 2023. Revenue in Think's
Clinical Services business declined to $5.9M in the first half of 2023 compared to
$8M in the six months ended
June 30, 2022.
- Annual Recurring Revenue, ("ARR") reached $25.0M at the end of June
2023, representing growth of 67% compared to $14.7M at the end of June
2022. Quarter over quarter growth in ARR was 12% compared to
$22.0M at the end of March 31, 2023. This growth in ARR stemmed
primarily from one large new contract along with multiple smaller
client engagements.
- Gross profit rose to $11.7M for
Q2 2023 and $23.1M for the
year-to-date, up 25% and 25% respectively compared to the same
periods a year ago. Gross profit was up 3% compared to the
immediately preceding quarter. These increases were due to a
combination of higher revenues, a higher share of revenue from
transactions that carry a higher gross profit margin, and cost
efficiencies realized from the company's previously disclosed cost
optimization efforts. Gross margin of 52% in Q2 2023 and 52% in the
year to date represents an increase from 51% in Q2 2022 and 48% in
the first half of 2022.
- Operating expenses declined to $14.2M, in Q2 and $28.2M in the year-to-date 2023 representing a
decrease of 13% or $2.1M and 7% or
$2.2M compared to the prior year
periods. As a percentage of revenue, operating expenses declined to
63% and 64% in the three and six months ended June 30, 2023, compared to 89% and 79% in the
prior year periods due primarily to a cost optimization program
executed by the Company.
- Think achieved EBITDA of $1.4M in
the second quarter and $1.6M in the
first half of 2023 compared to a loss of $4.0M in Q2 2022 and to a loss of $6.4M in the first six months of 2022.
- Adjusted EBITDA rose to $1.3M for
the three months ended June 30, 2023,
compared to an Adjusted EBITDA loss of ($1.6M for the same period a year ago.
Adjusted EBITDA for the first half of 2023 of $2.4M was $4.3M
higher compared to an Adjusted EBITDA loss of $1.9M in the six months ended June 30, 2022. These improvements were due
primarily to improvements in revenue combined with operating cost
reductions. The resulting Adjusted EBITDA Margin was 6% in Q2 and
6% in the year-to-date 2023 compared to losses of 9% in Q2 2022 and
5% in the first half of the prior year.
- Net loss was $2.3M for the three
months and ($5.9M for the six months
ended June 30, 2023, compared to
$7.5M and $13.7M for the comparable periods in the prior
year. The decrease in net loss when compared to 2022 is primarily
due to higher revenue coupled with lower operating costs as a
result of Think's cost optimization program.
Q2 2023 Revenue Performance Highlights by Line of
Business:
The Company has three primary streams of revenue that include:
(1) Software and Data solutions, (2) Clinical Research, and (3)
Clinical Services.
Revenue
Streams
|
Q2 FY
23
|
Q2 FY23 % of
Revenue
|
Q2 FY
22
|
Q2 FY22 % of
Revenue
|
Software and Data
Solutions1
|
10,375
|
46.1 %
|
6,897
|
43.2 %
|
Clinical
research2
|
9,204
|
40.9 %
|
7,252
|
43.1 %
|
Clinical
services3
|
2,913
|
13.0 %
|
4,293
|
13.6 %
|
Total
|
22,493
|
100 %
|
18,442
|
100 %
|
Notes:
|
(1) "Software and
Data Solutions" revenue consists of SaaS and professional services
revenue.
|
(2) "Clinical
research" revenue consists of revenue from BioPharma.
|
(3) "Clinical
services" revenue consists of revenue from the clinics owned by
TRC.
|
Revenue from Think's Software and Data Solutions business grew
by $3.5M or 50% from $6.9M (43% of revenue) in Q2 2022 to $10.4M (46% of revenue) in Q2 2023 primarily due
to organic growth associated with the launch of the new SaaS and
services initiative set out in the Notable Contracts section
above.
ARR reached $25.0M at the end of
June 2023, representing growth of 67%
compared to $14.7M at the end of
June 2022. Quarter over quarter
growth in ARR was 12% compared to $22.0M at the end of March
31, 2023. Think's Net Retention Rate for ARR was 106% for
the twelve months ended June 30,
2023.
Clinical Research revenue increased by $2M, or 27% in Q2 2023 to $9.2M compared to $7.3M in Q2 2022. Revenue in the comparable
period was depressed due to the operational impacts of COVID-19,
which were only fully resolved in late Q3 of 2022.
Clinical Services revenue declined by $1.4M or 32% in Q2 2023 compared to the
comparable period in 2022 due to operational challenges in sales
and marketing.
Liquidity and Capital Resources
The Company's agreements with its lenders regarding certain
covenants become more restrictive at the beginning of each quarter
from January 1, 2022 to January 1, 2024. Therefore, despite Think's rapid
improvements in financial performance, including three sequential
quarters of positive Adjusted EBITDA, the Company determined that
it was not in compliance with the minimum EBITDA covenants as set
out in the Bank of Nova Scotia Credit Facility and under the Beedie
Convertible Facility (the "Credit Facilities") and could
potentially be in non-compliance with certain covenants set out in
the Credit Facilities in future months in 2023. The Company is
actively engaging with its lenders and proactively addressing this
matter. For further details, please see the Company's MD&A.
Selected Financial Information
|
|
Q2
2023
|
Q1
2023
|
Q4
2022
|
Q3
2022
|
Q2
2022
|
(in thousands of
Canadian dollars, except
per share data)
|
$
|
$
|
$
|
$
|
$
|
Revenue
|
|
22,493
|
21,826
|
21,587
|
18,371
|
18,442
|
Net
Income
|
|
(2,327)
|
(3,594)
|
(5,602)
|
(6,459)
|
(7,484)
|
EBITDA1
|
|
1,398
|
197
|
(1,185)
|
(2,426)
|
(4,024)
|
Adjusted
EBITDA1
|
|
1,349
|
1,078
|
1,607
|
(696)
|
(1,579)
|
Adjusted EBITDA
margin2 (% of revenue)
|
6.0 %
|
4.9 %
|
7.4 %
|
-3.8 %
|
-8.6 %
|
Basic and diluted
EPS
|
|
(0.03)
|
(0.05)
|
(0.09)
|
(0.11)
|
(0.13)
|
|
|
|
|
|
|
|
|
|
Q2
2022
|
Q1
2022
|
Q4
2021
|
Q3
2021
|
Q2
2021
|
(in thousands of
Canadian dollars, except
per share data)
|
$
|
$
|
$
|
$
|
$
|
Revenue
|
|
18,442
|
20,204
|
19,117
|
10,083
|
10,224
|
Net
Income
|
|
(7,484)
|
(6,198)
|
(7,596)
|
(10,828)
|
(5,583)
|
EBITDA1
|
|
(4,024)
|
(2,399)
|
(4,187)
|
(8,290)
|
(3,814)
|
Adjusted
EBITDA1
|
|
(1,579)
|
(290)
|
(189)
|
(3,403)
|
(1,349)
|
Adjusted EBITDA
margin2 (% of revenue)
|
-8.6 %
|
-1.4 %
|
-1.0 %
|
-33.7 %
|
-13.2 %
|
Basic and diluted
EPS
|
|
(0.13)
|
(0.11)
|
(0.13)
|
(0.24)
|
(0.13)
|
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.
|
Three
months
ended June
30,2023
|
Three
months
ended June
30,2022
|
Six months
ended June
30,2023
|
Six months
ended June
30,2022
|
|
$
|
$
|
$
|
$
|
Net loss
|
(2,327)
|
(7,484)
|
(5,921)
|
(13,682)
|
Depreciation and
amortization
|
3,222
|
3,608
|
6,375
|
7,244
|
Finance
costs
|
1,489
|
757
|
2,713
|
1,833
|
Income tax expense
(recovery)
|
(986)
|
(905)
|
(1,572)
|
(1,818)
|
EBITDA1
|
1,398
|
(4,024)
|
1,596
|
(6,423)
|
Acquisition,
restructuring and other2
|
(648)
|
710
|
(302)
|
1,772
|
Stock-based
compensation3
|
599
|
1,735
|
1,134
|
2,782
|
Adjusted
EBITDA
|
1,349
|
(1,579)
|
2,428
|
(1,869)
|
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" 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.
|
3.
|
"Stock-based
compensation" relates to expenses recognized for equity awards
issued under the Company's Omnibus Equity Incentive
Plan.
|
Conference Call Details:
CEO Sachin Aggarwal and CFO
John Hayes will host a conference
call to discuss the results, with a Q&A session to follow.
TIME: 9:00AM EST, Tuesday
August 29, 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/6WVYnEMnalm
Conference Replay
Local: 416-764-8677
North American Toll Free: 1-888-390-0541
Replay Entry Code: 197171 #
Expiration Date: 09/03/2023
About Think Research Corporation
Think Research Corporation is an industry leader in delivering
knowledge-based digital health software and data solutions. The
Company's evidence-based healthcare solutions support clinical
decision-making, improve access to services, enable practitioners
to gain better capabilities and knowledge, and help to standardize
care to facilitate better healthcare outcomes. Think Research has
gathered a significant amount of data by building its repository of
knowledge through its digital solutions platform and group of
companies. The Company's focused mission is to become an essential
platform that helps health care clinicians, institutions and
networks to provide the best care and information.
Think licenses its solutions to over 16,000 facilities for over
326,000 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 MD&A 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 "ARR", "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, transaction, 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. ARR is used by some
investors and analysts as a predictor of future revenues because it
reflects new sales, renewals and lost customers. 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 by the
Company include:
Annual Recurring Revenue ("ARR"), means revenue
associated with software and services contracts that are expected
to have a duration of more than one year, normalized to a one-year
period.
"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.
"Net Retention Rate" means the total of retained
revenue from existing customers over a one-year period, expressed
as a percentage.
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