MindBeacon Announces First Quarter 2021 Financial Results

FIRST QUARTER HIGHLIGHTS

• Revenue of $5.0 million compared to $1.3 million in Q1 2020.
• Asynchronous cases of 8,460, up 1,433% compared to prior year and 27% compared to Q4 2020. Synchronous sessions of 10,099, up 39% compared to prior year and 17% compared to Q4 2020.
• Gross profit of $2.4 million (49% margin) compared $0.5 million (37% margin) in Q1 2020.
• Net loss of $2.3 million compared to loss of $2.0 million in Q1 2020.
• Signed new SOW with Ontario Health extending previous agreement through December 2022.
• Launched its revamped platform on January 6, 2021.
• MindBeacon Asynchronous iCBT is included as part of Wellness Together Canada.
• MindBeacon announced the upcoming launch of several new service offerings including Enhanced Stronger Minds, Therapist Direct Messaging and a new Peer to Peer community.
• Subsequent to the end of the quarter, MindBeacon entered the addictions space with the launch of a new digital therapy targeting alcohol use developed in consultation with the Centre for Addiction and Mental Health (CAMH).

TORONTO, May 12, 2021 /CNW/ - MindBeacon Holdings Inc. ("MindBeacon" or the "Company") (TSX: MBCN), a company specializing in the delivery of a comprehensive continuum of mental healthcare, using digital technologies, announces its financial results for the three months ended March 31, 2021. All amounts are in thousands of Canadian dollars unless otherwise stated.  

OPERATING RESULTS SUMMARY

Selected Consolidated Financial Information			Three Months Ended
(In thousands of Canadian dollars, except per share amounts)			March 31,
			2021	2020
Cases
Cases (Asynchronous)			8,460	552
Sessions (Synchronous)			10,099	7,268
Revenue
Asynchronous Therapist-Assisted iCBT			3,988	432
Synchronous Therapy			1,027	828
			5,015	1,260
Less: Client care costs
Asynchronous Therapist-Assisted iCBT			1,892	246
Synchronous Therapy			680	545
			2,572	791
Gross profit
Asynchronous Therapist-Assisted iCBT			2,096	186
Synchronous Therapy			347	283
			2,443	469
Gross profit margin
Asynchronous Therapist-Assisted iCBT			53%	43%
Synchronous Therapy			34%	34%
			49%	37%
Adjusted EBITDA			(1,646)	(1,677)
Net loss			(2,255)	(1,965)
Loss per share (basic and diluted)			($0.10)	($0.33)

"In the first quarter we continued to build on our successes and strengthened our solid foundation. We are seeing accelerated growth in demand generated by both mental health awareness and the pandemic", said Sam Duboc, Chair & CEO of MindBeacon. "We exited the quarter with an annualized revenue run rate of over $20 million and we saw our Asynchronous iCBT gross margins reach 53%. We have clearly laid out our multifaceted growth strategy and we are highly focused on executing on our strategy and expanding our continuum of care, which will deliver long-term value for all of our stakeholders. We are creating what we believe is the most robust mental healthcare company in Canada, one that no other company is close to matching."

"During the quarter we continued to scale our business while maintaining our outcomes and growing our offerings. At the beginning of the year, MindBeacon Asynchronous iCBT was included as part of the Wellness Together Canada program offering. We also launched our revamped platform now offering Canadians a full spectrum of digital mental health support ranging from digital therapist-guided programs, live therapy sessions, immediate crisis support and a range of free mental health resources through an online community. More recently, we launched several new service offerings and freely available expert resources that will provide more robust treatment options including Enhanced Stronger Minds, Therapist Direct Messaging and a new Peer to Peer community."

"We are also very excited to have formalized our new Statement of Work ("SOW") with Ontario Health (a Crown agency of the Government of Ontario) at the end of March, which allows us to continue expanding virtual mental health services to support Ontarians. We are proud to continue providing much-needed mental health services to people across Ontario at a time when stress and anxiety are at record levels. With over 50% of MindBeacon users accessing support outside of regular office hours and many saying they have never accessed therapy before, we are improving health equity by reaching individuals who either couldn't or wouldn't access traditional therapy because of barriers like stigma, affordability and accessibility."

FINANCIAL REVIEW

Revenue

(In thousands of Canadian dollars)	Three Months Ended March 31,
	2021	2020
Revenue
Asynchronous Therapist-Assisted iCBT	3,988	432
Synchronous Therapy	1,027	828
	5,015	1,260

Asynchronous Therapist-Assisted iCBT

Asynchronous revenue for the three months ended March 31, 2021 was $4.0 million, an increase of 823% compared to $0.4 million for the same period in 2020. The increase during the period was due to the continued uptake of asynchronous services by per-case and subscription-based customers from increased market penetration. Customers are gravitating towards asynchronous care due to its convenience, cost effectiveness and evidence-based outcomes. The growth in per-case revenues has benefitted significantly from the Ontario Government Program and does represent a revenue concentration risk. Excluding the Ontario Government Program, the growth in the asynchronous segment was 143% for the three months ended March 31, 2021 compared to the prior year period. Average revenue per case was higher in the asynchronous segment in the first quarter of 2021, when compared to the fourth quarter of 2020, and a return to go-forward expectations.   

Synchronous Therapy

Synchronous revenue for the three months ended March 31, 2021 increased by $0.2 million, or 24%, to $1.0 million compared to $0.8 million for the same period in 2020. The increase in revenue during the period was due to a continued adoption of virtual therapy and the launch of the Company's revamped platform which offers synchronous care to a broader population. The Company has seen a steady increase in therapy sessions since Q2 of 2020. Average revenue per session in the synchronous segment in the first quarter of 2021 was lower than the same period in 2020 due to the mix of sessions completed by registered social workers versus psychologists. The price point for a therapy session with a registered social worker is lower than one with a psychologist. 

Client Care Costs

(In thousands of Canadian dollars)	Three Months Ended March 31,
	2021	2020
Client care costs
Asynchronous Therapist-Assisted iCBT	1,892	246
Synchronous Therapy	680	545
	2,572	791

Client care costs for asynchronous therapy for the three months ended March 31, 2021 increased by $1.6 million, or 669%, to $1.9 million compared to $0.2 million for the same period in 2020. The increase during the period was due to higher asynchronous therapist-assisted iCBT volumes during the period. Year-over-year cost of delivery per case has decreased as we are becoming more efficient in our delivery.

Client care costs for synchronous therapy for the three months ended March 31, 2021 were $0.7 million an increase of $0.1 million or 25% from $0.5 million the same period in 2020, mostly in-line with revenue growth which was up 24% from the same period in 2020. The cost of delivery per session of synchronous therapy was lower than the comparative period due to the mix of sessions completed by registered social workers versus psychologists.

Gross Profit and Gross Profit Margin

(In thousands of Canadian dollars)	Three Months Ended March 31,
	2021	2020
Gross profit
Asynchronous Therapist-Assisted iCBT	2,096	186
Synchronous Therapy	347	283
	2,443	469
Gross profit margin
Asynchronous Therapist-Assisted iCBT	53%	43%
Synchronous Therapy	34%	34%
	49%	37%

Gross profit for the three months ended March 31, 2021 was $2.4 million compared to $0.5 million in 2020. Gross profit margin for the three months ended March 31, 2021 was 49%, compared to 37% for the same period in 2020. The Company has achieved increasing gross profit and gross profit margins over the last four quarters driven by top-line growth, the benefit of operational leverage, and an increasing percentage of asynchronous revenue.

Gross profit margin in the asynchronous segment was 53% in the first quarter of 2021, compared to 43% in the comparative period. In 2021, growth in volumes in the asynchronous segment resulted in more efficient clinician utilization and operational leverage and higher gross profit.

Gross profit margin in the synchronous segment in the first quarter of 2021 was consistent with the same period in 2020 at 34%.

Adjusted EBITDA^[1]

For the three months ended March 31, 2021, Adjusted EBITDA increased by 2% to ($1.6) million compared to ($1.7) for the same period in 2020. During the period, gross profit increased by $2.0 million or 421%, offset by higher selling and marketing expenses, product and development expenses and general and administrative expenses.

(In thousands of Canadian dollars)		Three Months Ended March 31,
		2021	2020
Net Loss		(2,255)	(1,965)
Depreciation andamortization		450	234
Finance costs		34	29
EBITDA		(1,771)	(1,702)
Loss in fair value of warrant liability		-	25
Non-recurring public company costs		125	-
Adjusted EBITDA		(1,646)	(1,677)

^[1]

Represents a non-IFRS measure. For the relevant definitions, see the " CAUTIONARY NOTE REGARDING NON-IFRS MEASURES" section of this press release. Management believes non-IFRS measures, including EBITDA and Adjusted EBITDA provide supplementary information to IFRS measures used in assessing the performance of the business.

LIQUIDITY AND CAPITAL RESOURCES

Our principal cash requirements are for working capital. Excluding deferred revenue and warrant liabilities, our working capital as at March 31, 2021 was $62.3 million. Given our existing cash balances, we believe there is sufficient liquidity to meet our current and short-term financial obligations and fund our organic growth strategy.

CASH FLOW

The following table provides an overview of the Company's cash flows for the periods indicated:

In thousands of Canadian dollars	Three Months Ended March 31,
	2021	2020
Cash provided by (used in):
Operating activities	(4,524)	(275)
Investing activities	(493)	(541)
Financing activities	(3,299)	(47)
Net increase (decrease) in cash	(8,316)	(863)

Operating Activities

Cash used in operating activities for the three months ended March 31, 2021 increased by $4.2 million to $4.5 million, compared to $0.3 million for the same period in 2020. The increase was primarily attributable to changes in working capital, an increase in non-cash expense of $0.3 million and an increased net loss of $0.3 million for the quarter ended March 31, 2021. The negative working capital adjustment during the first quarter of 2021 was mostly due to the timing of the collection of accounts receivable. Post quarter end, we made significant collections of outstanding balances.

Investing Activities

Cash used in investing activities for the three months ended March 31, 2021 decreased by $48 thousand or 9%, to $0.5 million. The decrease was due to a marginal reduction in additions to internally-developed software compared to the prior period, offset by an increase in additions to property and equipment related to computer equipment. 

Financing Activities

Cash used in financing activities for the three months ended March 31, 2021 increased by $3.3 million, compared to the same period in 2020. The increase was primarily due to settlement of amounts owing to selling shareholders who sold in the over-allotment as part of the IPO of $3.1 million and certain share issuance costs from the Company's IPO that were settled in the first quarter of 2021. This was offset by proceeds from the exercise of stock options of $0.2 million and receipt of $0.2 million government loans under the Contribution Agreement with the Federal Economic Development Agency of Southern Ontario. 

Capital Expenditures

Our capital expenditures include internally-generated intangibles, information technology hardware, leasehold improvements and office furniture.

Capital expenditures for the three months ended March 31, 2021 increased by 6% to $0.6 million, compared to $0.5 million for the same period in 2020. The increase was due to an increase in additions to property and equipment related to computer equipment, offset by a marginal reduction in additions to internally-developed software compared to the prior period. 

OUTSTANDING SHARE INFORMATION

The Company is authorized to issue an unlimited number of common shares and preferred shares. As of March 31, 2021, there are 23,766,067 Common Shares and nil Preferred Shares outstanding.

The number of Common Shares reserved for issuance under the Company's Omnibus Incentive Plan and Legacy Incentive Plan is 3,545,115. As of March 31, 2021, the number of stock options that are outstanding, including those that remain unvested, that may be converted to common shares is 1,958,867. 

The Company had an outstanding warrant with Green Shield that would allow them to purchase 453,667 shares at an exercise price of $3.202 that was contingent on the counterparty achieving certain sales referral targets. As of March 31, 2021, the vesting conditions were not met and the warrants have expired on that date.

OUTLOOK

The pandemic has completely changed our world. It's time that mental health care embraces those changes and provides the support that patients need, when, where and how they need it. We are proud of our performance in the first quarter of 2021 across all aspects of our business and we are well positioned to keep the momentum going through 2021 and beyond.

MindBeacon ended the first quarter of 2021 with sufficient available liquidity to pursue our multifaceted growth strategies, which include growing our consumer base and enterprise membership in existing markets, expanding into new geographies; expanding use cases and our continuum of care; investing in artificial intelligence and machine learning; pursuing selective acquisitions that expand our offering, provide geographic diversification and offer strong economics; and building and implementing our BEACON in a Box product offering, which is a mid-term objective.

We are excited by the outlook for MindBeacon and are confident we have the people and the assets to succeed.

FIRST QUARTER 2021 CONFERENCE CALL

MindBeacon will hold a conference call on Thursday May 13, 2021 at 8:30 a.m. Eastern Time to discuss its results. The call will be hosted by Mr. Sam Duboc, Chair and Chief Executive Officer and Mr. John Plunkett, Chief Financial Officer.

DATE:	Thursday, May 13, 2021
TIME:	8:30 a.m. Eastern Time
DIAL-IN NUMBER:	North American Toll Free: 888-390-0605, Toronto: 416-764-8609
WEBCAST LINK:	https://produceredition.webcasts.com/starthere.jsp?ei=1452564&tp_key=2f75a7f8af
TAPED REPLAY:	Number: 888-390-0541, Replay Code: 701305 #

The taped replay will be available for 7 days.

A link to the live audio webcast of the conference call will also be available on the events page of the investors' section of MindBeacon's website at www.mindbeacon.com/ir. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to hear the webcast.

VIRTUAL ANNUAL GENERAL MEETING OF COMMON SHAREHOLDERS

MindBeacon will hold its Annual General Meeting of common shareholders (AGM) on Thursday, May 20, 2021 at 11:00 a.m. ET.  The AGM will he held as a virtual-only meeting, which will be conducted via live audio webcast. Participants are recommended to register for the virtual webcast at least 10 minutes before the start time.

DATE:	May 20, 2021
TIME:	11:00 a.m. Eastern Time
WEBCAST LINK:	https://web.lumiagm.com/141755329
PASSWORD:	mbcn2021 (case sensitive)

For further information on MindBeacon's virtual AGM, kindly visit the Shareholder Information page under the Investor Centre tab at www.mindbeacon.com/ir.

ABOUT MINDBEACON HOLDINGS, INC.

MindBeacon provides a continuum of mental healthcare that includes self-guided psychoeducational and wellness content, Peer-to-Peer Support, Direct Messaging Therapy, Therapist Guided Programs and Live Therapy Sessions all offered virtually through its secure and private platform. As one of the first commercially available, digitally-native platforms to offer therapist-assisted internet-based Cognitive Behavioural Therapy in Canada, MindBeacon's professional service is designed around end users – their health, their way. Working with employers, insurance carriers and government ministries, MindBeacon offers services that are accessible, available, affordable and, most importantly, proven to be effective. MindBeacon is changing the therapy landscape by making professional care available to every Canadian, no matter when, where and how they choose to access it.

CAUTIONARY NOTE REGARDING NON-IFRS MEASURES

This press release makes reference to certain non-IFRS measures. These measures are not recognized under IFRS and 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 are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. MindBeacon uses the non-IFRS measures "EBITDA" and "adjusted EBITDA". EBITDA and adjusted EBITDA are intended to represent an indication of MindBeacon's capacity to generate profit from operations before taking into account management's financing decisions and costs of consuming intangible and tangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life. EBITDA represents net profit or loss before income tax expenses, finance costs and depreciation and amortization. Finance costs represent interest expense on lease liabilities and accretion of non-cash interest expense on government loans. Adjusted EBITDA represents EBITDA before taking into account certain unusual expenses. We also believe that securities analysts, investors, and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

This press release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information can, but may not always, be identified by the use of words such as "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "intend", "could", "might", "would", "should", "believe", and similar references to future periods or the negatives of these words and expressions. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that MindBeacon considered appropriate and reasonable as of the date such statements are made, and is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, the risk factors identified under "Risk Factors" in MindBeacon's supplemented PREP prospectus dated December 17, 2020, its Management's Discussion & Analysis ("MD&A") under the heading "Risks and Uncertainties" dated March 17, 2021 and in other filings that MindBeacon has made and may make in the future with applicable securities authorities, all of which are available under MindBeacon's SEDAR profile at www.sedar.com. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking information is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents MindBeacon's expectations as of the date hereof, and is subject to change after such date. However, MindBeacon disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Unaudited Interim Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
As at March 31, 2021 and December 31, 2020

	March 31, 2021	December 31, 2020
	$	$
Assets
Current
Cash and cash equivalents	58,694	67,010
Accounts receivable	5,964	3,903
Prepaid expenses	977	268
Total current assets	65,635	71,181
Property and equipment	545	684
Right–of–use assets	693	799
Intangible assets	2,141	1,809
Total assets	69,014	74,473
Liabilities and shareholders' equity
Current
Accounts payable and accrued liabilities	2,940	6,417
Deferred revenue	345	313
Current portion of lease liabilities	372	469
Total current liabilities	3,657	7,199
Lease liabilities	449	497
Government loans	741	607
Total liabilities	4,847	8,303
Shareholders' equity
Issued capital	96,737	96,555
Contributed surplus	492	422
Deficit	(33,062)	(30,807)
Total shareholders' equity	64,167	66,170
Total shareholders' equity and liabilities	69,014	74,473

Unaudited Interim Consolidated Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars, except per share amounts)
For the three months ended March 31, 2021 and 2020

	For the 3 months ended March 31
	2021	2020
	$	$
Revenue	5,015	1,260
Client care costs	2,572	791
	2,443	469
Operating expenses:
Selling and marketing	1,018	754
Product and development	935	469
General and administrative	2,261	923
Depreciation and amortization	450	234
Total operating expenses	4,664	2,380
Finance costs	34	29
Loss in fair value of warrant liability	-	25
Net loss and comprehensive loss for the period	(2,255)	(1,965)
Loss per share
Basic and diluted	($0.10)	($0.33)

Unaudited Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
For the three months ended March 31, 2021 and 2020

	For the 3 months ended March 31,
	2021	2020
	$	$
Operating activities
Net loss for the period	(2,255)	(1,965)
Add / (deduct) items not involving cash:
Depreciation of property and equipment	224	47
Depreciation of right–of–use assets	106	145
Amortization of intangible assets	120	42
Share–based payment expense	92	25
Interest expense on lease liabilities	10	27
Non–cash interest expense on government loans	24	2
Non-cash government grant recognized on government loans	(26)	(21)
Loss on fair value of warrant liability	-	25
Working capital adjustments:
(Increase) decrease in accounts receivable and prepaid expenses	(2,770)	708
(Decrease) increase in accounts payable and accrued liabilities and deferred revenue	(49)	690
Cash used in operating activities	(4,524)	(275)
Financing activities
Payments of principal and interest on lease liabilities	(155)	(157)
Repayment of over-allotment owing to selling shareholders	(3,124)	-
Share issuance costs	(351)	-
Proceeds from stock option exercised	160	-
Proceeds from government loans	171	110
Cash used in financing activities	(3,299)	(47)
Investing activities
Additions to property and equipment	(85)	(36)
Additions to intangible assets	(408)	(505)
Cash used in investing activities	(493)	(541)
Net decrease in cash and cash equivalents during the period	(8,316)	(863)
Cash and cash equivalents, beginning of period	67,010	11,471
Cash and cash equivalents, end of period	58,694	10,608

SOURCE MindBeacon Holdings Inc.

Investor relations, David Galison, (p): [phone], (e): [email protected]; Media Relations, (e): [email protected]