Syncordia Technologies and Healthcare Solutions, Corp. Reports Fourth (Year End) Quarter Fiscal 2017 Results
TORONTO, Aug. 3, 2017 /CNW/ - Syncordia Technologies and Healthcare Solutions, Corp. (TSXV: SYN) ("Syncordia" or the "Company") today reported financial results for the fiscal year ended March 31, 2017.
Reported results reflect operations of Health Services Integration Inc. ("HSI"), which was acquired effective October 31, 2014, and carved-out operations of Paragon Billing LLC, ("Paragon") which was acquired April 24, 2015, and Billing Solutions LLC ("Billing Solutions"), which was acquired March 22, 2016, both of which have been reclassified to assets held for sale for accounting purposes and in accordance with International Financial Reporting Standards ("IFRS"). For comparative purposes, 2017 amounts disclosed in this press release have not been reclassed.
Management Commentary
Syncordia continues to evaluate various strategic alternatives including, but not limited to, the divestiture of portfolio companies to reduce debt and put additional cash on the balance sheet. The divestiture of the behavioral health assets will certainly involve the departure of a number of key executives given that there may only be one asset and a suite of software remaining in the portfolio. The board intends to work to maximize shareholder value with a limited team, with a divestiture or payment of dividends for example at the appropriate time in the future with substantially reduced Corporate, Cloud and public company expenses.
With newly-signed contracts, Billing Solutions is on an EBITDA run rate of well over $3 million essentially doubling EBITDA in under 24 months. Paragon Billing is on an EBITDA run rate of approximately $700,000 and although essentially doubling EBITDA in the first few quarters after purchase, HSI still continues to struggle with many variables, which makes it very difficult for management to accurately provide a sense of the performance of this asset over the next 12 months but it will most likely be below $1.5 million in EBITDA.
Billing Solutions has had great success with its NECTAR software product which has won great accolades from customers. It has also built a solid operating protocol and a suite of new operational toolsets to allow the business to scale meaningfully nationally. Paragon Billing has also taken great strides to refine and improve its operating mandate for the benefit of its customers after moving the billing operations center from Minnesota to Wilmington, North Carolina in an operating environment and with a new team and support structure to accommodate scale and a national roll out.
The Company decided not to pursue the book of business it was evaluating as press released April 7th 2017.
The Company switched auditors from PWC to MNP as a cost containment measure given what it felt were relatively large audit fees from PWC. We anticipate annual audit expense will drop below $100,000.
Business Highlights
- Management is exploring strategic alternatives, including but not limited to (i) the sale of portfolio RCM company or companies(ii) strategic alliances with HSI to improve overall results (iii) licensing or sale of certain intellectual property (iv) other cash-generating initiatives.
- Paragon signed a customer contract with expected volume of 50,000 annual encounters. This contract commenced in February 2017.
- Rolled out NECTAR version 2.0, a client analytics portal for our behavioural health customers, consisting of a business intelligence dashboard showing key medical practice performance indicators. Syncordia continues to focus on building out its full-service software suite for Billing Solutions.
Fourth Quarter 2017 Compared to Four Quarter 2016
- Revenue increased by a modest $271 or 9%, with increases to each of Paragon and Billing Solutions, offset by decreases in HSI, as we wind down the provision of billing services to this customer group as well as other payor mix changes at HSI.
- Net loss and comprehensive loss was $12,583 compared to a loss of $1,186 in the comparative period, mainly the result of $10,489 of impairments to the Company's goodwill, client lists and intellectual property assets. In addition, as noted above, gross margin decreased by $875 and adjusted EBITDA before Platform Syncordia and Corporate costs, decreased to $811 or 25% from $871.
- Platform Syncordia costs decreased $96 or 22%. Total Platform Syncordia spend reflects our software development efforts as we continue to maintain Platform Syncordia.
- Corporate costs decreased $127 or 22% reflecting several cost reduction initiatives.
- Cash and cash equivalents of $973.
Key Performance Indicators
We report Encounters as a key performance indicator to assist readers in better evaluating our performance. We define an Encounter as a discrete business activity for which we would submit a claim. We believe this metric provides investors with a better proxy for measuring the level of business activity than revenue as encounters measure the number of distinct services provided in the period whereas revenue reflects the amount of services recognized for accounting purposes and is typically a lagging indicator of business activity.
| Encounters |
Sequential Quarterly Change (Q3 to Q4) |
||||||||
| Quarter |
Q1 FY2017 |
Q2 FY2017 |
Q3 FY2017 |
Q4 FY2017 |
Total |
# |
% |
||
| Air/SCT |
2,744 |
3,903 |
3,125 |
2,767 |
12,569 |
(328) |
(10%) |
||
| Ground |
7,202 |
12,231 |
15,708 |
16,576 |
51,717 |
868 |
6% |
||
| HSI |
9,946 |
16,134 |
18,833 |
19,373 |
64,286 |
540 |
4% |
||
| Paragon |
82,430 |
63,809 |
65,737 |
72,454 |
284,430 |
6,717 |
10% |
||
| Billing Solutions |
46,697 |
48,052 |
45,697 |
41,474 |
181,920 |
(4,223) |
(9%) |
||
Forward Looking Statements
Certain statements herein may be "forward looking" statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Syncordia or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and we assume no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.
Cautionary Note Regarding Non-IFRS Measures
This press release contains references to "EBITDA," "Adjusted EBITDA," "Gross margin," and "Adjusted EBITDA before Platform Syncordia and Corporate costs."
Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") are non-IFRS measures used by management to provide additional insight into our performance and financial condition. We believe that these non-IFRS measures are important as they provide an indication of the results generated by our RCM business prior to taking into consideration how those activities are financed as well as the other items listed in their respective definitions. Accordingly, we are presenting EBITDA, Adjusted EBITDA and Adjusted EBITDA before Platform Syncordia and Corporate costs in this MD&A to enhance the usefulness of our MD&A. We have provided below a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA before Platform Syncordia Corporate costs to the most directly comparable IFRS figures, disclosure of the purpose of the non-IFRS measure, and how the non-IFRS measures is used in managing the business.
EBITDA, Adjusted EBITDA and Adjusted EBITDA before Platform Syncordia and Corporate costs are not calculations based on IFRS and should not be considered an alternative to operating income or net income (loss) in measuring the our performance, nor should it be used as an exclusive measure of cash flow, because it does not consider the impact of working capital growth, capital expenditures, debt principal reductions and other sources and uses of cash which are disclosed in the consolidated statements of cash flows. Investors should carefully consider the specific items included in our computation of these measures.
Management defines EBITDA as Earnings before Interest, Taxes, Depreciation and Amortization.
Management defines Adjusted EBITDA as Earnings before Interest, Taxes, Depreciation, Amortization, Transaction Costs, Fair Value Gains/Losses, Foreign Exchange Gains/Losses, Stock Based Compensation and Cash based Share Compensation Arrangements. Transaction costs include professional fees associated with business transactions.
Management defines Adjusted EBITDA before Platform Syncordia and Corporate costs as Earnings before Interest, Taxes, Depreciation, Amortization, Transaction Costs, Fair Value Gains/Losses, Foreign Exchange Gains/Losses, Stock Based Compensation, Cash based Share Compensation Arrangements and costs of our Platform Syncordia and Corporate segment. This metric is used to assess the performance of RCM and Platform Syncordia segments.
Gross margin is a non-IFRS measure defined by management to reflect revenue less direct cost of sale, excluding amortization of intellectual property, customer lists, other amortizations and fair value gains/losses.
Platform Syncordia and Corporate costs include sales and marketing, general and administrative and research and development, less amortization and depreciation, foreign exchange gains and losses, and stock-based compensation expense indexed to our share price.
About Syncordia Technologies and Healthcare Solutions, Corp.
We are a technology enhanced revenue cycle management ("RCM") company focused on underserved niche segments of the healthcare industry. We are building a diversified software and services business by consolidating healthcare billing providers. Our growth strategy is to acquire RCM businesses with and without software and, improve their profitability by increasing revenues and operating efficiencies using our software, and in time, commercializing Platform Syncordia, our cloud-based software offering, to provide customer demanded turn-key solutions from a single provider and to address compelling RCM market opportunities.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Syncordia Technologies and Healthcare Solutions, Corp.
Michael Franks, Chief Executive Officer, (647) 949-2663, [email protected]
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