Think Research Announces 2021 Results Highlighted by 438% Growth in Q4 Revenue with Q4 Adjusted EBITDA Approaching Break-Even
- Realized record Q4 revenue of $19.1 million, and $47.8 million in 2021, an increase of 438% and 178% over the same periods in 2020.
- Q4 Adjusted EBITDA1 (as defined herein) improved by 94% over Q3 2021, increasing by $3.2M.
- Delivered continued organic growth by signing long-term government agreements and contract expansions for 2022.
TORONTO, May 2, 2022 /CNW/ - Think Research Corporation (TSXV: THNK) (OTCQB: THKKF) ("Think" or the "Company"), a healthcare technology company focused on transforming healthcare through knowledge-based digital health software solutions, today reported financial results for the fourth quarter and fiscal year ended December 31, 2021. Additional information concerning the Company, including its audited financial statements and related Management's Discussion and Analysis ("MD&A") for the three and twelve months ended December 31, 2021, can be found under the Company's profile on SEDAR and on Think's website.
"We are very pleased to report a significant improvement in our bottom line for the fourth quarter, driven by our record fourth quarter revenue along with capturing nearly $6M in annualized synergies. This was truly a transformative year during which we acquired and integrated four strategic assets and announced meaningful new long-term SaaS contracts, all of which enhanced Think's scale and position as a leader in the delivery of knowledge-based health technology," said Sachin Aggarwal, Think's CEO. "With over 13,000 enterprise healthcare facilities having licensed Think's solutions, we enable more than 300,000 doctors, nurses and pharmacist users to leverage our essential data service to help ensure everyone gets the best possible care."
- Record revenue of $19.1M and $47.8M for Q4 and fiscal 2021 grew 438% and 178%, respectively, over the same periods in 2020.
- Q4 2021 revenue increased by $9.0M or 90% relative to Q3 2021, attributable to the positive impact of including financial results of Bio Pharma Services Inc. ("BioPharma") for the full fourth quarter in the Company's results, incremental revenue from the acquisition of assets of Pharmapod Limited ("Pharmapod") (which closed on November 4, 2021), and stronger overall performance related to an industry-wide recovery following a relaxation of COVID-19 restrictions.
- Adjusted EBITDA1 was close to break-even for Q4 at $(0.2M) and $(6.6M) for the full year 2021, positioning Think well to achieve its goal of generating positive Adjusted EBITDA in 2022. See "Cautionary Note Regarding Non-IFRS Financial Measures" for further information.
- Relative to Q3 2021, Adjusted EBITDA increased by $3.2M, or 94% in Q4 2021, reflecting stronger revenue and realized synergies, which drove an Adjusted EBITDA Margin2 (as defined herein) of (1%) compared to (34%) in Q3 2021. See "Cautionary Note Regarding Non-IFRS Financial Measures" for further information.
- During the three months ended December 31, 2021, the Company generated gross profit of $9.1M compared to $1.5M for the same period in the prior year, an increase of 489%. For the three months ended December 31, 2021 the Company generated gross margin of 48% compared to 44% for the same period in the prior year. For the twelve months ended December 31, 2021 the Company generated a gross margin of 51% compared to 44% for the three months ended December 31, 2020. The gross margin in both periods was affected by the change in revenue mix as a result of the acquisitions. In Q4 of FY2021 the Company's gross margin % increased to 48% from 42% in Q3 of 2021 primarily as a result of operational synergies being realized during the quarter that reduced cost of sales and additional technology related revenue that has a higher gross margin percentage.
- Year-over-year net loss improved to $(7.6M) in Q4, compared to $(13.1M) for the same period in 2020, reflecting an increase in revenue and gross profit related to acquisitions, partially offset by an increase in amortization on acquired intangibles and higher non-cash stock-based compensation. Full year 2021 net loss totaled $(29.0M).
- Think fulfilled its goal of achieving $5.8M in annualized cost synergies throughout 2021 based on headcount reduction efficiency savings and vendor cost reductions achieved largely through shared services and by deploying superior technology.
- The Company's financial performance during 2021 reflects the four acquisitions completed during the year as detailed in the Company's MD&A for the year ended December 31, 2021. Together these acquisitions transformed the business such that revenue in the three months ended December 31, 2021 of $19.1M representing an increase of 438% over the same period in 2020. The reported financial performance of the Company includes $5.7M of one-time costs incurred during fiscal year 2021 associated with these transactions.
- The Company's cash balance at December 31, 2021 was $6.3M, down from $10.9M on December 31, 2020. This decrease in cash is the net impact of cash outflows from operations during the year of $11.5M and from investing activities of $27.4M offset by debt, lease and equity financings of $34.3M as detailed in the Company's MD&A for the year ended December 31, 2021.
- Think entered into a credit facility (the "Credit Facility") with the Bank of Nova Scotia on September 10, 2021, featuring a $22 million revolving operating credit facility, a $6 million revolving acquisition facility, and a $10 million uncommitted accordion that can be allocated to either the revolving operating credit facility or the revolving acquisition facility at the Company's discretion, subject to the approval of the lender. The Credit Facility will remain in place until September 10, 2023, with an option to extend the term by an additional year at the lender's discretion.
- Think acquired BioPharma, a leading contract research organization ("CRO") on September 10, 2021, contributing to a new base of clients for Think which includes global pharmaceutical companies.
- On November 15, 2021, the Company announced that it was awarded a five-year, Ontario-wide contract through the Better Access Alliance , with a value of approximately $5.2 million over the initial term of the contract. The contract will see Think deploy software across the province of Ontario through a SaaS-model that connects patients to health information and guidance, referred to as a 'Digital Front Door', that integrates with the Company's digital referral network. This deployment further builds upon Think's existing footprint across Ontario as the prime vendor supporting the Province's eServices and eReferrals products. With optional renewals and service expansion, this agreement could extend to a total length of eight years and potentially increase the contract's overall value.
- The Company announced on February 23, 2022, that it had processed a record 300,000 digital referrals in fiscal year 2021 through its continued partnership with the Ontario eServices Program and Cognisant MD. This growth in usage follows a June 10, 2021 announcement on increased access to the Company's digital referral product for the Province of Ontario, resulting in annual license fee growth of greater than $1.5M per year.
______________ |
|
Notes: |
|
(1) |
Represents a non-IFRS financial measure. For the relevant definitions of each non-IFRS financial measure and a reconciliation of each financial measure to net loss, the most directly comparable IFRS measure, see the "Cautionary Note Regarding Non-IFRS Financial Measures" section of this press release. Management believes non-IFRS measures, including EBITDA and Adjusted EBITDA, provide supplementary information to IFRS measures in assessing the performance of the business of the Company. Non-IFRS measures included in this press release are not standardized measures under IFRS, the financial reporting framework used to prepare the Company's financial statements and may not be comparable to similar financial measures disclosed by other issuers. |
(2) |
Represents a non-IFRS ratio. For the relevant definition of each non-IFRS ratio, see the "Cautionary Note Regarding Non-IFRS Financial Measures" section of this press release. Management believes non-IFRS ratios, including Adjusted EBITDA Margin, provide supplementary information to IFRS measures in assessing the performance of the business of the Company. Non-IFRS ratios included in this press release are not standardized measures under IFRS, the financial reporting framework used to prepare the Company's financial statements and may not be comparable to similar financial measures disclosed by other issuers. |
(3) |
Estimates from Pharmapod's then current management team and total number of licensed pharmacies in Canada as reported by NAPRA. |
- On February 9, 2022, Think announced that it was selected by the Children and Youth Mental Health Lead Agency Consortium to provide the technology to enable virtual clinical counselling across the province of Ontario, and an entry point into digital referrals for community mental health services. This SaaS contract has a minimum term of three years through which Think will realize a minimum of $2M in revenue.
- On April 25, 2022, the Company announced that it has entered into a credit agreement with Beedie Investments Ltd. ("Beedie Capital") for a non-revolving term convertible loan facility of up to the principal amount of $25 million (the "Convertible Facility"). The Convertible Facility will be funded by way of an initial advance of $10 million (the "Initial Advance") to be drawn on the date that the conditions precedent under the Credit Agreement are satisfied (the "Closing Date"), with the remaining $15 million available for subsequent advances (each a "Subsequent Advance"). The Convertible Facility has a term of four years from the Closing Date, bears interest at a rate of 8.50% per annum on advanced funds and carries a standby fee equal to 1.25% per annum on the unadvanced portion of the Convertible Facility. At any time during the term of the Convertible Facility, Beedie Capital may elect to convert the principal amount of the Initial Advance into common shares of Think (each a "Common Share") at a conversion price of $1.443 per Common Share, subject to adjustment in accordance with the terms of the Credit Agreement (the "Initial Conversion Price"). The Initial Conversion Price represents a 40% premium above the 20 trading day volume-weighted average price ("VWAP") of the Common Shares on the TSX Venture Exchange ("TSXV") on April 22, 2022. The Closing Date and funding of the Initial Advance is expected to take place in early May, subject to the satisfaction of customary closing conditions, including the receipt of approval of the TSXV. For more information on the Convertible Facility, see the Company's press release dated April 25, 2022.
The Company plans to grow revenue with improving margins by becoming an increasingly essential data solutions provider for healthcare providers everywhere, so they can deliver the best outcomes for patients.
To fulfill this objective, the focus of operations is threefold:
- Add more users to current licenses by promoting adoption and usage. Currently, more than 300,000 clinicians, including doctors, nurses and pharmacists, use Think's solutions. As we add more users, our solutions become more essential to health systems and licensees.
- Increase revenue per user by increasing the number of content services and data solutions that a licensed user adopts and uses regularly.
- Monetize licensed users directly, over-the-top of facilities licenses. For example, through Think's direct to user clinical education offerings.
The objective of this operational focus, both in the short and long term is to generate organic revenue growth with improved margins, and with positive Adjusted EBITDA.
Think will be holding a conference call via webcast on May 2, 2022, at 9:00 a.m. EST, hosted by CEO Sachin Aggarwal and interim CFO John Hayes, with a Q&A session to follow. To register for the conference call, please click here.
Conference call dial-in:
Toronto: 1-647-484-0478
North American Toll-Free: 1-800-256-1007
Conference ID: 3411402
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, 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, health care 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 13,000 facilities for over 300,000 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. Millions of 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 entity that Think acquired on September 10, 2021. BioPharma 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 providing elective surgery.
This press release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information may be identified by statements including words such as: "anticipate," "intend," "plan," "budget," "believe," "project," "estimate," "expect," "scheduled," "forecast," "strategy," "future," "likely," "may," "to be," "could,", "would," "should," "will" and similar references to future periods or the negative or comparable terminology, as well as terms usually used in the future and the conditional. Statements including forward-looking information may include, without limitation, statements regarding the Company's Adjusted EBITDA in 2022, the expected term and value of contracts entered into in fiscal year 2021 and 2022, the funding of the Initial Advance and the availability of Subsequent Advances, the anticipated Closing Date and the funding of the Initial Advance, the Company's strategies and growth objectives, and statements made in the "Outlook" section of this press release.
Forward-looking information reflects management's current beliefs and is based on assumptions that may prove to be incorrect, including but not limited to the Company's business objectives, results of operations, financial results and trading activity in the Common Shares. The Company considers these assumptions to be reasonable in the circumstances. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. By its nature, forward-looking information involves known and unknown risks, uncertainties, changes in circumstances and other factors that are difficult to predict and many of which are outside of the Company's control which may cause the Company's actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. The Company's actual results may differ materially from those indicated in the forward-looking information. Important factors that could cause actual results to differ materially from those indicated in the forward-looking information include, among others, the risk factors described under the heading "Caution Regarding Forward Looking Information" in the Company's Management's Discussion & Analysis for the year ended December 31, 2021, which is available on the Company's profile at www.sedar.com. The Company has assumed that the risk factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events. The reader is cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking statements.
Other than as specifically required by applicable Canadian law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, whether as a result of new information, future events or results, or otherwise.
This press release contains financial outlook information within the meaning of applicable securities laws. The financial outlook included in this MD&A includes, but is not limited to: the Company's goal of generating positive Adjusted EBITDA in 2022, the expected revenues to be realized from contracts entered into in fiscal year 2021 and 2022, the Company's objective to grow revenue with improving margins and with positive Adjusted EBITDA. The financial outlook set out in this press release is subject to the same assumptions, risk factors, limitations and qualifications set out in these cautionary statements. The financial outlook contained in this press release was approved by management as of the date of the Company's MD&A for the year ended December 31, 2021, and was provided for the purpose of providing an outlook of the Company's activities and results and may not be appropriate for other purposes. Management believes that the financial outlook has been prepared on a reasonable basis, reflecting reasonable assumptions, estimates and judgments; however, actual results of the Company's operations may vary from those described herein. The Company disclaims any intention or obligation to update or revise any financial outlook contained in this press release, whether as a result of new information, future events or results or otherwise, unless required pursuant to applicable Canadian law. Readers are cautioned that the financial outlook contained in this press release should not be used for purposes other than for which it is disclosed herein.
Additional information about the risks and uncertainties of the Company's business and material factors or assumptions on which information contained in forward‐looking statements is based is provided in its disclosure materials, including the Company's MD&A for the year ended December 31, 2021, which is available under the Company's profile on SEDAR at www.sedar.com.
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 senior lender and with Beedie Capital) 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 press release 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 MD&A and press release below.
Three months |
Three months |
Year ended |
Year ended |
|
$ |
$ |
$ |
$ |
|
Net loss |
(7,596) |
(13,088) |
(29,049) |
(10,016) |
Depreciation and amortization |
4,098 |
541 |
7,986 |
1,956 |
Finance costs |
713 |
639 |
2,054 |
1,488 |
Income tax expense (recovery) |
(1,481) |
(6) |
(1,461) |
(24) |
EBITDA1 |
(4,266) |
(11,914) |
(20,470) |
(6,596) |
Acquisition, restructuring and other2 |
1,270 |
5,922 |
5,638 |
— |
Premium on Redemption of Class A Preferred shares3 |
— |
1,271 |
— |
— |
Stock-based compensation4 |
2,052 |
1,925 |
7,249 |
4,248 |
Foreign exchange loss (gain)5 |
78 |
67 |
323 |
— |
Impairment loss6 |
677 |
— |
677 |
— |
Adjusted EBITDA1 |
(189) |
(2,729) |
(6,583) |
(2,348) |
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) |
"Premium on Redemption of Class A Preferred shares" relates to the premium that was paid to redeem preferred shares on December 23, 2020 as part of the RTO |
(4) |
"Stock-based compensation" relates to stock-based compensation expense recognized for equity awards issued under the Company's Omnibus Equity Incentive Plan. |
(5) |
"Foreign exchange loss (gain)" relates to foreign exchange fluctuations. |
(6) |
"Impairment Loss" relates to the loss on impairment of intangibles |
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, standardize care, and improve patient outcomes. For over a decade, Think's cloud-based, EMR- agnostic digital tools have empowered clinicians around the world and positively impacted millions of patients across the continuum of care – including primary physician care, acute care hospitals and surgical suites as well as community and seniors care. Think is proud to serve as a trusted health system partner to a rapidly growing, global client base that spans five continents across more than 13,000 healthcare facilities, with a clinical audience of over 300,000 doctors, nurses and pharmacists. Visit www.thinkresearch.com
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibilities for the adequacy or accuracy of this release.
For more information: https://www.thinkresearch.com/ca/investors/
SOURCE Think Research Corporation
Mark Sakamoto, Executive Vice President, Think Research, 416.388.7119, [email protected]
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