/C O R R E C T I O N -- Think Research Corporation/
In the news release, Think Research Announces Third Quarter 2022 Financial and Operational Results Highlighted by Strong Revenue Growth and Continued Cost Synergies; Closes Subsequent Advance with Beedie Capital, issued 28-Nov-2022 by Think Research Corporation over CNW, we are advised by the company that the second paragraph, third sentence, should include "along with Adjusted EBITDA guidance range of between $1.5 million and $2.3 million for Q4 inferring a run rate range of between $6 million and $9 million" as originally issued. The complete, corrected release follows:
Think Research Announces Third Quarter 2022 Financial and Operational Results Highlighted by Strong Revenue Growth and Continued Cost Synergies; Closes Subsequent Advance with Beedie Capital
- Q3 revenue of $18.4 million grew 82% over the same period in 2021
- 99% revenue growth to $57.0 million in the first nine months of 2022 compared to the same period in 2021
- Q3 Adjusted EBITDA1 nearing breakeven at ($0.7) million compared to ($3.4) million for the same period in the prior year
TORONTO, Nov. 28, 2022 /CNW/ - Think Research Corporation (TSXV: THNK) ("Think" or the "Company"), an innovative disruptor focused on transforming healthcare through knowledge-based digital health software solutions, today reported unaudited financial results for the third quarter and nine month period ended September 30, 2022. With over 13,000 enterprise healthcare facilities under license, Think solutions enable more than 300,000 doctors, nurses and pharmacist users to leverage its essential data service to help ensure everyone gets the best possible care. Additional information concerning the Company, including its unaudited consolidated interim financial statements and related Management's Discussion and Analysis ("MD&A") for the periods ended September 30, 2022, can be found under the Company's profile on SEDAR at www.sedar.com and on its website.
"Think's Q3 and first nine months of 2022 have built momentum for our path forward, evidenced by significant revenue increases despite summer's seasonal impact which affects both clinical and education operations. Multiple new study wins were secured into Q4 by our BioPharma subsidiary, which have increased the backlog of studies and provided Think with greater visibility into our future quarterly revenue potential," said Sachin Aggarwal, Think Research, CEO. "This backlog also supports our confirmation of Think's annualized Q4 2022 run rate revenue guidance range of between $84 million and $90 million and $21 million to $22.5 million guidance for Q4, along with Adjusted EBITDA guidance range of between $1.5 million and $2.3 million for Q4 inferring a run rate range of between $6 million and $9 million. Given our recent success winning increasingly larger deals combined with a more streamlined cost structure, the Company is well positioned to continue enhancing our revenue growth and advancing near and longer-term expectations for profitability, all of which we believe will translate into value creation for our shareholders."
The Company's Q3 results reflect the efforts undertaken by the Company over the past 12 months to successfully integrate several key acquisitions, while also identifying opportunities to optimize operations, streamline costs, and position Think's unique and critical offering in a post-COVID environment. Based on initiatives undertaken to date, along with enhanced sales and marketing programs, Think has greater visibility into improving revenue with reduced costs, supported by its core focus on increasing profitability and financial flexibility in order to drive shareholder value.
_____________________________ |
.Key Financial Highlights:
- Q3 revenue of $18.4 million was 82% higher than Q3 2021, while revenue for the first nine months of 2022 grew 99% to $57.0 million over the same period in 2021, with the Q3 2022 contributions from each of Think's primary revenue streams as follows:
- Software and Data Solutions revenue totaled $6.3 million (34.0% of revenue), compared to $6.9 million (37.4% of revenue) in Q2 2022, reflecting lower utilization of the Company's education offerings during the summer months.
- Clinical Research Operations revenue totaled $8.9 million (48.3% of revenue), compared to $7.3 million in Q2 2022 (39.3% of revenue), attributable to new study wins that have afforded visibility into higher revenue for clinical research in Q4 and into 2023.
- Clinical Services revenue totaled $3.2 million (17.6% of revenue) compared to $4.3 million (23.3% of revenue) in Q2 2022, reflecting revenue seasonality as fewer procedures are conducted during the summer months, and the impacts of staff turnover related to a tight labour market.
- Realized gross profit totaling $8.7 million and $27.2 million in Q3 and the first nine months of 2022, respectively, representing increases of 104% and 78% over the comparable periods in 2021, primarily related to higher revenue stemming from acquisitions supplemented by organic revenue growth.
- Generated gross margin of 48.0% for the nine months ended September 30, 2022, compared to 53.3% for the same period the prior year, which reflects the change in revenue mix arising from various acquisitions completed in 2021 in general, and BioPharma Services Inc. clinical research operations in particular.
- Adjusted EBITDA2 has continued to improve through 2022, with Q3 reflecting a loss of $0.7 million compared to a loss of $3.4 million in Q3 2021 and a loss of $1.6 million in Q2 2022. The quarter-over-quarter improvement directly reflects the impact of reduced operating expenses and efforts to further improve remain a priority. See "Cautionary Note Regarding Non-IFRS Financial Measures" for further information.
- Adjusted EBITDA Margin3 (as defined herein) reflected the same improvement and was negative 4% in Q3 compared to negative 34% in Q3 2021. For the first nine months of 2022, Adjusted EBITDA margin was negative 4.5% compared to negative 22.3% for the first nine months of 2021, with improvements attributable to realized cost synergies and overall revenue scale relative to last year. See "Cautionary Note Regarding Non-IFRS Financial Measures" for further information.
___________________________ |
3 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 the "Cautionary Note Regarding Non-IFRS Financial Measures" section of this press release. |
- Think continued to focus on reducing cash operating expenses through realized cost synergies, which had an annualized value of $5.8 million in FY2021 and an additional $5.7 million in the first nine months of FY2022, and which management believes will enable Think to realize significant expense leverage over larger revenue streams going forward.
- Other expense items related to activities and initiatives associated with the growth of Think's business, particularly via acquisitions, include:
- General and administration expenses of $6.6 million and $20.7 million for Q3 and the first nine months of 2022 increased by 6% and 32%, respectively, reflecting higher overall personnel costs as the business grows, partially offset by recognized synergies.
- Sales and marketing expenses associated with awareness-raising and other activities to elevate the Think brand totaled $2.3 million and $7.0 million in Q3 and the first nine months of 2022, reflecting increases of approximately 12% and 15%, respectively,
- Net loss decreased by $4.4 million for Q3 2022, and by $1.3 million in the first nine months of 2022 compared to the same periods in 2021, with decreases primarily attributable to higher revenue coupled with lower operating, acquisition and restructuring related costs and a non-cash recovery of tax expenses due to a reduction in Think's deferred tax liability.
- Cash balance at September 30, 2022, totaled $4.4 million, compared to $6.3 million as at December 31, 2021. In Q2 2022 the Company borrowed $10 million from Beedie Investments Ltd. as a convertible loan (net $8.9 million after considering transaction costs). Cash allocations during the first nine months of 2022 included payments of $2.4 million on lease liabilities and $2.3 million for finance costs, investments of $2.9 million in intangible assets, $0.4 million in property and equipment, with $0.4 million of cash consideration paid related to a 2021 acquisition.
Corporate and Other Highlights
- BioPharma signed multiple new contracts totaling approximately $12.8M in future revenue during the third quarter, with these project-based study contracts averaging approximately 12 months in duration and spanning several health disciplines from neurology to oncology to gastrointestinal treatments.
- An Amended and Restated Credit Facility agreement was announced during the quarter with Scotiabank to harmonise the terms of its existing credit facilities with the terms of the credit agreement with Beedie Investments Ltd., including Scotiabank covenant amendments foregoing the testing of certain covenants until December 1, 2022.
- Given Think's Scotia Credit Facility has a term of two years, maturing on September 10, 2023, the total outstanding amount has been reclassified as a current liability on the balance sheet for the period ended September 30, 2022. The Company is in active discussions to renegotiate the terms of the Scotia Credit Facility and anticipates it will be extended beyond its September 2023 maturity date.
Events Subsequent to Quarter End
- On October 14, 2022, Think announced revisions to its deferred consideration payable to the former shareholders of BioPharma, amending certain terms relating to the deferred consideration of $6.5 million owed to the sellers of BioPharma Services Inc.
- On November 22,2022, the Company drew down an additional $3M of its $25M convertible debt facility with Beedie Capital, with a conversion price of $0.43 per share.
(See the note titled "Subsequent events" in Think's September 30, 2022 financial statements)
Selected Financial Information
In thousands of Canadian Dollars |
Three months ended |
Three months ended |
Increase |
Revenue |
18,371 |
10,083 |
82 % |
Net Income |
(6,459) |
(10,828) |
-40 % |
EBITDA |
(2,426) |
(8,349) |
-71 % |
Adjusted EBITDA |
(696) |
(3,403) |
-80 % |
Adjusted EBITDA margin (% of |
-4 % |
-34 % |
|
Basic and diluted EPS |
(0.11) |
(0.24) |
|
In thousands of Canadian Dollars |
Nine months ended |
Nine months ended |
Increase |
Revenue |
57,017 |
28,674 |
99 % |
Net Income |
(20,141) |
(21,453) |
-6 % |
EBITDA |
(8,849) |
(15,959) |
-45 % |
Adjusted EBITDA |
(2,565) |
(6,394) |
-60 % |
Adjusted EBITDA margin (% of |
-4 % |
-22 % |
|
Basic and diluted EPS |
(0.34) |
(0.50) |
Note - Includes 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 and a reconciliation of each non-IFRS financial measure to net loss, the most directly comparable IFRS measure.
Business Outlook
Management is pleased to confirm its annualized fourth-quarter FY2022 run rate of between $84 million and $90 million, or $21 million to $22.5 million for the three months ending December 31, 2022. Management also confirms its annualized fourth-quarter run rate Adjusted EBITDA4 target of between $6 million and $9 million, or $1.5 million to $2.3 million for the three months ending December 31, 2022.
_____________________________ |
Following an active year of acquisitions in 2021, Think has completed nearly a full year of integration of the assets and businesses and believes that a foundation has been set to establish solid go-forward revenue generation and to achieve sustainable profitability. Think plans to grow revenue and improve margins by becoming an increasingly essential data solutions provider for healthcare practitioners globally, with the goal of delivering the best outcomes for patients and compelling returns for shareholders.
To fulfill this objective, Think's operational focus is threefold:
- Expand the user base of current licenses by promoting adoption and usage. Currently, more than 300,000 clinicians, including doctors, nurses and pharmacists, use Think's solutions. As the Company adds more users, it becomes more essential – and more integrated - to health systems and licensees, resulting in 'sticky' revenue that creates obstacles to change.
- Increase per user revenue by increasing the number of content services and data solutions that are adopted and used by a licensed user regularly.
- Monetize licensed users directly, in addition to those acquired through facilities licenses. For example, an opportunity exists to access users through Think's direct-to-user clinical education offerings.
Think believes the outcomes of its operational focus, both in the short and longer- term, will be the generation of organic revenue growth, stronger margins, positive Adjusted EBITDA and lasting enhancements to the Company's financial flexibility and long-term sustainability.
The Company has obtained waivers of covenants under the Beedie Credit Agreement and amendments to the Scotia Credit Facility. Copies of the Credit Agreement and Scotia Credit Facility are available under the Company's profile on SEDAR at www.sedar.com.
Conference Call Notification
Think will be holding a conference call via webcast on November 28, 2022, at 9:00 a.m. EST, hosted by CEO Sachin Aggarwal and CFO John Hayes, with a Q&A session to follow. To register for the conference call, please click here.
Conference call dial-in:
Toronto: 416-764-8659
North American Toll-Free: 1-888-664-6392
Conference ID: 70791013
Subsequent Advance Closed
Further to the Company's press release dated November 21, 2022, the Company is pleased to confirm that it has now closed the second advance of $3 million (the "Second Advance") from Beedie Investments Ltd. ("Beedie Capital"), under the Company's non-revolving term convertible loan facility (the "Convertible Facility"). Under the terms of the Credit Facility, Beedie Capital is not permitted to convert outstanding amounts under the Convertible Facility to the extent it would result in Beedie Capital owning 20% or more of the outstanding common shares of the Company without prior shareholder and TSXV approval. For further information, see the Company's press releases dated November 21, 2022.
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, health care professionals, and 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. Visit: www.thinkresearch.com.
Caution Regarding Forward-Looking Statements
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 Revenue and 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 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 includes but is not limited to: the Company's target revenue and Adjusted EBITDA for the fourth quarter of 2022, the expected revenues to be realized from contracts entered into in fiscal year 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 period ended September 30, 2022 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.
Cautionary Note Regarding 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 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 |
Nine months |
Nine months |
|
$ |
$ |
$ |
$ |
|
Net loss |
(6,459) |
(10,828) |
(20,141) |
(21,453) |
Depreciation and amortization |
3,562 |
1,665 |
10,806 |
3,888 |
Finance costs |
804 |
799 |
2,637 |
1,586 |
Income tax expense (recovery) |
(333) |
15 |
(2,151) |
20 |
EBITDA1 |
(2,426) |
(8,349) |
(8,849) |
(15,959) |
Acquisition, restructuring and other2 |
581 |
2,801 |
2,353 |
4,368 |
Stock-based compensation3 |
1,149 |
2,145 |
3,931 |
5,197 |
Adjusted EBITDA |
(696) |
(3,403) |
(2,565) |
(6,394) |
Notes:
- "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".
- "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.
- "Stock-based compensation" relates to stock-based compensation expense recognized for equity awards issued under the Company's Omnibus Equity Incentive Plan
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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