• Q1 2022 revenue of $41.4 million, compared to $8.8 million in Q1 2021, reflecting a year over year increase of 372%
• Enterprise Health Solutions delivered revenue of $26.0 million; reflecting the first quarter of revenue recognition from MindBeacon
• Q1 2022 gross margin of 32.5%; improvement of 250 basis points compared to the previous quarter

VANCOUVER, British Columbia, May 30, 2022 (GLOBE NEWSWIRE) — CloudMD Software & Services Inc. (TSXV: DOC, OTCQB: DOCRF, Frankfurt: 6PH) (the “Company” or “CloudMD”), a healthcare technology company revolutionizing the delivery of care, announced its financial results for the first quarter ended March 31, 2022. All financial information is presented in Canadian dollars unless otherwise indicated.

“In Q1 we delivered strong performance aligned with a company commitment to generating synergies, profitable execution, and continued growth. Innovation remains a key Company focus with the launch of our newly branded integrated personalized connected health platform, Kii. This is a milestone as we transform the way individuals receive healthcare. We are seeing momentum in client acquisition as Employers recognize the positive impact of our connected health ecosystem, starting with our unique nurse-led in-take. We are providing measurable improvements in employees’ health and wellness and reductions in absenteeism, driving significant return on investment,” said Karen Adams, Interim CEO and President of CloudMD. “As you’ve heard from us repeatedly, we remain focused on cost control, realizing synergies, and profitable execution. We have a strategic plan that focuses on leveraging our core assets, maximizing returns for our clients and shareholders, and achieving sustained profitability.”

First Quarter 2022 Financial Highlights

• Q1 2022 revenue was $41.4 million, compared to $38.7 million in Q4 2021 and $8.8 million in Q1 2021. The growth compared to Q4 2021 is primarily attributable to the consolidation of MindBeacon into CloudMD’s results, organic growth from the Employee Health Solutions (“EHS”) division offset by a decline in Digital Health Solutions (“DHS”) due to Vision Pros supplier issues. The increase compared to Q1 2021 is primarily attributable to organic and acquisition growth from the acquisitions completed in the last 12 months.

• Q1 2022 gross profit margin¹ was 32.5%, compared to 30.0% in Q4 2021 and 40.9% in Q1 2021. The lower year over year gross profit margin was primarily due to revenue mix in the periods. The Company’s online vision care platform and patient support programs are lower-margin businesses and were not in the comparative period. The Company expects its gross profit margin to increase over the course of 2022 with the ongoing efforts to integrate its acquisitions and increase its operational efficiency.
• Net loss in Q1 2022 was $5.6 million or $0.02 per share, compared to a loss of $15.1 million or $0.06 per share in Q4 2021 and a loss of $5.3 million or $0.03 per share in Q1 2021. The year over year increase in net loss was primarily due to additional expenses incurred to support the Company’s growth strategy, including acquisition integration costs. The Company is highly focused on profitable growth and generating positive net profit is a key objective for the Company.
• Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) was a loss of $1.6 million in Q1 2022, compared to a gain of $0.6 million in Q4 2021 and a loss of $1.6 million in Q1 2021. The Company had a step back in the quarter due to the slightly higher run rate costs of MindBeacon which was acquired in January 2022; however, it has have made significant progress towards exceeding the planned acquisition synergies.
• Cash and cash equivalents were $46.9 million as of March 31, 2022, compared to $45.1 million on December 31, 2021. The increase is related to the completion of the MindBeacon acquisition and net cash acquired.

First Quarter and Subsequent Corporate Highlights

• On January 14, 2022, the Company announced the closing of the MindBeacon acquisition, creating one of North America’s most comprehensive integrated health offerings.
• In Q1 2022, CloudMD announced Daniel Lee resigned as CFO and Sean Carr was appointed as Interim CFO. Subsequently, the Company announced Dr. Essam Hamza was resigning effective May 2, 2022, and Karen Adams would be appointed interim CEO. The Board has initiated a process to identify the permanent CEO and CFO.
• On March 3, 2022, the Company announced its new Public Sector division. Operating within EHS, this division will focus on the investments being made in navigation of healthcare, an important part of our organic growth strategy across North America. In addition, this division will manage recently acquired customer contracts awarded from various state, local, and public sector organizations across North America.
• On March 31, 2022, the Company announced its cost optimization and operational integration activities. In a desire to simplify operations and improve execution, the Company eliminated $7.5 million of annualized run-rate costs from its business. This is aligned with the Company’s focus on driving sustainable profitability.
• On May 26, 2022, the Company announced the launch of Kii, Personalized & Connected Care, the new brand identity for its integrated, health services offering. Kii, is the company’s flagship offering which integrates several of its best-in-class technologies and services into one exceptional, connected, and personalized experience for employees that will continue to disrupt the traditional employer healthcare industry.

Outlook

The Company continues to deliver on the value proposition of offering comprehensive solutions that create access to care, leading to better health outcomes. Through its team-based, personalized care approach, CloudMD provides comprehensive solutions to patients, healthcare practitioners, individuals, and enterprise clients through our call center, digitally or in person. The Company has a multi-pronged growth strategy which focuses on organic growth, cost optimization, leveraging of our core assets and accretive mergers and acquisitions.

The Company remains focused on a number of key priorities in 2022 including: (1) Organic growth by continuing to diversify and grow its client base within its EHS and DHS divisions through cross selling capabilities, geographic expansion and providing innovative and best-in-class customer service; (2) Driving continuous operational excellence across the organization to improve productivity, product quality and consistency, and lower customer acquisition costs; (3) delivering a diligent path to profitable financial sustainability and focus on delivering consistent financial performance across all divisions of the organization; and (4) continuing to develop corporate governance to support the Company’s growth.

The Company has a near-term focus on streamlining operations, with a plan to profit from the core and leverage its strength as a leader in the employer health markets. CloudMD is focused on driving profitable growth in the markets where we have scale, and strong differentiators in proven service delivery and that have the most attractive growth and profit potential. As such, the Company will undertake a strategic review of some smaller, non-core assets to determine how best to maximize shareholder value.

The Company will continue to deploy its capital prudently and will make investments that support growth in core areas of the business.

_____________
¹ Gross profit margin is a non-GAAP ratio. Refer to the “Non-GAAP Financial Measures” section of this news release for further information.

Selected Financial Information

All results were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

(In thousands of Canadian dollars, except per share amounts)		Three months ended
		March 31,
		2022			2021		(%)
Revenue	$	41,378		$	8,775		372	%
Cost of sales		(27,912	)		(5,184	)	438	%
Gross profit (1)		13,466			3,591		275	%
Gross margin		32.5	%		40.9	%
Expenses		21,310			9,132		133	%
Loss before other items		(7,844	)		(5,541	)	42	%
Other items, taxes		2,196			251		775	%
Net loss		(5,648	)		(5,290	)	7	%
Loss per share, basic and diluted	$	(0.02	)	$	(0.03	)	(33	%)

(1) Gross profit is a non-GAAP measure as described in the Non-GAAP Financial Measures section of this news release.

(In thousands of Canadian dollars)		Three months ended
		March 31,
		2022			2021		(%)
Net loss	$	(5,648	)	$	(5,290	)	7	%
Add:
Finance costs		497			88		465	%
Income taxes		85			40		113	%
Depreciation and amortization		3,012			689		337	%
EBITDA(1) for the period		(2,054	)		(4,473	)	54	%
Share-based compensation		490			1,595		(69	%)
Financing-related costs		–			749		(100	%)
Acquisition-related and integration costs, net		2,524			812		211	%
Litigation costs and loss provision		2			81		(98	%)
Change in fair value of liability to non-controlling interests		129			–		100	%
Change in fair value of contingent consideration		(2,735	)		(315	)	768	%
Adjusted EBITDA for the period (1)	$	(1,644	)	$	(1,551	)	(6	%)

(1) EBITDA and Adjusted EBITDA are non-GAAP measures as described in the Non-GAAP Financial Measures section of this news release.

First Quarter 2022 Earnings Conference Call

CloudMD invites all interested parties to join the conference call or webinar:

CloudMD Q1 2022 Earnings Call
Date: May 31, 2022
Time: 9:00 am ET (6:00 am PT)

Toll-Free Dial-In Number: (833) 562-0117
International Dial-In Number: (661) 567-1009

Webcast Link: https://edge.media-server.com/mmc/p/2popizyz

Non-GAAP Financial Measures

In addition to the results reported in accordance with IFRS, the Company uses various non-GAAP financial measures and ratios which are not recognized under IFRS, as supplemental indicators of the Company’s operating performance and financial position. These non-GAAP financial measures and ratios are provided to enhance the user’s understanding of the Company’s historical and current financial performance and its prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of the Company’s core operating results and ongoing operations and provide a more consistent basis for comparison between quarters and years. Details of such non-GAAP financial measures and ratios and how they are derived are provided below as well as in conjunction with the discussion of the financial information reported.

Since non-GAAP financial measures do not have any standardized meanings prescribed by IFRS, other companies may calculate these non-IFRS measures differently, and our non-GAAP financial measures may not be comparable to similar titled measures of other companies. Accordingly, investors are cautioned not to place undue reliance on them and are also urged to read all IFRS accounting disclosures presented in the audited consolidated financial statements and the related notes for the year ended December 31, 2021 and 2020.

EBITDA
EBITDA is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. EBITDA referenced herein relates to earnings before interest, taxes, impairment, and depreciation and amortization. This measure does not have a comparable IFRS measure and is used by the Company to assess its 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. 

Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Adjusted EBITDA referenced herein relates to earnings before interest; taxes; depreciation; amortization; share-based compensation; financing-related costs; acquisition-related and integration costs, net; litigation costs and loss provision; loss on sale of subsidiary; and change in fair value of contingent consideration. This measure does not have a comparable IFRS measure and is used by the Company to assess its 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, adjusted for factors that are unusual in nature or factors that are not indicative of the operating performance of the Company. 

Gross Profit
Gross Profit is a non-GAAP financial measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross Profit referenced herein relates to revenues less cost sales. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the business.

Gross Margin
Gross Margin is a non-GAAP financial ratio that has Gross Profit, which is a non-GAAP financial measure as a component. Gross Margin referenced herein is defined as gross profit as a percent of total revenue. This measure does not have a comparable IFRS measure and is used by the Company to manage and evaluate the operating performance of the business.

The following table provides a reconciliation of net loss for the periods to EBITDA and Adjusted EBITDA for the three months March 31, 2022 and 2021:

(In thousands of Canadian dollars)		Three months ended
		March 31,
		2022			2021		(%)
Net loss	$	(5,648	)	$	(5,290	)	7	%
Add:
Finance costs		497			88		465	%
Income taxes		85			40		113	%
Depreciation and amortization		3,012			689		337	%
EBITDA(1) for the period		(2,054	)		(4,473	)	54	%
Share-based compensation		490			1,595		(69	%)
Financing-related costs		–			749		(100	%)
Acquisition-related and integration costs, net		2,524			812		211	%
Litigation costs and loss provision		2			81		(98	%)
Change in fair value of liability to non-controlling interests		129			–		100	%
Change in fair value of contingent consideration		(2,735	)		(315	)	768	%
Adjusted EBITDA for the period (1)	$	(1,644	)	$	(1,551	)	(6	%)

⁽¹⁾ EBITDA and Adjusted EBITDA are non-GAAP measures as described in the Non-GAAP Financial Measures section of this news release.

Stock Options and Restricted Share Units Grant

CloudMD granted 550,000 stock options to acquire 550,000 common shares of the Company to certain officers and directors pursuant to the Company’s stock option plan effective as of market close on June 6, 2022, at an exercise price equal to the 5-day VWAP as of June 6, 2022, for a period of 10 years, subject to vesting requirements and any necessary regulatory approvals. CloudMD also granted 250,000 restricted share units (“RSUs”), plus that number of RSUs equal to $265,375 divided by the greater of the 5-day VWAP and the closing price as of June 6, 2022, to certain directors and officers of the Company pursuant to the Company’s RSU plan effective as of market close on June 6, 2022, each RSU entitling the holder to acquire one common share the Company in certain circumstances, subject to vesting requirements and any necessary regulatory approvals.

About CloudMD Software & Services

CloudMD is transforming the delivery of healthcare using technology and by providing a patient-centric approach, with an emphasis on continuity of care. By leveraging healthcare technology, the Company is building one, connected platform that addresses all points of a patient’s healthcare journey and provides better access to care and improved outcomes. Through CloudMD’s proprietary technology, the Company delivers quality healthcare through a holistic offering including hybrid primary care clinics, specialist care, telemedicine, mental health support, healthcare navigation, educational resources, and artificial intelligence (AI). CloudMD’s business is separated into three main divisions: Clinics and Pharmacies, Digital Solution and Enterprise Health Solutions, the Company’s fastest growing division. CloudMD’s Enterprise Health Solutions Division has built a leading employer healthcare solutions, including its Comprehensive Integrated Health Services Platform, which offers one comprehensive, digitally connected platform for educational institutions, corporations, insurers, and advisors to better manage the health and wellness of their students, employees, and customers.

CloudMD currently services a direct ecosystem of over 5,700 clinicians including, 1,800+ mental health practitioners, 1,600+ allied health professionals, 1,400+ doctors and nurses and covers 12 million individual lives across North America. For more information visit: https://investors.cloudmd.ca.

ON BEHALF OF THE BOARD OF DIRECTORS

“Karen Adams”
Interim Chief Executive Officer

FOR ADDITIONAL INFORMATION, CONTACT:

Julia Becker
VP, Investor Relations
[email protected]
(604) 785-0850

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 release.

Forward Looking Statements

This news release contains “forward-looking statements” and “forward-looking information” within the meaning of Canadian securities laws. Forward-looking statements in this news release include, but are not limited to, statements regarding: the new Public Sector division; key focuses in 2022; deployment of strategic capital and the impact of integration of its acquisitions; and options to recover amounts owed to the Company in connection with the acquisition of VisionPros. These statements are based upon information currently available to CloudMD’s management. All information that is not clearly historical in nature may constitute forward‐looking statements. In some cases, forward‐looking statements may be identified by the use of terms such as “forecast”, “assumption” and other similar expressions or future or conditional terms such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and “should”. Forward-looking statements contained in this news release are based on certain factors and assumptions made by management of CloudMD based on their current expectations, estimates, projections, assumptions and beliefs regarding their business and CloudMD does not provide any assurance that actual results will meet management’s expectations. While management considers these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. Such forward‐looking statements are not guarantees of future events or performance and by their nature involve known and unknown risks, uncertainties and other factors, including those risks described in the Company’s MD&A (which is filed under the Company’s issuer profile on SEDAR and can be accessed at www.sedar.com), that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. Although CloudMD has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward‐looking statements, other factors may cause actions, events or results to be different than anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such forward‐looking statements. Accordingly, readers should not place undue reliance on forward‐looking information. CloudMD does not undertake to update any forward-looking information, whether as a result of new information or future events or otherwise, except as may be required by applicable securities laws.