Mednow Achieves Record Q3 2023 Financial Results with Quarterly Revenue of $12.8 Million; 13% Q/Q Revenue Growth and 105% Y/Y Revenue Growth; Continues to Focus on Core Virtual Pharmacy Growth and Cost Reductions
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Q3’23 revenue increased approximately
13% Q/Q quarter-over-quarter to , and approximately$12.8 million 105% year-over-year; -
Core Virtual Pharmacy patient count increased quarter over quarter, growing by more than
9% to ~8,000 in Q3’23 versus ~6,900 in Q2’23; - New business partnerships signed, including Mednow’s partnership with Medcan
Operational highlights focus on increased growth in core virtual pharmacy and virtual pharmacy services
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Virtual Pharmacy Growth: Strong base developed in the “build phase” and now ready to pursue large partnership launches;
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Annualized monthly revenue for virtual care pharmacy and Medvisit grew in May 2023 to
on an annualized basis.$4.7M
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Annualized monthly revenue for virtual care pharmacy and Medvisit grew in May 2023 to
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User growth has been strong with Mednow app registrations at 17K and pharmacy patients of 8K as of May 2023 (up approximately
700% from 1K pharmacy patients in January 2022); - Gross margin expansion roadmap includes a focus on higher margin: chronic conditions, virtual clinical services, non-prescription sales and regularly scheduled subscription drug sales, all coupled with high customer retention.
The pharmacy industry is ready for a change to digital pharmacy
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Pharmacy is a large “offline” industry
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Canadian pharmacy market(1), has a relatively small penetration rate online today based on management estimates;$47 billion dollar -
Canada has a favorable competitive environment for virtual pharmacy; and -
The
U.S. already has large virtual pharmacy players (2)
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in annual costs to the Canadian health care system from$4 billion 5% of emergency room and physician visits due to drug non-adherence(3) -
20% of family doctors are anticipated to retire in the next 5 years inToronto (4) - 6.5 million Canadians without a family doctor(5)
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28% of Canadians believe health care is in crisis compared to10% one decade earlier(6) -
48% of Canadians are dissatisfied with health care system(7)
Business-to-Business focus
Driven by a convergence of factors, there has been an increase in demand for virtual pharmacy partnerships from payors and providers, including insurance companies, union groups, employers, and medical service providers. We believe escalating drug costs, which constitute the largest portion of health benefit expenditure (8), have prompted payors to seek cost-containment strategies and greater transparency. Mednow Pharmacy, with its partnerships and positive patient reviews, believes it is positioned to address these needs, considering its differentiated patient and technology experience.
In March 2022, Mednow released its new patient app into the market with a focus on business and doctor clients. In just over a year since its release, Mednow for Business has secured partnerships with groups that service over 500,000 lives, making Mednow the preferred virtual pharmacy for these individuals. With an average patient spend of over
Although business-to-consumer marketing was part of Mednow’s expenses in 2022 while it was building its technology and establishing its brand, since late 2022 and for 2023 Mednow has solely been focused on patient growth from business-to-business partnership development.
Virtual pharmacy services for providers and patients
Medical clinics and providers are increasingly seeking ways to reduce administrative burdens associated with prescription management, including medication reconciliations and refill requests, while moving away from outdated communication methods such as faxes with pharmacies. Mednow's technology-enabled pharmacy focuses on addressing these challenges and aims to empower medical clinics to focus more on patient care.
Mednow aims to supplement the clinical support provided by prescribers to their patients. For example Mednow’s Virtual Diabetes Program in partnership with Dexcom, ensures that allied health care professionals’ diabetic patients have access to the best practices when it comes to medication adherence and disease state education.
Our recent partnership announcement with Medcan, one of
Further, we believe that our services play a vital role in bridging the healthcare gap in
Technology investments and roadmap
Since the launch of our app in the spring of 2022, Mednow has introduced features such as Dependents and Single Sign-On, enhancing the pharmacy experience for our customers. Moving forward, we remain committed to investing in software development. Over the next 12 months, we plan on focusing on the expansion of our over-the-counter product offerings and providing white-labeled storefronts for other businesses to sell their products, with Mednow acting as a trusted fulfillment partner.
As part of our commitment to advanced technology, Mednow currently utilizes artificial intelligence (“AI”) in our fulfillment processes through PAC vision—a machine that employs photo analysis to identify pills in medication packages, helping prevent medication errors and increasing central fill efficiency. Looking ahead, we are exploring the use of AI, both internally developed and through strategic partnerships, in areas such as off-hours non-medical triaging, drug claims analysis, and medication adherence. The inclusion of AI in healthcare represents an exciting frontier, and Mednow's tech-enabled pharmacy platform positions us to efficiently adopt AI solutions.
Lastly, Mednow aims to expand its capabilities by enabling third-party pharmacies to serve as local last-mile fulfillment partners. With already 70+ partnerships in place, Mednow boasts a large pharmacy network to complement its online offering. Mednow believes that this digital-first and robust national fulfillment infrastructure will be competitive as more and more businesses look for virtual pharmacy partners.
Key Financials
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Revenue increased by
13% quarter-over-quarter, to during the three month period ended April 30, 2023, driven primarily by sales from the Company's Pharmacy operating segment.$12,785,913 -
Pharmacies based in
British Columbia ,Manitoba ,Ontario andNova Scotia collectively generated revenue of , as compared to$12,264,903 in the prior year’s comparative period.$5,712,574 -
Revenue generated by doctor services was
as compared to$469,536 in the prior year’s comparative period.$486,924
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Pharmacies based in
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Gross margin for the quarter increased approximately
21% year-over-year to , as compared to$1,484,859 in the prior year’s comparative period.$1,232,876 -
EBITDA for the period was a loss of
, as compared to a loss of$3,133,142 in the prior year’s comparative period, representing an increase in EBITDA of$5,056,149 compared to the prior comparative period.$1,927,007 - The change is primarily due to the increase in gross profit, resulting from higher revenues during the period, and a decrease in share-based compensation expenses, a decrease in marketing costs, and a decrease in headcount, partially offset against general and administrative expenses, which are corporate costs, such as technology.
- EBITDA is a non-IFRS financial measure and has been adjusted for certain items. Refer to the disclosure under the heading “Definitions of Certain Non-IFRS Financial Measures” for more information on this non-IFRS financial measure.
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Adjusted EBITDA for the quarter was a loss of
, as compared to a loss of$2,881,447 in the prior year comparative period, representing an increase in adjusted EBITDA of$4,285,204 .$1,403,757 - Adjusted EBITDA is a non-IFRS financial measure and has been adjusted for certain items. Refer to the disclosure under the heading “Definitions of Certain Non-IFRS Financial Measures” for more information on this non-IFRS financial measure. The composition of Adjusted EBITDA has changed from the comparative period to the current period discussed herein, as explained further under the heading “Definitions of Certain Non-IFRS Financial Measures - Reconciliation of Non-IFRS Financial Measures.”
Summary of Financial Results
Below is a summary of each operating segment's performance for the three-month period ended April 30, 2023 and 2022.
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For the three months ended April 30, |
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2023 |
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Pharmacies |
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Doctor Services |
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Mednow Inc. |
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Total |
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Revenue |
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|
|
|
|
|
|
|
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Cost of sales |
|
10,938,695 |
|
351,976 |
|
10,383 |
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11,301,054 |
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General and administrative |
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2,335,953 |
|
194,215 |
|
1,910,094 |
|
4,440,262 |
|
Share based compensation |
|
— |
|
— |
|
183,638 |
|
183,6387 |
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Marketing and sales |
|
— |
|
867 |
|
4,327 |
|
5,914 |
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Depreciation |
|
335,403 |
|
6,496 |
|
306,607 |
|
648,506 |
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Income tax expense |
|
57,562 |
|
— |
|
— |
|
57,562 |
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Other amounts in loss |
|
97,154 |
|
590 |
|
76,409 |
|
174,153 |
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Net loss |
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For the three months ended April 30, |
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2022 |
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Pharmacies |
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Doctor Services |
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Mednow Inc. |
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Total |
Revenue |
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|
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|
|
|
|
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Cost of sales |
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4,633,414 |
|
367,034 |
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7,574 |
|
5,008,022 |
General and administrative |
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1,308,767 |
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236,419 |
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3,425,488 |
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4,970,674 |
Share based compensation |
|
— |
|
— |
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612,713 |
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612,713 |
Marketing and sales |
|
867 |
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1,362 |
|
891,916 |
|
894,145 |
Depreciation |
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261,765 |
|
7,293 |
|
305,128 |
|
574,186 |
Income tax expense (recovery) |
|
— |
|
— |
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(134,353) |
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(134,353) |
Other amounts in loss |
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— |
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— |
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(9,927) |
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(9,927) |
Net loss |
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Source: Mednow’s MD&A as of April 30, 2023 |
RECONCILIATIONS OF NON-IFRS MEASURES |
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Three months ended April 30, |
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Nine months ended April 30, |
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2023 |
2022 |
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2023 |
2022 |
Net loss and comprehensive loss for the period |
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$ (5,674,562) |
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$ (12,859,224) |
$ (16,187,042) |
Interest expense |
131,246 |
44,227 |
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364,341 |
59,031 |
Interest expense on convertible debenture |
54,000 |
— |
|
54,000 |
— |
Depreciation and amortization |
648,506 |
574,186 |
|
2,035,022 |
970,834 |
Current income tax expense |
57,562 |
— |
|
144,947 |
— |
EBITDA1 |
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$ (5,056,149) |
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$ (10,260,914) |
$ (15,157,177) |
Loss on investment in equity securities |
— |
28,392 |
|
— |
117,558 |
Share-based compensation |
183,638 |
612,713 |
|
862,754 |
3,178,535 |
Acquisition costs |
— |
129,840 |
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11,400 |
217,492 |
Severance expenses |
— |
— |
|
250,000 |
— |
Accretion expense on convertible debenture |
57,113 |
— |
|
57,113 |
— |
Change in FV of derivative liability |
10,944 |
— |
|
10,944 |
— |
Loss on disposal of assets and leases |
— |
— |
|
183,399 |
— |
Adjusted EBITDA1 |
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$ (4,285,204) |
|
|
$ (11,643,592) |
1 EBITDA and Adjusted EBITDA are non-IFRS financial measures and have been discussed in the section Definitions of Non-IFRS Financial Measures. |
DEFINITIONS OF CERTAIN NON-IFRS FINANCIAL MEASURES
This press release discloses certain non-IFRS financial measures which are defined below (including non-IFRS financial measures for prior year comparative periods). Non-IFRS financial measures are not standardized financial measures under IFRS. As such, these measures may not be comparable to similar financial measures that are disclosed by other companies. These measures include “EBITDA” and “Adjusted EBITDA”. These measures are provided as additional information that is disclosed to provide further insight into the Company's results of operations from management's perspective. These measures should not be reviewed and assessed as a substitute for financial information reported under IFRS. A reconciliation of the non-IFRS measures to the IFRS measure is in the section "Selected Financial Information".
EBITDA and Adjusted EBITDA
EBITDA represents net loss and comprehensive loss for the period before interest expense, income taxes, and depreciation and amortization expenses. Adjusted EBITDA represents net loss and comprehensive loss for the period before interest expense, income taxes, depreciation and amortization expenses, loss on investment in equity securities, share-based compensation expense, acquisition costs incurred, asset impairment charges, the fair value remeasurement of the note receivable from Doko and severance expenses. These adjustments to calculate the non-IFRS measures of EBITDA and Adjusted EBITDA are for items that are not necessarily reflective of the Company’s underlying operating performance. As there is no generally accepted or standard method of calculating EBITDA, these measures are not necessarily comparable to similarly titled measures reported by other issuers. EBITDA and Adjusted EBITDA are presented as management believes it is a useful indicator of the Company’s relative financial performance. These measures should not be considered by an investor as an alternative to net income or other IFRS financial measures as determined in accordance with IFRS.
The Company presents EBITDA and Adjusted EBITDA to indicate ongoing financial performance from period to period, including comparative prior year periods.
Reconciliation of Non-IFRS Financial Measures
The most directly comparable financial measure to EBITDA and Adjusted EBITDA that is disclosed in the Company’s financial statements is net loss and comprehensive loss. The following are reconciliations of net loss and comprehensive loss to EBITDA. The adjustments include:
- The amortization and depreciation expenses of intangible assets, fixed assets, and the right-of-use assets of the Company.
- The net interest expenses, which primarily includes interest expense on the Company's credit facility and interest expense and interest income recorded in accordance with IFRS 16.
- The underlying income taxes recorded.
The following are reconciliations of EBITDA to Adjusted EBITDA. The adjustments include:
- The loss on investment in equity securities in connection with the Company's investment in Life Support.
- The share-based compensation expense recorded by the Company in connection with the stock option plan.
- The acquisition costs incurred by the Company.
- The asset impairment charges recorded by the Company as part of its annual impairment test of goodwill and intangible assets.
- The fair value remeasurement of the promissory note with Doko.
- The severance expenses incurred by the Company.
The composition of Adjusted EBITDA has changed from prior comparative periods disclosed herein. Information on the reason for the change is incorporated by reference to the Company’s Management Discussion and Analysis (“MD&A”) for the three month period ended October 31, 2022. The information can be found in the MD&A under the heading “Definition of Certain Non-IFRS Financial Measures - Reconciliation of Non-IFRS Financial Measures.” The Company’s MD&A is available on SEDAR at www.sedar.com under the Company’s profile.
The exclusion of certain items in calculating the non-IFRS measures does not imply that they are non-recurring, infrequent, unusual or not useful to investors.
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IBISWorld, Pharmacies & Drug Stores in
Canada , 2020; this figure represents the total amount spent on this industry inCanada in 2019 - https://www.forhims.com/; https://www.capsule.com/; https://alto.com/
- https://add.albertadoctors.org/issues/september-october-2018/sponsored-article-2/
- https://www.cbc.ca/news/canada/toronto/family-doctors-quitting-toronto-survey-shows-1
- https://healthydebate.ca/2023/03/topic/millions-adults-lack-canada-primary-care
- https://policyoptions.irpp.org/magazines/may-2023/canadian-healthcare-system-crisis-survey/.
- https://www.ctvnews.ca/health/less-than-half-of-canadians-are-satisfied-with-provincial- health-care-survey-1.6346995
- https://innovativemedicines.ca/wp-content/uploads/2022/11/2022CostDriversReporFINwithLinks.pdf
- CIHI National Health Expenditure, 2019
About Mednow Inc.
Mednow (TSXV: MNOW) (OTCQX:MDNWF) is a healthcare technology company offering virtual access with a high-standard of care. Designed with accessibility and quality of care in mind, Mednow provides virtual pharmacy and telemedicine services as well as doctor home visits through an interdisciplinary approach to healthcare that is focused on the patient experience. Mednow’s services include free at-home delivery of medications, doctor consultations, a user-friendly interface for easy upload, transfer, and refill of prescriptions, access to healthcare professionals through an intuitive chat experience and the specialized PillSmart™ system that packages prescriptions in easy-to-use daily dose packs, each labeled with the date and time of the next dose.
To learn more, follow Mednow on Facebook, Twitter, LinkedIn, and Instagram, or visit our website at www.mednow.ca/.
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.
Cautionary Note Regarding Forward-Looking Statements:
This release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. All statements in this news release, other than statements of historical facts, including statements regarding future estimates, plans, objectives, timing, assumptions or expectations of future performance, including without limitation, that Mednow expects operate in regions in
Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as “intends” or “anticipates”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “should”, “would” or “occur”. Forward-looking statements are based on certain material assumptions and analysis made by the Company and the opinions and estimates of management as of the date of this press release,
including that Mednow will operate in regions in
These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Important factors that may cause actual results to vary, include, without limitation that Mednow will not operate in regions in
Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The Company does not undertake to update any forward-looking statement, forward-looking information or financial out-look that are incorporated by reference herein, except in accordance with applicable securities laws.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230630044157/en/
Investor Relations:
Lorraine Cardenas
ir@mednow.ca
1.855.686.6300
Source: Mednow Inc.