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spk04: Greetings and welcome to 4E and Inc.' 's first quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. On the line from 4E today, we have Max Ligott, Executive Chairman, Co-Founder, Daniel Barton, Chief Executive Officer, Clifford Farron, Chief Financial Officer, Adam Dublin, Chief Strategy Officer, Co-Founder, Edward Spaniel, Executive Vice President and General Counsel. Before we begin, I'd like to remind you that management's marks on this call may contain forward-looking statements within the meaning of the private securities litigation reform act of 1995. Our actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the risk factor section of our form 10-K, followed by the Securities and Exchange Commission. Any forward-looking statement made on this call represents our views only as of today, and we undertake no obligation to update them. Words such as estimates, project, expect, anticipate, forecast, plans, intend, believe, seek, may, will, should, future, propose, and variations of those words or similar expressions or versions of such expressions are intended to identify forward-looking statements. These statements included but are not limited to statements regarding future growth or prospects. We will also refer to certain non-GAAP financial measures on today's call, such as adjusted EBITDA, which we believe which we believe may be important to investors to assess our operating performance and should be considered a supplement to and not a substitute for financial measures prepared in accordance with GAAP. A reconciliation of the comparable GAAP metric can be found in today's press release, which is available on our website. I remind you that these numbers are unaudited and may be subject to change, including risks related to changes in the cannabis market and risks related to the impact of the COVID-19 pandemic. These risk factors are more fully described in our current funds for the Securities and Exchange Commission. This morning's call is being recorded. A copy of the recording as well as a full transcript and copies of today's press release and SEC funds will be available at forian.com slash investors. I am now pleased to introduce our Executive Chairman, Max Weigod.
spk00: Thank you. Good morning, everyone, and welcome to Forian's first earnings call as a NASDAQ publicly traded company. We would like to thank all of our shareholders for their support and express our appreciation for the belief that they have demonstrated in Forian's mission and the business combination of Helix and Moore Analytics. The success of the transaction enables us to further execute on our vision to be the most trusted source of technology and mission-critical analytics for the emerging cannabis market while building innovative solutions for customers across the healthcare market. Forian is now uniquely positioned to generate significant value for traditional healthcare and cannabis companies as well as those seeking to operate at the intersection of the healthcare and legal cannabis markets. For traditional healthcare companies, Forian delivers data-driven commercial and clinical information solutions based on years of experience across the industry to improve business and clinical performance. In the legal cannabis market, Forian is a trusted leader in point of sale, seed to sale, cultivation, and traceability technologies. As the use of alternative therapeutics, including cannabinoid-based therapies, continues to grow and become more widely accepted, the understanding of how these alternative therapies impact clinical outcomes, standards of care, cost efficiency, and quality of life will be required to successfully integrate these new therapies into patient journey and achieve acceptance and adoption for patients, providers, and payers. Forian's offerings deliver unique and unparalleled insights for the companies operating at the intersection of traditional and emergent therapeutics, enhancing their ability to understand, optimize, and measure customer needs, the clinical value of their products, and the dynamics of a rapidly evolving marketplace. As the legal market continues to expand rapidly, consolidate, and mature at an estimated 20% compounded annual growth rate, the competitive differentiation of players across the industry will require more sophisticated technology and analytic solutions. Retailers, cultivators, and manufacturers require an improved understanding of their customers, products, and the markets in which they operate or intend to operate. Leveraging these technologies will allow the legal cannabis market to drive product innovation, competitive differentiation, and responsible commercial growth. Forient possesses the technology, proprietary, integrated data sets, data science, and domain expertise to drive both commercial and clinical performance for customers across the cannabis and healthcare industries. We are excited to bring groundbreaking products to market and become leaders in these large and growing markets. We have assembled a team with unrivaled experience and proven success in our market segments, all of which are committed to long-term financial success. I will now turn the call over to our CEO, Dan Barton.
spk02: Thanks, Max. Before I start with my prepared remarks, I would like to thank all of our tremendously talented employees who have quickly adapted to new working conditions in a very challenging environment due to the pandemic, while simultaneously merging two businesses together. Our success is the result of their efforts, and we look forward with confidence, thanks in large part to our team. I'd like to cover a couple of topics today. First, I will provide a brief summary of our product portfolio and how we are positioned for growth. Second, I will outline our major priorities for the year. The foundation of our business is built upon our proprietary databases and technologies. Driven by data science, we are developing intelligent technologies that deliver innovative and disruptive solutions. Our technologies are designed to service the needs of multiple market segments, and our database delivers near real-time information at industry-leading scale. We have developed an integrated HIPAA-compliant repository of longitudinal de-identified healthcare data consumer demographic information, lifestyle and behavioral data representing the majority of U.S. healthcare patients, providers, and payers. That is coupled with one of the largest cannabis transactional databases of the U.S., covering over 10 million cannabis consumers. These integrated and interoperable data are used to power our product portfolio. Our products assist our customers in better understanding the value and efficacy of both healthcare and cannabis products. while providing critical business insights into clients' products, services, customers, and the dynamics of a rapidly changing marketplace. Turning to an overview of three of our information and software products, our healthcare-centric information products are primarily leveraged by life science and provider clients, providing them with comprehensive coverage of the U.S. healthcare market coupled with a view across the healthcare continuum which depicts a more complete patient journey through the inclusion of alternative therapies. By leveraging HIPAA-compliant de-identification processes, proprietary algorithms, sophisticated data management and technology, we have integrated normalized data that historically has been siloed and unstructured on various platforms. Because of our ability to integrate this disparate and often unstructured information, our customers are able to develop more robust insights into their clinical offering and to become more competitive in their commercial efforts. BioTrac is a vertically integrated, SOC-compliant, point-of-sale cultivation and processor software solution for the cannabis industry. First introduced in 2010, it is among the largest, most tenured, trusted, stable and secure technology platforms in the cannabis industry. Serving over 2,300 dispensaries, cultivators, manufacturers and distributors in 38 states and Puerto Rico, BioTrak's point of sale software has been used to administer approximately 20 billion of legal cannabis transactions since 2010. The integration of 4EN's expertise in data science and massive proprietary databases will drive product innovation, leading to more intelligent, efficient, and effective technology, which in turn will drive business performance improvements for our customers. Canalytics is a foreign SaaS-based analytics platform built on machine learning algorithms that provides our dispensary and manufacturing clients with a comprehensive, customized, and flexible business intelligence tool to evaluate their customers, outlets, employees, products, and markets to optimize business performance. Canalytics enables dispensaries across the legal cannabis industry to better attract and retain customers, manage inventory, purchase, distribute, price, and invest in products. and understand complete marketplace dynamics. Forian has been investing in the Canalytics platform since its inception in 2019. In our next generation Canalytics 2.0 offering, we will provide Forian's proprietary technology to further our integrated healthcare cannabis data assets and give our cannabis clients a more holistic view of their product, customer, and marketplace dynamics. We are excited to be able to bring this product to BioTracks customers. Additionally, we will be releasing custom versions of the platform for cultivators, processors, and regulators. I'd like to now turn to discussing three of our services offerings, government traceability, real-world evidence solutions, and data management solutions. FOREAN's traceability platform, running in nine states, including Puerto Rico, manages the tracking and tracing of all cannabis products from cultivation to their eventual sale at retail. As legalization at the state level in the United States continues, seed-to-sale tracking will be the foundational compliance tool used by governments to regulate the legal cannabis market. The government traceability and enforcement monitoring system includes all the components needed to ensure transparency and accountability through the entire cannabis supply chain. Our real-world evidence solutions assist customers seeking to understand the safety, efficacy, and cost effectiveness of traditional, alternative, and emerging therapies. Our solutions integrate otherwise unconnected, unstructured, and disparate data to enable near real-time surveillance of adverse events and to study the clinical, economic, and social impacts of various therapeutic alternatives, like those derived from cannabinoids. First-of-its-kind clinical-grade observational research can be conducted to evaluate the impact of emerging therapies on patient outcomes and as alternatives to or concomitant use with existing therapy. Our customers will understand the therapeutic value by condition of various products, dosages, and formulations and gain insight into how to best develop, position, and market products that offer empirical healthcare benefits based on evidence and not conjecture. Government customers can extend their focus from transparency and compliance to include surveillance relating to cannabis-related adverse health events and product safety as well as the economic, and social equity benefits associated with the utilization and sale of cannabinoid-based products in their states. Our data management solutions enable customers to turn raw, transactional, non-standard data into actionable insights. Customers can leverage their proprietary data independently or integrated with foreign proprietary data assets. As there is no industry-wide standards for data capture, storage, structure, product classification, or product ontologies, Customers are challenged in generating accurate and meaningful analytics. FORIEN's data management solutions clean, standardize, normalize, enhance, and deduplicate customer data, enabling integration with FORIEN and other third-party data to maximize the utility and accuracy in analytics, all while ensuring customer privacy and regulatory compliance. We are developing proprietary customer product and dispensary master files that enables superior analytics and can set the standard for how the industry captures and codifies data relating to cannabis-related transactions. Now I would like to share with you our key priorities for the year. In 2021, our priorities are to invest in our growth by, one, developing innovative and groundbreaking products, two, delivering exceptional service to our clients, three, ensuring continuous operational improvements, and four, creating a culture that attracts and retains best-in-class talent. First, our product development initiatives are focused on BioTrack, Canalytics, and our traceability offerings. For BioTrack, we are enhancing the user experience and adding features and functionality to the software. As mentioned before, 4N is launching a next-generation version of Canalytics later this year, which will demonstrate the power of leveraging the technology, data science, and proprietary data coming together from both organizations. Our traceability offerings will be enhanced through sophisticated patient registries, adverse event surveillance solutions, and product quality, safety, and efficacy measurements. Second, client success is a top priority, and as such, we are investing in technology, processes, and human capital to provide unparalleled customer service, differentiate our business, and optimize customer acquisition and retention. Critical infrastructure integration activities, such as building out our financial, HR, and operational systems are well underway, and the first phases are expected to be completed in this calendar year. Finally, we have and will continue to add, as Max said, some of the best talent across industries to improve performance, drive growth, and realize our vision. We're investing in people to help drive the key priorities I just outlined, as well as to bolster our marketing and sales capabilities. Now that I've given you some background on the business and our key upcoming priorities, I'd like to introduce our CFO, Cliff Farren, to detail our Q1 performance results.
spk01: Thanks, Dan. Today, I would like to provide an overview of our financial results and key business metrics for 4IN's first quarter, ended March 31, 2021. As previously disclosed in our SEC filings, 4IN completed the business combination of Helix and more analytics on March 2nd, 2021. The press release just issued presents Forian's first quarter 2021 financial results on a gap basis as well as a pro forma financial results for the quarter as if the results of Helix were included for the entire quarter in each period. We have also disclosed adjusted EBITDA, which management uses as a measure to track the performance of the business. The press release includes a detailed reconciliation of these measures. We report our business in three segments. The information and software revenue segment is comprised of BioTrak and Canalytics software solutions, as well as our information product offerings. The services segment is comprised of the BioTrak government traceability, real-world evidence, and data as a service capabilities. The other revenue segment is comprised of digital marketing platform services and remote digital security monitoring. We had consolidated revenue of $1.6 million in the quarter, an increase of over $1.5 million versus the prior year. The growth was driven by the inclusion of Helix results for the last 29 days of the quarter, which contributed two-thirds of the increase. and year-over-year growth in the company's products, which contributed a third of the increase. On a pro forma basis, revenue was $3.8 million, growing 22% year-over-year. This was driven primarily by the information and software segment, which grew 26% versus the prior year quarter. Loss from operations widened by $4.4 million year-over-year, to $5.1 million, primarily due to investments in product development, customer service, operational improvements, and human resources. The loss from operations for the quarter includes transaction expenses related to the Helix acquisition of $1.2 million. Also of note, the $.9 million stock compensation expense for the quarter represents less than one month of expense as equity grants were issued to new hires and key helix management after we became publicly traded on March 3rd. Pro forma adjusted EBITDA loss for the quarter was $2.8 million. After adjusting for transaction costs and certain other non-cash costs and other items. These results are in line with our planned investment over the last four quarters and included doubling in the size of our sales teams, as well as additional data factory production resources. We also invested in building out our next generation SAS analytics platform and reference data assets, as well as additional delivery and customer support capabilities. As noted earlier, a reconciliation of our net loss to adjusted EBITDA along with an explanation of the reconciling items is included in today's earnings release. First quarter 2021 was an active period for the company. In addition to completing the merger transaction, we further strengthened our balance sheet by raising $12 million of incremental capital just after the quarter concluded. While we are not providing forward-looking guidance at this time, we are seeing meaningful growth in our pipeline. In particular, customer interest in our information product offerings provides us with confidence in the growing revenue opportunity. I will now turn it back to Dan.
spk02: Thanks, Cliff. In summary, first quarter results were in line with our expectations. We are excited by the growth opportunities in our addressable markets. By making strategic investments in our products, customer service, infrastructure, and most importantly in our employees, I am confident we will be able to accelerate innovation, drive rapid growth in our revenue and profitability, drive deeper customer penetration with disruptive new products, and deliver exceptional value to our customers. At this point, I will turn the call over to the operator, who will open the line for questions.
spk04: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touch-tone telephone. If your question has been answered or you wish to move yourself from the queue, please press the pound key. While we're waiting for questions to come in the queue, I'll turn the call back to Dan Bard to answer some questions that came through the email.
spk02: Thank you. First, we have a question if the company plans to file its 10Q today, and we do. Our filing is complete. and we are waiting for our auditors to wrap up their confirmatory procedures. Assuming that process completes today, and we do, we will be filing our 10Q. The next question was, how do we see COVID affecting Forian? As the impact of COVID-19 declines, we expect that sales and operations will revert back to pre-COVID trajectories. We saw in healthcare longer sales cycle with both large and small companies, and This was due in large part to their focus on conservative cash management. The recent momentum in our pipeline indicates the return to more normal customer buying patterns in this segment. In the cannabis market, we saw most customers classified as essential businesses and saw them continue to grow, but we also saw dispensaries in locations dependent on tourism that struggled. Some of the lasting impacts of COVID are the advancement of non-personal promotion and services, such as online ordering. And in addition, we think that across the board, the importance of customer retention is heightened and that the need for accurate analytics has begun top of mind as clients start spending more with ancillary products in a growing competitive space. And finally, what provides foreign confidence in growing revenue opportunities? As mentioned in the prepared remarks, We shared that one of the reasons we believe that we are well poised for growth and revenue this year is our emerging pipeline. We have and are continuing to invest in our sales and marketing efforts. This investment to date has yielded a pipeline that is growing meaningfully each month. Based on our pipeline coverage, we feel positive about revenue growth going forward. At this point, I will turn it back to the operator for any additional questions.
spk04: Our first question comes from Gerard Hayman with RBC.
spk03: Gerard Hayman Hello, gentlemen. Congratulations on your merger and your first quarter earnings. Very exciting. Thank you. I have one quick question, and it's with the implementation of the four points that you mentioned earlier in this call. How do you estimate your growth prospects for the next year and also into the future?
spk02: Thank you for the question. As you rightly pointed out, we have a well-defined strategy and some of the execution points that I mentioned earlier are key to our success, both in the near and the long term. While we're not providing forward-looking guidance at this time, we believe that the pipeline that I mentioned is growing. We're seeing larger contracts in the healthcare segment and multi-year contracts. So we feel very good about our ability to grow the business in the short and long term.
spk03: Thank you very much.
spk04: Again, ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touchtone telephone. And I'm not showing any further questions at this time, so this does conclude today's presentation. You may now disconnect and have a wonderful day.
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