MCI Onehealth Technologies Inc.

Good afternoon. Thank you for standing by and welcome to the MCI One Health Technologies Inc. First Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, CEO Alex Dobranowski. Thank you. Please go ahead, sir.

Thank you, operator, and good afternoon, and welcome everyone to MCI One Health 2021 First Quarter Financial Results Conference Call. I'm Alexander Dobranowski, the Chief Executive Officer, and joining me today on the call is Scott Nierimbierski, our Chief Financial Officer, and Fernando Maslin of Investor Relations. We truly appreciate everyone for joining today, and we hope that everyone has remained as safe and healthy as possible during this ongoing third wave of the pandemic, and that you've also had some time today to enjoy the wonderful weather in southern Ontario. Our financial results press release is now available online, and I encourage everyone to download a copy of our interim first quarter consolidated financial statements, and they should be on cedar.com shortly. Other than historical performance, our discussion today may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Your caution not to place undue reliance on these forward-looking statements would reflect our opinions only as of the date of this presentation. These forward-looking statements involve risks both known and unknown, assumptions and other factors, many of which are outside of MCI One Health's control, that may cause the actual results, performance, or achievements of MCI One Health to differ materially from the anticipated results or achievements implied by such forward-looking statements. I'd like to start today's call by providing some overarching commentary on the quarter and also provide some key highlights. I'd then like to go into further detail on our vision, our strategy, and our plan of execution. After which, our CFO, Scott Mierimbierski, will provide a comprehensive financial summary of our first quarter 2021 results, plus add further detail on the overall outlook of each of our core business competencies. After this, we'll have some time for a question and answer period. I'm excited and pleased to share that MCI One Health had a very productive first quarter, and we are ahead of schedule on execution and ahead of our targeted numbers. Apart from achieving strong quarterly revenue, we also completed a number of important objectives that in combination accelerate both our clinical and technology roadmaps. To expand, we closed the acquisition of Pure Health, an innovative technology company that harnesses clinical data to help screen for patients with rare and complex diseases. This acquisition accelerates the development of and brings artificial intelligence technology under our banner and further highlights our capabilities of being able to execute on our clinical data and precision medicine strategy. Plus, it exemplifies our capabilities of commercializing clinical information insights. Now, further to this, we completed three important investments, all targeted at companies that complement our strategy and also opens the door to exciting commercial partnerships and compelling commercial synergies. These include investments in Acorn Biolabs, a genomic data and cryo-storage biotechnology company, Aerial Precision Medicine, a technology company that helps predict disease and disease outcomes and also assists in the development of novel therapeutics, And Regen Scientific, a cutting-edge clinic that specializes in delivering innovative services at the forefront of regenerative and personalized medicine, a company founded by Dr. Robert Francis, the founder of MedCan, who has also joined our advisory board. Now, from a revenue perspective, I'm very pleased to share that MCI One Health completed the first quarter with solid results. If we continue to achieve strong quarterly revenue with revenue recovery from the pandemic pressure experienced in 2020, we are now within 4% of our pre-COVID revenue run right. A theme that has continued with regards to enabling our revenue recovery has been the ongoing adoption of telehealth and virtual care, whereas our doctors completed over 84,000 telehealth and virtual care consultations in quarter one, now exceeding 55% of all patient consultations, with considerable growth and adoption of our patient experience platform, MCI Connect. Further to our revenue recovery, our corporate health business channel continued to undergo exceptional organic growth in Q1. And as a reminder, revenue from this high-margin channel grew 730% in Q4 2020, and in Q1 2021 grew an additional 337% continuing this exciting trajectory of growth. And this ongoing growth in this channel has made a tangible impact on our revenue mix as the higher margin corporate health makes more than tripled from 3% to 11% year on year ending 2020, and is now at 13% end of Q1 2021. I'd also like to make note that our customer base here, our corporate customer base has grown to just under 400 corporate customers, a number of which are Fortune 500 companies, there's continued and exciting progress on this front. I'd like to take a quick moment for some remarks on our clinical care services channel. And since this pandemic has been ongoing, our clinical services landscape has remained largely the same. You know, our doctors, clinical and management staff continue to work exceptionally hard through this third wave of the pandemic. And again, I wanted to take this opportunity to thank our staff who have been doing their very best to ensure a high level of primary care access, and quality care delivery month after month through these very busy and trying circumstances. Although we still expect the demand for virtual care and telehealth to remain very high, we are also well prepared to continue to service our patients not just with a fantastic telehealth and virtual care experience, but also with in-person visits, as we are uniquely positioned to make sure that our patients and that visit us virtually have access to in-person continuity of care that maintains a high standard of care quality. And this also positions us uniquely in the virtual care space where we don't necessarily have the same attrition rate or lose patients to other providers. And I'd also like to highlight again that we are very well situated for what we anticipate to be a new normal for community primary care, that of hybrid digital and in-person care delivery. I'd like to change tack now and make a few comments with regards to our vision and strategy, including some highlights on innovation. We are building a technology-enabled healthcare company so that no matter how a patient or customer enters our ecosystem, whether it's through an in-person visit as an employee or online, they have access to the best healthcare and digital health services available, including specialist and personalized and individualized care, all under one roof. Now, what this allows is for us to improve that patient experience, improve patient outcomes, and it gives us access to consistent, high-quality, structured clinical information that in turn enables our technology and precision medicine roadmap. In other words, this creates a perpetual data flywheel effect. NCI One Health is advancing on this mission, and we are continuing to execute our plans which has resulted in our business changing from what was a traditional brick and mortar clinic network into one that is technology focused and is high growth and generating much higher margin revenue. On that note, I'm excited to reiterate again that we are ahead of schedule and execution. And from an execution perspective, in the very near term, we are continuing to focus efforts on four main fronts. The first is to continue to improve our abilities on delivering high quality clinical care services and fully recovering from the effects of the pandemic, and in turn continue to organically grow all our health services, telehealth, and our MCI Connect platform. The second is to continue organic growth in our higher margin corporate health services channel. The third is to tangibly scale commercial synergies with our strategic investment partners and capture revenue through these channels. And the fourth is to continue to grow our data and precision medicine channel both through supporting our acquisition of CURE Health and through organic means. We will also continue on our business development initiatives with a focus on acquisitions of technology and specialist health services. Lastly, I'd like to highlight our two main levers of growth as both provide fantastic opportunities for meaningful near-term expansion. The first is to leverage our already sizable critical mass of 850,000 patient visits annually And here lie very compelling opportunities to recapture referral revenue and clinical information. And the second is on execution of expansion of our services offerings and growth into new markets. I'd like to turn the call now over to our CFO, Scott Nierenbersky, who will review the financials for the first quarter of 2021. Over to you, Scott.

Great. Thanks, Alex, and welcome, everybody. I'm pleased to report we had a good strong quarter for the start of 2021. Revenue was only down 4% year on year. So we're almost back to the old highs of pre-COVID levels. The revenue decline was driven by the brick and mortar visits, which are still down about 14% year on year. However, telehealth now represents 55% of revenue and 53% of visits. So it's gaining momentum, and we don't really see a change in that. It's still up into the right trajectory there. So that's important. Corporate health continues to grow, you know, extremely rapidly with 377% growth led by the over 30 customers we added to our mix in a quarter. We're now approaching 400 corporate customers just for reference We were over 250 at the IPO, so that business is on a tear right now. And as you all know, the margins in that business are multiples of the corporate average, both in the gross margin sense as well as in the EBITDA margin. So overall, that's a very strong player. We're now annualizing at over $5 million, and as Alex pointed out, we're at 13% of revenues and climbing overall. we do often get asked about COVID. And, yes, COVID has a positive impact, but we beat well north in triple-digit growth, and that without the impact of COVID. So there's just a natural tailwind there with all the new customers and services that we're adding. If you look at the gross margins, just generally speaking, the positive mix effect of the corporate health had an over 100 basis point gross margin impact positive to our gross margins. On the EBITDA side, we reported – adjusted EBITDA of minus $650,000 during the quarter versus a positive $600,000 last year. Really, all of that change is due to becoming a public company and layering in the executive staff that we need to execute our technology roadmap. That's the most important difference in the cost. Insofar as everything else is concerned, tight cost controls remain in place and the clinics are being managed very well. I'd also like to point out that on the revenue front, we've had one clinic that's closed, just been closed throughout COVID just due to the fact that the building is closed, you know, and that's a very large clinic. So even with that not actually in full operation, we've managed to mostly direct all the traffic from that to nearby clinics, which demonstrates the power of our clinic network, as well as the strength in our telehealth business. On the balance sheet side, We added to our coffers with the IPO, successfully raising over $27 million early in the year. We ended the quarter with $25 million in cash, strengthening the balance sheet and giving us the runway that we need to execute our plan and deliver on what we told you we were going to do during the IPO, both in terms of acquisitions, in terms of partnerships, in terms of strengthening the staff that we need to leverage the synergies that we're going to get out of our acquisitions and our partnerships. And I think that's a very important piece to the puzzle here. Since the quarter ended, you'll see in our MD&A as well as in our press release, we retired the only debt that was outstanding on the balance sheet. So we further strengthened the balance sheet in that regard to the tune of about $1.4 million in the payoff of the debt. We also added Cure to the fold, and that's beginning to ramp inside of MCI now. It was already ramping pretty aggressively, and it continues to ramp aggressively. And then on top of that, we made subsequent investments in Regen through the issuance of stock priced using MCI at $5 a share. I think that's important to understand. And we gave them a short-term loan to help complete the clinic and a small acquisition that will be instrumental in our partnership with them and generating revenues from that partnership. In terms of other acquisitions and investments, we made a U.S. $250,000 investment in aerial precision medicine, focused on precision diagnostics and targeted therapeutics. And just recently we announced, of course, a letter of intent to acquire Terrence Wellness Group, which will take us into the mental health and addictions space. both brick and mortar as well as online, and it's a very important and very exciting roadmap for us that we'll be able to share more details with you down the road. Again, as we've said in the past, we're trying to take a very sensible approach with these things, which is they've got to fit the criteria within the roadmap, they've got to make sense from a valuation perspective, and they've got to be synergistic to what we do, and particularly so with revenue. We still are only not even halfway through the quarter, and we've got many more exciting things to share with you before we get to the end of this quarter. So it's full steam ahead on the acquisition and on the investment side. And then that will set us up for the back half of the year in terms of the revenue synergies. So not only are we acquiring high-growth businesses, but we will actually be able to accelerate those even further through the referrals that we will be able to drive their way from the classic MCI network. And I think we'll have a lot of exciting news to share with you on that front. In terms of share capital, at the end of the quarter, we ended the quarter with about $48.7 million in shares. You'll see that in our MD&A and our financial statements. So we're very excited about what we've put together here We're excited that the clinics are recovering nicely and that the corporate health just continues to grow at an exceptional rate, and we believe this continues going forward. So maybe with that, I'll turn it back to Alex.