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spk07: Ladies and gentlemen, thank you for standing by and welcome to the MCI One Health Technologies Incorporated third quarter 2021 results conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this time, you will need to press star 1 on your telephone keypad. And if you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Alexander Dobrynowski. Thank you. Please go ahead, sir.
spk06: Good afternoon and welcome everyone to MCI One Health's 2021 Third Quarter Financial Results Conference Call. I'm Alex Dobrynowski, Chief Executive Officer, and joining me today on the call is Scott Nierimbierski, our Chief Financial Officer. Our financial results press release is now available online, and I encourage everyone to download a copy of our interim third quarter consolidated financial statements from CDAR.com. 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. These forward-looking statements involve risks both known and unknown, assumptions and other factors that 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. We truly appreciate everyone for joining today, and I'd like to start today's call by providing some detailed commentary on the quarter and also provide key highlights. I would then like to go into further detail on our strategy and expand on what we have accomplished to date and also expand on our outlook as we proceed into 2022. After which, our CFO, Scott Nierimbierski, will provide a financial summary of our third quarter 2021 results, plus add further detail on each of our core business functions. And after this, we will have time for a question and answer period. With regards to this quarter's key highlights, I'm pleased to share that MCI One Health continued the momentum off of our second quarter, and we've had a strong and productive Q3. We remain ahead of our targeted schedule on execution and we are ahead of our plan. Apart from achieving strong quarterly revenue, we also completed a number of important objectives that in combination continue to accelerate our two strategic objectives, growing our high performance healthcare network and continuing to grow our data technology initiatives. As a major operational highlight, As previously reported, we closed our acquisition of the Polyclinic Group of Companies, establishing now a new flagship clinic group for our entire network. The Polyclinic Group is a specialist in primary care medical practice that also has a clinical research organization, a concierge medical channel, and a host of other diagnostic and medical services. The founders have built an innovative healthcare model that allow MCI One Health to further optimize patient care access, increasing quality, and adding value. This is a focal point in what I call our high performance healthcare network. The synergies for our patients across our entire clinic group are robust, and synergy contribution is expected to be substantial as the businesses are integrated, with revenue synergy opportunities already being realized in the fourth quarter. On a separate note, We are continuing to generate technology and clinical data-driven revenues, further marking our transition from healthcare services delivery to data and technology focus. These initiatives are supported by our BrightOS ecosystem and led by our acquisition from Q1 Cure Health. Now, Cure Health signed its largest contract to date with a quantum in the range of $500,000. signed in October with a global top 10 pharmaceutical manufacturer. And further to this, CURE has secured strategic partnership agreements with key EMR providers, increasing the availability of the CURE platform for more than 15,000 physicians across the country. There's significant opportunity here to scale both domestically and internationally. From a revenue perspective, I'm pleased to share that MCI One Health completed the third quarter with strong results Revenue increased 29% over the same period in 2020, driven by the ongoing recovery of patient volumes, ongoing growth from our corporate health services, and revenue contributed by our recently closed acquisitions. Total revenue for the quarter was $12.6 million compared to revenue of $9.8 million in the same period in 2020. A theme that has continued with regards to our strong revenue performance has been the ongoing adoption of telehealth and virtual care. whereas our doctors have completed over 450,000 telehealth and virtual care consultations since the start of the pandemic, and now with over 90,000 visits completed in Q3, continuing to exceed 49% of all patient consultations with ongoing adoption of our patient experience platform, MCI Connect. With regards to our corporate health services offerings, I'd like to highlight that our customer base is now approaching 600 corporate customers This is 40% growth this quarter, and this also includes over 40 insurance companies. Substantial progress on this front as we prepare to grow these services nationally. I'd like to make now a few remarks on our clinical care services channel. Our healthcare system, including both hospital and community-based networks, have been under considerable strain due to the pandemic. That notwithstanding, though, our patient volumes grew approximately 31% year-on-year excluding increases for many acquired businesses in 2021. Our patient volumes continue to improve, and the last of our clinics have resumed full operations coming out of the pandemic restrictions from earlier this year. This is also signaling that both patients and physicians are more comfortable with virtual channels and coming back into the clinic, and further highlighting that pent-up demand for health services continues to grow. This backlog of patient care needs to be addressed And MCI One Health is uniquely positioned to provide this care and help with this demand and get patients the access they need. Our expectation is that our patient volumes will continue to grow in the coming quarters. Now, changing tack for a moment, I'd like to make a few comments with regards to our strategy and outlook. At MCI One Health, our mission is an important one. And quite simply, it's to catch disease earlier possible. and in turn make healthcare more accessible, affordable, and ultimately safer. And we have two objectives. The first is to continue to build our high-performance healthcare network, whereas we have added specialist and diagnostic services, corporate and executive health services, a clinical research organization to our already established foundation of primary care. This allows for exceptional network and revenue synergies all the whilst providing our patients with more options and higher quality continuity of care. Further to this, having this deeper health services offering allows us to achieve our second main objective, and this is to continue to grow our clinical and commercial data initiatives. This is how we advance care to be truly personalized and truly intelligent, and this is how we can catch disease earlier. NCI One Health is advancing on this mission, and execution of our plan has resulted in our business evolving from what was a traditional brick-and-mortar clinic group into one that is technology-focused and is high growth and generating higher margin. Back to total company revenue growth in the first half of fiscal 2022, and we will accomplish this through two main efforts. The first through organic growth of all of our health services and in services provided to corporate customers as we expand our customer base and increase the number of available offerings, plus growth through network and revenue synergies with our recently acquired companies. The second is through executing on our robust pipeline of M&A opportunities, namely strategic acquisitions to accelerate our technology roadmap, and acquisitions of specialty clinics to expand our health service offerings, plus enter new markets to deliver more services to our large and growing patient and physician base. I'd like to turn the call now over to our CFO, Scott Nirenberski, who will review the financials for the third quarter of 2021.
spk05: Good afternoon, and thank you for joining our third quarter conference call. I'll provide a brief summary of key financial measures, some of which may include non-IFRS terms, Please refer to our financial statements in MD&A for descriptions of these measures, as well as the reconciliation of non-IFRS measures to our statutory IFRS reporting. In addition, this quarter, MCI One Health Technologies changed its grouping of expenses into more commonly used functional categories, more consistent with our public peers, and which better reflect the way we think about the business. You'll see a more simplified reporting of costs and expenses into four categories, cost of sales, R&D, sales and marketing, and general administrative expenses. In our financial statements and MD&A filed on CDAR, we've provided further details to help you understand the underlying cash costs of each expense category, as well as how the new reporting of cost expenses compares with the prior by nature reporting of these items. So with that, revenue grew 29% year-on-year driven by four factors. Higher patient volumes at MCI organically, the addition of two months of the polyclinic, continued strong growth in corporate health of over 40%, the addition of data revenue from CURE, two months of results from Canadian phase onward, our clinical research offering, and Executive Concierge Canada, our Executive Concierge medical practice offering. On the gross margin front, gross margins declined from 31% to 28.3% due to corporate health margins, which were impacted simply by the timing of expenses from 2Q to 3Q. As said, corporate health continues to grow very nicely in the current quarter, and margins are in line with previous expectations, which you've become used to. Operating expenses grew year on year to support the growth for 2022 data-driven revenue and clinical services, as well as to support future acquisitions. Specifically, R&D expenses associated with platform development in support of the company's data strategy, enhancements to MCI Connect, as well as investment in CURE Health to expand the platform and take it into the cloud. Sales and marketing expenses associated with the ramp-up in efforts to support growth in sales for 2022 include further enhancements to MCI Connect, the addition of CURE, the addition of two months of Polyclinic, and then branding and awareness and partnership development. G&A expenses grew significantly. primarily due to corporate development costs for the expansion of the company's senior management team that we've previously discussed, being a public company, higher legal and audit expenses, two months of polyclinic expenses, and of course the addition of Cure Health. Adjusted EBITDA was minus $1.8 million for the quarter versus $2.2 million in the year-ago quarter, largely driven by increase in operating expenses and the previously mentioned timing of corporate health expenses. Net loss for the quarter was minus 5.4 million or 11 cents per share, but includes 2.1 million or 4 cents per share of share-based comp and one-time items. MCI exited the quarter with 10 million of cash and nothing drawn on its revolving credit lines. The declining cash was driven primarily by $1.2 million used in operations, $6.3 million invested largely due to the acquisition of Polyclinic, and $2.2 million in financing was used in financing activities, approximately $900,000 from stock buyback and then higher net lease payments associated with the assumption of the polyclinic leases. I'll close with a very brief outlook. We remain optimistic about revenue growth for acquisitions and the ability to deliver on organic growth and growth from revenue synergies with recently acquired companies. In fact, we're already experiencing network revenue synergies and data-driven revenue from MCI Polyclinic and Cure Health. which illustrates that the investment in operations to support these growth initiatives has begun to pay off. As such, and further to Alex's comment, we would expect revenue growth to outpace costs and expenses in 2022, resulting in higher gross and EBITDA margins. We would also expect to return to cash flow positive in 2022. With that, I'll turn it back to the operator. So, Jeff, please open the line for questions.
spk07: Certainly. At this time, I would like to Remind everyone, in order to ask your question, press star, then the number one on your telephone keypad. Again, that's star one on your telephone keypad.
spk09: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Doug Taylor from Canaccord Genuity.
spk07: Your line is open.
spk12: Yeah, thank you. Good evening. I want to ask a question about the last comment you just made there about returning to free cash flow positive in 2022. Are you talking about annually for the year? Is that something we should expect over the course of the year back in loaded? Sure.
spk05: Yeah, it'll happen over the course of the year and for the full year to answer your question directly, Doug. And it'll it'll wrap through the year as the revenue grows and the synergies grow.
spk12: Okay, that's good to hear. Obviously, the impact of the pandemic on walk-in traffic to physical locations continues to drag on. I wonder if I could get you to comment on what your expectations are around the growth you expect in the first half of next year and that cash flow projection, positive cash flow projection, what your assumptions are around the mix of traffic and, you know, the return of traffic into your physical locations.
spk06: Yeah, sure, Doug. Thank you very much for the question. With regards to the effect of the pandemic, you know, and patient volumes, and I think this isn't – This isn't by any means news to anyone, but there's a lot of real, a lot of pens up. There's a backlog of demand for in-person clinical access. So we're going to continue to see and we're expecting to see patient volume growth as we not only see the patients that we need to see day to day, but actually make up for some of that backlog and continued growth on our virtual care and telehealth channel too. as demand for these services also continues to increase.
spk05: Yeah, volumes have almost recovered at this point, which is pretty much what we had said during the IPO Roadshow last year. So by the end of the year, we should be back there, and that's despite the ebbs and flows of COVID.
spk12: And are you talking about combined volume from virtual and in-person, or are you talking about in-person by itself?
spk05: It's a cross network, but definitely seen further strength in the clinics. And it's what Alex described. There's just a pent-up demand and backlog of in-person visits there. I think the province is estimating 20 million in-person visits that are needed.
spk12: Okay. One question. Final question for me, you certainly allude in your prepared remarks and in your release today about the potential for additional M&A and potentially sizable in the near term. I wonder if you'd talk through, you know, what you, I guess I'd like to ask about how you feel about your ability and your preferred methods of financing, you know, that M&A given, you know, the current balance sheet and resources available to you.
spk05: So, you know, the M&A strategy hasn't changed. It's got to make sense with the overriding strategy of building up the high-performance network and supporting the data initiatives. And the methods of financing are still similar because, you know, on the clinic side, it's got to be supported with EBITDA. And if it's supportable with EBITDA, then there are a range of options that are available to us outside of common equity in the debt markets.
spk11: Okay, I'll pass the line. Thank you.
spk05: Thank you.
spk07: Again, for anyone else who wants to ask questions, you may press star 1 on your telephone keypad. Your next question comes from the line of Mike Stevens from Echelon Capital. Your line is open.
spk14: Yeah, hi, guys. Good evening, and congrats on your quarter. I was just kind of wondering with your comments about the volumes getting to where they were pre-COVID. And then you think about the 50% that is virtual. I think you previously spoke to excess capacity and strategies around that going forward. I'm just wondering if there's any insight on those developments or what you guys are seeing over the next year plus.
spk06: yeah thank you uh mike thanks for the question and for joining the call and um so so yeah with virtual care right and now that means you know sustained demand for that avenue for for patients to communicate with doctors and staff i mean it opens up a whole host of opportunities of re-utilization the uh the brick and mortar space and and we're currently evaluating these things but Long story short, there are a tremendous amount of efficiency that can result from this change in patient and doctor behavior, and we're making plans to make sure that we can optimize on these changes, and that will be reflected in how we move forward through the coming quarters.
spk14: Okay, great. Thanks. And on to your Cure Health, the contract that you guys secured today, I know you guys discussed previously integrating BrightOS into that platform. Is there any insight as to securing that contract? Is that BrightOS included in that? Or is it still kind of being weaved in? And what kind of maybe trajectory are you thinking for these data revenues in 2022 if you had a ballpark type of target that you're going after?
spk06: Yeah. And look, Mike, thanks for that question, too. So I'll answer the second part first, really, whereas we've spent considerable time and resources this year preparing our foundation so we can grow and focus on these technology and data initiatives further and continue to grow in 2022 and really accelerate in that domain. And to answer your first question, so BrightOS is a supportive platform, right, a supportive data analytics platform where we enable, for instance, the growth of CURE Health and support not just CURE but on a number of other data-driven initiatives, and namely another one is on our ability to help identify and stratify patients for clinical trial recruitment. So you can picture BrightOS as as the backbone that allows us to execute on a number of data-driven initiatives that are both commercial and clinically valuable.
spk14: Okay, great. Thank you. And for your corporate health, I know Scott had mentioned a RevRec issue in the quarter that will be moved into Q4. I'm just wondering, in terms of your 2022 outlook, You guys mentioned expansion geographically. Where are you seeing that growth in corporate health in relation to 2021 and in what areas would you maybe see it? And also, you know, I think a lot of the growth so far has been organically.
spk13: I'm wondering if there is any thoughts about inorganic growth in that space.
spk05: Sure, Mike. So definitely you've got growth around the clinics in Alberta and Calgary. You've got national rollout. And then as you might know from prior calls, it's about land and expand. So you're typically called in to do X, Y, Z, and then you get in there and they're happy with the service. And it's what else can we do for you? And there's so many different types of services depending on you know, what the customer desires and what we can do for the customers that are there. So that strategy really is the same in 22 as in 21. It's just geographically a lot larger. In terms of your question on M&A, yes, there are M&A opportunities in corporate health out there. And, you know, it's the same thing as it is with the other health services, which is, you know, let's find the gaps in where we are today and see if we can't fill them. or if we're, you know, if we have an opportunity to enhance what we already have, we look at that as well.
spk14: Awesome, thanks. And one last one, if I can just sneak one in. You know, you're, given mental health is so top of mind, you know, I haven't seen much in your press release or, you know, notes about Terrace Wellness. I remember you guys made that acquisition earlier this year, and I was just wondering if, you know, how is that progress tracking? Have you been able to kind of incorporated into your corporate health services or, you know, what's been happening with that business? And, you know, are you still seeing a lot of opportunity there?
spk06: Yeah. No, thanks, Mike. And just a point of clarification that we didn't acquire Terrence Wellness Group. We had signed a letter of intent with And after further and deeper due diligence, it didn't really match up to our expectations. So we're right now evaluating a number of different opportunities on the mental health front. And, you know, echoing your sentiment, it's such an important part of, you know, community care. So we are looking to make an impact there in a big way. But really, I guess my answer there is stay tuned and we'll have something coming soon.
spk14: Okay, great. Thanks. Thanks for the insight, guys.
spk16: Have a good one. Thanks for the participation. Thank you, Mike.
spk07: There are no more questions at this time. Presenters, please continue. Yeah, thank you.
spk06: Just, you know, finishing with the concluding, you know, set of remarks here, because with the accomplishment of our recent acquisitions and now with continuing technology and data-driven revenues, our transition from a traditional care service delivery model to one that is more personalized, holistic, and of course, importantly, data and technology driven is well underway. Our outlook remains, as Scott and I have shared, highly positive across all our business units. And to summarize, we have a growing base of higher margin revenue, ongoing growth of our corporate health channel, accelerating growth in technology initiatives, and we continue to have a very strong balance sheet. And critically, I wanted to highlight a very exciting pipeline of business development opportunities. I'd like to thank everyone for joining us on this call today, thank our investors and our shareholders for their support, and also like to thank my executive team, management teams, and all of our employees and clinical staff for their ongoing and continued efforts. Thank you very much, everyone, for attending and listening to this Q3 results of 2021.
spk05: Thanks, everybody.
spk07: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you. Thank you. Thank you. Hello. Thank you. Thank you.
spk00: Thank you. you
spk07: Ladies and gentlemen, thank you for standing by and welcome to the MCI One Health Technologies Incorporated third quarter 2021 results conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this time, you will need to press star one on your telephone keypad. And if you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Alexander Dobrynowski. Thank you. Please go ahead, sir.
spk06: Good afternoon and welcome everyone to MCI One Health's 2021 Third Quarter Financial Results Conference Call. I'm Alex Dobrynowski, Chief Executive Officer, and joining me today on the call is Scott Nierimbierski, our Chief Financial Officer. Our financial results press release is now available online, and I encourage everyone to download a copy of our interim third quarter consolidated financial statements from CDAR.com. 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. 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. We truly appreciate everyone for joining today, and I'd like to start today's call by providing some detailed commentary on the quarter and also provide key highlights. I would then like to go into further detail on our strategy and expand on what we have accomplished to date and also expand on our outlook as we proceed into 2022. After which, our CFO, Scott Nierenberski, will provide a financial summary of our third quarter 2021 results, plus add further detail on each of our core business functions. And after this, we will have time for a question and answer period. With regards to this quarter's key highlights, I'm pleased to share that MCI One Health continued the momentum off of our second quarter, and we've had a strong and productive Q3. We remain ahead of our targeted schedule on execution and we are ahead of our plan. Apart from achieving strong quarterly revenue, we also completed a number of important objectives that in combination continue to accelerate our two strategic objectives, growing our high performance healthcare network and continuing to grow our data technology initiatives. As a major operational highlight, As previously reported, we closed our acquisition of the Polyclinic Group of Companies, establishing now a new flagship clinic group for our entire network. The Polyclinic Group is a specialist in primary care medical practice that also has a clinical research organization, a concierge medical channel, and a host of other diagnostic and medical services. The founders have built an innovative healthcare model that allow MCI One Health to further optimize patient care access, increasing quality, and adding value. This is a focal point in what I call our high performance healthcare network. The synergies for our patients across our entire clinic group are robust, and synergy contribution is expected to be substantial as the businesses are integrated, with revenue synergy opportunities already being realized in the fourth quarter. On a separate note, We are continuing to generate technology and clinical data-driven revenues, further marking our transition from healthcare services delivery to data and technology focus. These initiatives are supported by our BrightOS ecosystem and led by our acquisition from Q1 Cure Health. Now, Cure Health signed its largest contract to date with a quantum in the range of 500,000 signed in October with a global top 10 pharmaceutical manufacturer. And further to this, CURE has secured strategic partnership agreements with key EMR providers, increasing the availability of the CURE platform for more than 15,000 physicians across the country. There's significant opportunity here to scale both domestically and internationally. From a revenue perspective, I'm pleased to share that MCI One Health completed the third quarter with strong results. Revenue increased 29% over the same period in 2020, driven by the ongoing recovery of patient volumes, ongoing growth from our corporate health services, and revenue contributed by our recently closed acquisitions. Total revenue for the quarter was $12.6 million compared to revenue of $9.8 million in the same period in 2020. A theme that has continued with regards to our strong revenue performance has been the ongoing adoption of telehealth and virtual care, whereas our doctors have completed over 450,000 telehealth and virtual care consultations since the start of the pandemic, and now with over 90,000 visits completed in Q3, continuing to exceed 49% of all patient consultations with ongoing adoption of our patient experience platform, MCI Connect. With regards to our corporate health services offerings, I'd like to highlight that our customer base is now approaching 600 corporate customers. This is 40% growth this quarter, and this also includes over 40 insurance companies. Substantial progress on this front as we prepare to grow these services nationally. I'd like to make now a few remarks on our clinical care services channel. Our healthcare system, including both hospital and community-based networks, have been under considerable strain. due to the pandemic. That notwithstanding though, our patient volumes grew approximately 31% year on year, excluding increases for many acquired businesses in 2021. Our patient volumes continue to improve and the last of our clinics have resumed full operations coming out of the pandemic restrictions from earlier this year. This is also signaling that both patients and physicians are more comfortable with virtual channels and coming back into the clinic and further highlighting that pent-up demand for health services continues to grow. This backlog of patient care needs to be addressed, and MCI One Health is uniquely positioned to provide this care and help with this demand and get patients the access they need. Our expectation is that our patient volumes will continue to grow in the coming quarters. Now, changing tack for a moment, I'd like to make a few comments with regards to our strategy and outlook. At NCI One Health, our mission is an important one, and quite simply, it's to catch disease earlier and in turn make healthcare more accessible, affordable, and ultimately safer. And we have two objectives. The first is to continue to build our high-performance healthcare network, whereas we have added specialist and diagnostic services, corporate and executive health services, a clinical research organization to our already established foundation of primary care. This allows for exceptional network and revenue synergies, all the whilst providing our patients with more options and higher quality continuity of care. Further to this, having this deeper health services offering allows us to achieve our second main objective, and this is to continue to grow our clinical and commercial data initiatives. This is how we advance care to be truly personalized and truly intelligent and this is how we can catch disease earlier. MCI One Health is advancing on this mission and execution of our plan has resulted in our business evolving from what was a traditional brick and mortar clinic group into one that is technology focused and is high growth and generating higher margin revenue. Total company revenue growth in the first half of fiscal 2022 And we will accomplish this through two main efforts. The first through organic growth of all of our health services and in services provided to corporate customers as we expand our customer base and increase the number of available offerings, plus growth through network and revenue synergies with our recently acquired companies. The second is through executing on our robust pipeline of M&A opportunities, namely strategic acquisitions to accelerate our technology roadmap, and acquisitions of specialty clinics to expand our health service offerings, plus enter new markets to deliver more services to our large and growing patient and physician base. I'd like to turn the call now over to our CFO, Scott Nirenberski, who will review the financials for the third quarter of 2021.
spk05: Good afternoon, and thank you for joining our third quarter conference call. I'll provide a brief summary of key financial measures, some of which may include non-IFRS terms, Please refer to our financial statements in MD&A for descriptions of these measures, as well as the reconciliation of non-IFRS measures to our statutory IFRS reporting. In addition, this quarter, MCI One Health Technologies changed its grouping of expenses into more commonly used functional categories, more consistent with our public peers, and which better reflect the way we think about the business. You'll see a more simplified reporting of costs and expenses into four categories, cost of sales, R&D, sales and marketing, and general administrative expenses. In our financial statements and MD&A filed on CDAR, we've provided further details to help you understand the underlying cash costs in each expense category, as well as how the new reporting of cost expenses compares with the prior by nature reporting of these items. So with that, revenue grew 29% year-on-year driven by four factors. Higher patient volumes at MCI organically, the addition of two months of the polyclinic, continued strong growth in corporate health of over 40%, the addition of data revenue from CURE, two months of results from Canadian phase onward, our clinical research offering, and Executive Concierge Canada, our Executive Concierge medical practice offering. On the gross margin front, gross margins declined from 31% to 28.3% due to corporate health margins, which were impacted simply by the timing of expenses from 2Q to 3Q. As said, corporate health continues to grow very nicely in the current quarter, and margins are in line with previous expectations, which you've become used to. Operating expenses grew year on year to support the growth for 2022 data-driven revenue and clinical services, as well as to support future acquisitions. Specifically, R&D expenses associated with platform development in support of the company's data strategy, enhancements to MCI Connect, as well as investment in CURE Health to expand the platform and take it into the cloud. Sales and marketing expenses associated with the ramp-up in efforts to support growth in sales for 2022 include further enhancements to MCI Connect, the addition of CURE, the addition of two months of Polyclinic, and then branding and awareness and partnership development. G&A expenses grew significantly. primarily due to corporate development costs for the expansion of the company's senior management team that we've previously discussed, being a public company, higher legal and audit expenses, two months of polyclinic expenses, and of course the addition of Cure Health. Adjusted EBITDA was minus $1.8 million for the quarter versus $2.2 million in the year-ago quarter, largely driven by increase in operating expenses and the previously mentioned timing of corporate health expenses. Net loss for the quarter was minus 5.4 million, or 11 cents per share, but includes 2.1 million, or four cents per share, of share-based comp and one-time items. MCI exited the quarter with 10 million of cash and nothing drawn on its revolving credit lines. The declining cash was driven primarily by $1.2 million used in operations, 6.3 million invested largely due to the acquisition of Polyclinic, and 2.2 million in financing was used in financing activities, approximately $900,000 from stock buyback and then higher net lease payments associated with the assumption of the polyclinic leases. I'll close with a very brief outlook. We remain optimistic about revenue growth for acquisitions and the ability to deliver on organic growth and growth from revenue synergies with recently acquired companies. In fact, we're already experiencing network revenue synergies and data-driven revenue from MCI Polyclinic and Cure Health. which illustrates that the investment in operations to support these growth initiatives has begun to pay off. As such, and further to Alex's comment, we would expect revenue growth to outpace costs and expenses in 2022, resulting in higher gross and EBITDA margins. We would also expect to return to cash flow positive in 2022. With that, I'll turn it back to the operator. So, Jeff, please open the line for questions.
spk07: Certainly. At this time, I would like to remind everyone in order to ask your question, press star then the number one on your telephone keypad. Again, that's star one on your telephone keypad.
spk09: We'll pause for just a moment to compile the Q&A roster.
spk07: Your first question comes from the line of Doug Taylor from Canaccord Genuity. Your line is open.
spk12: Yeah, thank you. Good evening. I want to ask a question about the last comment you just made there about returning to free cash flow positive in 2022. Are you talking about annually for the year? Is that something we should expect over the course of the year back in loaded? Sure.
spk05: Yeah, it'll happen over the course of the year and for the full year to answer your question directly, Doug. And it'll it'll wrap through the year as the revenue grows and the synergies grow.
spk12: Okay. That's good to hear. Obviously, the impact of the pandemic on walking traffic to physical locations continues to drag on. I wonder if I could get you to comment on what your expectations are around the growth you expect in the first half of next year. and that cash flow projection, positive cash flow projection, what your assumptions are around the mix of traffic and, you know, the return of traffic into your physical locations.
spk06: Yeah, sure, Doug. Thank you very much for the question. With regards to the effect of the pandemic, you know, and patient volumes, and I think this isn't – This isn't by any means news to anyone, but there's a lot of real, a lot of pens up. There's a backlog of demand for in-person clinical access. So we're going to continue to see and we're expecting to see patient volume growth as we not only see the patients that we need to see day to day, but actually make up for some of that backlog and continued growth on our virtual care and telehealth channel too. as demand for these services also continues to increase.
spk05: Volumes have almost recovered at this point, which is pretty much what we had said during the IPO Roadshow last year. So by the end of the year, we should be back there, and that's despite the ebbs and flows of COVID.
spk12: Are you talking about combined volume from virtual and in-person, or are you talking about in-person by itself?
spk05: It's a cross network, but definitely seen further strength in the clinics. And it's what Alex described. There's just a pent-up demand and backlog of in-person visits there. I think the province is estimating 20 million in-person visits that are needed.
spk12: Okay. One question. Final question for me, you certainly allude in your prepared remarks and in your release today about the potential for additional M&A and potentially sizable in the near term. I wonder if you'd talk through, you know, what you, I guess I'd like to ask about how you feel about your ability and your preferred methods of financing, you know, that M&A given, you know, the current balance sheet and resources available to you.
spk05: So, you know, the M&A strategy hasn't changed. It's got to make sense with the overriding strategy of building up the high-performance network and supporting the data initiatives. And the methods of financing still similar because it's, you know, on the clinic side, it's got to be supported with EBITDA. And if it's supportable with EBITDA, then there are a range of options that are available to us outside of common equity in the debt markets.
spk11: Okay, I'll pass the line. Thank you.
spk05: Thank you.
spk07: Again, for anyone else who wants to ask questions, you may press star 1 on your telephone keypad. Your next question comes from the line of Mike Stevens from Echelon Capital. Your line is open.
spk14: Yeah, hi, guys. Good evening, and congrats on your quarter. I was just kind of wondering with your comments about the volumes getting to where they were pre-COVID. And then you think about the 50% that is virtual. I think you previously spoke to excess capacity and strategies around that going forward. I'm just wondering if there's any insight on those developments or what you guys are seeing over the next year plus.
spk06: yeah thank you uh mike thanks for the question and for joining the call and um so so yeah with virtual care right and now that means you know sustained demand for that avenue for for patients to communicate with doctors and staff i mean it opens up a whole host of opportunities of re-utilization the uh the brick and mortar space and and we're currently evaluating these things but Long story short, there are a tremendous amount of efficiency that can result from this change in patient and doctor behavior, and we're making plans to make sure that we can optimize on these changes, and that will be reflected in how we move forward through the coming quarters.
spk14: Okay, great. Thanks. And on to your cure health. the contract that you guys secured? Like I know you guys discussed previously integrating BrightOS into that platform. Is there any insight as to securing that contract? Is that BrightOS included in that? Or is it still kind of being weaved in? And what kind of maybe trajectory are you thinking for these data revenues in 2022 if you had a ballpark type of target that you're going after?
spk06: Yeah. And look, Mike, thanks for that question, too. So I'll answer the second part first, really, whereas we've spent considerable time and resources this year preparing our foundation so we can grow and focus on these technology and data initiatives further and continue to grow in 2022. and really accelerate in that domain. And to answer your first question, so BrightOS is a supportive platform, right, a supportive data analytics platform where we enable, for instance, the growth of CURE Health and support not just CURE but on a number of other data-driven initiatives, and namely another one is on our ability to help identify and stratify patients for clinical trial recruitment. So you can picture BrightOS as as the backbone that allows us to execute on a number of data-driven initiatives that are both commercial and clinically valuable.
spk14: Okay, great. Thank you. And for your corporate health, I know Scott had mentioned a RevRec issue in the quarter that will be moved into Q4. I'm just wondering, in terms of your 2022 outlook, You guys mentioned expansion geographically. Where are you seeing that growth in corporate health in relation to 2021 and in what areas would you maybe see it? And also, you know, I think a lot of the growth so far has been organically.
spk13: I'm wondering if there is any thoughts about inorganic growth in that space.
spk05: Sure, Mike. So definitely you've got growth around the clinics in Alberta and Calgary. You've got national rollout. And then as you might know from prior calls, it's about land and expand. So you're typically called in to do X, Y, Z, and then you get in there and they're happy with the service. And it's what else can we do for you? And there's so many different types of services depending on you know, what the customer desires and what we can do for the customers that are there. So that strategy really is the same in 22 as in 21. It's just geographically a lot larger. In terms of your question on M&A, yes, there are M&A opportunities in corporate health out there. And, you know, it's the same thing as it is with the other health services, which is, you know, let's find the gaps in where we are today and see if we can't fill them. or if we're, you know, if we have an opportunity to enhance what we already have, we look at that as well.
spk14: Awesome, thanks. And one last one, if I can just sneak one in. You know, you're, given mental health is so top of mind, you know, I haven't seen much in your press release or, you know, notes about Terrace Wellness. I remember you guys made that acquisition earlier this year, and I was just wondering if, you know, how is that progress tracking? Have you been able to incorporated into your corporate health services? What's been happening with that business? Are you still seeing a lot of opportunity there?
spk06: Thanks, Mike. Just a point of clarification that we didn't acquire Terrence Wellness Group. We had signed a letter of intent And after further and deeper due diligence, it didn't really match up to our expectations. So we're right now evaluating a number of different opportunities on the mental health front. And echoing your sentiment, it's such an important part of community care. So we are looking to make an impact there in a big way. But really, I guess my answer there is stay tuned, and we'll have something coming soon.
spk14: Okay, great. Thanks. Thanks for the insight, guys.
spk16: Have a good one. Thanks for the participation. Thank you, Mike.
spk07: There are no more questions at this time. Presenters, please continue. Yeah, thank you.
spk06: Just, you know, finishing with the concluding, you know, set of remarks here, because with the accomplishment of our recent acquisitions and now with continuing technology and data-driven revenues, our transition from a traditional care service delivery model to one that is more personalized, holistic, and of course, importantly, data and technology driven is well underway. Our outlook remains, as Scott and I have shared, highly positive across all our business units. And to summarize, we have a growing base of higher margin revenue, ongoing growth of our corporate health channel, accelerating growth in technology initiatives, and we continue to have a very strong balance sheet. And critically, I wanted to highlight a very exciting pipeline of business development opportunities. I'd like to thank everyone for joining us on this call today, thank our investors and our shareholders for their support, and I'd also like to thank my executive team, management teams, and all of our employees and clinical staff for their ongoing and continued efforts. Thank you very much, everyone, for attending and listening to this Q3 results of 2021. Thanks, everybody.
spk07: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
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