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spk04: As a reminder, this call is being recorded. I would now like to turn the conference call over to your host, Craig McPhail. Please go ahead.
spk01: Thank you, Krista. Good afternoon, everyone. And thank you for joining us for our conference call today. Discussing Numix's performance are Peyton Nyquist, founder and CEO, and Melanie Valloux, interim chief financial officer. The following discussion may include forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties. The risks and certainties that could cause our actual financial operating results to differ significantly from our forward-looking statements are detailed in our MD&A for the quarter ended May 31, 2024, and in our other Canadian security filings available on CDAR. Numinous does not undertake to update or revise any forward-looking statements to reflect new events or circumstances, except as required by law. Our third quarter results were released earlier this afternoon. We encourage you to review our earnings release, MD&A, and financial statements available on our website and CDAR. As a reminder, all figures discussed today are in Canadian dollars. I'll now turn the call over to Peyton Nyquist, Chief Executive Officer.
spk03: Thanks, Craig, and good afternoon, everybody. I'd like to start by extending our utmost gratitude that the work that we do is conducted on the unceded homelands of the Musqueam, Squamish, and Tsleil-Waututh people and on other sovereign Indigenous lands and territories across Turtle Island. In numinous, we are committed to a path towards reconciliation through continuous learning, reciprocity, and humility. In Q3 fiscal 2023 we embarked on a transformative initiative aimed at building on our cat on our position as a difference maker in the field of psychedelic therapy to also achieve profitability from our existing operation. This journey began with some difficult but necessary decision to right size, the company we eliminated non revenue generating business line. and roles, including the closure of our numinous bioscience business and our unprofitable clinic in Phoenix, Arizona. Additionally, we reduced our headcount by 60%, focusing our remaining team on growth-oriented initiatives and activities. Our goal was to reduce our burn rate to under $1 million per month. We reached that milestone this past October. And after accounting for one-time costs in our second quarter, we've successfully maintained that target into the third. In the past quarter, we further optimized our operations by transitioning out of our Canadian clinic operations. Through our agreement with Fieldtrip Health, our Canadian therapists were allowed to transfer their contracts to Fieldtrip, leading to the closures of our clinics in Montreal, Toronto, and Vancouver. This transition represents a significant asset light opportunity for us and could serve as a model for future development. We will endorse field trip health clinics and receive a referral fee for therapists who join their team. We will also collaborate on marketing campaigns for training therapists and patient recruitment. As a part of our recently launched numinous network, our former Canadian therapists have access to the latest therapeutic protocols, including ketamine and psychedelic assisted therapies, along with ongoing support and continuous learning opportunities. Today, our operation, our focus on our U.S.-based clinics. Our therapists are full-time numinous employees optimized to provide efficient, high-quality care focusing on ketamine and alternate therapies. In Q3, appointments in our U.S. clinics decreased by 6% over Q2, with new client appointments rising by 24% and ketamine and Spravato appointments increasing by 15%. Since inception, Our clinics have treated over 23,000 patients, and over that time, we have developed unique expertise in psychiatric services, medicine management, psychotherapy, and advanced therapies. A vital part of that expertise is successfully navigating the complex U.S. insurance system to achieve reimbursement for treatment. As well, we have built strategic relationships with leading psychedelic drug developers such as Lycos, Compass Pathways, Cybin, USONA, MindMed, and Beckley, and have been at the forefront of important clinical trials for MDMA, psilocybin, LSD, and 5-MeO-DMT. After the end of the past quarter, we decided to further leverage the significant experience in clinical care and research with the proposed acquisition of MedBright AI. Medbright is a Canadian company that has developed a medical-focused artificial intelligence and machine learning platform to drive clinic efficiency. Medbright's technology can transform the expertise that we have honed in patient care into an AI solution that will allow a therapist to be able to provide psychedelic-assisted therapy care without investing in the significant infrastructure required. We see this as a significant opportunity Ketamine is growing as an accepted treatment for depression, PTSD, and anxiety. Bravado, Janssen's pharmaceutical version of ketamine, doubled in sales over the past year, indicating an increase in demand. Therapists, however, are challenged to put in place the significant infrastructure and expertise to meet patient demands. The Numinous and Medbright AI solution can provide the infrastructure in a SAS model. This includes a call center to convert patients to new appointments, reauthorization systems to ensure insurance coverage, drug protocols, clinical notes to bill, billing processes for relevant reimbursement codes, and aftercare process and reoccurring therapy protocols and reimbursement. We believe this solution will be invaluable to therapists looking to provide ketamine therapy to their patients. As other psychedelic compounds are approved for treatment, the platform can be adapted to encompass new protocols. This acquisition is an important milestone and is the culmination of our efforts over the past year to align Numinous with revenue growth opportunities we see in the U.S. mental health care sector with the delivery of high-quality care to a large population of patients in need of drug-assisted therapy and mental health services. We will rebrand to Numinous Intelligence once the acquisition closes to mark this new strategic direction and focus. Our new name reflects our commitment to leveraging AI and data science to expand mental health services and solutions across the US. The acquisition is expected to close this August after completing a definitive agreement. the usual regulatory approvals, and shareholder approval. Melanie will now provide a financial overview of the quarter.
spk00: Thanks, Peyton, and good evening, everyone. This quarter's revenue was $4.3 million compared to $4.4 million in Q2 2024 and $5.2 million in the same quarter last year. The 1.9% quarter-over-quarter decline is a result of a decrease in outpatient services revenue due to the wind-down of the Arizona clinics. Revenue from our U.S. Wellness Clinics network was $3.4 million compared to $3.6 million in Q2 2024 and $4.1 million in Q3 2023. The year-over-year decline reflects our focus on optimizing our operations and the closure of the clinic in Phoenix, Arizona. Revenue from CDER clinical research increased 10.7% to $0.8 million from $0.7 million in Q2 2024 due to the launch of a clinical trial with additional patient appointments. As the timing of clinical trials creates variability in CCR's quarterly revenue, A more illustrative way to look at CCR revenue is on a trailing 12-month basis. CCR generated $3.8 million for the 12 months ended May 31, 2024, compared to $3.1 million for the 12 months ended May 31, 2023. Our practitioner training program has experienced solid growth since its launch, with over 1,650 learners on May 31, compared to 1,400 at the end of Q2 2024 and just 400 in Q4 of fiscal 2023. In Q3, Numinous Digital's revenue was $168,830, a 114% increase over $78,837 in Q2 2024. Gross margins in Q3 were 22% down from 24% in Q2 and 34.5% in Q3 2023. The decline in revenue is due to the company's focus on profitable operations. Operating expenditures in Q3, excluding other items, were 4.9 million compared to 6.3 million in Q2, a 22% decrease. The decrease reflects the success of our cost-cutting initiatives. In the quarter, cash burn was less than $1 million per month. Also reflective of our cost containment, our net loss from continuing operations this quarter was $5.1 million, or $0.02 per share, compared to $5.7 million and $0.02 per share in the prior quarter. We ended the quarter with $3.7 million of cash on hand and $2 million of working capital. Going forward, our focus will continue to drive high margin revenue and optimize our operating expenses. In preparation for the proposed acquisition of Medbright, we have put in place a transition team to reduce costs, preserve cash, and work to increase revenue through the period before the transition is completed. And with that overview of our financial results, I'll turn the call back to Peyton for some closing remarks.
spk03: Thanks, Melanie. Peyton. As you heard today, Numinous continues to have success transitioning to a leaner and more efficient organization. The proposed MedBright transaction will amplify the opportunities available by leveraging our unique expertise to create an AI enabled solution available to over 200,000 mental health providers in the United States. Closing the transaction opens up a growing high margin revenue opportunity for Numinous and furthers our mission to provide transformative care to thousands of patients. Before we open up the call to live questions, we'll take some questions sent in to us by investors.
spk01: Hi, Peyton. I have two questions sent to us from investors by email. Here's the first one. With the FDA Advisory Committee voting against MDMA-assisted therapy, what is your outlook for it being approved this August by the FDA?
spk03: Thanks, Craig. Given the strong clinical results for MDMA-assisted therapy and the significant need for care, while we were disappointed by the decision by the advisory committee, however, we note that the FDA is not bound by the committee's recommendation and in about one-third of the cases has approved treatments that the committee has recommended again. If the FDA does not approve it in August, I'm confident that the committee's specific concerns can be addressed and the treatment can be approved.
spk01: Thanks. Now the second one. What is the actual size of the opportunity with numinous intelligence?
spk03: We consider the addressable market for AI-enhanced psychedelic therapy clinic management to be significant. Regarding the patient population, an estimated 14 million people have conditions appropriate for psychedelic-consistent therapy. And about 200,000 mental health providers, including psychiatrists, psychologists, and clinical therapists, can provide care. We see the offering of a solution enabling providers to serve this population with reimbursed care without the investment in infrastructure or time to gain expertise will be very attractive. This also creates opportunities for us to introduce Numinous training and support through the Numinous network. And I believe with that, we'll open up the call from analyst and institutional investors. Operator.
spk04: Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. Your first question comes from Michael Auchinwich with Maxim Group. Please go ahead.
spk02: Hi, Peyton. Thank you for taking my questions today. So I guess the first question I have is just with regards to the Medbrite acquisition, the proposed platform that you would be offering, is this completely new and would it need to be developed or is this something that would be plug and play and then What about their existing AI offering?
spk03: Yeah, so a lot of what they've built is very complementary to what we've been also creating on the Numinous Network side. And they've done a significant amount of work building out that platform with a couple of their products, particularly their main product, which they've also been able to launch into a number of clinics already. There's a platform there that we can start to utilize immediately that we can incorporate into the numinous clinics. Certainly, as we grow and expand, there's opportunities to continue to grow and expand that platform as well. But something that we don't believe requires a lot of resources. And frankly, the data that we've been able to aggregate out of the numinous own clinics greatly enhances that model as well.
spk02: Thank you. And then do you have any additional color on your expectations on timing for that to close?
spk03: Yeah, so we're just working through the process right now, needing to complete definitive agreement. And then there's typically about a 60-day period after signing of the definitive agreement to do the shareholder vote on Numinous's side. But we should be able to see that happen fairly quickly. with, as I mentioned, a proposed timeline of end of August or early September.
spk02: All right. Thank you. And then just one last one for me that's more of a financial housekeeping question. I noticed that in terms of clinic revenues, you're down by about 18%, but you did have 6% growth sequentially on the clinic appointments. Could you kind of help quantify What drove that, I guess, disconnect?
spk03: Yeah, so as you mentioned, the closure of the Arizona clinic and just transitioning some of the services to some of the higher margin services that we've got, but Melanie might be able to provide some cover there too.
spk00: That was actually it. The appointments went up and the revenue, was because of the closure of the Arizona Clinic and some differences in some of the services that we provided.
spk02: All right. Thank you very much for taking my questions. Thanks, Michael.
spk04: We have no further questions at this time. I will now turn the call back over to Peyton for closing remarks.
spk03: Thanks, Operator, and thank you, everybody, for joining our conference call today. We look forward to speaking with everybody in November when we report our fiscal fourth quarter and full year 2024 results.
spk04: This concludes today's conference call. Thank you for your participation, and you may now disconnect.
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