Vitalhub Corp.

Good morning, everyone, and thank you for joining us for our 2024 first quarter conference call. Before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable security laws, including, among others, statements concerning the company's 2024 objectives, the company's strategy to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management and is subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Also, our commentary today will include adjusted financial measures, which are non-GAAP measures. These should be considered as a supplement to and not as a substitute for GAAP financial measures. Reconciliations between the two can be found in our MDNA, which is available on CDARplus.com and our website. With that, I will hand over the call to our CFO, Mr. Brian Gothenberg, to go over our financial highlights for the quarter. Please go ahead, Brian.

Good morning, everyone, and thank you for joining us today. The first quarter has set a strong pace for 2024, and I'm thrilled to discuss our accomplishments and the exciting trajectory we are on. We kicked off the year with remarkable growth, marked by significant increases in revenue, adjusted EBITDA, and net income, reflecting the success of our strategic initiatives and robust operational execution. Our focus on expanding and enhancing our healthcare technology solutions continues to drive increased adoption and deeper engagement with healthcare providers worldwide. We've also made strategic acquisitions that are already contributing to our top-line growth, while our operational efficiency efforts have helped improve our financial health. As we move forward, these results not only demonstrate our ability to execute our business plan, but also position us well for sustained growth throughout the year. I'll now highlight our key financial performance for the quarter. Total revenue for Q1 2024 reached 15.3 million, marking a 21% increase from 12.6 million in Q1 2023. This growth is driven by both organic initiatives and strategic acquisitions demonstrating our commitment to expanding our market reach. Revenue from term licenses, maintenance, and support in Q1 2024 reached 12.5 million, up from 10 million in Q1 2023, reflecting a 25% increase. This growth is primarily attributable to our sustained organic revenue increases with our core product offerings, bolstered further by strategic revenues approved through our recent acquisition. Term licenses maintenance and support continue to be a critical pillar of our revenue strategy due to their predictable and recurring nature. They comprise 82% of total revenues in Q1 2024, maintaining a consistent share compared to 79% in Q1 2023. Revenue from perpetual licenses in Q1 2024 was 121,771, down from 310,398 in Q1 2023, marking a decrease of 61%. Perpetual software licenses, which are influenced by the specific product mix sold in any given period, saw this reduction primarily due to the timing of delivery of several key in-touch products. Revenue from professional services and hardware in Q1 2024 totaled $2.67 million, compared to $2.29 million in Q123, an increase of 17%. This revenue stream can fluctuate based on the timing of hardware deliveries and the progression of customer projects. The increase in this quarter is primarily attributable to the successful deployment of new and ongoing customer projects, coupled with timely hardware deliveries, which have contributed positively to our growth in this sector. Annual recurring revenue, or ARR, of which we formally refer to as annual contract value, reached 47.8 million as of March 31, 2024, up from 44.6 million at the end of December 2023, marking a sequential increase of 7.2%. The substantial portion of this growth, 1.5 million, or approximately 3.4% of the total ARR, and translating to an annualized growth rate of 13.6%, was organic. underscoring our commitment to sustained growth through enhancements in our core service offering. Gross margin on total revenue for Q1 2024 was 81%, compared to 80% in the same period last year. This improvement is primarily attributable to an increase in high margin maintenance and support revenues, which represents a larger share of our overall revenue mix. Recurring revenue constituted 82% of total revenue this quarter, maintaining a consistent level with Q1 2023. highlighting our strong focus on sustained revenue streams. Operating expenses in Q124 were $8.8 million, reflecting a 15% increase from $7.7 million in the first quarter of 2023. This increase is mainly due to elevated sales and marketing activities, which included additional spending on conferences and exhibitions, as well as a sustained investment in research and development to further enhance our product offerings. Notably, Despite the increase in absolute figures, the operating expense as a percentage of revenue improved significantly, decreasing to 57.5% in Q124 from 60.7% in Q123. This demonstrates the ongoing operation efficiencies and cost synergies being realized across the company. Net income before income taxes in Q124 was $2 million compared to net income of $780,428 in the equivalent prior period. representing an increase of 154% year-over-year. This substantial growth in profitability for the quarter can be largely attributable to the significant rise in revenues driven by both organic growth and strategic acquisitions, alongside continued efforts to optimize costs and enhance operational cost synergies across our business units. Net income after tax in Q1 2024 was $1.3 million, a significant improvement from the net income of $162,000 in Q1 2023. This marks an increase of 713% year-over-year, highlighting our successful financial strategies and the robust growth stemming from both enhanced operation efficiencies and strategic acquisitions. EBITDA in Q1 2024 was 3.1 million compared to 2 million in Q1 2023, an increase of 56%. The substantial growth in EBITDA underscores our successful strategic initiatives and operational efficiencies that continue to positively impact our bottom line. Adjusted EBITDA in Q124 was 4 million, or 27% of revenues, compared to 2.9 million, or 23% of revenues in Q123, representing an increase of 38%. This improvement was largely driven by an increase in recurring revenues, which rose to 12.5 million in Q12, from 10 million in Q1-23. This revenue growth, combined with our persistent efforts to streamline operations and realize cost synergies, has significantly bolstered our adjusted EBITDA margins. Cash flow from operations before changes in working capital for Q1-24 was 2.9 million, compared to 1.5 million for the same period last year, representing an improvement of approximately 98%. This significant improvement This significantly increased highlights enhanced operational efficiency and robust revenue performance. Cash on hand at March 31-24 was $33.3 million, compared to $33.5 million at the end of 2023. The slight decrease over the quarter can be attributable to strategic financial moves, including an investment of approximately $5.3 million in acquisitions. Despite these expenditures, the company maintained a robust cash position due to strong operational cash flows and ongoing revenue growth. When you add our recent financing, the company now has in excess of $70 million in cash. With that, I'd like to hand the call over to Dan for an update on the business.

Thanks, Brian. Good morning, everybody. Just a brief update from me. I think we just spoke about six weeks ago with the end of the year, so not some radical change. Again, a good quarter for us in Q1. Again, proof of our business model being successful. cemented in and, you know, we continue to make acquisitions. We did get one over the finish line with Bookwell, Eisen, McWhorter, and our organic growth continued to go at a pace of $1.5 million, which is a high end of our guidance. You know, again, it's, again, proof of our ability to make an acquisition. I think it was highlighted. Our cash position remained the same, although we still made the acquisition of Bookwise for $5 million and a quarter. So we're using our own cash in that particular situation to make acquisitions. So it's something that we'd like to highlight. Again, adding the 1.5 was on the high end of our guidance in terms of ARR. A little bit on the Bookwise acquisition. We're excited about that one. It's a company that our UK group has known for a while. and has worked with and competed with in terms of room and resource booking in respect to outpatient facilities. So we have a little light module, light book-wise already in the in-touch suite of products, and it just gave us a more robust base. So we hope to get some good cross-sell base sales as we continue to work towards that. Again, organic growth was across all of our product lines, but was primarily led by the treat and transforming-based solutions. We're seeing and continue to see some uplifts in that particular product set and really good activity in respect to that. We did have some questions that came to me by email, which I do want to address. Some people started looking at the high balance of our accounts receivable relative to the other quarter. Q1 has a lot of seasonality in respect to our accounts receivable. We have a lot of our government year ends at the end of March. So we do have a lot of our renewals that come in at the end of March. So that has a lot to do with our AR perspective to do it. In respect to M&A, our expectation is to be very robust in that in the next little while. Our pipeline is really strong. We have a lot of activity going on in the M&A perspective with some of that being on the high end of the ARR side. So we're excited about that. We're excited about getting to the next phase of growth with M&A when positioning our organization to be able to absorb some of these larger acquisitions. So we are starting to make investments into our more into our corporate infrastructures, our integration methodology, so that we're ready for these in a concrete fashion. You saw the formation of Pat Mazza to COO. He's a seasoned veteran in terms of working in this particular space. We have other senior folks that are stepping up and other senior folks that we're looking to bring in to help us with these integrations. So a lot of that is starting to happen. on a global basis. So we continue to make investments in sales as well in our areas that we're not that, you know, we're not into that much in terms of the Mideast and Australia primarily. We're starting to see a little results of that, and we're starting to see the pipeline grows in both those areas, and we expect that to happen at the end of the year. So on a global basis, As we make some of these acquisitions, our financials could get a little bit blurred with these acquisitions in terms of as we work to right-size them and bring them into our fold. So we expect that to start happening over the next little while as we get into the latter part of this year. And I'll take any questions that anybody has.