CloudMD Software & Services Inc.

Good day and thank you for standing by. Welcome to the CloudMD second quarter 2023 earnings 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'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Kindersma, Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us for our second quarter 2023 conference call and webinar. We'll start the call with our CEO, Karen Adams, followed by CFO, Prakash Patel. We'll provide a recap of the company's Q2 2023 financial results before opening for a question and answer period with our covering analysts. A reminder that today's discussion contains some forward-looking information. which involve inherent risks and uncertainties and other factors that could cause actual results to differ materially from management's current expectations. Forward-looking information should not be interpreted as assurance of future performance or results. The risks related to forward-looking information are described in the company's MD&A, which is available on CR. We encourage you to review our public disclosure in context of all forward-looking information that you may hear today during this earnings call. Investors are cautioned not to place undue reliance on such forward-looking information unless such information is considered a reasonable basis on information available to management as of today. However, the company disclaims any intention or obligation to update or review any forward-looking information as a result of new information, future events, or any other reason except for to the extent required by law. Now it's my pleasure to turn the call over to Karen Adams, CEO of CloudMD. Karen, over to you.

Thank you, Mark. Welcome, everyone, to CloudMD's Q2 2023 earnings call. I also want to formally welcome Prakash Patel to his first call as Chief Financial Officer. In addition, we have Nathan Lane, who leads our Health and Productivity Operating Division in the United States, who will be participating in the Q&A portion of the call. In today's call, I will give an overview of our Q2 performance and highlights from our two operating divisions with comments on market trends and themes. As we have discussed on previous calls, for the last 12 months, the leadership team has been focused on generating high-quality organic growth, identifying operational improvements with integration and cost efficiency, and improving cash management. We are pleased with the progressive results that indicate sustainable growth and a narrowing of the gap to profitability. In the second quarter, we generated consolidated revenue of $23.2 million, which represents sequential growth. This growth was led by our mental health and assessment businesses. On a consolidated basis, gross margin was 38.2%, which represents a 130 basis point improvement over the previous quarter. On a consolidated basis, we achieved a 700,000 sequential improvement in adjusted EBITDA. These results reflect the decisions we made around our priorities and focus on execution. This consecutive quarter of revenue growth was due to multiple factors. In the quarter, we crossed over 1 million subscription employees with access to our integrated healthcare navigation, which is comprised of our mental health and medical care services. These employees can engage with family members in whole person experience that is demonstrating health outcomes. Over 32% of our new contracts are existing customers buying new services. That is up from 30% in the previous quarter. The sustainable revenue growth is due to the market demand for healthcare navigation solutions that support health risk management needs. In Q2, we continued to build the pipeline, which now sits at $58 million. This is an increase over Q1 2023. In the quarter, we closed $2.3 million in ARR with a mix of large local branded clients and small clients. Customer acquisition costs are benefiting from an increase in cross-sell sales. Also of note, 25% of all new customers are buying more than one service. So consolidated pipeline does remain strong at $58 million. In Q2, we finalized the sale of our electronic medical records and practice management assets, which provides an inflection point for CloudMD. We have divested all major non-core assets that were not aligned to our go-forward strategy. Prakash will discuss vision pros in the financial section. Our focus for the last two quarters was identifying the core assets, optimization and efficiency, maximizing revenue mix, and customer profitability. These initiatives resulted in consistent improvement in our financial position. As such, our go-forward focus is on two divisions, which are our health and wellness employer services and our health and productivity technology solutions. As we reported last week, our Health and Productivity Solutions business has secured a foundational contract for remote patient monitoring in the United States. This contract will provide monthly services for a health system of 115 healthcare providers, including over 25,000 chronic health patients. This United States addressable market for remote patient monitoring is $4.4 billion, with 26 states having Medicaid coverage. This is because remote patient monitoring can reduce readmissions to hospitals, as well as provide patients with the reassurance of their health condition status. Our proprietary Healthy Life app will enable us to seamlessly add new services to support whole health, such as our ICBT and newly developed glucose monitoring program. This new market segment for CloudMD capitalizes on whole person care and an ecosystem that is technology-enabled. This organic growth, leveraged internally, developed technology to tap into a new market, providing new streams of cash flow and generating healthy growth margins. We look forward to updating you on the progress of this important market segment's growth over the next few quarters. In the last few quarters, we have focused on cost savings and optimization. In this quarter, we welcome Bram Lowski to lead our largest revenue division health and wellness services, with a mandate to build efficiency, scale, and double-digit organic revenue growth. As I previously reported, this is required to take advantage of our business model of one company with diversified services that needs to be interdependent with each other for scale and to achieve profitability. This work is in the execution phase and is demonstrating consistent improvement in gross margin and revenue growth. An example of this strategy in action is using KEY to drive operational enablement for nurses to easily manage clients, which is resulting in margin improvements. The product team introduced innovative technology-enabled tools that support a seamless experience and realize a higher revenue per customer. Our bundled service offerings such as Mental Health Coach combined with traditional EFAP and ICBT and medical care as one product solution will capture market share and support a unified, connected user experience. Our land and expand strategy will offer our 7,000 clients access to industry-leading, clinically proven health outcome solutions. In this operating division, we have reduced our core operating expenses, improved customer acquisition costs, and expanded gross margins, leading to better profitability. I want to take a few moments to talk about market trends. These market trends are important in validating our approach to support healthcare with our foundational integrated platform, Key. The first is growth in healthcare navigation and virtual care. There are two trends to note in this area. Healthcare navigation is gaining momentum as individuals with health issues struggle to identify the right resources to solve mental and physical health issues. Our customers are looking for ways to reduce patient health risks, as well as financial and liability risks. Customers are looking for ways to ensure that their group benefit costs are being deployed to improve health outcomes. In a recent poll facilitated by CloudMD, human resources buyers indicated that 90% would consider implementing a new mental health model over traditional employee assistance programs. There is growing evidence that individuals experiencing mental health issues are requiring a more whole person approach to the treatment, including how the solution is delivered. Access to coaching, digital, and in person, coupled with the ability to access psychological assessments, is a growing demand. The shift from transactional products that solve health problems to a suite of services designed to support health risk management is aligned to our approach and why we are seeing an increase in the purchasing of bundled services. Another key area of health navigation is using virtual care for chronic illness that enables remote monitoring and support. Remote patient monitoring is critical to reduce hospitalization and provide ongoing support to patients with chronic illnesses. This is a growing market that will be further amplified with hospital budget cuts and, in some cases, closures across North America. We will be looking to launch a remote patient monitoring Canada in early 2024. The second trend is consolidation of vendors to enable accountability and more effective use of spend. In the current economic condition, employers and users are focused on the financial spend of rising benefit costs. The desire to consolidate services with less vendors at the right cost is a conversation we are having with many of our customers. CloudMD was founded on whole person care and the ability to build an ecosystem of solutions that would address an individual's mental and physical health issue. This validates our approach since our inception to ensure we own the assets of health risk management. Our investment in the key platform enables bundling of services and the delivery of care making consolidation of benefit programs convenient and affordable. Key is the vehicle that ensures users are matched with healthcare professionals who can collaborate in managing healthcare with a focus on return to function. Finally, I want to address the interest in technology and artificial intelligence in supporting a user experience. It is a fact that technology and AI can accelerate more personalized experience while enabling better delivery of care. In Q2, we hired a new CTO, Dhruv Chandra, an executive with executive experience in multinational organizations specializing in cybersecurity and digital transformation. Dhruv will be working with Aida Bevich and the product team to develop technology that supports a better user experience and provides more scale for our operations. We will use AI to strengthen our products and as support tools to augment healthcare provider treatment. We want healthcare providers delivering care to patients and using technology and AI to streamline experiences. In the coming quarters, we will continue to evolve our smart nurses, continued evolution of our live healthcare chat, and integration of our services with other platforms for payment and benefit information. All of the things I have spoken about today signifies our strategy in action. I will now invite Prakash to provide an overview of our financial performance. Prakash?