CloudMD Software & Services Inc.

Hello, and welcome to CloudMD Software third quarter 2023 earnings 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 the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker for today, Mark Kendesma. You may begin.

Thank you, and good morning, everyone. Thank you for joining us on our third quarter 2023 conference call and webinar. We'll start the call with our CEO, Karen Adams, followed by CFO, Rakesh Patel. We'll provide a recap of the company's Q3 2023 financial results before opening for a question and answer period with our covering analysts. A reminder that today's discussion contains certain 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 an insurance of future performance or results. The risks related to forward-looking information are described in the company's MD&A, which is available on CDAR. We encourage you to review our public disclosure in context of all forward-looking information that you may hear today during the call. Investors are cautioned not to place a new reliance on such forward-looking information unless such information is a reasonable basis on information available to management as of today, or 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 to the extent required by law. Now, it's my pleasure to turn the call over to Karen Adams, CEO of ClientMe. Karen, over to you.

Thank you, Mark. Welcome, everyone, to CloudMD's Q3 2023 earnings call. We want to thank everyone for their patience as we reschedule this call. As you know, we had to delay this call due to KPMG's need for additional time to review our financial statements. Prakash will further address this in his comments. Let me start with an overview of our Q3 results. Q3 was a positive quarter with some significant milestones achieved. The team is following through on its commitments and it is reflected in our quarterly results. After many months of hard work and a commitment to path to profitability, we are pleased to report that we generated consolidated revenue of $23.6 million, an increase of 2% over the previous quarter, and a $750,000 improvement in adjusted EBITDA over the same period, leading to positive adjusted EBITDA of $49,000 a full quarter ahead of our commitment of break-even in Q4. Our EBITDA continues to grow due to effective operating cost management, realizing the previous reported over $20 million in annualized cost savings and a further $1 million annualized savings from back office optimization identified in this quarter and will be actioned in the next few months. The leadership team intends to continue this momentum through our objectives of managing costs and organic revenue. We also delivered strong and consistent margin growth over last year. While the trend line is positive, we will at times be impacted by seasonality and revenue mix, along with external factors such as rising costs against fixed-term contracts. This is all part of our forecast. However, we still expect margin expansion as we drive efficiencies through automation and continue to manage delivery costs during times of inflation and healthcare provider supply chain issues. I'm pleased with the trend line we are seeing with organic revenue, growth margin expansion, and cost control. I want to now turn to the operating divisions to provide a brief update. As previously reported in the Health and Productivity Division, we secured a foundational contract for remote patient monitoring in the United States. This contract will provide remote patient monitoring services for a hospital network with approximately 115 healthcare providers and over 25,000 patients that are suited for the program. This contract for remote patient monitoring is expected to generate approximately $3 to $4 million per quarter once fully implemented, providing a solid foundation of growth expected to begin early in 2024 and into 2025. In 2024, we will begin reporting patients on the Healthy Life platform using our remote patient monitoring solution. We continue to grow the pipeline in the United States, which is currently at $200 million. by adding a mix of healthcare systems as well as small and medium clinics. Healthcare systems take time during the acquisition phase, predicated by the need to work with their procurement processes. Additional time is required to properly train staff on best practices to quickly onboard patients with chronic conditions into the program most effectively. We will continue to create innovations with adding additional features within the platform Healthy Life. Our health and wellness solution segment had a mixed quarter with strong revenue. In the quarter, we renewed a large client in our assessment business with increased profitability and improved margins. Our pipeline continues to grow as clients have the desire to consolidate services with fewer vendors at the right cost. The current economic conditions, as well as the focus on increasing mental health issues for people of all ages, has shone a light on the necessity for our program to create engagement and support the resolution of mental and physical health issues. 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 issues. The increasing migration of clients to our services validates our competitive differentiated approach to health navigation at all stages of an individual's health journey. We have achieved annual revenue growth on a normalized basis of 10%, which is evidence of our momentum in the market. Our priority is to deliver double-digit organic growth while maintaining cost-cutting and delivering positive adjusted EBITDA. We continue to see contract findings that represent small, medium, and large organizations across multiple services. The revenue performance is supported by an increase in our cross-sell and multi-product sales, to our existing 7,000 clients, which you have heard me say is critical to revenue growth and lower customer acquisition costs. In a quarter, 39% of our sales were additional solutions sold to existing customers compared to 32% in Q2. 35% of our new contracts were for multiple products, a first for Cloud Empty. This increase in multi-year, multi-product sales led to a $2.8 million in ARR contract sold, including contracts with one of the big five technology companies in the world, a large railroad, and a prominent Canadian university, along with many other clients. We also had our largest quarter in new revenue for occupational health, with over 800,000 in annualized ARR. Subsequent to the end of Q2, we have signed an additional 246,000 new lives, including a large media and telecommunications company. We have also secured a new partnership with an insurer for EAP services that will launch in Q2 2024. Growth margins were down slightly due to revenue mix in the assessment division. This is a result of specific server types being requested within the period, even though revenue and volumes were up. The management team is leveraging our proprietary ISF platform to ensure capacity utilization to improve growth margins. In addition, EBITDA improvements are being made through the insourcing of the call center and redesigning of operations to meet customer demand and profitability. Management and health and wellness services will be continuing to Q4 in 2024 with geographic expansion in Alberta and Quebec. We will open office in Quebec in early Q1 2024 and expand our operational capabilities within the province. We will have a new industry leader to lead the operational management within the province for the delivery of our ecosystem of services. In Alberta, we will be expanding our assessment services and have attracted an industry leader in healthcare provider recruitment to ensure our ability to support growth. I want to take a moment and comment on our technology and specifically AI. As part of our growth pillars, we are using technology to create efficiencies that reduce costs and create a better user experience. Technology is also used for revenue generation, which can be achieved by delivering best-in-class services and move towards a single integrated data stack to farm deep insights by using AI and Gen AI. Near term, the team is building their first recommendation engine, an AI-powered system that creates recommendations for services, thereby creating an efficient and optimized user experience. This will continue to reduce dependency on all care pathways having to be completed by a nurse upon intake. The ability to automatically triage and prioritize a select number of treatment pathways will save time for staff and users alike, providing better, faster access to appropriate care. Further, continued investments in AI include moving towards hyper-individual customer engagement as we reform our content engine to tailor suggestions to users based on their core needs and preferences. We believe investments into this will elevate user engagement and deepen brand loyalty to our services. All things I have addressed today speak about our strategy and action. The leadership team is focused on generating high-quality organic growth identifying operational improvements with integration and cost efficiency, and improving cost management. We are pleased with the progressive results that are indicative of our sustainable growth and the narrowing of the gap to profitability. I will now ask Prakash to provide some commentary on the Q3 results and address the shared consolidation vote, okay? Thanks, Karen.