Newtopia Inc.

Greetings and welcome to Nootopia Incorporated third quarter 2021 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Kimberly Estikin with Investor Relations. Thank you. You may begin.

Good evening and welcome to Newtopia's third quarter 2021 earnings conference call. Joining me today are Jeff Ruby, founder and chief executive officer, Edmund Lem, interim chief financial officer, and Laura Dodo, chief growth and operating officer. Please note that today's call is being broadcast live over the internet and will also be archived for both telephone and online listening upon completion of the call. Details on how to access the replays are available in the company's Third quarter earnings press release issued this afternoon and can be found on the investor section of Newtopia's website at www.newtopia.com. Before we begin, let me remind you that certain matters discussed during today's call or answers that may be provided to questions asked during the Q&A portion of the call could constitute forward-looking statements, which are subject to certain risks and uncertainties related to Newtopia's future financial and business performance. Actual results could therefore differ materially from those anticipated in such forward-looking statements. Newtopia is under no obligation to update any forward-looking statements discussed today, and investors are cautioned not to place undue reliance upon these statements. The risk factors that may affect results are detailed in Newtopia's periodical results and registration statements, which you can access on the CDAR database at cdar.com. Also, please note that all figures stated on today's call are in Canadian dollars, unless otherwise noted. I would now like to turn the call over to Jeff Ruby, founder and CEO of Newtopia. Please go ahead, Jeff.

Thank you, Kimberly, and thank you to everyone for joining us today on our first earnings conference call. We look forward to sharing with you more about our success as a publicly traded company over the past year and a half, as well as providing further details on our go-forward business strategies. I am particularly pleased to note that Newtopia recorded strong sequential and year-over-year revenue improvements in the third quarter, a true indication that our business is returning to growth as anticipated. I'll begin today's call with a quick overview of our business, as well as some highlights of the third quarter. I'll then turn the call over to Edmund Lem, our Interim Chief Financial Officer, for a more detailed discussion of the quarterly results. Lara Dodo, our Chief Growth and Operating Officer, will conclude today's discussion with commentary on our growth drivers and updated business development strategy. Newtopia saw strong growth in the third quarter as a result of the successful rollout of a Fortune 50 health services client and the evolution towards more standard operating procedures for our U.S. clients. Q3 revenues totaled $2.9 million, up 22% year-over-year, and up 15% sequentially. Gross profit also improved to total $1.4 million or 50% of revenue for the quarter compared with the $1.2 million or 49% of revenue in the third quarter of 2020 and $1.1 million or 42% revenue in the second quarter of 2021. As stated in today's earnings press release, while we are now anticipating flat year-over-year revenue due to the pandemic, I am very confident that our newly expanded sales strategy to larger health insurers which we officially launched this year, will set us up for growth in 2022 and even further top-line improvements in 2023. We'll speak further to this growth strategy later in today's call, but first, some more background on our company. For those new to our story, we are a tech-enabled habit change provider, helping health insurers prevent, slow, and reverse chronic disease. We leverage the best of humans, our health coaches, whom we call inspirators, with the best of digital, our proprietary habit change platform and data analytics to incrementally change habits around nutrition, exercise, and mental well-being. Importantly, we are the only tech-enabled habit change provider with CDC accreditation incorporating genetic data and leveraging HIPAA-compliant technology. While there are other virtual healthcare providers and chronic disease prevention programs on the market today, None have the extensive research, data, or proven results of Neutopia to prevent, reverse, and slow physical and mental risk factors underlying chronic disease. Before we set our sights on commercialization in 2017, we spent three years in a gold standard randomized control trial funded by Aetna. This disciplined, evidence-based approach has served our clients well. Results from this study showed significant annual cost savings of just under US $1,500 for Aetna employee participant. In a more recent study conducted with Medicare Advantage customers, our results demonstrated even stronger savings of US $1,700 per member per year. There's no doubt there's a need for Newtopia. Today, 90% of America's $4 trillion annual health care costs paid for by health insurers are attributed to individuals with chronic health conditions, including obesity, diabetes, cardiovascular disease, many forms of musculoskeletal disorders, and cancer. A healthy individual typically incurs roughly US$3,400 in annual medical expenses, but if that individual unfortunately reaches chronic status, annual medical costs can reach in excess of US$20,000. That's a massive, unmanaged liability for which health insurers must cope. Drilling this down further, nearly 80% of the North American population has at least one of five factors that put them at risk for chronic disease. That's equivalent to 320 million people. If each of those individuals were part of the Nootopia platform and generated on average $1,600 in revenue over the course of three years, our total revenue opportunity could reach more than $500 billion. That's a tremendous opportunity, but also easier said than done. The traditional health insurance model monetizes sickness rather than attempts to prevent disease. That's where Nootopia comes in. We are flipping the health insurance industry on its side, saving health insurers from significant liability and instead helping them generate additional revenue by working to keep their employees or members healthy, and therefore preventing them from ever reaching chronic status. To achieve this goal of whole person health care and chronic disease prevention, Newtopia follows a one-size-fits-one approach. We get to know each of our participants socially, behaviorally, and genetically, and then tailor our recommendations to that individual's needs, whether that be providing exercise routines, advice on dietary changes, or methods to improve mental and emotional health. By placing the individual at risk at the center of everything, we build confidence in durable new habits that stack on top of one another over time. As we emerge from the pandemic, we are already seeing a surge in the number of chronic disease cases, both physical and mental, due to isolation, poor eating, inactivity, and overall mental stress. Health insurers need to find ways to address the increase in chronic and pre-chronic conditions while still keeping their costs in check. Even the CDC has noted that we need to find innovative, technology-driven solutions to our healthcare needs. That's where Nootopia's unique offering comes into play and how we've succeeded in partnering with a growing list of Fortune 500 companies. With a further rollout of the COVID-19 vaccine and a return to in-person working conditions, we are seeing our client base increase their usage of risk identifiers in their populations, including in-person biometric testing and online health risk assessments, as a means by which to identify chronic disease risk factors. This acceptance of a combined approach to risk assessment that uses both in-person and online testing is helping us onboard additional participants onto our platform compared to earlier in the pandemic when there were limitations in conducting in-person biometric testing. Our performance for Q3 was in line with our expectations. Following the 300% increase in enrollment fee revenues in the second quarter, we expected an increase in our top-line growth in the third quarter and an overall returns growth in the second half of the year. We also continued to see record levels of engagement on our platform. Quarterly engagements increased to total 37,000 participants. Though the impact of COVID-19 is certainly decreasing, as a result of the pandemic, our internal expectations for year-over-year revenue growth have been pushed out approximately one year. As you can imagine, we're certainly not pleased with flat year-over-year revenue performance. We are making headway, however, and the momentum we are seeing thus far in the second half of the year, along with an expanded business development effort, position us strongly for revenue growth in 2022 as we prove out new health insurer channels and even better top-line growth in 2023 as we move into broader commercialization of those opportunities. We have a strong pipeline of new revenue generating opportunities and look forward to sharing our progress over time. The ability to identify risk factors, to expand our physical and mental health product offerings, and to diversify our client base are all supported by our ongoing investments in research and development. At the end of the third quarter, we amended our revolving credit facility with a leading Canadian Schedule 1 bank, as well as closed a private placement offering which doubled the amount of growth capital available to our company to hire additional inspirators, expand our sales and marketing teams, and continue to advance our technology efficiencies, key to our R&D efforts. Laura will discuss our R&D and business development efforts. But first, I'll turn the call over to Edmund Lem to speak to the third quarter financial results and outlook in greater detail.