Mednow Beats Guidance & Achieves Record Q3 2022 Financial Results with 225% Q/Q Revenue Growth & 4800% Y/Y Revenue Growth and Appoints Ali Reyhany CEO
- Q3/22 revenue increased over 225% quarter-over-quarter, and more than 4,800% year-over-year;
- Mednow patient count increased by approximately 20% to ~23,000 in Q3 versus ~19,000 in Q2;
- In the 2022 calendar year, revenue is forecasted to range between C$42.5M and C$47.5M; approximately C$42M will come from its pharmacy services, while approximately C$3M will come from doctor services;
- 2022 gross margin is expected to average approximately 20%, with 40K – 45K active patients, and a net loss for the year;
- Revenue for the 2023 calendar year is forecasted to range between C$105M and C$110M, with C$102M from pharmacy services while C$5M is expected to come from doctor services;
- 2023 gross margin is expected to average 25%, with 110K – 120K active patients;
- In the 2023 calendar year, Mednow is expected to produce approximately $5M to $10M in Adjusted EBITDA;
- Revenue is expected to grow 2,400% in 2022 relative to 2021 and 140% in 2023 compared to 2022;
- Founder and Chairman, Ali Reyhany to assume the role as CEO, taking over for Karim Nassar.
Toronto, ON. (June 15th, 2022) – Mednow Inc. (“Mednow” or the “Company”) (TSXV:MNOW) (OTCQX:MDNWF), Canada’s on-demand virtual pharmacy, is pleased to announce it has released its financial results for the period ending April 30th, 2022 (“Q3 2022”). Mednow’s Financial Statements and Management, Discussion & Analysis are available on sedar.com and on the Company’s website, https://investors.mednow.ca.
Key Milestones During and Subsequent to Q3 2022:
- Revenue increased by 225% quarter-over-quarter, to $6,136,511 during the three months period ended April 30, 2022, driven primarily by sales from the Company’s retail pharmacy operating segment.
- Retail pharmacies based in British Columbia, Manitoba, Ontario and Nova Scotia collectively generated revenue of $5,712,574, as compared to $0 in the prior year comparative period.
- Revenue generated by doctor services was $382,537, as compared to $0 in the prior year comparative period.
- Revenue was $41,400 from its pharmacy agreement with Mednow East Inc., as compared to $124,200 of revenue in the prior year comparative period, which was generated from pharmacy agreements with Mednow East Inc. and an equal amount with Mednow West.
- Gross margin for the quarter increased 900% year-over-year to $1,232,876, as compared $124,200 in the prior year comparative period.
- EBITDA for the quarter was a loss of $5,193,732, as compared to a loss of $3,359,184 in the prior year comparative period, representing a decrease in EBITDA of $1,834,548 compared to the prior comparative period.
- The change is primarily driven by increased corporate costs, such as increased headcount, technology development and marketing as the Company has continued to build out its internal teams in order to scale and grow its businesses.
- Adjusted EBITDA for the quarter was a loss of $4,444,474, as compared to a loss of $1,882,454 in the prior year comparative period, representing a decrease in adjusted EBITDA of $2,562,020.
- Adjusted EBITDA has been adjusted for certain items as explained further below under the heading “Definitions of Certain Non-IFRS Financial Measures.”
- On February 24, 2022, Mednow provided annual forecasted growth figures for the calendar years 2022 and 2023.
- For the calendar year 2022, revenue is forecasted to range between C$42.5M to C$47.5M. Contributions of approximately C$42M will come from its pharmacy services, while C$3M will come from doctor services. The gross margin is expected to average approximately 20%, with 40,000 – 45,000 active patients, and a net loss for the year.
- For the calendar year 2023, Mednow is expected to produce adjusted EBITDA of approximately $5M – $10M. Revenue for 2023 is forecasted to range between C$105M to C$110M, with C$102M contributed by pharmacy services and C$5M coming from doctor services. The gross margin is expected to average 25%, with 110K – 120K active patients.
- Mednow patient count increased significantly quarter over quarter, growing by approximately 20% to ~23,000 in Q3 versus ~19,000 in Q2.
- The Company is pleased to announce that Ali Reyhany, the Company’s current director, President and Chairman of the board, has been selected to replace Karim Nassar, as Chief Executive Officer effective June 15. As the Company’s founder and architect of its culture, the Company’s board of directors believes Mr. Reyhany is singularly qualified to serve as Chief Executive Officer.
- The Company thanks Mr. Nassar for his contributions to the Company and wishes him the best on his future endeavors.
- At the end of January, Mednow received approval from the Ontario College of Pharmacists for its new flagship fulfillment center in Toronto. The site boasts 20,000 square feet of space, with room for further expansion and growth.
- This location houses a secured floor for the pharmacy, the Mednow online shop, the customer support centre, and the automation and technology to support and optimize Mednow’s PillSmartTM and nutraceutical offerings.
- Separately, this location houses the Toronto corporate office and the logistics command center for the entire Company.
- Mednow expects to have the capability to deliver across Canada when it anticipates launching its (i) Montreal, Quebec and (ii) Calgary, Alberta fulfillment centres this summer.
Mednow For Business (MFB)
MFB has demonstrated strong traction already, with access to over 500,000 lives. MFB is an enterprise pharmacy solution suited to employers to better manage their drug benefit expenditure, which normally represents up to 80% of the total benefits expenditure made by employers. In addition, MFB also offers wellness and digital health programs to their employees, which includes a broad spectrum of solutions including digital pharmacy, nutritional services, personalized vitamins and supplements programs, and a wellness store which includes a broad array of health-related products.
To date, MFB has formed strategic channel partner relationships with PACE Consulting Benefits and Pensions Ltd., PACE Consulting MGA Services Inc. and Sterling Capital Brokers. MFB has launched and onboarded over 30 employers, which equates to approximately 3,500 corporate users on the Mednow pharmacy platform, including, but not limited to Tucows, Consensus Cloud Solutions, and Arista Networks. Furthermore, MFB has a healthy pipeline of groups which is expected to be launched in the coming months, and is working with multiple net new partners.
Marketing and Customer Service
To date, Mednow has achieved a perfect 5.0 rating on Google. Although in the early stages of scaling, this reinforces to Mednow that its product offering and customer service so far resonates with Canadians, and that there is product market fit. With that established, Mednow is about to embark on an integrated awareness and conversion-focused national marketing campaign. This first for the Company will include TV, out-of-home (billboards), digital and social media. Additionally, in early March 2022, Mednow launched an enhanced version of its web application that improves user experience, supports scalability and security which is also available from the Apple and Android app stores.
- On January 26th, 2022, Mednow was awarded the 2022 Best WorkplaceTM – Start-ups. In a year where many employers experienced high levels of employee turnover, dubbed by some as “The Great Resignation” Mednow was able to grow its employee base by more than three times to approximately 60 employees since its initial public offering in March 2021.
- On March 8, 2022, International Women’s Day, Mednow was named on the Great Place to Work® 2022 Best Workplaces for Women list. The list was created following a thorough and independent analysis conducted by Great Place to Work®. This includes direct feedback from employees of hundreds of various organizations surveyed by Great Place to Work®.
Summary of Financial Results
Below is a summary of each operating segment’s performance for the three month period ended April 30, 2022 and 2021.
Source: Mednow’s MD&A as of June 15, 2022
Normal Course Issuer Bid Update
As at April 30, 2022, the Company purchased and canceled a life to date total of 309,100 common shares for $865,955 of cash consideration. The life to date weighted average cost of the canceled shares totaled $455,233 resulting in a loss on cancellation of $410,822 allocated to the deficit. During the period ended April 30, 2022, the Company did not purchase and cancel common shares.
Stock Option Grant
The Company amended its current stock option plan to replace the previous rolling stock option plan (the “Old Plan”) with a 20% fixed stock option plan (the “New Plan”). Under the New Plan, the Company may issue up to an aggregate total of 4,372,132 stock options to purchase common shares in the capital of the Company.
The Company approved the grant of a total of 315,000 Options to certain officers, directors, employees and consultants of the Company pursuant to the New Plan. Subject to the policies of the TSX Venture Exchange (the “TSXV”) and the terms and conditions of the New Plan, the Options will have an exercise price equal to Mednow’s closing share price on June 14, 2022, and shall expire five years from the date of grant and shall vest over four years.
CORPORATE UPDATE OF FINANCIAL PERFORMANCE
The Company provided a corporate update on February 24, 2022, on its calendar 2022 and 2023 financial objectives. Pursuant to the update, the Company forecasts to generate annual revenue between the range of $42.5 million to $47.5 million for the calendar 2022 year, which comprises the months from January to December 2022. The Company projects $42 million of revenue from the retail pharmacy business segment, and $3 million from the doctor services operating segment. The Company forecasts to have 40,000 to 45,000 active patients by the end of the 2022 calendar year. The Company forecasts gross margin of approximately 20% and a net loss for the year.
For the 2023 calendar year, comprising the months from January to December 2023, the Company forecasts annual revenue between the range of $105 million to $110 million, with $102 million of revenue from the retail pharmacy operating segment, and $5 million from the doctor services operating segment. The Company forecasts to have 110,000 to 120,000 active patients by the end of the 2023 calendar year. The Company forecasts gross margin of approximately 25% and Adjusted EBITDA in the range of $5 million to $10 million. The Company plans to open retail pharmacies in Alberta and Quebec later this year.
The Company’s calendar 2022 results for the period ended April 30, 2022, are summarized below. The Company had 23,000 active patients at the end of April 2022.
As of the date of the report, June 14, 2022, management has assessed that the Company is on track to meet the 2022 calendar year objectives and financial forecast above, and the Company confirms that there are no material differences in the underlying assumptions and factors that were used to develop the Company’s forecast.
RECONCILIATIONS OF NON-IFRS MEASURES
DEFINITIONS OF CERTAIN NON-IFRS FINANCIAL MEASURES
This Press Release uses certain non-IFRS financial measures which are defined below. Non-IFRS financial measures are not standardized financial measures under IFRS. As such, these measures may not be comparable to similar financial measures that are disclosed by other companies. These measures include “EBITDA” and “Adjusted EBITDA”. These measures are provided as additional information that is disclosed to provide further insight into the Company’s results of operations from management’s perspective. These measures should not be reviewed and assessed as a substitute for financial information reported under IFRS. A reconciliation of the non-IFRS measures to the IFRS measure is in the section “Selected Financial Information”.
EBITDA and Adjusted EBITDA
EBITDA represents net loss and comprehensive loss for the period before interest expense, income taxes, depreciation and amortization expenses. Adjusted EBITDA represents net loss and comprehensive loss for the period before interest expense, income taxes, depreciation and amortization expenses, loss on investment in equity securities, share-based compensation expense, and acquisition costs. These adjustments to calculate the non-IFRS measures of EBITDA and Adjusted EBITDA are for items that are not necessarily reflective of the Company’s underlying operating performance. As there is no generally accepted or standard method of calculating EBITDA, these measures are not necessarily comparable to similarly titled measures reported by other issuers. EBITDA and Adjusted EBITDA are presented as management believes it is a useful indicator of the Company’s relative financial performance. These measures should not be considered by an investor as an alternative to net income or other IFRS financial measures as determined in accordance with IFRS.
The Company presents EBITDA and Adjusted EBITDA to indicate ongoing financial performance from period to period, including comparative prior year periods. The Company has disclosed certain non-IFRS measures on this report, including the disclosure of non-IFRS financial measures for prior year comparative periods.
Reconciliation of Non-IFRS Financial Measures
The following are reconciliations of net loss and comprehensive loss to EBITDA. The adjustments include:
- The amortization and depreciation expenses of intangible assets, fixed assets, and the right-of-use assets of the Company.
- The interest expenses, which primarily includes interest expense on the Company’s credit facility and interest expense recorded in accordance with IFRS 16.
- The underlying income taxes recorded.
The following are reconciliations of EBITDA to Adjusted EBITDA. The adjustments include:
- The loss on investment in equity securities in connection with the Company’s investment in Life Support.
- The share-based compensation expense recorded by the Company in connection with the stock option plan.
- The acquisition costs incurred by the Company.
The exclusion of certain items in calculating the non-IFRS measures does not imply that they are non-recurring, infrequent, unusual or not useful to investors.
About Mednow Inc.
Mednow is a healthcare technology company offering virtual access with a high standard of care. Designed with accessibility and quality of care in mind, Mednow.ca provides virtual pharmacy and telemedicine services as well as doctor home visits through an interdisciplinary approach to healthcare that is focused on the patient experience. Mednow’s services include free at-home delivery of medications, a user-friendly interface for easy upload, transfer, and refill of prescriptions, access to healthcare professionals through an intuitive chat experience, a specialized PillSmart™ system that packages prescriptions and vitamins by date and time, and doctor consultations.
Investor Relations Contact:
Benjamin Ferdinand, Chief Financial Officer
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
This release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. All statements in this news release, other than statements of historical facts, including statements regarding future estimates, plans, objectives, timing, assumptions or expectations of future performance, including without limitation, the Company’s expectation that during the next 12 months, the Company will build and open retail pharmacies in the provinces of Alberta and Quebec, the Company’s expectation that it will have national delivery capabilities in summer 2022, the Company’s expectation that its marketing campaign will include TV commercials, social media marketing campaigns directed at consumers along with billboard campaigns, the Company’s expectation that in 2022 the Company’s revenue will range between C$42.5M and C$47.5M and that approximately C$42M will come from its pharmacy services, while approximately C$3M will come from doctor services, the Company’s expectation that the Company’s 2022 gross margin will average approximately 20%, with 40,000 to 45,000 active users, and be a net loss for the year, the Company’s expectation that revenue for the 2023 calendar year will range between C$105M and C$110M, the Company’s expectation that the Company’s 2023 gross margin will average approximately 25%, with 110,000 to 120,000 active users, the Company’s expectation that it will produce adjusted EBITDA of approximately $5M to $10M in the 2023 calendar year, and the Company’s expectation that revenue will grow 2,400% in 2022 relative to 2021 and 140% in 2023 from 2022 are forward-looking statement and contains forward-looking information.
Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as “intends” or “anticipates”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “should”, “would” or “occur”. Forward-looking statements are based on certain material assumptions and analysis made by the Company and the opinions and estimates of management as of the date of this press release, including that the Company will be successful in the deployment of its resources and personnel, the Company’s marketing campaign will include TV commercials, social media marketing campaigns directed at consumers along with billboard campaigns, that during the next 12 months, the Company will build and open retail pharmacies in the provinces of Alberta and Quebec, the Company will have national delivery capabilities in summer 2022, the Company’s operations will not be adversely impacted by COVID-19, the availability of financing, the cost of planned expansion, third party contractors and supplies and governmental and other approvals required to conduct the Company’s planned activities will be available on reasonable terms and in a timely manner and that general business and economic conditions will not change in a material adverse manner, the Company will be successful in its targeted marketing campaigns and advertising initiatives that will allow the Company to grow its active patients to 40,000 to 45,000 active users in calendar 2022 and 110,000 to 120,000 active patients in calendar 2023, the Company will be successful in growing its active users to its estimated target range in calendar 2022 and calendar 2023, which will allow the Company to generate between C$42.5 million and C$47.5 million of revenue, average gross margin of 20% and a net loss in calendar 2022, and between C$105 million and C$110 million of revenue, average gross margin of 25% and adjusted EBITDA in the range of $5 million to $10 million in its calendar 2023 year, the Company will be able to continue to buy medications and other goods at reasonable prices and underlying purchase terms to achieve its expected gross margin in calendar 2022 and calendar 2023, the Company will be able to control operating costs to be able to achieve its target and forecasted earnings and adjusted EBITDA, the Company’s web and mobile application will be able to support a higher number of patients and users who will use the application to transact with the Company, and the Company will be successful in its strategic objectives, including the integration of existing business acquisitions and the pursuit of other investments and acquisitions.
These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Important factors that may cause actual results to vary, include, without limitation, changes in market conditions, fluctuations in the currency markets, changes in national and local governments, legislation, taxation, controls, regulations, and political or economic developments in Canada or other countries in which the Company may carry on business in the future; risks relating to the credit worthiness or financial condition of suppliers and other parties with whom the Company does business; inadequate insurance or inability to obtain insurance to cover these risks; availability and increasing costs associated with operational inputs and labor; business opportunities that may be presented to, or pursued by the Company; the Company’s ability to successfully integrate acquisitions; the ongoing economic impacts of the COVID 19 pandemic and the war in eastern Europe, and the risk factors discussed or referred to in the Company’s disclosure documents under the Company’s profile at www.sedar.com
Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The Company does not undertake to update any forward-looking statement, forward-looking information or financial out-look that are incorporated by reference herein, except in accordance with applicable securities laws.