Skylight Health Group Inc. (TSXV:SHG; OTCQX: SHGFF) (“Skylight
Health” or the “Company”), a multi-state primary care management
group in the United States, today announced its financial results
for the first quarter ended March 31, 2021.
First Quarter Financial
Highlights:
- Revenue increased 76% to $5.2
million, compared to $2.9 million for the same period last year,
and up 62% from $3.2 million in the fourth quarter of 2020.
- Gross profit margin was 69% for the
quarter, compared to 65% for the same period last year, and 68% for
the fourth quarter of 2020.
- Adjusted EBITDA improved 35% with a
loss of $1.3 million, compared to a loss of $2.1 million in the
fourth quarter of 2020, and a loss of $0.6 million the same period
last year.
- Cash balance of $15.3 million as of
March 31, 2021.
“The Skylight Health team delivered an
exceptionally strong quarter with revenue up over 76% compared to
the same period last year, and 62% compared to the fourth quarter
of 2020,” said Prad Sekar, CEO and Co-Founder. “We exited Q1
profitable at the clinical level, and the investments made in the
first quarter continue to be reflected in our strong on-going
growth. We spent the first quarter putting the right leadership
team in place to continue the shift to value based care payment
models, which we believe will significantly improve patient
economics in the upcoming quarters. This recruitment and alignment
of employees is an investment in human capital that we are
confident will drive strong shareholder value in return.”
Revenue increased 76% from the same period last
year due to additional revenue being contributed by the clinics
acquired during the fiscal year ended December 31, 2020, and the
quarter ended March 31, 2021.
US clinical operations generated positive net
income of $49.5 thousand and Adjusted EBITDA of $0.3 million
demonstrating that primary care clinical acquisitions continue to
be immediately accretive.
The Company closed on two acquisitions during
the quarter, Apex Family Medicine LLC (“Apex”) on January 4, 2021,
and River City Medical Associates (“RCMA”) on February 3, 2021. As
such, the Company’s second quarter will be the first period that
includes a full three months of contribution by RCMA. Further, the
subsequent acquisition of Rocky Mountain in the second quarter will
contribute to expected revenue growth in Q2 2021. The Company
remains committed to a strong growth by acquisition model fueled by
a strengthened balance sheet and robust pipeline.
Skylight Health has seen a rise in expenses in
three major categories: share-based compensation, professional
fees, and marketing activities. Of its $2.7 million net loss,
non-cash items represented $1.8 million. These include depreciation
and amortization and share-based compensation, connected to the
recruitment of key leadership, management and operational hires as
part of its employee stock option plan.
Within Adjusted EBITDA loss of $1.3 million,
approximately $1.1 million was spent on professional fees and
marketing and business development expenses to build a national
healthcare brand. The Company’s Adjusted EBITDA is expected to
continue to improve with expected acquisitions in the future that
bring positive cash flow.
Outlook
Skylight Health remains focused on growth, both
organically, and through acquisition, as it rapidly captures market
share within the US healthcare network. The Company continues to
prioritize the integration of health technology solutions to help
small and independent practices shift from a traditional
fee-for-service (FFS) model to value-based care (VBC) through
proprietary technology, data analytics and infrastructure. This
organic growth through an increase in insurable services represents
a predominant portion of revenue and is where the Company expects
to see its strongest growth in future periods. The Company expects
that by year end, the large majority of investments made at the
start of the year will result in both a higher growth of revenue
driven organically and by acquisition and will also result in
stronger EBITDA recognition. The Company is focused on competing
aggressively for market share growth in three areas: acquisition of
primary care practice groups, development of its single system of
operation and clinical leadership, and conversion from
fee-for-service to value-based-care. With the growing demand for
accessible and affordable medical services in the US, the Company
is well positioned to meet this growing opportunity while creating
significant shareholder value.
Operational Highlights for First Quarter
2021
- Commenced trading on the TSX-V
under the symbol “SHG” in January.
- Acquired 100% of Colorado based
primary care services group Apex for total cash transaction of $2.3
million on January 4, 2021. Apex reported unaudited financials of
$2.9 million in revenue in 2020.
- Acquired 100% of Florida-based RCMA
with 6 clinic locations on February 3, 2021. River City reported
unaudited financials of $6.5 million in revenue in 2020.
- Appointed Grace Mellis to the Board
of Directors, bringing over 28 years of experience with almost a
decade as a former Managing Director at JP Morgan Chase. Former CFO
and VP of Corporate Finance at Greendot Corporation, a US$3.1
billion market cap NYSE listed company.
- Appointed Dr. Georges Feghali as
Chief Medical Officer, bringing over 30 years of experience as
former CMO of TriHealth, which does over $1.7 billion in revenue,
and Emirates Hospital Groups, where he participated in doubling the
company’s revenue in one year from AED 500 million in 2017 to AED
1.1 billion in 2018.
- Appointed Andrew Elinesky as Chief
Financial Officer, former SVP and CFO at McEwen Mining, a publicly
traded company listed on NYSE and TSXV, bringing over 20 years of
experience with debt and equity financings and M&A.
- Named Patrick McNamee as Chairman
of the Board, former EVP and COO of Express Scripts (NASDAQ:ESRX),
a $120+ billion technology-driven pharmacy benefit management
company where he had an average of 27% EPS growth over his 9
year-tenure. Former President and CEO of Health Insurance
Innovations (NASDAQ:HIIQ), a turn-around story where he increased
share price from $4 to $58 in 23 months. Mr. McNamee succeeds
Norton Singhavon who remains involved as an active member of the
Board.
Key Subsequent Events of the three
months ended March 31, 2021
- Acquired 100% of the Colorado based
Primary Care Clinic Group, Rocky Mountain on April 5, 2021 for
total cash consideration of $13.8 million. The clinic group has 7
locations and reported $23.5 million in revenue in 2020.
- Partnered with ClinEdge to bring
clinical research to primary care practices in Massachusetts,
adding 50+ years of experience in the Company’s research team.
- The Company received conditional
approval from The Nasdaq Stock Market LLC to list its issued and
outstanding common shares under the symbol “SLHG” with an
anticipated listing during the week of June 7, 2021.
- Closed a bought deal offering with
a syndicate of underwriters led by Raymond James Ltd. as sole book
runner, Stifel GMP as co-lead, and a syndicate of underwriters
including Beacon Securities Limited, Echelon Wealth Partners Inc,
and Bloom Burton Securities Inc with full exercise of the
Underwriters' 15% over-allotment option, 9,857,800 common shares of
the Company at a price of $1.40 per common share for gross proceeds
of $13,800,920.
- The Board of Directors approved a
share consolidation on a 5:1 basis, in order to meet Nasdaq listing
requirements, which took effect on May 28, 2021.
Q1 2021 Financial
Highlights
|
Three Months EndedMarch 31 |
|
Three Months EndedDecember 31 |
|
|
2021 |
|
2020 |
|
2020 |
|
Revenue |
5,173,662 |
|
2,932,026 |
|
3,198,600 |
|
Cost of sales |
1,619,772 |
|
1,030,331 |
|
1,029,328 |
|
Gross profit |
3,553,890 |
|
1,901,695 |
|
2,169,272 |
|
Total operating expenses |
6,223,997 |
|
3,046,820 |
|
7,997,231 |
|
Operating loss |
(2,670,107) |
|
(1,145,125) |
|
(5,827,959) |
|
Adjusted EBITDA* |
(1,330,635) |
|
(603,134) |
|
(2,138,319) |
|
*Adjusted EBITDA is defined as earnings before
interest, tax, depreciation, and amortization, adjusted by
significant nonrecurring, nonoperational expenses and partially
offset by the cash impact of certain accounting treatments during
the period. Please see the Company’s Management Discussion &
Analysis for a detailed reconciliation to operating loss.
Conference Call
The Company will host a conference call at
9:00am EST on the morning of June 1, 2021 to discuss the financial
results. If you would like to participate in the call, details can
be found here or you can dial in to 1-800-319-4610. Please dial in
approximately 10 minutes prior to the start of the call. An audio
replay of the conference call will be available
on www.skylighthealthgroup.com within 24 hours after the
live call has ended.
About Skylight Health Group
Inc.
Skylight Health Group (TSXV:SHG; OTCQX:SHGFF) is
a healthcare services and technology company, working to positively
impact patient health outcomes. The Company operates a US
multi-state primary care health network comprised of physical
practices providing a range of services from primary care,
sub-specialty, allied health, and laboratory/diagnostic testing.
The Company is focused on helping small and independent practices
shift from a traditional fee-for-service (FFS) model to value-based
care (VBC) through tools including proprietary technology, data
analytics and infrastructure. In a FFS model, payors (commercial
and government insurers) reimburse on an encounter-based approach.
This puts a focus on volume of patients per day. In a VBC model,
payors reimburse typically on a capitation (fixed fee per member
per month) basis. This places an emphasis on quality over volume.
VBC will lead to improved patient outcomes, reduced cost of
delivery and drive stronger financial performance from existing
practices.
For more information, please visit
www.skylighthealthgroup.com or contact:
Investor Relations:
Jackie
Kelly investors@skylighthealthgroup.com416-301-2949
John
EvansJohn.evans@skylighthealthgroup.com415-309-0230
Currency Usage, Cautionary and
Forward-Looking Statements
All currency contained in this Press Release
represent Canadian Dollars unless otherwise stated.
Statements in this news release that are
forward-looking statements are subject to various risks and
uncertainties concerning the specific factors disclosed here and
elsewhere in Skylight Health's filings with Canadian and United
States securities regulators. When used in this news release, words
such as "will, could, plan, estimate, expect, intend, may,
potential, believe, should," and similar expressions, are
forward-looking statements.
Although Skylight Health has attempted to
identify important factors that could cause actual results,
performance or achievements to differ materially from those
contained in the forward-looking statements, there can be other
factors that cause results, performance or achievements not to be
as anticipated, estimated or intended, including, but not limited
to: the ability of Skylight Health to execute on its business
strategy, continued revenue growth in accordance with management’s
expectations, operating expenses continuing in accordance with
management expectations, dependence on obtaining regulatory
approvals; Skylight Health being able to find, complete and
effectively integrate target acquisitions; change in laws relating
to health care regulation; reliance on management; requirements for
additional financing; competition; hindering market growth or other
factors that may not currently be known by the Company.
There can be no assurance that such information
will prove to be accurate or that management's expectations or
estimates of future developments, circumstances or results will
materialize. As a result of these risks and uncertainties, the
results or events predicted in these forward-looking statements may
differ materially from actual results or events.
Accordingly, readers should not place undue
reliance on forward-looking statements. The forward-looking
statements in this news release are made as of the date of this
release. Skylight Health disclaims any intention or obligation to
update or revise such information, except as required by applicable
law, and Skylight Health does not assume any liability for
disclosure relating to any other company mentioned herein.
Non-GAAP Financial Measures
This Press Release contains references to EBITDA
and Adjusted EBITDA. These financial measures are not measures that
have any standardized meaning prescribed by IFRS and are therefore
referred to as non-GAAP measures. The non-GAAP measures used by the
corporation may not be comparable to similar measures used by other
companies. EBITDA is defined as “income (loss) before interest
expenses, taxes, expenses related to listing on the Canadian
Securities Exchange, depreciation, foreign exchange and financial
expenses.
Adjusted EBITDA excludes the effect of
share-based compensation expenses and related payroll taxes as well
as removes substantial one-time costs for unusual business
activities. Additional discussion on this can be found in the
Skylight Health Management Discussion and Analysis filed on
SEDAR.
The Company uses these non-GAAP measures because
they provide additional information on the performance of its
commercial operations. Such tools are frequently used in the
business world to analyze and compare the performance of
businesses; however, the Company’s definition of these metrics may
differ from those of other businesses. Skylight Health will, at
times, use certain non-GAAP financial measures to provide readers
with additional information in order to assist investors in
understanding our financial and operating performance. Skylight
Health believes that these non-GAAP measures provide readers with
useful information about the Company’s operating results, enhance
the overall understanding of past financial performance and future
prospects, and allow for greater transparency with respect to key
metrics used by management in its financial and operational
decision making.
Such non-GAAP financial measures should be
considered as a supplement to, and not as a substitute for, the
corresponding measures calculated in accordance with IFRS. See the
Company’s audited Financial Statements for a reconciliation of the
non-GAAP measures.
Neither the 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.
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