ARCpoint Inc. (TSXV: ARC) (the “
Company” or
“
ARCpoint”) a leading US-based franchise system
providing drug testing, alcohol screening, DNA and clinical lab
testing services announces that it will host a conference call on
Tuesday, May 23, 2023 at 3:15 pm Eastern time to review the
Company’s 2023 Q1 financial results for the quarter ended March 31,
2023, and provide an operational update.
The dial-in number for the conference call is as follows:
Canada / USA Toll Free
1-800-319-4610International
Toll 1-604-638-5340
Callers should dial in 5 – 10 min prior to the scheduled start
time and ask to join the ARCpoint call:
ARCpoint’s President and CEO, John Constantine
commented “We are pleased to report that on a quarter over quarter
basis, we increased revenues and narrowed losses. In particular, we
are encouraged that over half of our franchise locations increased
their B2B revenue versus the previous quarter”.
Bob Mann, who was recently appointed as the new
President of the ARCpoint Franchise Group LLC, (“AFG”) a wholly
owned US-subsidiary of the Company that operates ARCpoint’s
franchise business, added “With a goal to further build on these
gains, we are focused on executing the rollout of our Total
Reporting and MyARCpointLabs systems along with the implementation
of new business development strategies and partnerships to drive
sales at the franchisee level. These initiatives include the
introduction of new field marketing resources and a national sales
program to create new B2B leads for our franchisees”.
The Company has now largely completed its new,
integrated technology platform, which includes Total Reporting, the
Company’s B2B portal. Total Reporting allows ARCpoint’s franchisees
to market more services through an efficient, integrated platform
that is much easier for B2B customers to use. With Total Reporting
employers can login to one platform and manage all their drug
testing and background check needs, regardless of what type of
organization they are. Many companies login to multiple systems to
try to manage their employment needs today. The proprietary system
is owned by ARCpoint allowing for flexibility and future
development. Currently, about one-third of the AFG network has
signed up and trained on the Total Reporting system.
As at March 31, 2023, the Company had total cash
on hand of approximately US$5.4 million, comprised of US$4.6
million in unrestricted cash and cash equivalents and US$800
thousand in Brand Fund restricted cash. Use of Brand Fund
restricted cash is at the Company’s discretion and is used to
increase sales and the brand presence of the Company’s entities and
franchisees.
Summary of
2023 Q1
Financial Results All results below are reported
under International Financial Reporting Standards and in US
dollars.
- Total revenue for the three months
ended March 31, 2023 was $1.7 million compared to $5.6 million for
the three months ended March 31, 2022 and $1.3 million for the
three months ended December 31, 2022. During Q1 2022, high
complexity PCR testing and low complexity rapid tests volumes were
significantly higher due to the COVID pandemic.
- Net loss for the three months ended
March 31, 2023 was $2.1 million compared to net income of $684
thousand for the three months ended March 31, 2022 and negative
$6.1 million for the three months ended December 31, 2022.
- Operating cash flow for the three
months ended March 31, 2023 was negative $1.2 million compared to
positive $1.8 million for the three months ended March 31, 2022 and
negative $0.3 million for the three months ended December 31,
2022.
- EBITDA for the three months ended
March 31, 2023 was negative $1.8 million compared to positive $1.1
million for the three months ended March 31, 2022 and negative $5.8
million for the three months ended December 31, 2022.
- Adjusted EBITDA for the three
months ended March 31, 2023 was negative $1.1 million compared to
positive $1.4 million for the three months ended March 31, 2022 and
negative $1.3 million for the three months ended December 31,
2022.
DEFINITION AND RECONCILIATION OF
NON-IFRS FINANCIAL MEASURESThe Company reports certain
non-IFRS measures that are used to evaluate the performance of its
businesses and the performance of their respective segments.
Securities regulators require such measures to be clearly defined
and reconciled with their most comparable IFRS measures.
As non-IFRS measures generally do not have a
standardized meaning, they may not be comparable to similar
measures presented by other issuers. Rather, these are provided as
additional information to complement those IFRS measures by
providing further understanding of the results of the operations of
the Company from management’s perspective. Accordingly, these
measures should not be considered in isolation, nor as a substitute
for analysis of the Company’s financial information reported under
IFRS. Non-IFRS measures used to analyze the performance of the
Company’s businesses include “EBITDA” and “Adjusted EBITDA”.
The Company believes that these non-IFRS
financial measures provide meaningful supplemental information
regarding the Company’s performances and may be useful to investors
because they allow for greater transparency with respect to key
metrics used by management in its financial and operational
decision-making. These financial measures are intended to provide
investors with supplemental measures of the Company’s operating
performances and thus highlight trends in the Company’s core
businesses that may not otherwise be apparent when solely relying
on the IFRS measures. These non-IFRS measures are calculated as
follows:
“EBITDA” is comprised as income (loss) less interest, income tax
and depreciation and amortization. Management believes that EBITDA
is a useful indicator for investors, and is used by management, in
evaluating the operating performance of the Company. See “Unaudited
Interim Condensed Consolidated EBITDA and Adjusted EBITDA
Reconciliation” appended to this press release for a quantitative
reconciliation of EBITDA to the most directly comparable financial
measure.
“Adjusted EBITDA” is comprised as income (loss)
less interest, income tax, depreciation, amortization, share-based
compensation, Brand Fund revenue and expense timing difference,
change in fair value of warrant liability, foreign exchange gain
(loss) and other income / expenses not attributable to the
operations of the Company. Management believes that EBITDA is a
useful indicator for investors, and is used by management, in
evaluating the operating performance of the Company. See “Unaudited
Interim Condensed Consolidated EBITDA and Adjusted EBITDA
Reconciliation” appended to this press release for a quantitative
reconciliation of Adjusted EBITDA to the most directly comparable
financial measure.
A reconciliation of how the Company calculates
EBITDA and Adjusted EBITDA is provide in the table appended to this
press release.
For more information, please see
the interim financial
statements (the
“Financial Statements”) and the
interim Management Discussion &
Analysis of the Company for the three-month period
ended March 31, 2023 under the Company’s profile
at www.sedar.com.
About
ARCpoint
Inc.ARCpoint is a leading US-based franchise system
providing drug testing, alcohol screening, DNA and clinical lab
testing, corporate wellness programs, and employment and background
screening, among other services. The Company is based in
Greenville, South Carolina, USA. ARCpoint Franchise Group LLC,
formed under the laws of the state of South Carolina in February
2005, is the franchisor of ARCpoint Labs and supports over 130
independently owned locations. ARCpoint sells franchises to
individuals throughout the United States and provides support in
the form of marketing, technology and training to new franchisees.
ARCpoint Corporate Labs LLC develops corporate-owned labs committed
to providing accurate, cost-effective solutions for customers,
businesses and physicians. AFG Services LLC serves as the
innovation center of the ARCpoint group of companies as it builds a
proprietary technology platform and a physician network to equip
all ARCpoint labs with best-in-class tools and solutions to better
serve their customers. The platform also digitalizes and
streamlines administrative functions such as materials purchasing,
compliance, billing and physician services for ARCpoint franchise
labs and other clients.
For more information, please contact:
ARCpoint Inc.Jason Tong, Chief Financial
OfficerPhone: (604) 889-7827E-mail: invest@arcpointlabs.com
Neither the
TSX Venture Exchange
nor its
Regulation Services Provider (as
that term is
defined in the
policies of the Exchange)
accepts responsibility
for the adequacy
or accuracy of
this Press
release.
ARCpoint Inc.Unaudited
Interim Condensed Consolidated EBITDA and Adjusted EBITDA
Reconciliation(Expressed in United States
Dollars)
(a) Finance expense comprised
of interest on bank loans, notes payable and lease liabilities (see
Financial Statements).(b) Share-based compensation
expense comprised of non-cash compensation (see Financial
Statements).(c) Other income (expenses) comprised
of government assistance benefit received pertaining to the
COVID-19 pandemic and interest on notes receivable (see Financial
Statements, note 6).(d) One-time legal and professional fees
refer to expenses and other transactional costs incurred for
financings and restructuring completed in 2022 and 2023 (see
Financial Statements).(e) The Group operates a
Brand Fund established to collect and administer funds contributed
for use in advertising and promotional programs designed to
increase sales and enhance the reputation of the Group and its
franchisees. The Group reports contributions and expenditures on a
gross basis on the Group’s statement of profit and loss. Brand Fund
contributions are recognized as revenue when invoiced, as the Group
has full discretion on how and when the Brand Fund revenues are
spent. Brand Fund revenue received may not equal advertising
expenditures for the period due to timing of promotions and this
difference is recognized to earnings. This adjustment is made to
normalize for the timing difference of the Brand Fund revenues and
Brand Fund expenditures.
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