Skylight Health Group Inc. (NASDAQ:SLHG; TSXV:SLHG) (“Skylight
Health” or the “Company”), a multi-state primary care management
group in the United States, today announced its financial results
for the second quarter ended June 30, 2021.
Second Quarter Highlights:
- Revenue increased 184% to $10.5
million, driven by acquisitions and organic growth, compared to
$3.7 million for the same period last year, and up 103% from $5.2
million for the first quarter of 2021;
- Organic growth from existing
Primary Care clinics of approximately 13% during the quarter;
- Adjusted EBITDA was a loss of $1.5
million, driven by investments into people, technology and
professional fees tied to acquisitions;
- On April 5, 2021, the Company
completed the acquisition of Rocky Mountain in Denver, CO and on
June 23, 2021, Doctors Center in Denver, CO;
- The Company acquired ACO Partners
LLC, a new Accountable Care Organization (“ACO”) that will begin
participating in the Medicare Shared Savings Program offered by the
Centers for Medicare and Medicaid Services (“CMS”) effective
January 1, 2022;
- Executed clinical trial contracts
expected to generate revenue with strong margin potential;
- Net loss from operations was $3.5
million, with approximately $0.9 million in one-time expenses tied
to the Nasdaq up list, professional fees and the large Rocky
Mountain acquisition and $1.1 million in non-cash items; and
- Cash balance of $11.8 million as of
June 30, 2021.
“We are excited that we achieved our largest
revenue quarter in the history of the Company. The second quarter
continued the transformative growth that started in the first
quarter of this year,” said Prad Sekar, CEO of Skylight Health.
“We’ve identified two key growth areas that will remain a focus for
the last half of the year and onwards: the growth through strategic
acquisitions and the participation of value-based care under the
Medicare Shared Savings program for our traditional Medicare
patients beginning in 2022.
Revenue increased 184% 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
six months ended June 30, 2021. The third quarter of 2021 will be
the first period that includes a full three months of contribution
by Rocky Mountain and Doctors Center Inc. The Company remains
committed to a strong growth by acquisition model fueled by a
strengthened balance sheet and robust pipeline. The Company also
saw organic growth of approximately 13% from prior acquisitions
driven by improved revenue cycle management, provider access and
patient flow post acquisition, compared to the first quarter of
2021.
The Company ended the quarter with the addition
of new clinics, providers and patient panels. As of the end of the
second quarter, the Company had approximately 88,000 lives vs
21,000 lives compared to the previous quarter. Eligible managed
care lives represented over 15% of that population. Traditional
Medicare patients will begin participation in the CMS MSSP program
starting January 2022. This platform will help validate Skylight's
business model of shifting fee for service practices into
value-based care arrangements.
Net loss was driven by approximately $0.9
million in one-time expenses that were tied to the efforts to see
through the Nasdaq up list. These included professional fees and
other marketing efforts. Other one-time expenses including
professional fees attached to the closing of Rocky Mountain which
the Company recognized as its largest acquisition to date. While
the Company is focused on acquisitions of all sizes, it is focused
on smaller independent practices. Net loss also consisted of
approximately $1.1 million in non-cash items.
Adjusted EBITDA loss of $1.5 million was a
result of investments made primarily in human capital, technology
and infrastructure. While the Company is focused on managing
EBITDA, it expects that investments needed to be successful in a
full risk and total cost of care reimbursement model will be offset
by improved patient economics driven by higher margin payor
contracts as validated by its peers. As a result, the Company
expects to continue to make investments in this growth opportunity
and believes that it has sufficient capital on hand to see this
investment through to realize increased margin contribution.
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 revenue
growth which it believes is how its peers are measured and expects
to continue to compete 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, Skylight Health is well
positioned to meet this growing opportunity while creating
significant shareholder value.
Operational Highlights for Second
Quarter 2021
- Acquired 100% of the Colorado based
Primary Care Clinic Group, Rocky Mountain on April 5 for total cash
consideration of $13.8 million. The clinic group has 7 locations
and reported $20.0 million in revenue and $3.0 million EBITDA in
2020.
- Executed one new clinical research
trial agreement in Massachusetts through partnership with
CliniEdge.
- The Company received approval from
The Nasdaq Stock Market LLC to list its issued and outstanding
common shares under the symbol “SLHG” effective June 7. In
addition, effective June 7, 2021, the Company’s shares on the TSX-V
began trading under the new symbol “SLHG”.
- Closed a bought deal offering with
a syndicate of underwriters led by Raymond James Ltd. with full
exercise of the Underwriters' 15% over-allotment option, 1,970,360
common shares of the Company at a price of $7.00 per common share
for gross proceeds of $13.8 million.
- Acquired 100% of Florida based
primary care group Doctors Center Inc on June 23. The clinic group
has 4 locations and reported $3.2 million in revenue and expected
EBITDA margin of 10%.
Key Subsequent Events of the three
months ended June 30, 2021
- On July 7, the Company appointed
Dr. Kit Brekhus as Chief Medical Officer (“CMO). Dr. Brekhus brings
a wealth of experience to Skylight Health, a passion for improving
patient care, and building large value-based care networks.
- Acquired 100% of the interest of
ACO Partners LLC, a new Accountable Care Organization (“ACO”) that
will begin participating in the Medicare Shared Savings Program
offered by the Centers for Medicare and Medicaid Services (“CMS”)
effective January 1, 2022. The Company expects to see the ACO
benefit all current and future Skylight primary care practices for
traditional Medicare patients at the start of the 2022 contribution
year.
Q2 2021 Financial Highlights
(in 000s of dollars) |
Three Months Ended June 30 |
Six Months Ended June 30 |
|
2021 |
2020 |
2021 |
2020 |
Revenue |
10,514 |
3,701 |
15,687 |
6,632 |
Cost of sales |
3,770 |
1,088 |
5,390 |
2,118 |
Gross profit |
6,744 |
2,613 |
10,297 |
4,514 |
Total operating expenses |
10,240 |
2,633 |
16,463 |
5,524 |
Operating loss |
(3,496) |
(20) |
(6,166) |
(1,010) |
Adjusted EBITDA* |
(1,517) |
381 |
(2,094) |
(222) |
*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
8:30am EST on the morning of August 17, 2021 to discuss the
financial results. If you would like to participate in the call,
details can be found here. 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 (NAQSAQ:SLHG; TSXV:SLHG)
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:
Canadian Investors
Jackie
Kelly investors@skylighthealthgroup.com 416-301-2949
U.S. Investors
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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