MNOW Mednow Inc

• Q1’23 revenue increased approximately 35% quarter-over-quarter to $9.7 million, and approximately 1,300% year-over-year;
• Mednow patient count increased quarter over quarter, growing by more than 13% to ~35,000 in Q1’23 versus ~31,000 in Q4’22;
• Costs down by 30% Q/Q from reduced headcount and SG&A; achieved additional cost savings post-Q1’23 to further reduce cash burn;
• New business partnerships signed, including Mednow’s partnership with Care Pharmacies

Mednow Inc. (“Mednow'' or the “Company”) (TSXV:MNOW), Canada’s on-demand virtual pharmacy, is pleased to announce it has released its financial results for the period ending October 31, 2022 (“Q1 2023”). 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, M&A and Partnerships During and Subsequent to Q1 2023:

• Significant revenue growth. Q1/23 revenue increased approximately 35% Q/Q to $9.7 million, and approximately 1,300% year-over-year
• Patient growth. Mednow patient count increased quarter-over-quarter, growing by approximately 13% to ~35,000 in Q1’23 versus ~31,000 in Q4’22
• Significant cost reductions and operational streamlining to drive towards cash flow positive status. Having completed the “build & buy” phase, Mednow has delivered on its goal to establish the core infrastructure required for its national virtual pharmacy ambitions. The company has taken the learnings from initial time in market and refined strategy to adjust to of that experience as well as macroeconomic conditions
  • Integration of acquisitions. Cost synergies have been achieved through the integration of acquisitions. This includes the consolidation of call centers, pharmacy operations and patient outreach programs. The resulting merged entities produce more revenue from cross-selling and have less overall costs for the Company.
  • Core business streamlining. Costs were reduced in respect of personnel, technology, CAPEX, marketing, and SG&A due to efficiencies.
• Asset-light model for select regions. Mednow has shifted from a strategy of owning the pharmacies in all its provinces, to funding only pharmacies in the three largest provinces (Ontario, British Columbia and Quebec). In the rest of the country Mednow is moving to a partner pharmacy and franchising model. This allows Mednow to maintain the same high level of pharmacy care through a preferred provider network (PPN) that provides national coverage, while significantly reducing costs.
  • Mednow continues to own and operate pharmacies in Ontario and British Columbia along with a franchise in the province of Quebec.
  • In other regions of the country Mednow will operate via Preferred Pharmacy Partners and franchisees. Mednow provides the technology and engagement tools for local fulfillment in these smaller regions of Canada.
  • Central fill Mednow pharmacies in Ontario and British Columbia can also service select other provinces.
• Mednow entered into a national distribution and preferred pharmacy network (“PPN”) agreement with Care Pharmacies, one of the largest consolidators of rural and remote pharmacy chains in Canada, with more than 55 pharmacy locations.
  • Mednow utilizes its proprietary technology to offer a transformed and engaging virtual pharmacy experience for its Mednow for Business (MFB) client plan members, patients and customers.
  • By enhancing pharmacy distribution, regional coverage and pharmacist access via a differentiated PPN, Mednow continues to build on its MFB offering.
  • In addition to Mednow’s owned central fill pharmacies, 3rd party pharmacies that are part of Mednow’s PPN enable Mednow to service more Canadians with localized pharmacy fulfillment with Mednow acting as the technology layer, controlling their experience.
  • Mednow expects to collect technology fees from participating pharmacies in exchange for access to members and an integrated technology solution powering 3rd party pharmacy patient engagement, communication and coordination.
  • This is the first step in Mednow’s strategic vision to provide Canadian patients and independent pharmacies with a consumer-driven, engaging front-end virtual pharmacy experience, along with the software which can support back-end virtual pharmacy operations.
• MFB continues to drive growth with partner signings. MFB has demonstrated strong traction, with access to over 500,000 lives.
  • MFB also offers wellness and digital health programs to their employees, providing a broad spectrum of solutions, including digital pharmacy, nutritional services, personalized vitamins and supplements programs, and a wellness store that 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 450 employers, including, but not limited to Tucows (TSX: TC), Consensus Cloud Solutions (NASDAQ: CCSI), and Arista Networks (NYSE: ANET). 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.
• Increased demand for Mednow for Doctors. An important area of demand for Mednow’s virtual pharmacy services is from physicians and medical clinics who are looking for administrative, data, clinical, and adherence support. Such collaborations result in revenues from clinical services such as medication reviews and dispensing of adherence medication solutions. Mednow drives growth by leaning into this demand and continues its mission to push forward innovation in collaborative care.
• Additional services to benefit patients. Mednow’s technology and pharmacy services solutions address administrative and patient care pain points for these businesses. Integrating clinical pharmacy services empowered by technology where there is a need, such as adherence packaging, medication reviews and minor ailment prescribing, drives efficiencies for service providers that allow patients to benefit.
• Accelerated integration of acquired businesses. In order to maximize growth level potential, we have significantly improved the coordination of activities between our businesses.
  • Medvisit: Medvisit is Canada’s oldest doctor home visit company and the largest in the Greater Toronto Area (GTA). It was acquired by Mednow in August 2021
    • Mednow’s pharmacists are expected to perform an in-home medication review and medication cabinet clean-up for eligible housebound patients under the Ontario Drug Benefits Program
    • The medication reconciliation will attempt to flag any potential medication issues for the physician in an easy-to-use report
    • Medvisit service has been provided to over 400,000 patients in the GTA, serviced by over 100 doctors
    • Mednow pharmacy continues it’s push for more clinical services for patients, provided conveniently at their homes
  • Specialty pharmacy integration. Mednow continues to build out its specialty roadmap. Having acquired two specialty businesses, the Company has made significant strides towards the integration and expansion of these businesses.
    • Livercare. The hepatology-focused business expanded to British Columbia (from its base in Ontario) and has grown organically achieving Q/Q growth of 50%
    • Infusicare. Our business focused on biological drugs has grown at a strong pace. Revenue grew 9% Q/Q
• Continued investment in technology. Investing in an important area for the pharmacy industry, Mednow continues to develop its leading-edge technology.
  • The technology team is building stable, scalable, secure and proprietary Mednow customer relationship management (“CRM”) and patient app
  • The Mednow app makes it easy to manage prescriptions and provides patients with instant access to pharmacists and nurse practitioners, in addition to non-prescription product shopping
  • Built for a virtual pharmacy environment, it also coordinates delivery and allows Mednow’s cloud based contact center to manage relationships with patients, payors and prescribers
• Established product-market fit. Mednow has earned and maintains a perfect 5-star rating on Google. The reviews show that Mednow is solving real problems and changing what Canadians expect from their pharmacy. Customer service is our obsession and in a market as price-regulated as pharmacy, the patient experience makes the difference. Furthermore Mednow’s growing list of enterprise clients validates that the company is providing a differentiated pharmacy experience for users, payors and prescribers.

Key Financials

• Revenue increased by 35% quarter-over-quarter, to $9,723,306 during the three month period ended October 31, 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 $9,212,188, as compared to $17,022 in the prior year’s comparative period.
  • Revenue generated by doctor services was $484,709 as compared to $546,445 in the prior year’s comparative period.
• Gross margin for the quarter increased approximately 369% year-over-year to $1,227,743, as compared to $261,324 in the prior year’s comparative period.
• EBITDA for the period was a loss of $3,729,280, as compared to a loss of $4,662,673 in the prior year’s comparative period, representing an increase in EBITDA of $933,393 compared to the prior comparative period.
  • The change is primarily due to the increase in gross profit, resulting from higher revenues during the period, and a decrease in share-based compensation expenses, partially offset against general and administrative expenses, which are corporate costs, such as increased headcount, technology and marketing expenses.
  • EBITDA is a non-IFRS financial measure and has been adjusted for certain items. Refer to the disclosure under the heading “Definitions of Certain Non-IFRS Financial Measures” for more information on this non-IFRS financial measure.
• Adjusted EBITDA for the quarter was a loss of $3,224,260, as compared to a loss of $3,066,768 in the prior year comparative period, representing a decrease in adjusted EBITDA of $157,492.
  • Adjusted EBITDA is a non-IFRS financial measure and has been adjusted for certain items. Refer to the disclosure under the heading “Definitions of Certain Non-IFRS Financial Measures” for more information on this non-IFRS financial measure. The composition of Adjusted EBITDA has changed from the comparative period to the current period discussed herein, as explained further under the heading “Definitions of Certain Non-IFRS Financial Measures - Reconciliation of Non-IFRS Financial Measures.”

Summary of Financial Results

Below is a summary of each operating segment's performance for the three-month period ended October 31, 2022 and 2021.

 

 

For the three months ended October 31, 2022

 

 

 

Retail Pharmacies

 

 

Doctor Services

 

 

Mednow Inc.

 

 

Total

 

Revenue

 

$

9,212,188

 

 

 

$

484,709

 

 

 

$

26,409

 

 

 

$

9,723,306

 

 

Other amounts in loss

 

 

(10,418,600

)

 

 

 

(778,421

)

 

 

 

(3,117,255

)

 

 

 

(14,314,277

)

 

Net loss

 

$

(1,206,412

)

 

 

$

(293,712

)

 

 

$

(3,090,846

)

 

 

$

(4,590,971

)

 

 

 

For the three months ended October 31, 2021

 

 

Retail Pharmacies

 

 

Doctor Services

 

 

Mednow Inc.

 

 

Total

Revenue

 

$

17,022

 

 

 

$

546,445

 

 

 

$

120,194

 

 

 

$

683,661

 

Other amounts in loss

 

 

(177,915

)

 

 

 

(610,742

)

 

 

 

(4,696,013

)

 

 

 

(5,484,670

)

Net loss

 

$

(160,893

)

 

 

$

(64,297

)

 

 

$

(4,575,819

)

 

 

$

(4,801,009

)

Source: Mednow’s MD&A as of January 17, 2023

 

RECONCILIATIONS OF NON-IFRS MEASURES

 

 

Three months ended October 31,

 

 

2022

 

 

2021

 

 

Net loss and comprehensive loss for the period

$

(4,590,971

)

 

$

(4,801,009

)

 

Interest expense

 

99,312

 

 

 

3,279

 

 

Depreciation and amortization

 

701,678

 

 

 

135,057

 

 

Current income tax expense

 

60,700

 

 

 

—

 

 

EBITDA

$

(3,729,281

)

 

$

(4,662,673

)

 

Loss on investment in equity securities

 

—

 

 

 

28,724

 

 

Share-based compensation

 

355,020

 

 

 

1,479,529

 

 

Acquisition costs

 

—

 

 

 

87,652

 

 

Severance expenses

 

150,000

 

 

 

—

 

 

Adjusted EBITDA

$

(3,224,261

)

 

$

(3,066,768

)

 

 

 

EBITDA and Adjusted EBITDA are non-IFRS financial measures and have been discussed in the section Definitions of Non-IFRS Financial Measures. Source: Mednow’s MD&A as of January 17, 2023

DEFINITIONS OF CERTAIN NON-IFRS FINANCIAL MEASURES

This press release discloses certain non-IFRS financial measures which are defined below (including non-IFRS financial measures for prior year comparative periods). 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, and 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, acquisition costs incurred, asset impairment charges, the fair value remeasurement of the note receivable from Doko and severance expenses. 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.

Reconciliation of Non-IFRS Financial Measures

The most directly comparable financial measure to EBITDA and Adjusted EBITDA that is disclosed in the Company’s financial statements is net loss and comprehensive loss. The following are reconciliations of net loss and comprehensive loss to EBITDA. The adjustments include:

1. The amortization and depreciation expenses of intangible assets, fixed assets, and the right-of-use assets of the Company.
2. The net interest expenses, which primarily includes interest expense on the Company's credit facility and interest expense and interest income recorded in accordance with IFRS 16.
3. The underlying income taxes recorded.

The following are reconciliations of EBITDA to Adjusted EBITDA. The adjustments include:

1. The loss on investment in equity securities in connection with the Company's investment in Life Support.
2. The share-based compensation expense recorded by the Company in connection with the stock option plan.
3. The acquisition costs incurred by the Company.
4. The asset impairment charges recorded by the Company as part of its annual impairment test of goodwill and intangible assets.
5. The fair value remeasurement of the promissory note with Doko.
6. The severance expenses incurred by the Company.

The composition of Adjusted EBITDA has changed from prior comparative periods disclosed herein. Information on the reason for the change is incorporated by reference to the Company’s Management Discussion and Analysis (“MD&A”) for the three month period ended October 31, 2022. The information can be found in the MD&A under the heading “Definition of Certain Non-IFRS Financial Measures - Reconciliation of Non-IFRS Financial Measures.” The Company’s MD&A is available on SEDAR at www.sedar.com under the Company’s profile.

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 (TSXV: MNOW) (OTCQX:MDNWF) is a healthcare technology company offering virtual access with a high-standard of care. Designed with accessibility and quality of care in mind, Mednow 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, doctor consultations, a user-friendly interface for easy upload, transfer, and refill of prescriptions, access to healthcare professionals through an intuitive chat experience and the specialized PillSmart™ system that packages prescriptions in easy-to-use daily dose packs, each labeled with the date and time of the next dose.

To learn more, follow Mednow on Facebook, Twitter, LinkedIn, and Instagram, or visit our website at www.mednow.ca/.

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 Statements:

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, that Mednow expects operate in regions in Canada other than BC and ON by way of Preferred Pharmacy Partners and franchisees; that Mednow expects to collect technology fees from participating pharmacies in its preferred pharmacy network, MFB has a pipeline of groups which are expected to be launched in the coming months and that Mednow Pharmacists are expected to perform an in-home medication review and medication cabinet cleanup for eligible housebound patients under the Ontario Drug benefits program 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 Mednow will operate in regions in Canada other than BC and ON by way of Preferred Pharmacy Partners and franchisees; Mednow will collect technology fees from participating pharmacies in its preferred pharmacy network, MFB has a pipeline of groups which will be launched in the coming months and Mednow Pharmacists will perform an in-home medication review and medication cabinet cleanup for eligible housebound patients under the Ontario Drug Benefits Program.

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 that Mednow will not operate in regions in Canada other than BC and ON by ways of Preferred Pharmacy Partners and franchise or at all; Mednow will not be successful in collecting technology fees from participating pharmacies in its preferred pharmacy network, MFB’s pipeline of groups will not be successfully launched in the coming months or at all, Mednow Pharmacists will not perform an in-home medication review and medication cabinet cleanup under the Ontario Drug Benefits Program 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230118005509/en/

Investor Relations Contact: Benjamin Ferdinand, Chief Financial Officer ir@mednow.ca 1.855.686.6300