Sign in

You're signed outSign in or to get full access.

EM

EVOME MEDICAL TECHNOLOGIES INC. (LNDZF)·Q1 2023 Earnings Summary

Executive Summary

  • Q1 2023 revenue rose 23% year over year to CAD $10.68M, with gross profit of CAD $4.10M and gross margin expanding to 38.3% as the company prioritized pricing and operational efficiency; net loss was CAD $(1.66)M, or $(0.03) per share .
  • Integration and growth runway expanded: Biodex closed on April 3 (projected ~$26M annual revenue at ~30% GM), and Arrowhead closed May 15; management now projects >CAD $70M in annualized revenue post-deals .
  • Near‑term outlook: management expects >CAD $6M incremental revenue in the June quarter from acquisitions and targets positive enterprise profitability in Q3 (beginning July) as integration advances and cost actions flow through .
  • Liquidity and leverage watchpoints: cash/restricted cash totaled CAD $3.70M, while the line of credit rose to CAD $8.08M; management is working to extend short-duration debt, a key focus to reduce the enterprise profitability gap and support growth plans .

What Went Well and What Went Wrong

  • What Went Well
    • Gross margin expansion to 38.3% (vs 33% in the prior quarter) driven by pricing and operational efficiency; management reiterated a focus on higher‑margin lines and enterprise profitability .
    • Strategic scale + channel expansion: closed Biodex (adds ~$26M revenue, ~30% GM) and Arrowhead distribution; order book at a record ~CAD $25M including additions from Biodex and Arrowhead .
    • Long‑term differentiation: plan to embed data collection and AI into Biodex/Mio‑Guard products to enhance outcomes and recurring revenue potential (“data collection and artificial intelligence for predicting patient progress”) .
  • What Went Wrong
    • Profitability still negative: Q1 net loss CAD $(1.66)M; adjusted EBITDA ~CAD $0.18M after transaction costs; interest expense CAD $0.28M pressured enterprise profits .
    • Leverage/short-duration obligations: LOC increased to CAD $8.08M; management highlighted the need to extend debt duration to relieve overhang and support execution .
    • Execution complexity: multiple integrations and deferred cash earn‑outs (e.g., Simbex) and installment payments for Biodex add operational and financing demands during a tight capital environment .

Financial Results

  • Income statement comparison (CAD)
MetricQ1 2022Q2 2023Q3 2023Q1 2023
Revenue$8,668,415 $10,044,239 $10,547,652 $10,683,229
Gross Profit$3,226,860 $3,028,513 $3,495,160 $4,095,859
Gross Margin %n/a30% 33% 38.3%
Net Income$(593,634) n/a$(1,528,597) $(1,662,744)
EPS (Basic & Diluted)$(0.01) n/a$(0.03) $(0.03)
  • Actual vs. estimates (Q1 2023)
MetricActualConsensus (S&P Global)Beat/Miss
Revenue$10,683,229 n/a*n/a
EPS (Basic & Diluted)$(0.03) n/a*n/a

*n/a: S&P Global consensus was unavailable due to missing mapping. Values retrieved from S&P Global.

  • KPIs and balance sheet (CAD)
KPIQ2 2023Q3 2023Q1 2023
Order Book/Backlog~$18.5M ~$20M (as of Apr 3 release) ~CAD $25M (includes Biodex/Arrowhead)
Adjusted EBITDAn/an/a~CAD $0.18M (incl. txn costs); >CAD $0.6M pre‑txn costs
Cash & Restricted Cashn/an/aCAD $2.34M cash; CAD $1.35M restricted cash
Line of Credit Balancen/an/aCAD $8.08M
Inventoryn/an/aCAD $6.69M
  • Segment disclosure: one reporting segment (healthcare operations) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue contribution from acquisitionsQ2 2023 (quarter ending Jun 30, 2023)n/a“Add revenues of over CAD $6M” from recent acquisitions Introduced
Enterprise profitabilityQ3 2023 (beginning Jul 2023)n/aExpect positive enterprise profits Introduced
Annualized revenue run‑ratePost‑Biodex~CAD $65M (with Biodex) “>CAD $70M” projected Raised
Order bookNear‑term~$20M (early Apr) ~CAD $25M with Biodex/Arrowhead Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q1 2023)Trend
M&A/Scale & IntegrationPursuing $26M Biodex deal; adding DaMar; building pipeline . Q3 reinforced higher‑margin focus, expanded credit line, plan to close Biodex and consider US listing .Closed Biodex (Apr 3), closed Arrowhead (May 15), projecting >CAD $70M annualized revenue .Accelerating scale
Gross margin & profitabilityQ2 GM ~30% amid supply chain constraints; positive “operational profit” YTD . Q3 GM 33% .GM 38.3%; adjusted EBITDA >CAD $0.6M pre‑transaction costs; targeting enterprise profitability in Q3 .Improving
Debt/liquidityExpanded bank line in Jan 2023 .LOC CAD $8.08M; focused on extending short‑duration debt .Watchpoint; active management
Order book/salesBacklog ~$18.5M (Oct 2022) .Backlog ~$20M (Apr 3), now ~CAD $25M with acquisitions .Strengthening
Technology/AI/datan/a in prior releases.Long‑term plan for data collection and AI to predict patient progress, create recurring revenue .New strategic vector
US listingExploring potential NASDAQ listing with advisor .Continues to prepare toward potential US listing .Ongoing

Management Commentary

  • “We… shifted our focus in the contract services businesses to pricing and operational efficiency… we were able to achieve a 38% gross margin, a significant improvement over the previous quarters.” – CEO Luke Faulstick .
  • “We… can turn our attention to some very exciting drivers for growth: data collection and artificial intelligence for predicting patient progress… part of our long‑term strategic plan.” – Executive Chairman Leslie Cross .
  • “Revenue for the three months ended March 31, 2023, increased 23% to CAD $10.7 million… gross profit reached 38.3%… adjusted EBITDA of CAD $183,000 including transaction costs… interest costs CAD $278,000… order book… record CAD $25 million.” – CFO Dennis Nelson .

Q&A Highlights

  • The accessible transcript focused on prepared remarks covering integration, margin improvement, leverage, and growth plans; a separate Q&A section was not available in the accessible content –.
  • Management clarified timing: >CAD $6M acquisition revenue expected in the June quarter and positive enterprise profitability targeted in Q3 (beginning July), contingent on integration and debt duration extension .

Estimates Context

  • Wall Street consensus from S&P Global was unavailable due to mapping constraints; therefore, beat/miss vs. estimates cannot be determined for Q1 2023. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin expansion is real: GM reached 38.3% as mix/pricing and efficiency initiatives took hold; sustaining this trajectory through integration is the next execution test .
  • Scale and channel leverage: Closing Biodex and Arrowhead boosts portfolio breadth and distribution; management’s >CAD $70M annualized revenue outlook reflects that expanded base .
  • Profit inflection targeted for Q3: Near‑term >CAD $6M incremental revenue in Q2 and actions on debt duration support the transition to positive enterprise profits .
  • Liquidity/leverage watch: LOC at CAD $8.08M and installment/earn‑out obligations raise sensitivity to working capital and credit availability; proactive duration extension is a critical catalyst .
  • Strategic moat development: embedding data/AI into rehab solutions could drive differentiation and recurring revenue over time, but requires sustained R&D and productization execution .
  • Stock catalysts: successful integration synergy capture, visible profitability in Q3, backlog conversion, and debt duration extension; risks include integration complexity, financing conditions, and cost inflation .