Executive Summary

Salona Global Medical Device Corporation (ticker LNDZF) reported fiscal Q2 2023 (quarter ended August 31, 2022; calendar Q3 2022) revenue of $10.044M, up 153% y/y, with gross profit of $3.029M and gross margin of 30% amid summer supply-chain bottlenecks .
The company built a record ~$18.5M order backlog as of Oct 15, 2022 and collected ~$13.6M in total cash receipts during the quarter, including ~$4.2M tied to a previously announced $7.5M sales order .
Management highlighted continued M&A momentum (DaMar Plastics closed Sept 23) and is negotiating a potential $26M annual-revenue acquisition with an optimized debt structure; no equity raise anticipated under the current plan .
No formal quantitative guidance or Wall Street consensus (S&P Global) estimates were available for this quarter; investors should focus on backlog conversion, margin normalization as supply chain improves, and M&A execution as key stock catalysts .

What Went Well and What Went Wrong

What Went Well

Strong top-line growth: revenue +153% y/y to $10.044M; gross profit +152% y/y to $3.029M, driven by organic sales focus and growing channels .
Record backlog and cash generation: order book ≥$18.5M; total cash receipts ~$13.6M in the quarter, bolstered by $4.2M on the $7.5M sales order; management projects nearly $1M in net cash flow from this order for the year .
Strategic progress: closed DaMar Plastics (projected ~$6.6M annual revenue, ~45% gross margin) and advanced a $26M-revenue potential acquisition; management reiterated plan to fund growth with debt rather than equity .
- Quote: “We built our order book backlog to over $18.5 million… as a result of increasing our focus on organic sales.” — CEO Luke Faulstick .

What Went Wrong

Margin pressure: gross margin was 30% in the quarter (vs 36% in Q1), constrained by “summertime bottlenecks in component supply chains,” though issues have improved in the current quarter .
Limited P&L clarity: company emphasized non-GAAP/operational profit; six-month figures show net loss of $(12.798)M driven largely by fair value changes and transaction costs, complicating quarterly EPS comparability .
Execution risk on acquisitions: while pipeline is robust, closing depends on financing and integration; management acknowledged pre-acquisition investments temporarily pressured profit .

Financial Results

Note: Fiscal periods are ordered oldest → newest.

Metric	Q4 FY2022	Q1 FY2023	Q2 FY2023 (calendar Q3 2022)
Revenue ($USD Millions)	$8.461	$10.049	$10.044
Gross Profit ($USD Millions)	$2.888	$3.642	$3.029
Gross Margin (%)	—	36%	30%
Consensus Revenue (S&P Global)	N/A (not available)	N/A (not available)	N/A (not available)
Consensus EPS (S&P Global)	N/A (not available)	N/A (not available)	N/A (not available)

Segment breakdown: Not disclosed. The company reports consolidated results and strategic updates across subsidiaries (e.g., DaMar Plastics, Simbex, SDP, Mio-Guard) without segment P&L detail .

KPIs and Balance Sheet Highlights

KPI / Balance Sheet	Q4 FY2022	Q1 FY2023	Q2 FY2023
Order Backlog ($USD Millions)	—	—	≥$18.5
Total Cash Receipts in Quarter ($USD Millions)	—	—	~$13.6
Cash Collected on $7.5M Sales Order ($USD Millions)	—	—	~$4.2
Cash & Equivalents ($USD Millions)	—	—	$6.938

Additional multi-period (H1 FY2023) disclosures

Adjusted EBITDA: $1.427M for six months ended Aug 31, 2022 .
“Net income before the undernoted” (operational profit): $0.560M for six months ended Aug 31, 2022 .
GAAP Net Loss for six months: $(12.798)M (driven by fair value changes, transaction costs, and non-cash items) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin Long-Term Target	Long-term	“Over 40%” target (Q1 commentary)	“Long-term goal of reaching 40% as we scale”	Maintained
Financing Plan	Medium-term	Strong balance sheet; fund acquisitions (Q1 commentary)	Growth plan does not envision equity financing; intends to take additional debt as needed	Reinforced
Quantitative Revenue/Profit Guidance	FY2023	Not provided	Not provided	Unchanged (none)

No formal quantitative guidance ranges were issued for revenue, margins, opex, tax rate, or segment metrics this quarter .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q2 FY2023)	Trend
Supply Chain	Q-2: COVID-era constraints impacting revenue timing (Dec demand strong) ; Q-1: Margin strength 36% but flagged potential moderation ahead	Revenues and margins constrained by summertime component bottlenecks; improving in current quarter	Improving from temporary bottlenecks
M&A Pipeline & Integration	Q-2: Acquisitions taking longer than usual ; Q-1: Two LOIs ($5M plastics @40% GM; $14M PT @35% GM)	Closed DaMar Plastics (projected ~$6.6M rev, ~45% GM); negotiating $26M-revenue potential acquisition; building optimized debt structure	Accelerating pipeline; execution focus
Product Development & IP	Q-1: Mio-Guard IP acquired; first premium electrode; K-Laser U.S. distribution	First orders of 600 Mio-Guard units; increased product development to expand high-margin branded portfolio	Scaling branded products
Backlog/Order Book	Earlier updates focused on demand/run-rate dynamics	Record order book to ≥$18.5M (≈6 months of revenue), driven by organic sales	Building backlog
Gross Margin Trajectory	Q-1: 36% (highest since listing)	30% amid supply constraints; long-term goal 40%	Near-term compression; LT target intact
Capital Strategy	Q-1: Balance sheet supports deals	Plan does not envision equity financing; will utilize debt as needed	Balanced funding approach

Management Commentary

“We built a record order book backlog to over $18.5 million… We generated 152% year-over-year gross margin growth and $1.427 million in positive adjusted EBITDA for the 6 months ended August 31, 2022.” — CEO Luke Faulstick .
“It is also important to note that revenues and margins were constrained this quarter from summertime bottlenecks in component supply chains. Thankfully, we have seen improvements with these issues during the current quarter.” — CEO Luke Faulstick .
“We are now negotiating acquisition agreements… for a $26 million annual revenue potential acquisition. We are pursuing an optimized debt structure for closing.” — CEO Luke Faulstick .
“We ended the quarter with $6.938 million in cash and cash equivalents… plan to take down additional debt for acquisitions as needed. Our growth plan does not envision a need for equity financing.” — CFO Dennis Nelson .
“We built our order book backlog to over $18.5 million during the quarter as a result of increasing our focus on organic sales.” — CEO Luke Faulstick ; also reiterated in press release .
“It is a shame, due to accounting rules, that [the $7.5M sales order] will not be reflected as revenues, but the net cash flow from the order will make a difference to our year.” — Executive Chairman Les Cross .

Q&A Highlights

The posted transcript contains prepared remarks only; no Q&A session is included, and the call concluded after management commentary .

Estimates Context

S&P Global (Capital IQ) consensus estimates for LNDZF could not be retrieved for this quarter; therefore, we cannot benchmark revenue or EPS against Street expectations. Values retrieved from S&P Global were unavailable due to missing mapping.
As the company did not disclose quarterly GAAP EPS in the press release or transcript, and S&P Global estimates were unavailable, EPS comparisons are not provided -.

Key Takeaways for Investors

Backlog strength provides near-term revenue visibility: ≥$18.5M order book (≈6 months of revenue) should support Q4/Q1 conversion as supply chain issues abate .
Top-line scaling continues: revenue held around $10.0M for two consecutive quarters (Q1: $10.049M; Q2: $10.044M), up sharply from $8.461M in Q4, underscoring organic growth and channel momentum .
Near-term margin compression appears transient: gross margin dipped to 30% (from 36% in Q1) on component bottlenecks; management targets 40% long-term as scale effects and mix improve .
M&A remains a critical growth lever: DaMar adds capacity/margins; a $26M-revenue potential deal is in negotiation with debt financing, avoiding equity dilution under the current plan .
Cash/liquidity is adequate for execution: $6.938M cash and multiple lending options position the company to fund earnouts and acquisitions while supporting working capital .
Accounting/earnings optics: significant non-cash fair value adjustments and transaction costs drove a $(12.798)M six-month GAAP net loss despite positive operational profit and adjusted EBITDA, suggesting headline EPS may understate operating momentum .
Watchlist catalysts: backlog conversion pace, margin normalization as supply chain improves, closing/financing of the $26M acquisition, and continued branded product ramp (e.g., Mio-Guard electrodes) .

Appendix: Prior Two Quarters (for Trend)

Q1 FY2023 (ended May 31, 2022): Revenue $10.049M; Gross Profit $3.642M; Gross Margin 36%; run-rate revenue for May ~$47.9M annualized; K-Laser distribution and Mio-Guard IP/product launch .
Q4 FY2022 (ended Feb 28, 2022): Revenue $8.461M; Gross Profit $2.888M; prior commentary highlighted strong demand with COVID-related supply chain impacts .

Sources: Q2 FY2023 press release and 8-K (Oct 17, 2022) ; Q2 FY2023 earnings call transcript (Oct 17, 2022) -; Q1 FY2023 press release and 8-K (July 14, 2022) -; Jan 13, 2022 press release and 8-K .

EVOME MEDICAL TECHNOLOGIES INC. (LNDZF)·Q3 2022 Earnings Summary