Executive Summary

Q3 2023 delivered a turnaround: revenue rose to $19.65M (+18.5% q/q; +78% y/y), gross margin expanded to 37% (from 34%), and adjusted EBITDA turned positive at ~$0.75M; reported net income was $2.99M versus a $1.12M loss in Q2 .
Quality-of-earnings caveat: results benefited from $2.00M of Employer Retention Credit (ERC) grant income and a $3.54M non-cash gain from remeasuring contingent consideration, which materially boosted net income .
Liquidity risk remains elevated: management is “assessing a pathway to eliminate going concern issues,” while operating under a forbearance agreement tied to the Biodex acquisition debt; acquisition debt was reduced by US$428K in Q3 with a further scheduled payment on Oct 31, 2023 .
Strategic catalysts: rebranding to Evome Medical Technologies, near-term product launch (portable, connected, AI-enabled devices), and targeted gross margin >40% focus could drive 2024 growth narrative .
No SPGI Wall Street consensus estimates available for LNDZF; relative-to-estimates assessment is not possible this quarter [GetEstimates error noted].

What Went Well and What Went Wrong

What Went Well

“Record revenue with solid organic revenue and gross profit growth” and a rapid execution of the turnaround plan; CEO targets gross margin above 40% next, setting a clear operational North Star .
Gross margin improved to 37% (from 34%), aided by prioritizing higher-margin shipments and demand exceeding near-term capacity, signaling pricing/mix and execution gains .
Adjusted EBITDA swung positive to ~$0.75M from a loss in Q2, marking a key profitability milestone after several loss-making quarters .

What Went Wrong

Reported net income reliance on non-operating items: $2.00M ERC grant and $3.54M contingent consideration gain drove the profit print; underlying operating income was still a loss (-$1.02M) .
Going concern and refinancing risks persist despite debt extensions; company disclosed substantial doubt remains until funding plans are executed (not fully within management’s control) .
SG&A and lease/amortization burdens remain heavy (SG&A $7.10M; leases/intangibles amortization ~$0.91M combined), reflecting acquired asset base and overhead that must be leveraged with sustained margin and volume .

Financial Results

Metric	Q1 2023	Q2 2023	Q3 2023
Revenue ($CAD)	$10,683,229	$16,575,075	$19,647,489
Gross Profit ($CAD)	$4,095,859	$5,632,415	$7,268,163
Gross Profit Margin %	N/A	34%	37%
Net Income ($CAD)	$(1,662,744)	$(1,115,843)	$2,988,468
Diluted EPS ($CAD)	$(0.03)	$(0.02)	$0.03
Adjusted EBITDA ($CAD)	N/A	$(819,394)	~$749,425

Notes: Adjusted EBITDA reconciliation shows $749,765 for Q3 (minor discrepancy vs press text) .

Vs estimates: SPGI consensus unavailable for LNDZF this quarter (no mapping); cannot assess beats/misses.

Segment breakdown

Company reports a single segment (“healthcare operations”); no disaggregated segment financials provided .

KPIs and Balance Sheet Levers

KPI	Q1 2023	Q2 2023	Q3 2023
Cash & Equivalents ($CAD)	$2,343,417	$1,398,103	$1,052,647
Total Debt ($CAD)	$729,895	$9,775,156	$10,227,985
Line of Credit ($CAD)	$8,081,745	$8,434,492	$7,682,971
Inventories ($CAD)	$6,693,780	$13,348,620	$12,132,422

Operating cash flow for the nine months ended Q3: $(2,026,644) (use reflects working capital/integration), highlighting liquidity discipline needed into Q4 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA	FY 2023	Company-issued projections as of Feb 9, 2023 (not reiterated here)	Management expects to adjust Adjusted EBITDA downward; no numeric range provided	Lowered (directional)
Gross Margin	Near-term operational target	N/A	CEO aims to push gross margin “above 40%” (target, not formal guidance)	New operational target
Revenue	FY 2023	N/A	No formal revenue guidance; focus on product launches and international partnerships to fuel growth in 2024	N/A
Capital & Debt	2023–2025	N/A	Forbearance terms constrain capex >$100K without consent; monthly excess cash sweeps and 50% of capital raised to late payments until current	New constraints under forbearance

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
AI/Technology initiatives	Limited/no explicit AI commentary in filings; focus on acquisitions/integration	“Portable, connected and AI-enabled” product vision tied to clinic throughput; product announcement imminent	Rising strategic emphasis
Supply chain	Risk-factor awareness; no major operational commentary	Caution that disruptions could persist; focus on prioritizing high-margin deliveries	Managed, risk remains
Debt/Going concern	Substantial doubt disclosed; funding plan in process	“Assessing a pathway to eliminate going concern issues”; debt extended under forbearance	Improving framework, still a key risk
Product performance/launches	Accretive acquisitions (Biodex/Arrowhead) integration underway	Near-term new product launch; next-gen line in pipeline	Pipeline building
Regional trends	US-centered operations/recognition; one segment	International partnerships flagged as growth driver	Broadening
Regulatory/legal	No material proceedings	Unchanged; compliance and disclosures maintained	Stable
R&D execution	Simbex capability supports design/commercialization	Continued emphasis on new products, margin expansion	Execution focus

Management Commentary

CEO: “We have succeeded in implementing our turnaround plan very quickly this quarter with fantastic results… With this sales momentum I now want to focus on getting our gross profit figures up above 40%… assessing a pathway to eliminate our going concern issues.”
CEO: “We have some very exciting product launches and international partnerships that look to fuel growth in 2024… tomorrow we will debut our new product… soon our entire next generation line.”
CFO: “Organic revenue for the quarter increased 18.5% from the previous quarter to $19.6 million… gross profit reached 37%… adjusted EBITDA of $749,000… net income nearly $3 million… now concentrating our attention on the cash flow.”
CEO: Vision centers on “portable, connected and AI-enabled” devices to increase therapist-to-patient throughput without incremental labor .

Q&A Highlights

The released transcript contains prepared remarks only; no separate Q&A disclosures were provided. CFO clarified the focus on cash flow and reaffirmed the positive adjusted EBITDA and margin expansion in Q3 .
Management reiterated debt extension and plans to mitigate going-concern risks under the forbearance framework .

Estimates Context

SPGI consensus estimates for LNDZF were unavailable this quarter due to missing mapping; therefore, performance versus Street estimates cannot be assessed.

Key Takeaways for Investors

Underlying operations improved (q/q revenue and margin gains; adjusted EBITDA positive), but reported net income was heavily influenced by one-off/non-operating items (ERC grant and contingent consideration gains); focus on operating income and cash flow going forward .
Gross margin trajectory is favorable (37% with a stated >40% target), supported by mix/fulfillment prioritization; monitor sustainability amid integration and working-capital needs .
Liquidity risk remains material: short-term debt stack, forbearance covenants (cash sweeps, capex limits), and ongoing going-concern disclosures; execution on refinancing and funding will be pivotal .
Product-launch and rebranding to Evome are potential catalysts; international partnerships may broaden TAM and diversify revenue in 2024 .
Inventory and receivable levels are high; working-capital optimization could unlock cash conversion if demand maintains strength .
Watch for margin and adjusted EBITDA quality absent non-operating items; operating income remained negative in Q3, underscoring the need for continued cost discipline and mix improvement .
No Street estimates this quarter; trading set-ups should key off operational beats/misses (gross margin, adj. EBITDA, cash metrics) and any concrete funding/forbearance updates.

Appendix: Additional Data Notes

Non-GAAP definition of Adjusted EBITDA excludes interest, taxes, depreciation, amortization, FX, other income, impairment, FV changes, transaction costs, severance, and stock-based compensation; reconciliation provided (Q3 adj. EBITDA $749,765) .
Revenue recognition and one-segment disclosure per ASC 606; no multi-segment comparison available .
Operating cash flow for 9M was negative, reflecting integration and working capital dynamics; financing inflows supported liquidity earlier in the year .

EVOME MEDICAL TECHNOLOGIES INC. (LNDZF)·Q3 2023 Earnings Summary