Name: EVOME MEDICAL TECHNOLOGIES INC. Q4 2022 Earnings Call
Start: 2023-01-17T00:00:00.000Z

Executive Summary

Q4 2022 (three months ended November 30, 2022) revenue was $10.55M, up 100% year over year; gross margin was $3.50M and 33% of revenue, improving sequentially versus Q2 FY2023’s 30% .
Reported net loss was $(1.53)M and diluted EPS was $(0.03); Adjusted EBITDA was $(0.16)M as the company incurred transaction and fair value remeasurement costs tied to acquisitions and earnouts .
Order backlog reached $20.4M, and management emphasized a strategic pivot to higher‑margin products; the company also increased aggregate credit line availability by up to $5.5M via Pathward to support growth .
No formal numeric guidance was issued; management reiterated a long‑term goal of ~40% gross margin and focus on closing the Biodex acquisition and pursuing a potential U.S. listing to expand capital market access .
Wall Street consensus (S&P Global) estimates for revenue and EPS were unavailable for LNDZF; thus beat/miss analysis versus consensus cannot be determined.

What Went Well and What Went Wrong

What Went Well
- 100% YoY revenue growth and 110% YoY gross margin growth in the quarter, with gross margin percentage rising to 33% as the mix shifted toward higher‑margin products .
- Record order backlog of $20.4M; management highlighted stronger bookings and preparation for integrating Biodex to drive scale .
- Expanded credit facilities (Pathward) by up to $5.5M to fuel growth; management cited readiness for acquisitions and operations scaling .
What Went Wrong
- Net loss of $(1.53)M and negative Adjusted EBITDA of $(0.16)M, driven by transaction costs, amortization, and fair value changes on contingent/earnout liabilities .
- Elevated operating expenses (G&A $4.04M) reflecting integration, regulatory, and acquisition readiness costs, pressuring near‑term profitability .
- Prior quarter supply chain constraints (summer) constrained margins and throughput, though conditions improved in Q4 2022; macro frictions remain a risk .

Metric	Q1 FY2023 (May 31, 2022)	Q2 FY2023 (Aug 31, 2022)	Q3 FY2023 (Nov 30, 2022)
Revenue ($CAD)	$10,048,548	$10,044,239	$10,547,652
Gross Margin ($CAD)	$3,642,265	$3,028,513	$3,495,160
Gross Margin (%)	36%	30%	33%
Net Income (Loss) ($CAD)	N/A	N/A	$(1,528,597)
Diluted EPS ($CAD)	N/A	N/A	$(0.03)

Adjusted EBITDA ($CAD)	Q3 FY2023
Adjusted EBITDA	$(159,717)

Segment/Revenue Disaggregation (Q3 FY2023):

Revenue Type	Amount ($CAD)
Point‑in‑Time	$7,849,808
Over‑Time	$2,697,844

Selected KPIs and Balance Sheet:

KPI / Balance Item	Q3 FY2023
Order Backlog	$20.4M
Cash and Cash Equivalents	$3,138,860
Line of Credit Outstanding	$6,162,803
Credit Line Expansion (Pathward)	+$5.5M availability

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin Target	Long‑term	Not quantified	~40% target reiterated	Maintained directional goal
Capital Markets Strategy	2023	TSXV only	Pursue potential U.S. listing while maintaining Canada listing	New strategic action
Acquisition Pipeline / Biodex	Near‑term	LOI signed previously	Close and integrate Biodex; timing dependent on regulatory/third‑party approvals	Update timing/complexity

No formal numeric revenue/EPS/OpEx guidance was provided for Q4 2022 .

Topic	Previous Mentions (Q1 & Q2 FY2023)	Current Period (Q3 FY2023)	Trend
Gross Margin Focus	36% margin in Q1; mix improvements	33% margin; pivot to higher‑margin lines	Improving mix focus
Supply Chain Constraints	Summer bottlenecks constrained Q2 margins; improving	Noted improvement; focusing on margin growth	Easing constraints
Order Book / Backlog	Built to >$18.5M in Q2	Reached $20.4M	Strengthening demand
M&A / Biodex Integration	Preparing back office & systems; negotiating for larger deal	Close Biodex; integration plans outlined	Execution phase
Capital Markets / U.S. Listing	Goal to seek U.S. listing (Q2 remarks)	Engaged U.S. bank; maintaining Canada listing	Advancing listing prep

“We raised gross margin as a percentage of revenue quarter‑over‑quarter by focusing on higher‑margin products and services… We are focused on potential U.S. listing” – CEO Luke Faulstick .
“We have personally created an integrated medical device company with 5 engines to drive revenue and profit growth… M&A, product development, IP acquisition, distribution, and organic growth” – Executive Chairman Les Cross .
“Order book backlog… reached $20.4 million… Gross margin as a percentage of revenue increased to 33%… We increased our aggregate credit line availability by up to $5.5 million” – CFO Dennis Nelson .

The call was primarily structured around prepared remarks focused on margin mix shift, backlog strength, Biodex closing/integration steps, and capital markets strategy; specific Q&A disclosures were not provided in the available transcript excerpts .

S&P Global/Capital IQ consensus revenue and EPS estimates for LNDZF were unavailable, so a beat/miss analysis versus Street consensus cannot be performed for Q4 2022.

Revenue momentum is strong: Q3 FY2023 revenue +100% YoY; backlog at $20.4M supports near‑term visibility .
Margin mix shift is working: gross margin rose to 33%; management targeting ~40% long‑term through higher‑margin products and services .
Near‑term profitability remains pressured: net loss $(1.53)M and Adjusted EBITDA $(0.16)M given integration, amortization, and fair value adjustments on earnouts/contingent consideration; watch pace of opex normalization .
Balance sheet flexibility improved via Pathward credit expansion (+$5.5M availability) to fund growth and working capital, though leverage and earnout obligations warrant monitoring .
Execution on Biodex close/integration is the key catalyst; success would broaden product portfolio and channel, supporting margin and scale .
U.S. listing pursuit aims to broaden investor base and valuation; timing depends on execution milestones .
With Street estimates unavailable, monitor internal KPIs (backlog, margin %, cash/credit capacity) and disclosures for directional guidance and operational progress .