Mednow Achieves Record Q4 2022 Financial Results with +11% Q/Q Revenue Growth and 5,700% Y/Y Revenue Growth

• Q4/22 revenue increased over 11% quarter-over-quarter, and more than 5,700% year-over-year;
• Mednow patient count increased quarter over quarter, growing by more than 35% to ~31,000 in Q4 versus ~23,000 in Q3;
• Achieved significant cost savings in the August to October 2022 period, to reduce cash burn and streamline operations;
• New business partnerships signed, including Mednow’s partnership with Aya

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 July 31th, 2022 (“Q4 2022”). Mednow’s Financial Statements and Management, Discussion & Analysis are available on sedar.com and on the Company’s website, https://investors.mednow.ca.

Key M&A, Partnerships and Milestones During and Subsequent to Q4 2022:

Key Financials

• Revenue increased by 11% quarter-over-quarter, to $7,206,664 during the three months period ended July 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 $6,698,297, as compared to $0 in the prior year comparative period.
  • Revenue generated by doctor services was $482,366 as compared to $0 in the prior year comparative period.
• Gross margin for the quarter increased 262% year-over-year to $449,003, as compared $124,200 in the prior year comparative period.
• EBITDA for the year was a loss of $13,319,073, as compared to a loss of $3,753,496 in the prior year comparative period, representing a decrease in EBITDA of $9,565,577 compared to the prior comparative period.
  • The change is primarily driven by increased corporate costs, such as increased headcount, technology development and marketing as the Company has continued to build out its internal teams in order to scale and grow its businesses.
• Adjusted EBITDA for the quarter was a loss of $4,614,122, as compared to a loss of $2,203,582 in the prior year comparative period, representing a decrease in adjusted EBITDA of $2,410,540.
  • Adjusted EBITDA has been adjusted for certain items.

2022 operational milestones

In addition to these strong and forecasted results, it is also important to understand the long-term potential of the national digital pharmacy distribution network that has been established by the company pursuant to the following:

• Patient Growth: Mednow patient count increased significantly quarter over quarter, growing by approximately 35% to ~31,000 in Q4 versus ~23,000 in Q3.
• Pharmacy Licenses: 9 Provincially licensed pharmacies, allowing Mednow to ship to Canadians from coast-to-coast.
• Investment in Technology: Investing in an area the pharmacy industry desperately needs, Mednow has recruited more top talent. This is the team that builds the stable, scalable, secure and proprietary Mednow CRM and patient app. The Mednow app makes it easy to manage prescriptions and provides patients with instant access to pharmacists, nurse practitioners as well as 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.
• Acquired Medvisit: Canada’s largest and most established doctor home visit organization, serving the GTA with “house call” doctor care.
• Specialty pharmacy acquisitions: Established a nationwide specialty pharmacy preferred provider network offering to address this fastest growing drug category by dollars spent. High barriers to entry means few competitors and with Mednow’s “pharmacy of the future” infrastructure, we believe we have a major competitive advantage.
• Medical clinic network: By solving administrative challenges and offering clear clinical value, Mednow is positioned as the ideal pharmacy partner for medical clinics. Partnering with these clinics offers a catalyst for Mednow’s growth.
• Mednow for Business (MFB): Partnering as the much-needed digital pharmacy solution for benefits providers and other organizations offers mutual benefits and allows Mednow to add patients at scale. MFB has secured several partnerships in this vein with more in the late stages, all the while building and working the pipeline that brings these valuable deals to fruition.
• Established product-market fit: Mednow has earned and maintains an exceptionally rare perfect 5-star rating on Google. Even skimming the reviews shows that we’re 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, personal customer relationships make the difference.

Mednow For Business (MFB)

MFB has demonstrated strong traction already, with access to over 500,000 lives. MFB is an enterprise pharmacy solution suited to employers to better manage their drug benefit expenditure, which normally represents up to 80% of the total benefits expenditure made by employers. In addition, MFB also offers wellness and digital health programs to their employees, that includes a broad spectrum of solutions including digital pharmacy, nutritional services, personalized vitamins and supplements programs, and a wellness store which 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, Consensus Cloud Solutions, and Arista Networks. 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.

Summary of Financial Results

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

 

 

Three months ended July 31,

 

 

2022

 

2021

 

 

Retail Pharmacies

 

Doctor Services

 

Mednow Inc.

 

Total

 

Mednow Inc.

Revenue

 

$ 6,698,297

 

$ 482,366

 

$ 26,004

 

$ 7,206,664

 

$ 124,200

Other amounts in loss

 

8,982,346

 

720,011

 

11,358,813

 

21,061,170

 

3,974,386

Net loss

 

$ (2,284,049)

 

$ (237,645)

 

$ (11,332,809)

 

$ (13,854,503)

 

$ (3,850,186)

Source: Mednow’s MD&A as of November 28, 2022

 

 

For the year ended July 31,

 

 

2022

 

2021

 

 

Retail Pharmacies

 

Doctor Services

 

Mednow Inc.

 

Total

 

Mednow Inc.

Revenue

 

$ 14,319,421

 

$ 2,069,551

 

$ 249,698

 

$16,638,670

 

$ 414,000

Other amounts in loss

 

17,192,498

 

2,608,623

 

26,393,449

 

46,194,570

 

9,367,835

Net loss

 

$ (2,873,077)

 

$ (539,072)

 

$ (26,143,751))

 

$ (29,555,900)

 

$ (8,953,835)

Normal Course Issuer Bid Update

As at July 31, 2022, the Company purchased and canceled a life to date total of 309,100 common shares for $865,955 of cash consideration. The life to date weighted average cost of the canceled shares totaled $455,233 resulting in a loss on cancellation of $410,822 allocated to the deficit. During the year ended July 31, 2022, the Company did not purchase and cancel common shares.

DEFINITIONS OF CERTAIN NON-IFRS FINANCIAL MEASURES

This MD&A uses certain non-IFRS financial measures which are defined below. 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. The Company has disclosed certain non-IFRS measures on this report, including the disclosure of non-IFRS financial measures for prior year comparative periods.

Reconciliation of Non-IFRS Financial Measures

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.

In prior periods, Adjusted EBITDA represented 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, and acquisition costs incurred. In the current period, the composition of Adjusted EBITDA has changed. It now excludes the following additional items: asset impairment charges, the fair value remeasurement of the note receivable from Doko and severance expenses.

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 labelled 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, the Company’s competitive advantage in the pharmacy industry and the launch of additional strategic channel partner relationships, 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 the Company will be successful in the deployment of its resources and personnel, the Company’s operations will not be adversely impacted by COVID-19, the availability of financing, the cost of planned expansion, third party contractors and supplies and governmental and other approvals required to conduct the Company’s planned activities will be available on reasonable terms and in a timely manner and that general business and economic conditions will not change in a material adverse manner, the Company will be able to maintain its competitive advantage in the pharmacy industry with its “pharmacy of the future infrastructure”, the Company will be able to execute on additional strategic channel partner relationships and the Company will be successful in its strategic objectives, including the integration of existing business acquisitions and the pursuit of other investments and acquisitions.

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, changes in market conditions, fluctuations in the currency markets, changes in national and local governments, legislation, taxation, controls, regulations, and political or economic developments in Canada or other countries in which the Company may carry on business in the future; risks relating to the credit worthiness or financial condition of suppliers and other parties with whom the Company does business; inadequate insurance or inability to obtain insurance to cover these risks; availability and increasing costs associated with operational inputs and labor; business opportunities that may be presented to, or pursued by the Company; the Company’s ability to successfully integrate acquisitions; the ongoing global economic impacts of the COVID 19 pandemic and the war in eastern Europe, 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.

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Investor Relations Contact: Benjamin Ferdinand, Chief Financial Officer [e-mail] 1.855.686.6300