Syncordia Technologies and Healthcare Solutions, Corp. Reports Third Quarter Fiscal 2016 Results

Sequential 4% growth of Adjusted EBITDA
Subsequent to quarter end, HSI awarded two new contracts for ground ambulance RCM billing services

TORONTO, Feb. 11, 2016 /CNW/ - Syncordia Technologies and Healthcare Solutions, Corp. (TSXV: SYN) ("Syncordia" or the "Company") today reported financial results for the three and nine months ended December 31, 2015.

Reported results reflect nine months of operations of Health Services Integration Inc. ("HSI"), which was acquired effective October 31, 2014, and 251 days of operations of Paragon Billing LLC, ("Paragon") which was acquired April 24, 2015. Syncordia's Revenue Cycle Management ("RCM") segment had operational activities for 61 days during the three month period ended December 31, 2014. All results are reported in thousands of US dollars and are prepared in accordance with International Financial Reporting Standards ("IFRS").

Q3 FY 2016 Financial Highlights

  • Adjusted EBITDA increased $28 or 4%.
  • Cash and cash equivalents increased $240 to $10,285 reflecting stronger cash flow from operations.

Q3 FY 2016 Operational Highlights

  • Completed the onboarding of Air Medical and began billing operations in October 2015. This three year contract was signed in September 2015.
  • Previously announced HSI customer contract wins have all completed onboarding and continue to perform in-line with management's expectations.
  • Subsequent to quarter end, HSI was awarded two new contracts for ground ambulance RCM billing services. Both of the contracts have terms beyond 18 months.

Management Commentary
Michael Franks, Chief Executive Officer of Syncordia, said "I am pleased to report sequential growth of Adjusted EBITDA. In the quarter we successfully on boarded Air Medical and began billing operations for them. Since acquiring HSI in October 2014 we have signed a number of new contracts. All of these contracts have been on boarded and are performing at or above of management's expectations in terms of volume and revenue. One of the two new contracts that we have announced concurrently with this press release was procured through the Request for Proposal process that has been a focus of our sales and operations teams since acquisition of HSI. We are excited about our pipeline in FY 2017 and look forward to continued contract wins. Lastly, we are continuing to reduce Corporate costs. We have lowered head-count and have reduced expenditure. Further reductions to Corporate costs are under review and an update will be provided when we report our Q4 FY 2016 results following our March 31, 2016 fiscal year end."

Q3 FY 2016 Financial Results
Revenue from the RCM segment was $3,678, segmented between air transportation client billings of $2,808, ground transportation client billings of $154, behavioural health client billings of $505 as well as other RCM related revenue streams of $211.

Gross margin was $2,683 or 73% of revenue.

Adjusted EBITDA before Syncordia Cloud and Corporate costs was $1,674 or 46% of revenue.

Syncordia Cloud costs were $420 reflecting the ramp up of our development efforts which are focused on the Syncordia Cloud Billing Module.

Corporate costs were $550 reflecting reduced staff and other costs reduction initiatives as previously announced.

Grant of Stock Options
The independent members of the Board of Directors, in conjunction with its compensation consultant have approved the granting of 625,000 stock options in accordance with Syncordia's Stock Option Plan. This grant represents 31.8% of the option pool. Prior to the issuance of this grant, Syncordia's President and Chief Executive Officer, Chief Strategy Officer, Chief Financial Officer or any Vice President have not participated in the Syncordia Stock Option Plan.

The exercise price of these newly issued stock options will be the greater of CAD $1.50 or the closing price of the Company's common shares on February 16, 2016. The granted stock options will be vested over a period of 3 years with 1/3 vesting 12 months after the date of grant and the remainder vesting in equal amounts each 3 months thereafter. Additionally, the independent members of the Board of Directors anticipate reducing the option expiry term of all previously issued options from 10 years to 5 years to ensure better alignment with shareholders and are seeking the necessary approvals required in connection with the foregoing, including the approval of the TSXV. Therefore, all options previously issued and any new issuances will expire after 5 years from grant date if not exercised.

Notice of Conference Call
Syncordia will hold a conference call on Friday, February 12, 2016, at 8:00 a.m (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. A live audio webcast will be available through www.syncordiahealth.com or http://event.on24.com/r.htm?e=1122639&s=1&k=4056DF45B4D9E7685F822FF92EA8F46E . An archived replay of the webcast will be available for 90 days. A presentation will accompany the conference call and will be available for download from the Investor Relations section of Syncordia's website at: http://www.syncordiahealth.com/company/investor-relations/events-presentations/.

Forward Looking Statements
Certain statements herein may be "forward looking" statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Syncordia or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and we assume no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.

Cautionary Note Regarding Non-IFRS Measures
This press release contains references to "EBITDA," "Adjusted EBITDA," "Gross margin," and "Adjusted EBITDA before Syncordia Cloud and Corporate costs."

Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") are non-IFRS measures used by management to provide additional insight into our performance and financial condition.  We believe that these non-IFRS measures are important as they provide an indication of the results generated by our RCM business prior to taking into consideration how those activities are financed as well as the other items listed in their respective definitions.  Accordingly, we are presenting EBITDA, Adjusted EBITDA and Adjusted EBITDA before Syncordia Cloud and Corporate costs in this MD&A to enhance the usefulness of our MD&A. We have provided below a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA before Syncordia Cloud Corporate costs to the most directly comparable IFRS figures, disclosure of the purpose of the non-IFRS measure, and how the non-IFRS measures is used in managing the business.

EBITDA, Adjusted EBITDA and Adjusted EBITDA before Syncordia Cloud and Corporate costs are not calculations based on IFRS and should not be considered an alternative to operating income or net income (loss) in measuring the our performance, nor should it be used as an exclusive measure of cash flow, because it does not consider the impact of working capital growth, capital expenditures, debt principal reductions and other sources and uses of cash which are disclosed in the consolidated statements of cash flows. Investors should carefully consider the specific items included in our computation of these measures.

Management defines EBITDA as Earnings before Interest, Taxes, Depreciation and Amortization.

Management defines Adjusted EBITDA as Earnings before Interest, Taxes, Depreciation, Amortization, Transaction Costs, Fair Value Gains/Losses, Foreign Exchange Gains/Losses, Stock Based Compensation and Cash based Share Compensation Arrangements. Transaction costs include professional fees associated with business transactions.

Management defines Adjusted EBITDA before Syncordia Cloud and Corporate costs as Earnings before Interest, Taxes, Depreciation, Amortization, Transaction Costs, Fair Value Gains/Losses, Foreign Exchange Gains/Losses, Stock Based Compensation, Cash based Share Compensation Arrangements and costs of our Syncordia Cloud and Corporate segment. This metric is used to assess the performance of RCM and Syncordia Cloud segments.

Gross margin is a non-IFRS measure defined by management to reflect revenue less direct costs of sale, excluding amortization of intellectual property, customer lists, other amortizations and fair value gains/losses.

Syncordia Cloud and Corporate costs include sales and marketing, general and administrative and research and development, less amortization and depreciation, foreign exchange gains and losses, and stock-based compensation expense indexed to our share price.

About Syncordia Technologies and Healthcare Solutions, Corp.
We are a technology enhanced revenue cycle management ("RCM") company focused on underserved niche segments of the healthcare industry. We are building a diversified software and services business by consolidating healthcare billing providers. Our growth strategy is to acquire RCM businesses with and without software and, improve their profitability by increasing revenues and operating efficiencies using our software, and in time, commercializing the Syncordia Cloud, our cloud-based software offering, to provide customer demanded turn-key solutions from a single provider and to address compelling RCM market opportunities. 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The following is a reconciliation of EBITDA with net loss and comprehensive loss:
(in thousands of US Dollars)






Three Months ended

Three  Months ended

Nine Months ended


Dec 31

2015

Sep 30

2015

Dec 31

2015

Dec 31

2014

Dec 31

2015

Dec 31

2014

Net loss and comprehensive loss

(601)

(138)

(601)

(1,261)

(1,929)

(1,840)

Amortization of operating and other assets

774

772

774

439

2,275

440

Interest expense

478

476

478

261

1,397

261

EBITDA

651

1,110

651

(561)

1,743

(1,139)

 

The following is a reconciliation of Adjusted EBITDA and Adjusted EBITDA before Corporate costs with Net loss and comprehensive loss:
(in thousands of US Dollars)







Three Months ended

Three  Months ended

Nine  Months ended


Dec 31

2015

Sep 30

2015

Dec 31

2015

Dec 31

2014

Dec 31

2015

Dec 31

2014

Net loss and comprehensive loss

(601)

(138)

(601)

(1,261)

(1,929)

(1,841)

Amortization of operating and other assets

774

772

774

439

2,275

440

Interest expense

478

476

478

261

1,397

261

Transaction costs

17

47

17

545

1,786

818

Foreign exchange (gains) and losses

12

106

12

-

146

-

Unrealized (gains) and losses on derivative financial liability

(1)

(608)

(1)

-

(608)

-

Realized gain on contingent consideration

-

-

-

-

(1,111)

-

Stock based compensation

25

21

25

8

75

13

Adjusted EBITDA (i)

704

676

704

(8)

2,031

(309)

Syncordia Cloud costs (i)

420

394

420

107

1,114

107

Corporate costs (i)

550

643

550

556

1,804

857

Adjusted EBITDA before Syncordia Cloud and Corporate costs (i)

1,674

1,713

1,674

655

4,949

655

Notes:

(i)

Non-IFRS measure, Syncordia Cloud and Corporate costs exclude stock based compensation, transaction costs, foreign exchange gains and loss, and amortization.

 

Syncordia Technologies and Healthcare Solutions, Corp.
Condensed Interim Consolidated Statement of Financial Position
As at December 31, 2015 and March 31, 2015





(expressed in US dollars)

December 31

2015

March 31

2015




Assets






Current assets




Cash and cash equivalents

10,285,018

2,842,413


Accounts receivable

1,876,903

1,931,076


Other assets

373,830

145,304





12,535,751

4,918,793




Property and equipment

283,175

168,418




Intangible assets

17,293,181

16,134,626




Goodwill

6,370,291

5,836,719





36,482,398

27,058,556




Liabilities






Current liabilities




Accounts payable and accrued liabilities

1,119,067

1,135,379


Holdback payable

250,000

-


Contingent consideration payable

-

2,320,000


Current portion of notes payable

2,222,065

-





3,591,132

3,455,379




Notes payable

10,117,106

10,483,989




Other non-current liabilities

127,428

-





13,835,666

13,939,368




Shareholders' Equity






Share capital

25,517,330

14,387,095




Contributed surplus

1,952,958

1,626,593




Deficit

(4,823,556)

(2,894,500)





22,646,732

13,119,188





36,482,398

27,058,556




 

Syncordia Technologies and Healthcare Solutions, Corp.
Condensed Interim Consolidated Statement of Loss and Comprehensive Loss
For the three and nine months ended December 31, 2015 and 2014






Three months ended
December 31

Nine months Ended
December 31 

(Expressed in US dollars)

2015

2014

2015

2014






Revenue

3,678,236

1,690,552

10,969,933

1,690,552






Gain on settlement of contingent consideration

-

-

1,111,342

-


3,678,236

1,690,552

12,081,275

1,690,552






Cost of sales

996,161

549,976

3,088,326

549,976






Amortization of operating assets

708,368

394,093

2,077,351

394,093

Gross profit

1,973,707

746,483

6,915,598

746,483






Operating expenses

2,016,429

1,157,236

6,072,616

1,462,996






Transaction costs

16,742

544,493

1,786,170

817,550






Other amortization

65,332

45,005

197,618

45,702

Loss before financing expenses

(124,796)

(1,000,251)

(1,140,806)

(1,579,765)






Interest expense

477,594

260,922

1,397,237

260,922






Net loss

(602,390)

(1,261,173)

(2,538,043)

(1,840,687)






Unrealized non-cash gain on fair value of derivative financial liability

(1,026)

-

(608,987)

-

Net loss and comprehensive loss for the period

(601,364)

(1,261,173)

(1,929,056)

(1,840,687)






Net loss per share





Basic and diluted earnings per share

(0.03)

(0.08)

(0.11)

(0.26)






Weighted average number of shares outstanding





Basic

19,643,635

10,995,141

18,291,004

7,118,738

Diluted

19,673,670

11,007,256

18,321,039

7,130,853

 

Syncordia Technologies and Healthcare Solutions, Corp.
Condensed Interim Consolidated Statement of Cash Flows
For the three and six month periods ended December 31, 2015 and 2014





Three months ended

December 31

Nine months ended

December 31

(Expressed in US dollars)

2015

2014

2015

2014






Cash provided by (used in)










Operating activities










Net loss for the period

(601,364)

(1,261,173)

(1,929,056)

(1,840,687)

Items not affecting cash






Gain on settlement of contingent consideration

-

-

(1,111,342)

-


Reverse Takeover transaction costs

-

-

1,068,920

-


(Gain)/loss on derivative liability

(1,026)

-

(608,987)

-


Amortization

773,700

439,097

2,274,969

439,794


Non-cash interest on notes payable

171,473

92,290

500,361

92,290


Share-based compensation and

awards

25,231

8,137

75,239

13,498

Changes in non-cash working capital items






Accounts receivable

246,123

(483,881)

329,687

(483,881)


Other assets

(108,198)

(45,668)

(180,260)

(69,443)


Accounts payable and accrued liabilities

(274,184)

96,250

(338,205)

482,731


Other non-current liabilities

43,590

249,954

127,429

-


275,345

(1,001,244)

208,755

(1,365,698)






Investing activities





Purchase of property, equipment and intangible assets

 

(34,966)

 

(12,713)

 

(158,496)

(30,753)

Acquisition of Health Services Integration

-

(21,413,474)


(21,413,474)

Acquisition of Paragon

-

-

(3,479,929)

-

Settlement of Paragon holdback

-

-

(250,000)

-

Settlement of contingent consideration

-

-

(1,208,658)

-


(34,966)

(21,426,187)

(5,097,083)

(21,444,227)






Financing activities










Issuance of Class A preferred shares

-

-

-

3,500,000

Issuance of Class B Series 2 preferred shares

-

12,181,442

3,405,000

12,181,442

Issuance of private placement

-

-

8,052,460

-

Cash consideration from issuance of Reverse Takeover shares

 

-

 

-

 

402,605

-

Share issuance costs

-

(829,685)

(831,560)

(867,344)

Proceeds from long-term notes

-

12,000,000

1,332,388

12,000,000

Deferred financing costs

-

(725,237)

(29,960)

(725,237)


-

22,688,200

12,330,933

26,088,861






Increase/(decrease) in cash and cash equivalents during the period

240,379

199,089

7,442,605

3,278,936






Cash and cash equivalents - Beginning of period

10,044,639

3,079,850

2,842,413

3

Cash and cash equivalents - End of period

10,285,018

3,278,939

10,285,018

3,278,939






Cash interest paid

307,616

168,658

899,816

168,658






 

SOURCE Syncordia Technologies and Healthcare Solutions, Corp.

For further information: Michael Franks, Chief Executive Officer, (647) 949-2663, mike.franks@syncordiahealth.com; Lawrence Davis, Chief Financial Officer, (647) 350-7962, lawrence.davis@syncordiahealth.com

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