Dialogue Health Technologies Reports Fourth Quarter and Full Year 2021 Results

Record Quarter Highlighted by a $9.6 Million Increase in ARR, an Expansion in Gross Margin to 43.5%, and the Addition of iCBT to Our Partnership with Canada Life

MONTREAL, March 23, 2022 /CNW Telbec/ - Dialogue Health Technologies Inc. (TSX: CARE) ("Dialogue" or the "Company"), Canada's premier health and wellness virtual healthcare platform, announced today its financial and operational results for the three months and year ended December 31, 2021. Financial references are in Canadian dollars unless otherwise indicated.

"2021 was a pivotal year for Dialogue as we made our entry on the Toronto Stock Exchange. Even more notably, we delivered strong growth, launched our Integrated Health Platform^TM, strengthened our offering with the addition of internet-based cognitive behavioural therapy, and expanded our largest partnerships," said Cherif Habib, Chief Executive Officer of Dialogue. "As we enter 2022, we are excited about the opportunity to take advantage of our growing scale, competitive moats, and market awareness to establish Dialogue as the leading, fully-integrated virtual health and wellness platform in Canada and beyond."

Navaid Mansuri, Chief Financial Officer, added: "We are pleased with our record fourth quarter performance, as we demonstrated excellent revenue growth and continued business efficiencies, ending 2021 on a high note. Our business model is scaling, and we saw sustained momentum across our key operating metrics. Our IPO has allowed us to strengthen our balance sheet, positioning us well to make purposeful acquisitions to enhance our offering. We will continue executing on our strategy as we focus on the large, long-term growth opportunity ahead of us."

Q4 2021 Financial Highlights

^{(All capitalized terms not defined herein, shall have the meaning and usefulness ascribed to them in the Management's Discussion and Analysis for the three months and year ended December 31, 2021 Comparison periods in each case are the three months and year ended December 31, 2020, unless otherwise stated)}

• Annual Recurring and Reoccurring Revenue ("ARR") grew 45.2% year-over-year to $85.0 million, driven by new Customer wins, which include a national retailer of general merchandise, a national home improvement company, a global IT and business consulting services firm, and a large Canadian labour union, as well as program expansions and the addition of new services by existing Customers.
• Fourth quarter revenue increased by 40.6% year-over-year to $18.9 million, due to growth in Members, both Direct and from agreements with strategic distribution partners, and an increase in the Attach Rate as existing Customers add more services over time.
• Members grew to more than 1.8 million, an increase of more than 900,000, or 98.0%, year-over-year, and approximately 82,000, or 4.7%, compared to the third quarter of 2021. Many signed customers chose to launch our platform at the start of 2022, subsequent to quarter end, to account for budgetary and financial planning requirements. As such, we onboarded an additional 100,000 members in the first week of 2022. When factoring the timing of these additions, Members grew approximately 182,000, or 10.3%, compared to the third quarter of 2021.
• Attach Rate grew to 1.50 from 1.07 in the same period last year, mainly due to the addition of our internet-based cognitive and behavioural therapy ("iCBT") service to The Canada Life Assurance Company's ("Canada Life") Consult+ platform.
• Member-Service Units, which we define as total Members multiplied by the Attach Rate, rose 177.6% year-over-year to just under 2.8 million from approximately 1.0 million in the same period last year. This meaningful increase demonstrates the success of Dialogue's land and expand strategy, as both existing and new Customers continue to leverage our Integrated Health PlatformTM.
• 56% of new direct Members signed up for two services or more in the fourth quarter of 2021. Combined with current Customer expansions, the cumulative number of direct Members with two or more services is now 21%, compared to 14% at the same time last year and 17% at the end of the third quarter of 2021.
• Average Monthly Net Retention Rate ("NRR") was 102% for the fourth quarter of 2021, marking another quarter of NRR greater than 100%, with no member churn within our mid-market and enterprise customer categories.
• Gross Margin increased to 43.5%, compared to 34.8% in the fourth quarter of 2020, as the lower margin profile at Optima was more than offset by a favourable utilization rate and by greater scale year-over-year in both our Mental Health service and Employee Assistance Program ("EAP").
• Adjusted EBITDA¹ loss was $5.7 million, compared to a net loss of $5.2 million in the same period last year. The loss was due mainly to higher operating expenses year-over-year to support our growth, to launch and promote new services, to develop our technology platform, and to sustain a public company structure, partially offset by higher gross profit.
• Net loss was $7.1 million, as compared to $6.6 million in the same period last year, due mainly to higher operating expenses, partially offset by higher gross profit.
• Cash and Cash Equivalents were $104.3 million as of December 31, 2021, compared to $42.1 million as of December 31, 2020. The increase was the result of net proceeds from the initial public offering of $90.6 million, offset in part by cash used in operations during the year.

Q4 2021 Business Highlights

• Building on the launch of our iCBT service in Q3, we developed an enhanced option, iCBT Plus, with guidance from a coach, allowing clients and members to select their desired level of support and autonomy to improve mental health.
• We rolled out three new self-care toolkits in November within our iCBT program to provide members with an even more robust coverage. In addition to the original modules for managing Depression and Anxiety, eligible Dialogue members can now access toolkits for Social Anxiety, Divorce & Separation, and Loss & Bereavement.
• On December 1, 2021, we received a meaningful vote of confidence from our largest partner, Sun Life Assurance Company of Canada ("Sun Life"), which increased its investment in Dialogue by acquiring approximately 6 million shares in a private agreement with certain third parties. We did not receive any proceeds from this transaction.
• On December 2, 2021, we announced an agreement with Canada Life to make our iCBT program available to all Consult+ users across Canada, expanding on its existing Primary Care offering and demonstrating the appeal of our Integrated Health PlatformTM.
• Subsequent to quarter end, on January 11, 2022, we published our 2nd annual Canadian Attitudes on Health and Virtual Care Report, a joint study with Environics Research. Key findings indicate that 82% of working Canadians agree that employers should provide virtual care services through their benefit plans, and nearly 40% plan to use their employee benefits to help them reach their health and wellness objectives.
• Subsequent to quarter end, on February 9, 2022, we announced an expanded partnership with Sun Life, whereby both our EAP and iCBT services would be added to the Lumino Health Virtual Care platform effective June 1, 2022.
• We added Jennifer Buckley to our leadership team as Senior Vice President, Commercial. She most recently held the role of Vice President of Sales and Country Manager for Canada with Workday.
• We have been ranked #8 on Deloitte's 2021 Canada Technology Fast 50, a program that celebrates the world-class achievements and the evolution of the Canadian technology sector, with a three-year revenue growth of 4,215%

Upcoming events

• Laurentian Bank Securities 9^th Annual Institutional Investor Conference on April 7, 2022.
• RBC Capital Markets 2022 Global Healthcare Conference in New York City on May 17-18, 2022.
• CIBC Capital Markets Technology and Innovation Conference 10.0 in Toronto on May 25-26, 2022.
• National Bank Financial 12^th Annual Quebec Conference in Toronto on June 9, 2022.

Notice of Conference Call

Dialogue will host a live video webinar on Wednesday, March 23, 2022 at 9:00 a.m. ET to discuss its financial results. Cherif Habib, CEO, and Navaid Mansuri, CFO, will co-chair the call. All interested parties can join the event at the following link, which is also available in the Events and Presentations section of the Company's website. The presentation will be accompanied by slides, which will be available on the screen view and will be made available prior to the start of the webinar on  the Company's website. Please connect at least 15 minutes prior to the event to ensure adequate time for any software download of Zoom that may be required to attend the event. Listeners that prefer to dial in by phone may do so by accessing the same web link and the dial in details will be provided by email upon registration.

Non-International Financial Reporting Standards ("IFRS") Financial Measures

This press release makes reference to certain non-IFRS measures, such as "EBIT" represents net profit or loss before net financing (income) expenses and income taxes,  "EBITDA" (which stands for net profit or loss before net financing (income) expenses, income taxes, depreciation of property and equipment, amortization of intangible assets, and amortization of right-of-use assets) and "Adjusted EBITDA" (which stands for net profit or loss before net financing (income) expenses, income taxes, depreciation of property and equipment, amortization of intangible assets, amortization of right-of-use assets, transaction costs, acquisition costs, change in fair value of conversion feature, share-based payments expense, change in fair value of contingent consideration, severance costs, and foreign exchange gain or loss). These measures are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information as reported under IFRS. Management also believes that other users, such as securities analysts, investors and other interested parties, frequently use non-IFRS measures, particularly in the evaluation of issuers.

Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. Where applicable, we provide a clear quantitative reconciliation from the non-IFRS financial measures to the most directly comparable measure calculated in accordance with IFRS.

The following table reconciles net loss to Adjusted EBITDA loss for the three months and years ended December 31, 2021 and 2020:

DIALOGUE HEALTH TECHNOLOGIES INC. ADJUSTED EBITDA FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2021 and 2020
(in thousands of CAD)		Three months ended December 31,				Year ended December 31,
		2021		2020		2021		2020
		$		$		$		$
Net loss		(7,142)		(6,565)		(251,352)		(20,904)
Net financing (income)       expenses		(207)		219		(362)		714
Current income tax expense		36		—		70		—
Deferred income tax recovery		(114)		(229)		(393)		(229)
EBIT		(7,427)		(6,575)		(252,037)		(20,419)
Depreciation of property and       equipment		172		140		519		676
Amortization of intangible       assets		377		447		1,502		740
Amortization of right-of-use       assets		152		134		600		505
EBITDA		(6,726)		(5,854)		(249,416)		(18,498)
Share-based payments expense		677		383		2,061		966
Acquisition costs		150		350		380		590
Change in fair value of      conversion feature		—		(104)		225,417		(381)
Fair value of contingent liability		193		—		193		—
Severance		37		—		37		—
Foreign exchange loss (gain)		—		—		87		—
Adjusted EBITDA		(5,669)		(5,225)		(21,241)		(17,323)

About Dialogue

Incorporated in 2016, Dialogue is Canada's premier virtual healthcare and wellness platform, providing affordable, on-demand access to quality care. Through our team of health professionals, we serve employers and organizations who have an interest in the health and well-being of their employees, members and their families. Our Integrated Health Platform™ is a one-stop healthcare hub that centralizes all of our programs in a single, user-friendly application, providing access to services 24 hours per day, 365 days per year from the convenience of a smartphone, computer or tablet.

Forward-Looking Information

This release includes "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking information may relate to our financial outlook (including revenues and Adjusted EBITDA), and anticipated events or results and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives.

In some cases, but not necessarily in all cases, forward-looking statements can be identified by the use of forward-looking terminology such as "plans" "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding future events and operating performance.

Forward-looking statements are necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by Dialogue as of the date of this release, are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, the risk factors identified under "Risk Factors" in the Company's latest annual information form, and in other periodic filings that the Company has made and may make in the future with the securities commissions or similar regulatory authorities in Canada, all of which are available under the Company's SEDAR profile at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect Dialogue. However, such risk factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Dialogue undertakes no obligation to publicly update any forward-looking statement, except as required by applicable securities laws.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not currently known to us or that we currently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, you should not place undue reliance on forward-looking information. The forward-looking information represents our expectations as of the date of this earnings release (or as the date it is otherwise stated to be made) and is subject to change after such date. However, we disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities laws. All of the forward-looking information contained in this earnings release is expressly qualified by the foregoing cautionary statements.

DIALOGUE HEALTH TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF NET LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
	Three months ended December 31,				Year ended December 31,
	2021		2020		2021		2020
	$		$		$		$
Revenue	18,916,275		13,450,370		68,049,313		35,801,572
Cost of services	10,693,090		8,774,648		39,242,644		21,408,622
Gross profit	8,223,185		4,675,722		28,806,669		14,392,950
Operating expenses
General and administrative	8,362,041		6,679,882		32,149,578		20,078,952
Sales and marketing	3,363,330		2,859,778		11,700,157		9,432,924
Product and development	3,248,270		1,430,930		9,515,466		4,715,248
Share-based payments expense	676,741		382,701		2,060,636		966,206
	15,650,382		11,353,291		55,425,837		35,193,330
Operating loss	(7,427,197)		(6,677,569)		(26,619,168)		(20,800,380)
Other expenses
Change in fair value of conversion       feature	—		(103,610)		225,416,590		(380,526)
Net financing (income) expenses	(207,085)		219,218		(362,138)		713,897
	(207,085)		115,608		225,054,452		333,371
Net loss before income taxes	(7,220,112)		(6,793,177)		(251,673,620)		(21,133,751)
Current income tax (expense)	(35,552)		—		(70,466)		—
Deferred income tax recovery	113,968		229,241		392,698		229,241
Net loss	(7,141,696)		(6,563,936)		(251,351,388)		(20,904,510)
Other comprehensive income
Items that may be reclassified       subsequently to net loss
Foreign currency translation gain (loss)	217,971		(93,871)		752,499		(375,481)
Total comprehensive loss	(6,923,725)		(6,657,807)		(250,598,889)		(21,279,991)
Loss per share - basic and diluted	(0.11)		(0.59)		(4.48)		(1.87)

 

DIALOGUE HEALTH TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2021 AND DECEMBER 31, 2020
	December 31,		December 31,
	2021		2020
	$		$
Assets
Current assets
Cash and cash equivalents	104,296,162		42,067,100
Trade and other receivables	13,659,453		11,358,615
Asset held for sale	—		909,541
Prepaid expenses	1,811,159		745,673
	119,766,774		55,080,929
Property and equipment	1,136,558		1,019,406
Right-of-use assets	1,567,985		1,687,434
Intangible assets	5,818,624		5,472,196
Goodwill	6,962,820		3,114,927
	135,252,761		66,374,892
Liabilities
Current liabilities
Trade payable and accrued liabilities	9,533,670		7,489,083
Unearned revenue	67,759		476,619
Liability related to asset held for sale	—		430,110
Current portion of contingent consideration payable	718,133		1,379,501
Current portion of long-term debt	400,020		398,020
Current portion of lease liabilities	540,894		524,618
	11,260,476		10,697,951
Non-current portion of lease liabilities	911,337		1,086,720
Non-current portion of long-term debt	1,074,053		1,459,407
Non-current portion of contingent consideration payable	1,299,907		523,499
Redeemable Class B preferred shares	—		82,805,661
Deferred income tax liability	766,263		976,890
Conversion option on redeemable Class B preferred shares	—		92,755
	15,312,036		97,642,883
Commitments and contingencies
Shareholders' equity (deficit)
Share capital	458,961,698		18,890,120
Equity reserve	3,513,934		1,777,907
Cumulative translation adjustment	347,336		(405,163)
Deficit	(342,882,243)		(51,530,855)
	119,940,725		(31,267,991)
	135,252,761		66,374,892

 

DIALOGUE HEALTH TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
	Year ended December 31,
	2021		2020
	$		$
Operating activities
Net loss	(251,351,388)		(20,904,510)
Items not affecting cash
Decrease in contingent consideration- Optima	(358,000)		—
Increase in contingent consideration- EHH	192,688		—
Write-off of leasehold improvements	—		157,715
Income tax recovery	(392,698)		—
Change in conversion feature on preferred shares	225,416,590		—
Depreciation of property and equipment	519,122		675,830
Amortization of right-of-use assets	599,846		504,956
Net financing (income) expenses	(362,138)		713,897
Amortization of intangible assets	1,502,339		739,873
Share-based payments	2,060,636		966,206
	(22,173,003)		(17,146,033)
Net changes in non-cash operating working capital items
Trade and other receivables	(2,300,838)		(7,112,797)
Prepaid expenses	(1,065,486)		(151,766)
Trade and other payables	2,044,587		5,615,788
Unearned revenue	(408,860)		447,369
Interest paid	(128,265)		(64,615)
Interest income	752,868		—
	(23,278,997)		(18,412,054)
Investing activities
Purchase of property and equipment	(651,026)		(780,767)
Purchase of intangible assets	(86,984)		(161,140)
Sale of asset held for sale	909,541		—
Acquisition of Optima	—		(5,000,000)
Acquisition of Botfront	(291,800)		—
Acquisition of e-Hub Health Pty Ltd., net of cash acquired	(3,137,531)		—
Payment of Optima Global Health Inc. Earnout	(1,500,000)		—
Payment of Botfront Earnout	(198,500)		—
	(4,956,300)		(5,941,907)
Financing activities
Issuance of shares	100,008,000		43,235,247
Share issue costs	(9,371,189)		—
Options exercised	603,995		—
Repayment of liability related to asset held for sale	(430,110)		—
Repayment of long-term debt	(400,020)		(133,330)
Repayment of lease liabilities	(698,816)		(417,271)
Transaction costs	—		(500,000)
	89,711,860		42,184,646
Effect of foreign currency translation	752,499		(375,481)
Net increase in cash and cash equivalents	62,229,062		17,455,205
Cash and cash equivalents, beginning of the year	42,067,100		24,611,895
Cash and cash equivalents, end of the year	104,296,162		42,067,100

SOURCE Dialogue Health Technologies Inc.

Investor relations: Jean Marc Ayas, Director, Investor Relations, [email protected]; Media Relations: Jean-Christophe de Le Rue, Director, Public and Government Relations, [email protected] / 613-806-0671