MONTREAL, Sept. 20, 2022 /CNW Telbec/ – Dialogue Health Technologies Inc. (TSX: CARE) (“Dialogue”), Canada’s premier virtual healthcare and wellness platform, provided today a business update and offered an outlook for its third quarter of 2022.
Update on customer migrations at Optima
Since acquiring Optima Global Health (“Optima”) in 2020, Dialogue has successfully migrated a large percentage of Optima customers to Dialogue’s virtual Employee Assistance Program (“EAP”), many of which signed on to additional services on the Integrated Health PlatformTM. The net impact to date has been accretive to gross profit, and has more than compensated for the anticipated customer churn, which remained within plan.
While we continued to deliver successfully on our objectives, Optima recently received a notice from one of its customers, which was reluctant to modernize its offer, confirming that it will not renew its agreement with Optima. As such, the service relationship will end on December 31, 2022. This agreement represented revenue of approximately $4.6 million in the twelve months ended July 31, 2022, with a gross margin less than half of that generated in our virtual business, well below our targeted margin profile.
“Every day, we hear from customers and members who appreciate the responsiveness, convenience, and effectiveness of our modern approach,” said Cherif Habib, Chief Executive Officer of Dialogue. “Our ability to consult with patients within 24 hours, compared to several weeks for legacy EAPs, as well as our commitment to provide strong continuity of care, have reduced employee leaves of absence in a meaningful way and generated a clear return on investment for customers. Demand for our modern EAP is robust and our pipeline for that service continues to grow.”
Navaid Mansuri, Chief Financial Officer, continued: “While disappointed to lose a customer, we stand by our strategy to focus on higher margin, tech-enabled services that deliver superior outcomes. The churn at Optima represents lower margin revenue that varies based on utilization and that we expect to replace with more stable recurring revenue on our Integrated Health PlatformTM. When combined with operating expense savings, we anticipate that the impact on adjusted EBITDA will be limited. The net result will be a higher gross margin profile for our business. We remain committed to breakeven EBITDA by the end of 2023, and are well-capitalized to achieve our growth and profitability objectives.”
Of important note, this announcement does not affect Dialogue’s reported key performance indicators such as Members, Attach Rate, Member-Service Units, and Net Retention Rate, as these metrics never included Optima.
Canada Life expands its relationship with Dialogue
Effective on September 1, 2022, Dialogue’s Mental Health service and EAP have been made available through Canada Life’s Consult+ app across Canada for plan sponsors that choose to add them. This development is a strong testimonial from one of Canada’s most important insurers in favour of our modern approach to generate positive health and wellness outcomes. Importantly, it is also supportive of our integrated platform as a key factor to drive growth and adoption.
“This extension of our relationship with Canada Life will increase access to mental health resources for Canadians in need,” said Jean-Nicolas Guillemette, Chief Operating Officer of Dialogue. “We are proud to work with Canada Life to help Canadians access modern, convenient and quality care.”
Recent wins highlight momentum with enterprise customers and student associations
Our momentum in the third quarter to date has been strong. We added more than $5.2 million in new ARR and expect to record more gains before the end of the period. Importantly, ARR for our virtual business in Canada, which represents approximately 75% of our revenues, grew by nearly 60% year-over-year. We continue to have good traction within the enterprise segment and are seeing a positive contribution from all our services.
From a partnership standpoint, we are seeing many Sun Life customers expanding their benefits on the Lumino Health platform by adding our virtual EAP to their existing Primary Care service. From a direct customer standpoint, wins include a large retail chain, a national food producer, and a global technology leader.
Additionally, our relationship with a leading provider of student health plans in Canada continues to expand, as many colleges and universities take important steps to support the health and well-being of their students. Our performance in this segment has been strong and students who love our services become ambassadors for Dialogue with employers as they integrate the workforce.
Outlook for the third quarter of 2022
Dialogue is providing an outlook based on current market conditions and expectations. For the third quarter of 2022, we expect:
- Total revenue to be in the range of $23.2 million to $23.5 million.
- Gross profit margin to be in the range of 49.0% to 50.0%.
- Adjusted EBITDA to be in the range of ($4.7) million to ($4.5) million.
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.
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 Dialogue’s latest annual information form, and in other periodic filings that Dialogue has made and may make in the future with the securities commissions or similar regulatory authorities in Canada, all of which are available under Dialogue’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.
SOURCE Dialogue Health Technologies Inc.
For further information: 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