Medical Tech Stock CloudMD (TSXV: DOC) (OTCQX: DOCRF) Demonstrates Customer Focused Commitment to Profitable Business Growth Delivered with Efficiency
Vancouver, British Columbia - January 30, 2024 (Newsfile Corp.) (Investorideas.com Newswire) CloudMD Software & Services Inc. (TSXV: DOC) (OTCQX: DOCRF) (FSE: 6PH) (the "Company" or "CloudMD"), a healthcare technology and innovative health services company transforming the delivery of care, is pleased to provide an update on recent developments and execution of its growth initiatives in the Health and Wellness Services ("HWS") and the Health and Productivity Solutions ("HPS") divisions, along with significant advancements in cost initiatives and security measures.
"2023 was a transformational year for CloudMD. It was a year of stabilization and reorganization for the Company to enable sustainable growth and profitability. We have been diligently executing our strategy to drive low double-digit organic growth and profitability. Our growth in 2024 will be driven by continuing to deliver on our paradigm-shifting approach to provide the highest quality of mental health and virtual care through nurse-led navigation and interoperability of Kii mobile first platform across our suite of outcome-based solutions," said Karen Adams, CEO of CloudMD. "This strategy has created unprecedented interest from clients and distribution partners who are demanding positive health outcomes and clinically focused programs. Along with growing topline, we continue to drive efficiencies by lowering our costs while maintaining high levels of service and product quality."
Prakash Patel, CFO of CloudMD, added, "I'm proud of the team's success in Q4 and their focus on our key priorities. Through our cost-savings measures and revenue expansion, we delivered on our promise of being Adjusted EBITDA positive while ensuring we are building a cost effective, connected, and scalable support system behind it. Our focused approach to Customer Service initiatives while enhancing our operating platforms within HR, Finance, and IT is driving the sustainable corporate structure that will allow us to reinvest into our products to accelerate growth."
Health and Wellness Services:
CloudMD is executing against its 2024 growth priorities of cross selling its product offering across its existing customer base, enhancing user experience, expanding into new geographies, and creating new strategic partnerships.
- Cross selling efforts have demonstrated strong results, with 41% of sales in Q4 2023, and early Q1 2024, coming from existing customers, up from 39% in Q3 2023 and 32% in Q2 2023. Similarly, the recognition of the value provided by an integrated approach to healthcare has accelerated, with multi-product sales showcasing a steady progression, making up 42% of sales in Q4 2023, and early Q1 2024, compared to 35% in Q3 2023 and 26% in Q2 2023.
- One of CloudMD's largest customers recently reaffirmed their commitment by renewing their contract with a substantial 15% increase in total contract size. This underscores the high quality of user experience and the value the HWS division delivers to customers.
- CloudMD is executing against its priority of geographic expansion in line with its previously communicated timeline, launching its Assessment business in Quebec and Alberta. This strategic move is garnering positive reviews and is expected to generate revenue late in Q1 2024.
New Strategic Partnerships
- The Company's sales pipeline remains robust as the Company actively seeks out new market penetration opportunities and successfully finalizes agreements with targeted clientele. This includes a notable engagement with a large hospital in the contract finalization phase to procure CloudMD's EAP services. Further details will be disclosed once the contractual terms have been finalized.
Health and Productivity Solutions:
Remote Patient Monitoring Deployment
In December 2023, CloudMD successfully concluded the implementation period for its Remote Patient Monitoring ("RPM") service with a major U.S. regional Hospital system (the "Hospital"), paving the way for patient onboarding, which began on schedule at the beginning of January 2024. The collaborative effort is well underway with the integration of RPM with the Hospital's Electronic Medical Record System. This integration will streamline the onboarding process, enabling providers to seamlessly enroll eligible patients into the RPM program.
Recognizing the high incidence of mental health issues among those experiencing physical health issues, the HPS division continues to build a competitive advantage in the U.S. market by adding complementary services from CloudMD's extensive portfolio of mental health and education services. RPM clients and patients have access to the market-leading digital education library. Therapist Assisted Internet Cognitive Behaviour Therapy ("TAiCBT") has now started to be integrated with the RPM service, further enhancing the patient experience and revenue potential.
The business continues to gain momentum, as evidenced by the signing of another mid-sized contract in December 2023. This underscores the growing demand for CloudMD's RPM solution and its positive impact on patient outcomes.
Enterprise Optimization Initiatives:
During 2023, CloudMD launched company-wide optimization initiatives aimed at maximizing operating efficiencies while improving operating cash flow. The Company is deploying a variety of strategies, such as leveraging technology enablement, process automation, and artificial intelligence, to optimize processes throughout the entire enterprise, with a strategic lens on Customer Experience, Innovation & Data, Employee Engagement, and Finance. The Company's focus is to drive and enable scalable profitability, showcasing the inherent operating leverage within CloudMD's business. These initiatives are crucial to meeting industry demand and ensuring continued growth in the sectors in which CloudMD operates.
- CloudMD continues to enhance operational efficiency and cost-effectiveness by increasing capacity to handle call volumes internally, reducing dependence on third-party overflow partners. This initiative is expected to result in an improvement in gross margin1 starting in Q1 2024.
- In the last four months, CloudMD added 155 therapists to its national network to improve capacity, meet growing demand, and support revenue expansion.
Innovation & Data
- CloudMD continues to execute its consolidation strategy, bringing its cloud infrastructure under a singular cloud tenant. Simultaneously, the Company is consolidating end-user software licensing costs, resulting in a substantial reduction in licensing expenses. This consolidation of the technology stack enables CloudMD to deploy its data optimization strategy, a cornerstone for the development and implementation of AI for automation, sentiment analysis, and population health insights.
- The Company has successfully implemented Multifactor Authentication (MFA) on the Kii platform and has introduced automated penetration testing and vulnerability assessment within its product development pipeline. This approach bolsters the overall security posture of CloudMD's product offering.
- The Company has implemented a consolidated payroll and Human Resource Information Systems platform into a single offering, reducing the number of payroll cycles and improving the employee experience. This strategic implementation accelerates the ability to streamline the recruitment process with automated systems, and provide value-add insights into workforce trends, performance and engagement.
- The Company has initiated modernizing its finance function around an ecosystem of tools and processes to enhance financial analysis, better report KPIs, improve forecasting accuracy, optimize budgeting processes, and identify areas for cost reduction or investment. This investment translates further into strategic vendor management and the ability to negotiate favorable terms, consolidate suppliers, and explore long-term partnerships to secure cost savings.
Non-GAAP Financial Measures
Certain terms used in this news release, such as Adjusted EBITDA and gross margin, are non-GAAP financial measures that do not have a standard meaning and may not be comparable to similar measures disclosed by other issuers. These non-GAAP financial measures are provided to enhance the reader's understanding of the Company's historical and current financial performance and its prospects for the future. Details on such non-GAAP financial measures are set out in the Company's MD&A for the three and nine months ended September 30, 2023 and is available under the Company's issuer profile on SEDAR+ and can be accessed at www.sedarplus.ca.
About CloudMD Software & Services
CloudMD is an innovative North American healthcare service provider focused on empowering healthier living by combining leading-edge technology with an exceptional national network of healthcare professionals. Every day, our employees and healthcare providers live our values of delivering excellence, collaboration, connected communication, and accountability to solve complex health problems. CloudMD's industry-leading workplace health and wellbeing solution, Kii, supports members and their families with a personalized and connected healthcare experience across mental, physical, and occupational health. Kii delivers superior clinical health outcomes, consistent high engagement, and measurable ROI for payers such as employers, educational institutions, associations, governments, and insurers. CloudMD is also a market leader in workplace absence management through data-driven prevention, intervention, and return-to-work programs.
In addition, the Company sells health and productivity tools to hospitals, clinics, and other healthcare service providers to empower them to deliver better care. Visit www.cloudmd.ca to learn more about the Company's comprehensive healthcare offerings.
Forward Looking Statements
This news release contains "forward-looking statements" and "forward-looking information" within the meaning of Canadian securities laws, including statements about the Company's focus, strategy and expectations for 2024. These statements are based upon information currently available to CloudMD's management. All information that is not clearly historical in nature may constitute forward‐looking statements. In some cases, forward‐looking statements may be identified by the use of terms such as "forecast", "assumption" and other similar expressions or future or conditional terms such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and "should". Forward-looking statements contained in this news release are based on certain factors and assumptions made by management of CloudMD based on their current expectations, estimates, projections, assumptions and beliefs regarding their business and CloudMD does not provide any assurance that actual results will meet management's expectations. While management considers these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. Such forward‐looking statements are not guarantees of future events or performance and by their nature involve known and unknown risks, uncertainties and other factors, including those risks described in the Company's MD&A (which is filed under the Company's issuer profile on SEDAR+ and can be accessed at www.sedarplus.ca), that may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. Although CloudMD has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward‐looking statements, other factors may cause actions, events or results to be different than anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such forward‐looking statements. Accordingly, readers should not place undue reliance on forward‐looking information. CloudMD does not undertake to update any forward-looking information, whether as a result of new information or future events or otherwise, except as may be required by applicable securities laws.
Chief Executive Officer
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