Dialogue Announces Record Third Quarter 2021 Results

Canada NewsWire

MONTREAL, Nov. 9, 2021

Strong and Sustained Demand Drives Near Doubling of ARR to Over $75M, 120% Growth in Revenue, and 1 Million New Members Y/Y

MONTREAL, Nov. 9, 2021 /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 and nine months ended September 30, 2021. Financial references are in Canadian dollars unless otherwise indicated.

"We continue to see robust demand for Dialogue's products, which doubled our revenue and drove our pipeline of opportunities to a historical high as we entered the fourth quarter," said Cherif Habib, Chief Executive Officer of Dialogue. "These results, as well as strong momentum in a number of our key indicators as we exited the third quarter, underscore the growing need within the Canadian market for the power and convenience of our Integrated Health Platform(TM) ("IHP"). Our customers increasingly recognize its usefulness, not only to deliver better health and wellness outcomes for their employees, but also to attract and retain talent, especially in a competitive labour market."

Navaid Mansuri, Chief Financial Officer, added: "We showed solid discipline on cost and capital allocation through the first nine months of the year and have seen our operating expenses plateau. While we will continue to make measured investments in our operations, we see the third quarter as an inflection point in driving operating leverage. Our balance sheet is well capitalized, providing Dialogue with ample capacity to act on M&A opportunities and further strengthen our IHP."

Q3 2021 Financial Highlights

(All capitalized terms not defined herein, shall have the meaning ascribed to them in the Management's Discussion and Analysis for the three and nine months ended September 30, 2021; Comparison periods in each case are the three and nine months ended September 30, 2020, unless otherwise stated)

   -- Annual Recurring and Reoccurring Revenue grew 99.5% year-over-year to 
      $75.4 million, driven by new Customer wins, which include a global 
      consulting and engineering firm, a global testing and inspection company, 
      a leading network of dental practices, and a national apparel retailer, 
      as well as program expansions and the addition of new services by 
      existing Customers. 
   -- Third quarter revenue increased by 119.6% year-over-year to $17.2 million, 
      due to growth in Members, both Direct and from agreements with strategic 
      distribution partners, an increase in Attach Rate, as well as the 
      acquisition of Optima Global Health Inc. ("Optima") on October 1, 2020. 
   -- Members grew to nearly 1.8 million, an increase of more than 1 million, 
      or 132.2%, year-over-year, and approximately 312,000, or 21.5%, compared 
      to the second quarter of 2021. 
   -- Attach Rate grew to 1.11 from 1.06 in the same period last year. 
   -- Member-Service Units, a new reported metric which we define as total 
      Members multiplied by the Attach Rate, rose 143.2% year-over-year to just 
      under 2 million from approximately 800,000 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 IHP. 
   -- 59% of new direct Members signed up for two services or more in the third 
      quarter of 2021. Combined with current Customer expansions, the 
      cumulative number of direct Members with two or more services is now 17%, 
      compared to 12% at the same time last year. This traction builds on that 
      of the prior quarter, which saw 44% of new direct Members sign up for two 
      services or more, and provides further support in favour of Dialogue's 
      IHP. 
   -- Average Monthly Net Retention Rate ("NRR") was 102% for the third quarter 
      of 2021, marking another quarter of NRR greater than 100% and a virtually 
      non-existent member churn. 
   -- Gross Margin increased to 42.6%, compared to 32.7% in the third 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"). 
      Additionally, the Gross Margin in the third quarter of 2020 had been 
      negatively impacted by a meaningful ramp-up in staffing and Member 
      onboarding. Compared to the first two quarters of 2021, the Gross Margin 
      improved by 110 basis points, mainly due to a lower seasonal utilization 
      and the continued migration of Optima customers to our digital EAP. 
   -- Adjusted EBITDA1 loss was $4.9 million, compared to a loss of 
      $5.3millions 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. 
   -- Total Comprehensive Loss was $6.4 million, as compared to $6.3 million in 
      the same period last year, due mainly to higher operating expenses, 
      partially offset by higher gross profit. 
   -- Cash and Cash Equivalents were $110.9 million as of September 30, 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 first nine months of 
      2021. 

Q3 2021 Business Highlights

   -- We built on the successful acquisition of internet-based cognitive 
      behavioural therapy ("iCBT") provider e-Hub Health Pty Ltd ("eHH") in Q2 
      by completing the launch of self-care toolkits, thus enabling Dialogue 
      members to manage anxiety and depression symptoms to remission using 
      industry-leading, proven techniques. Several clients have already signed 
      up to use the program. 
   -- Subsequent to quarter end, we launched an enhanced iCBT option with 
      guidance from a coach, allowing clients and members to select their 
      desired level of support and autonomy to treat mental health. 
   -- We added a meaningful number of new customers in non-traditional segments, 
      such as students, first responders, municipal employees, and union 
      members. We also expanded the coverage of several existing customers in 
      those segments. 
   -- We hosted our 2nd Annual Humanizing Healthcare Conference, with an agenda 
      that featured a keynote address from Chris Hadfield, Astronaut and First 
      Canadian Commander of the International Space Station, and that touched 
      on mental health strategies, diversity and inclusion perspectives, and 
      much more. The event was sponsored by some of our most important 
      strategic partners. 
   -- We have been recognized as a 2021 Best WorkplaceTM for Today's Youth by 
      Great Place to Work(R). 
   -- We have been ranked #9 on the 2021 Report on Business list of Canada's 
      Top Growing Companies with a three-year revenue growth of 4,215%. 

Upcoming events

   -- TD Virtual Technology Conference on November 16, 2021. 
   -- Benefits Canada Mental Health Summit on November 24, 2021. 
   -- Desjardins Digital Healthcare Conference on November 30, 2021. 

Notice of Conference Call

Dialogue will host a live video webinar on Tuesday, November 9, 2021 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 adjusted 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 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.