Kovo HealthTech Reports Second Quarter 2023 Financial Results
Kovo Pivots to Focus on Software Solutions; Accelerates Quarter-over-Quarter Growth +36%
Company Updates 2023 ARR Projection +9% to USD$12M
Vancouver, British Columbia--(Newsfile Corp. - August 28, 2023) - Kovo HealthTech Corporation (TSXV: KOVO) (the "Company" "Kovo") a leader in healthcare technology and Billing-as-a-Service - today reported its second quarter financial results for the three month period ending June 30, 2023.
36%+ Quarter-over-Quarter Revenue Increase
Kovo posted USD$2.63 million in revenue for the quarter ended June 30, 2023, which represents a 36% Quarter-over-Quarter increase compared to the period ending March 31, 2023. The Company completed two strategic acquisitions in April and June 2023 and signed new clients subsequent to quarter end which is expected to drive organic growth in the second half of the year.
Kovo Increases 2023 ARR Projection +9%
Based on Kovo's strong Q2 growth and the recent signing of three new clients representing an estimated Annual Recurring Revenue (ARR) value of USD$1.14 million, Kovo CEO Greg Noble confirms that the Company is officially updating its 2023 ARR projection to USD$12 million - a 9% increase vs. Q2 2023. The Company expects a 2023 net loss between USD$3 million to USD$3.3 million, mostly driven by investments in its software development and marketing efforts to launch its new software platform KovoCloud, which is not anticipated to initiate revenue until Q4 2023. According to Noble, the Company expects to return to EBITDA positive as KovoCloud revenue grows.
"To harness our SaaS and software solutions business, Kovo recently introduced our innovative KovoCloud platform, welcomed a new CTO to lead our AI innovation and have signed on three new long-term clients, which are due to begin billing toward the end of 2023," explains Noble. "The strategic evolution to focus on our SaaS strengths is a natural fit to Kovo's market-leading RCM e-health solutions and allows Kovo to continue to invest in meeting the specialized technology needs of US-based small and medium-sized healthcare providers," he says.
The Company also completed financing of approximately $10.3M on April 20, 2023 consisting of $3.3M in equity invested, and availability of $7M in an acquisition debt facility. This financing enabled Kovo to complete the acquisitions of E&A Medical and Kairos Billing Solutions during the quarter, while continuing to invest in its SaaS software technology platform KovoCloud.
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About Kovo HealthTech Corporation
Kovo HealthTech Corporation is a growing healthcare technology company that specializes in Billing-as-a-Service offering SaaS-style recurring revenue contracts and software for more than 2250 US healthcare providers. Kovo helps healthcare providers digitally track and manage complex patient care registration, services, billing and payments in a seamless way, using its industry-leading KovoCloud technology platform. Currently, through its clients, Kovo processes over USD$250 million in annual billing transactions for more than 4.5 million patients. By offering effective billing practices and technology through long-term SaaS-style contracts, Kovo helps healthcare practitioners get paid so they can focus on offering quality care. To learn more about Kovo and to keep up-to-date on Kovo news, visit www.kovo.co
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Greg Noble, CEO
Forward-Looking Information and Non-IFRS Measures Statement
This press release may contain "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") concerning the Company and its subsidiaries within the meaning of applicable securities laws. Forward-looking information may relate to the future financial outlook and anticipated events or results of the Company and may include information regarding the Company's financial position, business strategy, growth strategies, acquisition prospects and plans, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company's expectations of future results, performance, achievements, prospects or opportunities or the markets in which the Company operates is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects", "budgets", "scheduled", "estimates", "outlook", "forecasts", "projects", "prospects", "strategy", "intends", "anticipates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will" occur. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. Many factors could cause the Company's actual results, performance, or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking information, including, without limitation, those listed in the "Risk Factors" section of the final prospectus of the Company dated May 26, 2021. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this press release. Forward-looking information, by its nature, is based on the Company's opinions, estimates and assumptions in light of management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company currently believes are appropriate and reasonable in the circumstances. Those factors should not be construed as exhaustive. Despite a careful process to prepare and review forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. These factors should be considered carefully, and readers should not place undue reliance on the forward-looking information. Although the Company bases its forward-looking information on assumptions that it believes were reasonable when made, which include, but are not limited to, assumptions with respect to the Company's future growth potential, results of operations, future prospects and opportunities, execution of the Company's business strategy, there being no material variations in the current tax and regulatory environments, future levels of indebtedness and current economic conditions remaining unchanged, the Company cautions readers that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates may differ materially from the forward-looking statements contained in this press release. In addition, even if the Company's results of operations, financial condition and liquidity, and the development of the industry in which it operates are consistent with the forward-looking information contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. Although the Company has 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 presently known to the Company or that the Company presently believes 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, readers should not place undue reliance on forward-looking information, which speaks only as of the date made (or as of the date they are otherwise stated to be made). Any forward-looking statement that is made in this press release speaks only as of the date of such statement.
This press release may make reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, 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 the Company's results of operations from management's perspective. The Company's definitions of non-IFRS measures used in this release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The Company uses non-IFRS financial measures, including "ARR**", "EBITDA", "Adjusted EBITDA*" and "Adjusted EBITDA Margin" to provide investors with supplemental measures of its operating performance and to eliminate items that have less bearing on operating performance or operating conditions and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. "EBITDA" means net income (loss) before amortization and depreciation expenses, finance and interest costs, and provision for income taxes. *"Adjusted EBITDA" adjusts EBITDA for stock-based compensation expense, transactional gains or losses on assets, asset impairment charges, interest income, net foreign exchange gains or losses, income tax expense or recovery, forgivable one-time government financial payments related to the COVID-19 pandemic ("PPP Loans"), and any transactional expenses. Specifically, the Company believes that Adjusted EBITDA, when viewed with the Company's results under IFRS and the accompanying reconciliations, provides useful information about the Company's business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization methods and restructuring, impairment and other charges, the Company believes that Adjusted EBITDA can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated. The term Annual Recurring Revenue ("ARR") is a non-IFRS measure and refers to multiplying the monthly revenue for a current month by twelve. ARR is a metric typically used by recurring revenue companies to communicate run rate at a specific moment in time The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company's management also uses non-IFRS financial measures in order to facilitate operating performance comparisons from period to period.
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