Earnings Transcript for DOCRF - Q2 Fiscal Year 2021

Company Representatives: Essam Hamza - Chief Executive Officer Karen Adams - President Daniel Lee - Chief Financial Officer Julia Becker - Vice President, Investor Relations

Operator: Good afternoon and welcome to the CloudMD's Second Quarter 2021 Earnings Conference Call and Webinar. My name is Jonathan and I will be a conference facilitator today. As a reminder, this conference call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. . It is now my pleasure to turn the call over to Julia Becker, Vice President, Investor Relations with opening remarks.

Julia Becker: Thank you Jonathan and good afternoon everyone. Thank you so much for joining us today, August 25, 2021 for our second quarter earnings conference call and webinar. We’ll start the call with a summary from our CEO, Dr. Essam Hamza, followed by our President, Karen Adams, to provide commentary on our Digital Health Services and Enterprise Health Solutions division. Our Chief Financial Officer, Dan Lee will then recap the company's second quarter 2021 financial results before opening up for a question-and-answer period from our covering analysts. A friendly reminder that today's discussion contains certain forward-looking information which involve inherent risks and uncertainties and other factors that could cause actual results to differ materially from management's current expectation. Forward-looking statements should not be read as assurances of future performance or results. The risks related to the forward-looking information are described in the company's Annual Information Form for the fiscal year ended December 31, 2020, and then the Management’s Discussion and Analysis for the three and six months ended June 30, 2021 which are now available on SEDAR. We encourage you to review our disclosure in the context of all forward-looking information that you may here today during this earnings call. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company disclaims any intention or obligation, except to the extent required by law to update and revise any forward-looking statements as a result of new information, future events or for any other reason. With that, it is my pleasure to turn the call over to CEO, Dr. Essam Hamza.

Essam Hamza: Thank you, Julia. Good afternoon and thank you for joining us for our second quarter 2021 earnings call and webinar. We are very pleased with the company's performance in Q2, which is in line with expectations from a financial and operating perspective. CloudMD is leading the innovation in healthcare delivery by using technology to ensure a comprehensive personalized whole-person approach to care. By leveraging technology, we are building a complete and connected healthcare ecosystem and platform that addresses all points of an individual’s care, including primary care, virtual care, mental health support, access to specialist and healthcare and navigation and education to name a few. This first of its kind ecosystem and proprietary platform underpins our organic and cross selling growth strategy across all lines of our business and is showing some very early promising success. I'd like to take this opportunity to remind the audience of the three foundation principal – sorry, pillars that the company was built on and it continues to serve us quite well. Firstly, we believe that the person centric longitude and all team based healthcare is the future for our industry and results in better and more efficient access to care and more importantly, improved outcomes. Secondly, we are led by a team of medical professionals, doctors and industry experts that understand the pinpoints and the stakeholders of this historically fractured medical system. We also understand the competitions in accessing care through group benefit plans that has meaningful outcomes and share the vision for a team-based whole person care. And finally, in order to execute on this vision and build a connected ecosystem, we must own our own technology solutions. Technology is the grade equalizer that will enable frictionless access to care and serve to have connected experiences thereby eliminating the siloedeffects many continued to feel till this day. CloudMD has made solid progress in ensuring alignment and integration of our capabilities to solidify our leadership in delivering healthcare innovation. We have organized the company into three revenue generating operating units and Karen will highlight how all of our divisions are interconnected and work in unison to support CloudMD’s overall business. After our most recent hyper growth phase that saw us complete 14 acquisitions, we prioritize segmenting the company into three divisions; each responsible for their own P&L. The divisions have been purposely set up to align with the market and customer segments that R&D serves. First, Enterprise Health Solutions; secondly, Digital Health Services and third, Clinic Services & Pharmacies. Each of these divisions are currently undergoing thorough brand repositioning to reflect our position as a market leader in the delivery of integrated health and wellness. We believe these tactics will continue to evolve our market position and we are excited on the next phase of growth focusing on the execution of our corporate strategic plan. We had a strong Q2 delivering solid operating and financial performance. On a consolidated basis, we had a record quarter with revenue of $15.7 million a 461% increase from Q2, 2020. Year-to-date we recorded revenue of $24.4 million, an increase of 318% over the prior year period. We saw strong organic growth in our Enterprise Health Solutions and Digital Health Services divisions, along with robust revenue in our Clinic Services & Pharmacies divisions. These financial results are largely attributable to the closing of all our outstanding strategic acquisitions, as well as strong organic growth. In the second quarter we closed four acquisitions adding $96 million of annual revenue. The following are the specific acquisitions that supported our growth and closed in the second quarter. Rxi is a Canadian based, Specialty Drug Wholesaler Pharmacy and Technology Patient Support Program Administrator. The company develops customized programs for a variety of clients that offer end to end solutions to optimize holistic disease management and clinical treatment outcomes for patients requiring complex and expensive pharmaceutical treatments. Rxi is part of our Clinic Services & Pharmacies business unit, which offers insurers and organization proper support for people needing specialty drugs. Secondly, VisionPros is a North American online eyewear platform with roughly 1 million unique customer accounts. VisionPros has a monthly subscription based model and provides contact lenses and eyeglasses through direct consumer channels and B2B via Enterprise Health Solutions division right now. VisionPros is part of our Digital Health Services division. Thirdly, Aspiria, a North American Employee and Family Assistance Program or EFAP offering Mental Health Support to organizations and students. Aspiria is our Mental Health brand in the United States and supported by our Snapclarity platform. Aspiria in Canada has been integrated with our Mental Health Support Solutions, offering clients and navigator as part of the experience. And lastly, Oncidium is a leading health management company in the employer of B2B space with a loyal client base of over 500 corporate and public sector clients across various industries. The focus on Oncidium service is predominantly on reducing occupational absence by delivering solutions that improve the health and wellness of employees. Oncidium suite of services include solutions that support absentee management, short term and long term disability, the management of workers compensation claims and Mental Health Assessments. They also provide evaluation services that focus on prevention, accommodation and recovery, and most recently through the tuck-in acquisition of Cira Health Solutions has positioned CloudMD to be a leader in the Independent Medical Assessments across Canada. Oncidium is part of our Enterprise Health Solutions Division. Like all our acquisitions, those completed in the second quarter are high growth, accretive and synergistic and will support our focus on revenue expansion through cross selling and bundling services to drive further organic growth. In addition, the operating divisions are collaborating to share assets across businesses and are focused on delivering a whole person health and wellness platform. I now want to give an update to our audience with respect to our plans to transition our listing to a senior exchange. While this has always been an important initiative for the company, managements have prioritized on other initiatives that we believe will lead to greater long term shareholder value. These priorities include the completion of its transformational acquisitions earlier the summer with Oncidium and VisionPros; the successful debt financing secured with Bank of Montreal, and the continued integration of the 14 acquisitions completed in the past 12 months and the focus on achieving strong organic growth with profitability for the company. While we always need to evaluate our strategic priorities at all times, we are now targeting a potential listing to a senior exchange in early 2022. Lastly, during the quarter the company was very pleased to appoint Karen Adams as President of CloudMD, and we would like to welcome her in her new role. Karen is responsible for overseeing our growth and operating plan across all three divisions and has already made great strides toward that goal. I will now pass it over to Karen to give an update on both Digital Health Services and Enterprise Health Solutions.

Karen Adams : Thank you, Essam, and good afternoon. I'm very excited and proud of the performance in Q2 2021, with our operating units and that all acquisitions are now closed and leaders are aligned towards executing the company strategy. The operating units generated an impressive organic growth and we are well above planned for Q2. A strong indicator of our ability to earn market share is organic growth. Organic growth in Digital Health Services and Enterprise Health Solutions divisions, both exceeded 10% in Q2 2021 as compared to the prior sequential quarter. Revenue was also strong in all business units. Digital Health Services revenue in Q2 was $4 million, an increase of $1.6 million versus Q1. Enterprise Health Solutions delivered profitable revenue of $5 million in Q2, an increase of $2.4 million over Q1. This is attributable to multiyear contracts and the recent acquisitions that Essam spoke of. These results are driven by the addition of unique capabilities and high client adoption. Our business units will accelerate our transformation as leadership teams enable each unit to focus on initiatives with agility to foster growth and innovation. The market is looking for access to care and connected services to ensure people receive the healthcare solutions that are necessary to enable return to function. Whereas providers are marketing technology to solve siloed, one dimensional, mental and physical health issues. CloudMD is leveraging technology to address collective mental, physical and social healthcare. We are confident that by launching the Digital Health Services business unit and owning the technology, we are positioned as an innovator and market leader in providing access to care for providers and users. Our highly regarded proprietary technology is being sold through a multi-channel approach. We are successfully marking this as direct-to-market and through Enterprise Health Solutions, as well as our clinic and pharmacy network. This includes supplying North American medical practitioners with clinics in-a-box tools such as electronic medical records, known as EMRs, Automated Billing Solutions, Patient Portals and Telemedicine Solutions. The Technology and Digital Health Services is the underpinning of all of our capabilities in Enterprise Health Solutions, enabling improved outcomes and provides a single vendor relationship for those looking for efficiency, increased engagement and cost savings. 2021 is shining a light on the importance of Health Risk Management for Individuals, Employers, Governments and Society as a whole. It is important for organizations to address Mental Health and absence management with an understanding of collaboration for both the individual and care providers focusing on return to function. We fully recognize that this is our opportunity to take a leadership role in a rapidly growing societal problem, by delivering solutions that people need in managing their health. Our differentiator is the ability to offer different modalities of care people often need to ease into treatment and access in a way that works for compliance and adherence. Our Enterprise Health Solutions mandate is to support organizations as they address growing issues. As a key part of our growth strategy, our comprehensive Complete Health platform has seen significant growth. We now have over 260,000 lives covered on our Mental Health platform, which is a 10 fold increase over Q1. This platform offers individuals the ability to access support for Mental Health through their preferred channel, including in person, telephonic and virtual. This adoption of the platform is predicated on our ability to offer the type of support the person needs for the issues they are facing. Q2 saw another first as we launched our new Comprehensive Complete Health Navigation platform with an 11,000 employee paid pilot. This pilot has resulted in an over 40% active users with a 48% retention rate using ongoing care planning and high user satisfaction scores. The Complete Health platform is gaining momentum as a very affordable solution to employers, who are seeking a streamlined access to care in meeting their employees health and wellness needs. Evidence of such momentum can be noted by the two additional contracts that will launch in Q3 and our strong pipeline of customers who see value in CloudMDs Complete Health platform to attain better health outcomes, while optimizing their spends. Our organic growth momentum is also attributed to the industry's first Mental Health Assessment tool, Snapclarity, which is available within all of our Mental Health products, including our employee and family systems program. People suffering from Mental Health require this assessment to provide guidance on the appropriate treatment and support options along a step to care pathway. This is our proprietary gateway to our multitude of health services that CloudMD brings to market. Over 150 customers in Q2 selected our Mental Health solutions over our competitors, due to this unique platform and approach to Mental Health. We have also evolved by providing members new cycle social and precision Mental Health solutions to our existing products by applying human touch and technology to support problems members face with emotional, psychological and social well-being issues. We have further enhanced our offerings by allowing members to choose their modality of choice for all interaction via phone, digital app experience, online chat or a virtual visit. This allows members to choose how they access our services, enabling it to be on their terms and cater to their preferences. Members will also be able to switch between methods of service and delivery at any point in their experience. This will continue to gain momentum as the focus on Mental Health accelerates through return to work or return to school issues, isolation, and most recently as prominent individuals in sports and entertainment share their stories. It is the ability to provide screening and coaching that increases a person's acceptance of help to start recovery. I want to also highlight that we have our new contracts in our assessment and disability business, including three small and mid-market insurers that has been proven to be successful in reducing disability days and focus on return to work. These specific contracts will be implemented in the coming quarters. I am also extremely pleased to welcome Oncidium to CloudMD, who will expand our ability to deliver absence management, assessment services and occupational health solutions. We are currently working with the teams on revenue expansion to introduce clients to our innovative products from CloudMD. In addition, Oncidium recent acquisition of Cira Health Solutions, a leader in property and casualty assessments, solidifies our position of Canada's leader in Independent Medical Assessments. Cira’s industry leading proprietary software platform, ISS, has been endorsed by insurers for its effectiveness and claim management. This will enable efficiency with all of our assessments and disability operations to manage our networks, build workflow management protocols and have a communication portal to engage with both practitioners and customers for referrals. Proven efficiency will continue to lead customer loyalty and margin expansion. The Oncidium acquisition is transformational for CloudMD in terms of our market presence, and our ability to leverage our technology to be a leader in the delivery of our comprehensive healthcare solution. To summarize, our four pillars of performance that will continue to drive our reporting of results are

Daniel Lee: Thank you, Karen. As Essam and Karen touched on, it was a great quarter for the business. We are very excited by our Q2, 2021 results and the framework we have built for scale and growth. I'll now walk through our fiscal 2021 second quarter results. For the quarter, total revenue was $15.7 million, compared to $8.8 million in Q1 2021 and $2.8 million in Q2 2020. The increase is primarily attributable to acquisition growth with four acquisitions completed in the quarter and 14 acquisitions completed in the last 12 months. Excluding the impact of business acquisitions, the company achieved an overall organic growth rate from our existing businesses of 9% over Q1, 2021, with an organic growth rate exceeding 10% for both Enterprise Health Solutions and Digital Health Services. And we continue to experience robust revenue growth in Clinic Services & Pharmacies. I do want to point out we reclassified a couple of companies amongst our divisions this quarter, which increased the following

Essam Hamza: Thank you very much, Daniel; that's great. Everyone at CloudMD is proud of the work we are doing to transform the delivery of healthcare and the momentum we are seeing in the market. I would personally like to take a moment to thank our incredible team at CloudMD for their hard work and dedication to our vision. We have made significant strides this year and now have a revenue run rate as Dan mentioned of over $140 million and are on track to achieve positive EBITDA for the next quarter. The company is well funded to execute on its growth strategy and our integration efforts are going very well and remain on track. Our Comprehensive Employer Healthcare platform has proven successful with very impressive early adoption rates and with a robust sales pipeline we are excited for the remainder of the year and expected additional new contract wins in the coming quarters. Not only have we seen hyper growth through acquisitions, we've also achieved quarter-over-quarter organic growth of 9%, driven by cross sell synergies and new contract wins. Our mission of providing access and improved healthcare outcomes to patients is being realized as we continue to see great progress in our connected healthcare ecosystem, and we are very excited about the growth of CloudMD in the coming quarters and years. I would also like to thank the shareholders and analysts for their continued support and operator, we can open up two questions-and-answers here.

Operator: Certainly. Our first question comes from the line of Rob Goff from Echelon. Your question please.

Rob Goff: Thank you very much for taking my question, and congratulations on the quarter and more particularly the outlook.

Essam Hamza: Thank you.

Rob Goff: My question will be on the EHS side, where you talked to the momentum of it and that’s part a product of the comprehensive services you have. But could you also talk to the role of some of the KPIs that you talked to when you're responding to RFPs, i.e. the stat that we put in the MD&A, 100% reduction disability, 420% ROI satisfaction, just how do those play out in the RFPs and how do you see that in the momentum?

A - Essam Hamza: Yeah. No, thank you for the question Rob. So EHS or Enterprise Health Solutions and – sorry Services, I will send it over to Karen to answer.

Karen Adams: Thank you for that question. So, I think the good news story for us is that currently, we're not seeing a lot of RFPs out there for this service. So it's basically at point a great opportunity for us to introduce this to clients. But the KPIs we are citing to encourage clients to measure health outcomes, which is what we are all about. We started at the top which is how many people have access to the program, how many people engage with the program, how many people use our assessment tools, how many people engage in therapy, and then because the complete platform allows for a variety of programs to be integrated into that, the KPIs then follows a function to the off ramps as we have spoken to often, which would be if they're using us for disability and our navigators are navigating for somebody on disability. There are specific KPIs for the disability that you just highlighted, which would be how long is somebody off work, and how fast can we get back to work. So each of the off-ramps have specific KPIs, but the platform in and of itself, the KPIs that we are using right now are number of people have access, number of people engage, number of people who use the service and satisfaction numbers.

Rob Goff: Okay, that’s very good. Perhaps if you could give us any additional color with respect to the large pilot?

Karen Adams: Yeah. So, I think we're very excited about the pilot because it's the first of its kind that we're aware of. We saw a large uptake on the people who engaged in the platform, and then as we reported in the results, we were very pleased with the people who stayed engaged with that platform. So the 48% number that I cited were people who are using the platform and staying engaged over time and that's a high number when you think of the total available population. The number I did not cite to you is the user satisfaction number, which is 73% and we're very pleased with the 73%, because remember people are using this for very extreme health issues, Mental Health issues, physical health issues. So the SLAs we had in this particular pilot were predicated on people who engaged with the platform, who were above what was expected, people who stayed engaged, were well above and the client satisfaction number, which we are above. So we will be reporting in Q3 the outcomes of the pilot, but ourselves are all happy with the results that we are getting on those SLAs.

Rob Goff: Great! Thank you for the color.

Operator: Thank you. Our next question comes from the line of Scott Schoenhaus from Stephens. Your question please.

Scott Schoenhaus: Hi, team. Congrats on the nice results, and thanks for taking my questions. My first question is on COVID and the impacts of the accelerating delta variant having on your business, both in Canada and your expansion into the U.S., particularly given the spread is occurring more rapidly down here in the U.S. rather than in Canada, I believe. Has this driven increased demand for any of your specific product offerings, maybe on your more digital offerings, mental telehealth offerings? Thank you.

Essam Hamza: No, thank you very much Scott for the question. Yeah, maybe I'll back up a second before I hand it over a little bit. But with regards to what we built and how we built it, this is many years in the making and to give you kind of a background of what happened when COVID first came into play last year, it was seamless for us, because we already had built infrastructure platform that was – it didn't really matter where the patient was being seen. So it was electronic medical record and the doctor could be in the office or at home and the patient could be in the office or at home. And so there's no downtime when COVID hit, and so people – doctors continued to see patients and actually expanded their practices under our platform. Now, moving forward as things changed in different geographical locations and some places opened and not, the different revenue, sorry, the different mix of in-person versus virtual fluctuated a little bit. I think we made a little bit of reference last year – sorry, last quarter to how many comments and visits and I think Dan can give an update on the Telemedicine visit revenue for those doctors. But the good thing about it again is that it's seamless. It really does not matter and what we're seeing internally within our own clinics, is the ability for doctors to now actually work a lot more efficiently. So a lot of them are actually working in the clinic maybe one or two days a week and the rest of the time they are seeing their patients from home. So we're often seeing 75% or 73% of their visits being virtual, because now they don't have to come into the clinic for every single case. They can only come to the – they only need to come to the clinic to touch a patient that needs to be touched, otherwise they are able to do most of the stuff efficiently through our platform virtually. I'm going to hand it over to two people. So first, I'm going hand it over to Daniel to talk a little bit about our telemedicine business, and then I would like to hand it over to Karen to talk about how COVID has impacted and what we're seeing with regards to enterprise health going forward. So maybe Daniel first?

Daniel Lee : Sure. Great! Thank you, Essam. So in terms of our telemedicine business, so out of all of our clinic or patient visits, we have historically and we continue to see that 72% are coming through telemedicine. So whether that is online, virtual or over the telephone, that comprises of 72%, and I think what we're very excited about here is that we're just continuing to see great adoption of our CloudMD App. So BC, the numbers in British Columbia continue to be quite robust and continue to grow. And what we're saying in the last quarter was a much more exponential growth as it relates to Ontario. Well, we now have a roster of positions and a network and a platform so, you know to enable further visits and so forth the quarter itself we did realize 23% growth in Ontario patient visits from Q1 to Q2, so we're very pleased with that.

Karen Adams : Thank you – Yes, sorry. Thank you for the questions. I'm going to answer it two ways. I think the sustainability of health risk management is becoming a focal point for employers, and that's whether they deal with the public or whether they deal with the employees, and I think one of the benefits of the acquisition of Oncidium, is they are – they have been incredibly – they pivoted to use their expertise, which is doctors and nurses and relationships with clients to become strategic consultants to employers and doing health screening and health risk management, and that has been a great revenue generator for us, but also a very trusted resource for clients, in building the relationship with clients as we help them through these tough times and I think that's not going to go away. We are constantly going to be on-guard from a health risk and governance management perspective. I also think though that the flip side of that is the increase in mental health cases. I mean, it is well documented globally that mental health has become a real issue for people from an isolation perspective, from even psychologically, going back to work, going back to school. So we will continue to see people engage with us and I talked a little bit about our differentiation in that. We help people ease into mental health. It's very hard for people to put their hand up and just jump right into counseling. So we have created a pathway for people to get help that I think has been widely adopted now and why we're seeing those increases in clients or are choosing our mental Health Solution program over the competitors, because of the way we're treating people with mental health; everything from how we see them, virtually, in-person, telephonically, to the app that does the assessment, so we see that continuing. And I would say then lastly, as we think about the assessment business, disability continues to be a concern for employers, short term disability, long term disability as people deal with COVID. So we really are fortunate to have a lens on this through both an impact in specific programs and initiatives geared towards COVID that we believe is going to be a long, sustaining approach to healthcare in the workplace, but also our momentum around mental and physical health with regards to our assessment business and mental health. So I don't know if that answered your question specifically, but that's really how we're looking at it.

Scott Schoenhaus: No, that was a lot of great color, very thorough and I appreciate that. I'll hop back in the queue. But great results, and thanks for the question team.

Operator: Thank you. Our next question comes from the line of Gabriel Leung, Beacon Securities; your question please.

Gabriel Leung: Good afternoon, and thanks for taking my questions and congrats on all the progress. Karen, you mentioned in your preamble two new contracts that’ll be starting up with your complete healthcare platform in Q3 on the enterprise side. I was wondering if you can provide more color around those wins specifically. These also are sort of pilots like your larger employer pilot, and is this being set up as a potential displacement of an incumbent provider within these two accounts?

Karen Adams : That's a fabulous question. So, they are not pilots. So they are actually multi-year contractual agreements and they are beyond just you know mental health. It actually includes a more holistic view of the healthcare care of the individual and connecting them to finding a family doctor, connecting them to visionwear if they have some eye issues. It’s really a – it is a complete platform rollout, which we have used all of our iterations in our pilot to feel confident in rolling this out in Q3. So I would say – and then your second question around are we displacing. So our parameters have always been, and I alluded to it in the script. If this is affordable for two reasons for employers

Gabriel Leung: No, it's great. And just as a follow-up to that, are you able to provide a number around – sorry, what the total number of employees are within these two accounts. That's the first follow-up question. The second follow-up question is, are you able to talk a bit more about what your current pipeline looks like on the enterprise side for similar sort of a solution set?

Karen Adams : Yes. So we have a – so I'm going to take the pipeline first and then back into the second one. So the pipeline is a very – we have two ways we look at the pipeline. So we have pipeline, which is customers we don't currently do business with in any of the organizations that we work with, and we have two numbers that we use. We use pipeline which is the – where we're having engagements and conversations with all kinds of clients and a weighted pipeline. I don't have those numbers in front of me right now, but I can tell you that we look at the pipeline on a weekly, monthly and quarterly basis. So all business units report off their pipeline, and that pipeline gets consolidated into one number at the end of the month and we use that pipeline to measure closing rates and to determine are we on track. And I think what you're seeing in the organic growth numbers that we're highlighting, which is the double digit organic growth numbers is because we're managing the pipeline. Your second question is, I would say that the life size groups, we want to be in a position to issue press releases on these as they come to market. They are great client brands for us and I would say they are together collectively, probably just slightly over 1,000 employees.

Gabriel Leung: Got you. That's great feedback. Thanks for that and congrats on the progress.

Karen Adams : Thank you very much. I appreciate that.

Operator: Thank you. Our next question comes from the line of Nick Agostino from Laurentian Bank Securities. Your question please.

Nick Agostino: Yes, good afternoon everyone. I just wanted to dig in on the gross margin side of things. I think this all, if I heard correctly, for the next couple of quarters I think you're suggesting low to mid 30’s as far as gross margin. So can you just talk to I guess, first of all what impact or has your gross margin profile expectations by segment changed as a result of the reclassification that you called out and that are in your MD&A? And secondly, what impact do you anticipate with the onboarding of the two acquisitions, you know Oncidium in particular. How do we look at that or what impact is that going to have on gross margins in the second half?

A - Essam Hamza: Great! Thanks Nick. Yeah, I'll hand it over to Dan here.

Daniel Lee : Great! Thanks Nick. So just with respect to gross margin, so we don't disclose our gross margin by division or we are not at this time. So it is blended overall and so as part of my prepared remarks, we had our patient support programs that really the revenues came in much higher than originally anticipated, you know what you see in terms of the strong revenues, but that did have a short term impact as it relates to our Q2 gross margin. With respect to future – sorry, with respect to the most recent acquisitions, Oncidium and VisionPros and even with Rxi, as part of my prepared remarks these companies operate lower than the 41% gross margin from Q1. I think in terms, so in terms of the guidance of the low to mid 30’s, that is in consideration of all three companies and actually the mix of revenues that we expect in Q3 and in Q4. So I think and I believe for Oncidium, I believe it's publicly disclosed. I believe the gross margin that we have publicized was between 334% to 35%. So hopefully that gives you a bit of color as you think about how to model that for the balance of the year.

Nick Agostino: Okay, I guess a similar question on a relative basis. After all these shuffling, do you still expect enterprise to be your highest gross margin business? And should we – even though as you integrate in the second half and see gross margins coming down, we continue to model and look out into 2022 given the enterprise announced contracts your highlighting. Should we expect your gross margins as a result to kind of tick upwards, assuming that your enterprise gross margins in general still remain your highest contributors?

Daniel Lee : Right. So I think what I would say to that Nick is that both, Digital Health Services and our Enterprise Health Solutions, the gross margins are quite healthy. There is scalability with respect to our cost base and so there are some cost efficiencies and volumes that we can realize from that regard. We do expect over time for our margins, where both digital services and our enterprise to increase, especially with Oncidium where there are a lot of synergies with respect to their product offering and the ability. So as an example, their independent medical assessment business, we have similar business that we function and there's going to be synergies, where there's going to be margin expansion from that regard. As it relates to just in terms of the shuffling of the, of some of the companies that we had mentioned, that doesn't negatively impact the margin profile for those companies. We do in terms of clinic and pharmacies, that is a bit of a lower margin profiles, just given the nature of clinics as well as patient support programs. But our margins overall will continue to remain strong and we are working on the background in terms of expanding those margins that should start realizing in beginning of 2022. Does that help answer your question on it?

Nick Agostino: Sure, sure. I guess Essam, question for you is M&A. Obviously you guys got a large amount over the last year. You still have some capacity to continue to do so. I know in the last call you highlighted areas where you wanted to increase your footprint in both Ontario and Alberta and possibly look at Europe. I think there was some products you looked at, so just a whole bunch of stuff. I guess my question simply is, have you advanced any talks to the point where you’ve signed some LOI’s alongside some of those initiatives?

Essam Hamza : Kind of expanding on what we said before, we do have an incredibly strong pipeline of acquisitions. It's shifted a little bit from the historically, these types of acquisitions where we're bringing in capabilities we didn't have to now we have pretty much all the capabilities we need or a lot of the ones we need anyways. And those puzzle pieces are basically that we talked about before, and now we have the ability to do two things. One is, expand those capabilities to other geographical locations. So, you're right, we are looking at other geographical locations in the U.S. as well as other jurisdictions. But also the ability to tuck in, and you see that with this Cira acquisition that we did before we closed on Oncidium and the ability to now use the strong talent that we have and the infrastructure and tuck in these acquisitions at relatively good prices a lot more efficiently. So we're going to be able to use our capital a lot better now and expand further, so the revenue run rate that we talk about, as Dan mentioned, does not include any organic growth or any other acquisitions that we might make. But we're in the driver’s seat now. We're not needing to do anything if we don't want to, but there are some very good things that we're looking at within our pipeline that do add to other jurisdictions and again, expand our capabilities outside of where we are right now. So we will continue to look at that. In terms of whether we signed in to or now, we don't really refer – if there's anything material that we signed, we always do publicize it.

Nick Agostino: Okay. And then my last question, I guess some clarity. I'm not sure I think you said something along the lines of the debt facility signed with BMO was contingent if I heard correctly. Oncidium EBITDA, I'm not sure if I heard correctly and if so, is that what’s driving the covenants, it's the Oncidium performance. And adding to that, I believe you alluded to that although the facility was backed by on Oncidium, you can use that facility for acquisitions outside of Oncidium. Can you just confirm all that?

Essam Hamza: Yeah, I'm going to hand it over to Dan if you can get some more clarity on that.

Daniel Lee: Great! So, in terms of the debt facility Nick, so the debt facility was a large component of that, what’s based on the EBITDA earnings of Oncidium and so there are debt covenants as it relates to the EBITDA performance off on Oncidium. And so the Oncidium component of the debt facility took Cira up to $25 million of the cash consideration on closing, and it does cover up to 80% of the contingent consideration or the earn out as it's achieved in the next three years? And then lastly, there is call it a $10 million acquisition line that is made available to CloudMD, so we can make those acquisitions outside of Oncidium. However, we do see there's a lot of opportunities within EHS and certainly just as an example in terms of the strategic tuck-in of Cira Health Solutions, you know we're looking for – continuing to look certain assets that's going to continue to bolster our product and service positioning within EHS.

Nick Agostino: Okay, great, that was great. I appreciate that color and that's it for me, I'll pass it on.

Operator: Thank you. Our final question for today comes from the line of Yue Ma from Research Capital. Your question please.

Yue Ma: Hi! Thanks for taking my questions. First, just a follow on that M&A question. So in terms of valuation of Digital Health Companies, we saw the public sector is under some pressure. So did you observe the same trend in the private sector and how does that impact CloudMD’s acquisition strategy going forward?

Essam Hamza: Yeah, great question. You know last year, I think there was a big rush with regards to a lot of these different companies that came out during COVID and the valuations were quite high. The good news is we were able to bring everything in house that we needed, like I said, those puzzle pieces to crease that infrastructure that we need and we're in the driver’s seat now, basically pick and choose good value acquisitions are either tuck-in or expand either a customer base or our capabilities as we need. But the good thing is we're in the drivers now. In terms of what we're seeing in terms of valuations, it's all over the map. So we are seeing valuations going down in the private sector, where they are a lot more reasonable and I think that is a good trend to see as we continue with our kind of large warchest and the ability to kind of pick and choose and continue adding both the, like I said, the customer base, the capabilities, but also the geographical expansion that we're going to be looking for. So yes, we have seen the valuations come down.

Yue Ma: Okay. Thanks Essam for the color. The next question maybe for Karen. So for the digital and enterprise segments, in terms of potential revenue growth forward, how should we think about sales from cross setting to existing clients versus sales to new clients?

Karen Adams: Yes, so that's a great question. So, the cross selling I would say is very predicated on account management approach to each client. We have a process for – we've educated the account managers in our company on the different products and then we are systematically going to customers in creating the value proposition. When you think about the market, we have different people who are salespeople, direct sales teams, who have sales targets who are out doing client acquisition which are customers that we don’t currently have today. We have recently just put somebody in a role where they are the cross pollination and selling in the market place to customers we currently don't have to do that. So we see, as far as if you're asking specific targets for each, we are in the process of figuring that out and it really comes down to on cross selling customers where their current contracts are coming up, customers where it makes sense from them from a timing perspective. We want to be respectful of them with their current products and building it in with a value proposition and education. The acquisition market is totally different and has a totally different approach for us. So were you asking specifics on numbers or were you asking specific on the how?

Yue Ma: Yeah. Just the general comments on how we should see…

Karen Adams: And we see a nice balance between both. If that's what you're asking, we seen a nice balance between both, because we think it's important for client acquisition outside of the clients we currently have, and then obviously Oncidium with their blue chip clients are very important to us, both from testimonials from the work they do, their loyal clients. We have great client satisfaction levels from them with the current products that they use. So it's a nice segway for us, but we do have laser lenses on both with specific internal, targets and KPIs for sales people as it relates to both?

Yue Ma: Yeah. Thanks Karen. I'll ask question for…

Daniel Lee : Toby , sorry, its Daniel here. And I just want to just kind of add, because I think this will be helpful for modeling purposes, as you kind of just think through in terms of organic growth rates, and so certainly right now it's still a bit early given the pace of the acquisitions, but how we're seeing it is that we are – at least how I'm seeing it is that we are expecting an overall annualized organic growth rate of between 8% to 10% and the reason for that is that we've added $96 million of annualized revenues in the quarter, just through the four acquisitions. And so repeating a 9% quarter-over-quarter growth rate from Q1 to Q2 towards the future over a significantly larger revenue base, it's just going to be very difficult to attain. So, we are – it's still very early on, but I do want to just make that we temper expectations that although we're seeing a lot of growth opportunities within the company organically the growth rate will be reducing because there is a lot more revenues that we've added very recently. And we're still digesting some of these acquisitions and as Karen has been mentioning, that there are a lot of cross selling opportunities, but these things just will take a little bit of time.

Yue Ma: Yeah, that makes sense. Thanks Dan. Yeah, just my last question, also for you. So there's the acquisition related cost on the income statement embedding, which was $2.9 million. I just want to confirm this is one-time expense. Is that correct?

Daniel Lee : Yes, that's correct. So those are one-time expenses. I believe that’s in the MD&A where we do detail out that the majority of that is primarily due to the finder’s fee associated with the acquisition of VisionPros. So if we don't have any further acquisition related work, those costs will go away or go down.

Yue Ma: Okay, perfect. Thank you. Yeah, I’ll stop here.

Operator: Thank you. This does conclude the question-and-answer session of today's program. Thank you ladies and gentlemen for your participation. You may now disconnect. Good day!