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Jack Nathan Health Announces Its Q3 Fiscal 2022 Financial Results

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  • Q3 fiscal 2022 revenues of $2.4 million grew by 143% over Q3 fiscal 2021

  • Company ends Q3 fiscal 2022 with over 190 medical clinics, up 130% from fiscal 2021 year-end

  • Recent leadership changes and acquisitions have positioned the Company for significant growth

TORONTO, December 31, 2021--(BUSINESS WIRE)--Jack Nathan Medical Corp. (TSXV: JNH, OTCQB: JNHMF) ("Jack Nathan Health", "JNH" or the "Company") announced today its unaudited consolidated interim financial results for the third quarter of fiscal 2022, ended October 31, 2021. Jack Nathan Health’s financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS").

Management Commentary

Commenting on the Company’s performance and outlook, Dr. Glenn Copeland, Chief Executive Officer and Chief Medical Officer stated, "The third quarter marks a positive inflection point for Jack Nathan Health as we made significant progress expanding our footprint, scaling our operations, strengthening our digital platform, and enhancing our foundation for growth. We continued to expand our corporate-owned and operated footprint in Canada, with new Medical Clinics, MedSpas and Rehab services in British Columbia and Ontario. In Mexico, investment and expansion has been rapid, and the potential for profitable expansion has been strengthened. We also continued to restructure and realign our organization as we scale operations. In both Canada and Mexico, we remain focused on improving access to high quality healthcare, while enhancing the patient-practitioner experience."

Dr. Copeland continued, "In Q3 in Canada, we acquired a profitable medical clinic in British Columbia and completed large new format clinic (approximately 5000 sqft.) inside Walmart, in Alberta. Also in Canada, we opened new Rehab and MedSpa facilities in our existing Walmart locations and now own and operate four rehab and five MedSpa locations. In Mexico, we continued to build new medical clinics in Walmart to broaden our reach. We have been integrating new digital and telemedicine initiatives, working hand-in-hand with Walmart, which is key to providing more consistent and reliable medical service."

David Berman, Chief Financial Officer added, "The global pandemic has certainly curtailed our YTD results, though to a lesser extent in Q3, as restrictions and lockdowns were lifted. Consequently, we saw tremendous growth in total Q3 revenue, up 143% over Q3 last year. Now, with the November acquisitions in British Columbia, we expect to add an additional $5 million of annualized revenue that is accretive to our bottom line, with growing contributions from other clinics throughout our footprint. Many upfront acquisition costs in our growth plan this fiscal year are behind us, as are other one-time and non-operating expenses. Taken together, even as we address the latest challenges of Covid in both countries we operate, we anticipate steady and meaningful growth, better capital allocation and cash flow, and improved bottom-line performance. With recent leadership changes and the additional impact of acquisitions, this was a transitional quarter for our company, and we are well positioned for continued growth and improved bottom-line performance heading into 2022."

Financial Highlights for the Three and Nine Months Ended October 31, 2021

Operating Results

Three months ended

Nine months ended

October 31, 2021

$

October 31, 2020

$

October 31, 2021

$

October 31, 2020

$

License revenues

742,173

887,406

2,344,878

2,877,544

Clinic operations

1,564,863

69,588

2,987,303

183,673

Other revenues

107,730

36,696

288,861

74,697

Total revenues

2,414,766

993,691

5,621,042

3,135,914

Total revenues in Q3 fiscal 2022 were $2.4 million, as compared to $1.0 million in Q3 fiscal 2021, an increase of $1.4 million or 143%. Total revenues in the nine months ended October 31, 2021, were $5.6 million, as compared to $3.1 million in the nine months ended October 31, 2020, an increase of $2.5 million or 79%. Driving the increases in both quarterly and year-to-date periods were high clinic operations revenue from acquisitions and organic growth in Canada, including Rehab and MedSpa services, in Canada, and new medical clinics and services in Mexico. The Company experienced lower license revenues for the same periods, as expected and in line with its strategy, as it acquires corporate-owned medical facilities from its licensed locations.

Three months ended October 31

Nine months ended October 31

2021

2020

2021

2020

$

$

$

$

Revenues

2,414,766

993,691

5,621,042

3,135,914

Operating expenses

(4,483,043)

(1,072,301)

(11,158,763)

(2,503,564)

Income (loss) from operations

(2,068,277)

(78,610)

(5,537,721)

632,350

Total operating expenses in Q3 fiscal 2022 were $4.5 million, as compared to $1.1 million in Q3 fiscal 2021, an increase of $3.4 million. Total operating expenses in the nine months ended October 31, 2021, were $11.2 million, as compared to $2.5 million in the nine months ended October 3, 2020, an increase of $8.7 million. The year-over-year increase was driven by the growth in Clinic Operation revenues that resulted in increases in several new expenses related to clinic operations including higher associate fees for new medical services, higher clinic operation costs, higher salaries and wages higher consulting fees and professional fees, higher development costs, new acquisition costs and an increase in non-cash charges of $2.1 million, including Share Compensation Expense, Depreciation and Amortization. The operational increases are primarily attributable to the rapid expansion of medical clinics, medical and paramedical practitioners added, and new Rehab and MedSpa services provided.

The Company reported a loss from operations of $2.1 million in Q3 fiscal 2022, as compared to a loss from operations of $0.1 million Q3 fiscal 2021. In the nine months ended October 31, 2021, the Company reported a loss from operations of $5.5 million, as compared to income from operations of $0.6 million in the nine months ended October 31, 2020. The year-to-date loss from operations is attributable to increased expenses associated with growth and the investments to scale operations, which includes $2.1 million in non-cash charges including Share Compensation expense, Depreciation and Amortization. Three were also several other non-recurring, and one-time charges (See Adjusted EBITDA below). The Company expects to improve its operating performance as higher revenues are generated and scale is achieved throughout its medical clinic footprint.

Three months ended October 31

Nine months ended October 31

2021

$

2020

$

2021

$

2020

$

Adjusted EBITDA

(754,558)

83,840

(1,970,752)

863,201

Restructuring costs

305,757

669,278

Development costs

112,919

471,118

Acquisition related costs

124,909

304,204

Share compensation expense

669,491

129,576

1,836,062

129,576

Bad debt expense (recovery)

(9,325)

6,660

Depreciation

55,748

19,092

124,336

59,745

Depreciation - right-of-use-asset

18,419

10,075

38,569

30,225

Amortization - intangible assets

28,372

84,804

Other (Income) expense

3,179

76,941

Finance costs (income)

34,216

21,534

96,135

5,370

Loss on investments at fair value

106,467

Writedown of investments

404,314

404,314

Foreign exchange loss

74,276

(29,910)

81,878

81,822

Listing expense

8,276,765

8,276,765

Current income tax recovery (expense)

(324,044)

(290,419)

Deferred income tax recovery (expense)

(7,518)

(22,520)

493

Net income (loss)

(2,161,822)

(8,426,741)

(5,661,276)

(8,018,098)

Adjusted EBITDA (1) in the three months ended October 31, 2021, was a loss of $0.8 million, as compared to an adjusted EBITDA of $0.1 million in the three months ended October 31, 2020. For the nine months ended October 31, 2021, the Company reported an adjusted EBITDA loss of $2.0 million, as compared to adjusted EBITDA of $0.8 million. The adjusted EBITDA loss for both quarterly and year-to-date periods in fiscal 2022 was directly attributable to higher operating expenses to facilitate medical clinic openings and corresponding growth, as well as other investments to improve operational efficiencies and future bottom-line performance. Additionally, several expenses incurred in fiscal 2022 are not anticipated to repeat in future periods.

Revised Clinic Operations Agreement in Mexico

Subsequent to the end of Q3 fiscal 2022, the Company entered into a beneficial new Addendum to the Clinic Operating Agreement with Walmart Mexico, effective November 1, 2021. Under the terms of the addendum, Jack Nathan Health will be reducing its medical clinic footprint in Mexico from 115 to 78 by February 2022, removing lower-performing locations in small markets and shifting resources to strengthen its overall financial performance in Mexico. As a result, the revised agreement will result in significantly higher revenues at remaining clinics, while maintaining comparable total revenues moving forward with less clinic locations. The Company anticipates that the revised agreement may result in profitable operations in Mexico once the consolidation is complete and remains in discussions with Walmart Mexico about future strategic growth and expansion.

Balance Sheet as of October 31, 2021

  • Cash of $2.7 million (January 31, 2021 - $7.7 million)

  • Total assets of $9.2 million (January 31, 2021 - $10.7 million)

  • Total liabilities of $3.7 million (January 31, 2021 - $2.1 million)

Shares Outstanding

As of October 31, 2021, the Company had 82,159,935 common shares outstanding, 7,371,875 stock options outstanding, and 397,304 warrants outstanding.

(1) Adjusted EBITDA

We believe Adjusted EBITDA is a useful measure to assess the ongoing performance of our Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of our underlying business performance as well as one-time or non-recurring expenses. We define Adjusted EBITDA as EBITDA adjusted to add back or deduct, as applicable, certain expenses, costs, charges, or benefits incurred in the period, which in management’s view, are not indicative of normal operations, including: (i) restructuring costs, (ii) non-capitalized development costs, (iii) acquisition related costs, (iv) share compensation expense, (v) bad debt expense(recovery), (vi) other income (expense), (vii) finance costs (income), (viii) loss on investments at fair value, (ix) write down of investments, (x) foreign exchange gain or loss and (xi) listing expense.

Non-GAAP measure: Earnings before interest, taxes, depreciation, and amortization ("EBITDA") and Adjusted EBITDA should not be construed as alternatives to net income (loss) determined in accordance with IFRS. EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations which the Company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives.

For further information regarding the Company’s financial results for Q3 fiscal 2022, please refer to the audited financial statements for the year ended January 31, 2021 and unaudited condensed interim financial statements for the three, six and nine month periods ended October 31, 2021 together with corresponding MD&As, available at www.sedar.com and the JNH website https://www.jacknathanhealth.com

About Jack Nathan Medical Corp.

Jack Nathan Medical Corp., operating as Jack Nathan Health®, is one of Canada’s largest healthcare networks. Jack Nathan Health® is an innovative healthcare company that is improving access for millions of patients by co-locating physician and ancillary medical services conveniently located inside Walmart® stores.

Jack Nathan Health® provides an exceptional level of patient care, made possible through patient-centric physicians, a variety of medical services, technology, and programs, designed to put patients first. Our mission is to provide everyone access to the finest quality retail medical centres, with both in-clinic physicians and digital telemedicine, so you and your loved ones can "Live Your Best Life".

Jack Nathan Health® was established in 2006 and continues to expand its international footprint, delivering exceptional, state-of-the-art, turn-key medical centres. In Canada, the Company has 76 clinics in Walmart locations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Quebec. In Mexico, the Company has approximately 115 corporate owned and operated clinics in Walmart locations. For more information, visit www.jacknathanhealth.com or www.sedar.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Jack Nathan are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect the Company's current views and intentions with respect to future events, and current information available to them, and are subject to certain risks, uncertainties, and assumptions Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize. Such factors include but are not limited to: changes in economic conditions or financial markets; increases in costs; litigation; legislative and other judicial, regulatory, political, and competitive developments; the economic and business impact of COVID-19 and operational difficulties. This list is not exhaustive of the factors that may affect forward-looking information. These and other factors should be considered carefully, and readers should not place undue reliance on such forward-looking information. Should any factor affect the Company in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, the Company does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward- looking information, other than as required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211231005018/en/

Contacts

Investor Relations: Prit Singh, Thesis Capital psingh@thesiscapital.ca

Jack Nathan Medical Corp., David Berman, CFO, david.berman@jacknathanhealth.com

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