Dialogue, LifeSpeak struggle to please shareholders with first quarter 2022 results

Both healthtech companies noted user-driven revenue growth while share prices continue to tumble.

Like other tech stocks, healthtech stocks are currently circling the toilet, despite Canadian firms posting slightly robust first quarterly earnings. Dialogue Health Technologies and LifeSpeak Inc. both posted earnings reports for the first quarter of 2022.

At presstime, Dialogue’s stock was sitting at $3.85 from a 52-week high of $15.14. LifeSpeak’s wasn’t doing any better, hovering around 75 cents down from a 52-week high of $9.90.

Dialogue adds almost one million customers YoY, while share price drops 69%.

Founded in 2016 and incubated in Diagram Ventures, Dialogue provides a virtual healthcare and wellness platform that offers affordable, on-demand access to quality care. Its IHP is a one-stop healthcare hub that centralizes all of its programs and services in a single application that is accessible through a smartphone, computer, or tablet.

Dialogue reported that its first quarter revenue in 2022 represented a 35.8 percent increase year-over-year to $20.7 million. The company attributed the increase to adding more members for its services.

Dialogue said it experienced an increase in members of nearly 800,000 year-over-year to more than two million, adding approximately 200,000 in the quarter.

A large win for the company over the quarter was an agreement to offer its virtual employee assistance program to more than 38,000 employees at Scotiabank, beginning on April 1, 2022. This represented Dialogue’s largest direct customer to date for that service.

The company’s adjusted EBITDA loss came to $5.7 million, compared to a loss of $5.0 million in the same period last year. The increase was due mainly to a planned increase in operating expenses year-over-year to support the company’s 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, according to Dialogue.

Net loss was $7.1 million, compared to $231.2 million in the same period last year. Dialogue attributed the decrease primarily to an accounting charge in the first quarter of 2021 related to the increase in the fair market value conversion feature of the Class B preferred shares as well as an increase in operating expenses.

Montréal-based Dialogue acquired digital health and well-being company Tictrac in April for up to $56 million CAD, through a combination of cash-on-hand and a treasury issuance of common shares of the company.

The transaction included consideration of $24 million paid in cash once the acquisition closed, with the remaining earn-out consideration of up to $32 million upon achievement of certain revenue milestones by Tictrac.

Dialogue raised gross proceeds of approximately $100 million through its IPO on the TSX in 2021. At the time, the company noted it also planned to use its IPO capital to build and put in place new health services in end-markets and grow its customer base.

RELATED: Dialogue Health announces record revenues in its third quarter, 2021

Fuelled by its sizable IPO, Dialogue went on to acquire internet-based cognitive behavioural therapy solutions provider e-hub Health in 2021 for an undisclosed amount.

Before tapping into the public markets, Dialogue’s acquisition strategy was backed by a series of institutional financing rounds, including a $43 million round in July 2020, led by Canadian life insurance company Sun Life Financial.

Dialogue’s past acquisitions include Optima Global Health, and Argumed Consulting Group, as well as the purchase of DXA, an AI-powered tool designed to replicate how an ER doctor’s brain thinks, in 2018.

LifeSpeak doubles net loss YoY as company ‘evolves’ post-acquisitions

LifeSpeak Inc. also posted strong revenues, increasing 77 percent to $8.7 million in the first quarter of this year compared to the same period in 2021. The company said it represented a continuing adoption of its platform.

The company increased its number of clients to 873 as of March 31, 2022, a 283 percent increase when compared to 228 at the same date in 2021. Notable enterprise client additions for the quarter included Chartwell Master Care LLP, Fujifilm Holdings America Corporation, Santander Holdings USA, S&P Global and Loblaws Inc.

However, LifeSpeak reported a net loss of $16.4 million, an increase of 100 percent compared to the same period in 2021. The company attributed the loss to its acquisition of digital fitness platform, Wellbeats, for $117.9 million, as well to increased stock-based compensation expense, financing expense and additional depreciation and amortization associated with the Wellbeats business.

LifeSpeak’s first quarter 2022 adjusted EBITDA3 of $400,00 represented a decrease of $1.5 million compared to the same period in 2021. That included approximately $700,000 of cost savings in Q1 2022 identified from a comprehensive expense review of the company’s acquisitions and operations.

“The first quarter of 2022 marked a period of significant transition for LifeSpeak as we evolved into a more diverse company on the strength of our recent acquisitions and the ongoing contributions from our core business,” said Michael Held, CEO and Founder of LifeSpeak.
Founded in 2004, LifeSpeak sells its digital mental health and well-being education software to organizations ranging from Fortune 500 companies to government agencies, insurance providers, and other healthtech firms.

LIfeSpeak went public on the Toronto Stock Exchange in July 2021, raising $125 million. The company issued a short-form base shelf prospectus in late 2021, indicating that it intended to raise $450 million for acquisitions.

Following its IPO, LifeSpeak acquired a trio of other healthtech and wellness software companies in online wellness company Lift, substance use disorder solution ALAViDA, and caregiver support platform Torchlight.

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in Wired.com, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.

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