Dear shareholders and investors,
I am pleased to report Premier Health’s results for our fiscal year ended September 30, 2021, and to share our first full year’s activities and achievements as a public company.
Results and Operations
Premier Health is a leading Canadian Healthtech company that provides a comprehensive range of outsourced services solutions for healthcare needs to governments, corporations, and individuals. Premier Health uses its proprietary PSweb platform to lead the healthcare services sector digital transformation to pro
We are following our growth trajectory by increasing our revenue organically and through acquisitions. The consolidation of Code Bleu and Solutions Nursing in the course of the year had an important impact on the Corporation’s revenue that reached $66.6 million for the year ended September 30, 2021 ($20.7 million for the same period in 2020). This translated into an adjusted EBITDA of $5.9 million ($2.1 million for the same period in 2020) and a net income of $1.5 million ($0.03 million for the same period in 2020). Our average gross margin of 24.4% for the year was slightly below our objective of 25% due in part to the reclassification of expenses and the impact of our geographical service offering mix earlier in the fiscal year. We expect a certain level of volatility of our gross margin and EBITDA margin as we continue our acquisition program in other markets.
Over the year, our three main business units showed continued organic growth. There are approximately 4,600 healthcare professionals currently active on our platform and the Corporation reached a total of 253,701 billable hours in the fourth quarter for a total of 991,076 for the fiscal year, just a bit shy of our objective of 1,000,000 hours billed for the year.
In March 2020, in connection with the pandemic, the government of Quebec established a state of health emergency by decree to provide the Minister of Health and Social Services the required powers to put in place all measures necessary to ensure the protection of the health of the population. In normal circumstances, Quebec health establishments may solicit independent agency staff only from agencies selected after a tender process carried out by the Government Acquisitions Center (CAG). Premier Health’s contractual agreements were all awarded following such tender processes.
In the context of the state of emergency, however, and to ensure the continuity of services as well as user safety, the Ministry of Health consented to the solicitation of independent staff from non-qualified agencies. Unfortunately, this often resulted in higher costs for the numerous health institutions, and in certain cases, quality of care issues. With the gradual improvement of the situation, the Ministry of Health recently issued clear directives to health institutions regarding the use of independent work force. These directives are aimed at better managing recourse to independent work force that should be subject to written contractual agreements between establishments and agencies which hold the required permits and certifications. While it is clear the government is pursuing the objective to reduce independent labour, we believe that the recent directives will mostly affect smaller non-qualified staffing agencies as the authorities are gradually going back to the normality of existing contractual agreements and tender processes. This should improve quality of care and reduce costs for health institutions while benefiting tier one agencies such as Premier Health.
As a fifth wave of COVID-19 epidemic begins to gather momentum across Europe and with the emergence of the Omicron variant, leaders in France and neighbouring countries are introducing a wide range of measures to protect their population, including mandatory vaccination, mask wearing, remote working and booster vaccines. The recent spike in figures has prompted countries such as Austria and the Netherlands to reintroduce partial lockdowns. We don’t know yet how the situation will evolve in Canada but, more than ever, health workers face physical, mental, and emotional exhaustion, and backlog in care delivery and procedures are still increasing in health institutions. Organizations need to adapt to this reality, and we believe that the situation will take a few years to settle.
Healthcare Workforce Solutions
During fiscal 2021, we acquired Code Bleu Placement en Santé and Solutions Nursing L.F.C. The integration of Code Bleu enabled us to reach a market share in the province of Quebec that we estimate at approximately 25%. This was an important short-term objective and a trigger for Premier Health to start its geographical expansion in other Canadian provinces. The integration was based on the sharing of best practices, both on the operational and technological fronts, which enabled us to identify specific organic growth vectors, one of which being targeted web-based marketing as a means to accelerate recruiting for the different business units. Organic growth is mainly based on our capacity to attract personnel, and the results of our marketing strategy have met our expectations. Code Bleu and Placement Premier Soin also renewed some of their long-term government contracts in the normal course of business, notably for Eastern Quebec. In our opinion, this signals a certain level of continuity in the need for services at the provincial level and translates into revenue stability for Premier Health.
The Premier Soin Nordik business unit has been growing steadily during the year. This unit is focused on Canada’s northern regions and, as such, provides services to provincial and federal governments. Due to the nature of the healthcare services provided and the implied geographical challenge, contractual arrangements provide for specialized personnel and longer stays. This translates into revenue stability and higher margins than what the Corporation can anticipate in densely populated areas. We acquired Solution Nursing specifically with the goal of increasing this segment of our revenue mix. The integration of this acquisition enables the Corporation to streamline the training process and to offer a wider range of mandates to specialized healthcare professionals. We believe this gives the Corporation a definitive strategic advantage for recruitment. The business unit renewed an important contract with the Ungava Tulattavik Health Center for a period of three years, with two renewal options of one year each. This contract alone, for personnel placement and training activities, secures an annual revenue of over $500,000 for the business unit.
Non-Ambulatory Transport Services
Our transport division was launched in June following the awards in March 2021 of two long-term contracts representing an estimated 28,000 transport segments per year. While Premier Health’s software platform fully supports the logistics and monitoring of this service offering, the delivery of services in two administrative regions requires approximately 40 specialized transport units. Our initial operational strategy was to maximize the use of our technology to generate above market margins for the service while using a fleet of new leased vehicles backed by the two long-term agreements. These units were ordered earlier this year, upstream of the expected start of the contracts in June and October. Unfortunately, manufacturers are experiencing COVID-related supply chain issues, namely with industrial computer chips, which resulted in our vehicles delivery being postponed to 2022. Consequently, we had to adjust to the situation by acquiring a limited number of used vehicles and performing unplanned maintenance to launch the services. The ensuing non-recurring expenses put temporary pressure on EBITDA, which explains in great part a lower than anticipated EBITDA margin for the Corporation. We expect to resume our initial deployment strategy once we take possession of the new fleet, and the business unit’s performance to be in line with our performance indicators at that point in time.
We performed a technology roadmap exercise during the second half of our fiscal year. The purpose of this exercise, which included the participation of our technical team, our strategic committee and third-party guidance, was to perform a thorough analysis of our current platform’s performance and existing features to identify future development axes. It was also a benchmark exercise through which we were able to compare ourselves with other players in different spaces such as SPaaS (Staffing platform as a service), global placement agencies, and other non-healthcare and non-placement agency technology-based models to articulate a technology development strategy for the next foreseeable future. We were surprised to see that technology was not a priority for over 50% of healthcare agencies in North America and we see this as a tremendous opportunity for Premier Health as we continue to improve our proprietary platform and our leadership in the sector. Development axes in the next 12 to 24 months will be oriented toward improving mobile user experience for nurses and care attendants, as well as connectivity and booking automation features for health organisations. So far, client connectivity was not a priority in the past due to Quebec health organizations’ strong resistance to change. However, as we start deploying our platform in other geographical markets, we believe this will become an important strategic tool for organic growth. I am pleased to welcome Eric Dupont as our new Chief Technology Officer who will be responsible going forward for this critical aspect of our business.
We are actively pursuing our three development axes, namely technology, recruitment, and acquisitions. In the short term, we expect a good level of stability in demand for our services over what is now anticipated to be a 24-month COVID recovery period, over which healthcare organizations will address the increasing backlog of non-critical surgeries and other care services, while healthcare workers will also generally need to recuperate from physical, mental, and emotional exhaustion. The recent directives from the Ministry of Health signal a gradual return to normality where recourse to independent workforce is performed within a precise operational and legal framework. This is a direction that favours tier one agencies that have the capacity to deliver a constant quality of service at a competitive pricing.
We are moving forward with our technology roadmap aimed at positioning ourselves at the forefront of healthcare services delivery trends, with the objective of extending the capabilities of our platform and the width of our services.
We are actively seeking transaction opportunities in other Canadian provinces. Ontario represents the biggest market in Canada for our type of services and we were able to gather enough datapoints to build a deployment strategy that has the potential to lead us into becoming an important player in the delivery of care in this market. At this point, the Corporation has the critical mass and the liquidity to be an active consolidator. We had an excellent track record in terms of integration and so far, we see no factors that could mitigate our growth path across the country in the foreseeable future.
I wish you all the best,
Chief Executive Officer