Business Highlights Q1 2025 - Message from the CEO
Dear shareholders and investors,
I am pleased to report on Premier Health’s results for the first quarter ended December 31, 2024, and to update you on the status of our operations as well as recent developments.
Results and operations
The Company’s consolidated revenues reached $32.1M for the quarter ended December 31, 2024 ($37.0M for the same period in 2024). The decrease in revenues can be attributed to the Quebec operations, namely the per diem business units where hours billed continued to decrease during the quarter. This resulted in an operating net loss of $2.3M for the quarter (-$0.2M for the same period in 2024). The Company generated an Adjusted EBITDA of $0.7M for the three-month period ended December 31, 2024 ($2.6M for the same period last year). Over the quarter ended December 31, 2024, 282,212 hours were billed on a consolidated basis.
Per diem / locum tenens segment
The per diem and locum tenens segment includes Premier Soin and Code Bleu, two of our Quebec subsidiaries that offer their respective services for nursing and assistance by profile and by region. Per diem (“by the day”) and locum tenens (“to substitute for”) nurses work on an as-needed basis, sometimes for multiple health care institutions, and are typically assigned shifts at the last minute and paid directly tied to worked hours or occupy temporary vacant positions. Code Bleu and Premier Soin offer similar services but are independently managed, the weighting of different type of professionals active on the respective platforms are materially different, and geographical focus also varies from one business unit to the other, resulting in different revenue profiles.
Our two per diem business units’ revenues continued to decrease during the first quarter. Revenues for the two subsidiaries have been fluctuating and trending downward from one quarter to another since Bill 10 was sanctioned in April 2023. The per diem units are active mainly in urban centers in the province of Quebec where the provincial government has initially targeted staffing agencies as the source of all the province health care system issues. The Ministry of Health and Social Services (MSSS) issued directives and sanction threats aimed at reducing agency staff with the stated objective to hire back these personnel in the system. As expected, the MSSS operational responsibilities were officially transferred to Santé Québec, the recently created (December 2024) provincial health care authority which is now primarily responsible for providing access to health services and oversees hospitals, clinics, and specialized care facilities. Santé Québec also has a regulatory and oversight role on health service providers to ensure compliance with established standards of care and safety. Santé Québec was created to make the health-care system more efficient and accessible as part of the wide-ranging reform that aims to reduce surgery delays, improve emergency room wait times, and offer better service. However, it also faces the challenge of managing financial resources efficiently. Some of its immediate financial goals include the optimization of the provincial health care budget without compromising service delivery as well as cost containment.
Independent labor rate in Quebec as of December 28, 2024 (percentage), https://app.powerbi.com/view?r=eyJrIjoiOTFmZjc4NzAtMTBkMS00OTE5LWE4YjQtZTIzOTc5NDZjNmZlIiwidCI6IjA2ZTFmZTI4LTVmOGItNDA3NS1iZjZjLWFlMjRiZTFhNzk5MiJ9>
The impact of the combined MSSS and Santé Québec efforts in reducing agency staff are highlighted in the most recent MSSS dashboard that shows a peak of independent workforce hiring of 6.25% in December 2023 compared to 1.27% in December 2024. This includes both per diem and travel nurse activities. The MSSS is clearly on a mission to reduce and control the costs of the healthcare apparatus in the province and the range of measures has widened considerably to include doctors, infrastructure maintenance, and private clinics. So far, Santé Québec’s management message of being a patient centric organization in parallel with a $1.5 billion cost cutting mandate seems contradictory and has been received with a certain level of skepticism by the media and the population as evidenced by regular media coverage.
Both business units are now currently operating within the parameters of the recent April 14, 2024, award that integrated the notion of hourly rates ceilings previously indicated in decree 1481-2023. While the rate ceiling has an impact on gross margins, Premier Soin and Code Bleu can still be competitive at that price range that favors bigger and better organized staffing agencies.
It is not possible at this point to have a clear visibility on our per diem units’ revenues. The MSSS and Santé Québec are close to achieving their goals in terms of independent workforce, but they also face challenges in service delivery. PHA still anticipates that a fair number of smaller agencies, unable to cope with the new regulatory framework, will disappear over a ~24 months period. Personnel working for these small players will either migrate to bigger, better organized agencies, go back to the public system, or leave the sector altogether. Accordingly, the Company sees this as a recruiting opportunity that could eventually result in an upward trend for revenues at our per diem business units assuming recruitment momentum picks up and the political and organizational landscapes stabilize.
Travel nurse segment
The travel nurse segment includes Canadian Health Care Agency, Premier Soin Nordik, Solutions Nursing as well as Solutions Staffing, four of our subsidiaries that offer their respective services to the federal and provincial governments for nursing and assistance including in remote regions. Travel nurses are healthcare professionals who work in temporary positions, carrying out short- and medium-term assignments that require travel.
Over the quarter, hours billed at our travel nurse units fluctuated from one unit to the other for diverse reasons, but overall, the outlook for the travel nurse sector is positive.
Solutions Staffing (SSI) grew its client base over the quarter with one new client, and by adding 12 new facilities and 31 new units to their active system, reflecting a stable demand across healthcare roles in the Western Canadian market. Hours billed were similar to the previous quarter but nevertheless below expectations. In addition, SSI experienced a compression of its gross margin over the period. British Columbia health authorities are currently finalizing a centralization process aimed at improving booking efficiencies and streamlining administrative processes. These changes aim for long-term gains but are still creating temporary delays in staffing requests and service fulfillment during the transition, temporarily impacting our ability to manage efficiently the placement of staff and the related logistics. This reorganisation translated lately into several last-minute cancellations, namely over the Holidays, creating a mismatched between agency revenues and logistics expenses. SSI nurses' salaries were also increased by ~3% to match Canadian CPI while the opportunity to adjust hourly rates will only arise upon contract renewal. SSI’s larger contract is due for renewal in less than 3 months, and in the eventuality where an increase rate was not possible nurses’ salaries would need to be adjusted downward to reflect this new reality. This is a situation CHCA faced last year before it renewed its contract with Federal Authorities. In this case nurses’ salaries did not need to be adjusted downward.
British Columbia health authorities are currently finalizing a centralization process aimed at improving booking efficiencies and streamlining processes. These changes aim for long-term gains but are still creating temporary delays in staffing requests and service fulfillment during the transition, temporarily impacting our ability to place staff in a timely manner. This market centralization and harmonization of the engagement with the independent workforce is similar to what is happening elsewhere in Canada, with the exception of Quebec, in the sense that it aims at streamlining the interaction and administration of these relationships by engaging with fewer, but better organized staffing agencies, to better target needs, and ultimately have a better costs oversight. We believe this is a net positive for SSI since the business unit is positioned as a leader in its markets. As an example, a local health authority conducted a pilot project to standardize forms across all agencies and selected SSI’s forms as their standard, specifically praising its invoicing and business processes, noting that documentation addressed all the critical components needed for their internal processing. In our opinion, we are therefore moving towards commercial relations similar to the one we have with the federal government.
Our two Quebec based travel nurse business units, Premier Soin Nordik (PSN) and Solutions Nursing (SN), were not overly affected by the operationalization of Bill 10 and we anticipate that the demand for independent labor for nursing and assistance in the province’s northern regions will remain fairly stable in the long term, as it is the case with most Canadian northern and remote regions. However, while Solutions Nursing posted a better-than-expected quarter, Premier Soin Nordik’s revenues were below expectations. Due to PSN’s and SN’s size of operations, the impossibility to fill an assignment or cancellations may have a material impact on revenues over a specific month or quarter. We expect that an increased collaboration with CHCA will decrease revenue volatility by stabilizing employee placement rates. This should also help Premier Soin Nordik gradually develop activities in Northern Ontario and eventually position itself for future federal government awards. We also believe that the operational reorganization eventually will enable us to pool our resources under one single entity, reducing operation costs and improving placement rates.
Canadian Health Care Agency (CHCA) posted a 6% revenue organic growth for the quarter compared to the same period in 2024. The top line was slightly affected by a certain level of monthly volatility in terms of hours billed as it is often the case over the over Holiday periods. Now that the onboarding and training program for the ISC contract is completed, we expect revenue stability for our business unit over the contractual period and management is focusing on business development and organic growth with the previous additions to the management team. CHCA was recently retained as service provider to provide travel nurse contingent labor services to a Maritimes Health Authority. The agreement has a duration of 3 years, positions CHCA as a vendor of reference with this public organism, and covers Registered Nurses, Specialty Registered Nurses and Licensed Practical Nurses roles. The agreement, as most independent labor contract awards are, is for an execution on request contract which purpose is to meet recurring personnel needs, but for which the number, pace, or frequency of service requests are uncertain. However, we do expect CHCA to show organic growth in the next quarters as it gradually starts delivering services according to the terms of this agreement.
The Case for a Healthy Independent Workforce
Canada’s Demographics
Canada's population is aging at an unprecedented rate. According to Statistics Canada, by 2030, one in four Canadians will be 65 years or older. This segment of the population has already increased by 41% between 2014 and 2024. This demographic shift is primarily due to increased life expectancy and declining birth rates, and the implications for healthcare services are profound. As older adults typically experience more health-related issues, including chronic diseases, the demand for healthcare services is projected to rise significantly.
Chronic disease prevalence: As people age, the prevalence of chronic diseases like diabetes, heart disease, and arthritis rises, and leads to higher healthcare utilization.
Aging population: Canadians aged 65 and older represent today 19% of the population and already need a wider health service offering. Another important age group (25-45) will reach that threshold in a couple of decades.
Increased need for long-term care: A growing elderly population also creates a greater need for long-term care services, such as assisted living and home care.
Impact on healthcare workforce: The aging population puts strain on the healthcare workforce, as there may not be enough medical professionals to meet the growing demand for care.
Regional variations: Different regions in Canada may have varying healthcare needs depending on their demographic makeup, including the concentration of older adults.
The age structure pattern observed in Canada is seen in populations with low birth and death rates. Declining populations are often seen in countries with long established economic development, which tend to have readily available education and health care. The demographic landscape shift, especially in urban centers, is increasing pressure for healthcare systems to meet the needs of older adults. This was easily predictable decades ago and theses demographic changes affect the demand for healthcare services and the delivery models in Canada, emphasizing an expected rise in demand for travel nurses and temporary healthcare personnel.
Predictability of Health Services Requirements
The impact of an aging population on healthcare demand can be quantified through statistics. Currently, older adults account for a significant portion of healthcare expenditures, with estimates suggesting that individuals over 65 consume roughly 40 percent of healthcare services while representing approximately 19% of the population. This disparity underscores the urgency of adapting healthcare systems to better serve this demographic. Future projections indicate that as the number of seniors continues to rise, the financial burden on the healthcare system will also grow, leading to potential shortages of services if not adequately addressed.
In urban areas, the effects of this aging population are particularly pronounced. Cities often serve as hubs for healthcare services, meaning they must scale up operations and develop new models of care to accommodate the increasing number of older adults. These changes may include the expansion of geriatric services, enhanced palliative care, and improved access to rehabilitation programs. For instance, several cities have begun implementing age-friendly initiatives that focus on enhancing the quality of healthcare delivery for seniors. These changes are not merely reactive policies; they are necessitated by demographic data indicating a clear trajectory towards an older population.
The Impact of Austerity
Austerity measures, implemented in response to economic downturns or budgetary pressures, have demonstrably impacted healthcare services across Canada. While proponents argue that such policies are necessary for fiscal responsibility, their effect on the population's access to quality of healthcare is undeniably negative.
One major consequence of austerity is reduced funding for healthcare infrastructure. This translates directly into longer wait times for essential procedures and treatments. For instance, several provinces have experienced significant increases in wait times for specialist appointments, diagnostic imaging, and elective surgeries in recent years, particularly after periods of budget cuts. This delay in access to care not only impacts patient well-being but can also lead to worsened health outcomes, including increased mortality rates in certain cases. The deterioration of infrastructure, including outdated equipment and insufficient staffing in hospitals and clinics, further compounds these problems.
Beyond infrastructure, austerity measures frequently lead to cuts in healthcare personnel. Budgetary constraints force hospitals and healthcare providers to reduce staffing levels, leading to increased workloads for remaining staff and potential burnout. This impacts the quality-of-care patients receive, potentially resulting in higher rates of medical errors and a decline in overall patient satisfaction. The recruitment and retention of qualified healthcare professionals is further hampered by limited career advancement opportunities, exacerbating the existing shortage of skilled workers in many areas of the country.
Furthermore, austerity policies often target preventative healthcare programs, which are crucial in minimizing long-term healthcare costs. Funding cuts to public health initiatives, such as disease prevention programs and health education campaigns, can lead to increased incidence of preventable illnesses, ultimately placing greater strain on the healthcare system down the line. This creates a vicious cycle where reduced funding for preventative measures leads to increased demand for more expensive acute care services. Examples include cuts to public health nursing programs and reduced funding for community health services, leaving vulnerable populations with limited access to crucial support.
Austerity policies, while aiming at short-term fiscal relief and financial stability, both legitimate goals, unfortunately ultimately undermine the effectiveness and accessibility of Canada's publicly funded healthcare system.
Role of Independent Workforce
The growing need for healthcare services due to the Canadian population aging extends beyond traditional settings. Rural and urban centers alike face challenges in maintaining adequate staffing levels. Consequently, there is an increasing reliance on travel nurses and temporary healthcare personnel to bridge staffing gaps. Travel nurses, who fill short- to medium-term needs in various healthcare facilities, provide critical support in high-demand areas. Their value has become more evident during events such as the COVID-19 pandemic, which highlighted vulnerabilities in healthcare systems when spikes in demand occur.
The demand for temporary personnel is expected to grow as healthcare facilities are pressured to deliver quality care efficiently while managing staffing shortages. This phenomenon can be linked to a broadening recognition of workforce challenges. The Canadian Institute for Health Information noted that an estimated 34 percent of registered nurses are nearing retirement age. This signifies an impending shortfall of trained professionals to care for an aging population, prompting facilities to seek out travel nurses and flexible staffing solutions to maintain service levels. The role of travel nurses and independent health care workers has become increasingly critical in the context of budget austerity. As health care systems around the world face financial constraints, there is a pressing need for flexible, capable professionals who can respond quickly to varying demands. Travel nurses and independent health care workers not only fill essential gaps in health care delivery but also contribute significantly to efficiency and quality of care during times of budget cuts.
Travel nurses are professionals who take temporary assignments in different locations, often filling shortages where they are most needed. During budget austerity, many health care institutions are forced to reduce their permanent staff. As a result, the remaining staff may experience increased workloads, leading to burnout and a decline in the quality of patient care. Travel nurses help alleviate these pressures by stepping in during critical times. For instance, during the COVID-19 pandemic, hospitals across the United States and Canada faced overwhelming patient numbers while grappling with budgetary issues. Travel nurses played an indispensable role by providing immediate support, allowing hospitals to maintain patient care standards despite financial limitations.
The increased demand for healthcare services should have a direct correlation with the need for temporary healthcare workers. We expect the anticipated growth in the elderly population will eventually lead to a substantial increase in the demand for nurses, particularly travel nurses. The flexible nature of travel nursing makes them an attractive solution for healthcare providers facing staffing shortages. Hospitals and long-term care facilities can supplement their permanent staff with temporary nurses to meet fluctuating demand and manage peak periods, often during flu seasons or other times of high patient volume. Their role is becoming increasingly central, and policymakers must recognize this trend and encourage measures that foster an adaptable workforce capable of meeting growing demand and address continuity of care.
The long-term implications of relying partially on temporary staff require careful consideration. Addressing underlying systemic issues, such as training shortages and low nurse-to-patient ratios, will be crucial in developing a sustainable healthcare system capable of handling the increasing demands of an aging population. The importance of maintaining robust healthcare services cannot be underestimated in a country that prides itself on its commitment to universal care.
Moving Forward
Our business model, digital platform, and mobile app are perfectly aligned with the gig economy framework and global service trends in general. We offer a level of flexibility that health systems cannot offer, both in terms of schedules, experiences, and remuneration options. Our efficiency enables us to bridge the gap between professionals looking for flexibility and organizations seeking staff relief. This translates into tangible economic and organizational benefits to health organizations that can be quantified. At this level we believe that we play a vital role in these ecosystems. It is also this flexibility that gives us the ability to adapt to quickly changing environments. With a geographically diversified revenue base and an excellent management infrastructure in place across Canada, we have the capacity to improve our operational performance, enhance our placement rates, and further diversify our revenue stream with other regional and sectorial opportunities.
I wish you all the best,
Martin Legault
Chief Executive Officer