On the surface this looks like a soft quarter, but if you dig into the financial statements, I don't think the overall summary results tell the whole story.
For EBITDA: Their Q2 EBITDA was $0.5 million. However, they had some non-recurring expenses:
- $0.3 million for the implementation of a new ERP system and computer expenses
- $0.3 million for transaction costs related to their acquisition
- $0.1 million for training costs
If you add that back, you get approximately $1.2 million. Some possibly recurring expenses in the quarter were
- $0.2 million for salary increases
- $0.1 million for maintenance of non-ambulatory transport vehicles
Finally, $0.3 million was due to the fluctuation (decrease) of revenue, which seems to be temporary but unpredictable at this point in the transition period of the pandemic.
So in all, the EBITDA number is comparable to the previous Q1 2022 number.
I am not financially savvy enough to break out the exact numbers for the net loss, but these expenses of course would have made their way to the bottom line.
Regarding the lower revenue at Premier Soin, it is good news that the issues seem to be resolved in April, but something which is likely to fluctuate while things adjust post-pandemic.
Some good news: - They have now $6.3 million in cash, an increase of $1.9 million from the previous quarter.
- They still generated $1.7 million of cash from operating activities this quarter.
- With the new acquisition, they now derive 27% of revenue from Federal Government sources, and 26% outside Quebec.
- There is organic growth in the Nordik division, signing contracts with 6 additional hospitals.
- The Solutions Nursing extended role training program seems to be in high demand.
- Solutions Nursing is negotiating a framework agreement with a Northern Territory sometime in the next two quarters.
- They are exploring tuck-in acquisitions of smaller staffing agencies in Ontario with the completion of their recent acquisition.
My takeaway is that things still seem to be progressing okay. This quarter had the expense, but not the benefit, of the transformational acquisition, adding about $6 million/quarter in revenue and around $0.7-0.8 million EBITDA /quarter, although the next quarter won't include an entire 3 months of the acquisition yet.
Still, I expect more dumping into $0.50 or $0.40 as investors won't be patient in the current market. I will continue to hold as the investment thesis needs more time to play out.
Does anyone else have any thoughts? I don't know if I have added any useful commentary. Please correct me if I have made any mistakes.