Think Research Corporation (TSX:THNK) reported record sales for the first quarter, ended March 31, 2022, driven by continued growth in the enterprise software and data solutions segment. The company said it was on track to achieve its growth and profitability objectives.

What Think Research Does

Think Research is an industry leader in providing knowledge-based digital healthcare software solutions. The company’s mission is to organize the world’s health knowledge so that everyone receives the best care possible available to them. Its evidence-based healthcare technology solutions support the clinical decision-making process, standardize care for patients, and improve patient outcomes. 

The company aggregates, develops, and delivers a knowledge-based software-as-a-service- solution globally to customers. Their customer base typically include enterprise customers, hospitals, health regions, healthcare professionals, and/or governments. Its cloud-based, EMR-agnostic digital tools have enabled clinicians around the world to positively impact millions of patients across the continuum of care, including primary medical care, acute care hospitals, and operating theaters, as well as community care and care for the elderly.  

With more than 13,000 licensed enterprise healthcare facilities, Think’s solutions enable more than 300,000 physician, nurse, and pharmacist users to leverage its critical data service to ensure that everyone receives the best possible health care.

Q1 Highlights

Revenue was $20.2 million, an increase of 142% from the first quarter of 2021 and 6% higher than the fourth quarter of 2021.

Think’s CEO Sachin Aggarwal said, “We are very pleased to report record revenue for the first quarter of 2022, which we achieved despite facing some program setbacks in clinical research and clinical services caused by the Omicron COVID-19 outbreak in January. Our software and data solutions segment served as a solid offset to these unforeseen events and helped to augment our overall performance until the affected revenue streams recovered in the latter part of the quarter. Think’s results in the first quarter of 2022 prove that our diversified revenue streams afford us resilience and greater sustainability, and as a result, we believe the Company is on-track to meet our internal growth and profitability targets.”

Due to major contract rollouts, the software and data segment grew 41% from Q4 2021 and contributed $8.5 million to revenue for the quarter. This helped to counterbalance a $1.4 million decline in revenue in other lines of business, attributed to delays in clinical research and clinical service operations associated with the Omicron outbreak.

Think completed Four acquisitions in 2021, which have generated significant revenue streams and provided the company with significant expense leverage. Think realized integration synergies totaling approximately $5.8 million on an annualized basis in 2021. An additional $1.1 million was realized in the first quarter of 2022.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved to near breakeven during the period with a loss of $0.3 million, driven by higher revenues and synergies carried out.

The company announced last week that it expects to achieve $9 million in cost synergies this year as part of its cost optimization program.

Building on these improvements, Think advanced its goal of generating positive Adjusted EBITDA in 2022.

The company plans to grow revenue while improving margins by becoming an increasingly essential provider of data solutions for healthcare professionals worldwide, enabling them to deliver the best possible outcomes for all patients.

To achieve this objective, Think aims to:

• Add more users to current licenses by driving adoption and usage;
• Increase revenue per user by increasing the number of content services and data solutions a licensed user adopts and regularly uses;
• Directly monetize licensed users, in addition to facility licenses, through various methods such as direct clinical training offerings to Think users.

The objective of this operational focus, both in the short and long term, is to generate organic revenue growth with improved margins and achieve positive adjusted EBITDA.

The company said its cash balance as of March 31, 2022, was $6.1 million, down from $6.3 million at the end of December last year, with improved liquidity after quarter-end thanks to a convertible credit facility.

Events That Happened After Quarter-End

On April 22, 2022, Think entered into a credit agreement with Beedie Investments Ltd. for a secured non-revolving convertible term loan of up to $25 million, maturing May 10, 2026.

On May 10, 2022, Think announced that it has closed an initial advance of $10 million from Beedie Investments Ltd under the company’s non-revolving term convertible loan facility up to a maximum principal amount of $25 million. In accordance with the terms of the credit agreement established between the two entities Think may use the proceeds to fund future acquisitions, growth investments and for general working capital. The undrawn $15 million of the convertible facility will be available for subsequent advances in minimum tranches of $3 million. The advances can also be used to future fund Think’s purchasing or acquisition of other businesses or assets.

On May 19, Think Research announced that MDBriefcase Group Inc., a subsidiary of Think, has been chosen by a global pharmaceutical company to provide high-quality content to healthcare practitioners and allied health professionals regarding its drug and vaccine therapies. MDBriefCase will provide programming under the contract throughout 2022 and 2023. The aforementioned contract’s total value is worth around $4.1 million. The revenue to be earned is based on the achieving of contract milestones and the company’s delivery of the applicable programming. The agreement encompasses Think’s content solutions along with MDBriefCase’s Learning Management System (LMS) to provide offerings of content, data services and essential software.

On May 26, Think Research announced updates to its cost optimization program to improve the Company’s profitability and operating cash flow.

Think expects to realize total annualized cost synergies of approximately $9 million by the end of fiscal 2022, including cost synergies realized to date. Think has recently created an internal team which aims to review all operations in order to ensure operating margins become optimized, whilst not affecting the growth targets of revenue. This operational review includes combining operations to gain efficiency and digitizing manual operations to save time and improve services. It is likely that Think’s future profitability profile will be improved by these measures, which will be pleasing to investors.

Think Research stock, however, has fallen by over 50% since the start of the year.

Fearured Image: Megapixl ©Lianna2013