ARCPOINT TO HOST CONFERENCE CALL TO PROVIDE BUSINESS UPDATE AND DISCUSS 2023 Q1 FINANCIAL RESULTS
Greenville, South Carolina, May 18, 2023 (GLOBE NEWSWIRE) — ARCpoint Inc. (TSXV: ARC) (the “Company” or “ARCpoint”) a leading US-based franchise system providing drug testing, alcohol screening, DNA and clinical lab testing services announces that it will host a conference call on Tuesday, May 23, 2023 at 3:15 pm Eastern time to review the Company’s 2023 Q1 financial results for the quarter ended March 31, 2023, and provide an operational update.
The dial-in number for the conference call is as follows:
Canada / USA Toll Free 1-800-319-4610
International Toll 1-604-638-5340
Callers should dial in 5 – 10 min prior to the scheduled start time and ask to join the ARCpoint call:
ARCpoint’s President and CEO, John Constantine commented “We are pleased to report that on a quarter over quarter basis, we increased revenues and narrowed losses. In particular, we are encouraged that over half of our franchise locations increased their B2B revenue versus the previous quarter”.
Bob Mann, who was recently appointed as the new President of the ARCpoint Franchise Group LLC, (“AFG”) a wholly owned US-subsidiary of the Company that operates ARCpoint’s franchise business, added “With a goal to further build on these gains, we are focused on executing the rollout of our Total Reporting and MyARCpointLabs systems along with the implementation of new business development strategies and partnerships to drive sales at the franchisee level. These initiatives include the introduction of new field marketing resources and a national sales program to create new B2B leads for our franchisees”.
The Company has now largely completed its new, integrated technology platform, which includes Total Reporting, the Company’s B2B portal. Total Reporting allows ARCpoint’s franchisees to market more services through an efficient, integrated platform that is much easier for B2B customers to use. With Total Reporting employers can login to one platform and manage all their drug testing and background check needs, regardless of what type of organization they are. Many companies login to multiple systems to try to manage their employment needs today. The proprietary system is owned by ARCpoint allowing for flexibility and future development. Currently, about one-third of the AFG network has signed up and trained on the Total Reporting system.
As at March 31, 2023, the Company had total cash on hand of approximately US$5.4 million, comprised of US$4.6 million in unrestricted cash and cash equivalents and US$800 thousand in Brand Fund restricted cash. Use of Brand Fund restricted cash is at the Company’s discretion and is used to increase sales and the brand presence of the Company’s entities and franchisees.
Summary of 2023 Q1 Financial Results
All results below are reported under International Financial Reporting Standards and in US dollars.
- Total revenue for the three months ended March 31, 2023 was $1.7 million compared to $5.6 million for the three months ended March 31, 2022 and $1.3 million for the three months ended December 31, 2022. During Q1 2022, high complexity PCR testing and low complexity rapid tests volumes were significantly higher due to the COVID pandemic.
- Net loss for the three months ended March 31, 2023 was $2.1 million compared to net income of $684 thousand for the three months ended March 31, 2022 and negative $6.1 million for the three months ended December 31, 2022.
- Operating cash flow for the three months ended March 31, 2023 was negative $1.2 million compared to positive $1.8 million for the three months ended March 31, 2022 and negative $0.3 million for the three months ended December 31, 2022.
- EBITDA for the three months ended March 31, 2023 was negative $1.8 million compared to positive $1.1 million for the three months ended March 31, 2022 and negative $5.8 million for the three months ended December 31, 2022.
- Adjusted EBITDA for the three months ended March 31, 2023 was negative $1.1 million compared to positive $1.4 million for the three months ended March 31, 2022 and negative $1.3 million for the three months ended December 31, 2022.
DEFINITION AND RECONCILIATION OF NON-IFRS FINANCIAL MEASURES
The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measures.
As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company’s businesses include “EBITDA” and “Adjusted EBITDA”.
The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the IFRS measures. These non-IFRS measures are calculated as follows:
“EBITDA” is comprised as income (loss) less interest, income tax and depreciation and amortization. Management believes that EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See “Unaudited Interim Condensed Consolidated EBITDA and Adjusted EBITDA Reconciliation” appended to this press release for a quantitative reconciliation of EBITDA to the most directly comparable financial measure.
“Adjusted EBITDA” is comprised as income (loss) less interest, income tax, depreciation, amortization, share-based compensation, Brand Fund revenue and expense timing difference, change in fair value of warrant liability, foreign exchange gain (loss) and other income / expenses not attributable to the operations of the Company. Management believes that EBITDA is a useful indicator for investors, and is used by management, in evaluating the operating performance of the Company. See “Unaudited Interim Condensed Consolidated EBITDA and Adjusted EBITDA Reconciliation” appended to this press release for a quantitative reconciliation of Adjusted EBITDA to the most directly comparable financial measure.
A reconciliation of how the Company calculates EBITDA and Adjusted EBITDA is provide in the table appended to this press release.
For more information, please see the interim financial statements (the “Financial Statements”) and the interim Management Discussion & Analysis of the Company for the three-month period ended March 31, 2023 under the Company’s profile at www.sedar.com.
About ARCpoint Inc.
ARCpoint is a leading US-based franchise system providing drug testing, alcohol screening, DNA and clinical lab testing, corporate wellness programs, and employment and background screening, among other services. The Company is based in Greenville, South Carolina, USA. ARCpoint Franchise Group LLC, formed under the laws of the state of South Carolina in February 2005, is the franchisor of ARCpoint Labs and supports over 130 independently owned locations. ARCpoint sells franchises to individuals throughout the United States and provides support in the form of marketing, technology and training to new franchisees. ARCpoint Corporate Labs LLC develops corporate-owned labs committed to providing accurate, cost-effective solutions for customers, businesses and physicians. AFG Services LLC serves as the innovation center of the ARCpoint group of companies as it builds a proprietary technology platform and a physician network to equip all ARCpoint labs with best-in-class tools and solutions to better serve their customers. The platform also digitalizes and streamlines administrative functions such as materials purchasing, compliance, billing and physician services for ARCpoint franchise labs and other clients.
For more information, please contact:
Jason Tong, Chief Financial Officer
Phone: (604) 889-7827
E-mail: [email protected]
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press release.
Unaudited Interim Condensed Consolidated EBITDA and Adjusted EBITDA Reconciliation
(Expressed in United States Dollars)
(a) Finance expense comprised of interest on bank loans, notes payable and lease liabilities (see Financial Statements).
(b) Share-based compensation expense comprised of non-cash compensation (see Financial Statements).
(c) Other income (expenses) comprised of government assistance benefit received pertaining to the COVID-19 pandemic and interest on notes receivable (see Financial Statements, note 6).
(d) One-time legal and professional fees refer to expenses and other transactional costs incurred for financings and restructuring completed in 2022 and 2023 (see Financial Statements).
(e) The Group operates a Brand Fund established to collect and administer funds contributed for use in advertising and promotional programs designed to increase sales and enhance the reputation of the Group and its franchisees. The Group reports contributions and expenditures on a gross basis on the Group’s statement of profit and loss. Brand Fund contributions are recognized as revenue when invoiced, as the Group has full discretion on how and when the Brand Fund revenues are spent. Brand Fund revenue received may not equal advertising expenditures for the period due to timing of promotions and this difference is recognized to earnings. This adjustment is made to normalize for the timing difference of the Brand Fund revenues and Brand Fund expenditures.