Newtopia (NEWU) Q2 2024 earnings summary

Executive summary

• Delivered industry-leading engagement and clinical outcomes in Q2 2024, with engagement rates exceeding 91% and some client outcomes at 105% of expected weight loss targets.

• Revenue declined to CAD 1.6 million in Q2 2024 from CAD 2.4 million in Q2 2023, mainly due to client program changes and discontinuations.

• Announced a strategic review process to explore alternatives such as a sale, merger, or strategic investment to maximize shareholder value and address indebtedness.

• Focused on growth drivers: expanding partnerships, integrating with GLP-1 drugs, and collaborating with health AI and clinical discovery innovators.

• Tech-enabled habit change platform with Full-Plus CDC accreditation, integrating genetic data and HIPAA-compliant technology, targeting chronic disease prevention and cost reduction for insurers and employers.

Financial highlights

• Q2 2024 revenue was CAD 1.6 million, down from CAD 2.4 million year-over-year.

• Gross profit was CAD 0.8 million, representing a 48% margin.

• Selling, general, and administrative expenses improved by 15% year-over-year to CAD 1.1 million.

• Adjusted operating expenses (excluding share-based compensation) improved by 18% to CAD 1.5 million.

• EBITDA loss was CAD 727,000, compared to a loss of CAD 436,000 in Q2 2023.

• Cash balance as of June 30, 2024, was CAD 0.52 million, with continued access to a revolving line of credit.

Outlook and guidance

• Actively reducing variable costs and accelerating new market opportunities to offset lost revenue.

• Engaged in strategic discussions with U.S. and Canadian payers to co-prescribe the platform with GLP-1 drugs.

• Management remains optimistic about strategic positioning in healthcare despite macro challenges, focusing on returning to EBITDA positive through pipeline execution.

• Broadened business development to new channels, including Medicare Advantage and fully insured populations.

• Recently strengthened balance sheet with a $2.5M financing extension.