After a series of M&A, CloudMD Software & Services Inc. (TSXV: DOC) seems to be looking now at the public sector to drive and diversify its already diversified revenue mix. The health tech firm announced today that it is establishing a public sector division to handle contracts with local government offices.
“The public sector is recognizing the importance of investing in mental health solutions that will reduce wait times, improve access with a lens on health outcomes,” said President Karen Adams.
One of the contracts that fall under the division touted by the firm is providing integration and technology services to the New York City Department of Education, covering over 1.2 million students. It also won a contract for its substance use disorder solution with North Carolina’s state-wide campaign against the opioid crisis.
The company is also putting under the new division its newly confirmed 107 contracts from its mental health support solutions that deal with public sector organizations. These cover up to 50,000 new employees under subscription services.
“These contracts provide meaningful revenue diversification for the Company and opportunities to accelerate technology and service integration,” the company said in its statement.
However, the company hasn’t disclosed yet any value pertaining to the said contracts under the public sector division.
The move follows the announcement in January 2022 of the company’s review of one of its acquisitions, VisionPros, after suppliers of the latter claim around $3.73 million in unpaid rebates and reassessments. This is shortly followed by the immediate resignation of its CFO Daniel Lee due to “personal reasons.”
The company had been on an acquisition spree, aiming to diversify its revenue streams. VisionPros is just one of the 14 acquisitions by the firm in the last more than twelve months.
The newly established public sector division is headed by Colin Andersen who joins the firm from being an executive at CloudMD’s recently acquired MindBeacon.
In its Q3 2021 financials, the company said it has increased its annual revenue run rate to over $185.0 million, higher than the $155.0 million it previously announced in the preliminary results.
While it recorded an increase in quarterly revenue, the firm’s gross margin for the quarter went down to 34.0% from 35.5% in Q2 2021 and 37.5% in Q3 2020. The company attributes this to the current revenue mix, with lower-margin businesses taking 32% of the revenue share.
CloudMD Software & Services Inc. last traded at $0.65 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
