Digital Health Acquisition (DHAC) - 2024 Q2 - Quarterly Results

Business Update & Management Commentary VSee Health completed its de-SPAC transaction, becoming publicly traded, and expanded its market reach and service offerings through strategic partnerships and new product launches, with management emphasizing accelerated growth Business Highlights VSee Health successfully completed its de-SPAC transaction, becoming publicly traded, and expanded its service capabilities and market reach through strategic partnerships, new product launches, and significant client contracts in the second quarter of 2024 - Successfully completed de-SPAC transaction, merging VSee Lab and iDoc Telehealth into Digital Health Acquisition Corp., now publicly traded as VSee Health, enhancing acute care and tele-intensivist services[2] - Partnered with Ava Robotics for the development of a VSee Health-powered Ava robot to extend provider reach and offer personalized remote care in hospital intensive care units[2] - Launched Aimee, an innovative virtual healthcare, labs, and prescription drug service providing low-cost access to quality healthcare for patients regardless of insurance status[2] - Contracted with Seven Corners Correctional Health, operator of 24 federal prisons, to offer accessible, quality specialty care to the inmate population[2] - Expanded telehealth and billing services to major healthcare clients through a partnership with SkywardRx, including nonprofit, hospital, and Fortune 20 corporate clients[2] - Secured a virtual care purchasing agreement with Premier, Inc., expanding market reach and penetration in key healthcare markets[2] Management Commentary Management emphasized the company's commitment to innovative virtual care B2B solutions, highlighting the significance of becoming publicly traded and the merger for accelerating growth, technology investment, and customer acquisition - Co-CEO Imo Aisiku highlighted the successful transition from a SPAC to an operating company, emphasizing the public listing as a significant milestone for market access and leveraging strengths for expanded partnerships and service offerings, aiming to accelerate growth and technology investment[3] - Co-CEO Milton Chen noted VSee Health's growing recognition as a trusted brand due to robust telemedicine solutions, citing success in the Federal Bureau of Prisons and the launch of Aimee to develop community healthcare hubs, anticipating additional revenue opportunities in 2025 and beyond[3] GAAP Financial Results VSee Health saw revenue growth in Q2 and H1 2024, with increased operating expenses largely offset by tax benefits, resulting in reduced net losses Second Quarter 2024 Financial Results VSee Health reported a 33% increase in revenue for Q2 2024, driven by professional and technical fees, while operating expenses rose significantly due to business combination-related transaction costs, with net loss decreasing by 16% primarily due to a tax benefit Revenue (Q2 2024) Q2 2024 Revenue Performance | Metric | Q2 2024 (USD) | Q2 2023 (USD) | Change (%) | | :--------------------------- | :------------ | :------------ | :--------- | | Total Revenue | $1,700,000 | $1,300,000 | 33% | | Professional & Other Fees | | | 93% | | Technical & Engineering Fees | | | 290% | | Subscription Revenue | | | Slight Inc.| - Revenue increased by 33% year-over-year, primarily driven by a 93% increase in professional and other fees due to higher hardware purchases from new customers, and a 290% increase in technical and engineering fees from a higher volume of engineering, customizations, and integration services[4] Operating Expenses (Q2 2024) - Operating expenses for Q2 2024 increased by 69% compared to the prior-year quarter, mainly due to higher transaction expenses (legal, professional, advisory, consulting fees) related to the business combination[5] - The increase was also driven by higher general and administrative expenses due to increased reseller fees, partially offset by lower software costs from reduced headcounts and lower compensation and related benefits[5] Net Loss (Q2 2024) Q2 2024 Net Loss Performance | Metric | Q2 2024 (USD) | Q2 2023 (USD) | Change (%) | | :--------------- | :------------ | :------------ | :--------- | | Net Loss | $(0.3) million | $(0.4) million | (16%) | | Net Loss per Share | $(0.06) | $(0.09) | (33%) | - The 16% decrease in net loss was primarily driven by a tax benefit related to valuation allowance changes from the business combination and higher revenue, partially offset by increased operating expenses[6] Six Month 2024 Financial Results For the first half of 2024, VSee Health's revenue grew by 11%, primarily from professional and technical fees and the iDoc acquisition, despite a decline in subscription revenue, with net loss significantly decreasing by 62% due to a substantial income tax benefit Revenue (H1 2024) H1 2024 Revenue Performance | Metric | H1 2024 (USD) | H1 2023 (USD) | Change (%) | | :--------------------------- | :------------ | :------------ | :--------- | | Total Revenue | $3,200,000 | $2,900,000 | 11% | | Professional & Other Fees | | | 57% | | Technical & Engineering Fees | | | 57% | | Subscription Revenue | | | (6%) | - Revenue for the first half of 2024 increased by 11% year-over-year, driven by 57% increases in both professional and other fees (due to higher hardware purchases) and technical and engineering fees (due to a higher volume of services), as well as higher fees from the iDoc acquisition[7] - Subscription revenue declined by 6% due to churned enterprise customers in 2024 with little to no clinic usage, as some clients gradually shifted back to face-to-face consultations[7] Operating Expenses (H1 2024) - Operating expenses for the first half of 2024 increased by 13% year-over-year, primarily due to higher transaction expenses related to the business combination (legal, professional, advisory, consulting fees)[8] - General and administrative expenses also increased due to the iDoc acquisition and higher reseller fees, partially offset by lower software and business service costs from reduced headcounts and lower compensation and related benefits[8] Net Loss (H1 2024) H1 2024 Net Loss Performance | Metric | H1 2024 (USD) | H1 2023 (USD) | Change (%) | | :--------------- | :------------ | :------------ | :--------- | | Net Loss | $(0.3) million | $(0.9) million | (62%) | | Net Loss per Share | $(0.07) | $(0.19) | (63%) | - The 62% decrease in net loss was driven by an income tax benefit primarily related to valuation allowance changes from the business combination and higher revenue, partially offset by increased operating expenses[9] Cash and Cash Equivalents Cash and Cash Equivalents as of June 30, 2024 | Metric | Amount (USD) | | :--------------------- | :----------- | | Cash and Cash Equivalents | $1.1 million | Pro Forma Financial Results Pro forma results indicate slight revenue decreases for Q2 and H1 2024, with Q2 net loss increasing and H1 net loss remaining stable Unaudited Pro Forma Financial Information The unaudited pro forma financial information, combining VSee Health and iDoc operations as if the acquisition occurred at the beginning of 2023, shows a slight decrease in total revenues for both Q2 and H1 2024 compared to the prior year, and an increased net loss for Q2 2024, while H1 2024 net loss remained relatively stable Pro Forma Financial Summary | Metric | Q2 2024 (USD) | Q2 2023 (USD) | H1 2024 (USD) | H1 2023 (USD) | | :-------------------- | :------------ | :------------ | :------------ | :------------ | | Total Revenue | $2,701,485 | $2,769,241 | $5,837,245 | $6,314,200 | | Net Loss | $(1,791,264) | $(1,030,910) | $(2,002,771) | $(2,106,741) | | Net Loss per Share | $(0.12) | $(0.07) | $(0.14) | $(0.14) | - Pro forma total revenues decreased slightly to $2.7 million in Q2 2024 from $2.8 million in Q2 2023, and to $5.8 million in H1 2024 from $6.3 million in H1 2023[10] - Pro forma net loss for Q2 2024 increased to $1.8 million ($0.12 per share) from $1.0 million ($0.07 per share) in Q2 2023, while H1 2024 net loss was $2.0 million ($0.14 per share) compared to $2.1 million ($0.14 per share) in H1 2023[10] Company Information VSee Health provides a SaaS telehealth platform for specialized care, with a disclaimer on forward-looking statements due to inherent risks and uncertainties About VSee Health VSee Health operates as a SaaS platform enabling clinicians and enterprises to rapidly create and integrate telehealth workflows, focusing on patient disease state telemedicine and turnkey billing services, incorporating iDoc Telehealth Solutions for intensive, critical, and neuro care with 24/7 specialist support - VSee Health is a software-as-a-service (SaaS) platform designed to allow clinicians and enterprises to customize telehealth workflows without programming, enabling rapid mobile app creation or system integration into existing hospital operations[12] - The platform focuses on patient disease state telemedicine and turnkey billing services, integrating iDoc Telehealth Solutions for intensive care, critical care, and neuro solutions, providing 24/7/365 care coordination by neurointensivists, neurologists, and tele-radiologists[13] Forward-Looking Statements This section serves as a disclaimer regarding forward-looking statements, indicating that future performance may differ materially from historical results due to known and unknown risks and uncertainties, advising readers not to place undue reliance on these statements - The news release contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual performance to differ materially from expectations[14] - Readers should not place undue reliance on forward-looking statements, and VSee Health undertakes no obligation to publicly update or revise them[14] - More information on risk factors is available in VSee Health's periodic and current SEC filings[14] Condensed Consolidated Financial Statements Condensed consolidated financial statements reflect significant balance sheet changes post-business combination, showing increased assets and equity, alongside revenue growth and reduced net losses in operations due to tax benefits Condensed Consolidated Balance Sheets The condensed consolidated balance sheets as of June 30, 2024, and December 31, 2023, reflect significant changes following the business combination, including a substantial increase in total assets, primarily driven by goodwill and intangible assets, and a corresponding rise in total liabilities and stockholders' equity Key Balance Sheet Figures | Metric | June 30, 2024 (Unaudited) | December 31, 2023 | | :-------------------------- | :------------------------ | :---------------- | | Cash | $1,105,971 | $118,734 | | Accounts Receivable, net | $2,513,855 | $628,480 | | Total Current Assets | $5,166,549 | $827,134 | | Intangible Assets | $12,100,000 | — | | Goodwill | $59,900,694 | — | | Total Assets | $78,987,750 | $830,791 | | Total Current Liabilities | $22,879,867 | $4,243,438 | | Total Liabilities | $24,177,194 | $4,243,438 | | Total Stockholders' Equity | $54,810,556 | $(3,412,647) | - Total assets significantly increased from $830,791 as of December 31, 2023, to $78,987,750 as of June 30, 2024, largely due to the recognition of $12.1 million in intangible assets and $59.9 million in goodwill following the business combination[15] - Total liabilities rose from $4,243,438 to $24,177,194, with current liabilities increasing from $4,243,438 to $22,879,867, reflecting various new notes and payables[16] - Stockholders' equity shifted from a deficit of $(3,412,647) to a positive $54,810,556, driven by increased common stock and additional paid-in capital, despite an accumulated deficit[17] Condensed Consolidated Statements of Operations The condensed consolidated statements of operations for the three and six months ended June 30, 2024, show revenue growth driven by professional and technical services, alongside increased operating expenses due to transaction costs, with net loss decreasing significantly for both periods, primarily due to a substantial income tax benefit Key Income Statement Figures (Q2 & H1 2024 vs 2023) | Metric | Q2 2024 (USD) | Q2 2023 (USD) | H1 2024 (USD) | H1 2023 (USD) | | :-------------------------------------- | :------------ | :------------ | :------------ | :------------ | | Total Revenue | $1,711,566 | $1,290,223 | $3,207,561 | $2,886,491 | | Gross Margin | $1,224,926 | $815,936 | $2,334,668 | $1,836,882 | | Total Operating Expenses | $2,408,268 | $1,427,063 | $3,479,531 | $3,085,154 | | Net Operating Loss | $(1,183,342) | $(611,127) | $(1,144,863) | $(1,248,272) | | Benefit from Income Tax | $2,241,208 | $174,395 | $2,241,208 | $357,238 | | Net Loss | $(361,961) | $(428,581) | $(332,792) | $(884,600) | | Basic and Diluted Loss per Common Share | $(0.06) | $(0.09) | $(0.07) | $(0.19) | - Total revenue increased by 33% in Q2 2024 and 11% in H1 2024, driven by growth in professional services and technical engineering fees, partially offset by a decline in subscription fees for H1[18] - Operating expenses significantly increased by 69% in Q2 2024 and 13% in H1 2024, primarily due to transaction expenses related to the business combination[18] - Net loss decreased by 16% in Q2 2024 and 62% in H1 2024, largely attributable to a substantial income tax benefit related to valuation allowance changes from the business combination[18]