Healthcare Triangle(US:HCTI)2023-05-09 11:00Financial Performance - Net revenue for Q1 2023 was $9,838,000, a decrease of 11% compared to $11,056,000 in Q1 2022[22] - The net loss for Q1 2023 was $3,278,000, compared to a net loss of $2,011,000 in Q1 2022, representing a 63% increase in losses year-over-year[22] - Total revenue for the three months ended March 31, 2023, was $9,838,000, compared to $11,056,000 for the same period in 2022, reflecting a decrease of 11%[50] - Operating loss for Software Services segment was $1,135,000, a significant increase of 470% from a loss of $199,000 in the prior year[50] - Managed Services and Support segment reported an operating profit of $552,000, down 56% from $1,254,000 in the same quarter last year[50] - Total segment operating loss was $1,046,000, compared to a profit of $483,000 in the same quarter of 2022, marking a 317% decline[50] - The company reported a net income attributable to common stockholders of $(3,278) thousand for the three months ended March 31, 2023, compared to $(2,011) thousand for the same period in 2022[141] Assets and Equity - Total current assets decreased to $6,440,000 as of March 31, 2023, down from $7,749,000 at the end of 2022, a decline of 17%[20] - Total assets decreased to $18,860,000 as of March 31, 2023, down from $20,763,000 at the end of 2022, a decline of 9%[20] - Total stockholders' equity decreased to $9,303,000 as of March 31, 2023, down from $12,388,000 at the end of 2022, a decline of 25%[20] Expenses - Operating expenses for Q1 2023 were $4,802,000, slightly down from $4,868,000 in Q1 2022[22] - Research and development expenses decreased to $539,000 in Q1 2023 from $1,066,000 in Q1 2022, a reduction of 49%[22] - General and Administrative expenses rose to $1.63 million, representing 17% of total revenues, up from 12% in the previous year[183] - Sales and Marketing expenses increased to $1.76 million, accounting for 18% of total revenues, compared to 16% in the previous year[183] - Amortization expense for the quarter ended March 31, 2023, was $857,000, compared to $660,000 for the same quarter in 2022, reflecting a year-over-year increase of approximately 30%[96] Cash Flow and Liquidity - Cash and cash equivalents at the end of Q1 2023 were $267,000, down from $1,341,000 at the beginning of the period, a decrease of 80%[27] - Cash flows provided by operating activities were negative at $(1.605) million for the quarter ended March 31, 2023, compared to $0.350 million for the same quarter in 2022[209] - The company believes that existing cash and cash equivalents will be sufficient to meet working capital needs over the next 12 months[208] Customer Concentration - Revenue from the top customer accounted for 50% of total revenue, amounting to $4,930,000 for the three months ended March 31, 2023[51] - Revenue from the top five customers accounted for approximately 80% of total revenue for the quarter ended March 31, 2023, compared to 76% for the same period in 2022[92] - Accounts receivable from five major customers represented approximately 82% of total accounts receivable as of March 31, 2023, up from 72% as of December 31, 2022[92] Segment Performance - The company operates in three distinct segments: Software Services, Managed Services and Support, and Platform Services, with financial performance evaluated by the Chief Executive Officer[45][46] - Revenue from Software Services increased by $1 million, or 18%, to $6.5 million for the quarter ended March 31, 2023, compared to $5.5 million in the same quarter of 2022[197] - Revenue from Managed Services and Support decreased by $1.2 million, or 29%, to $3 million for the quarter ended March 31, 2023, compared to $4.2 million in the same quarter of 2022[197] Debt and Financing - The company has a credit facility with Seacoast business funding, with a balance of $2,945,000 as of March 31, 2023, compared to $2,412,000 at the end of 2022[118] - The company's debt-to-equity ratio increased to 0.32 as of March 31, 2023, compared to 0.20 as of December 31, 2022, indicating lower exposure to debts than equity[204] Acquisitions - The company acquired Cornerstone Advisory Services LLC for a total consideration of $7,000,000, with $4,700,000 allocated to net working capital and $2,300,000 to intangibles[105] - The acquisition of Devcool, Inc. had an aggregate purchase price of $777,293, which included $4,500 in cash and up to $2,500 in post-closing earnout payments based on performance targets[107][108] Employee and Operations - The company had a total of 55 full-time employees and 197 sub-contractors as of March 31, 2023[148] - The company anticipates an increase in employee strength due to investments in scaling the business and research and development[159] Tax and Compliance - The Company recognized a total income tax expense of $19 thousand for the quarter ended March 31, 2023, compared to $21 thousand for the same quarter in 2022[123] - The effective tax rate for the Company was 0% for both the quarter ended March 31, 2023, and the same quarter in 2022[123] Other Information - The company is classified as an "emerging growth company" and will remain so until certain revenue or debt thresholds are met, allowing for reduced disclosure obligations[43] - The company does not have any off-balance sheet arrangements or relationships with unconsolidated organizations as of March 31, 2023[213] - There were no changes to the internal control over financial reporting that materially affected the company's controls during the three months ended March 31, 2023[216]