Financial Performance - Net revenue for Q3 2023 was $7,779,000, a decrease of 34.3% compared to $11,950,000 in Q3 2022[21] - Net loss for Q3 2023 was $1,943,000, compared to a net loss of $2,339,000 in Q3 2022, showing an improvement of 15.9%[21] - Net income for the nine months ended September 30, 2023, was a loss of $7,007,000 compared to a loss of $4,747,000 in the same period of 2022[26] - Total revenue for the nine months ended September 30, 2023, was $26,143,000, a decrease of 24% from $34,594,000 in 2022[47] - Revenue for the quarter ended September 30, 2023, decreased by $4.2 million, or 35%, to $7.78 million compared to $11.95 million for the same quarter in 2022[190] Expenses and Costs - Operating expenses for Q3 2023 were $3,231,000, a reduction of 43.1% from $5,675,000 in Q3 2022[21] - Research and development expenses significantly decreased to $54,000 in Q3 2023 from $1,471,000 in Q3 2022, a drop of 96.3%[21] - Sales and marketing expenses increased to $1.1 million, or 14% of total revenue, for the quarter ended September 30, 2023, compared to $1.8 million, or 15%, for the same quarter in 2022[189] - General and administrative expenses for the quarter ended September 30, 2023, were $1.36 million, or 18% of total revenue, compared to $1.48 million, or 12%, for the same quarter in 2022[189] - Interest expenses increased by $0.36 million, or 655% to $0.42 million for the quarter ended September 30, 2023, compared to $0.05 million for the same quarter in 2022[198] Assets and Liabilities - Total assets decreased to $14,466,000 as of September 30, 2023, down from $20,763,000 as of December 31, 2022, representing a decline of 30.5%[19] - Total stockholders' equity decreased to $6,127,000 as of September 30, 2023, down from $12,388,000 as of December 31, 2022, a decline of 50.6%[19] - Total current liabilities increased to $6,852,000 as of September 30, 2023, compared to $6,148,000 as of December 31, 2022, an increase of 11.4%[19] - Cash and cash equivalents fell to $75,000 as of September 30, 2023, down from $1,341,000 as of December 31, 2022, a decrease of 94.4%[19] - Total cash, cash equivalents, and short-term investments decreased to $0.08 million as of September 30, 2023, from $4.14 million as of September 30, 2022[208] Operational Performance - The company reported a loss from operations of $1,524,000 in Q3 2023, compared to a loss of $2,247,000 in Q3 2022, reflecting a 32.2% improvement[21] - For the three months ended September 30, 2023, the total segment operating loss was $108, a decrease of 58% compared to a profit of $260 in the same period of 2022[49] - Software services reported an operating loss of $703 for the three months ended September 30, 2023, which is a 385% increase in loss compared to a loss of $145 in 2022[49] - Managed services and support generated $709 in operating profit for the three months ended September 30, 2023, down 49% from $1,397 in 2022[49] - Platform services saw a significant turnaround with an operating profit of $102 for the three months ended September 30, 2023, compared to a loss of $992 in the same period of 2022, marking a 110% change[49] Customer Concentration - The top customer contributed $4,168, accounting for 54% of revenue for the three months ended September 30, 2023, compared to $4,562 and 38% in the same period of 2022[50][51] - For the quarter ended September 30, 2023, revenue from the top five customers accounted for approximately 78% of total revenue, compared to 76% for the same period in 2022[95] Acquisitions and Goodwill - The Company acquired Cornerstone Advisory Services LLC for a total consideration of $7,000,000, allocated to net working capital of $4,700,000 and intangibles of $2,300,000[107] - The Company recognized a liability for the estimated fair value of contingent consideration related to the acquisition of Devcool, Inc., amounting to $1,487,000[90] - The total purchase price for the acquisition of Devcool Inc. was $7,773,000, which included $4,500,000 in cash and $700,000 in equity[109] - The company recorded $1,289,000 of goodwill from the acquisition, which is not tax deductible[112] Stock and Shareholder Information - Weighted average shares outstanding increased to 4,228,340 in Q3 2023 from 3,602,289 in Q3 2022, an increase of 17.4%[21] - The Company has reserved 600,000 shares of common stock under the "2020 Stock Incentive Plan"[92] - As of September 30, 2023, the Company had nil uninsured cash balances, down from $816,000 as of December 31, 2022[96] - As of September 30, 2023, there was $546 thousand of unrecognized share-based compensation expense related to unvested options, expected to be recognized over approximately two years[143] Future Outlook - The company expects to continue increasing its investment in sales and marketing to support business growth, which may lead to higher expenses in absolute dollar terms[180] - The company anticipates that its employee strength will increase due to investments in scaling the business[163] - The company is currently evaluating the impact of new accounting pronouncements on its consolidated financial statements[130]
Healthcare Triangle(HCTI) - 2023 Q3 - Quarterly Report