Q3 2024 Numinus Wellness Inc Earnings Call

Good afternoon, and welcome to Numonyx wellness incorporated third quarter fiscal 'twenty 'twenty four results conference call.

Question and answer session for analysts and institutional investors will follow the formal remarks as a reminder, this call is being recorded I would now like to turn the conference call over to you to your host Craig Mcphail. Please go ahead.

Chris: Thank you Chris Good afternoon, everyone and thank you for joining us for our conference call today.

Discussing <unk> performance, our patent Nyquist, founder and CEO, and Melanie <unk> interim Chief Financial Officer.

Okay.

Chris: The following discussion May include forward looking statements that are based on current expectations and are subject to a number of risks and uncertainties.

The risks and uncertainties that could cause our actual financial operating results to differ significantly from our forward looking statements are detailed in our MD&A.

For the quarter ended May 31, 2024, and there are other Canadian securities filings available on SEDAR.

Chris: Numerous does not undertake to update or revise any forward looking statements to reflect new events or circumstances, except as required by law.

Our third quarter results were released earlier this afternoon.

We encourage you to review our earnings release, MD&A and financial statements available on our website and SEDAR.

As a reminder, all figures discussed today are in Canadian dollars.

I'll now turn the call over to Pete Nyquist, Chief Executive Officer.

Thanks, Craig and good afternoon, everybody I'd like to.

Start by extending our utmost gratitude that the work that we do is conducted on the unseated homeland of the musk Liam Squamish and stay with the people.

And on other sovereign indigenous lands in territories across Turtle Island.

Given this we are committed to a path towards reconciliation through continuous learning reciprocity and humility.

In Q3 fiscal 2023, we embarked on a transformative initiative aimed at building on our on our position as a difference maker in the field of psychedelic therapy to also achieve profitability from our existing operation.

This journey began with some difficult but necessary decision to right size of the company, we eliminated non revenue generating business lines.

And roles, including the closure of our numinous Bioscience business and our unprofitable clinic in Phoenix, Arizona <unk>.

Additionally, we reduced our head count by 60% focusing on focusing our remaining team on growth oriented initiatives and activities.

Our goal is to reduce our burn rate to under $1 million per month, we reached that milestone. This past October and after accounting for onetime costs in our second quarter.

Definitely maintain that target into the third.

In the past quarter, we further optimize our operations by transitioning out of our Canadian clinic operations through our agreement with field trip helped our Canadian therapists are allowed to we're allowed to transfer their contracts to field trip, leading to the closures of our clinics in Montreal, Toronto and Vancouver.

This transition represents a significant asset light opportunity for us.

Could serve as a model for future development.

We will endorse field trip health clinics and receive a referral fee for therapists, who joined our team.

We will also collaborate on marketing campaigns for training therapists and patient recruitment.

As a part of our recently launched numerous network, our former Canadian therapists have access to the latest therapeutic protocols, including ketamine and psychedelic assisted therapy, along with ongoing support and continuous learning opportunities.

Today, our operations are focused on you on our U S based clinics.

Therapists are fulltime numinous employees optimize to provide efficient high quality care focusing on ketamine in alternate therapies in.

In Q3 appointments in our U S clinics decreased by 6% over Q2 with new client appointments rising by 24% and ketamine is a provider of appointments increasing by 15%.

Since inception, our clinics have treated over 23000 patients and over that time, we have.

Developed unique expertise in psychiatric services medicine management cycle therapy in advanced therapies.

So part of that expertise is successfully navigating the complex U S insurance system to achieve reimbursement for treatments.

As well, we have built strategic relationships with leading psychedelic drug developers such as lycos compass pathway side than you saw in our mindset and Beckley and have and have been at the forefront of important clinical trials for MDMA psilocybin LSD in five mbo DMT.

After the end of the past quarter, we decided to further leverage the significant experience in clinical care and research with the proposed acquisition of Med <unk>.

<unk> is a Canadian company that has developed a medically medical focused artificial intelligence and machine learning platform to drive clinical efficiency.

<unk> technology can transform the expertise that we have honed in.

Patient care into an AI solution that will allow a therapist to be able to provide psychedelic assisted therapy care without investing in the significant infrastructure required.

We see this as a significant opportunity.

I mean is growing I don't accept as an accepted treatment for depression, PTSD and anxiety.

Auto Janssen pharmaceuticals.

Of ketamine doubled in sales over the past year, indicating indicating an increase in demand.

Therapists, however, our challenge to put in place the significant infrastructure and expertise to meet patient demand.

The numerous and med bright AI solution and provides the infrastructure in a SaaS model. This includes our call center to convert patients to new appointments Preauthorization systems to ensure insurance coverage drug protocols clinical notes to bill billing processes for relevant reimbursement code.

Woods, and aftercare process on reoccurring therapy protocols and reimbursement.

We believe this solution will be invaluable to therapists looking to provide ketamine therapy to their patients.

As other psychedelic compounds are approved for treatment the platform can be adapted to encompass new protocols.

This acquisition is an important milestone and is the culmination of our efforts over the past year to align numinous with revenue growth opportunities, we see in the U S mental health care sector with the delivery of high quality care to a large population of patients in need of drug assisted therapy and.

Mental health services.

We will rebrand to numerous intelligence once the acquisition closes to Mark this new strategic direction and focus our new name reflects our commitment to leveraging AI and data science to expand mental health services and solutions across the U S.

The acquisition is expected to close this August after completing a definitive agreement.

<unk> regulatory approvals and shareholder approval.

Melanie will now provide a financial overview of the quarter.

Yeah.

Thanks Peyton.

Good evening everyone.

This quarter's revenue was $4 3 million compared to $4 4 million in Q2, 2024, and $5 2 million in the same quarter last year.

The one 9% quarter over quarter decline is a result of a decrease in outpatient services services revenue due to the wind down of the Arizona clinics.

Revenue from our U S wellness clinics network with $3 4 million compared to $3 6 million in Q2, 2024, and $4 1 million in Q3 2023.

The year over year decline reflects our focus on optimizing our operations and the closure of the clinic and in Phoenix, Arizona.

Revenue from Cedar clinical research increased 10, 7% 2.8 million from <unk> 7 million in Q2 2024 due to the launch of a clinical trial with additional patient appointments.

As the timing of clinical trials creates variability and CCR its quarterly revenue a more illustrative way to look at CCR revenue is on a trailing 12 month basis.

CCR generated $3 8 million for the 12 months ending May 31, 2024, compared to $3 1 million for the 12 months ended May 31 2023.

Our practitioner training program has experienced solid growth since its launch with over 1650 learners on May 31, compared to 1400 at the end of Q2 2024, and just 400 in Q4 of fiscal 2023.

In Q3, Numinous Digital's revenue was $168830.

A 114% increase over $78837 in Q2 2024.

Gross margins in Q3 were 22% down from 24% in Q2 and 34, 5% in Q3 2023.

The decline in revenue is due to the Companys focus unprofitable operations.

Operating expenditures in Q3, excluding other items were $4 9 million compared to $6 3 million in Q2, a 22% decrease.

The decrease reflects the success of our cost cutting initiatives in the quarter and the quarter cash burn was less than 1 million per month.

Also reflective of our cost containment, our net loss from continuing operations. This quarter was $5 1 million or <unk> <unk> per share compared to $5 7 million and <unk> <unk> per share in the prior quarter.

We ended the quarter with $3 7 million of cash on hand, and $2 million of working capital.

Going forward, our focus will continue to drive high margin revenue and optimize our operating expenses in preparation for the proposed acquisition of med bright we have put in place a transition team to reduce costs preserve cash and work to increase revenue through the period before the transition is completed.

And with that ever be a lot of our financial results I'll turn the call back to paying for some closing remarks.

Yeah.

Thanks Melanie.

As you've heard today numerous continues to have success transitioning to a leaner and more efficient organization. The proposed med brake transaction will amplify the opportunities available by leveraging our unique expertise to create an AI enabled solution available to over 200000.

Mental health providers in the United States.

Closing the transaction opens up a growing high margin revenue opportunity for new munis and furthers our mission to provide transformative care.

And patients.

Four we open up the call up for live questions, we'll take some questions sent in to us by investors.

Hi, Peyton.

I have two questions sent to us through investors by email.

Here's the first one.

With the FDA Advisory committee voting against MDMA assisted therapy.

What is your outlook for it being approved this August by the FDA.

Thanks, Craig given the strong clinical results for MDMA assisted therapy, and the significant need for care, while we were disappointed by the decision by the Advisory Committee.

However.

We note that the FDA is not bound by the committee's recommendation and then about one third of the cases has approved treatments that the committee has recommended against if the FDA does not approve and then August I'm confident that the committee specific concerns can be addressed and the treatment can be approved.

Thanks.

The second one wondering what is the actual size of the opportunity with.

New minutes intelligence.

We consider the addressable market for AI enhanced psychedelic therapy clinic management to be significant regarding the patient population an estimated 14 million people have conditions appropriate for psychedelic consistent therapy and about 200000 mental health providers, Inc.

<unk> psychiatrist psychologist and clinical therapist can provide care, we see the offering of our solution, enabling providers to serve this population with reimburse care without the investment in infrastructure or time to gain expertise will be very attractive.

This also creates opportunities for us to introduce numerous training and support through the numerous network.

I believe with that we'll open up the call from analysts and institutional investors.

Operator.

Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad do you raise your hand and join the queue.

Your first question comes from Michael <unk> with Maxim Group. Please go ahead.

I paid and thank you for taking my questions today.

So I guess the first question I have is just with regards to the med breath the med bright acquisition.

The proposed platform that you would be offering is this completely new and what it needs to be developed or is this something that will be plug and play and then.

Well what about their existing.

By offering.

Yes, so a lot of a lot of what they've built is very complementary to what we have been also creating on the numinous network side.

And they've they've done a significant amount of work building out that platform with a couple of their products, particularly.

Their main product, which they have also been able to launch into a number of clinics already. So there is a platform. There that we can start to utilize immediately but then we can incorporate into the numinous clinics, certainly as we grow and expand theres opportunities to continue to grow and expand that platform as well.

But something that we don't we don't believe requires a lot of resources and frankly.

The data that we've been able to aggregate out of the numinous own clinics great.

Greatly enhances that model as well.

Chris: Alright, Thank you and then yet.

Any additional color on your expectations on timing for that to close.

Yes. So we're just working through the process right now needing to complete definitive agreement and then there is typically about a 60 day period after signing of the definitive agreement to.

Due to the shareholder vote on numerous inside but we should be able to see that that happened fairly quickly with the as I mentioned.

Proposed timeline of end of August early September.

Alright. Thank you and then just one last one for me that's more of a financial housekeeping question I noticed that.

In terms of clinic revenues that youre down by about 18%, but you did have.

6% growth sequentially on the clinic appointments could you kind of help quantify what drove that I guess disconnect.

Yes, so as I mentioned, the closure of the Arizona clinic.

Just just transitioning some of the services to some of the higher margin services that we've got but Melanie you might be able to provide some color there too.

Okay.

That was actually at the Appointment's went up and the revenue was because of the closure of the Arizona clinic and some.

Differences in some of the services that we provided.

Alright.

Thank you very much for taking my questions.

Thanks, Michael.

And we have no further questions at this time I will now turn the call back over to Peyton for closing remarks.

Okay.

Thanks, operator, and thank you everybody for joining our conference call today, we'll look forward to speaking with everybody in November when we report our fiscal fourth quarter and full year 2024 results.

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

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Speaker Change: Yeah.

Yes.

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Okay.

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