Q2 2026 Vitalhub Corp Earnings Call

August 7, 2026

Speaker #1: You have joined the meeting as an attendee and will be muted throughout the meeting.

Speaker #2: Hi, good morning everyone. And thank you for joining us for a 2026 Q2 conference call. With me on the call today are Vitalhub CEO Dan Matlow, and CFO Brian Gothenberg.

Christian Sgro: Hi. Good morning, everyone, and thank you for joining us for our 2026 Q2 conference call. With me on the call today are Vitalhub's CEO, Dan Matlow, and CFO, Brian Goffenberg. After our prepared remarks, we will open up the line to questions from analysts. Please press star one or use the raise hand function to indicate that you would like to ask a question. Before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, please review the forward-looking statements disclosure in the earnings press release and in our SEDAR filings. As well, our commentary today will include adjusted financial measures, which are non-IFRS measures.

Speaker #2: After our prepared remarks, we will open up the line to questions from analysts. Please press *1 or use the raise hand function to indicate that you would like to ask a question.

Speaker #2: Before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements that involve risks and uncertainties.

Speaker #2: Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, please review the forward-looking statements disclosure and the earnings press release and in our CDAR filings.

Speaker #2: As well, our commentary today will include adjusted financial measures, which are non-IFRS measures. These should be considered as a supplement to, and not a substitute for, IFRS measures.

Christian Sgro: These should be considered as a supplement to and not a substitute for IFRS measures. Reconciliations between the two can be found in our SEDAR filings. With that, I'll hand the call over to Brian to go over financial highlights for the quarter. Over to you, Brian.

Speaker #2: Reconciliations between the two can be found in our CDAR filings. With that, I'll hand the call over to Brian to go over financial highlights for the quarter.

Speaker #2: Over to you, Brian.

Speaker #3: Thank you, Christian. Good morning, everyone, and thank you for joining the call today. We are pleased to report the results for the Q2 of 2026.

Brian Goffenberg: Thank you, Christian. Good morning, everyone, and thank you for joining the call today. We are pleased to report the results for Q2 2026. Vitalhub reached a new milestone this quarter, exceeding CAD 100 million of annual recurring revenue. We closed June at CAD 101.5 million, representing 10% organic growth over the prior year. adjusted EBITDA margin continued to increase sequentially at 26% in Q2. Some of the key financial highlights for the quarter are as follows: We report a total revenue of CAD 31.7 million, an increase of 33% year-over-year. Recurring revenue or term license maintenance and support segment was CAD 24.5 million, or 77% of total revenue. Virtual care term license revenue was CAD 2.3 million. Perpetual license revenue was CAD 800,000. Services, hardware, and other revenue was CAD 4.1 million, compared to CAD 2.7 million in the prior year period.

Speaker #3: Vitalhub reached a new milestone this quarter, exceeding $100 million of annual recurring revenue. We closed June at $101.5 million representing 10% organic growth over the prior year.

Speaker #3: Adjusted EBITDA margin continued to increase sequentially at 26% in the Q2. Some of the key financial highlights for the quarter are as follows: we reported total revenue of $31.7 million and increase of 33% year over year.

Speaker #3: Recurring revenue, or term license, maintenance and support segment, was $24.5 million, or 77% of total revenue. Virtual term revenue, perpetual license revenue was $800,000. Services, hardware and other revenue was $4.1 million, compared to $2.7 million in the prior year period.

Speaker #3: Our gross margin was 79% of revenue compared to 81% in the prior year period. Adjusted EBITDA for the quarter was $8.2 million, or 26% of revenues, as we continue to gain synergies from the acquisitions of induction and Nivari.

Brian Goffenberg: Our gross margin was 79% of revenue, compared to 81% in the prior year period. Adjusted EBITDA for the quarter was CAD 8.2 million or 26% of revenues as we continue to gain synergies from the acquisitions of Induction and Novari, compared to CAD 6.3 million or 26% of revenue in the prior year period. We closed the quarter with CAD 136.5 million of cash and investments and no debt. We had strong cash conversion this quarter. Our cash balance increased by over CAD 15 million this quarter, benefiting from collection activity and continued platform integration. Subsequent to quarter end, we completed the acquisition of Buddy Healthcare. Post the transaction, we continue to have over CAD 120 million of cash that we are ready to deploy on our M&A strategy. As well, with the addition of Buddy Healthcare, pro forma ARR as of 30 June 2026, would have been approximately CAD 106 million.

Speaker #3: Compared to $6.3 million, or 26% of revenue, in the prior year period. We closed the quarter with $136.5 million of cash and investments, and no debt.

Speaker #3: We had strong cash conversion this quarter, our cash balance increased by over $15 million this quarter, benefiting from collection activity and continued platform integration.

Speaker #3: Subsequent to quarter end, we completed the acquisition of Buddy Healthcare, and post the transaction we continued to have over $120 million of cash that we are ready to deploy on our M&A strategy.

Speaker #3: As well, with the addition of Buddy Healthcare, proforma ARR as of June 30, 2026, would have been approximately $106 million. With that, I'd like to hand the call over to Dan for an update on the business.

Brian Goffenberg: With that, I'd like to hand the call over to Dan for an update on the business.

Speaker #4: Thanks, everyone. Welcome today. I just want to reflect in back that it's exciting to see us get over $100 million of recurring, and I know our people and our staff were really excited about that.

Christian Sgro: Thanks, everyone. Welcome today. Just on reflecting back that it's exciting to see us get over CAD 100 million of recurring, I know our people and our staff, we're really excited about that. I think when we started this 8, 9 years ago, that was the goal and it's achieved. Just take another one off of the bucket list, we continue to move forward.

Speaker #4: I think when we started this 8, 9 years ago, that was the goal, and it's achieved. So it just takes another one off of the bucket list, and we continue to move forward.

Speaker #4: Just a little bit about the Buddy acquisition. Just before I get into some of the other things, we're really excited about that. It's an organization that we've been speaking to the technology is really entered into the UK with it, but it gives us a really strong digital backdoor solution.

Dan Matlow: Just a little bit about the Buddy acquisition just before I get into some of the other things. We're really excited about that. It's an organization that we've been speaking to for 4 years. The technology is really strong. They're a group that has entered into the UK with it gives us a really strong digital backdoor solution. We already have a very good digital front door solution with Zesty that is moving through our markets. Our customers have been asking us to say, That's good that you can get us into the hospital, into the setting, but what about after we leave? We want to continue to communicate with you. Our plans will be to integrate that with that backdoor solution. It also fits in nice with the Strata solution, which does the discharge process.

Speaker #4: So, we already have a very good digital front door solution with Zesty that is moving through our markets. And our customers have been asking us, saying, "That's good that you can get us into the hospital, into the setting, but what about after we leave?"

Speaker #4: We want to continue to communicate with you." So our plans will be to integrate that with solution. It also fits in nice with the Strata solution, which does the discharge process.

Speaker #4: And now we've got a way to communicate with the patients as we go through that discharge. So we expect that once we get the technology, I'll integrate it and so forth. That will be a good addition to our cross-sell methodology.

Dan Matlow: Now we've got a way to communicate with the patients as we go through that discharge. We expect, once we get the technology all integrated and so forth, that will be a good addition into our cross-sell methodology. It's good people, great technologies, and we're excited to add that piece onto it. In respect to the quarter, in terms of the numbers, you see the recognized recurring growth. Services revenue, a little bit behind the previous quarters, but still reflects that. Services revenue is always tough to nail at 100%. I think we had a CAD 5 million quarter a couple quarters ago and down here. It comes in ebbs and flows, just based on revenue recognition and how that gets delivered to the customer. We're happy with that. We were happy with the way the virtual care, our renewal process came through.

Speaker #4: So it's good people, great technologies, and we're excited to add that piece onto it. In respect to the quarter, in terms of the numbers, you see the recurring recognized recurring grow services revenue a little bit behind the previous quarters, but still reflects that.

Speaker #4: Services revenue is always tough to nail at 100%. I think we had a $5 million quarter, a couple of quarters ago, and down here it comes and ebbs and flows.

Speaker #4: Just based on revenue recognition and how that gets delivered to the customer. So we're happy with that, and we were happy with the way the virtual care renewal process came through about 85% to 90% of that attend anywhere.

Dan Matlow: About 85% to 90% of that Attend Anywhere renewal process comes at the end of March, and as you can see, they held up pretty hard for that. We're happy with those outcomes. Revenue contribution came from really all of our products, but mainly from the Zesty and the two care coordination products, the Strata and the Novari product. Novari continues to move through Canada, but what we're really excited about is the momentum it's starting to get a little bit in our UK marketplaces and other markets. It's a unique solution and we're excited and think it has great opportunity to do that. The revenue number was offset by still some challenges with our SHREWD product and the SCC, that's the system control centers with the ICBs, and the FDP and the Palantir-based solutions, along with the mergers and acquisitions.

Speaker #4: Renewal process comes at the end of March, and as you can see, the ARR held up pretty hard for that. So we're happy with those outcomes.

Speaker #4: Revenue contribution came from really all of our products, but mainly from the Zesty and the Q2 care coordination products, the Strata and the Nivari product.

Speaker #4: We're starting to Nivari continues to move through Canada, but we're really excited about is the momentum it's starting to get a little bit in our UK marketplaces, and a little in other markets.

Speaker #4: But it's a unique solution, and we're excited and think it has great opportunity to do that. The revenue number was offset by still some challenges with our SHREW product and the SCC—that's system control centers with the ICBs.

Speaker #4: And the FTP and the Palantir-based solutions, and along with the mergers, and acquisitions. So we had some customers that I'm going to say suspended use, during the quarter, waiting for the outcome of what's happening with the FTP and Palantir situation just to refresh people.

Dan Matlow: We had some customers that, I'm going to say, suspended use during the quarter, waiting for the outcome of what's happening with the FDP and Palantir situation. Just to refresh people, the NHS has a national contract for Palantir, but there's a break clause in that contract in Q1 of 2027, and it's right up at the parliamentary level, and indications are suggesting that product will be getting removed and hopefully that will continue that momentum for us on that SHREWD product through the UK marketplaces. In addition to that, we still have renewals coming through, so it's just some of our cases. In other cases, they are renewing, it just depends on the ICB and the approach. It's a little bit just up in the flux and we keep working on it.

Speaker #4: The NHS has a national contract for Palantir, but there's a break clause in that contract in Q1 of 2027, and it's right up at the parliamentary level, and indications are suggesting that that product will be getting removed, and hopefully that will continue that momentum for us on that shrew product.

Speaker #4: Through the UK marketplaces, in addition to that, we still have renewals coming through. So it's just some of our cases and other cases they are renewing, it just depends on the ICB and the approach.

Speaker #4: So it's a little bit just up in the flux, and we keep working on it. But even with that, we see a really good pipeline of all of our other solutions, and still expect to continue with our organic growth profile.

Dan Matlow: Even with that, we see a really good pipeline of all of our other solutions and still expect to continue with our organic growth profile. We've introduced AI products into the marketplaces. We have the protocoling solution that started in the Novari product, but we're starting to move that into other products, and we're starting to see some revenue streams from that. We're really excited about our transcription solutions for our community services-based work. We've been working on that for about a couple of quarters. It's now in the hands of customers to get ratification on that, and we expect that to start hitting the revenue streams hopefully end of this year, but definitely going into next year. We expect that to continue on that place. We're getting close to the complete integration of the Novari and the Induction transaction.

Speaker #4: We've introduced AI products into the marketplaces. There's two we have the protocoling solution that started in the Nivari product, but we're starting to move that into other products, and we're starting to see some revenue streams from that.

Speaker #4: And we're really excited about our transcription solutions for our community services-based work. We've been working on that for about a couple of quarters. It's now in the hands of customers to get ratification on that, and we expect that to start hitting the revenue streams—hopefully end of this year, but definitely going into next year.

Speaker #4: We expect that to continue on that place. We're getting close to the complete integration of the Nivari and the induction transaction, and as you can see, our thesis for both of those two large acquisitions have come to fruition.

Dan Matlow: As you can see, our thesis for both of those two large acquisitions have come to fruition. Our adjusted EBIT is back to 26%. We are generating some pretty good cash flow. I think I look back about six quarters ago, we were generating about CAD 5 million of adjusted EBITDA, and we are up over CAD 8 million and our goal is to continue to get that to grow. That has always been the thesis of the company. I know there are a lot of question marks by people saying, "When we did those two acquisitions, both of those were losing money at the time of that, and we have managed to integrate them. They are producing new organic revenue and they are adding to the bottom line pretty nicely. We are excited about what our accomplishment was on that, and we continue to still work on it.

Speaker #4: Our adjusted EBIT is back to 26%. We're generating some pretty good cash flow. I think I look back about six quarters ago, we were generating about $5 million of adjusted EBITDA.

Speaker #4: And we're up over $8 million, and our goal is to continue to get that to grow. That's always been the thesis of the company.

Speaker #4: So I know there are a lot of question marks, with people saying, "Hey, can you—when we did those two acquisitions, both of those were losing money at the time of that, and we've managed to integrate them. They're producing new organic revenue, and they're adding to the bottom line pretty nicely." So we're excited about what our accomplishment was on that, and we continue to still work on it, but it's getting toward the visibility in terms of trying to get that number back up to the high 20s, which we're at.

Dan Matlow: It is getting towards the visibility in terms of trying to get that number back up to the high 20s, which we are at. I also just want to talk about the NCIB. I know as we go through and have met investors, people have asked about that. We have put it in place. We do think our financial results will continue to improve. The stock to some degree, staying still. We think it is a good value for us, with lots of cash, to start looking at buying back our own stock. We decided as a board to put that in place, and we expect to use it and as we see how the stock is reflecting and so forth. We do have it in place, and we are working to do that. We continue to work on M&A deals.

Speaker #4: I also just want to talk about the NCIB. I know as we go through and have met investors, people have asked about that. We have put it in place.

Speaker #4: We do think our financial results have continued to improve the stock to some degree, staying still. We think it is a good value for us to with lots of cash to start looking at buying back our own stock.

Speaker #4: So, we decided as a board to put that in place, and we expect to use it as we see how the stock is reflecting and so forth.

Speaker #4: So, we do have it in place, and we're working to do that. We continue to work on M&A deals. We have some large things that we're looking at, and some small things.

Dan Matlow: We have some large things that we are looking at and some small things. The activity still seems to be there in that marketplace, and we continue to go, and we do expect to do more M&A through 2026 and forward. Yeah, we are happy where we are as a company. We are making money. We are growing. We are adding customers. We have got lots of cash for M&A, and we think we are in a good position. I think we continue to prove our business model, and we are happy with what we have accomplished here. Are there any questions?

Speaker #4: But the activity still seems to be there in that marketplace, and we continue to go and we do expect to do more M&A through 2026.

Speaker #4: And, going forward, we're happy with where we are as a company. We're making money, we're growing, we're adding customers, we've got lots of cash for M&A, and we think we're in a good position.

Speaker #4: And I think we continue to prove our business model, and we're happy with what we've accomplished here. Are there any questions?

Speaker #1: Great. Thanks, Dan. We'll now open up the line to questions from analysts. Please press star one or use the raise hand function if you would like to ask a question.

Christian Sgro: Great. Thanks, Dan. We will now open up the line to questions from analysts. Please press star one or use the raise hand function if you would like to ask a question. Today's first question comes from Gavin Fairweather with ATB Cormark. Gavin, your line is open.

Speaker #1: Today's first question comes from Gavin Fairweather with ATB Cormark. Gavin, your line is open.

Speaker #2: Oh, hey, good morning. Thanks for taking my questions. Maybe just on e-Referral in the UK, Dan, you mentioned that I think you've had some marquee wins in the UK market, which is great.

Gavin Fairweather: Oh, hey. Good morning. Thanks for taking my questions. Maybe just on eReferral in the UK, Dan, you mentioned it. I think you've had some marquee wins in the UK market, which is great. Curious if you've been able to uncover any funding envelopes for eReferral or if this is coming out of general budgets. Do you see the potential for this to become a more strategic priority at the NHS level with some bigger funding attached?

Speaker #2: Curious if you've been able to uncover any funding envelopes for ear referral, or if this is coming out of general budgets? And do you see the potential for this to become a more strategic priority at the NHS level, with some bigger funding attached?

Speaker #4: Yeah, I do think the NHS is definitely like other organizations is looking to integrate and do a lot of different things. I think if you looked at the a lot of the parliamentary-based approaches and things the NHS is integrating into social care and integrating into aftercare and rehab facilities has become a big issue, and we're expecting that to help with the strategy-based solutions to do that.

Dan Matlow: Yeah, I do think the NHS is definitely, like other organizations, is looking to integrate and do a lot of different things. I think if you looked at a lot of the parliamentary-based approaches and things, the NHS is integrating into social care and integrating into aftercare and rehab facilities has become a big issue, and we're expecting that to help with the Strata-based solutions to do that. We know by looking at other markets around the world that eReferral is a needed aspect of it, and we know that the NHS and the UK is behind relative to other places of the world, Canada included, in those particular markets. We can see the reactions to if we get to the right people on what the power of the solution does and how it can automate some of those things.

Speaker #4: We know by looking at other markets around the world that e-referral is a needed aspect of it, and we know that the NHS and the UK other places of the world, Canada included.

Speaker #4: In those particular markets. And we can see the reactions to if we get to the right people on what the power of the solution does and how it can automate some of those things.

Speaker #4: So, it's like anything else in our market—it's trying to get momentum. We closed our first deal about six to eight months ago, and that's gone live.

Dan Matlow: It's like anything else in our market, is trying to get momentum, and we closed our first deal about 6, 8 months ago, and that's gone live. The natural process is referrals don't necessarily stay in 1 region. They cross other regions. Of course, the 2 regions next to this region have seen what this 1 region is doing, so it only makes sense that those other 2 regions are now interested, and we're looking at closing some business with those regions. We're starting to see the behavior that we want in the NHS for those referral-based products. Our sales force is pretty focused on referral, that marketplace, and we are seeing available money for this, but business case is very easily justified for it.

Speaker #4: And the natural process is referrals don't necessarily stay in one region; they cross into other regions. So, of course, the two regions next to this region have seen what this one region is doing.

Speaker #4: So it only makes sense that those other two regions are now interested in we're looking at closing some business with those regions. So we're starting to see the behavior that we want in the NHS for those referral-based products.

Speaker #4: And our Salesforce is pretty focused on referral of that marketplace, and we are seeing available money for this. The business case is very easily justified for it.

Speaker #2: It's great, appreciate that. And then just on Buddy, I've seen Finland's healthcare described as pretty digitally mature. I'm curious what products you think have maybe greenfield opportunities in Finland where maybe there isn't a big amount of competition.

Gavin Fairweather: That's great. Appreciate that. Just on Buddy, I've seen Finland Healthcare described as pretty digitally mature. I'm curious what products you think have maybe greenfield opportunities in Finland where maybe there isn't a big amount of competition.

Speaker #4: Yeah, I think they have a similar structure to regional-based groups, and they've connected regions pretty nicely. Again, we think there's opportunity for the referral-based projects within the Scandinavian-based marketplaces.

Dan Matlow: I think they have a similar structure to regional-based groups, and they've connected regions pretty nicely. Again, we think there's opportunity for the referral-based products within the Scandinavian-based marketplaces. We also see opportunities for the Intouch-based suite of products in those marketplace. Those would be the ones that we would primarily focus on. Similar markets and our group has some pretty good connections to that. The Buddy product has also done some work in Germany, which is interesting, and they've done some work in that marketplace. Again, the biggest area where we see Buddy really having opportunities would be in the Canadian and the UK marketplaces, and those are the areas that we focused on. Canada still is lagging behind on the digital backdoor-based solutions, and this is a pretty comprehensive one. The UK is definitely lagging behind on the digital backdoor solutions.

Speaker #4: We also see opportunities for the in-touch-based suite of products in those marketplaces. So those would be the ones that we would primarily focus on.

Speaker #4: But yeah, similar markets and our group has some pretty good connections to that. The buddy product is also done some work in Germany, which is interesting, and they've done some work in that marketplace.

Speaker #4: Again, the biggest area where we see buddy really having opportunities would be in the Canadian and the UK marketplaces and those are the areas that we focused on.

Speaker #4: Canada still is lagging behind on the digital backdoor-based solutions, and this is a pretty comprehensive one. The UK is definitely lagging behind on the digital backdoor solutions.

Speaker #4: They've really focused on the front door. So, we think we've got a solution to help fill that gap, and we'll continue to move in that direction.

Dan Matlow: They've really focused on the front door. We think we got a solution to help fill that gap, and we'll continue to move in that direction.

Speaker #2: Great. And then just lastly for me on the Ontario Health deal, can you just discuss the contribution this quarter to ARR growth and how would you describe the how ramped up you are on ARR versus the initial scope on that deal?

Gavin Fairweather: Great. Then just lastly from me on the Ontario Health deal, can you just discuss the contribution this quarter to ARR growth, and how would you describe how ramped up you are on ARR versus the initial scope on that deal?

Dan Matlow: I think it's adding somewhere between CAD 500,000 to CAD 1 million on a quarterly basis, and we expect that to continue on a ramp up over the next couple of years type of thing.

Speaker #4: I think we're I think it's adding somewhere between 500,000 to a million on a quarterly basis, and we expect that to continue on a ramp-up over the next couple of years type of thing.

Speaker #2: Thanks so much for passing on.

Gavin Fairweather: Thanks so much. I'll pass the line.

Speaker #1: Thank you, Gavin. The next question comes from Doug Taylor with National Bank. Doug, your line is open.

Christian Sgro: Thank you, Gavin. The next question comes from Doug Taylor with National Bank. Doug, your line is open.

Speaker #5: Yeah, thank you. Good morning. I wanted to drill down a little bit more on the UK market. Obviously, the growth there has been flat, with some puts and takes.

Doug Taylor: Yeah, thank you. Good morning. I wanted to drill down a little bit more on the UK market. Obviously, the growth there has been flat with some puts and takes. The question is, with the impact to SHREWD, some of the pause that you're talking about, is that something that is reflected in the net ARR growth and you've outgrown it through some other cross-selling? Perhaps you could help us quantify that.

Speaker #5: So the question is with the impact to shrewd some of the pause that you're talking about, is that something that is reflected in the net ARR growth?

Speaker #5: And you've outgrown it through some other cross-selling and perhaps you could help us quantify that. So we can.

Dan Matlow: Yeah, we definitely took some ARR reduction in the quarter with some of the SHREWD work. That's been offset by other products in that particular marketplace. The net is the number that we've gotten here. I don't have the exact numbers on my fingertips here, Doug. Yeah, there's some of that has gone on.

Speaker #4: Yeah, we definitely took some ARR reduction in the quarter with some of the shrewd work. But that's been offset by other products in that particular marketplace.

Speaker #4: So we're the net is the number that we've gotten here. I don't have the exact numbers, I might fingertips here, Doug. But yeah, there's some of that that has gone on.

Speaker #5: And so is the idea here that if you get some sort of resolution on the situation as it relates to Palantir, some of that might rebound or impact your finances next year?

Doug Taylor: Is the idea here that if you get some sort of resolution on the situation as it relates to Palantir, some of that might rebound-

Dan Matlow: We're Yeah

Doug Taylor: impact your finances next year?

Speaker #4: That's what we're hoping. We're each customer has we're really got two different scenarios that are cooking in here. One is we got these new ICBs that have come together and formed.

Dan Matlow: That's what we're hoping. We've really got two different scenarios that are cooking in here. One is, we got these new ICBs that have come together in form. There's all new people in these particular groups, funding isn't really set up in some of these appropriately. They're going like, "Whoa, hang on, there's a renewal here. What's going on here? We got FDP, we're just going to hold here for a couple quarters here till we see what's going on, reconvene this thing." It's not like they're putting FDP in these places, all of them. They're just saying, "We've got to suspend this while." In other cases, they're just going on as business as usual, and they're renewing their contract. We hope within the next couple of quarters to get resolution of that.

Speaker #4: So there's all new people in these particular groups. And then funding isn't really set up in some of these appropriately. So they're going like, whoa, hang on, there's a renewal here.

Speaker #4: What's going on here? And we got FTP. We're just going to hold here for a couple of quarters here until we see what's going on.

Speaker #4: And then reconvene this thing. It's not like they're putting FTP in these places all of them. They're just saying, we got to suspend this while in other cases, they're just going on as business as usual, and they're renewing their contract.

Speaker #4: So we hope within the next couple of quarters to get resolution of that. We even if the contracts are new, we still think there's opportunity to continue and if it's not renewed, we're really excited about that because we continue to grow.

Dan Matlow: Even if the contract's renewed, we still think there's opportunity to continue, and if it's not renewed, we're really excited about that as we continue to grow. That's the scenario we're facing at right now.

Speaker #4: But yeah, that's the scenario we're facing at right now.

Speaker #5: Okay, that's helpful. Next question. I mean, you described the integration process for induction of ARRI as being substantially completed or approaching completion. And you can see the EBITDA margins here at 26% as you say.

Doug Taylor: Okay. That's helpful. Next question. You described the integration process for Induction and Novari as being substantially complete or approaching completion, and you can see the EBITDA margins here at 26%, as you say, that's been well executed. The question is, given that EBITDA margins have been higher in the past, is there something about the way the portfolio sits now or structurally that would prevent you from continuing to march the EBITDA higher from here?

Speaker #5: That's been well executed. So, the question is: given that EBITDA margins have been higher in the past, is there something about the way the portfolio sits now, or structurally, that would prevent you from continuing to march the EBITDA higher from here?

Speaker #4: Well, every million dollars of ARR theoretically adds if we don't add more costs, adds a point of adjusted EBITDA, right? And we're still not completed on the other side of some reductions.

Dan Matlow: Well, every CAD 1 million of ARR theoretically adds, if we don't add more costs, adds a point of adjusted EBITDA, right? We're still not completed on the other side of some reductions. There's still some work that's continued to move it, right? The natural increase of new deals will not only just increase new deals, it comes to the bottom line as well. We continue to march on both of those fronts to fine tune those things. We continue to work our way through it.

Speaker #4: There's still some work that's continued to move it, right? So the natural. Increase of new deals, not only does it increase new deals, it comes to the bottom line as well.

Speaker #4: So we continue to march on both of those fronts to fine-tune those things. But we continue to work our way through it.

Speaker #5: So summarizing, cost transformation work largely done, but further.

Doug Taylor: Summarizing costs, transformation work largely done, further-

Dan Matlow: Yeah

Speaker #4: Yeah, it's still sufficiently scaled. They're still work to be done, but we've taken a big chunk out of the apple.

Doug Taylor: efficiencies of scale-

Dan Matlow: There's still work to be done, but we've taken a big chunk out of the apple.

Speaker #5: Okay, thank you.

Doug Taylor: Okay. Thank you.

Speaker #1: Thank you, Doug. The next question comes from Paul Trevor with RBC Securities. Paul, your line is open.

Christian Sgro: Thank you, Doug. The next question comes from Paul Treiber with RBC Securities. Paul, your line is open.

Speaker #2: Yeah, thanks and good morning. Just Dan, just now that the company's past 100 million in ARR, how do you look at the cadence and the drivers of organic growth from here?

Paul Treiber: Yeah, thanks and good morning. Dan, just now that the company's passed CAD 100 million in ARR, how do you look at the cadence and the drivers of organic growth from here? What I mean is, does it become less about point solutions, individual point solutions and their growth, and more about perhaps like the broader platform and cross-selling, and how are you sort of shifting the organization, to sell, to sustain the organic growth as a larger company?

Speaker #2: And what I mean is, does it become less about point solutions, individual point solutions and their growth, and more about perhaps the broader platform and cross-selling?

Speaker #2: And how does how are you sort of shifting the organization to sell to sustain the organic growth as a larger company?

Speaker #4: Yeah, I think a good point, Paul. I think we are the patient care coordination platform as we would describe it, which is really the combination of Zesty, Strata, MedKern, InTouch, and MedKern.

Dan Matlow: Yeah, I think good point, Paul. I think we are the patient care coordination platform as we would describe it, which is really the combination of Zesty, Strata, MedCurrent, Intouch and MedCurrent. We've done work on integrating those products across different worlds. We're also adding AI injection into a lot of those base products. We are working on moving our sales force into regional-based sales force and giving them those suite of products and merging them together in comprehensive solutions. We're already seeing that in the field, customers asking for these things to be integrated.

Speaker #4: We've done work on integrating those products across different worlds. And we've also we're also adding AI injection into a lot of those base products.

Speaker #4: But we are working on moving our Salesforce into regional-based Salesforce and giving them that suite of products, and merging them together into comprehensive solutions.

Speaker #4: And we're already seeing that in the field—customers asking for these things to be integrated. So just through osmosis, you get the customer, and a customer already has two or three of those solutions.

Dan Matlow: Just through osmosis, you get the customer, and the customer already has two or three of those solutions, and they've asked to, Hey, let's get these things working together. We work with them in the field, we get it integrated, we start integrating into other places, we continuously add on other base products. We are moving into that direction on our patient flow suite of base solutions, and we're starting to see it work in the field. The bigger ticket items and the more complicated ones, being the Strata and Novari based implementations, yeah, we're starting to see some really nice proposals going out for those products with high ticket and high numbers that get associated with. We expect those core products to really be most of our engine for our organic growth.

Speaker #4: And they've asked to, hey, let's get these things working together. So we work with them in the field, we get it integrated, and then we start integrating into other places.

Speaker #4: And then we continuously add on other base products. So we are moving into that direction on our patient flow suite of base solutions. And we're starting to see it work in the field.

Speaker #4: The bigger ticket items and the more complicated ones being the Strata and Novari-based implementations, yeah, we're starting to see some really nice proposals going out for those products with high ticket and high numbers that get associated with.

Speaker #4: So we expect those core products to really be our most of our engine for our organic growth. We're still seeing work on our treat-based product sets and our community services product sets.

Dan Matlow: We're still seeing work on our TREAT base product sets and our community services product sets. We successfully have moved that CaseWORKS product into Australia, and we're having really good success with that product in those marketplaces as well. We continue to work on those approaches. Essentially, that's how we're seeing it.

Speaker #4: We've successfully moved that caseworks products into Australia and we're having really good success with that product in those marketplaces as well. And we continue to work on those approaches, but essentially that's how we're seeing it.

Speaker #2: That's great to hear. Second question—just on body healthcare: with the management team on board and a footprint in the region, does that open you up and give you more insight into other acquisitions in the Nordics region?

Paul Treiber: That's great to hear. The second question, just on Buddy Healthcare. With the management team on board and a footprint in the region, does that open you up and give you more insight into other acquisitions in the Nordics region? How would you describe the M&A opportunity in the Nordics compared to other regions?

Speaker #2: And then how do you describe the M&A opportunity in the Nordics compared to other regions?

Dan Matlow: We've done some work on that. There's a couple other scenarios that we know of and the CEO just told me about one other one yesterday. Yeah, your question is very much doing. Again, our acquisition targets have really, in a lot of cases, are companies that we're well aware of because we work in the same markets and we would compete with them or complement them in many different situations. Every time we enter a new marketplace, we get expertise on that market and how that ecosystem works and what the gaps are in respect to that and those organizations that fill those gaps and what they do. We'll definitely explore the Nordics marketplace. It is a pretty interesting marketplace. It's very similar to our other government-funded groups between the Scandinavian countries, we'll continue to explore and we'll continue to look at it.

Speaker #4: We've done some work on that. There are a couple of other scenarios that we know of, and the CEO just told me about one more yesterday.

Speaker #4: So yeah, your question is very much done. Again, we our acquisition targets have really in a lot of cases our companies that were well aware of because we work in the same markets and we would compete with them or complement them in many different situations.

Speaker #4: So every time we enter a new marketplace, we get expertise on that market and how that ecosystem works and what the gaps are in respect to that.

Speaker #4: And those organizations that fill those gaps and what they do. So we'll definitely explore the Nordics marketplace. It is a pretty interesting marketplace. It's very similar to our other government-funded groups between the Scandinavian countries.

Speaker #4: So, we'll continue to explore, and we'll continue to look at it. But yeah, that is a byproduct you get by entering into another region—intelligence on that region and how those healthcare ecosystems are.

Dan Matlow: Yeah, that is a byproduct you get by entering into another region, is intelligence on that region and how that healthcare ecosystems are and who the players are in those areas. We continue to work with it and Jussi who's come over from Buddy, very excited about the opportunity. He wanted to roll over stock into our organization, and he has, and he's excited to help us in those Nordics regions, and that's a good thing.

Speaker #4: And who the players are in those areas. So we continue to work with it, and you see who’s come over from Buddy—very excited about the opportunity.

Speaker #4: He wanted to roll over stock into our organization and he has and he's excited to help us in those Nordics regions. And that's a good thing.

Speaker #2: Okay, thanks for taking the questions.

Paul Treiber: Okay. Thanks for taking the questions.

Speaker #1: Thank you, Paul. The next question comes from Michael Freeman with Raymond James. Michael, your line is open.

Christian Sgro: Thank you, Paul. The next question comes from Michael Freeman with Raymond James. Michael, your line is open.

Speaker #5: Hey, good morning, everybody. And congrats on the results. First question is I wonder if you could tell us a bit about the what you're seeing in the M&A environment right now and the sort of competitive dynamics you're seeing in bids and also, I guess, the pricing environment as you're poking around.

Michael Freeman: Hey, good morning, everybody, and congrats on the results. First question is, I wonder if you could tell us a bit about what you're seeing in the M&A environment right now and the sort of competitive dynamics you're seeing in bids and also, I guess, the pricing environment as you're poking around.

Speaker #4: Yeah, it continues to be all over the map, as it always has. Michael, it's hard to predict. In terms of—everyone is a different world, and it all depends on who the founder is and how the thing is structured.

Dan Matlow: Yeah. It continues to be all over the map as it always has, Michael, it's hard to predict in terms of everyone is a different world, it all depends on who the founder is and how the thing is structured and what they are continuing to do. We are seeing more and more organizations that have had investments of some sort where the cash is no longer going and the company is in a little bit of a stagnant standstill state, investors starting to think they want to get their money back. The challenge becomes, are they prepared to take a haircut on their money because the valuations that they went into were higher? Buddy is one of those scenarios to a degree.

Speaker #4: And what they are continue to do. We are seeing more and more organizations that have had investments of some sort where they're the cash is no longer going and the company is in a little bit of a stagnant standstill state in investors starting to think they want to get their money back.

Speaker #4: In and then the challenge becomes are they prepared to take a haircut on their money because the valuations that they went into were higher?

Speaker #4: But "buddy" is one of those scenarios to a degree. So, we continue to see some of those coming to market, but we still see founders and other situations coming to market as well.

Dan Matlow: We continue to see some of those coming to market, we still see founders in other situations coming to market as well. It's all over the map relative to it, probably we are seeing companies that did manage to take on investors potentially going to the market to see what their exits are because there's no more cash to be had in those particular companies. We are starting to see that.

Speaker #4: So it's all over the map relative to it, but probably we are seeing companies that did manage to take on investors potentially going to the market to see what their exits are because there's no more cash to be had in those particular companies.

Speaker #4: So we are starting to see that.

Speaker #5: Okay. All right. Thanks, Dan. And for my next question, I wonder if you could touch on your AI roadmap and what you're working on with your R&D team and with your customers.

Michael Freeman: Okay. All right. Thanks, Dan. For my next question, I wonder if you could touch on your AI roadmap, and what you're working up with your R&D team and with your customers. I'm happy to hear that some of these have been deployed. Curious if you could just give us the layout.

Speaker #5: I'm happy to hear that some of these have been deployed. Curious if you could just give us the layout.

Dan Matlow: We're really happy with some of the AI progressions we've built in our team. Part of sometimes on these acquisitions is you inherit some technical debt and we've had some projects that have helped us get out of some technical debt by using AI, which has streamlined some processes. It's helped us in our internal development group, and we continue to embrace it, starting to move in, and we've seen some benefits. We do have capital projects groups that we're building in there. We built a protocoling form-based system, which is used to understand forms and give you AI descriptions on forms. We look at all of our different products where we can add that. It started evolving in the Novari product.

Speaker #4: Yeah. We're really happy with some of the AI progressions we've built in our team. Part of sometimes on these acquisitions is you inherit some technical debt and we've had some projects that have helped us get out of some technical debt.

Speaker #4: By using AI, which has streamlined some processes, it's helped us in our internal development group, and we continue to embrace it and are starting to move it forward.

Speaker #4: And we've seen some benefits. We do have capital projects groups that we're building in there we built a protocol and form-based system which is used to understand forms and give you AI descriptions on forms and we look at all of our different products where we can add that.

Speaker #4: It's started evolving in the Novari product. I think it's been responsible for getting two deals that I know of over the finish line with Novari that we're radiologists have just loved that feature.

Dan Matlow: I think it's been responsible for getting two deals that I know of over the finish line with Novari where radiologists have just loved that feature. We continue to do that, and we continue to upsell it to the rest of our Novari base, but now we've added it to other products as an add-on feature. The other area which we think we can add substantial revenue is we've taken on the journey of building our own scribing solution for our case management solutions. We have a fair amount of users between our four or five products in that suite that would be clinicians or caseworkers that would meet with patients all the time that are not using scribing at this point.

Speaker #4: So we continue to do that, and we continue to upsell it to the rest of our Novari base, but now we've added it to other products.

Speaker #4: As an add-on feature. And the other area which we think we can add substantial revenue is we've taken on the journey of building our own scribing solution for our case management solutions and we have a fair amount of users between our four or five products in that suite that would be clinicians or caseworkers that would meet with patients all the time.

Speaker #4: That are not using scribing at this point. So we are building our own scribing and we're integrating it into our own product sets and we expect to get uptake on that product and 2027 with it.

Dan Matlow: We are building our own scribing and we're integrating it into our own product sets, and we expect to get uptake on that product in 2027 with it. We are adding AI products into the market, and we continue to build that. We're investing in it, and I think it's interesting to note that we are up to the 26% level on the bottom line, and we've been investing in AI continuously and still supporting that number. We're happy with what's going on in that group.

Speaker #4: So we are adding AI products into the market and we continue to build that. We're investing in it and I think it's interesting to note that we are up to the 26% level on the bottom line and we've been investing in AI continuously and still supporting that number.

Speaker #4: So we're happy with what's going on in that group.

Speaker #5: Okay. All right. That's helpful to understand. Last question from me: Are there any, perhaps outside of the UK, material RFPs that are coming down the pipeline or that you're preparing to respond to now?

Michael Freeman: All right. That's helpful to understand. Last question from me. Perhaps outside of the UK, are there any material RFPs that are coming down the pipeline or that you're preparing to respond to now?

Dan Matlow: We're starting to see some interest in the US marketplace with our Strata solution through some groups. It's still early to tell with that stuff, but we're seeing some pretty interesting responses on that. We do have a US group in with Strata with the search business. We decided to move the core referral management product into the US marketplace. Early indications are that we got something that's a little unique in certain scenarios. We continue to move on that front to explore what we can do to build that. That would open up an interesting marketplace if we could start getting some references down there, which I think we will.

Speaker #4: You know what, we're starting to see some interest in the US marketplace with our Strata solution. Through some groups and it's still early to tell with that step, but we're seeing some pretty interesting responses on that and that.

Speaker #4: So we're we do have a US group in with Strata with the surge business and we decided to move the core referral management product into the US marketplace and early indications are that we got something that's a little unique in certain scenarios.

Speaker #4: So we continue to move on that front to explore what we can do to build that. But that would open up an interesting marketplace if we could start getting some references down there, which I think we will.

Speaker #5: Yeah. And does that provide an opening for other products to be introduced into the US or is this a very strategic?

Michael Freeman: Now, does that provide an opening for other products to be introduced into the US, or is this a very Strata-

Dan Matlow: You got to be really careful. I think we are starting to add the patient engagement part of the Buddy product onto the other side of Strata. As you get discharged and referred to another area, the patient can be in the stream of the discharge to do that. We've been integrating those into one big product, an example being a patient gets referred out of a hospital to a hospice, and most of hospice is home care right now. The referral goes into hospice, but we take the patient and the family all the way through that journey by having an engagement platform and an app that they can download all the way through the process. We allow the patient family to communicate with their caretakers during the whole end-of-life process.

Speaker #4: That'd be really careful. I think you could start with I think we are starting to add the patient engagement part of the buddy product onto the other side of Strata.

Speaker #4: So the as you get discharged, which into in referred to another area, the patient can be in the stream of the discharge to do that.

Speaker #4: So we've been integrating those into one big product example being a patient gets referred out of a hospices home care right now. So the referral goes into hospice.

Speaker #4: But we take the patient and the family all the way through that journey. By having an engagement platform and an app that they can download all the way through the process and we allow the patient family to communicate with their caretakers during the whole end-of-life process.

Speaker #4: So before I think we got about 20 different hospices on the Strata platform that we do referral management-based world too. And we came up with that new idea in the UK and we've implemented it now and now we're rolling that we're looking to all the other ones to add that feature to it, right?

Dan Matlow: Before, I think we got about 20 different hospices on the Strata platform that we do referral management based world to, we came up with that new idea in the UK, we've implemented it now we're rolling that. We're looking to all the other ones to add that feature to it, right? Always on the other side of a referral, there's a whole patient engagement world on it, and that's just an example of one of the upsell platforms that we could add to the marketplace. As we move into the US with that, maybe there's an opportunity there, who knows? It's still early days.

Speaker #4: So always on the other side of a referral, there's a whole patient engagement world on it and that's just an example of one of the upsell platforms that we could add to the marketplace.

Speaker #4: So as we move into the US with that, maybe there's an opportunity there. Who knows? But it's still early days.

Speaker #5: Got it. All right. Thank you, Dan.

Michael Freeman: Got it. All right. Thank you, Dan. I'll pass it on.

Speaker #1: Thank you, Michael. Next question comes from Kevin Krishnaratne with Scotia Capital. Kevin, your line is open. You may be on mute, Kevin.

Christian Sgro: Thank you, Michael. Next question comes from Kevin Krishnaratne with Scotia Capital. Kevin, your line is open. You may be on mute, Kevin.

Speaker #4: Hello? Hey, Kevin, I hear you now.

[Analyst] (Roth MKM): Hello?

Dan Matlow: Hey, Kevin. I can hear you now.

Speaker #5: Yeah. Sorry for that. This is Richard on for Kevin. Just a quick question. I know you haven't provided any formal guidance on ARR growth, but I think you've been comfortable with it being in the low double-digit range.

[Analyst] (Roth MKM): Yep. Sorry for that. This is Richard on for Kevin Krishnaratne. Just a quick question. I know you haven't provided any formal guidance on ARR growth, but I think you've been comfortable with it being in the low double-digit range. I was just wondering if you have any thoughts on near term on where that's heading. I note that you've currently been running in the 10% to 11% range this year, and was just curious on where that goes.

Speaker #5: So I was just wondering if you have any thoughts on the near term, on where that's heading, and I know that you've currently been running in the 10 to 11 percent range this year.

Speaker #5: And I was just curious on where that goes.

Speaker #4: Yeah. It's really the wildcard with this FTP stuff that's going on and that's really account by account. To do that. But we still feel comfortable with the rest of our business that we even with that headwind that we we should still be in the range where we were this quarter and above it.

Dan Matlow: Yeah. It's really the wild card with this FDP stuff that's going on, and that's really account by account to do that. We still feel comfortable with the rest of our business that even with that headwind, that we should still be in the range where we were this quarter and above it for sure. We continue to work with that, and we continue to work with the cards that we're being dealt on that particular scenario. Even with that scenario, we're still getting 10%, 11% organic growth. We're happy with that in the bottom line, have come to the other side. We continue to do that.

Speaker #4: For sure. So, we continue to work with that, and we continue to work with the cards that we're being dealt in that particular scenario.

Speaker #4: But even with that scenario, we're still getting 10, 11 percent organic growth. So we're happy with that in the bottom line has come to the other side.

Speaker #4: So we continue to do that.

Speaker #5: Thank you. And do you have any thoughts on capital allocation, particularly the balance between M&A and buybacks, given your recently introduced NCIB?

[Analyst] (Roth MKM): Thank you. Do you have any thoughts on capital allocation, particularly the balance between M&A and buybacks, given your recently introduced NCIB?

Speaker #4: Yeah. At the core of what we are, we're a we can only buy up to 5%, right? So we're still sitting at 100 probably we're getting back up to the 130 million dollar level even after the buddy acquisition because we continue to produce cash.

Dan Matlow: Yeah. At the core of what we are, we can only buy up to 5%, right? We're still sitting at CAD 100, and probably we're getting back up to the CAD 130 million level even after the Buddy Healthcare acquisition biz. We continue to produce cash. Yeah, I think we're definitely focused on M&A as our biggest thing. I think that's our best return for our shareholders in the long run. At these levels, I think we can do both, and that's sort of what we decided at the board meeting.

Speaker #4: But yeah, I think we're definitely focused on M&A as our biggest thing. I think that's our best return for our shareholders. In the long run, but at these levels, I think we can do both and that's sort of what we decided at the board meeting.

Speaker #5: Sounds good. Thanks for taking my questions.

[Analyst] (Roth MKM): Sounds good. Thanks for taking my questions.

Speaker #1: Thank you, Richard. The next question comes from David Kwon with TD Securities. David, your line is open.

Christian Sgro: Thank you, Richard. The next question comes from David Kwan with TD Securities. David, your line is open.

Speaker #3: Yeah, thanks. Thanks, Christian, for that. Just maybe getting back to that last question on the buybacks—Dan, so it sounds like once it gets approved, if the shares are still kind of at these levels, you'll be active with the buyback?

David Kwan: Yeah, thanks. Thanks for that. Just maybe getting back to last question on the buybacks, Dan. Sounds like once it gets approved, if the shares are still kind of at these levels, you'll be active with the buyback?

Speaker #4: Yeah. I think we I think the we discussed that at the board and we'll continue to look at things as they continue to progress.

Dan Matlow: Yeah, I think we discussed that at the board, we'll continue to look at things as they continue to progress. I don't want to commit to anything, that could be the world that we go into as we go forward.

Speaker #4: But I don't want to commit to anything, but that could be the world that we go into as we go forward.

Speaker #3: Yeah, I just was wondering, in terms of the buyback, even if you kind of max it out, you'd still have a lot of cash left over.

David Kwan: Yeah, just wondering in terms of the buyback, even if you kind of max it out, you'd still have a lot of cash left over.

Speaker #3: So it seems like it could be active on both fronts.

Dan Matlow: Yeah.

David Kwan: It seems like you could be active on both fronts.

Speaker #4: Well, and I think we can too, David. And that's sort of the thought process. On this thing. With that being said, there's always larger transactions that are floating around where that might not be enough cash.

Dan Matlow: Well, no, I think we can too, David, and that's sort of the thought process on this thing. With that being said, there's always larger transactions that are floating around where that might not be enough cash. It's just weighing all those into the equation based on what's going on in our particular world. We're constantly exploring it and making the proper decisions, which we think would be the right for our shareholders. We'll continue to look at it and based on how we're doing now in terms of the level of the acquisitions that we've been making, we definitely do that enough to continue to do that. That would be the case. If something larger was progressing, then that may change that thought process.

Speaker #4: So it's just weighing all those into the equation. Based on what's going on in our particular world. So we're constantly exploring it. And making the proper decisions, which would be in the proper which we think would be the right for our shareholders.

Speaker #4: So we continue to look at it. And based on how we're doing now in terms of the level of the acquisitions that we've been making, we definitely do got enough to continue to do that.

Speaker #4: That would be the case. However, something larger was progressing that may change that thought process.

Speaker #3: Yeah, that's helpful. Thanks, Dan. And when you talk about the M&A and larger deals, are we talking about things that could be meaningfully larger than Navarre?

David Kwan: No, that's helpful. Thanks, Dan. When you talk about the M&A and larger deals, are we talking stuff that could be meaningfully larger than Novari, or are we kind of looking at more Novari-type deals?

Speaker #3: Are we kind of looking at more Navarre-type deals?

Speaker #4: I think meaningful—larger than Navarre to a degree. Not that much larger, but yeah, meaningfully larger, I think.

Dan Matlow: I think meaningful larger than Novari to a degree. Not that much larger or yeah, meaningful larger, I think.

Speaker #3: So that's helpful. Just one or two more questions here. Getting back on the AI, can you talk about to what extent are you seeing customers adopting AI?

David Kwan: That's helpful. Just one or two more questions here. Getting back on the AI, can you talk about to what extent are you seeing customers adopting AI? How quickly are they and to what extent customers are kind of working with you to help find projects that might be more specific to their use cases, their needs, but maybe that also can be leveraged to other customers?

Speaker #3: How quickly are they? And to what extent customers are kind of working with you to help find products that might be more specific to their use cases, their needs, but maybe that also can be leveraged to other customers?

Speaker #4: Yeah. Every single one of our AI projects is being done based on customer input into the equation. And not just one customer—multiple customers.

Dan Matlow: Every single one of our AI projects are being done based off of customer input into the equation and not just one customer, multiple customers, so that we actually get a feel for does it add value and what it's going to cost us to deliver, and do they got the funding to deliver it. There's definitely a lot of intrigue within our customer base. There's also a fair amount of uncertainty in respect to things like privacy, security, compliance, regulatory-based approvals. The one area that definitely is the most adopted area is the transcription side of the business, and I think we see that all the way through. We've already seen that through the GP marketplaces with the adoption of Heidi and things like that in the GP world.

Speaker #4: So that we actually get a feel for whether it adds value and what it's going to cost us to deliver, and whether they have the funding to deliver it.

Speaker #4: There's definitely a lot of intrigue within our customer base. There's also a fair amount of uncertainty in respect to things like privacy, security, compliance, regulatory-based approvals.

Speaker #4: The one area that definitely is the most adopted area is the transcription side of the business. And I think we see that all the way through.

Speaker #4: We've already seen that through the GP marketplaces with the adoption of Heidi and things like that in the GP world. But there are lots of other caregivers that aren't there.

Dan Matlow: There's lots of other caregivers that are there, and I think in the hospital setting, the big EHRs will do those. In the community social services area, we are the record that the caregivers use. They're looking for us to provide that transcription services. We believe that's our lowest hanging fruit out of all of our AI projects to go get revenue. The other stuff is really working between the scenes and its injection into our applications, and we see things in our MedCurrent base where AI can help speed up the delivery of that clinical decision support system. We see things in our patient engagement platforms and so forth where AI can do some things. We continue to work with our group. It's not like they're screaming at the door saying, "Hey, we need this stuff tomorrow." That's not how our markets work.

Speaker #4: And I think in the hospital setting, the big EHRs will do those, but in the community social services area, we are the record that the caregivers use.

Speaker #4: So they're looking for us to provide that transcription service. We believe that's our lowest-hanging fruit out of all of our AR projects to go get revenue.

Speaker #4: The other stuff is really working behind the scenes, and it's being injected into our applications. We think that we see things in our Med Current base where AI can help speed up the delivery of that clinical decision support system.

Speaker #4: We see things in our patient engagement platforms and so forth where AI can do some things. So we continue to work with our group.

Speaker #4: It's not like they're screaming at the door saying, "Hey, we need this stuff tomorrow." That's not how our markets work. It's a little slow and bureaucratic, which is both a blessing and a curse.

Dan Matlow: It's a little slow and bureaucratic, which is both a blessing and a curse, it is the market that we deal with. In terms of the transcription side, we definitely think, yeah, as soon as we get that product into the marketplace, that we would like to think there's going to be adoption if we can create it properly and price it properly for our base.

Speaker #4: But it is the market that we deal with. So but in terms of the transcription side, we definitely think, yeah, as soon as we get that product into the marketplace, we would like to think there's going to be adoption if we can create it properly and price it properly for our base.

Speaker #3: No, that makes sense. And maybe one last question for Brian. Just on the growth margin side, it was a bit weaker than what we were looking at, especially given the revenue mix.

David Kwan: No, that makes sense. Maybe one last question for Brian. Just on the gross margin side, it was a bit weaker than what we were looking at, especially given the revenue mix. Wanted to know if there was anything in particular that was worth flagging and how we should be looking at gross margins going forward.

Speaker #3: So want to know if there was anything in particular that was worth flagging and how we should be looking at gross margins going forward.

Speaker #4: No, I think it was still—I think it continues to be probably the 80% line. If you look at Q2 and Q1, we were a little bit higher.

Brian Goffenberg: No, I think it will still, I think, continue to be, it's probably to be the 80% line. If you look at Q1, we were a little bit higher. Overall for the six months, it's been the 80% range. As Dan said earlier, some of the services revenue was a little bit lower, and that's kind of lower margin stuff. You'll probably see that improve as we go forward.

Speaker #4: And so overall for the six months, it's been the 80% range. We as Dan said earlier, some of the services revenue was a little bit lower and that's kind of lower margin stuff.

Speaker #4: You'll probably see that improve as we go forward.

Speaker #2: I think David, part of timing of services revenue where you get the revenue to match the expenses is sometimes challenging. So we may incur expense on services revenue, but because we haven't hit a particular milestone, we haven't recognized the revenue accordingly for it yet.

Dan Matlow: I think, David, part of timing of services revenue, where you get the revenue to match the expense is sometimes challenging. We may incur expense on services revenue, but because we haven't hit a particular milestone, we haven't recognized the revenue accordingly for it yet. We get the expense without the revenue. In other quarters, it's the other way around, right? Sometimes the timing of that sort of just offsets that a little bit, but it should always be in that range.

Speaker #2: So we get the expense without the revenue. In other quarters, we get the it's the other way around, right? So sometimes the timing of that sort of just offsets that a little bit, but it should always be in that range.

Speaker #3: Oh, it's helpful. Thanks, Matt. Thank you very much.

David Kwan: It's helpful. Thanks a bunch. Thank you very much.

Speaker #1: Thank you, David. The next question comes from Justin Keyword with Stifel. Justin, your line is open.

Christian Sgro: Thank you, David Kwan. The next question comes from Justin Keywood with Stifel. Justin, your line is open.

Speaker #5: Hey, good morning. Thanks for taking my call. I understand that the cost side of the recent large M&A in 2025 has largely been integrated, but I was hoping to get an update on how the cross-sales opportunity is going with Navarre Health, and in particular, the opportunity within the subsegment of the Canadian mental health institutes, where I understand that Navarre has a substantial market share.

Justin Keywood: Hey, good morning. Thanks for taking my call. Understand that the cost side of the recent large M&A in 2025 has largely been integrated, I was hoping to get an update on how the cross-sales opportunity is going with Novari Health and in particular, the opportunity within the sub-segment of the Canadian mental health institutes, where I understand that Novari has a substantial market share.

Speaker #5: But some of the competing options are not nearly at the same level of functionality, including, frankly, some paper-based processes that are still being utilized.

Justin Keywood: Some of the competing options are not nearly at the level of functionality, including also just, frankly, some paper-based processes that are still being utilized. Just seeing how that sales opportunity is and what the TAM could be for the sub-segment.

Speaker #5: So, just seeing how that sales opportunity is and what the TAM could be for the subsegment.

Speaker #4: Yeah, well, we're pretty active in the mental health world because we own the predominant area HRs in that world, right? So both Strata and Navarre both have footprints in the mental health referral basis, depending on what the different scenarios are.

Dan Matlow: Yeah. Well, we're pretty active in the mental health world because we own the predominant EHRs in that world, right? Both Strata and Novari both have footprints in the mental health referral bases, depending on what the different scenarios are. Novari, I think a few years back, did the mental health referral business for CAMH, and that's where a lot of that expertise was done, and they continue to have a footprint in those particular levels. Part of that is being addressed with the provincial-based transaction, and there's other opportunities all across Canada in the mental health world. The two implementations we've sold in the UK have been in the mental health-based arena as well, and we continue to see some stuff in that. You're right, they have developed some pretty strong workflows, and we have added to that expertise by having our own EHRs in that space.

Speaker #4: Navarre, I think a few years back, did the mental health referral-based business for CAMH, and that's where a lot of that expertise was developed.

Speaker #4: And they continue to have a footprint in those particular levels. Part of that is being addressed with the provincial-based transaction and there's other opportunities all across Canada.

Speaker #4: In the mental health world, the two implementations we've sold in the UK have been in the mental health-based arena as well.

Speaker #4: And we continue to see some activity in that area, so you're right. They have developed some pretty strong workflows, and we have added to that expertise by having our own EHRs in that space.

Speaker #4: So connecting our EHRs to their referral management suite is something that our customers like, and we continue to do that.

Dan Matlow: Connecting our EHRs to their referral management suite is something that our customers like, and we continue to do that.

Speaker #5: That's helpful. Maybe just a follow-up—Epic, are they pretty active in the Canadian mental health area? And how do you see that competitor?

Justin Keywood: That's helpful. Maybe just a follow-up. Epic, are they pretty active in the Canadian mental health area, and how do you see that competitor?

Speaker #4: Yeah, I don't see Epic has not done anything in Canada. They just sell to the peer hospitals. They probably would cover off a little bit in the mental health beds within hospitals, but they're not focused on community agencies or mental health-based worlds.

Dan Matlow: I don't see Epic has not done anything in the Canadian. They just sell to the pure hospital levels. They probably would cover off a little bit of the mental health beds within hospitals, but they're not focused on community agencies, mental health-based worlds. That's not what they do. Whatever mental health pure hospitals, like we have, there's about three or four different hospitals across Canada or across Ontario that do that. Meditech seems to be the vendor that runs those bigger organizations to do that. On the community and social services side, I think we would be the predominant vendor that would do that work.

Speaker #4: That's not what they do. Whatever mental health peer hospitals, like we have, like, there's about three or four different hospitals across Canada or across Ontario that do that.

Speaker #4: Meditech seems to be the vendor that runs those bigger organizations to do that, but on the community and social services side, I think we would be the predominant vendor that would do that work.

Speaker #5: Thank you. Very helpful.

Justin Keywood: Thank you. Very helpful.

Christian Sgro: Thanks, Justin. There are no further questions at this time. I'll hand the call back to you, Dan, for any closing remarks.

Speaker #1: There are no further questions at this time. I'll hand the call back to you, Dan, for any closing remarks.

Speaker #4: Yeah, I think that the best thing to look at from that quarter is— we've always said this— we like organic growth. We want organic growth.

Dan Matlow: Yeah, I think the best thing to look from that quarter is, and we've always said this, we like organic growth, we want organic growth, and we push organic growth. At the core of what this business is, really is cash flow striving and earnings on the other side. As you guys can see, we're back executing on that side of the equation, as we continuously always will. We're starting to see that come through, and we continue to take our organic growth as it comes to us and adds to the bottom line. Yeah, we're excited to get our adjusted EBITDA up there. We're excited to start seeing cash flow, and we're excited about the suite of solutions that we've accumulated, and how those are starting to come together as comprehensive solutions.

Speaker #4: And we push organic growth, but at the core, what this business is really is cash flows thriving and earnings. On the other side, and as you guys can see, we're back executing on that side of the equation as we continuously always will.

Speaker #4: And we're starting to see that come through, and we continue to take our organic growth as it comes to us and as to the bottom line.

Speaker #4: But yeah, we're excited to get our adjusted EBIT up there. We're excited to start seeing cash flow, and we're excited about the suite of solutions that we've accumulated and how those are starting to come together as comprehensive solutions.

Speaker #4: So we continue to work, and we continue to progress in that space. We continue to look at M&A, and another quarter is behind us as we look forward to the next one.

Dan Matlow: We continue to work, and we continue to progress in that space, and we continue to look at M&A, and another quarter is behind us, and we look forward to the next one. Thanks everyone for attending today.

Speaker #4: So thanks everyone for attending today.

Speaker #1: It's now concluded today's conference call. Thank you all for joining.

Christian Sgro: This now concludes today's conference call. Thank you all for joining.

Speaker #4: Bye-bye.

Dan Matlow: Bye-bye.

Operator: Goodbye.

Q2 2026 Vitalhub Corp Earnings Call

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