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VANCOUVER, BC, Nov. 13, 2024 /CNW/ – LUC LUC (Nasdaq Stockholm: LUC) 

Lucara Diamond Corp. (“Lucara” or the “Company”) today reports its results for the quarter ended September 30, 2024. All amounts are in U.S. dollars unless otherwise noted. View PDF

Q3 2024 HIGHLIGHTS

• Recoveries of two exceptional diamonds larger than 1,000 carats, including the epic 2,488-carat⁽¹⁾ diamond and the 1,094-carat diamond.
• A total of 116,221 carats of diamonds were sold, generating revenue of $44.3 million in Q3, 2024.
• On October 4, 2024, the Company sold its interest in Clara Diamond Solutions Limited Partnership, Clara Diamond Solutions B.V., and Clara Diamond Solutions GP (together referred to as “Clara”) for approximately $3.0 million in cash, the return of 10,000,000 Lucara common shares, as well as the transfer of liabilities tied to sales performance metrics and a change of control, thereby eliminating a share issuance obligation of 13,400,000 Lucara common shares.
• Karowe registered no lost time injuries during the three months ended September 30, 2024. As of September 30, 2024, the mine had operated over three years without a lost time injury.
• Significant progress was made in shaft sinking and lateral development connecting the production and ventilation shafts, with the critical path ventilation shaft being ahead of the July 2023 rebase schedule. At the end of Q3, the production shaft had reached a depth of 686 metres and the ventilation shaft a depth of 582 metres below surface (“mbs”).
• A total of 104,390 carats were recovered in Q3, 2024, including 96,597 carats from direct ore feed from the pit and stockpiles, at a recovered grade of 13.4 carats per hundred tonnes (“cpht”) and an additional 7,793 carats recovered from processing of historic recovery tailings.
• A total of 244 Specials (defined as rough diamonds larger than 10.8 carats) were recovered during the quarter, with 12 diamonds greater than 100 carats, including three stones greater than 300 carats. The recovery of 244 Specials equated to 11.28% by weight of the total recovered carats from ore processed in Q3, 2024. This weight percentage of Specials exceeded the Company’s expectation and was heavily influenced by the recovery of the 2,488-carat and 1,094-carat stones.
• Operational highlights from the Karowe Mine included:
  • Ore and waste mined of 0.8 million tonnes (“Mt”) (Q3, 2023: 0.9Mt) and 0.2Mt (Q3, 2023: 1.0Mt), respectively.
  • 0.7 Mt of ore processed (Q3, 2023: 0.7Mt).
• Financial highlights for Q3, 2024 included:
  • Operating margins of 48% were achieved (Q3, 2023: 63%). Lower operating margins resulted from the decrease in revenue realized for the quarter.
  • Operating cost per tonne processed⁽²⁾ was $27.34, a decrease of 5% compared to Q3, 2023 cost per tonne processed of $28.84. The continued impact of inflationary pressures, particularly labour, has been well managed by the operation. A strong U.S. dollar continues to offset a small increase in costs over the comparable period.
• During Q3, 2024, the Company invested $24.1 million into the Karowe Underground Project (“UGP”), excluding capitalized cash borrowing costs:
  • During Q3, 2024, the ventilation shaft completed 169 metres of lateral development and 28 metres of sinking advance.
  • Production shaft activities included sinking a total of 130 metres, and completion of 3 water probe hole covers.
• Cash position and liquidity as at September 30, 2024:
  • Cash and cash equivalents of $23.6 million.
  • Working capital (current assets less current liabilities excluding assets and liabilities held for sale) of $22.3 million.
  • $180.0 million drawn on the $190.0 million Project Facility (“Project Facility”) for the Karowe UGP with $25.0 million drawn on the $30.0 million working capital facility (“WCF”) and a funded Cost Overrun Reserve Account (“CORA”) balance of $43.7 million.

William Lamb, President & CEO commented: “The third quarter of 2024, again, proved to be transformative for Lucara, marked by two extraordinary discoveries that underscore our preeminent position in the exceptional stone segment of the diamond industry. The recovery of an unprecedented 2,488-carat diamond, followed by the discovery of a remarkable 1,094-carat stone, not only demonstrates the exceptional quality of our Karowe asset but also validates our technical expertise and innovative mining approaches.

These historic recoveries reflect the culmination of our unwavering commitment to operational excellence and our industry-leading safety standards. Our open pit operations continue to deliver consistent results, while the underground expansion project has achieved significant milestones, particularly in shaft sinking activities during the quarter. This progress is testament to our team’s technical proficiency and dedication to executing complex mining projects.

Looking ahead, Lucara’s strategic positioning in the diamond sector remains robust. The ongoing development of the Karowe underground project represents a pivotal investment in our future, designed to extend mine life and maintain our exceptional stone production profile.

As we progress through this transformative period, we remain focused on executing our strategic objectives while maintaining our position as an industry leader in the recovery and marketing of exceptional diamonds. The recent discoveries reinforce our confidence in Karowe’s potential and our ability to deliver long-term value to our shareholders.”

DIAMOND MARKET

The long-term natural diamond prices outlook remains resilient due to favourable supply and demand dynamics due to decreasing production volumes from major operating mines. However, the smaller size stones market remains soft as demand is impacted by a weak Asian market and the increasing uptake of laboratory-grown diamonds. Demand for stones larger than 10.8 carats remains robust, as reflected in the Company’s sales in the plus 10.8 carats category. The G7 sanctions on Russian diamonds over one carat, effective March 2024, caused some trade delays with import times returning to normal during the quarter. The Company views the sanctions as short-term support for diamond prices, as the emphasis on stone provenance increases. Lucara, with its established operations producing exceptional Botswana diamonds, stands to benefit from this heightened focus on origin verification.

Prices of laboratory-grown diamonds have continued to decrease in 2024 with production outweighing demand for these products. In mid-2024, De Beers announced it will cease creating synthetic diamonds and will instead direct its efforts to sell natural diamonds. This is in conjunction with several major brands confirming that they would no longer market laboratory-grown diamonds. The longer-term market fundamentals for natural diamonds remain positive as demand is expected to outpace future supply, as supply has been declining globally over the past few years.

DIAMOND SALES

Karowe diamonds are sold through three sales channels: through a diamond sales agreement concluded with HB Antwerp (“HB”), on the Clara digital sales platform and through quarterly tenders. 

HB Sales
Karowe’s large, high value diamonds have historically accounted for approximately 60% to 70% of Lucara’s annual revenues. In February 2024, Lucara entered into a ten-year New Diamond Sales Agreement (“NDSA”) with HB. Under the sales arrangements with HB, +10.8 carat gem and near gem diamonds from the Karowe Mine of qualities that could directly enter the manufacturing stream are sold to HB at prices based on the estimated polished outcome of each diamond (“HB qualifying Specials”). The estimated polished value is determined using advanced scanning and planning technology, with an adjusted amount payable on actual achieved polished sales value, less a fee. The timing of payments varies based on the category of stones being delivered, as determined by the estimated diamond’s polished value.

A ‘top-up’ payment is due to the Company when HB’s final polished diamond sales price exceeds the initial estimated price. Conversely, if the final sale price is lower than estimated (after HB’s fees), HB receives a refund of the difference. These top-up payments, which mainly relate to diamonds from previous quarters, are paid after deducting HB’s fees. The timing and amount of these payments vary based on diamond complexity and initial planning assumptions. Throughout manufacturing, stones undergo reassessment, potentially leading to plan adjustments aimed at maximizing final sale prices while considering market demand for the polished product.

For accounting purposes, the transaction price includes estimates of both final polished sales price and top-up payments, net of HB’s fees and manufacturing costs. These estimates are updated each period end until the final transaction price is confirmed.

Sethunya Diamond
Sethunya, a 549-carat stone recovered in 2020, distinguished by its considerable size and quality is subject to a separate agreement with HB. Lucara received an advance of future proceeds of $20.0 million from HB that is classified as deferred revenue.

Quarterly Tenders
All +10.8 carat non-gem quality diamonds and all diamonds less than 10.8 carats which are not sold on the Clara platform are sold as rough diamonds through quarterly tenders. Viewings take place in both Gaborone, Botswana and Antwerp, Belgium.  

Clara
Clara is a secure web-based digital marketplace which is designed to transact single diamonds between 1 and 10 carats, in higher colours and quality.

On October 4, 2024, the Company sold its interest in Clara and, as a result, classified the Clara group as held for sale as of September 30, 2024 (link to news release). Total consideration comprises of approximately $3.0 million in cash, the return of 10,000,000 Lucara common shares initially issued as partial consideration when Lucara originally acquired the Clara platform in 2018, and termination of liabilities tied to sales performance metrics or the change of control, thereby eliminating a share issuance obligation of 13,400,000 Lucara common shares. Lucara will retain a 3% Net Profit Interest on Clara’s net earnings. The Company also granted Clara a 5-year rough diamond supply agreement for stones meeting the size and quality specifications historically sold through the Clara platform. This supply agreement may be terminated after the second anniversary or as otherwise mutually agreed between the parties.

KAROWE UNDERGROUND PROJECT UPDATE

The Karowe UGP is designed to access the highest value portion of the Karowe orebody, with initial underground carat production predominantly from the eastern magmatic/pyroclastic kimberlite (south) (“EM/PK(S)”) unit. The Karowe UGP is expected to extend the mine life to beyond 2040.

An update to the Karowe UGP schedule and budget was announced on July 16, 2023 (link to news release). The anticipated commencement of production from the underground is H1 2028. The revised forecast of costs at completion is $683.0 million (including contingency). As at September 30, 2024, capital expenditures of $353.5 million had been incurred and further capital commitments of $57.4 million had been made. 

With the 2023 update to the UGP schedule and budget, the Karowe Mine production and cash flow models were updated for the revised project schedule and cost estimate. Open pit mining will continue until mid-2025 and provide mill feed during this time. Stockpiled material (North, Centre, South Lobe) from working stockpiles and life-of-mine stockpiles should provide uninterrupted mill feed until 2027 when Karowe UGP development ore is scheduled to start offsetting stockpiles with high-grade ore from the underground development. Full scale underground production is planned for H1, 2028. The long-term outlook for diamond prices, combined with the potential for exceptional stone recoveries and the continued strong performance of the open pit could mitigate the modelled impact on project cash flows due to the changes in schedule. The Company continues to explore opportunities to further mitigate the modelled impact.

During Q3, 2024, the UGP achieved a twelve-month rolling Total Recordable Injury Frequency Rate of 0.65. The UGP Total Recordable Injury Frequency Rate at September 30, 2024 was 0.57. A total of $24.1 million was spent on the Karowe UGP development in Q3, 2024 for the following surface infrastructure and ongoing shaft sinking activities:

The ventilation shaft Q3, 2024 development:

• Reached 582 mbs out of a planned final depth of 722 metres.
• Continued 470-level⁽²⁾ station development.

The production shaft Q3, 2024 development:

• Reached 686 mbs, out of a planned final depth of 770 metres.

Related infrastructure Q3, 2024 development:

• Completed the construction and pre-commissioning of the permanent bulk air coolers at the production shaft in July 2024.
• Construction and fabrication of the permanent man and materials winder continued during the quarter, representing the last major component for the permanent winders.
• Commenced the adjudication and review of underground lateral development tender documents.
• Advanced mining engineering with a focus on supporting shaft sinking, underground infrastructure engineering, finalizing drilling level plans and placed shaft steelwork orders in October 2024.

The capital cost expenditure for the UGP in 2024 is expected to be up to $80 million, excluding capitalized cash borrowing costs – see “2024 Outlook” below.

Activities planned for the Karowe UGP in Q4 2024 include the following:

• Production shaft sinking to 310-level⁽²⁾ and ventilation shaft to 335-level⁽²⁾.
• Complete 470-level⁽²⁾ station structural construction work, 670-level⁽²⁾ electrical substation and sump construction.
• Procurement of underground equipment, including an additional Load, Haul, Dump vehicle for the production shaft station development. Major components of the underground crusher and dewatering pumps will be delivered to site.
• Continuation of detailed design and engineering of the underground mine infrastructure, drawbells and underground layout.
• Construction of the man-and-material winder civils and structural building.

FINANCIAL HIGHLIGHTS – Q3 2024

QUARTERLY RESULTS FROM OPERATIONS – KAROWE MINE

QUARTERLY SALES RESULTS

HB Arrangement
For the three months ended September 30, 2024, the Company recorded revenue of $27.8 million from the HB arrangement as compared to revenue of $38.4 million in the period ending September 30, 2023. Revenue generated from HB was 63% of total revenue recognized in the third quarter of 2024 (Q3, 2023: 68%). The revenue includes “top-up” payments which are payable to the Company when the polished diamond final sales price is higher than the initial estimated polished price (“IPV”). In Q3, 2024, HB revenue decreased compared to the previous year’s third quarter as less carats were sold. The Company experienced an exceptional quality of goods recovered in Q3, 2023 including 7 stones greater than 100 carats with combined value in excess of $20 million of IPV compared to Q3, 2024 where the Company recovered 5 category B stones (stones with an IPV equal to or greater than $2.0 million that have a 120 days payment term) with a combined value of $10.2 million. As at September 30, 2024, the Company has $23.2 million of trade receivables from HB of which $22.8 million relates to IPVs that are due between 60-120 days.

Quarterly Tender & Clara
For the three months ended September 30, 2024, the sales volume transacted by tender was $14.6 million (Q3, 2023: $14.2 million) and by Clara was $1.9 million (Q3, 2023: $3.7 million). Both sales channels experienced lower dollar per carat sold amounts compared to Q3, 2023 reflecting the weakening of prices in the smaller sized diamond market. Tender revenue increased slightly due to a higher number of carats sold through tender.

2024 OUTLOOK

This section of the news release provides management’s production and cost estimates for the remainder of 2024. These are “forward-looking statements” and subject to the cautionary note regarding the risks associated with forward-looking statements. Diamond revenue guidance does not include revenue related to the sale of exceptional stones (an individual rough diamond which sells for more than $10.0 million), or the Sethunya since the marketing, analysis, cutting and ultimate sale of such diamonds is highly complex. It could take in excess of a year to monetize the significant value for each diamond. Accordingly, until all the proceeds from the sale of a large diamond are considered to be collectible, the diamond is held as inventory and valued at cost. No changes have been made to the guidance released in November 2023 except for 2024 full year’s revenue and capital costs for the Karowe UGP.

Revisions to diamond revenue guidance reflect lower production of HB qualifying Specials combined with softening of the global rough diamond market during 2024. Revenue is expected to be lower than the initial guidance of $220M to $250M range.

Revisions to Karowe UGP capital costs to be spent in 2024 have been revised down to approximately $80 million from previous guidance of up to $100 million. This decrease is mainly due to the sequencing change in shaft equipping which has deferred the related costs to be spent in 2025 with no impact to the overall construction timeline. The Company’s 2024 capital costs remain primarily directed towards shaft sinking activities and station development. Surface works centered on completing the construction of the bulk air cooler and will continue towards installation of the man and materials winder building.

The table above reflects the natural variability in the resource production in both recovery and diamond quality and were it to continue, this may impact revenue guidance for 2024.

In 2024, the Company expects to mine between 3.6 and 4.6 million tonnes, of which ore tonnes mined represent approximately three quarters of total tonnes mined. The assumptions for carats recovered and sold as well as the number of ore tonnes processed are consistent with achieved plant performance in recent years. A portion of the tonnes mined in 2024 will be stockpiled, prior to the end of open pit mining in mid-2025. Stockpiled material is planned to be processed between 2025 to 2027 before the mine transitions to the underground operations. Ore from the underground development is expected to supplement lower grade stockpile material, primarily from the upper benches of the South lobe, during the transition period to the underground mining operations, beginning in 2027.

Sustaining capital and project expenditures are expected to be up to $10 million with a focus on replacement and refurbishment of key asset components in addition to dewatering activities, and an expansion of the tailings storage facility in accordance with Global Industry Standard on Tailings Management (“GISTM”).  

On behalf of the Board,

William Lamb
President and Chief Executive Officer

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ABOUT LUCARA

Lucara is a leading independent producer of large exceptional quality Type IIa diamonds from its 100% owned Karowe Diamond Mine in Botswana. The Karowe Mine has been in production since 2012 and is the focus of the Company’s operations and development activities. Lucara has an experienced board and management team with extensive diamond development and operations expertise. Lucara and its subsidiaries operate transparently and in accordance with international best practices in the areas of sustainability, health and safety, environment, and community relations. Lucara is certified by the Responsible Jewellery Council, complies with the Kimberley Process, and has adopted the IFC Performance Standards and the World Bank Group’s Environmental, Health and Safety Guidelines for Mining (2007). Accordingly, the development of the Karowe underground expansion project (“UGP”) adheres to the Equator Principles. Lucara is committed to upholding high standards while striving to deliver long-term economic benefits to Botswana and the communities in which the Company operates. 

The information is information that Lucara is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the contact person set out above, on November 13, 2024, at 5:00 p.m. Pacific Time.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain of the statements made in this news release contain certain “forward-looking information” and “forward-looking statements” as defined in applicable securities laws. Generally, any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance and often (but not always) using forward-looking terminology such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “budgets”, “scheduled”, “forecasts”, “assumes”, “intends”, “goals”, “objectives”, “potential”, “possible” or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved, (or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

By their nature, forward-looking statements and information involve assumptions, inherent risks and uncertainties, many of which are difficult to predict and are usually beyond the control of management, that could cause actual results to be materially different from those expressed by these forward-looking statements and information. Forward-looking information and statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to several known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. The Company believes that the expectations reflected in this forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct. Readers and investors should not place undue reliance on such statements.

This press release contains forward-looking information in several places, such as in statements relating to the Company’s ability to continue as a going concern, the project schedule and capital costs for the Karowe UGP, the diamond sales, production and cost estimates under “2024 Outlook”, the Company’s ability to meet its obligations under the Rebase Amendments with its Lenders, the Company’s ability to fill the CORA, the impact of supply and demand of rough or polished diamonds, expectations regarding top-up values, estimated capital costs, the timing, scope and cost of grouting events at the Karowe UGP, that expected cash flow from operations, combined with external financing will be sufficient to complete construction of the  Karowe UGP, that the estimated timelines to achieve mine ramp up and full production from the Karowe UGP can be achieved, the economic potential of a mineralized area, expectations that the Karowe UGP will extend mine life, forecasts of additional revenues, future production activity, that depletion and amortization expense on assets will be affected by both the volume of carats recovered in any given period and the reserves that are expected to be recovered, the future price and demand for, and supply of, diamonds, expectations regarding the scheduling of activities for the Karowe UGP in 2024, future forecasts of revenue and variable consideration in determining revenue, the impact of the HB and Clara sales arrangements on the Company’s projected revenue and sales channels, the outcome of tax assessments and the likelihood of recoverability of tax payments made, estimation of mineral resources, cost and timing of the development of deposits and estimated future production, interest rates, including expectations regarding the impact of market interest rates on future cash flows and the fair value of derivative financial instructions, and the potential impacts of economic and geopolitical risks.

Certain risks which could impact the Company are discussed under the heading “Risks and Uncertainties” in the Company’s most recent MD&A and Annual Information Form available at SEDAR+ at www.sedarplus.ca. Forward-looking information and statements contained in this news release are made as of the date of this news release and accordingly are subject to change after such date. Except as required by law, the Company disclaims any obligation to revise any forward-looking information and statements to reflect events or circumstances after the date of such information and statements. All forward-looking information and statements contained or incorporated by reference in this news release are qualified by the foregoing cautionary statements.

SOURCE Lucara Diamond Corp.

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Third Quarter 2024 vs. Third Quarter 2023

• Revenue of $19.4 million compared to $20.4 million;
• Gross profit of $4.2 million compared to $3.7 million;
• Gross margin of 21.7% compared to 18.2%;
• Net income of $0.7 million compared to $0.3 million;
• Earnings per diluted share of $0.06 compared to $0.02;
• Adjusted EBITDA (1) of $1.7 million compared to $1.4 million;
• Cash flow provided by operating activities of $0.7 million compared to $0.0 million.

Nine Months 2024 vs. Nine Months 2023

• Revenue of $59.3 million compared to $63.0 million;
• Gross profit of $12.9 million compared to $13.0 million;
• Gross margin of 21.7% compared to 20.6%;
• Net income of $2.3 million compared to $2.4 million;
• Earnings per diluted share of $0.18 compared to $0.19;
• Adjusted EBITDA (1) of $5.5 million compared to $5.8 million;
• Cash flow used in operations of $(0.8) million compared to $0.8 million generated by operations;
• Debt as of September 30, 2024 of $18.2 million compared to $20.9 million at September, 2023.

EDGEWOOD, N.Y., Nov. 13, 2024 (GLOBE NEWSWIRE) — CPI Aerostructures, Inc. (“CPI Aero” or the “Company”) CVU today announced financial results for the three and nine month periods ended September 30, 2024.

“Our third quarter 2024 performance was stronger than third quarter 2023 on all fronts, while revenues were marginally lower. As a result of improved product mix and efficiencies, gross profit margin increased by 350 basis points and net income increased by 149%. In addition, our third quarter-adjusted EBITDA of $1.7 million is 15.6% higher than third quarter 2023. Our nine-month results remain strong on lower revenues.

“We continue to pay down our debt and reduced it by $2.7 million over the last twelve months. Our Debt-to-Adjusted EBITDA Ratio was 2.5, which marks our seventh consecutive quarter-end below 3.0, while we generated $0.7 million of cash from operations during the third quarter 2024,” said Dorith Hakim, President and CEO.

Added Ms. Hakim, “We are also pleased to receive an award from L3Harris for the Next Generation Jammer Low Band Pod, our first from this Tier 1 defense contractor, adding to our backlog of $506 million as of September 30, 2024. This award continues our success of winning new development programs and demonstrates the confidence top tier companies have in CPI Aero.”

About CPI Aero

CPI Aero is a U.S. manufacturer of structural assemblies for fixed wing aircraft, helicopters and airborne Intelligence Surveillance and Reconnaissance pod systems in both the commercial aerospace and national security markets. Within the global aerostructure supply chain, CPI Aero is either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. CPI also is a prime contractor to the U.S. Department of Defense, primarily the Air Force. In conjunction with its assembly operations, CPI Aero provides engineering, program management, supply chain management, and MRO services.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included or incorporated in this press release are forward-looking statements. The word “expect,” and similar expressions are intended to identify these forward-looking statements. The Company does not guarantee that it will actually achieve the plans, intentions or expectations disclosed in its forward-looking statements and you should not place undue reliance on the Company’s forward-looking statements.

Forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated or implied by its forward-looking statements, including those important factors set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2023 filed with the Securities and Exchange Commission. Although the Company may elect to do so at some point in the future, the Company does not assume any obligation to update any forward-looking statements and it disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

CPI Aero® is a registered trademark of CPI Aerostructures, Inc. For more information, visit www.cpiaero.com, and follow us on Twitter @CPIAERO.

Unaudited Reconciliation of GAAP to Non-GAAP Measures

Note: (1) Adjusted EBITDA is a non-GAAP measure defined as GAAP income from operations plus depreciation, amortization and stock-compensation expense.

Adjusted EBITDA as calculated by us may be calculated differently than Adjusted EBITDA for other companies. We have provided Adjusted EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance understanding of our operating results. Adjusted EBITDA should not be construed as either an alternative to income from operations or net income or as an indicator of our operating performance or an alternative to cash flows as a measure of liquidity. The adjustments to calculate this non-GAAP financial measure and the basis for such adjustments are outlined below. Please refer to the following table below that reconciles GAAP income from operations to Adjusted EBITDA.

The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:

Depreciation. The Company incurs depreciation expense (recorded in cost of sales and in selling, general and administrative expenses) related to capital assets purchased, leased or constructed to support the ongoing operations of the business. The assets are recorded at cost or fair value and are depreciated over the estimated useful lives of individual assets. Stock-based compensation expense. The Company incurs non-cash expense related to stock-based compensation included in its GAAP presentation of cost of sales and selling, general and administrative expenses. Management believes that exclusion of these expenses allows comparison of operating results to those of other companies that disclose non-GAAP financial measures that exclude stock-based compensation.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the Adjusted EBITDA financial adjustments described above, and investors should not infer from the Company’s presentation of this non-GAAP financial measure that these costs are unusual, infrequent, or non-recurring.

Reconciliation of income from operations to Adjusted EBITDA is as follows:

Annual Recurring Revenue (ARR) ⁽¹⁻²⁾ up 25% YoY to $53.5 million 
Total Revenue up 25% YoY to $16.5 million 
Adjusted EBITDA ⁽²⁾ up 33% YoY to $4.6 million

TORONTO, Nov. 13, 2024 (GLOBE NEWSWIRE) — Vitalhub Corp. (the “Company” or “VitalHub”) VHI VHIBF announced today it has filed its Interim Condensed Consolidated Financial Statements and Management’s Discussion and Analysis report for the three and nine months ended September 30, 2024, with the Canadian securities authorities. These documents may be viewed under the Company’s profile at www.sedarplus.com.

“We are pleased to report strong third quarter 2024 results, continuing our path of driving stable revenue and cash flow growth,” said Dan Matlow, CEO of VitalHub. “Financial highlights include $16.5 million of revenue, 28% adjusted EBITDA ⁽²⁾ margin, and $1.1 million of sequential net new organic ARR ⁽¹⁻²⁾ in the seasonally quieter summer quarter. We are continuing to build on the success of our diversified portfolio, from a product and geographic perspective.”

“Subsequent to the quarter, we closed the acquisitions of MedCurrent and Strata Health, bringing our third quarter 2024 pro forma ARR ⁽¹⁻²⁾ to $68.0 million. Both of these acquisitions expand the functionality of our patient flow platform. The technologies are innovative and will increase our growth potential as healthcare systems increasingly embrace digitization.”

“Inclusive of these transactions, we closed the quarter with a September 30, 2024 pro forma cash balance of over $50 million and no debt. In combination with our stable quarterly cash generation, we are in a strong position to continue on our M&A path. We have record activity in our deal pipeline. We will continue to exercise discipline to transact only on the opportunities that enhance the value of the VitalHub suite for our healthcare partners and our shareholders.”

VitalHub’s quarterly investor conference call will take place on Thursday, November 14, 2024, at 9:00AM EST.

To register for the call, please visit:

https://us06web.zoom.us/webinar/register/WN_b6XzLByVR0yOqO4IN-9UiQ

Third Quarter 2024 Highlights

• Revenue of $16,509,135 as compared to $13,224,264 in the equivalent prior year period, an increase of $3,284,871 or 25%.
• Gross profit as a percentage of revenue was 81% compared to 82% in the equivalent prior year period.
• ARR ⁽¹⁻²⁾ at September 30, 2024 was $53,452,108 as compared to $51,283,570 at June 30, 2024, an increase of $2,168,538 or 4%.
  • ARR ⁽¹⁻²⁾ growth was due to organic growth of $1,081,181 or 2%, and an increase of $1,087,357 or 2% due to the fluctuations in foreign exchange rates during the quarter.

• Net income before income taxes of $2,360,258 as compared to net income before income taxes of $1,820,543 in the equivalent prior year period, an increase of $539,715 or 30%.
• EBITDA ⁽²⁾ of $3,004,034 compared to $2,928,358 in the equivalent prior year period, an increase of $75,676 or 3%.
• Adjusted EBITDA⁽²⁾ of $4,554,597 or 28% of revenue, compared to $3,411,871 or 26% of revenue in the equivalent prior year period, an increase of $1,142,726 or 33%.
• On October 4, 2024, the Company acquired all of the issued and outstanding shares of MedCurrent Corporation and its subsidiaries (“MedCurrent”). MedCurrent integrates evidence-based guidelines at the point of care, serving over 80 customers in Canada, the UK, the US, and Australia. Total closing consideration for the acquisition was $8.3 million in cash after working capital adjustments.
• On October 29, 2024, the Company acquired all of the issued and outstanding shares of Strata Health Solutions Inc. (“Strata Health”). Strata Health designs, builds, and deploys software that improves access and navigation to care for customers internationally. Total closing consideration for the acquisition was $32.3 million, composed of a cash payment of $18.6 million and the issuance of 1,480,726 common shares of VitalHub.
• With the addition of the ARR⁽¹⁻²⁾ of MedCurrent and Strata Health subsequent to the quarter, the Company’s pro forma ARR ⁽¹⁻²⁾ would be approximately $68.0 million.

Nine Month 2024 Highlights

• Revenue of $48,003,531 as compared to $38,904,879 in the equivalent prior year period, an increase of $9,098,652 or 23%.
• Gross profit as a percentage of revenue was 81% compared to 81% in the equivalent prior year period.
• ARR ⁽¹⁻²⁾ at September 30, 2024 was $53,452,108 as compared to $42,612,166 at September 30, 2023, an increase of $10,839,942 or 25%.
  • ARR ⁽¹⁻²⁾ growth was primarily due to organic growth of $5,826,248 or 14%, acquisition growth of $3,311,500 or 8%, and a gain of $1,702,194 or 4% due to fluctuations in foreign exchange rates.

• Net income before income taxes of $5,722,758 as compared to net income before income taxes of $3,343,487 in the equivalent prior year period, an increase of $2,379,271 or 71%.
• EBITDA ⁽²⁾ of $8,075,502 compared to $6,895,569 in the equivalent prior year period, an increase of $1,179,933 or 17%.
• Adjusted EBITDA ⁽²⁾ of $12,793,514 or 27% of revenue, compared to $9,305,973 or 24% of revenue in the equivalent prior year period, an increase of $3,487,541 or 37%.
• Cash on hand at September 30, 2024 was $81,438,615 compared to $33,480,018 as at December 31, 2023.
  • The increase is primarily due to a bought deal offering of approximately $37 million in net proceeds, plus cash generated from operations.
• Cash from operations before changes in working capital was $8,135,174 as compared to $8,536,603 for the same period last year.

^{(1) The Company defines annual recurring revenue (“ARR”) as the recurring revenue expected based on yearly subscriptions of the renewable software license fees and maintenance services.
(2) Non-IFRS measure. Disclaimers and reconciliations can be found in SEDAR filings.}

About VitalHub

Software for Health and Human Services providers designed to simplify the user experience and optimize outcomes.

VitalHub is a leading software company dedicated to empowering Health and Human Services providers. Our clients include hospitals, regional health authorities, mental health and addictions services providers for children and adults, long-term care facilities, home health agencies, correctional services, and community and social services providers. 

VitalHub’s comprehensive suite of SaaS solutions include:

• Electronic Health Record (EHR), Case Management, Care Coordination, and Optimization
• Patient Flow, Operational Visibility, and Patient Journey Optimization
• Workforce Automation

The Company has a robust two-pronged growth strategy, targeting organic growth opportunities within its product suite, and pursuing an aggressive M&A plan. Currently VitalHub serves more than 1,000 clients across Canada, USA, UK, Australia, the Middle East, and Europe.

VitalHub is based in Toronto, Canada, with an offshore development hub in Sri Lanka. The VitalHub team comprises more than 500 team members globally. The Company is publicly traded on the Toronto Stock Exchange (TSX) under the symbol “VHI” and on the OTC Markets OTCQX Exchange under the symbol “VHIBF”.

https://www.vitalhub.com/

Contact Information

Christian Sgro, CPA, CA, CFA
Head of IR and M&A Specialist
(416) 277-3776
christian.sgro@vitalhub.com

Dan Matlow
Chief Executive Officer, Director
(416) 727-9061
dan.matlow@vitalhub.com

Cautionary Statement

Certain statements contained in this news release may constitute “forward-looking information” or “financial outlook” within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information or financial outlook. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”, “anticipates”, “believes”, “proposes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Such statements are based on the current expectations of the management of each entity and are based on assumptions and subject to risks and uncertainties. Although the management of each entity believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.