Newtopia reports first quarter 2021 financial results

Newtopia Inc. a tech-enabled habit change provider focused on disease prevention, today reported financial results for the first quarter 2021. All amounts are expressed in Canadian dollars, unless otherwise noted.

First Quarter 2021 Financial Highlights (vs. Q1 2020):

• Revenue of $2.6 million, as compared to $3.9 million
• Gross margin percentage of 50%, up from 43%

“The pandemic has proven the importance of prevention as a means of protecting our global population. Specifically, we continue to see strong engagement levels for our whole person care and participant churn remains at historically low levels. Interestingly, participants who joined our platform right as the pandemic began have outperformed our traditional participant,” said Jeff Ruby, Founder & CEO of Newtopia. “We are looking forward to the return to year-over-year growth, with a rollout with one of our Fortune 500 clients that was previously postponed now scheduled for the back half of the year, and a pipeline of new clients building.”

Ruby continued, “The first quarter marked a significant expansion of Newtopia’s health insurer focus and addressable market as we bring our proven disease prevention model to both the US and Canada for Medicare and provincial health customers, respectively. We anticipate a tsunami of chronic disease risk following COVID-19 and look forward to supporting our clients with a proven means of addressing this mounting issue. With increased vaccination counts across North America, and in particular the United States, we are hopeful that our clients will return to their standard operating procedures. Our underlying business remains strong, and we look forward to supporting current and prospective clients hoping to mitigate their risks as the world economy fully reopens.”

Recent Operational Highlights:

• Debuted Habit Change Platform in Canada in April through a partnership with Eastern Health, the largest, integrated health authority in Newfoundland and Labrador, and Medtronic, a formal partner under Eastern Health’s Innovation Strategy. Together, Newtopia and its two partners will implement an integrated type 2 diabetes prevention program.
• Launched Phase 1 – the first six months – of a campaign with a Fortune 500 apparel and home fashion chain in the United States employing 90,000 people, with the opportunity to expand to the entire at-risk population.
• Completed a 12-month JPMorgan Chase Medical Trial sponsored by Haven. Results of this study will be formally published in the coming weeks.
• Expanded Company Advisory Board to include Nancy Cocozza, Former President of Aetna Medicare, and Gil Bashe, Global Head of Health at FINN Partners, a leading global marketing agency.
• Officially commenced sales efforts into the Medicare and Medicare Advantage (“MA“) markets following a successful study conducted by Santa Barbara Actuaries Inc. and commissioned by Newtopia. Results of the Santa Barbara Actuaries study demonstrate that Newtopia’s programs can provide significant medical cost savings of up to $1,700 per MA member. Adding this particular at-risk population to the Newtopia platform expands the Company’s potential target base into the 65 years and older Medicare and MA markets, which together represent 62 million people.

Newtopia’s platform leverages genetic, social and behavioral insights to create individualized prevention programs. The Company’s whole person approach combines virtual care, digital tools, connected devices and actionable data science to assist in preventing, slowing and reversing chronic disease while also enriching mental and emotional health. Newtopia helps generate sustainable habit change for participants while maintaining clinical and financial outcomes for health insurers.

First Quarter 2021 Financial Results
Revenue for the three months ended March 31, 2021 was $2.6 million, compared to $3.9 million in the prior-year period. In the first quarter of 2021, revenue was comprised of 77% engagement fee revenue, up from 64% in the prior-year period.

Gross profit for the first quarter 2021 totaled $1.3 million, as compared to $1.7 million in the prior-year period. Gross profit is comprised of Newtopia’s revenue less direct expenses, which include the cost of Welcome Kits sold to new participants as well as labour costs associated with hiring and training of the Company’s coaching team of Inspirators. As a percentage of revenue, gross profit totaled 50%, up from 43% in the first quarter of 2020.

Selling, general and administrative expenses totaled $2.2 million, as compared to $1.7 million in the prior-year period. Selling, general and administrative expenses included approximately $0.1 million in search costs related to sales and technology hires in the quarter that will not recur in future periods.

Adjusted operating expenses² for the three months ended March 31, 2021 totaled $2.9 million, compared to $2.4 million in the prior-year period, as the Company continued to add technology, sales and marketing and administrative resources to support long-term growth.

For the quarter, the Company had an adjusted operating loss³ of $1.6 million, compared to an adjusted operating loss of $0.8 million in the prior-year period. This increase in adjusted operating loss is due to the lower level of revenue in this year’s first quarter along with the corresponding lower margin.

The Company ended the first quarter 2021 with $2.6 million in cash on the balance sheet. During the quarter, Newtopia incurred $0.5 million in capital expenditures and approximately $0.5 million of additional non-recurring public company costs and recruitment search fees. The Company has not utilized its credit facility to date. PR Newswire