People Corporation announced financial results for the quarter ended November 30, 2019.
Laurie Goldberg, Executive Chairman and Chief Executive Officer commented, “People Corporation has made solid strategic and financial progress in the first three months of 2020. During the first quarter, a combination of execution on our acquisition strategy, integration initiatives and efforts to drive organic growth resulted in revenue growth of 21.9%, of which organic revenue growth was 8.3%. Adjusted EBITDA, excluding the impact of IFRS 16, continued to grow faster than revenue compared to Q1 of 2019, up 34.9%. During 2020, we will maintain our focus on four key areas: sales and service; products; strategic acquisitions; and integration. We see substantial opportunity to continue to integrate our national platform in 2020 and beyond, to truly leverage our growing scale and national distribution footprint. These efforts will enable us to maintain a best-in-class product and service offering for our customers and their plan members, while driving returns for shareholders.”
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Highlights of Financial Results for the quarter ended November 30, 2019
Financial Results from Operations
The Company’s financial results for the three months ended November 30, 2019, fully reflect the effect of last year’s acquisitions of Benefit Partners Inc. (“BPI), Life Benefit Solutions Inc. (“Life”), and ACL Student Benefits Ltd. (“ACL”). In addition, the partial effect of the current year acquisitions of Collage Technologies Inc. (“Collage”) and the Apri Group of Companies (“Apri”) are reflected in the current period.
| Three months ended November 30 |
||
| (In 000’s) | 2019 | 2018 |
| Revenue | $44,307 | $36,342 |
| Adjusted EBITDA | $10,804 | $7,426 |
| Adjusted net earnings | $1,226 | $1,120 |
| Net income (loss) Net income (loss) per share (basic) Adjusted net earnings per share (basic) |
($2,750) ($0.04) $0.02 |
($1,522) ($0.03) $0.02 |
The Company realized revenue growth for the three months ended November 30, 2019, of $8.0 million (21.9%). Organic growth of $3.0 million (8.3%) was recognized primarily from launching new services, gaining new clients, increasing product and service penetration with existing clients and natural inflationary factors. The Company recognized acquired growth of $5.0 million (13.6%) resulting from the acquired operations of Life, BPI, ACL, Collage and Apri.
Adjusted EBITDA for the three months ended November 30, 2019, was $10.8 million, representing an increase of $3.4 million (45.5%), as compared to the same period in fiscal 2019. Excluding the favourable impact of $0.8 million from adopting IFRS 16, Adjusted EBITDA for the three months was $10.0 million representing an increase of $2.6 million (34.9%), as compared to the same period in fiscal 2019. Growth in Adjusted EBITDA for the three month period was primarily driven by contribution from acquired operations, organic revenue growth in the first quarter, partially offset by higher variable compensation expenses tied directly to the higher revenue and an expanded staff complement to accommodate current growth in operations and the launch of our new disability service. The Company continued its investment in sales and support staff, along with marginal growth within the Corporate support functions which included the Company’s new HR department.
The Company reported Net loss for the three months ended November 30, 2019 of ($2.8) million. Net loss increased by $1.2 million as compared to the prior fiscal year due to increased acquisition, integration and reorganization costs and higher depreciation and amortization expense, partially offset by an increase in Adjusted EBITDA of $3.4 million, as described above, and a reduction in fair value adjustments relating to the non-controlling interest put options.
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Strategic and Operational Highlights
The Company continues to make significant progress on executing its strategic plan, while at the same time making investments to position the Company for ongoing future growth. Some notable milestones include:
- Completed the acquisition of Collage, a leading cloud-based digital human resource employee benefits administration and payroll solution provider based in Ontario. This acquisition has provided entry into adjacent markets, expanding the Company’s administrative and technological capabilities and providing new supplier relationships, which will enhance the breadth and depth of the Company’s product and service offering and the plan member experience;
- Completed the acquisition of Apri, one of the largest independent group benefits Managing General Agents (“MGA”) and group benefits consulting firms in Canada. Apri has established a presence in multiple provinces, has built a strong reputation for innovative, client-focused solutions, and forged solid long-term relationships with clients, third-party brokers, and suppliers. In addition, Apri’s JungoHR platform offers a HRIS focused on mid-sized and enterprise-level businesses, expanding the Company’s existing human resource solutions. Paired with the Collage Benefits HQ platform, the Company is able to provide a comprehensive solution and value proposition to its third-party broker network as one of the largest group benefits MGAs in Canada;
- Completed a private placement equity offering of 6,983,500 shares for total net proceeds of $61.0 million;
- Executed on the buy-back of selected retained economic interests in Coughlin and BPA;
- Continued to invest in top talent with additional senior leadership in the Company’s Group Retirement Solutions operation and additional consultants focusing on group retirement, disability, and enterprise clients;
- Launched a MGA solution to provide back office support to our third party consultants;
- Initiated the operational integration of ACL and Gallivan to strengthen the Company’s position as a leader in the student benefits market;
- Launched a new disability management and administration system solution;
- Completed and launched the pilot for People Care, a new online Mental Health solution for clients; and
- Initiated the first phase of integration related to shared service functions for recently acquired firms, including ACL Student Benefits Ltd. And Collage Technologies Inc.
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