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Skylight Health Provides Clinical Research Update

Skylight Health Research has been selected to participate in 10 clinical research studies since its launch

TORONTO, April 29, 2022 (GLOBE NEWSWIRE) — Skylight Health Group Inc. (NASDAQ:SLHG;TSXV:SLHG (“Skylight Health” or the “Company”), a multi-state primary care management group in the United States, today provides an update on the status of the Company’s research program; Skylight Health Research.

• In April 2021, Skylight Health Research announced its partnership with ClinEdge to launch formal clinical research studies into its practices;
• Since inception, Skylight Health Research has been awarded ten (10) clinical studies and has completed two (2) to-date;
• Total revenue earned through clinical studies in 2021, $300,000, has already been surpassed in 2022, and is expected to quadruple by the end of this year;
• The progress since its launch demonstrates incredible momentum and steady growth of its research program which will continue throughout 2022 and beyond.

In 2021, Skylight Health leveraged its growing clinical services division and launched Skylight Health Research, which has since been awarded ten clinical studies through its partnership with ClinEdge, announced on April 7, 2021. Skylight Health Research has since made several other key partnerships with research partners and Contract Research Organizations that will bring a steady supply of study opportunities to Skylight Health practices.

All potential study opportunities are reviewed by the research team to assess feasibility based on existing infrastructure and alignment with the goal of Skylight Health Research, to meaningfully contribute to the advancement of medical science with Skylight’s deep base of experienced providers and engaged patients. The ten studies awarded range in indication and methodology and will each provide important contributions to evidence-based medicine including advancing knowledge of COVID-19, influenza patterns, cancer detection, major depressive disorder, and Lyme disease.

In less than a year, Skylight Health Research practices have enrolled more than 1000 patients across five studies, and two Skylight Health sites were among the top performing sites in a highly competitive study that collected blood samples for the development of a cancer-detecting blood assay. The five additional studies that have been awarded are expected to begin enrollment within Q2 of this year.

“We are proud to have seen our research arm experience such rapid and enduring growth in such a short period of time,” said Prad Sekar, CEO of Skylight Health. “The power of our growing patient base to further contribute to the betterment of US healthcare through research studies is proof that we are just scratching the surface of Skylight’s ability to contribute to the market as a whole.”

The program has gained incredible momentum and demonstrated the reach and efficiency provided by the centrally organized research team, allowing for quick start-up at multiple Skylight-owned practices to bolster Skylight’s research applications in a competitive market. The program has grown from a single practice participating in research at the beginning of 2021 to five practices that will have active research initiatives by the end of Q2 2022, furthering opportunities and access to new patient populations.

Skylight Health Group Reports Fourth Quarter and Full-Year 2021 Financial Results

Revenue Growth of 3,842% Year over Year and 8% Growth Compared to the Previous Quarter

TORONTO, ON – March 30, 2022 – Skylight Health Group Inc. (NASDAQ:SLHG; TSXV:SLHG) (“Skylight Health” or the “Company”), a multi-state primary care management group in the United States, today announced its financial results for the fourth quarter and year ended December 31, 2021, as well as the filing of its restated condensed interim consolidated financial statements and management’s discussion and analysis for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021 (collectively, “restated financial statements and MD&A”).

“Our strength as an entrepreneurial team means that we continue to place our efforts where we believe will drive the maximum value for the Company and our shareholders,” said Prad Sekar, CEO and Co-Founder of Skylight Health. “We are pleased with our results for 2021 which saw a year of high growth as we invested in our team, technology, and refocused business lines to support our mission of fully encompassing value based care. While market conditions in 2022 have seemingly slowed our growth trajectory from an acquisition standpoint, our strong foundation has given us the ability to endure a weaker climate and allowed us to focus on strategic optimization and cost-savings. We remain bullish on several large-scale initiatives that have been quietly in the works for several months. As we continue to scale towards profitability, the strategic impact of these initiatives could potentially result in a positive impact for the Company.”

Fourth Quarter and Full-Year 2021 Financial Highlights:

• Revenues for the year were $27.2 million (excluding revenue from discontinued operations of $10.6 million), compared to $0.7 million for the year ended December 31, 2020 (excluding revenue from discontinued operations of $12.5 million), an increase of $26.5 million;
• Gross profit was $15.1 million for the year ended December 31, 2021 (excluding gross profit from discontinued operations of $8.1 million), compared to $0.3 million for the year ended December 31, 2020 (excluding gross profit from discontinued operations of $8.8 million);
• Gross margin was 56% for the year ended December 31, 2021, compared to 39% for the year ended December 31, 2020 (discontinued operations gross margin was 76% and 70%, respectively);
• Adjusted EBITDA loss of $14.6 million in 2021 compared to loss of $6.0 million in 2020, driven by one-time expenses in infrastructure development and acquisition related expenses. The Company does not expect to see many of these expenses moving forward;
• Loss from continuing operations in 2021 was $22.2 million, with approximately $6.7 million in share-based compensation and depreciation and amortization and $4.2 million in professional fees related to accounting, legal and consulting fees;
• Cash balance of $11.7 million as of December 31, 2021.

Fourth Quarter and Full-Year 2021 Operational Highlights:

• On January 4, 2021, acquired 100% of Colorado based primary care services group Apex for $2.3 million.
• Executed clinical trial contracts, with an increase in revenues of 207% compared to 2020;
• On January 5, 2021, The Company’s shares commenced trading on the TSX-V under the symbol “SHG” after the Company’s shares were voluntarily delisted from the Canadian Securities Exchange on January 4, 2021
• On January 14, 2021, the Company appointed Grace Mellis, as an independent director to the Company’s Board of Directors and the Chair of the Audit Committee. Ms. Mellis has a robust background in strategy and finance leadership roles with over 28 years of success and experience
• On February 3, 2021, acquired 100% of Florida-based RCMA with 6 clinic locations for $5.6 million (US$4.4 million).
• On February 26, 2021, the Company appointed Andrew Elinesky as Chief Financial Officer. Mr. Elinesky has a long and distinguished career in Finance and has served as CFO for multiple publicly traded companies in Canada and the United States. He comes with strong cross-border market experience and specializes in mergers & acquisitions and consolidation.
• On March 16, 2021, the Company appointed Mr. Patrick McNamee as Chairman of the Board. Mr. McNamee succeeds Norton Singhavon who will remain involved as an active member of the Board. Mr. McNamee has previously acted as EVP and COO of Express Scripts, where he led all major activities of the $120B+ technology-driven pharmacy benefit management company.
• On April 5, 2021, acquired 100% of Colorado based Primary Care Clinic Group, Rocky Mountain for $13.3 million (US$10.7 million).
• On May 13, 2021, the Company received conditional approval from Nasdaq to list its issued and outstanding common shares on Nasdaq. On May 25, 2021, the Company received a confirmation from the Nasdaq that its common shares will be able to commence trading on the Nasdaq during the week of June 7, 2021 under the symbol “SLHG”. On June 7, 2021, the Company commenced trading on the Nasdaq under the symbol “SLHG”.
• On May 26, 2021, the Company closed a bought deal offering with a syndicate of underwriters led by Raymond James Ltd. as sole bookrunner and co-lead underwriter and Stifel GMP as co-lead underwriter on behalf of a syndicate including Beacon Securities Limited, Echelon Wealth Partners Inc., and Bloom Burton Securities Inc. (collectively the “Underwriters”). Pursuant to this, the Underwriters were issued, on a bought deal basis, with full exercise of the Underwriters’ 15% over-allotment option, 1,970,360 common shares (post-Share Consolidation basis) of the Company at a price of $7.00 per common share for gross proceeds of $13.8 million.
• On June 23, 2021, acquired 100% of Florida based primary care group Doctors Center Inc. for $2.8 million (US$2.2 million).
• On July 7, 2021, the Company appointed Dr. Kit Brekhus as Chief Medical Officer (“CMO”), taking over from Dr. Georges Feghali who served as CMO from February 2021.
• On August 26, 2021, the Company appointed Mohammad Bataineh as President.
• On September 16, 2021, acquired 70% of Pennsylvania based Primary Care Clinic Group, Aspire Health Concepts, Inc. for $2.0 million (US$1.6 million).
• On December 6, 2021, the Company announced the closing of the registered offering of 275,000 9.25% Series A Cumulative Redeemable Perpetual Preferred Shares (“Series A Preferred Shares”) at a price to the public of US$21 per share for gross proceeds of US$5.8 million. The Series A Preferred Shares trade on the Nasdaq Capital Market under the symbol “SLHGP”; and
• On December 15, 2021, the Company completed the divesture of 100% of assets related to the Legacy Business for a total cash consideration of $11.1 million (US$8.6 million), including $5.2 million ($US4.0 million) on closing subject to customary working capital holdbacks and the remaining balance paid over three installments.

Fourth Quarter and Full-Year 2021 Performance:

Revenue increased $9.0 million from the same period last year, largely due to additional revenue being contributed by the clinics acquired during the fiscal year ended December 31, 2021. The fourth quarter of 2021 was the first period that included a full three months of contribution by Harrisburg, Pennsylvania’s Aspire Heath Concepts, Inc. The Company remains committed to a strong growth by acquisition model fueled by a strengthened balance sheet and robust pipeline.

Net loss for the year ended December 31, 2021 was driven by approximately $6.7 million in share-based compensation and depreciation and amortization and $4.2 million in professional fees related to accounting, legal and consulting fees. Adjusted EBITDA loss of $14.6 million was a result of investments made primarily in human capital, technology and infrastructure. While the Company is focused on managing EBITDA, it expects that investments needed to be successful in a full risk and total cost of care reimbursement model will be offset by improved patient economics driven by higher margin payor contracts as validated by its peers. As a result, the Company expects to continue to make investments in this growth opportunity and believes that it has sufficient capital on hand to see this investment through to realize increased margin contribution.

2021 was a year of infrastructure development for value-based care and laying the foundation for the effective management of practices across multiple markets. Several large-scale initiatives that were executed through 2021 and into Q1 of 2022 included the integration of technology systems in human resources, payroll, electronic health records and the implementation of improved benefits and insurance programs. These initiatives, while an investment in 2021 and early 2022, will lead to improved cost synergies and savings while driving future revenue growth through better practice management.

Each of these programs have now been executed and the Company is starting to see immediate improvements to its annual expenses under each of these initiatives. These initiatives will also support the implementation of business development activities which the Company has outlined as its priorities for 2022. These include a national contact center to boost patient access and service and drive revenue growth, in-house revenue cycle management, improved payor contract negotiations and the ability to better identify the shift to value-based care under certain payor agreements.

Restated financial statements and MD&A

The Company has restated its condensed interim consolidated financial statements for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021, as well as the management’s discussion and analysis for those periods. The restated financial statements and MD&A were necessary because of errors related to the accounting treatment of certain revenue transactions. The Company overstated revenue and accounts receivable due to not properly recording price concessions as a reduction of revenue.

Outlook

Skylight Health remains focused on growth, both organically, and through acquisition, as it rapidly captures market share within the US healthcare network. The Company continues to prioritize the integration of health technology solutions to help small and independent practices shift from a traditional fee-for-service model to value-based care through proprietary technology, data analytics and infrastructure.  This organic growth through an increase in insurable services and new patients represents a predominant portion of revenue and is where the Company expects to see its strongest growth in future periods. The Company expects that by 2022, the large majority of investments made at the start of the year will result in both a higher growth of revenue driven organically and by acquisition and will also result in stronger EBITDA recognition. The Company is focused on revenue growth which it believes is how its peers are measured and expects to continue to compete aggressively for market share growth in three areas: acquisition of primary care practice groups, development of its single system of operation and clinical leadership, and conversion from fee-for-service to value-based-care. With the growing demand for accessible and affordable medical services in the US, Skylight Health is well positioned to meet this growing opportunity while creating significant shareholder value.

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