For joining us this morning for NeuPath Q3 results. The company will be making a presentation and discussing their business and their financial results. Then we will be taking questions from the audience. Please type your questions into the Zoom Q&A function, and I will read those out to management. Please try to keep the questions clear and tight. It makes everything a lot better. Sometimes I, it's literally hard to understand what the question is. With that, we're gonna get the show officially on the go here. NeuPath is Canada's largest provider of healthcare services for the treatment and assessment of chronic pain, back injuries, sports-related injuries, and concussions. The company just released its Q3 results with over 26 percent revenue growth and adjusted EBITDA up 98 percent. CEO Joe Wolowitz and Steven Lemieux, the President, are here to discuss the results.
I'm Martin Gagel with Market Radius Research. Please remember, this is neither a recommendation nor investment advice. Gentlemen, welcome back and congrats on another strong quarter.
Yeah, thanks, Martin, and thanks for the intro there. I'm Joe Walewicz. I'm the CEO of NeuPath Health, and I'm joined here by Steven Lemieux, our President. I apologize for those of you who know the story. I'm gonna go over a little bit just background so for those who are new to the story can get a little sense of what we do. As Martin mentioned, we are Canada's largest network of chronic pain treatment facilities. Next slide, Martin. We will be making forward-looking statements today. I encourage all investors to have a look at our AIF and all our other documents filed in SEDAR. We do also use non-IFRS measures. You know, just so everyone knows, all our details are in the financials and there's nothing, everything's there.
If you have any questions, just give us a call. You know, why invest in NeuPath? First and foremost, we do run, I mentioned, regulated healthcare facilities. In the past, we've talked a little bit about, you know, sometimes some of our peers talk about clinics. These are regulated facilities. We are a private provider of public health operating healthcare facilities that augment and supplement the public system. These require specialized personnel and training, and very expensive equipment and, you know, a decent amount of CapEx, although we've put that behind us, I think, for the most part now. We've had a great organic growth profile, as you can see from our numbers. We've not made any material acquisitions in some time. The numbers are really driven by patient visits and doctors adding more time and spending more time with us.
As of today, unfortunately, this is a large growing market. There are lots of people out there who are underserved and need our help. More importantly, we think that as the business has grown stronger, we have lost our opportunity for inorganic growth. Finally, growing cash flows, you can see the balance sheet. A few years ago, we had over 5 million net debt. We are now down to under 2 million, 1.7 million. We have been really rejigging that balance sheet and using that cash flow to buy back stock and other things. We are able to invest in new initiatives. What do we do? People always kind of wonder, what does chronic pain treatment mean?
There is kind of magic, people can imagine a bunch of different ways, but I think this helps to simplify it a little bit. We do injections. For example, Botox. If you have a migraine, you may get a Botox injection, which is, you know, for people who do not know that, Botox can be used for the treatment of chronic migraine. Things like prolotherapy and PRP for sports injuries. You know, you get nerve blocks for people who have sciatica. You know, these are things that you can do. In addition, we do things like infusions, IV infusions of lidocaine for people with systemic pain. Ketamine can also be used for pain. I just want to be clear, this is not a field trip kind of situation. What happens when you get ketamine in our clinics, it is usually lower dose than you would get for the psychological treatment.
These are lower dose, for the treatment of chronic pain. And then, of course, there's other things. You know, radiofrequency ablation is a very important treatment modality for people with chronic lower back pain. We have physical therapy onsite in Edmonton. We have one of our doctors actually does acupuncture. You know, we do cognitive behavioral therapy. We make that free, freely available to our patients. We do sessions every couple months. And then, you know, some, we have a massage therapist who comes in once in a while. So, you know, there's all these things that are ancillary to what we do, but the core business is really kind of injections, infusions, and things like radiofrequency ablation. Next slide, please. There. For those of you who do not know, we are currently in Ontario and Alberta.
We're in Ontario from Ottawa to Windsor and most places in between operating under two brands, in Medic and NeuPath Center for Pain and Spine. In 2021, we entered the Alberta market with our HealthPoint acquisition, which led to our expansion to Red Deer. That site began operations really 2023, but really accelerated in 2024. It is one of our fastest growing sites now. Steve, I'll pass it over to you.
Perfect. No, thanks, Joe. Just looking at our results for the quarter, as Martin mentioned, our Q3 revenue was up approximately 26 percent. This is mainly driven by higher patient volumes at all of our clinics across all of our brands. On the year to date, we're up roughly 20 percent to 65 million compared to 53 million last year. That, again, is mainly driven by higher patient visits. We did have a one-time revenue pickup we talked about in our Q2 results. On the next slide, looking at our adjusted EBITDA. Strong adjusted EBITDA growth both in the quarter and year to date. This is really driven by our operational improvements.
Looking at optimizing this, the available time that doctors give us to maximize the amount of patients we can get through the clinics, IT investments to help improve the doctor's efficiency with respect to using like artificial intelligence in their EMR systems, as well as optimizing our real estate footprint to get the most out of the square footage we have, expanding where we need and contracting at clinics where we had additional space. To our balance sheet, as Joe mentioned, our balance sheet is in great shape. We finished the quarter with 4.6 million in cash. Our net debt is 1.7 million. We have been growing that cash balance while we have been investing in our facilities across the country. This puts us into a great position to start growing the business.
have got a good cash balance that is growing, and we have got a great partner with National Bank. We have the availability to increase our leverage and use acquisition lines to move forward as we continue to look at opportunities to grow our business in new markets. With that, I will turn it back to you, Joe.
Sure. I think, you know, people, for those of you who've been following us, we've been talking about this for some time. Step one, increased capacity utilization, better use our facilities. In that case, we've been, you know, and one of the best ways, of course, is to onboard new doctors at underutilized clinics, doctors adding hours. We always say add doctors, but it isn't really quite that way. If a doctor's working one day a week and they add, you know, two more days, that's three days a week. That significantly increases our ability to serve our patients. You know, and as well adding new services. You know, we did, we started with Arthrosamid this year. We've been doing PRP and prolotherapy for some time, and we're adding the ketamine infusions.
You know, adding these new services, you know, augments our revenues. You know, for example, we've done approximately 100 Arthrosamid procedures already, you know, at CAD 4,200 an injection. You know, it's been a significant part of our revenue, given that we just started in March. You know, expanding our network. As we know, we expanded to Alberta, we expanded to Red Deer. We're looking at additional opportunities to expand both within our two core provinces as well as additional provinces. Finally, you know, we've always talked about other specialties, you know, radiology, orthopedics, things that would be able to, that fit hand in glove. You know, every patient who comes in our clinic has probably had imaging done. It's a great idea to kind of think about some of those.
If you're a candidate for surgery, you know, we can send you over there. If you're referred for surgery, you're not a candidate, maybe you still have pain that needs to be treated. There are kind of, these are the three areas we view as important for the future. Inorganic growth, that's really kind of our now, our focus. Steven joined in on May 1, you know, and what we've been doing with that, you know, we got our National Bank new credit line in place at the end of March. Steven on May 1. Now we've been spending a lot of time evaluating a lot of new opportunities for using our existing cash flows and our balance sheet to be able to allow for some tuck-in acquisitions.
Lots of things, you know, we won't, I know some of our peers, you know, talk about the actual numbers and when they're gonna close and whatnot. You know, we know we have certainly more than a dozen things on our desk right now that we're actively evaluating. And, you know, always timing is very difficult to predict. We are super excited about our ability to do so given our financial state and looking at all of these things here, new, nicer facilities in our core markets, new facilities in new markets, like for example, the cities in Ontario and Alberta that we're not in, as well as, you know, things like BC, Quebec, et cetera, where we can get in as well on a different location. Next slide, please. I want to talk about the cap structure too, because this is interesting.
I talked about how we cleaned up our balance sheet, but you know, we've really cleaned up our entire cap structure. When I took over, we had some high yield debt, we had related party debt, we had broker warrants, we had other warrants. You know, it's clean. We have common shares, options, RSUs, and that's it. And, you know, we've cleaned that up over time and we got rid of all the debt. We have one bank facility. So we have a bank facility debt, sorry, one debt facility, shares, options, warrants, or RSUs. That's it. I'm really proud of kind of cleaning this up. We've been busy buying back the stock, as you can see. You know, over the last year, you've seen me buying in the market, you've seen the company's been buying in the market.
We continue to believe if you look at our last nine months, year to date, if you look at trailing 12 months, sorry, adjusted EBITDA of almost $6 million, we're trading at, you know, well as of whenever two days ago, CAD 23 million in terms of enterprise value. We think the board and myself, both as shareholder, board member, and as an executive are very comfortable that the company is undervalued here. We're very pleased to continue with that, returning capital to shareholders in that manner. Next slide, please. For those of you who do not know, I joined about three years ago, took over as CEO, but I was with the company since I joined the board of directors in 2020 as part of the RTO.
I've been almost 30 years in healthcare with multiple successful companies in the pharma and biotech space. Jeff, our CFO, he was a controller until he was our controller, was promoted to CFO in 2021 on an interim basis. We loved him so much, we asked him to step up and take that full time. Then Steven, we brought him back in in 2025. Steven.
Yeah, yeah. Rejoined the company back in 2025 as well. I've been CFO at a variety of pharmaceutical companies up on both sides of the border. I wanted to say to join the team here at NeuPath again and start continuing to grow and build it and try to.
Next slide. I think that just kind of gives people, we don't give guidance, but just kind of gives people a good sense of our outlook and what we see. You know, we think continued high single, low double digit organic growth for the base business is very achievable over the next 12 months. We're seeing it, you know, the increased physician hours resulting in more patient volume growth, which is really, I'd say probably the fundamental thing we want to keep an eye on. You know, this Arthrosamid has been great. We're looking at other procedures like that, where we can kind of add in new novel therapies that just make our service offering more unique and differentiated from our peers. You know, we're under the hood, we're tinkering drug costs, scheduling of staff.
You know, we're making, you know, right-sizing clinics. You know, everything's kind of, we keep tinkering away to work on all the pieces of our expense structure. And then, you know, finally, you know, we're gonna, we definitely expect over the next 12 months, we'll be executing on a couple of these transactions. In summary, you know, we are Canada's leader in chronic pain treatments. We're a private provider of public health, as I mentioned, which means we support and augment the system. We're not a private pay business. These are regulated facilities. There's a large market for this. We have, I think in Edmonton now, we're 18-month wait lists. I have a few clinics in Ontario with probably 1,200 patients that's waiting to be seen. You know, we have a lot of people who are waiting to get care from us.
The bad news is if they go to the public system or go to a public hospital, it's even worse. We are trying, we are all trying to better serve patients. We think that we will be able to do that over the next 12 months. You know, in terms of health policy, I think that the comment there is really around the idea of what we do. I always say this to investors who do not know us: what we do, you can also get done in the hospital, right? We are kind of hospital light, so to speak. The difference is that, you know, I am downtown Toronto today. If you want to fight traffic and pay $30 for parking and get to the hospital, then you wait two years to get it through the wait list.
whereas we're providing it in the community in Brampton and Mississauga and Scarborough and, and Oshawa, you know, where people, you know, can actually readily access this. I think we're providing better access to patients. That's what I think the government would like to see, things that are not required to be done in the hospital, done out of hospital. That's, you know, whether it's Doug Ford, whether it's other premiers talking about how do we do some of these procedures like corneas or, or cataract surgery, you know, things like things that don't need a hospital, shouldn't be done in the hospital. I think you're gonna see more and more. Canada is probably 10 plus years behind other countries in doing this. I think we're, we're just at the nexus of that.
You know, we've had really turned this business around, you know, management here. I think we've, you know, I told you two, three years ago that I was gonna turn this around. I think, you know, you can kind of see what we've done and just judge for yourself. I, you know, we know we're undervalued, because we know what our multiples are and we know what the multiples are of the acquisitions we're looking at. We are gonna continue to return capital to shareholders in the manner we see fit. I think that's it. Oh, that's from our MD&A. Great. Thank you.
All right, gentlemen, thanks for that overview. I just wanna make sure, just you are a private provider of public services. You're largely government paid, although some of that knee procedure you do, I believe, is a private pay thing. For the vast majority of services, you get paid by the provincial government, correct?
Yes. Currently, Alberta Health and OHIP are, you know, primarily cover, you know, 97-99 percent of our revenues. It's changing now, you know, as, or like PRP is a, is a procedure that's done for, for like sports injury. For example, you've probably heard of a hockey player or, you know, a baseball player who's got injured and they get a PRP shot. You know, those are things that I think the, as we call the aging, you know, warriors here, you know, people like to, you know, keep active in their, in their older age, do those kinds of procedures. The government doesn't pay. We were able to provide that to patients, you know, for a fee, things like Arthrosamid. I think we'll start seeing some more of that.
I don't see this ever going to a full, private pay, but basically we're not allowed to provide anything that the government provides, you know, for a fee. If the government doesn't want to do that or it doesn't see value in that, or is unable to pay for it, you know, then certainly you'll see those kind of procedures. That's not just in chronic pain, it's everywhere. There's, you know, procedures the government just refuses to pay for. There's drugs for cancer they won't pay for. You know, there's, and then patients have to find their own way around that.
All right. I noticed on your cap table, things have, as you highlighted, cleaned up. What's very noticeable is your warrants on, or I didn't see any, or you said that there are no more warrants on the cap table. What happened there?
Yeah. If you look in our filings, you'll see the details there. Basically, we paid a very nominal fee to retire those warrants and get rid of them. Essentially, in line with what we're doing with our buyback, we are trying to minimize—we did not want to dilute shareholders, you know, for almost 10 percent at a price of $0.25. I think we are very confident where the stock is today. We're undervalued. We think we're even more undervalued at $0.25. Being able to pay a nominal fee to retire those, those two things: one, it minimized dilution for the rest of our shareholders, and two, it removes an overhang, I think, that was out there, a perceived overhang. We're very pleased to have done that at a really very low price.
If you look at the number, it was about 180,000. If you do the premium to $0.25, you'll see that it was a very nominal fee and very attractive use of capital for the company.
As well as signaling you do not need that capital right now, your cap structure and table is just air.
Yeah. And that too. Yes. You know, as we mentioned on our other side of the balance sheet, you know, we're very comfortable with where we're at right now.
Yeah. You've been growing organically, quite substantially over the last few years with essentially the same footprint. You've optimized it a little bit. Can you talk about your capacity utilization and how much more internal growth can you do before you just start hitting up against the natural limits of walls and doors and that without having to open new locations?
That's a good comment. First, I'll just say that, you know, one of the things you've heard from me over the last two years is we've been really kind of consolidating our sites. We had closed Toronto, we closed Oakville, we shrunk Mississauga, we shrunk London. Now you're seeing two other things. We now grew Windsor and we grew Brampton because they're at capacity and so they're busy. When we look at our capacity utilization, it's across the network of 12 sites. What we've done is with those other closures, we've been able to consolidate positions into sites that helps on the capacity utilization. Now we're at the point where some of the sites actually need a little bit, a little extra space. We're going to do that.
We probably have, in January, we have two more sites. We'll probably be adding a few treatment rooms because, as you can see, our organic growth is there. That being said, just in terms of, op, capacity utilization, there's different ways to look at it. You know, we've historically looked at it more as like kind of an operational capacity utilization, not a footprint-based utilization, which is kind of a little different. What I want to message to investors is we have more than enough footprint to grow organically, over the next few years. We're going to provide some updates on that, provide more detail in the new year. We'll be talking a little more about footprint and operational capacity so people can kind of better understand that.
Basically, bottom line is, you know, for example, if I have a site, but there's no doctors there, then, you know, the functional or operational capacity isn't there, right? We'll provide more detail on that in the new year. I think when you see our capacity utilization, I think some people had some concern about being over 80 percent, you know, that then it gets to be a problem recruiting and retaining doctors. We don't have that. One, we've been expanding, as you know, with Brampton and Windsor I mentioned, for example. Two, that physical space, we have a lot of physical space still available. We just have to use it better. We're gonna, I, I'm not worried about the growth profile organically for now.
Is the rate limiting factor right now the number of physicians that are there and it's a matter of hiring and that'll expand your total capacity and just then tweaking, I don't know how it's used and so forth. Do I, do I have that right?
Yeah. Martin, you do like, so like as we said in the past, like we've gotta, there's a lot of patients that need to be served here and really finding doctors has been the biggest priority of the business. We do have, we do work with recruiters and through our physician network to expand the doctor footprint. We do have probably about half a dozen new doctors that will start into the new year. It does take time from when the doctors leave their existing contracts to when they can start joining us. Some will come on one day a week and then expand to two or three days. That, that's what we're doing.
We're looking at like it's new doctors both in our, in Edmonton at the clinic and we have there as well at HealthPoint and as well across some of the clinics we have in Ontario.
All right.
Martin, just on that, you know, we do have, for example, people do ramp up, right? Even though we have a backlog, you know, a doctor will start, like we had a few people start earlier this year in 2025, you know, in Q1 and Q2. Now you're seeing kind of them ramping up their practice. It does take a little bit of time for people to ramp up their practice when they join.
All right. There's an audience question here. I think we've largely covered it, but if there's anything else you'd like to add, can you please talk about how you at the clinic level optimize retention of staff while incentivizing growing revenues and margins?
I think on the staff, what we do, we do pay attention to the culture we have at every clinic and every clinic's culture is different. It's kind of like they're each their own little family. You really have to focus on making it a good place to work, get good interaction. You really want your MOAs and your nurses and the doctors all working together, understand how the doctors work. The more we can do that, and we've put clinic managers in some of our clinics as well to run it so they can learn how the doctor practices, make sure they can optimize that schedule. Then working with our technology group as well to look at different ways they can use AI, how can we make charting more efficient and those little steps.
If they can add one or two patients a day to a doctor schedule, then that helps grow our revenue organically, makes the workflow in the clinic much more efficient. You can see that in our, the numbers we've been reporting over the last few quarters.
Just to add to that, you know, we do have, like, from a staff point of view, you think about, you know, for sure, like, if we have a radiation tech, a rad tech, or a nurse or an MOA, you know, they can work in hospitals, right? The difference is that, you know, like my daughter working 12-hour night shifts, you know, it's not for everybody. You know, there is an environment to be able to work in the community and community care setting, which is, you know, I would say from an hour, you know, the way the hours work, it's definitely, we pay almost the same as hospitals, but, you know, they have a slightly better work profile for people who are looking for that. That's kind of the environment.
I think the idea that these are small little islands, so they work together in teams. We've been busy trying to work on training as well. We've had some, you know, we do our surveys of staff. We did one last year and, you know, one of the things that came up was opportunities for training and learning. We've been adding that. We are able to kind of respond to them in a manner and try and get them to feel part of the team. Those are ways we retain and we do not have a lot of turnover, to be honest, on the staff side, you know, which I'm very proud of, you know, because I mean, everyone's short staffed on nurses and MOAs and rad tech.
You know, we're very pleased that the turnover has been relatively modest.
All right. Changing the topic back to your cap table. You have been buying back shares and I believe your share buyback program expires in the near term. Given the recent rise in the share price, are you continuing the share buyback? What sort of action should investors expect from the company right now?
I think that the board, you know, the message right now is that the board and management all believe that the, you know, we continue to be extremely undervalued and we're more than, we'll reevaluate that over the coming weeks. You know, definitely we think returning capital to shareholders in this manner is a great way, a great use of funds.
With your inorganic growth strategy, how obviously you can't, you, you've said that you expect to have some acquisitions over the coming year. Can you discuss a little more about what the pipeline looks like, how you're seeing the visibility in that sector right now?
On the inorganic side, Martin, or?
Yes. On acquisitions.
On acquisitions. Yeah. We probably have approximately about a dozen or so opportunities that we're looking at from various stages, like early discussions into the LOI phase. Yeah, we're looking at growth opportunities within both the province of Alberta and Ontario, as well as some of the new markets like Joe mentioned, like into BC, Saskatchewan, and we're looking at Quebec as well. I'd say there's healthy interest, like there's the appeal for some of these smaller doctors who are managing a clinic business as well as managing supply channels, HR, their finance, like the appeal of being able to go focus more on medicine and less focus on all the back office administration has been some of the appeal for some of the doctors that we're in current discussions with in Troy.
All right. With all the budgetary talks going on right now, is there any risk about changing in the method of payment that could be negative on you or positive on you to try to find a more efficient manner to deliver healthcare in the various provinces?
If you'd like to.
Oh, go ahead, Joe.
Oh no, I was just gonna say like, look, you know, I think that one way I step back and look at this is that these changes happen all the time, sometimes for good and sometimes, you know, not as beneficial. We have managed through that over time. I think that we're, you know, we're comfortable. We know that there's a, we don't believe there's a strong interest on the part of payers to see these patients in the street, right? This is the challenge. When I talk about patients, you know, people often think about chronic pain. They're like, oh, you know, you got a back injury, you know, a person's got a, you know, shoulder injury, you know, was playing squash, ran into the wall, you know, like it's not that.
These are people who are probably out of work, who do not have insurance, who have been out of work for some time. There is a lot of our patients who are really suffering. I do not think there is a strong interest on the government side to really play with that in a big way. Certainly we see that, you know, where would these patients end up if they are not getting chronic, if they are not getting treatments from us? I think the answer is probably not anything any public payer wants to see, you know, going forward.
All right. We've covered a lot of topics here. There are no more audience questions at this point. Are there any final comments or areas you'd like to highlight on before we wrap it up here this morning?
No, I think, you know, in summary, you know, I think just look, you know, we've told you we're gonna deliver, we're starting to deliver, you're starting to see what happens when doctors start adding time with us, when the micro scale starts bubbling up to the top, when each of our clinics is running really smoothly, you see that kind of, you know, come up to the top. I think we're pretty pleased that all of our clinics are doing pretty well. Some are doing better than others, but, you know, we see great opportunity in, in just on the inorganic side as well to be able to add to that.
All right. Gentlemen, thank you very much. Congratulations on a solid quarter. I look forward to seeing future progress from NeuPath. Thank you.
Thanks, Martin.
Thanks, Martin.