Transcript: Vitalhub Q2 2026 Earnings Conference Call

Vitalhub (TSX: VHI ) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

7 million. The company completed the acquisition of Buddy Healthcare, enhancing its digital solutions portfolio and integration capabilities, with plans to leverage this in the UK and Canadian markets. 5 million in cash and investments, and no debt, positioning well for future M&A activities. Strategic focus is on integrating recent acquisitions Induction and Novari, with adjusted EBITDA margin at 26%, and an ongoing M&A strategy supported by over $120 million in cash.

Operational highlights include a new AI roadmap with protocoling solutions, and the integration of AI in transcription services, expected to impact revenue positively by end of 2027. Challenges include some customer suspensions related to the UK market's Palantir contract situation, though management remains optimistic about future resolutions and growth opportunities. The company has initiated a normal course issuer bid (NCIB) to repurchase stocks, balancing between buybacks and M&A as key capital allocation strategies.

Future growth strategies focus on cross-selling opportunities and expanding the patient care coordination platform across regions, particularly in the UK and potential US market entries. Full Transcript Christian, Investor Relations After our prepared remarks, we will open up the line to questions from analysts. Please press star one or use the raise hand function to indicate that you would like to ask a question. Before we begin, I will read our cautionary note regarding forward-looking information.

Certain information to be discussed during this call contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, please review the forward-looking statements disclosure in the earnings press release and in our SEDAR filings as well. Our commentary today will include adjusted financial measures which are non-IFRS measures.

These should be considered as a supplement to and not a substitute for IFRS measures. Reconciliations between the two can be found in our SEDAR filings. With that, I'll hand the call over to Brian to go over financial highlights for the quarter. Over to you, Brian.

Brian Goffenberg, CFO Thank you, Christian. Good morning, everyone, and thank you for joining the call today. We are pleased to report the results for the second quarter of 2026. Vitalhub reached a new milestone this quarter, exceeding $100 million of annual recurring revenue.

5 million, representing 10% organic growth over the prior year. Adjusted EBITDA margin continued to increase sequentially at 26% in the second quarter. Some of the key financial highlights for the quarter are as follows. 7 million, an increase of 33% year over year.

5 million, or 77% of total revenue. 3 million. Perpetual license revenue was $800,000. 7 million in the prior year period.

Our gross margin was 79% of revenue compared to 81% in the prior year period. 3 million, or 26% of revenue, in the prior year period. 5 million of cash and investments and no debt. We had strong cash conversion this quarter.

Our cash balance increased by over $15 million this quarter, benefiting from collection activity and continued platform integration. Subsequent to quarter end, we completed the acquisition of Buddy Healthcare and, post the transaction, we continue to have over $120 million of cash that we're ready to deploy on our M&A strategy as well. With the addition of Buddy Healthcare, pro forma ARR as of June 30, 2026 would have been approximately $106 million. With that, I'd like to hand the call over to Dan for an update on the business.

Dan Matlow — President and CEO Thanks, everyone. Welcome. Today, just on reflecting, it's exciting to see us get over $100 million of recurring. Our people and our staff were really excited about that.

I think when we started this eight, nine years ago, that was a goal and it's achieved. So just take another one off of the bucket list and we continue to move forward. Just a little bit about the Buddy acquisition before I get into some of the other things. We're really excited about that.

It's an organization that we've been speaking to for four years. The technology is really strong. They're a group that has entered into the UK with it, but it gives us a really strong digital backdoor solution. So we already have a very good digital front door solution with Zesty that is moving through our markets, and our customers have been asking us to say that's good that you can get us into the hospital, into the setting, but what about after we leave?

We want to continue to communicate with you. So our plans will be to integrate that with that backdoor solution. It also fits in nice with the Strata solution which does the discharge process, and now we’ve got a way to communicate with the patients as we go through that discharge. So we expect, once we get the technology all integrated and so forth, that that will be a good addition into our cross-sell methodology.

So it's good people, great technologies, and we're excited to add that piece onto it. In respect to the quarter, in terms of numbers, you see the recognized recurring growth. Services revenue a little bit behind in previous quarters, but still reflects that services revenue is always tough to nail it 100%. I think we had a $5 million quarter a couple quarters ago, and down here it comes in ebbs and flows just based on revenue recognition and how that gets delivered to the customer.

So we're happy with that, and we were happy with the way the virtual care renewal process came through. About 85% to 90% of that Attend Anywhere renewal process comes at the end of March, and as you can see, they are held up pretty hard for that. So contribution came from really all of our products, but mainly from the Zesty and the Q2 Care Coordination products, the Strata and Novari product. Of course, Novari continues to move through Canada, but we're really excited about the momentum that's starting to get a little bit in our UK marketplaces and a little in other markets.

It's a unique solution and we're excited and think it has great opportunity to do that. The revenue number was offset by still some challenges with our product and the SCCs. That's the System Control Centres with the ICBs and the FDP and the Palantir-based solutions along with the mergers and acquisitions. So we had some customers that I'm going to say suspended use during the quarter, waiting for the outcome of what's happening with the FDP and Palantir situation.

Just to refresh people, the NHS has a national contract for Palantir, but there's a break clause in that contract in Q1 of 2027, and it's right up at the parliamentary level, and indications are suggesting that that product will be getting removed, and hopefully that will continue that momentum for us on that SHREWD product through the UK marketplaces. In addition to that, we still have renewals coming through. So in some of our cases, in other cases they are renewing. It just depends on the ICB and the approach.

So it's a little bit just up in flux and we keep working on it. But even with that, we see a really good pipeline of all of our other solutions and still expect to continue with our organic growth profile. We've introduced AI products into the marketplaces. There's two.

You have the protocoling solution that started in the Novari product. We're starting to move that into other products and we're starting to see some revenue streams from that. And we're really excited about our transcription solutions for our community services-based work. We've been working on that for about a couple quarters.

That is now in the hands of customers to get ratification on that, and we expect that to start hitting the revenue streams hopefully end of this year, but definitely going into next year we expect that to continue on that place. We're getting close to the complete integration of the Novari and the Induction transaction. And as you can see, our thesis for both of those two large acquisitions have come to fruition. Our adjusted EBITDA is back to 26%.

We're pretty good cash flow, I think 5 million adjusted EBITDA and we're up over 8 million, and our goal is to continue to get that to grow. That's always been the thesis of the company. So I know there were a lot of question marks by people saying, hey, can you? We did those two acquisitions; both of those were losing money at the time of that, and we've managed to integrate them.

They're producing new organic revenue and they're adding to the bottom line pretty nicely. So we're excited about what our accomplishment was on that and we continue to still work on it, but it's getting towards the visibility in terms of trying to get that number back up to the high 20s, which we're at. I also just want to talk about the NCIB. I know as we go through and have met investors, people have asked about that.

We have put it in place. We do think our financial results will continue to improve. The stock, to some degree, you know, stay. We think it is a good value for us to, with lots of cash, start looking at buying back our own stock.

So we decided to put that in place and we expect to use it as we see how the stock is reflected and so forth. So we do have it in place and we're working to do that. We continue to work on M&A deals. We have some large things that we're looking at and some small things, but the activity still seems to be there in that marketplace and we continue to go, and we do expect to do more M&A through 2026 and forward.

But yeah, we're happy where we are as a company. We're making money, we're growing, we're adding customers, we've got lots of cash revenue, and we think we're in a good position. And I think we continue to prove our business model and we're happy with what we've accomplished here. Are there any questions?

Go ahead. Christian, Investor Relations Great. Thanks, Dan. We'll now open up the line to questions from analysts.

Please press star one or use the raise hand function if you'd like to ask a question. Today's first question comes from Gavin Fairweather with ATB Core. Mark. Gavin, your line's open.

Gavin Fairweather, Analyst at ATB Oh, hey, good morning. Thanks for taking my questions. Maybe just on eReferral in the UK. Dan, you mentioned it.

I think you've had some marquee wins in the UK market, which is great. Curious if you've been able to uncover any funding envelopes for eReferral, or if this is coming out of general budgets, and do you see the potential for this to become a more strategic priority at the NHS level with some bigger funding attached. Dan Matlow — President and CEO Yeah, I do think the NHS is definitely, like other organizations, looking to integrate and do a lot of different things.

I think if you looked at a lot of the parliamentary-based approaches and things, NHS integrating into social care and integrating into aftercare and rehab facilities has become a big issue, and we're expecting that to help with the Strata-based solutions to do that. We know by looking at other markets around the world that eReferral is a needed aspect of it, and we know that the NHS and UK is behind relative to other places of the world, Canada included, in those particular markets. And we can see the reality of the solution and how we can automate some of those things.

So it's like anything else in our market, it's trying to get momentum, and we closed our first deal, you know, about six, eight months ago and that's gone live. And the natural process is referrals don't necessarily stay in one region, they cross other regions. So of course the two regions next to this region have seen what this one region is doing. So it only makes sense that those other two regions are now interested, and we're looking at closing some business with those regions.

So we're starting to see the behavior that we want in the NHS for those referral-based products, and, you know, our sales force is pretty focused on referral in that marketplace, and we are seeing available money for this. The business case is very easily justified for it. Gavin Fairweather, Analyst at ATB It's great, appreciate that. And then just on Buddy, I've seen Finnish healthcare described as pretty digitally mature.

I'm curious what products you think are maybe greenfield opportunities in Finland where there isn't a big amount of competition. Dan Matlow — President and CEO Yeah, I think they have a similar structure to regional-based groups and they've connected regions pretty nice. Again, we think there's opportunity for the referral-based products within the Scandinavian-based marketplaces. We also see opportunities for the touch-based suite of products in those marketplaces.

So those would be the ones that we would primarily focus on. But yeah, similar markets and our group has some pretty good connections to that. Buddy, and they've done some work in that marketplace. Again, the biggest area where we see Buddy really having opportunities would be the Canadian and the UK marketplaces and those are the areas that we focused on.

Canada still is lagging behind on the digital backdoor-based solutions and this is a pretty comprehensive one, and the UK is definitely lagging behind on the digital backdoor solutions. They've really focused on the front door. So we think we got a solution to help fill that gap and we'll continue to. Gavin Fairweather, Analyst at ATB And then just lastly for me on the Ontario Health deal, can you just discuss the contribution this quarter to ARR growth and how would you describe, you know, how ramped up you are on ARR versus the initial scope on that deal?

Dan Matlow — President and CEO I think we're, I think it's adding, you know, somewhere between 500,000 to a million on a quarterly basis and we expect that to continue on a ramp up over the next couple of years type of thing. Gavin Fairweather, Analyst at ATB Thanks so much. I'll pass on. OPERATOR Thank you, Gavin.

The next question comes from Doug Taylor with National Bank. Doug, your line is open. Doug Taylor, Analyst at National Bank Yeah, thank you. Good morning.

I wanted to drill down a little bit more on the UK market. Obviously the growth there has been flat with some puts and takes. So, you know, the question is, with the impact to shrewd some of the pause that you're talking about, is that something that is reflected in, you know, the net ARR growth and you've outgrown it through some other cross selling and perhaps you could help us quantify that. So, you know, we can, yeah, we, Dan Matlow — President and CEO We, we, we definitely took some ARR reduction in the quarter with some of the shrewd work, but that's been offset by other products in that particular marketplace.

So we're, we're, you know, the net is the number that we, we, we've gotten here. I don't have the exact numbers at my fingertips here, Doug, but yeah, there's something. Doug Taylor, Analyst at National Bank And so is the idea here that if you get some sort of resolution on the situation as it relates to Palantir, you know, some of that might rebound and impact your finances next year. Dan Matlow — President and CEO That's what we're hoping.

We, we, you know, we're, each customer has really got two different scenarios that are cooking here. One is we got these new ICBs that have come together and formed. There's all new people in these particular groups and then funding isn't really set up in some of these appropriately. So they're going like, whoa, hang on, there's a renewal here.

What's going on here? We've got FDP. We're just going to hold here for a couple quarters here until we see what's going on and then reconvene this thing. It's not like they're putting FDP in these places, all of them.

They're just saying we got to suspend this. While in other cases they're just going on as business as usual and they're renewing their contract. So, you know, we hope within the next couple the contracts are new. We still think there's opportunities to continue.

And if it's not renewed, we're really excited about that because we continue to grow. But that's, that's the scenario we're facing at right now. Doug Taylor, Analyst at National Bank That's helpful. Next question.

I mean, you described the integration process for Induction Novari as being, you know, substantially completed or approaching completion. And you know, you can see the EBITDA margins here at 20%, 6%. As you say, that's been well executed. So the question is, given that EBITDA margins have been higher in the past, is there something about the way the portfolio sits now or structurally that would prevent you from continuing to march the EBITDA higher from here?

Brian Goffenberg, CFO Well, every million dollars of ARR theoretically adds, if we don't add more cost, that's a point of adjusted EBITDA. Right. And we're still not completed on the other, other side of some, some reductions.