25% Y-O-Y Revenue Growth in Q3 2023 Compared to Q3 2022 and 51% Increase in Gross Profit.
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In Q3 2023, QHSLab generated $336,407 in revenues, reflecting a notable 25% year-over-year increase from the $269,323 reported in Q3 2022.
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Achieved a 55% gross margin over the nine months ending September 30, 2023, representing a 551-basis point growth in gross profit compared to the same period in 2022, and realized a remarkable 51% increase in gross profit, reaching $189,510 in the three months ended September 30, 2023, compared to $125,607 for the corresponding period in 2022.
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Net operating loss for nine months ending September 30, 2023, decreased by 54% to $191,747 compared to the same period in 2022.
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Projecting positive net income in 2024.
WEST PALM BEACH, FL, Nov. 14, 2023 (GLOBE NEWSWIRE) -- QHSLab, Inc. (the “Company”) (OTCQB: USAQ), a company focused on providing clinicians with tools to leverage proactive, value-based healthcare solutions through emerging digital health and point-of-care technologies, today announced its financial results for the third quarter ended September 30, 2023, and provided a business update.
In the first nine months of this year, QHSLab conducted over 30,000 digital medicine assessments through healthcare providers, encompassing mental health evaluations, allergy and asthma assessments, psychological screenings, chronic pain monitoring, and more. We anticipate a robust 2024, with the physician-ordered digital assessment run rate projected to exceed 65,000. Our services have significantly bolstered healthcare practices' revenue, with physician customers reporting a remarkable 20-30% reimbursement increase. The QHSLab assessments predict future healthcare costs and show promising preliminary data on improving patient quality of life.
QHSLab has also seen a recent surge of new business since the beginning of Q4 for the Integrated Service Program (ISP), particularly in South Florida. We secured eight new multi-location customer accounts, spanning eighteen primary care facilities, further establishing QHSLab as a prominent player in the digital healthcare industry. Esteemed medical practices have chosen QHSLab to enhance patient care, implementing programs such as mental health screening, chronic pain management, allergy testing and treatment, and more. These partnerships offer comprehensive healthcare solutions, driving new revenue through our successful reimbursement strategies.
Foreseeing a substantial revenue uptick, QHSLab expects a quarterly sales increase of over 100% within the ISP segment, positioning us for positive cash flow early in 2024. ISP's current strength is addressing evolving patient preventive and chronic care needs and improving independent medical practice healthcare delivery. The ISP, a cornerstone of our comprehensive healthcare solution, facilitates non-face-to-face and point-of-care communication, reduces non-clinical administrative workloads, strengthens patient-provider relationships, and is a vital revenue source for our primary care customer practices.
"My vision is clear – we are steadfastly committed to achieving positive cash flow by propelling our revenue higher, as evidenced by our impressive 25% year-over-year growth in Q3 2023, a typically slower quarter in the medical industry. Our strategic focus includes advancing our core digital medicine platform technology, acquiring new physician customers, growing our recurring revenue lines, and optimizing operational efficiencies. The significant 51% increase in gross profit during Q3 reflects our dedication to driving high-margin growth. We aim to reach positive cash flow early in 2024 while strategically managing operating costs and evaluating options for handling our current liabilities, including paying down or converting outstanding debt. This ensures a balanced and prosperous future for QHSLab," stated Troy Grogan, President and CEO at QHSLab, Inc.
Third Quarter 2023 Financial Results
In the third quarter of 2023, we achieved 25% growth in sales year-over-year in a highly seasonal quarter, where most medical practices are slower due to the summer holidays.
Our revenues for the three and nine months ending September 30, 2023, consisted of the following:
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2023
2022
2023
2022
Allergy Diagnostic Kit Sales
$
148,912
$
138,265
$
536,738
$
566,176
Immunotherapy Treatment Sales
88,934
111,131
287,704
363,853
Subscription Revenue
15,922
4,930
55,334
6,304
Integrated Service Program
71,600
-
184,803
-
Training & Other Revenue
3,225
6,937
3,225
11,038
Shipping and handling
7,814
8,060
26,170
28,098
Total revenue
$
336,407
$
269,323
$
1,093,974
$
975,469
Results of Operations during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022
For the three months ended September 30, 2023, we generated $336,407 compared to $269,323 of revenue for the same period.
For the three months ended September 30, 2023, and 2022, the cost of revenues was $146,897 and $143,716, respectively.
The Company generated a gross profit of $189,510 during the three months ending September 30, 2023, compared to $125,607 for the same period in 2022. Gross margin improved 966 basis points to 56.3% for the quarter compared to 46.6% during the three months ended September 30, 2022.
Reduced Operating Expenses to $224,743, down 32% compared to the same period last year.
For the three months ended September 30, 2023, sales and marketing expenses totaled $114,019 compared to $154,620 for the three months ended September 30, 2022. The decreases in sales and marketing expenses relate primarily to the shift to internal sales and marketing personnel, proving more cost-effective than independent sales representatives.
For the three months ended September 30, 2023, general and administrative expenses totaled $47,277, a decrease of $60,688, compared to $107,965 for the three months ended September 30, 2022. The decrease is primarily due to decreased fees associated with legal, investor relations, and management consulting services, combined with a decrease in bad debt expense.
For the three months ended September 30, 2023, R&D expenses totaled $45,419, a decrease of $2,986 compared to $48,405 for the three months ended September 30, 2022. The decrease in R&D expenses is due to the reduction in ongoing R&D consulting fees.
For the three months ended September 30, 2023, interest expense decreased by $58,123 to $48,581 from $106,704 for the three months ended September 30, 2022. The decrease was due to the timing of the amortization of debt issuance costs, including legal fees and warrants issued in connection with certain of our convertible notes payable. The amortization of those costs, which are non-cash expenses, during the quarter ended September 30, 2023, totaled $6,701, or 12% of interest expense during the quarter, while the amortization of those costs during the quarter ended September 30, 2022, totaled $59,153, or 55% of interest expense for the quarter.
Results of Operations during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022
For the nine months ended September 30, 2023, QHSLab generated revenues of $1,093,974 compared to $975,469 of revenues for the nine months ended September 30, 2022.
For the nine months ended September 30, 2023, and 2022, the cost of revenues was $490,294 and $490,965, respectively.
The Company generated a gross profit of $603,680 during the nine months ended September 30, 2023, compared to $484,504 for the nine months ended September 30, 2022. Gross margin increased from 49.7% during the nine months ended September 30, 2022, to 55.2%, a 551-basis point improvement. Gross profit margins are projected to improve during 2024 based on the increase in higher margin digital medicine software as a service customer acquisitions and revenues generated from this segment.
Reduced Operating Expenses to $795,427, down 11.5% compared to the same period last year.
For the nine months ended September 30, 2023, sales and marketing expenses totaled $366,055 compared to $387,687 for the nine months ended September 30, 2022. The decreases in sales and marketing expenses relate primarily to the shift to internal sales and marketing personnel proving more cost-effective than independent sales representatives, offset by an increase in marketing spend in connection with the launch of the Integrated Service Program and Subscription Revenue products.
For the nine months ended September 30, 2023, general and administrative expenses totaled $205,799, a decrease of $115,774, compared to $321,573 for the nine months ended September 30, 2022. The decrease is primarily due to decreased fees associated with legal, investor relations, and management consulting services, and a decrease in bad debt expense following the creation of the bad debt reserve in the second quarter of 2023.
For the nine months ended September 30, 2023, R&D expenses totaled $169,489, which is an increase of $33,491 compared to $135,998 for the nine months ended September 30, 2022. The increase in R&D expenses was driven by the completion of testing of our QHSLab platform software at the end of the first quarter of 2022. As a result, the spending on development is no longer being capitalized as the software is now in post-implementation stages.
For the nine months ended September 30, 2023, interest expense decreased by $170,678 to $192,268 from $362,946 for the nine months ended September 30, 2022. The decrease was due to the timing of the amortization of debt issuance costs, including legal fees and warrants issued in connection with certain of our convertible notes payable. The amortization of those costs, which are non-cash expenses, for the nine months ended September 30, 2023, totaled $61,836, or 32% of interest expense, and $226,158, or 62% of the interest expense during the nine months ended September 30, 2022.
We generated a net loss of $381,725 (-$0.04 per share) for the nine months ended September 30, 2023, a decrease of $398,079 or 51% compared to $779,804 (-$0.09 per share) for the same period in 2022. We used cash of $24,462 and $281,205 in operations in these periods.
On October 5, 2023, subsequent to the quarter ended September 30, 2023, the Company entered into a fixed-fee loan with its merchant bank and received $226,700 in loan proceeds, a portion of which was used to pay the balance of the prior fixed-fee loan. The loan is repaid by the merchant bank withholding an agreed-upon percentage of payments they process on behalf of the Company with a minimum of $28,463 paid every 60 days. The loan is due in April 2025.
The Future
As we look forward to 2024 and beyond, QHSLab remains excited and confident about the growth prospects for our digital medicine Integrated Service Program (ISP). Our initial allergy diagnostics and allergen immunotherapy segment currently supports the business, but now, with the growing ISP product line, we expect significant synergies in sales growth and profitability. Importantly, it represents a path to positive cash flow and net income for the Company.
For more information, please visit the Company’s recently updated website at www.qhslab.com. The recent launch of the updated Company website has been informed by a year's field experience and direct engagement with our customer base.
About QHSLab, Inc.
QHSLab, Inc. (OTCQB: USAQ) is a medical device company providing primary care physicians and healthcare providers with digital healthcare solutions and point-of-care-diagnostic tests. Digital healthcare allows doctors to assess patient responses quickly and effectively using advanced artificial intelligence algorithms. Digital healthcare can also remotely monitor patients’ vital signs and evaluate the effects of prescribed medicines and treatments on patients’ health through real-time data transferred from patient to doctor. QHSLab, Inc. also markets and sells point-of-care, rapid-response diagnostic tests used in the primary care practice. QHSLab, Inc.’s products and services are designed to help physicians improve patient monitoring and medical care while also improving the revenues of their practice.
Forward-Looking Statements
Certain matters discussed in this press release are ‘forward-looking statements’ intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. In particular, the Company’s statements regarding trends in the marketplace, future revenues, future products, and potential future results and acquisitions are examples of such forward-looking statements. Forward-looking statements are generally identified by words such as ‘may,’ ‘could,’ ‘believes,’ ‘estimates,’ ‘targets,’ ‘expects,’ or ‘intends,’ and other similar words that express risks and uncertainties. These statements are subject to numerous risks and uncertainties, including, but not limited to, the timing of the introduction of new products, the inherent discrepancy in actual results from estimates, projections, and forecasts made by management, regulatory delays, changes in government funding and budgets, and other factors, including general economic conditions, not within the Company’s control. The factors discussed herein and expressed from time to time in the Company’s filings with the Securities and Exchange Commission could cause actual results and developments to be materially different from those expressed in or implied by such statements. The forward-looking statements are made only as of the date of this press release. The Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
