Vitalhub Q2 2026 Earnings Report

Vitalhub EPS Results

• Actual EPS: C$0.03
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Vitalhub Revenue Results

• Actual Revenue: $31.74 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Vitalhub Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: After Market Closes
• Conference Call Date: Friday, August 7, 2026
• Conference Call Time: 9:00AM ET

Vitalhub (TSE:VHI) is a leading software company dedicated to empowering health and human services providers globally. VitalHub's comprehensive product suite includes electronic health records, operational intelligence, and workforce automation solutions that serve over 1,300 clients across the UK, Canada, and other geographies. The Company has a robust two-pronged growth strategy, targeting organic opportunities within its product suite and pursuing an aggressive M&A plan. VitalHub is headquartered in Toronto with over 700 employees globally, across key regions and the VitalHub Innovations Lab in Sri Lanka.

Vitalhub Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Annual recurring revenue surpassed CAD 100 million, reaching CAD 101.5 million at quarter-end and growing 10% organically year over year. Revenue increased 33% to CAD 31.7 million, while recurring revenue represented 77% of total revenue.
• Positive Sentiment: Adjusted EBITDA rose to CAD 8.2 million, with the margin holding at 26% as Vitalhub captured synergies from the Induction and Novari acquisitions. Management expects additional scale efficiencies and organic growth to support further margin expansion.
• Positive Sentiment: Vitalhub completed its acquisition of Buddy Healthcare after the quarter, adding a digital “backdoor” patient-engagement solution that complements its Zesty front-door and Strata discharge offerings. Pro forma ARR would have been approximately CAD 106 million, and the company retains more than CAD 120 million in cash for further M&A.
• Negative Sentiment: U.K. growth remains affected by uncertainty surrounding NHS funding, ICB reorganizations, and the future of the FDP and Palantir arrangements. SHREWD experienced ARR reductions and some customers temporarily suspended usage, although management expects potential recovery if the Palantir contract is not renewed or the situation is resolved.
• Positive Sentiment: The company is expanding AI-enabled offerings, including protocoling tools and transcription/scribing solutions, with customer validation underway and broader revenue contribution expected from late 2026 into 2027. Vitalhub also established a normal course issuer bid and may repurchase shares while continuing to prioritize acquisitions.

Presentation

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Good morning, everyone, and thank you for joining us for our 2026 second quarter conference call. With me on the call today are VitalHub CEO, Dan Matlow, and CFO, Brian Goffenberg. 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.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

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.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

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 at VitalHub]

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 CAD 100 million of annual recurring revenue. We closed June at CAD 101.5 million, representing 10% organic growth over the prior year. Adjusted EBITDA margin continued to increase sequentially at 26% in the second quarter.

[Brian Goffenberg, CFO at VitalHub]

Some of the key financial highlights for the quarter are as follows. We report a total revenue of CAD 31.7 million, an increase of 33% year-over-year. Recurring revenue or term license maintenance and support segment was CAD 24.5 million, or 77% of total revenue. Virtual care term license revenue was CAD 2.3 million. Perpetual license revenue was CAD 800,000. Services, hardware, and other revenue was CAD 4.1 million compared to CAD 2.7 million in the prior year period.

[Brian Goffenberg, CFO at VitalHub]

Our gross margin was 79% of revenue, compared to 81% in the prior year period. Adjusted EBITDA for the quarter was CAD 8.2 million, or 26% of revenues, as we continue to gain synergies from the acquisitions of Induction and Novari, compared to CAD 6.3 million, or 26% of revenue in the prior year period. We closed the quarter with CAD 136.5 million of cash and investments and no debt. We had strong cash conversion this quarter.

[Brian Goffenberg, CFO at VitalHub]

Our cash balance increased by over CAD 15 million this quarter, benefiting from collection activity and continued platform integration. Subsequent to quarter end, we completed the acquisition of Buddy Healthcare. Post the transaction, we continue to have over CAD 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 30th, 2026, would've been approximately CAD 106 million. I'd like to hand the call over to Dan for an update on the business.

[Dan Matlow, CEO at VitalHub]

Thanks, everyone. Welcome today. On reflecting back, it's exciting to see us get over CAD 100 million of recurring, and I know our people and our staff, we're really excited about that. I think when we started this eight, nine years ago, that was the goal and it's achieved. Take another one off of the bucket list, and we continue to move forward. A little bit about the Buddy acquisition, just before I get into some of the other things. We're really excited about that.

[Dan Matlow, CEO at VitalHub]

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 U.K. with it, but it gives us a really strong digital backdoor solution. We already have a very good digital front door solution with Zesty that is moving through our markets.

[Dan Matlow, CEO at VitalHub]

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." 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.

[Dan Matlow, CEO at VitalHub]

Now we got a way to communicate with the patients as we go through that discharge. We expect, once we get the technology all integrated and so forth, that that will be a good addition into our cross-sell methodology. It's good people, great technologies, and we're excited to add that piece onto it. In respect to the quarter, in terms of the numbers, you see the recognized recurring grow. Services revenue a little bit behind the previous quarters, but still reflects that.

[Dan Matlow, CEO at VitalHub]

Services revenue is always tough to nail at 100%. I think we had a CAD 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. We're happy with that and we were happy with the way the virtual care, renewal process, came through. About 85%-90% of that Attend Anywhere renewal process comes at the end of March, and as you can see, the ARR held up pretty hard for that.

[Dan Matlow, CEO at VitalHub]

We're happy with those outcomes. Revenue contribution came from really all of our products, mainly from the Zesty and the two care coordination products, the Strata and the Novari product. Novari continues to move through Canada, what we're really excited about is the momentum, it's starting to get a little bit in our U.K. marketplaces and in other markets. It's a unique solution, and we're excited and think it has great opportunity to do that.

[Dan Matlow, CEO at VitalHub]

The revenue number was offset by still some challenges with our SHREWD product and the SCC, that's the system control centers with the ICBs, and the FDP, and the Palantir-based solutions, and along with the mergers and acquisitions. 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.

[Dan Matlow, CEO at VitalHub]

Just to refresh people, the NHS has a national contract for Palantir. There's a break clause in that contract in Q1 of 2027, and it's right up at the parliamentary level. 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 U.K. marketplaces.

[Dan Matlow, CEO at VitalHub]

In addition to that, we still have renewals coming through. It's just some of our cases. In other cases, they are renewing. It just depends on the ICB and the approach. It's a little bit just up in the flux, and we keep working on it. 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.

[Dan Matlow, CEO at VitalHub]

We 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. We're really excited about our transcription solutions for our community services-based work. We've been working on that for about a couple of quarters. It's 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.

[Dan Matlow, CEO at VitalHub]

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 generating some pretty good cash flow.

[Dan Matlow, CEO at VitalHub]

I think I look back about six quarters ago, we were generating about CAD 5 million of adjusted EBITDA. We're up over CAD 8 million, and our goal is to continue to get that to grow. That's always been the thesis of the company. I know there are a lot of question marks by people saying, "Hey, can you" When we did those two acquisitions, both of those were losing money at the time of that.

[Dan Matlow, CEO at VitalHub]

We've managed to integrate them. They're producing new organic revenue, and they're adding to the bottom line pretty nicely. We're excited about what our accomplishment was on that, and we continue to still work on it. 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.

[Dan Matlow, CEO at VitalHub]

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, staying still. We think it is a good value for us with lots of cash to start looking at buying back our own stock. We decided as a board to put that in place, and we expect to use it as we see how the stock is reflecting and so forth.

[Dan Matlow, CEO at VitalHub]

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.

[Dan Matlow, CEO at VitalHub]

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 for M&A, and we think we're in a good position. I think we continue to prove our business model, and we're happy with what we've accomplished here. Are there any more questions? Go ahead.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

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 would like to ask a question. Today's first question comes from Gavin Fairweather with ATB Cormark. Gavin, your line is open.

[Gavin Fairweather, Analyst at ATB Cormark]

Hey. Good morning. Thanks for taking my questions. Maybe just on eReferral in the U.K., Dan, you mentioned it. I think you've had some marquee wins in the U.K. 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. Do you see the potential for this to become a more strategic priority at the NHS level with some bigger funding attached?

[Dan Matlow, CEO at VitalHub]

Yeah. I do think the NHS is definitely, like other organizations, is 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, the NHS is 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.

[Dan Matlow, CEO at VitalHub]

We know by looking at other markets around the world that e-Referral is a needed aspect of it, and we know that the NHS and the U.K. is behind relative to other places of the world, Canada included, in those particular markets. We can see the reactions to if we get to the right people on what the power of the solution does and how it can automate some of those things.

[Dan Matlow, CEO at VitalHub]

It's like anything else in our market, it is trying to get momentum and we closed our first deal about six, eight months ago, and that's gone live. The natural process is referrals don't necessarily stay in one region. They cross other regions.

[Dan Matlow, CEO at VitalHub]

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. We're starting to see the behavior that we want in the NHS for those referral-based products. Our sales force is pretty focused on referral about marketplace and we are seeing available money for this. The business case is very easily justified for it.

[Gavin Fairweather, Analyst at ATB Cormark]

It's great. Appreciate that. Then just on Buddy, I've seen Finland healthcare described as pretty digitally mature. I'm curious what products you think have maybe greenfield opportunities in Finland where maybe there isn't a big amount of competition.

[Dan Matlow, CEO at VitalHub]

Yeah, I think they have a similar structure to regional-based groups and they've connected regions pretty nicely. Again, we think there's opportunity for the referral-based products within the Scandinavian-based marketplaces. We also see opportunities for the Intouch base suite of products in those marketplace. Those would be the ones that we would primarily focus on. Yeah, similar markets and our group has some pretty good connections to that. The Buddy product is also done some work in Germany, which is interesting, and they've done some work in that marketplace.

[Dan Matlow, CEO at VitalHub]

Again, the biggest area where we see Buddy really having opportunities would be in the Canadian and the U.K. 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. The U.K. is definitely lagging behind on the digital backdoor solutions. They've really focused on the front door. We think we got a solution to help fill that gap, and we'll continue to move in that direction.

[Gavin Fairweather, Analyst at ATB Cormark]

Great. Just lastly from me on the Ontario Health deal, can you just discuss the contribution this quarter to ARR growth and how would you describe how ramped up you are on ARR versus the initial scope on that deal? X and Q2.

[Dan Matlow, CEO at VitalHub]

I think it's adding somewhere between CAD 500,000-CAD 1 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 Cormark]

Thanks so much. I'll pass the line.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Thank you, Gavin. The next question comes from Doug Taylor with National Bank. Doug, your line is open.

[Doug Taylor, Analyst at National Bank]

Thank you. Good morning. I wanted to drill down a little bit more on the U.K. market. Obviously, the growth there has been flat with some puts and takes. The question is, with the impact to SHREWD, some of the pause that you're talking about, is that something that is reflected in the net ARR growth and you've outgrown it through some other cross-selling? Or perhaps you could help us quantify that so we can just-

[Dan Matlow, CEO at VitalHub]

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. The net is the number that we've gotten here. I don't have the exact numbers at my fingertips here, Doug. There's some of that has gone on.

[Doug Taylor, Analyst at National Bank]

Is the idea here that if you get some sort of resolution on the situation as it relates to Palantir, some of that might rebound-

[Dan Matlow, CEO at VitalHub]

We're-

[Doug Taylor, Analyst at National Bank]

and impact your finances next year?

[Dan Matlow, CEO at VitalHub]

That's what we're hoping. We're really got two different scenarios that are cooking in here. One is we got these new ICBs that have come together and formed. There's all new people in these particular groups, funding isn't really set up in some of these appropriately. They're going like, "Whoa, hang on, there's a renewal here. What's going on here? We got FDP. We're just going to hold here for a couple of quarters here till we see what's going on and then reconvene this thing."

[Dan Matlow, CEO at VitalHub]

It's not like they're putting FDP in these places, all of them. They're just saying, "We've got to suspend this while." In other cases, they're just going on as business as usual, and they're renewing their contract. We hope within the next couple of quarters to get resolution of that. Even if the contract's renewed, we still think there's opportunity to continue, and if it's not renewed, we're really excited about that because we continue to grow. That's the scenario we're facing at right now.

[Doug Taylor, Analyst at National Bank]

Okay, that's helpful. Next question, you described the integration process for Induction and Novari as being substantially complete or approaching completion, and you can see the EBITDA margins here at 26%. As you say, that's been well executed. 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?

[Dan Matlow, CEO at VitalHub]

Every CAD 1 million of ARR theoretically adds, if we don't add more costs, adds a point of adjusted EBITDA, right? We're still not completed on the other side of some reductions. There's still some work that's continued to move it, right? The natural increase of new deals, well, not only does it increase new deals, it comes to the bottom line as well. We continue to march on both of those fronts to fine-tune those things. We continue to work our way through it.

[Doug Taylor, Analyst at National Bank]

Summarizing, cost transformation work largely done, but further-

[Dan Matlow, CEO at VitalHub]

Yeah

[Doug Taylor, Analyst at National Bank]

efficiencies of scale.

[Dan Matlow, CEO at VitalHub]

There's still work to be done, we've taken a big chunk out of the apple.

[Doug Taylor, Analyst at National Bank]

Okay. Thank you.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Thank you, Doug. The next question comes from Paul Treiber with RBC Securities. Paul, your line is open.

[Paul Treiber, Analyst at RBC]

Yeah, thanks and good morning. Dan, just now that the company's past 100 million in ARR, how do you look at the cadence and the drivers of organic growth from here? What I mean is, does it become less about individual point solutions and their growth, and more about perhaps the broader platform and cross-selling? How are you sort of shifting the organization to sell, to sustain the organic growth as a larger company?

[Dan Matlow, CEO at VitalHub]

Yeah, I think good point, Paul. I think we are. The patient care coordination platform, as we would describe it, which is really the combination of Zesty, Strata, MedCurrent, Intouch and MedCurrent. We've done work on integrating those products across different worlds. We're also adding AI injection into a lot of those base products. We are working on moving our sales force into regional-based sales force and giving them those suite of products and merging them together in comprehensive solutions. We're already seeing that in the field, customers asking for these things to be integrated.

[Dan Matlow, CEO at VitalHub]

Just through osmosis, you get the customer, and the customer already has two or three of those solutions, and they've asked to, "Hey, let's get these things working together." We work with them in the field, we get it integrated, and then we start integrating into other places, and then we continuously add on other base products. We are moving into that direction on our patient flow suite of base solutions, and we're starting to see it work in the field.

[Dan Matlow, CEO at VitalHub]

The bigger ticket items and the more complicated ones, being the Strata and Novari-based implementations, yeah, we're starting to see some really nice proposals going out for those products and with high ticket and high numbers that get associated with it. We expect those core products to really be most of our engine for our organic growth.

[Dan Matlow, CEO at VitalHub]

We're still seeing work on our TREAT-based product sets and our community services product sets. We've successfully have moved that CaseWORKS products into Australia, and we're having really good success with that product in those marketplaces as well. We continue to work on those approaches. Essentially, that's how we're seeing it.

[Paul Treiber, Analyst at RBC]

That's great to hear. The second question, just on Buddy Healthcare. With the management team on board and a footprint in the region, does that open you up and give you more insight into other acquisitions in the Nordics region? How would you describe the M&A opportunity in the Nordics compared to other regions?

[Dan Matlow, CEO at VitalHub]

We've done some work on that. There's a couple other scenarios that we know of, and the CEO just told me about one other one yesterday. Yeah, your question is very much done. Again, our acquisition targets have really, in a lot of cases, are companies that we're well aware of because we work in the same markets, and we would compete with them or complement them in many different situations.

[Dan Matlow, CEO at VitalHub]

Every time we enter a new marketplace, we get expertise on that market and how that ecosystem works and what the gaps are in respect to that and those organizations that fill those gaps and what they do. We'll definitely explore the Nordics marketplace. It is a pretty interesting marketplace. It's very similar to our other government-funded groups between the Scandinavian countries. We'll continue to explore, and we'll continue to look at it.

[Dan Matlow, CEO at VitalHub]

Yeah, that is a byproduct you get by entering into another region, is intelligence on that region and how that healthcare ecosystems are and who the players are in those areas. We continue to work with it, and you see who's come over from Buddy. Very excited about the opportunity. He wanted to roll over stock into our organization, and he has, and he's excited to help us in those Nordics regions, and that's a good thing.

[Paul Treiber, Analyst at RBC]

Okay. Thanks for taking the questions.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Thank you, Paul. The next question comes from Michael Freeman with Raymond James. Michael, your line is open.

[Michael Freeman, Analyst at Raymond James]

Hey, good morning, everybody, and congrats on the results. First question is, I wonder if you could tell us a bit about what you're seeing in the M&A environment right now and the sort of competitive dynamics you're seeing in bids and also, I guess, the pricing environment as you're poking around.

[Dan Matlow, CEO at VitalHub]

It continues to be all over the map as it always has, Michael, it's hard to predict in terms of everyone is a different world, it all depends on who the founder is and how the thing was structured and what they are continuing to do.

[Dan Matlow, CEO at VitalHub]

We are seeing more and more organizations that have had investments of some sort where the cash is no longer going, the company is in a little bit of a stagnant standstill state, investors starting to think they want to get their money back. The challenge becomes, are they prepared to take a haircut on their money because the valuations that they went into were higher? Buddy Healthcare is one of those scenarios to a degree.

[Dan Matlow, CEO at VitalHub]

We continue to see some of those coming to market, we still see founders in other situations coming to market as well. It's all over the map relative to it, probably we are seeing companies that did manage to take on investors potentially going to the market to see what their exits are because there's no more cash to be had in those particular companies. We are starting to see that.

[Michael Freeman, Analyst at Raymond James]

Okay. All right. Thanks, Dan. For my next question, I wonder if you could touch on your AI roadmap, and what you're working up with your R&D team and with your customers. I'm happy to hear that some of these have been deployed. Curious if you could just give us the layout also.

[Dan Matlow, CEO at VitalHub]

Yeah. We're really happy with some of the AI progressions we've built in our team. Part of sometimes on these acquisitions is you inherit some technical debt, we've had some projects that have helped us get out of some technical debt, by using AI, which have streamlined some processes. It's helped us in our internal development group, we continue to embrace it in starting to move it, we've seen some benefits.

[Dan Matlow, CEO at VitalHub]

We do have capital projects groups that we're building in there. We built a protocoling form-based system, which is used to understand forms and give you AI descriptions on forms. We look at all of our different products where we can add that. It started evolving in the Novari product.

[Dan Matlow, CEO at VitalHub]

I think it's been responsible for getting two deals that I know of, over the finish line, with Novari, where radiologists have just loved that feature. We continue to do that and we continue to upsell it to the rest of our Novari base, but now we've added it to other products, as an add-on feature.

[Dan Matlow, CEO at VitalHub]

The other area which we think we can add substantial revenue is we've taken on the journey of building our own scribing solution for our case management solutions. We have a fair amount of users between our four or five products in that suite that would be clinicians or caseworkers that would meet with patients all the time, that are not using scribing at this point.

[Dan Matlow, CEO at VitalHub]

We are building our own scribing and we're integrating it into our own product sets, and we expect to get uptake on that product in 2027 with it. We are adding AI products into the market, and we continue to build that. We're investing in it, and I think it's interesting to note that we are up to the 26% level on the bottom line, and we've been investing in AI continuously and still supporting that number. We're happy with what's going on in that group.

[Michael Freeman, Analyst at Raymond James]

Okay. All right. That's helpful to understand. Last question from me. Perhaps outside of the U.K., are there any material RFPs that are coming down the pipeline, or that you're preparing to respond to now?

[Dan Matlow, CEO at VitalHub]

We're starting to see some interest in the U.S. marketplace with our Strata solution, through some groups and it's still early to tell with that stuff, but we're seeing some pretty interesting responses on that, and that. We do have a U.S. group in with Strata with the search business when we decided to move the core referral management product into the U.S. marketplace.

[Dan Matlow, CEO at VitalHub]

Early indications are that we got something that's a little unique in certain scenarios. We continue to move on that front to explore what we can do to build that. That would open up an interesting marketplace if we could start getting some references down there, which I think we will.

[Michael Freeman, Analyst at Raymond James]

Does that provide an opening for other products to be introduced into the U.S., or is this a very Strata-specific-

[Dan Matlow, CEO at VitalHub]

You got to be really careful. I think you can start with I think we are starting to add the patient engagement part of the Buddy product onto the other side of Strata. As you get discharged, which into and referred to another area, the patient can be in the stream of the discharge, to do that. We've integrated those into one big product. An example being, a patient gets referred out of a hospital to a hospice, and most of hospice is home care right now.

[Dan Matlow, CEO at VitalHub]

The referral goes into hospice, but we take the patient and the family all the way through that journey, by having an engagement platform and an app that they can download all the way through the process. We allow the patient's family to communicate with their caretakers, during the whole end-of-life process.

[Dan Matlow, CEO at VitalHub]

Before, I think we got about 20 different hospices on the Strata platform that we do referral management based world to. We came up with that new idea in the U.K., we've implemented it now, and now we're rolling that. We're looking to all the other ones to add that feature to it, right? Always on the other side of a referral, there's a whole patient engagement world on it, that's just an example of one of the upsell platforms that we can add to the marketplace. As we move into the U.S. with that, maybe there's an opportunity there. Who knows? It's still early days.

[Michael Freeman, Analyst at Raymond James]

Got it. All right. Thank you, Dan. I'll pass it on.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Thank you, Michael. Next question comes from Kevin Krishnaratne with Scotia Capital. Kevin, your line is open. You may be on mute, Kevin.

[Analyst at Scotia Capital]

Hello?

[Dan Matlow, CEO at VitalHub]

Hey, Kevin. I hear you now.

[Analyst at Scotia Capital]

Yep. Sorry for that. This is Richard on for Kevin. Just a quick question. I know you haven't provided any formal guidance on ARR growth, but I think you've been comfortable with it being in the low double-digit range. I was just wondering if you have any thoughts on near-term on where that's heading. I note that you've currently been running in the 10%-11% range this year, and I was just curious on where that goes.

[Dan Matlow, CEO at VitalHub]

Yeah. It's really the wild card with this FDP stuff that's going on, and that's really account by account to do that. We still feel comfortable with the rest of our business that even with that headwind, we should still be in the range where we were this quarter and above it for sure. We continue to work with that, and we continue to work with the cards that we're being dealt on that particular scenario. Even with that scenario, we're still getting 10%-11% organic growth. We're happy with that. The bottom line has come to the other side. We continue to do that.

[Analyst at Scotia Capital]

Thank you. Do you have any thoughts on capital allocation, particularly the balance between M&A and buybacks given your recently introduced NCIB?

[Dan Matlow, CEO at VitalHub]

Yeah. At the core of what we are, we can only buy up to 5%, right? We're still sitting at CAD 100, and probably we're getting back up to the CAD 130 million level even after the Buddy acquisition biz. We continue to produce cash. Yeah, I think we're definitely focused on M&A as our biggest thing. I think that's our best return for our shareholders in the long run. At these levels, I think we can do both, and that's sort of what we decided at the Board meeting.

[Analyst at Scotia Capital]

Sounds good. Thanks for taking my questions.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Thank you, Richard. The next question comes from David Kwan with TD Securities. David, your line is open.

[David Kwan, Analyst at TD Securities]

Thanks. Thanks, Christian, for that. Just maybe getting back to last question on the buybacks, Dan. Sounds like once it gets approved, if the shares are still kind of at these levels, you'll be active with the buyback?

[Dan Matlow, CEO at VitalHub]

Yeah, I think we discussed that at the Board, and we'll continue to look at things as they continue to progress. I don't want to commit to anything, but that could be the world that we go into as we go forward.

[David Kwan, Analyst at TD Securities]

Yeah, just wondering in terms of the buyback, even if you kind of max it out, you'd still have a lot of cash left over.

[Dan Matlow, CEO at VitalHub]

Yeah.

[David Kwan, Analyst at TD Securities]

It seems like you could be active on both fronts.

[Dan Matlow, CEO at VitalHub]

Well, no, I think we can too, David, and that's sort of the thought process on this thing. With that being said, there's always larger transactions that are floating around where that might not be enough cash. It's just weighing all those into the equation based on what's going on in our particular world.

[Dan Matlow, CEO at VitalHub]

We're constantly exploring it and making the proper decisions which we think would be right for our shareholders. We'll continue to look at it. Based on how we're doing now in terms of the level of the acquisitions that we've been making, we definitely do got enough to continue to do that. That would be the case. If something larger was progressing, that may change that thought process.

[David Kwan, Analyst at TD Securities]

No, that's helpful. Thanks, Dan. When you talk about the M&A and larger deals, are we talking stuff that could be meaningfully larger than Novari, or are we kind of looking at more Novari-type deals?

[Dan Matlow, CEO at VitalHub]

I think meaningfully larger than Novari to a degree. Not that much larger, yeah, meaningfully larger, I think.

[David Kwan, Analyst at TD Securities]

That's helpful. Just one or two more questions here. Getting back on the AI, can you talk about to what extent are you seeing customers adopting AI? How quickly are they, to what extent customers are kind of working with you to help fund projects that might be more specific to their use cases, their needs, but maybe that also can be leveraged to other customers?

[Dan Matlow, CEO at VitalHub]

Yeah, every single one of our AI projects are being done based off of customer input into the equation, and not just one customer, multiple customers, so that we actually get a feel for does it add value and what it's going to cost us to deliver, and do they got the funding to deliver it. There's definitely a lot of intrigue within our customer base.

[Dan Matlow, CEO at VitalHub]

There's also a fair amount of uncertainty in respect to things like privacy, security, compliance, regulatory-based approvals. The one area that definitely is the most adopted area is the transcription side of the business. I think we see that all the way through. We've already seen that through the GP marketplaces with the adoption of Heidi and things like that in the GP world.

[Dan Matlow, CEO at VitalHub]

There's lots of other caregivers that are there, and I think in the hospital setting, the big EHRs will do those. In the community social services area, we are the record that the caregivers use. They're looking for us to provide that transcription services. We believe that's our lowest hanging fruit out of all of our AI projects to go get revenue.

[Dan Matlow, CEO at VitalHub]

The other stuff is really working between the scenes and its injection into our applications and we see things in our MedCurrent base where AI can help speed up the delivery of that clinical decision support system. We see things in our patient engagement platforms and so forth where AI can do some things. We continue to work with our group. It's not like they're screaming at the door saying, "Hey, we need this stuff tomorrow." That's not how our markets work.

[Dan Matlow, CEO at VitalHub]

It's a little slow and bureaucratic, which is both a blessing and a curse, but it is the market that we deal with. In terms of the transcription side, we definitely think as soon as we get that product into the marketplace, that we would like to think there's going to be adoption if we can create it properly and price it properly for our base.

[David Kwan, Analyst at TD Securities]

No, that makes sense. Maybe one last question for Brian. Just on the gross margin side, it was a bit weaker than what we were looking at, especially given the revenue mix. We want to know if there was anything in particular that was worth flagging and how we should be looking at gross margins going forward.

[Brian Goffenberg, CFO at VitalHub]

No, I think it will still continue to probably be the 80% line. If you look at Q1, we were a little bit higher. Overall for the six months, it's been the 80% range. As Dan said earlier, some of the services revenue was a little bit lower and that's lower margin stuff. You'll probably see that improve as we go forward.

[Dan Matlow, CEO at VitalHub]

I think, David, part of timing of services revenue, where you get the revenue to match the expense is sometimes challenging. We may incur expense on services revenue, but because we haven't hit a particular milestone, we haven't recognized the revenue accordingly for it yet. We get the expense without the revenue. In other quarters, it's the other way around, right? Sometimes the timing of that sort of just offsets that a little bit, but it should always be in that range.

[David Kwan, Analyst at TD Securities]

That's helpful. Thanks very much.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Thank you, David. The next question comes from Justin Keywood with Stifel. Justin, your line is open.

[Justin Keywood, Analyst at Stifel]

Hey, good morning. Thanks for taking my call. Understand that the cost side of the recent large M&A in 2025 has largely been integrated. I was hoping to get an update on how the cross-sales opportunity is going with Novari Health and in particular, the opportunity within the subsegment of the Canadian Mental Health Institutes, where I understand that Novari has a substantial market share.

[Justin Keywood, Analyst at Stifel]

Some of the competing options are not nearly at the level of functionality, including also just, frankly, some paper-based processes that are still being utilized. Just seeing how that sales opportunity is and what the TAM could be for the subsegment.

[Dan Matlow, CEO at VitalHub]

Yeah. We're pretty active in the mental health world because we own the predominant EHRs in that world, right? Both Strata and Novari both have footprints in the mental health referral basis, depending on what the different scenarios are. Novari, I think a few years back did the mental health referral-based business for CAMH, and that's where a lot of that expertise was done, and they continue to have a footprint in those particular levels.

[Dan Matlow, CEO at VitalHub]

Part of that is being addressed with the provincial-based transaction, and there's other opportunities all across Canada in the mental health world. The two implementations we've sold in the U.K. have been in the mental health-based arena as well, and we continue to see some stuff in that. You're right. They have developed some pretty strong workflows and we have added to that expertise by having our own EHRs in that space. Connecting our EHRs to their referral management suite is something that our customers like, and we continue to do that.

[Justin Keywood, Analyst at Stifel]

That's helpful. Maybe just a follow-up. Epic, are they pretty active in the Canadian mental health area, and how do you see that competitor?

[Dan Matlow, CEO at VitalHub]

Yeah, I don't see Epic has not done anything in the Canadian They just sell to the pure hospital levels. They probably would cover off a little bit of the mental health beds within hospitals, but they're not focused on community agencies, mental health-based worlds.

[Dan Matlow, CEO at VitalHub]

That's not what they do. Whatever mental health pure hospitals like we have, there's about three or four different hospitals across Canada or across Ontario that do that. MEDITECH seems to be the vendor that runs those bigger organizations to do that. On the community and social services side, I think we would be the predominant vendor that would do that work.

[Justin Keywood, Analyst at Stifel]

Thank you. Very helpful.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

Thanks, Justin. There are no further questions at this time. I'll hand the call back to you, Dan, for any closing remarks.

[Dan Matlow, CEO at VitalHub]

Yeah, I think the best thing to look from that quarter is, we've always said this, we like organic growth, we want organic growth, and we push organic growth. At the core of what this business is really is cash flow striving and earnings on the other side. As you guys can see, we're back executing on that side of the equation as we continuously always will. We're starting to see that come through and we continue to take our organic growth as it comes to us and adds to the bottom line. Yeah, we're excited to get our adjusted EBITDA up there.

[Dan Matlow, CEO at VitalHub]

We're excited to start seeing cash flow, and we're excited about the suite of solutions that we've accumulated, and how those are starting to come together as comprehensive solutions. We continue to work and we continue to progress in that space, we continue to look at M&A and another quarter is behind us, we look forward to the next one. Thanks everyone for attending today.

[Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub]

This now concludes today's conference call. Thank you all for joining.

[Dan Matlow, CEO at VitalHub]

Bye-bye

Participants

Analysts

• Christian Sgro, Head of Investor Relations and M&A Specialist at VitalHub
• Brian Goffenberg, CFO at VitalHub
• Dan Matlow, CEO at VitalHub
• Gavin Fairweather, Analyst at ATB Cormark
• Doug Taylor, Analyst at National Bank
• Paul Treiber, Analyst at RBC
• Michael Freeman, Analyst at Raymond James
• Analyst at Scotia Capital
• David Kwan, Analyst at TD Securities
• Justin Keywood, Analyst at Stifel