- Began trading in June, 2021
- Network of nine pain clinics in major markets across Canada
- Eyeing co-branding opportunities with pharmacies
What Pathway Health does:
Pathway Health (TSX-V:PHC) Corp (CVE:PHC) is one of the largest providers of out-of-hospital pain management services in Canada. It has developed an expertise in harm reduction strategies where medicinal cannabis is being used as an alternative to traditional opioids.
The Toronto-based company has established a network of nine specialized medical clinics across four provinces in Canada to treat patients with chronic pain. Pathway Health (TSX-V:PHC)’s Virtual Clinic division also boasts the largest medical cannabis telemedicine network in Canada.
Pathway Health’s business has three clear foundations. The first of the three pillars, the Pathway Clinical Services division, provides traditional, interdisciplinary chronic pain care through its physician specialists. These services are provided from its physical clinic locations in the provinces of Ontario, Saskatchewan, Manitoba, and Quebec. The company plans to acquire or open other locations in other major hubs in Canada.
The second pillar is the Virtual Clinic division where among other things, it operates the largest medical cannabis telemedicine network in Canada, serving over 50,000 active patients with licensed producer partners. Most of the pharmacy collaboration agreements also operate through this business unit, as well as all business initiatives involving the company’s proprietary actionable digital intelligence SPARK software.
The third pillar constitutes the Product division where the company currently sells assistive devices to patients suffering from chronic pain. This is also the unit that will be developing and distributing the proposed Cannabis Health Products to Pathway’s own patient base, in addition to private label and co-branded products with some selected pharmacy retail companies.
There are more than 7 million Canadians aged 15, or older that live with chronic pain. That’s one in four for this age group. The government estimates that the total direct and indirect cost of chronic pain is about $40 billion.
How is it doing:
Pathway Health has undoubtedly raised its profile in 2021 and shares began trading on the Toronto venture exchange on June 17 this year
In March 2021, Pathway Health and Colson Capital Corp, a capital pool company listed on the TSX Venture Exchange, closed an oversubscribed financing for $13.8 million as part of a go-public round, in line with a previously announced proposed reverse take-over of Colson by Pathway.
Canaccord Genuity (TSX:CF, LSE:CF) went to market with a brokered deal for Pathway for $10 million earlier this year but because of strong interest in the deal, the size was increased to $13.8 million.
As a part of its strategic expansion and initiative with pharmacy companies, Pathway Health launched an initiative which involves the implementation of its proprietary Medical Cannabis Management System (MCMS) with its pharmacy partners. MCMS is designed to be implemented in retail pharmacies, with the aim of providing access points for medical cannabis care and enabling pharmacists to assess their patients to determine if medical cannabis could be beneficial for their medical condition.
On the financial front, on August 26 this year, the company reported it had achieved "stable" second quarter and first half results despite the impact of the coronavirus (COVID-19) pandemic as it outlined plans to continue to grow the business via acquisitions, partnerships and creating new products
Revenue for the three and six months ended June 30, 2021, was $2.9 million and $5.6 million, respectively, while gross margins were $1.5 million and $3 million for the three and six months. It ended the period to June 30 this year with $6.4 million in cash.
The company said that for the remainder of 2021 and for 2022, it would remain focused on three key initiatives to grow the business - to continue expanding through acquisition or partnership in Canada and explore opportunities in the US.
The second initiative involves our pharmacy partnerships, it said, while the third involved adding new products and services to its existing clinics to expand the 'circle of care' and create new revenue opportunities.
Pathway is also looking to capitalize on the anticipated next round of Health Canada changes to the Cannabis Act and the introduction of cannabis health products (CHPs) by developing proprietary, national distribution channels, and accessing proprietary formulation technology.
In February, 2021, Pathway struck a strategic partnership with Geocann that will bring VESIsorb formulated products to the forefront of the rapidly evolving medical cannabis programs of Canadian pharmacies. The partnership will allow Pathway to have exclusive distribution of a portfolio of proprietary formulations that are co-branded through its retail pharmacy partners.
Significantly, Pathway has also expanded its business model by finalizing agreements with some of the largest national retail pharmacy companies in Canada. Key elements of these agreements include a full-service collaboration, from pharmacist education programs to patient fulfillment of medical cannabis products.
Pathway and Geocann also have a focus on education initiatives that are aimed at reaching the approximately 42,000 licensed pharmacists working in more than 10,000 pharmacies. These include traditional Canadian Council on Continuing Education in Pharmacy (CCCEP) accredited bilingual programs and onboarding tools such as the Medical Cannabis Management Program for pharmacists.
Inflection points:
- More partnership agreements to add pharmacy locations to its product and service network
- Boosting revenue through product development deals with pharmacy companies
- Making acquisitions that can add patients to its existing patient base
What the boss says:
"These results reflect the continued commitment and hard work of our employees. During this time, we laid the foundation to be well positioned to execute our strategic initiatives and capitalize on future opportunities for this year and beyond," said Ken Yoon, Pathway CEO in a statement about the company's fiscal 2Q results.
"We remain focused on growth, both organically and through accretive acquisitions. We intend on adding new, complementary services and products to those we currently offer so we can provide a more wholistic approach to care for our patients. We believe this is the best path for providing best-in-class patient care and greater profitability for the Company," he added.
Contact the writer at giles@proactiveinvestors.com