Think Research Corporation (TSX-V:THNK, OTCQB:THKKF) says Beedie Investments Ltd has continued to show its support of the company with a second advance from its current credit agreement as Think also gave a positive outlook for the fourth quarter of 2022 and into 2023.
The credit agreement, which was announced on April 25, 2022, provided for a non-revolving term convertible loan facility of up to $25 million with an expiry on May 10, 2026. Subsequent to closing and an initial draw, the remaining $15 million was available to Think for subsequent advances in minimum tranches of $3 million over the term of the convertible facility.
Think said that Beedie Capital has agreed to a second advance of $3 million under the facility and has confirmed subscriptions for the significant majority of an equity raise with gross proceeds of a minimum $3 million via a non-brokered equity private placement, being completed at an 16.4% premium to Think's 20-day volume weighted average price (VWAP) on the TSX Venture Exchange (TSXV).
READ: Think Research amends certain terms relating to previously completed acquisition of BioPharma Services
"This capital infusion and ongoing support from Beedie helps to strengthen our balance sheet while also supporting the Company's growth efforts in its SaaS revenue and to expedite the conversion of Think's backlog into revenue, and drive us further down the path to profitability," Think CEO, Sachin Aggarwal said in a statement.
"With greater visibility to growth in revenue and EBITDA into 2023, supported by a remarkable backlog of work, we believe Think is well positioned to prudently execute on our strategy, while continuing to prioritize cost synergies and disciplined growth. We greatly appreciate the continued support of all shareholders as we carve our path forward," he added.
The company noted that the additional capital in aggregate will be used for general working capital purposes, and to pay down a portion of the term loan under its existing credit agreement with The Bank of Nova Scotia (BNS) credit facility.
"We continue to be excited about supporting Think Research's mission to transform digital health in Canada and internationally," commented David Bell, managing director at Beedie Capital. "The outlook and demand for Digital Front Door and eReferrals to connect healthcare systems has never been greater and we are confident in Management's ability to execute their strategy and backlog. We view Think Research as uniquely undervalued and are confident that as the Company executes its strategic plan it will unlock significant value for stakeholders."
Positive outlook for Q4FY22 and into 2023
Think also said it has continued to gain sales momentum across its business lines into the fourth quarter of 2022 and remains excited by the growth in its software-as-a-service business and robust backlog of contracted revenue.
Based on the company's unaudited financial results for the current fiscal year to date, Think's management confirmed its annualized fourth-quarter FY2022 run rate of between $84 million and $90 million, or $21 million to $22.5 million for the three months ending December 31, 2022.
It said its management is also confirming its annualized fourth-quarter run rate adjusted EBITDA target to between $6 million and $9 million, or $1.5 million to $2.3 million for the three months ending December 31, 2022.
Second advance and equity financing details
At any time during the term of the convertible facility, Think noted that Beedie Capital may elect to convert the initial principal amount of the second advance into common shares at a conversion price of $0.43 each, subject to adjustment in accordance with the terms of the agreement. The second advance conversion price represents a 25.2% premium above the 20-day VWAP of Think common shares on the TSXV.
The second advance closing date and funding of the second advance is expected to take place in the coming days subject to the satisfaction of customary closing conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSXV.
The common shares issued on conversion of the second advance will be subject to a statutory resale restriction in accordance with applicable Canadian securities laws, expiring four months and one day from the date of the applicable advance, in addition to such other restrictions as may apply under the policies of the TSXV.
The company said it has received subscription agreements representing a significant majority of the non-brokered private placement offering of a minimum of 7,500,000 common shares at a subscription price of $0.40 each for total aggregate gross proceeds of a minimum of $3 million. Beedie Capital has led and priced this equity financing with a commitment of $750,000 and pricing at a 16.4% premium to the company's 20-day VWAP on the TSXV.
The company said it is expected to complete the equity financing within 30 days following the second advance closing date. The equity financing is subject to TSXV approval.
Think Research Corporation is an industry leader in delivering knowledge-based digital health software solutions. The company's focused mission is to organize the world's health knowledge so everyone gets the best care. Its evidence-based healthcare technology solutions support the clinical decision-making process, standardize care, to facilitate better healthcare outcomes.
The company gathers, develops, and delivers knowledge-based solutions globally to customers which typically includes enterprise clients, hospitals, health regions, healthcare professionals, and/or governments. It has gathered a significant amount of data by building its repository of knowledge through its network and group of companies, including acquired companies.
Think licenses its solutions to over 13,000 facilities for over 300,000 primary care, acute care, and long-term care doctors, nurses and pharmacists that rely on the content and data provided by Think to support their practices. Millions of patients and residents annually receive better care due to the essential data that Think produces, manages and delivers.
In addition, the company collects and manages pharmaceutical and clinical trial data via the BioPharma Services entity that Think acquired on September 10, 2021. BioPharma Services is a leading provider of bioequivalence and Phase 1 clinical research services to pharmaceutical companies globally. Think's other services include a network of digital-first primary care clinics and medical clinics that provide elective surgery.
Contact the author at jon.hopkins@proactiveinvestors.com