Vitalhub (TSE:VHI) executives highlighted a milestone year on the company’s fiscal 2025 fourth-quarter earnings call, pointing to revenue surpassing CAD 100 million, double-digit organic growth in annual recurring revenue, and continued progress integrating recent acquisitions. Management also discussed the pace of cost synergies, the early stages of monetizing artificial intelligence initiatives, and ongoing merger-and-acquisition activity.
Financial results: revenue milestone and stable EBITDA margin
CFO Brian Goffenberg said Vitalhub generated over CAD 100 million in total revenue for full-year 2025, calling it a company milestone. He reported annual recurring revenue (ARR) of CAD 96.1 million at year-end, representing net organic growth of 10% versus the prior year.
- Recurring revenue (term license maintenance support) was CAD 23.6 million, representing 75% of total revenue.
- Virtual care term license revenue was CAD 2.4 million, down 4% sequentially.
- Perpetual license revenue was CAD 0.5 million, up from CAD 0.1 million in the prior-year quarter.
- Service, hardware, and other revenue was CAD 4.9 million, which management described as normalized sequentially versus a stronger Q3.
Gross margin was 79%, down from 81% in the prior-year quarter. Adjusted EBITDA was CAD 7.4 million, or 24% of revenue, compared to CAD 5.0 million (25% margin) a year earlier, and 22% in Q3 as the company “continue[s] to gain synergies from our latest acquisitions and operations,” Goffenberg said.
Vitalhub ended the year with CAD 119.2 million of cash and no debt.
Integration update: Novari and Induction
CEO Dan Matlow said the integrations of Novari and Induction were “going really well” and described them as “pretty good contributors,” adding that the impact is visible in the company’s cost lines as synergies begin to flow through.
Matlow also addressed a reporting delay, attributing it to “growth pains” associated with a new auditor and new internal teams rather than anything “material.” He said the company booked results earlier than the prior year and called the timing decision “probably not the smartest thing that we did,” while adding that the company was “in great spirits” with EY going forward.
On operating expenses, Matlow said management continues to move costs out of the business, although some savings could be offset by investments in AI initiatives. He noted there is still work to do, including moving resources and rationalizing development operations, pointing out that both Novari and Induction had their own offshore development groups. Matlow also said Induction has been integrated into Vitalhub’s broader U.K. operations.
Demand environment: Q4 seasonality, NHS restructuring, and backlog
Discussing bookings and demand, Matlow described Q4 as “challenging” due to year-end timing and procurement slowdowns during the holiday period, noting that customers often push decisions into Q1 to use budgets. He said there were “a lot of deals” in the quarter, “just not the size of the deals,” and reiterated that booking performance will not move “in a straight line.”
Matlow said Vitalhub’s services backlog is “really strong” entering the new year and called out a healthy pipeline for Novari in both Canada and the U.K., including activity tied to provincial initiatives. He added that some public-sector customers do not allow the company to announce deals at signing.
On the U.K. market, Matlow said NHS restructuring has primarily affected the SHREWD product line. He described reorganizations and mergers among regional oversight bodies (ICBs), including employee cuts, as slowing purchasing decisions. However, he suggested it could become an opportunity once “the dust settles,” while noting it may take “a few more quarters.” Matlow added that referral-management demand for products such as Novari and Strata remains active, as operational groups continue to coordinate across regions.
AI initiatives: early revenue, customer-driven roadmap, and pricing considerations
Management repeatedly emphasized that Vitalhub’s AI efforts are being driven by customer needs and targeted use cases rather than broad disruption. Matlow said the company has established AI development teams and projects, and has already seen revenue from one Novari AI project. He said Vitalhub expects AI projects to contribute to revenue “through the middle to the end of 2026” as offerings move into the portfolio.
In Q&A, Matlow described how product managers identified AI use cases and prioritized them based on customer demand. He cited several examples:
- Novari: an AI-related module for protocolling within imaging solutions; Matlow said customers bought it before it was built and helped with design.
- Transcription and case management/EHR-related workflows: described as “low-hanging fruit,” with customers already participating; Matlow said the company hopes to have something in production midyear and sees potential for uplifts later in the year.
- SHREWD: projects using voice to query analytics and data more directly, with partners, with management hoping for incremental revenue.
Matlow also said some customers have directly funded development, including paying the company to build transcription capabilities. Internally, he said Vitalhub is embedding AI into development, sales, and support processes, citing tools such as Gong for sales call transcription and upgrades to Freshdesk, while also exploring NetSuite AI modules. He noted that compliance and security requirements require controlled deployment.
On customer purchasing behavior, Matlow said AI is not currently “making or breaking” deals or churn, describing healthcare as slower-moving than other sectors, but he characterized AI as an opportunity to add modules and functionality across the installed base.
He also discussed pricing dynamics, noting Vitalhub itself is charged on a usage basis for some AI components and may need to pass those costs through transparently. Matlow said the company’s view is that it needs to build and train its own models rather than relying on third-party layers in order to make AI economically viable.
Cash flow timing, capital allocation, and M&A outlook
On cash flow, Matlow pointed to timing factors and renewal cycles. He said a significant portion of the Induction stream, including Attend Anywhere, renews at the end of Q1, which is a “big cash driver.” He also said accounts receivable was higher than desired, attributing part of that to billing and collection setup challenges at Induction and Novari that have been “improved… tremendously.” He suggested Q2 is “probably our big cash collection item,” citing the timing of large deals and collections in Q1 and Q2.
Regarding capital allocation, Matlow said the company has considered share repurchases in light of stock price weakness, but believes cash is better deployed toward acquisitions where it expects higher returns. He said the company remains focused on building financial performance and following the board’s mandate.
On M&A, Matlow said Vitalhub is actively working on deals and expects to complete acquisitions in 2026. He indicated the competitive backdrop has shifted somewhat, with more scrutiny from private equity and fewer situations where PE drives up prices, while noting the presence of “tired investors” in some companies facing the prospect of selling at lower valuations than prior financing rounds. He said Vitalhub’s valuation methodology remains consistent and that opportunities to do deals at its preferred prices are available in “a bunch of scenarios.”
When asked about deal size, Matlow said Vitalhub would use debt “if the business was right” and could service the debt, but described the company as traditionally conservative. On geography, he suggested the company is looking more toward Europe than Asia-Pacific.
Looking ahead, Matlow reiterated a target profile of returning to a “Rule of 40” model and said management continues to aim for a roughly 27%-28% EBITDA margin paired with 12%-13% growth over time, emphasizing that progress depends on both continued integration-driven cost reductions and adding higher-margin ARR without proportionate cost increases.
About Vitalhub (TSE:VHI)
Vitalhub Corp is Canada-based firm that develops technology solutions for health and human services providers in the mental health (child through adult), long term care, community health service, home health, social service, and acute care sectors. Its technologies include blockchain, mobile, patient flow, web-based assessment, and electronic health record solutions.
