Q: Please explain the losses due to fair value of the redeemable preferred shares and special securities?
5i Research Answer:
The accounting loss (non cash) is an accounting treatment used to account for the fair value adjustments and accrued dividends on the redeemable preferred shares in relation to the acquisition of WideOrbit and the public listing of LMN. It distorts the Net Income of the company during that reporting period. However, this has nothing to do with the underlying fundamentals of the business (similar to TOI when it went public). We think investors can look at other performance metrics for now such as revenue growth, gross margin, and EBITDA margin, and use the fully diluted share count to value LMN (instead of share outstanding) until the Income Statement normalizes next year.