President and CEO’s Message to Shareholders
Moving Forward with Purpose
2020 was a uniquely challenging year. From our perspective at Morneau Shepell, given our presence in global wellbeing markets, we experienced 2020 through the eyes of our 24,000 clients on the front lines of what can justifiably be called a growing mental health pandemic in the workplace that owes much to COVID-19.
The decline in the mental health of the global working population has inspired the best from our people and company. Daily we are fighting a different but powerful form of climate change – the impairment of our psychological climate. I’ve never been prouder of our own people who pushed their own limits to support the wellbeing of our clients and their people through difficult and uncertain times.
Today mental health – or employee wellbeing generally – is among the top business issues globally. In a positive sense it’s an opportunity to act on the time-tested principle that happy, healthy and engaged people are essential to building a high-performing workforce and resilient organizations. It’s an opportunity for us at Morneau Shepell to keep moving forward in the spirit of our purpose as a company: improving lives, improving business.
Solidly profitable global growth during a challenging 2020
Morneau Shepell delivered a solid year in 2020, despite considerable economic headwinds. Revenue grew 10.2 per cent to $979.2 million and Adjusted EBITDA by 9.6 per cent to $200.0 million. Our performance met our expectations for 2020 that we had prior to the pandemic. While in-person services were impacted by the COVID-19 lockdowns, there was a strong increase in sales of technology-enabled solutions delivered virtually, especially in fastgrowing wellbeing markets for telemedicine and digital health care. We continued to see growth in retirement solutions, disability management and pension administration – all core businesses with strong recurring revenues.
During the year we added nearly four million lives through new client wins to our wellbeing business. We now cover 13.8 million direct lives through our EFAP programs, up from just over 10 million at the beginning of the year. We also saw the continued adoption of our LifeWorks platform, a key part of our technology and innovation strategy. We increased lives on the platform to 5.1 million, an improvement of 125 per cent. This migration sets the stage for upselling clients to additional technology modules. At the beginning of the year, we had been upselling at 10 per cent and, by year-end, we increased to 15 per cent, even with a large increase in the base of total lives available.
In 2020 our solid business results owed much to the ability of our people and systems to pivot quickly to working from home. Our priority at all times was the health and wellbeing of our people, a contributing factor to our record levels of employee engagement last year. Similarly, by ensuring business continuity early in the pandemic, we were a great source of stability for our clients. Last year we achieved record client satisfaction scores with our Top 100 clients (representing 50 per cent of revenue) and our Top 400 clients (representing 75 per cent of revenue) by providing wellbeing services to their people and their families during an especially stressful time.
Environment, social and corporate governance (ESG)
Our business has a strong ESG orientation by definition, given our total wellbeing focus. In 2020 we made meaningful contributions to supporting our communities. We rolled out new technology-enabled solutions and community programs designed to address the wellbeing challenges surfacing in the pandemic. Usage of AbilitiCBT, our iCBT solution, grew significantly in the year, providing online therapy to some 35,000 Canadians to help manage their anxiety and depression symptoms, with over one million sessions. We also rolled out our unified telemedicine portfolio across North America.
In April we launched our monthly Mental Health Index (MHI), a new global benchmark for measuring the mental health of the working population in the four key jurisdictions (United States, Canada, the United Kingdom, and Australia) where we operate. The Index is positioned to support mental health strategies on a larger scale for the greater community good, providing insights to help formulate policy decisions about public health and helping organizations with their employee wellbeing strategies. By year-end, the Index had been mentioned in the media some 2,600 + times. Also in April, we launched the Wellcan app and website that provides free mental health resources to more than 6,500 Canadians today. In a similar vein, our Living Well podcast, launched in July, has some 8,000 downloads and continues to build an audience for its thought leadership content on total wellbeing.
From an ESG perspective, and consistent with our growth aspirations, we became a signatory to the United Nations Global Compact. This involves a commitment to its “Ten Principles” that cover key areas of ethical conduct, human rights, labour rights and the environment. Last year we focused on issues with respect to inclusion, diversity and systemic racism and discrimination. To that end we comprehensively expanded our internal action plans in this area of workforce culture.
Changing our name to LifeWorks to support our global strategy
On March 10, 2021, we announced our intention to change our company name from Morneau Shepell Inc. to LifeWorks Inc.
Several factors came together to present an opportunity to refresh our brand to better reflect where we are going as a company.
For many years, the Morneau Shepell name has served our business exceptionally well. It is a solid brand in our Canadian markets that speaks to the reputation of our people as trusted client partners and to the quality of our solutions. That said, over the last 10 years alone, we have grown to where almost half of our revenue comes from outside Canada. Our growth presents an opportunity to refresh our brand to reinforce our purpose of improving lives and improving business, while reflecting our position as leaders in delivering total wellbeing through technology and deep expertise.
Strategic Direction: The Global Leader in Total Wellbeing
Our global growth is reflected in part by the fact that we now deliver wellbeing solutions in over 160 countries. Our full solutions portfolio also keeps expanding and now includes employee and family assistance plans, absence management, digital health, unified telemedicine, pension and benefits administration and retirement planning. At year end, we are well-positioned to continue delivering profitable growth while accelerating our global expansion:
We are the only organization today that integrates solutions for the four key pillars of total wellbeing: mental, physical, financial and social.
We are the world’s largest solutions provider in the converging markets for wellbeing solutions and employee and family assistance programs.
We are the largest administrator of pension, retirement and benefit plans in Canada with a fast-growing U.S. business, with some nine million plan participants under administration at year-end 2020. We continue to help clients enhance employee productivity through technology.
We are the largest provider of integrated absence management solutions in Canada and we are continuing to grow this business internationally. We help our clients reduce the incidence and duration of employee absences while improving their financial performance.
Going forward, we are focused on a growth strategy with three pillars:
1. Leadership in the total wellbeing market
We differentiate by supporting the whole person across the four key pillars of wellbeing – mental, physical, social and financial. In doing so we provide our clients with access to the full continuum of care that addresses a broad spectrum of needs, ranging from the most severe or complex physical and mental health issues, to reward and recognition strategies to mitigate workforce stress, anxiety and absence while increasing engagement.
2. Accelerate growth through U.S. and global expansion
We are focused on U.S. market growth with growing emphasis on global expansion through strategic acquisitions and partnerships to attract new clients, expand our solutions set and develop new wellbeing businesses. We are positioned today to provide solutions on a global basis, including support for multinational enterprises seeking consistent quality in their wellbeing strategies that cross borders and serve large workforce populations.
3. Drive world-class delivery through people and technology.
We are creating a sustainable competitive advantage by combining our cloud-based wellbeing platform and technology depth with a strong talent base. Our focus is merging the innovation speed and agility of a smaller company with the global talent platform - the people – of a much larger one. Our data-driven, technology-derived insights and innovations will in future, we believe, drive the development of new revenue streams while improving the client experience and delivering best-in-class operational efficiencies.
Committed to making a real difference in the world
Morneau Shepell has a long track record of responsible and sustainable growth. It’s that long-term, consistent approach to delivering results that gives us the confidence that in the future we can touch and improve the lives of many more people and make a real difference in the world.
During a time of crisis such as our communities are experiencing today, companies like ours have a responsibility to step forward for the greater good.
On behalf of our entire leadership team, I would like to thank our employees, partners, clients and stakeholders for their support and resilience through an incredibly challenging year for so many.
President and CEO