Telehealth Co. Notches First Profitable Quarter

Reliq Health Technologies Inc. (RHT:TSX.V; RQHTF:OTCQB; A2AJTB:WKN) announced record revenues for the three months ending March 31 and its first profitable quarter with a gain from operations of CA$731,017.

During the same three months in 2022, the telehealth company reported a loss of CA$811,042. Sales increased 88% YoY to CA$4.7 million compared to CA$2.4 million for the three months ending March 31, 2022.

"Since January 1, 2023, the Company has added over 120 new Skilled Nursing Facilities to its client base and signed new contracts with a large U.S. Healthcare System client and a large U.S. Health Plan," Chief Executive Officer Lisa Crossley said. "It is a tremendous validation of Reliq's unique value proposition that we are able to attract these very large clients. We expect to see increasing traction with large clients through the remainder of 2023 and beyond."

The focus of the rest of the year will focus on "improving profitability and cashflows," Crossley said during a webcast on the financial results.

The company's continued expansion "is really a testament to our unique value proposition in this space," she said.

According to Research and Markets, the global telehealth market is expected to grow with a compound annual growth rate (CAGR) of 27% from 2022 to 2028.

According to Research and Markets, the global telehealth market is expected to grow with a compound annual growth rate (CAGR) of 27% from 2022 to 2028 due to the growing prevalence of chronic diseases and growing accessibility to platforms like Reliq's.

"The rising occurrence of chronic illness in developing regions will drive the demand for telemedicine services," Global Market Insights wrote. "Increased traditional health care costs, growing number of digital health users, and the evolution of health services in the health care institutions have spurred the technology uptake."

In an April 3 note, Sadif Analytics upgraded RHT to Above Average from Average. 

The company "has fair financials and good earnings quality," the note said, adding the stock was "safe."

And technical analyst Clive Maund of CliveMaund.com recommended the stock shortly after news broke last year that the company's revenue jumped 485% from the fiscal year 2021 to the fiscal year 2022. Writing for Streetwise Reports, he said he would "stay long" on the stock.

The Catalyst: Increasing Software and Services Revenue

Reliq said it expects the majority of its revenue to come from software and services by 2024. Revenue from that category increased by more than 69% to CA$1.8 million relative to the three months ending March 31, 2022.

Technical analyst Clive Maund recommended the stock shortly after news broke last year that the company's revenue jumped 485% from the fiscal year 2021 to the fiscal year 2022. Writing for Streetwise Reports, he said he would "stay long" on the stock.

The company said gross profits for the quarter increased by 95% to CA$3.2 million. Gross margins for the period were 68% and are expected to exceed 70% by the end of 2023 due to reduced device costs and an increase in the percentage of Reliq's total revenues from higher-margin software and services vs. hardware sales.

The company said its adjusted EBITDA for Q3 FY 2023 was a 2,190% increase YoY to CA$1.4 million.

Reliq is in the process of taking over adherence management for clients and has done so for 30% of them so far, improving patient adherence levels from less than 20% to about 70%. It expects to be managing adherence for all clients by June 30, the end of the fiscal year. The company said it also expects to have all clients caught up on accounts receivable by that time.

Multiple New Contracts

The company recently signed a contract with a U.S. health plan that operates in five states with more than 3,000 doctors and 1 million patients, a move expected to add more than 10,000 new patients to iUGO by next March at an average revenue of CA$65 per patient per month.

It also signed five new contracts in four states for iUGO, including its first contract in Arkansas. 

Reliq also started onboarding patients in March for another large client, a healthcare system with more than 1,200 care centers in seven states that are expected to add over 2,000 new patients per month to iUGO.

Diseases the platform aims to manage include chronic obstructive pulmonary disease (COPD), congestive heart failure, diabetes, hypertension, and others.

Patients get audible reminders to step on a scale, take their blood pressure, or prick their fingers for glucose monitoring. The information is automatically uploaded to the cloud. 

iUGO draws on data from fall detection devices, medication tracking, and vitals data to flag patients at home or in facilities who need additional monitoring.

Ownership and Share Structure

About 8% of Reliq's shares are owned by insiders, including Crossley, with 1.6% or 3.22 million shares. About 0.3% of the company is owned by institutional investors, including FNB Wealth Management, with 0.01% or 0.03 million shares, according to Reuters.

Other top investors include Eugene Beukman, who owns 0.11% or 0.23 million shares, and Brian Storseth, who owns 0.07% or 0.14 million shares, Reuters said.

Crossley said 91.7% of the company is retail.

The company has 202 million shares outstanding, with about 198.4 million free-floating. It has a market cap of CA$112.56 million and trades in a 52-week range of CA$0.76 and CA$0.36.

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Important Disclosures:

1. Reliq Health Technologies Inc. is billboard sponsor(s) of Streetwise Reports and has paid SWR a sponsorship fee between US$3,000 and US$5,000. 
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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