Telemedicine company Reliq Health Technologies Inc. (RHT:TSX.V; RQHTF:OTCQB; A2AJTB:WKN) announced it has expanded into a new country, signing its first contract with a client in Mexico.
The agreement with the healthcare organization in San Luis Potosi is expected to add more than 10,000 new patients to Reliq's iUGO Care platform by the end of June 2024 at an average revenue of CA$50 per patient per month.
"Thanks to our success in the Southern U.S. states and our multilingual platform and care management team, we have been able to attract our first client in San Luis Potosi," Reliq Chief Executive Officer Lisa Crossley said. "A number of major multinational corporations have operations in San Luis Potosi, including BMW, General Motors, and Cummins, and the city has a population of 2.8 million."
"We believe a discount to the peer group average is warranted based on the company being at an early stage of execution," Klee wrote as he initiated coverage on the company with a Buy rating and a CA$1.75 share price. "We project that Reliq will have a primarily recurring, high-margin business model going forward."
The iUGO platform aims to manage diseases such as 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.
In a June 20 research note, Maxim Group analyst Allen Klee noted that Reliq has been signing larger contracts in 2022 and 2023. It recently picked up skilled nursing facilities (SNFs) and home care agencies in four states and signed a contract with a U.S. health plan that operates in five states with more than 3,000 doctors and 1 million patients.
"We believe a discount to the peer group average is warranted based on the company being at an early stage of execution," Klee wrote as he initiated coverage on the company with a Buy rating and a CA$1.75 share price. "We project that Reliq will have a primarily recurring, high-margin business model going forward."
The Catalysts: Pandemic, Rising Chronic Illnesses
The global telehealth market is expected to reach US$455.3 billion by 2030, with a compound annual growth rate (CAGR) of 24% from 2023 to 2030, according to Research and Markets.
"The pandemic exposed the shortcomings in the health care systems," the researchers wrote. "The government-imposed travel restrictions and lockdowns (mandated) in order to curb the spread of the virus . . . led to patients and healthcare institutions shifting towards teleconsultation and telemedicine."
The rising occurrence of chronic illness in developing regions also is driving the demand for telemedicine services, Global Market Insights wrote.
The global telehealth market is expected to reach US$455.3 billion by 2030, with a compound annual growth rate (CAGR) of 24% from 2023 to 2030, according to Research and Markets.
"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," researchers wrote.
Diabetes is the leading killer in Mexico, the World Health Organization has said. There are also high rates of hypertension, chronic kidney disease, and congestive heart failure, Crossley noted.
"The impact of chronic disease on productivity has led many employers in Mexico to offer healthcare coverage focused on preventative care," Crossley said. "The two largest providers of public health in Mexico, the Ministry of Health and the Mexican Social Security Institute have also launched key initiatives aimed at improving the management of chronic disease, creating a significant opportunity for Reliq."
Klee noted that chronic disease accounts for more than 80% of healthcare spending.
"Over 57 (million) Medicare/Medicaid patients have eligible chronic conditions, resulting in a multi-billion-dollar TAM (total addressable market," he wrote. "Practitioners benefit from new revenue streams (over US$400 per patient per month) and the ability to oversee more patients."
Record Revenues
Reliq earlier this month 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.
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.
Klee projected "onboarded lives of 21K by the end of FY23, to 54K by FY24 and 137K by FY25 (primarily all in the U.S.), which translates to FY23-FY25 revenue of CA$17M, CA$27M and CA$95M, up 101%, 99% and 184%, respectively."
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Reliq Health Technologies Inc. (RHT:TSX.V; RQHTF:OTCQB; A2AJTB:WKN)
The analyst also sees potential catalysts for the coming year, predicting "increased cash flow generation, shift to profitability, an uplisting to a large U.S. exchange, and the initiation of a stock dividend."
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 203 million shares outstanding, with about 199 million free-floating. It has a market cap of CA$96.37 million and trades in a 52-week range of CA$0.76 and CA$0.36.
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