Telehealth Co. Inks Contracts With Rural Clinics in 5 States, Territories

Telehealth company Reliq Health Technologies Inc. (RHT:TSX.V; RQHTF:OTCQB; A2AJTB:WKN) announced it has signed contracts with 20 new rural health clinics (RHCs) in California, Nevada, Puerto Rico, Texas, and the U.S. Virgin Islands.

The contracts are expected to add more than 50,000 patients to the company's iUGO platform, which remotely monitors patients, by the end of 2024.

"Building on our success to date with Rural Health Clinics in Puerto Rico and the U.S. Virgin Islands, we are now expanding into RHCs on the U.S. mainland as well as adding new RHCs on the islands," said Reliq Chief Executive Officer Lisa Crossley. "The Rural Health Clinic program is intended to increase access to primary care services for patients in underserved, rural communities. Clinics that are granted RHC status receive enhanced reimbursement rates for providing Medicare and Medicaid services to their patients."

The first five RHCs will start onboarding more than 10,000 patients next month with an average revenue of US$60 per patient per month, Crossley said. The remaining 15 will be onboarded next year.

Reliq had its first profitable quarter during the three months ending March 31 with a gain from operations of CA$731,017 YoY. It also has started scoring larger contracts for iUGO, including one with a U.S. health plan that operates in five states with more than 3,000 doctors and 1 million patients.

The company will not release its final results for fiscal year 2023, which ended June 30, until October. But Crossley recently told analysts and shareholders that according to estimates, revenues more than doubled from fiscal year 2022.

The company is gathering "continuing momentum," wrote Maxim Group analyst Allen Klee in an updated research note. "We believe the company has hit an inflection point of accelerating revenue and EBITDA profitability. Tailwinds include a significant number of larger contracts that have been won."

"Going forward, we expect that total revenues will double, more than double again, from fiscal year 2023 to fiscal year 2024," Crossley said. "So, we're certainly in a period of rapid growth. And I would say that growth is going to accelerate significantly over the second half of the (calendar) year and into 2024."

The company is gathering "continuing momentum," wrote Maxim Group analyst Allen Klee in an updated research note. "We believe the company has hit an inflection point of accelerating revenue and EBITDA profitability. Tailwinds include a significant number of larger contracts that have been won."

Klee, who doubled down on his Buy rating of the stock and CA$1.75 per share price target, generally agreed with Crossley's revenue predictions.

"We also believe our revenue could prove conservative if the company is successful in onboarding some of the larger contracts that have been announced," he wrote.

The Catalyst: Telehealth Market Continues to Grow

The iUGO platform helps 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. 

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

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 toward teleconsultation and telemedicine."

Analyst: Company Has Growing Momentum

Analyst Klee wrote that Reliq's larger contracts signaled growing momentum for the company.

"We believe a discount to the peer group average is warranted based on the company being at an early stage of execution," wrote Klee. "We project that Reliq will have a primarily recurring, high-margin business model going forward."

iUGO is a "compelling offer for practitioners," Klee wrote. "A typical practice can bring in more than US$1 million in Medicare and Medicaid payments implementing it."

"We project FY23 revenue of C$17.1M, up 101% (YoY), in line with management's expectations for revenue to double in FY23 and implying F4Q23 revenue of C$4.8M, up 110% (YoY)," Klee wrote. "For FY24, we project revenue of C$34.2M, +99% (YoY), roughly in line with management's expectations for revenue doubling in F2024."

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 200 million free-floating. It has a market cap of CA$101.45 million and trades in a 52-week range of CA$0.76 and CA$0.46.

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