Reliq Health Technologies Inc. (RQHTF) 2020-12-01 Earnings Call Transcript

Please review this disclaimer regarding forward-looking statements and interpret the webinar and its contents within this context. A reminder, I am sure most of you are very familiar with Reliq Health, but for those of you who are joining us for the first time, Reliq is a healthcare technology company focused in the digital health space. We are a cloud-based Software-as-a-Service provider. We are headquartered in Hamilton, Ontario Canada, but our largest customer base is in the United States and we therefore have sales and operational offices in Florida and in Texas. This webinar will be a relatively brief overview of our Q1 Fiscal 2021 Quarterly Financials. We just met basically a month ago on the last webinar. So, not a huge number of updates or news and we’ll keep this relatively brief. But we will go through the highlights from the last quarter’s financial statements. I’ll provide an update on the private placements; an outlook for calendar 2021 in terms of the revenue projections; sales projections. And lastly, we’ll review the date for the next upcoming webinar to review the Q2 fiscal 2021 financial statements. For the Q1 fiscal year 2021 financials, a reminder that our fiscal year is July 1st to June 30th. So, Q1 fiscal 2021 is the period from July 1st to September 30th 2020. In this quarter, as expected, due to the global pandemic, our sales for this quarter decreased relative to the previous quarter. This is a quarter that was hardest hit by long shot, by the coronavirus pandemic. We’ve already recovered significantly in the current quarter. But in the Q1 of fiscal 2021, our clients in South Texas and Florida where our customer base was really very heavily concentrated were really impacted by the coronavirus healthcare systems in that space and essentially ERs and ICUs were full capacity it had a really devastating effects on the home health industry. Many home health providers were not able to continue to deliver services as the fear of transmitting the virus. And so, it had a really dramatic impact on our client base in those two geographies as you probably know from watching the news or reading the news online. And both Florida and South Texas the real gram value in particular really didn’t implement much in the way of restrictions or precautions around the novel coronavirus and as a result they have some of the highest rates of transmission and their COVID hospitalizations in the inherent U.S. and as we know, the U.S. has been hit very hard by COVID-19. So, it had a pretty devastating impact on those clients. And as a result, the company was really in a position where we had no other option, but to shift our sales efforts and business development efforts to other geographies. So, in late Q4 of 2020 and into Q1 of fiscal 2021, so over the summer, we shifted our business development in sales efforts and resources to geographies like Puerto Rico, North Texas, Ohio, Oregon, Washington and we are fortunate to secure some really good clients in those geographies. So, in the last fiscal quarter, Q1, 2021 fiscal, we signed new contracts with MaxLink MD in North Texas, and they have been doing very well with onboarding inpatients; Diversified Health Partners in Ohio, and also in Oregon and Washington and in fact in several states others across the U.S.; and digiiMED, LLC, in Puerto Rico. So, we provide our iUGO Care, Remote Patient Monitoring, Chronic Care Management, Transitional Care Management, and Behavioral Health Integration Solutions, few of the more than 250,000 patients that are covered by these different clinical entities. So, we are - we have just started onboarding these patients. But these are significant clients and they are in new geographies for us that have been able to weather the global pandemic, a little bit better than some of the other geographies where we initially had our business concentrated. So, in addition to signing contracts with those groups and as I say, we have begun onboarding those clients, we also signed a contract with the University of Notre Dame in Australia to provide iUGO Well, which is our new, essentially Corporate Wellness Solution to their 12,000 faculty, staff and students. So, iUGO Well is a mindfulness and mental and physical wellness App that can be used primarily in what you would typically think others corporate sponsored health insurance programs or health programs out there like health begins obviously in university and school settings. So this is a new market for us and having historically concentrated on the really clinically ill patient population, we are now standing into a much more diverse population, younger and working with employers and in the space in universities to provide that mental and physical wellness support to their constituents. A certainly exciting effort for us and it’s been very well received by the University of Notre Dame’s population and the onboarding has obviously started with them as well. As I say, we’ve started onboarding with all of these new groups and that’s started in October, but it’s accelerated very significantly in November. And the pace of onboarding with these clients is expected to continue to increase month over month not only throughout the rest of this year, even with U.S. Thanksgiving and Christmas and associated slowdowns and with those two events, but also continuing beyond the end of this year throughout all of calendar 2021. Subsequent to Q1 fiscal 2021, we entered into a strategic alliance with iDocsWeb. They are a physician founded group that provides clinical support and software to over 200 Skilled Nursing Facility clients who together discharge over 50,000 patients per year. And the majority of those patients are eligible for multiple different iUGO care products including Transitional Care Management, Remote Patient Monitoring, and Chronic Care Management and Behavioral Health Integration. As you may know, the skilled nursing facility sector has been really hard hit by the pandemic. A lot of patients who would normally be admitted to a skilled nursing facility whether it’s for longer term care or for short-term rehab after open heart surgery or a hip replacement and there is significant new reluctance to admitting patients and on the parts of families. And who don’t want to put their loved ones into a residential or institution - institutional environment where the risk of contracting COVID-19 is higher and there can be service per seats to be higher. So that’s had a pretty profound negative impact on the skilled nursing facility sector. And in addition to that, that sector was already facing the significant challenges associated with the changes in regulation that the Centers for Medicare and Medicaid services introduced late last year where they are now penalizing skilled nursing facilities for what they consider excessive rates of readmissions. So the patient is discharged home from a skilled nursing facility and then is readmitted with a complication from the original diagnosis, the original condition, then CMS will call back some of the payments that were made to the skilled nursing facility in association with that patient. CMS has also provided a financial caret where skilled nursing facilities that have lower than average readmission rates receive financial incentives, essentially bonuses for that performance. So there is a lot of pressure on the skilled nursing facility space to do more post-discharge and our technology is really enabling in that respect. So, if you, as a skilled nursing facility implement our technology for post-discharge care, you are going to generate new revenues by providing new services such as transitional care management. And you are also going to avoid those penalties potentially even generate some of those bonuses from the Centers for Medicare and Medicaid services. So that’s clearly a very strong pull for us in that space and certainly the skilled nursing facility market is one that we in fact will continue to become a larger and larger portion of our business as we move forward in calendar 2021. And I gave this message its own slide, so that I can make sure that this take home message really does get taken home. Sales for this quarter have already exceeded sales for Q1 fiscal 2021. So for the current quarter we are in right now. So, as we had said on the last webinar, there was a six month period post lockdown where there were significant impacts on our business related to the impact of COVID-19 and the novel pandemic on our clients in South Texas and Florida. But having pivoted to clients in new geographies, I am very pleased with the way that our sales team was able to secure significant contracts with clients in new geographies really quite quickly despite the fact that we are in the middle of a pandemic. And those clients have moved very quickly to begin onboarding their patients. So, this quarter we are already doing better than last quarter and we fully expect that this quarter sales will be back at the levels that they were before or prior to at Q1 fiscal 2021. So I think we are in a very good position for this quarter and we absolutely anticipate that going forward, every quarter, you’ll see quarter-over-quarter growth in sales very consistently through all of 2021 and frankly beyond. The update on the private placements, as you know, we set out to raise $2 million non-brokered raise. That was largely precipitated by our clients and strategic partners in the U.S. who wanted to invest in the company. There was sufficient demand for the raise that we ended up upsizing to a maximum of $3 million. That amount was actually oversubscribed. We had more just than just $3 million. We stayed with our cap of $3 million. And we closed on the first tranche of that raise on October 27th, 2020. And that was we issued 10.6 million units at a price of $0.225 per unit for gross proceeds of just under $2.4 million. A second and final tranche of that private placement is fully subscribed and we will close that on or before December 7th, so within the next week. As part of the closing, the final closing, the company will be issuing just under 2.7 million units at the same price and with the same terms for gross proceeds of an additional just over $600,000. So, in total, we are raising $3 million through this private placement. And as I have mentioned before, the raise was led by our clients and strategic partners and that’s an enviable position for any company to be in. Having clients and partners who can see much more closely than anyone else of what the potential is for your business and what the prospective growth is in the near future, having them want to actually own a part of your company is a very good sign in terms of potential growth. So we are very encouraged by that, very honored that our clients and partners are so aligned with our vision for the business that they chose to invest. But these funds will take the company to cash flow positive in Q1 calendar 2021. So, the period ending March 31, 2021 will be cash flow positive and the funds in the interim will allow us to accelerate onboarding across these multiple jurisdictions. And the outlook for calendar 2021 highlights are, it’s a very bright outlook. After six months of significant uncertainty due to the global pandemic, we are now in a position where we have a really clear view of our path to cash flow positive next quarter. And we are working with clients that are in regions that haven’t been as completely overwhelmed by the global pandemic. We are also working with clients who are larger and are better able to weather changes in business conditions whether it’s a global pandemic or something else entirely. So that’s a very good form of diversification for the company. I think it very effectively derisks a lot of our business going forward and it certainly provides us with significant opportunities given the size of these clients and we have a very large pipeline and as obstacles related to the Coronavirus are eliminated, going forward, we should be able to be needing to just more and more rapidly onboard their patients and move through that large pipeline and get those patients on to our platform. And as I said earlier, we’ve began actively onboarding the patients that are part of these new clients’ practices. In October 2020, we have significantly accelerated that onboarding through November and we expect that pace to continue to accelerate month-over-month, every month through the end of this year and on through all of calendar 2021 and frankly beyond. Sales in 2021, we anticipate that by the end of the fiscal 2021 year. So June 30th, 2021, we anticipate sales will hit a runrate of $1.5 million per quarter. And that’s more than triple where we were at the end of June this year. So it’s a significant rate of growth and certainly projections were very, very comfortable with given the current contracts. There is also really significant potential upside around those numbers in that, we are anticipating that the COVID-19 vaccines will be widely available next summer. That’s the current projection in Canada that everyone who want the vaccine will get one by the end of September 2021. In the U.S., their projections are actually more aggressive. And if they are accurate and the virus - the vaccine rather is more widely available in the spring of 2021 then there is significant potential upside for us as the more population that is vaccinated easier, it’s best for our clients to continue to do business and to implement new solutions like ours. The CDC, the Centers for Disease Control in the U.S. are meeting this week to determine which groups will be given priority in the U.S. to receive the Coronavirus vaccine. Certainly, we all expect that among the priority groups will be high risk individuals as well as frontline healthcare providers. So, there is a good chance that by the spring and the populations that are relevant to us. So, healthcare providers and high risk chronic disease patients will be receiving the vaccines. And so, we are prepared to accelerate onboarding if some of these COVID-related obstacles are removed. But at a minimum, we expect that we are going to significantly grow revenues and sales by June 30th regardless. If the vaccine is not widely disseminated or at least not disseminated to frontline healthcare providers and chronic disease patients by the spring, then it will come in the summer and as a result, at that point, we would expect to see that growth will significantly accelerate primarily in the latter half of calendar 2021. So, we are - currently the projections we are providing are very conservative to the first half of 2021. And - but there is potential for that to see significant upside. But without a question, the second half of calendar 2021 will see very significant growth as the global pandemic is brought under control. And the company will provide more detailed guidance in calendar 2021 as the course of the pandemic becomes clear. So, once we have a better sense of which vaccines have been approved and what volume of vaccine doses will be made available really in the U.S., the timing and the priority groups will be able to provide more granular guidance. And lastly, our fiscal year 2021 webinar date. The quarterly financials for the current quarter, Q2 fiscal year 2021 period ending December 31st, 2020 are due to be filed on SEDAR on or before March 1st, 2021. So a webinar to review the quarterly financials will be scheduled on or before March 2nd, 2021. That doesn’t preclude us from having a shareholder call or webinar prior to that date to discuss other developments, but that’s when we’ll be discussing the Q2 fiscal 2021 financial results. I’d like to thank you all for joining us. And we are looking forward to seeing the back of 2020. It’s been a long year for all of us. And we wish all of you a safe and happy holiday season for the rest of this year and we look forward to seeing you again in 2021. Thanks again. End of Q&A :