Mobile healthcare tech company Reliq Health Technologies Inc. (TSXV:RHT) should be headed to positive EBITDA before the year’s out, says analyst Gabriel Leung of Beacon Securities, who maintains his “Speculative Buy” rating and 12-month target price of $3.00.
Last week, Reliq Health reported its Q2 FY18 ended December 31, 2017, results, posting revenues and EBITDA of $878,000 and negative $739,000, respectively, with cash operating costs of $1.4 million. Those numbers came in lower than expected, says Leung who says that he’s looking for the company to hit a number of important milestones in the near-term.
A SaaS provider for patient monitoring and community-based healthcare, RHT should be concentrating on growing its patient number above the current 10,000, says Leung. “The majority of these patients are from Paz Home Health (RHT’s first commercial customer),” says Leung in an update to clients on March 2.
“Management anticipates its three other customers to start deploying this quarter. We believe this will be important in helping to diversify RHT’s revenue base.”
“On the cost side, RHT anticipates increasing headcount to ~25 over the near-term from the current 20 with additions focused on R&D and sales,” says the analyst. “The company anticipates a quarterly operating expense run-rate of ~$1 million (and higher if warranted for growth opportunities. To be conservative, we are modeling a higher expense run-rate.”
Leung says that there are potentially hundred of thousands of patients in RHT’s near-term pipeline, meaning that the company is “on the cusp of a major growth phase,” he says.
“Overall, we believe the FQ2 results were neutral to our investment thesis and believe the next few quarters will be key in terms of solidifying our cash flow, operating leverage and growth thesis on RHT,” says the analyst.
Leung sees Reliq Health producing revenue and EBITDA of $5 million and -$1.6 million, respectively, in 2018, revenue and EBITDA of $25.2 million and $9.1 million, respectively, in 2019 and revenue and EBITDA of $51.2 million and $24.4 million, respectively, in 2020.
The analyst maintains his “Speculative Buy” rating and 12-month target price of $3.00, representing a 22 per cent return at the time of publication.