Reliq Health has a 41 per cent upside, says PI Financial

Patient monitoring software company Reliq Health Technologies (Reliq Health Technologies Stock Quote, Chart, News: TSXV:RHT) received a coverage launch by PI Financial’s David Kwan on Tuesday, with the analyst giving RHT a “Buy” rating and a $2.60 target price, representing a potential 12-month return of 40.5 per cent at the time of publication.

With healthcare costs expected to continue rising over the next decade, home-based treatment of chronic care patients will become a major focus of governments looking to pare down their healthcare spending.

And that’s where Reliq Health comes in, says Kwan. The company’s SaaS platform iUGO Care allows for remote patient monitoring, care collaboration and telemedicine, combining Bluetooth-enabled sensors, biometric monitoring devices and other tools with mobile applications.

“RHT is targeting the community-based healthcare market, as it partners with home health agencies, accountable care organizations (ACOs), general and specialized practitioners, and other non-hospital healthcare providers/organizations, with a focus on the North American market,” says Kwan.

“To date, RHT has secured commercial contracts with home health agencies and ACOs totalling over 60,000 patients under contract, representing +US$35 million in annual recurring revenue,” he says. “As of March 29, 2018, the Company had +12,000 patients deployed on iUGO Care and it expects to have 30,000 patients on-boarded by the end of CY18.”

Kwan says that there is a lot to like about the RHT story, including the company’s early mover advantage in what should be a multi-billion dollar market. At the same time, the analyst highlights a number of risks to be wary of, namely, slower than expected adoption of RHT’s product by customers, hardware shortages, regulatory risks, a management team and board which could use more strength and depth, customer concentration and location and the notably early stage of development at this point.

Ultimately, Kwan says that RHT’s risk/reward profile is attractive at current levels. “With several potential de-risking events in the near-term, there could be material upside to our valuation,” he says.

The analyst forecasts an Adj. EBITDA of negative $1.3 million on revenue of $4.8 million in FY18 and an Adj. EBITDA of $9.3 million on a topline of $26.2 million in FY19.