Reliq Health Technologies (TSXV:RHT) just picked up a couple of new customers, with David Kwan of PI Financial calling the impact slightly positive for RHT. In a corporate update to clients on Thursday, the analyst maintains his “Buy” recommendation, $2.60 target price and “Speculative” risk rating.
Vancouver-based Reliq Health, which specializes in software for the community care market, today announced new contracts with home health agencies in South and Central Texas, with CEO Dr. Lisa Crossley saying the deals will allow Reliq to provide its iUGO Care remote patient monitoring software to over 1,200 new chronic disease patients.
“We are very excited to be expanding our footprint into Central Texas with our first customer in the Austin area,” says Crossley in a press release. “We look forward to continuing to help our customers deliver high quality virtual care to their patients in the home, reducing hospital admissions, improving health outcomes and enhancing patient and family satisfaction with their care.”
Kwan says the new patients bring Reliq’s backlog to approx. 50,000 patients under contract, based on approx. 12,000 patients already deployed onto iUGO Care. Kwan says that diversification of RHT’s customer base outside of South Texas is a key catalyst.
“Although the financial impact of these two customer wins is not material (~$1 million in annual recurring revenue; ~2 per cent of patients under contract), the expansion outside of South Texas and into the Austin area is positive,” says Kwan. “This could lead to additional customer wins in and around Austin (e.g., San Antonio) given many healthcare providers tend to find and purchase solutions based on recommendations from (reference) customers.”
The analyst notes that proposed changes by the US Centers for Medicare and Medicaid (CMS) are intended to boost funding for home health agencies and make it easier for such agencies to get reimbursed for remote patient monitoring, which could benefit Reliq.
Kwan believes RHT will generate Adj. EBITDA of negative $1.3 million on revenue of $4.8 million in FY18 and Adj. EBITDA of $9.3 million on a topline of $26.2 million in FY19. His $2.60 target represents a projected return of 39.8 per cent at the time of publication.