Reliq Health Technologies still under review at PI Financial

Healthcare SaaS company Reliq Health Technologies (Reliq Health Technologies Stock Quote, Chart TSXV:RHT) released its fourth quarter results this week but analyst David Kwan of PI Financial says he’ll need to see further clarity on the company’s accounting issues before providing a valuation and recommendation.

On October 16, Reliq announced that it was intending to restate aspects of its financial information for the quarter ended March 31, 2018, saying that the decision followed an audit which revealed problems over the “timing and certainty of receiving the revenue invoiced to clients,” said management in a statement.

The stock lost more than half of its value effectively overnight, with the company last week announcing the firing of Chief Visionary Officer, Giancarlo De Lio, and the hiring of Sophic Capital as its investor relations firm.

Kwan rates RHT’s fourth quarter 2018 financial report as Neutral.

“As previously guided, RHT did not recognize any revenue [in Q4] due to the issues faced by its customers in getting reimbursed by CMS,” says Kwan in an earnings update to clients on Tuesday. “They did not restate their prior financial results but instead wrote off $1.1 million in receivables as bad debt, equaling the revenue recognized last quarter (represents half of the revenue that had been recognized in FY18). RHT indicated the remaining $1.1 million in revenue that was booked in 1H FY18 was reimbursed by CMS and has been collected.”

“RHT is actively working to sort out the reimbursement issues in the coming months and to ultimately have the Company ready for a re-launch at the start of CY19, as it looks to ramp the on-boarding of patients onto iUGO Care,” says Kwan.

Kwan is maintaining his “Under Review” rating and target price for Reliq Health while maintaining his “Speculative” risk rating.