There’s still gas in the tank for Reliq Health, this investor says

Reliq Health Technologies (Reliq Health Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:RHT) has come a long way in 2021 but  don’t think the run is over, says Bruce Campbell of StoneCastle Investment. With revenue expected to double next year and a still good-looking valuation, Reliq is a Top Pick for Campbell over the next 12 months.

“We like the company. They’re in the remote monitoring business,” said Campbell, president and portfolio manager at StoneCastle, who spoke on BNN Bloomberg on Friday. “What ends up happening is people leave the hospital and they need to be monitored from a healthcare perspective, and quite often these are older or sick people and they may not necessarily be adept at monitoring.”

“What Relic’s technology does is it syncs up with a number of different hardware solutions and provides real-time monitoring that gets reported back to the doctors or the hospitals or to the patient’s family members. And so they’re able to track and keep health care costs down,” he said.

Reliq Health’s share price has made huge strides this year, rising from about $0.25 at the start of January to now $1.12, as investors warm up to Reliq’s growth prospects in the latter days of the pandemic. COVID-19 was a problem for Reliq as it was for many businesses, with the company had trouble rolling out its products to new physicians and home health agencies over lockdowns.

But the company says business has picked up over 2021, with the company reporting sales only slightly down year-over-year in its most recently published financials, the company’s fiscal third quarter 2021 delivered at the end of May. There, revenue was reported as $441,965 for the fiscal Q3 versus $457,077 a year earlier and $1.06 million for the nine months ended March 31, 2021, versus $1.13 million for the same period a year earlier. 

In July, the company announced it was on target for a $1.5 million revenue run rate per quarter, enough to put it into the black profit-wise.

“The current quarter (ending September 30, 2021) will be our first full profitable quarter – a major milestone for Reliq,” said CEO Dr. Lisa Crossley in a July 28 press release. “Momentum is strong and patient onboarding is accelerating significantly as the US healthcare sector continues its recovery from the global pandemic. We remain on track to generate $11 Million in revenue this calendar year, with gross margins of over 75 per cent and EBITDA margins of over 45 per cent. We expect to exit December 2021 at a revenue run rate of $2 Million per month or $24 Million annually.”

Reliq continues to pick up contracts, as well, announcing recent wins in Texas, Puerto Rico and the US Virgin Islands, while expanding its remote patient monitoring services across its iUGO Care platform.

Reliq had been a market favourite a few years back when its platform was first revving up. But the stock took a tumble in the back end of 2018 after an accounting issue related to revenue reporting came up, with lawsuits following and the company having to do some repair work internally. The lawsuits were settled in 2019 and the company made organizational changes related to the dispute and related accounting issues.

Campbell says the growth in Reliq’s sales is significant because it’s recurring.

“What you’ve seen happen with Reliq is that they continue to add more doctor groups and more healthcare regions in North America, mostly in the US, and each one of these is a reoccurring revenue stream,” he said. “Right now, the CEO is projecting that they’re going to have a run rate of around $24 million in revenue at the end of this year, which should probably double or more for 2022. And the margin on this business is about 45 per cent.”

“So, we think that the valuation is quite attractive here and, obviously, the CEO does as well because she has been buying a fair bit of stock in the last six or eight months,” Campbell said.

Last week, Reliq announced new contracts with three primary care physician practices in Puerto Rico for chronic disease patients through a partnership with digital medical services business digiiMed.

“We are pleased to be adding these three new physician practices on the island to our platform,” said Dr. Crossley in a press release. “Chronic disease is a major concern for the healthcare system in Puerto Rico as over 50 per cent of the population over age 50 have hypertension, over 30 per cent have diabetes and over 42 per cent have high cholesterol, all of which are risk factors for the development of other serious chronic diseases including congestive heart failure, kidney disease and cardiovascular disease. Patients living with chronic conditions also report higher levels of depression and anxiety than the general population.”

“Using our iUGO Care Remote Patient Monitoring (RPM), Chronic Care Management (CCM) and Behavioural Health Integration (BHI) modules, clinicians can comprehensively address their patients’ physical and mental health needs. We expect to onboard over 3,600 patients with these clients at an average revenue of $40 USD per patient per month for Reliq. Onboarding will begin this month and is expected to be completed in early 2022,” Dr. Crossley said.