HealthBeacon PLC HealthBeacon - HBCN - Interim Results 2023
05/10/2023 07:00
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RNS Number : 7584O HealthBeacon PLC 05 October 2023
Disclaimer - This announcement contains inside information.
HealthBeacon plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023
Dublin, 05 October 2023, HealthBeacon plc ("HealthBeacon" or the "Company")
and together with its subsidiary undertakings (together the "Group"), a
leading Irish digital therapeutics company, announces its interim results for
the six months ended 30 June 2023.
FINANCIAL HIGHLIGHTS
H1 2023 financial highlights (comparison to H1 2021):
· Revenue flat at €0.9 million (June 2022: €0.9 million),
however, marked by significant change in product mix which drives improved
gross margin versus 2022.
o Patient Support Programmes €0.51M -10% (June 2022: €0.57 million)
o Patient Safety Hub (PSH) €0.35M +100% (June 2022: €0.0M launched)
reflecting launch in September 2022.
o DTC Revenues €0.0M -100 % (June 2022: €0.3 million)
· Gross profit margin 67% (June 2022: 38% DTC Adjusted)
· Net cash position at 30 June 2022 of €1.9 million (December
2022: €12.2 million)
Six months ended 30 June H1 2022 H1 2021 Change
€'000 €'000 %
Revenue 861 867 0%
Gross Profit 578 87 564%
Gross Profit Margin (Group) 67% 10%
Adjusted EBITDA* (5,398) (4,573)
Net cash 1,927 20,028
Exit Annual Recurring Revenue (ARR) 2,071 1,092 89%
*Adjusted EBITDA is a non-accounting term which the Company has defined as:
Excluding Share Based Compensation, Expected Credit Losses, Fx Gains/Losses
and Warranty Expenses
STRATEGIC AND OPERATIONAL HIGHLIGHTS
· HealthBeacon launched its Injection Care Management System (ICMS)
with US Specialty Pharmacy partner Accredo for a major global blockbuster
injectable medication in July 2023. The Company is now receiving over 1,700
patient referrals each month and has shipped over 1,240 units to date
· The Company is in final launch planning with its next large
Specialty Pharmacy Organisation and in contracting and negotiations with three
others. HealthBeacon anticipates partnering and launching its ICMS with four
of the top five Specialty Pharmacy organisations by the end of 2024. These
launches will provide HealthBeacon access to over 60% of the US Specialty
Injectable Market
· The Patient Safety Hub (Risk Management Platform) continues to
grow very strongly with expansion into new geographies in Australia and New
Zealand generating H1 Revenues of €0.35M.
· HealthBeacon has successfully introduced its ICMS directly to US
clinicians through its Medico CX partner and individual clinicians following
Medicare and Medicaid establishing Remote Therapeutic Monitoring insurance
reimbursement
· Expansion of Hamilton Beach partnership announced to include the
management of HealthBeacon's supply chain allowing to the Company to leverage
Hamilton Beach's procurement, distribution and fulfilment capabilities across
the US. The partnership provides Healthbeacon with access to significant scale
whilst also enabling efficiencies and positive working capital movement.
Management change
On 26 September 2023, the Company announced that CEO and Co-Founder Jim Joyce
was to step down from his role with immediate effect. Jim remains as an
adviser to the board, and a non-executive director.
Rebecca Shanahan, an independent non-executive director of the Company, will
assume the role of CEO on an interim basis. Rebecca is an accomplished
Healthcare CEO, board chair & board member, with a proven track record of
starting, building and growing businesses to sustain stakeholder value across
publicly-traded, private-equity sponsored, founder-owned, and tax exempt
healthcare services companies.
Outlook
As announced on 26 September 2023, HealthBeacon is making progress with the
roll-out of its technology across key channels. However, the scale and
complexity of implementations, and the contracting and planning phases of
these new launches, are running up to 9 months longer than previously
estimated. As a result, HealthBeacon's exit Annual Recurring Revenue
guidance for December of 2023 is approximately €3.2m versus previous
estimates of mid-teens by the end of 2023. The Company is therefore revising
its ARR guidance to approximately €17m 1 (#_ftn1) by the end of Q4 2024.
To achieve cash breakeven and scale at the pace now expected, the Company has
a gross funding requirement of approximately €11m over the next 18-24
months. Cash breakeven is expected to be achieved by Q2 2025.
Nearer term, the Company had approximately €1.9m cash on the balance sheet
at the end of June, from €12.2m at the end of December. Operating cash
outflows in H1 were approximately €1m per month, with approximately €4m
cash outflows on new units to fulfil the uptick in demand in H2 with the
Accredo launch.
To accelerate its path to profitability and improve cash management the
Company has initiated the activation of the Hamilton Beach supply chain
project; a 30% reduction in operating expenses effective by year end; a focus
of resources on our key US Specialty Pharmacy and clinical launches; and an
improvement of commercial terms on new contracts. The combination of these
activities will reduce monthly cash burn to approximately €0.7M per month by
the end of 2023.
As at 30 September 2023, the Company has approximately €0.5m net cash on its
balance sheet. Together with expected working capital movements over the
period this represents sufficient cash to continue to trade until mid-late
November 2023. The Board believes that subject to certain working capital
initiatives and other cost saving measures, the Company will have sufficient
cash resources to continue to trade to the end of the year. Furthermore, the
Company is progressing a number of longer-term strategic funding options
including the potential disposal of the its Patient Safety Hub business.
While the board remains very focused on the near term funding requirements of
the business, it believes that an appropriately funded HealthBeacon has very
significant growth prospects, having made substantial progress in the
speciality pharmacy sector.
Rebecca Shanahan, HealthBeacon plc Interim Chief Executive Officer said:
"The HealthBeacon Board and Management team is committed to taking the
necessary actions to secure the future of the business through short term cash
management and longer-term strategic funding options. Notwithstanding
near-term challenges, we are confident that an appropriately funded
HealthBeacon has significant growth prospects, having made substantial
progress in the specialty pharmacy sector."
ANALYST CALL
A conference call for investors and analysts will be held today 05 October at
09:30am.
Operator Assisted Dial-In:
United Kingdom (Local): +44 20 4587 0498
United Kingdom (Toll-Free): +44 800 358 1035
Access Code: 815338
CONTACT DETAILS:
HealthBeacon plc: Investor.Relations@HealthBeacon.com
(mailto:Investor.Relations@HealthBeacon.com)
Rebecca Shanahan
Lar Malone
Goodbody (Euronext Listing Sponsor and Broker): +353 (1) 667 0420
Finbarr Griffin
David Kearney
Drury (Public Relations):
Cathal Barry +353 (0) 87 227 9281
Gavin McLoughlin +353 (0) 87 327 2161
About HealthBeacon plc
Headquartered in Dublin, HealthBeacon is an Irish digital therapeutics company
that develops smart tools for managing medications for patients in the home.
The HealthBeacon Injection Care Management System tracks adherence and
persistence with medication schedules through the provision of medication
management reminders, safe and sustainable sharps disposal devices,
educational tools, and artificial intelligence (AI) driven data analytics.
Peer reviewed evidence supports a 19% improvement in therapy persistence by
patients and up to 26% improvement in adherence to therapy, which improves
clinical outcomes and significantly improves efficiency in health systems. The
Company has expanded its offering to growth management with the launch of its
integrated Smart Scale and oral adherence with the launch of HB Wave which
integrates with its existing technology. The Company operates across Europe,
North America and the United Kingdom and employs more than 70 people and has
obtained more than 30 design and utility patents. The Company's mission is to
become the world's leading digital therapeutics platform for patients managing
medications in the home.
Cautionary statement
This announcement contains certain projections and other forward-looking
statements with respect to the financial condition, results of operations,
businesses and prospects of HealthBeacon plc. These statements are based on
current expectations and involve risk and uncertainty because they relate to
events and depend upon circumstances that may or may not occur in the future.
There are a number of factors which could cause actual results or developments
to differ materially from those expressed or implied by these projections and
forward-looking statements. Any of the assumptions underlying these
projections and forward-looking statements could prove inaccurate or incorrect
and therefore any results contemplated in the projections and forward-looking
statements may not actually be achieved. Recipients are cautioned not to place
undue reliance on any projections and forward-looking statements contained
herein. Except as required by law or by any appropriate regulatory authority,
HealthBeacon plc undertakes no obligation to update or revise (publicly or
otherwise) any projection or forward-looking statement, whether as a result of
new information, future events or other circumstances.
Financial Review
Revenues of €0.9 million were flat on June 2022. Revenue is comprised of
revenue from Patient Support Programmes ("PSP") of €0.51 million and Patient
Safety Hub of €0.35 million.
Gross Margin was €0.6M +€0.5M versus June 2022 as a result of the launch
of the Patient Safety Hub and the cessation of Direct to Consumer (DTC) Sales.
The Company had a net cash position of €1.9 million at 30 June 2023
(December 2022: €12.2 million). The decrease in cash reflected €6M of ICMS
unit purchases, €1M on new product development (HB Wave and Patient Safety
Hub) and supporting Operating Cash Burn of €4M offset by increased Trade
Receivable receipts of €1M.
The Company recorded a loss from operating activities of €7.1 million (June
2021: loss €6.2 million). The increased loss of €0.9M was as a result of
increased costs of €1.4M versus June 2022 representing additional
infrastructure deployed to support the Specialty Pharmacy launch.
Principal Risks and Uncertainties
The Company has a risk management structure in place, which is designed to
identify, manage and mitigate business risk. Risk assessment and evaluation is
an essential part of the Company's internal control system. It is designed to
enable the Company to meet its business objectives by appropriately managing,
rather than eliminating, these risks.
Strategic, Operational and Financial Risks
Global Macro-Environment: The Company's business is influenced by economic
conditions in Ireland, North America, Europe and by global economic
conditions. Levels of healthcare spending and spending on pharmaceutical
products and medical devices have been and could be adversely affected by
decreases in people holding health insurance policies, disposable income
decreases, tax increases, unemployment increases, or the spending patterns of
customers changing to reflecting increased uncertainty or apprehension
regarding economic conditions or cessation of reimbursement schemes. Any of
these factors could have an adverse effect on the Company's ability to deliver
results.
Partnerships: The success of our business depends on achieving our strategic
objectives, including through entering into strategic partnerships with
pharmaceutical, specialty pharmacy and retail partners where we may have a
lesser degree of control over the business operations, which may expose us to
additional operational, financial, legal or compliance risks.
Product Adoption: There is early-stage uncertainty around the rate or level of
patient and medical professional adoption of the Company's Injection Care
Management System and the reliance on reimbursement schemes remains a primary
risk in achieving the Company's strategy. The Company's strategy depends on
the continued growth of the remote healthcare market in the United States,
Europe, and elsewhere. These trends which are unrelated to the performance of
the Company may have a material adverse effect on the performance of the
Company itself.
Intellectual Property: Our intellectual property portfolio may not prevent
competitors from independently developing products and services similar to or
duplicative to ours, and the value of our intellectual property may be
negatively impacted by external dependencies. If we are not able to protect
our intellectual property, the value of our brand and other intangible assets
may be diminished, and our business may be adversely affected. The Company
invests in R&D in order to protect and expand its current IP suite and
offer new solutions to patients for managing their medications, there is no
guarantee that R&D investment may result in new product development or
protect the Company against technological changes.
Supply Chain: Significant material shortages, supplier capacity constraints,
supplier production disruptions, supplier quality and sourcing issues or price
increases could increase our operating costs and adversely impact the
competitive positions of our products. Our reliance on third-party suppliers,
contract manufacturers and service providers, and third parties to secure
materials, parts and components used in our products exposes us to volatility
in the prices and availability of these materials, parts, components and
services. A disruption to these providers could have an adverse effect on our
ability to meet our commitments to customers or increase our operating costs.
Quality, capability and sourcing issues experienced by third-party providers
can also adversely affect our costs, margin rates and the quality and
effectiveness of our products and services and result in liability and
reputational harm.
Environment and Sustainability: The increasing global focus on environmental
and sustainability governance is recognised by the Group, and by its
stakeholders. Failure to appropriately assess, monitor and manage the Group's
impact on the environment and the communities in which it operates may result
in reputational damage, impacting the Group's ability to deliver results.
Growth Management: With continuous execution on growth initiatives, strategies
and operating plans, the Company anticipates expansion of its service
offerings to new therapeutic areas as well as future expansion into select
international markets. Any failures to effectively execute on growth
initiatives, business strategies, or operating plans will adversely affect the
Company's operations. If the Company is unable to attract new clients or
expand members with existing clients, revenue growth may take longer than
expected. Any inability to offer high-quality member support to patients could
also adversely affect the Company's relationships with future and prospective
payers, members, and subsequently adversely impact the Company's future
operations and financial condition.
Licences and Regulatory: The Company is dependent to a significant degree on
certain licences and regulatory approvals to conduct its business. The Company
is also subject to domestic, European and foreign laws and regulations
including but not limited to with respect to healthcare, consumer protection,
privacy and data protection, employment, accounting, customs, tax, antitrust
and competition matters. A failure to obtain, maintain, or comply with the
terms of such licences, applicable laws and regulations could have an adverse
impact on the Company.
Treasury and Foreign Currency: The Company is exposed to liquidity, interest
rate and credit risks. The Company's reporting currency is Euro. Exposure to
foreign currency is present in the normal course of business, together with
the Company operating in jurisdictions outside of the Eurozone.
Statement of Directors' responsibilities
The Directors confirm to the best of their knowledge that the condensed
consolidated interim financial statements have been prepared in accordance
with IAS 34 Interim Financial Reporting, as adopted by the EU, and to the best
of their knowledge and belief:
a) the condensed consolidated interim financial statements comprising the
Condensed Consolidated Group Income Statement, the Condensed Consolidated
Group Statement of Comprehensive Income, the Condensed Consolidated Group
Balance Sheet, the Condensed Consolidated Group Cash Flow Statement, the
Condensed Consolidated Group Statement of Changes in Equity and related notes
have been prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU, and are prepared in order to comply with the Euronext
Growth Market Rule Book;
b) the interim results include a fair review of the important events that have
occurred during the first six months of the financial year and their impact on
the condensed consolidated interim financial statements for the half year
ended 30 June 2023.
Signed on behalf of the Board
R Shanahan L
Toole
05 October 2023 05 October
2023
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended 30 June 2023
(unaudited) (unaudited)
6 months to 6 months to
30-Jun 30-Jun
2023 2022
€'000 €'000
Income
Lease Revenue 209 208
Revenue from Contracts with Customers 652 659
Total Revenues 861 867
Cost of Sales (283) (780)
Gross Profit 578 87
Operating Income / (Expenses)
Impairment losses on Financial Assets 18 (9)
Other Operating Expenses (7,689) (6,295)
Other Operating Income 82 66
Loss from Operating Activities (7,010) (6,151)
Finance Costs
Finance Income (33) 67
Finance Expense (24) (115)
Net Finance Costs (57) (48)
Loss before Taxation (7,067) (6,199)
Tax Expense - -
Loss from Continuing Operations (7,067) (6,199)
Other Comprehensive Income / (Expense)
Measured through Other Comprehensive Income - -
Tax on Other Comprehensive Income - -
Other Comprehensive Income / (Expense) - -
Total Comprehensive Loss for the year (7,067) (6,199)
All amounts are attributable to the owners of the parent.
Basic Earnings per Ordinary Share (0.42) (0.37)
Diluted Earnings per Ordinary Share (0.42) (0.37)
All income relates to continuing operations. All profits and total
comprehensive income for the current and preceding financial year are
attributable to the equity holders of the company. The accompanying notes form
an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 30 June 2023
(unaudited) (audited)
30-Jun 31-Dec
2023 2022
€'000 €'000
Non-Current Assets
Intangible Assets 3,947 2,803
Property & Equipment 10,094 1,116
14,041 3,919
Current Assets
Inventories 306 244
Trade and Other Receivables 1,810 2,181
Cash and Cash Equivalents 1,927 20,028
4,044 22,453
Total Assets 18,084 26,372
Equity
Share Capital 42 42
Other Reserves 2,152 1,232
Share Premium 29,926 29,926
Accumulated Deficit (21,245) (7,133)
Total Equity 10,875 24,067
Non-Current Liabilities
Trade and Other Payables 771 127
771 127
Current Liabilities
Trade and Other Payables 6,439 2,178
6,439 2,178
Total Liabilities 7,210 2,305
Total Equity and Liabilities 18,084 26,372
Consolidated Statement of Cash Flows
For the six months ended 30 June 2023
(unaudited) (unaudited)
30-Jun 30-Jun
2023 2022
€ €
Loss Before Tax (7,067) (6,199)
Adjustments for:
Depreciation of Property & Equipment 879 266
Amortisation of Intangible Assets 370 295
Credit Impairment Charge (18) 9
Interest Expense on Leases 20 4
Share Based Payments 364 -
Warranty Expense - -
Foreign exchange loss/(gain) 33 (67)
(5,420 (4,684)
(Increase)/Decrease in Receivables 1,513 244
(Increase)/Decrease in Inventory 1,663 (117)
Increase/(Decrease) in Payables (35) (1,300)
Net Cash outflow from Operating Activities (2,287) (5,877)
Investing Activities
Additions to Property, Plant & Equipment (6,797) (180)
Additions to Intangible Assets (1,022) (446)
Net Cash outflow from Investing Activities (7,818) (626)
Financing Activities
Proceeds from the issuance of share capital - -
Lease liability payments (144) (82)
Net Cash inflow/(outflow) from Financing Activities (144) (82)
Net increase/(decrease) in cash and cash equivalents (10,248) (6,585)
Cash and cash equivalents at the beginning of the period 12,168 26,613
Cash and cash equivalents at the end of the period 1,927 20,028
Consolidated Statement of Changes in Equity
For the six months ended 30 June 2023
Share Other Share Accumulated Total
Capital Reserves Premium Deficit Equity
€'000 €'000 €'000 €'000 €'000
As at 1 January 2022 42 231 29,926 (934) 29,265
Loss for the financial year - - - (6,199) (6,199)
Shares issuance - 1,001 - - 1,001
As at 30 June 2022 (unaudited) 42 1,231 29,926 (13,520) 24,067
42 1,788 29,926 (14,176) 17,580
As at 1 January 2023
Loss for the financial year - - - (7,070) (7,070)
Long term incentive plan - 364 - - 364
As at 30 June 2023 (unaudited) 42 2,152 29,926 (21,246) 10,874
Notes to the Consolidated Financial Statements
1. General information
Basis of preparation
The condensed consolidated interim financial statements of HealthBeacon plc
and its subsidiaries (the 'Group') have been prepared in accordance with IAS
34, Interim Financial Reporting, as endorsed by the European Union.
The financial information in the condensed interim consolidated financial
statements has been prepared on a basis consistent with that adopted for the
year ended 31 December 2022. The accounting policies applied in the interim
financial statements are the same as those applied in the 2022 Annual Report.
The Half-Yearly Financial Report is unaudited and has not been reviewed by the
Group's auditor pursuant to the Financial Reporting Council guidance on Review
of Interim Financial Information. These interim financial statements are
prepared in order to comply with the Euronext Growth Market Rule Book and are
not statutory financial statements as they do not include all of the
information required for full annual financial statements and should be read
in conjunction with the HealthBeacon Group Annual Report (statutory financial
statements) for the year ended 31 December 2022. The audit report on those
statutory financial statements was unqualified and did not contain any matters
to which attention was drawn by way of emphasis.
The preparation of interim financial statements in compliance with IAS 34
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the interim financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. The areas involving a high degree of
judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in the Group's Annual
Report for the year ended 31 December 2022 in note 1 and 2 on pages 43 to 52.
The Group's interim financial statements are prepared for the six-month period
ended 30 June 2023. The interim financial statements incorporate the Company
and all of its subsidiary undertakings. A subsidiary undertaking is
consolidated by reference to whether the Group has control over the subsidiary
undertaking. The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of
the entity.
HealthBeacon plc is incorporated in the Republic of Ireland under registration
number 530689 with a registered office at Unit 20 Naas Road Business Park,
Muirfield Drive, Naas Road, Dublin 12, D12 WD85, Ireland.
Going Concern
The financial statements have been prepared under the assumption that the
Group operates on a going concern basis and on an accruals basis and under the
historical cost convention as modified to include the fair valuation of
certain financial instruments.
As at 30 September 2023, the Group has approximately €0.5m net cash on its
balance sheet. Together with expected working capital movements over the
period this represents sufficient cash to continue to trade until mid-late
November 2023. The Board believes that subject to certain working capital
initiatives and other cost saving measures, the Company will have sufficient
cash resources to continue to trade to the end of the year. Furthermore, the
Company is progressing a number of longer-term strategic funding options
including the potential disposal of the its Patient Safety Hub business.
While the board remains very focused on the near term funding requirements of
the business, it believes that an appropriately funded HealthBeacon has very
significant growth prospects, having made substantial progress in the
speciality pharmacy sector.
The Group is projecting to significantly increase revenues in 2024 and is
projecting profits in the near term onwards due to its broadening partnership
base. Accordingly, the Directors continue to adopt the going concern basis in
preparing the financial statements.
2. New Standards
New Standards, Amendments, and Interpretations
There have been no accounting standards, amendments and interpretations that
are effective for the first time in respect of the Group condensed interim
financial statements for the six months ended 30 June 2023.
New Standards and Interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for 30 June 2023 reporting periods and have not been adopted
by the Group. These standards are not expected to have a material impact in
the current or future reporting periods and on foreseeable future transactions
1 (#_ftnref1) Note the €17M ARR includes the Patient Safety Hub revenues.
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