REG - Induction Healthcare - Half-year Report
07/11/2023 07:00
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RNS Number : 5646S Induction Healthcare Group PLC 07 November 2023
Induction Healthcare Group PLC
("Induction", the "Company", or the "Group")
Unaudited Interim Results
for the six months ended 30 September 2023
Induction (AIM: INHC), a leading digital health platform driving
transformation of healthcare systems, announces its unaudited interim results
for the six months ended 30 September 2023.
Financial Highlights
· Revenues of £6.1m (H1 2022: £7.1m). New NHS patient portal
contracts (revenue to be recognized in second half of this financial year)
compensates for decline in NHS video conferencing usage.
· Gross margin improvement to 75% (H1 2022: 66.1%). Improved management
of direct cost base including cloud infrastructure.
· Adjusted EBITDA of £0.01m (H1 2022: Loss £1.0m) Breakeven after
non-cash adjustments.
· Operating loss reduced to £2.4m (H1 2022: (£4.5m)). Ongoing cost
containment programme continues to yield results.
· Cash position £3.1m (FY23 YE: £4.3m). We remain on track towards
our objective of self-sustaining growth and cash flow breakeven in FY24.
Operational Highlights
· Awarded five new patient portal development contracts totaling £1.9m
with several large Trusts/ICS and ICBs for the Zesty patient portal. In
addition to the £1.4m announced in October, a further £538,000 is announced
today:
o Whittington Health NHS Trust worth £267,000 covering several patient
portal projects including the use of Induction's Form Builder module for wait
list validation, enhancing appointment management functionality, and
integrating with Whittington's pre-surgical assessment tool.
o Milton Keynes University Hospital worth £271,000 covering several patient
portal projects related to reducing wait lists and launching an Induction
video consultation from the patient portal.
· Induction to be the first NHS-accredited portal to digitize maternity
records for expectant mothers ensuring patient records are accessible within
Zesty.
· Completed roll out of NHS App integration with 6 new customers. 2.5
million patients can now access Zesty via the NHS App, up from 1 million
patients at the beginning of April 2023.
· One of only two patient portal providers to launch new functionality
into the NHS App related to notifications, messages, and forms. This
functionality is vital to supporting waitlist validation.
· In final stages of engineering work which will enable patients to
launch video consultation from within the patient portal, as well as enable
clinicians to access a video consultation from their Electronic Medical Record
(EMR) - integration of Zesty and Attend Anywhere platforms.
· Non-core asset (Switch) sold for material consideration.
Paul Tambeau, CEO of Induction Healthcare, said: "With reports that over 8m
patients will be on a waiting list by next year, Induction has a vital role to
play in helping NHS Trusts manage their backlog and giving patients more
choice in how they access care. We're well positioned to do this because of
the work we've done on integrating our platforms and enhancing the features
available through the NHS App. Improvement in both gross margin and operating
losses also demonstrates the outcome of our cost containment work completed in
the last 9 months which remains on track to achieve our goal of being
breakeven this year."
Enquiries
Induction
Christopher Samler, Chair +44 (0)7712 194092
Paul Tambeau, Chief Executive Officer +44 (0)7983 104443
Singer Capital Markets (Nominated Adviser and Broker) +44 (0)20 7496 3000
Philip Davies
Alaina Wong
Jalini Kalaravy
About Induction - www.inductionhealthcare.com
(http://www.inductionhealthcare.com/)
Induction (AIM: INHC) Induction delivers a suite of software solutions that
transforms care delivery and the patient journey through hospital. Our
system-wide applications help healthcare providers and administrators to
deliver care at any stage remotely as well as face-to-face - giving the
communities they serve greater flexibility, control and ease of access.
Purpose-built for integration with leading Electronic Medical Record (EMR)
platforms, our products offer immediate stand-alone value that becomes even
greater when integrated with pre-existing systems.
Used at scale by national and regional healthcare systems, as well non-health
government services, our applications are relied upon by hundreds of thousands
of clinicians and millions of patients across almost every hospital in the
British Isles.
CEO Review
Overview
Over the last six months, we have been focused on implementing our FY24 plan
that was based on four goals:
1. To be a profitable and sustainable growing business to deliver our
commitments to shareholders.
2. To successfully develop our Integrated Product.
3. To be customer centric and commercial in everything we do.
4. To implement and continuously develop an inclusive, performance
driven and rewarding employee experience.
I am pleased to say that we are making strong progress on all four of these
goals.
Through greater cost management, we are on track towards our objective of
self-sustaining growth and cash flow breakeven in 2024. In addition to
completing the cost containment measures started in Q4 FY23, an important
driver has been better management of our cloud infrastructure. Our cloud costs
are down c.50% compared to this time last year. In July 2023 we completed a
major overhaul of our database infrastructure and are currently completing a
significant change to our call screen which will generate further savings as
well as improve user experience. There are additional projects we're
evaluating to drive further savings in our cloud infrastructure.
In terms of sales growth, we have capitalised on the funding provided by the
NHS to support Trusts to adopt or enhance their patient portal. We've been
successful in securing £1.9m in new contracts which will fund key items on
our integrated product roadmap, such as:
· Digitizing maternity records for expectant mothers, as well as making
diagnostic appointment details available from within the patient portal.
· Enabling a patient to launch a video consultation from within the
patient portal - integrating Attend Anywhere and Zesty.
· Enhancing our appointment management functionality so that it can be
used to support Patient Initiated Follow Up / and Clinician Initiated Follow
Up initiatives.
· Using our Form Builder module to support waitlist validation.
· Deeping our integration with EMR partners such as Oracle Cerner, as
well as other third-party systems.
Whilst the large majority of these new contracts are one time revenue, the
enhanced platform will result in new features and case studies to support
future sales.
We have made tangible progress in integrating our product, notably being able
to launch a video consultation from within the patient portal. We expect this
work to be completed in early Q4 FY24 and already have 3 customers contracted
to adopt this functionality. We're also near completion of work to enable a
clinician or staff member to launch a video consultation within their EMR.
We also continue to work closely with the NHS Wayfinder team in integrating
new features into the NHS App. We are one of only two patient portal providers
to launch new functionality into the NHS App related to notifications,
messages, and forms. This functionality is vital to supporting waitlist
validation. We've also completed roll out of NHS App integration with 6 new
customers; 2.5 million patients can now access Zesty via the NHS App, up from
1 million patients at the beginning of April.
Consistent with our previously announced focus on our key strategic assets, we
sold the Switch platform for a material consideration. We continue to look for
a strategic buyer for the Guidance platform.
Financial Overview
We ended the first half of this year with £6.1m in recognised revenue, down
from £7.1m over the same period last year. This decrease primarily reflects
some Attend Anywhere contracts churning in England as well as lower than
expected utilisation in Wales. This is offset by a 20% increase in Zesty
revenue over the previous corresponding period. As we look to the full year,
we note that most of the new NHS contracts will be recognised in the second
half of the fiscal year, meaning a higher overall contribution from Zesty to
revenue.
Gross margin in H1 improved to 75% compared to 66.1% in the same period last
year. This demonstrates the improved management of direct cost base including
cloud infrastructure.
Our operating loss was reduced in H1 to -£2.4m, an improvement from -£4.5m
compared with the same period last year. This reflects that the ongoing cost
containment programme continues to yield results. On an adjusted EBITDA
position, we ended H1 at £0.01m compared to a loss of £1m over the same
period last year.
From a cash perspective, we ended H1 with £3.1m, down from £4.3m at the end
of FY23. The timing difference of the impact of post year end termination
costs and delay in receipt of invoiced revenue accounts for this drop at the
half year.
Outlook
With reports that over 8m patients will be on a waiting list by next year, we
have a vital role to play in helping NHS Trusts manage their backlog and give
patients more choice in how they access care. We're well positioned to do this
because of the work we've completed on integrating our platforms and enhancing
the features available through the NHS App. The NHS continues to prioritize
further developments within the NHS App, enabling Induction to become more
embedded in the health ecosystem. We're already seeing early evidence of the
effectiveness of Induction's digital tools in supporting waitlist validation
which positions us well for future growth.
We continue to see headwinds with Attend Anywhere renewals due to downward
pressure on pricing, Trusts returning to more in-person appointments, and a
post-Covid decline in the perceived advantages of video appointments.
We're also seeing increasing demand for integrating the capabilities of both
our Zesty and Attend Anywhere platforms, creating a better experience for
clinicians and patients.
Given the rightsizing changes we have already implemented, and the growth
opportunities in front of us, we are increasingly confident about Induction's
future as a leading player in the interface between the patient and their
secondary care clinical teams.
Paul Tambeau
CEO
7 November 2023
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the six months ended 30 September 2023
30 September 2023 30 September 2022
Unaudited Unaudited
Note £'000 £'000
Revenue from contracts with customers 2 6,057 7,118
Cost of sales (1,514) (2,414)
Gross Profit 4,543 4,704
Sales and marketing expenses 3 (578) (821)
Development expenses 3 (4,652) (4,159)
Administrative expenses 3 (1,731) (4,237)
Operating loss (2,418) (4,513)
Finance Costs (2) (4)
Finance Income 2 -
Loss before tax (2,418) (4,517)
Taxation - (311)
Loss for the period from continuing operations (2,418) (4,828)
Profit / (Loss) from discontinued operations, net of tax 5 755 -
Loss for the period (1,663) (4,828)
Attributable to:
Equity holders of the parent (1,663) (4,828)
(1,663) (4,828)
Loss per share from operations
- Basic 4 (0.03) (0.06)
- Diluted 4 (0.03) (0.06)
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the six months ended 30 September 2023
30 September 2023 30 September 2022
Unaudited Unaudited
Note £'000 £'000
Loss for the period (1,663) (4,828)
Other comprehensive income
Items that may be reclassified to profit or loss
Foreign currency translation differences (394) 457
Reclassified to profit and loss during the period 162 (801)
Other comprehensive income for the financial period (233) (344)
Total comprehensive loss for the financial period (1,896) (5,172)
Attributable to:
Equity holders of the parent (1,896) (5,172)
(1,896) (5,172)
Loss per share:
Basic loss per share (£) 4 (0.03) (0.06)
Diluted loss per share (£) 4 (0.03) (0.06)
Condensed Consolidated Statement of Financial Position
As at 30 September 2023
30 September 2023 31 March 2023
Unaudited Audited
Note £'000 £'000
Non-current assets
Goodwill 10,685 10,685
Intangible Assets 13,005 15,251
Property, Plant and Equipment 7 9
Deferred tax assets 552 556
Total non-current assets 24,249 26,501
Current assets
Trade and other receivables 6 2,165 2,672
Contract Assets 1,589 1,228
Current tax receivable 810 1,175
Cash and cash equivalents 3,055 4,287
Assets held for sale 2,474 2,474
Total current assets 10,093 11,836
Total assets 34,342 38,337
Non-current liabilities
Contract liabilities - (3,588)
Deferred tax liabilities (3,789) (3,870)
Other financial liabilities - (56)
Total non-current liabilities (3,789) (1,235)
Current liabilities
Trade and other payables 7 (1,922) (2,713)
Provisions (25) (528)
Contract liabilities (4,846) (2,198)
Liabilities associated with assets held for sale (1,016) (1,016)
Other financial liabilities (91) (72)
Total current liabilities (7,900) (6,527)
Total liabilities (11,689) (14,041)
Net assets/(liabilities) 22,653 24,296
Equity attributable to equity holders of the parent
Share capital 462 462
Share premium 41,665 41,665
Merger reserve 20,205 20,205
Translation reserve (405) (162)
Other reserves 1,776 1,578
Accumulated deficit (41,050) (39,452)
Total equity 22,653 24,296
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2023
Share Share Translation Other Merger Accumulated Total
Capital Premium reserve reserve reserve deficit equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2023 462 41,665 (162) 1,578 20,205 (39,452) 24,296
Total comprehensive loss for the period
Loss for the period - - - - - (1,663) (1,663)
Other comprehensive loss for the period - - (243) - - - (243)
Total comprehensive loss for the period - - (243) - - (1,663) (1,906)
Transactions with owners, in their capacity as owners
Equity-settled share-based payments - - - 199 - - 199
Total contributions by and distributions to owners - - - 199 - - 199
Balance at 30 September 2023 462 41,665 (405) 1,776 20,205 (41,050) 22,653
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2021
For the period ended For the period ended
Note 30 September 2023 30 September 2022
£'000 £'000
Cash flows from operating activities
Loss for the financial period (1,663) (4,828)
Adjustments for:
Depreciation of property, plant and equipment 1 39
Amortisation and impairment of intangible assets 2,150 2,363
Finance costs 2 4
Finance income (2) -
Share-based payment expense 199 246
Taxation 311
Gain on sale of discontinued operations, net of tax (750) -
1,600 (2,963)
Decrease / (Increase) in trade and other receivables and contract assets 146 (1,500)
(Decrease) / Increase in trade and other payables and contract liabilities (1,731) 7,303
(Decrease) / Increase in provisions (503) -
Interest received 2 -
Interest paid (2) (4)
Income taxes paid - (288)
Income taxes received 365 44
Net cash generated from / (used in) operating activities (1,786) (3,690)
Cash flows from investing activities
Payment of software development costs - (1,615)
Acquisitions of property, plant and equipment - (5)
Disposal of discontinued operations, net of cash 750 -
Net cash from investing activities 750 (1,620)
Cash flow from financial activities
Share issue proceeds - (194)
Payment of lease liabilities (33) -
Net cash from financing activities (33) (194)
Net increase in cash equivalents (1,069) 1,876
Cash and cash equivalents at the beginning of the financial period 4,287 7,495
Effects of exchange rate changes on cash and cash equivalents (163) (393)
Cash and cash equivalents at the end of the financial period 3,055 8,978
Notes to the Condensed Consolidated Interim Financial Statements
1. Accounting Policies
1.1. Reporting entity
Induction Healthcare Group PLC ("Induction", the "Group" or the "Company") is
publicly listed on the AIM market of the London Stock Exchange ("LSE"), and
incorporated, domiciled and registered in the United Kingdom. The registered
number is 11852026 and the registered address is 30 Crown Place, London, EC2A
4ES.
1.2. Basis of preparation
These interim financial statements have been prepared and approved by the
directors in accordance with International Financial Reporting Standards
("Adopted IFRSs"). They do not include all the information required for a
complete set of IFRS financial statements. However, selected explanatory notes
are included to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and performance
since the most recent annual consolidated financial information included in
the annual report and accounts as of and for the year ended 31 March 2023.
The accounting policies applied are consistent with those applied in the most
recent consolidated annual report and accounts for the year ended 31 March
2023, which are available on the Company's website at
www.inductionhealthcare.com under "Investors - Financial reports &
publications"
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtained control and continue to be consolidated until
the date when such control ceases. The financial information of the
subsidiaries is prepared for the same reporting period as the Group, using
consistent accounting policies. All intra-group balances, transactions,
unrealised gains and losses resulting from intra-group transactions are
eliminated in full.
Changes in the Group's interest in a subsidiary that do not result in a loss
of control are accounted for as equity transactions.
When the Group loses control over a subsidiary, the assets and liabilities are
derecognised along with any related non-controlling interest and other
components of equity. Any resulting gain or loss is recognised in profit or
loss. Any interest retained in the former subsidiary is measured at fair
value when control is lost.
These interim condensed consolidated financial statements are unaudited and were approved by the Board of Directors and authorised for issue on 6 November 2023 and are available on the Company's website at www.inductionhealthcare.com under "Investors - Financial reports & publications".
2. Revenue
2.1 Revenue by performance obligations
Period to 30 September 2023 Period to 30 September 2022
£'000 £'000
Provision of software 5,221 6,294
Post-contract support and maintenance 165 103
Set-up services 169 30
Professional services 225 492
Text message revenue 277 199
Total revenue from contracts with customers 6,057 7,118
3. Expenses by nature
Period to 31 September 2023 Period to 30 September 2022
£'000 £'000
Employee benefit expense 3,686 4,809
Contractors 814 1,858
Amortisation of intangible assets 2,150 2,363
Depreciation of property, plant and equipment 1 39
Professional and legal fees 48 251
Research and development expense capitalised - (1,615)
4. Earnings per share
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in the basic and diluted EPS calculations:
Loss attributable to ordinary shares (basic and diluted)
30 September 30 September
2023 2022
£'000 £'000
Loss attributable to ordinary shares used in calculating basic loss per share
and diluted loss per share
From continuing operations (2,418) (4,828)
From discontinued operations 755 -
(1,663) (4,828)
Weighted average number of ordinary shares (basic and diluted)
Period to 30 September 2023 Period to 30 September 2022
Shares in issue on 1 April 92,380,300 92,050,727
Issue of ordinary shares on exercise of equity settled share-based payments - 329,573
Issued ordinary shares as at the end of the period 92,380,300 92,380,300
Weighted-average number of ordinary shares (basic and diluted) 92,380,300 92,206,033
Basic loss per share from continuing operations (0.03) (0.06)
Total basic loss per share (0.03) (0.06)
Diluted loss per share from continuing operations (0.03) (0.06)
Total diluted loss per share (0.03) (0.06)
5. Discontinued operations
During June 2023, the Group completed the sale of the Induction Switch disposal Group for an undisclosed sum. This disposal Group was classified as held for sale in accordance with IFRS 5 "Non-current assets held for sale and discontinued operations" at 31 March 2023. The sale was completed in line with the Group's strategy to focus on sustainable growth.
6. Trade and other receivables
30 September 2023 31 March 2023
£'000 £'000
Receivables from third-party customers 1,568 2,069
Other receivables 320 351
Prepayments 230 125
Social security and other taxes receivable 47 127
Total trade and other receivables 2,165 2,672
Trade receivables are non-interest bearing and are generally on terms of 30
days. Included within trade and other receivables is £nil expected to be
recovered in more than 12 months.
7. Trade and other payables
30 September 2023 31 March 2023
£'000 £'000
Trade payables 509 849
Accruals 886 1,096
Social security and other taxes 469 703
Other payables 58 65
1,922 2,713
Included within trade and other payables is £nil expected to be settled in
more than 12 months
All trade and other payables are non-interest bearing and are normally settled
on 30-day terms.
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