REG - Induction Healthcare - Half-year Report
05/11/2024 07:00
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RNS Number : 8964K Induction Healthcare Group PLC 05 November 2024
Induction Healthcare Group PLC
("Induction", the "Company", or the "Group")
Unaudited Interim Results
for the six months ended 30 September 2024
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 2024.
The Company's growth continues to be driven by the Zesty portal, evidenced by
recent wins and growing ARR. Notwithstanding, the first half of the year was
impacted by the early election call which caused some contracts to be paused.
The new government's emphasis on digital health investments, in addition to
recent new business generation, provide a basis for the Company to return to
material growth.
Financial Highlights
· Revenues of £5.4m (H1 FY24: £6.1m)
· Gross margin improvement to 78.2% (H1 FY24: 75.0%)
· Adjusted EBITDA Loss of £0.9m (H1 FY24: Loss £0.01m)
· Operating loss increased to (£3.2m) (H1 FY24: (£2.4m))
· Cash position £3.1m (FY24 YE: £3.7m).
Operational Highlights
· 51% increase in Zesty portal revenue compared to H1 FY24.
· 5 Zesty portal deployments in progress, bringing the total number
of Zesty portal Trusts to 23.
· 7 Trusts contracted for Zesty portal deployment or major upgrade
in FY26 & FY27, generating £0.7m new ARR.
· 3.9 million patients can now access Zesty portal via the NHS App,
up from 2.5 million 1 year ago.
· Attend Anywhere revenue down £1.1m compared to H1 FY24 with
shift to utilisation-based contracts.
· Lower revenue in H1 FY25 accounts for higher losses as
expenditures remain flat.
· Completed substantial engineering project to replace Attend
Anywhere call screen with Amazon Chime which will generate £0.4m annual
savings.
· Sold Horizon Strategic Partners Limited for £1.2 million.
· NHS Wales extension to 31 March 2025 for £0.5m.
o From April 2025, each Health Board will procure separately, although
negotiations are underway nationally to fund language and hosting
requirements.
o One Health Board already secured on a 2-year contract with active
engagement with the other six Health Boards.
Post Period End Highlights
· Secured £1.5m contract to digitise diagnostic referrals and
bookings in North Central London ICS which will contribute to higher group
revenue in H2.
Paul Tambeau, CEO of Induction Healthcare, said: "The Zesty portal continues
to be our growth engine, with revenues up 51% compared to the same period last
year. We also secured several new Zesty portal wins which will unseat our main
competitors over the next two years. However, our plan for this year was
negatively impacted by the early election as we had a number of contracts due
to be completed in Q1 paused. With Labour's emphasis on reducing the elective
recovery backlog, investing in the NHS App, and empowering patients to take
more control over their health, Induction is in the right place at the right
time to capitalise on growth. Our recent win in North Central London, along
with upcoming pilot projects in cancer surveillance and smart uses of AI,
provides a basis for Induction to get back onto a growth trajectory next year.
We continue to manage cash carefully with no requirement for immediate
funding."
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
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 FY25 plan
that was based on four goals:
1. To be a profitable business whilst building new revenue streams that
will accelerate growth into the future
2. To continue innovating and integrating our product suite in a way that
is validated by our customers and supports the delivery of our revenue plans
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 progress on all four of these goals.
We have been successful in growing Zesty portal revenue and building new
revenue streams by 51% to £2.0m (H1 FY24: £1.4m). We secured 5 new Zesty
portal wins since 1 April 2024 worth £0.5m ARR which will go live in FY26
& FY27 and we are due to go live in our first Community & Mental
Health Trust shortly. Over the last year we have incorporated a number of new
features into Zesty portal and these are well received by both new and
existing customers. Furthermore, we see increased interest for Zesty portal in
the private health care market.
These successes have been subdued by the political environment. In particular,
the call for an earlier than expected election caused a number of contracts,
which were due to be completed in Q1, to be paused. However, the increased
focus by the new administration on healthcare spend in general and
particularly on digitisation as a means of increasing efficiency, patient
throughput and outcomes will benefit us in the medium term.
The team have continued to implement changes to our cloud infrastructure to
generate additional savings. Our work to overhaul the Attend Anywhere call
screen with Amazon Chime will further improve margin as well as deliver a
better user experience for patients and clinicians. It also enhances our
flexibility for the future design and build of customer-focused product
enhancements.
With the divestment of Guidance, the business is now focused on our core
products and markets. We're aligning the business to deliver on the next phase
of patient engagement platforms by digitising entire pathways and enabling
regions to efficiently manage high-risk patients, like those who are being
monitored for cancer. We consider the total addressable market for digitising
pathways to be material, and we are well placed to capitalise on this
opportunity. North Central London represents our first foray into this
strategic space.
We're also investing in our people and working to improve our collaborative
culture. Employee NPS score is now +6, having improved 29 points over the last
year.
Financial Overview
We ended the first half of this year with £5.4m in recognised revenue
(including £0.2m relating to the Guidance platform which was earned prior to
its sale) down from a total group income £6.1m over the same period last year
(which included £0.3m relating to Guidance).
The number of our Attend Anywhere contract renewals held steady, however,
price competition drove income down to £3.2m (H1 FY24: £4.3m). Note:
Income from the Guidance product, which was sold during the period (see note 5
- Discontinued operations) is disclosed separately as an asset and is not
reported in the P&L.
Gross margin in H1 improved to 78.2% compared to 75.0% in the same period last
year as a result of continued rationalisation of the direct cost base
including cloud infrastructure.
Our operating loss after depreciation and amortisation increased to £3.2m (H1
FY24: Loss £2.4m). While contribution from our Zesty portal increased period
on period by £0.5m. The increased operating loss reflects the fall in
contribution from Attend Anywhere of £0.8m, plus one-time, non-cash
administrative expenses (£0.3m) and one-time termination and professional
costs relating to the business divestment (£0.2m).
On an adjusted EBITDA position, after accounting for non-recurring, non-cash
items we ended H1 with an adjusted Ebitda loss of £0.9m (H1 FY24: Loss
£0.01m). This translated into an H1 period end cash position of £3.1m (FY24
YE: £3.7m).
Outlook
The new Labour government has made reducing the elective recovery backlog a
major priority for the NHS as 6.3m patients are still waiting for an
appointment. The recent budget invested billions of pounds to add 40,000 new
appointments per week and technology will be a key enabler to manage that
extra capacity. The government has also targeted £2bn for technology
investments in the NHS which will include giving patients greater access to
their information and greater control of their experience through the NHS App.
Induction has been working with the NHS to integrate our solutions into the
NHS App and we believe we are well positioned to drive new growth through
these investments.
The government is investing in community diagnostic centres so that patients
can get into treatment sooner. Our recent win in North Central London, and the
associated technology that we are developing to digitise diagnostic referrals
and appointments, positions Induction well to generate new regional wins as we
can connect hospitals with diagnostic centres.
The government and clinicians alike emphasise the importance of diagnosing
patients who have cancer sooner. Our platform has the capability to manage
patients on a cancer pathway by sending them notifications to complete a form
or book an appointment as part of a surveillance program. The platform
integrates these capabilities with video appointments so that patients don't
have to travel for routine follow-ups. We are in the final stages of contract
negotiations for a cancer surveillance pilot project which, if successful,
will unlock new revenue streams for Induction.
While the competitive threat of Microsoft Teams and other solutions remains,
our team has done a good job of communicating the value and fit-for-healthcare
nature of our video appointments solution and the erosion of our share has
been lower than anticipated. However, we expect some revenue churn in Attend
Anywhere as Wales moves from a national contract to each Health Board
procuring their video solution with pricing commensurate with their
utilisation. We also expect this loss to be made up by a new large contract
that we expect to announce before the end of the financial year. We're also
gaining traction within the private market, having just secured a new Attend
Anywhere contract in the occupational health sector
Despite FY25 seeing lower revenue than the previous year, we are very well
positioned to capitalise on the new Labour government's priorities and expect
to generate new growth from FY26 and beyond.
Induction Healthcare Group Plc
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the six months ended 30 September 2024
30 September 30 September 2023
2024
Unaudited Unaudited
Note £'000 £'000
Revenue from contracts with customers 2 5,189 6,057
Cost of sales (1,132) (1,514)
Gross Profit 4,057 4,543
Sales and marketing expenses 3 (552) (578)
Development expenses 3 (4,407) (4,652)
Administrative expenses 3 (2,332) (1,731)
Operating loss (3,234) (2,418)
Finance Costs (1) (2)
Finance Income 83 2
Loss before tax (3,152) (2,418)
Taxation 525 -
Loss for the period from continuing operations (2,627) (2,418)
(Loss) / Profit from discontinued operations, net of tax 5 (226) 755
Gain on sale of disposal group 525 -
Loss for the period (2,328) (1,663)
Loss per share from operations
- Basic 4 (0.03) (0.03)
- Diluted 4 (0.03) (0.03)
Induction Healthcare Group Plc
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the six months ended 30 September 2024
30 September 2024 30 September 2023
Unaudited Unaudited
Note £'000 £'000
Loss for the period (2,328) (1,663)
Other comprehensive income
Items that may be reclassified to profit or loss
Foreign currency translation differences 63 (394)
Reclassified to profit and loss during the period - 162
Other comprehensive income for the financial period 63 (232)
Total comprehensive loss for the financial period (2,265) (1,895)
Induction Healthcare Group Plc
Condensed Consolidated Statement of Financial Position
As at 30 September 2024
30 September 2024 31
March 2024
Unaudited Audited
Note £'000 £'000
Non-current assets
Goodwill 10,264 10,264
Intangible Assets 9,269 11,162
Property, Plant and Equipment 5 6
Deferred tax assets 382 501
Total non-current assets 19,920 21,933
Current assets
Trade and other receivables 6 1,229 3,758
Contract Assets 1,997 1,366
Current tax receivable - 814
Cash and cash equivalents 3,131 3,690
Convertible loan 816 -
Assets held for sale - 1,813
Total current assets 7,173 11,441
Total assets 27,093 33,374
Non-current liabilities
Contract liabilities (1,121) (3,920)
Deferred tax liabilities (2,812) (2,831)
Total non-current liabilities (3,933) (6,751)
Current liabilities
Trade and other payables 7 (1,696) (3,571)
Contract liabilities (3,251) (1,702)
Liabilities associated with assets held for sale - (913)
Other financial liabilities (23) (57)
Total current liabilities (4,970) (6,243)
Total liabilities (8,903) (12,994)
Net assets/(liabilities) 18,190 20,380
Equity attributable to equity holders of the parent
Share capital 469 469
Share premium 41,976 41,976
Merger reserve (1,043) (1,106)
Translation reserve 1,641 1,566
Other reserves 20,205 20,205
Accumulated deficit (45,058) (42,730)
Total equity 18,190 20,380
Induction Healthcare Group Plc
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2024
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 2024 469 41,976 (1,106) 1,566 20,205 (42,730) 20,380
Total comprehensive loss for the period
Loss for the period - - - - - (2,328) (2,328)
Other comprehensive loss for the period - - 63 - - - 63
Total comprehensive loss for the period - - 63 - - (2,328) (2,265)
Transactions with owners, in their capacity as owners
Equity-settled share-based payments - - - 75 - - 75
Total contributions by and distributions to owners - - - 75 - - 75
Balance at 30 September 2024 469 41,976 (1,043) 1,641 20,205 (45,058) 18,190
Induction Healthcare Group Plc
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2024
For the period ended For the period ended For the
year
ended
30 September 2024 30 September 2023 31
March
2024
Note £'000 £'000 £'000
Cash flows from operating activities
Loss for the financial period (2,328) (1,663) (3,257)
Adjustments for:
Depreciation 1 1 2
Amortisation 2,274 2,150 4,029
Finance costs 1 2 11
Finance income (83) (2) (6)
Share-based payment expense 75 199 299
Net foreign exchange gain - - (180)
Taxation 20 - (962)
Gain on sale of discontinued operations, net of tax (525) (750) (750)
1,763 1,600 2,443
Decrease / (increase) in trade and other receivables and contract assets 6 1,968 146 (1,224)
(Decrease) / increase in trade and other payables and contract liabilities 7 (3,202) (1,731) 591
(Decrease) in provisions (19) (503) -
Interest received 67 2 6
Interest paid (1) (2) (11)
Income taxes received 814 365 365
Net cash generated from / (used in) operating activities (938) (1,786) (1,087)
Cash flows from investing activities
Disposal of discontinued operations, net of cash 400 750 750
Acquisition of intangible assets (47) - -
Payment of Software development costs - - (329)
Net cash from investing activities 353 750 421
Cash flow from financial activities
Payment of lease liabilities (34) (33) (70)
Issue of ordinary shares - - 7
Net cash from financing activities (34) (33) (63)
Induction Healthcare
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2024 (continued)
For the period ended 30 For the period ended For the
year
ended
30 September 2024 30 September 2023 31
March
2024
Note £'000 £'000 £'000
Net increase in cash equivalents (619) (1,069) (729)
Cash and cash equivalents at the beginning of the financial period 3,690 4,287 4,287
Effects of exchange rate changes on cash and cash equivalents 60 (163) 132
Cash and cash equivalents at the end of the financial period 3,131 3,055 3,690
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 C/O Pinsent Masons 30 Crown
Place, Earl Street, London, England, 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 2024.
The accounting policies applied are consistent with those applied in the most
recent consolidated annual report and accounts for the year ended 31 March
2024, 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 5(th) November 2024 and are available on the Company's website at www.inductionhealthcare.com under "Investors - Financial Reports & Publications".
2. Revenue
Revenue by performance obligations
Period to 30 September 2024 Period to 30 September 2023
£'000 £'000
Provision of software 3,939 5,221
Post-contract support and maintenance 225 165
Set-up services 75 169
Professional services 513 225
Text message revenue 437 277
Total revenue from contracts with customers 5,189 6,057
3. Expenses by nature
Period to 30 September 2024 Period to 30 September 2023
£'000 £'000
Employee benefit expense 3,675 3,686
Contractors 780 814
Amortisation of intangible assets 1,944 2,150
Depreciation of property, plant and equipment 1 1
Professional and legal fees 155 48
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)
Period to 30 September 2024 Period to 30 September 2023
£'000 £'000
Loss attributable to ordinary shares used in calculating basic loss per share
and diluted loss per share
Loss from continuing operations (2,627) (2,418)
(Loss) / Profit from discontinued operations (266) 755
Gain on sale of disposal Group 525 -
(2,328) (1,663)
Weighted average number of ordinary shares (basic and diluted)
Period to 30 September 2024 Period to 30 September 2023
Shares in issue on 1 April 93,849,376 92,380,300
Weighted-average number of ordinary shares 93,849,376 92,380,300
Basic loss per share from continuing operations (0.03) (0.03)
Total basic loss per share (0.03) (0.03)
Diluted loss per share from continuing operations (0.03) (0.03)
Total diluted loss per share (0.03) (0.03)
5. Discontinued operations
On 1 July 2024 the Company disposed of its wholly owned subsidiary, Horizon
Strategic Partners Limited, for consideration of £1.2 million, consisting of
a £0.8m loan issue and £0.4m in Cash.
30 September 2024
£'000
Revenue 186
Cost of Sales -
Gross profit/(loss) 186
Operating expenses (82)
Impairment (330)
Net operating loss (226)
Finance income -
Finance costs -
Loss before tax from discontinued operations (226)
Tax -
Loss for the period from discontinued operations (226)
The net cash flows incurred by discontinued operations are as follows:
30 September 2024
£'000
Operating (106)
Investing -
Financing -
Net cash outflow (106)
6. Trade and other receivables
30 September 2024 31 March 2024
£'000 £'000
Receivables from third-party customers 930 3,510
Other receivables 103 167
Prepayments 196 81
Total trade and other receivables 1,229 3,758
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 2024 31 March 2024
£'000 £'000
Trade payables 392 1,195
Accruals 810 1,656
Social security and other taxes 438 665
Other payables 56 55
Total trade and other payables 1,696 3,571
All trade and other payables are non-interest bearing and are normally settled
on 30-day terms. Included within trade and other payables is £nil expected to
be recovered in more than 12 months.
8. Significant events after the reporting date
At the end of October the group signed a contract worth £1.5m to transform
patient access to diagnostic tests across the North Central London Integrated
Care System. (FY24: None).
This project will deliver significant enhancements to Induction's integrated
platform which will connect the Royal Free London NHS Foundation Trust,
Whittington Health NHS Trust, and their corresponding Community Diagnostics
Centres in Wood Green and Finchley.
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