Oneview Healthcare PLC

Thank you for standing by and welcome to the OneView Healthcare Half-Year 2021 Results Announcement. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. James Spitter, CEO. Please go ahead.

Thanks, Lexi, and good morning to everyone in Australia. Good afternoon to those here in the States. I'm calling from our Chicago office, and with me on the line in Dublin, I have Hamina Darcy, interim CFO, and Niall O'Neill, our chief customer officer, who will also be presenting today. So just... Quick reminder on the legal disclaimers and just a reminder that we are reporting currencies in euros unless otherwise specified in this presentation. And this, of course, is our first half results as we are currently year-end. So just a reminder of our mission and our vision, which is to power personalized exemplary care experiences. And never has our mission been more relevant than it has been in the last 18 months during a global pandemic. And of course, the pandemic has put extraordinary pressure on care teams. It's put obviously very challenging time for families who are unable in many cases to visit their loved ones. And I think it's really brought home the power of bedside technology and of course, also really focus on our ability to drive workflow and operational efficiencies for nursing. So the agenda today, we're just going to look at obviously the first half in review, our second half strategy and vision, the financial results and key trends, talk a little bit about the ESG initiative we kicked off in the first quarter of this year, and of course we'll conclude with the outlook for the second half of this year and into 2022. So the first half has been transformational for the company in many ways. As those of you who know the company well, we've transitioned our care experience platform to the cloud, becoming the first company in our space to do so, and that was obviously an enormous undertaking and something I'll speak more about shortly. As part of that, as we obviously become custodians of private health information, we've dramatically improved our security posture across the company. with ISO 27001 in March and last month we completed our ISO 27701 certification which deals specifically with how we handle our customers' data and their private health information. We renewed our partnership with Epworth which dates back to 2014. It's been a fantastic partnership and we're really looking forward to moving them onto our next generation platform. As you'll know from our earlier announcement, we signed our first cloud custom in Australia, which was also our first success with the public sector in Victoria, and perhaps the most striking thing about this was that the time from contract signing in June to go live in July was 39 days, which by healthcare standards is incredibly fast. And again, I think it revalidates one of the key drivers for our transition to cloud, which was to be able to sell faster, but also to implement faster, and obviously that path of revenue is going to be incredibly important. Niall's going to give us an update today on the significant go-to-market partnership that we've established with Samsung and with Caregility, and many of you will have seen on Friday we announced the joint press release with Microsoft around transactable status in the Azure marketplace, which is also going to be incredibly important, and you'll hear from Niall exactly how that's going to work. And of course the other thing that happened during the half year was a key customer testimonial from our friends at NYU Langone and again I don't think we can overstate the importance of referenceability in the healthcare industry. It's a massive industry but everyone talks to each other and again we're incredibly proud of the partnership and just thrilled that NYU were so giving in sharing the value proposition of the work we're doing with them. Just a quick reminder of the two different product offerings we have in the cloud. So our first response when the pandemic initially hit in New York was to rapidly deploy something that didn't include the patient's context, so it was assigned to a specific room. It didn't matter who the patient was in that room, but what it did is it provided an immediate ability for the care team to communicate with that patient, in this case through Cisco Jabber, but it could have been any number of telehealth solutions. It provided generic educational content to patients, and importantly, it provided streaming content to, again, try and distract patients at the time they're obviously the most vulnerable. The much bigger and bolder challenge for our engineering teams was to transition the entire product to the cloud, which is what we refer to as cloud enterprise. And this is where we are doing all of the work that we do in our on-premise solution, which is to customize and personalize based on what we know about the patient in the room. So in this case, we obviously know their demographics. We know their primary language. We know their diagnosis. So it allows us to give a much richer experience for the customers. So just keep that in mind. The Cloud Start product is the product that we have been bundling with Samsung Tablets in the United States. cloud enterprise is obviously much more sophisticated and requires different integration capabilities at their side. So let's talk a bit about market conditions. I think there's two real key things here. The obvious one is that the pandemic has really helped to accelerate the demand for digital care. And you'll see throughout today's presentations, we've provided a few quotes around the speed of digital adoption, around the pace of cloud adoption, I think most of you are aware that the healthcare industry has been a late adopter to cloud. But out of necessity, that has really been ramped up in the last 12 months due to pressure on IT budgets and really the need to be able to deploy without physically being on site. So I think based on the conversations we're having with major health systems here in the United States and in Australia, it's very clear that the value proposition of bedside technology has been substantially re-rated. We know from those conversations that we've moved up the priority list of capital projects, which has always been a challenge for us. I think many have described the product as nice to have product. I think it's very clear that we've crossed that chasm to more of a must-have product. Having said that, we know that health systems continue to be preoccupied caring for their patients. I don't need to tell anyone in Australia around the acceleration of COVID there. And clearly in the United States, we have some states that have seen very substantial deteriorations in recent weeks and months. So hospital budgets do remain under pressure. They're being continually reviewed. We are hearing in our sales channel, we have a number of opportunities, one specific one in Texas, one in Australia, where hospital leaders have just listened. We're absolutely committed to deploying the OneView platform. We'd like to get a better sense of what our new normal operating model looks like. So that may take some weeks and months potentially to work through the system. So what we've been doing to try and help is first of all enabling virtual care at all of our existing customer locations where possible. I think we really ingratiated ourselves to a number of customers with our speed to respond and I think they were all incredibly grateful that they had made the investment in bedside technology. Niall has done some fantastic work around enhancing the value proposition for the partnership. It's very clear that people don't want two tablets at the bedside. So I think the steps we've made to transition to Android to an open and scalable platform The investment we've made in security has been incredibly helpful for our partnership development. And most importantly, we've been continuing to do everything we can to lower the total cost of ownership for our customers. That began with the hardware strategy, which is about to pay dividends, and has obviously been accentuated by the transition to cloud. Here's a couple of the quotes. I'll just point to the one on the right from KPMG that says, in the next two years, CEOs expect digital and other services to be their organization's top priority. In the next five years, 80% expect improving patient customer experience to be their top priority. So I think we feel very strongly like the next five years is going to be a very exciting time for the business. So let's talk a little bit about the numbers in detail. So we've seen improving trends in most but not all key metrics. We've seen 6% growth in our contracted beds year over year. And I should point out that includes the decommissioning of 300 beds in Cairns, which was the first and to date the only customer we haven't been able to navigate. And that was really around just bad timing around the availability of our new Android devices. So, adjusting to that, we would have been up around about 10% on a contract expansion in the midst of a pandemic. So, I think credible. Returning revenue is obviously disappointing. It's only increased up slightly, and this reflects the short-term impact of delayed deployments that were impacted primarily by hospital access, but also by the supply chain disruption to the co-op step-top box, which is currently... being shipped as we speak. Security, sustainability and hardware foundations are all in place to support accelerated growth. We really feel like we've got strong operational leverage. We'll talk a bit more about that. We're projecting 100% revenue growth in the second half. This is the first half based on work that's currently in progress and current project scheduling. So a pretty significant acceleration coming, even notwithstanding market conditions with COVID-19. We've obviously been laser-focused on cash burn, which has improved 61% year-over-year. Our operating expenses are down 9%. Total revenue is up 13%. And we've done some important work to strengthen the governance of the board with Nishina Asaria joining the board during the half. We now have three-quarters of our non-execs are active participants in the North American healthcare industry, which is incredibly impactful for our sales organisation because we're able to leverage some of the fabulous relationships that those monetary exits have built up over many years. So just getting a little bit deeper into the numbers, as I mentioned, total revenue up 13%, annualised exiting recurring revenue of 5.6 based on the June number, continued focus on cost control, reduced our operating expenses by 9%, improved EBITDA by 12%, And as I mentioned, a significantly improved cash burn of 2 million in the first half versus 5.1 in the previous corresponding period. So let's talk a bit about the operational drivers. We've had an extremely positive response to the cloud product launch in March. We're obviously only one quarter into that process. I'll talk a little bit more about that in a second. Very important to understand what we've been doing on the OEM hardware side. We now have completed the testing of all the new hardware, which comprises this coax set-top box, which you can see on the top of the slide, and the social mobile all-in-one, which you can see on the bottom of the slide. These are very important and significant investments that we've made and we've incurred some degree of cost and a large amount of time from our engineering teams to ensure that this hardware is fit for purpose. We've just deployed these desktop boxes to a number of customer sites. We'll talk about a couple of them in a second. And we've received the first shipment of Android All-in-Ones arrived in Melbourne last week. And this All-in-One is really important. It's healthcare-grade, certified for the healthcare industry, but also GMS-certified, and it's the first time or it's the largest tablet of its size that has been certified by Google, and that is going to fill a very significant unmet need in the market. We've just been at the largest healthcare IT trade show in Vegas a few weeks ago, and there wasn't a single hardware vendor that's offering a 22-inch Android device at this time. This is going to enable us to convert all of our remaining Windows devices, which are currently deployed in 5,000 bands, which is around about half of our estate. We're beginning that journey with 1,400 are being converted at Epworth in the second half of this year. The reason that's so important is that we currently have across a footprint around the world, we have 20 different Windows devices that are being deployed. What that means is every time we upgrade our software, we have to regression test against those different devices. Those devices are difficult and time consuming to manage in the wild. When we are managing our Android devices, we currently have the Samsung tablets, the WeTech boxes, the special mobile and ones. So it's going to give us huge operational efficiencies and drive a material improvement in our support in 2022. In addition to our ISO certification, we've also made a commitment to external pen testing to enhance our security posture, and that's been extremely well received by customers. We've appointed a new marketing manager here in Chicago and enhanced CRM capabilities. I'll share some details of how that looks in a second. So what does this mean for the second half? Most importantly, we are in active conversations with our three largest US customers to migrate them to the cloud. One of them has already begun that journey. A second one, we have four workshops scheduled with another customer here in the Midwest this month to make sure we move them across. That's going to see us, in addition with our two largest customers in Australia who have both adopted cloud-first strategies, it really validates the decision, the product decision we made to move to the cloud, the fact we've had such a euphoric response to our major customers. is incredibly important, and unsurprisingly, it's going to really help our Microsoft partnership because we're going to be moving significant business to Azure in the second half of this year. As I mentioned, the delivery of the new Android hardware is going to allow us to sunset our Gen 2 Windows platform next year. We've already sat down and explained that to all of our Gen 2 customers, and we have migration plans in place for all of them. That's obviously going to see us replace Windows hardware in over 5,000 beds next year. But most importantly, as I mentioned, it's going to dramatically lower our support costs and eliminate the need to support two different operating systems. As I pointed to earlier, we see a very significant acceleration in revenues and cash flows in the second half. We're reaffirming our previously issued revenue guidance at 10.4 million. And as part of that, we've recently added six staff to our U.S. market, which is really consistent with the confidence we have in the U.S. sales pipeline. And as you may have seen a couple of weeks ago, we've announced to the market previously that the mediation was scheduled for the 16th of September. We'll talk a little bit more about that in a second. So in terms of commercial activity, a couple of key indicators to share here. On the left-hand side, we are in formal RFI or RFPs or pricing conversations with just under 10,000 hospital beds. This is a conservative number because we've excluded, for example, some high-profile tenders in the Australian market that are a model that we think is outdated, where they're asking customers to provide it. So they're asking vendors to provide hardware and charge patients in return for an entertainment experience. We just think that in this day and age, that model is broken. So we've excluded those numbers from the calculations here. But as you can see, compared to a full year 2020 of just under 5,000 beds, very material acceleration in formal pricing requests in the business. And the point I made earlier about referenceability and the impact of the NYU webinar, you can see the number of unique hospitals visiting our website in the first eight months of the year, and most importantly, the fact that they are revisiting the website on a pretty consistent basis is a very strong lead indicator around our sales pipeline. Couple of key contracts to secure, as I mentioned, Northern Health, which has begun and the rollout there already, and that'll be finalized this month. We'll talk about Omaha in a second, which is our latest addition to the portfolio. And as I mentioned earlier, we're really proud and excited to extend the airport's contract. So today's a big day. We've got a team of folks on the ground in Omaha, Nebraska, where we've today gone live in just under 300 new beds at the Omaha Children's Hospital. And again, I hope these pictures give you a sense of the impact that technology has. So you'll see on the left-hand side the tablet that is controlling the television. They've gone with 55-inch televisions in the main across the enterprise. But you also notice on the bottom left that the pillow speaker, which is provided by the nurse call, is also enabled for patients. And this is more common in senior settings or adult hospitals where it gives the flexibility for the patient to navigate the OneView experience on the television either by the pillow speaker all by the tablet, the bedside. And I've just got some inbound traffic from our project team to say it's been an extremely smooth go-live, and this is the first deployment of new WeTech hardware in the United States. So why don't I pass now to Niall, who's going to talk through a bit more on strategy and vision and where we're at with partnerships.

Thanks, James. So I'm going to start with Samsung. So James Hutchins has signed a distribution agreement with Samsung, SPSA America, and Samsung Business Services and Distribution Subsidiary earlier in the year. And this agreement enables SPSA to distribute a year's subscription to Cloud Start along with a Samsung tablet and with a single SKU to their reseller network. And really since then, our focus has been supporting the SESA team as they've worked with their reseller networks, which would be large IT supply chain organizations in the U.S. market, to enable them to contract clouds to start with their customers. As this is in parallel, slowing down terms and conditions, so our terms and conditions, our end-user license agreements to their resellers, and that's required them to build those into their reseller agreements. And that's something that SDSB and their resellers have been working through over the first half of the year. So we meet frequently with the Transom team, and we're continuing to get feedback from them, from their resellers. And one of the key pieces of feedback that we've got is that their resellers are anticipating more demand for cloud enterprise and for cloud start. And as James shared earlier, cloud enterprises are fully integrated, fully functional cloud offerings. So for larger organizations, it means more integration with hospital systems. It means more functionality and ultimately more value. And really what we're seeing is that resellers are looking at their markets and they're segmenting based on accounts that they think will be cloud start customers. So these would be smaller organizations like community hospitals. And then the larger enterprise accounts that they believe will require cloud enterprise. So we're currently working as a priority with Samsung and CSA and their resellers to extend the go-to-market model to enable channel sales of cloud enterprise. There's more complexity from a sales perspective of cloud enterprise just in terms of the pricing model and the cloud stock, but we're working to find a model that will enable cloud enterprise to be sold through the channel. And then we continue to collaborate with the Samsung team on marketing initiatives. For example, we had co-meetings at HINZ, the trade show that James mentioned recently. And we're also working on a number of co-marketing initiatives the second half of the year. And then the other key to our market partnership is with Microsoft. So as James mentioned last week, we announced that our cloud enterprise product offering is now available in the Azure Marketplace. And what this means is that Microsoft customers can procure Cloud Enterprise from the Azure marketplace. And this is an important development because it means that we're fully aligned with Microsoft's co-sale programs. And with these programs, Microsoft account executives are incentivized by Microsoft to refer leads to partners and also to help partners close deals. And for customers, it means that they can simplify the procurement of the SaaS software by buying via Microsoft. So you can think about it as being a little bit like the Apple App Store or the Google Play Store, only for enterprise software. And for larger enterprise customers, it's also more economically advantageous for them to procure in this way because they're able to count the cost of one use towards their overall Microsoft commitment. So this means they're getting greater leverage and better value across their broader Microsoft relationships. So we're currently working with the Microsoft teams in our target market in the US and Australia to raise awareness of the 1D solution and also to engage the current executives to support our active sales proceeds. And when you really think about the market, I mean, almost all of our target customers will be Microsoft customers at some level. And so this gives us a real competitive advantage in terms of finding and closing sales opportunities. And so the last thing I want to talk about in terms of partnership is our smart room strategy. This is a strategy we've been working on for a while, but I think it's never been more prescient than now because of COVID, because of the way COVID has accelerated demand for technologies in the patient room. And this is really a multi-step strategy for how the bedside technology platform can support care model innovation. And that's in the technology that we have available today, which is a step one. to a future state which is leveraging artificial intelligence, which is step three. And we're working with best of breed organizations such as Agility, our partner for agency in the U.S. market, and Verity, our pure play company, to deliver on this strategy. And on the premise of a bedside technology platform that is not single purpose, but is multi-purpose. And that's really about providing our customers with the greatest value from that infrastructure investment in the bedside technology platform. But step one is the virtual care model that we're delivering today already at our department, including NYU London Health and OU Harvard Oklahoma, for example. And through this, we're connecting patients with their caregivers and their families and remote interpreters from bedside tablets and in partnership with Caregility, with Powerbreak, who offer language services, and with other third-party solutions like Cisco and Java. With step two, we're bringing those virtual care use cases to the OneView television. And this is all about not requiring additional hardware in the patient room to fulfill these virtual care use cases, not requiring a separate stack of hardware, but integrating it into the OneView platform by adding a camera and a microphone array that enables these use cases to be supported from the bedside technology platform. And because this audiovisual hardware is fixed, it's always there, it's always on, That enables new models of care. So, for example, remote caregivers can support the nurses on the unit. And this is really key because we're already seeing staff shortages, burnout, nurse attention issues, US hospitals and beyond. And this is where we're going to get worse as the pressure on the healthcare system grows. But using this technology enables new hybrid physical and virtual care models. This is very much an emerging space, but it's something that we're seeing interest from already from innovative healthcare systems. And this is very much an active focus for us when we're working together with Caregility to bring these use cases onto the television and the patient screen. And then finally, with step three, this is very much a future space, but this is probably years out. But in step three, we have sensors and artificial intelligence that enable continuous autonomous monitoring of the patient room. And so some of the specific use cases of this would be for things like fall prevention, beds for avoidance, reducing the number of adverse events that negatively impact patient outcomes, patient experience, and ultimately hospital bottom line. And so just moving on to the next slide, this is just a a quote from some research that Accenture did recently. It will just give you a sense of how healthcare executives are thinking about innovation, about digital transformation. This was a survey conducted this year of nearly 400 healthcare executives across six countries. And over 80% said the pace of digital transformation is accelerating. And 93% said their organizations are innovating with urgency. And these are clearly trends that are pertinent for us and for our digital health, their website platforms. And now I'm going to hand over to Helena, our interim CFO, to take us through our financial results for the half year.

Thank you, Niall. This first slide just shows our cap table and ownership structure. Diving further into the figures, we present our income statement for the first half of 2021. Total revenue for the first six months of 2021 was $3.4 million, up 13% on the prior year comparative periods. The growth in recurring revenues has been hindered by a lack of access to hospitals due to the COVID pandemic and also some supply chain disruptions. However, we do expect recurring revenues to increase in the second half of the year as we have several large projects which are now well underway and will go live in the second half of the year. Growth profits have decreased by 4% due to a higher proportion of non-recurring revenue, particularly hardware sales which carry lower margins. Operating expenses excluding restructuring expenses reduced by 9% over the prior year. The one expense category bucking the trend here is DNO and PI insurance premiums, which are impacting businesses across the board. The operating EBITDA loss for the period is 3.5 million, a reduction of half a million on the corresponding period in 2020. and the result of all these factors is that our net loss after tax has reduced to 4.4 million down from 5.6 million in the first half of last year. Turning now to the balance sheet. The company had cash balances of 5 million at the end of June. This includes a strategic investment of 1 million Australian dollars. Moving now to cash flows. Total operating cash flows of 2 million were 61% lower than the $5.1 million figure for the corresponding period last year. This was driven by receipts from customers of $4.8 million up from $3 million last year, while payments to suppliers and staff were $6.7 million down from $8 million in the prior year. This reduced cash bearing level reflects the impact of last year's cost restructuring. I now hand back to James to update on Regus.

Thanks, Lena. So just a reminder, the Regis case is scheduled for mediation on the 16th of September. Our litigator had advised us that the commercial court in Victoria has a strong preference for mediation, so this was exactly the result that he was anticipating. So we're looking forward to that conversation in two weeks' time. Just turning to ESE, we began initiatives in the first quarter of this year to address environmental, social and governance practices. I think it's really important for us as a company. I think our mission is very clearly aligned with doing well. Our technology has a massive impact. It's a terrible cliche to say that your technology makes a difference to people's lives, but I can tell you from the the go-live at Omaha today. Already we've had three Spanish-speaking families expressing their gratitude for being able to use the virtual interpretation services available on the OneView platform. I think everyone who works at OneView is motivated by our mission. It's been an incredibly powerful tool to attract talent and to retain talent, and I think we're very proud of the commitment we've made Our purpose statement really speaks to that. It's available on our website and a copy here in the presentation for those of you who are not familiar with it. And perhaps more importantly, we've engaged with an outside consultant to monitor our progress against the World Economic Forum's standards. This is our second quarter update, which again is also available on our website. But we've also produced, for example, a report looking at our key ESD metrics. We're providing information around our gender balance. our gender pay, our diversity, and we're very proud of the progress we've made on that. We've obviously also addressed our gender diversity on the board with Nishina's appointments, which we're delighted with. We haven't, obviously, as far as the plan is concerned, we don't have a massive footprint on that account, which is why you don't see too much progress in that category, but we're very pleased with the progress we've made and we'll continue to invest in this as we move forward. So turning to the outlook for the second half, as I mentioned, our full-year revenue guidance is on track, notwithstanding a fairly significant disparity between the first half and the second half. The key drivers are around our go-to-market strategy, which is building momentum. The progress we're making with Microsoft is very, very important. As Niall mentioned, there's barely a customer that we're targeting that's not a Microsoft partner in the United States. Virtual malls of care are a reality now for healthcare systems both in the United States and in Australia. We now have the ability to deliver on the long-promised expansion opportunities with existing customers and we have some very exciting conversations going on around the new Android hardware. From a risk point of view, we know hospital budgets are under pressure and we know there's a risk of further worsening of COVID in our key markets. but certainly we feel as though there's an exciting second half coming. In conclusion, we've had new technology leadership for just under two years now with Declan, our Chief Technology Officer, Declan Bright and JP Howe, our Director of Engineering and Operations. They've really transformed the company during the COVID years. I think we've really capitalised on the fact that customers have been pulling back from purchasing. but it's given us an opportunity to really accelerate our security posture, deliver cloud and all whilst utilising a much lower cost structure. So we've got the foundations in place to accelerate new feature development now. We've signed and are working on these important go-to-market partnerships and we see that as a great way to accelerate our growth as we come out of the pandemic. So that's the end of my formal remarks and as always, I'd be delighted to take any questions.

Thank you. If you wish to ask a question via the phone, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. If you wish to ask a question via the webcast, please type your question into the ask a question box. We'll pause briefly to allow questions to enter the queue. Once again, if you wish to ask a question via the phone, please press star 1 on your telephone and wait for your name to be announced. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. It appears we are showing no questions today. I'll hand the conference back to Mr. Fitter for closing remarks.

Thanks, Lexi. It is early on Monday morning, so if anyone feels like asking a question after their coffee, you know where to find us. But thanks again for your time this morning and thanks for your support.