Oneview Healthcare PLC

Thanks, Harmony. Good morning, everyone, or good afternoon if you're here in the United States, or good evening in Dublin. With me is Helena Darcy, our Chief Financial Officer, who's joining us from Dublin. I'm currently in our Chicago office. I'm going to be referring to some slides. I'm conscious some of you may not have access to the slides on the phone, so I'll try and communicate as visually as I can. Firstly, just a legal disclaimer. I just remind everyone that we are a December year-end, so we're presenting our full year results for 2021 today. And all numbers in the presentation are euros, which remains our reporting currency unless otherwise specified. So just a reminder on that front. So let's start with the headline numbers. So financial highlights for 2021. And Helena will obviously talk more to these shortly, but recurring revenue was up 5% to 5.35 million euros. Total revenue was up 37% to 9.73 million, which we think is a very credible set of numbers in what was obviously a year that was very heavily affected by the pandemic, and certainly our ability to grow recurring revenue was limited by a lack of access to hospital sites and just simply the competing priorities as pretty much every health system in the world has been focused on dealing with patient lives, not necessarily with technology investments. Gross margin was 5.31, which was up 12%, which represented a 55% gross margin, which is down 12 points on last year. That was a reflection of a greater hardware mix in this year's revenue number and also some extraordinary items around shipping and freight costs, which I think everyone is familiar were wildly inflated this year. Operating EBITDA was flat at 6.18 million, a loss of 6.18 million, and cash operating expenses a negative of 11.49 million. Our net loss after tax was 8.19, which is a 13% improvement on last year. And perhaps most importantly, we finished with a cash balance of 15.2 million euros, which was up 220% on the same time last year. And I think we'd all agree that the timing of the cap raise in November last year was very fortuitous with hindsight. Just a reminder around the quarterly cash flow trend. As you'll know, those who follow the company closely will know from our last 4C that we had our first net operating cash inflow in the fourth quarter of 2021. We don't want to get overly excited about that. It was obviously a great quarter from receipts from customers, which were very strong at 5.5 million euros, but we would really encourage the market to focus on the rolling four-quarter average which was an average burn of just under a million euros per quarter for the average of last year. And that really is because of the lumpiness around the delivery of hardware. I think it's a better way to look at the business. And we're certainly indicating that based on current market conditions, which are still challenging, we would expect to see a similar rate of burn, an average of around 1 million per quarter for the four quarters of 2022. But certainly we're in A very healthy cash position with $15 million of cash on the balance sheet, which obviously represents nearly four years of cash at those current burn rates. 2021 was a really important year for the company. A lot of operational highlights that really began the year with our partnerships with Samsung and Caregility, which have been very, very impactful, and we'll talk more about how that's affected us as we move through. But the The real transformation has been the move to cloud and the very material investment we made in our security posture through ISO 27001 certification in March and 27701 certification in August. And they're two really important milestones for the company that have really set us up and really enabled us to have a very different level of engagement with security officers at major customers here in the United States. We also really think of the pandemic as a time when it was a great opportunity to double down on existing relationships with our customers. We've done that in a very meaningful way. NYU Langone, who were the first customer to take our cloud product and who very kindly shared a customer testimonial in May of this year, which really speaks to the value proposition of what we're doing. In June, we renewed our longest serving customer in Australia at Epworth, who've extended for another five years, which will bring our relationship with them to be over a decade. We signed our first cloud customer in Australia with Northern Health and were able to deploy very, very effectively and very quickly, which is obviously one of the key attributes of the cloud product. And then in October, in the midst of what was, again, a very challenging time here, we signed a very important deal with Kingman Medical Center here in the United States and delivered on much of the hardware that is really helping to transform the business as we move forward. And as I mentioned earlier, in November, we raised 20 million. In November, we'd raised a million dollars earlier in the year in April, which has obviously set us up for future growth and really helping us to capitalize on our first mover advantage as the first cloud-hosted care experience platform in the world. I want to talk a bit about the connected patient room because this is really the trend that is driving what I describe as a paradigm shift in conversations around bedside technology here in the United States and in Australia. And in this graphic, I want you to focus on the fact that the patient really remains at the center of what we do, always has done for the last nine years since I've been with the company. The thing that's really enabling a change in conversation here is the OneView set top box, which you see on the back of this television here, which effectively is the brain that is bringing together and enabling the bringing together of a whole bunch of disparate systems that typically don't talk to each other. And that ability to use that device, which we've invested an awful lot of time and money in getting that device right, is delivering really interesting conversations around how can we use that device to host other applications through our partner strategy. And what's incredibly important to health systems is they don't want to be dealing with complex hardware. The fact that we can minimize the hardware footprint for them, eliminate points of failure, and host not just the OneView solution, but partner solutions, particularly in the telehealth space, is transforming the conversation we're able to have. And that's best visualized by this slide nine, which talks to the kind of future vision we have for the connected patient room. So when the pandemic hit, the now situation, we had customers who had OneView technology deployed largely on tablets, but also on televisions, but primarily on tablets and all-in-ones, And our first response to the pandemic was asking them simply, what could we do to help? And the universal answer was, look, is there any way you could turn on some sort of video capability for us, whether it be Zoom, Teams, Facebook Messenger, it really didn't matter. Cisco Jabber was another popular choice. And that enabled virtual rounding, virtual visitation, and virtual interpretation, which was particularly important at a time when, obviously, families' visitation was restricted in hospitals. We effectively did most of that work pro bono, which again had a little bit of a negative impact on our gross margin this year, but I think it was really important to help build a relationship with our customers, help them save on PPE, and provide that connectivity to patient rooms at a time when that was really paramount. The second phase of that is what's happening in the middle of this slide, which is where the conversation has now changed. whilst that was a great, in some cases, a sort of Band-Aid-style fix during the early stages of the pandemic, now that institutions have had time to think about their longer-term structural needs, they're thinking much more about using the television in the room and the set-top box behind the television to host not just the OneView platform, but also an array of telehealth partners so that we can now... We know that the TV is always facing the patient, the device is always fixed, It allows us to now bring in virtual patient observation, virtual nursing as a way of taking pressure off nursing. We'll talk more about that shortly, but clearly the latest wave of the pandemic, as bad an impact as it had on patient numbers, the real issue was on absenteeism in nursing and the impact that's had on staff costs. And the future state and the state that we're now beginning to discuss with a number of our customers is how do we then use that camera, that computer vision in the room that's enabled through the OneView set-top box and the telehealth partner to think about augmenting patient observation with AI. And that's very much a future state, but we are having conversations with a number of interesting partners today around what that might look and feel like. And I think that, again, is a way that we can start thinking about taking further burden off nursing staff. So that's the vision of the connected patient room, which is really driving what you'll hear shortly is a very significant growth in our pipeline, both in the United States and Australia. So as I mentioned, the real theme for 2021 was laying the foundation for future success. And I think we've done a really good job of that. I wanted to call out the amazing work that our technology teams have done to deliver the first cloud-hosted care experience platform in the world, which launched on the 30th of March. We've also had a fantastic response from existing customers. So five of our largest customers have already committed to transition from on-premise to cloud. And I think this graphic here gives a very good sense of why that's important to them right now. Clearly, as hospitals are under intense financial pressure, anything they can do to alleviate the burden on their hospital IT resources is going to be incredibly well received. And you can see how that burden of responsibilities changes as we move from on-premise to cloud. So if migrating our five largest customers to cloud was the only outcome, that would have been a fantastic result. But of course, it's been much more impactful than that because it's enabled us to deploy faster, sell faster, and ultimately address new and expanding markets. And I think the Most pronounced example of that is the market opportunity that's opened up in the United States in the regional space where many regional hospitals may not have had the IT maturity to deploy a solution like ours on-prem, but they're very happy to purchase it as a managed service. On the hardware front, we delivered the long-awaited set-top box strategy, which enables us to deliver over both IPTV and coax infrastructure, which is incredibly important. This set-top box has been a couple of years in the making with our partners, but we're incredibly proud of the output. We've also just had that box subjected to external pen testing, which it passed with zero issues, which, again, in the security-conscious world is incredibly important. And then we've also just delivered the first of our GMS certified UL compliant 22-inch tablets, which are currently being deployed at Epworth in Australia and at Kingman Regional here in the United States. And again, that's a very important development for us and is giving us a really strong position on the hardware front. As I mentioned, information security and data privacy have never been more important. They are front of mind. Again, this is a point of differentiation for us in a highly competitive market. And I think the discipline and the transparency that goes around being ISO certified simply makes us a much better organization in so many ways. And very proud of the team in achieving these two awards. And in addition to testing our hardware, we also now have got into the habit of every time we have a material change to our APIs, we are subjecting ourselves to external third-party cybersecurity pen testing as well, which again, we've passed with flying colors. On the product innovation side, there's been a very significant shift in the market as nursing finds itself under so much pressure. A lot of nursing tasks are manual by nature. And for any of you who are unlucky enough to have been in a hospital room recently, you'll know or you'll be familiar with the concept of the whiteboard, which often contains important information about the patient, about their allergies, about their medication. All of that information can be sourced from the electronic medical record. So we've launched two new products this year. The first is the digital door sign, which is placed outside the patient room which gives the care team visual cues before they enter the room as to the condition of the patient, their primary language, dietary restrictions, whatever that may be. Very, very excited about that new technology. And likewise, the notion of transforming what is a very manual whiteboard currently, which during the busy times and the staff shortages is often neglected, being able to automate that and deliver that in the patient room is going to be a huge improvement in nursing efficiency, but it's also giving us an opportunity to go back and upsell both of these two products to existing customers. So very encouraging innovation on that front, as well as patient feedback. And we've done a lot of work around building a very complex notification framework that allows us to survey the patient, trigger it on multiple events, And that product is going live in the first quarter of this year, which is really going to round out our product innovation for the short term. So I'm now going to pass across to Helena, who's going to share the financial information, and then I'll come back and talk about the 2022 outlook. Helena.

Thank you, James. Okay, so turning to the income statement, total revenue increased year on year by 37%. When we break this down, we see an increase in recurring revenue of just 5%. This is driven by an increase in live beds. This is lower than targeted due to COVID-19 preventing access to hospital sites and delaying installations and go-lives. We do expect that the installation rate will normalize in 2022 as we come out of the pandemic. The total revenue increase is also driven by a non-recurring revenue increase of 120% due to increased hardware sales. In particular, our new OEM hardware, the 22-inch tablets and the set-top boxes that James talked about a few minutes ago. This higher mix of hardware sales has resulted in a lower gross profit margin percentage for the year, 55% compared to 67% in the prior year. However, in absolute Euro terms, the gross margin is 12% higher than last year. Margins were also impacted by higher shipping costs due to COVID. Operating expenses increased by 5%, stripping out restructuring expenses incurred last year, a sales and marketing headcount increased, and marketing spend increased to exploit our first mover advantage of the OneView cloud product. These increased revenues and margins resulted in a net loss for the year of 8.2 million, down from 9.5 million in the prior year. Moving now to the balance sheet. The company had cash balances of 15.2 million at the end of December. This reflects the additional equity raised of 21 million Australian dollars a year or 13.4 million euro before costs. Trade and other receivables are lower due to much higher cash collections in the year compared to the prior year. Payables are higher due to the deferral of Irish payroll tax liabilities onto the Irish Revenue Commissioner's COVID debt warehousing interest-free facility. Now to the cash flow statement. Looking at cash flows, The cash balance at the end of the year of 15.2 million reflects the capital raises in 2021 and also a significant reduction in operating cash burn. The company had a net operating cash inflow for the first time in its history in the last quarter of 2021 and is trending towards lower quarterly cash burns in this year. Cash burn for 2021 from operating activities has reduced year on year. Total operating cash outflows of 4 million were 48% lower than the 7.8 million figure for the prior year. This is due to higher receipts from customers, lower cash costs for the year, including lower payroll cash payments as the company received various COVID-related grants in various jurisdictions, including a second fully forgiven PPP loan in the US and also some Australian JobKeeper grants. The deferral of Irish payroll taxes I mentioned earlier has also contributed to the lower cash burn in 2021. James, I'll hand back to you.

Thanks very much, Leanne. So in terms of the 2022 outlook, just a quick reminder, I think this graphic gives a pretty powerful visual of what 2021 looked like. And I think we're all pretty clear as to why we want to put 2021 behind us. But important to understand that Just as we thought things were starting to improve in the third quarter of last year, we obviously had the latest wave, which has really distracted hospital management and forced a reprioritization of patient care over just about everything else, which is hardly surprising. Nevertheless, it's been really interesting to see the trends in our commercial pipeline metrics. So on the chart on the left, we're showing inbound quarterly RFIs or RFPs. So these are formal processes that were put out to tender over the last two years. The light blue indicate 2020. So you can see we had 500 in the second quarter and 800 in the third quarter. This is beds by RFP, I should stress. And then a very fallow period, nothing in the fourth quarter of last year and only 372 in the first quarter of 2021. But you can see that there's been a dramatic increase in activity since then. And I really attribute this to the fact that, as I mentioned before, during the pandemic, everyone was really looking at short-term Band-Aid-style fixes to their care experience needs. And I think now they've come out the other side and they're under intense pressure to invest in more medium-term structural investments. And we're seeing a dramatic increase, as you can see here. I'd point out that for the first two months of this year, we're up 10x on where we were in the first quarter of last year, and we still have a month to go. We know we've already been told to expect another RFP for 800 beds from an Australian customer any day. So that's a really powerful trend. And on the right-hand side, you can see the cumulative impact of that, that we now have over 12,000 beds where we are awaiting decisions And whilst it might seem shocking to some of you that we'd still be awaiting a decision from an RFP that was issued in the second quarter of 2020, that is the reality. And in fact, the one that we received in the third quarter of 2020 have just reengaged with us this week. So I think these health systems are coming up for air. We're seeing a flurry of activity And I'd say that the thing that's most impactful is that the quality of the conversations we're having are at a very different level, a much more strategic level than the conversations we're having pre-pandemic. And I'd also emphasize that these 12,000 beds that are in formal process represent just under two-thirds of our total sales pipeline, which is currently standing at 18,927 beds. Live beds, obviously a disappointing year in terms of converting live beds, which were up only 3% year over year to 9,487. That includes the 300 beds that were lost at Cairns, which still remains the only hospital we've lost to renewal in our history. And we have 2,355 contracted beds that are still yet to be installed. And we're obviously hoping that as we put this pandemic behind us, that we can get back to business and deliver those beds in 2022. In terms of market trends, I just want to caution that conditions do remain challenging. That should come as no surprise to anyone. Estimated that more than a third of hospitals ended 2021 with negative margins and a system-wide loss of $54 billion, despite the very strong fiscal response from the federal government here, which we'll have a look at in a second. I think the thing that is really impacting conversations more than anything is the impact of nursing costs. Nursing costs in general for employed staff are running obviously well ahead of inflation, but for contract staff, wage inflation has really gone parabolic, and short-term contract nursing can pretty much name their own price. The impact that's having is that nursing leadership and hospital leadership in general are really thinking about, you know, what can they do to mitigate the rising labour costs, and of course, is one of the key answers to that, and this automation and transition to hybrid care models is what is driving this very pronounced increase in inbound commercial activity that we're enjoying currently. As I mentioned, lots of headlines about how difficult the operating conditions are in the United States, but lest we forget, the federal government has handled over $178 billion in support, and we're just thankful for the Kaiser Foundation here for the the breakdown of those various programs and the recipients of them. But I look at, you know, I get asked a lot about the health of hospital systems finances. And we know a couple of things. I kind of use HCA share price as a pretty good proxy for the general health of the health systems in the United States. And their share price was $150 pre-pandemic. It's $240 today. So I think, and trading very close to five-year highs. So I think the system's in reasonable shape. We're also hearing from a number of customers that one of the surprises was that because 2021 was so difficult, there's a lot of unused IT budget that has been set aside to be deployed in 2022. So we don't want to get overly optimistic. We're still expecting things to be fairly challenging today. And again, this global nursing shortage was well documented pre-pandemic. It's obviously a lot worse now than it was then because of early retirement and disillusionment with the industry. But as noted here, the key question is, how can technology be leveraged to decrease the strain on nursing and other healthcare professionals? We really feel like we have a platform that can really deliver to that chronic problem. So in summary, in terms of the current market conditions and outlook, there has been a paradigm shift in the perceptions of the value of bedside technology. We see that in the conversations we're enjoying today. The pipeline, I think, speaks to that. The initial technology response, as I mentioned, was sporadic and unstructured, but we're now enjoying conversations with major health systems, both in the United States and Australia, that are very different and contemplating different ways in which bedside technology can be to be used to augment their physical nursing needs. As I mentioned, cancellation of a number of IT projects in 2021 means that there are unused funds that are being reprioritized in 2022. We feel very strongly that we have moved from the nice-to-have category to the must-have category, and that's, again, I think reflected in the pipeline. So we're very comfortable with revenue guidance of $12.5 million to $14 million for 2022. The midpoint of that would be 37% growth. And I think that's based on expectations that conditions remain fairly challenging. And finally, just a quick update on Regis. We have instructions from the court to go back with final statements next week. So as I think we've announced to the market before, there's been no resolution via mediation, and we continue to pursue the matters through the court. So that concludes my formal remarks, but I'd be delighted to take any questions.

Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. We'll now pause a moment for any questions to register. Thank you. Your first question comes from Tom Godfrey from MST. Please go ahead.

Good morning, James. Thanks for taking my questions. Can you hear me okay?

I can, Tom, yeah. Good morning.

I was just going to start with a question just around the guidance. I know it's early days and there's obviously a lot of uncertainty in the market at the moment, but just do you have sort of a broad split in terms of recurring versus non-recurring for the guidance range for CY22?

No, we've never shared guidance on that basis, but I think it's fair to say that we're not expecting to have as challenging a year on recurring revenue as we had in 2021. Obviously, market conditions have never been more difficult. So we are already seeing signs that things are opening up a little, but we haven't provided a breakdown of that.

Got it, okay. Understood. And then maybe just a follow-up question just on the Kingman deal. Obviously, there's a pretty significant sort of mid-market regional hospital market opportunity in the US, and this is... obviously a very important deal for you guys with regards to sort of the cloud product and into that market segment. Can you maybe just sort of speak to the experience so far, how the implementation is going and what this sort of means as a true sort of cloud-based plug and play product for these sort of smaller hospital systems?

Yeah, good question. It's going well. It is delayed slightly by the pandemic. So we had hoped to go live this month, but I think A first, we've just delivered the first version of the software to their test environment. Hardware is sort of being received as we speak. So we expect that's going to go live. First rooms will go live late March, early April. So still by historical standards in terms of speed to deploy, you know, lightning speed to compare to what we're used to in on-premise. But it is a really important, it's important for a number of reasons. It's a new electronic medical record integration. They're a Meditech customer. It's going to be our first Meditech integration in the United States. Meditech have a very strong position in the market. They represent around 15% of the market here, but they tend to be focused on the regional market. So it is a really important test case for us. It's going very well. The Kingman folks are very pleased with progress to date, and I think it is going to open up interesting new conversations in that super regional space.

Great. Thanks, James. And maybe just a final one from me, just around sort of now that you've sort of got the, I suppose, the enhanced hardware suite and the opportunity that gives you to go back to a lot of your installed base in the US and look at beds that previously couldn't have been brought onto the platform, just how those conversations are going. Is it really just the market and the macro dynamics that you've spoken to that might be holding those back, or how are those sort of conversions looking?

They're going really well, and I think the set-top box, as I said, it's been externally validated. It's also been internally validated by a number of customers. So we've got just over 6,500 customers beds that are expansion opportunities with existing US customers, so opportunities to upsell within their enterprises. And I think the other thing that the pandemic has done is really reinforce that need for a standardized level of care or quality of care across the enterprise. So we are really enthused about the conversations we're having around expansion opportunities. And I think as the As the dust settles from the last, hopefully last, or I should say the most recent wave of the pandemic, we feel like we're in a really good space for those conversations.

Great. Thanks for taking my questions and good luck for calendar 22. Thanks, Tom. Appreciate it.

Thank you. Once again, if you'd wish to ask a question, please press star one on your telephone. We'll pause again for any further questions to register. Thank you. There are no further phone questions at this time, and I hand the conference back to your speakers to address any webcast questions.

Thanks. Helena, is there anything in the queue?

I have no webcast questions at this time.

Okay, great. Well, listen, I know a lot going on in the world that's probably distracting people from calls like this, but as always, please feel free to reach out to us directly on email. If you've got any follow-up questions, we'd be delighted to take them. and appreciate your attendance.