Oneview Healthcare PLC

Thank you for standing by and welcome to the 1V Healthcare Half Year 2024 Results Announcement. All participants are on a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, 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 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 Fisher, CEO. Please go ahead.

Thanks, Ashley, and good morning, everyone. Good afternoon to those of you in the United States, and good evening to those joining from Ireland. Welcome to the half-year 2024 results presentation. Let me start by just the usual reminder, the legal disclaimer that's in the presentation. I just want to remind everyone that we are a calendar year-end reporting entity. So we are reporting first-half results for the six months ended June 2024, and our reporting currency is Euros, not Australian dollars. Joining me today are three of the leadership team, JP Howell, our Chief Operating Officer, Niall O'Neill, our Chief Product and Strategy Officer, and Helena Darcy, our CFO. And it would be remiss of me not to make a special mention of Helena. This will be Helena's last results presentation For the company, she's stepping down at the end of September after a fabulous six-year career. One year of the last four years as CFO and just on behalf of the board and the leadership team, I wanted to publicly recognise the fabulous job Helene has done and wish her every success as she embarks on a career break at the end of September and wish her every success in the future. So just a reminder of our vision to power personalized exemplary care experiences and for reasons I think most of you as shareholders know that has never been more relevant in today's world and we'll talk a lot more about that as we work through the presentation. For some of you who might be a little less familiar with the company, just a brief company overview here. We are now contracted with over 100 hospitals across 24 health systems on four different continents using the OneView platform. We have a very distinguished group of customers, including some of the most discerning healthcare systems in the United States. We count three of the top 20 hospitals in the US as clients. We are enabling the connected patient room of the future with cloud-based modular SaaS products. We've made a really significant investment in cloud, which we'll talk about shortly. Our philosophy is to land and expand in large enterprise healthcare systems. We place a huge emphasis on scalability, those that have a significant long-term contract value potential. Typically, our contracts are three to five-year contracts. We're very proud of our very strong retention rate and customer lifetime value. Some of our customers now have enjoyed over a decade with us. Others are rapidly approaching on that date. But it's great to see the longevity in the portfolio as we continue to tackle the US market and the Australian market. As I think most of you know, the strategic partnership with Baxter International and New York Stock Exchange listed a partner to sell and service OneView in their customer base in the US market. We're obviously fighting debt on that today, but lastly, we have that progressing. And we continue to see this growing need for inpatient virtual care and bedside technology, which has really entered what I would describe as the mainstream adoption phase, according to the GALTA hype cycle. As you can see there, Marle and JP and others will be sharing some views on different parts of the business. But I wanted to start with market trends. I think the workforce challenges are pretty well documented at this stage. Surveys showing up 85% of US nurses are planning to leave their current roles and 43% planning to leave the profession. Here in the United States, we have a projected national shortfall of over 350,000 nurses in 2026. So this is the problem of the day that is creating the financial challenges for hospitals. U.S. hospitals' labor costs increased by more than $42 billion between 2021 and 2023. Now we present over 60% of all hospital expenses. So they need to find a different way to embrace technology and use that to take pressure off headcount and move to this new virtual model of care. We are the platform that enables that. Artificial intelligence, obviously I don't need to tell you on this call, is creating new opportunities. We are very invested in understanding what those opportunities are. You're going to hear from Niall today on the work that he's been doing with our customers to understand what their needs are, how the regulatory landscape is developing and what that means for the competitive landscape for the company. We've seen some very significant market and vendor consolidation, both within the healthcare systems, with major healthcare systems continuing to consolidate in the United States. We know that in Australia, the private hospital market is going through a dire time. So we're seeing some serious indigestion in the Australian procurement market. But in the United States, the consolidation is creating new opportunities for us. We're also seeing a vendor consolidation. Two of our four competitors have been acquired this year, which I think is a really interesting data point that I think speaks to the level of interest in our space. So let's get into the operational highlights. So first half of the year, we've added four major new logos, which I'll detail in a second, three are on the enterprise healthcare systems. Importantly, our contracted bed number is up 16% year-to-date. You might recall at the time of the last capital raise, we had said that we felt that virtual care alone, the virtualisation of care, was going to drive somewhere between 20% and 25% annual demand for our product, and we've delivered on that in the first half of this year with 16% growth. If we just convert the beds that we're currently in redline, contract negotiation will hit that 25% growth rate, if nothing else, from the pipeline end. So we're enjoying really good success at the contract level, where we're suffering a few challenges just around our project delays, and we'll talk about those in a second. The Baxter partnership is delivering unparalleled access for us in the United States. We couldn't be happier with how that partnership is developing, and I think that feeling is mutual. If you were to speak to anyone at Baxter, I think there is a great collaboration on both sides of the partnership. To give you a sense of what that looks like, even though we're in the dog-based summer in the United States, in the last week, this week and last week, we are meeting with Baxter at five major health systems spanning Florida, Tennessee, Kentucky and two in California where we are jointly presenting to very significant Baxter customers. So given we're running into a later day, I think that's a pretty interesting sign. The nursing workforce challenges have really elevated the connected patient room from nice-to-have to must-have, and we'll look a bit more about how that's actually playing out. We are in negotiations for MySoMobile with a major US health system and a number of other smaller systems, so we're very pleased with how that market adoption has gone. Niall's going to talk a bit more about our AI strategy. On the negative side, disappointing side, we have seen some significant revenue delays in the first half of this year. As I alluded to earlier, we are seeing a lot of consolidation amongst health systems. Our largest contracted customer in the United States is about a third of the way through an enterprise-wide deployment of our solution. And in December last year, they acquired 16 hospital systems. They acquired a 14 hospital system. And as a result, they have been working through the synergies of that acquisition. and have paused project spend on all capital spending projects for the first half of this year. We expect that's about to resume any day, but it's obviously had a meaningful impact on our first half revenues, as have the ongoing construction delays at the Children's Hospital of Ireland, which we had expected to deliver in the first half of this year. So both of these are timing related. They're incredibly frustrating. It's the nature of the industry we work in. but it does have a material impact on the numbers in the short term. So in terms of new logos, the previously announced Anova, Mercy, and Nicholas Children's, and the next most recent addition is Sharp Healthcare in San Diego, a very impressive healthcare system in the West Coast of the United States. The top two, Anova and Mercy, are direct sales from one of you, The bottom two are the first two sales via the BASA channel. Both of them are for the digital door sign initially, but in keeping with our land and expense strategy, we are very optimistic that that will lead to a broader partnership with those two organisations going forward. So some of the financial highlights. As I mentioned, there's been some impact of the postponements on our recurring revenue. So you'll see our recurring revenue and total revenue up a fairly modest 8% and 7% respectively. Despite that, our gross margins are up 20% and our absolute gross margin is up 73% to an all-time high since we've been a public company. So there's encouraging signs on that front. The office number is up 25% which is in keeping with the strategy we set ourselves at the time of the capital raise last year. You will recall we set about an effort to expand our resources in order to scale into the Baxter opportunity. Baxter have been through similar programs before with other vendors and made it very clear to us that they were going to deliver a step change in our business and we needed to be ready for that. We are very comfortable with the investment we've made, the people we've brought on board, but obviously there's a tiny lag between those people joining and being trained and the impact of the Baxter pipeline, which we know is tight. This is just a graphic representation on slide 12 of the gross margin. As you can see, it's trending up, and this is a testament to the fact that as we continue get heart out of the business, we expect to see these positive trends in gross margin continues. This was the genesis for our investment in MyStay Mobile, and we'd be pleased with the output for the product, which Niall will talk to a little further. So I just wanted to remind us where we are on the cloud journey. We transitioned to cloud in full in 2020. We have been supporting two versions of the product since that time. the Windows product, which we call our legacy Gen 2 product, and our current Android Care Experience platform. We have now officially sunsetted all of the Windows devices, so we have 100% of our customers running on Android. That obviously removes complexity, and particularly around regression testing. We're currently delivering between five and six software releases a year, so being able to remove one of those operating systems from that regression testing has been extremely helpful. 60% of our customers are now deployed on the cloud platform, and 100% of new customer sales are deploying to the cloud platform, which obviously speaks to the investment we made. Corp Lieutenant was our speed to value, and this is a small example of our latest enterprise customer, Mercy Health. We signed the first contract with Mercy for the Love Women's and Children's Centre in Oklahoma on the 2nd of February. and went live eight weeks later on the April 7th. So that, by healthcare standards, is miraculous in terms of a speed from contract to deploy and something we're very proud of. It's a great example, and JP's written a blog post on this deployment, which I encourage you to have a read of on our website. We're currently now expanding to Ardmore, another site in Oklahoma, across another 258 beds, and that go-live is scheduled at the end of next month. So that's clearly driving the speed to value that we were aspiring to. Similarly, we have a very large project at Innova where we contracted to deliver over 1,900 beds. During the second quarter, we completed the customer scoping workshops. This is a very complex deployment because Innova will be the first customer that is taking the entire portfolio of our cloud care experience platform. They are taking our digital whiteboard and our digital door signs. Again, a great example of upsell, which Niall's going to speak to later in the presentation. And we currently have three other site deployments currently in the planning phase with ANOVA, so we expect to see a further acceleration of this project in the second half and similar with Mercy. Just a reminder of how we're delivering value. Obviously, patient care and experience was the genesis of the business. It's what we began. Lots of different ways that we're driving value. One of the most important is through our language portfolio. We currently support 28 different languages. This is incredibly important in non-English speaking population where studies are showing that access to interpret services during the impact day that can reduce, not just length of stay, but reduce 30-day readmission rates materially. We've spoken in the past about the impact meal ordering has had. We published a very impressive white paper with Nebraska Children's in the first half of this year, showing that they went from zero to 95% adoption of digital meal ordering, resulting in an 87% reduction in wasted meals and a 75% reduction in employee time due to self-service meal ordering. And this, again, we think is one of the killer applications for Marksday Mobile. And our vision for the future is that all patients will be ordering their meals on their own device. Perhaps most importantly is the impact we're having on care team experience through service requests. This is alleviating staff burden by our own user group's estimations. Every time the patient is using a service request on the OneView platform, it's eliminating between two and 12 minutes of nurse time per service request. So at a time when nursing remains under extreme pressure, this is extremely powerful validation of the platform. And none of this would be possible without the Data Analytics platform. So we have made a very significant investment and our customers tell us we have one of the leading platforms in our space. It is a cloud-hosted data lake which allows us to capture all of the patient activity, share those insights both via executive reports and increasingly through operational dashboards that allow for early intervention. If we have a dissatisfied patient in the room, the data is allowing the hospital to address that rather than allowing it to fester in a poor patient experience course. So turning to the bed growth numbers that I alluded to earlier, as I mentioned, we're thrilled with the 16% growth in contracted beds in the first half. You'll see it's a significant jump up from where we were in December 2023. We have 1,556 beds in redline contract negotiation with three health systems currently. When we deliver those, that will get us to the 25% growth rate that we envisaged. And this is prior to any meaningful contribution from the back-to-part shift. In addition, we currently have 11,100 beds that are in RFP or proposal. Last week, we completed our first joint RFP bid with Baxter, which was a seamless process and has been a joy for both sides to work on. And we're very excited about that specific opportunity. But I think you can see that the pipeline is represented here. Informal RFPs is powerful. The qualified pipeline is much more significant. This is the new chart we're sharing for the first time, which is the burn-up chart for our installation. I think there's been some confusion in the analyst community around how long it takes to get from a contracted bed to a live bed. Typically, we would expect that timeframe to be three to six months, but for the reasons we talked about earlier around consolidation of the health system, construction delays, many of these things are beyond our control. These are not unique to OneView. These are the challenges of selling into large-scale enterprise health systems. But what we've attempted to do here is sit down with our customers and our project teams and give you the best estimate of when we expect these beds to be deployed. You can see we have layered in on the blue line those beds that are in contracting, but this chart does not take account of any opportunities that are in the sales pipeline. So this is a dynamic chart. We would like to think it is a conservative assumption on go-lives. But obviously, as these numbers change, we'll be updating them going forward on a half yearly basis. I hope you find that helpful. So turning to the back of the partnership, just a quick reminder of the timeline. It was just over a year ago in the second quarter of 2023 when we were selected after a very competitive process as FACTSDA's partner of choice. We signed the Value Added Resale Agreement in the third quarter of 2023. And Baxter had said at the time, look, we want to allow you time to get ready for what is going to be a step change in your business. They had said since the day we first met that they believed they would add between 3,000 and 5,000 bids per annum from their customer base. And we have absolute confidence in that number. I think it's fair to say that there are a number of opportunities in the pipeline that could deliver that number in and of themselves individually. We have a very joined-up collaborative sales process. Our sales leadership and Baxter sales leadership meets on a regular basis to run through the 30 most prominent opportunities in their pipeline. And as of today, Baxter have over 100 opportunities in their internal pipeline, which I think speaks to the impact that they're having in creating value for us going forward. So just a reminder of... where the Baxter team is focused. So Baxter, as I think we've spoken about in the past, has a number of businesses. We roll up under their Connected Care Division. The Connected Care Division is tasked with selling two major products that they sell. One is their NurseCall system and the other is their unified care communication platform called Vault. That part of the business for Baxter represents about 25-30% of the market for NurseCall in the United States. So it's around 300,000 beds, 250,000, 300,000 beds. It's a huge opportunity for Baxter, obviously, to upsell the OneView care experience platform to existing customers, but also a cross-standing opportunity for Baxter to non-Baxter customers to open the door for them. Obviously, a huge amount of synergy in terms of the work we're doing, taking pressure off the nurse call system is clearly complementary to their family products. We've now trained over 100 Baxter salespeople who are working tirelessly to support our own sales organisation and our sales organisation is working aggressively to make sure that the Baxter team have the resources and the subject matter experts that they need in order to be successful. So whilst we haven't landed the major enterprise customer that we're all aspiring to, Our confidence level of that happening has never been higher. We couldn't be more pleased with the way this relationship is building. So virtual care is the other key driver for the business, and I think this is something we've talked about in the past. I'm going to try and drill into this a little bit further. The growth rate of virtual nursing across the United States is pretty pronounced. growing at somewhere between 30% and 40% per annum. You will recall that we had chosen to set up a virtual care API in the view that we want to be vendor agnostic. We want to give our customers the opportunity to choose their telehealth partner of choice. We think that's incredibly important, and it has been proven. I think our strategy has been highly successful. We could have chosen to build this capability ourselves, but the telehealth space is very competitive. I think you can see that in the share prices of companies like AMLO and Teladoc. So I think we made a very wise decision not to invest engineering dollars in that, but to create the conduit that allows us to deliver virtual care. I'm going to give you a sense of what that looks like. So on the left is a typical patient room, one of our enterprise customers. You can see the OneView TV on the left. You can see the telehealth provider's TV on the top right. You can see the telehealth camera is the white box to the left of that TV and the manual whiteboard which is still commonplace in just about every hospital room in the United States and Australia. It's a very cluttered and complex deployment as you can see. It's not scalable. That camera is very expensive. It requires its own compute device. So we now have a compute device for the OneView platform and a compute device for the telehealth provider. On the right-hand side, you can see how we're simplifying that by delivering simply one TB. We're handling the HDMI switching over the air. When we get a message from the telehealth provider that they want to take control of the device, we pass control to them. The camera you see there is a very sophisticated camera. It has both a 5x zoom and a 40x zoom. for clinical care. It comes with a very elaborate audio array. There are much simpler cameras on the market. This is one of the vendors we work with, but many vendors have different solutions, but this is one that a number of our customers have chosen to deploy. This tries to get eyes and ears in every room that is driving the business at BJC, at Inova, and at Mercy Health. That is what we see as underpinning this sustainable 25% growth in our business going forward. So Morrissey Mobile, as you know, we have been piloting Morrissey Mobile in the Long Island Community Hospital for NYU Langone. It's been a very instructing experience for us, and we are very fortunate that NYU has now deployed the OneView platform across every room in their enterprise, and they have the financial resources to deploy hardware in every room, they see hardware in every room as a competitive differentiation. So whilst they have successfully piloted the mobile solution, they very much see it as an adjunct or an add-on to their existing products. So they are going to be deploying tablets and TVs in every room on the Long Island Community Hospital. but we're going to be offering MyStay Mobile as an alternative modality, particularly for Gen Z and younger patients who obviously live on their mobile phone. So we've not yet got to the point where we have a customer that is going to go MyStay Mobile only, but almost every conversation we're in currently, both directly and with the Vaxxer pipeline, including MyStay Mobile as an additional modality. And we do have one enterprise customer that is considering a MyStay mobile only strategy, which we hope to be able to update the market on the second half. So very clear to the investment. We see this as the future. It's the old adage that, you know, we're still looking for that pioneer. But we do think that once this takes on, we're going to see fairly significant adoption fairly quickly. Just wanted to talk to people and culture because I think it's incredibly powerful at OneU. And I think this really speaks to the mission of our company. First of all, employee sentiment survey recently completed. 91% of employees stated that they feel highly valued. That's something we're incredibly proud of. We run a very comprehensive onboarding and learning and development program. This is complex work. It does require time to invest and train our employees, which is why we're comfortable with the investment we've made in these people. The fact you have an employee turnover ratio of less than 5% in the first half, I think, speaks volumes. We are very invested as part of our AI investment in upskilling our existing employees. We know there's a massive shortage of AI talent in the market. So the commitment we've made is that we want all employees, first of all, to complete the Responsible AI Awareness Program. And secondly, we've asked or tasked all employees with setting personal AI-specific development goals this quarter. And we think that's going to be an investment that's going to pay back in spades and Niall will talk, and JP will talk more about that shortly. We've also been investing in new leadership. So Nikki Fetterman, who's been with us for three years, has just been recently promoted in February to VP of Account Management and Customer Success. This is an absolutely critical part of the business. As I alluded to earlier, it is so hard to be successful in enterprise healthcare systems in the United States. It takes an eternity to win the business, but the great thing is Once you've run the business, you typically build decades-long partnerships. And Nikki's team is the team that is mandated with managing those relationships, making sure customers are driving value from the solution. Nikki is the owner of our value framework and has done an amazing job making sure that we now have the position where major customers are scaling us across every bit in their enterprise. Dan Holberson joined us in June really as a response to the somewhat overwhelming inbound flow of opportunity we have from Baxter. So Dan brings over 20 years experience in healthcare support in the United States. He has joined as the VP of Sales in North America to really work with Aaron Box. Aaron is our VP of Strategy and Innovation who has been driving so much of the recent activity. But Dan is has made an immediate impact. He's only with us for three months, but I think he's going to really help solidify the sales success with Baxter. And as I mentioned, Helena is stepping down at the end of September. We went to market and went through a fairly exhaustive search and I'm thrilled, as we mentioned, the market last week to have appointed Dara Lyons as our Chief Financial Officer. Dara has got an extremely impressive background as a Chief Financial Officer, but also in recent times he has been working as a CEO for Mellon Corporate, a publicly traded company in the UK, which has been an investor in the health and life sciences business for the last decade. And for the last five years, Dara has been the CEO of that business. So he brings not just an exemplary career in finance, but a really interesting perspective around a strategy and value drivers in Health and Life Sciences, which is obviously going to be highly relevant for the work we're doing. So thrilled to have Dara join, and I would appreciate your support. Dara has been an executive and non-executive board member of both Malin and a number of their investing companies, and we have nominated Dara to join the Board of OneView Healthcare, and we will be asking for your support in that appointment at the Annual General Meeting in October. We just shared a few quotes here, which I think speak to the impact of the work we're doing, which I think really allows us to have this fabulous staff retention. I'm just going to read one of them for you. The mission really resonates with me, delivering technology to patients at such a vulnerable time is empowering. I love the question about the workplace and the fact that people are so helpful and friendly across the company. I think that's a really solid endorsement of the work we're doing. So with that, let me pass it across to Helena for her final run-through of the first half financial results.

Thank you, James. That slide there shows our capital structure. Our market cap, based on the latest share price, is AU$277 million. So turning now to our income statement. Recurring revenue was up by 8% compared to the first half of last year. This is due to a combination of, firstly, the increase in live bets, And secondly, higher average revenues per bed per day. The sunsetting of Gen 2 has delivered higher Gen 3 revenues, and it should be noted that all of our customers are now on Gen 3. Higher revenues have also been derived from CPI increases on contracts which provide for this. And total revenue for the half year was $4.7 million, up 7% on the first half of last year. We are expecting material increase in revenue growth in the second half of the year as projects current in installation will go live. Large postponed expansion that James referred to earlier will recommence in September and installation work will commence on new logos that we signed earlier in the year. The gross margin has increased by 8 percentage points and this is driven by a higher mix of software revenue. Operating expenses increased by 25%. And this reflects the additional hires made to ensure that the company is adequately resourced to support upcoming Baxter implementations. And we have indicated this in the $22.8 million Australian equity raise that we carried out in the summer of last year. The operating EBITDA loss for the year is $0.9 million higher than last year, and the loss after tax increased by $1 million to $5.5 million. Moving to the balance sheets. The cash balance at the 30th of June was 6 million, reflecting the equity rate of last year. The capitalisation of MyStay mobile development costs is now complete as the product has moved out of development and has been actively marketed. Moving to the cash flow statement. The group had 6 million in the bank at the 30th of June. Total operating cash flows were 5.2 million euro, 1.8 million higher than the prior year corresponding period. This is primarily due to the increase in headcount costs as we ramp up to fulfil Baxter resourcing. And I would highlight that the majority of the company's cash receipts in respect of its annual customer renewals are receivable in the second half of the calendar year. A phased payment arrangement was formally agreed with the Irish Revenue Commissioners for the €2.5 million COVID-related debt warehouse payroll tax liabilities. An initial 10% down payment of €248,000 was made in April of this year, and the remaining balance will be repaid in 60 equal instalments over a five-year period with a 0% interest rate. And that concludes the financial results part of the presentation, so I hand back to you now, James.