Global Health (ASX:GLH) is at its best financial position since listing after achieving its fourth consecutive year of net profit after tax in excess of $1 million.
The company entered the 2017 calendar year with cash and net receivables of $5.1 million, placing it in a sustainable position to grow its share in Australia’s digital healthcare market.
Global Health’s mission is to transform the patient journey through software applications that connect clinicians and consumers.
It achieves this through its software products, which currently service over 1.5 million active patients every year.
Global Health is well positioned in Australia’s healthcare information technology market, which currently worth $1.2 billion per annum, and is predicted to nearly double to $2.2 billion per annum by 2020.
Background
Global Health is a provider of digital health solutions that address the needs of administrators, funders, clinicians and consumers across the healthcare industry.
Recently celebrating its 30 year anniversary, the company is one of Australia’s longest established and most experienced developers of software applications for the healthcare industry.
Global Health’s core software products include:
- MasterCare: An Electronic Medical Record designed for multidisciplinary teams, specialists and allied health.
- PrimaryClinic: Practice Management and Clinical Software for GPs and specialists.
- ReferralNet: A secure message delivery platform for the exchange of confidential clinical and patient information between healthcare providers.
- LifeCard: A Personal Health Record for consumers. Store health information securely and allowing access at anytime, anywhere.
- HotHealth: An easy to use community engagement website and phone app that allows healthcare businesses to engage with providers and patients.
Healthy financial position
Global Health is currently at its best financial position since listing on the ASX and is cash flow positive with no net debt.
The last reported financial results were for the 6 months ending December 31, 2016 and featured:
- Revenue up 183% to $7.5 million.
- Cash at bank up over 300% to $4.9 million.
- Fourth consecutive year of net profit after tax in excess of $1 million.
- Net profit up 350% to $3.6 million.
- Earnings per share up to $0.1118 from $0.0107.
Furthermore, dividends of $0.02 per share were paid in FY17.
A growing industry
The global healthcare IT market is forecast to have grown from $US40 billion in 2012 to $US57 billion in 2017 - driven largely by an ageing population.
The Asian digital health market is expected to grow 27.6% compounded annually between 2016 and 2022.
The Australian healthcare IT market is worth $1.2 billion annually, and is predicted to grow to $2.2 billion per year by 2020.
The current challenges for health systems include:
- Rising chronic diseases as a result of poor diets and negative lifestyle choices.
- Treatment is through coordinated care, not single episodes in hospitals.
- Currently managed in multiple disparate silos.
- Massive rise in chronic disease and treatment costs across Asia.
Global Health aims to take advantage of the opportunity for technology to act as a solution as:
- Patients have smart phones ready to use.
- Diagnostic tools for remote monitoring are increasingly available.
- Artificial Intelligence will recommend treatments.
- Patient engagement will improve productivity and population outcomes.
- An increasingly affluent Asian market seek solutions for chronic diseases.
Patient engagement the key to success
Global Health sees patient engagement as the key to success in the healthcare industry.
Clinical studies show active and engaged patients achieve better clinical outcomes.
Global Health’s consumer services are built to maximise community/patient engagement in their healthcare and wellbeing.
Looking forward
The company’s outlook is positive with continuing revenue growth forecast for its underlying business and high single digit earnings per share growth.
It also expects its new consumer business contribution of $8-12 million annually in revenue over the next 5 years.
Global Health’s focus is on sustainable, profitable growth through:
- Considered investments in consumer health services particularly focused on connectivity, community engagement and consumer empowerment.
- Increased investments in local and neighbouring market development.
- Accelerated investment in executing the ‘mobile-first’ upgrade of its portfolio.
- Ensuring its clients continue to maintain the quality and efficiencies of their healthcare services by fully utilising Global Health’s growing portfolio services and products.
The company has a clear plan for investments and new product launches going forward:
- FY18: Launch HotHealth digital engagement platform and ramp up secure messaging;
- FY19: Launch new patient engagement platform; and
- FY20: Accelerate expansion into Asian market.
Analysis
Global Health offers investors leverage into a growing e-health industry as well as its own expertise in building software across the health sector.
The time is right to invest with a number of greenfield healthcare opportunities developing across Asia.
A large opportunity exists to improve chronic care outcomes in Asia, where governments and private health insurers are increasingly focused on chronic care populations.
For a company with an enterprise value of circa $12 million coupled with the fact that Global Health is cash flow positive with no net debt, makes it a rarity on the ASX.
Global Health is well placed to continue its earnings growth from its existing products and this will be enhanced as it rolls out its consumer products to the Australian market.
Furthermore, the company is well positioned to deliver further revenue growth from its measured expansion into the fast-growing Asian healthcare markets.
The company’s board and management are well aligned with its future as they collectively own 58.8% of issued shares.
Mathew Cherian, chief executive officer, brings a background in software development has the necessary skills and experience to take the company’s products to the next stage of growth, which includes:
- ReferralNet: Establish a focused connectivity business to grow ReferralNet’s reach and revenue.
- LifeCard: Launch LifeCard Personal Health Record that enables healthcare consumers to proactively manage their health and wellness (positive feedback and good take-up since November 2016 in early adopter sites).
- HotHealth: Launch the HotHealth digital engagement platform for healthcare providers to engage online with their healthcare consumers.
- MasterCare: Accelerate the release of the mobile-first, next generation of applications for hospitals, community health, and medical and allied health service providers.
- Overall: Develop new overseas markets with a particular focus on Asia.