Member Info for Monkf6

I agree with you RazzaB. What is the most likely scenario here.

INHC runs out of cash?

INHC is acquired?

Other?

It would not surprise me to see offers double the current market cap to acquire them. CISCO bought the parent company of patient platform market leader healthcare communications in 2021. INHC appear to be the market leader in patient video calls.

Not to defend any overconfidence from any CEO but... with 3 months from year end, they say they are already below 2.5x and will be 2.1x by end of Dec. They need to too as the covenant drops to 2.25x.

Furthermore, the £5/6m cash out flow on LAICA-related earn out costs will not repeat in H2 or next year. Strix are only paying this because LAICA have met expectations.

With a pinch of salt... Broker Shore Capital: 'We expect net debt to remain within the 2.75x covenant threshold. The company delivered £15.6m in H1 and would only need to deliver EBITDA roughly in line with H1 in the second half to be within the limit if net debt remains close to £87m (we expect some reduction in net debt).'

The dividend has cost £16/£17m each of the last two years, albeit using debt, so they could just cut the dividend completely if needed. I'd prefer them to do that.

Unless I'm mistaken, the maximum interest they will pay on the majority of their debt is 4% and likely to be 2.85% or 3.5%.

I did not see that coming, although it fits my summation that this CEO was too over confident in his predictions and therefore a poor captain of the ship. Typically expect the share price to fall significantly on this news.

I think it positive for the company, though I wonder what has triggered this. I suspect the over confident predictions on revenue are not coming to fruition. Maybe some lost contracts too. Time to research Chris and Paul.

I am of the opinion that my outlook carries a considerable margin of safety. I look at what I think a competitor would be prepared to pay for the business if it did not perform particularly well.

Do we think the current occasional sellers are MMs or people who think this is over valued at £21m. I welcome any perspectives to argue why this is a sell.

That seems reasonable. They need to deliver on something though. We will soon see whether zesty is appealing to hospitals with Oracle and System C.

The company could be valued over £100m if they reach the £30-35m ARR the CEO claims is doable in the annual report. I'll call over confidence on that now.

Here's a conservative scenario: video ARR declines over the next few years and is replaced with an increase in zesty ARR to maintain £15m ARR - a more reliable £15m ARR with less churn risk. The cost base settles around that, with 75% gross margin and something like 20% EBITDA. I could put a £33m/36p valuation on that conservative scenario. Then again, typical valuations on SaaS based on ARR multiples might value that same business at over £100m/110p.

What would you value the company at, RazzaB?

Mrs Davy appears to have eaten too many fantasy fruit pastilles that Pennon is a force for good, checking all the necessary boxes to virtue signal to an unknown audience.

You won't need management consultants in to learn that residents in the South West, Bournemouth, and Bristol will want clean, safe drinking water, consistently and at a good price. This is the force for good. Maybe I am too old in the tooth for today's corporate social responsibility world.

SWW trust pilot 2.2 rating may suggest spending on customer service skills and training would do more good than TV commercials showcasing their limited electric fleet.

The cash committed to a buy back is now allegedly going into the renewable energy projects.

Fantasy and reality continue to diverge here. Ofwat criticised the usual bad six for paying excessive dividends when they are not meeting expected performance. Surprise, surprise South West Water was one of them.

H1 profit down over 70%. I thought H1 last year was down YoY. Although increases in finance costs totalled £40m and increases in energy costs totalled £50m. These are high and unusual costs so the underlying business appears to be performing quite well.

Will South West Water just increase customer bills next year? Or does Ofwat control that? Never paid much attention to the bill from Thames Water. Assume it increases annually like poll tax.

The strategy to partner with the two computer systems that have almost half the acute hospital market is a good one as that gives them direct access to customers.

Gross profit margin should reach 75%. The patient platform will be more of a challenge to change suppliers than video software, thus giving a more reliable revenue base. The combined offer with video gives them a USP.

Over confidence will probably strike again and that is my primary concern with this business. I cannot make up my mind if the CEO is too optimistic with his passion for the business or if he knowingly over sells. Neither is good for investors. I will give him his due though, he does seem to know his business.

Nevertheless the INHC finds itself in the right place at the right time. The business looks well positioned as the zesty platform will almost certainly win more contracts and will almost certainly grow its % of total revenue within 1-2 years. The attend anywhere video will almost certainly be used by most hospitals over the next 1-2 years even if that declines over time.

Overall I come to the conclusion that this business is undervalued based on the opportunities right now.

I thought I would post my thoughts in case they are useful to anyone else.

CEO says "...so to be clear, we're gonna go from 16 where we are now to 40 in total, and we expect to be able to conclude those contracts in the next 12-18 months. How can he be sure? Smelling over confidence again.

CEO also talked about the INHC market share. I searched online and found that healthcare communications claim to be the market leader, 'The #1 patient engagement platform is contracted to 38 UK trusts and delivers digital appointment letters instantly to patient’s smartphones. Patients can access all appointment information from the palm of their hand, anytime and anywhere!' This company did not get a mention in the CEOs presentation. Can anyone reading this shed some light on the difference between INHC product and this? It sounds like the same thing as their zesty platform to this old dinosaur.

A little more online searching found that the healthcare communications promote east lancashire hospitals, who use Oracle Cerner, and United Lincolnshire hospitals, who use System C.

The partnership agreements that INHC have signed are non exclusive so presumably a hospital can choose any of the other suppliers, and have done so. It seems the CEO is counting his chickens before they've hatched.

System C gives them a link into 28 acute hospitals in the UK. The Oracle Cerner partnership covers 24 acute hospitals in the UK and 1 (that I could find) acute hospitals in Ireland.

I wonder if Oracle have signed similar partnership agreements elsewhere in the world. Website says they have over 2000 hospitals using the Cerner system and over 1000 are outside the US.

Oracle Cerner have a similar agreement with WELL Health / Artera so forget US expansion. Artera are rumoured to be heading for an IPO and so it quite possible that INHC would become a future takeover target.

I am not why the CEO said he still expects ARR of nearly £4m for the zesty platform by the end of FY23. The RNS said many of these expected contracts would now complete in FY24. It would be a remarkable achievement to go from over £1m at H1. Will this be an overconfident prediction too?

Cash position up to £9m from £7.5m at FY22 and expect to be £6m at FY23 instead of £10m in the guidance. That was over confident. Can we presuppose they are now burning £1.5m of cash annually?

CEO predicts to be cash positive by the end of FY24. Old CFO said the same for FY23 back in 2021. That was over confident. CFO leaving with one month notice after only a year into the job. CEO did not say much about him in the update. One could read all sorts into that.

What do people think about the results? There was already an expectation of significant revenue increase with the acquisitions. It didn't take much selling (a couple of trades) to hammer the share price! Someone can correct me but I read the results as though it's really a £2m cash loss, which is better than last year. With £7m+ cash on the balance sheet, they can go for another 4 years if the cash burn stays the same. Do any of you expect it to have gone up in the last 6 months? Reading between the lines, I see them selling the low revenue software they have for clinical use to focus on the software for patient use. That'd bring in more cash. I don't know the products well enough to judge.

No need to execute a trade - it'll all go through automatically, Luke. You'll log in to your account in a few weeks and the cash will be there instead of the shares. It hasn't happened to me very often: the first time was WaterLogic. Surprisingly, the MYT letter didn't give a date when responses were needed by or a date for when it will happen!? Just soon, I guess, and as Hounddog says, before the end of year results are required to be released.

Yep - and we'd probably do the same in this situation. Bittersweet for what MYT is really worth. 50% on a 3 month average seems reasonable - just very cheap. Some updates about progress through the year would have helped the share price. I held MYT for 5 years (fortunately averaged down). I hope MYT continue to do well and will keep an eye out for the no-doubt excellent full year results.

An article in IC compared the company's bi-annual promises of a brighter future to consistently "rearranging the deck chairs on the Titanic". Although I'm broadly in favour of Glaxo's recent reinvention and high-level strategy, the analogy stuck with me. I had an amateur review of the annual reports and finances from when the efficiency programme began nearly 10 years ago. It's left me questioning whether the endless cost-cutting programme has / will ever make a difference to the bottom line - or at least a difference worthy of the cost of the cost-cutting (billions of "one-off" items by this point). And despite my support of the strategy, I have the same concern about the Novartis asset swap - especially there doesn't seem to be a lot of "brand" in Novartis' old brands - although the sales numbers must have appealed to Glaxo management. I know free cash flow / dividend cover is a constant talking point but we assume management's high-level strategy pays off and the dividend cover returns - a brighter future is coming! Management seem confident but how many times (and for how long) have management seemed confident!? If this was my business I'd be genuinely concerned that, after all these years of "efficiency" and "change" to simplify and strengthen, I'm left with eps that hasn't improved in a decade, less cash, much more debt, poor working capital management (IMO, despite what management say), a year-on-year growing pension deficit, and a dubious increase in "assets" to conveniently offset most of this (IMO, the value added to the balance sheet seems too good to be true). And despite all that... I still own Glaxo shares for the promise of a brighter future! ;) Any thoughts?

This is better than an IPO for-show, in my opinion. Interesting - as always - that selling part of the company will raise $500m while we have a current market cap of �50m. Maybe the deal will be structured in a similar way to the GE deal a couple of years ago? Or, for the first time, it could be dilutive? Either way, a re-reating is long overdue. It shouldn't be long until the end of year results are out now. As an aside: I'm surprised MYT haven't (yet) made an opportunistic approach to buy General Electric's 5% share of Tungabhadra as GE are "divesting" all sorts of assets at the moment to raise cash. Unless I'm wrong, that was $23m for 5% of just one wind project (200 MW). I know we've been there before with valuation so I won't use that as a reliable guide to estimate the company's present value!