Induction Healthcare Group PLC
(“Induction”, the “Company”, or the“Group”)
FY24 Audited Final Results
London, UK – 4 July 2024: InductionHealthcare Group PLC (“Induction”, the“Company”, or the “Group”;AIM: INHC), a leading digital health platform driving transformation of healthcare systems, announces its audited final results for the year ended 31 March 2024.
Financial Highlights
- Revenues from customer contracts up 5.6% to£14.4m (Note 1) (2023: £13.6m Note 2)
- Gross margin 78.4% (2023: 63.1%)
- Adjusted EBITDA positive £0.3m (Note 3) (2023loss of £4.0m)
- Adjusted Operating loss of £0.2m (Note 4) (2023: loss of £4.8m)
- Loss for the year £3.3m (2023: loss of £17.4m)
- Net cash at the year-end of £3.7m (2023:£4.3m)
Operational Highlights
Achieved objective of EBITDA breakeven having completed cost containment and margin enhancement programme
Zesty revenues up by 133% with strong pipeline for growth in FY25
- 17 Zesty customers, covering 3.2m patients, now connected to the NHS App
- Launched Zesty in 5 new Trusts, with 4 additional Trusts contracted to go-live within the next 12 months
- Signed a total of £3.4m (includes previously-announced contracts) in contracts with NHS England Trusts to fund new deployments and build out new functionality to generate growth
Attend Anywhere market share in England maintained in a challenging renewals environment
Successfully built and launched the first phase of our integrated product which enables a patient to view and launch their Attend Anywhere consultation from within Zesty. Five customers have already purchased the integrated functionality.
Divested non-core assets Switch, and post-period end sold Guidance for £1.2m
Paul Tambeau, CEO of InductionHealthcare, said: “The Zesty portal continues to be our growth engine as the NHS sees value in digitizing interactions with patients who have an outpatient appointment. Not only did we secure new wins, but we developed new features and deepened our integration with Oracle Cerner which can generate new growth for Induction. Growth in Zesty has helped to counteract downward pressure on pricing with Attend Anywhere.”
Annual Report and Accounts and Notice of AGM
The Annual Report and Accounts and notice of AGM will be available later today on the Company's website: https://inductionhealthcare.com/investors/financial-reports-and-publications/. Copies of both documents will be posted to shareholders in due course. The AGM will be held at 10.00 am on Tuesday 13th August 2024.
Enquiries
Induction Healthcare
Christopher Samler, Chair
Paul Tambeau, Chief Executive Officer
+44 (0)7712 194092
+44 (0)7983 104443
Singer Capital Markets (Nominated Adviser and Broker)
+44 (0)20 7496 3000
Philip Davies
Alaina Wong
Jalini Kalaravy
About Induction - www.inductionhealthcare.com
Induction (AIM: INHC) Induction delivers a suite of software solutions that transforms care delivery and the patient journey through hospital. Our system-wide applications help healthcare providers and administrators to deliver care at any stage remotely as well as face-to-face – giving the communities they serve greater flexibility, control and ease of access. Purpose-built for integration with leading Electronic Medical Record (EMR) platforms, our products offer immediate stand-alone value that becomes even greater when integrated with pre-existing systems.
Used at scale by national and regional healthcare systems, as well non-health government services, our applications are relied upon by hundreds of thousands of clinicians and millions of patients across almost every hospital in the British Isles.
Highlights from Annual Report
Chair’s Statement
Over the year, Induction has continued to successfully transform itself from an unprofitable, vulnerable business with a disparate product set into one that is profitable, self-sustaining, and offers an integrated product to the UK healthcare market. We have also, as we committed to shareholders, divested two non-core assets and ensured that our cost base is appropriate for a business of our size.
Our message to shareholders twelve months ago, as we embarked on this objective, was that we had enacted difficult measures to start this process and that we expected a particularly challenging period ahead.
A year later, it is very pleasing to report, and a testimony to the hard work of the team, that in all of these major aims we are broadly on track and, although there is still much work to be done to drive growth into the business, the platform for this anticipated growth is in place and secure.
Although much of this activity has been inwardly focused, the company also faces its market with increased confidence. Induction is at the centre of the current NHS focus on digital efficiencies which are a precondition to drive necessary change into the UK healthcare system.
It is universally recognised that effective and integrated patient management systems are at the heart of the challenges of both waiting lists and of the patient ‘journey’ through the hospital system. Induction’s products are central to this and the business has, over the year, won a number of contracts with Trusts to provide digital services that will enable administrators, clinicians and the whole of the clinical team to offer a better service to patients at lower overall cost to the paying body.
At the centre of this is the Zesty portal for patients and administrators. Winning new Zesty contracts has been critical in ensuring that the business has been able to weather the price and market share pressures associated with the legacy video product (AttendAnywhere). Notwithstanding the presence of Teams, we have held our market share for Attend Anywhere – testimony to the strength of a bespoke healthcare focused product.
In our report for last year we talked to the key technical goal of integrating our platform over the coming year so that patients and clinicians gained access to our various digital amenities through one platform. It is particularly pleasing to note that an important first phase, of enabling a patient to see and launch their video consultation from within the portal, has been completed on time and on budget. This new integrated platform together with other product and supply chain improvements will ease our customer journey, enhance customer loyalty and reduce our cost base.
Last year I reported on the difficult changes to both Board and the senior executive team that we felt were necessary to effect the radical transformation we desired. I am pleased to report that these changes have been successful - there have been no subsequent changes and the Board and senior team have remained in position.
I genuinely thank them for all of their counsel, support and incredibly hard work in challenging circumstances.
The full year results outcome was an EBITDA on continuing operations, adjusted for normalisation, improved to £0.3m(2023: loss of £4.0m). Whilst the immediate stabilisation goals have been met,the challenge for this year and beyond is to drive growth of the top line and at the same time to retain our profitability as well as our focus.
The healthcare market for our products and services is changing rapidly and for the immediate future we have to invest heavily in the product and sales capability to meet this growing opportunity. Such investment will be in both people and processes but will not be at the expense of our previous profitability commitments to shareholders.
In conclusion, my message to our shareholders is that whilst we have succeeded in our task to date, we recognise that, to fully fulfil the company’s potential and to achieve the value our shareholders deserve, we need to drive our revenue onto a higher trajectory.The current direction of travel in the NHS bodes well for Induction although we are fully aware of the challenges, and potential opportunities, which may be presented by the anticipated change in government or in spending priorities. Either way we feel confident that with the team we have and Induction’s product capabilities we are as well positioned as any to capitalise on a changing NHS.
Christopher Samler
Non-executive Chair
4th July 2024
CEO Statement
Achieving Breakeven, Building NewRevenue
Our key focus this year was to stabilise the business, execute on our integrated product strategy, and putInduction onto a self-sustaining path without the need for immediate funding. I'm very pleased that we have delivered on these objectives.
We achieved our target adjusted EBITDA£0.3m (compared to a loss of £4.0m EBITDA in FY24). An important initiative was to implement efficiencies in our cloud infrastructure which resulted in a 56% reduction in hosting cost. That has driven a 15.3% improvement in gross margin to 78.4.%. There are additional initiatives we are implementing this year that will drive further reductions in cloud hosting costs.
We’ve also carefully managed our cash position so that we didn’t have to return to the market for more funding. We ended the year with £3.7m in cash which was ahead of market expectation.
Market Conditions Impacting Growth
Delivering breakeven also required growth in revenue. We ended FY24 at £14.4m of total Group recognised revenue,5.6% ahead of the previous year. Zesty continues to be our growth engine which delivered £4.9m in revenue (up 133%). This growth in Zesty is making up for revenue churn with Attend Anywhere as we move customers in England to utilisation-based contracts.
Growth in Zesty included £3.4m in contracts with the NHS as part of a national mandate for hospitals to acquire a patient portal (of which £2.9m has been recognised in the year). Through these contracts we were also able to:
- Further integrate Zesty with Oracle Cerner and widely-used diagnostic booking systems;
- Enhance our Form Builder module to support waitlist validation and patient initiated follow up (PIFU) pathways; and,
- Build new functionality, such as digitising maternity records.
We signed contracts with 4 new NHS England Trusts to implement Zesty, all to be rolled out in FY25, which will bring our total contracted number of NHS Trusts to 21.
All platform and product enhancements underpin valuable upsell opportunities for FY25.
Integrated Product Strategy
We delivered on our integrated product strategy goals for this year which will provide enhanced functionality to drive growth and customer retention.
We completed an important first phase of enabling patients to see and launch their Attend Anywhere consultation from within the Zesty. Five customers have already purchased this new functionality,with more expected to follow. This year we will continue to develop that integration for patients, as well as integrate Attend Anywhere into electronic medical records so that clinicians can see and launch a video consultation from within their electronic medical record. This will improve both patient and clinician experience.
We also built single sign-on capabilities which allow third-party providers to connect with Zesty to deliver enhanced functionality for patients. For example, at Whittington NHS Trust, we connected a surgical pre-assessment tool called Lifebox to Zesty so that patients could complete the questionnaire via the portal. The functionality we built this year will allow us to build an ecosystem of partners that can drive revenue.
We also continued our partnership with the NHS Wayfinder Programme – the team responsible for connecting services into the NHS App. As of the end of FY24, we had 17 NHS Trusts connected to Zesty via the NHS App. A total of 3.2m patients now have access to Zesty via the NHS App,with 1.7m of those having registered to the portal.
Given our integrated product focus on supporting the interaction between care teams and patients, we have deprecated or divested non-strategic assets, such as Switch in June 2023 and also recently completed the divestment of Guidance, which was announced as being sold on 1st July 2024 for £1.2m.
Key Focus in FY25: Driving New RevenueGrowth
All NHS England Trusts have now moved to utilisation-based contracts for Attend Anywhere, from centrally funded population-based contracts. With utilisation-based contracts we have the ability to increase revenues by driving adoption and utilisation. It is also important to note that the number of Trusts that have churned is low, and we continue to hold our market share in NHS England.
Whilst there is room to change the trajectory of Attend Anywhere revenue, Zesty will continue to be our growth engine. There are greenfield opportunities to sell Zesty into NHS Acute Trusts that either don’t have a portal, are looking to upgrade from a non-NHS-accredited portal, or switch due to poor performance of their existing provider. We also see opportunity in the integration of Attend Anywhere and digitised maternity records.
Integrating Attend Anywhere into Zesty, as well as into the Trust’s electronic medical record, will provide for a better user experience and drive greater adoption. This integrated capability, which includes video, will be important as we seek to grow into Community & Mental Health.
Our partnership with Oracle Cerner continues to be productive and fruitful and provides a further funnel of new opportunities for Zesty.
As we look to FY25 and beyond, we need to start driving revenue growth in other parts of the health care system. By selling into other areas of the health system, we have a greater ability to sign regional ICS wide contracts that connect a patient’s care journey.
Outlook
The NHS continues to prioritise investments in digitising the health care system to drive efficiencies and provide a greater experience for patients. In the past year we have seen the NHS mandate that all acute trusts have a patient portal, and they continue to direct funding to support the system deliver on that mandate. And whilst we are in the midst of a general election in 2024, all of the major parties are talking about the importance of investing in digital health.
The NHS also continues to tackle growing waiting lists, with 6.3m patients still waiting for an outpatient appointment as of March 2024. We’re seeing growing demand for our Form Builder module to help Trusts validate their waiting list.
Through our enhanced appointment capability we’re also playing a role in reducing ‘did not attend’ rates by an average of 30%, freeing up spots for patients that need them. On that basis, our product suite is well suited to support the NHS meet this mounting challenge.
Where FY24 was the year of stabilising the business, FY25 is a year for generating growth in new areas so that we can accelerate our performance into the future.
With the team we have around us, I believe we can be successful.
Paul Tambeau
CEO
4th July 2024
Click here to view full - FY24 Audited Final Results
