HealthBeacon SHA

Earnings Release • Mar 31, 2023

National Storage Mechanism | Additional information

RNS Number : 8588U

HealthBeacon PLC

31 March 2023

HealthBeacon plc

Preliminary Statement of Results for the year ended 31 December 2022

HealthBeacon grows deployments, builds out sales and operations infrastructure

Dublin, 31 March 2023: HealthBeacon plc ("HealthBeacon" or "the Company"), a leader in devices and software to manage critical and chronic medications together with its subsidiary undertakings (together the "Group") announces its full year results for the year ended 31 December 2022.

2022 HIGHLIGHTS

Financial

·      Technology deployments of 14,756 (13,224 Units +30% v 2021 (10,187); 1,532 patients on the Patient Safety Hub).

·      Revenue growth of 2% to €2.25 million (2021: €2.21 million).

·      Gross profit margin excluding Direct-to-Consumer ("DTC") of 41% (2021: 65%) due to increased supply chain costs in 2022, expected to reverse in 2023.

·      Net cash position at 31 December 2022 of €12.16 million (2021: €26.61 million), sufficient capacity to fund growth over the coming quarters.

·      Outlook for significant revenue growth in the near term with the launch of speciality pharmacy distribution in Q2 2023 gaining momentum by quarter into Q1 2024.

Year ended 31 December	2022	2021	Growth
	€'000	€'000	%
Revenue	2,250	2,214	2%
Gross Profit	153	301	(49%)
Gross Profit Margin (Group)	7%	14%
Gross Profit Margin (ex. DTC sell-in) Adjusted EBITDA*	41% (10,345)	65% (5,225)
Net cash	12,168	26,613
Technology Deployments**	14,756	10,187	45%

*Adjusted EBITDA is a non-accounting term which the Company has defined as: Excluding Share Based Compensation, Expected Credit Losses, Fx Gains/Losses, Warranty Expenses and non-recurring IPO Costs

**Technology Deployments reflect total patients served by HealthBeacon technology including units and patients on the Patient Safety Hub (PSH).

Operational and Strategic Highlights

·      Continued expansion of client base to 30 currently, from 23 in 2022 and 18 in 2021.

·      Increased Speciality Pharmacy customer base  with 2 contracted and a further three at contracting stage.

o  These five specialty pharmacy organisations represent more than 60% of the specialty pharmacy sector a $191 Billion market of which approximately $40 Billion is injectables with a patient population of over 9 million and a forecasted 8% CAGR to 2028 in this market space. This will be a key growth engine for HealthBeacon in 2023 and into 2024.

·      Considerable progress on Direct Reimbursement (RTM) channel developed in US.

o  Medicare directly reimburses remote therapeutic monitoring devices with a focus on respiratory and rheumatology conditions.

o  One large clinic group signed to date and contracting with 3 more groups. These four groups represent approximately 600 prescribers.

·      The Company successfully developed new products in 2022 in partnership with clients:

o  The Patient Safety Hub, a new proprietary software platform to help cancer patients take the medication more safely  was developed and launched delivering revenue of €0.35M in 2022 and an exit ARR of €0.8M with 13 active customers across multiple countries supporting one drug.

o  The HB Wave, the Company's Pill Management Solution was showcased at the HB Vision Events in Ireland and the US in late 2022. There is already one contracted customer for this product and it is expected to launch in Q1 2024.

·      2022 saw the global chip shortage and global energy crisis saw an impact on lead times, transport and component costs which had an impact on gross margin. The company expects to hit the anticipated run rate margin in excess of 60% with the launch of specialty pharmacy volumes in 2023.

Outlook

HealthBeacon's focus on the specialty pharmacy and RTM markets combined with a continued focus on value adding innovation sees it well placed to deliver its growth aspirations in 2023 and into 2024.

·      The Specialty Pharmacy channel launch in Q2 with Accredo of 2023 with further launches into Q3, Q4 as well as the first quarter of next year. This will be complemented by the development and growth of other channels such as Direct Reimbursement (RTM).

·      Group 2023 exit ARR of mid-teens with Q1 2024 ARR exit rate of €25M and 100,000 deployments by end of Q2 2024.

·      The patient safety hub continues to grow with 13 existing clients on one drug. An additional drug is being added to the platform in H2 2023 which is expected to result in 2023 exit ARR of at least €1.0M.

·      Supply chain cost increases experienced in 2022 have subsided with gross margin expected to improve through 2023.

·      With the IPO proceeds and its commercial relationships, the Company has sufficient funding in place to deliver on the significant growth opportunity ahead.

Jim Joyce, HealthBeacon plc Chief Executive Officer said:

"The evolution of Speciality Pharmacy as the influential route to market for injectable medicines has presented a clearly realisable opportunity for Health Beacon in the US. We have signed two major Speciality Pharmacy clients including Accredo, with a further 3 currently at contracting stage. We will be launching the ICMS system with our initial client in Q2 and will follow with subsequent client rollouts through to Q1 2024.

"We have confronted several challenges in building out our delivery infrastructure in the US. However, I'm pleased to report that we will soon be in a position to deploy our highly effective medical adherence tool at scale to exploit the Speciality Pharmacy opportunity we have worked so hard to engineer. Following a challenging 2022, my colleagues and I look forward with confidence to the next 12 months."

Analyst presentation

A presentation for investors and analysts will be held by conference call at 10:00am, today, 31 March 2022. To register for the call please e-mail investor.relations@healthbeacon.com

Enquiries:
HealthBeacon: Jim Joyce Lar Malone		Investor.Relations@HealthBeacon.com
Goodbody (Euronext Growth Adviser and Broker): David Kearney		+353 (1) 667 0420
Stephen Kane
Drury (Public Relations):
Billy Murphy		+353 (0) 87 231 3085
Cathal Barry		+353 (0) 87 227 9281

About HealthBeacon

Headquartered in Dublin, HealthBeacon is an Irish digital therapeutics company that develops products for managing injectable medications for patients in the home. The Company operates in 17 countries primarily across Europe, North America and the United Kingdom employs more than 60 people and has obtained more than 30 design and utility patents. HealthBeacon's mission is to become the world's leading digital therapeutics platform for injectable medications.

Cautionary statement

This announcement contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of HealthBeacon plc. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these projections and forward-looking statements. Any of the assumptions underlying these projections and forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the projections and forward-looking statements may not actually be achieved. Recipients are cautioned not to place undue reliance on any projections and forward-looking statements contained herein. Except as required by law or by any appropriate regulatory authority, HealthBeacon plc undertakes no obligation to update or revise (publicly or otherwise) any projection or forward-looking statement, whether as a result of new information, future events or other circumstances.

Overview

2022 saw HealthBeacon further build the base for growth through the establishment of the Orlando operations to support the roll out of the ICMS into Specialty Pharmacy and RTM markets. HealthBeacon continued to build its customer base and increased the number of specialty pharmacy customers it is engaging with, two have signed contracts and a further three are at the contracting stage. These five Specialty Pharmacy organisations represent just over 60% of the total Specialty pharmacy market of $191 billion. In addition the Company focused on developing other channels such as the Direct Reimbursement (RTM) market culminating in the signing of one clinic group in Q1 2023 with a further three at contracting stage representing a combined 600 prescribers across the US.

The Company delivered further new product innovations and launches with the Patient Safety Hub (€0.35M Revenue in 2022; 2022 exit ARR of €0.8M) and the HB Wave (Pill Management Solution).

Technology  deployments increased to 14,756 +45% 13,224 Units +30%  v 2021 (10,187); 1,532 patients on the Patient Safety Hub). The Company shipped its first units to Japan as part of the roll out with Takeda in the Japanese market. The Patient Safety Hub launched in 2022 delivering revenues of €0.35M across 13 customers including Teva, Viatris and Clonmel Healthcare.

The company listed on the OTC market in August 2022 in order to provide access to US investors to invest in the HealthBeacon stock. This provides another investment platform to increase liquidity in the stock.

Supply Chain costs and lead times saw significant increases in 2022 and had a negative impact on margins in the year, which are expected to reverse through 2023.

Financial Review

Revenue for 2023 was €2.25M +2% v 2021. Total technology deployments were 14,756 [units 13,224; 1,532 patients using the Patient Safety Hub]. The Revenue comprised of €1.29 million from Patient Support Programmes ("PSP") and €0.96M from Direct to Consumer ("DTC"). The Patient Safety Hub was launched in 2022 delivering revenues of €0.35M.

PSP price per unit is in line with management expectations. The launch and subsequent roll out of the ICMS into Specialty Pharmacy from Q2 2023 gaining momentum into Q1 2024 is expected to deliver a better than anticipated PSP price per unit.

Reported Gross Margin for the company was 7% (2021 14%). The Gross Profit Margin excluding the DTC channel was 41% (2021 65%). The DTC channel has been slower than anticipated to deliver on the subscription-based margin share model. The Company expects margins to hit the anticipated run rate margin in excess of 60% with the launch of specialty pharmacy volumes in 2023 coupled with the full year impact and growth of the Patient Safety Hub.

The Company recorded a loss from operating activities of €13.2M (2021: loss of €7.3M). Average headcount increased to 67 employees (2021: 47 employees. Most of the increased headcount was in the US with the build out and scaling of the company operations in Orlando across two locations. The Company recorded a Share Based expense of €1.58M (2021: €0.23M). Opex of €3.0M on payroll and infrastructure in 2022 in building the commercial and delivery infrastructure in Orlando.

The Company has a net finance expense of €0.15M (2021: €0.91M) the main component of which was a financing charge from a supplier on unit build and also negative interest on deposits of IPO funds raised. The significant reduction relates to the conversion of the convertible loan note in December 2021 resulting in of €0.9M of related interest expense in 2021 falling to zero.

The Company had a net cash position of €12.16 million at 31 December 2022 (2021: €26.61 million). The reduction in cash is attributable to Opex as part of establishing  the Orlando base, investment in new product development and the commencement of delivery of the 35k order in October 2022.

Current trading and outlook

HealthBeacon has built the technology, operations and commercial infrastructure to deliver the ramp up of deployments in the US Specialty Pharmacy market from Q2 2023 into Q1 2024. This will see the company significantly grow deployments and deliver a 2023 exit ARR of mid teen €M. Coupled with the ramp up of volumes in the US market the Patient Safety Hub continues to grow and the addition of a further drug to the platform in H2 2023 will see 2023 Exit ARR grow to at least €1.0M.

Principal Risks and Uncertainties

The Company has a risk management structure in place, which is designed to identify, manage and mitigate business risk. Risk assessment and evaluation is an essential part of the Company's internal control system. It is designed to enable the Company to meet its business objectives by appropriately managing, rather than eliminating, these risks.

Strategic, Operational and Financial Risks

Global Macro-Environment: The Company's business is influenced by economic conditions in Ireland, North America, European and by global economic conditions. Levels of healthcare spending and spending on pharmaceutical products and medical devices have been and could be adversely affected by decreases in people holding health insurance policies, disposable income decreases, tax increases, unemployment increases, or the spending patterns of customers changing to reflecting increased uncertainty or apprehension regarding economic conditions or cessation of reimbursement schemes. Any of these factors could have an adverse effect on the Company's ability to deliver results.

Partnerships: The success of our business depends on achieving our strategic objectives, including through entering into strategic partnerships with pharmaceutical, specialty pharmacy and retail partners where we may have a lesser degree of control over the business operations, which may expose us to additional operational, financial, legal or compliance risks.

Product Adoption: There is early-stage uncertainty around the rate or level of patient and medical professional adoption of the Company's Injection Care Management System and the reliance on reimbursement schemes remains a primary risk in achieving the Company's strategy. The Company's strategy depends on the continued growth of the remote healthcare market in the United States, Europe, and elsewhere. These trends which are unrelated to the performance of the Company may have a material adverse effect on the performance of the Company itself.

Intellectual Property: Our intellectual property portfolio may not prevent competitors from independently developing products and services similar to or duplicative to ours, and the value of our intellectual property may be negatively impacted by external dependencies. If we are not able to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected. The Company invests in R&D in order to protect and expand its current IP suite and offer new solutions to patients for managing their medications, there is no guarantee that R&D investment may result in new product development or protect the Company against technological changes

Supply Chain: Significant material shortages, supplier capacity constraints, supplier production disruptions, supplier quality and sourcing issues or price increases could increase our operating costs and adversely impact the competitive positions of our products. Our reliance on third-party suppliers, contract manufacturers and service providers, and third parties to secure materials, parts and components used in our products exposes us to volatility in the prices and availability of these materials, parts, components and services. A disruption to these providers could have an adverse effect on our ability to meet our commitments to customers or increase our operating costs. Quality, capability and sourcing issues experienced by third-party providers can also adversely affect our costs, margin rates and the quality and effectiveness of our products and services and result in liability and reputational harm.

Growth Management: With continuous execution on growth initiatives, strategies and operating plans, the Company anticipates expansion of its service offerings to new therapeutic areas as well as future expansion into select international markets. Any failures to effectively execute on growth initiatives, business strategies, or operating plans will adversely affect the Company's operations. If the Company is unable to attract new clients or expand members with existing clients, revenue growth may take longer than expected. Any inability to offer high-quality member support to patients could also adversely affect the Company's relationships with future and prospective payers, members, and subsequently adversely impact the Company's future operations and financial condition.

Licenses & Regulatory: The Company is dependent to a significant degree on certain licences and regulatory approvals to conduct its business. The Company is also subject to domestic, European and foreign laws and regulations including but not limited to with respect to healthcare, consumer protection, privacy and data protection, employment, accounting, customs, tax, antitrust and competition matters. A failure to obtain, maintain, or comply with the terms of such licences, applicable laws and regulations could have an adverse impact on the Company.

Treasury & Foreign Currency: The Company is exposed to liquidity, interest rate and credit risks. The Company's reporting currency is Euro. Exposure to foreign currency is present in the normal course of business, together with the Company operating in jurisdictions outside of the Eurozone.

For the financial year ended 31 December 2022
					31-Dec		31-Dec
					2022		2021
					€'000		€'000
Income
Lease Revenue					417		572
Revenue from Contracts with Customers					1,833		1,642
Total Revenues					2,250		2,214
Cost of Sales					(2,096)		(1,938)
Gross Profit					154		301
Operating Income / (Expenses)
Impairment of Property and Equipment					-		(0)
Impairment losses on Financial Assets					7		(44)
Other Operating Expenses					(13,496)		(7,769)
Other Operating Income					163		214
Loss from Operating Activities					(13,172)		(7,298)
Finance Costs
Finance Income					-		-
Finance Expense					(150)		(911)
Net Finance Costs					(150)		(911)
Loss before Taxation					(13,322)		(8,209)
Tax Expense					-		-
Loss from Continuing Operations					(13,322)		(8,209)
Total Comprehensive (Loss) for the year					(13,322)		(8,209)
All amounts are attributable to the owners of the parent
Basic Earnings per Ordinary Share					(0.79)		(0.79)
Diluted Earnings per Ordinary Share					(0.79)		(0.79)

Consolidated Statement of Financial Position
As at 31 December 2022
		31-Dec		31-Dec
		2022		2021
		€'000		€'000
Non-Current Assets
Intangible Assets		3,299		2,651
Property & Equipment		4,136		1,203
		7,435		3,854
Current Assets
Inventories		2,038		127
Trade and Other Receivables		3,283		2,348
Cash and Cash Equivalents		12,168		26,613
		17,488		29,088
Total Assets		24,923		32,942
Equity
Share Capital		42		42
Share Premium		29,926		29,926
Other Reserves		1,788		231
Accumulated Deficit		(14,256)		(934)
Total Equity		17,501		29,265
Non-Current Liabilities
Trade and Other Payables		485		112
		485		112
Current Liabilities
Trade and Other Payables		6,937		3,565
		6,937		3,565
Total Liabilities		7,422		3,677
Total Equity and Liabilities		24,923		32,942

Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2022

	Share		Other		Share		Accumulated		Total
	Capital		Reserves		Premium		Deficit		Equity
	€'000		€'000		€'000		€'000		€'000
As at 1 January 2021	6		0		18,072		(11,006)		7,072
Loss for the financial year	-		-		-		(8,209)		(8,209)
Long term incentive plan	-		231		-		-		231
Share re-organisation	19				(18,300)		18,281		-
Share Issuances	17				30,154				30,171
As at 31 December 2021	42		231		29,926		(934)		29,265
As at 1 January 2022	42		-		29,926		(934)		29,265
Loss for the financial year	-		-		-		(13.322)		(8,209)
Long term incentive plan	-		1,557		-		-		231
As at 31 December 2022	42		1,788		29,926		(14,256)		17,501

Consolidated Statement of Cash Flows
For the financial year ended 31 December 2022
		31-Dec		31-Dec
		2022		2021
		€		€
Loss Before Tax		(13,322)		(8,209)
Adjustments for:
Depreciation of Property & Equipment		602		487
Amortisation of Intangible Assets		621		499
Impairment of Property & Equipment		-		-
Credit Impairment Charge		(7)		44
Interest Expense		188		894
Share Based Payments		1,557		231
Warranty Expense		16		26
Foreign exchange loss / (gain)		(45)		16
		(10,390)		(6,012)
(Increase) / Decrease in Receivables		(928)		(1,927)
(Increase) in Inventory		(1,910)		(114)
Increase in Payables		3,611		2,071
Net Cash used in Operating Activities		(9,616)		(5,982)
Investing Activities
Additions to Property and Equipment		(3,532)		(192)
Additions to Intangible Assets		(1,269)		(577)
Net Cash used in Investing Activities		(4,620)		(769)
Financing Activities
Proceeds from the issuance of share capital		-		28,849
Options exercised		0		440
Lease liability payments		(207)		(160)
Net Cash generated from Financing Activities		(207)		29,129
Net increase in cash and cash equivalents		(14,444)		22,378
Cash and cash equivalents at the beginning of the period		26,613		4,235
Cash and cash equivalents at the end of the period		12,168		26,613

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