- 1st Group (1st) has seen a dip in its share price after releasing its March quarterly report
- The digital health company achieved annual recurring revenue of $5.26 million – a 6.5 per cent increase from the previous quarter
- Despite this, 1st experienced significant disruptions by COVID-19
- The company has various contracts in place which have seen developmental delays due to level 2 and 3 restrictions
- But a silver lining came when 1st launched its Telehealth solution roughly two weeks ago
- Telehealth connects patients with their health care providers while limiting COVID-19 risk
- 1st closed the quarter with just $3.4 million but the company remains confident the next quarter will be more fruitful once contracts and Telehealth revenue progress
- 1st Group is down 9.38 per cent and shares are trading for 2.9 cents each
1st Group (1st) has seen a dip in its share price after releasing its March 2020 quarterly report.
The Australian digital health company achieved Annual Recurring Revenue (ARR) of $5.26 million which is a 6.5 per cent increase from the previous quarter. Despite the slight increase, 1st reports its ARR growth was largely affected by COVID-19.
The pandemic caused a significant amount of delays in the company’s operations. For example, Phase 2 of a dental agreement with Medibank Private was suspended as most dental operations moved to level 3 restrictions. This resulted in the business closing down and only accepting emergency appointments. If this wasn’t the case, ARR would have been $5.5 million for the quarter.
From April 27 however, dental operations moved back to level 2 restrictions and most are now becoming operational again. 1st expects to capture the lost ARR in future quarters.
A second phase portion of a contract with St Vincent’s Hospitals Australia has also been delayed due to the pandemic. St Vincent’s is funding the development of a digitised referral platform for 1st Group to improve the patient experience.
Positively, the recent launch of 1st’s integrated Telehealth solution and the government announcing some elective surgeries can restart, is helping to re-prioritise phase 2 with discussions underway for possible commencement during the June quarter.
The Telehealth solution connects patients with their health care providers while limiting both parties’ potential exposure to COVID-19. Despite delays also impacting a contract with Benestar Group, the Telehealth launch will see the acceleration of onboarding psychologists.
“The impact of these projects, in addition to normal organic growth, and our Telehealth initiative is expected to have a positive impact on Q4 FY20 and into FY21,” Managing Director and Co-founder Klaus Bartosch said.
At the end of the quarter, 1st had a total of $3.4 million.
Cash receipts for the quarter were $1.25 million, compared to a slightly higher $1.29 million in the previous quarter. The result was less than expected due to a major corporate customer delaying a $90,000 payment which was meant to arrive by March 31.
In response to COVID-19, the company has reduced expenses such as travel, selected marketing and outsourced services. These actions and government assistance measures are expected to reduce cash payments by $0.5 million in the June quarter.
1st expects net cash outflow will reduce to below $700,000 in the June quarter with further cost reduction measures currently under review and anticipated revenue growth from Telehealth usage and the continued rollout of the landmark projects.
“Such a major event can dramatically change consumer behaviour permanently and I believe that once the pandemic is over both healthcare providers and consumers will remain online, and many of the new services like Telehealth and ePrescriptions, will continue as a permanent and convenient feature of how consumers interact with healthcare services,” Klaus said.
1st Group is down 9.38 per cent and shares are trading for 2.9 cents each at 1:37 pm AEST.