RNS Number : 8964K
Induction Healthcare Group PLC
05 November 2024
 

Induction Healthcare Group PLC

("Induction", the "Company", or the "Group")

 

Unaudited Interim Results

for the six months ended 30 September 2024

 

Induction (AIM: INHC), a leading digital health platform driving transformation of healthcare systems, announces its unaudited interim results for the six months ended 30 September 2024.

 

The Company's growth continues to be driven by the Zesty portal, evidenced by recent wins and growing ARR. Notwithstanding, the first half of the year was impacted by the early election call which caused some contracts to be paused. The new government's emphasis on digital health investments, in addition to recent new business generation, provide a basis for the Company to return to material growth.

 

 

Financial Highlights

·      Revenues of £5.4m (H1 FY24: £6.1m)

·      Gross margin improvement to 78.2% (H1 FY24: 75.0%)

·      Adjusted EBITDA Loss of £0.9m (H1 FY24: Loss £0.01m)

·      Operating loss increased to (£3.2m) (H1 FY24: (£2.4m))

·      Cash position £3.1m (FY24 YE: £3.7m).

 

 

Operational Highlights

·      51% increase in Zesty portal revenue compared to H1 FY24.

·      5 Zesty portal deployments in progress, bringing the total number of Zesty portal Trusts to 23.

·      7 Trusts contracted for Zesty portal deployment or major upgrade in FY26 & FY27, generating £0.7m new ARR.

·      3.9 million patients can now access Zesty portal via the NHS App, up from 2.5 million 1 year ago.

·      Attend Anywhere revenue down £1.1m compared to H1 FY24 with shift to utilisation-based contracts.

·      Lower revenue in H1 FY25 accounts for higher losses as expenditures remain flat.

·      Completed substantial engineering project to replace Attend Anywhere call screen with Amazon Chime which will generate £0.4m annual savings.

·      Sold Horizon Strategic Partners Limited for £1.2 million.

·      NHS Wales extension to 31 March 2025 for £0.5m.

o   From April 2025, each Health Board will procure separately, although negotiations are underway nationally to fund language and hosting requirements.

o   One Health Board already secured on a 2-year contract with active engagement with the other six Health Boards.

 

 

Post Period End Highlights

·      Secured £1.5m contract to digitise diagnostic referrals and bookings in North Central London ICS which will contribute to higher group revenue in H2.

 

 

Paul Tambeau, CEO of Induction Healthcare, said: "The Zesty portal continues to be our growth engine, with revenues up 51% compared to the same period last year. We also secured several new Zesty portal wins which will unseat our main competitors over the next two years. However, our plan for this year was negatively impacted by the early election as we had a number of contracts due to be completed in Q1 paused. With Labour's emphasis on reducing the elective recovery backlog, investing in the NHS App, and empowering patients to take more control over their health, Induction is in the right place at the right time to capitalise on growth. Our recent win in North Central London, along with upcoming pilot projects in cancer surveillance and smart uses of AI, provides a basis for Induction to get back onto a growth trajectory next year. We continue to manage cash carefully with no requirement for immediate funding."

 

 

 Enquiries

 

Induction

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

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.

 

 

 



 

CEO Review

 

Overview

 

Over the last six months, we have been focused on implementing our FY25 plan that was based on four goals:

1.   To be a profitable business whilst building new revenue streams that will accelerate growth into the future

2.   To continue innovating and integrating our product suite in a way that is validated by our customers and supports the delivery of our revenue plans

3.   To be customer centric and commercial in everything we do

4.   To implement and continuously develop an inclusive, performance driven and rewarding employee experience

 

I am pleased to say that we are making progress on all four of these goals.

 

We have been successful in growing Zesty portal revenue and building new revenue streams by 51% to £2.0m (H1 FY24: £1.4m). We secured 5 new Zesty portal wins since 1 April 2024 worth £0.5m ARR which will go live in FY26 & FY27 and we are due to go live in our first Community & Mental Health Trust shortly. Over the last year we have incorporated a number of new features into Zesty portal and these are well received by both new and existing customers. Furthermore, we see increased interest for Zesty portal in the private health care market.

 

These successes have been subdued by the political environment. In particular, the call for an earlier than expected election caused a number of contracts, which were due to be completed in Q1, to be paused. However, the increased focus by the new administration on healthcare spend in general and particularly on digitisation as a means of increasing efficiency, patient throughput and outcomes will benefit us in the medium term.  

 

The team have continued to implement changes to our cloud infrastructure to generate additional savings. Our work to overhaul the Attend Anywhere call screen with Amazon Chime will further improve margin as well as deliver a better user experience for patients and clinicians. It also enhances our flexibility for the future design and build of customer-focused product enhancements.

 

With the divestment of Guidance, the business is now focused on our core products and markets. We're aligning the business to deliver on the next phase of patient engagement platforms by digitising entire pathways and enabling regions to efficiently manage high-risk patients, like those who are being monitored for cancer. We consider the total addressable market for digitising pathways to be material, and we are well placed to capitalise on this opportunity. North Central London represents our first foray into this strategic space.

 

We're also investing in our people and working to improve our collaborative culture. Employee NPS score is now +6, having improved 29 points over the last year.

 

 

Financial Overview

We ended the first half of this year with £5.4m in recognised revenue (including £0.2m relating to the Guidance platform which was earned prior to its sale) down from a total group income £6.1m over the same period last year (which included £0.3m relating to Guidance).

 

The number of our Attend Anywhere contract renewals held steady, however, price competition drove income down to £3.2m (H1 FY24: £4.3m).  Note: Income from the Guidance product, which was sold during the period (see note 5 - Discontinued operations) is disclosed separately as an asset and is not reported in the P&L.

 

Gross margin in H1 improved to 78.2% compared to 75.0% in the same period last year as a result of continued rationalisation of the direct cost base including cloud infrastructure.

 

Our operating loss after depreciation and amortisation increased to £3.2m (H1 FY24: Loss £2.4m). While contribution from our Zesty portal increased period on period by £0.5m. The increased operating loss reflects the fall in contribution from Attend Anywhere of £0.8m, plus one-time, non-cash administrative expenses (£0.3m) and one-time termination and professional costs relating to the business divestment (£0.2m).   

 

On an adjusted EBITDA position, after accounting for non-recurring, non-cash items we ended H1 with an adjusted Ebitda loss of £0.9m (H1 FY24: Loss £0.01m). This translated into an H1 period end cash position of £3.1m (FY24 YE: £3.7m).

 

 

Outlook

The new Labour government has made reducing the elective recovery backlog a major priority for the NHS as 6.3m patients are still waiting for an appointment. The recent budget invested billions of pounds to add 40,000 new appointments per week and technology will be a key enabler to manage that extra capacity. The government has also targeted £2bn for technology investments in the NHS which will include giving patients greater access to their information and greater control of their experience through the NHS App. Induction has been working with the NHS to integrate our solutions into the NHS App and we believe we are well positioned to drive new growth through these investments.

 

The government is investing in community diagnostic centres so that patients can get into treatment sooner. Our recent win in North Central London, and the associated technology that we are developing to digitise diagnostic referrals and appointments, positions Induction well to generate new regional wins as we can connect hospitals with diagnostic centres.

 

The government and clinicians alike emphasise the importance of diagnosing patients who have cancer sooner. Our platform has the capability to manage patients on a cancer pathway by sending them notifications to complete a form or book an appointment as part of a surveillance program. The platform integrates these capabilities with video appointments so that patients don't have to travel for routine follow-ups. We are in the final stages of contract negotiations for a cancer surveillance pilot project which, if successful, will unlock new revenue streams for Induction.

 

While the competitive threat of Microsoft Teams and other solutions remains, our team has done a good job of communicating the value and fit-for-healthcare nature of our video appointments solution and the erosion of our share has been lower than anticipated. However, we expect some revenue churn in Attend Anywhere as Wales moves from a national contract to each Health Board procuring their video solution with pricing commensurate with their utilisation. We also expect this loss to be made up by a new large contract that we expect to announce before the end of the financial year. We're also gaining traction within the private market, having just secured a new Attend Anywhere contract in the occupational health sector

 

Despite FY25 seeing lower revenue than the previous year, we are very well positioned to capitalise on the new Labour government's priorities and expect to generate new growth from FY26 and beyond.

 

 

 

 

 

 

 

 

 

 

 

Induction Healthcare Group Plc

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the six months ended 30 September 2024

 


 

30 September

2024

 

30 September 2023


 

Unaudited

 

Unaudited


Note

£'000

 

£'000

Revenue from contracts with customers

2

5,189


6,057

Cost of sales


(1,132)


(1,514)

Gross Profit

 

4,057

 

4,543






Sales and marketing expenses

 3

(552)


(578)

Development expenses

 3

(4,407)


(4,652)

Administrative expenses

 3

(2,332)


(1,731)

Operating loss

 

(3,234)

 

(2,418)


 




Finance Costs

 

(1)


(2)

Finance Income


83


2

Loss before tax

 

(3,152)

 

(2,418)

Taxation


525


-

Loss for the period from continuing operations

 

(2,627)

 

(2,418)






(Loss) / Profit from discontinued operations, net of tax

5

(226)


755

Gain on sale of disposal group


525


-

Loss for the period

 

(2,328)

 

(1,663)






Loss per share from operations





- Basic

4

            (0.03)


            (0.03)

- Diluted

 4

            (0.03)


 (0.03)


Induction Healthcare Group Plc

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the six months ended 30 September 2024

 

 

 


30 September 2024

 

30 September 2023



Unaudited

 

Unaudited


Note

 £'000

 

£'000

Loss for the period


 (2,328)

 

(1,663)

 





Other comprehensive income





Items that may be reclassified to profit or loss





Foreign currency translation differences


63


(394)

Reclassified to profit and loss during the period


-


162

Other comprehensive income for the financial period


63

 

(232)

 





Total comprehensive loss for the financial period


(2,265)

 

(1,895)






 

 

Induction Healthcare Group Plc

Condensed Consolidated Statement of Financial Position

As at 30 September 2024

 

 

30 September 2024

 

31

March      2024

 

 

Unaudited

 

Audited

 

Note

£'000

 

£'000

Non-current assets





Goodwill


10,264


10,264

Intangible Assets


9,269


11,162

Property, Plant and Equipment


5


6

Deferred tax assets


382


501

Total non-current assets

 

19,920

 

21,933

 

 

 

 

 

Current assets





Trade and other receivables

6

1,229


3,758

Contract Assets


1,997


1,366

Current tax receivable


-


814

Cash and cash equivalents


3,131


3,690

Convertible loan


816


-

Assets held for sale


-


1,813

Total current assets

 

7,173

 

11,441

Total assets


27,093

 

33,374

 





Non-current liabilities





Contract liabilities


(1,121)


(3,920)

Deferred tax liabilities


(2,812)


(2,831)

Total non-current liabilities

 

(3,933)

 

(6,751)

 





Current liabilities





Trade and other payables

7

(1,696)


(3,571)

Contract liabilities


(3,251)


(1,702)

Liabilities associated with assets held for sale


-


(913)

Other financial liabilities


(23)


(57)

Total current liabilities

 

(4,970)

 

(6,243)

Total liabilities


(8,903)

 

(12,994)

Net assets/(liabilities)


18,190

 

20,380






Equity attributable to equity holders of the parent





Share capital


469


469

Share premium


41,976


41,976

Merger reserve


(1,043)


(1,106)

Translation reserve


1,641


1,566

Other reserves


20,205


20,205

Accumulated deficit


(45,058)


(42,730)

Total equity


18,190

 

20,380


Induction Healthcare Group Plc

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 September 2024

 



Share

Share

Translation

Other

Merger

Accumulated

Total



Capital

Premium

reserve

reserve

reserve

deficit

equity



£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 April 2024


469

41,976

(1,106)

1,566

20,205

(42,730)

20,380

 









Total comprehensive loss for the period









Loss for the period


-

-

-

-

-

(2,328)

(2,328)

Other comprehensive loss for the period


-

-

63

-

-

-

63

Total comprehensive loss for the period


-

-

63

-

-

(2,328)

(2,265)

 









Transactions with owners, in their capacity as owners









Equity-settled share-based payments


-

-

-

75

-

-

75

Total contributions by and distributions to owners


-

-

-

75

-

-

75

Balance at 30 September 2024

 

469

41,976

(1,043)

1,641

20,205

(45,058)

18,190

 

 

 

 

 

 

 

 

 


Induction Healthcare Group Plc

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 September 2024

   

 

For the period ended

 

For the period ended

 

For the

year

ended

 

 

30 September 2024

 

30 September 2023

 

31

March

2024

 

Note

£'000

 

£'000

 

£'000

Cash flows from operating activities







Loss for the financial period


(2,328)


(1,663)


(3,257)

Adjustments for:







Depreciation


1


1


2

Amortisation


2,274


2,150


4,029

Finance costs


1


2


11

Finance income


(83)


(2)


(6)

Share-based payment expense


75


199


299

Net foreign exchange gain


-


-


(180)

Taxation


20


-


(962)

Gain on sale of discontinued operations, net of tax


(525)


(750)


(750)



1,763

 

1,600

 

2,443








Decrease / (increase) in trade and other receivables and contract assets

1,968


146


(1,224)

(Decrease) / increase in trade and other payables and contract liabilities

(3,202)


(1,731)


591

(Decrease) in provisions


(19)


(503)


-

Interest received


67


2


6

Interest paid


(1)


(2)


(11)

Income taxes received


814


365


365

Net cash generated from / (used in) operating activities


(938)

 

(1,786)

 

(1,087)

 







Cash flows from investing activities







Disposal of discontinued operations, net of cash


400


750


750

Acquisition of intangible assets


(47)


-


-

Payment of Software development costs


-


-


(329)

Net cash from investing activities

 

353

 

750

 

421

 

 

 

 

 

 

 

Cash flow from financial activities

 

 

 

 

 

 

Payment of lease liabilities


(34)


(33)


(70)

Issue of ordinary shares


-


-


7

Net cash from financing activities

 

(34)

 

(33)

 

(63)


Induction Healthcare

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 September 2024 (continued)

 

 

   

 

For the period ended 30

 

For the period ended

 

For the

year

ended

 

 

30 September 2024

 

30 September 2023

 

31

March

2024

 

Note

£'000

 

£'000

 

£'000

Net increase in cash equivalents

 

(619)

 

(1,069)

 

(729)

Cash and cash equivalents at the beginning of the financial period


3,690


4,287


4,287

Effects of exchange rate changes on cash and cash equivalents


60


(163)


132

Cash and cash equivalents at the end of the financial period


3,131

 

3,055

 

3,690



Notes to the Condensed Consolidated Interim Financial Statements

1.   Accounting Policies

1.1. Reporting entity

Induction Healthcare Group PLC ("Induction", the "Group" or the "Company") is publicly listed on the AIM market of the London Stock Exchange ("LSE"), and incorporated, domiciled and registered in the United Kingdom. The registered number is 11852026 and the registered address is C/O Pinsent Masons 30 Crown Place, Earl Street, London, England, EC2A 4ES.

1.2. Basis of preparation

These interim financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards ("Adopted IFRSs"). They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the most recent annual consolidated financial information included in the annual report and accounts as of and for the year ended 31 March 2024.

The accounting policies applied are consistent with those applied in the most recent consolidated annual report and accounts for the year ended 31 March 2024, which are available on the Company's website at www.inductionhealthcare.com under "Investors - Financial Reports & Publications"

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtained control and continue to be consolidated until the date when such control ceases. The financial information of the subsidiaries is prepared for the same reporting period as the Group, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions are eliminated in full.

 

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

When the Group loses control over a subsidiary, the assets and liabilities are derecognised along with any related non-controlling interest and other components of equity.  Any resulting gain or loss is recognised in profit or loss.  Any interest retained in the former subsidiary is measured at fair value when control is lost.

These interim condensed consolidated financial statements are unaudited and were approved by the Board of Directors and authorised for issue on 5th November 2024 and are available on the Company's website at www.inductionhealthcare.com under "Investors - Financial Reports & Publications".

 



 

2.   Revenue

Revenue by performance obligations

 

 

Period to 30 September 2024

 

Period to 30 September 2023

 

 

£'000

 

£'000

Provision of software

 

3,939


5,221

Post-contract support and maintenance


225


165

Set-up services


75


169 

Professional services


513


225

Text message revenue


437


277 

Total revenue from contracts with customers

 

5,189

 

6,057

 

3.   Expenses by nature



Period to 30 September 2024

 

Period to 30 September 2023



£'000

 

£'000

Employee benefit expense


3,675


3,686

Contractors


780


814

Amortisation of intangible assets


1,944


2,150

Depreciation of property, plant and equipment


1


1

Professional and legal fees


155


48

4.  Earnings per share

Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

 

Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

 

 

 

 

 

 

 

 

 

 

 

The following table reflects the income and share data used in the basic and diluted EPS calculations:

 

Loss attributable to ordinary shares (basic and diluted)

 

 

 

Period to 30 September 2024

 

Period to 30 September 2023

 

 

£'000

 

£'000

Loss attributable to ordinary shares used in calculating basic loss per share and diluted loss per share

 




Loss from continuing operations


(2,627)


(2,418)

(Loss) / Profit from discontinued operations


(266)


755

Gain on sale of disposal Group

 

525


-

 

 

(2,328)

 

(1,663)

 

 

Weighted average number of ordinary shares (basic and diluted)

 


 

Period to 30 September 2024

 

Period to 30 September 2023

Shares in issue on 1 April

 

93,849,376

 

92,380,300

Weighted-average number of ordinary shares

 

93,849,376

 

92,380,300

 

Basic loss per share from continuing operations


(0.03)


(0.03)

Total basic loss per share


(0.03)

 

(0.03)

 

Diluted loss per share from continuing operations


(0.03)


(0.03)

Total diluted loss per share


(0.03)

 

(0.03)

5.  Discontinued operations

On 1 July 2024 the Company disposed of its wholly owned subsidiary, Horizon Strategic Partners Limited, for consideration of £1.2 million, consisting of a £0.8m loan issue and £0.4m in Cash.

 

 

 

 

30 September 2024

 

 

 

£'000

Revenue



186

 

Cost of Sales



-

 

Gross profit/(loss)



186

 





 

Operating expenses



(82)

 

Impairment



(330)

 

Net operating loss



(226)

 





 

Finance income



-

 

Finance costs



-

 

Loss before tax from discontinued operations



(226)

 

Tax



-

 

Loss for the period from discontinued operations



(226)

 





 

 

The net cash flows incurred by discontinued operations are as follows:

 

 

 

30 September 2024

 

 

 

£'000

Operating



Investing



-

Financing



-

Net cash outflow



(106)




 

6.   Trade and other receivables

 

 

30 September 2024

 

31 March 2024

 

 

£'000

 

£'000

Receivables from third-party customers


930


3,510

Other receivables


103


167

Prepayments


196


81

Total trade and other receivables

 

1,229

 

3,758

 

Trade receivables are non-interest bearing and are generally on terms of 30 days. Included within trade and other receivables is £nil expected to be recovered in more than 12 months.

 

7.  Trade and other payables

 

 

30 September 2024

 

31 March 2024

 

 

£'000

 

£'000

Trade payables


392


1,195

Accruals


810


1,656

Social security and other taxes


438


            665

Other payables


56


55  

Total trade and other payables

 

1,696

 

3,571

 

All trade and other payables are non-interest bearing and are normally settled on 30-day terms. Included within trade and other payables is £nil expected to be recovered in more than 12 months.

 

 

8.  Significant events after the reporting date

At the end of October the group signed a contract worth £1.5m to transform patient access to diagnostic tests across the North Central London Integrated Care System.  (FY24: None).

 

This project will deliver significant enhancements to Induction's integrated platform which will connect the Royal Free London NHS Foundation Trust, Whittington Health NHS Trust, and their corresponding Community Diagnostics Centres in Wood Green and Finchley.

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