Like most developed countries, Australia’s population is ageing. While senior citizens are known to not exactly be technophiles, a research by the Pew Research Center shows that this group is more digitally connected than ever. In Australia, 87% of seniors now find digital services helpful compared to 71% in 2018, influenced by the pandemic where they had to use smartphones to connect with families and friends, or use QR codes for venue check-ins or contactless ordering and payments.
Also, for tech-savvy seniors that have begun to move into assisted living homes, technology becomes even more unmissable. Platforms like Sofihub for example, have significantly improved their quality of life and independence at home and in care facilities. The cloud-base platform is made by assistive living technology business Careteq (ASX: CTQ) and assists seniors with fall detection monitors, electronic medication management, personal safety alarms, spoken word reminders, and carer alert when help is needed.
As the core product of Careteq, Sofihub ended the June quarter with 4.6k subscribers, up 49% over the previous corresponding period (pcp). An additional 1.3k subscribers will be added over the coming weeks following hardware device sales, representing 90% growth over pcp. Meanwhile, the churn rate (rate at which customers stop doing business with an entity) remains low at 1.8%.
Careteq is targeting Sofihub subscribers to hit over 15,000 subscribers in FY24, which once achieved, will result in a cash flow break even run rate for the Company on an operational basis.
Apart from cashing in from Sofihub’s success, the Company’s June quarter was also livened up by its Ward MM business entered into a joint venture (JV) with another medication business Mederev in April. This JV created a new business called Embedded Health Solutions (EHS), in which Careteq owns 55% of EHS and has a board majority.
The initial integration has delivered early cost synergies, while future sales and operational synergies have been identified. The JV is expecting an EBITDA of $1.5 million for FY24.
In early July, Careteq established an exclusive partnership with National Seniors Australia, a leading advocacy group for older Australians. Through this 2+2 year referral partnership agreement, National Seniors will employ various marketing strategies such as sponsored content, banner advertising, and dedicated landing pages on their website to refer potential customers to Careteq.
The partnership also includes specialised training for National Seniors call centre staff so they can better support their members, many of whom are not tech savvy, in purchasing Careteq’s solutions.
Moving forward, Careteq decided to outsource hardware research and development projects in the upcoming year to allow more focus towards Sofihub. The Company expects this to save annual cost of around $1.2m (excluding one-time expenses) while maintaining access to R&D products from the outsourced party for future commercial release.
As of 30 June 2023, Careteq holds no ongoing core debt and holds $1.8m cash compared to $2.1m in the previous quarter as the Company continued to expand Sofihub distribution into the Australian, New Zealand and US markets.
During the quarter, Careteq accessed an R&D loan facility of $700k which is secured against the FY23 R&D claim. The Company expected to deliver approximately $900k refund based on prior successful experiences.
Careteq has announced a retail entitlement offer to raise $2.47m before costs, which will bump the Company’s cash position to $4m following completion of the offer at an issue price of $0.025 per share.
The Company also stated that new and existing sophisticated and professional investors have provided firm commitments for any potential shortfall under the offer. Moreover, its lead manager, Sequoia Corporate Finance, also procured advance commitments for any shortfall under the offer.
Clara is a Business Reporter for The Sentiment.
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