Careteq further penetrates its large and growing addressable market

Addressing industry thematics of cloud-based computing and technology disruption and the rapid aging of Western populations, Careteq (ASX:CTQ ) has released FY23 results that  demonstrate it is penetrating these addressable markets and is moving closer to creating a sustainable business.  Its suite of leading cloud-based assistive living technology solutions, encompassing intelligent sensors and devices, materially improve the lives and care of the elderly, disabled and vulnerable in our society.

Improved revenue and earnings metrics in FY23

Careteq’s FY23 top-line revenues of $6.4m were up some 23% on the figure for the previous corresponding period (PCP). The Company attributed this revenue gain to the growth and “stickiness” of its Software-as-a-Service (SaaS) platform subscribers as well as the benefits enjoyed from the recently settled Embedded Health Solutions joint venture.

The revenue uplift fed through into reduced losses at both the EBITDA (-$3.5m, down 15% on PCP) and NPAT loss (-$4.1m, down 23% on PCP) lines.

The continued growth in Careteq’s Assistive Living Technology platform, Sofihub, over FY23 was a clear demonstration that the Company is successfully upscaling its business. The number of active Sofihub subscribers jumped by nearly 50% to around 4,600 – and that excludes additional subscribers in the process of onboarding as at end-FY23 who will provide an associated annual recurring revenue uplift of around $0.3m. In another positive, churn remained very low at 1.8% over the past year.

In further news, Careteq’s personal security solution was repurposed by an existing Active Partner for the lone worker market during FY23. This new and significant global opportunity for Careteq has subsequently continued to grow both in the North American and the Australia-New Zealand markets.

The size of the Company’s medication management business ratcheted higher early in Careteq’s Q4 FY23. This after Careteq formed a JV called Embedded Health Solutions Pty Ltd with Mederev Pty Ltd. As part of the transaction, Careteq has a 55% controlling stake in the Health Solutions business. The combined entity, one of Australia’s largest medication management service providers, is already benefiting from economies of scale. It is also in a strong position to meet aged care requirements for embedded medication management, Quality Use of Medicines solutions and on-site pharmacist time.

Careteq has also provided a positive FY24 outlook

Looking to the FY24 outlook, Careteq says it will continue to focus on growing its recurring SaaS subscription revenue, as the Company continues to evolve a business model not reliant on one-off sales of hardware devices. Importantly from a margin performance angle, this revenue growth will be generated by an already optimised cost base.

Focussing on the earnings upside of Careteq’s Sofihub, this platform is currently being trialled by 18 groups (11 in the United States; 7 in Australia). Careteq notes that converting just one of these would likely deliver a significant step change in subscriber numbers. The Company now expects to reach breakeven run rate on an operating basis before end of its FY24, on the assumption that 15,000+ Sofihub subscribers are on its books. Careteq additionally anticipates that the Health Solutions JV will deliver an EBITDA of $1.5m over FY24.