The global healthcare workforce is set to experience a squeeze, as the WHO estimates 10 million fewer workers by 2030. Lack of funding, disproportionate migration and low wages are just some of the reasons. This is a worrying picture, especially following the Covid-19 pandemic. 

One company working towards remedying this is the global EdTech provider Keypath Education (ASX: KED), which develops online higher education programs across Australia, the United States, Canada, the UK, Malaysia and Singapore. The Company has been expanding its Healthcare programs, including Nursing, Speech Pathology, and Mental Health.

Following its FY23 results, Keypath Education shifted its focus to the Healthcare segment, seeing it was driving program demand in light of overall dwindling enrollments. 

In Q1 FY24, it saw a revenue of $55.76 million, 13.1% higher than Q1 FY23. Its revenue within the Healthcare segment represented a 27.8% rise. Its Q1 FY24 adjusted EBITDA of $3.5 million was $8.8 million higher than Q1 FY23.

Keypath’s Founder and CEO, Steve Fireng, said, “We are pleased with our progress in FY24 with strong revenue and adjusted EBITDA growth in Q1 FY24 keeping us on track to meet our FY24 guidance. These Q1 FY24 results show the progress we are making in our strategic focus on Healthcare in the US and the APAC region, providing us with confidence in driving revenue growth and continued profitability improvements in the coming periods, including achieving breakeven adjusted EBITDA from H2 FY24.”

Keypath expects that its future vintages (where vintage is the year when the programs welcome their first students) will achieve $39.3 million to $54.9 million in revenue at maturity. With online education services still thriving after the pandemic, Keypath is well-positioned to serve a range of segments. 

Overall, it saw its course enrollments increase by 6.6% on Q1 FY23 to 36.7k students. It is witnessing strong demand for programs in the North American region for Healthcare and, more broadly, in APAC.

Keypath saw an increase in the contribution margin, or profitability of its services, by $6.9 million, reaching $16.6 million. This increase was attributed to large recent vintages progressing to maturity, offsetting the large number of programs it has recently signed, which are in their deepest investment phase. 

Its operating cash outflow was $18.8 million, reflecting the timing of collections and payments and employee and direct marketing costs. Q1 and Q3 are typically lower cash receipt quarters for Keypath as its largest student enrollments generally are in these quarters with a relatively high cash outflow versus inflow. The timing of launches and spending on new programs also impacts quarterly cash flow. 

In FY24, the Company will keep investing in newer vintages. It reaffirmed its guidance for FY24 of revenue between $204.2 million and $212.06 million. It is also targeting adjusted EBITDA profitability from H2 FY24.

As of September 30, 2023, the Company had cash on hand of $51.7 million.