Tuesday, September 06, 2011

The Sorry State of Listed Health IT Companies in Australia. Pretty Sad!

It really has been a pretty bad time for large Health IT companies in Australia.
First we had the well-known collapse of iSoft and its purchase by CSC.
Then, right as the death knell of the Australian Listed Companies reporting season we have had the following news:

Global Health narrows FY11 loss to $223k

Healthcare software firm Global Health (ASX:GLH) slashed $500k from its FY11 loss, and lifted its core revenue for the period by 12 per cent
Healthcare software and services company Global Health (ASX:GLH) narrowed its FY11 loss by over $500,000, due to improving core revenue and lower costs.
The company reported a net loss for the year of nearly $223,000, from an $812,000 loss in FY10.
EBITDA swung to a positive $170,000, from a $723,000 EBITDA loss a year earlier.
Core revenue from the supply of software systems to hospitals and health care providers grew 12 per cent to $4.9 million. International revenue more than doubled to about $519,000.
More here:
The losses have been happening for a while

Global Health 1H loss widens to $511k

Global Health, (ASX:GLH), a e-health solution provider, said its loss widened to $511k in the first half as a result of the strong Australian dollar
Lots more here:
The annual basics here are a Net Loss of $223,000
Total Revenue about $5 Million and of that $1.3Million was General and Admin costs.
We don’t have the full report but last year the company spent $750,000 on executive salaries while having a loss of a little over $800,000 for 2010.
It will be very interesting to see how much of this is trimmed in this year’s final report.
It is hard to understand just why this company is actually listed, other than as a source of public funds for the directors to then loose.
Both the accumulated losses and the contributed equity are about $19,000,000. The chances of this ever being recovered would have to be remote!
Following all this we had news from the long deceased, in Australia, ICSGlobal.

ICSGlobal reports maiden $204k profit

IT consulting and e-business company ICSGlobal (ASX:ICS) said solid growth in the UK helped the company move to an FY11 profit
IT consulting and e-business services company ICSGlobal (ASX:ICS) swung to a maiden profit of $204,000 in FY11.
The company lifted its revenue from continuing operations by 35.6 per cent to $1.7 million, led by a 69 per cent increase in revenue from the UK in local currency terms. The contribution would have been higher were it not for an 18 per cent increase in the value of the AUD against the pound sterling during the year.
In its financial report, ICSGlobal said it is well-placed to expand its UK business this financial year.
In Australia, the company concentrated on streamlining its operations, and now no longer employs any full-time executives here.
Earnings were also lifted by the first proceeds from the sale of ICSGlobal's Australian Thelma e-health business, worth up to $1.25 million.
More here:
This report is great fun. The Australian business has been closed down, the former CEO who managed accumulated losses of near to $32,000,000 has returned to the board as a Non Exec Director and directors fees have been well over ½ of the profit.
It is just impossible to conclude either of these companies are being run for the benefit of shareholders in any way at all. Key advice is not invest in sub-par money loosing enterprises like this if you value your savings.
At the other end of the scale we have ProMedicus (ASX:PME).
Here is their release:

Pro Medicus Limited full-year results

Friday 26 August 2011
Leading e-health company Pro Medicus Limited [ASX: PME] today announced its full-year results for the year to 30 June 2011.
·         Revenue – $14.07m, 27.7% lower than last year’s revenue of $19.46m
·         Gross profit – $13.61m, 23.0% lower than last year’s gross profit of $17.68m
·         Net profit – $0.50m, 87.2% lower than last year’s net profit of $3.92m
·         Cash reserves – $3.26m
·         Company remains debt-free
Pro Medicus Chief Executive Officer, Dr Sam Hupert, said the full-year result was in line with guidance made to the Australian Securities Exchange on 20 May 2011 with revenue affected by fewer new sales than anticipated. Profit was further impacted by several factors including a number of one-off payments and the strong Australian dollar with foreign exchange fluctuations reducing the company’s profit by more than $1.1m. As a result, no dividend was declared in the 2nd half.
“The past year has been a difficult one – but I am confident that Pro Medicus is turning the corner,” Dr Hupert said. “We have cleared the decks and taken some financial hits and are now in better shape. We believe that last year will represent the bottom of the cycle for us and we will move up from here.”
Dr Hupert said Pro Medicus continues to invest in new product development and will release its new RIS technology platform before the end of the year.
“This is a new product which we think will reposition us as market leaders,” he said. “Importantly, with our new offering, we are able to configure business-specific workflow and rules to suit clients’ needs without needing to customise the program for each client. This will make a huge difference to both us and our clients. This is a new concept, and a significant advance on what is currently in the market. Unfortunately, like many large scale development projects, it has taken longer to complete than expected but it will be worth it.”
----- End Extract
Full release is here:
A vastly different picture with both cash in the bank, no debt and profits! What a change.
Lastly we must not ignore Primary Health Care (ASX:PRY). They own a health technology division which was the old HCN and which owns Medical Director.
There are still doing OK with revenues about $50M per annum but the revenue is flat and the profit margin is dropping. They failed to sell the division recently due to no-one wanting to pay the asking price apparently.
See here:
All in all it is a pretty sorry sight. We really should be doing better than this is a sector with a pretty good health system and some pretty good IT developers. I guess most of the better and more useful action is in the smaller unlisted sector (think Best Practice, Medical Objects, Pen Computing and so on).

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