Global Health (GLH) E-Health Solutions

[Bigane]

A health sector/IT stock that has been flying under the radar in the current IT boom is Global Health (GLH).

The main advantage of Global Healthcares products is it reduces the level of paper processing leading to improved patient care, increase productivity and lower operational costs.

The company has three product groups:

Mastercare - An electronic medical record system thal allows sharing of patient information between departments and hospitals worldwide. It also has billing and online claiming functionality.
LifeCard - a secure card that stores a patients health records. This includes allergies, family medical history, prescriptions, test results etc
ReferralNet - A cloud based patient referral system.

GLH is a small cap (Current MC of AU$13m) and is tightly held. It is trading on a hist PE of 10.
It has operations in Australia and Malaysia, having divested from other global markets in 2012.

Restructuring of operations in 2012 has let to significant increases in profitability in 2013 (An increase of 266% in NPAT). The cash position has improved significantly in 2013 ($12k to $825k) and a capital raising had been carried out to retire debt. It is important to consider that the majority of revenue is up front annual subscription payments, leading to great cash conversion (note: over 1/3 of liabilities are unearned revenue). Followers of other cloud based software systems will know that one of the key avantages is that revenue is 'sticky' as customer attrition rates are very low.

The company has stated that the outlook for FY14 will be dependant on the healthcare policies of the new Australian Government, and that they beleive that most short term growth will come from the public health system rather than private clinics.

Interested to know others thoughts.

Disc: Own a small parcel, considering buying more

[percy]

Good to see you have started a new thread for GLH .
The old thread was Working Systems Solutions [WSS].
After Steve Fleming posted [13/7/2013] I tried to buy some at the then price of 12cents.Managed to buy a very small parcel at 16cents [31/7/2013],then they took off,so missed buying any more.Pretty pleased to see them at 40cents.
Prospects look "interesting."

[Bigane]

Wow, GLH is shooting up today up 17% already. Only one marketable holding for sale!

[percy]

But wait! There's more.!!!
I brought more at 37 and 39 cents recently. Just in time to enjoy today's share price trajectory to 46.5 cents,although there have been sales up to 51 cents today.!!

[soulman]

But wait! There's more.!!!
I brought more at 37 and 39 cents recently. Just in time to enjoy today's share price trajectory to 46.5 cents,although there have been sales up to 51 cents today.!!

Good work Percy. I too have been buying in the 30's. EPS forecast at 5 cents this year so on PE of less than 10 this year, no debt (I think) and maybe a maiden dividend this year. All bodes well for GLH.

You are on the Buy and Hold strategy Percy?

[percy]

Good work Percy. I too have been buying in the 30's. EPS forecast at 5 cents this year so on PE of less than 10 this year, no debt (I think) and maybe a maiden dividend this year. All bodes well for GLH.

You are on the Buy and Hold strategy Percy?

I try to buy and hold. I had a re-think a few weeks ago.Sold out of AZV, CAJ,CTE,EPD,IIN, and SOM.
Realised I had made a mistake and brought back into AZV,added to both my EBT and GLH,and brought into KME.
Unless any of them do something I don't like I will hold for a number of years.Doing very well with MNF [brought 17cents] and INA,[brought at 7.5cents]
Will leave my disasters to another day.!!!! lol.

[kiora]

Interesting that Global Health have been operating since 1985 ? but retrenched to Aus market during GFC and revenue only $4,543,000 while Orion Health increased penetration in USA last year and have offices in United States, Canada, United Kingdom, Spain, Australia, Singapore, France, Japan and New Zealand. Orion Health revenue now over $113,000,000

[percy]

Interesting that Global Health have been operating since 1985 ? but retrenched to Aus market during GFC and revenue only $4,543,000 while Orion Health increased penetration in USA last year and have offices in United States, Canada, United Kingdom, Spain, Australia, Singapore, France, Japan and New Zealand. Orion Health revenue now over $113,000,000

I think it is a pity Orion Health is not listed.Appears to be solely owned by Ian McCrae.Would make a great addition to either NZX or ASX.

[noodles]

Excellent half year result from GLH, reflected in a nice burst in share price on a large increase in volume. Currently on a P/E of 12 so a bit of a rerating due as well as financial improvements. If it keeps this up I might have to move GLH from my spec portfolio to my long term growth portfolio :-)

Financial Highlights
 38% increase in Net Profit After Tax (NPAT) of $697,509 compared to the Previous
Corresponding Period to December 2012
 EBITDA of $757,660 for the six months to 31 December 2013 (Dec 2012: $512,061) –
an increase of $245,599 (up 48%)
 Expected full year NPAT of between $1.5M and $1.7M for the 12 months to 30 June
2014

Forward Outlook

The Company has experienced an increase in sales activity over the reporting period and a
healthy project fulfilment backlog. These are encouraging trends that have continued into
the current period.
yes good results. It should be noted that those results include 0 tax dues to previous tax losses. Therefore, a normalised pe (including tax) would be much higher.

That was my reason for not buying on the news. What a fool I was:)

[percy]

A friend sent me a copy of ethical investor.Saw my old friend GLH was on it still.
Had a look at the chart and thought "I'm in again."
A couple of positive announcements in the last few days too.
Brought a small parcel today at 45 cents,so will be interesting to see if the ride is as much fun this time.!!
Page 6 of the investor presentation given on 23rd June was very interesting.

[percy]

Me too. Had it on the watchlist since selling out at 53c, and got back in at 36c :D

Well that's made my day.!!
Always a lot of fun holding the same shares as you.
And very profitable too.!!!!!!!!

[percy]

Did ya gets some ACX and CAT though?????

No...The little birdie who told me about CAT was a little unsure of it at the time.!!!!
Can't recall looking at ACX.
Did catch PRO @ 68cents,and hopeful of CNW performing,although it looks as though it has stopped at the station, to let more pilgrims aboard.?!
Looks as though I was too late buying a ticket on the ADA express too.!

[Bigane]

Not sure that GLH offers great value at these levels. With the unknown outcome of the SA Govt case, reductions in AU Govt funding for medical IT and the weaker half year result, I think it is safer watching from the sidelines. I also don't live the disparity between NPAT and cash inflows year after year (I suspect this is why we still haven't seen a dividend even though this has been profitable for a few years not).

[percy]

Today's announcement that GLH had signed a $3mil contract over an initial 5 year term with ACT Health I thought was positive,as were their comments "Our pipeline is strong and we are confident of further new contract wins in the coming months".
I brought more at 23 cents.

[NZSilver]

Hi Percy, I've looked at this one from time to time, I haven't looked at it recently however on quick inspection after you brought it back to my attention it really hasn't done much in the last year and sp is pretty low. I would be interested in your investment thesis on this one. I remember reading not to sure where once that the software was not the greatest and is also very competitive market. It is in some nice areas though - tech, software, medicine.

[percy]

Hi Percy, I've looked at this one from time to time, I haven't looked at it recently however on quick inspection after you brought it back to my attention it really hasn't done much in the last year and sp is pretty low. I would be interested in your investment thesis on this one. I remember reading not to sure where once that the software was not the greatest and is also very competitive market. It is in some nice areas though - tech, software, medicine.

Yes tech,software,medicine.
June 23rd Investor presentation.
November 25th CEO's presentation.Projected eps year ended June 2016, of between 3 and 3.5cents.=PE of either 6.57 or 7.6.
via HC Rising Star Research.
The transition to cloud Saas model should lead to greater revenue and margin growth.

[noodles]

Yes tech,software,medicine.
June 23rd Investor presentation.
November 25th CEO's presentation.Projected eps year ended June 2016, of between 3 and 3.5cents.=PE of either 6.57 or 7.6.
via HC Rising Star Research.
The transition to cloud Saas model should lead to greater revenue and margin growth.
The RisingStar research can be found here.
http://risingstarresearch.com.au/resources/Global%20Health%20.pdf

[muss1]

After a frustrating year or so the last few
months have been nice. Some clarity around expected performance this FY without the SA govt contract. Good revenue growth (although there was an acquisition) excluding SA govt.

Yesterday's announcement was very positive and I think bodes well. I topped up too as I like the value on offer. With the market sentiment at rock bottom and a bit of growth on the horizon we could see a nice rerate over the next year or so

[NZSilver]

Eps in 2014 was 4.3cps, now eps is around 3cps. Court case with SA would not have helped and as mentioned above aus govt med budget scrutiny. You are really buying this as a turn around story, and with the downtrend and sentiment it could be good buying but it may also go lower. MCap currently 7 mil so very small.

[muss1]

I tend to disagree a bit there NZSilver. It's not exactly a turnaround story. It's a company that lost a major contract which hit earnings hard. The market absolutely punished it. The rest of the business has been ticking away in the background quite nicely. I tend to look at it as though some earnings were sliced off the top, but the SP was disproportionately sliced at the knees. All other reasons I originally bought into the business still stand and have progressed.

I do agree though it's a very small company and a high risk investment

[NZSilver]

Good to hear muss, I think you explanation is quite true - amazing how one contract can sway eps in companies that have a small no. Of contracts. How is the competition places ie Orion comes to mind? Being a small companies means it's nimble but also less staff/r&d. Really like its small and profitable!

[percy]

I think the transition to cloud Saas model could see big growth in both revenue and margins.

[noodles]

I have had GLH on my watchlist for a while. But up until the announcement (http://stocknessmonster.com/news-item?S=GLH&E=ASX&N=436324)this week, I've never owned any.

I think the announcement is significant for their future earnings, and could be a trigger for a rerate. To put the news in context, it will increase revenue by around 15-20% pa. This assumes the revenue is evenly apportioned over the next 5 years. I also like the concluding comment from the CEO... " Our pipeline is strong and we are confident of further new contract wins in the coming months.“"

Certainly the volume that has gone through in the last couple of days indicates that the release is significant. But clearly there is a seller who wants out and is selling into the good news. Perhaps the seller has given up after 2 years of falling revenue and earnings. The company will argue that this is due to the transition to a SAAS model. Rising star research summarizes the situation here (http://risingstarresearch.com.au/resources/Global%20Health%20.pdf).The recent AGM (http://stocknessmonster.com/news-item?S=GLH&E=ASX&N=434533)gave a progress update. There were a lot of encouraging signs that the fall in revenue and earnings have halted. In fact they appear to be growing even after the fall in profits due to the loss of the South Australian contract. "In the first 4 months of this financial year (July‐15 to Oct‐15), management accounts indicate a 3.1% increase in Licence and Recurring Subscriptions over the previous corresponding period (July 2014 to Oct 2014). Disregarding the South Australian Government revenue over the comparison periods, the underlying growth in Licence and Recurring Subscription is closer to 25%."
This is a really important because last year's recurring income represented 80% of total income during the year.

There are many IT related stocks that make money from projects (EPD, RXP, UXC etc). GLH earns most of their revenue from recurring maintenance and SAAS income. This provides a lot of stability and quality to their earnings base. GLH should attract a higher pe multiple than these project based IT services companies. At a price of 23c, GLH are trading on pe=7 based on the mid-point of management guidance (eps=3-3.5c). It is important to note they they pay no tax, and have no debt. MC=$7.5m (a nano-cap).

[Joshuatree]

Thanks for your thoughts noodles et al..I bumped up my buy near closing on thurs to 23c and got my order filled.I "feel" thats a pretty good margin of safety after that announcement. Yes it is in the micro micro cap zone with its own inherent risks.

[NZSilver]

Thanks for your thoughts noodles et al..I bumped up my buy near closing on thurs to 23c and got my order filled.I "feel" thats a pretty good margin of safety after that announcement. Yes it is in the micro micro cap zone with its own inherent risks.

agree'd and im in at 23c too. New sales staff and more contracts should see this one right...

[NZSilver]

agree'd and im in at 23c too. New sales staff and more contracts should see this one right...

Surely I didn't just about time the bottom, that would be a rarity. Well up 11% yesterday so I better enjoy it before markets open today!

[muss1]

Surely I didn't just about time the bottom, that would be a rarity. Well up 11% yesterday so I better enjoy it before markets open today!

You might be pleasantly surprised. I've been looking at the depth for a while and there's been a regenerating sell at 23c ever since the announcement (I don't understand how this works). Yesterday that disappeared and all over a sudden buyers couldn't get what felt like unlimited shares at 23c. I want another parcel still but I don't like my chances of seeing 23c again!

[Joshuatree]

Thanks for a positive first post for the day guys because i know global mkts tanked last night DOW re 275 points worst start of the year since 2008/1932 take your pick, and Chinese mkts halted to stop the drop.Quality stocks often ride through ;lets see what Global Health does today ; maybe another op to top up or not, in a glass half full way.

[Joshuatree]

Download Document (http://hotcopper.com.au/documentdownload?id=uOMxKKzFkiWRTLKhOROKAxjvTkQM6g u7pmeKqJlJ2%2Fk%3D) Good contract! s/p lifts to currently 28c (high as 32c).

[muss1]

I'm surprised this announcement pushed the SP so much compared to the last one given no dollar value. But then again the last announcement was met with relentless offloading

[NZSilver]

37c, always good to be in these rather illiquid stocks when an they are moving up!

[muss1]

This has all happened a lot quicker than I thought it would. I'd love to know how much of these contracts have been factored into their revenue estimate. If they were a bit conservative then we could be in for a nice surprise. Also, I wonder if the market will apply a higher multiple based on the estimate. Historically the PE hasn't been too high (low teens in my time monitoring), so not a given. But if a PE of 20 was applied we could have a way to go yet!

[Joshuatree]

Interview with Mathew Cherian, CEO of Global Health Limited On Switzer TV (https://www.youtube.com/watch?v=ERFkuV0w4nw)

[NZSilver]

Good announcement today

[muss1]

Yep. Their last two announcements have included information about the number of concurrent users licences purchased. Last one was 250 and this one was 175. I'd love to know what this means in dollar terms.

[NZSilver]

Yes surely they should be giving info re $$, but seems we will have to wait - do you have any ball park figures muss?

[muss1]

I haven't looked into the numbers at all - it's the first time I've noticed the users figure so not sure there is anything to compare to. I imagine these are confidential contracts so they can't release the info.

The more contracts they announce the more I think they could beat guidance (obviously). When calculating their guidance numbers they would have factored in new contract wins, but I wonder how many.

[Wolf]

Here is my estimate for the Adelaide PHN contract.

MasterCare EMR selected by Adelaide PHN

There are a few version's of their MasterCare EMR product with different prices.
https://www.global-health.com/Products/MasterCare/MasterCare-EMR.aspx#790e62d2-9647-4b31-a3df-0efd65872d21

The aim of the contract is to support the electronic exchange of correspondence between GP’s, Allied Health and Specialist providers.
So I assume they would be using EMR Allied Health, EMR Specialist or maybe a mix of both.
The agreement encompasses annual licensing, implementation and support for 250 concurrent users.

Using their stated pricing including installation I get the following sums.
250x Allied Health = $180k
250x Speacilist edition = $271k

Then there are additional fee's for addons, which they may have purchased since the ann mentions "support".
Assuming an additonal 4 hours website training pack per user these sums become $381k and $471k respectfully.
However the pricing online is merely representative and I expect that actual figures will be alot different.
A ball park figure may be $200k PA from licensing and possibly an additonal $100k-$200k PA in addons.

The recent 360+ Health contract is harder to value as it has a wider product mix, however i estimate it is similar.

Yet the recent price spike makes me wonder if someone knows something different.
I still think it is safer to assume that these contract wins were included in managments $4.6m revenue target for 2016.
The half year report should provide a better idea.

[NZSilver]

Thanks for sharing wolf

[muss1]

Great post wolf - thanks. I imagine their forecast was based on a likelihood of winning multiplied by contract size type formula. Given sentiment has been hit hard recently I wouldn't be surprised if they erred in the side of conservatism.

I will go through the exercise of seeing what the difference between last years revenue was minus SA contract and this years forecast. That along with Wolfs numbers should give us an idea of where we are sitting

[Joshuatree]

mastercare EMR selected for malaysian mental health programme
PDF (http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01710533)

[NZSilver]

mastercare EMR selected for malaysian mental health programme
PDF (http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01710533)
Im enjoying these contract wins! :t_up: turnaround story of 2016!

[muss1]

Well that's not bad on such a negative day. I wonder if an upgrade is around the corner. A lot of contract wins. I doubt they gave guidance based on the assumption they would win all these contracts. Either way, thank you to whoever was selling relentlessly at 23c or this opportunity would have swiftly passed us by.

[Joshuatree]

Yep double bagger in this mkt hard to come by; this success helps me see a half full glass(of Lindauer Summer). Don't mention PRG etc lol

[NZSilver]

Yep, i still think 60+ cents is not to far on the horizon - good ride so far. Currently up 110%

[muss1]

Does anyone have a date for half year results? I wouldn't be surprised if we see the guidance tweaked upwards. Valuation is still reasonable for 3cps so could put a boost under the SP if it eventuates.

[NZSilver]

Does anyone have a date for half year results? I wouldn't be surprised if we see the guidance tweaked upwards. Valuation is still reasonable for 3cps so could put a boost under the SP if it eventuates.

Should be any day now - last year was the 18th feb when i looked back. I'm excited about GLH - turnaround story of 2016!

[NZSilver]

http://www.asx.com.au/asxpdf/20160225/pdf/435cccjkx28dxx.pdf

eps fy 3-4c, good commentary re sales pipeline.

[muss1]

Yep nice little 15% upgrade to the upper end of guidance. Looks like they are quite confident going forward. Taken a small amount of debt on too which is interesting

[noodles]

Yep nice little 15% upgrade to the upper end of guidance. Looks like they are quite confident going forward. Taken a small amount of debt on too which is interesting
Muss, you mean 33% (4-3/3) upgrade?

[muss1]

The bottom end of guidance hasn't changed (for conservatism I imagine) - I was just referring to the upper end. Either way I am a pretty happy holder

[Joshuatree]

APS and GLH in strategic relationship for eHealth compliance. Very Positive news
PDF (http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01741461)

[NZSilver]

Yep + 2 other contract wins a week or so back, its seems to be positive track. I sold a third of my initial holding I bought at 23c for 42c (approx 80% gain) - I thought of your tactics when i did this JT, and now I will hold the rest. Expecting +ve outcome re court trial and more contract with growing EPS. Still see 60+ cents fair value. This is however a very small iliquid company and has associated risks.

[muss1]

This one could lead to exciting things. Would be interesting to know how many of these are customers already. They keep ticking over small wins that end up trickling down to the bottom line. I find it especially interesting the CEO wants 20m rev by 2020 (I think those were the numbers). That indicates the number of opportunity he thinks are out there

[NZSilver]

Yes I agree, the 3 extra sales staff seem to be working out well. I think we can expect further growth in earnings and sp. Once a the legal case is sorted the market will be a lot more positive towards Glh.

[Joshuatree]

Reluctantly sold GLH;have small number left now atp.Building cash and bought half a dozen Goldies on friday. Things look a mess for a while with Brexitt so hope this kind of hedging helps my portfolio; time will tell.

[NZSilver]

Update yesterday - EPS is going to be approx 0.5c vs previous guidance of 3-4c for fy16... a bit of a surprise... However management is starting 2017 with 1.2 mil revenue already banked and mediation in august for case - can we expect settlement then - that is anyone's guess.. SO good and bad really, but overall short term pain and I'm a bit weary re GLH.

[muss1]

Great timing in the end for you JT.

I'm confused about this. Previous guidance was for less that 5m rev and 3-4cps earnings. Now we have higher revenue and a lot lower EPS. EBIT is going to be roughly equal to the half year.

Are we expecting any significant one off expenses or write downs? It just seems bizarre to me.

It has probably provided a good entry though as it looks like short term pain only. However, I will wait for this to be clarified further before dipping my toes in and possibly even getting my ankles wet.

[NZSilver]

Yes I agree muss - was a bit out of left field. It dosen't do much for my trust in management.

[muss1]

So the SA govt debacle is coming to an end. Any guesses as to what the resolution will be?

My guess is they have to pay what they would reasonably owe and GLH will let them continue to use the product for fees.

Best case scenario is a migration plan to the new system

[muss1]

Pretty decent result really.

And boy did the market enjoy that. I watched the closing auction and all the sellers were wiped out with healthy bids leftover. Could be interesting tomorrow

[muss1]

Accounting experts: will 20% of the one-off $5m payment for April 2015 to April 2020 now be included in the FY16 results? And $1m per year thereafter? Or will this come as a one-off payment in FY17?

I would expect $1m per year (including last FY) because that's when it was earnt

[NZSilver]

Very good result (however I sold out). Should see a nice rerate.