Induction Healthcare Group — Evolving technology in healthcare

Induction Healthcare Group (AIM: INHC)

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Research: TMT

Induction Healthcare Group — Evolving technology in healthcare

Induction Healthcare is a growing UK-based healthcare software company, aiming to provide patients with more flexible care options beyond the traditional face-to-face consultation model. Early in FY22, management acquired Attend Anywhere, which was transformative for the business, leading to revenue growth of 8x and a move to adjusted EBITDA break-even. Our forecasts indicate further growth in revenue and profitability, which should be supported by its robust cash position.

Max Hayes

Written by

Max Hayes

Associate Analyst

TMT

Induction Healthcare Group

Evolving technology in healthcare

Initiation of coverage

Software & comp services

4 July 2022

Price

48.5p

Market cap

£45m

Net cash (£m) at 31 March 2022

8.0

Shares in issue

92.1m

Free float

46.6%

Code

INHC

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.6

19.8

(34.0)

Rel (local)

12.7

27.6

(32.0)

52-week high/low

73.5p

39.5p

Business description

Induction Healthcare is a UK-based healthcare technology company, primarily engaged in the provision of software to the UK’s secondary care market. Its products include Attend Anywhere, Zesty, Guidance, Switch and its Induction HealthStream platform. All its products are delivered over a SaaS platform, aiming to improve the efficiency of the market in myriad areas.

Next events

Final results

July 2022

Analysts

Max Hayes

+44 (0)20 3077 5700

Kenneth Mestemacher

+44 (0)20 3077 5700

Induction Healthcare Group is a research client of Edison Investment Research Limited

Induction Healthcare is a growing UK-based healthcare software company, aiming to provide patients with more flexible care options beyond the traditional face-to-face consultation model. Early in FY22, management acquired Attend Anywhere, which was transformative for the business, leading to revenue growth of 8x and a move to adjusted EBITDA break-even. Our forecasts indicate further growth in revenue and profitability, which should be supported by its robust cash position.

Year end

Revenue
(£m)

Adj. EBITDA (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/sales
(x)

EV/EBITDA
(x)

03/21

1.5

(4.6)

(6.0)

(15.0)

0.0

24.2

N/A

03/22e

12.1

(0.1)

(1.3)

(2.0)

0.0

3.0

N/A

03/23e

17.6

1.6

0.3

0.3

0.0

2.1

23.5

03/24e

21.0

2.4

1.2

1.0

0.0

1.7

15.1

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Developing flexible care

Induction has built a track record of improving efficiencies within the NHS through the provision of its four key products: Attend Anywhere, Zesty, Guidance and Switch. In the UK, there has been a drive to enhance the digitisation of healthcare infrastructures, primarily to reduce costs and to give patients more control and flexibility over their own care. Induction’s products address several inefficiencies, from optimising internal communications to enabling virtual care. Its products are high-margin and SaaS-based, designed to integrate with third-party systems, allowing clinicians and other staff to continue using software they may have become accustomed to. Induction employs a buy and build strategy, which it will use to potentially expand into new geographies and other verticals.

FY22: A transformative year

Induction’s FY22 trading update shows an eightfold increase in revenues and a move to adjusted EBITDA break-even, driven by its £25m acquisition of Attend Anywhere in June 2021. Since then, management has renewed multiple Attend Anywhere contracts within the NHS, delivering increases in contract value and term lengths, as well as high retention rates. Zesty, its second biggest revenue driver, saw a substantial increase in annual recurring revenue (ARR), up c 100% y-o-y. All contracts have fixed values and term lengths, providing revenue visibility and driving our forecasts. We forecast revenue growth of 45% in FY23e and 19% in FY24e. We believe that management can maintain good control of its cost base and we expect EBITDA margins to expand to 9% in FY23e and 12% in FY24e. Increased profitability should mitigate high cash burn, and we do not foresee the need for a capital raise soon, excluding acquisitions.

Valuation: Upside potential to the current share price

At 2.1x FY23e EV/sales, Induction trades at a 38% discount to its peers. Were the shares to trade in line with the peers, the implied share price would be 73.4p, suggesting an upside of 51%.

Investment summary

Company description: Evolving healthcare through technology

Induction Healthcare is a UK-based healthcare technology company, providing various software products that integrate with incumbent platforms used by the UK’s National Health Service (NHS). Its products can be easily integrated to improve efficiency, which differentiates it from digital healthcare companies aiming to disrupt existing models of care, which trusts can be reluctant to adopt. Its main products include: (1) Attend Anywhere, a leading provider of virtual consultation software that can sit on a hospital’s patient administration system, (2) Zesty, a patient portal that allows patients to manage their health care, and (3) two healthcare collaboration apps (Guidance and Switch). It operates in the secondary care market, where public funding is c 2.5x higher than in primary care in the UK. The company is benefiting from the NHS’s drive to streamline processes through digital transformation, where its products address many of the objectives of the government’s 2019 long-term plan. Additionally, through a buy and build strategy, we believe there is scope for the group to expand into new geographies and into verticals outside of healthcare.

Financials: Rapid revenue growth and move to break-even

FY22 was a transformative year for Induction Healthcare following the acquisition of Attend Anywhere in June 2021, which drove an 8x increase in revenues to £12m and a move to adjusted EBITDA break-even. Attend Anywhere’s recent contract renewals with NHS Scotland, Wales and England, saw higher than expected customer retention, and in England saw increases in contract value and length. Attend Anywhere’s contract win with the Department for Work and Pensions (DWP) illustrates Induction’s ability to grow outside of healthcare. Zesty, a digital patient portal and its second biggest revenue driver, saw a substantial increase in ARR, up c 100% y-o-y. Management now believes there is scope to significantly increase the adoption of Zesty ahead of its original expectations, underpinned by the government-led drive for digital adoption within healthcare. We forecast that Zesty will be its fastest growing product at a two-year CAGR of 68%. The group has net cash of £8m, which it will use to invest in development, delivery and commercial resources. We forecast revenue growth of 45% (25% organic) and 19% in FY23e and FY24e respectively. We also expect good control over the cost base to deliver EBITDA margin expansion.

Valuation: Upside potential that could increase with M&A

We value Induction on an EV/sales basis, as it only broke even at the adjusted EBITDA level in FY22 and will take a while to build its EBITDA margins. On EV/sales, Induction trades at a small discount to its healthcare software peers and a bigger discount to a basket of European software-as-a-service (SaaS) providers. Were the shares to trade at EV/sales parity with all the peers for FY23e, the implied share price would be 73.4p, suggesting an upside of 51%. To begin closing this gap, Induction would likely need to continue making accretive acquisitions that complement its existing products, enter into partnerships that can extend Induction’s reach and continue expanding into new geographies.

Sensitivities: M&A and execution risk

Buy and build is key to management’s growth strategy, so there is a risk that an acquired company may not perform to management’s expectations. There is also the risk that Induction may not be able to develop an acquired product to management’s expectations. Both risks could be exacerbated if the group acquires a company to expand into an unfamiliar market or region. Additionally, there are sensitivities around customer concentration, and the potential for heightened competition borne from new technologies that may render Induction’s products obsolete.

Company description: Making healthcare more efficient

Induction Healthcare is a UK-based healthcare technology company providing software that helps providers and patients choose how and when they receive care, with the mission to ‘Make healthcare better, anywhere’. Its four key products help streamline the delivery of care via video consultations, a patient portal, internal communications and the provision of guidance from one aggregate source. The company was founded and listed on AIM in 2019, with its founders, Dr Hugo Stephenson and Ibraheem Mahmood, wanting to leverage their corporate finance backgrounds to build a healthcare technology company that could scale quickly. Both had experience in developing healthcare and technology companies and believed there was an opportunity presented by the UK government-led drive to increase the digitisation of healthcare.

In 2019, the UK government published its long-term plan, aiming to improve efficiency and the use of technology within healthcare. Since then, the company has built a strong track record of success within the NHS, with at least one of its products used in 230 out of the 231 hospital trusts in the UK. Part of its success lies in its strategy of ‘evolution not revolution’, which aims to mitigate resistance from clinicians to adopt brand new technologies by offering add-on solutions that integrate with existing software that they may have already become accustomed to. Its solutions provide patients with greater flexibility than has historically been made available through brick-and-mortar models, by advancing the range of in-person and digital care options.

Exhibit 1: Induction Healthcare timeline

Source: Induction Healthcare

Underpinned by the founders’ corporate finance background, management believed the optimum way to scale was through a buy and build strategy. It acquired its first product, Switch, from Podmedics in 2019 and then employed a freemium strategy to rapidly build its user base in the NHS (offering basic features for free and then charging for supplemental or advanced features). Following its initial public offering (IPO) later that year, the company quickly acquired Horizon Strategic Partners (Guidance) and then Zesty and it was able to leverage its user base within the NHS to cross-sell these products.

On 9 June 2021, Induction acquired Attend Anywhere for £25m (a mix of cash and shares; see the Financials section). Attend Anywhere has been transformative for the group, driving an eightfold increase in revenues to £12m in FY22e.

Exhibit 2: Induction Healthcare organisation structure

Source: Edison Investment Research, Induction Healthcare

Induction currently operates in the UK’s secondary care market (hospitals and specialists) and believes it represents the largest opportunity, where, according to management, public funding is c 2.5x higher than in primary care despite lower patient footfall. However, most of Induction’s products can be used in a variety of settings, which should allow it to expand into primary and tertiary care, as well as verticals outside of healthcare. Attend Anywhere’s recent contract win with the DWP provides evidence of the opportunity in verticals outside of healthcare.

Products: Developing flexible care

Induction has built a successful track record within the NHS, where 230 out of the 231 hospital trusts in the UK use at least one of its products. Management acquired and developed products with the aim of improving efficiencies within the secondary market, with upselling and cross-selling being a key part of the strategy to leverage an expanding product base. The company is a pure software provider, allowing for products to be high-margin and scalable.

Currently the company sells four key products, including:

Attend Anywhere – video consultation software that can be integrated with a hospital’s existing patient administration system (PAS).

Zesty – a patient portal that provides access to patient and other hospital data on one platform.

Guidance – a central depository for clinicians to provide homogenous advice to patients across a trust as well as providing guidelines for internal trust-specific processes.

Switch – a productivity toolkit, aiming to improve internal communication.

All its products are white label and can be seamlessly integrated with existing third-party software. This preserves existing workflows and enables customers to continue using systems that they have invested significantly in and may have become accustomed to, such as PAS or electronic health record (EHR) applications.

Induction’s proprietary HealthStream product provides a real-time bridge between a trust’s local systems and Induction’s secure environment in the UK’s Health and Social Network (HSCN) – a data network for health and care organisations. Importantly, this drives many of its products, such as Zesty and Switch, but it also has the potential to generate immediate value for acquired software, which may not have the same application programming interface (API) functionality.

Attend Anywhere (85% of FY22e revenue)

Attend Anywhere (Near Me in Scotland) is a market-leading video consultation platform for secondary care and it is now Induction’s primary revenue driver since it was acquired in June 2021. The software aims to mirror the end-to-end workflow of a physical hospital visit, while also offering the additional benefit for consultations to be delivered at a location convenient to a patient.

Attend Anywhere offers several advantages over standard conference platforms such as Zoom or Teams, including:

Efficiency gains: hospital administrators only need to send out one link for all patients to use, rather than lots of individual links, which is time consuming and can lead to human error. It integrates with a hospital’s existing PAS, which allows for patients to be checked-in in a similar way to a physical visit and directs them to the appropriate virtual waiting room based on their clinical requirement.

Privacy: its proprietary peer-to-peer encryption capabilities allow for the direct exchange of data between two parties, whereas other conference or consultation platforms typically require an intermediary sever. Management believes that the additional steps created by the intermediary server makes the process inherently less secure than the peer-to-peer encryption used by Attend Anywhere. Consultations delivered on Attend Anywhere are automatically deleted following a meeting, ensuring further data integrity.

Exhibit 3: Attend Anywhere patient journey

Source: The NHS

We discuss the financials in more detail later, however we believe that Induction’s recent contract renewals are important to mention here as they highlight the value-add among its customers. First, its renewal with NHS Wales in 2021 saw expansion in scope and uplifts in contract value. In NHS England, it retained 94% of contracts, which was far higher than management’s expectations for larger churn following the shift from national to regional procurement, and equates to 68% share of all trusts (ie acute, specialist and community trusts).

As a pure software provider, Attend Anywhere can also be sold outside of healthcare to other verticals. Its recent deal with the DWP highlights this possibility, where its SaaS capabilities allow it to be deployed at scale to address ubiquitous concerns of efficiency and privacy in any consultation environment. The contract was won through Induction’s partner Involve Visual Collaboration, a UK video specialist, for two years to support the virtualisation of the UK benefits system. Specifically, Induction would supply DWP with Attend Anywhere so that members of the public can hold video consultations with DWP assessors regarding their financial support needs, as an alternative to a face-to-face meeting.

However, further deals in other verticals will likely happen in the longer term as management believes there is still significant scope for growth within healthcare.

As highlighted by its recent contract wins, Induction has a track record of being able to expand the scope and thus increase contract values upon renewal, which can happen frequently as contracts typically range from one to three years. However, given its large share of the NHS across the UK, we believe that the greatest opportunity to scale the platform will be through international expansion in countries that have similar public healthcare infrastructures to the UK, such as Canada, Australia and several European countries (Germany, Italy, Spain etc). Operational barriers may make it challenging to grow internationally but could be made easier through targeted acquisitions.

Zesty (9% of FY22e revenue)

Zesty was acquired in the summer of 2020. Zesty’s platform provides an integration layer with a hospital’s EHR and/or PAS software and a portal for patients. Currently, UK hospitals still use a variety of systems across hospitals or specialities, leading to inefficiencies and a sustained need for manual processes. This creates significant overhead costs: management believes a hospital may require c 100 administrators for every 100,000 patients. Zesty aims to alleviate some of these administrative burdens by providing a digital front door for patients, giving them access to data from a wide variety of third-party clinical systems, including Cerner Millennium, System C Careflow and SilverLink PCS Acute, in a centralised platform. The company has yet to integrate with Epic, the other remaining major system.

Exhibit 4: Induction’s integration workflow

Source: Induction Healthcare

Zesty’s proprietary HealthStream engine integrates with an array of clinical systems, with the aim of joining up care and building a well-functioning ecosystem. Its ability to integrate on a two-way basis with a large variety of systems is a competitive advantage for Induction, as management believe its competitors would likely have to invest significantly to attain the same API capabilities.

When hospitals use Zesty, features include:

Patients have the ability to reschedule or cancel appointments: Zesty provides a direct link to the PAS where patients can choose from a range of available slots.

Remote registration and consent: patients are invited by SMS, email or direct link on the trust website to register for the service. Consent (regarding data) is also managed here. The user base would likely expand significantly, as each hospital could have tens of thousands of patients that sign up for Zesty.

Digital letters: patients can receive, select and view clinical appointment letters, which can result in significant cost savings. For example, a hospital may send over 500,000 letters to 100,000 patients, costing c £1.08 per letter.

Online patient questionnaires: crucial for improving internal non-clinical processes and there is an increased likelihood of patients completing them online rather than physically.

Form builder: enables trusts to create their own forms; previously they would have to find and rely on companies that build specific types of forms, eg pre-surgery forms.

Video consultations: the portal can direct patients to Attend Anywhere as an alternative to a physical appointment.

Asynchronous messaging: improves efficiencies within teams with the ability to share and communicate under one secure platform.

Clinical records: patients gain access to their EHR, enabling them to view, share and store clinic letters, discharge summaries and radiology reports.

A Royal Free London NHS Trust case study highlights the value Zesty provides. The trust used Zesty to develop the ‘My RFL Care’ app, which saw more than 50,000 patients register in the first four months. For every 100 patients invited to create an account on the portal, 63 successfully did and used the platform at least once, highlighting the attractiveness of the Zesty platform for patients.

Guidance (6% of FY22e revenue)

Horizon was Induction’s first acquisition post IPO and was bought for its product MicroGuide, which became Guidance once under the Induction brand. Guidance is an app for doctors (available on mobile or desktop) that allows them to provide homogenous clinical guidance for all patients in a given trust or organisation as well as internal guidance for processes such as doctor on-boarding. Historically, guidance was shared on paper among the trusts in a region, giving rise to disparities in the advice given across hospitals. Guidance addresses this by offering a system akin to a ‘Dropbox’ for doctors, establishing a central depository for clinicians. The content management system can support any kind of guidance, with more than 50 different types currently available ranging from anti-microbial, e-learning, doctors on-boarding, to pain management. A key example is the provision of localised rules for responsible antimicrobial use, laying out the guidelines for which antibiotics should be used for a particular illness. A Southampton case study found that Guidance supported careful antibiotic prescribing, leading to a fall in Clostridium difficile infections from 60 a month to less than 10.

Exhibit 5: Examples of Guidance user interface

Source: Induction Healthcare

Guidance is used in over 50% of NHS England hospitals and consists of several modules: Governance & Review, Patient Information and Decision Support, as well as a Secure Guide feature. The Governance & Review module ensures that guidance given on the app can be regularly reviewed by doctors to ensure that it is up to date and complies with regulation. Patient Information allows a medical organisation to tailor guidance specifically to its clients and provides patients with additional advice by showing related content and also includes powerful search functionality. Decision Support enables medical specialists to stratify guidance for a drug or other treatment choices depending on the characteristics of a patient’s condition or profile. The Secure Guide feature enables medical organisations to create and publish guidance to smaller, more discrete subsets of their clinical population. Guidance contract values are relatively small, ranging from £1–5k per annum.

Switch (0.3% of FY22e revenues)

Switch was Induction’s first product and its only one when it listed. The platform offers a productivity toolkit that helps clinicians and hospital staff save time by connecting them to people and the information they need together on one platform. The services include directory listings, secure messaging and the ability to share workflows and patient information, which can all be done either on or offline.

Switch was Induction’s first acquisition and bought under the name Podmedics. Once under the Induction brand, its user base went from 30k to now over 200k, available and actively used in every NHS trust in England. Management offered the basic version of the product for free to expand its user base, with the intention of upselling customers to the product’s more advanced features (freemium strategy). This also established trust among its users for Induction’s other products (eg Attend Anywhere, Zesty), resulting in cross-selling opportunities.

Exhibit 6: Difficulties reported by junior doctors in NHS Lanarkshire case study, before using Switch, one month after and three months after

Source: Induction Healthcare

As shown by Exhibit 6, an NHS Lanarkshire case study highlights the value Switch provides, with 15 junior doctors reporting a significant decline in reporting problems in three main areas: referring to specialities, requestion investigations and finding guidelines. The study also showed that 100% of the doctors felt that the app saved time and that c 70% of them used the app at least once per month.

Market: Drive for digitisation underpins opportunity

The NHS, Induction’s largest customer, is undergoing structural changes with the UK government aiming to streamline processes through both consolidation and digital transformation. The inefficiencies the government is trying to address, such as long wait times and the difficulty for patients to access their own patient records, have resulted in patient frustration, worsening clinical outcomes and high administrative costs. We expect that cost burdens will worsen with rising medical inflation.

Induction’s products have a track record of improving efficiencies within the healthcare market, and its experience working with the NHS makes it well-placed to capture the opportunity. Moreover, we note that Induction’s products have potential to expand outside of the UK and in verticals outside of healthcare.

Opportunities in a simplified procurement framework

Each of the UK’s four countries control their own NHS services. In each country, trusts can procure technology directly, although increasingly in England, procurement is being managed at the integrated care system (ICS) level (see below). With funding being made available at the ICS level for digital services, this is likely to accelerate the shift of procurement from local trusts to ICSs.

Following the publication of the NHS long-term plan in 2019, there has been an emphasised shift to consolidate the regional model from many fragmented clinical commissioning groups (CCGs) into 42 integrated care systems (ICSs), as shown in Exhibit 7. This is part of the concerted effort to streamline the decision-making processes for the allocation of resources, the design of services and improvement of the population’s health. Consolidation is set to be complete by July 2022 (previously April 2022) and should lead to a more equitable distribution of resources across health and social care providers, a more integrated approach to health and social care provision and help to relieve some of the current pressures facing the NHS.

Exhibit 7: Simplified structure of NHS England

Source: Edison Investment Research

NHS long-term plan to drive digital adoption

Funding the improvement of the digital capabilities among all the NHS trusts is a key part of the government’s 2019 long-term plan, which focuses on making data more available to patients and technology providers to open new opportunities in prevention, care and treatment. The widespread adoption of Induction’s products in 230 of the 231 the NHS Trusts highlights the company’s trusted partner status and we therefore believe it is well placed to drive further digital adoption in the space.

The UK government’s plan focuses on several areas in which Induction specialises, including:

improving digital access to NHS services;

optimising the way in which clinicians and patients can interact with EHRs, while protecting patient privacy and data integrity;

using digital tools to alleviate administrative burdens;

enforcing technology standards to ensure data is interoperable and accessible; and

providing a supportive environment for software developers and innovators.

Management believes that simplifying the patient journey is necessary to deliver care more effectively. Currently, the number of clinical pathways is increasing due to improvements in medicines and technology, but the capabilities of hospitals’ administrative systems are lagging behind. The company believes that this mismatch can be addressed by its integrated approach. As add-on products to existing software, Induction’s products should help preserve existing clinician workflows and thereby mitigate potential resistance to digital adoption.

COVID-19 and funding

Public funding for health services in England rose steadily from 2007 to 2020, followed by a step change increase in spending due to COVID-19. As illustrated by Exhibit 8, the King’s Fund expects NHS funding at its core level to increase, moving from £143.9bn in 2020 to £176.4bn in 2024, equating to a 5.2% CAGR.

Exhibit 8: Department of Health & Social Care spending, 2007–24

Source: The King’s Fund. Note: 2022–24 are King’s Fund forecasts

Typically, a portion of funding is allocated to an ICS based on the clinical requirements for a region. However, the government can use pump priming to catalyse the use of a product/system across the market, meaning it commits to investing for a determined period outside of a hospital’s budget. This was the case with Attend Anywhere, which received national funding for five months pre-COVID-19, led by NHS CEO Simon Stevens, who released a report saying that he wanted to reduce footfall in hospitals by 30%. Attend Anywhere was key to achieving this as around one-quarter of a hospital is made up of the waiting area, so it makes sense to digitise this with either remote video or asynchronous solutions.

After the pandemic started, Attend Anywhere usage accelerated substantially, with 3m consultations delivered on the platform in its first year in NHS England, equating to one of the fastest roll-outs of a single technology in NHS history according to an Edge Health report (Edge Health is a UK health and care analytics company).

At the end of 2021, the same Edge Health report reviewed the success of video consultations in secondary care and in addition to identifying cost savings for the trust, it noted the benefit to patients because of reduced travel and waiting times, avoidance of potential hospital-acquired infections and averted productivity losses for patients having to miss work.

This underpins the value of Attend Anywhere within secondary care and illustrates how management were able to retain 94% of NHS England trusts, despite funding moving to a regional model.

The healthcare software competitive landscape

In the UK and globally, there is a large range of healthcare technology companies aimed at improving the delivery, efficiency and quality of care. The NHS defines three main types of technology: point-of-care applications (mainly focused on supporting clinicians to deliver care and includes EHR, PAS, medicines management software), patient-facing applications (to access primary, community or secondary care), and back-end applications (often including a database, usually national in scope). Induction’s software is designed to integrate with point-of-care applications, either to help clinicians in the delivery of care or to allow patients to manage their own care. We have identified a selection of UK providers that can compete directly with Induction:

Huma – allows hospitals to manage health records and clinicians to share patient data through a secure mobile platform. It has three accelerator programmes aimed at speeding up the adoption of healthcare technology in the NHS.

Cera – partners with the NHS and local authorities to deliver at-home nursing, repeat prescriptions and telemedicine services to pensioners, over the phone or through its website.

accuRx – originally a provider of text messaging software to GP practices, accuRx expanded into offering video consultation software during the COVID-19 pandemic. It has since developed its offering to serve secondary care providers, as well as providing Record View, software that allows secondary care providers to view GP records from anywhere.

DrDoctor – competes with Zesty, providing tools to improve patient booking and confirmation processes, maximise clinic capacity, enable bulk messaging to patients, staff and volunteers, facilitate remote consultations between clinicians and patients, and increase patient engagement through digital communications.

We believe this competitive landscape also highlights the opportunity for consolidation, where Induction could leverage its buy and build strategy to provide a greater range of options under one umbrella brand.

Landscape outside of healthcare

Unlike most digital health providers, Induction develops product-agnostic software that does not require the onboarding of specialists, such as doctors, which could expand its addressable market beyond healthcare. A report by Deloitte showed that digital adoption across public departments is being driven by budget pressures, as well as from citizen demand. Its study from over 70 countries showed that nearly 70% of public sector departments believed they lagged their private sector counterparts when it comes to digital capabilities, which increases to 75% when looking solely at the UK.

We believe that most of Induction’s products could address some of the inefficiencies caused by antiquated analogue operating models. The recent Attend Anywhere deal with the DWP provides tangible evidence that this is a possibility; we note there are 23 ministerial departments it could possibly work with. Management used the UK’s Ministry of Defence as an example of an organisation that would benefit from Attend Anywhere’s capabilities, with security being a top priority.

Strategy: Innovating within existing ecosystems

Since its inception, Induction has acquired and developed four products, providing organic growth opportunities as the NHS goes digital and as result of cross-sell/upsell to clients. The company is keen to expand customers of AA to its flexible care platform (AA+Zesty+Guidance+Switch) and estimates that this could expand ARR per ICS from £180k to £700k.

M&A remains at the core of its strategy, where it will be used primarily to expand into new territories as well as grow its product range. Developing strategic partnerships will also be key to achieving both.

Buy & build underpins the flexible care strategy

M&A has always been core to Induction’s business model, where the founders believed that they could leverage their corporate finance backgrounds to develop a scalable healthcare technology company.

The company’s main M&A focus now is to acquire companies that can accelerate its entry into new geographies, by helping it mitigate potential operational barriers. The company has also used M&A in the past for product development, which will continue to be key to its growth strategy. Further acquisitions should help diversify revenues and potentially reduce customer concentration (the NHS is currently its largest customer at an estimated 95% of revenue).

As part of its strategy for incremental innovation, rather than disruptive, acquired companies will ideally produce software that can integrate with existing systems to allow for the preservation of existing workflows, thereby reducing resistance from staff who are unwilling to learn a new system.

Induction now targets acquisitions that are accretive to growth and profitability, where they should ideally have a similar ARR-driven SaaS business model to make it easier to integrate into its existing platform. This acquisition strategy follows the success of the Attend Anywhere acquisition. Attend Anywhere generated revenue of £10.4m and EBITDA of £4.5m in the year to 30 June 2021, supporting Induction’s move to EBITDA break-even in FY22. Management can then use its experience in the market to accelerate revenue growth, while employing economies of scale to reduce costs and drive efficiency.

Geographic expansion

Induction already has a small presence outside of the UK, including in Ireland, Australia, the United States, Mexico and South Africa. For example, the Attend Anywhere management was based in Australia and Induction plans to launch Attend Anywhere there with the aim of generating revenues in Australia in FY23. There is scope to expand in this list of geographies, as well as those with public healthcare infrastructures, which we have identified in Exhibit 9. The map illustrates the significant opportunity to diversify revenues outside of the UK.

Exhibit 9: Map highlighting global potential

Source: Edison Investment Research. Note: Dark green – already operating, mid-dark green – most likely targets, light green – public infrastructure but unlikely to enter, grey – no public healthcare.

Acquiring companies in targeted territories would accelerate entry in those markets, primarily by reducing operational barriers. Once in a new region, the company can employ its land and expand strategy to cross-sell its products, which have a track record of success in the UK’s public healthcare market.

Module development

The UK healthcare market is currently fragmented, consisting of many point solution providers, often with low user bases and only a modest number of customers. Through consolidation, management believes it can reduce the number of systems that healthcare professionals rely on, while also maximising potential efficiency savings. Once present within a trust, the company is well-placed to cross-sell its other products.

We note that Induction can develop and integrate its own technologies once a product is acquired. In 2021, the company launched Booking as an add-on feature to Zesty, which saw multiple regional contract wins to facilitate COVID-19 vaccinations and the delivery of home antibody tests. Management intends to continue investing in its technology to add more features to existing modules, which they believe will not only give rise to upselling opportunities but will also make products stickier.

Evolution versus disruption

Unlike many telehealth providers that aim to disrupt the market, Induction intends to provide incremental and evidence-based solutions. It achieves this by evolving pre-existing systems, which health providers may have become accustomed to and may have invested millions in. This ensures minimal disruption to existing workflows, which management believes is key to user uptake and adoption. Unlike many telehealth providers, Induction does not provide clinical services – its pure software offering is scalable, high margin and does not compete with its customers’ clinical work.

Strategic partnerships to accelerate expansion

Induction works with third parties to accelerate growth in either new geographies or verticals outside of healthcare. Currently, a primary sales partner is Involve, a UK-based video specialist with over 30 years of experience delivering audio visual and collaboration solutions across healthcare, corporate, legal and public sector markets. This partnership was key to Attend Anywhere’s DWP contract in November 2021. The contract had an initial value of £2.6m spread over two years, with the chance to double this to £5.2m if the contract is extended to four years. Induction also collaborated with Involve to win its contract with Health Service Executive, the Republic of Ireland’s publicly funded healthcare system.

Elsewhere, Induction entered into a value-added reseller agreement with Cerner Corporation in October 2020, where NHS Trusts that are already Cerner clients can access Zesty’s patient portal without the need to go through a protracted procurement process. This partnership could also provide a channel to international markets, where Cerner has a substantial footprint.

Creating value for healthcare and technology providers

Induction’s products can provide solutions for problems that may be faced by large healthcare and technology providers. An example of this was Induction’s agreement with Milton Keynes University Hospital NHS Trust, which saw one of the first UK roll-out of secondary care health records on iPhones through the Zesty platform. Cerner and Apple partnered with Induction for this roll-out, with Zesty providing patient authentication and onboarding. Induction’s management believed both partners recognised clear value from the ability to consolidate Cerner’s electronic patient records on to the iPhone’s health app. Cerner sees higher utilisation of its digital health records, Apple can now provide this service to its customers, and over 70,000 patients now have greater autonomy over their health care.

The board and executive management

Induction Healthcare’s board consists of the chairman, CEO, CFO and four non-executive directors. Christopher Samler recently replaced Chris Spencer as chairman on 7 June 2022, having previously held roles as CEO and chair of several quoted and private companies, in the education, healthcare, services and technology sectors.

James Balmain joined the board as co-CEO in June 2020, following the acquisition of Zesty, which he co-founded in 2012. His time at Zesty gave him valuable experience dealing with the NHS at a commercial level. In September 2021, James became sole CEO after Hugo Stephenson took on a new role as global executive director. The CFO is Guy Mitchell, who has worked at Induction since August 2021 and has previous experience as interim CFO at AIM-listed FreeAgent, and Oxehealth, a SaaS medical software producer. The executive team includes CTO Dave Williams, who joined from Just Eat in September 2021. Biographies are provided on page 20.

One of the co-founders, Hugo Stevenson, remains involved with the company. He recently stepped down to the non-executive director role he originally held on admission to AIM in May 2019.

Financials

Business model

Induction Healthcare primarily sells into the secondary care market. Revenue is mainly generated from licensed subscription services, but it also collects fees for initial set-up services. Management’s experience is that the public sector does not like open-ended contracts, so fees remain fixed throughout the life of a contract and do not change with usage. Contracted business is a key performance indicator (KPI) for Induction, as it provides robust short- and mid-term revenue visibility.

Historically, contract sizes have been relatively small and contract lengths circa one year, where cash collection occurred either upfront or quarterly. As management built a track record of success within the NHS, it has been able to win significantly larger contract sizes with longer term lengths.

Many of its renewed contracts are now also paying for the entire term length upfront, representing a substantial increase from collecting cash on an annual or quarterly basis. The company only recognises revenue once the project has gone live, which is positive for working capital. Revenue and the associated costs are amortised over the length of the contract.

The size of a contract is dependent on the product sold and end-customer. We highlight a few examples below:

Attend Anywhere NHS England (April 2022) – aggregate contract value of £10.9m and ARR of £6.6m. Contracts range from between one and three years, with the majority committing to at least two years.

Attend Anywhere (Near Me) NHS Scotland (March 2022) – revenue of £2m on a 12-month contract.

Zesty London hospitals contract (April 2022) – total revenue of £3.6m and ARR of c £650,000, where the combined contracts have terms ranging from two to nine years.

FY22 results show move to EBITDA break-even

FY22 has been a transformative year for Induction following the acquisition of Attend Anywhere, which drove an 8x increase in revenues to £12m and a move to broadly EBITDA break-even for the year ending 31 March, as reported in the company’s trading update of 21 April. We expect full year results to be reported in July.

Exhibit 10: Summary of revenue and profit forecasts

Year end 31 March, €m

FY19

FY20

FY21

FY22e

FY23e

FY24e

Attend Anywhere

-

-

-

10,300

14,535

16,935

Zesty

-

-

872

1,064

2,126

2,900

Guidance

-

148

636

700

840

1,007

Switch

-

-

5

32

64

128

Total revenue

-

148

1,513

12,096

17,565

20,970

Operating expenses (excluding D&A, share-based payments and one-off costs)

(2,696)

(3,222)

(6,126)

(12,192)

(16,012)

(18,546)

EBITDA

(2,696)

(3,074)

(4,613)

(97)

1,552

2,425

D&A

-

(323)

(1,347)

(1,207)

(1,257)

(1,257)

Normalised operating profit

(2,696)

(3,397)

(5,960)

(1,304)

295

1,168

Amortisation from acquired intangibles

-

-

-

(2,000)

(1,900)

(1,800)

Share-based payments

-

(94)

(698)

(777)

(792)

(808)

Exceptional items

(11)

-

(1,584)

(3,355)

-

-

Reported operating profit

(2,707)

(3,491)

(8,242)

(7,435)

(2,397)

(1,441)

Free cash flow

(2,360)

(4,108)

(5,678)

(5,713)

(1,562)

(2,307)

Net debt/(cash)

2,331

(10,718)

(2,471)

(8,093)

(6,531)

(4,224)

EBITDA margin

-

(2077%)

(305%)

(1%)

9%

12%

Normalised operating margin

-

(2295%)

(394%)

(11%)

2%

6%

Reported operating margin

-

(2359%)

(545%)

(61%)

(14%)

(7%)

Source: Edison Investment Research, Induction Healthcare

In its FY22 trading update, both revenue and EBITDA were in line with the already upgraded market consensus. ARR was reported to have grown to £15m, providing good visibility for FY23 and beyond. Its performance was supported by Attend Anywhere’s recent contract renewals with NHS Scotland, Wales and England, which saw higher than expected customer retention, as well as some increases in contract value and length. Its contract win with the DWP also illustrates Attend Anywhere’s ability to grow in verticals outside of healthcare.

Attend Anywhere was acquired on 9 June 2021 and hence was included for just under 10 months of FY22. Its H122 revenue contribution (for just under four months) was £3.6m (the interims disclosed that it would have been £5.9m if it had been owned for the full six months). Its full year contribution will be disclosed with the final results.

Zesty, its second biggest revenue driver, also saw a substantial increase in FY22 ARR, reported in the trading update to have been up c 100% y-o-y. Management now believes there is scope to significantly increase the adoption of Zesty ahead of its original expectations, underpinned by the government-led drive for digital adoption within healthcare.

The company’s move to EBITDA break-even in FY22 benefited from acquiring Attend Anywhere, which offset ongoing losses elsewhere. Attend Anywhere had delivered positive EBITDA of £4.5m in the 12 months to 30 June 2021 (and it contributed net profits of £1.99m to the H122 results).

Fund-raise bolsters financial position

Induction’s FY22 trading update reported year-end net cash of £8m (March 2021: £2.5m). In June 2021 it raised gross proceeds of £25m via a placing of 35.7m shares at 70p. At the same time, it acquired Attend Anywhere for £16.3m in cash and the issue of 14.3m consideration shares worth c £10m. Management intended to use the funds raised for product development, delivery and commercial resources.

The trading update reported that the cash balances have increased since March 2022 due to strong renewals of NHS England Attend Anywhere contracts. While in the near-term, the company is targeting organic growth, in the medium-term M&A will the main driver of growth.

Introduction to our forecasts

Induction views contracted business as its primary KPI, with a contract’s fixed value providing revenue visibility. This drives our revenue forecasts, with Exhibit 11 illustrating that the company has already contracted c 70% of our FY23 revenue forecast.

We expect that Attend Anywhere’s revenue will drive Induction’s growth. Aside from expected underlying growth in FY23 (which we estimate at 18%), it will contribute for the full 12 months versus just under 10 months in FY22.

Attend Anywhere recently won contracts with NHS England, Scotland and Wales, as well as with the DWP, equating to £11.5m in contracted revenue for FY23 (£9.7m in FY21, £10.3m in FY22). We assume that management can win two contracts in the year with a total value of £3m, which we believe is achievable given recent contract wins.

Exhibit 11: Product breakdown of FY23 revenue forecast

Source: Edison Investment Research, Induction Healthcare

We use the same process in our FY24 forecasts. However, we also assume a c 80% renewal rate for those contracts with a term length of 12 months, which seems conservative given that the company typically delivers a retention rate of over 90%.

Looking at profitability, we believe the company can maintain control of its operating costs as it continues to scale. The company capitalises development costs, which have historically been high relative to revenues: in FY21 capitalised development costs were 110% of revenue. Following the Attend Anywhere acquisition, and the subsequent rise in group revenue, we believe capitalised development costs will fall relative to revenue. In FY22, we expect capitalised development costs to be 25% of revenues and remain at similar levels in the medium term, reflecting planned investments in its technology and R&D team.

Our EBITDA estimates are in line with management’s guidance, which show the company moving to EBITDA profitability by end-FY23, followed by further margin expansion in FY24.

We believe that growth in profitability and a move towards positive free cash flow should help Induction maintain its robust net cash position. We estimate that total cash burn will be c £2m in FY23 and FY24, which will mean Induction may not need to conduct any additional fund-raisings. However, we note that management may need to raise capital if it intends to make any further acquisitions.

Valuation

Below, we show Induction’s valuation against global small-cap healthcare technology providers and a selection of European SaaS companies. We have used European SaaS companies to provide a more direct comparison to Induction’s operating model, as many of the healthcare technology providers are not SaaS and have different operating models.

We do not believe a discounted cash flow is appropriate given the company’s limited track record and loss-making history.

Peer valuation: Upside potential

We value Induction primarily on an EV/sales basis, as we forecast the company will remain loss-making at the reported PBT level in FY23 and FY24 and it is only just beginning to expand its EBITDA margins (to 12% in FY24e).

On EV/sales, Induction trades at a slight discount to its healthcare technology peers but is at a significant premium on EV/EBITDA in FY23 and FY24, reflecting how Induction is earlier in its profitability cycle than many of these peers. Looking at our basket of SaaS peers, Induction trades at a greater discount on EV/sales across FY23 and FY24 at an average of 43%. It still trades a large premium on EV/EBITDA across both years, but less significantly than with the healthcare technology companies.

Were the shares to trade at parity with all of the peers on EV/sales for FY23, the implied share price would be 73.4p, suggesting an upside of 51%. To begin closing this gap, Induction would likely need to continue making accretive acquisitions that complement its existing products, enter into partnerships similar to those with Cerner and Apple to extend Induction’s reach, and continue expanding into new geographies.

Exhibit 12: Peer group valuation

 

Price

Ytd performance

Market cap

EV

EV/sales (x)

Forecast sales growth

EV/EBITDA (x)

FY23 EBITDA margin

Company

(local ccy)

(%)

(£m)

(£m)

FY22

FY23

FY24

Two-year CAGR (%)

FY22

FY23

FY24

(%)

Small cap healthcare technology providers

EMIS

1860p

36.8

1,177.6

1,119.5

6.7

6.3

6.0

5.5

22.3

19.9

18.8

31.8

Computer Programs and Systems

US$32.5

10.8

396.3

461.3

2.2

1.9

1.8

12.6

12.2

9.9

8.9

18.9

Cegedim

€22.8

(5.0)

269.5

480.7

1.1

1.0

1.0

5.1

5.4

5.3

4.9

19.5

Craneware

1615p

(33.4)

577.8

409.0

7.5

2.8

2.6

70.1

21.3

9.6

8.7

29.5

OPTIMIZERx Corp

US$27.8

(55.2)

417.7

355.1

7.9

5.3

4.1

39.0

63.8

32.4

20.4

16.5

Tabula Rasa HealthCare

US$2.6

(82.7)

55.4

306.0

1.3

1.3

1.2

2.6

20.7

31.3

21.2

4.3

Average

(21.5)

4.4

3.1

2.8

22.5

24.3

18.1

13.8

20.1

Premium/discount to healthcare tech

6.6

(32%)

(33%)

(37%)

9.2

N/A

31%

9%

(11.3)

European SaaS peers

Esker

€128.9

(64.3)

661.9

628.9

5.6

4.8

4.0

17.7

26.6

24.2

20.1

20.0

Craneware

1615p

(33.4)

577.8

409.0

7.5

2.8

2.6

70.1

21.3

9.6

8.7

29.5

DotDigital

70p

(64.7)

208.7

180.2

3.1

2.9

2.7

7.6

9.3

8.8

8.4

32.6

Smartcraft

€15.7

(23.2)

225.7

214.1

9.5

7.5

6.5

21.1

24.5

18.6

15.3

40.6

Pexip Holding

NOK13.6

(66.8)

118.5

61.1

0.9

0.7

0.6

19.7

N/A

N/A

10.9

(10.3)

MotorK

€3.4

(51.0)

119.3

90.0

3.9

2.4

1.8

47.7

N/A

15.4

8.0

15.6

Sidetrade

€126.0

(26.5)

147.5

143.3

5.3

4.3

3.6

21.4

33.8

41.7

25.3

10.4

SaaS average

(47.1)

5.1

3.7

3.1

29.3

23.1

19.7

13.8

19.8

Total average

(34.3)

4.8

3.4

2.9

25.9

23.7

18.9

13.8

19.9

Induction Healthcare

49p

(14.9)

44.6

36.6

3.0

2.1

1.7

31.7

N/A

23.6

15.1

8.8

Premium/discount to SaaS (%)

32.2

(41%)

(43%)

(44%)

2.3

N/A

20%

9%

(10.9)

Premium/discount to total (%)

79.4

(36%)

(38%)

(41%)

5.8

N/A

25%

9%

(11.1)

Source: Edison Investment Research, Induction Healthcare. Note: Priced as at 4 July 2022.

Sensitivities

Our forecasts and Induction’s share price could be sensitive to the following factors:

Customer concentration: the NHS is the group’s primary customer (accounting for c 95% of revenues on our estimates), so any changes to the NHS structure or level of funding would significantly affect revenues. To mitigate this, management has built cross-political party support for its technologies and plans to expand globally to diversity its customer base.

M&A and execution risk: buy and build is key to management’s strategy, so there is a risk that an acquired company, or its development once acquired, may not perform to management’s expectations. This risk could then be exacerbated if the group acquires a company to expand into an unfamiliar market/region.

Competition and technological change: Induction operates in a competitive environment and there is the potential for a new technology to render Induction’s products obsolete or competitively impaired. This could have an impact on its market share as well as putting potential downward pressure on pricing. However, this risk is mitigated by the stickiness of Induction’s products – once software is embedded in workflows and clinicians become accustomed to using it, they are often reluctant to switch to alternative products.

Regulation: healthcare data is heavily regulated, so this could create barriers to entry when expanding geographically. Misuse of data in the areas it already operates could have a material impact on the group’s financial performance and reputation.

Restricted liquidity: the free float of Induction shares is low at 46.6%.

Exhibit 13: Financial summary

£'000s

2019

2020

2021

2022e

2023e

2024e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

0

148

1,513

12,096

17,565

20,970

Cost of Sales

(66)

(73)

(636)

(2,648)

(3,513)

(4,194)

Gross Profit

(66)

75

877

9,448

14,052

16,776

EBITDA

 

 

(2,696)

(3,074)

(4,613)

(97)

1,552

2,425

Normalised operating profit

 

 

(2,696)

(3,397)

(5,960)

(1,304)

295

1,168

Amortisation of acquired intangibles

0

0

0

(2,000)

(1,900)

(1,800)

Exceptionals

(11)

0

(1,584)

(3,355)

0

0

Share-based payments

0

(94)

(698)

(777)

(792)

(808)

Reported operating profit

(2,707)

(3,491)

(8,242)

(7,435)

(2,397)

(1,441)

Net Interest

0

47

(2)

(20)

(10)

(6)

Joint ventures & associates (post tax)

0

0

0

0

0

0

Exceptionals

0

(83)

(91)

0

0

0

Profit Before Tax (norm)

 

 

(2,696)

(3,350)

(5,962)

(1,324)

285

1,162

Profit Before Tax (reported)

 

 

(2,707)

(3,527)

(8,335)

(7,455)

(2,407)

(1,447)

Reported tax

0

0

504

0

0

0

Profit After Tax (norm)

(2,696)

(3,350)

(5,962)

(1,324)

231

941

Profit After Tax (reported)

(2,707)

(3,527)

(7,831)

(7,455)

(2,407)

(1,447)

Minority interests

0

0

0

0

0

0

Discontinued operations

0

0

0

0

0

0

Net income (normalised)

(2,696)

(3,350)

(5,962)

(1,324)

231

941

Net income (reported)

(2,707)

(3,527)

(7,831)

(7,455)

(2,407)

(1,447)

Basic average number of shares outstanding (m)

13.2

26.2

39.7

67.1

92.1

92.1

EPS - basic normalised (p)

 

 

(20.5)

(12.8)

(15.0)

(2.0)

0.3

1.0

EPS - diluted normalised (p)

 

 

(20.5)

(12.8)

(15.0)

(2.0)

0.3

1.0

EPS - basic reported (p)

 

 

(20.6)

(13.5)

(19.7)

(11.1)

(2.6)

(1.6)

Dividend (p)

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

N/A

N/A

922

699

45

19

Gross Margin (%)

N/A

51

58

78

80

80

EBITDA Margin (%)

N/A

(2077)

(305)

(1)

9

12

Normalised Operating Margin

N/A

(2295)

(394)

(11)

2

6

BALANCE SHEET

Fixed Assets

 

 

222

3,999

16,153

41,369

42,443

44,040

Intangible Assets

222

3,902

15,258

40,474

41,548

43,145

Tangible Assets

0

0

15

15

15

15

Investments & other

0

97

880

880

880

880

Current Assets

 

 

397.0

10,881.0

3,969.0

14,328.2

17,238.4

16,891.3

Stocks

0

0

0

0

0

0

Debtors & contract assets

128

163

1,051

5,789

10,261

12,220

Cash & cash equivalents

169

10,718

2,471

8,093

6,531

4,224

Other

100

0

447

447

447

447

Current Liabilities

 

 

3,261.0

2,074.0

2,421.0

6,201.4

11,800.9

13,689.1

Creditors & contract liabilities

761

665

2,423

6,201

11,801

13,689

Other financial liabilities

0

1,409

0

0

0

0

Short term borrowings

2,500

0

0

0

0

0

Other

0

0

(2)

0

0

0

Long Term Liabilities

 

 

0.0

359.0

1,235.0

5,709.0

5,709.0

5,709.0

Long term borrowings

0

0

0

0

0

0

Other long-term liabilities

0

359

1,235

5,709

5,709

5,709

Net Assets

 

 

3,880

17,313

23,778

67,607

77,191

80,329

Minority interests

0

0

0

0

0

0

Shareholders' equity

 

 

3,880

17,313

23,778

67,607

77,191

80,329

CASH FLOW

Net income

(2,707)

(3,527)

(7,831)

(7,455)

(2,407)

(1,447)

Depreciation & amortisation

0

323

1,347

3,207

3,157

3,057

Working capital

533

(313)

600

(959)

1,127

(71)

Net interest

0

0

0

0

0

0

Exceptional & other

11

170

2,376

2,512

785

801

Tax

0

0

(504)

0

0

0

Net operating cash flow

 

 

(2,163)

(3,347)

(4,012)

(2,696)

2,663

2,340

Capex

(197)

(761)

(1,666)

(3,018)

(4,225)

(4,647)

Acquisitions/disposals

0

(976)

(1,987)

(13,486)

0

0

Change in borrowing

2,500

0

(501)

0

0

0

Equity financing

30

16,115

(64)

24,821

0

0

Dividends

0

0

0

0

0

0

Other

0

(490)

0

0

0

0

Net Cash Flow

170

10,541

(8,230)

5,622

(1,562)

(2,307)

Opening net debt/(cash)

 

 

0

2,331

(10,718)

(2,471)

(8,093)

(6,531)

FX

(1)

8

(17)

0

0

0

Other non-cash movements

(2,500)

2,500

0

0

0

0

Closing net debt/(cash)

 

 

2,331

(10,718)

(2,471)

(8,093)

(6,531)

(4,224)

Source: Edison Investment Research, Induction Healthcare

Contact details

Revenue by geography

20 St. Dunstan’s Hill
London – EC3R 8HL
United Kingdom
+44 (0)333 9398091
https://inductionhealthcare.com/

Contact details

20 St. Dunstan’s Hill
London – EC3R 8HL
United Kingdom
+44 (0)333 9398091
https://inductionhealthcare.com/

Revenue by geography

Management team

Non-Executive Chairman: Christopher Samler

Chief Executive Officer: James Balmain

Christopher replaced Chris Spencer as non-executive chairman on 7 June 2022, having previously held CEO and chair roles at several quoted and private companies in the education, healthcare, services and technology sectors. He also has significant experience supporting growth for businesses across the US and Europe, as well as emerging economies in Asia, Latin America and the Middle East.

James has a wealth of NHS facing commercial experience, having co-founded Zesty Limited in 2012, a multi award winning UK digital health company. Prior to Zesty, James was ecommerce director at EE, leading the digital teams at both Orange and T-Mobile during the merger and subsequent launch of EE.

Chief Financial Officer: Guy Mitchell

Chief Technology Officer: Dave Williams

Guy Mitchell is a finance professional with over 20 years’ experience in senior financial leadership roles. He previously served as interim CFO at AIM-listed FreeAgent, a SaaS based accounting software company, and as interim CFO at Oxehealth Limited, a venture capital and private equity backed global SaaS model medical software supplying mental health trusts and care homes with a niche solution unrivalled in the market.

Dave Williams joined Induction Healthcare from Just Eat in September 2021. He has over 25 years’ experience leading technology teams, including positions at CompuServe UK, AOL UK and the UK Hydrographic Office, a trading fund of the UK Ministry of Defence. During his tenure as chief information officer at Just Eat, Dave held group-wide accountability for the stability, scalability and security of all e-commerce platforms and the technology used by Just Eat employees.

Management team

Non-Executive Chairman: Christopher Samler

Christopher replaced Chris Spencer as non-executive chairman on 7 June 2022, having previously held CEO and chair roles at several quoted and private companies in the education, healthcare, services and technology sectors. He also has significant experience supporting growth for businesses across the US and Europe, as well as emerging economies in Asia, Latin America and the Middle East.

Chief Executive Officer: James Balmain

James has a wealth of NHS facing commercial experience, having co-founded Zesty Limited in 2012, a multi award winning UK digital health company. Prior to Zesty, James was ecommerce director at EE, leading the digital teams at both Orange and T-Mobile during the merger and subsequent launch of EE.

Chief Financial Officer: Guy Mitchell

Guy Mitchell is a finance professional with over 20 years’ experience in senior financial leadership roles. He previously served as interim CFO at AIM-listed FreeAgent, a SaaS based accounting software company, and as interim CFO at Oxehealth Limited, a venture capital and private equity backed global SaaS model medical software supplying mental health trusts and care homes with a niche solution unrivalled in the market.

Chief Technology Officer: Dave Williams

Dave Williams joined Induction Healthcare from Just Eat in September 2021. He has over 25 years’ experience leading technology teams, including positions at CompuServe UK, AOL UK and the UK Hydrographic Office, a trading fund of the UK Ministry of Defence. During his tenure as chief information officer at Just Eat, Dave held group-wide accountability for the stability, scalability and security of all e-commerce platforms and the technology used by Just Eat employees.

Principal shareholders

(%)

Lombard Odier Asset Management

15.97%

Ryan (Christopher James)

11.95%

Blue Muse Investments

7.77%

Knowhow Holdings

6.00%

Harwood Capital

4.89%

Acacia Research Corp

4.54%

Chelverton Asset Management

4.43%


General disclaimer and copyright

This report has been commissioned by Induction Healthcare and prepared and issued by Edison, in consideration of a fee payable by Induction Healthcare. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Induction Healthcare and prepared and issued by Edison, in consideration of a fee payable by Induction Healthcare. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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