Like the birth of the internet, telemedicine is a transformational science that will ultimately provide billions of people worldwide with substantial healthcare benefits delivered in real-time & at much lower cost.
However as with many other early-stage technologies, wide-scale adoption can take a little longer than anticipated, as both patients & healthcare providers familiarise/educate themselves wrt which systems to deploy.
Temporarily elongating sales cycles - but ultimately not detracting from the inevitable transition from expensive & resource-heavy face-to-face consultations towards remote & point of care (POC) solutions. Importantly freeing up vital hospital capacity too.
One area where this has enormous therapeutic application is treating incurable, chronic conditions - especially Inflammatory Bowel Disease (IBD), such as Crohn’s & ulcerative colitis.
Here Trellus Health (TRLS ) is a pioneer, providing a ‘1st-of-its-kind’ IBD resilience/AI enabled chronic disease management platform. Which enables adults (17+) to take greater control of their own long term care. A 3m patient & $25bn TAM in the US alone.
Today the group reported ‘in-line’ FY21 results (-$5.7m EBITDA). Adding it had experienced delays in signing new B2B contracts, due to longer client lead-times/approval processes, coupled with challenges obtaining some state licenses & reimbursement codes (eg Medicare & Medicaid).
Sure this is frustrating - albeit #TRLS is not hanging around, but instead adapting the business model.
Indeed it has recently launched a new lower-priced (vs B2B) Direct-to Consumer (DTC) service in the New York, New
Jersey & Connecticut - with plans to later expand across all 50 states.
This strategic shift should both stress test its “Elevate” platform this year (re increasing patient volumes & real world evidence), & help deliver $10.6m of DTC sales in 2023 vs $0.5m for B2B (source: Singer Capital Markets).
Elsewhere, the Board also intends to broaden the clinical proposition by including other chronic conditions such as
Irritable Bowel Syndrome (IBS) in H1’23 (re much larger US population of c. 30m US patients / $61bn annual spend) - followed by autoimmune, kidney, heart and cancer disease thereafter.
Wrt the numbers, house broker Singer Capital Markets have 'right-shifted’ their turnover & EBITDA forecasts to $0.4m & -$9.2m and $11.1m & -$3.2m) respectively for this year & next.
Alongside calculating a Target Price of 32p/share, whilst projecting net cash of $19.6m (or 9.6p/share) as at Dec’22 (vs $32m LY).
Time to be patient.