Reliq Health Technologies Inc.

This is our forward-looking statement disclaimer. I encourage you to review this at your leisure.

So for those of you who might be new to the Reliq story, Reliq Health Technologies is a rapidly growing global healthcare technology company. We are focused on the virtual care Software as a Service market.

We really are aiming at the chronic disease patient population, primarily in the U.S. It is a multibillion dollar market that is rapidly growing as the population itself ages and grows.

Our iUGO Care proprietary platform benefits everyone in the healthcare system, from patients to clinicians to payers to our company and our shareholders ourselves. We provide comprehensive turnkey solutions that allow clinicians to seamlessly roll out new billable virtual care services.

So the advantage for clinicians is increased revenue as well as improved patient outcomes. We generate recurring revenue from subscriptions, so we're a classic Software as a Service company.

We are growing organically very rapidly at the moment, fueled by industry trend at least the next several years. We have strong margins, so our gross margins and EBITDA margins for 2022 are expected to be 75% gross and 45% EBITDA.

And we expect to uplist to the NASDAQ in late 2022. Agenda for this webinar, we will go through highlights from the fiscal year 2022 second quarter.

That's the quarter ending December 31, 2021. And I'm also going to provide an overview of some of our key metric definitions.

I know there have been some questions from shareholders. We want to make sure that everyone's speaking the same language.

We'll provide an update on our outlook for calendar year 2022, and we'll set the date for the webinar to review -- sorry, I should say Q3 fiscal year 2022 financials. So the Q2 fiscal year 2022 financials, again a reminder that this is the period from October 1, 2021 to December 31, 2021.

During this period, we increased sales to a little under 2.2 million, a significant increase compared to the comparable period in the previous fiscal year. We increased our gross margin to 74%, so very close to the 75% that we expect to achieve this calendar year.

The revenues for the period are from July 1 to December 31, so the second half of calendar year 2021 were 3.748 million as compared to 843,000 for the period from January 1 to June 30. This is very consistent with our message all through last year that the bulk of the growth that we would see in calendar year 2021 would come in the second half of the year, largely due to COVID.

So the increase from the first half of the year to the second half of the year was very significant, was over 344% increase in revenues. After adjusting for non-cash expenses, including share-based compensation and accretion as well as one-time non-reoccurring expenses, legal fees associated with litigation and some costs associated with adopting the fire standards and so on, the company's adjusted EBITDA gain for this past quarter was 48,000 as compared to an EBITDA loss of almost period in the previous fiscal year.

Other highlights from the financials. We've increased our working capital significantly to just under 6 million as of December 31, 2021.

At the end of our last fiscal year June 30, 2021, our working capital was at 939,000. So it's a very significant increase.

We've also been paying down liabilities. As many of you who are familiar with our story are aware during the pandemic, we extended favorable payment terms to our clients to accommodate some of the hardships that they were experiencing as a result of COVID-19.

We also were very fortunate to receive very flexible payment terms from a number of our suppliers. And we are now working through those liabilities and we've reduced the current liabilities relative to the end of the fiscal year June 30 by over 1.3 million to 945,000 compared to 2.238 million at June 30, 2021.

We reached a revenue run rate of 2 million per month as of December 31, 2021, as we expected. And a little bit later on in the presentation, I'm going to provide a little bit more detail about what exactly that means.

I also want to provide a little bit of information around our receivables. So as I mentioned in the previous slide, we did provide a generous extended payment terms to clients during the pandemic.

But the aging receivables, specifically those that are older than one year, will be paid in full by the end of this month, end of March 2022. And we expect to collect all other receivables in a timely manner going forward.

So now that our clients have primarily resumed or predominantly resumed normal operations, we don't expect to see those aging payables persisting. I will note on the receivables front that in some ways, the receivables can be a little bit misleading that number, because for hardware sales that are associated with software subscriptions, so unlike in the previous fiscal year where we sold hardware to resellers or to clients who didn't need software and were just going to use the devices without our platform.

So those would be basically one-time sales that wouldn't generate recurring revenue for us. As of fiscal year 2022, we aren't selling hardware to anyone unless they're purchasing a software subscription from us.

So there is a corresponding recurring revenue stream associated with any hardware sales for fiscal 2022 and beyond. So for those hardware sales, we do offer clients pay over time versus paying upfront.

They can purchase hardware on a payment plan that allows for monthly payments over a 12-month period. If we extend those flexible payment plans to a client, we do so at a higher device price.

So our margins on the hardware sales improved significantly when we are offering the hardware over a 12-month payment plan versus an upfront payment. But we're very flexible in terms of what the client wants to do, what they want to pay upfront or pay for hardware over time.

Hardware is not our primary business as the company grows and as the business evolves, we'll see hardware becoming a smaller and smaller percentage of our total revenues. So we're, at the moment, it may be close to 80%.

Over time, that will drop to less than 20% of our revenue coming from hardware and over 80% coming from software. The hardware is a minor piece of our business, but it's something that a lot of the clients request that we facilitate for them.

And so it's something that we are willing to offer where it's tied to a software subscription, but we will not be selling hardware going forward as we did in fiscal '21 just to generate one-off hardware revenue. The tradeoff associated with the higher margin, payment plans, settlement payment plans is that it ends up looking like we have more aging receivables than we do.

But the reality is simply that that device is not going to be paid in full for 12 months, and that's our expectation. But clients are paying consistently on a monthly basis.

So going forward, we'll see what we can do to try to kind of divide that off from any other software-related receivables so that it's very clear that for the most part anytime you see aging receivables over 90 days, they are hardware related and related to those payment plans not sort of true aging receivables. Customer traction in the first quarter of this calendar year, so the current fiscal quarter, we signed a contract with Cognizant.

They are a $45 billion Fortune 500 firm. And that contract will not only allow us to rapidly scale to support client of any size by leveraging Cognizant's existing Care Management services, but we are also the RPM partner for Cognizant.

So when Cognizant is going into new clients or existing clients who are looking for an RPM solution, we provide that technology and Cognizant and any of its partners, like Microsoft, provide the IT infrastructure and software platforms that enhance the RPM offering. So they basically have a suite of tools that allow customers to integrate with different electronic medical records, to do billing with Medicare and Medicaid and to provide security in mobile device management, all different offerings through Cognizant.

So they're basically an enabler of our platform for these clients. We signed a contract with Data Soft Logic.

They're essentially a practice management software provider to home health agencies. That contract will bring over 600 home health agencies and their associated physicians and patients.

And to Reliq, there are over 500,000 patients who received care through those providers that Data Soft Logic works with. And we anticipate adding approximately 50,000 new patients to our platform every year going forward through this partnership.

We are going live with Data Soft Logic clients in April of 2022. So we're not yet certain how much revenue we'll generate from that partnership, specifically, in calendar year 2022.

But we know that from 2023 on, it will be at least 36 million in new revenue every single year. So just to be very, very clear, it will be 36 million in new revenue in 2023, then 72 million new revenue and total revenue from the Data Soft Logic partnership in 2024 and so on and so on.

So ultimately, that contract is worth roughly $360 million in recurring annual revenue to the company at full deployment. New wins we talk about in the positive industry trends for our business, Medicare introduced five new billing codes in January 2022 for what they call Remote Therapeutic Monitoring.

And this is monitoring of patients who have musculoskeletal or respiratory conditions. So an example would be osteoarthritis as a musculoskeletal condition and then asthma as a respiratory condition.

That expanded Reliq's target patient population by over 20 million newly eligible patients. So our total eligible patient population, our target patient population is now up to 57 million patients who are covered by Medicare and Medicaid.

So that doesn't include any potential upside if we were to work with insurance plans or privately insured patients. So it has substantively expanded our market, and I think it's a very good validation of Medicare's intent.

So it really clearly shows that Medicare is benefiting from these proactive and preventative programs, their virtual care programs. And the expectation in the industry is certainly that funding will continue to grow and the programs will continue to expand over the next several years.

In the first half of fiscal year 2022, so that's basically from July 1 to December 31, 2021, that company signed contracts with 39 new primary care physician practices in the U.S. as well as 10 healthcare organizations in specialties that include hospice care, nephrology, which is kidney care, orthopedics, long-term care, cardiology and care management.

The company also signed contracts with nine new home health agencies in the second half of 2021. Our existing contracts provide a pipeline of over 200,000 patients.

So those are patients who are not only covered by contracts, but are also covered by implementation plans that tell us how many patients will be onboarded per client, per facility that they may have or per location and at what point. So we know from the implementation plans, we have very good visibility into that 200,000 patient number in particular.

So by the middle of 2023, we expect to have those 200,000 patients onboarded at an average revenue of US$40 per patient per month. That translates to recurring revenue of 120 million annually.

The key metric definitions, I know there is often -- I will often get questions from shareholders about what I mean by different terms when I use them. So just to try to clarify, when I talk about revenue run rate, and let me just say that the reason I talk about revenue run rate so much is that that's really what the potential partners and the larger institutional investors, that's really what they're looking at when they're valuing the company or doing due diligence on a company as a potential partner.

Revenue how many patients we have signed up with this platform and onboarded, and it's a very good kind of leading indicator of revenue. So it's a very strong indication, very good indicator for the revenue that the company will do -- minimum revenue the company will do over the next 12 months.

It does not take into account any new contracts that will be signed during that forward-looking four-month period. So it's essentially a conservative estimate of total revenue for the next 12 years.

But it's not guidance because it isn't including other new growth that we're expecting for the year. Revenue run rate is calculated basically by multiplying the number of subscribers or in this case patients that we have on the platform at a given point in time by the average revenue per user at that particular moment.

So it's essentially a forecast, a forward-looking metric. When we talk about revenue recognition when we report revenue in the financials, so sales, this is sales revenue that has been recognized.

And revenue is typically expected to be recognized within two to three months of onboarding of a patient onto our platform. So in the first two to three months, the first month, full month that a patient is on the platform is not billable, per Medicare and Medicaid.

So that's a constraint that we can't get around. That's just part of the way that this business -- this industry is structured.

But after that first month the patient has been on, we're able to bill. The patient has to essentially get through a period of adaptation to their new routine and get to a point where they are consistently using the platform to the point that we are able or their clinician is able to bill for delivering these services to them.

So typically between the one month billable period for Medicare and Medicaid and the next month or two of the patient needing to kind of get their feet under them and really get the hang of using the platform consistently so that they're reaching the minimum compliance thresholds for billing. And typically, we are recognizing revenue within two to three months of a patient being onboarded onto the platform.

That's essentially revenue run rate is revenue recognition by two to three months. When we talk about guidance, the difference between guidance, which is also obviously forward-looking and a forecast, is that the difference between that and revenue run rate is that guidance includes some of the expected growth over the year.

So revenue run rate is really just clients that we've signed contracts with, whereas guidance includes clients that are in the pipeline that we have a very high level of confidence will convert and -- or potential clients that are in the pipeline that we have a very high level of confidence will convert to actual clients during that 12-month period for which we've provided guidance. So the outlook for calendar 2022.

There was certainly a significant unexpected resurgence of COVID-19, the Omicron variant in late 2021 and early 2022. And despite that, we expect growth to accelerate significantly through calendar year 2022, especially now that the numbers are starting to come down again.

I think from a clinical perspective, the expectation is that by next fall, they will either be improved boosters or COVID will have mutated itself into a much more benign form. So I don't think most of us on the clinical side expect another COVID resurgence in our future.

But certainly that's always something that we keep in the back of our mind as a healthcare company. It's unexpected, clinical outbreaks that may impact business.

But we do expect that by the end of this calendar year, we will have signed additional larger scale clients. We continue to expand geographically.

And we continue to see significantly increasing customer demand, both as the existing billing codes allow clients to leverage significant revenues. The typical clinician can now generate over $400 per patient per month by deploying our platform.

With the addition of the Remote Therapeutic Monitoring and billing codes, there is potential for that to increase further per patient. But it also expands the number of patients that a given clinician can offer our services to or offer their services to leveraging our platform.

So there's significant demand for our platform and we expect that to only continue to grow over the rest of the calendar year. We still expect to generate over $40 million CAD in revenue for this calendar year at gross margins of 75% and EBITDA margins of 45%.

The Q3 fiscal year 2022 webinar date, this is for the period that will end March 31, 2022. So we are filing our financials for Q3 fiscal 2022 on or before May 30.

The webinar will therefore be scheduled for on or before May 31, 2020. I want to just leave you with a little bit of an answer in response to questions that I get, a question that I receive frequently from shareholders that's around how to model our forecasted revenue or future looking -- forward-looking revenue?

And I know I've said many times, and particularly as an engineer myself, I'm very, very cautious about models. I think a model is only good as good as your inputs into a model of a company's revenue or inherently flawed if you're not within the company, because you just don't have all the data.

But I think the one key point that I want to make because I know I'm not going to be able to stop people from creating their own models. But the one key point I want to make is it's very important to keep in mind when you're considering and creating your own forecast for the company that patient onboarding is not linear.

So I've seen a lot of comments about how revenue should be such and such, because if we were at X number of patients at the end of the quarter, we would have been adding those patients in even increments along the course of that quarter. And that's certainly not true.

I think I've explained before that -- I know I've explained before over the years that there's definite variation month-to-month and seasonal variation in terms of patient onboarding. So we often will see a large number of clients signing at the end of a quarter, because under their, particularly the larger companies, the way that their businesses operate, that tends to be kind of the drop dead date at which they like to make a decision.

So we may get suddenly a whole bunch of patients at the end of a quarter. They will also be variation around things like most healthcare providers go on vacation in July or August.

And so you're probably not going to get a lot of patients during those two months. But you'll get more patients in September.

You may get a whole bunch of patients in October, but maybe not as many in December because of holidays. So there's that month-to-month variation.

That can also be impacted by things like if you have a big COVID surge and a lot of your patients are too sick to collect data, then that can impact the patient numbers in terms of billable patient numbers. So, again, we encourage you to use our guidance as your model.

But if you are modeling for yourself, it's very important to keep in mind that you cannot model exponential growth linearly. It will tend to produce very inaccurate estimates.

And I know Scott Fitzgerald, our IR and guru internally, has answered some questions on this front. But it keeps coming up, so I did want to make sure that we sort of touched on it during this webinar.

But, of course, feel free to reach out to Scott at IR at reliqhealth.com with any further questions. So thank you very much for joining us.

And it's seems like it's been quite a long winter for all of us, especially with Omicron and Delta before that, but I think it's going to be a really positive spring for all of us. I know we're all dealing with the global concerns around the conflict with Russia and Ukraine.

And so there are much bigger things that we're all worrying about. Certainly on the business front, Reliq is anticipating a very exciting calendar year 2022.

And we're very pleased with the progress to date, but really looking forward to an explosive year this year as a lot of the constraints that have previously been around the company, specifically due to COVID, become no longer issues, no longer constraints.

So thanks for joining us, and we will meet again in about three months I guess. Thank you.

Bye.