"@azzy_m I had a great call with Scott earlier today" Thanx to @azzy_m at CEO.CA for this great questions to Scott at IR.
"@azzy_m I had a great call with Scott earlier today that lasted about 45 min. I tried to be direct with my questions hoping to get concrete answers. I was listening and taking notes at the same time so I may not have captured every single detail. However, I think I captured the gist of his answers. NOTE: these are not direct quotes from Scott but rather my attempt to paraphrase his answers. AND please excuse any typos, it's really wonky typing on this board.
Question: Why did Reliq extend generous payment terms to doctors when the doctors were reimbursed by Medicare/Medicaid? It seems borderline unethical for them to not pay for the services for which they were reimbursed for.
Answer: We extended payment terms in order to allow practices to stay afloat during the initial stages of the pandemic. Reliq had the ability from a cashflow perspective to provide generous payment terms and in return, we allowed practices to stay afloat and grow, which in the long run will pay off.
Question: Last two financial statements showed A/R increased quite a bit quarter over quarter, which implies that Reliq isn't collecting. How much of that A/R is attributable to the early pandemic where generous payment terms were extended and how much of it is recent?
Answer: A/R seems higher on the statements because it includes taxes, duties, shipping, etc, whereas those are not included in revenue. From top of mind, about $3m of the A/R is less than a year old and about $1.2m is over a year. The recent A/R will be collected in normal course over 60-90 days. Everything over a year will be cleared out by Q1 calendar 2022. We're not worried about collection because there is a very large risk for customers to not pay. We hold their patient data and if they don't pay, they bear the risk of losing that data because we would cut them off from the service; and secondly, they've received reimbursement from the government and if the regulators find out they received reimbursement but didn't pay, there could be huge consequences for the doctors. Moreover, our auditors reviewed the emails/statements from our customers that have A/R from over a year and they felt comfortable enough to NOT write it off.
Question: is there a percentage of patients that have been onboarded to the platform but are not billable?
Answer: for 2022, our expectation is that on average, about 10% of the patients during any given month are not billable. There could be various reasons for this, including: they don't hit enough of the criteria for doctors to be able to bill, patients may be moving around or are hospitalized, etc. This figure is based on historical data (under normal circumstances - not Covid).
Question: It was said that the issuance of options would stop second half of CY2021 but we're still seeing options being issued.
Answer: these are mostly from prior commitments or new executive hire. Our expectation is that FY2022 will be less than FY2021; and calendar 2022 will be significantly less than calendar 2021.
Question: Lisa has mentioned moving forward the team will be compensated through cash (salaries/bonuses) as opposed to options. How will this impact your expenses and margins?
Answer: the cash based expenses related to salaries/bonuses will grow but so will our sales. The bonuses will be target based so bonuses will only be paid if sales are growing. So while the cash based expenses will grow, they will grow far less than revenue (proportionately).
Question: Are you still holding $11m revenue guidance for CY2021?
Answer: I believe so. I haven't heard otherwise. As we previously disclosed, a big portion of that is from a device order from a big customer.
Question: Is that in connection with a potential large customer contract that is expected to be forthcoming?
Answer: Yes, but if it slips into first quarter 2022, then the revenue guidance for 2022 would be updated (the current $40m guidance for 2022 does not include the device sale from this potential large customer).
Question: How many of these "big deals" are in the pipeline?
Answer: There are lots but there's 3-4 that are close. Some of these deals have been in the works for 2 years. Covid slowed things down but we've really picked things up since about April. Our expectation is that at least one of these contracts will be announced before the end of the year.
Question: what type of organizations are these large clients?
Answer: they are a combination of insurance companies, managed care organizations, acute care organizations, or companies that provide other services to the industry but have large patient populations.
Question: In terms of the 200,000 patient backlog, what percentage of that will be onboarded in 2022 and what portion in 2023.
Answer: Our expectation is that we will have 40k by the end of 2021 and, my expectation is about 100k by the end of 2022. But in reality, we will likely always have a large backlog of patients given the pace of growth.
Question: Moving forward, will you be identifying how much of the revenue is from Saas vs. devices in your financial statements?
Answer: we will be. we have been doing it in the annuals but moving forward we will start doing it in the quarterlies at some point. The problem with the Q1 statement is that since we compare quarters, we would have to go back and reconcile with the previous quarter, and since the first quarter comes so quickly after the annuals, we don't have enough resources to dedicate to this effort but moving forward we will have more accounting bandwith and will start reporting it.
Last question: You've been with the company for a long time and have now navigated through a pandemic, how do you feel about Reliq when you first started and how do you feel about it now?
Answer: I started with the company in 2018 when it was starting to rebuild. at that time, we were selling one product in one market (Texas medicaid patients). As reimbursement codes were changing and making it advantageous for doctors to do medicare billings, company changed it's focused it expanded the services we could provide. This allowed Reliq to go national as opposed to just Texas. We've been moving up the value chain for the last two years, and looking at where we are now, we are on the verge of signing contracts with gigantic health care organizations that have hundreds of thousands to millions of patients. Investors may not see any progress looking at what's been disclosed or in the financial statements, but behind the scenes we have been building the capabilities and credibility of the company and this will show going forward."