Reliq thoughts... I've been musing lately about Reliq's past, present and potential in light of things issued by the company/IR and commentary by several astute bulletin board posters and friends.
Conventional thinking has put Reliq into 2 boxes, Reliq 1.0 and Reliq 2.0, the former being the business (and monkey business) which transpired prior to the exposure of the company's debacle over alleged former employee shenanigans and the latter being the rebuilding/broadening of the business model based on something more sustainable. I'm now thinking that the whole employee episode is nothing but a distraction.
Let's look at the evolution of Reliq from a different perspective. The original business model was based on a gradual transition to more technology-based in-home care to reduce the number of hospital visits, provide better care and save money. Governments were moving in that direction, but the transition would likely have taken place over a decade. Physicians, home health agencies, etc. would be a major part of the transition, but Reliq could only offer its service and hope to see onboarding. That's the key, that any agreements Reliq would sign with care providers would require those providers to do nothing whatsoever. Oh yes, if they decided to onboard patients, then certain protocols would apply. And, as we all know, those protocols were in their infancy at the time, both within Reliq and within governments as well. BUT, the agencies and physicians themselves had the complete luxury of doing nothing if they wanted to. Imagine signing contracts with a counterparty that didn't have to perform. Of course, that happens in business all the time (such as, when you sign up a new non-exclusive distributor), but that's not what was intimated we were going to see from contracts signed up until the present.
As an aside, it doesn't take much to imagine a Reliq salesperson saying “I know we're early stage, but our software is solid and, if you sign a contract with us you can introduce it to your clients, enroll those who are interested (which should be pretty well everyone) on your own schedule and we'll help you do it if necessary.”
So, early on, under Reliq 1.0, we got an initial number of contracts, many of which went nowhere. That's not surprising when you think of how much government resistance there was to it and how much work/risk would have been involved. Only the most dedicated would have put in the effort to make the transition. From mid 2019 onward (after the debacle), basically under the same paradigm, we saw a lot of smaller contracts which haven't really gotten traction either. In 2020, we've seen a bunch of bigger contracts, which look promising but for which results are as yet unknown.
Once again, all of this is in the context of a slow transition to more automated in-home care. To me, in retrospect, all of this was Reliq 1.0.
So, stopping here, did all of this make Reliq as a company investible? I think the answer is “probably yes”, but it would be a long term investment with a lot lower reward than many (including myself) have been talking about. I say that because change was in its infancy and entrenched systems are slow to change. And, Reliq's counterparties are part of that system. Sure, they could see the writing on the wall and sign a no obligation contract with Reliq, but they could proceed or not proceed based on their own needs and at their own pace. From Reliq's point of view, each new contract represented an important new source of revenue, and they promoted it as such. It seems many of their counterparties were looking at it differently.
I should pause here to acknowledge the effort and dedication of Reliq staff other than those who were in it for themselves. And also pause to reflect on the efficacy of Reliq's software itself. None of what I've said above reflects poorly on either the current staff or the software of the company.
Ok, to proceed...
COVID-19. The big accelerator.
All of a sudden, it becomes much more important - and in many cases a matter of life and death - to keep vulnerable populations as separate as possible from the rest of us. On one hand, States that didn't like automated care are now embracing and promoting it. Governments of all stripes are actively funding it. On the other hand, physicians are seeing office visits decline precipitously. Care homes are swamped with COVID-19. Health care professionals are getting sick. You get the idea: faster change is inevitable and in fact is already happening.
Now, while it's highly likely that Reliq's counterparties still won't be required by their agreements with Reliq to onboard, they are highly incentivized to do so. The company should see much higher levels of onboarding from each contract signed. Still, there won't be 100% onboarding, but you won't have to estimate onboarding by heavily discounting the patient numbers provided in Reliq's news releases. This, finally, hopefully, is Reliq 2.0.
And, now, we hear about some sort of "franchise" thing. That seems to be the company's response to demand it can't satisfy itself with its current balance sheet. If this happens, the details will be interesting. I too wonder about franchise fees.
So, ending here, does all of this make Reliq as a company investible? I think the answer is “very likely yes”, with the final result being more rewarding. Certainly, under Reliq 2.0, any modeling numbers you could possibly run would look very good but, like anything that involves the future, we'll have to let things play out over time.