Reliq Health Technologies Inc V.RHT.H

Updated Thoughts on Reliq (RHT.V - RQHTF) – February 2018

[narmar]

November 12, 2017, was my last updated thoughts on Reliq at which point my summarized opinion and short-term price target based on my analysis was as follows:

“I am expecting multiple updates from the company before year-end and early 2018. In my opinion, we’ll see a lot of traction from the recently closed deals with PAZ and RGVHA and the subsequent ramping up patient onboarding.
In the meantime, I think we hit my expected target of “north of a +1$ CAD” before Christmas. And that is if Reliq doesn’t lock down any further agreements by that time. Any new agreement announcement will push the SP hard in the short term.
That being said, I personally have a longer-term outlook on Reliq and think RHT will be worth multiple dollars by early 2019, maybe even earlier. We will most likely even be targeted for a buyout sometime next year for 3 to 5$.”

*  So what has happened since my last post? 

1) The share price has passed the $1 mark on December 1^st 2017, and since then we have traded a total of 65.3M shares over the past couple of months (Dec 1^st 2017 to Feb 2^nd 2018) at an average price of approximately $1.23. That represents 65.5% of the 98.2 total outstanding shares over approximately a 2-month period.   
 
2) Reliq has also had their first investor call on December 1^st 2017. After listening to the call, I can honestly say that Lisa has gained so many fans in the capital markets community. She is considered as one of the Top CEOs on the venture. So not only am I super proud of what Reliq has achieved, I am also tremendously proud of what our CEO has achieved. You don't just get this recognition by bullshitting your way through it, gaining the trust and support of the big boys is no easy feat.   
 
3) With the onboarding of +6,000 paid patients Reliq has achieved the coveted milestone of being cash flow positive from operations in December 2017.
 
4) Reliq has closed two additional contracts for 3k patients (worth $1.8M YSD annually). With these additional 3K patients, Reliq has reached a total patient pipeline of 51K contracted patients worth $30.6M USD in annual recurring revenues at full deployment.
 
5) Reliq has also closed a $10M financing at $1.12 (with half a warrant, each full warrant exercisable at 1.75). This latest raise gives Reliq a balance sheet that many companies would be envious of and allows the company to effectively target and close larger customers. The extra cash could also come in handy in potentially getting Reliq uplisted on an exchange like the NASDAQ.   
 
6) After being selected as a Top Pick on BNN by a major name, Bruce Campbell, Founder and Portfolio Manager of StoneCastle Investment Management Inc., Reliq has received a second endorsement as a ‘Top Pick’ recommendation on BNN from Peter Imhoff, VP and Portfolio Manager at AGF Investments. Peter recommended RHT at $1.33.
 
From what I know, Peter seems to be a strong fundamentalist and likes to hold investments until they actually don’t do well operationally. Which makes Reliq a perfect investment as the fundamentals are already way ahead of the current SP and continue to get better with management continuing to fire on all cylinders.
 
*  So Today on February 4^th 2018, what are my updated thoughts on Reliq?

After carefully dissecting every news release, analyzing every interview with Lisa, carefully listening to every word said on the last investor call, and discussing at length with several experienced and savvy investors, I am more bullish on Reliq now than I have ever been before. I must say, I think we are sitting on a monster in the making.

Reliq’s team has completely zoned their strategy and efforts to maximize their penetration of the 37 Million Medicaid/Medicair patients with 2 or more chronic conditions.
Only 1% of this target market would represent 370K patients. I hate to be one of those guys that say if we can only get 1% of the market share it would be huge and I am only using this statement to illustrate the fact that Reliq has merely scratched the surface of the target US market. However, I have absolutely no doubt that Reliq has the full intention and ability to penetrate their target market in the US and gain a sizable market share of the aforementioned 37M patient group.
But just for argument sake, the 370K patients would put a value per share of $21 to $25.63 using the same assumptions outlined below.

As outlined by the CEO in the last investor conference, this segment of the market is where Reliq is fully focused on and has a clear first mover advantage. Additionally, the majority of the target institutions are very motivated due to the cost savings to the system and due to the fact that only a small portion of what they get reimbursed from Medicaid/Medicair for the patient monitoring and/or telemedicine is paid to Reliq as their monthly subscription fee. So basically, the value proposition for these institutions makes the speedy onboarding of patients on the Reliq platform a no brainer.

Finally as detailed below, using only the current agreements for the onboarding of 51k patients (refer scenario # 1 below), I believe the share price should be north of +$3 by year-end 2018 which is more than double the current price. However, with a potential patient pipeline of 150-200K patients by year-end 2018, that puts the share price closer to $8 to $14 (refer to scenario # 3 and # 4 below).

I personally think that Reliq has a very good chance of signing +200K patients and onboarding north of +100K patients by early 2019. If it happens, then we would be easily talking about a Market Cap north of $1B and a price per share on a fully diluted basis north of $7-$8 CAD per share over the next 12 months. 

Now, these aforementioned estimated values were calculated on a fully diluted basis and assume NO additional value added based on the expected rollout of the direct to consumer application and the potential Big Data revenue (value should be recognized once we hit 20K patients this year). Both of which can, and will IMO, unlock a TON of additional revenue for Reliq and value for its’ shareholders.

* One Request from all current and future shareholders!!

If I could recommend anything for current and potential investors to get a general idea of the opportunity at hand here, I would recommend that absolutely everyone watch the most recent interview with the CEO conducted on January 23^rd 2018 at the ‘Capital Event Conferences’.

MUST WATCH VIDEO
https://www.youtube.com/watch?v=8iGSQawm51o&feature=youtu.be

I have also written out the answer as detailed by the CEO to the concluding question of the interview (See below): 

Q. What’s ahead for you guys?

We just hit a few key milestones, by onbarding +6K patients and achieving profitability in December. We also just closed a $10M raise where we brought in some major institutional investors through that raise.

Now we have an attractive balance sheet and capital to really fuel accelerated growth.
We are already profitable, but that additional capital will provide a really attractive balance sheet which will help us attract larger customers but also to really help us accelerate our penetration of primarily the US market where the 37M Medicare and Medicaid patients who have chronic diseases and for whom our system is 100% reimbursed, they represent a $180B market for us.
So being able to accelerate our growth is Key!

Good Luck to all,
Narmar

**   Please follow me on twitter:  @kingnarmar   **

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Important Note: Much of this info has been shared in the past and has been updated to reflect the latest public news and my speculative opinions and estimates of the potential value for RHT.
Also, full disclosure, as many of you can decipher from my writing, I am very bullish on Reliq in the short and long term and I currently own a significant amount of shares in the company. In fact, Reliq is currently my largest holding and I personally intend on holding onto my shares until the actual value is realized in the share price.
Also, there is never any substitute for doing your own DD and everything detailed in this post is me sharing my personal opinion and analysis and not a recommendation to buy or sell.

** Refer to further analysis and illustration of potential valuations detailed below. **

Tele-Health & Remote Patient Monitoring

There is a tremendous need for Reliq’s technology in the market and that demand is increasing significantly every day. This growing adoption of tele-health is happening at a faster pace year after year.

Also, for those following healthcare news, this trend is very evident, as some key legislation has passed in the US in 2017 that is very positive for the tele-health industry and its growth. This push by government is happening all over the world.

Essentially, compared to its full potential, the tele-health industry as a whole is just in its infancy and there is absolutely no doubt amongst intelligent people that the entire healthcare system is heading towards telemedicine. And that’s just to be able to survive the growing demand from the aging population and manage the increasing cost. So it is either use technology to revamp healthcare or just bankrupt the system. Not much of a choice there, which bodes very well for RHT.V RQHTF.

It is also very important to note that the rapid adoption of telemedicine is not only being promoted by governments around the world, it is also being heavily promoted by healthcare institutions. The main driver here of course is the bottom line, healthcare institutions can charge Medicare / Medicaid, or the respective government agency the same fee while reducing their cost by using technology to dramatically increase healthcare professionals productivity.

Not to mention of course, the fact that delivering quality healthcare to rural locations across north America and other parts of the world is only made practical through telemedicine. Basically, travelling for hours to see the nearest doctor or specialist is made unnecessary by telemedicine.  

Telemedicine = faster delivery of care = more patients seen by a doctor in a day = higher profits (healthcare institution happy) = less waiting time and backlog (patient happy, which also equals voters happy and thus governments happy).

In addition to telemedicine, 24/7 remote patient monitoring is revolutionizing the healthcare industry. The amount spent on managing chronic disease that is increasing in our aging populations is just immense. Patient monitoring allows for earlier intervention (before any health issues become too severe) and improved patient outcomes. This reduces the strain on the healthcare system and the associated costs by preventing long stays in hospitals or an earlier return to hospital than otherwise necessary.    

Reliq’s Platform

Imagine the son or daughter that wants to make sure their parents health is stable and wants to be alerted at the first sign of change, or the home-care facility that wants to offer more advanced health monitoring to their patients and their families, or the individuals across North America that live in rural locations that need better access to a doctor, or even the entire healthcare system that has become unsustainable without tele-health and home patient monitoring to reduce cost, reduce re-admittance, and reduce longer patient wait time. As a result of all these factors, the demand for RHT’s platform is unquestionable in my opinion.

* So what are some of the main functionalities provided by Reliq’s platform?

Note: This list is not a complete list, just a few main points that are continuously evolving in my opinion as different healthcare clients use the platform.

- Secure, cloud-based platform providing real time access to patient health by the patient’s circle of care (physician, family, care giver, etc.).
- Continuous patient monitoring of various health indicators (including trends and statistics), alerting the circle of care of any change in condition or leading indicators requiring intervention. 
- Monitors patient compliance with prescribed medication and lifestyle changes. This includes monitoring patient movement in the house and patient activity using sensors. So not only is the circle of care alerted (in time to intervene) if there is any missed or over dosage of prescription drugs, but they are also alerted if the patient is excessively frequenting the bathroom or hasn’t left the bedroom for 24 hours (among other indicators of the patient having any issues).
- Monitors the patient’s location outside the house for dementia patients.
- Remote physician consultation via secure video conferencing.
- Supports care givers in their day-to-day workflow.
- Allows timely and more regular access to care to patients in remote or rural locations. 
- Addresses patients questions and provides responses via two way voice system (ex: What pills do I take in the morning?, I see a red pill and a blue, which one should I take and why was it prescribed to me?, What are the possible side affects of this medication? etc.)
 
But what makes Reliq Health Technologies unique is the following: 

1 - Comprehensive solution:

Reliq is the only comprehensive solution in the market. There are other companies that are targeting bits and pieces of what the Reliq platform offers, many of which only work with proprietary hardware (usually focused on a specific condition), which must be sold with the software. This is a great advantage for Reliq.

2 - Security as a Top priority:

The Reliq platform was developed with the highest level of security in mind. Some might not know this, but top talents in cloud security were involved in the development of Reliq's platform.

Worthy of mention here is that Reliq’s CTO is one of the top 5 cyber security experts in the WORLD. Reliq’s platform was developed with ‘Best In Class’ cyber security for Reliq’s patient data, which is an absolute key advantage and differentiator.

3 - Compatibility with the majority of hardware:

The Reliq platform is integrated and compatible with many of the leading hardware in the market and the list continues to grow. Essentially, Reliq does not need to worry about a better pressure monitoring devise coming to market or a customer having a brand preference. Reliq will integrate (if not already done) the hardware of the customer’s choosing with the platform.

4 - Very healthy margins

Unlike 99% of venture companies, as a software company Reliq’s profit margins are north of 80%. I have witnessed many companies go from pennies to +3$ based on strong sales contracts only to retrace back significantly when it becomes clear to shareholders that the company’s low margins are making it difficult to become cash flow positive and actually grow the company as initially expected.
This will not be the case with Reliq with margins ranging from 80 to 90% of sales.

5 - Recurring Revenue Model:

With the exception of some deals made earlier (for example the white label deal with the city of San-Antonio for +1M), the majority of Reliq’s contracts will be generating growing recurring revenue. If we take the PAZ deal as an example, once the 10K patients are onboarded, Reliq will be recognizing 7.2M USD annually and this number will continue to grow as the population ages and the number of home care patients keeps on increasing. This will be the same for every deal that Reliq signs.  IMO it is safe to expect all Reliq’s customers to grow annually at a significant pace.

6 - Ease of Scalability:

Ease of scalability is key for any business and Reliq checks all the boxes on this front. Reliq has developed a robust platform and continues to build additional functionalities based on customer needs. The key is that once any customization is built for one customer it can be easily rolled out to all future customers with the same need. Essentially, Reliq can grow exponentially year after year with absolutely no slowdown or large capital investment. The sky is the limit here.

This should not be confused with onboarding thousands of patients at the same institution at the same time. There is a cap to how many patients can be on-boarded at the same institution due to resource constraints at the healthcare institution. There is always a limited number of patient facing personnel (ex. nurses and other healthcare professionals) that are integral to the successful patient onboarding. But like I mentioned previously the steady onboarding of patients increases the satisfaction of the patients and the staff with the platform as any concerns are addressed earlier and the strain on the institution is minimized.

That of course doesn’t mean that Reliq can’t onboard 1,000-1500 patients monthly simultaneously across 10, 20 or 100 different customers. Reliq essentially employs a train the trainers model. So once the initial trainers (patient facing professionals like nurses or home care professionals) are educated, they themselves train the next wave and the next wave internally.

7 – Top Notch Management Team:

While I think Reliq’s management team is one of the best I’ve seen for some time now, I will just focus on a couple of management team members.

CEO: Anyone that has had the fortune of actually meeting Lisa and hearing her speak in person, knows that she is an absolute Rockstar of a CEO. I personally got heavily invested after hearing the story first hand at an investor presentation in Montreal.
The ability to clearly tell the story and give confidence to the listener is not something every CEO has, other then managing the strategic direction of Reliq, this quality has been very useful with customer acquisition and with increasing Reliq’s investor base.

I have no doubt that her abilities were instrumental in telling the story to Bruce Campbell and his team, which recently got Reliq a Top Pick spot on BNN.

While managing the daily business, Lisa has managed to be on the road on a regular basis spreading the word to larger and more sophisticated money. I think getting the likes of Bruce Campbell and Peter Imhoff to be fans of Reliq is just the start. This story is getting out and it is happening faster than most would have estimated.

Worthy of mention here is that Lisa was announced as a finalist for the 8th Annual Cantech Letter Awards for ‘CANADIAN TECH STOCK EXECUTIVE OF THE YEAR (TSXV)’.

https://www.cantechletter.com/newswire/cantech-letter-announces-finalists-for-8th-annual-cantech-letter-awards/

The ‘Cantech Letter Awards’ recognize excellence in Canada’s innovation sectors. They are selected by an anonymous panel of more than 40 sell-side analysts from dozens of Canadian investment banks.

CVO: In addition to Lisa at the helm of the operation, Giancarlo has been the key to landing the recent multi mullion dollar agreements and maintaining the ongoing pilots, while constantly meeting and demoing the platform to new healthcare customers.

I haven’t had the pleasure of meeting him personally, but from what I hear he is entirely focused on delivering the absolute best product and service to the customer. He is absolutely relentless in his pursuit of customer satisfaction. He is also very close to all that is new and cutting edge in the mhealth industry.

I personally think that landing the current agreements with a currently non-existing sales team should come as no surprise with Giancarlo on the team. I expect he has much more exciting news in the works as he seems to be constantly meeting new customers and planning new and exciting improvements to the platform.  

IMO, at some point in the near future, Reliq will hire additional account managers that will be set up for each group of customers or a specific geographical area (ex: Texas, Ontario, London, etc.,). Currently, the role of account manager and sales team is being filled by the ‘Sales & Business Development’ team at Reliq, which is basically a team of 2-3 individuals including the CVO. This is a major key success factor for this company, as current management has the know-how, networks and skill-set required to close mega deals before building staff levels that would initially not be fully utilized and would be very expensive and taxing to the company’s treasury.

Due to its strong management, Reliq’s customer acquisition cost is almost negligible as a percent of the sales contracts it has landed.

8 – Strong Balance Sheet:                                         

After the recent announcements of a $5M and subsequently $10M PP, Reliq is flush with cash and has been profitable since December 2017.
Being cashed up will allow Reliq to fire on all cylinders and accelerate potential growth. A healthy balance sheet also makes Reliq very attractive to potential investors and potential customers. For different reasons of course, but mainly they know the company has the resource to take on larger projects without any hiccups or cash shortages.

Overall

The aforementioned points make Reliq very appealing to major healthcare institutions worldwide while still being a Canadian microcap (won't be the case for too long). You need to ask yourself why would Sacred Heart, the Fieldman Institute, and the NHS commence Pilots (paid for by the customer) with a small Canadian company like Reliq and why would PAZ (12k patients) and the RGVHA (38k patients) in Texas select Reliq to ink a deal with. The short answer is that Reliq’s platform is uniquely positioned amongst competitors.

Main Business Segments:

IMO Reliq’s business can currently be segregated into the following 3 main business segments; each can be a company maker on their own (Remember my point above regarding Reliq not being dependent on any one deal. Reliq has multiple irons in the fire across its different business segments; each can potentially value RHT at multiples from current valuation):

Note: These are not official business segments for Reliq, just my personal views and interpretation of the business.

1) Hospitals or Groups of Hospitals (ex: Hospitals like Sacred Heart and the NHS)

This area relates to managing patient health, post discharge, after an operation or a stay at a healthcare institution with a main focus on monitoring the patient for post discharge complications, thus increasing the speed of intervention when any indication of problems surface. In addition to improving the patient’s health through timely intervention, patients’ readmission and the associated cost are significantly reduced.

It is also important to note that Medicare in the US claws back a significant percentage of the amount reimbursed to hospitals if the patient is readmitted within 30 days of discharge, costing hospitals a ton of money. Implementing Reliq’s platform will save large hospitals millions for a very small cost (an insignificant expense as a percent of the saving, basically pennies on the dollars saved).

This segment deals primarily with large-scale institutions with a discernible amount of red tape. For this segment, the complete process from start to finish (pilot negotiation, determining pilot design & requirements, determining pilot team, patient enrollment, pilot conclusion and result analysis, contract negotiations, patient on-boarding and patient ramp up) is likely to take approximately 2-4 years.

The key aspect here is that the path to finalizing a full agreement in this segment will take time and will be completed on a multi-phase basis, however; these agreements are potentially worth hundreds of millions in recurring annual revenue when all is said and done. So while an initial revenue-generating contract is possible a few months after a pilot is concluded, the full ramp up and mega dollars will definitely take more time. But will definitely be worth the wait once it does happen.

Using Sacred Heart as an example, when the pilot conclusion and disclosure of results is announced, the first phase of contract negotiations will likely take a few months resulting in the onboarding of some patients. However, reaching the full potential of annual recurring revenue of 72M from Sacred Heart (Florida only) and potentially 100s of Millions through expanding into the Ascension Health network will likely only be achieved a year or two after pilot conclusion. The same logic goes for the likes of the NHS. However, as time passes, supporting arguments for Reliq’s platform only increases and supporting data just becomes stronger and stronger.

While the realization of the aforementioned mega projects (in the large institution segment) will take some time, the following business segment can actually be a larger contributor to overall revenues due to the large number of small/medium healthcare institutions and the speed of decision making and signing of agreements (which is unlike the larger Hospital systems).  

2) Long Term Care and In-Home Care facilities (ex: Home care places like PAZ, Old Age homes, etc.)

This area relates to managing patient health outside of the hospital, in a homecare facility or other, on an ongoing basis. This model will most likely offer a range of services and add-ons based on the facilities’ and/or patients’ needs.

This business segment is probably the most important segment to Reliq’s long-term success while also being the most ignored and undervalued segment. This segment will provide the operational liquidity for Reliq to get into the big leagues and tackle the mega healthcare institutions of the world (some of which are already piloting Reliq’s platform).

As most can imagine, the red tape and time needed to sign a revenue generating agreement with a smaller institution (ex: PAZ homecare facility with 12k patients) is significantly less than that needed when dealing with large hospital systems. Additionally, this segment tends to have fewer layers of management and decision makers, which speeds things up significantly.

Accordingly, the road to a 100M in annual revenues can be achieved in less time by signing contracts with a few facilities the size of PAZ and the RGVHA. All of this can be done while the larger hospital systems take the time they need to proceed to the agreement stage.

3)    Big Data

Big data is considered by many intelligent people to be the most valuable resource in the future. Once enough patients are on the platform, It is basically like starting a winery, where you vines mature over time and get more mature and valuable as they age. The more diverse patients we onboard on the platform, the more rich the data becomes and more valuable to potential customers. These customers, to name a few are pharmaceutical companies, governments, research institutions, etc.,

Don’t forget that Reliq just confirmed a pipeline of 51k patients just in Texas. So imagine how many potential customers in the area will be interested in that aggregated and de-identified data that is geographical specific.

When the patient population grows, the data can be segregated by region, by condition, by cross conditions, by medication, or even a mix of all.

The key here, this data becomes more valuable with age and increased patient population and is not a one-time revenue generator. It will be the gift that keeps on giving.

Current State: Agreements worth +$38.25M CAD in annual recurring revenue

Other than the multiple ongoing pilots; with many more speculated to be coming through the pipeline, Reliq has already closed 4 deals worth $38.25M CAD in annual revenue at full deployment (12k patients @ PAZ home care facility + 36k patients @ RGVHA ACO + 1k patients @ B Golden + 2k patients @ True Life). All of these agreements are in Texas.

As of today, February 4^th 2017, I would estimate that Reliq has onboarded 9-10K patients on their platform (+6K confirmed by company @ Dec 2017 + 2K added monthly). Reliq has clearly demonstrated to the market that it is able to successfully onboard patients even faster than initially advertised. The rate of patient onboarding will most likely increase with increased efficiencies after the first few months and will increase even further with increasing the number of agreements signed with on boarding occurring simultaneously across several healthcare institutions.

So what are current customers saying?

In a recent NR the CEO of Paz stated the following:
“We are excited to be working with Reliq Health to support our care providers in their day-to-day workflow, freeing up more time for patient care. Reliq Health’s cloud-based portal will allow our clients’ family members to access real-time information about their loved one’s health status, care team and home visit schedule.  Patients and their families can feel secure knowing that the Reliq Health system will continuously monitor the patient at home and summon emergency services if needed.”

In a recent NR the President of the RGVHA stated the following:
"We are excited to be working with Reliq Health to ensure that our patients receive the best possible care, and that we as their physicians are alerted immediately when patients need additional attention. This is critical to reducing hospital readmissions; ensuring patients successfully transition home after a hospital stay and preventing medication confusion for complex patients. Reliq's telemedicine platform will allow us to provide patients who are not able to travel to appointments with secure video appointments in the comfort of their own homes, improving access to care for patients in remote and rural communities."

Current State: Ongoing and Planned Pilots

Reliq has several ongoing pilots with some of the best and largest healthcare institutions worldwide. Three current pilots with Sacred Hearth, Fieldman, and the NHS, with an additional 2 planned to start soon with the HHS, and Sioux Lookout. It's also important to note that the customers (i.e. healthcare institutions) pay for all pilot cost. Also, the Sioux Lookout pilot is actually funded through an Ontario Government grant. This illustrates the government support for the industry generally and Reliq specifically.

It should be noted that the cost of running these pilots range from 50 to 100K each. Accordingly, these healthcare institutions would have done a tremendous amount of due diligence throughout the process of agreeing to the paid pilot, enrolling patients for the pilot, and actually running the pilots with Reliq. They know what the platform can do, they decided they need the platform to improve patient care and reduce cost, and they decided to put some up front dollars for a pilot to document outcomes and results before proceeding with negotiating a potential agreement. So while an agreement is yet to be finalized with the aforementioned institutions, there is still tremendous value created in getting to the pilot stage with the caliber of healthcare institutions Reliq is currently working with. 

* Sioux Lookout – Meno Ya Win Health Center (SLMHC)
SLMHC is a fully accredited 60-bed hospital and a 20-bed extended care facility that provides health services to all residents within Sioux Lookout and the surrounding area. SLMHC provides health services to approximately 30,000 people living in 28 First Nations communities and the four municipalities.

* Hamilton Health Sciences (HHS): https://hamiltonhealthsciences.ca/
HHS is a family of seven unique hospitals, a cancer center and an urgent care center serving more than 2.3 million residents in and around the city of Hamilton, Ontario. With a staff of approximately 11,000, the hospital is the largest employer in the Hamilton region. HHS serves the densely populated south central region of Ontario and is also a referral centre for patients from elsewhere in the province. The HHS treats over 50,000 patients and performs over 28,000 surgeries each year.
In affiliation with McMaster University and other educational institutions, HHS also helps to train the next generation of caregivers. It has also become an international leader in hospital-based research and is recognized as one of the top two healthcare research institutions in Canada. 

* The National Health Service (NHS)
The National Health Service (NHS) is the publicly funded healthcare system for England. It is the largest and the oldest single-payer healthcare system in the world, providing coverage for over 54 million United Kingdom residents.

* Sacred Heart
Sacred Heart health system is northwest Florida's leading provider of high-quality health care to children and adults. The hub of the Sacred Heart system is its 566-bed Sacred Heart hospital in Pensacola that includes the region's only children's hospital, a Level II trauma center, a cancer center affiliated with MD Anderson Cancer Network, and a heart and vascular institute. Sacred Heart admits more than 30,000 patients annually and has more than 4,000 employees.
It is also a member of Ascension Health, with 2,500 sites of care in 24 states and the District of Columbia (including 142 hospitals, and more than 30 senior care facilities), Ascension Health is the US’s largest non-profit health system and the world’s largest Catholic health system.

* The Feldman Institute
The Feldman Institute in Louisiana is an interventional pain management clinic and surgical center, and is considered to be a regional center that serves a large group of patients within Louisiana and its surroundings. The Feldman institute performs thousands of pain management surgeries annually.

Executing on Current Agreements, while Building a Robust Pipeline:

Reliq’s team is constantly on the road meeting with healthcare institutions and government agencies, which has resulted in a very steady flow of new pilots. So, Reliq will continue to run pilots, turn pilots into agreements, and sign new agreements directly, thus adding to an increasing pipeline of patients. The current pipeline is already at 51k and will be growing as they close on further agreements.

The key is to have more institutions that start onboarding patients on the platform and not the same institution onboarding 2-3K patients monthly. Slow and steady will absolutely win the race in this case. At the point where Reliq has 6 agreements in place for example, we will be looking at 5k to 6k patients on-boarded monthly, resulting in the addition of 3.75M to 4.5M in additional annual recurring revenue each month that passes. Also, a steady flow of patients will guarantee a better patient experience and increase the satisfaction of the nurses/ doctors with the platform as any issues are dealt with earlier and the strain on the institutions resources is minimized.

Milestones & Timeline

This is an Investment that will continue to add value to its shareholders, and in my opinion one that will pay patient investors very handsomely for their time.

Will this happen in days or weeks, of course not, but we have already checked some key boxes like being cash flow positive, having a very strong balance sheet, and regularly announcing new agreements. Additionally, we are very close to checking a few other DD boxes for many investors. For example, receiving positive feedback from running pilots, published white papers, turning ongoing pilots into contracts, announcing new pilots, analyst(s) coverage, and showing strong quarter over quarter revenue growth.

With each one of these milestones, more and more investors will start realizing the value here, thus resulting in successive upward movement in the share price. All the while, Reliq will continue to expand their customer base and thus continue pushing the market cap target higher and higher.

With $38.25M CAD in annual recurring revenues in the pipeline, multiple mega pilots currently in progress and expected to turn into contracts, a solid management team constantly in discussions to close new pilots, and new contracts and joint ventures, this is the perfect time to be invested in RHT.V.

Bottom line is that Reliq will continue to increase in value as they hit some of the milestones detailed below and it will just keep on going. There is just too much fundamental value here for the share price to keep on lagging the actual achieved fundamentals. And that is not even speaking about the speculative value that is completely ignored in the current share price.

What could trigger further SP appreciation in the short and medium term?
 
- Announcement of new pilots and new agreement.
- Further patient onboarding milestones.
- Updates on pilots currently in progress, including the successful pilot conclusion and the issuance of White Papers.
- Commencement of planned pilots (HHS and Sioux Lookout).
- Potential expansions of current agreements and/or the upgrading from the current $50USD subscription to the full expanded application +$100-200USD.
- The monetization of anonomised patient data starting when Reliq hits the 20k patient mark (Big Data).
- Launching the direct to consumer application of the tele-health platform by mid 2018.
- Analyst(s) Coverage being initiated on RHT
- Uplisting to the NASDAQ (would most likely double our valuation at this stage just on the listing)

The bottom line is that there is absolutely no shortage of expected news flow and we have yet to hit the actual value of current contracts. 

Potential valuation over next 12 months:

** Note: The below detailed scenarios and respective valuations only consider that Reliq will onboard 51K, 100K, 150K, or 200K patients onto its platform by 2019. These scenarios are only intended to show the impact of additional patients on SP valuation.

Each one of these scenarios only assumes the specified number of patients is onboarded on the platform and assumes no other revenue from other segments of the business (white label agreements, direct to consumer, big data, etc.).

I personally think that Reliq has a very good chance of signing +200K patients and onboarding north of +100K patients by early 2019. If it happens, then we would be easily talking about a Market Cap north of $1B and a price per share on a fully diluted basis north of $7-$8 CAD per share over the next 12 months. 

**** SO DO NOT BE SHORTSIGHTED WITH THIS INVESTMENT OPPORTUNITY ****

Important Note: The below valuations are determined using the following 3 multiples based on forward-looking earnings (Net Income) using multiples of 18, 20 and 22.
The average of all 3 valuations was used to calculate the Average SP and the lowest and highest calculated valuations were used to illustrate the range of potential SP valuations detailed below. 

Also, the valuations presented below are based on a fully diluted basis including all options and warrants as at January 31^st 2018. That is assuming a fully diluted share count of 137.62M with both warrants and options included.

However, as stated above the different valuation scenarios are meant to present the different possibilities here, all of which are many multiples from the current share price.

** Key Changes from last post: It is also Important to note that the multiple used in this post differ from what I used in my last post in November as the company has further matured and gained traction and also due to the fact the that I have concluded that using multiples based on revenue for a tech company that is expected to achieve margins between 80% and 90% is just not appropriate or realistic. **

Scenario # 1 (51k patients by H1-2019): 12K "PAZ" + 36K “RGVHA + 1k B Golden + 2K True Life
Assuming only the currently announced deals as at Jan 31^st 2018 with the aforementioned customers are executed.
* Forecasted annual revenue of $38.25M and NI of $19.92M.
* Expected Share Price over upcoming 12 months =

Average SP using multiples detailed above: 3.08 CAD /share
Range: 2.80 to 3.37 CAD /share
 
Scenario # 2 (100k patients by H1-2019): Scenario 1 + additional 49k patients
In addition to scenario 1, Reliq is able to sign additional agreement(s) adding 49K patients to its pipeline.
* Forecasted annual revenue of $75M and NI of $41.53M.
* Expected Share Price over upcoming 12 months =

Average SP using multiples detailed above: 6.23 CAD /share
Range: 5.62 to 6.83 CAD /share
 
Scenario # 3 (150k patients by H1-2019): Scenario 1 + additional 99k patients 
In addition to scenario 1, Reliq is able to sign additional agreement(s) adding 99K patients to its pipeline.
* Forecasted annual revenue of $112.5M and NI of $62.84M.
* Expected Share Price over upcoming 12 months =

Average SP using multiples detailed above: 9.32 CAD /share
Range: 8.41 to 10.24 CAD /share
 
Scenario # 4 (200k patients by H1-2019): Scenario 1 + additional 149k patients 
In addition to scenario 1, Reliq is able to sign additional agreement(s) adding 149K patients to its pipeline.
* Forecasted annual revenue of $150M and NI of $84.89M.
* Expected Share Price over upcoming 12 months =

Average SP using multiples detailed above: 12.53 CAD /share
Range: 11.29 to 13.76 CAD /share
 
Key assumptions made:
Please refer to the below detailed assumptions that were used to calculate the estimated potential value of RHT.V:
- Outstanding CS + Warrants + Options = Fully Diluted shares count of approximately 137.62M.
- FX Rate = 1.25 CAD per USD
- Monthly payment per all patients in all 4 scenarios is assumed to be 50 USD, which is the lowest rate charged by Reliq. The range based on services provided is $50 to $200).
- Annual fixed expenses for scenario # 1 and #2 = $3.5M. This was increased to $4.5M for scenario # 3 & #4.
- Gross margin is assumed to equal to 80% across all 4 scenarios (note: margins should be closer to 85% for scenario #2 and 90% for scenario # 3 and #4).
-  Annual corporate tax rate was assumed to equal 26.5%.
-  19 cents per share were added to the average (and min and max) of the 3 valuations calculated. This amount is the 16.2M in warrants + 10M in cash on hand from the latest raise divided by the fully diluted number of shares (Only the 10M was assumed to be cash on hand as it is likely not to be used for current working capital as Reliq has achieved profitability in Dec 2017).

** End of detailed Analysis **