ONE's First Cloud Deal a Monster

We invested in telehealth tech Oneview Healthcare (ASX:ONE) as our Tech Pick of Year for 2021 - today ONE has announced a critical proof point - a 5 year contract for its recently launched cloud based offering with a major hospital client.

The deal is with Victoria's largest private health service, Epworth HealthCare.

For all 1,440 of its beds.

For 5 years.

On ONE’s new cloud offering.

In our opinion this is an extremely important milestone for ONE’s new cloud offering and it has happened much faster than we had expected - plus the contract size was significantly bigger AND longer duration than we expected.

ONE launched its cloud offering in March this year - it’s designed to replace ONE’s “on premise” server model and make it much easier to sell, install and use ONE’s technology.

ONE is a health tech company that provides hospital patients a “virtual care and digital control centre” at their bedside to deliver the best possible patient experience during their hospital stay.

We called ONE our Tech Pick of the Year because its advanced patient experience technology was in the right place at the right time as hospitals around the world rush to digitise and adapt telehealth after COVID-19.

When we first invested in ONE, the key de-risking events we were looking for was for ONE to sign up contracts for its new cloud offering that was developed to make ONE easier to sell, install and use.

ONE’s cloud offering was launched on March 31st this year - and today’s cloud contract news is a big one that will definitely be noticed by other hospitals globally.

Today’s deal ticks off two key early company milestones we were watching for with our investment in ONE:

This deal is with ONE’s existing customer Epworth HealthCare - the largest private health service in Victoria. It is a 5 year contract across 1,440 existing beds plus an expansion of 63 more beds.

And most importantly it’s for a migration to ONE’s new cloud based platform... so being the first cloud deal off the ranks is a monster.

This deal also provides a critical live case study of the cloud offering that can be used to show other potential customers as ONE embarks on growing credibility and revenue from its cloud offering.

Epworth is an existing ONE customer which is a big vote of confidence for ONE’s new cloud offering, and the fact that Epworth want to roll out to ALL their beds AND commit to 5 years AND expand to a further 63 beds is a massive vote of confidence.

Sales teams love a big successful case study when on the road selling.

Our rough calcs put this total contract value easily north of $10M (note: we don’t have any insights into the contract terms or potential volume discounting etc, this is just a guess).

ONE used by hospital staff too - not just for patients

Another key thing we noted in the announcement is that Epworth’s CEO reckons that the ONE tech is not only great for the patient experience, but nurses and doctors access ONE’s point of care screens 20,000 times a day.

So ONE’s tech is clearly useful for care staff in their daily routines - its not just patient experience, which in our opinion means that the ONE tech is more critical within hospitals as it touches staff and patients:

Here is our ONE back story

On the 8th March 2021 we first invested in ONE as Tech Pick of the Year 2021 - read here.

A few days later we explained the 10 reasons why we chose ONE as our Top Tech Pick - read here.

We commented on ONE’s cloud offering launch and how they can now adopt a land and expand strategy.

In late April we analysed ONE’s most recent quarterly report - we are keeping a close on revenue growth and cost stability.

In May we covered a webinar given by a Top 10 US hospital on its use of ONE and the benefits it is getting - watch the webinar and read our take here.

ONE share price commentary

So far ONE has performed quite well since we first invested. We haven’t sold a single share of ONE yet.

ONE’s share price has gone through a consolidation period over the last two months after the company launched its cloud platform and then the ONE team went heads down to start moving cloud units.

Companies will go through quiet news periods while they are busy executing on their plan.

Quiet periods are usually when impatient holders will sell. Hot money usually exits once a share price goes into a “boring sideways phase”. This, combined with general “sell in May” weakness and potentially some tempting tax loss sales, has all helped to nicely consolidate the ONE share price at around the 30s.

After this consolidation phase we expect most holders in ONE right now want to be here for the longer term. We believe ONE is now primed for its next leg up, and are watching for more news about momentum in ONE’s cloud offering (see our expected milestones below for more details of what we expect next).

As long term holders we invest in companies like ONE where we believe in the management and the business strategy. We are happy to wait during the quiet periods while the share price consolidates.

The quiet periods are always the base from which the next share price rerate launches (assuming the company delivers on its plan of course).

Yes it takes patience, but we have found long term holding works best for us in the long run, especially when we look at some of our other long term portfolio performers and are glad we didn’t sell too early.

What we are watching out for next

As mentioned earlier, the key reasons we invested in ONE are because its advanced patient experience technology was in the right place at the right time as hospitals around the world rush to digitise and adapt telehealth after COVID-19.

When we first invested in ONE, the key de-risking events we were looking for was for ONE to sign up contracts for its new cloud offering that was developed to make ONE easier to sell, install and use.

Here are the our investment milestones for ONE, we are long term holders waiting for key value adding events (like today's news) the key events are show below:

As per our current investment strategy we haven’t yet sold a share and are waiting for a few more cloud deals before we consider de-risking the investment and free carrying,

Our past articles on ONE