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ASX:ONE

Oneview Healthcare plc

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ASX:ONE
- Oneview Healthcare plc
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$0.360

Last Price

Investment Memo:

Oneview Healthcare plc (ASX:ONE)

- LIVE

Opened: 22-Sep-2023

Shares Held at Open: 8,818,333


What does ONE do?

Oneview Healthcare (ASX:ONE) is a health tech company that provides hospital patients a “virtual care and digital control centre” at their bedside.
ONE’s products are cloud-hosted patient dashboards that help make hospitals more efficient and patients more engaged in their own care.

What is the macro theme?

Nursing shortages brought on by the pandemic highlighted the systemic issues in healthcare systems. The trend now is for these institutions to modernise by adopting new healthcare technology.

Big tech companies like Google, Amazon and Microsoft are looking to enter the health tech space and companies with an early-mover advantage should thrive or become takeover targets in their own right.

Our Big Bet for ONE

ONE will sign on enough new hospital beds at an accelerating rate to achieve a $1Bn valuation (based on 5x to 10x forward ARR multiple) and be acquired by a large health tech provider.

Why did we invest in ONE?

Proven tech, liked by customers

ONE is moving into the growth stage having proven out its tech products in a hard to enter sector (hospitals). Customers are sticky and sign long term contracts.

Value Added Reseller agreement with largest hospital bed supplier in US

ONE now has an initial 2 year “value added reseller agreement” with the largest hospital bed supplier in the US (Baxter International).

Under the agreement, Baxter will sell ONE’s technology to certain customers in Baxters’ current customer base (~75% of the US hospital bed market). Given the market reach of Baxter, this agreement could unlock significant growth in contracted beds for ONE.

Well funded to grow further

ONE completed a $20M placement in July 2023 that should provide the company with the funds it needs to become a sustainable operating cashflow positive business and further penetrate the US healthcare market.

Potential faster growth from “bring your own device” (“BYOD”) solution

ONE is developing a platform for patients to use their own phone or tablet.

This upgrade in ONE’s tech could remove the hardware costs associated with setting up ONE in a hospital potentially increasing ONE’s margins, reducing how long it takes for ONE to close a deal - and most importantly, helping hospitals more rapidly improve the patient experience.

Nursing shortages driving demand for healthcare solutions

Since the pandemic nursing shortages in Australia and the US have worsened.

These shortages put pressure on healthcare systems which causes more stress and ‘burnout’ for existing nurses.

Due to these issues, hospitals are now looking for technology to better improve their healthcare service and reduce the burden on nursing staff.

Although hospitals are notorious technology laggards, we think that the nursing crisis will be the impetus that drives change in these institutions and improves the healthcare system overall.

What do we expect ONE to deliver?

Objective #1: Repeat sales success and hit 25,000 beds

For ONE, ‘contracted beds’ is like an ‘active user’ metric for a tech company. We think this is the basis for judging ONE’s success.

More contracted beds = more revenue.

Building on ONE’s previous 15,000 bed achievement, we want to see ONE hit a total of 25,000 in CY2024, primarily out of the USA.

ONE is projecting growth of 20-25% across this metric in FY23 excluding the potential beds from the Baxter agreement and BYOD solution.

Objective #2: More deals with major hospital networks through Baxter agreement

We want to see ONE sign more deals with more hospitals.

Given Baxter’s large share of the US hospital bed market - we think Baxter is the ideal partner for ONE to achieve this goal.

Baxter can introduce ONE’s products to major US hospital networks that already have Baxter’s products.

The Baxter value added reseller agreement has started and the market launch is expected in Q3 CY2023, and we are hoping to see sales traction from this agreement in Q1 CY2024.

Objective #3: More progress on BYOD solution

With sales and marketing activities already commenced for the BYOD solution, we expect the product to become available in Q1 CY2024.

This includes the launch of the product through a pilot program in the US with an existing US hospital customer - NYU Langone.

If the pilot program is agreed and is successful, we’d want to see ONE expand the program to eventually capture a large potential market in the US and other key markets.

What could go wrong?

Sales risk

Despite a strong customer retention rate and the endorsement of the product by prestigious hospitals, ONE could lose key clients or not seal as many deals, hurting their revenue and share price.

Large institutions like hospitals don’t tend to adopt new technology very often and the sales cycle can be long. This feature of ONE’s customer base can cause delays in sales that drag out over a long time,

Marco factors in the market including a recession can cause a reduction in spending on new technology, affecting ONE’s ability to make sales.

Distribution partner risk

A key part of ONE’s strategy is to sell its products through a distribution partner like Baxter, Microsoft or Samsung.

Although ONE has a strong relationship with these companies, if they move slowly - or don’t prioritise ONE’s products when making a sale - then it could reduce the sales outcomes for ONE.

Funding risk

Although ONE raised $20M in July 2023, growth companies need cash to achieve their goals. If ONE doesn’t use the money from this raise wisely, then share price pain could follow. This was ONE’s fourth capital raise since it listed in 2016.

Technology risk

ONE will need to add functionality to its products over time as the health tech industry advances. The BYOD rollout may not go as planned.

Also, ONE has flagged that a range of additional features are in the pipeline, and the successful roll out of these features could help it reduce this particular risk as hospitals become more advanced.

Market risk

Tech stocks could fall in value again. Even if ONE does everything right from an operational standpoint, the market could always sell off or favour different sectors.

What is our investment plan?

We plan to hold a position in ONE for the next 3-5 years (and beyond) as it progresses its plan to gain significant market penetration in the lucrative US healthcare market, and (as always) may look to take some profit by selling up to ~20% of our holding if the company successfully delivers on the key objectives listed above and the share price hopefully re-rates again.


Disclosure: Disclosure: S3 Consortium Pty Ltd (The Company) and Associated Entities own 8,818,333 ONE shares at the time of publishing this memo. The Company has been engaged by ONE to share our commentary on the progress of our Investment in ONE over time.

Our Investment Summary

Date of Initial Coverage

12-Mar-21

Inital Entry Price

$0.060

Returns from Initial Entry

500%

High Point

858%