Feedback LON:FDBK, the AIM-listed, London based medical and clinical software developer will publish its results for the half-year to end-November next Tuesday (25th February).
The SaaS company has been around for sixteen years and celebrated its 10th anniversary on AIM last year. It develops communication software for the health sector that supports clinicians in collating data and information on patients in their care.
The company’s flagship product is Bleepa – a cloud-based medical imaging platform. It allows clinicians to securely view, interpret, and share diagnostic images and patient data in real-time, directly from mobile devices like smartphones and tablets. Bleepa is particularly useful in settings like hospitals, GP surgeries, and emergency care units and has application in areas with remote access, where a digital infrastructure doesn’t exist, so has considerable utility in developing countries.
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Bleepa NHS rollout
The kit offers real-time access to medical images, is compliant with NHS security and privacy requirements and fully-integrable with existing NHS backbone IT infrastructure. The aim of the product is to make workflow transmission more efficient and speed access of front-line clinicians to background data and imaging.
Most importantly at the end of last year Bleepa received NHS reimbursement eligibility. This allows healthcare providers to receive funding from the National Health Service in the UK through the Elective Recovery Fund (ERF) to cover the costs of using the kit. Bleepa operates on Feedback’s CareLocker data platform.
Bleepa is in the foothills of NHS rollout. The system is installed in three hospitals in the UK: two hospitals in the Northern Care Alliance and at Royal Berkshire Hospital. It also has a number of pilots with NHS Community Diagnostic Centres (CDCs).
Feedback making ‘strong commercial progress’
Julie Simmons, an analyst at Panmure Liberum, which has Feedback under coverage said:
“Feedback is making increasingly strong commercial progress. As ever, operating with the NHS as the primary customer makes contract signing and rollout challenging to forecast. However, the company now has three different routes to see Bleepa into the NHS, across three different levels of access, which we describe as local (trusts/CDC’s), regional (Integrated Care Systems through the ERF) and national (primary care partner enabling community reach). Each has the potential for different levels and rates of penetration depending on the level of adoption within each tier.”
Although the last set of results the company published for the year to end-May, released in November, were not stellar, revenue did increase 15% year-on-year to £1.2m, with the majority attributable to Bleepa. That said sales were down 25% y-o-y to £950,000, but most of the company’s sales (85%) were from Bleepa. Losses expanded 4.5% y-o-y to £2.73m, and cash fell £3.4m over the year to £3.9m.
Fundraise nets £6.5m
The company also initiated a fundraising exercise in November. It raised £5.57m in a placement with an issue price of 20p/share, after initially seeking £5.2m. However, to get the fundraise off the slate Feedback had to reorganise its capital structure, as companies are not permitted to issue new shares at a price below market value, which at the time was 50p/share, and split its existing shares into two units, one of 49p and one of 1p. Feedback followed the placing with a £1m retail offer.
Panmure, prior to the fundraising had a target price for Feedback of 240p. Simmons noted that the value of Feedback was dependent on its ability to sign contracts for Bleepa, “[…] but the timeframe for these remains uncertain as the NHS is a difficult customer to negotiate.” Post-fundraising Panmure readjusted its target price to 60p and rated the stock as a ‘Speculative Buy’.
She said: “The EV/Sales valuation multiples are broadly aligned with the sales growth rate. If we consider the Feedback 2024-27 CAGR of 61% […] this extrapolates to an EV of £55.6m; translating to a share price of 129p. We believe it will take tangible progress for the shares to re-rate but believe that this could occur rapidly as rollout occurs.”
Feedback ‘one to watch’
The company’s shares opened the week (17th February) at 18.67p, down 23.8% since the close of the retail fundraise on 4th November, and down 70% over one-year with shares ranging between 16p and 152.9p over a 52-week period. Year-to-date Feedback has traded flat, and the company has a market cap of £8.1m.
Feedback’s upcoming half-year results should shed light on the company’s progress in expanding Bleepa’s reach within the NHS and beyond, and establish if the fundraise has helped to spur the company to new highs. With NHS reimbursement eligibility and multiple pathways for integration, as the analyst argues, the potential for growth is significant, though the timeline for adoption remains uncertain. Investors will be keen to see how the company leverages its recent fundraising to drive sales and navigate the complexities of the healthcare market. As the digital transformation of healthcare accelerates, Feedback’s ability to capitalise on emerging opportunities will be crucial to its success. This stock becomes ‘One to Watch’.
