Adheris Health Limited (AHE.XA) Earnings Call Transcript & Summary

Welcome, and good morning, ladies and gentlemen. Thank you for joining us today, and welcome to the MedAdvisor Solutions Annual General Meeting for the 2025 financial year. I note that this meeting is being held as a virtual meeting only. I ask that everybody please note down the telephone number, which will be on the screen shortly. If you experience any technical difficulties during the meeting, please dial that number for assistance. I advise that in accordance with the company's constitution, a quorum is present, and accordingly, I declare the meeting open. I'm Kate Hill, and as Interim Chair of the Board of Directors, I will chair today's meeting. I would like to introduce my fellow directors on the call today, our CEO, our Company Secretary and other attendees. So we have John Ciccio, our Managing Director and CEO, and you'll hear from him a little bit later on; Non-Executive Director, Luke Merrow; Executive Director, Sean Slattery; Sean is also our CFO; and we have Gillian Nairn, who's our Company Secretary. Also present today is Mathavan Parameswaran from RSM Australia, our auditors. The format for today's meeting will be as follows. Firstly, I'll present my Chair address. We will then attend to the formal business of the meeting. The meeting will be closed once the formal business is concluded. Following the close of the meeting, John will present a business update. I'll now proceed with the Chair's address. So good morning again. I'm Kate Hill, and I'm pleased to address you today as Interim Chair of MedAdvisor Limited at our 2025 Annual General Meeting. On behalf of the Board, I would like to extend a warm welcome to our shareholders and to thank you for your continued support during what has been a year of considerable challenge and transformation for the company. Before outlining the key strategic actions taken during the year, I want to briefly address our financial results and the factors that has shaped them. Although the company reported a substantial statutory loss, it is important to note that the majority of this relates to a non-cash impairment of intangible assets in our U.S. business. This was a deliberate and responsible step to ensure the balance sheet accurately reflects prevailing market dynamics. The operational performance itself was impacted by factors affecting the wider health care sector, particularly reduced promotional activity by pharmaceutical manufacturers and also subdued demand for seasonal vaccinations. Despite these headline numbers, it is important to recognize that the past year has been one of decisive action aimed at positioning the company for a more focused and sustainable future. Early in the financial year, we initiated a formal strategic options review to evaluate options for maximizing shareholder value. This process culminated in the sale of our Australian and New Zealand operations to Jonas Software Australia Pty Limited with completion announced early July 2025. The headline sales price of $35 million with a potential uncapped earn-out of around 7.4 million payable over 3 years implies a 1.7x FY '25 revenue multiple and demonstrates the inherent value of the ANZ business and the strength of the MedAdvisor platform developed over many years The transaction also enabled the company to repay all debt obligations, leaving MedAdvisor debt-free and in a stronger financial position from which to consider future strategic options. The financial year saw a difficult operating environment for our U.S. business. Revenue from the U.S. operations declined as pharmaceutical manufacturers and pharmacy chains reduced marketing and engagement budgets due to economic pressures, a delayed flu season and lower-than-expected RSV and COVID vaccination rates. In addition, regulatory uncertainty and financial distress amongst major pharmacy groups resulted in a significantly reshaped competitive landscape. Against this backdrop, management acted early in the calendar year to preserve the financial position of the company with a comprehensive cost reduction program implemented, achieving a 13% reduction in operating costs compared with the prior year. These measures serve to align our cost base with expected revenue levels, while maintaining the capability to respond quickly as the U.S. pharmaceutical and pharmacy sectors recover. As John will outline in his presentation, we have in recent times gone further in this regard as the industry uncertainty continued during the year. Progress was also made on the U.S. platform redevelopment with more than 70% of the work completed by year-end. Phase 1 of this project remains on track for completion in the second quarter of FY '26 with migration of the pharmacy network expected to follow in the third quarter. I'd like to acknowledge the work of Rick Ratliff, our former CEO, who planned and executed this complete overhaul of our technology platform, which once deployed, will set us apart from our competitors and add even more value for our pharmaceutical and pharmacy partners. During the year, the Board was streamlined to reflect the company's downsized operating structure. As part of this consolidation, the Board reduced from 9 directors to 4, including the appointment of our CFO, Sean Slattery, as an Executive Director. Earlier this month, Rick Ratliff stepped down as Managing Director and CEO, and we were pleased to appoint John Ciccio, as his successor. John brings more than 12 years of experience within our U.S. business and a deep understanding of its operations. I'd like to sincerely thank Rick and our former directors for their contributions over the last few years and warmly welcome John back to the company. As part of the strategic options review, the company received several nonbinding indicative offers for the U.S. business. However, none progressed to a stage that would warrant consideration by shareholders. Accordingly, in September 2025, the Board resolved that in order to maximize shareholder value, it will prioritize the comprehensive transformation of U.S. operations, modernizing systems, strengthening commercial performance and positioning the business for sustainable growth ahead of any potential sale. The Board does, however, retain the option to revisit a trade sale when the business is on a stronger footing and market conditions are more favorable. Looking ahead, the Board is confident that the decisive actions taken over the past year, including the sale of the ANZ operations, the significant cost reductions and the continued progress on the U.S. platform transformation have created a more focused and financially resilient organization. As John will outline shortly, we are optimistic that the fundamentals of our business are sound and that our strategy to broaden the health program pipeline and advance the rollout of our digital engagement platform will resonate strongly with our program partners. Before I close, I would like to acknowledge and thank our former CEO, Rick Ratliff and his executive team for their professionalism and commitment during a very difficult year. I also extend my sincere thanks to our staff across all regions, whose hard work and adaptability have sustained MedAdvisor through this period of transformation. Finally, I would like to thank my fellow directors and our shareholders for their continued confidence and support. Thank you. I will now proceed with the formal aspects of the meeting. The purpose of this meeting is set out in the Notice of Meeting, which was made available to all shareholders on the 8th of October 2025. Unless anyone has any objections, I will take the notice as read. I'll briefly explain our voting and question procedures. Shareholders can vote online using the online voting platform link, which is found in the Notice of Meeting. The link is also shown on the screen. Once you've registered and logged into the platform, you can commence voting when I open the polls by using the vote icon shown on your screen. Please ensure you see a tick against the item you're voting as that indicates that your vote has been received. You may change your vote at any time until the polls are closed by selecting the icon on your screen, change your vote. I will just say that if you've already lodged your vote by proxy, then please could you not vote again unless you wish to change your vote. Thank you. If you're a shareholder, you can submit a question by using the Q&A function in Zoom. When addressed, your question will be read out loud to the meeting by the Company Secretary. Please include your registered holder name with your question. We will address questions at the appropriate time in the meeting. If we receive a number of questions on a similar topic, we may choose to amalgamate them, and we may not attribute a question to the person who asked it. There are 6 items of business today as detailed on the slide. As we move through the items of business for voting items, we will present on individual slides the proposed resolution and the votes received prior to the AGM on the resolution. The specific voting preferences indicated by proxies, who had either directed their voting preferences or who had left their voting preferences open to be cast by the nominated representative or the Chair are available for inspection. Where a proxy vote has been given to the Chair with instructions to vote in favor of the resolution in accordance with the directions on the proxy form, I intend to vote in favor. Any undirected proxies will also be voted in favor of the resolution. Voting on all resolutions at today's meeting will be by way of a poll. The company's share registry, Computershare, will process the poll votes at the end of the meeting, and the results will be announced to the ASX once they're available. The polls are now open, and the results of the valid proxies received are shown on the screen. The results for the individual resolutions will also be shown as we consider each resolution. The first item is to receive and consider the financial statements for the financial year ended 30 June 2025, consisting of the directors' report, the financial report, the directors' declaration and the auditor's report. It is not a requirement that shareholders vote in relation to the accounts. However, we are pleased to answer any questions relating to them and any other matters you would like us to raise -- you would like to raise at this moment. And as I mentioned earlier, we have Mathavan from RSM with us here today to answer any questions on the conduct of the audit. Are there any questions or comments in relation to the reports under consideration?

Yes, there are 2 questions of a general nature from [ Stephen Mayne ]. First question is, will you undertake to make sure a full copy of the AGM webcast is published. [ I have been asked ] [indiscernible]. Will you undertake to make sure a full copy of the AGM webcast is published on your website for the benefit of the thousands of shareholders unable to tune in live to a virtual AGM on Zoom at 10:00 a.m. on a workday. Also, please run a hybrid AGM next year, which is better for shareholder access and Board accountability.

Thank you, Stephen. I think it is our normal practice to post the video of the AGM. We're certainly recording it. And we have held hybrid AGMs in the past. This year, we chose for cost purposes to hold a purely virtual one, but we'll take your comment on consideration for next year. Thank you. Any other questions?

There's a second question from Stephen Mayne. Stephen says, best practice is to disclose the proxy position early to the ASX along with the formal addresses, which you haven't done today. In light of the multiple resolutions, which were defeated at the EGM earlier this year, please inform the meeting in a timely manner if there has been any material protest votes against any of today's resolutions. For instance, have we received a remuneration strike? And has the Interim Chair, Kate Hill, been reelected based on the proxy votes?

Thank you. Thanks again, Stephen. We didn't actually release the proxy results to the ASX ahead of the meeting. I understand that's a practice adopted at the bigger end of town, and we will take your comments on consideration. We have already shown the votes -- the proxy votes received on the previous slide. And perhaps we could flip back to that slide just to make sure people could see it. So I think that perhaps answers your questions, Stephen. Any more questions, Gillian?

There are no further questions, Chair.

Thank you. So I'll move now to the resolutions. So the first item requiring a vote is the adoption and the remuneration -- the adoption of the remuneration report forming part of the directors' report for the financial year ended 30 June 2025. The Corporations Act requires that a resolution be put to members to adopt the remuneration report as disclosed in the directors' report section of the 2025 annual financial report. In accordance with the legislation, the vote on the resolution is advisory only and does not bind the directors of the company. However, the Board will take the outcome of the vote into consideration when reviewing the remuneration practices and policies of the company. I now refer shareholders to the screen displaying the resolution and the valid proxy results. As Chair, I will now formally move that Resolution 1 that the remuneration report be put to the meeting in the form set out in the Notice of Meeting and call a poll on this resolution to be held at the end of the meeting. Do any shareholders have any questions or comments?

There are no questions, Chair.

Thank you. And so please vote on Resolution 1. The second resolution seeks the approval of shareholders for the election of Sean Slattery, as a Director of the company. I now refer shareholders to the screen displaying the resolution in full and the valid proxy results. I now formally move the motion that Resolution 2 be put to the meeting in the form set out in the Notice of Meeting, calling a poll on this resolution to be held at the end of the meeting. Do any shareholders have any questions or comments?

Chair, one of the shareholders has asked, could you please make the slides bigger? They're hard to see.

[indiscernible] can you manage that?

Yes. On it.

One option perhaps is not to have the videos and just the slides, but I'll leave that to you.

This should be better. If anyone is still having issues, please let us know, and we will remove the videos. Thank you.

Thank you. Thanks, [indiscernible]. So any more questions?

There are no further questions, Chair.