CONNEQT Health Limited (CQT) Earnings Call Transcript & Summary

Okay. So let me continue. So I don't know what's going on there. But just let me know what -- as we go forward.

It sounds perfect now.

If you could start from the Pulse partnership, that will be perfect.

Yes. Sure. So 3 very exciting partnerships to announce. Firstly, we have entered into an agreement with the American Association of Retired Persons for a marketing campaign, which we'll be launching in the course of the next couple of months, which will be out to about a base of about 55 million of their subscribers. This is the largest media organization in America that serves 50-plus generation. So this is -- for those of you who are well past 50 like me, it's sort of a constant presence in your life. And so this is something we're super excited about. Secondly, we've been selected for inclusion in Blueprint's protocol marketplace, which is targeted for launch in August. So for those of you who are not aware, the Blueprint marketplace is the e-commerce platform run by Bryan Johnson for his Blueprint Protocol. And I'm sure most of you are aware who Bryan Johnson is, probably the sort of largest longevity influencer globally. So we'll be integrating a Pulse package into his marketplace and basically validated by Bryan to be offered as part of the Blueprint Protocol. So this is -- it could be a real game changer for us for a number of reasons. Firstly, because he's got nearly 7 million followers across all his platforms. If you look at Instagram, nearly 3 million, YouTube with a couple of million, X 1.7 million, TikTok, 750,000. So that's important. But more important is really who follows him and what that network effect will look like because really, if you look at sort of the spectrum of the people that we want to try and connect with and really get exposed to our product. I mean, pretty much all of them will follow Bryan Johnson. And he has anyone from Andrew Huberman, Chris Williamson, Steven Bartlett, Kim Kardashian follows him, believe it or not, the Winklevoss twins on and on. It's really who's who in the tech and wellness industry as well as those people who are investing in it. So that's important. And also from the perspective of the demographic that follows him, which is a very tech-savvy, affluent, educated audience. So we're excited to launch that. At the moment, we're not allowed to use his image. We're still finalizing some areas around the contract, but we're all working towards the graphics and everything that are going to be incorporated into his website on the basis that we'll be launching in August. So we'll keep you informed as to what's going on there. And then lastly, continued progress with a very, very impactful opportunity we have with a national primary care platform to integrate into their health stations on a national basis. So we can't say anything more about this. But again, the first 2 are pretty much done in the bag signed, this one ongoing, but we're working on success on the basis of everything we're doing from a potential technical integration with them as we move forward. But again, more to follow on that. Next slide, Catherine. So we thought it would be useful to just look back at what we told you last quarter and really how far we've come in the last 3 months. So firstly, we've sustained double-digit revenue in respect of consumer sales, up 21% quarter-on-quarter. First quarter to receive $1 million in cash receipts, which is fantastic. From the perspective of everything we're doing in digital innovation, our digital revenue was up 71% quarter-on-quarter. National Council on Aging over the last period announced us as the Best Advanced BP monitor for 2026, which was a huge validation for us. And we continue with our V2 build of the app. So everything we told you in respect to those achievements, we've executed against over the quarter. And then from the perspective of scaling enterprise adoption, again, as I said previously, our clinical subscription annual recurring revenue is up 70%, 7 new agreements signed, total contract value up 65%. So check, check, check on all 3 of those. And then we've expanded our pharmaceutical and research partnerships. We're in a Phase b -- sorry, Phase IIb pharma trial, which is progressing, and our research pipeline continues to strengthen. So check marks on all 4 of those. Next slide, Catherine. And then from the perspective of SphygmoCloud and launching our arterial health analytics service. We'll talk about that in a moment when Catherine gives you a high level of what the opportunity looks like with that. That is continuing. We've done an FDA pre-submission, and we're waiting to be scheduled in respect of their program for the first discussions around that, but that's proceeding to plan. And then our Pulse SDK kit as well as our Biomarker-as-a-Service is progressing as well. So again, we'll talk a little bit more about that. And then as always, trying to really, as we move through establishing a clear capital-efficient path to profitability, whether it's from the perspective of revenues, from the perspective of being more resourceful from an operating cost perspective. So that continues on an ongoing basis. So as far as our priorities for 2027, they're really grounded in really what we've been executing against over the past 4 quarters. And nothing has really changed. We continue to focus on shifting from a hardware to a software analytics and data infrastructure. We continue to focus on moving from transactional revenues to recurring revenue, both from the perspective of the Pulse as well as from the perspective of our enterprise contracts. And then moving consistent with that from a single device to an ecosystem in order to establish us as a platform for arterial health and cardiovascular biomarker services. So nothing changes for us. We just -- so we continue to execute against everything that we've told you previously. So that's really where we're focused. So next slide, Catherine. So as a result of that, really, what does that look like from the perspective of not just the next quarter, but as we move through the next year. So from a platform and technology basis, a lot of it's founded in SphygmoCloud and everything we're doing from a development perspective as well as from a regulatory perspective in order to get that cleared and then ultimately launch that into the market and building really the Biomarker-as-a-Service as a foundation for everything that we're doing moving forward. And then ultimately, having SphygmoCor powered devices or SphygmoCor power integrations across multiple devices rather than just our ecosystem of devices within CONNEQT. Next slide, Catherine. And then from an enterprise perspective, a number of things, obviously, scaling our enterprise customers, which is key, launching new packages, arterial services, analytics to our customers, focusing on growth across other sectors and really building that out at scale just beyond the wellness clinics and the concierge and the practices that we are focused on at the moment to insurance companies, expanded clinical networks and the like. So that's really what we're doing with -- from an enterprise perspective. Next slide, Catherine. And then from a consumer perspective, obviously, expanding on the installed base for the Pulse. Currently, we have a little over 12,000 devices deployed in the market. Ultimately, as we start to scale out version 2 of the app, launch new features around premium services, subscription services, more advanced biomarkers that we integrate into the app, all these will form the basis of scaling the revenue within the digital ecosystem that will be built around the app and really expanding that revenue base out from just single device to multiple revenue subscription, ongoing features within the Care+ network that we offer as part of the app. So a lot going on. Not much is going to shift on a quarter-to-quarter basis, but really, that's what the vision is over the course of 2027. Next slide, Catherine. All right. So with that, I'll pass it over to Catherine, who hopefully has a better Internet connection than I have to really see how it all comes together from the perspective of really what we're focusing on from a software perspective, Biomarker-as-a-Service and really how we look at this opportunity at scale.

Thank you, Craig. And over the past 2 years, we've been really evolving from a medical device company into a vascular intelligence platform. If you really think about it, I mean, the Pulse has been shipping for about 1.5 years and the consumer -- the enterprise subscription started 6 months ago. And so we are moving very rapidly and showing performance and showing results. And this is enabled by the notion of a SphygmoCor Cloud because the idea is that when we can move our capability into the cloud, we can move much more rapidly to capture new opportunities. So if you think about it, every new Pulse device and future generations of hardware feeds data into that common cloud infrastructure, which allows us to continuously improve algorithms, support multiple hardware platforms and ultimately deliver a vascular biomarker-as-a-Service. And what that really gives us is creating a foundation for enterprise integrations. As you've heard about, we are doing Pulse integration through what's called a software development kit with third-party applications in new health care settings, right? So that will be an example of something like that or perhaps integration into other pieces of consumer wearables, hardware where that they can send us a signal and we can back out a validated biomarker for them, which is really all anchored around being able to take that SphygmoCor Cloud through the FDA as a software, as a medical device. And that's fundamentally where all the value will compound. Hardware will then eventually become simply a data acquisition layer and then the cloud and the data and what we can do with that data becomes a long-term value creation engine for the company. And so -- and as you've probably got a sense of it over the last 2 years is that building a new market category isn't just about the technology. It's really about building the market alongside it. And so we have been deliberately building CONNEQT both from the bottoms up and top down. So from the customer upwards, and we've seen this play out over the last 18 months is that we've seen consumers increasingly seek deeper insights into their health. And importantly, they are willing to pay for that insight. And that demand is also pulling Arterial Health Assessments into clinical practices where clinicians are basically seeing their patients bring this information to them and reaching out to us and say, we are interested in offering this to our other patients, too, and offering that as a premium service. And so that is pulling forward really all the enterprise business that we didn't have 6 months ago. And at the same time, we are building from the system downwards, right? And so basically, what we know is that from the system down by generating the scientific evidence, implementation framework and policy pathway that's needed to really make Arterial Health to become part of routine preventive care. And that work is critical because consumer demand can establish a market, but you need system-level validation to really allow it to scale to everyone. And so it gives the [ GPs ] the confidence to act on the information, gives health care systems a practical way to implement it and gives policymakers the economic rationale to support it. And in other words, the consumer up strategy creates revenue today, but let's us invest into the company, let's invest into the product and features and capabilities. But the system down strategy expands the addressable market and creates a pathway from an elective assessment to a routine prevention. And I'm really excited to tell you a little bit more about what that would look like long term. So because if we want to go build a new large-scale health category, it needs to solve a problem of enormous consequence, which you know this. You've heard us talk about heart health, cardiovascular disease for years now. And despite decades of progress, health attacks continue to impose an enormous human and economic burden. Importantly, around 1/3 of heart attacks, and this is data in the U.S. specifically, occurred before the age of 65. And these are often people in the prime of their working lives, supporting families, contributing to the economy. And in fact, 2/3 of that $85 billion a year economic burden actually come from lost productivity, disability and people leaving the workforce due to that heart attack, not just from the direct medical cost, which makes prevention before retirement age incredibly valuable, certainly at the policy level. So yet, while we routinely screen for cancer, we don't routinely measure the risk of heart attacks. And when we do, we have the opportunity to change a person's health trajectory before a heart attack ever occurs and really have a great significant impact at an individual and at a national and definitely at a global level. So the long-term scale of the opportunity is significant and the economics are compelling. So you've seen so far, we've executed for the last 18 months really around this whole bottoms-up strategy, consumer demonstrating that they can pay, that's pulling in clinicians and now clinicians are paying. And all that is setting the stage around the notion that people want to know more about the risk of heart attacks and how healthy they are. I'd like to tell people that we answer a simple question, which is, am I okay? And we do that day in and day out for our customers. Now what the exciting opportunity is that for -- we can do that from the top down. What does that look like when we do that from the top down, right, on this $85 billion a year problem. So for less than $1 billion a year, our technology could enable populational scale arterial health screening for everyone aged 40 to 59 in the U.S. And that is a -- even just with a modest reduction of 1% in heart attack burden, that will fund the entire program for everybody in the U.S. And that is the -- $1 billion opportunity that we are uniquely positioned to capture. Of course, we know that population scale adoption does not happen overnight, but it illustrates the size of the category that we are working to create. And so we believe that the 2 strategies reinforce each other. The commercial adoption builds real-world experience and evidence and the strong evidence expands adoption and over time, that creates a compounding opportunity from recurring revenue today to a $1 billion annual market that extends well beyond hardware and that we are uniquely positioned to capture that. And why am I confident and excited about the opportunity? Well, because this work has started, 6 months ago, I was selected to participate in the Presidential Leadership Program on behalf of CONNEQT. It's initiative founded by 4 former U.S. presidents that bring together leaders from business, health care, government and nonprofit sector. The program provides a platform to engage with decision-makers and open doors that can advance arterial health at a national level. And the last 6 months established that foundation for us, and the work now is turning those relationships and ideas into implementation and impact, and we are executing on that alongside the commercial activities that we are doing that's generating revenue today. And so as you can see, and hopefully, you do see the work that we are doing both from revenue today through the consumers, through the health and enterprise customers that we are capturing. And then in parallel, we are starting to do work on the policy level so then they converge to capture this opportunity in kind of the medium-term time frame. And so with that, I'll hand it back to Craig.

Yes, that's fantastic, Catherine. All right, Niall, over to you.

All right. Thanks very much. So another quarter of transformational growth and an increase in the recurring revenue, which is very exciting for all of us. But looking at what we've done, we foreshadowed in March that we would be raising capital in the June quarter. So as announced, we have upsized and oversubscribed a capital raising that ended up being $5.5 million and it's been strongly supported by top 10 shareholders, Regal Funds Management returning -- putting new money in and C2 Ventures. It's a 2-tranche placement. There's $825,000 still to come in this quarter, which will be after an EGM that we will hold in over a month's time. And then if you move forward to the next slide, please, Catherine. So in keeping with the principle that we -- that Craig and I have always had in place, which is that as we seek to have all shareholders the opportunity to participate as we go forward, we put in place a share purchase plan, which is underway at the moment. That enables each individual shareholder to put up to $30,000 of capital in for new shares at the same price as the placement, $0.022 per share. That closes at the moment on Friday this week. We do look forward to your participation. But I'll say that we are encouraged by the increased support that shareholders have shown over this last quarter, which we believe is a good endorsement for the transformation that Craig and Catherine have been talking about as we further develop this business. Back to you, Craig.

That's great. Thanks, Niall. Yes, I think just reiterating your point, Niall, I mean, we're constantly getting e-mails from shareholders when we do an institutional round. This was a strong round. I mean, Regal came back in, which was great to have them back on the register again. We're consistently getting e-mails from shareholders saying, what do we miss out? We would have like to participate and so on and so forth. So we're putting this out there so you can participate. So hopefully, everyone on the call will take advantage of that because really, the growth in the company is going to come from the capital that's invested in the company. It's not going to come from trading shares amongst our shareholder base. So it's important that we have capital that we can use that to grow the opportunity that we've tried to outline. So we absolutely appreciate all of that. So to close off a record quarter for consumer with device sales up 38% and our first quarter above $1 million in consumer cash receipts. So with that, we now have, as we outlined, more than 12,000 Pulses deployed in the markets. Our digital sales were up 71%, showing our customers are continuing to pay us for digital upgrades after they've bought our devices. Enterprise grew 70% with 7 new clinics signed in the quarter. We now have 17 on subscription. Again, as I said earlier, 12 months ago, that business did not exist. And then together with research revenues, that takes the group to an annualized run rate of around $10 million moving forward. Three final points importantly, we launched the FDA presubmission for SphygmoCloud, which gives us a solid pathway to a suite of high-margin SaaS and digital products. We've got a significant pipeline of commercial partnerships ready to launch and in development. And as Niall just outlined, we closed a strong funding round with the share purchase plan still open but closing shortly on the same terms as the institutional round. So for us, and hopefully, from your perspective, that's a great wrap on a big year for us, a transformational year as we move into 2027. And with that, I'll pass it back to you, Rod.

Yes. Thanks, Craig. That concludes today's webinar. Thanks, everyone, for joining, and have a great day.