Doctor Care Anywhere Group PLC (DOC) Earnings Call Transcript & Summary

Good morning or evening to those who are joining us today, whether from Australia, the United Kingdom, or elsewhere. My name is John Stier, and I'm Chair of the Board of Doctor Care Anywhere Group PLC. I would now like to welcome you to our Annual General Meeting. I confirm that we have the necessary quorum, and I declare the meeting open. With me today attending from the U.K. or virtually are my fellow Board members: Matthew Addison, Non-Executive Director and Chair of our Remuneration and Nomination Committee; Sam Shah, Non-Executive Director, who chairs our Audit and Risk Management Committee; David Ravech, Non-Executive Director and a major shareholder; and Laura O'Riordan, our Chief Executive Officer. Also in attendance today are our Chief Financial Officer, Seema Sangar; Andrew Bellingham, our Chief Product and Digital Officer; and our Interim Company Secretary, Cathy Baxandall. We are grateful to our auditors, Crowe LLP, making the City of London office available to us for this meeting. 2024 has been a really strong year for the business. We have grown, moved our profit to broadly break even, and started generating cash for the first time. We'll take you through these details shortly. We've also significantly strengthened our team. Our NEDs have been strengthened with Matthew and Sam joining us and our executive team have been strengthened with Laura, Andrew and Christian Bateman joining us and Anushka Mohotra being promoted to Chief Medical Officer. This and the strong backdrop set us up for a very strong 2025 and beyond. Our goals for 2025 are focused around strengthening and expanding our existing relationships, signing transformational new business, continuing to develop innovative clinical pathways, driving continued margin expansion, and accelerating our digital delivery. Laura will share more details of all of this in a moment. We believe this puts us at a pivotal point to deliver material shareholder value over the coming years. We want to thank you for your continuing support on this journey. I'll now hand over to Laura, our Chief Executive Officer, Seema, and Andrew, who will give an overview of our progress in 2024 and discuss how we have positioned the business for future growth. Thank you.

Good morning, everybody, and welcome to our Annual General Meeting. It's a pleasure to see so many of you here today. And first and foremost, I want to take a moment to sincerely thank our incredible team, valued customers, and loyal clients for your continued support over the last year. Your trust and commitment has been instrumental in our success, and we truly appreciate the role each of you play in driving our business forward. Today, I'm here with Seema Sangar, our CFO; and Andrew Bellingham, Chief Digital Officer. And we're going to give you an overview of our business, the financial performance for 2024, and I'm really excited to walk you through the detail of our key priorities, which have a clear focus on growth and efficiency. So as we move forward, we remain committed to building a strong and resilient, and forward-thinking business and continue to deliver value for all our customers and stakeholders. Today, I'm really proud to reaffirm that we're one of the U.K.'s largest digital-first primary care providers. With our revenue approaching GBP 40 million, we not only achieved significant financial scale, we've also delivered quick and efficient access to services. Over the last year, we've completed just under 1 million digital consultations. It's a testament to both the demand for accessible modern health care and our ability to deliver it at scale and with quality. This success is driven by our mature business, the multiskilled workforce, and a team that blends deep clinical expertise with digital capability. We're not just growing in size, we're evolving in depth, and we're supporting all of this by a highly experienced leadership team, combined with decades of experience across health care management and innovation. We're a team that remain agile, forward-thinking and patient-focused, and we continue to scale and lead in this space. I'm now going to hand you to our Chief Financial Officer, Seema Sangar, who is going to present the successful achievements of 2024.

Thank you very much, Laura, and good morning to everybody. So look, as John and Laura mentioned, we are really pleased with our achievements in 2024. We met all of our market guidance, and we continue to show significant year-on-year improvement in our financial performance. Just want to pick out a few highlights on this slide. So in 2024, we worked really hard to drive through efficiency initiatives to lower our cost to serve, and this was achieved by continuing to develop our mixed clinical workforce model, increasing the use of advanced clinical practitioners in consultations, and this rose from 20% to 40% throughout 2024. We also had a shift to more 15-minute appointments, and also a higher revenue per consultation from annual price increases. All of this enabled us to increase our gross margin by 12% from 46% in 2023 to 28% year-on-year. Moving on to underlying EBITDA. With the growth in revenue, our focus on margin improvement and improving productivity in the business, we have delivered a significant shift in underlying EBITDA being broadly breakeven in 2024. This compares with a GBP 5.9 million loss in 2023. Finally, moving on to cash. We are extremely pleased to have achieved underlying cash generation in the second half of 2024. This is the first time in the company's history that this has been achieved. DCA ended the year in a strong financial position with GBP 4.4 million in cash and a GBP 10.6 million convertible loan. So look, with the opportunities we have to drive revenue growth and further reduce our cost base, we have sufficient cash to fund organic growth as we move forward. Just building on the momentum of 2024, our aim is to double our revenue and deliver at least a minimum EBITDA margin of 15% over the next 3 to 5 years. And we will do this through aggressive cost rationalization and favorable margin mix shifts. The chart on the left shows our trajectory from 2022 through to 2024. The year-on-year performance clearly demonstrates our acceleration towards profitability and cash generation. By continuing to optimize clinical delivery, streamline our cost base, and scale within our existing infrastructure, we expect to generate strong operational leverage. This really gives us the confidence in our ability to not only double revenue, but also to do this profitably, positioning DCA as a high-margin, cash-generative digital health platform. I should now pass back to Laura, and she will talk through the strategic priorities that will support our growth ambitions.

Thank you, Seema. So as we look ahead over the next 3 to 5 years, our strategy is anchored in 4 clear priorities, each designed to strengthen our market position to deliver meaningful outcomes for our partners and unlock scalable, sustainable growth. So I'm now going to take you through each of these priorities. First, we look at how we're strengthening and expanding our current relationship. Becoming a more strategic partner by helping our customers delight their users, we're here to solve business challenges and improve outcomes. Importantly, our already strong engaged customer base offers significant potential for organic growth. We've established a strong foundation with our existing partners, creating trusted relationships. Now we're focused on unlocking the next phase of our growth by expanding the new services we deliver to these clients. Expanding our services embeds us deeper within our clients, making us essential to their success. We aim to boost user engagement, cut costs, improve outcomes, and unlock new revenue streams. This strengthens the client loyalty, increases lifetime value, and drives scalable high-margin growth for our business. So we're really excited about the new opportunities we're developing with our current clients. As an example, we're working with Medichecks. We're expanding our service offering to include self-blood test ordering. This empowers customers with great choice and enables our clinicians to diagnose and treat more effectively. This improves outcomes, clinical quality, and also enhances the equity value for our business. Additionally, we have a virtual health assessment pilot going live with one of our major clients, and this is a key step in broadening our value proposition and providing preventative care options for employees while also generating rich health insights for the corporate client. So by strengthening our relationship with existing customers, it also allows us to run a highly cost-effective, sustainable business. And this is one that enables long-term growth while increasing efficiency. We are actively lowering our cost to serve through digital optimization, live chat, and multiskilled workforce, and our ability to offer very length of appointments to meet customer needs. This allows us to maintain high-quality service while also delivering and reducing operational overheads. So at the same time, we're unlocking more value from our existing client base through deeper engagement, broader service offering, while increasing revenue per client, which further strengthens our gross margin. So this dual-focused approach, disciplined cost management, combined with organic revenue growth, positions us to continue expanding our margins and deliver strong return as we grow. So secondly, we're focused on signing transformational new business. We see a massive opportunity in the virtual health care market. Our goal is to capture at least 10% of this, converting a strong pipeline of opportunity we already have today, particularly with the private medical insurers, corporate clients, and emerging channels such as construction and education. Today, we're all aware we're in a pressured market, challenges demand solutions, and our business uniquely turns obstacles into opportunities. The U.K. health market and system is under immense pressure at the moment. There's a long current wait 2 to 3 weeks to see a GP and then months or years to see specialist services. So demand is high for private digital services, and we see a variety of opportunities ahead. Customers are willing to pay for convenience with private health care inquiries at a record high. And for example, direct-to-consumer, when patients cannot see an NHS practice, we can offer quick and easy access to care. We're really pleased with our new partnership with MyGP. They've got a 3 million user base, the U.K.'s largest independent NHS GP booking and health care management platform. And each month, we see hundreds and thousands of U.K. patients seeking appointments and are unable to see GP in person. So DCA will be there with MyGP to bridge this gap and give people the choice of care direct to consumer. Also, the U.K. private medical insurer market claims costs are expected to continue to grow 12% to 15% per annum. They want and need to manage care in the most cost-effective way possible, and we have the solutions and the experienced team to support this. You can see here at Doctor Care Anywhere, our enhanced suite of services are designed to provide end-to-end support. We recently launched our PhysioFirst service and already, we see a positive impact it's having on managing musculoskeletal presentations. This not only gives excellent clinical outcomes, but it also provides for the private medical insurer significant savings in the millions, keeping their customers in primary care and managing care in the most cost-effective way. We've seen a significant increase in inquiries around employees providing health benefits. This is a clear sign that organizations are prioritizing the employee well-being more than ever. This growing demand aligns strongly with our offering that's digital first, flexible, and designed to deliver both preventative care and fast access 24/7 with clinical support. So whether it's through virtual consultations, health assessments, or integrated well-being services, our platform gives employees the tools to support healthier and more resilient workforces, whilst also gaining meaningful insights into the health needs of their teams. It's a compelling value proposition and one I believe will continue to drive growth across direct-to-consumer, corporate, and private medical insurer channels. I'm now going to pass you to Seema, who's going to talk you through our priority 3, margin expansion.

Thank you, Laura. So moving on to more detail around priority 3. As Laura mentioned, we remain extremely focused on delivering sustainable, high-quality earnings growth. And to do this, we are executing a dual approach. Firstly, driving both organic and new revenue growth whilst really focusing on disciplined cost control, and that is by both lowering our cost of sales and also our overhead costs. This margin expansion strategy is designed to strengthen cash generation, support reinvestment into growth, and increase shareholder value. Look, it's a really clear and executable plan. And the next 2 slides outline the specific operational levers underpinning that margin growth. So starting firstly with gross margin. As I mentioned at the start of this presentation, we increased our gross margin to 58% in 2024, and we've identified a clear set of levers to push this even higher. A big opportunity lies in the way we manage clinical appointments. We have already seen the impact -- the successful impact in 2024 of the mixed clinical workforce model, and there is more opportunity here. By shifting more appointments to be handled by other clinicians and adjusting the skills mix further, which is currently split 60-40 in terms of GPs versus other clinicians. We can definitely lower our delivery costs further while maintaining a high quality of care. We are also planning to introduce 10-minute appointments where clinically appropriate, which will help us serve more patients. This improves efficiency, patient access, and margin all at once. Taken together, these changes will deliver a meaningful uplift in gross margin as we scale. Equally important is the opportunity we see in reducing nonoperating costs. We have already completed a transformation program in the first quarter of 2025, which will materially lower our run rate against our cost base. So we have already completed a transformation program in quarter 1 of 2025, which will materially lower our run rate against our cost base and improve operating leverage. But look, we're doing a lot more, and there's so much more to go for. Further simplification, process automation, and system consolidation will drive further efficiencies, while a sharper procurement strategy will allow us to capitalize on scale and eliminate unnecessary third-party spend. The target is really clear to us, reduce nonoperating costs from approximately 43% of revenue at the moment to around 20% over the next 3 to 5 years. This will significantly enhance margins and strengthen cash flow. A really important point to note here is that whilst I say 3 to 5 years, we are actively working on cost reduction programs right now. A number of initiatives are in play, and this will continue to reflect in our margins. I shall now hand over to Andrew, who will talk about how we will accelerate digital delivery to drive scalable growth.

Thanks, Seema, and good morning, everyone. I'm going to take you through our final key priority, accelerating our digital delivery to drive scalable growth. Our digital infrastructure is a key enabler for our business growth. Our platform today has the foundations to deliver this without additional investment. Security and compliance is a given, we meet NHS and healthcare regulatory standards. Our platform provides clients flexibility with the ability to offer different payment and care pathways to meet clients' individual needs. To scale efficiently, we are building navigation and digital pathways that triage patients into the most clinically and cost-effective pathways, which may not even require a clinical consultation. Interoperability is essential for speed to market. We are currently integrating with best-in-class health tech companies that have the specialized clinical capabilities we need, for example, using AI to diagnose skin cancer more effectively. Another key requirement and differentiator is the ability to surface our propositions within our clients' own digital experience, enabling a more seamless patient experience. Our product vision is to utilize technology to deliver better patient outcomes in a more cost-effective and timely way within primary care. Our product road map is focused on building comprehensive end-to-end digital care pathways for the most common conditions managed in primary care, avoiding more costly secondary care pathways. We are providing additional tools for our clinicians, such as diagnostics, blood tests, the ability to prescribe digital supported self-care programs, delivering better outcomes for patients and reducing downstream costs for insurers. We can provide lower-cost solutions to corporate clients who are looking for alternatives to expensive PMI provision. And as Laura mentioned, the growing number of business is focused on health and well-being, and more preventative care. We can also meet the growing demand in the self-pay market through partnerships such as MyGP. Having these propositions delivered through a client's own digital front door provides Doctor Care Anywhere a unique differentiation in the marketplace. I'll now hand back over to Laura to close. And as Laura mentioned, the growing number of businesses focused on health and well-being and more preventative care. We can also meet the growing demand in the self-pay market through partnerships such as MyGP. Having these propositions delivered through a client's own digital front door provides Doctor Care Anywhere a unique differentiation in the marketplace.

Thank you, Andrew. So in closing, this is a business that's performing today. We continue to demonstrate strong financial progress built on an efficient, disciplined, and scalable operating model. Our trajectory is clear, sustainable growth, and we're only just getting started. We've seen a significant opportunity ahead, and we're well-positioned to capture it. So despite our progress, we believe the current market valuation does not yet reflect the true strength of our business or the scale of the opportunity we're unlocking today. Our share price is undervalued, not due to the lack of performance, but because the market has not yet really fully recognized the long-term value that we are creating here. This is a business with a solid foundation, a clear strategy, and growing momentum. And we're confident in the path forward, and we're just at the beginning of what's possible. So thank you for your time and your continued support. Today, we've highlighted a business that's performing with strength, growing with discipline, and positioned for the opportunity in the U.K. health care market today. We're entering our next phase, and we've got real momentum behind us. Our operating with a sharp focus under a new experienced leadership team backed by a strong financial base. Our priorities are focused, ambitious over the next 3 to 4 years. And just to recap, we're here to deepen and expand existing relationships, win transformational new business, deliver meaningful margin expansion, and accelerate digital delivery. This is a business with a clear vision, strong execution, and massive opportunity ahead. So we're just getting started, and we're confident in our ability to create a sustainable long-term value. Thank you again, and I'm now going to hand you back to John.

Thank you, Laura, Seema, and Andrew. Today's presentation slides and the audio recording will be available on the Investor Hub section of the DCA website to view in the next 24 hours. Before we start the formal business of the meeting, I will answer any questions sent by our members. I will also allow time for questions as we progress through the formal items of business. Do we have any questions? We'll just give it 30 seconds, Cathy, just in case any wants to put anything forward for us. Thank you. Given there are no questions, we will now proceed to the formal business of the meeting. The agenda for today's AGM is set in the Notice of Meeting dated the 2nd of April 2025, which was circulated to all eligible securityholders and shareholders. I'll take the notice as read. Copies of this and our 2024 annual report are available on our website and the ASX company's portal. The minutes of the 2024 AGM have been signed and are available for inspection by arrangement through our Company Secretary. You will have received instructions on voting and submission of questions as part of the voting pack. But here is a brief summary. Today's meeting is being held online via the Computershare meeting platform. This allows shareholders, proxies, and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies may ask questions and submit votes. Online attendees can submit questions at any time. To ask a question, select the Q&A icon. Type your question in the text box. Once they finish typing, please hit the send button. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that the questions may be moderated. And if we receive multiple questions on one topic, amalgamate together. To ask a verbal question, please follow the instructions written below the broadcast. I should remind you that voting today will be conducted by way of a poll on each item of business set out in the notice of meeting and that all voting will be recorded electronically. I will shortly open voting for all resolutions. If you're eligible to vote, once voting opens, please press the vote icon, and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button, as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. You can change your vote at any time during the meeting up until the time I declare the voting closed. After voting is closed at the end of the meeting, we will show a slide with the proxy votes received for each resolution. The final votes for and against each resolution will be released to the ASX after the meeting is closed, which is likely to be tomorrow morning, Australian time, following verification by our share registrar, Computershare. Does anyone have any questions about the voting process? Well, given there aren't, thank you. I will now declare voting open for all items of business. The vote icon on all resolutions will soon appear, so you may submit your votes at any time, although I will also pause after each resolution to allow for voting. The Board recommends that you vote in favor of all resolutions as set out in the Notice of Meeting. I, as Chair of this meeting, intend to vote all open proxies in favor of all resolutions. The first item of business is to receive and consider the company's annual report and financial statements for the year-ended the 31st of December 2024. While we do not put this item of business to a vote, we would welcome any questions about the company's accounts or more generally. Does anybody have any questions? Given there are no questions, we'll move to the next item of business, reappointment of our auditors. Resolution 1 deals with the reappointment of the company's auditors, Crowe LLP, whose appointment was previously approved at our 2024 AGM. It is proposed that they be reappointed as the company's auditors for the next 12 months. I now put this resolution to the meeting. If you have not already cast your vote, please do so now. Resolution 2 relates to the election of Matthew Addison, who was appointed to the Board of Directors as a Non-Executive Director in October 2024 and is therefore standing for election at this meeting. His experience and credentials are set out in the notice of meeting and in our annual report. I now put this resolution to the meeting. If you have not already voted, please vote now. Resolution 3 relates to the election of Sam Shah, who was appointed to the Board as a Non-Executive Director in January this year and is therefore standing for election at this meeting. His experience and credentials are set out in the notice of meeting and in our annual report. I'll now put this resolution to the meeting. So if you have not already voted, please vote now. Resolution 4 relates to my own reelection. So I'll hand over to Matthew Addison to Chair the meeting for the purposes of this resolution.

Thank you, John. This resolution proposes the reelection of John Stier as a Director, who retires and is standing for reelection in accordance with the rotation requirements of the company's articles. He was first appointed to the Board as a Non-Executive Director in May of 2022 and has served as Chair of the Board since 2023. His experience and credentials are set out in the notice of meeting and in our annual report. I now put this resolution to the meeting. Please vote now if you've not cast your vote already. Thank you. And I'll pass the Chair back to John.

Thank you, Matthew. The next item of business is Resolution 5, which relates to the adoption of the 2024 remuneration report. Before putting the resolution to a vote, I would like to remind shareholders that a voting exclusion applies to this resolution as set out in the notice of meeting. This is an advisory resolution, but the Board will take the outcome of the vote into consideration when reviewing the future remuneration policies and practices of the company. I now put this resolution to the meeting. Please vote now. Next resolution relates to the introductory share option award for Laura O'Riordan, our Chief Executive Officer, who joined the business in January 2025. This award is part of a remuneration package designed to attract and reward talented and motivated leadership in a way that aligns their interest with those of our securityholders. Details of the proposed award are set out in the full notes of the meeting. I'll respond to questions on this resolution now. Are there any questions? Given there are no questions, I now put this resolution to the meeting. So if you have not voted already, please vote now. That concludes all items of business in the meeting today. I will now give all shareholders a moment to finalize their votes, as voting will close momentarily. I now formally close the poll. As I said earlier, the final numbers of votes for and against each resolution will be made available to shareholders when we release the results to the ASX. However, on the basis of proxy voting, all resolutions have been passed, and the preliminary results are shown on the screen. I now declare the meeting closed. Thank you all for your time and participation today. If you have any further questions or matters to raise, please send in your question via the meeting portal, and we will endeavor to respond after the meeting. For anyone attending in person, we will be available for the next few minutes to speak to you. Thank you.