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

Okay. So good morning or evening and welcome to our Investor Webinar. I'm Laura O'Riordan, the CEO of Doctor Care Anywhere, and I'm delighted to have you with us today, whether you are tuning in live or watching the replay at your convenience. So before we begin, I'd like to introduce our Investor hub. Our hub is for our investors. It's your central destination for staying up to date with everything happening at Doctor Care Anywhere. You can find all our company information and future webinars like this. On any new pieces of information, you can submit your questions and one of us or the management team at DCA will respond to you. It's designed to give you transparent, timely access to information that matters most to you as a shareholder or anyone interested in future investments. I'm really happy to say I'm joined here today with Seema Sangar, our Chief Financial Officer, who will take you through our finances; and Andrew Bellingham, our Chief Product and Digital Officer, who will share how we're building smarter, more integrated and digital healthcare experiences for our patients and partners. And also got Zoe Sullivan, our Chief Customer Officer, who will be managing the Q&A section at the end of our webinar. We have some dedicated time at the end of the presentation to go through investor questions. We've already had some submitted earlier. We'll go through those. And if we've got time, we'll continue on with your questions. Any questions that are not answered, we'll have a place on our webinar for you to be able to -- for us to be able to respond to you. You can submit your questions, please use the chat function. You can find this at the right-hand side of your screen and it looks like a little comment bubble. So as I said, if we don't manage to get through them, we'll provide somewhere on the webinar page to submit and follow-up questions and get back to you. Firstly, I'm really excited to introduce myself as the new CEO at Doctor Care Anywhere. I'm honored really to be leading this organization. I think, it's good for me to start and give you a little bit about me. So I'm a clinician by background. I come with decades of leadership experience in both the National Health Service, but also in Private Healthcare. I'm still registered nurse today. I care deeply about patient services, and I'm committed to building scalable, focused care services that both deliver clinical and commercial results. So much of the groundwork has been laid through my extensive operational transformation experience, innovation, and this would be helpful to give you some examples of kind of the work that I've done before. I have worked really driving 30% year-on growth in private services and secured a GBP 50 million partnership with one of the largest insurers here in the U.K. I've also managed to scale, growing one of the U.K.'s largest NHS practices. When I started, just to give you an example, it was about 2,500 registered patients, and that went on to 120,000 with a retention rate of 93%. I've also got experience of redesigning clinical workforce models, reducing GP reliance of 96% down to 20% over 2 years. I've also had experience in the direct-to-consumer market, where we've seen an opportunity and opened three clinics in London that allowed our patients also choice to be able to come in face-to-face. And during all this time, I've done this by achieving a 90% plus satisfaction rate and maintaining a 95-star rating for services across the business. To give you something as well as an example of being innovative, we managed to launch an in-app orthopedic referral, which brought about savings of GBP 3.5 million per 100,000 patients for one of our insurers. I've also been a registered manager for our Care Quality Commission. And during my inspection, we got good overall with outstanding leadership rating. I've also had experience at working globally. So while my time at Babylon Healthcare Services, I was really fortunate to have the ability to work with the Rwanda team work in U.S. and Thales in Canada. And then lastly, when I was at EMED, we also launched their GLP-1 program. So I really look forward to building on my experience to unlock the next phase of growth for Doctor Care Anywhere. I'm really proud also to say that the exceptional executive team that already driven us to where we are today, we're actually building on that strength, and we've recently welcomed new Board and executive leaders who bring decades of experience at driving growth, innovation and margin improvement across complex and highly regulated industries. So with this team, we're strongly positioned for our real audacious bold gold for the next 3 to 5 years. So during the webinar today, we're going to go through our achievements, look at our financial performance overview with Seema, and really talk you through our strategic priorities for the next 3 to 5 years, look at our growth opportunities and at the end with some questions. So I'm really happy to say that I'm proud to reaffirm that we're one of the largest digital primary care providers with the revenue approaching GBP 40 million. And over the last year, we've completed just under 1 million digital consultations. This really is a testament to both the demand for accessible modern healthcare, but also our ability to deliver quick, efficient, good quality access to care. This success has been driven by the mature business, the multiskilled workforce that we've got and a team that blends clinical expertise with digital capability. So we're not just growing in size, we're evolving in depth and adaptability. Now supporting all of this is a highly experienced leadership team with decades of combined experience across healthcare, management and innovation. So really, we're a team that remain agile. We're forward thinking and patient focused. So as we continue to scale in this space, it's really important to say that we're moving on to the next part for Doctor Care Anywhere. So next, I'm going to hand you over to Seema Sangar, who's going to present the financial highlights for 2024.

Thank you very much, Laura. Thank you, and good morning to everybody. So look, 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. So on this slide, I'm just going to pick out a few highlights. So last year, 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. This was through increasing the use of ACPs and consultations, rising from around 20% to 40% throughout last year. We also had a shift to more 15-minute appointments and also higher revenue per consultation, and that was through annual price increases. All of this has enabled us to increase our gross margin by 12% year-on-year from 46% to 58%. Next, moving on to our underlying EBITDA. So look, with the growth in revenue, our focus on margin improvement and improving productivity in the business, we have delivered a significant shift in our underlying EBITDA performance being broadly breakeven in 2024. This compares with a GBP 5.9 million loss in 2023, so a huge improvement year-on-year. Finally, just 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. Doctor Care Anywhere ended the year in a strong financial position with GBP 4.4 million in cash and our GBP 10.6 million convertible loan note. And look, with the opportunities we have to drive revenue growth and further reduce our cost base, which we will talk about later on in the presentation, we have sufficient cash to fund organic growth as we move forward. Building on the momentum of 2024 as we move on to the next slide, our aim is to double our revenue and deliver 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-hand side shows our trajectory from 2022 through to 2024. The year-on-year performance clearly demonstrates our acceleration towards profitability and cash generation. So by continuing to optimize clinical delivery, streamlining our cost base and scale within our existing infrastructure, we expect to generate strong operational leverage. This really gives us confidence in our ability to not only double revenue, but to do so in a profitable manner, positioning Doctor Care Anywhere as a high-margin, cash-generative digital health platform. I shall now hand back to Laura, who will talk through the strategic priorities that will support our growth ambitions. Thank you.

Thank you, Seema. So as we look ahead over the next 3 to 5 years, our strategy is anchored in four clear priorities and each are designed to strengthen our market position. We're here to deliver meaningful outcomes for our partners and unlock sustainable growth. I'm now going to take you through each of these priorities. So first, we'll look at how we're strengthening and expanding our current relationship, becoming a more strategic partner by helping our customers delight their users, solve business challenges and improve outcomes. It's great that we already have a strong engaged customer base that offers significant potential for organic growth. We've established a strong foundation with our existing partners such as AXA, Meta, and we've created trusted relationships already. Now we're focused on unlocking the next phase of 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 engagement, cut costs, improve outcomes and unlock our new revenue streams. So this strengthens our client loyalty, increases the lifetime value and really it drives our scalable high-margin growth for our business. So we're excited about the opportunity we're developing with our current clients. And just to give you some example, we're working with Medichecks. So we're expanding our service offering to include home testing blood tests. This empowers our customers with greater choice and enables clinicians to diagnose and treat more effectively. This allows us improving patient outcomes and also enhancing our Doctor Care Anywhere equity value. Just to add also, we have a virtual health assessment pilot live with one of our major clients. And this is the next step in broadening our value proposition. We're not just a virtual GP service. We're here to provide preventative care options for employees while also generating rich insights for our corporate clients. So moving on from that. So by strengthening our relationship with existing customers, it also allows us to run a highly effective, cost-effective, sustainable business, and one that enables long-term growth while increasing efficiency. We are actively lowering our cost to serve through digital optimization, live chat, bringing in a multiskilled workforce and the ability to offer varied length of appointments to meet our customer needs. This allows us to maintain high-quality service delivery, while also reducing really importantly, our overhead costs. So at the same time, we're unlocking more value for our existing client base. This is through deeper engagement, broader service offering. We're increasing the revenue per client, which strengthens our gross margin. So this dual-focused approach, it's disciplined cost management, combined with organic revenue growth positions us to continue expanding margins and deliver strong return as we grow. So secondly, we're now focused on signing also a transformational new business. We see significant opportunity in the virtual healthcare market, and our goal is to capture at least 10% of that market by converting the strong pipeline of opportunity that we already have today, particularly within the private medical insurers, the corporate clients and emerging channels such as construction and education. So you can now -- I'm sure, all have seen and read in the paper, it's in the media. The U.K. health system is under immense pressure. There's lots of changes happening today at our National Healthcare Service, and there are currently long waits 2 to 3 weeks to see a GP and even months and years to see specialist services within secondary care. The demand is high for private digital services, and we see a variety of opportunities ahead of us. Consumers are willing to pay for convenience with private healthcare services really at high demand. Just to give you some example, I see a real opportunity for us for the direct-to-consumer with patients who cannot see their NHS GP, we can offer quick, easy access to care. So we're really pleased about our partnership with myGP. They have a 3 million user base. They're the U.K.'s largest independent NHS GP booking and healthcare management platform. And we're really aware that hundreds of thousands of U.K. patients are seeking appointments are unable to get to see their GP. So Doctor Care Anywhere will be there with myGP. We aim to bridge the gap in healthcare by offering people real choices. We're here to deliver care that's not only affordable and accessible, but it's also there to tailor to their needs. And this service, I'm really happy to say, goes live next month. Also, the U.K. private medical insurance market claims costs are expected to continue to grow at least 12 to 15 per annum. They want and need to manage care in the most cost-effective way possible. And here at Doctor Care Anywhere, we have the solutions and the experienced team to support this. So you can see here at Doctor Care Anywhere, our enhanced suite of services are designed to provide end-to-end support. We've recently launched our Physiofirst service. Andrew will talk you through in more detail. He's going to bring it to life and how this works. And already, we're seeing a positive impact it's having on managing musculoskeletal presentations. This not only gives excellent clinical outcomes, but also for the private medical insurers significant savings in the millions, keeping their customers in primary care and managing them in a more cost-effective way. We've seen also a significant increase in inquiries around our employees providing health benefits. This is a clear signal that organizations are prioritizing their employee well-being more than ever. So this growing demand aligns strongly with our offering that's digital first, flexible and designed both for preventative care and fast access 24/7 to medical need. Whether it's through virtual consultations, health assessments or integrated well-being services, our platform gives employees the tools to support a healthier, more resilient workforce, while also gaining meaningful insights into the health needs of their teams. Really, it's a compelling value proposition and one that I believe will continue to grow across our direct-to-consumer, corporate and our private medical insurance channels. I'm now going to hand you back to Seema, who's going to talk you through our priority three on our margin expansion priority. Over to you, Seema.

Thanks, Laura. So look, we've talked about margin expansion, but how are we actually going to do? So let me talk a little bit more about that. 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 new revenue growth; and secondly, focusing on disciplined cost control. And that is by lowering our cost of sales and our overhead costs. This margin expansion strategy is designed to strengthen cash generation, support reinvestment in growth and increase shareholder value. It's a clear and executable plan, and the next two slides outline the specific operational levers underpinning that margin growth. So firstly, moving on to 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 in 2024 of all the mixed clinical workforce, and there is more opportunity here. By shifting more appointments to be handled by other clinicians and adjusting the skills mix, which currently is split 60-40 in terms of GPs versus other clinicians, we can lower our delivery costs whilst maintaining the 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 in one go. Taken together, these changes will deliver a meaningful uplift in gross margin as we scale the business. Equally important is the opportunity we see in reducing non-operating costs. We have already completed our transformation program in the first quarter of 2025, and this will materially lower our run rate against our cost base and improve operating leverage. But we are doing much more. Further simplification, process automation and system consolidation will allow us to drive more 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. We want to reduce non-operating costs from approximately 43% to around 20% over the next 3 to 5 years. This will significantly enhance margins and strengthen our cash flow. I think, an important point to note here is that whilst I say 3 to 5 years, we are actively working on cost reduction programs right now, and this will continue to be reflected through our reporting on our margins. I shall now hand over to Andrew, who will talk about how we will accelerate digital delivery to drive scalable growth. Thanks, Andrew.

Thanks, Seema. Good morning, everyone. I'm going to take you through our final key priority, how we accelerate to digital delivery to drive scalable growth. Our digital infrastructure is a key enabler for our business growth, and our platform today has the foundations to deliver this without additional investment. Security and compliance is a given. We meet all 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're building navigation and digital pathways that triage patients into the most clinically and cost-effective pathways, which may not require a clinical consultation. Interoperability is essential for speed to market. We're currently integrating with best-in-class health tech companies that have specialized clinical capabilities, for example, using AI to diagnose skin cancer. Another key requirement and differentiator is the ability to surface our propositions within a client's 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 care programs, delivering better outcomes for patients and reducing downstream costs for insurers. I'll take you through an example of a new clinical pathway on the next slide. Musculoskeletal, MSK, presents a growing problem for employers, employees and insurers alike. Our clinical pathway ensures that patients will be navigated to the most appropriate care based on their needs. For example, in this slide, a patient may start with a virtual consultation with a physiotherapist after a simple automated triage who prescribes a digital-led exercise program. Upon follow-up, the patient may require a scan or a face-to-face physiotherapy sessions that can all be managed through a single platform. This same model can be applied to other disease conditions, including dermatology, mental health, women's health and weight management, which are all currently being built out. This proposition enables Doctor Care Anywhere to provide lower-cost solutions to corporate clients who are looking for alternatives to expensive PMI provision and the growing number of businesses focusing on health and well-being. We can also meet the growing demand in the self-care pay market through partnerships such as myGP that Laura referenced earlier. Having these propositions delivered through our client's own digital front door provides Doctor Care Anywhere with a unique differentiation in the marketplace. I'll now pass back to Laura to close.

Thank you, Andrew and Seema. Just in closing, this is a business that's performing and developing services that meet a healthcare need. We continue to demonstrate strong financial progress, built on efficient, disciplined and scalable operating model. Our foundation is strong. We have growth opportunities, and we're just really scratching the surface of what's possible. So I see a significant opportunity ahead, and we're well positioned to capture it. Despite our progress, we believe that the current market valuation does not yet reflect the true strength of our business or the scale of the opportunity that we're unlocking. I see this as a moment of misalignment between price and potential, and our current valuation doesn't reflect the full extent of the long-term value that we're building here at Doctor Care Anywhere, and that presents a unique opportunity. So I'm really confident and excited that we're just beginning of what's possible. So thank you for your time and continued support. Today, we shared the story of a business that's growing with discipline, performing with strength and perfectly positioned to seize the opportunity in the U.K. healthcare market. We're really entering our phase with real momentum. We've got a revitalized leadership team with deep experience, a sharpened strategic focus and a strong, stable financial foundation. So over the next 3 to 5 years, our priorities are ambitious and really clear. And I'm incredibly excited about the future for Doctor Care Anywhere. We have the right team in place to sustainably grow the business, and we are committed to doubling our revenue and achieving an EBITDA margin of at least 15% over the next 3 to 5 years. So I'm really excited, as I said, and look forward to executing the strategy and delivering long-term value for our stakeholders. I'm now going to hand over to Zoe Sullivan, our Chief Commercial Officer, who's going to facilitate some questions and answers. Over to you, Zoe.

Thank you, Laura, and hello, everyone. Thank you very much for those that have submitted questions. We're going to read them out and provide some answers. If we are unable to get to your questions today, we will make sure that we get back to you shortly by the Investor hub. So the first couple of questions that have come in, I'm going to direct to you, Seema. So Doctor Care Anywhere set a goal of doubling revenue and achieving a 15% EBITDA margin in 3 to 5 years. How do you expect to achieve this?

Great. Thanks for the question. So look, we will achieve this through operational leverage, margin expansion by the clinician mix that I talked about and our reduced overhead costs while scaling with key partners like AXA and a new corporate clients like Alliance Health and also through winning new business. So the four pillars that we've already talked about in the presentation is all going to enable us to reach those growth ambitions.

Thanks, Seema. And the next question coming to you also. With GBP 4.4 million cash on hand at year-end and underlying EBITDA loss narrowing, how close is the business to sustainable cash flow generation?

Yes, sure. So look, you will have all seen from our published accounts that cash burn is significantly down. And as mentioned throughout the presentation, we have a clear strategy that will lead to profitable growth and cash generation. So we're getting closer.

Thanks, Seema. I'm now going to hand over to Andrew for the next couple of questions. So only 1.2 million of your 3.3 million eligible lives are activated. What's the strategy to convert more of these? And what kind of revenue uplift could that deliver?

Thanks, Zoe. We're focused on improving conversion throughout the entire user journey, not just activation. We started this program last month with optimizing the booking and appointment section of the flow, which has already delivered double-digit growth in consultations booked within the first month of going live. The next phase of this is focused around patient activation and patient verification parts of the user journey. In addition, we're working with our partners to relaunch new marketing campaigns and having deeper partner collaboration to boost activation and lifetime value.

Thanks, Andrew. And we've got quite a typical question now. So can you give an example of how AI and digital triage tools are being integrated into the platform and how this improves both efficiency and patient outcomes?

Yes, sure. Thank you for the question. And I referenced this earlier in the presentation. We're launching shortly a pilot with a specialist health tech partner focused on the diagnosis of skin cancer. Up to 50% of the patients that are referred to secondary care for suspect malignancy go on not to have a positive diagnosis upon investigation. And wait times even in private healthcare for skin cancer are between 4 to 6 weeks. What we're looking to do in the pilot is patients with a suspected skin cancer will upload a demo digital image using their mobile phones, which is analyzed by a Class III medical product, AI, with 98% accuracy, which is better than a dermatologist. And the results will be sent back to the clinician same day. So this will transform patient care in this pathway, reducing referrals to secondary care and crucially waiting list within secondary care and ultimately driving substantially better patient outcomes. And this will be going live in the next month or so.

Thanks, Andrew. Next question then I'm going to direct to Laura. So your plan includes moving more appointments to 10 minutes and expanding the clinical skills mix. How do you ensure clinical quality remains high?

Thank you. Great question. I think firstly, it's important to say that we're not just moving to 10-minute appointments. The aim here is to offer varied length of appointments to meet need. So whether that's, as we talked earlier, our physio appointments up to 20 minutes to your cough, cold and running nose to 10 minutes. That's what we're building out today is the ability to be agile enough to meet a need. So that's the first thing to say. During all of this, it's really important that you've got strong clinical governance. We will be doing regular audits, tracking, identifying needs. We'll be looking at the information that tells us when our clinicians log on, how long the appointments on average are taking. These are all key metrics that we already do today that allows us to go forward with confidence to know this is the right thing to do. So I've done this before, I've been successful. It meets the need. And also, it allows us to be, again, looking at where the impact we will have on our gross margin. So I have no concerns with that. But I think, it's just important to say this is not just us moving to 10-minute appointments. This is us offering a varied length of appointments to meet a clinical need. Thank you, Zoe.

Thanks, Laura. Thank you for watching, everyone. We'll now bring our webinar to a close. We hope to maintain our dialogue with our shareholders through our interactive Investor hub. The hub is the best place to discover all of our news and engage with us directly through the Q&A function. If you do have any follow-up questions, we'll have the Q&A to the bottom of the webinar page, and we'll make sure that we get back to you, as soon as we can. And we'd really just like to thank you again for joining us, and we hope to see you again soon.