Belated update post qtr report, strawman preso and their preso yesterday at the aussie micro conference.

Qtr report - face value 1Q25 looks weak but driven by one-offs, timing and seasonally weak. Does tell one that the inflection is going to be fully reflected in 2H. Ideally one would want to see 2Q25 be close to or above even.

From the recent presos, clear that the success of the inflection can be lucrative as it potentially places the company on a single digit multiple. The Straw and OZ Micros presos had additional "colour" on FY25 with guides of revenue +10% and total costs -10%.

FY24 gross revenue and costs were $8.6m and $10.0m respectively. Based on the guides, they would be $9.4m and $9.0m respectively, which implies a profit of +$0.5m. Given a fully expensed biz model with no D&A, I interpret this is effectively EBITDA/EBIT. It also implies a number higher than the very specific EBITDA of $301k in the sharewise preso so maybe I have the estimated grant or another figure slightly off to get a higher output. I do note that the R&D grant would be the difference between flat and the guided positive profit figure ultimately. But either way, the jaws are opening up and the business is on a trajectory of inflecting.

The current EV is $8.3m and using the above maths, implies an EBITDA/EBIT multiple of ~18x so not cheap at face value atm especially with 1Q25 report giving some concerns.

2H25 will be important as it will show the underlying profitability and an exit run-rate to work with as well a step up of profitability into FY26 could be. As in my prior straws, my graphs show what that run-rate and inflection into FY26 could look like on the current trajectory but to reiterate, there is reasonable scope that EBITDA/EBIT could be $1m+ (ex-grant) implying a multiple of ~8x. To get this in FY26, revenue has to grow 10% again whilst costs are flat as any opex increases are offset by another ~200k+ in reduced R&D spend as flagged in a prior preso.

Looking forward, 2Q25/1H25 results will be a big derisking catalyst for the inflection narrative in GLH as it will confirm (or not).

(Edits for spelling and incorrect EV figure, $8.3m not $7.4m)

Today Matthew held a preso via sharewise and offered some further titbits around FY25 which have helped me firm up FY25 expectations and provide some lead into FY26.

Key financial points were:

• FY25 R&D spend of $2.055m (FY24 was $2.686m)
• With cost reductions in FY24 being fully realised in FY25, coupled with lower R&D spend and revenue growth, leads to FY25 EBITDA guide of $301k.
• FY26 R&D spend to taper to $1.8m which at the target of 20% of expenses implies a total cost base of $9.07m.

Key business initiatives in FY/CY25 were:

• From Jan 2025: Upgrading everyone to SaaS & More aggressive upselling of hothealth and referral net messaging
• From July 25: Push B2C products to get value out of customers customers & Add channel partners to ramp sales

Below are updated charts from my prior inflection post update based on new info today and extending to include a potential scenario for FY26 which I think gives scope to see the company do $1m+ in EBITDA post R&D spend (assuming revenue of $10m+ is possible). This implies an EV/EBITDA of ~6.5x which I think is too low for a sustainably growing tech company with the quality of ARR that it has.

Sharewise do eventually put out replays of the webinar so keep an eye out for it.

This is where I see opportunity in micro tech names such as GLH as the market caps/EVs continue to lag the large/Mid-cap names that are back in vogue as well as underlying fundamentals of specific micro names.

With GLH, the inflection back into profitability as the company continues to execute client implementations and ARR growth (guiding $7m for FY25) hits the revenue line at the same time costs continue to be managed + plus peak R&D spend rolling over to create operating leverage at the bottom line.

With operating metrics improving significantly and the market cap at historical lows, seems like the asymmetry of returns is to the upside. More so post the con note which increases the liquidity on the balance sheet (noting $250k of the $1m was picked up by insiders).

I know the below is very speccy but seems directionally right as long as the fundamentals play out.

Ditto an ASX release.

https://www.theage.com.au/business/companies/no-brainer-woolies-muscles-into-telehealth-20230320-p5ctno.html

Book ya GLH powered telehealth appointment here.

https://www.healthylife.com.au/telehealth/telehealth-appointment