Consensus community valuation
$1.145
Average Intrinsic Value
17.2%
Undervalued by
Active Member Straws
#Potential Acquisition Target
Last edited 4 months ago

Interesting turn of events, with Mach7 buying Client outlook for $40M. Client Outlook has eUnity that competes with Promedicus' Visage. Both products are front-end and Visage had acquired market share faster. The combined Mach7 technology (front-end and back-end) aims to take market share from Promedicus. Competing for tenders with the combined (front and back end) is a very serious threat to Promedicus. 

Hence, my thinking is that if Mach7 starts winning tenders that Promedicus would have got, then Promedicus would have to acquire Mach7. Either Promedicus build back-end themselves or acquire future market leaders. In the acquisition route, they should do it early such that they pay a lower price. 

Just my thoughts on what could be a really interesting battle for market share :) 

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#ASX Announcements
Added 3 months ago

Q4 FY20 Results

  • The freecashflow was the main focus this quarter. The purple bar showing FY20 freecashflow of $4.5M is a great achievement by management. Mach 7 by itself did well to grow this quarter. 
  • In the cashflow statement the investment into Client Outlook have not materialised "in respect of working capital and other financial assets/liabilities that will be made on or before 30 September 2020". Mach7 have $48M in cash, of which $40.8M will go towards the acqusition. I feel, Mach 7 have slightly overpaid for the acquisition, however if both Mach 7 and Client Outlook end up winning their target tenders it would be a genius move. In a way, Mach7 is using the lockdown to integrate with Client Outlook and then compete for large end-to-end tenders. They aim to come out stronger and be more agressive with sales pipeline post acquisition.    
  • "Mach7 has hired U.S. advisory firm Exactus Advisors to assist Mach7 with planning and the execution of the integration of Client Outlook." This was the only thorny point in the quarterly. Having a 3rd party advisor for integration means higher execution risk. Fingers crossed it works out, but definetly a potential red flag. Fortunately, Mach7 aims to update the market on the integration progress. Hence, shareholders are kept in the loop. 
  • In regard to Covid, "It is still expected that travel and vendor visits to hospitals will remain a challenge for the next six (6) months". Hence they cautioned the market that "the full impact of COVID-19 is still unclear in relation to its impact on current deal timing. It is expected that there will remain some residual effect during the 1st half of this fiscal year." Covid force tradeshows to be conducted online and like in previous quarterly, hospitals did not have difficulty with workflows moving outside the hospital and into cloud. 
  • Client Outlook won the Univerisity of Michigan contract valued at $175k p.a.
  • Mach 7 successfully deployed their Enterprise Imaging Platform across the entire Advocate Aurora Health's (AAH) network. The Mach7 system is currently taking in 500,000 orders and Admission Data & Transfer (ADT) messages per day. Prior to this, AAH  purchased Mach7’s Migration Engine to migrate ~3.5 petabytes of existing data. AAH is one of the 10 largest not-for-profit integrated health systems in the United States, encompassing 28 hospitals, 500 outpatient locations, and 68 Walgreen’s clinics across the states of Wisconsin and Illinois. There is an excellent opportunity for Mach 7 to cross sell Client Outlook's eUnity. AAH is eager to fully digitise their hospitals. 
  • Mach 7 also successfully deployed their VNA solution to Children of Alabama (CoA). "The solution will provide extensive cost savings by centralizing their radiology images into a single archive." Another customer that could be potentially cross-sold Client Outlook products. 
  • Overall, the company is on track to maintain their customers and aim to come out of the pandemic with Client Outlook added on. Acquisitions are always risky, and this is no exception. It was expensive, but maybe they can integrate well to drive down cost and hopefully existing customers adopt Client Outlook's products.      

View Attachment

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#FY2020 Full Year Results
Added 2 months ago

27-Aug-2020:  Mach7 Announces FY2020 Financial Results   and   Investor Presentation - FY2020 Results

plus  Preliminary Final Report and Audited Financial Statements

Profitable NPAT Result, Cashflow Positive & Triple Digit Revenue Growth

Mach7 Announces FY 2020 Results

Financial Highlights:

  • Revenue up 102% to $18.9M
  • EBITDA up 181% to $3.3M
  • Net profit after tax up 102% to $0.2M
  • Positive free cashflows from operations up 225% to $4.7M
  • Contracted annual recurring revenue at 30 June 2020 $9M

Melbourne, Australia; 27 August 2020: Mach7 Technologies Limited (ASX:M7T), a company specialising in innovative data management solutions for healthcare providers, today released its full year results for the year ended 30 June 2020 (FY20). This update provides information on what the Company considers to be key financial metrics.

Business Further De-risked

The Company has reported strong revenue growth and its first (since listing) profitable and free cashflow positive result. Together with its cash reserves of $15+ million after the acquisition of Client Outlook, Mach7 has become increasingly less reliant on investor funding, and has demonstrated the scalability of the business.

FY20 Revenue Growth 102%

The Company has reported revenues of $18.9 million, growth of 102% over prior year revenue of $9.3 million. Each category of revenue achieved strong double-digit growth, with the majority being attributable to software license fees. Software license fee revenue is representative of new customers licensing the platform, and existing customer re-licensing at the expiry of their contract term. Software license fees for FY2020 included license fees earned from prestigious US-based Advocate Aurora Healthcare and Hospital Authority HK who purchased two-fifths (2/5) of their contracted licensing volume during this year.

Pleasingly, the Group’s recurring annual revenue of $6M also achieved strong (35%) annual growth. The Group’s recurring revenue is representative of customers going “live” on the Mach7 Platform and commencing their support or subscription agreement. Notably, Advocate Aurora, Sampson Regional Medical Centre, Adventist Health Tulare (“Tulare”), Colorado Imaging Associates, P.C. (“CIA”), Children’s of Alabama, Sentara Healthcare (subscription) and University of Vermont all achieved go-live during FY20.

--- click on links above for more ---

[I don't hold M7T shares, but this is an impressive set of results.  The M7T share price is up by around 4% today so far on the back of these numbers.]

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#Nice Presentation from M7T
Added 5 months ago
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#Sidenote
Last edited 2 months ago

Mach7 now included in the top 20 holdings of the Wilson Asset Management Microcap LIC (ASX: WMI) according to their monthly investment update.

Update can be downloaded here:

https://wilsonassetmanagement.com.au/lic/wam-microcap/

Not holding but watching closely.

Edit: Now holding

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#Satisfaction!
Added 5 months ago

This is one of the first stocks i ever bought - back in mid 2018 @ $0.31. I heard about it on a podcast, read some company reports and liked what i saw. 6 months later I had lost 50% of my investment in it. I wish i could say i bought some more but i didn't but i didn't sell either. Fast forward to 2020 and my return is currently over 100% AND the fundermentals of this company are very sound. Ok i have other shares that are still below their March 2020 lows but there is something very satisfy about backing yourself onto a winner.

Here's hope of more upside!

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#Financials
Added 5 months ago

I recently contacted M7T's Investor relations to ask about when the full year results will be released (see below). An interesting comment though about the "growing interest  in the company"

 

My apologies for the delay in responding. Historically the full year results have been released during the final week of August.

I can’t provide a provisional date as yet with the timing of Board meetings and audit involvement not 100% finalised. Until a date is published assume the final week of August. We will be publishing the date in advance given the growing interest in the company and looking to host a results conference call.

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#Retail Share Placement
Added 4 months ago

Up 17% today  on completion of instituional placement and opening of retail placement. 

MACH7 COMPLETES INSTITUTIONAL ENTITLEMENT OFFER AND PLACEMENT WITH STRONG INVESTOR SUPPORT Highlights • Mach7 raises $23.4M (34.4M shares) under Placement and Institutional Entitlement Offer • Mach7 will seek to raise $11.4M (16.8M shares) pursuant to the fully underwritten Retail Entitlement Offer • All 51.2M shares will be issued at A$0.68 per share • Total funds of $34.8M will be used towards the acquisition of Client Outlook Inc. Melbourne, Australia; 12 June 2020: Mach7 Technologies Limited (“Mach7” or the “Company”) (ASX:M7T), a company specialising in innovative medical imaging data management solutions for healthcare providers, today announced it has successfully completed the institutional placement (Placement) and the institutional component of its entitlement offer (Institutional Entitlement Offer) announced to the ASX on Wednesday, 10 June 2020. Funds raised from the capital raising together with the Company’s existing cash reserves will be used to fund the purchase of Client Outlook Inc. as announced to market on 10 June 2020. Mike Lampron, CEO, said: “I am delighted by the strong demand for the capital raise so far. This highlights shareholder commitment to Mach7, from our existing shareholders and from new shareholders which we welcome to our register. Mach7 is continuing a market disruptive, high growth journey, which has now been enhanced by our acquisition of Client Outlook. We are excited by our growth potential and the immediate opportunities to improve patient outcomes and service delivery for our healthcare customers.” Placement and Institutional Entitlement Offer The Placement and Institutional Entitlement Offer raised $3.7 million and $19.7 million respectively, a total of $23.4 million. The Company will progress the planned Retail Entitlement Offer to raise a further $11.4 million, taking the total capital raise to $34.8 million. The Company will issue 5.4 million and 29.0 million shares under the Placement and Institutional Entitlement Offer respectively (New Shares), with all New Shares being issued at a fixed price of A$0.68 per share (Offer Price). This Offer Price represents a 13.9% discount to the last traded price of $0.79 on 9 June 2020, a 9.6% discount to the 5-day VWAP of $0.7524 up to 9 June 2020, and an 11.2% discount to the TERP1 of $0.7659. The New Shares issued will rank equally with existing Mach7 ordinary shares on issue. ASX Announcement Placement Shares issued represent 3% of issued capital (prior to the Entitlement Offer) and will be issued using ASX Listing Rule 7.1 (58,500 shares) and 7.1A (5,371,202 shares) capacity available to the Company. Settlement of the Placement and Institutional Entitlement Offer is expected to occur on Wednesday, 17 June 2020 with allotment of the New Shares expected to occur on Thursday, 18 June 2020. Morgans Corporate Limited has solely managed, and fully underwritten, both the Placement and the Institutional Entitlement Offer. Retail Entitlement Offer The Company will seek to raise A$11.4 million pursuant to the retail component of the Entitlement Offer (Retail Entitlement Offer). Eligible retail shareholders, with a registered address in Australia or New Zealand, are invited to subscribe for 1 New Share for every 4 shares they hold as at 7.00pm (AEST) on Friday, 12 June 2020 (Record Date), at an offer price of A$0.68 per share. The Retail Entitlement Offer is fully underwritten by Morgans Corporate Limited. The Retail Entitlement Offer will open on Wednesday 17 June 2020 and close at 5.00pm (AEST) on Friday 26 June 2020. Eligible retail shareholders who take up their entitlement in full will also be offered the opportunity to subscribe for additional New Shares, up to a maximum of 50% of their entitlement under an oversubscription facility, but only to the extent that there is a shortfall under the Retail Entitlement Offer (Shortfall Facility) and at the Board’s absolute discretion. Entitlements cannot be traded on the ASX or transferred. Eligible shareholders who do not take up their entitlement under the Entitlement Offer in full or in part, will not receive any value in respect to those Entitlements not taken up. Further details about the Retail Entitlement Offer will be set out in the retail offer booklet, which the Company expects to lodge with the ASX and dispatch on Wednesday, 17 June 2020.

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#HAHK deal
Added 5 months ago

M7T signs deal with HAHK

Revenue to exceed $18M for FY2020.

Maintaining SP target of 96c.

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#Broker/Analyst Views
Last edited 9 months ago

31 January 2020:  Taylor Collison:  Mach7 Technologies (M7T):  Expecting a strong 1H result. Fair value estimate raised.

That link will take you directly to a .PDF file, so you'll need Adobe Acrobat Reader installed to read the file.

TC's Recommendation: Buy

Summary (AUD):

  • Market Capitalisation: $141M
  • Share price: $0.76 (31-Jan-20)  ($0.88 close on Fri 07-Feb-20)
  • Price Target: $1.17
  • 52 week low: $0.17
  • 52 week high: $0.92

"We reiterate our buy recommendation with a higher level of conviction in the investment thesis:  Validation of Mach7’s software in large hospital networks should spur increasing demand.  With $9.4m in new business for 1H FY20, the thesis appears to be playing out well.  After upgrading our FY20 numbers to reflect stronger than expected cash flow and extending the forecast to FY23, our base case fair value estimate rises to $1.07 (30-Aug: $0.77) which implies a 12-month price target of $1.17.  Our forecasts assume additional contract wins at large institutions (similar in deal size to Advocate Aurora) over the next 12 months.  The major downside risk is in delays to contract wins.  Management report the pipeline is strong with opportunities at various stages of advancement."

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