Health technology company improves earnings and cash flow in Q3/22


These changes earned Reliq Health Technologies Inc. an upgrade in overall rating from independent investment research and advisory firm Jefferson Research.

Reliq Health Technologies Inc. (RHT:TSX.V; RQHTF:OTCQB; A2AJTB:WKN) strengthened cash flow and earnings in Q3/22, leading Jefferson Research to upgrade the company’s rating from telemedicine to Hold from Sell, as noted in a June 10 research note.

Jefferson rates companies on five metrics — cash flow quality, earnings quality, operating efficiency, balance sheet and valuation — to derive an overall score.

During Q3/22, Reliq achieved better quarter-over-quarter (QOQ) ratings in two categories: earnings quality and cash flow quality.

In terms of earnings quality, the area in which it performed best, the company went from Strongest to Strongest.

“With a reported net income of -$800,000 last quarter that was equal to the adjusted figure, Reliq’s net income quality is extremely high,” noted Jefferson Research.

In terms of cash quality, Reliq also shined. After increasing its cash flow to -$1.5 million from -$2.8 million QOQ, the company earned a strong rating, improved from weak.

Reliq’s low-risk valuation rating is also positive for Reliq.

“A favorable valuation (a lower risk or low risk rating) implies lower potential downside risk, as evidenced by a company’s price multiple below the corresponding industry average,” Jefferson explained. Research.

Areas where Reliq could improve are operational efficiency and the bottom line, Jefferson Research noted.

In the operational efficiency category, Reliq showed no change, again scoring low. Indeed, the life sciences company’s gross margin and asset turnover deteriorated in Q3/22. Gross margin fell to 65.1% from 74%.

“The lower margin indicates that Reliq’s competitive position has deteriorated and the company may not be able to obtain higher prices for its goods or services,” according to Jefferson Research.

On a positive note regarding operational efficiency, however, during the quarter, Reliq strengthened its earnings before interest and tax margin (to -29.7% from -93%), net margin, return on investment , its sales and general administrative expenses, and equity turnover.

On the balance sheet, Reliq has deteriorated QOQ from a low to low rating due to the deterioration of the rapid and current ratios. The lower current ratio, having dropped to 4.6 times from 7.3 times, indicates that Reliq has decreased the amount of its current assets relative to current liabilities. The drop in the quick ratio from 6.7 to 4.4 times shows that the company has reduced its total liquid assets compared to current liabilities.

“The balance sheet shows Reliq’s ability to pay its bills and fund future growth,” Jefferson Research wrote.

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Disclosures for Jefferson ResearchReliq Health Technologies Inc., June 10, 2022

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