Health Check On 1st Group

By Tim Boreham | More Articles by Tim Boreham

First Group chief Klaus Bartosch says the health services portal’s share price “does not remotely reflect our performance.”

You’re no Robinson Crusoe there, Klaus. But he’s got a point given the group’s subscription based revenue has been building, with the shares languishing well below their June 2015 IPO price of 35c.

While ostensibly oversubscribed, the raising turned into a damp squib after one institution pulled out at the last moment, causing a conga line of others to follow.

Having targeted $5m to $12m, the backers scrambled together $5.3m.

But 1st Group is not exactly friendless: the Gandels (Australia’s fifth richest family) own 15%, having bought into a subsequent $2.9m raise last July.

John Plummer, who founded and then sold the recruiter Chandler McLeod, accounts for 30%.

1st Group is an online search and appointment service for health and beauty care professionals. A similar product, PetYeti, provides a similar service for vet practices and has 500 practices signed up.

Blue-chip customers include Primary Healthcare, Ramsay Healthcare, the Pacific Smiles dental chain, Bupa Optical and Australian Unity.

In December, the company inked a deal with Alphapharm, a subsidiary of global drug company Mylan, to provide online bookings through 320 chemists and 90 retail stores (Priceline).

Customers will be able to book services such as flu shots, diabetes checks and make-up appointments. All up, the company claims a 50% share of the pharmacy market and 25% of the optometry market.

But there’s another reason for the share price malaise: “We haven’t grown as fast as we would have liked in the early days. Stuff took longer than expected.”

You’re no Robinson Crusoe there either, Klaus, but “stuff” is happening.

The company this month reported monthly recurring revenue (MRR) of $261,000 for the June quarter, up 20% from the March quarter tally of $218,000.

MRR measures recurring subscription sales and excludes fees from products such as the company’s appointments reminder app, EasyRecalls.

Bartosch says there’s a time lag of some months between customers deploying the portal and revenue flowing through.

As with so many other ambitious minnows, 1ST Group faces the dilemma of requiring more funds on the back of a trashed share price.

But at least it has deep pockets to turn to and that could mean the difference between surviving and thriving or withering away like a dog-eared waiting room gossip mag.

About Tim Boreham

Tim Boreham edits The New Criterion. Many readers will remember Boreham as author of the Criterion column in The Australian newspaper, for well over a decade. He also has more than three decades' experience of business reporting across three major publications.

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