Thursday, 5 March 2009

IBA Health half year results - what do they tell us about the health of this business?

IBA Health results – Are They Good or Are They Bad?
On 17th February IBA Health published half year results to 31st December 2008. A cursory look indicates that things are looking good. Revenue is up, profit is up, new business signings are up. But note; cash flow is negative at -$ 12.9m while Debt is up by S66.6m. Together these show that money is flowing out of the business.
As mentioned; new and renewed business signings look good. However if the average contract duration is 2.2 years and 36% are for 3+ years then the other 64% of new contracts are for an average 1.5 yrs each, which to me looks pretty short. Imagine trying to sign up deals fast enough to keep the business fed with contracts? It’s a task which would require Super Salesman to step forward and deal with.
The results presentation has suppositions about the world health market for IT, quoting healthy growth in gross terms with no mention of the fit with IBA’s products. This is rather like stating that China has a growing population who will all ride bikes and we intend to sell them all cycle shorts. The market volume to be based on the number of bikes per head when no one knows how many people would wear the shorts. A recipe for failure I think.
There is no mention of the many issues with NPfIT in UK. i.e. ‘It’s Late’, ‘It is not fit for purpose’, Health Trusts are backing out and doing their own solutions. The press and pundits are all over this programme. As indeed is UK’s Parliament. See the following from the proceedings of The Public Accounts Committee:
"Trusts in the largest of the regions covered by the national programme, the North, Midlands and East, are using an interim system because of major delays to the Lorenzo system which should have been deployed there. At the end of last year Lorenzo was being used in only one primary care trust, and in no acute trusts.
It recommends that before the new arrangements for the South are finalised, the Department of Health should assess whether it would be wise for trusts in the South to adopt these systems. In particular if either of the local service providers takes on additional work in the South, the department should assess the implications for the quality of services to trusts their existing areas of responsibility. "
Edward Leigh, chair of the committee, said: "The original aim was for the systems to be fully implemented by 2010. The truth is that, while some are complete or well advanced the major ones, such as the care records systems, are way off the pace."
Yet IBA Health does not acknowledge the problems in anything I have seen from them. IBA Health talks up the product set even though many deadlines appear to have been missed. Are they being entirely honest with the audience and investors?
Read this interview with Gary Cohen CEO of IBA Health in which he manages to not mention any of the problems seen by the UK Public Accounts Committee who represent his single largest customer.
http://abnnewswire.net/press/en/60157/IBA_Health_Group_Limited_ASX:IBA_Interview_With_CEO_Gary_Cohen_on_Earnings_Visibility.html

All the above notwithstanding if Obama does a Blair/Brown toss-money-at-health-IT-programmes-to-see-if-it-sticks then IBA Health could be getting some handsome revenues from the US, assuming the US Government can bring itself to buy products from non-US companies. Its track record here though is very poor.

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