PKS dips on debut as profitability isn’t enough to lasso investors
Health & Biotech
Link copied to
Health software company PKS Holdings (ASX:PKS) has slumped on debut, with its shares falling 10 per cent to 18c.
The stock slowly climbed to 19c over the next few hours.
The company sells software that automates clinical decisions around patient care, pulling in a variety of data to make a recommendation on what treatment a person should have.
For example, a lab report may show a person has high cholesterol levels; PKS says its system also takes into consideration patient history and applies the ‘rules’ set up around cholesterol data by the doctor or clinic, and provides a recommendation on how the person should be treated.
The company issued stock at 20c and raised $20.9m from investors in the IPO, $15.5m of which went to the vendors of the company that owned the RippleDown software and $1.8m on getting the IPO off the ground.
That leaves $4.2m in cash which it plans to spend on “further growth”.
The company was profitable in the 2017 and 2018 financial years but dipped to a $590,000 loss in the first half of 2019.
PKS says 80 per cent of its earnings are recurring ”annuity style” revenue streams mostly from customers outside Australia, and it hit EBITDA (earnings before interest, tax, depreciation and amortisation) margins of 54 per cent in FY2018.
Forty-seven shareholders hold 58 per cent of the company.
They don’t pay dividends.
PKS does 30 per cent of its sales through three big partners Abbott, Philips and Thermo Fisher, but plans to expand its own sales team for Australia, New Zealand, the US and Asia, and wants to expand into pathology and hospitals.