HealthSpace Data System (CSE:HS) Has Momentum… and Massive Potential

HealthSpace signed contracts worth over $350,000 this summer, has an oversubscribed financing, and a new partnership

SmallCapPower | November 1, 2016: HealthSpace Data System Ltd. (CSE:HS), a Canada-based Software as a Service (SaaS) company for the food and health inspection industry, had quite the summer and the momentum hasn’t stopped. After a string of contract extensions, renewals and new customers totalling more than $350,000 in value, HealthSpace capped off its summer with a strategic data collaboration, followed by raising $960,000 more than initially expected in an oversubscribed financing deal. The collaboration with Keboola, a leader in customized data analytics platforms, who also does work with software giants SAP and Salesforce, will produce a new product geared specifically for the Food & Beverage and Hospitality Industries, which is to be released this quarter.

 

Recent Highlights

  • HealthSpace recently closed the second tranche of an oversubscribed financing offering for gross proceeds totalling $3.46 million. Compared to its original release of $1.5 million in debentures and $1 million in equity with an issuance of 20 million units, this represents an oversubscription of more than 19.2 million units, for $1.96 million in total equity proceeds. The debentures offered have a maturity date of two years from closure and a conversion price of $0.075 per share for the first 12 months, and $0.10 thereafter. Each unit consists of one common share and one-half of one share purchase warrant, for which, one whole purchase warrant is exercisable within 12 months at a price of $0.075 per share.
  • On October 13th, Health Space announced a strategic Data Collaboration with Keboola, a provider of innovative data platforms, to create a customized data analytics product targeted for the restaurant and hospitality industry.
  • Between May 10th, and September 20th, 2016, HealthSpace signed new, or renewed seven contracts totalling more than $350,000 in value. These contracts represent recurring revenues between two and five years with the potential for extensions. For a detailed list of these contracts refer to the end of the article, “Recent contracts.”

Enhancing the Food & Beverage and Hospitality Industries

The new data analytics platform called the HS Data Platform will be a customized data analytics product allowing customers access to actionable insights and real-time health scores locally, and trans-nationally. With data such as this it will provide users with information on both violations and potential quality-control issues, allowing managers to proactively maintain compliance in operations and get a head of any potential food-related issues before they make it to the end consumer and create larger health concerns.

To explain the importance of such an application, imagine if Chipotle Mexico Grill (NYSE:CMG) (“Chipotle”) had access to this information across its stores, it would have been able to identify the problem and rectify it, before the estimated 5000 people (according to health experts) became ill. In the Food & Beverage and Hospitality Industries, having such instances is extremely costly as Chiptole found out, seeing more than 40% of its equity value, or approximately $10 billion, wiped out since July 2015. Furthermore the damage to its brand will surely result in greater losses down the road. With a fully-configurable platform to the standards of food inspection agencies, HealthSpace’s product gives the customer the ability to conduct an internal audit (example of a HealthSpace Interface in Figure 1), which would identify the problem earlier in the supply chain and notified all appropriate locations.

health
Figure 1: Health Space User Interface

The Power of Data Collection and its Growth with HealthSpace

By collecting and analyzing data, organizations can be privy to actionable insights to drive better results. HealthSpace currently boasts services rendered to more than 300 governments, public health agencies and private sector companies, and has seen data collection grow by approximately 20% so far this year, with an additional growth of 10% expected for the rest of 2016, and 50% growth in 2017.

This creates massive potential for HealthSpace as big data is becoming more manageable and its importance is more widely recognized and implemented by governments and organizations. A report released by the Economist Intelligence Unit in January 2016, found that of the 476 executives surveyed across North America, Europe and Asia, 83% of respondents said they used big data to make existing products or services more profitable. As an individual restaurant, hotel or chain, organizations can only collect data from its locations and customers, but as data is needed to analyze trends of the broader industry, HealthSpace is in a unique position to monetize its data by providing those insights.

This product is really the first step in creating a fully integrated and ultimately safer food industry as all of HealthSpace’s customers could be notified of issues raised in a certain geographical location or from a certain supplier.

This would create a very efficient and proactive food and health inspection industry as the platform, for example, could connect an inspection in Alberta that found E.coli, to agencies in Ontario and Montana, so the inspectors can first target those who imported from that supplier.

Financial Analysis and Final Thoughts

With the signing of four new contracts in Q4, you can expect HealthSpace’s trend of top-line growth to continue onto its year end-results which, should be released shortly. Currently HealthSpace is trading at a price/ revenue multiple of 1.9x compared to a peer average of 3.5x, which does mean that the market may be undervaluing the stock, and with the string of positive events that has unfolded, could be getting ready for a rebound.

As the Company recently had a successful financing period to retire an outstanding $2.2 million loan facility, significantly strengthening the balance sheet, the financial position of the Company has improve tremendously. This also bodes well for shareholders as decreasing high interest debt reduces the risk of default and lets the Company manage its cash better as it no longer needs to make those interest payments.

Through signing new contracts and continuing to expand its list of recurring revenue streams, HealthSpace’s management has positioned the Company to expand on the growing trends of big data analytics in ultracompetitive industries, while at the same time building better industry practices.

Recent contracts

  • VANCOUVER, BC – September 20, 2016 – HealthSpace Data Systems Ltd. (the “Company” or “HealthSpace”) is pleased to announce the signing of an annual contract with the Tennessee Department of Health. The contract includes an initial set up and license value of USD $58,500 and reoccurring annual revenues of USD $42,000. “We are very pleased to be working with the Tennessee Department of Health who becomes our ninth state-wide client. The Tennessee Department of Health employs 150 inspectors working throughout the state doing approximately 187,500 inspections a year of which over 103,000 are restaurant and food service inspections,” commented Joseph Willmott, President of the Company.
  • VANCOUVER, BC – July 7, 2016 – HealthSpace Data Systems Ltd. (the “Company” or “HealthSpace”) is pleased to announce that it has signed its 12th local health department in the State of Michigan. The Company has signed a three year contract, with renewal options, with the Lapeer County Health Department (“Lapeer County”), located in Lapeer, Michigan. Lapeer County is one of 45 local health departments in the State of Michigan. The value of the contract is USD$25,880.
  • VANCOUVER, BC – July 11 , 2016- HealthSpace Data Systems Ltd. (the “Company” or “HealthSpace”) is pleased to announce the signing of a three year Agreement with renewal options for the installation and maintenance of HealthSpace Health Protection Inspection Software and Service with Hastings & Prince Edward Public Health. Hastings & Prince Edward Public Health is one of 36 public health units in Ontario and covers the continuum of environmental public health including: food protection, drinking water quality, on site wastewater disposal, indoor air quality, epidemiology, tobacco reduction, communicable diseases and many other environmental health initiatives. The contract is valued at $64,160.
  • VANCOUVER, BC – June 23, 2016 – HealthSpace Data Systems Ltd. (the “Company” or “HealthSpace”) is pleased to announce the signing of an Agreement and Purchase Order (collectively the “Contract) from the City of Milwaukee (the “City”) for the deployment of the Healthspace enterprise software application and service for the surveillance and regulatory enforcement of the City’s environmental health and consumer protection programs. The Contract is valid for two years for a total contract value of USD $55,140. The Contract may extend up to five years at the option of the City.
  • VANCOUVER, BC – May 19, 2016 – HealthSpace Data Systems Ltd. (the “Company” or “HealthSpace”) is pleased to announce the signing of a new three year contract with the Gwinnett, Newton and Rockdale County Health Departments, located in the State of Georgia, with a total value of $82,625 USD.
  • VANCOUVER, BC – May 16, 2016 – HealthSpace Data Systems Ltd. (the “Company” or “HealthSpace”) is pleased to announce the signing of a contract renewal with the Sanilac County Health Department, located in Michigan. The renewal is for a term of three years.
  • VANCOUVER, BC – May 10, 2016 – HealthSpace Data Systems Ltd. (the “Company” or “HealthSpace”) is pleased to announce the signing of contract extensions with Pueblo-City County Health Department, Genesee County Health Department and Cheyenne-Laramie County Health Department. Each extension has been renewed on a term of three years and combined are worth CDN $77,520.

Source: Company filings

banner

 

Ubika Research/SmallCapPower has received compensation from HealthSpace Data Systems Ltd. (CSE:HS) to provide analyst research coverage. For full disclosure please visit here >>

The Content contained on this page (including any facts, views, opinions, recommendations, description of, or references to, products or securities) made available by SmallCapPower/Ubika Research is for information purposes only and is not tailored to the needs or circumstances of any particular person. Any mention of a particular security is merely a general discussion of the merits and risks associated there with and is not to be used or construed as an offer to sell, a solicitation of an offer to buy, or an endorsement, recommendation, or sponsorship of any entity or security by SmallCapPower/Ubika Research. The Reader should apply his/her own judgment in making any use of any Content, including, without limitation, the use of any information contained therein as the basis for any conclusions. The Reader bears responsibility for his/her own investment research and decisions. Before making any investment decision, it is strongly recommended that you seek outside advice from a qualified investment advisor. SmallCapPower/Ubika Research does not provide or guarantee any financial, legal, tax, or accounting advice or advice regarding the suitability, profitability, or potential value of any particular investment, security, or information source. Ubika and/or its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities and/or commodities and/or commodity futures contracts in certain underlying companies mentioned in this site and which may also be clients of Ubika’s affiliates. In such instances, Ubika and/or its affiliates and/or their respective officers, directors or employees will use all reasonable efforts to avoid engaging in activities that would lead to conflicts of interest and Ubika and/or its affiliates will use all reasonable efforts to comply with conflicts of interest disclosures and regulations to minimize the conflict.