Authentidate (NASDAQ:ADAT) continues to be a core holding of ours. For those new to the story, the company has a suite of software solutions that help healthcare organizations manage patient care. The company's technology both improves patient outcomes and slashes the cost of care, so we view it as a win for all parties involved.
Yesterday, the company reported its financial results for the quarter ending Sept. 30, 2013. Revenues were up 96% to a record high, margins improved, and the operating loss declined. On the company's last earnings call in September, Authentidate's CFO Bill Marshall stated in response to a question about future results, "The stock answer is we don't give guidance, but as Ben said, the numbers will be better, much better." These guys delivered yesterday. Management was very upbeat on the call and expressed an optimistic outlook.
We thank all our readers who told us how much they appreciated the conference call summary we published on Authentidate's prior quarter. We are pleased to share some highlights once again.
On the outlook:
This was a strong quarter for Authentidate, one that provides a glimpse into the company we expect to become.
We reported record revenue growth for the quarter from current operations and we improved our margins and lowered our operating loss and net loss for the period. . . . We expect to see continued improvement in these areas as we grow revenues and transition to a cash flow positive business.
On the VA's budget:
The VA's requested appropriation for telehealth for the 2014 fiscal year is $460 million, a 4.3% increase, or $19 million, compared to 2013. This demonstrates the VA's ongoing commitment to telehealth.
On reaching breakeven:
We're still on track to attain our goals for cash flow breakeven in our third fiscal quarter and to reach profitability by the end of our fiscal year, during the fourth quarter. So we haven't changed those goals.
On commercial healthcare opportunities:
The queue of RFPs has increased significantly and it has a lot to do with the new healthcare act. ... So we have been participating in a lot of RFPs.
As you would expect with complex systems it takes a long time for people to make decisions. Having said that, we expect there will be decisions made in the next two to three months...
Most of the major health plans out there have RFPs out for things like telehealth and other kinds of automated systems that we offer. So what we're seeing is ... increasing significantly and exactly how do I look into the crystal ball and say what percentage I'm going to win, I would say I don't have the ability to do that. But I feel reasonably certain that I'm going to win enough to ... more than use up the capabilities that we have in terms of resources.
On Authentidate's program for HIV patients:
The pilot is proceeding well and we expect this to lead to opportunities in the public sector. We expect that the HIV telehealth program will be made available for VA HIV patients nationwide after the pilot is completed. ... The HIV program uses our Interactive Voice Response telehealth solution, which we provide for a recurring monthly subscription fee for patients.
On their relationship with the VA:
The efforts of the last year to deploy our telehealth offering with the VA are finally paying dividends. In the first quarter of fiscal 2014 we delivered record revenues on our highest growth rates ever...
Our efforts to increase our business with the VA are going extremely well. And we believe the VA's telehealth project positions us well to pursue projects with other state and federal agencies as well as in the commercial sector.
On the growth opportunity with the VA:
The VA has a program in place ... to add about 600,000 [telehealth] patients ... [over] a little more than three years.
Q: So we should start to see rapid acceleration if those trends hold?
A: That's my expectation.
On the competitive landscape:
We clearly see that our product is way advanced and in fact serves patients much better than the competitor's products. So that's where we have really put our trust and our belief that we will succeed in the VA.