SGX Market Dialogues

Author: SGX   |   Latest post: Tue, 14 Mar 2023, 6:47 PM


10 in 10 – Meta Health Limited

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10 Questions for Meta Health Limited  

Company Overview  

Meta Health Limited (META), formerly known as Metal Component Engineering, was founded in 1987 in Singapore. With consistent focus on quality and engineering innovation, it has expanded its customer base by serving Multi-National Corporations (MNCs), Electronic Manufacturing Services (EMCs), and Small-Medium Enterprises (SMEs) globally. Meta Health is now vertically integrated with licensed clinics with pharmacy, online self-branded ecommerce portals, and product placements on regional e-commerce portals.

1. Meta Health was formerly known as Metal Component Engineering, could you elaborate on the new positioning of the company and its business segments?  

  • Over the last few years, the Group took calibrated steps to diversify its business offerings beyond mechanical manufacturing solution into the more defensive healthcare sector. Currently, META has 2 main business segments:

i. Mechanical manufacturing and solutions provider segment which serves various industries such as printers, consumer electronics, automotives, medical and semiconductor industries.

ii. Healthcare segment where we provide primary care clinical services, clinical nutrition distribution and healthcare infrastructure/software as a service (HISAAS) for remote patient monitoring.

  • Going forward, we intend to advance our strategic focus on the healthcare segment by ramping up our primary care clinical services. This includes engaging the elderly population as we strive to become the preferred partner in Singapore, to help manage and monitor chronic conditions. For activities beyond Singapore, the Group will be focusing on remote patient monitoring for chronic diseases in the Middle East and the UK.

2. What/where are the key growth areas for Meta Health over the next 1-2 years?

  • The healthcare business will be our key focus over the long term as we look to expand across this business segment. Expansion plans include:  
    • Securing new contracts overseas for our HISAAS platform to help overseas healthcare businesses digitalise their operations.  
    • Expanding our local patient base by tapping into the HealthierSG initiative for our primary care segment.  
    • Increasing range of products for clinical nutrition distribution network.  
    • Expanding our clinical services operations through the provision of additional services, which includes the supply of chronic medications for institutions.

3. Could you expand on the scalability and profitability of the healthcare infrastructure/software-asa-service (HISAAS) segment?  

  • Through partnerships with various vendors including Medtel Healthcare, an India-based remote patient monitoring platform, the Group offers a digital service platform for healthcare businesses looking to digitalise their operations. Meta Health is the exclusive licensee of Medtel’s technology for South-east Asia, Hong Kong, Australia and New Zealand.
  • The services provided by Meta Health through its digital service platform include Telemedicine, Medical IoT, Medical Triage, imaging artificial intelligence (AI), enterprise resource planning (ERP) platform, web-based clinic management system and call center platform with web Customer relationship management (CRM).  
  • These services are packaged into a comprehensive digital service platform that serves the need of healthcare providers through a pay per use or subscription model. Hence, the HISAAS segment has a relatively low-cost structure with a highly scalable business model.
  • The HISAAS segment is distributed mainly to Indonesian healthcare institutes via the Group’s 70%-owned Indonesian subsidiary, PT Gaido Digital Medika (PT GDM). PT GDM’s trademarked product, Digital Hospital, has been identified as a key partner of the Indonesian tourism medical association.

4. How does Meta Health plan to bring in new revenue streams and create more value for shareholders?  

  • We are constantly on the lookout for partnerships and complementary businesses to grow our healthcare business. For example, our clinical nutrition distribution and pharmaceutical business are highly complementary. Distributing to over 600 customers including retailers and F&B outlets, we believe that the distribution arm has room for further growth as it taps into the Group’s central pharmacy network (which also services B2B clients such as telemedicine providers and homecare nursing groups) for cross-selling opportunities.  
  • In addition, the Group is also conducting a strategic review of its existing businesses to maximise value for our shareholders.

5. Meta Health’s overall net profit was weighed down by your metal business segment in 1H22, what is the management’s guidance for the full year ahead?  

  • The operating environment continues to remain challenging for our metal business due to geopolitical uncertainty and slowing economic growth. However, the Group is cautiously optimistic of an earnings recovery in the year ahead as we have been actively optimising our cost structure to work towards an eventual earnings turnaround for our metal business segment.  
  • On the healthcare business, our Group continues to actively grow its various segments, including tapping on the government’s initiatives such as HealthierSG.

6. What is the group’s key considerations when expanding into a new market or business vertical?

  • The Group is focused on growing our healthcare business, where we hope to expand organically and inorganically. Some key considerations for expansion include:
    • Acquisition of profitable complementary business segments.  
    • Expand offerings of our clinical services and products.  
    • Partnership with providers with a need for remote patient monitoring of chronic diseases.

7. Has the acquisition of GainHealth created value for the group’s overall business? Is there any synergistic energy with the group’s engineering business?

  • GainHealth is the main subsidiary through which the Group operates its healthcare business – (i) Primary and home care, (ii) Pharmacy and (iii) Clinical Nutrition distribution. The 3 subsegments contribute to about 91% of the Group’s total healthcare revenue.
  • The acquisition of GainHealth has helped to diversify the Group’s business and provides a source of recurring income and value, while enabling the Group to expand into the growing digital ecosystem in the pharmaceutical space. There was an increased awareness and volume growth during the COVID-19 pandemic for digital healthcare and e-commerce.  
  • Since acquiring GainHealth in 2H2021, revenue from the healthcare segment has accelerated, having recorded S$2.3m revenue in 1H2022 vs S$1.3m in 2H2021. It has also generated positive segmental adjusted EBIT since 2H2021.

8. What are some key risks the business is facing? How are you managing these risks?

  • Supply chain disruptions and a slowing economic growth has affected the Group’s metal business which saw a drop in sales due to:
    • COVID-19 Lockdown in China;
    • shortage of integrated circuit (IC) chips which affected our customers’ demands; and
    • macro uncertainty from the Russia-Ukraine war.  
  • The Group has taken active measures to rationalise and reduce its cost structure as well as improve cashflows. The cost savings measures along with a stabilisation in business operations is expected to help improve the metal business’s revenue and profitability in the next 12 to 24 months.

9. What is Meta Health doing to fulfil your sustainability commitments?  

  • The company has in place a governance structure which involves the board and management in providing oversight and assessing materiality of ESG related factors and the associated impact to the business.  
  • To demonstrate our commitment to sustainability, the company has established performance metrics and targets to measure and improve various environmental and social factors. These include greenhouse gas emissions, energy and paper consumption, employee engagement and training as well as community contribution etc.  
  • Please refer to our Sustainability Report for more information.

10. Why Should Investors Take a Closer Look at Meta Health?

  • The Group believes that Meta Health is a proxy for investors looking to capture the digitalisation of healthcare in the region. The Group’s e-pharmacy business has seen an increase in user base while its central pharmacy business facilitates the delivery of medicine for clinics, nursing homes and end patients, allowing healthcare institutes to execute their telemedicine business.  
  • In addition, the Group’s HISAAS model is highly scalable beyond Singapore as remote monitoring for patients with chronic disease is gaining traction.

10 in 10 – 10 Questions in 10 Minutes with SGX-listed companies

Designed to be a short read, 10 in 10 provides insights into SGX-listed companies through a series of 10 Q&As with management. Through these Q&As, management will discuss current business objectives, key revenue drivers as well as the industry landscape. Expect to find wide-ranging topics that go beyond usual company financials.

This report contains factual commentary from the company’s management and is based on publicly announced information from the company.

For more, visit sgx.com/research.

For more company information, visit https://metahealth.sg/

Click here for Meta Health’s 1H2022 Financial Results.

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