VIDEO: VitalHub’s Rapid Growth and the Convergence of Healthcare Software With Blockchain Solutions
VitalHub Corp. (CVE:VHI) CEO Dan Matlow talks to James about his rapid growth and the convergence of blockchain into the healthcare space. Health-Care software, is a major growing business as a premium continues to be placed on efficiency. VitalHub is making strategic acquisitions as well as using blockchain solutions to keep records on the Hyperledger. Hyperledger is an umbrella project of open source blockchains and related tools, started in December 2015 by the Linux Foundation, to support the collaborative development of blockchain-based distributed ledgers. VitalHub’s specific area of focus is on mental health and long-term care, and for a company that is only 1 year old, their revenues of $7 million shows the demand for these services are currently underserved in a substantial way.
James West: Dan, let’s talk about VitalHub. What is it, and what does it do?
Dan Matlow: VitalHub is a new company that’s been formed for about a year now, and we’re focused in the health care software arena, primarily focused on the mental health and the long term health care space. There’s two parts to our business: one is the aggregation of existing companies that are looking to get more scale and more size, so we combine those together, and we’ve completed already four little acquisitions to date on that.
And the other side that we’ve been working on is an innovative Blockchain solution for the similar space, for the mental health and long term care health space.
James West: And so what’s the size of the long term mental healthcare space in Canada?
Dan Matlow: In the Canadian marketplace, there’s about 3,000 mental health facilities, and that doesn’t include all the hospitals that have departmental solutions. There’s about 1,000 institutional based stuff. So there’s a marketplace of about 4,000 locations that we would be servicing, but that’s only the Canadian marketplace. The one company that we just purchased is already in the US marketplace, so we already have a customer base there. So the US marketplace is ten times our size. We have experience internationally as well.
James West: I see. Okay, so what’s the – how does it make money?
Dan Matlow: We make money, so our primary business is in the electronic health records system and auxiliary applications that get associated with that, so it’s recurring revenue stream that we would get off of those existing systems. We provide electronic health record systems for those spaces, and our annual use charges that would go through into those locations. It ranges between 20,000 to about 150,000 per year that we would be charging. The Blockchain solution will be differently; it will be on a per-user basis, as users need to get access to those records on the Blockchain.
James West: Okay, so what are the features of the Blockchain that are attractive and applicable for this particular…
Dan Matlow: You know, Blockchain is new to everyone, but we’ve embarked on that journey. We’ve taken our elite developers, and we’re looking at building a Blockchain solution on the hyper-ledger based platform. Hyperledger is by far recognized for corporate use. they’re building up a big health care base initiative on that; we’re one of the early adopters in that particular based arena.
Blockchain allows – well, there’s lots of uses in health care, but the use that we’re looking for is the interoperability of health care records, primarily focused on the space that we’re involved with: mental health and long term care space, which is a huge issue within the health care sector.
James West: Yeah, sure, okay. So what’s the revenue picture look like right now, and what’s it going to look like 12 months, 24 months out?
Dan Matlow: You know, through all of our aggregations, we’re a $7 million a year company; we’re only a year old. So we’re already 7 million in revenue, 200-plus customers running across five different provinces already, and into the US marketplace. So we have a $7 million revenue stream that’s coming in off of that; about 65 percent of that’s recurring in nature. So we feel comfortable with that revenue mark.
We’re accelerating our existing solutions, so we’re ramping up salespeople. So we expect, and already are seeing, some organic growth from those acquisitions, and as Blockchain solutions come into the market, we expect some really good things to happen.
James West: Sure. So it’s not profitable now, then; when do you anticipate profitability?
Dan Matlow: You know, we just put together these organizations. Of course, we’re getting some economies of scale as we start going through here. Our expectation is that our M&A side of the business will be profitable in two to three quarters; that’s where we’re aiming towards getting to. Blockchain initiative is a separate initiative which we have some costs of getting associated with that, and as that particular grows and we start doing it, we may add more costs, we may not. But we’re exploring that. But we’re routing it as two separate sides of the business right now.
James West: Sure. And so how do you drive sales?
Dan Matlow: We have a direct sales strategy, so we have an experienced – it’s my background, per se. we’ve brought in a lot of experienced salespeople into these organizations that didn’t typically have sales before, so we’re going to drive that through a very sophisticated direct sales channel. We also work very handily with partners, so we believe in working with bigger consulting groups and other organizations just to help you solve those solutions.
James West: Sure. And what would you categorize as the target size of the company, market cap-wise, call it, five years out?
Dan Matlow: We think the sky’s the limit for this particular organization. The Blockchain initiative just on itself, just on expandable, is a huge problem, and it’s one of those things that can get viral and grow internationally in a fast period of time. But five years, if we’re doing one acquisition a year just with 5, 6 million, that’s already going to be just aggregated as a $40 million, $50 million a year company at that particular time. We expect that we can do more than that, but you know, conservatively, moving in that direction, Blockchain is a wild card. It can be a $20 million, it can be a $60 million business in five years.
We’re working aggressively and trying to present to the investors a good opportunity with some stability, a management team that knows what they’re doing, a good install base on the M&A, but we really want the opportunity for explosive growth with the Blockchain as well.
James West: Okay. Let’s leave it there for now, we’ll come back to you in a couple of quarters and see how you’re making out. Thanks for joining me today.
Dan Matlow: We’re looking forward to it. Thanks for having me.
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