ImExHS : 2022 Q2 Quarterly Activities Report and Appendix 4C

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29 July 2022

ASX ANNOUNCEMENT

2022 Q2 Activity Report and Appendix 4C

Financial Highlights

• Q2 FY22 revenue of $4.8m1, up 79% vs pcp2; up 77% on a constant currency basis3.
• 1H FY22 revenue of $9.5m, up 83% vs pcp; up 82% on a constant currency basis.
• Q2 FY22 revenue up 42% and 1HFY22 revenue up 41% on a like-for-like basis excluding the incremental revenue from the RIMAB acquisition.
• Recurring revenue generated in Q2 was $4.7m, up 80% vs pcp and up 78% on a constant currency basis.
• Q2 FY22 Underlying EBITDA4 loss of ($0.2m); 1HFY22 underlying EBITDA loss of ($0.4m) up $1.0m versus pcp of ($1.4m).
• Annualised Recurring Revenue (ARR)5 of $20.5m, up 61% vs pcp; up 60% on a constant currency basis.
• Closing cash balance of $0.9m as at 30 June 2022.

Operational Highlights

• Continued sales momentum for IMEXHS Cloud (formerly Aquila in the Cloud) standardised radiology solution with an expected combined ARR of $2.8m from 140 active customers at 30 June.
• First IMEXHS Cloud customer in Brazil and a new Partner with over 30 years of experience.
• IMEXHS Radiology Services awarded new contracts with Colsubsidio and Colombia's National Police
  Hospital.
• Appointment of a master distributor in the UK.
• IMEXHS Cloud beta product live with 3 IMEXHS Partners and used by 66 active customers.

1. All financial information for FY22 in this announcement is preliminary, unaudited financial information and may be subject to adjustment following audit review.
2. Previous corresponding period; includes RIMAB acquisition from 5 October 2021.
3. Constant currency basis assumes FY22 results are converted at the average foreign exchange rate for FY22. This removes the impact of changes in currency rates and allows comparison of IMEXHS's underlying operating performance.
4. Underlying EBITDA excludes the impact of FX, share based payments, transactions costs for the RIMAB acquisition in FY21 and any one-off costs in relation to the cost-out program.
5. Annualised Recurring Revenue (ARR) is the value of the monthly recurring contract revenue multiplied by twelve. ARR excludes a customer who the company ceased to service on 1 July 2022 due to poor payment performance.

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Strategic Refocus - Path to Profit

• Cost out program aimed at getting to cash positive at the Company level with both divisions profitable.
• Sales capability focused on near term profitable pipeline.
• Product development directed to those areas with a clear line to profit.
• Maintaining current high medical and customer service standards.
• While longer term product development projects deferred the strategic vision and direction is on course to be realised.

IMEXHS Limited (ASX: IME) ("IMEXHS" or "the Company") today provides its quarterly cash flow and activities summary for the period ended 30 June 2022. IMEXHS is an innovative provider of cloud-based medical imaging software and radiology services across 15 countries.

IMEXHS CEO Dr German Arango said, 'The Company is taking a definitive pathway to achieve profitability on the basis of a cost reduction plan, maintaining existing recurrent revenues and bringing new customers. The improvements in the onboarding process plus the optimization of the post-sales support have been key objectives for the Company during the quarter, including the automation of the most time-consuming activities. The standardized product IMEXHS Cloud, keeps contributing to the geographical expansion and footprint. The radiology services business confirms the attractiveness of the outsourcing model after the renewal of two of the largest contracts with Colsubsidio and Colombia's National Police Force, building the foundations for a profitable stage for the company.

The Company has demonstrated the scalability of the business across different geographies with an attractive product and disruptive business model and now if focused in generating positive numbers.

Revenue in the second quarter of FY22 was $4.8m, 79% up on pcp and the underlying EBITDA was a loss of ($0.2m), confirming the direction the Company is taking.'

June Quarter Financial Summary

Revenue

Q2 FY22 revenue of $4.8m was up 79% vs pcp and 77% on constant currency basis.

Recurring revenue of $4.7 m was up 80% vs pcp and 78% higher on a constant currency basis, representing 98% of total revenue in the June quarter.

Annualised Recurring Revenue

ARR of $20.5m as at 30 June 2022, was up 61% vs pcp and 60% higher on a constant currency basis. On 1 July 2022 the Radiology business ceased to service a customer with a poor payment record, the associated ARR has been excluded.

ARR of $20.5m consisted of $12.0m ($13.3m as at 31 Dec-21) from Radiology services and $8.5m ($7.1m as at 31 Dec-21) from Software. The software ARR includes $2.8m from 140 active IMEXHS Cloud contracts and $5.7m from IMEXHS Enterprise. The increase in ARR reflects increasing volumes in radiology services, new contract wins in both customized solutions and the standardised software product offering offset by the customer that we have ceased to service.

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Chart 1 shows ARR that is currently billing as well as ARR which is yet to commence billing.

Cashflow

At 30 June 2022, IMEXHS held cash and cash equivalents of $0.9m, compared with $4.2m at 31 December 2021 and $2.9m at 31 March 2022.

Cash receipts for Q2 FY22 were $4.2m resulting in net cash used in operating activities of $0.5m.

As at 30 June 2022 Trade Receivables were $7.0m. The Company has outstanding invoices of $310,000 over 90 days from a customer with a poor payment history. Management expects that the Company will recover the outstanding amount. However, subject to the pattern of receipts over August the Company may impair these receivables on the balance sheet in connection with finalisation of its half year audit review. The Company has tightened its processes to reduce the risk of any future bad debt.

Net cash used in investing activities included the release of retention payments of $221,000 in relation to the Acquisition of RIMAB SAS.

Payments to acquire PP&E of $452,000 included purchase of equipment of $347,000 for a customer contract for which equipment financing was approved in early July and is expected to be received in August to replace the initial cash outlay by the Company.

Additionally, the corporate tax process began during the quarter, which will see the company receive ~$270,000 in cash tax refunds in the second half.

The Company is currently undertaking a capital raising to provide additional working capital. Details will be announced to the market on completion of the capital raising.

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Operational Metrics

Key operational metrics showed strong growth in Q2 FY22 compared to Q2 FY21:

• IMEXHS Enterprise and IMEXHS Cloud installed in 20 new sites, with a total of 418 installations worldwide by Q2 FY22, a 19% increase on Q2 FY21 (340 installations worldwide).
• Software solutions were actively used by 2,653 radiologists, a 18% increase on Q2 FY21 (2,183 radiologists).
• IMEXHS's Imaging Platform stored 1.5 petabytes of data in the cloud and processed over 167 million images for the quarter (over 2.5 million studies), a 17% increase on Q2 FY21, a total of over 1.6 billion images since the inception of the Company.
• Over 638,540 people entered IMEXHS's patient portal over 762,390 times for an average of 1.2x visits per user, which was a 24% increase on Q2 FY21.
• Radiologist team now totals 137 and the number of reported imaging studies is more than 280,000 for Q2, a 21% increase on pcp.

Guidance and Outlook

The company has a strong and growing pipeline of business in front of it and is in advanced negotiation on two material contracts expected to be concluded within Q3 FY22. The Company provides the following guidance for FY22:

• Revenue between $18.0m to $20.5m (vs $13.4m in FY21). This is a reduction from previous guidance of $19.5m to $22.0m due principally to the Company's decision, noted above to cancel a contract for poor payment performance.
• Underlying EBITDA is expected to be positive for 2022 (vs loss of $1.4m in FY21).
• Monthly run-rate underlying cash breakeven during 2H FY22.

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Sales and Market Update

IMEXHS Enterprise

IMEXHS Enterprise continues to perform well and to strengthen its market share in Colombia after signing its first contract with Grupo Empresarial Salud Total during the quarter. Salud Total is one of Colombia's largest medical institutions which caters for over 5 million people every year. The group has a variety of clinics and hospitals in over 200 municipalities across 17 main cities in Colombia. This quarter, the Company signed its first Software as a Service (SaaS) contract with the medical group to replace the current PACS system at two of Salud Total's medium-sized hospitals in Bogotá with IMEXHS's Enterprise Imaging Platform which will integrate with the customers hospital information system (HIS). The potential upside would be to implement IMEXHS Enterprise across Salud Total's entire network over time.

In April, the Company signed its second ophthalmology customer. Clínica Oftalmología Sandiego, is a highly specialized eye care center in Medellin, Colombia. IMEXHS Enterprise will allow this customer to digitalise.

In addition, during the quarter, two large tenders were renewed. The first with Colsubsidio and the second with Colombia's National Police Hospital in Bogotá (see Radiology Services below for further information.)

IMEXHS Cloud (previously Aquila in the Cloud)

IMEXHS Cloud, the Company's standardised cloud-based radiology solution targeted at small and medium- sized customers, continued to expand its global footprint and to generate significant interest during Q2 FY22. IMEXHS signed 15 new customers through the quarter and now has 140 active IMEXHS Cloud customers since the product launched in May 2020 for an expected contribution of $2.8m in Annual Recurring Revenue (ARR). During the quarter, the Company signed a new customer in Queensland, Australia for a total of six customers. The Company also signed its first IMEXHS Cloud contract in Brazil, where the platform will initially be used to interpret MRI images at "Hospital Municipal Dr. Moacyr Rodrigues do Carmo (HMMRC)".

Partners Program

During the June quarter, IMEXHS focused on strengthening its existing Partners network with multiple training sessions being carried out throughout the quarter. In June, IMEXHS hosted Crowd IT's CEO (the Company's Australian master distributor) and BJC' s Medical BDM (the Company's Partner from Thailand) for a week-long training at the Company's offices in Bogota. Furthermore, the Company's Partners network grew to 35 Partners after a new distributor was signed in Brazil. This new Partner has over 30 years of experience in the medical imaging industry and over 700 customers across Brazil.

New Markets

During the second quarter, IMEXHS signed a new partner in Rio de Janeiro, Brazil who has over 30 years of experience in the medical imaging industry. The Company also received its first IMEXHS Cloud order from its latest partner. IMEXHS Cloud will be implemented at "Hospital Municipal Dr. Moacyr Rodrigues do Carmo (HMMRC)" in the Rio de Janeiro region. Initially, IMEXHS Cloud will be used to perform the radiology interpretations produced by the Magnetic Resonance Imaging (MRI) department at the named hospital.

Since the end of the second quarter, the Company appointed 3verest as a master distributor for the UK.