[Office], and I'll be your moderator for today. Joining us on this call will be Rick Ratliff, MedAdvisor CEO and Managing Director. Good evening to you, Rick.
Hi, George.
Also on the call is Mark Lindh . Mark's the Executive and Principal of Adelaide Equity Partners. They were retained by MedAdvisor to assist with the strategic review process and advise on the ANZ business transaction. Good morning to you, Mark.
Morning, everyone.
Hopefully, your call can probably be clearer, Mark. You're a bit fuzzy there. The plan for the session today is for Rick to open up with some comments relating to the sale of the ANZ business to Jonas . He'll also talk to the broader review of the strategic options, which remain underway. Following some opening remarks from Rick, we'll then open the Q&A session. There'll be two ways to ask questions. You can either click on the Q&A ribbon below, or alternatively, you can click on the raise hand function, and I'll enable your microphone at the appropriate time. With the housekeeping now done, I'd like to hand it over to Rick to get us started.
Okay. Thanks, George, and good morning to everyone on the call, and thanks for joining us today. As George mentioned, the purpose of this briefing is to discuss our recent news and to offer an update on the broader review of strategic options, which was announced, as George said, in the November timeframe of last year, and it is ongoing. Now, I'm going to provide some comments. I'm not going to use any slides for the discussion. If you'll bear with me, I'll go through about five to 10 minutes of comments, and then, as George said, we'll open it up to Q&A, and to the extent we need to talk about the strategic review process, Mark Lindh will join me on some of those discussions. To get started, the stated objectives for the review were to explore pathways to delivering greater value for our shareholders.
That was recognized on the ASX listing. The view of the Directors was that the two business units under the ASX listing were suboptimal from a value perspective. We launched the strategic options review process at the same time in the United States and in Australia and New Zealand. While the ANZ process has advanced more quickly, it's important to note that we continue to review the process in the United States. Before I get started, I do want to emphasize that we remain optimistic about the U.S. business and its long-term potential. Approximately 75% of our U.S. replatforming is now complete, forming a broader transformation that also includes redesign of our client success team and targeted process improvements. These initiatives are already creating a more scalable and efficient operation, laying the groundwork for future growth and value creation.
I'll comment a little bit further as we get into the latter part of the discussion. Turning back to the ANZ business, in 2024, it represented 20% of the group's revenue and earnings based on the company's market cap of approximately AUD 80 million when the review process started. A liquidity event in the order of AUD 43 million represented greater value than what the ASX was demonstrating. On May 7th of this year, we announced that a letter of intent had been received from a prominent multinational software organization with operations in Australia. The proposal was to acquire the company's ANZ business division for cash considerations. The proposal was commercial in confidence, but it represented what Directors believed to be a materially higher value than what was implied in the share price for MedAdvisor Solutions. On that basis, MedAdvisor Solutions executed the LOI in the best interest of shareholders.
The LOI included customary conditions such as a period of exclusivity to conduct due diligence, and given the significant amount of preliminary work that had already been undertaken by both parties, the timeframe for execution of the binding sale and purchase agreement was expected to take approximately five to seven weeks, at least at that point in time. The Australian sale process did offer a level of transparency, which allowed for third- parties to enter with a base value that was set by the offer that was communicated on the ASX. Following the announcement of the LOI, we did receive additional interest in the ANZ business, but despite the additional interest, there was no more compelling offering that came to our attention, and none of the other proposals actually matched the certainty, speed, and overall value of the offer we had in hand.
We remain confident that this transaction represents the best outcome for our shareholders, customers, and employees. One key point, though, while over 95% of pharmacies in Australia utilize software services from MedAdvisor, it's important to note that further capital is required to maintain this position and the long-term growth. This need has been influenced by requirements and movements from strategic players in the market, expansion of the pharmacy's scope of practice, and various competitors entering into the market as well. As the ANZ business enters into its next chapter under the Jonas Software umbrella, we're confident that Jonas is well-positioned to build on MedAdvisor's legacy of digital innovation and community pharmacy and look forward to seeing that the business continues to thrive.
Jonas is a portfolio company of Constellation Software, which is a Toronto Stock Exchange listed business with a market capitalization of CAD 100 billion and revenues in excess of U.S. $10 billion in 2024. Constellation and, in turn, Jonas have a mission to provide market-critical software solutions with a philosophy of buy and hold forever. In fact, over the past 30 years, Constellation has acquired over 1,800 software businesses across various industries globally, with over 35 software businesses in the Jonas Software ANZ portfolio. After market closed last Friday, Australian time, we completed the sale of the ANZ business division and associated intellectual property to Jonas Software. This transaction marks a major milestone in the first phase of the strategic review process. The deal delivers a headline price of AUD 35 million with an upfront consideration of AUD 27 million. There's an outstanding AUD 8 million.
All this is in AUD, is expected by calendar year end at the latest when working capital adjustments have been completed. There is also the potential to realize further consideration based on an uncapped three-year earnout, which we currently estimate to be worth a potential of AUD 7.35 million payable annually over the three-year time horizon. This would take total proceeds for the deal to AUD 42.35 million . With the completion now finalized, we have discharged all outstanding debt obligations, leaving the company well-capitalized and with a performing net cash balance of approximately AUD 16.5 million. In addition, the proceeds from the Jonas transaction recently completed, including the AUD 8 million holdback that I just mentioned, are to be received later this year. All of these funds will be held separately until the termination of the use of funds is completed.
I know that some shareholders have been asking, you know what's going to happen with MedAdvisor Solutions at this point? To be clear, this transaction relates solely to the sale of the ANZ business and associated entities. MedAdvisor Limited will continue to operate the U.S. business and remains listed on the ASX. The completion of the ANZ business transaction now allows us to focus on the U.S. business, which continues to operate under the MedAdvisor Solutions brand via a royalty-free license from Jonas. As we noted earlier, the U.S. business is progressing well. With the ANZ transaction complete, we are in a stronger position to accelerate the U.S. growth agenda. The team is executing against clear priorities, including the expansion of client programs and optimization of our technology infrastructure.
The foundational work we've undertaken across platform enhancements, partner engagement, and internal efficiencies places us in a stronger position to drive long-term value. As part of the next phase of our review of strategic options, as I mentioned earlier, we continue to actively consider a range of options for the U.S. business, including the potential sale of the business. Discussions are continuing, and we're committed to unlocking the value of the business in the United States for our shareholders. The Board is also considering various capital management initiatives, including a capital return, which we highlighted in the ASX release on July 2nd. We will provide an update on this in due course. In tandem, we are finalizing our FY 2025 accounts.
We expect to provide a market update on our FY 2025 full-year results guidance, either alongside the release of our Appendix 4C or earlier as needed in line with our disclosure obligations. Finally, before we move to Q&A, I would like to sincerely thank our Chief Financial Officer, Ancila Desai, who will be stepping down later this year at the conclusion of her notice period. Ancila has been instrumental over the past three years in guiding MedAdvisor through significant transformation, and we are deeply grateful for her leadership and support during this period. That concludes my remarks. I want to thank you again for joining us today. I'll now turn it back to George, and we can have some time for Q&A. Thanks, George.
Thanks, Rick. Thanks for that update. As a reminder, if you'd like to ask a question, please click on the Q&A box below. Alternatively, you can click on the raise hand, and I'll open the mic for you. A few questions here. I believe you've answered quite a few of them already in your remarks, Rick, but I'll just ask them again for clarity. Can you clarify the net cash and debt position right now?
Yeah, the net cash position is approximately AUD 16.5 million as of today.
No debt, right?
I'm sorry, no debt. That's correct. We fully discharged the debt.
Okay, great. Thank you. What is the current cash spend going forward?
We'll provide clarity on that as well as our progress relative to guidance as we finalize the 4C, and we'll look at providing some direction on the first half results in that process.
Thanks, Rick. We forgot the U.S. business. Have you had offers for that business?
As I mentioned in my remarks, we are continuing with the strategic review process in the U.S. We have significant interest in the business, and that process is moving along. It is moving, obviously, at a slower pace than the ANZ business. We hope to have an update in the very near future when we have something material to share.
Great, thank you. Next question, again, a question around guidance. I think you answered it, but you know we'll provide guidance at the time of the Appendix 4C. Another kind of question, outlook on the pipeline?
We have a solid pipeline for the first half of FY 2026, and as we're finalizing this transaction, wrapping up the financial year, and preparing for the 4C, we'll prepare some guidance for pipeline progress in that same context with the 4C.
Great, thank you. Question around the earnout. Can you provide some color on the mechanics of the earnout, particularly in relation to any thresholds and structure on the earnout?
Yeah, the primary focus on the earnout is related to revenue growth over the next three years. The revenue targets are definitely targets we feel comfortable with, so we're very comfortable with the earnout structure. There are EBITDA-required components in relation to the earnout that act as accelerators to the revenue component. We're very confident. We're very happy with the fact that the earnout structure is uncapped and feel confident in the earnout projections that I provided in my comments.
Great, thank you. Again, I believe you did answer this in your remarks, but in relation to the holdback amount, it said it won't be until the end of the calendar year. They just assume the return will occur after the states. I think you're referring to the AUD 8 million hitting your bank account.
Right. The expectation would be that the AUD 8 million would be received, if that, I think that's part of the question, would be received prior to the end of the calendar year.
If we knew, was any of the other offers for a higher cash pitch? I think someone's asking here, were there higher offers for the ANZ business?
If there were higher offers for the ANZ business and they were more compelling, the Board would have moved forward with those offers. As I said in my comments, if you look at the structure of the offers that were provided in relation to the offer that we had in hand and other considerations, those offers were not considered compelling or superior to the offer that we had in place.
Great, thank you. There's a bit more clarification asked for around the AUD 16.5 million cash position. It says, is this before including the AUD 8 million deferred payment?
This does not include the, if I'm following the question, this does not, the AUD 16.5 million does not include the AUD 8 million deferred payment. We don't have the cash. Therefore, the AUD 16.5 million is cash that we have in our bank account.
Perfect, thank you. Please explain clearly what the ongoing strategic review of the remaining U.S. names is, specifically is the U.S. for sale, and are you contemplating an ASX listing?
We are looking at, relative to the United States, we are looking at all options, very similar to the process that we've run in Australia. It's been a very targeted process. It has been a process to focus on the valuation of the business and the opportunities, and one of those opportunities could result in the sale of the business. If the business were sold, if the U.S. business were sold, that would then trigger the question on the delisting of the business. That's a decision that has not been made yet, but it's a part of the analysis that's ongoing.
Right, thanks, Rick. Another question around the cash and the debt position. It says the debt at the last quarter was AUD 18 million, and it appears to have jumped by AUD 5.6 million. Just wondering what the reason for the jump was.
Yeah, the reason for the jump was related to the early payment of the debt. The debt was a three-year vehicle that was paid down a few years ahead of time. As a result, there are different terms that relate to the increased costs in terminating the debt earlier. That's the difference.
All right, great, thank you. A question around the AUD 8 million holdback: why so large, and why is it going to take so long to work out to make the working capital adjustment?
The key point is that the AUD 8 million is tied to the completion of certain analysis on the accounts, and the payment is no later than the end of the year. It could be paid earlier. Initial terms were much longer than the four months that's in the current version. This is a much shorter timeline, and if accounts are managed, if everything's managed appropriately in a timely fashion and we get to closure, then the payment can happen faster.
Great, thank you. A couple of questions here again around the U.S. strategic review timeline. I guess that's the question.
Oh, that's the question?
I'm sorry. I'll just put a couple of questions together. What is the tentative timeline for the U.S. strategic review?
The process has been ongoing, as I mentioned, and our intent is to bring that to closure as soon as possible. I would say that we're moving it along as quickly as we can. We had hoped to close everything out by the end of June. We closed out the Jonas transaction close to that, and conversations are following quickly behind that in the United States, but we're not in a position yet to put a definitive timeline on it.
All right, great, thanks. If you sell the U.S. business, how does the earnout get paid or managing a listed company?
There are processes in place to create a shell company, if you will, that may be, to your point, be listed that manages the distribution of funds as they come in. It's my understanding is how that works.
Right. Mark, I know you're there. Did you want to add anything to that?
Not really. I think we've covered it pretty well. In that circumstance, there's no point having a listed structure under a proposal that would have effectively both businesses sold. That would be an unlisted structure, and then any proceeds that come in would be distributed as to the original pro rata shareholder.
All right, thanks, Mark. Question here around the tech stacks. It says, I believe there was some alignment between the tech stacks in the U.S. and the ANZ businesses. How will ongoing development of the U.S. tech stack work with the sale of the ANZ business?
I'm sorry, what was the last part of that question, George?
How will ongoing development of the U.S. tech stack work with the sale of the ANZ business?
Okay. Maybe a couple of things there. The longer-term plan was definitely to bring the tech stacks, the ANZ, and U.S. businesses together. We're short of that phase. If we were having this conversation next year, it would be a whole entirely different conversation. In ANZ, we've moved the platform, what we call MedAdvisor, was called PlusOne to MedAdvisor for Pharmacy. It's cloud-based, it's on its own tech stack, and it is in AWS, and it is focused on Australia, New Zealand. In the United States, the development work going on with the platform today, and as I mentioned, we're about 75% of the way done with that platform development. It is a separate technology stack, and it runs in the Google Cloud Platform . There are two different technology stacks, two different sets of those, intellectual property, etc. They are completely separate today.
Software licenses for different types of software, security software, certain Microsoft software, etc., there is some crossover, and those are being split up as we speak, but that's basically the extent of it at this point.
Great. Thanks, Rick. Next question. What's the IP that's getting sold alongside the ANZ business, and does it include the Thrive platform?
It does not include the Thrive platform. It is all of the IP capabilities, and they were already in the Australia ANZ business, primarily inclusive of the MedAdvisor for Pharmacy platform, as well as the MedAdvisor mobile app, the full scope of practice, expanded scope of practice software, etc. All of those elements that have been in development over the last few years remain with the ANZ business that was acquired by Jonas . All of that moved over. That platform does have a form of a capability for pharmaceutical-sponsored communications through the MedAdvisor mobile app, as well as SMS kind of communications, and even with pharmacist intervention programs through the MedAdvisor for Pharmacy platform. That is not the same as the Thrive platform.
That is an area where longer-term and phase II of our technology strategy, we would have started to see some crossover in technology between Australia and the U.S., but that had not happened yet. It is still separated.
All right, thank you. Question around the U.S. business. If the cost cuts, can the U.S. business be free cash flow neutral or small positive in 2026?
With the cost cuts in the revenue projections, that is definitely the direction the business is headed, yes.
All right. Are there any outstanding abatements that would reduce the AUD 16.5 million cash position?
That's a very good question. There are ongoing abatement payments, just a part of the cash flow, particularly for this individual, who sounds like they're very familiar with the U.S. business. There will be some level of abatements from a few of the pharmacies in the July-August timeframe.
I guess on the other side, Rick, there's revenue coming in too, right?
Excuse me? Yeah, I mean, that's just part of it.
Coming in, yeah.
There's revenue, yes. There's cash coming in and cash going out, which is just part of the ongoing operations, but the revenue share or the abatement is a part of the structure, and it will always be contemplated on a month-to-month basis relative to reduction in cash, and then cash coming in from pharmaceutical manufacturers will drive the increases in cash. Yeah.
Great, thanks. Just conscious of the time, I know we'll have to finish at 9:30 A.M. There's still a few questions, and the ones that we can't answer today, we'll come back to you. I just want to, we're not finished on this question. Please outline the current structure of the Board.
The current structure of the Board, okay. Good question. There are four individuals, and then myself. The Chairman of the Board is Kate Hill. Jim Xenos is a Non-Executive Director, and he's in Melbourne. Kate is in Sydney. Kevin Hutchinson, Non-Executive Director, is the Head of the Remuneration Committee. He's based out of the United States. Luke Merrow is the other Non-Executive Director based out of the United States. Those are the four individuals, and then myself. There's a five-member Board.
All right. It is 9:30 A.M. We have time to finish. There are a few outstanding questions, but we will attempt to answer those questions. I guess we'll get back to those. People that ask those questions will be paused. Thank you, everyone. Thank you, Mark, for your time today, and thank you for everyone that attended. That now concludes the investigation.
Thanks, George. Thanks, everybody, for joining us today.