Business Overview and History
OneMedNet Corporation (ONMD) is a healthcare technology company that has established itself as a leading provider of regulatory-grade Real-World Data (RWD) solutions. Founded in 2015 and headquartered in Eden Prairie, Minnesota, OneMedNet has been at the forefront of leveraging advanced technologies to unlock the immense value within clinical data repositories.
OneMedNet Corporation was founded in Delaware on November 20, 2015, with a focus on creating solutions to simplify digital medical image management, exchange, and sharing. The company established a wholly owned subsidiary, OneMedNet Technologies Canada Inc., on October 16, 2015, under the provisions of the Business Corporations Act of British Columbia.
A significant milestone in OneMedNet's history occurred on November 7, 2023, when Data Knights Merger Sub, Inc., a wholly owned subsidiary of Data Knights Acquisition Corp., merged with OneMedNet Solutions Corporation (formerly named OneMedNet Corporation). This business combination resulted in OneMedNet Solutions Corporation becoming a wholly owned subsidiary of Data Knights, which was subsequently renamed OneMedNet Corporation.
The merger marked a transition for OneMedNet, as it inherited the structure of Data Knights, which was previously a special purpose acquisition company (SPAC) formed to effect a business combination. This transition brought about challenges in internal controls, as the previously existing controls were no longer comprehensive enough for the consolidated entity post-Business Combination. As a result, material weaknesses were identified in areas such as user access, segregation of duties, control environment, oversight of financial reporting controls, accounting for non-routine transactions, and record keeping.
As part of the Business Combination closing, all shares of Legacy ONMD Series A-2 Preferred Stock and Series A-1 Preferred Stock were converted into common stock of OneMedNet Corporation. Additionally, all convertible promissory notes issued by Legacy ONMD were converted into shares of common stock immediately prior to the closing, and were no longer outstanding as of December 31, 2023.
Today, OneMedNet's proprietary iRWD™ platform provides seamless access to a trove of regulatory-grade data, including electronic health records, laboratory results, and, uniquely, medical imaging.
Financial Performance and Metrics
OneMedNet's financial performance has been characterized by steady revenue growth and a focus on expanding its data ecosystem. In the latest fiscal year ended December 31, 2023, the company reported revenue of $1.02 million, a 12.2% increase from the previous year. While the company has not yet achieved profitability, it has demonstrated strong operational efficiency, with a gross margin of -12.6% in 2023 compared to -31.3% in 2022.
Financials
The company's cash position as of December 31, 2023, stood at $47,000, with a total debt of $5.09 million. OneMedNet's working capital position, however, remains a concern, with a negative working capital of $13.01 million as of the same date. This reflects the company's need to secure additional financing to support its growth initiatives.
For the fiscal year 2023, OneMedNet reported a net loss of $33.78 million and negative operating cash flow of $4.79 million. The company's free cash flow for the same period was -$4.84 million.
In the most recent quarter (Q3 2024), OneMedNet reported revenue of $142,000, representing a 56% decrease compared to the same quarter in the previous year. This decline was primarily due to the planned discontinuation of the BEAM subscription platform as the company transitions to focus on its iRWD product. The net loss for Q3 2024 was $2.06 million.
Liquidity
OneMedNet's liquidity situation requires careful management given its negative working capital position. As of the latest reported quarter, the company's cash balance stood at $1,930. The current ratio and quick ratio were both 0.23, indicating potential liquidity challenges. OneMedNet had a $1 million line of credit with BOC Bank, which was terminated in November 2024. The company will need to secure additional funding or improve its cash flow from operations to address its short-term financial obligations and support its growth strategies.
Product Segments
OneMedNet operates in two main product segments: Subscription revenue (BEAM) and Web imaging revenue (iRWD).
The Subscription revenue (BEAM) segment provides a medical imaging exchange platform that enables data sharing between healthcare systems, imaging centers, physicians, and patients. This platform is subscription-based, with customers paying quarterly or annual fees to access the service. BEAM revenue has been declining, decreasing from $595,000 in the prior year nine-month period to $443,000 in the current nine-month period. This decrease is due to the company's planned discontinuation of the BEAM platform in 2025, as they shift their focus towards the iRWD product.
The Web imaging revenue (iRWD) segment provides regulatory-grade imaging and clinical data services to the pharmaceutical, medical device, contract research, and AI industries. Revenue from this segment increased from $86,000 in the prior year nine-month period to $174,000 in the current nine-month period, a 102% increase. The growth in iRWD revenue was driven by the company's enhanced focus on this product line as they transition away from the BEAM platform.
Overall, OneMedNet's total revenue decreased 9% from $681,000 in the prior year nine-month period to $617,000 in the current nine-month period. This decline was primarily due to the decrease in BEAM subscription revenue, which was partially offset by the increase in iRWD web imaging revenue.
Operating Expenses and Margins
The company's cost of revenue increased from $812,000 in the prior year nine-month period to $872,000 in the current nine-month period, a 7% increase. This increase was driven by higher iRWD data and consulting costs as the company focused more on that product line, as well as the decrease in overall revenue. Gross margin improved from 19.2% in the prior year nine-month period to 41.3% in the current nine-month period.
Operating expenses increased 38% from $4.85 million in the prior year nine-month period to $6.68 million in the current nine-month period. This was primarily due to a $2.46 million increase in general and administrative expenses, related to higher professional fees from being a public company, as well as a $0.50 million commitment fee associated with the company's Standby Equity Purchase Agreement. Sales and marketing expenses decreased 23% while research and development expenses decreased 28% over the same period.
Recent Developments and Partnerships
OneMedNet has been actively expanding its network and partnerships to drive growth and enhance its RWD offerings. In June 2024, the company announced a significant collaboration with Bayer's AI Innovation Platform (AIIP), which aims to empower healthcare organizations and startups in building scalable and compliant AI-powered medical imaging software products.
Furthermore, in May 2024, OneMedNet reported a greater than five-fold expansion of its iRWD™ network and platform, driven by a series of new partnership agreements with healthcare systems and medical records custodians. This expansion has significantly increased the company's reach, providing seamless access to data from 1,402 healthcare provider sites, 31.0 million patients, and 121.4 million clinical exams.
Risks and Challenges
OneMedNet's business model is not without its risks and challenges. The company operates in a highly regulated healthcare industry, and its ability to maintain compliance with various data privacy and security standards is crucial. Additionally, the company's reliance on a limited number of large customers poses a concentration risk, as the loss of any of these key customers could have a significant impact on its financial performance.
The company's recent transition to a public entity also brings additional scrutiny and compliance requirements, which it must navigate effectively. OneMedNet's ability to secure ongoing financing to support its growth initiatives is another key risk factor, as its current negative working capital position suggests the need for additional capital.
Outlook and Conclusion
OneMedNet's future prospects remain promising, as the demand for high-quality RWD continues to grow within the healthcare and life sciences industries. The company's strategic partnerships, expanding data ecosystem, and focus on technological innovation position it well to capitalize on this market opportunity.
However, the company must address its working capital and profitability challenges to ensure long-term sustainability. Successful execution of its growth plans, effective cost management, and the ability to secure additional financing will be critical in determining OneMedNet's future trajectory.
The company's focus on the iRWD product line and efforts to transition away from the BEAM platform will be key factors in determining its future financial trajectory. While the decline in BEAM revenue has impacted overall financial performance, the strong growth in iRWD revenue demonstrates the potential of this segment.
Overall, OneMedNet's pioneering efforts in the RWD space, combined with its technological advancements and collaborative partnerships, make it an intriguing player in the rapidly evolving healthcare technology landscape. The company's ability to navigate its current financial challenges and capitalize on the growing demand for its iRWD platform will be crucial in determining its success in the coming years.