By M. Marin
NASDAQ:SYRA
READ THE FULL SYRA RESEARCH REPORT
Results mirror benefits of cost containment efforts …
Healthcare technology company Syra Health Corp. (NASDAQ:SYRA) reported strong 3Q24 results yesterday. Revenue of $2.3 million was up 42% from $1.6 million in 3Q23. It would not surprise us if SYRA beat our 4Q24 revenue estimate of $2.0 million, given the momentum in its business and as new contracts come online. Billings for contracts sometimes can lag work commencing but with SYRA indicating that it has begun to implement a new four-year, $5.8 million training contract for healthcare professionals throughout the state of Indiana, SYRA believes that revenue from this contract will be recognized beginning in 4Q24. Moreover, management has indicated that the company has a strong sales pipeline spanning both public and private sectors.
Key takeaways 3Q24 results
➢ Revenue continues to grow as the company signs a growing number of contracts
➢ Margins climbing reflecting company’s proactive strategy to shift to higher margin service mix
➢ SYRA continues to expand its operating footprint
➢ Cost containment initiatives implemented earlier this year contributed positively to net results
➢ Recent capital raise enhances financial flexibility
➢ Company optimistic about prospects for mental health app, Syrenity
➢ SYRA targets achieving profitability in 2025
Multiple new contract awards drive revenue growth
SYRA is optimistic about its growth plans and strategy as it expands its footprint in additional and existing markets via new contract wins. As the company continues discussions with existing and prospective customers, SYRA recently secured a four-year, $5.8 million statewide health education and training contract with Indiana Family and Social Services noted above. The company will assist Indiana statewide to train home and community support professionals. SYRA also recently signed a contract with the Wyoming Department of Health, Behavioral Health Division to assess Emergency response plans and a new award in the Healthcare workforce space across multiple states, among multiple other contracts signed this year.
Positive impact of cost containment initiatives
SYRA has implemented a cost optimization initiative aimed at containing expenses and contributing to margin increases. Specifically, SYRA’s total operating expenses of $1.1 million in 3Q24 increased 22.2% compared to $0.9 million in 3Q23 versus the above-noted 42% revenue advance. Total operating expense was just under 70% of total revenue in 3Q24, down from just under 88% in the same period of last year. We believe that as SYRA continues to shift its services mix towards higher margin services and contain costs and as the topline grows, it will lead to even greater cost absorption over a growing revenue base.
Company optimistic about prospects for Syrenity…
SYRA is encouraged by the traction it is seeing for Syrenity, a key product the company has introduced recently to support its growth strategy. Syrenity is an AI-enabled mental health app. Mental health apps began gaining traction during the pandemic. During the pandemic when in-person health care visits were curtailed, Deloitte Global estimated that spending on these apps grew 32% in the first 10 months of 2020 compared to the same period in 2019. Subsequently, their usage has continued to grow. The company believes that it can expand the market for this tool over time, targeting a customer base that includes large employers, academic institutions, health plans, and also marketing the app directly to consumers.
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