Of all the CEOs I talk to on a regular basis, and I talk to many, none come across as more genuine, more affable, and more capable than Warwick Smith, CEO of Healthspace (HS.C).
Also, nobody matches up to the guy sartorially. I mean, check out the garb in this recent video interview:
Who is this fashionplate? Well, Warwick is a mining guy, or has been, and was a damn good one at that. Back in the day, he managed to convince Quintana to take up a $10m investment in Western Pacific Resources (WRP.V), which Smith then helmed, to advance their silver project. It was the sort of right out of nowhere, ‘they did what now?’ deal that makes a microcap into a smallcap, and makes a CEO into an in-demand President.
Western Pacific’s board, meanwhile, went in another direction, thanking Smith for setting them up nicely, and then letting him go.
Since then, that same board has managed to turn their partners against them, is a year behind on land payments, and has drifted from the $0.14 price the stock was at when Smith was working the gears, to $0.01 today, with no news out in nearly a year and liquidation likely.
Smith, on the other hand, has moved on from strength to strength. He was part of the team that got Keir Reynolds’ fashion brand aggregator Mezzi (MZI.V) off the ground, and he’s now landed in one of the more interesting tech deals right now, in my opinion, in Healthspace.
Let’s be up front here and disclose potential conflicts of interest: I own Healthspace stock. I purchased it with my own damn money, not as part of any promotional deal, because I believe in the pitch.
Also, Smith has bought me lunch a few times, which I accept mostly because it gives me a chance to talk UFC for an hour and mock his ties and/or socks.
But, lately, it’s been because the dude is hooked into some of the most interesting tech stories on the public markets. He showed me Eguana Technologies (EGT.V), a battery tech company with growing sales in the B2B space (I’ll be writing more about this company shortly), and Avivagen (VIV.V), a biotech deal with a technology that helps oxidize beta-carotene which, for the layman, could see livestock producers be able to ditch antibiotics if the testing currently underway continues to prove itself.
I’ve been watching Avivagen for a while now – it was a client back in the day at Stockhouse – and they’ve been on the brink for a long time. Eguana too, it seems.
And Healthspace? Totally brinkin’ it.
What Healthspace is, is a company that helps health inspection agencies collect, collate and disseminate data, which it then has access to and can license for nice bucks. That’s the short story.
Health inspection reports not sexy enough for you? You’re not alone. It’s hardly biotech. But it is, or will be, big data. Let me explain.
I used to own a restaurant in East Vancouver (Fray on Fraser, what what!), and we would get visits from a health inspector now and then. When we did, the chef knew what he had to do. While he chatted up the inspector, line cooks would scarper and start fixing problems. Hide the box of bacon that someone had left out of the fridge for the past hour, quickly hose down the back dock, run into the fridge and date label anything that had been not labeled.
If it sounds like I ran a shonky organization, not at all – we got peerless reviews every inspection, and actually ran the cleanest kitchen of any my people had worked in. But you miss stuff when you’re cranking out burgers for the dinner rush, or eggs benny at Sunday brunch, and that stuff you miss stays on your record.
So the health inspector, with her clipboard and pencil, would move around the kitchen and our guys would distract her when she got near the broken soap dispenser and hope she’d forget to check it. And sometimes she would. Sometimes, rather than get down on the floor to check under the fridges, a quick spill of gravy in the right place might dissuade her from getting down on the tiles.
Health inspectors know these tricks, but they’re filling in a sheet of A4 paper with an H4 pencil, and they still have to get back to the office to hand-type all of what they’ve written into a computer system and it’s getting late and aaaaaargh.
Healthspace completely shits up the restaurant owner’s game by giving those same health inspectors an app, with all the fields that need to be filled out all sitting there, waiting ominously. If Mavis misses the soap dispenser, the app reminds her to get her act together. If she wants to get back to start her transcription, Healthspace says, ‘hey, you’re only halfway done here.’
And if Mavis finds rat droppings in the salt (never happened, but let’s say it did), the app lets her take a timestamped photo, and even circle the trouble spots, so that I can’t threaten to sue her bosses when she posts the information online.
And here’s a screenshot of the app, from the iTunes store:
No longer does Mavis have to wait six weeks for her work to get online in the next big quarterly update. Now she hits ‘send’ at the restaurant itself, and it’s ALL DONE. Database updated securely, all fields filled, and information posted to the public website for all to see.
This is bad ass. And, though Healthspace has competitors, it has none that have this system.
Sure, one of those competitors has a website it lets client organizations use that has fields to be entered, but if the internet connection drops (you know, like happens when you take the elevator or stairs to the basement?), the entire entry drops out and has to be redone. Madness.
Healthspace says there are 4300 different government agencies that oversee health inspections across the US and Canada. Healthspace already has contracts with 300 of them, including Health Canada and both Vancouver health agencies. That’s 300 government contracts. 300 contracts that get paid on time. 300 contracts where nobody in a position of power wants to undergo a process to draw in bids afresh at the end of said contract, so they’d much rather just renew if the product works. 300 pieces of paper that bring revenue.
And right now, Healthspace trades at a multiple of about 2x revenue. That’s INSANE.
With the company currently bringing in bizdev types, with over a decade of real time experience in the field and contacts and track record, and with data licensing something that could blow all the rest out of the water quickly and resoundingly, things are going to heat up soon.
Imagine Yelp wants to add health reports to their site? Imagine Google competing with that? And the only place to get a large amount of those reports in a sortable format is Healthspace… Imagine McDonalds would like to know when one of their franchisees fails their health inspection before the general public does… Imagine a restaurant supply company wanting to know when a restaurant has a bug problem so they can appear with a solution…
I bought Healthspace because, even if it doesn’t move an inch from where it is today, 2x earnings is a crazy low valuation. But if I know Warwick Smith, that rose-lapeled, BJJ-trained, finance-delivering bastard, these days are not long for this world.
Maybe it won’t happen next week. Maybe it won’t happen next month. But it will happen.
James West calls the company one of his top four Internet of Things companies to watch. I agree.
Brinkin’ it, baby.