Summary and Analysis of Key Points

Overview of the Company’s Financial Performance:

• SCWorx is a provider of data content and services related to the healthcare industry, offering solutions to improve data flow, interoperability, and analytics for healthcare providers.
• The company experienced a decline in revenue from $3.8 million in 2023 to $3.0 million in 2024, a decrease of 21%. This was primarily due to the expiration and non-renewal of certain customer contracts.
• Gross profit decreased by 41% year-over-year due to the revenue decline outpacing cost reductions.
• Operating expenses decreased by $714,329 (26%) in 2024 compared to 2023, mainly due to reductions in stock-based compensation, salaries, and bad debt expense.
• The company reported a net loss of $1.1 million in 2024, an improvement from the $4.0 million net loss in 2023.

Revenue and Profit Trends:

• SCWorx generates revenue from four main performance obligations: data normalization, software-as-a-service (SaaS), maintenance, and professional services.
• The decline in revenue was primarily due to the expiration and non-renewal of certain customer contracts.
• Gross profit margin decreased from 33% in 2023 to 25% in 2024 as the revenue decline outpaced cost reductions.
• The company was able to reduce operating expenses through lower stock-based compensation, salaries, and bad debt expense.

Strengths and Weaknesses:

Strengths:

• Diversified revenue streams from multiple service offerings
• Ability to reduce operating expenses to mitigate profit declines

Weaknesses:

• Reliance on a small number of large customers, with the top 3 customers accounting for over 50% of revenue
• Declining revenue and profitability, leading to a working capital deficit and going concern issues
• Significant accumulated deficit and limited cash on hand

Outlook:

• SCWorx faces substantial doubt about its ability to continue as a going concern due to its working capital deficit, limited cash, and history of operating losses.
• The company raised $1.5 million in additional capital in January 2025, which it plans to use to fund growth through sales force expansion, product development, and project capabilities.
• However, there is no guarantee the company will be able to generate sufficient revenue to achieve profitability and positive cash flow in the near future.
• The company’s ability to continue as a going concern will depend on its success in securing additional financing and growing its customer base and revenue.