Physitrack: Delivery on track - ABG

Pro forma growth in line with company target Margin slightly pressured by virtual care acquisitions Trading at 14 ‘23e EV/EBITDA

Wellness segment showed strong pro forma growth The report was largely in line with our expectations when looking at sales and adj. EBITDA, and we highlight that the wellness segment showed solid pro forma revenue growth y-o-y of 44%. Subscription revenues were slightly below our expectations, but still managed to grow 27% y-o-y pro forma (Lifecare Technology division). On opex, the company continues to invest in future growth, and we believe the transition to an in-house technology team could have put some short-term pressure on the margin. As well, some revenues have been shifted towards a subscription-based model which pushes back revenues. The EBIT margin came in well below our expectations, which can largely be explained by higher acquisition-related amortisations than we expected, thus not affecting the EBITA margin.

Solid ARR development and improving churn set to continue ARR at end-quarter was EUR 9.8m, up 29% q-o-q and partly boosted by the consolidation of Champion Health. However, as the company is transitioning some of its non-recurring revenue to a subscription-based model, the ARR should see solid growth ahead. In addition, we note that the rolling 12-month churn rate continues to improve, which we find encouraging; it is now down to 1.3% (monthly basis). However, we believe there remains room for improvement, and it seemed like a focus point when CEO Henrik Molin mentioned it on the conference call.

Estimate revisions and valuation We raise our sales estimates slightly, primarily following the strong Virtual Care growth. The CEO also commented on the macroeconomic environment, which did not appear to have weighed on growth – quite the opposite, in fact, providing further support to our sales estimates. On costs, we raise opex ex. D&A largely in line with our sales revisions, but adjust D&A, primarily acquisition-related amor ... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/physitrack/Equity-research/2022/8/physitrack---delivery-on-track/