Physitrack reported a y/y organic growth of 10%, resulting in sales of EUR4.1m, which is in line with our estimate. Further, sales rose by 7% on a q/q basis, an encouraging improvement from last quarter when sales were flat q/q. OPEX, excluding adjustments and D&A, amounted to EUR3.1m (EUR2.8), which is in line with our estimate. Adjusted EBITDA (adjusted for EUR0.1m in acquisition and integration costs) reached cEUR1.1m in the quarter, corresponding to an EBITDA margin of 26% (25%), 1pp below our estimate. Regarding sales across the respective divisions, organic revenue increased by 10% y/y in the Lifecare division and 11% y/y within the Wellness division, which is on par with our estimates. Adjusted EBITDA-CAPEX amounted to cEUR0.3m, a slight profitability improvement from last quarter and somewhat better than our EUR0.2m estimate.

ARR increased by 15% year-on-year, reaching EUR13.0m, surpassing our estimate by 6% and showing an 8% quarter-on-quarter growth. SaaS revenues now constitute 80% of total revenues, up from 72% last year, indicating a 23% year-on-year rise. We appreciate this shift towards SaaS revenue for its better margins and recurring nature. Lifecare expanded its subscription base by approximately 4,300 licenses, totalling an average of 65,300 by the end of Q1 2024, reflecting a 19% year-on-year growth. Management notes continued strong license growth from the Lifecare division into Q2. The positive outlook is supported by increased confidence in securing more significant Champion Health agreements during Q2 and expectations of organic growth rebounding to the 30% level in H2. From now on, we would also like subscription revenues in the Wellness division to grow on a q/q basis.

Following Physitrack’s Q1 2024 report, our estimate adjustments have been minimal. We have trimmed the EBIT margin forecast 2024e by 1pp and raised OPEX by 5% for the same period. Anticipating a steady Q2 and a robust H2 in terms of both growth and profitability, our fair value range remains steady at SEK9-75, with a base case of SEK35 per share. Physitrack trades at an EV/EBIT of 7.4x and an EV/Sales of 1.2x based on our 2025 estimates. Compared to peer median EBIT multiples for 2025e, Physitrack trades at roughly a 60% discount.