Redeye takes a positive view towards the acquisition of Data-AL. It is a relatively small acquisition – and thus low-risk, which we appreciate – providing Carasent with a +1000-customer base, a salesforce familiar with the market, and expertise in local requirements and regulations. While we take a cautious approach to estimate revisions in this early stage, the German market has huge potential.

Yesterday, Carasent announced the acquisition of German Data-AL. Carasent will pay EUR8m (and eventually an additional earn-out of EUR4m) for the company with sales of EUR4m and an EBITDA-CAPEX margin of about 13%. Thus, Carasent’s purchase values Data-AL at 2x sales and 16x EBITDA-CAPEX, which might initially look somewhat expensive. However, Carasent is not acquiring Data-AL because of its current sales and EBITDA-CAPEX (although it is nice to see positive margins and hence avoid a drag on earnings). Carasent is buying Data-AL to kickstart its initiatives with WebdocX on the German market with a +1000-customer base, a salesforce familiar with the market, and expertise in local requirements and regulations.

Data-AL’s core offering is an on-prem system dating back to the late ’80:s/early ’90s targeting small clinics and doctors. The average customer is smaller in Data-AL compared to Carasent, which was expected given WebdocX's somewhat smaller functionality than the Swedish Webdoc. However, Carasent sees potential for increased ARPC over time by adding additional functionalities and migrating to the cloud. Usually, migrating from on-prem to the cloud can increase the ARPC by 100% (partly as customers save costs on hosting, etc). Note that as Data-AL is an on-prem solution, we cannot derive its ARPC from its current sales divided by the number of customers.

Carasent

* Heavy concentration on Webdoc product and Swedish market, lacking revenue diversification.
* Operates in a regulated industry with potential for regulatory interference, particularly in public healthcare systems.
* Historical financial performance has been mixed, with inconsistent returns on invested capital.
* Limited track record of profitability, though expected to become EBITDA-CAPEX positive on a full year basis in 2025.

* Strong recurring revenue model with 90% of sales from SaaS, indicating high business stability and scalability potential.
* Benefits from secular tailwinds of healthcare digitalization and an aging population, positioning for long-term growth.
* Robust competitive advantage with high switching costs and low churn (1-2%), suggesting long-lasting customer relationships.
* Contributes positively to healthcare efficiency and quality, aligning with sustainability trends and societal benefits.
* Successfully expanded into new markets (Norway, public sector) and shows potential for further geographic expansion, particularly in Germany.

* Operating margin below 20% and not consistently increasing, suggesting potential operational inefficiencies or competitive pressures.
* Return on Equity (ROE) and Return on Assets (ROA) underperforming, indicating suboptimal capital utilization.
* Inconsistent earnings growth, failing to maintain 10% annual growth over the past five years or outperform historical averages.
* Lack of dividend payments or growth, limiting appeal for income-focused investors.

* Strong gross profit margin exceeding 40%, indicating profitable product mix and pricing power.
* Healthy short-term liquidity with current assets 1.5 times greater than current liabilities.
* Solid debt management, with net debt less than two times operating cash flow and five times free cash flow.
* Excellent cash flow conversion, with both operating and free cash flow conversion above 80% over the past five years.

* Relatively new senior management team with tenure under five years, potentially limiting institutional knowledge and long-term strategic continuity.
* Limited management ownership stake (less than 5% of shares), which may reduce alignment with long-term shareholder interests.
* Absence of a controlling owner with a significant long-term commitment (>20% ownership), potentially impacting strategic stability and decision-making.
* Board members, as a whole, do not hold sizeable personal stakes in the company, which could affect their alignment with shareholder interests.

* Strong leadership with CEO Daniel Öhman, who has deep industry knowledge, a track record of value creation, and a clear long-term vision for Carasent's growth in healthcare technology.
* Decentralized organizational structure promotes accountability and customer-focused innovation, with consistent delivery on promises and commitment to R&D.
* Transparent and candid investor communication, focusing on long-term business value and providing comprehensive, timely updates with consistent key metrics.
* Balanced executive compensation with reasonable CEO pay and incentives aligned with long-term shareholder value, including stock-based plans that avoid excessive dilution.
* Diverse and experienced board of directors with relevant industry expertise, promoting gender diversity and maintaining independence from management.

NOKm	2023	2024e	2025e	2026e	2027e
Revenues	244.0	280.8	369.5	417.8	471.3
Revenue Growth	25.0%	15.1%	31.5%	13.1%	12.8%
EBIT	-29.1	-28.2	27.8	54.0	76.8
EBIT Margin	-11.9%	-10.0%	7.5%	12.9%	16.3%
EV/Revenue	1.7	4.1	3.0	2.6	2.2
EV/EBIT	-14.6	-40.5	40.1	20.0	13.4
ARR	239	271	322	373	426
ARR Growth	18.3%	13.4%	18.8%	15.8%	14.3%
EBITDA - CAPEX	-47.5	-5.3	41.4	55.7	73.9
EBITDA - CAPEX Margin	-19.5%	-1.9%	11.2%	13.3%	15.7%
EV/ARR	1.8	4.2	3.5	2.9	2.4
EV/EBITDA - CAPEX	neg	neg	26.8	19.3	13.9
Net Debt	-373.9	-275.3	-305.0	-339.7	-388.3
NWC/R12mSales	-11.1%	-10.0%	-10.0%	-10.0%	-10.0%

Key financials