Physitrack reported a y/y organic growth of 1%, resulting in sales of EUR3.9m, which is 2% below our estimate. Further, sales declined by 2% on a q/q basis. Subscription revenue grew by 12% y/y and amounted to EUR13.2m, representing a 2% q/q growth and slightly below our estimate. SaaS revenues now amount to 84% of total revenues vs 75% last year, a 16% increase y/y. Adjusted EBITDA reached cEUR0.9m in the quarter, corresponding to an EBITDA margin of 23% (27%), 1pp above our estimate. Adjusted EBITDA-CAPEX was marginally negative and 2pp below our estimate.

Organic revenue in the Lifecare division increased by 7% y/y but dipped by 2% q/q. Meanwhile, the Wellness division saw a 9% y/y decline and a 2% q/q drop, which aligns with our estimates. The softer performance in the Wellness division is largely due to delays in the international rollout of Champion Health’s software, slowing the division’s growth. Although launches in Germany and Sweden took place at the end of November, the ramp-up remains in its early stages. Combined with the typically long sales cycles for larger accounts, we expect it may take until mid/late H1 2025 to see the Wellness division return to steady growth. It is worth noting that year-over-year comparisons in the Wellness division will ease next year, which could aid performance.

Following Physitrack’s Q3 2024 report, we trimmed the revenue growth forecast by 15pp for 2025e and lowered the adjusted EBITDA margin by 2pp for the same period. These estimate revisions and a slightly weaker EUR/SEK impact are reflected in our updated fair value range of SEK8-SEK72 (SEK9-SEK72) per share, with a new base case of SEK23 (30).