Kontigo Care: No trend changes
Research Update
2023-08-23
07:15
Redeye provides an update on Kontigo Care following its Q2 2023 report. The current market conditions continue to bring forth challenges, and Kontigo Care decreased its base of licenses during the quarter. On the bright side is high business activity, the successful completion of clinical studies for mobile phone-based drug monitoring, and the forthcoming effects of price increases. Our near-term financial forecast has undergone minor adjustments, and our fair value range remains unchanged, with a base case of SEK9.5 per share.
Jessica Grunewald
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Net sales for the quarter came in at SEK7.3m (7.3m), up 3% q/q. Our net sales projection had a negative deviation of 2% compared to the actual figures. Monthly Recurring Revenue (MRR) and active licenses declined from the previous quarter. MRR stood at SEK2.4m (compared to SEK2.5m in Q1’23), and the active license base declined from 956 to 893 during the second quarter of ’23. The company signed four new frame agreements with municipalities during the quarter, and one additional contract was signed after the end of the period. As we advance, these agreements should result in more licenses and the stabilisation of MRR.
The finish distributor A-Klinikka terminated the partnership with Kontigo Care early in Q3’23. We expressed concern despite the collaboration contributing only 6% to net sales in 2022, and we regarded it as an essential initiative for advancing international expansion. Nevertheless, we viewed it as crucial in propelling international expansion efforts forward. Given Kontigo Care’s resource constraints, there is a limit to what they can prioritise. Its primary focus appears to be on Sweden and reestablishment in Finland. The company hopes to present a solution for customers and clients who use Previct daily in Finland during the fall.
We have already revised our forecast and fair value range to account for the delayed internationalisation process and the decline in revenues from Finland from 2023 onwards. Consequently, we only made minor adjustments for our ’23 estimates, not impacting our fair value range. Our fair value range is SEK1.5–18, with a Base case of SEK9.5 per share. Currently, Kontigo is trading at an EV/EBIT of 8x based on our 2024e, which implies a c60% discount to its peers.
SEKm | 2021 | 2022 | 2023e | 2024e | 2025e |
Revenues | 24.5 | 28.4 | 29.4 | 36.0 | 43.2 |
Revenue Growth | 20.4% | 15.9% | 3.3% | 22.6% | 20.0% |
EBITDA | 2.7 | 6.8 | 2.6 | 9.8 | 9.4 |
EBIT | -1.1 | 2.9 | -1.7 | 5.6 | 6.5 |
EBIT Margin | -4.5% | 10.2% | -5.7% | 15.5% | 15.0% |
Net Income | -1.2 | 2.9 | -2.0 | 5.6 | 5.3 |
EV/Revenue | 5.3 | 3.2 | 1.7 | 1.2 | 1.0 |
EV/EBIT | -117 | 31.8 | -30.0 | 8.0 | 6.6 |
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