Kontigo Care: Investing for growth
Research Update
2024-02-05
06:55
Redeye has updated its estimates and valuation following Kontigo Care’s Q4’23 report. While we are encouraged by the all-time high in Monthly Recurring Revenue (MRR), we acknowledge the challenges anticipated for growth in 2024 due to reduced municipal budgets. However, we remain optimistic about the upcoming launch of Previct Drugs in 2024, which is expected to open doors to new customer segments. Our new Base case valuation is SEK6.5 (previously 8.0) per share.
Jessica Grunewald
Martin Wahlström
Contents
Q4 2023 review
Download article
Net sales for the quarter were SEK7.4m (7.2), reflecting a year-on-year growth of 4% and remaining consistent on a quarter-on-quarter basis. Our net sales forecast exhibited a 6% negative variance compared to the actual figures. Monthly Recurring Revenue (MRR) was SEK2.4m, showing an 8% quarter-on-quarter growth, in line with our estimate. We attribute the growth to the new CEO, Ulrika Gires, who energised the sales efforts during her first quarter. Operating expenses (OPEX) amounted to SEK10.3m (8.5), slightly exceeding our projected SEK9.7m, primarily due to increased personnel costs stemming from the change in CEO. EBIT of -SEK0.3 million fell short of our SEK2.7 million estimate, attributed to SEK3m in lower activated expenses and a marginally softer topline, explaining the deviation.
Despite achieving an all-time high in Monthly Recurring Revenue (MRR) at the end of Q4, we anticipate a challenging 2024 ahead in terms of growth due to reduced municipal budgets. Meanwhile, an agreement with the first corporate healthcare customer was signed during Q4’23, and we believe that a part of the new CEO Ulrika Giers’s strategy is to attract new customer segments. At the same time, we expect CAPEX to remain elevated due to continued investments in the Previct Drug product. The launch of Previct Drug during ’24 will likely help attract new customer segments and has the potential to become pivotal for Kontigo Care. Furthermore, as Kontigo Care takes over sales and support for the Finnish market, investments in organisational infrastructure are anticipated.
We have adjusted our sales projections for ‘24-25e, reducing them by 17% and 11%, respectively. We are now factoring in a growth rate of 3% for 2024e, aligning with the 2% growth in 2023. Our Base Case is now at SEK6.5 (8.0) per share. Our fair value range is SEK1.0 per share to SEK14 (previously: SEK1.6-SEK17).
SEKm | 2023 | 2024e | 2025e |
Net Sales | 28.9 | 29.8 | 38.4 |
Revenues | 44.4 | 40.2 | 49.2 |
EBIT | 0.60 | 1.4 | 4.1 |
EBIT Margin | 2.1% | 4.8% | 10.6% |
Net Income | 0.34 | 1.4 | 3.8 |
EV/Sales | 2.1 | 2.2 | 1.7 |
EV/EBIT | 102 | 45.7 | 16.0 |
Disclosures and disclaimers
Contents
Q4 2023 review
Download article