Physitrack provides a digital platform with a wide range of solutions for physiotherapists that work for healthcare providers. The company had an organic sales CAGR of 78% in ‘16/’17-‘20/’21, driven mainly by its valuable recurring revenues from the increased subscriber base, which had a low churn of 1.4% in Q4’21. We forecast an organic growth CAGR of 24% in ‘20/’21-’24, driven by more expansion of the subscriber base, and growth in its Virtual care offering, which includes physiotherapy and preventive care. This lowers the total share of subscription revenues from 84% in ‘20/’21 to 72% in ‘24e. However, we believe that some of the Virtual care revenues will eventually be recurring. Despite the short history, the average adj. EBITDA margin was a strong 43% in ‘17/’18-’20/’21, but in the past year it has dropped to 33% because of dilutive acquisitions. We forecast that the adj. EBITDA margin will expand to 40% in ‘22e-‘24e, driven by economies of scale and synergies between the acquired entities.
Positioned for the digitalisation and growing wellness trend
Although Physitrack’s strong growth before COVID, the demand for digital care solutions skyrocketed in the pandemic. We believe that this has favoured Physitrack and will continue to do so given that digital care is becoming a larger part of the healthcare in general. iHealthcareAnalyst forecasts that the preventive care market will grow by a CAGR of 9.7% in ‘21-’27, driven by govt. policies and a rising awareness of preventive methods. With Physitrack’s recent acquisitions, we believe that it has positioned itself well to exploit this growth. The biggest risk is the fierce competitive landscape, with players offering similar platforms.
Initiate with a fair value range of SEK 42-69 per share
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