Earnings Call: Q2 2021

Aug 18, 2021

Hello, everyone, and welcome to this session and presentation of the Q2 report of CaraSant Asa. My name is Dennis and I am the CEO for CaraSant. With me today we have our new recruits, Sven Martin. Yes. Thank you, Dennis. So my name is Svein Martin Bjornstein. I'm the new CFO of Carousel. And just to briefly mention my background, I come from DNB Markets where I've been more than 5 years working within Investment Banking and focusing primarily on the healthcare sector and the eHealth sector as well. So I've actually been working with Carasent for quite a while and been part of several of the transactions that the company has completed during the last year as an advisor. So I know the company quite well and I'm very excited about the future prospects and really glad and happy to be on board to continue building this company going forward. That goes both sides. It's going to be very exciting to work with you, Sven Martin. So the Q2 of Carasent. Some highlights. We had a strong financial quarter. We had an organic growth of 36% for Evimeria and Avansoma combined. We made a successful acquisition of the Swedish company Metotica in May and we also made a private placing raising NOK 345,000,000. We get lots of good and positive response from the customers because we are broadening in our offer and are able to offer a more holistic solution for the customers. And we also still have an active pipeline of new M and A opportunities on 4. And CaraSant, the business model is continuing to scale as scene here. We have been growing 68% on the revenue compared to last the Q2 last year. We had a strong organic growth and we successfully executed 2 acquisitions throughout the year and the business model is continuing to scale. Next slide. I'm on the 6th page now. And the acquisition of Metodica MA. Why we did that acquisition? Of course, it's a good standalone business with a very loyal base. We have been able to strengthen our position within the Norwegian market, but also the Danish market. Mettortica also got some customers throughout Europe. So we get a small footprint throughout the Nordics as well. And they can offer a solution for the smaller private health care hospitals. And they are very good in their solution to offer more surgery heavy solution, which helps CareCentre broadening the offer. And how it looks today. If we look at our different entities and what they offer and to what segments, this is how it looks today. And we are continuing to broaden our offering throughout the acquisitions, which gives us a more holistic offering, which I said before. It also gives us a very positive response from the customers and the market, where we are able to please more needs of the bigger clients. And with this, we also have the aim on Force to becoming 1 carousel to unlock more synergies. And the strategic direction on 4th is to combine different platforms to 1. And of course, this will give us significant cost of maintaining only one platform. And we can bring out more synergies throughout the entities, which gives us more scalability. And to go through the different entities within the EMEA entity. We signed 32 new units during the Q2, and we ended up with 561 active units. And we still see a positive demand for EMIRIUS services in the market. And the amount of units was the growth of 26% compared to the Q2 last year. Anderevenue. We still see that our integrated service in comparison with the Webdoc license is growing and we are continuing to expand our ecosystem with different kind of services within the Vemiria. And we ended up quarter with the revenue of SEK 21,700,000 Swedish crowns, which gave us a 32% revenue growth over the quarters. And the scalability is still showing. We had an EBIT growth of 54%, and we ended the quarter with 28% EBIT margin. And for Evans Soma, they signed 5 new units during the Q2 and we ended up with 169 units within the Avanzoma business. And for the first half year, we have signed 29 new units, including the large contract with the Schuitens Binderkorn. And as we have been told and what we have been saying before, the biggest growth from this entity won't come from new business. It will come from the existing customers and up sales, which have been very successful. We had a revenue of NOK8.1 million, which gave us a 48% revenue growth over the quarters within the Avansoma business. And we are continuing to migrate the customers from on prem solutions to cloud solutions and also some up sales on different kinds of services on the existing customers. And the business within Diamond Soma is also scaling. We had quite huge EBIT margin, the Q2, but this is Norwegian effect of vacations. But if you look at the EBITDA for the first half year. It ended up with a 45%, which is above the guiding we have given of 40%. Slide 17, the financials. I hand over to Sven Martin. Sure. Thank you, Dennis. If we move to the next page, we see an overview of the quarter on consolidated the group level. So as Dennis mentioned, the quarter was strong and the first half year. It was also strong. So in the Q2, we saw revenue coming in at 32,000,000 and that's 88% growth compared to 17,000,000 in Q2, 2020. And approximately 2 thirds of that growth is related to acquisitions and the remaining is related to our strong organic growth. So the margins are also trending positively, again showing the scalability of the business model. So as Dennis mentioned, we see that both Avan Surma and EMEA is performing well and are tracking in line with the guidance that we have provided for the full year. And the acquisition of Metordika. Only had 1 month effect on these figures. So we expect to see the full run rate of that acquisition going into the Q3 fueling growth further. If we go to the next page, we can see take a closer look at our organic growth. So we delivered year on year growth of 36% in the Q2 versus 2020 for Eden Area and AVANZUMAR combined and 33% for the first half year. And Alansuma in particular had a strong performance and that was driven by majority, the big contract won in Q1 with the Schickenspivenschon and also upsell of modules on the existing customer base. But in summary, our existing business has very good momentum and that's driven by, if we go to the next page, mainly to 2 factors. That's growth on our existing customer base and from winning new customers. So our existing customer base. We continue to see a strong demand for new digital services and as our portfolio or ecosystem of products and services growth in addition to a strong underlying market and low term. We have seen net retention rates of 115% to 120% historically. In addition, we win new customers and our market position continues to improve as we add new products and services to our portfolio. And as we have touched upon, the margins are trending positively with both improving EBITDA and EBIT Margins. It's worth mentioning that there's some seasonality effects in the Avan Surma margins for Q2 given their handling of the vacation pay in Norway. But strong quarter even with that considered. Moving to the next page, we have a breakdown of the EBIT on the group level. So as you can see on the far right bar, we reported EBIT of SEK3.7 million in the quarter and we have the non recurring cost of SEK 3,300,000. And that's mainly related to the acquisition of Matodika that happened during the quarter, but also some smaller costs related to one time license fee and recruitment costs. And that means that adjusted EBIT came in at SEK7 1,000,000 and our cash balance is robust with the SEK487 1,000,000 as per Q2. The and then we also completed a private placement in July of SEK 4 SEK20 1,000,000 that's not included in the cash balance in Q2. So we are very well capitalized to the growth opportunities we have identified going forward. Moving on, I won't go into details on this page, but so I will leave the word back to you, Dennis. Yes, thank you, sir Martin. And the outlooks, we still see a huge demand for the digitalization within the healthcare sector, whereas one component of succeeding with this is the availability to integrate different services to each other to share data. And we our opinion is that CareCent is well positioned here with their ecosystem, with the open ecosystem, so that we can offer a more holistic solution to the healthcare sector. And we also see that the latest acquisition combined with Avansoma, the Avansoma acquisition has given us a good position to speak with larger customers that have a more broad care offer to the patients. So the different solutions combined gives us a strong position on Porth. The and as Sven Martin said, we are well positioned to execute on our M and A strategy. We have identified a broad range of different opportunities, both in short term and also in long term. And with that, I open up for some Q and A and I say thank you for listening. Yes, Dennis, I can I see that we have gotten a few questions here? So I think the first one you can handle. So that's Evimera's customer intake has been higher 2 quarters in a row. What has changed and is this level new normal. What's changing and we have been talking a little bit about this before. But as we are growing, our market is growing and this business, we sell mostly on the word-of-mouth. And when we get more customers, we also get more customers that helps us sell our offer and also our ecosystem, which we are expanding with the new vendors. And with that, we also get more sales personnel out there. And of course, we continue to invest and we continue to develop our offer to be able to address more different kinds of segments and it's also results that gives us a higher income. So our goals, our internal goals is to try to reach the 30% customer base growth year over year. Great. Next question, Avan Soma's growth And especially profitability were exceptional. Could you give some flavor to the standout margins and the ongoing SaaS transformations? Outcome the business is able to show so such margins so fast. So maybe I can comment on the margin first and then you can comment on the growth. So in terms of margins, we are very happy to see that the margins are at the level we see. However, there are, as I mentioned in the presentation, some seasonality effects there. So even though the margins are at 45% as per first half of the year, we maintain our guidance of 40% margins in the Amazuma. Yes. And for the revenue growth, the - we have been guiding for 35% this year, but over the year, we don't think that Avensommer will keep up the pace with the Ebymeria. So over the years on forth, it might slow down a little bit, but we don't have any prognosis of this more exactly than that for now. Next question. How will the 1 carasen platform look like practically? How will the timeline look like more or less. Yeah. This is more of a strategic vision. It will take time. One of the reasons why we acquired Methodica, for example, is to be able to transform the customer base into parts of the web doc, the Vemuria platform and continue to develop to reach the goal of 1 platform. So it will take many, many years, but the strategic direction of becoming 1 care center, 1 platform will give us synergies in both short term and also long term. But there is no exactly timeline to give at this point. Great next question. With your recent capital raise, do you expect that you have to look outside the Nordics acquisition targets to be able to deploy the capital. I can take that one. So we of course we actively work with our pipeline and the pipeline is quite long both within the Nordics, but with both long term and short term opportunities. But of course, as we go, we will look to expand in new markets as well. But in the near term, I would say that the main focus will be on Nordic targets. So next question. EMEA growth is slightly behind guidance for the full year. Do you expect revenues to come up in the second half? As of today, we have no reason to change the guidance. So we see that the market remains strong and we have a good income of new customers within the VUMERIA business. So we still withhold the guidance of the entities. What was the net retention rate of Avan Surman and Evimera separately. So as you saw in the presentation we showed the net retention rate of Evimera because that's since 2018. So we are starting to track that for Avan Summa as well. And as we said, we expect the majority of the 35% growth to come from the existing customer base. So that should give you an indication of how that retention rate is trending. Metulika HADEN Occupational Software Program Ready For Q2 2021. Will this be integrated with Area's occupational offering or will the 2 be separated? First of all, we won't address the same customer with different kind of solutions. So this is something we are looking into at the moment. But when we target a market, we won't compete within the Group. So we are similar demand driven company. So we will offer what the customer need and we will create our offer in line with the needs the demands of the markets. So with that said, it's to be seen which solution is the better. Okay. I think that's it. So, thank you all for listening. If you want to wrap up then. Yes, thank you very much. And I look forward to winter year. And I look forward to work with you, Sven Martin. Welcome aboard. Thank you. And if you have any questions, feel free to contact us after this session. And with that, I say thank you again. Bye bye. Bye bye.