Carasent AB - Nordic SaaS

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Hello,

Have anyone here in Finland looked at Carasent? It is a company listed in Norway but the company is just a holding company that owns Evimeria EMR AB.

Evimeria is a SaaS-company that has developed a cloud-based EMR (Electric Medical Record) for the private health care market and target primary care and specialty care clinics. As of today the company has 384 customers in Sweden and plans to enter the Norwegian market in 2020.

The company is currently enjoying strong growth and grew 53% in Q3 and has grown 49% YTD with strong profitability. In Q3 the EBITDA-margin was 28,0% with a Revenue of just SEK 15m or approx. EUR 1,5m, so this is a very scalable business.

Their targets for 2019 is to grow sales by >50% and EBITDA with >100% which they are in-line with. I believe they can grow at 35-40% in 2020 and believe their revenue in 2020 can be around SEK ~80m with an EBITDA of 23-24m. This would equal around an EV/EBITDA of 17x which for me is ok for a company growing >30% with 90% recurring revenues and also a very scalable business model.

The market cap as of today is a little bit more than NOK 400m. The chairman holds around 20% of the shares, the CEO of Evimeria ~10% and other insiders around 20%. So around half of the shares are owned by insiders. Another interesting owner for you Finnish guys is Aktia Nordic Micro Cap who owns 3,68% of the shares since August 2019.

Lets start a discussion around the share!

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Onko kukaan perehtynyt tähän firmaan tarkemmin? Vaikuttaisi erittäin mielenkiintoiselta yritykseltä. Hyvin kasvavaa ja skaalautuvaa bisnestä Evimerialla. Kysyntä vetää myös ilmeisesti hyvin. Lykkäsivät Norjaan menoa tälle vuodelle, koska Ruotsissa oli tarpeeksi tekemistä. Minkähän kokoiset markkinat tälläiselle pelurille on, kun keskittyvät pelkästään pohjoismaihin?

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Report today.

Sales grew 44% in the fourth quarter with an adjusted EBITA of 5,5m or a margin of 37,2%.

They also released their guidance for 2020 and stated that they expect revenues to grow ~40% in 2020 with an EBITDA-margin of 35-40%. This would imply a valuation of 7,2x EV/Sales or 19x EV/EBITDA on 2020E. Not too much for a company growing at this pace?

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Interesting. What p/e the stock is trading?

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P/E is hard to calculate since it’s a holding company that is listed. I prefer EV/EBIT which shooul be 26-27x for 2020E.

Ulkomaiset SaaS-yhtiöt
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RedEye initiated coverage of Carasent today. Their base case valuation for the share price is NOK 40, and yesterday’s closing price was SEK 22.90. They anticipate robust and scalable growth for the company in the coming years.

Link:
https://www.redeye.se/research/795614/carasent-at-your-service

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I had to immediately fish this excellent business into my portfolio right from the opening. Highlights from the RE report:

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  • emerging compounder

  • cloud-based SaaS business, over 90% of revenue from recurring billing. Clinics generally pay according to patient flows; on-demand-contracts. Payments increase by 3% annually.

  • Strongly supported by the digitalization trend (digitalization of healthcare, reduction of paper handling, video connections between doctor and patient, etc.).

  • net retention ratio 115%, churn < 1%… i.e., organic growth generated by the existing customer base alone is 8-9%. Below, the image shows typical SaaS vs. Carasent-SaaS:
    image

  • several identified competitive advantages, moats

  • low customer acquisition costs; sales work is done up to 70% via video calls

  • comprehensive integrated services, customers can purchase functionalities they deem necessary

  • software competitive advantages

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  • strong commitment of management and board as owners
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I was wondering about the same thing this morning. Unfortunately, work prevented some good deals. Well, this will probably end up in the portfolio anyway.

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Carasent_Investor-Presentation_vF.pdf (1.6 MB)

Here’s a presentation from September 2020

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Q3 ens viikolla

Carasent ASA will present its Q3 2020 Financial Results on Thursday October 22, at 8:00 (EST) as a webcast. Please use the following link for the webcast: Hegnar Media - Carasent Audiocast Q3 2020

http://www.newsweb.no/newsweb/search.do?messageId=515412

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That redeye effect is pretty strong. +17%. It’ll probably go up even more, but it feels bad to jump in after such a big rise :D. Oh well, we’ll see…

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We’re starting to find more promising Norwegian stocks for the shopping list than we can handle!

A quick TA note on Carasent, it seems to have fallen below MA50 only a few days ago, but has stayed above it well in the short term. RSI was close to oversold yesterday, so today’s bounce is not quite as dramatic as the daily change-% might suggest. Similarly, compared to, for example, Kahoot, which has had an insane rally, Carasent is only less than 10% above MA50, while Kahoot is almost 50% above that moving average.

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Evimeria certainly sounds interesting. How does it affect the case when there is ownership through Carasent? What exactly does the announcement that came out about a week ago mean?

https://m.marketscreener.com/quote/stock/CARASENT-ASA-58808438/news/Carasent-ASA-New-share-capital-registered-31510912/
Have they printed some more shares?

Insider selling visible (Johan Lindqvist) 1,000,000 shares at 22.5 NOK. And Admaniha AS has bought them. (13 Aug 20)

Johan also sold another batch, 7.7 million shares at KR15.27 on 14 Feb 20.

At first glance, insiders have sold just under 10 million shares during the year, and bought 100k.

Low debt level is a plus, but has corona temporarily hit the business a bit? At least the last quarter had a small dip.

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Admicom comes to mind when looking at the numbers, but it’s a bit more expensive still. Need to investigate further…

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The company had a directed issue just over a month ago, which corresponded to 30% of the total number of shares, meaning it was quite a large issue. The company justified the use of the proceeds for “leveraging already identified future growth opportunities”. I would therefore expect the new cash reserves to be used for expansion into Norway and possibly for some known acquisition.

The company’s management had confidence, as they strongly subscribed for shares in the issue:

"The following primary insiders in the Company were allocated shares in the Private Placement:

Johan Lindqvist, Chairman of the Board, has been allocated 170,213 Offer Shares in the Private Placement, and will following delivery of such Offer Shares hold an aggregate of 2,994,337 shares, corresponding to 5.7% of the total number of shares and votes in the Company after the Private Placement

Jesper Jannerberg, CEO, has been allocated 170,213 Offer Shares in the Private Placement, and will following delivery of such Offer Shares hold an aggregate of 4,972,831 shares, corresponding to 9.4% of the total number of shares and votes in the Company after the Private Placement (passing below the 10% disclosure threshold)..

Dennis Höjer, CEO Evimeria AB, has been allocated 170,213 Offer Shares in the Private Placement, and will following delivery of such Offer Shares hold an aggregate of 4,403,266 shares, corresponding to 8.3% of the total number of shares and votes in the Company after the Private Placement (passing below the 10% disclosure threshold)

Niclas Hugosson, Business Developer and founder of Evimeria, has been allocated 340,425 Offer Shares in the Private Placement, and will following delivery of such Offer Shares hold an aggregate of 4,502,417 shares, corresponding to 8.5% of the total number of shares and votes in the Company after the Private Placement (passing below the 10% disclosure threshold)..

Lars Forsberg, CFO, has been allocated 85,106 Offer Shares in the Private Placement, and will following delivery of such Offer Shares hold an aggregate of 1,310,106 shares, corresponding to 2.5% of the total number of shares and votes in the Company after the Private Placement.

Ebba FĂĄhraeus, Board Member, has been allocated 42,553 Offer Shares in the Private Placement, and will following delivery of such Offer Shares hold an aggregate of 127,556 shares, corresponding to 0.2% of the total number of shares and votes in the Company after the Private Placement.

Jon Schultz, Legal Counsel, has been allocated 12,766 Offer Shares in the Private Placement, and will following delivery of such Offer Shares hold an aggregate of 80,973 shares, corresponding to 0.2% of the total number of shares and votes in the Company after the Private Placement."

Link to the announcement:
https://newsweb.oslobors.no/message/513179

I’ve been wondering if the target for the issue funds could be related to Evimeria’s integrated video service, which allows clinics to connect remotely with their clients.

evimeria
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, source: https://evimeria.se/

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a good comparison from the report, which includes Admicom

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It’s confusing when Carasent is under the name Apptix at OP. :slight_smile:

Carasent now has 447 active clinics as customers. During Q2, they acquired 20 new customers, which is quite in line with other quarters. The Q2 report states that the sales process with large customers is much longer and requires multiple face-to-face meetings, which have been delayed due to the corona pandemic. The pandemic has also naturally caused other difficulties, such as a collapse in physical patient visits (up to 50%). On the other hand, online activity grew, and the business model is related to the number of listed patients, so there was no major impact on revenue.

In the report, Carasent’s own view is that the basic need for digitalization in the market remains strong. The pandemic may even accelerate this need (as we have noticed with other companies on the forum). Carasent still does not provide a short-term outlook because Q2 was still a rather gray area regarding the direction of the pandemic.

The pandemic has also acted as a kind of catalyst in Sweden for the harmonization of digital healthcare processes across different municipalities and regions, to optimize care for patients efficiently. In Sweden, when I visited hospitals and nursing homes during my studies, it really felt a bit like a patchwork quilt situation :slight_smile:

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I haven’t had a chance to properly look into it, but what is Evimeria’s role in the large overall solutions that hospital districts are implementing? Is this a completely separate software, or are there interfaces to larger systems? If we’re looking for big overall solutions and savings through them, why would this succeed? Or am I completely off track?

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They offer solutions for the private sector, not the public. Their business model seems to be a bit different from the usual, which they consider a competitive advantage. If the software is good, I guess they’ll get growth in the future too.

At least Swedish Vitec software (https://www.vitecsoftware.com/fi/tuotealue/acute/) and TietoEvry (https://www.tietoevry.com/en/industries/healthcare-and-welfare/healthcare/) compete for the same customers. Probably many others too, but those two are publicly traded.

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I quickly glanced at the Q2 report numbers, so did I understand correctly that last year the company had a turnover of 51 MNOK, and if we add +40% for this year (apparently a pretty good estimate), then this year’s turnover will be about 71 MNOK and the company’s value about 1200 MNOK, meaning P/S would be about 17? P/E around 70.

What’s funny/sad about this is that in today’s world, these don’t even sound like very bad numbers when compared to many other SaaS companies :smiley:

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