Coala-Life - Heart monitoring

[Geologiopiskelija]

I finally decided to create a thread for this so I don’t have to spam the Stock Price Monitoring thread .

Coala Life makes systems/applications/devices for heart monitoring (I’m not very familiar with the industry, so I can’t say for sure). So, the sectors are SaaS and health tech. They have already accumulated a good number of patents and product approvals/recommendations, so the technology risk is limited, and sales should really pick up speed this year. The company went public last year in a slightly unusual way when a former company “bought” it onto the exchange and sold off its old businesses.

"Coala Life is a medical device company founded in Sweden focusing on cloud-based cardiac and pulmonary diagnostics. The company has developed and launched the Coala Heart Monitor - a multi-award winning, FDA-cleared and CE-approved product platform enabling long-term remote monitoring, analysis and algorithm-based diagnostics of heart and auscultation of lungs, remote in real-time. The Coala Heart Monitor is mainly marketed to healthcare providers as an Rx solution for use in patient’s everyday life and home environment. The company’s solutions are based on over 10 years of R&D, and are protected by more than 30 patents. The head office is based in Uppsala, Sweden and since 2019, the US office is based in Irvine, California. More than 10,000 patients have used, been diagnosed or are under long-term monitoring with the Coala Heart Monitor. In the Coala Care Portal, there are currently more than 1,700 doctors and nurses connected to more than 500 care providers. "

The company is, of course, still heavily loss-making, but the figures for previous quarters have apparently been affected by matters related to the listing arrangements. Dilution has been significant, and due to the unusual listing, the company’s valuation was challenging (and at least on Nordnet, misleading), which is why the stock price looks… very interesting. Red Eye’s forecasts:

Q1:

Coala_Q1_2022_SV_FINAL.pdf (coalalife.com)

A fairly large acquisition was announced a moment ago.

Nordnet

To which Red Eye commented:

Coala Life: Initial Take on the Acquisition of Vitrics (redeye.se)

The CEO just added a good chunk today:

“Coala Life’s CEO, Dan Pitulia, acquired 500,000 shares on June 9, 2022 at a total value of approximately 1,6 MSEK, with an average price per share of 3.2277 SEK. The shares were acquired on Nasdaq First North Growth Market.
Following the acquisition, Dan Pitulia owns a total of 3,411,279 shares, corresponding to 4.29 percent of the outstanding shares in Coala-Life Group AB (publ), as well as 1,271,706 warrants, the ownership is in person and through related parties and companies.”

[Geologiopiskelija]

The CEO bought some more shares again.

Coala Life’s CEO, Dan Pitulia, acquired 100,000 shares on June 15, 2022 at a total value of approximately 0.245 MSEK, with an average price per share of 2.4550 SEK. The shares were acquired on Nasdaq First North Growth Market.

Following the acquisition, Dan Pitulia owns a total of 3,511,279 shares, corresponding to 4.42 percent of the outstanding shares in Coala-Life Group AB (publ), as well as 1,271,706 warrants, the ownership is in person and through related parties and companies.

[Geologiopiskelija]

Q3 results. Growth has started well, even though it’s easy to grow from zero. Still a lot of losses.

Third quarter 2022

• Net sales increased to SEK 5.0 M (0.9).

• EBITDA amounted to SEK -27.8 M (-16.0).

• Operating income totaled SEK -28.2 M (-16.9).

• Profit after tax was SEK -18.5 M (-16.0).

• Earnings per share (weighted) was SEK -0.3 (-7.8).

• Cash flow from operating activities was SEK -36.0 M (-13.7).

Nordnet

Monthly US figures started to be published (yay)

Sept:
KPI’s September 2022:

• Patients in RPM as of September 30, 2022: 2,600

• Annual revenue rate as of September 30, 2022: 2.7 MUSD

Oct:
KPI’s October 2022:

• Patients in RPM as of October 31, 2022: 2,800

• Annual revenue rate as of October 31, 2022: 3.2 MUSD

[Geologiopiskelija]

“Light” dilution

" Coala-Life Group intends to carry out a rights issue of units, guaranteed to 75 percent, consisting of new shares and warrants of approximately SEK 101 million

The Rights Issue comprise no more than 198,704,085 units and each unit consist of one (1) new share and one (1) warrant issued free of charge. The subscription price is SEK 0.51 per unit and refers to the share. "

Number of shares before the issue 79.4m.

"The main reason for the Rights Issue is to finance the Company’s continued commercial expansion, primarily in the United States. QorumPartners, which is a service company in Managed Remote Patient Monitoring, was established in the beginning of 2022 and has since grown rapidly. In August 2022, Coala Life acquired Vitrics, which also is service company within the Managed Remote Patient Monitoring space. Sales of the medical device Coala Heart Monitor has developed well, with an increasing number of recurring customers and in Sweden the sales organization has been reorganized to create a better offering for the Swedish healthcare system. In the spring of 2022, the Coala Heart Monitor received 510K approval for use in lung auscultation. Coala Life’s patient platform and software has been further developed and multiple milestones related to this have been reached.

To ensure that the Company has the best conditions to build and grow its business, primarily in the United States, and to develop its product offering and establish sustainable profitability, the board of directors intends to convene an extraordinary general meeting to resolve on the Rights Issue (as well as the Overallotment Option and the Commitment Consideration Issue). Upon full subscription, the Company will initially receive proceeds of approximately SEK 101 million before deduction of transaction costs. Should the Overallotment option be fully exercised, the Company will initially receive additional proceeds amounting to approximately SEK 10.1 million before deduction of transaction costs. Approximately SEK 25 million is expected to be contributed to the Company through set-off of debt. The transaction costs related to the various issues are estimated to amount to approximately SEK 10.9 million. The Company may furthermore receive additional proceeds in the event that the warrants are exercised for the subscription of new shares during the third quarter of 2023.

The expected net proceeds will, following below order of priority and with the approximate split specified in parentheses, be used for;

• Continued market penetration in the United States (50%)

• R&D (12.5%)

• Financing of day-to-day operations (37.5%)"

Nordnet

Some kind of offering was expected, given the company’s focus on growth, but there will be plenty of losses at least in the initial stages. However, the size of this offering is quite staggering, especially since most of it is already pre-subscribed . Well, even this is better than bankruptcy, as the company’s products seem solid and the business looks promising, provided they get through the initial loss-making period.

[Geologiopiskelija]

Q4 is out. Growth is staggering (albeit from a small initial revenue base), and the absolute amount of the loss has been reduced, but at this rate, the money will surely run out again at some point. Looking at the EPS line might make your head spin, as the Q4 loss alone is greater than the share price (and significantly more for the full year)

Nordnet

However, the business has started rolling well, and the 2024 targets are still in place.

". Even considering that we have strengthened the organization in order to develop the expanded service, the key ratios published in this report are in line with
our financial target of sales of SEK 250 million by 2024 with a positive operating profit and a maintained gross

margin of over 80%."

The most significant factor in this case is likely whether the company can turn its cash flow positive before the money runs out and the company goes bankrupt, if it cannot secure further financing. If the company survives the initial phase, the business seems good, and considering the industry, there is no fear of running out of customers for a very long time.

[JJussi]

The company operates in a rather difficult and competitive segment. There are quite a lot of companies today producing these various portable/single-channel/otherwise small ECG devices and the systems and algorithms built around them. There is certainly real medical use for these, but quite few can emerge as winners in the competition.

This one has a slightly different angle compared to others, though, in that the device includes phonocardiographic analysis (listening to heart sounds), which I don’t recall seeing from other companies. Still, I can’t imagine any particular benefit for the clinical work of healthcare professionals. Of course, these are probably marketed to laypeople prone to self-monitoring as well. In my opinion, this enters somewhat shaky ground, and even then, I can’t imagine this bringing any particular competitive advantage to the company either.

Of course, nothing rules out the possibility that the product could succeed very well in the future. For my taste, it’s just a rather speculative and highly risky investment.