Physitrack PLC (PTRK) - Healthcare and Virtual Wellness

[kettunen]

Founded in 2012, Physitrack is a global digital healthcare provider primarily focused on the B2B physiotherapy and musculoskeletal care markets.

Website

Physitrack Group - Investor Relations

Physitrack is a British company, but it has a Swedish founder, Henrik Molin, and Nathan Skwortsow as the co-founder. It has significant operations in the Nordics, especially after acquisitions.
It was listed on Sweden’s First North Premier Growth list on 18.6.2021 with the ticker PTRK, IPO price 40SEK.

The company has two business lines and an active acquisition program

1. Software-as-a-Service (SaaS) based software platform

The Physitrack technology platform digitizes the entire patient journey from initial contact to patient interaction and outcome tracking, enabling clinicians to provide better care.

The SaaS platform is offered through a cloud-based software package that customers can customize to the specific needs of patients, and it is also offered as a white-label solution.

The virtual care offering serves payers, such as insurance companies and hospital operators, through in-house physiotherapists who use Physitrack technology in parallel with practical care as needed for specific patient types.

Customers pay us monthly or annually recurring subscription fees for access to our technology.

Virtual care powered by a technology platform

Following the acquisition of Rehabplus in 2021, Physitrack has expanded its offering from pure technology to also include virtual care.

We believe a paradigm shift is underway in the delivery and perception of care. Through strategic initiatives and acquisitions, Physitrack believes it is poised to capitalize on this opportunity.

M&A Program - accelerating growth and technology

Physitrack’s organic growth is complemented by acquisitions aimed at increasing its user base or entering new markets. Additionally, we have identified acquisition targets that can add value to Physitrack’s product portfolio, unlock specific market segments, and ensure the growth of Physitrack’s enterprise customers.

Materials

Q2/2021 report

610079add1e4bb314211a945_Physitrack%20PLC%20%E2%80%93%20Interim%20report%20December%202020%20%E2%80%93%20May%202021.pdf

And Q2 presentation materials

61011bc86ec7fe226a96d2db_Physitrack%20PLC%20Presentation%20%E2%80%93%20Interim%20report%20December%202020%20%E2%80%93%20May%202021_web.pdf

IPO Prospectus

60c0733ce0c65a5c55da5d57_Physitrack%20PLC%20-%20Prospectus%20ENG.pdf

Q2 new significant customers

Growth exceeded expectations, also considering revenue growth from acquisitions

Highly profitable operations, but acquisitions lead to negative cash flow for H1

Market

Physitrack operates globally through its platform

Physitrack is part of the broader Telehealth market, which is set to grow tenfold

From that, a niche share is the Telerehabilitation market, which is Physitrack’s specialty.
This sector’s growth forecast is also significant, and there are fewer competitors sharing the pie through it

Competitors

Historia

• | 2012 | The company is founded by Henrik Molin and Nathan Skwortsow.
  The idea for Physitrack came about in late 2011, when a relative of Henrik was given a paper home exercise handout after a knee operation and suggested there should be an app for it.
• | 2013 | First version in English and Dutch with 180 exercises launched at year-end.
• | 2014 | First SMB customers in the Netherlands following endorsement agreement with a large insurer, first Enterprise customer signed. Launch in Australia and the UK.
• | 2015 | Launch in the US and Canada. Accepted into the Apple Mobility Partner program, with Apple’s designers re-defining UIUX. Launch of Apple re-designed solution.
• | 2016 | Launch of Physitrack Telehealth and PhysiData.
• | 2017 | Launch of Physitrack AI.
• | 2018 | UK government innovation grant won for Physitrack Telehealth.
• | 2019 | First major US hospital system sale.
• | 2020 | 173 percent annual growth. Launch of M&A program, acquisition of major competitor Physiotools OY.
• | 2021 | Continued M&A activity, acquisition of Rehabplus and expansion into Virtual care.

---

As part of my own investment strategy

As part of implementing my investment strategy, I aim to find growth companies where profitability and scalability are prerequisites. Additionally, the operations must be understandable, at least in their main outlines, so that the effects of the surrounding market on the business can be grasped. Physitrack fits my strategy in these respects.

In the IPO, I subscribed for a share and also bought more at the opening. Due to risk management and portfolio balancing, I sold the position in September when the market seemed to be pulling downwards. However, I returned after positive acquisition news and the start of DNB’s coverage, when I was still able to get in at a lower price than my selling price.

[kettunen]

Acquisitions also continued in Q3
https://www.physitrackgroup.com/investors/press-release?slug=physitrack-plc-publ-physitrack-acquires-fysiotest-enhances-product-offering-and-expands-addressable-market

Under DNB’s coverage, TP 85SEK and Buy recommendation

Finwire - Physitrack lyfter på DNB-analys

Let’s add a bit more graphics here

2021 first half figures in a slightly different format

Ping @Yu_Gong: could we open the company pages, please

[kettunen]

Terveystalo Becomes a Physiotools Customer in January

Physiotools

Regarding the platform’s flexibility:

A new innovative invention also emerged in the coffee room: why couldn’t dental hygienists also utilize the Physiotools platform? After a while of planning and integration, this is now possible.

And a functional platform in practice, over 50% of trial periods turn into paying customers

[Ziibra]

Thank you for the excellent background.

As a physiotherapist, I’ll comment on Physiotools, without yet delving deeper or at least understanding what else the entire Physitrack entails:

• Physiotools is an easy-to-use and clear additional tool for work. In my opinion, it is not expensive (annual license pricing) considering the benefits received.

• In my approximately 10 years in the field, I have not encountered a similar program/tool with such an extensive exercise and test battery. I’m sure they exist, for example, among Physitrack’s competitors?

• As research knowledge accumulates, physiotherapy is increasingly focusing on client/rehabilitator/patient’s own exercise and rehabilitation, moving away from manual, or “now I lie down here, fix me” (massage, “crack”, heat treatments, etc.) treatments. Every physiotherapist providing evidence-based physiotherapy will therefore need some kind of tool to provide clients with rehabilitation instructions for daily life.

• People naturally learn and remember better when they have rehabilitation instructions available as pictures and/or videos to take home already at the first visit. Physiotools makes this easy and convenient.

This is a praise speech. Physitrack is not the same as Physiotools and vice versa, but I hope this was of some benefit to someone.

[kettunen]

It’s great to have experts from the field on the forum once again, bringing their deeper insights.

@Ziibra

As research knowledge grows, physiotherapy is increasingly focused on activities based on the client’s/rehabilitator’s/patient’s own exercise and rehabilitation.

I also have personal experience, twice in previous years, with a similar system from the user’s, or rather, the patient’s perspective. The first time, several years ago, it was for treating stride and shin splints. Back then, it was a fairly helpful system, and the physiotherapist’s instructions carried more weight. But the second time, a few years ago, back and shoulder pains were significantly improved. Video exercises were a big help in self-training. I no longer remember the system, but the concept was similar.

These experiences thus provided personal support for my investment decision. But also, the pricing during the IPO was really affordable, which is why I became interested in this. There is still plenty of room for growth, and the growth story, even with its short stock market history, already seems to be continuing as planned.

And your openly shared positive experiences with the Physiotools system will support customer experiences in the future. Systems acquired through company acquisitions will be integrated onto the same platform, thereby expanding the service offering in the future.

---

The capital raised from the IPO has been put to its intended use. New acquisition targets had already been identified, and Fysiotest was likely among them.

Others are apparently still in the pipeline. The acquisition strategy is aggressive, there are always risks in integrating new acquisitions, and so far, the profitability of new acquisitions is not yet at the same level as Physitrack.

[Tommi9]

An interesting company. At first glance, it might seem difficult to lock in a competitive advantage over other players. Of course, the sheer volume of described material/movements could be one such advantage. Are there others?

On the other hand, competitors, in addition to other similar programs, also include YouTube, at least in part, which physiotherapists also use to demonstrate and film exercises.

[kettunen]

A functional and user-friendly platform, the company’s size and growth through acquiring competitors, and the affordable price @Ziibra described, are at least some of the ways to win customers.
Can these then be replicated? Certainly, but the more time passes and Physitrack grows, the harder it is to enter the industry. The first mover’s advantage and the power of scale quickly take effect, especially if the product is solid. Even though there is plenty of room in the market for growth, ultimately “winner takes it all.” Will it be Physitrack, or will a stronger player emerge from elsewhere in the world?

YouTube is a generic channel, which everyone naturally has access to. Describing exercises seems laborious and time-consuming to me. Do people want to share these freely? If ready-made descriptions are available, that certainly helps. I haven’t looked into that more closely.

But if I were an entrepreneur, I would want to tie the customer to my own operations and clientele even after visits. Communication and progress tracking through the service platform would likely be smooth and better connect with the customer. A conversion rate of over 50% from trial periods to paying customers indicates that something has been done right. That number is really significant and, among other things, significantly reduces marketing costs in new customer acquisition.

I don’t know the industry well enough to answer nearly everything. I initially got involved in this because of the numbers and the clear business model. But that’s also why I started the thread, so that good questioning like @Tommi9’s and experts like @Ziibra would be available to help move forward and gather more information to support investment decisions - and of course, for other forum members too

[Tommi9]

As a physiotherapy client, I’ve personally received YouTube tutorials in addition to image instructions. So there are countless exercises filmed on the platform, available for free. The clearest advantage compared to using free YouTube clips is the feedback received from the client. And it also gives the therapist a more professional image when using a proper application designed for this purpose.

[Ziibra]

Indeed, it’s very difficult to say anything about competitors because it seems there are no serious contenders, at least not in Finland.

Regarding the price: in our workplace, four physiotherapists have a “premium license” (all content available, free login), costing a total of approximately €500/year. Additionally, about 15 physiotherapists share a license with slightly less content and only one can be logged in at a time (everyone still has their own usernames, passwords, and exercise pattern storage), costing a total of approximately €500/year for their package.

If I were to send an email inquiry to a hundred physiotherapists across Finland, I would estimate that 98-100 of them would know about Physiotools. PERHAPS 5-10 might know of another similar program (if YouTube is not counted here), but I certainly don’t know of any myself. When talking about home exercise instructions, Physiotools is practically always mentioned… Just like a certain type of car is always referred to as a Jeep in Finland . I remind you that this refers to familiarity within the industry, which does not indicate user numbers or different user license types. Off the cuff, I could estimate that about half of physiotherapists use Physiotools, but this is a completely rough estimate.

[Tommi9]

Physiotools was originally a Finnish company, it turns out. This came as a complete surprise when I looked into it. And it’s only been less than a year since their acquisition

https://www.finder.fi/Sovellukset+ja+ohjelmistot/PhysioTools+Oy/Tampere/yhteystiedot/114956

[Yu_Gong]

@kettunen sorry for the delay!! One company’s IPO has taken up some of my work time lately

Here’s the company page and news integration: Physitrack - osake - Inderes

[Tommi9]

I asked a couple of physical therapist acquaintances about this Physiotools program, and they praised their experiences quite voluminously. There is indeed a tremendous amount of potential here, no matter how much I try to bring up opposing views. So let’s jump in!

It looks like the next earnings release is already coming up on the 20th of this month.

[Geologiopiskelija]

Apparently, the quarters here do not follow normal quarters but are offset by 1 month? So, December-February, March-May, etc. At least there’s a slight time difference from other earnings releases

[kettunen]

Good point, which was missing from the opening post

The financial year is an exception, from the beginning of December to the end of November

@Ziibra

Regarding the price: in our workplace, four physiotherapists have a “premium license” (all content available, free login), the total price is approximately 500e/year. In addition, about 15 physios have a shared license with slightly less content and only one can be logged in at a time (everyone has their own usernames, passwords and exercise program storage), the total price for their package is approximately 500e/year.

Thank you, this is very useful information. Different pricing options depending on usage and a very reasonable price, which should not be a major obstacle even for smaller operators.

Of course, this is only for Physiotools, the overall package is significantly larger, and there are certainly more modules and options for different product and service packages available.

@Tommi9

Physiotools was originally a Finnish company, it seems. This came as a complete surprise when I researched the matter. And less than a year has passed since their acquisition.

Similarly, the latest acquisition, Fysiotest, is Finnish. The Nordic countries have also been well represented in acquisitions and operations, even though the company has a global presence.

[Von_Wangell]

Thanks to Kettunen for an interesting opening! So many positive things came up that it immediately slipped into my portfolio. I’ve had Teladoc and American Wellness in my portfolio, but since both have only incurred significant losses, I’ve divested them. So I’ve been looking for a suitable telemedicine provider or at least a health tech company utilizing new technology. PT (Physitrack) seems to be a rare company in the field that is already making a profit and seems to value profitability as an important criterion for its business.

Through my wife’s work, Fysiotools became familiar a long time ago, and until now, I was under the impression that it was still in Finnish hands. It’s a bit of a shame that they decided to sell it to other countries, but now one can invest in it, which, in turn, is not a bad thing at all. In that sense, I can’t say anything new about Fysiotools (other than the praises above), nor can I comment on PT’s other products, but if revenue grows profitably by 30% per year, this is a very interesting company.

It was also a surprise that PT is under DNB’s coverage. I saw in DNB’s morning report that they predict a P/E of just under 40 for this year, which is quite reasonable for such a growth company. If the other acquisitions are even slightly comparable to Fysiotools in terms of features and attractiveness, then I’m sure this will turn out well.

[kettunen]

@Von_Wangell

If those other acquisitions are even slightly comparable to Physiotools in terms of features and attractiveness, then I’m sure this will turn out well.

The challenge, at least when going through the numbers previously, was specifically the profitability of other operations relative to Physitrack. Hopefully, this will improve over time as synergies and cross-selling and upselling begin to work.

Physiotools is still operationally in domestic hands, but its ownership has, of course, changed.

If you see any more of the DNB report, a referral here would be welcome

[Von_Wangell]

I can’t see anything else from DNB’s morning report, but picking up estimates in euros from MarketScreener, for example:

sales 2021: 7.5 2022: 10.5 2023: 13

EPS 2021: 0.13 2022: 0.16 2023: 0.24

So, at a rough price of 6 euros, the P/E for 2023 would be 25.

No idea if the latest acquisitions are included in these estimates, probably not. Q3 will be released on October 20th, so we’ll be wiser next week.

[kettunen]

At first glance, it appears that both Rehab and Fysiotest’s revenue for the remainder of the year are included in the forecast.

Roughly:
Physitrack H1/21 revenue €3.3M
Another at the same level, i.e., * 2 → €6.6M

This also requires significant additional growth to reach €7.5M in revenue.

Physiotest’s annual revenue is 12M SEK, approx. €1.2M, of which 2 months / €0.2M could be recorded for the fiscal year by the end of November, if calculated from the beginning of October. So, it’s not a significant addition and doesn’t affect the overall picture other than in terms of costs.

Again, we need to look at Adjusted EBITDA in terms of costs, and EPS will take a hit from this.

ARR is close to DnB’s 2021E revenue forecast, but it’s not yet the actual figure for this year unless H2 is very strong. Good, large customer accounts have certainly been acquired, but will they generate invoicing in time?

---

It’s quite difficult to see how an EPS of 0.13 could be achieved when H1 only reached 0.01.
This, of course, includes significant M&A costs, but still. And these will also come in H2.

Once M&A costs are reduced, profitability will naturally start to rise. Similarly, synergies will improve the potential for growth and scalability. In that respect, I don’t see a risk of overvaluation, at least not yet. But a 2023E P/E of 25 doesn’t look cheap either.

[kettunen]

Q3 tulokset ulkona

Kuten mainittua, EPSit heittää volttia M&A ja IPO kulujen takia. Toivottavasti markkina näkee näiden taakse paremmin kuin DnB ennusteissaan

physitrack-plc-interim-report-december-2020-august-2021.pdf

Third quarter 2020/21 (June 2021 – August 2021)

• Revenue of EUR 2.0m (1.0m) for the quarter ended 31 August 2021. An increase of EUR 1.0m or 104 per cent compared to the same period last year.
• Proforma[1] revenue growth of 22 per cent for the quarter ended 31 August 2021 compared to the same period last year;
• This growth was achieved in all businesses:
  • 22 per cent revenue growth of the existing Physitrack business compared to the same period last year against a strong prior year comparator
  • 10 per cent revenue growth of the acquired Physiotools and Mobilus (“Physiotools”) businesses on a proforma basis
  • 96 per cent revenue growth of the acquired Rehabplus business on a proforma basis;
• 3 month adjusted EBITDA[2] of EUR 0.7m (0.6m) increased by 23 per cent compared to the same period last year;
• Adjusted EBITDA margins[3] of 34 per cent, a decrease from 57 per cent compared to prior year due to lower margins of recently acquired companies;
• Loss after tax of EUR 0.9m (0.4m profit) for the quarter, due to incurring one off IPO and M&A costs.
• Earnings and diluted earnings per share of EUR -0.07 (EUR 0.04).

---

Tilikausi päivittyy kalenterivuoteen

Change of year end
In order to more closely align our financial year end with the purchasing cycles of our customers the Board has made the decision to change the Group’s financial year end from 30 November to 31 December.

[Geologiopiskelija]

https://www.physitrackgroup.com/investors/press-release?slug=physitrack-plc-interim-report-december-2020-august-2021

There it is. Again, this is a Kahoot-like company, so I can’t say if this is 100% good or just meh for this quarter, but nice triple-digit growth figures are always good. IPO (Initial Public Offering) costs seem to still affect the result, even though the IPO was ages ago?

Apparently, no changes to the outlook, but the financial year will be changed to “normal,” meaning early earnings releases for this company during the earnings season, just when I bought my first shares