Physitrack PLC

Welcome to Physitrack's Q2 2021 Interim Results Webcast. Thank you for joining the call this morning. I'm joined by Charlotte Goodwin, our CFO, and we are going to take you through a little introduction. We'll be looking at some quick highlights for the quarter, just in case you're short on time this morning. Because a lot of you will have joined the call and you don't know much about us other than what you've read, in the press and in our presentations. We'll give you a little bit of an update as to who we are and how the business works. We'll give you a business update from Q2. We'll look at the financial results, and we'll do a little market outlook looking forward, and then we'll open up for Q&A. Total time for the call, around 30 to 40 minutes, depending on how many questions that you ask. So thank you again for joining. Just a quick introduction to myself and the management team. So I'm Henrik Molin. I'm the CEO and co-founder of I'm Swedish. I'm from Umeå in the north of Sweden, where I grew up. I have a degree in finance and accounting from Handelshögskolan in Umeå. And I grew up in an entrepreneurial family. My dad ran a very successful travel business until he retired. I learned a lot on how to run a business from him in terms of growing strongly, but not at the price of taking on too much risk. And this is a pattern that you see in Physitrack in the way that we run the business, that runs in a family, so to say. I was mostly an entrepreneur for other people before I co-founded Physitrack with my friend Nathan Skortsov, an accomplished tech entrepreneur, Dutch. And the combination, I think, in terms of having a deep friendship, Nate's extraordinary focus on tech, architecture and design from his well, I think it's well over a couple of decades of experience at this point, and myself with a focus on business development and finance. And I think that's been a really, really nice combination. Of course, in the management team, we also have some exceptional people. Let me introduce Andrew Knox, who's our chief operating officer, who has a very, very strong background, among other things. He co-founded the IBM Venture Program on the European side. He's the glue that keeps the company First of all, the entities, because we are made up of several entities following M&A transactions, but also the glue that keeps together the team as one in terms of knowing what everybody does and what everybody needs to do. And this is a very, very nice addition to the management team. I'll let Charlotte introduce herself.

hi yes, my name is Charlotte goodwin i'm the CFO of busy track and my background, I started my career out at pwc where I worked in the technology, media and telecommunications division. And I work with clients more sizes there from small tech startups right through to large listed corporates. or recently I was director of group finance at a company called wilmington plc which very acquisitive tech focus group listed on the London stock exchange. So here to sort of assist VisiTrack in its transition to a listed company and they're very pleased to be here. Yes, and I will start off, I'll obviously go into some more detail further on on the financials, but to give you a little bit of context right up front, I'll pull out some financial highlights here. So in the first box of the slide here, you'll see in the six months ended May 2021, we delivered overall revenue growth of 184%. Some of this growth was driven by our recent acquisitions and on a pro forma basis with these acquisitions included in the prior comparators. Revenue growth was 37% for the six months to May. Within this 37% growth, we were pleased to see growth within each of our three businesses, both the two SAS businesses, PhysiTrack and PhysioTools, and our virtual care business, RehabPlus. This resulted in us exiting Q2 with a revenue run rate of 7.2 million euros per year. And on the profit side, in the six months, we saw adjusted EBITDA growth of 61% and delivered adjusted EBITDA margins of 34%. So I'll pass you back to Henrik now to discuss some of the operational highlights for the quarter.

Thank you, Charlotte. And so just quickly running through some of the business highlights on the M&A side. In terms of what we executed so far, we continue to focus on EBITDA expansion and physio tools. It's been a very successful project in terms of reducing costs through synergies. And so we've had an EBITDA expansion with the EBITDA margin on a run rate basis increasing by 100%. We've also integrated very nicely the Rehab Plus business. We keep accelerating that with the help of Physitracks and Physitools, this excellent technology. And I can say the overall M&A activity remains very high. We were looking at some very, very interesting companies at the moment in various stages of our M&A pipeline. And so we anticipate to continue to executing well there with a lot of discipline, but with a lot of speed once we are comfortable with whatever target companies that we do acquire. So more to come on that side of things in the coming quarters. As you also know, we successfully completed an IPO on Nasdaq First North Premier, and we were quite well received by the markets. And for that, we are very, very grateful. We'll come to that a little bit later on as well. But in terms of a business, this has been a very, very favorable journey for us. And we have a very, very nice outlook in terms of what a publicly listed environment will do to us as a business. Notable wins in terms of bigger brands, Circle BMI Healthcare, became a customer. That's the biggest private hospital group in the UK. Very, very nice to welcome them into the Physitrack family. CBI Health is the biggest physiotherapy provider in Canada. Also very, very nice to call them friends at this point. And on the public healthcare side, notable wins apart from several NHS trusts in the UK. Alberta Health Services in Canada was also a very, very nice win. Overall activity has been very, very strong. and the continuation of digitization, which has become a bit of a trend following COVID-19 that very much continues for us. But more on that later, but those were the highlights. Now let me back the tape slightly just because I can appreciate some of you are new to the company. And so we'll give you a few sound bites here just for you to get some context. So we are a B2B virtual care company. So our customers are mainly clinical providers in the public and private sector, more so in the private sector. On a global level, 90% of our business is software as a service, or pure software as a service, meaning that there's a very, very high degree of recurring revenue in our revenue streams. And we also have a 10% focus on virtual care delivery, where we act as a healthcare provider ourselves. I'll get to that more in a moment. That's about 10% of the business today. We have a high growth, high profitability philosophy in the company, something I spoke about in the introduction, very, very important to grow at a pace which doesn't put the company at risk. As the largest shareholder of the business and my co-founder being the second largest shareholder, this is especially important for us to protect value with this type of philosophy, but without actually compromising on the upside that that gives. It's been very, very favorable in the past. In terms of the target market that we address, it's multi-billion, it's global market. you have some very, very strong macro drivers to that addressable market. In terms of size, we've seen that. We're about 7.2 million on a run-rate basis at the end of our fiscal quarter. The growth numbers have been very, very strong for us, and we continue to see very, very high potential in what we do. And for those of you that are interested, the RESD profile is very interesting, with a lot of projects that we have to support the delivery of care in rural areas, A lot of research into, among other things, various cancer diagnoses. And, of course, some of the pet projects with providing care to some of the indigenous population in Australia, the Royal Flyer Doctors. But more to read about that on our Baymester Relations page. Just a quick soundbite here. We're a truly global company. Where you see a red dot, you have a person on the ground. And so... We do a lot of business development out in the world. We have representation on the ground in Melbourne, in Jakarta. We have some finance functions in New Delhi. The application and content is developed in Europe. And so with application development in the Netherlands, coding in Poland, software reliability engineering in Poland as well, content development in the UK and in Finland. says representation in several mainly European countries, strong presence in North America and also representation in South America. We have a templated model for growing internationally in that we use a proprietary technology for localization and translations. And it doesn't take a lot of resources. That means that we can actually push out quite widely, which we do on a regular basis. And I'll return to that as we look at the market outlook and new markets that we're penetrating. So overall, very, very nice to be a truly global company and without actually putting the business at risk by doing so. This is my last slide in terms of the business background. but just illustrating what we do in terms of the two business models that are part of the company. On the left side there, you see that PhysDirect has a pure play SaaS offering where we provide technology to healthcare providers all around the world on a subscription basis. They subscribe to our technology like you would subscribe to a Netflix or to a Spotify or something like that. They use that technology with their patients to enhance the quality of care. that they do. So very, very nice recurring revenue streams. And it's about 90% of the business today. On the right side, you have that semicircle there, we are actually a care provider ourselves through our subsidiary Rehab Plus in the UK, where we provide care to patients using our own technology. And this is how we get some of the unit economics associated with patient care. 10% of the business today And there's a lot of interesting potential there that we're looking to develop in the UK, in Germany and in the US as we continue growing. So that was it in terms of a background. Now over to the business update. And we saw the initial public offering on the 18th of June. So that was a very nice moment for us as a company to get to that milestone. We were well received by the markets. We raised over 200 million Swedish krona in the process. There was substantial interest in the shares in the IPO, and that's also filtered through in terms of the post-IPO activity. Now, we are very, very positive about the impact that the IPO has had on the company. And in terms of our ability to grow customers, they really like having a company that's transparent, has great reporting, governance overlay, and that gives people a lot of comfort as they participate in these tenders that we do in the healthcare industry. Also, internally, obviously, having that scoreboard in terms of what the markets feel about us as a company, as they learn about our initiatives, our performance, et cetera, is a very, very valuable tool. So we couldn't be happier about this. So the IPO allows us to continue with the acquisition plans. As you've seen in the IPO prospectus, if you read that, most of these funds are earmarked for further M&A, and we're very, very happy to be in that position because there's a lot, a lot of interesting activity in our M&A program at this point. Now, just mentioning the M&A program, and I alluded to this in my introduction here, the PhysioTools acquisition has been very, very favorable to us in terms of also on terms of looking at the chart there on the top left, the PhysioTools library combined with ours makes up the biggest clinical home exercise library for physiotherapy in the world. So this is really, really boosted the content and the service as a whole. And it's something that really supports the notion that people are actually ready to pay for great software as a service. And so we're able to ride on the overall software as a service trend with raised prices. As you've seen, your Netflix subscriptions and your Spotify subscriptions have become a little bit more expensive in the last year, year and a half or so. And this is certainly something that we see filtering through in terms of price sensitivity at our end. And so that's very, very positive for the average revenue per user situation. In terms of market expansion with Physiotools, it was very, very exciting to launch in a big way in Finland and also in Sweden. So thanks to Physiotools, there's a very strong presence in Finland and a subsidiary of Physiotools called Mobilus in the Swedish market. And this has really been nice for us, not just because I'm Swedish, but I think it's a very sophisticated market There's a lot of potential there and couldn't be happier to be there. And as I mentioned, EBITDA expansion through cost synergies mainly at this point, but we have started the synergies on the revenue side as well. because Physiotools' average revenue per user, ARPU, is a lot lower than Physitracks, despite the fact that it's a very, very nice product and it's a very, very well-regarded business. And this is certainly something that we are working on. We initiated some of that ARPU expansion at the end of Q2, so something that's expected to filter through in results in the coming quarters. It's a slower process. It's a slower burn in terms of the pace of that because Physiotools' customer base is mainly based on yearly subscriptions, but we're systematically doing that month by month going forward. And then quickly on RehabPlus, so very, very nice to have such a team of amazing entrepreneurs on board and very, very much a nice enhancement to Physitrack's overall business. It's a space we wanted to go into for a long time and at their end, We certainly hope that they feel that we enhanced their clinical offering with our technology. It's very, very nice. And as I alluded to, the market expansion with us being able to go into the care space, providing care to patients directly, very, very positive for us. And of course, this has led to nice EBITDA expansion. from just the acquisition itself, but also generating revenue that scales per patient user in the UK, in Germany, in the US is something that's very much exciting us at the moment. So, so much for the business update and I will pass you to Charlotte for an update on the financial results.