Izafe Group
iZafe - Dispensing healthcare peace of mind (ABG Sundal Collier)
2019-12-19 06:36
Creating a safer environment at home and work
ARR growth set to turn group profitable in ’21e
’19e-’21e sales CAGR 55%, EV/Sales 7.0x-2.8x
A new company, but with a long history of R&DThe iZafe Group of today – formerly Medirätt – was formed when Sensec Personal Safety was acquired in 2018. Today, the company offers personal care alarms and an internally-developed digital medicine dispenser named Dosell. Its customers range from Swedish municipalities to large corporations like Skanska, Humana and Sodexo.
Combination of Security and Healthcare
iZafe stands at an inflection point, we believe. On the one hand the Security segment has been growing steadily since it was formed, increasing the number of active subscriptions from 3,348 in Q3’18 to 4,526 in Q3’19, with an average monthly ARPU of SEK 875 and a stable churn of approximately 2%. We estimate that the segment will continue to grow in line with historical figures, and we see total active subscriptions increasing to approximately 8,000 by the end of ’21e, increasing revenues from SEK 12.6m in ’19e to SEK 22.2m in ’21e. On the other hand, iZafe has just begun commercialising its robotised medicine dispenser, Dosell, which has been developed in-house since 2008. It was introduced to the market in Q1’19, and several pilot studies have been initiated with large municipalities in Sweden. By the end of ’19e, we estimate that approximately 250 Dosells will have been delivered. However, the total addressable market in Sweden is 200,000 patients. On a group level, we forecast revenues increasing from SEK 13.7m in ’19e to SEK 33m in ’21e, for a CAGR of 55.0%, and EBIT of SEK 1.3m in ’21e.
EV/Sales 7.0x-2.8x ’19e-’21e, DCF scenarios explored
In terms of valuation, we find that iZafe is trading at an EV/Sales of 7.0x-2.8x for ’19e-’21e, which constitutes a premium compared with both our peer groups (which are based on FactSet consensus). We also explore three DCF scenarios, which all utilize a WACC of 12.2%, but are based on
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