Healthy healthcare, lagging Labs and sour SEK
Currency headwind in a mixed quarter
ADDvise reported Q1 2018 revenue and adjusted EBITDA of SEK 67.4m and SEK 4.1m, respectively. This implies 9% revenue growth versus last year and an adjusted EBITDA margin of 6%, below the company’s long-term financial targets of 20% sales growth and a 10% EBITDA margin. The numbers came in below our estimates of SEK 74.0m in sales and adjusted EBITDA of SEK 5.5m. Adjusting for negative currency effects of SEK 1m related to a weaker SEK, EBITDA came in at SEK 5m translating into a 7% margin. Order intake in the quarter was SEK 63.5m, which was lower than the SEK 74.0m seen in Q1 2017, but the first quarter of 2017 saw an unusually strong order intake driven by two large orders.
Lower project-related activities within Labs
We expect to see M&A activity in H2 2018 accelerate top-line growth and believe that the bond refinancing and previously announced cost measures should support earnings going forward. We expect about 1-2 acquisitions in 2018. Our current estimates for group sales and adjusted EBITDA in Q2 2018 are SEK 77.5m and SEK 4.8m, respectively. Based on our fundamental DCF approach and using a WACC of 8.6% to 9.1%, we derive an equity value per share of SEK 2.0 to SEK 2.4.For the investor that is interested in the latest report on ADDvise, we provide the full downloadable report here.
2017 paves the way for a brighter 2018
Lower project-related activities within Labs
ADDvise already pre-announced its preliminary headline figures for Q4 on 7 February, as net sales and EBITDA were below the company’s expectations. The miss was mainly related to lower project-related order intake from Labs and supply chain disruptions. On the positive side, 2018 has started off on a good note according to CEO Rikard Akhtarzand.
Q4 earnings were burdened by a series of one-offs, partly derived from the closure of an unprofitable production plant during the quarter. In Q4 the company also booked SEK 3m in financial costs relating to the bond refinancing. These measures were a drag on earnings in the quarter, but will reduce the cost base going forward – 2018 should see operational improvement on based on these measures.
Sequential uptick during next quarter
We take comfort in the company’s comments about a good start to Q1, as we expect a meaningful sequential improvement, primarily thanks to the acquisition of AB Germa (consolidated as of 1 December 2017). Germa sells emergency care products and will be part of Healthcare. It reported sales of SEK 30.1m and EBITDA of 3.4m for 2016.
For the investor that is interested in the latest report on ADDvise, we provide the full downloadable report here.
ADDvise – an acquisition story unfolding
Institutional & Private investors need quality research, which should be balanced, insightful, timely, readable and financially rigorous, and should also be made readily available.
ADDvise provides equipment and services to healthcare and research institutions. The company operates through two business units: Lab and Healthcare. Sales are global, but Sweden is the company’s primary market. Overall, ADDvise’s underlying markets are characterised by stable growth due to favourable demographics, such as an ageing and growing population. The business model is acquisition-heavy and the company aims to expand by adding even more companies to broaden the product portfolio, drive growth and expand its geographical scope.
For the investor that is interested in ADDvise, we provide the full downloadable report here.
Initiation report on ADDvise – Oct 2, 2017
ADDvise has commissioned Nordea Markets to produce a research report with the aim of providing investors with quality research on the company, which owing to its size might otherwise not receive much attention from the financial markets. For the investor that is interested in ADDvise we provide the full initiation report here.
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Conflict of interest
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This report has been reviewed, for the purpose of verification of fact or sequence of facts, by the issuer of the relevant financial instruments mentioned in the report prior to publication. The review has led to changes of facts in the report. Completion date: 07 May 2018, 13:29 CET