PatientSky Group (No_rec, TP: NOK) - Discontinuing coverage

We have discontinued coverage of PatientSky (now named Codelab Capital). Our last published recommendation, target price and estimates should no longer be relied upon.

PatientSky Group (Buy, TP: NOK3.00) - SaaS business divestment

PatientSky has agreed to sell its software business to EG for NOK850m–900m (based on a contingent earn-out), to be settled in cash. Part of the proceeds is to be used to repay the NOK225m outstanding bond, after which management estimates it would have net cash of cNOK650m–700m (NOK3.2–3.4/share). We reiterate our BUY and have raised our target price to NOK3.0 (2.2), assuming reinvestments of NOK50m in its platform business, with the remaining cash distributed to shareholders.

PatientSky Group (Buy, TP: NOK2.20) - Cost-cuts set to materialise

We have trimmed our 2022e revenue on lower than forecast Q3 revenues, but have further accelerated our estimated opex and capex reductions on the company’s reported cost-reduction initiatives. As we expect the opex and capex reductions to drive increased profitability and mitigate any potential near-term liquidity risk, we reiterate our BUY and NOK2.2 target price.

PatientSky Group (Buy, TP: NOK2.20) - Inflection point

While our recent proprietary EMR survey of general practitioners in Norway suggests continued elevated churn for PatientSky’s on-premises solutions, we see material improvement as the company is seemingly mitigating some of the churn risk by migrating clinics to its cloud-based solutions. Based on this, we have lowered our churn estimates for 2023–2025, leading to slightly higher revenue forecasts. With this backdrop and the recent share price pressure, we have upgraded to BUY (HOLD), while we k...

Northern Lights

PatientSky Group (Hold, TP: NOK2.20) - Under observation

Q2 revenues were in line with our estimate, while underlying operating profit was lower on higher than expected opex and investments. We continue to expect cost reductions to drive increased profitability, but at a slower pace than previously forecast. As such, we reiterate our HOLD, but have lowered our target price to NOK2.2 (2.8).

PatientSky Group - Initiation of coverage - Patience needed

As PatientSky Group has already gained a leading position in the Norwegian electronic medical records (EMR) market, we expect limited new clinic intake and elevated churn to drive slightly negative revenue growth near-term. However, since we also see upside potential from a possible divestment of its Norwegian software business, as well as new international platform contracts, we initiate coverage with a HOLD and NOK2.8 target price.