Company profile - Brighter Actiste feature image - 16092019 - JPG

Multiple registrations underway

Brighter 28 May 2020 Update
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Brighter

Multiple registrations underway

Financial update

Healthcare equipment
& services

28 May 2020

Price

SEK4.98

Market cap

SEK991m

US$0.10/SEK

Net cash (SEKm) at 31 March 2020

71.8

Shares in issue

199.0m

Free float

99.5%

Code

BRIG

Primary exchange

NASDAQ First North

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

31.4

24.5

(13.1)

Rel (local)

23.1

31.7

(17.8)

52-week high/low

SEK8.46

SEK2.29

Business description

Brighter is a Swedish healthtech company addressing common welfare challenges of modern society through a group of innovation companies. Its lead solution, Actiste, currently being commercialised, is aimed at helping people with diabetes adhere to care guidelines and achieve treatment goals by simplifying the everyday treatment and introducing a new layer of data-driven support.

Next events

Actiste commercial launch

2020

Analysts

Maxim Jacobs

+1 646 653 7027

Wiktoria O’Hare

+1 646 653 7028

Brighter is a research client of Edison Investment Research Limited

Brighter continues to scale up the commercialization effort for Actiste in the target regions of South-East Asia and the Gulf Cooperation Council (GCC) and, as of May, the service is commercially available in Sweden. Registration is currently underway in Malaysia, Singapore, Thailand, Indonesia and the United Arab Emirates (UAE). The registration process is also about to start in Saudi Arabia, Kuwait, Oman and Bahrain. The company expects Actiste to be commercially available in multiple countries by the end of the year.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/18

1.1

(48.8)

(0.74)

0.0

N/A

N/A

12/19

3.3

(88.7)

(1.06)

0.0

N/A

N/A

12/20e

24.5

(141.4)

(0.71)

0.0

N/A

N/A

12/21e

133.8

(55.2)

(0.27)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

An attractive service during a pandemic lockdown

The Actiste device is delivered as part of a subscription-based service that includes different levels of data sharing, continuous replenishment of everyday supplies delivered directly to the home and digital services designed to facilitate, improve and streamline the treatment. With many physicians’ offices closed and diabetics being especially high risk for coronavirus, this service seems especially attractive.

GCC launch status

The completion of registration in the UAE has taken longer than originally anticipated partly due to delays related to coronavirus, as the regulatory authorities are working remotely. However, the company continues to expect approval in the coming months. UAE and Saudi Arabia (where the registration process is about to begin) will be the focus countries initially.

Launch through partners in South-East Asia

In South-East Asia, registration is currently underway in Malaysia, Singapore, Thailand and Indonesia. The company intends to launch Actiste through partners in multiple countries in this area by the end of the year.

Valuation: SEK1,282m or SEK6.44 per basic share

We have lowered our valuation to SEK1,282m or SEK6.44 per share, from SEK1,383m or SEK7.13 per share, mainly due to lower net cash and higher expenses though these were partially offset by rolling forward our NPVs. The company has SEK78.5m in cash on hand at the end of Q120, added another SEK9.2m through warrant exercises in May and we project will need to raise an additional SEK100m by the end of this year and an additional SEK140m in 2021. We had previously not expected additional fund-raising after the recent SEK192.1m raise, but expense levels have risen following the acquisitions of Pink Nectarine Health and Camanio.

Q120 update

Brighter’s Actiste integrates three essential steps for daily diabetes management in one device: a blood glucose meter, a lancet and insulin injection apparatus. Due to the combined functionality of the Actiste device, the company estimates that the number of steps for daily treatment and measurement is reduced by up to 67%. The Actiste device has global out-of-the-box connectivity through eSIM technology and is delivered as part of a subscription-based service that includes different levels of data sharing, continuous replenishment of everyday supplies delivered directly to the home and digital services designed to facilitate, improve and streamline the treatment. Brighter’s cloud-based platform, the Benefit Loop, and associated companion applications for iOS and Android, were previously CE marked. Together, the Benefit Loop and its applications collect, manage and analyse data for the purpose of sharing critical treatment information with friends, relatives, caregivers and healthcare providers to improve self-management outcomes.

Brighter is currently registering Actiste with local authorities in the United Arab Emirates (UAE) and, on introduction to the market, it will conduct user experience pilot tests to optimise adoption. Following the UAE, the company plans to focus its commercialisation efforts on Sweden (where it is already approved for sale due to the two CE marks that the company received and has gone commercially live as of May), the rest of the Gulf Cooperation Council (GCC) area (particularly Saudi Arabia) and South-East Asia (Singapore, Thailand, Indonesia and Malaysia). Brighter is launching initially in the GCC as this area has an especially high level of unmet need in diabetes. The region has some of the highest rates of the disease in the world, ranging from 10.1% to 16.3% of the population on an age-adjusted basis and affecting millions of people.1 The disease is also typically more poorly controlled in this region than in other countries and an estimated 40–70% of worldwide disease-related foot amputations occur in GCC countries.1 This positions Actiste as an attractive solution to potentially increasing compliance and improving patient engagement with healthcare in these countries.

  IDF Diabetes Atlas, 9th Edition.

Exhibit 1: Adults aged 20–79 with diabetes in 2019 in target markets

Country

Age-adjusted prevalence (%)

Prevalence of diabetes in adults aged 20–79 (‘000s)

GCC

UAE

16.3

1,223.4

Saudi Arabia

15.8

4,275.2

Kuwait

12.2

681.1

Oman

10.1

291.8

Qatar

15.6

347.0

Bahrain

15.6

202.7

South-East Asia

Indonesia

6.3

10,681.4

Thailand

7.0

4,284.9

Singapore

5.5

640.4

Malaysia

16.7

3,652.6

Europe

Sweden

4.8

521.2

Valuation

We have lowered our valuation to SEK1,282m or SEK6.44 per share, from SEK1,383m or SEK7.13 per share, mainly due to lower net cash and higher expenses though these were partially offset by rolling forward our NPVs.

Exhibit 2: Brighter valuation table

Program

Market

Probability of success

Launch year

Upper tier launch pricing ($ per month)

Lower tier launch pricing ($ per month

Peak revenue
($m)

Valuation (SEKm)

Actiste

Nordic region

30%

2020

131.3

71.6

5.5

23.1

Gulf Cooperation Council countries

30%

2020

112.5

61.4

45.7

178.3

South-East Asia

30%

2020

93.8

51.1

54.7

240.3

EU

25%

2020

133.9

73.0

243.1

680.0

US

20%

2021

143.1

78.0

193.1

446.5

Unallocated costs

(366.9)

Total

1,201.3

Net cash (at 31 March 2020 + warrant exercise) (SEKm)

81.0

Total firm value (SEKm)

1,282.3

Total shares (m)

199.0

Value per basic share (SEK)

6.44

Source: Edison Investment Research

Financials

The company reported sales of SEK1.7m in Q120 (86% derived from the Camanio segment), down from SEK2.4m (100% derived from Camanio) in Q419 mainly due to the fact that Camanio was changing its sales model from product sales towards a recurring revenue model. The companywide Q120 operating loss was SEK38.0m for the quarter, compared to a loss of SEK12.7m in Q119 as operating expenses increased in part due to the acquisitions of Pink Nectarine Health and Camanio in late 2019/early 2020. For example, staff costs had increased SEK10.1m to SEK14.9m for the quarter compared to SEK4.8m in the same quarter last year, with SEK8.3m of that staffing cost increase coming from the acquired entities. Following these results, we have increased our net loss estimate for 2020 from SEK99.5m to SEK141.4m, and for 2021 to SEK55.2m from SEK12.4m due to higher expected expenses from the higher cost base.

The company had SEK78.5m in cash on hand as well as SEK6.7m in debt at the end of Q120. In May, it raised an additional SEK9.2m through a warrant exercise, which increased the number of shares outstanding by 4.6m to 199.0m. We project it will need to raise an additional SEK100m by the end of this year and an additional SEK140m in 2021. We had previously not expected additional fund-raising after the recent SEK192.1m raise, but expense levels have risen following the acquisitions of Pink Nectarine Health and Camanio.

Exhibit 3: Financial summary

SEK'000s

2018

2019

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,052

3,284

24,532

133,779

Cost of Sales

0

(1,246)

(5,039)

(26,756)

Gross Profit

1,052

2,039

19,492

107,023

General and Administrative Expenses

(13,014)

(23,418)

(61,885)

(62,503)

Other Operating Expenses

(32,201)

(52,365)

(73,382)

(74,116)

EBITDA

 

 

(44,163)

(73,744)

(115,774)

(29,596)

Operating Profit (before amort. and except.)

 

 

(44,326)

(78,857)

(141,862)

(55,684)

Intangible Amortisation

0

0

0

0

Other

0

0

0

0

Exceptionals

0

0

0

0

Operating Profit

(44,326)

(78,857)

(141,862)

(55,684)

Net Interest

(4,476)

(9,875)

474

502

Other

(4,278)

(953)

0

0

Profit Before Tax (norm)

 

 

(48,802)

(88,732)

(141,388)

(55,182)

Profit Before Tax (FRS 3)

 

 

(53,080)

(89,685)

(141,388)

(55,182)

Tax

0

0

0

0

Deferred tax

(0)

(0)

(0)

(0)

Profit After Tax (norm)

(48,802)

(88,732)

(141,388)

(55,182)

Profit After Tax (FRS 3)

(53,080)

(89,685)

(141,388)

(55,182)

Average Number of Shares Outstanding (m)

71.7

84.7

199.1

201.1

EPS - normalised (ore)

 

 

(74.00)

(105.85)

(71.00)

(27.44)

EPS - FRS 3 (SEK)

 

 

(0.74)

(1.06)

(0.71)

(0.27)

Dividend per share (ore)

0.00

0.00

0.00

0.00

BALANCE SHEET

Fixed Assets

 

 

112,430

186,740

215,449

250,227

Intangible Assets

102,930

158,677

182,471

217,035

Tangible Assets

8,537

16,470

21,385

21,599

Other

964

11,593

11,593

11,593

Current Assets

 

 

58,186

68,925

166,403

223,739

Stocks

7,070

6,831

14,965

14,965

Debtors

40,358

44,396

91,603

91,603

Cash

9,031

9,340

50,572

107,909

Other

1,727

8,358

9,262

9,262

Current Liabilities

 

 

(63,698)

(46,308)

(30,392)

(50,240)

Creditors

(11,805)

(35,666)

(27,981)

(47,829)

Short term borrowings

(51,893)

(10,642)

(2,411)

(2,411)

Long Term Liabilities

 

 

0

(1,581)

(104,432)

(244,445)

Long term borrowings

0

(1,390)

(104,305)

(244,305)

Other long-term liabilities

0

(191)

(127)

(140)

Net Assets

 

 

106,918

207,776

247,027

179,280

CASH FLOW

Operating Cash Flow

 

 

(68,249)

(93,902)

(166,973)

(35,320)

Net Interest

0

0

0

0

Tax

0

0

0

0

Capex

(29,986)

(40,125)

(46,852)

(47,343)

Acquisitions/disposals

0

0

0

0

Financing

34,655

150,532

201,332

0

Conversion of convertible debt instruments

43,065

0

0

0

Dividends

0

(494)

0

0

Other

(14,406)

(18,685)

(35,965)

0

Net Cash Flow

(34,921)

(2,673)

(48,457)

(82,663)

Opening net debt/(cash)

 

 

(1,580)

42,862

2,692

56,144

HP finance leases initiated

0

0

0

0

Exchange rate movements

0

0

0

0

Other

(9,521)

(42,844)

(4,995)

0

Closing net debt/(cash)

 

 

42,862

2,692

56,144

138,807

Source: Company reports, Edison Investment Research

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This report has been commissioned by Brighter and prepared and issued by Edison, in consideration of a fee payable by Brighter. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Brighter and prepared and issued by Edison, in consideration of a fee payable by Brighter. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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