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Brighter initiated activity on multiple fronts following the issue of CE marks for its lead product, Actiste. It acquired Nectarine Health, a Swedish healthtech start-up, to complement its other assisted care solutions acquisition, Camanio. Brighter also entered into a strategic partnership with Accumbo, a digital healthcare provider, to support the visibility of Actiste in the Swedish market, one of Brighter’s target markets. Also, to support commercialisation activities in the near term, the company raised SEK191m via a rights offering.
Written by
Maxim Jacobs
Brighter |
Expanding further into assisted care solutions |
Financial update |
Healthcare equipment |
18 March 2020 |
Share price performance
Business description
Next events
Analysts
Brighter is a research client of Edison Investment Research Limited |
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Brighter initiated activity on multiple fronts following the issue of CE marks for its lead product, Actiste. It acquired Nectarine Health, a Swedish healthtech start-up, to complement its other assisted care solutions acquisition, Camanio. Brighter also entered into a strategic partnership with Accumbo, a digital healthcare provider, to support the visibility of Actiste in the Swedish market, one of Brighter’s target markets. Also, to support commercialisation activities in the near term, the company raised SEK191m via a rights offering.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
1.1 |
(48.8) |
(0.74) |
0.0 |
N/A |
N/A |
12/19 |
3.3 |
(88.2) |
(1.06) |
0.0 |
N/A |
N/A |
12/20e |
24.5 |
(99.5) |
(0.51) |
0.0 |
N/A |
N/A |
12/21e |
133.8 |
(12.4) |
(0.06) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Nectarine Health acquisition completed
In January 2020, Brighter completed the acquisition of Nectarine Health, a Swedish healthtech start-up company focused on assisted care solutions. This acquisition complements Brighter’s other acquisition from Q419, Camanio, another company focused on home care solutions. The acquisition pattern could indicate that Brighter is preparing to establish a broader market for its Actiste and Benefit Loop system down the line.
Strategic partnership with Accumbo
In Q419, Brighter entered into a partnership with Accumbo, a digital healthcare provider, via a SEK9m investment in Accumbo amounting to a 13% equity stake. The investment will be used to expand and develop new services for both digital and physical healthcare, starting by offering Actiste with Accumbo’s new care service under development for diabetics. This collaboration could help establish Actiste in the Swedish market and demonstrate its flexibility as adjunctive care.
Capital secured through a rights offering
Brighter raised SEK191m via a rights offering with current shareholders, largely to support commercialisation activities relating to Actiste. A total of 95.67m new shares were issued, and Brighter’s total share count is now 194.1m. The company had previously engaged Winance to help facilitate its financing needs, but the agreement was terminated as Brighter instead chose to proceed with a rights issue.
Valuation: SEK1,383m or SEK7.13 per basic share
Our total valuation has increased from SEK1,227m to SEK1,383m due to higher net cash, while on a per-share basis, the value fell from SEK13.14 to SEK7.13 due to a higher share count. The net cash and share count changed following a directed share issue to management and key personnel for SEK19m in November 2019 and a capital raise of SEK191m in January 2020.
Active on multiple fronts
While Brighter’s main focus currently remains launching Actiste in the United Arab Emirates, it has been busy with the completion of multiple acquisitions and formation of a strategic partnership. Late last year, Brighter acquired Camanio, a company developing home care solutions, such as an assisted eating device and telepresence robot. The transaction was conducted through a set-off issue of 1.598m Brighter shares. In January 2020, Brighter completed the acquisition of Nectarine Health (through the issue of 2.267m shares), a Swedish healthtech start-up company focused on assisted care solutions, which provided more context for Brighter’s venture into the home care space. These acquisitions indicate that Brighter is considering broadening the platforms on which Actiste and the Benefit Loop can be offered as it intends to move beyond diabetes in the future.
Brighter entered into a strategic partnership in Q419 with Accumbo, a digital healthcare provider, to help increase Actiste’s visibility in Sweden. Accumbo currently offers a digital service called Blodtrycksdoktorn (the Blood Pressure Doctor) where an individual with hypertension utilises a blood pressure cuff and app to gather biometric data that will shape the person’s treatment regimen set by a healthcare provider. Accumbo has launched a pilot project to integrate Actiste in the upcoming Diabetesdoktorn (the Diabetes Doctor) service, which will be offered as an extension to the Blood Pressure Doctor service. Since high blood pressure and diabetes are highly correlated, the collaboration could be a suitable project to demonstrate Actiste’s utility and flexibility as adjunctive care to already established platforms, and support the product’s visibility in Sweden since it is a target market.
Actiste: A new phase for Brighter
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, the rest of the Gulf Cooperation Council (GCC) area and South-East Asia (particularly Thailand and Indonesia). 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 12.6% to 17.7% 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, 8th Edition.
Valuation
Our total valuation has increased from SEK1,227m to SEK1,383m due to higher net cash, while on a per-share basis, the value fell from SEK13.14 to SEK7.13 due to a higher share count. The net cash and share count changed following a directed share issue to management and key personnel for SEK19m in November 2019 and a rights issue-based capital raise for SEK191m in January 2020.
Exhibit 1: Brighter valuation table
Programme |
Market |
Prob. of success |
Launch year |
Upper tier launch pricing ($/month) |
Lower tier launch pricing ($/month) |
Peak revenue ($m) |
Valuation (SEKm) |
Actiste |
Nordic region |
30% |
2020 |
131.3 |
71.6 |
5.5 |
22.5 |
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 |
233.3 |
|
EU |
25% |
2020 |
133.9 |
73.0 |
243.1 |
680.0 |
|
US |
20% |
2021 |
143.1 |
78.0 |
193.1 |
433.6 |
|
Unallocated costs |
-152.5 |
||||||
Total |
1194.4 |
||||||
Net cash (at 31 December 2019 + capital raise) (SEKm) |
188.3 |
||||||
Total firm value (SEKm) |
1,382.7 |
||||||
Total shares (m) |
194.1 |
||||||
Value per basic share (SEK) |
7.13 |
||||||
Source: Edison Investment Research
Financials
The company reported sales of SEK2.4m in Q419, compared to SEK0.2m in Q319, mainly due to the acquisition of Camanio since it is revenue generating. The operating loss was SEK35.0m for the quarter, compared to a loss of SEK11.7m in Q319, due to a number of factors including a SEK2.9m write-off on expired inventory, amortisation of capitalised development costs relating to Actiste, an increase in staff costs and higher R&D expenses.
Following these results, we have increased our net loss estimate for 2020 from SEK78.1m to SEK99.5m due to higher expenses. We also introduce our 2021 estimates, including SEK133.8m ($14.1m) in revenues, which are composed mainly of Actiste sales in the GCC, South-East Asian and Nordic regions. Our net loss projection for the year is SEK12.4m.
The company ended the quarter with SEK9.3m in gross cash, compared to SEK32.5m in Q319, mainly due to the SEK9m investment in Accumbo and increased expenses. After including SEK12m in short- and long-term debt, the firm ended the quarter with SEK2.7m in net debt. The capital raise of SEK191m closed after the quarter and increased its pro forma net cash position to SEK188.3m, which we believe may be enough to fund it through to profitability (assuming it meets commercial milestones).
Exhibit 2: 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) |
(4,906) |
(26,756) |
||
Gross Profit |
1,052 |
2,039 |
19,626 |
107,023 |
||
General and Administrative Expenses |
(13,014) |
(23,418) |
(24,354) |
(23,183) |
||
Other Operating Expenses |
(32,201) |
(51,782) |
(79,193) |
(79,985) |
||
EBITDA |
|
|
(44,163) |
(73,161) |
(83,922) |
3,854 |
Operating Profit (before amort. and except.) |
|
|
(44,326) |
(78,274) |
(89,035) |
(1,259) |
Intangible Amortisation |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Operating Profit |
(44,326) |
(78,274) |
(89,035) |
(1,259) |
||
Net Interest |
(4,476) |
(9,875) |
(10,468) |
(11,096) |
||
Other |
(4,278) |
(1,536) |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(48,802) |
(88,150) |
(99,503) |
(12,355) |
Profit Before Tax (FRS 3) |
|
|
(53,080) |
(89,685) |
(99,503) |
(12,355) |
Tax |
0 |
0 |
0 |
0 |
||
Deferred tax |
(0) |
(0) |
(0) |
(0) |
||
Profit After Tax (norm) |
(48,802) |
(88,150) |
(99,503) |
(12,355) |
||
Profit After Tax (FRS 3) |
(53,080) |
(89,685) |
(99,503) |
(12,355) |
||
Average Number of Shares Outstanding (m) |
71.7 |
84.7 |
194.1 |
196.0 |
||
EPS - normalised (ore) |
|
|
(74.00) |
(105.85) |
(51.26) |
(6.30) |
EPS - FRS 3 (SEK) |
|
|
(0.74) |
(1.06) |
(0.51) |
(0.06) |
Dividend per share (ore) |
0.00 |
0.00 |
0.00 |
0.00 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
112,430 |
186,740 |
221,468 |
256,197 |
Intangible Assets |
102,930 |
158,677 |
193,240 |
227,803 |
||
Tangible Assets |
8,537 |
16,470 |
16,635 |
16,801 |
||
Other |
964 |
11,593 |
11,593 |
11,593 |
||
Current Assets |
|
|
58,186 |
68,925 |
120,094 |
70,455 |
Stocks |
7,070 |
6,831 |
6,831 |
6,831 |
||
Debtors |
40,358 |
44,396 |
4,033 |
21,991 |
||
Cash |
9,031 |
9,340 |
100,872 |
33,275 |
||
Other |
1,727 |
8,358 |
8,358 |
8,358 |
||
Current Liabilities |
|
|
(63,698) |
(46,308) |
(46,308) |
(49,582) |
Creditors |
(11,805) |
(35,666) |
(35,666) |
(38,940) |
||
Short term borrowings |
(51,893) |
(10,642) |
(10,642) |
(10,642) |
||
Long Term Liabilities |
|
|
0 |
(1,581) |
(1,600) |
(1,621) |
Long term borrowings |
0 |
(1,390) |
(1,390) |
(1,390) |
||
Other long-term liabilities |
0 |
(191) |
(210) |
(231) |
||
Net Assets |
|
|
106,918 |
207,776 |
293,653 |
275,449 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(68,249) |
(93,902) |
(59,120) |
(27,018) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(29,986) |
(40,125) |
(40,347) |
(40,579) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
34,655 |
150,532 |
191,000 |
0 |
||
Conversion of convertible debt instruments |
43,065 |
0 |
0 |
0 |
||
Dividends |
0 |
(494) |
0 |
0 |
||
Other |
(14,406) |
(18,685) |
0 |
0 |
||
Net Cash Flow |
(34,921) |
(2,673) |
91,532 |
(67,597) |
||
Opening net debt/(cash) |
|
|
(1,580) |
42,862 |
2,692 |
(88,840) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
||
Other |
(9,521) |
42,844 |
(1) |
0 |
||
Closing net debt/(cash) |
|
|
42,862 |
2,692 |
(88,840) |
(21,243) |
Source: Company reports, Edison Investment Research
|
|
Research: TMT
Mensch und Maschine (M+M) reports strong revenue and earnings growth in 2019. Organic revenue growth of 25% was further boosted by the SOFiSTiK acquisition, driving EPS growth of 38% y-o-y and a dividend ahead of company guidance. Despite concerns over coronavirus, the company maintains its positive outlook for organic growth and profitability in FY20 and FY21.
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