Warsaw Stock Exchange - Voxel: 4Q22 financial results summary

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Recommended action

We maintain our 12M EFV at PLN 47.7 per share and keep our recommendations: LT fundamental Hold and ST relative Neutral intact. As we expected, the Group’s 4Q22 financial results are materially lower both yoy and qoq due to the high base (featuring testing for SARS-CoV-2), growth of salaries, and write-offs. 4Q22 EBITDA/ NI fell 34%/ 49% yoy and 13%/24% qoq. Write-offs for inventories and fixed assets reached c. PLN 5 million in 4Q22. The Group’s profitability was supported by raised NFZ reimbursements of diagnostic services from 3Q22, on average by 30%; salary costs started growing from 3Q22-end.

Sector: Health care & biotechnology

Market Cap: US$ 102 m

Fundamental rating: Hold (→)

Bloomberg code: VOX PW

Market relative: Neutral (→)

Av. daily turnover: US$ 0.03 m

Price: PLN 41.7

12M range: PLN 33.10-45.80

12M EFV: PLN 47.7 (→)

Free float: 51%

Guide to adjusted profits

Results adjusted for (i) write-offs for CardioCube/ Vito-Med/fixed assets and inventories (PLN 1/1/4 million), discount costs and valuation of loans and receivables in 2021 (PLN 3 million), (ii) costs of laboratories closedown (PLN 3 million) and write-offs for inventories and fixed assets (PLN 5 million) in 2022.

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Recent events

1. Release of consolidated 1H22 financial results: August 24, 2022
2. Release of consolidated 3Q22 financial results: November 24, 2022
3. Release of FY22 consolidated financial results: March 28, 2023

Upcoming events

1. Release of consolidated 1Q23 financial results: May 24
2. Release of consolidated 1H23 financial results: August 23
3. Release of consolidated 3Q23 financial results: November 22

4Q22 financial results summary

In 4Q22 the Group performed altogether 99,000 diagnostic tests (up 11% yoy), including 32,000 CT scans (down 3% yoy), 59,000 MRI scans (up 20% yoy), 4,000 PET scans (up 14% yoy), and 3,000 SPECT scans (flat yoy). 4Q22 net revenues from diagnostic services reached PLN 69 million (up 38% yoy). 4Q22 unconsolidated revenues amount to PLN 66 million (up 35% yoy) and are fully in line with our forecast at PLN 66 million. Revenues at RP/ Scanix/ Exira/ Vito-Med/ Alteris stood at PLN 3 million/ 7 million/ 3 million/ 9 million/ 59 million vs our expectations of PLN 3 million/ 8 million/ 2 million/ 9 million/ 42 million with 4Q22 consolidated revenues reaching PLN 140 million (up 8% yoy) and beating our expectations at PLN 117 million mainly because the sales at Alteris turned out to be higher than we assumed (higher revenues from external clients (up 152% yoy and lower sales in the Group (down 86% yoy)). The revenues from the core business grew yoy due to a material rise of average prices of services offered coupled with higher volumes.

The Group’s 4Q22 EBIT hit PLN 19 million (down 44% yoy) with the decline caused by the absence of testing for SARS-CoV-2 (vs 153,000 in 4Q21) and salaries rise. Vito-Med’s 4Q22 net loss stands at PLN 1.5 million. Voxel made write-offs for fixed assets and inventories in the amount of PLN 5 million (we assumed PLN 4 million). We expected a tad higher costs of salaries (a number of employees and collaborators down by 10% to 1,908 as of 2022-end) and higher other costs as well.

Net financial costs at PLN 3 million were in line with our expectations and slightly lower yoy. The Group’s 4Q22 NI hit PLN 12 million (down yoy) which was above our expectations.

The Group’s operating/ investing cash flows reached PLN 49 million/ -13 million vs PLN 41 million/ -7 million in 4Q21. Net debt at the end of 4Q22 stood at PLN 105 million (down 7% yoy) while we expected PLN 115 million. Alteris’s backlog for this year is estimated at PLN 70 million. FY22 revenues of Alteris reached PLN 138 million.

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Financial forecasts

We keep our financial forecasts for 2023 and onwards intact.

Risk factors

1. Lower public spending on health care (high exposure to NFZ)
2. Medical services pricing increase too low
3. Change in the State’s policy regarding private medical contractors
4. Changes in the Company’s contracts with NFZ
5. Changes in legislation regarding the funding of hospitals/ treatments
6. The decline in the society’s affluence (FFS and commercial clients contribute up to 20% of Voxel’s revenues)
7. New innovative methods of cancer diagnostics/ treatment
8. Medical errors - reputation risk
9. Low and deteriorating availability of radiologists
10. Loss/low labor supply
11. Salary pressure (in particular of medical and IT staff)
12. Overblown investments
13. Lagging behind the technological progress in diagnostics

Catalysts

1. Aging society
2. The number of diagnostic imaging treatments below the standards in developed countries
3. Medical services pricing increase
4. Development of the market of private medical services
5. Improvement of the treatment mix (towards more advanced)
6. New medical services offered
7. Development of a profitable segment of pharmaceutical research (clinical trials)
8. Organic growth, new centers (high barriers to entry)
9. Acquisitions – economies of scale
10. Consolidation of the sector; potential acquisition target
11. AI development and new algorithms for test descriptions
12. IT software development for cloud diagnostics R

Analyst: Sylwia Jaskiewicz, CFA

GPW’s Analytical Coverage Support Programme 3.0

6/2023/GPW (21) March 28, 2023

This report is prepared for the Warsaw Stock Exchange SA within the framework of the Analytical Coverage Support Program. 3.0. This is an excerpt from the Polish version of DM BOÅš SA’s research report.