Sector: Health care & biotechnology
Market Cap: US$ 107 m
Fundamental rating: Hold (↓)
Bloomberg code: VOX PW
Market relative: Neutral (↓)
Av. daily turnover: US$ 0.03 m
Price: PLN 45.2
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 and pandemic-related inventories (PLN 5 million), expenses for Scanix laboratory (PLN 1 million) in 2022.
Recent events
1. Release of consolidated 1H22 financial results: August 24
2. Release of consolidated 3Q22 financial results: November 24
Upcoming events
1. Release of FY22 consolidated financial results: March 28
2. Release of consolidated 1Q23 financial results: May 24
3. Release of consolidated 1H23 financial results: August 23
4. Release of consolidated 3Q23 financial results: November 22
Recommended action
We uphold our financial forecasts for the Company and 12M EFV at PLN 47.7 per share while the Company’s market share price has come near our 12M EFV. At the same time we can’t see any positive ST catalysts. We expect the deterioration of the Company’s operating performance for 4Q22 both yoy (absence of testing for SARS-CoV-2) and qoq (wages growth). Therefore, we lower our recommendations: LT fundamental to Hold from Buy and ST relative from Overweight to Neutral. At the same time we plan to remove the Company’s shares from our monthly portfolio.
4Q22 financial results preview
In 1/2/3Q22 Voxel performed 72,000 (up 20% yoy)/ 76,000 (up 15% yoy)/ 77,000 (up 4% yoy) diagnostic tests vs 60,000 (up 5% yoy)/ 66,000 (up 72% yoy)/ 74,000 (up 33% yoy)/ 73,000 (up 30% yoy) diagnostic tests in 1/2/3/4Q21. We expect the volume of diagnostic tests in 4Q22 to reach 82,000 (up 12% yoy) and the demand for MRI, PET and SPECT scans to be sustained while CT scans are not supported, in line with the Company’s strategic guidelines. We forecast the Company’s FY22 total volume of diagnostic tests to have reached 307,000 (up 13% yoy) and additionally, we assume 67,000 scans (up 7% yoy) in Rezonans PowiÅ›le and Scanix in 2022. Ultimately, we forecast 374,000 diagnostic tests as specified above in total (up 12% yoy) performed by the Group in 2022. We expect Exira performed 545 scans last year.
We estimate Voxel’s 4Q22 non-consolidated revenues at PLN 66 million (up 36% yoy). We forecast 4Q22 revenues of RP/ Scanix/ Exira/ Vito-Med/ Alteris to reach PLN 3/8/2/9/42 million. We expect the Group’s consolidated revenues to arrive at PLN 117 million (down 9% yoy) with the decline caused by the absence of testing for SARSCoV-2 (vs 153,000 in 4Q21).
The Group’s 4Q22 EBIT should reach PLN 14million (down 59% yoy). We assume a material increase of the medical staff’s salaries from 4Q22. We assume the write-offs in 4Q22 (tests for SARS-CoV-2) to reach PLN 4 million, though their value will depend on the expiration dates of tests. New write-offs are likely to appear in 1Q23 – depending on the auditor’s decision. In 4Q22 further write-offs for Scanix’s assets may surface.
Vito-Med hospital may generate further losses which we assume at PLN -2 million in the discussed period. The Company has been restructuring the hospital business in order to increase revenues keeping the current level of employment and existing equipment base intact.
We assume almost flat yoy net financial costs (high in 4Q21) and forecast 4Q22 NP at PLN 8 million.
Financial forecasts
We modify our financial forecasts only slightly incorporating our expectations for 4Q22.
Risk factors
- Lower public spending on health care (high exposure to NFZ)
- Medical services pricing increase too low
- Change in the State’s policy regarding private medical contractors
- Changes in the Company’s contracts with NFZ
- Changes in legislation regarding the funding of hospitals/ treatments
- The decline in the society’s affluence (FFS and commercial clients contribute up to 20% of Voxel’s revenues)
- New innovative methods of cancer diagnostics/ treatment
- Medical errors - reputation risk
- Low and deteriorating availability of radiologists
- Loss/low labor supply
- Salary pressure (in particular of medical and IT staff)
- Overblown investments
- Lagging behind the technological progress in diagnostics
Catalysts
- Aging society
- The number of diagnostic imaging treatments below the standards in developed countries
- Medical services pricing increase
- Development of the market of private medical services
- Improvement of the treatment mix (towards more advanced)
- New medical services offered
- Development of a profitable segment of pharmaceutical research (clinical trials)
- Organic growth, new centers (high barriers to entry)
- Acquisitions – economies of scale
- Consolidation of the sector; potential acquisition target
- AI development and new algorithms for test descriptions
- IT software development for cloud diagnostics
GPW’s Analytical Coverage Support Programme 3.0
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.
4/2023/GPW (11) March 9, 2023
Analyst: Sylwia Jaskiewicz, CFA
