Feelgood - A year of accelerated digitalisation

Q4: 7% net sales decline (-12% organic) Benefitting from a market-leading digital platform 11-7x EV/EBIT ‘21e-‘22e for 25% EBIT CAGR ’20-‘23e Q4: a solid end to a challenging year Feelgood delivered sales slightly below our expectations in its seasonally strong Q4. Net sales came in at SEK 205m (-12% organic; +5% M&A) with governmental support in Q4’20 adding SEK 4. 1m to operating revenue. EBIT of SEK 22m (vs.

ABGSCe SEK 22m and SEK 22m Q4’19) yet again demonstrated the company’s earnings resilience, supported by a combination of COVID-19 subsidies and a continued adaption to digitalisation. Roughly 250 employees were covered by short-term layoffs in Q4’20. While the pandemic and rising unemployment will continue to impact demand for traditional occupational health services, the shift to digital has accelerated.

For example, in December, ~4,600 (17%) of all of Feelgood’s meetings were held in a digital format, versus 60 in February 2020. We note that the Feelgood Plus app roll-out continues, with 20 corporate accounts in place (vs. 12 in Q3’20).

Due to the ongoing pandemic, Feelgood will not distribute any dividend for FY’20. Well-equipped for 2021 and beyond after digital investments Feelgood nearly doubled its investments into its digital platform in FY’20 (SEK 18m) as the company’s business model becomes increasingly digital. Feelgood’s business model is supported by four key factors: 1) traditional occupational health, 2) organisational and managerial support, 3) addiction and substance abuse and 4) the Feelgood Plus app.

Uncertainty is high for 2021, but we believe Feelgood is equipped to serve the digital demands of its ~8,300 company customers. Feelgood’s long-term goal is 10% annual sales growth and a 7. 5% EBIT margin.

Near-term uncertainty, long-term margin expansion On the back of a continued dim market outlook due to COVID-19, we lower our EBIT estimates by 16-12% for ’21e-‘22e. If Feelgood continues to execute on its market-leading digital t.