Feelgood - On the road towards recovery
Q1: net sales and EBIT -7% and -57% y-o-y, respectively Strong end to Q1’21 and positive outlook for Q2’21 14x-9x EV/EBIT ‘21e-‘23e for 21% EBIT CAGR ’21e-‘23e Continues to feel the COVID-19 impact Feelgood sales were 7% below our expectations in its seasonally softer Q1. Net sales came in at SEK 205m (-7% y-o-y), with governmental support in Q1’21 adding SEK 1. 7m to operating revenue. The company continued to focus on costs, with opex down 5% y-o-y.
Despite strong cost control, EBIT of SEK 5m for a margin of 2. 5% was 53% below ABGSCe. Roughly 250 employees were covered by short-term layoffs in Q4’20, a number that declined significantly in Q1’21 with normalising demand.
While the pandemic and rising unemployment will continue to impact demand for traditional occupational health services, the shift to digital continues to accelerate. This has increased the productivity and scalability of Feelgood’s business model. We note that the company extended its agreement with Volvo Cars Sweden (~26,000 employees) in Q1.
Feelgood has been Volvo Cars’ occupational health provider since 2002, and the contract extends for at least three more years. Increasing customer activity & pace of Feelgood Plus roll-out Feelgood ended Q1’21 on a positive note, with the strongest March month in company history. Management also emphasises that it sees a positive trend going into Q2’21.
We note that the Feelgood Plus app roll-out continues, with 40 corporate accounts in place (vs. 20 in Q4’20). Feelgood is also in far-reaching negotiations with some of Sweden’s largest employers to offer Feelgood Plus to all employees.
Examples of Feelgood’s customers include SAAB, NCC, SKF, Ericsson and AstraZeneca (~60% private sector, ~40% public sector). Estimates down, but long-term outlook appears positive On the back of expected pressure from increasing unemployment due to COVID-19, we trim our EBIT estimates by 13% for ’21e and 5-4% for ‘22e-‘23e. We remain optimistic regarding Feelgood’s.
