Carasent AB (publ) (CARA) Earnings Call Transcript & Summary

Hi, and welcome to this update call on the new focus for Webdoc and the cost savings program. Today, we go through the change of focus, the cost reductions, and then we'll have a Q&A at the end. But just please put out your questions as we go. My name is Daniel Ohman. I'm the CEO of multiple acquisitions, large new development projects and very rapid hiring. We've grown too fast and in too many directions at once. So what we really need to do now is to focus and increase efficiency. And starting with focus. We have taken the decision to focus Webdoc on Sweden and close down the Webdoc Norway project. And to give a little bit of background on that, Webdoc today in the Swedish market, has a TAM of somewhere around been running. Webdoc Norway, where we have a possible market of around SEK 350 million, and where we still have 24 to 48 months of development remaining to be able to address that market. We have 1 customer in Norway at the moment, but that's a customer which uses very little functionality. They don't even prescribe drugs. So it's a very limited version that's up and running. We also have other projects which are in the pipeline, which is the segments. But they do lack some very important functionality, which hinders our growth within those segments. So if we talk about Region Stockholm, just briefly, their most care providers use the public system, which is called TakeCare. It's going to be closed down, that's been decided. It has also been decided that it will not be replaced by a new system for everyone. It will still be open for its private provider to choose their own systems. But today, if you use our product, you will get -- you'll not pay web -- Webdoc. And there's a lot of extra work, and there's also a lot of external risk involved in that process. So that's the downside for using our system today. Still quite a lot have tried to do it already, anyway, because they see the other upsides. But if we can add e-referrals, it will really, really help. The secondary, surgery, it's those clinics who has operating theaters and both outpatient and inpatient surgery that is certainly what we need, that's -- which drives all your income and most of your costs. So you really want to optimize surgery, and we need to give them the tools to be able to do that if we want to address that market properly. That being said, there are not really any competitors offering that today, not while at the same time, being good at other things Webdoc is good at. So we think we have a really, really good chance within both these segments if we give them the functionality. And we already have all operations in place to be successful, and we have a good reputation. So it will really increase and improve our growth profitabilities quite a lot by making this change. And we need to focus, we cannot do both. It just gets very inefficient if you try to build too much at once in the same system. Also we have, since before, Webdoc X, which is from the foundation made to move between -- over, which means that you need less functionality to be able to really use the system. It's attractive for smaller clinics than what Webdoc is. So I find this a very natural conclusion. We have drawn this subject, and which will really strengthen us going forward and less in complexity, which I think is an important goal in itself. Looking at the other decision that were being made, it is that we need to increase efficiency, able to have about the same development capacity as before. But diving into the cost-cutting program, it's mostly related to staff and consultants. It's around 32 full-time equivalents that will lead organizations. Most of them are employees. And the total cost of realizing this program is around NOK 4 million we expect, and which will take place in the second quarter this year as by the end of Q3. But it's really an efficiency change. We need to get down our running costs, and I still expect us to have the same capacity as before to develop new solutions and going forward. So in conclusion, we focus Webdoc in Sweden with new functionality to their -- to new segments. But what's also important here when we add functionality for new segments, also present segments and customers we gained from. We focused Webdoc X, ongoing international. And instead of having 2 cross-border projects we have only one, which decreases complexity and increases the likelihood of success, also in that part. And even if these savings are quite large, we will still be staffed for expansion, and we will be able to grow quite a lot within the same cost structure that we have now. There might be minor additions we need to make, for example, within the quality where we need to improve efficiency and especially we'll focus on sales. Today, we only have inbound sales. So all sales within all of our products are e-mails coming in from customers who wants to change their products. I believe we can do quite a lot with outbound, and that's the next step of development for the group, together with the new structures within R&D, where we aim to increase the velocity of development.

About your big cash position? Are you considering share buybacks?

We have not decided yet how to handle the cash position. There are many entry acquisition we could make, which will strengthen our present products and also for going into new countries. And we will have to choose between how much acquisitions we want to do and make possible buybacks or dividends. We'll come back to you on that.

And that drove continued investments as before?

So the savings are within the entire group. We're doing savings in Norway, within Ad Curis. We're doing savings within HPI and so on. So the savings are not only within Webdoc even if the most part of the savings are within Webdoc. So this is a program for the group where we aim to increase efficiency. We still do a lot of investments within Ad Curis and in market shares there. Same for HPI, they have a very interesting new platform coming out, where we aim to continue to grow. So nothing of what we do now is in any way a break on the expansion. We see how much we can grow. We changed focus for Webdoc to a larger market, and we continue to invest in products we have, and we increase efficiency.

All right. Thank you.

[Audio Gap] in our organization. We have -- obviously we communicated this today to most part of the organization. I think that in most parts, it's been -- have had a positive reaction to this, not to colleagues leaving, of course, but they see the rationale behind it. And they see the need to improve how we work and the process we have. So I believe we'll come out very strong out of this.

[Audio Gap] of the -- or have the facts changed over time?

I cannot really comment on the original decision. I was not part of it. To me, from where we stand now, it's quite obvious that we have a larger market to go after in Sweden, which with less risk and less investment. We also have Webdoc X for going international, and it's better to focus on that. But I cannot really comment on the historical decision.

And some decisions that looked like it could be dangerous for our situation in Sweden. But now the wind is blowing in the direction that market is opening up more and more in Sweden as well. So this also favors Sweden versus Norway, I would say. Next question, what happened with the Norway hub? It went from SEK 500 million to SEK 350 million. What were the major differences in how you evaluate the market are, while the new figure of SEK 350 million result of the strategy process that we have gone into very great, great lengths of detail in looking at the different markets and different segments, both in Norway and Sweden. I don't know if you have anything to add, Daniel?

No. It's like you said, Svein Martin, we have really gone in deep into all aspects of this, and really been digging into exactly what functionality different parts, needs and where our strength falls and so on.

Especially those who are using the Swedish Webdoc, but also has operations in Norway.

So I think that our Swedish customers will be very happy about this. I know when I started the discussion was that where is Carasent today, or maybe used to say Webdoc, are you seeing Webdoc? Where is Webdoc today? We don't see them anymore. It seems like the development we need doesn't happen anymore. And I think that's part of our -- of why our sales have slowed down a bit. And cared about -- where they used methodically our other system in Norway and Denmark. So I think we still have joint meetings with our largest customers on both markets, actually.