Novolog (TASE: NVLG) has reported a successful first quarter, with growth in revenue, profit and cash flow, and with all the company's units contributing to improvement in its results, according to group CEO Eran Taus.
But what about the next quarter, the coronavirus quarter?
The company, which in the past few years has been in a process of expansion and acquisitions, and whose business is distribution of drugs and medical equipment, clinical trials, home medical care, and digital health, will record some handsome one-time deals as a result of the pandemic, Taus says, adding, "The coronavirus had an effect on awareness of our activity which will manifest itself in the longer term. I refer mainly to home treatment and distance medicine."
Following the release of its financials, Novolog's share price rose by over 2%. So far this year, it has risen 59%, bringing the company to a market cap of NIS 1.27 billion.
Novolog's first quarter revenue was NIS 302 million, 14% higher than in the corresponding quarter of 2019. Net profit was NIS 13 million. The company had NIS 164 million cash at the end of the quarter, up from NIS 121 million at the end of the corresponding quarter. It has no debt.
"The quarterly results are in line with our work plan, written in 2019, according to which our EBITDA will reach NIS 100 million in 2021, with operating profit of NIS 64 million from our business in Israel, compared with NIS 18.3 million today. The company's activity is currently mostly in Israel. The first quarter 2020 results support these forecasts. The current pace enables us to meet them," says Taus.
What is your profit model in digital medicine?
"This is a medical information platform combined with services to doctors, including digital reputation management, and the element from which most of the profit stems - an appointments management system that includes algorithms for reducing the risk of 'no-shows', a preliminary online questionnaire to set priorities for appointments and so that the patient will come to the doctor with information ready. Within this system we are launching a system for making remote appointments for the use of all the doctors in our digital health services, thousands of doctors. Today, people want to choose a doctor who can offer remote medicine. Even if you currently want to see your doctor physically, you will probably also want to be prepared for a situation in which that won’t be possible, for example because of a second wave of the coronavirus. Our business model is a subscription for service."
Because of the coronavirus, alongside a rise in home-care patients and in demand for equipment for ventilated patients, there has also been a decline in non-urgent medical procedures. Did that not have an adverse effect on your distribution segment?
"At first, the coronavirus did slightly depress the distribution segment of our business, but we overcame that, and at the same time there was growth in other segments because of the transfer of patients to their homes. We recently launched a service of care for chronically ill patients at home. As far as I'm concerned, this is our crowning glory. It may not be profitable yet, but it's a breakthrough. Today we have one-time deals for the purchase of ventilators, and also for treatment of ventilated patients from hospitals, because every discharged patient is taken off the list of patients ventilated in the hospitals and takes up a Novolog machine. What we are seeing is that the coronavirus pandemic actually strengthens our strategic plan for a transition to online medicine at home. This is a change in awareness that will materialize as a business change."
Has the pandemic created acquisition opportunities?
"Yes. We are looking for opportunities in Israel and overseas, in all our areas of business, but chiefly in home treatment."
Published by Globes, Israel business news - en.globes.co.il - on May 24, 2020
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