Presentation

Company Profile
Swedencare develops, produces and sells premium products on the global and fast-growing market within animal healthcare for cats, dogs and horses. The product groups ProDen PlaqueOff® and NutriScience® are sold in approximately 50 markets worldwide, both through direct sales and distributors. Swedencare’s customers are primarily veterinarians, pet stores and pharmacies. The company is headquartered in Malmö, Sweden.

Recent highlights
Net sales were 2% below our expectations but increased by 400% y/y, of which 45% organically. The gross margin of 59.2% beat our forecast by 60 bps and the EBIT margin of 27.5% beat our expectations by 170 bps, showing good operational scalability. In Q2, Swedencare acquired Vetio, a North American CDMO group dedicated to Animal Health.

Outlook
Some larger projects were delayed but will be delivered in Q3, suggesting continuous robust sales in the current quarter, which will also include the recently acquired Vetio. Despite showing good operational scalability, we expect the gross margin to drop to 57.0% in Q3 following the integration of Vetio. Although we forecast the gross margin to decrease to 57.8% for full-year 2021 from 65.7% in 2020, we expect the EBIT margin to improve to 26.8% in 2021 from 25.0% in 2020, due to the increasing scalability. Management said the financial targets for 2025 will be reviewed during H2 2021, indicating the company’s confidence about reaching sales of SEK 2bn, and suggesting further upside potential.