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Coala-Life Group AB Interim Report January-December 2021

Fourth quarter 2021

  • Net sales increased to SEK 1.0 M (0.2).
  • EBITDA totaled SEK -118.0 (-15.7).
  • Operating income totaled SEK -120.5 M (-16.5).
  • Profit after tax was SEK -111.0 M (-16.6).
  • Earnings in the period totaled SEK -111.0 M (-16.6).
  • Earnings per share (weighted average) was SEK -6.1 (-8.1).
  • Cash flow from operating activities was SEK -24.7 M (-15.3).
  • The result is affected by a non-recurring item of SEK -102.3 M which refers to the surplus value of aquired equity in connection with the reverse acquisition of Coala-Life Group AB.

Significant events during the fourth quarter

  • On September 27, the company announced its intention to acquire the existing operations in Brothers, resolve debt financing and acquire Coala-Life AB.
  • On October 22, the company published a description of the business activities in Coala-Life AB.
  • On October 22, Nasdaq Stockholm AB announced that the company satisfied the requirements for listing on Nasdaq First North Growth Market.
  • The Extraordinary General Meeting on October 29 reached the following resolutions relating to: a directed new share issue, adjusting the limits applying to the number of shares in the Articles of Association and aggregation of shares, adjusting the limits applying to share capital in the Articles of Association and and any reduction in share capital without withdrawing shares, adopting new Articles of Association, approving the divestment of Brothers & Sisters AB, approving the acquisition of Coala-Life AB, authorizing the Board to issue new shares against offset payment, determining the number of Board members, determining Directors’ fees, election of Board members.
  • On November 1, Richard Roa was appointed CFO of the company.
  • On November 8, the company completed the acquisition of Coala-Life AB, the divestment of Brothers & Sisters, the debt conversion process and changed its name to CoalaLife Group, and appointed a new Board of Directors and management.
  • On December 14, the company announced that the TITAN-DM study on people with diabetes was fully recruited.
  • On December 30, the company divested the shares in the subsidiary Departments and Stores Europe AB.

Significant events after the end of the period

  • On January 14, the company announced that Johan Eckerdal will be taking up his position as Vice President R&D of Coala Life in March 2022.
  • On February 9, the company announced the outcome of a review of the health economics of Coala Heart Monitor Pro carried out by the Swedish Dental and Pharmaceutical Benefits Agency at the request of the Medical Technology Product Council, which demonstrated the cost-effectiveness of the device.
  • On February 23 the company announced the intention to complete a preferential rights issue totaling SEK 150 M.

Comments from the CEO

Unique position in remote heart monitoring

In the fourth quarter 2021, we took a major step on Coala Life’s growth journey. On November 9, the company was listed on Nasdaq First North Growth Market in a reverse acquisition of RNB Retail and Brands. The listing increases our ownership base, strengthened our financial position and gives us access to the stock market and the opportunity to accelerate our market expansion. In our first quarterly report as a listed company, I want to outline our current position, provide a business update at the start of 2022, and describe the strategic considerations we face ahead of capitalizing on our unique position on the US market.

Our business concept is to enable long-term monitoring and improved diagnostics for patients with heart and lung disease in everyday life. We achieve this through the Coala Heart Monitor – an award-winning and FDA- and CE-cleared product and service platform that enables long-term monitoring, analysis and algorithm-based remote diagnosis of heart and lungs. The device is ideal for patients suffering from chronic illness or intermittent symptoms, and is connected to healthcare services remotely.

Over 500 million people are currently affected by chronic heart and lung disease. The US has a disproportionately high proportion of chronically ill patients, and is Coala Life’s most important market. In 2019, new legislation and new innovative compensation systems created potential for preventative long-term monitoring and diagnostics of chronically ill patients in the home. Developments have moved quickly in the US, and millions of patients have been included in a Remote Patient Monitoring (RPM) program which provides access to connected med tech products that allow healthcare providers to regularly monitor patients’ vital parameters in daily life. To qualify as an RPM patient, acute or chronic disease is required, which applies to just under half of the US population. Because the Coala Heart Monitor has obtained FDA approval and is available within the RPM reimbursement system in the US, we enjoy a unique position in the area of cardiac health.

However, the pandemic has presented some obstacles to our sales efforts over the past two years. The effects of the Delta and Omicron strains last fall continue to present some temporary obstacles. However, underlying market conditions for telemedicine, remote surveillance and digital healthcare have made very strong progress, which is to our advantage.

In 2021, the management team and myself continued to refine and improve the product platform, intensify our sales initiatives in the US, and review funding opportunities on the capital markets to build on our unique market position as the pandemic recedes.

In the quarter, we strengthened the US organization with the recruitment of six new sales staff. This will continue in the early part of 2022. We connected 20 new clinics in the fourth quarter 2021, as well as a further 6 new clinics in the beginning of 2022. At the time of writing further agreements are awaiting signature by clinics. The increased US presence at clinic level means that we also foresee accelerating sales growth and an increased presence on this market. Clinics are increasingly requesting that remote monitoring of patients be handled by external operators. This business model provides us with business opportunities for improved margins by managing patient monitoring, maintaining ongoing patient contacts and ensuring correct and regular monitoring. Our monitoring center will follow patients 24/7 and report deviations directly to health providers. We can also handle administration and invoice insurance providers so that clinics can focus on their core operations. I look forward to presenting more information about this progress shortly.

Our platform is being further developed to collect and process information from many different clinical data sources. This increases our opportunities and we initiated several transactions with clinics to use our system for other indications in the fourth quarter.

In order to fully capitalize on our business opportunities we need to ensure that Coala Life remains at the leading edge in terms of technical development and systems development. This work intensified in Q4, when we further strengthened our position with the recruitment of VP R&D Johan Eckerdal, announced at the start of 2022.

More than 10,000 patients has used, been diagnosed or are under long term monitoring with Coala Heart Monitor to date. The Coala Care platform has over 1,700 doctors and nurses connected and more than 500 healthcare providers. Clinical validation has been obtained through studies required for approval in the US and Europe – but also through the systems being used in numerous clinical trials carried out by researchers and pharmaceuticals developers. Several examples can be found on our website. In the fourth quarter, the recruitment for the TITAN-DM study was completed. This is a clinical observational study with 600 participants, aimed at increasing knowledge about the incidence of atrial fibrillation in people with diabetes through remote monitoring with the Coala Heart Monitor. The study is being carried out under the management of Region Gävleborg and the results are expected to be presented in the second half of 2022. In February, we also presented the results of the Swedish Dental and Pharmaceutical Benefits Agency’s evaluation of the health economics of Coala Heart Monitor Pro for diagnosing atrial fibrillation in primary care settings. The evaluation concluded that Coala Heart Monitor Pro engenders increased benefit at a lower cost than the alternatives. Several studies are also in progress on other markets, including Japan, where the results of a major ongoing clinical trial are expected to be published later this year.

We have also made progress closer to home. Region Stockholm chose Coala Life from a large number of contenders as the only company alongside Siemens and Cuviva to participate in the pilot study on remote monitoring scheduled for 2022. In Denmark, a pilot study at Odense University Hospital was completed successfully in Q4. The monitors are already in clinical use with further expansion planned for spring 2022. In India, we initiated a partnership with Vera Healthcare to implement Coala Heart Monitor in primary health care services in rural areas. The collaboration with Vera Healthcare initially encompasses the distribution of 100 monitors.

Just before the publication of this report, we announced our intention to complete a preferential rights issue totaling SEK 150 M. The share issue, which is fully underwritten, will allow us to realize our growth plan and accelerate market penetration. But we are also looking at a number of attractive potential acquisitions that would strengthen Coala Life’s position in long-term monitoring, analysis and algorithm-based diagnostics. A stronger financial position will significantly improve our opportunities to make selective acquisitions and increase growth.

Coala Life will soon have been listed on Nasdaq First North Growth Market for six months. A key reason for the listing is to access financing opportunities on the stock market. Above I have outlined some of the growth opportunities that exist on the US market. We believe that we need to be able to act quickly in order to take the lead in the paradigm shift towards remote monitoring in healthcare currently underway in the US. The aim of the preferential rights issue is primarily to ensure intensified marketing in the US, but we also foresee many other promising opportunities. In parallel with organic growth, we continuously monitor acquisition opportunities that would allow us to accelerate the pace. I look forward to keeping you up-to-date about our continued journey

Dan Pitulia
President and CEO