The company is initiating a cost-saving program that will reduce ongoing operating costs while linking sales resources to performance. The program will start immediately and will have an effect already in October 2023. Fully implemented in January 2024, Coala Life's total operating costs will be reduced by approximately 30 percent.
The background to the cost savings program is that sales growth has not met expectations and thus costs need to be adjusted, but also that the company's working capital, due to payment terms of almost three months, is increasingly tied up in accounts receivable. The factoring agreement that the Company entered in June 2023 has not yet had full effect, and together these factors creates strains on the company's liquidity.
The greatest effect will be achieved in the US operations, where fixed selling costs are halved through a shift towards performance-based compensation and external parties are involved to a greater extent. The latter has proven to work well and is therefore now being expanded. At the same time, efficiency improvements are being made in all functions, which leads to overall lower costs.
Through the established customer base, new clinics and external sales resources, growth is still expected to continue with between 5-10% monthly. A stricter process for the selection of clinics and patients is expected to lead to improved efficacy of the sales initiatives.
"It is not uncommon for companies in early growth to modify their cost and compensation models. We have an exciting growth journey in the rapidly growing market for Managed Remote Patient Monitoring in the US. The measures now being implemented will streamline our sales organization and will improve our financial situation without adversely affecting customer benefits. We will report in more detail on the cost savings program in our next quarterly report”, says the Company's CEO Dan Pitulia.