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Word from the CEO

Dan Pitulia vd Coala

Our efforts to build a profitable business within Managed RPM in the fast-growing US market increased further during the period, and a clear demand for our solutions shows that we are on the right track.

“A clear demand for our solutions shows that we are on the right track.

Coala Life’s main focus is the US market. In the United States, more than half of the adult population suffers from one or more chronic diseases which qualifies them as patients for subsidized remote monitoring, Remote Patient Monitoring (RPM). Limited to those suffering from chronic cardiovascu- lar diseases, there are currently over 120 million Americans and the number is expected to increase in the coming years.

It has now been barely a year since we launched our invest- ment in Managed RPM in the US as a full-service under the name Qorum Partners, for remote monitoring of chronically ill patients in a home environment. The service is partly cloud-based and can be compared to a SaaS model where we sign operating and monitoring agreements on behalf of US healthcare providers that are compensated by the new regulations for RPM. In the middle of the past quarter, the acquisition of the American company Vitrics was finalized, which is also active in Managed RPM. These two solutions have shown strong growth during the quarter, which is very reassuring. The key ratios we present in this report are well in line with our financial target: to reach sales of SEK 250 million by 2024 with a positive operating profit and a maintained gross margin of over 80%.

Above all, in the past two quarters, we have learned a lot about our customers, the clinics, work and the internal processes that govern their daily work. This means that we know what to solve for them so they and their patients can get started and use our platform on a continuous basis.

It is also clear that there are notable differences between clinics. This has led us to focus on a tailored approach. In this work, our experienced sales force is complemented by the forty or so clinical people we have contracted. The goal is always to make customers feel that we are their partner and not just a supplier. Once we have gained that trust, we can clearly see that the use is gaining momentum.

The key ratios we have reported to date are the number of patients monthly and the ongoing revenue this corresponds to on an annual basis. As of the end of September, the number of patients had grown to 2,600, which corresponds to a level of USD 2.7 million measured as annual recurring revenue. By the end of October, these numbers had increased to 2,800 patients corresponding to an annual future turnover of USD 3.2 million.

Managed RPM means that clinics’ remote monitoring of patients is handled by external companies. This form was widely used even before Covid, but the pandemic caused a strong acceleration in the use of Managed RPM. Our busi- ness model for Managed RPM is the same for both Qorum Partners and Vitrics. We monitor patients 24/7 and the systems notifies any deviations that we report directly to the healthcare provider. We also handle the administration and invoicing to the insurance system, which allows clinics to focus on their core business. This model allows for improved margins when we handle patient monitoring, maintain ongoing patient contact and ensure correct and regular monitoring.

The synergies between Qorum and the acquired company Vitrics also mean that we can manage most of our RPM from the same center going forward, which further contributes to strong gross margins. We continuously evaluate other possibilities to adapt and modify our model to further increase efficiency. I will provide regular updates on this in our quarterly reports going forward.

In Sweden, we have seen that sales are starting to pick up and although the Swedish model does not allow room for the same business model as in the US, it is an important validation for Coala. In April this year, we received formal approval when the Medical Device Council (MTP) rec- ommended the use of Coala Heart Monitor in Swedish healthcare for patients with symptoms of atrial fibrillation. We are now seeing regions begin to require MTP council approval as a shall requirement in the context of procure- ment. In Sweden, at the end of the period, we had 1,800 patients and private consumers connected to Coala Heart Monitor.

I am delighted that our business has had a strong impact in the market and that we are delivering in line with our ambitious goals. I am also grateful that a group of our major shareholders has made a loan facility of SEK 25 million available to the company to ensure our working capital needs. The loan can be converted into shares, which clearly indicates that our owners believe in our long-term growth journey in the US market. For further information, see the press releases published in connection with this report.

Overall, we are well in line with our ambitious goals. Our Board of Directors continuously evaluates solutions to ensure the company’s long-term financial situation. The loan facility allows us to continue our successful marketing efforts in managed RPM in the US. I look forward to keeping you updated about our continued journey.

Dan Pitulia, President and CEO, Coala Life AB
November 2022

Comments from the CEO can be found in the most recent Interim report from Coala Life AB. For more information about the company operations and figures from the recent quarter see the full Interim report.

See full Interim report