Physitrack PLC

STO:PTRK

Earnings Call Transcript

[Henrik Molin, executive]

Good morning, everybody. Welcome to Physitrack's Q1 results presentation. My name is Henrik Molin, and I'm the CEO and Co-Founder of Physitrack. And I'm joined by Charlotte Goodwin, who is our CFO. We'll give you a little overview of the quarter in short, followed by a business update. Charlotte will walk you through the financial results more in detail and then we'll look a little bit about the strategy and outlook and then we'll open up for Q&A. The time for our initial part of the presentation is between 15 and 20 minutes. So let's go.

Let's take a look at Q1 in short. Some nice KPIs coming in here with notably profitability increasing 44% in the quarter. This is a very, very important part of what we do. We like growth with profitability. For those who know us, it creates a robust and it creates a very nicely accelerating company without having to risk the situation in terms of -- in this type of an environment, a lower valuation for our shareholders and also a climate for our team and our customers and overall stakeholders that something is going to happen to the company as a result of a funding crunch, for example, we're seeing with some of the industry. Still very happy about that.

But overall, 67% growth on the company in terms of top line revenue, and that's organic and inorganic. Looking at the pro forma and the organic side of that, that's 29%. This is right in line with our expectations, the expectations of the analysts covering us and would like the fact that things are moving in a very nice, predictable, stable way. And again, we maintain profitability.

Looking there on the right side, some strategic acquisitions that came in, in the quarter. Obviously, PT Courses was a key one for us and that enables us to accelerate further in the American market, notably in the enterprise space. I'll give you some more comments about that in coming slides. The middle one, that's some and nice -- and nicely accelerating footprint in the German markets with some great short-term results with Wellnow. That's a very important part of what we did there in Q1. And of course, as you saw it from the introduction video, we are very, very proud of having Champion Health as part of the family. It's a nicely -- very nicely accelerating business both in terms of their financial KPIs and also what they will do in the context of our Access wellness ecosystem. But more comments on that a little bit later on, but those were the highlights from the quarter.

Moving into the business updates. Looking at the SaaS piece. And so this is nicely growing, not just the user base. We're also seeing that continued trend with the sophistication of our user base and moves towards more high-end products like our custom app range, our data repository services, PhysiData. And of course, there's a solidified appetite for telehealth among our user and that technology is being used as a permanent addition to people's product lines and that's generating some nice growth and not just on the user base. This is not a one-trick pony where we just solely focused on the user base and the pricing of the user base, there's so much more to us at SaaS than just that. But these are nice numbers.

We have had a very solid retention focus. We have a name for that now. It's called the Customer Value Taskforce. It's designed to identify what customers find as valuable with us as a provider based on what people do in the ecosystem as they become customers and also before they become customers. And this is something that we can then pinpoint and prioritize the investment into the platform with and also how we train and onboard our customers during the free trial phase. So this is all designed to increase free trial conversion and also to reduce retention. As Charlotte will be discussing a little bit later on, our retention numbers are up, churn is down, and this is a continuing trend that's very, very strong. But being data-driven to analyze what's going on, on the platform and making decisions and educating customers and communicate it to them based on that is a very, very important part of a strategy when your product [indiscernible] which we are.

Now we are continuing to build on the foundations for scale up here and making sure that we have the best-in-class technology and a really, really competent team to make sure that this works. Some of the things mentioned here on the financial side, as you can imagine, when you expand a group from a couple of entities that we have going into the IPO to now 6 or 7 entities. It's very, very important that you have a robust system for managing payments, managing subscriptions and also for managing a multicurrency, multi-jurisdictional accounting and reporting, which we are now doing with NetSuite, which is an accounting system that will keep us robust until EUR 1 billion of revenue, give or take. And this is very, very important to keep reporting predictable and nice numbers. So a lot of things going on under the hood there among other things.

And lastly, the platform enhancements and that links back to what we're doing with the Customer Value Taskforce and the team, just prioritizing what's coming into that product roadmap and the things that have come out there as a result of the Customer Value Taskforce are very drastic improvements on the algorithmic search methodology that we have in place and the way that that experience is accretive to our users. And so the ability to search through this 15,000 exercise library is something that is the #1 priority for people and this is something that we've been able to enhance quite dramatically in this quarter. So some exciting things going on there on the SaaS side.

Moving over to some of the things that we've been doing here on M&A. And as I mentioned in the intro there, the accretiveness of PT Courses for the expansion that we see and notably enterprise in the U.S. market. That's been very, very positive for us with this acquisition of PT Courses. And I'm happy to say that the integration work and the boost of PT Courses, both in terms of their course catalog and some examples of what those revamped Physitrack design and courses look like on the right, also in terms of the technology to boost the overall revenue flows for them via a subscription model, a system parallel to the a la carte course purchase model. So very, very positive first moves in that market with PT Courses and we have some really nice plans for that in the future and with the bundles with the Physitrack, et cetera, but a very, very nice start there.

Second company here to just highlight here that we acquired here in the quarter, Wellnow, of course, a superstar platform for delivering virtual-first wellness to the corporate space. And we can see there examples of some really, really nice strong brands there. I particularly like the logo there, the second from the left, Tesla, and some of these other Berlin-based companies. And this is just the beginning. We see a very, very, very strong revenue growth trends with what Wellnow has achieved so far, and we're very happy to have Alex and Enno on Board to keep doing what they do and also to help accelerate them inside of the Access ecosystem, the technology that we can use to boost them.

Now speaking on technology to boost the Access ecosystem. We are very proud of Champion Health, and you've seen that in our communication and you saw that in the opening of this webcast. This is really the employee wellness platform for the future, and we couldn't be happier to work with Harry Bliss and Ricky Bailey and their amazing team with this tool that's the perfect wrapping paper or the perfect user interface for the Access ecosystem. And so the plan here is to integrate the care pathways that we have available from our subsidiaries, Rehabplus and from Wellnow and from Fysiotest with everything from biometric testing to rehabilitation on the MSKs, that are things down the line as well for emotional wellbeing, rehabilitation to have that in one of the slickest and most amazingly architected and designed user interfaces that I have personally seen.

So on top of that, of course, extremely strong revenue growth, which was indicated in the press release, with the spinout and transaction. The -- there is a continued growth along those lines in store for Champion Health, which also explains the multiple that we paid for them, as you could also see from the press release. Overall, we think this is a great deal and just the energy and the enthusiasm that Harry and Ricky bring to this team is leading to some amazing results that we're seeing both in the short, medium and the long-term.

And that concludes my little business update, and I'm going to hand it over now to Charlotte to dig into the numbers a little bit more. Charlotte, over to you.

[Charlotte Goodwin, executive]

Thank you very much, Henrik. And I should first mention before jumping into any numbers that now we're reporting on our new year-end to align with the calendar year. All prior comparators have been realigned to the quarter ending March 2021.

So firstly here, a quick overview of the key financials. For the quarter ending March '22, revenue has increased 67% to EUR 2.6 million from EUR 1.5 million in the prior year. Some of this growth is due to the acquisitions of Rehabplus, Fysiotest, PT Courses and Wellnow. And on a pro forma basis, with the revenue from these entities included in the prior year comparators, revenue has increased 29%. In the quarter, the Physitrack Group has delivered adjusted EBITDA of EUR 0.7 million, up 44% from the prior year. And this results in adjusted EBITDA margins of 29%, down slightly from 34% in the prior year. This fall represents the well-signaled impact of the recent acquisitions on the group margins.

Moving to the next slide. Focusing on revenue now. On the left, here you can see the quarter's revenue growth both on an absolute and a pro forma basis. As previously signaled, the growth in both our SaaS and care divisions are usually H2 weighted. And in this context, we consider Q1's revenue performance to be strong. On the right-hand side, here we can see revenue split by SaaS and Virtual Wellness.

In SaaS, which is currently makes up the majority of our revenue, the growth is driven by increasing user numbers, the price rise implemented in summer 2021 and strong levels of upsells. We will implement our annual price rise for monthly SMB customers in 2022 on the 1st of June. And our enterprise and annually built Physiotools customers will receive price increases throughout the next 12 months.

The Virtual Wellness business, which is still a relatively small proportion of the group, although we expect this to grow over time, has experienced strong year-on-year pro forma revenue growth, although there is still some volatility in quarter-on-quarter numbers as the impacts of COVID have shifted spending cycles out of their normal pattern. The acquisition of Champion Health will accelerate the move of this division towards a subscription-based revenue model with more predictable growth patterns.

Moving to the next slide. Moving on to profit. On the left-hand side here, we have EBITDA for the quarter. Last year in Q1, we delivered EBITDA of EUR 0.5 million. And the current year, this has fallen to EUR 0.3 million. Within this, there were EUR 0.4 million of nonrecurring adjusting items, primarily related to the acquisitions of PT Courses and Wellnow. These amounts stripped out, adjusted EBITDA was EUR 0.7 million or an increase of 44% from last year. Adjusted EBITDA margins have fallen from 34% last year to 29% in the current year due to the well-signaled impact of acquisitions. Over the medium-term, we expect these to rebound to our target EBITDA margins of 40% to 45%. On the right-hand, here you see the EBITDA shown by quarter. As depreciation and amortization remained flat year-on-year, adjusted operating profit has more than doubled in the period to EUR 0.4 million.

Moving to the next slide. Looking at cash, we opened the year with a net debt position of EUR 13.3 million. Adjusted EBITDA in the period generated EUR 0.7 million and was offset by small working capital movement of EUR 0.2 million. Intangible asset additions was EUR 0.9 million in the quarter and consisted of development of the SaaS platform, investment in the new Access virtual care product plus the previously signaled spend on build fees for internal systems such as Chargebee, [ Pendo ] and NetSuite. There was acquisition spend in the period of EUR 4.2 million related to PT Courses and Wellnow and related M&A costs of EUR 0.3 million. There was also a EUR 0.1 million movement on foreign exchange on our cash balance and this leaves the group exiting the quarter with cash of EUR 8.5 million.

As announced on the 6th of May in conjunction with the acquisition of Champion Health, we're in advanced discussions with finance providers regarding putting a lending facility in place to ensure that Physitrack can continue to invest in future growth opportunities.

Moving to the next slide. Moving on to the group's balance sheet. The first line here includes the internally developed technology platform as well as intangibles and goodwill arising on acquisitions. This figure now includes the accounting for our PT Courses and Wellnow acquisitions. Accounting for our most recent acquisition, Champion Health will be included in the Q2 2022 numbers. Cash we've already covered and trade and other receivables have increased due to the recent acquisitions as well as the relative increase of our enterprise customer base and the strong sales of custom apps in the quarter. Deferred revenue is primarily generated by Physiotools who bill upfront for 12-month contracts. Deferred tax arises on the intangible asset balance is recognized on acquisitions and will unwind over the period of the amortization of these assets. The third consideration relates to the Rehabplus, Fysiotest and Wellnow acquisitions.

That's all from me, so I'll pass back to Henrik now.

[Henrik Molin, executive]

Thank you, Charlotte. And of course, we're opening up for questions. After this if you have something for either me or Charlotte, you can put them in the chat field or you can ask them on the phone if you've been dialed in.

A couple of last slides here from my side of things, just looking at strategy and where we're going. First one on the left, market growth dynamics continued to be buoyant. We are still in a favorable macro environment for investments into digital health and it goes for both health care and for corporates. And this is very much supporting the 2 main business line of Physitrack, and we don't see any of that slowing down. We actually see that things are accelerating, especially on the corporate side as we see a return to offices and we see this post-pandemic era taking over with a lot of focus on wellness and prevention and the acceleration of course of health and wellness and productivity with using platforms such as Champion Health and down the line also the integrated care pathways or the Access ecosystem coming into play there, so very, very strong tailwinds there.

Still in the middle there, of course, geographical penetration continued to be very important. You saw that on the care side with the acquisition of Wellnow in Germany. So to have that significant footprint with that really, really talented team on the ground in the biggest economy in Europe is very key for us and that we'll see more of that as we move forward. And of course, on the SaaS side of things, we are always looking to create offerings that are attractive to users around the world so that we can take advantage of the next wave of digital health into more emerging type markets. So still going strong there, quite interesting.

Now also something I mentioned, of course, the increased sophistication of our user base and the need for more high-powered products such as our custom app range, data repository product, PhysiData as well as the virtual onboarding and telehealth product. That's also something that's spreading around the world and we are seeing our first customer deals done in places like Indonesia and this is very, very interesting for the future.

Last point here, M&A initiative. We have a very, very strong portfolio of companies now, and we have a great family, both for SaaS and for the Access ecosystem and wellness. We've had some real superstars on Board. We have some great working groups that are working together as if they are part of the same company, they are part of the same group, but they're in different corporate entities, but it has created some great dynamics and some great synergies, notably on the revenue side of things. And we continue to work actively with those companies to make sure that we accelerate organic growth very significantly like we did with Rehabplus in 2021. We did it with Fysiotest in 2021. We've seen that as well with Wellnow from the start of our relationship with them just a few months ago, with very rapidly accelerating revenue. And of course, Champion Health, which are real champions when it comes to growing revenue. So part of the group, part of these very dynamic working groups is a very high priority for us to work on, on the M&A side of things and that continues.

Now new opportunities. We get to see a lot in this type of environment. So as I mentioned in the early parts of this, we've indicated there is a funding crunch underway for companies that are not focusing on growth and profitability. And as such, we are seeing founders and we're seeing entrepreneurs that are contemplating a new home for their business so that they can keep accelerating and to stay on the mission that they went on when they first started their businesses. So we do see a lot of things. We haven't slowed down our sourcing. We haven't slowed down the pipeline. But that said, it is very important that we make sure that these working groups and this team of very, very strong, very hungry entrepreneurs continue to work together to reach organic growth on the aggregate that is way above the indicated targets for the group and for care. And so that remains the priority. But we are seeing a lot of interesting things.

Last couple of slides for me. Just highlighting this and I did point that out during the Champion Health webcast, how this has now come full circle in terms of the content. So looking at this from the left to the right, having the ability to offer corporates biometric testing and coaching to boost performance and to build productivity via Fysiotest IP, via Fysiotest's business model, very, very important to us and are plugging that in geographically in places like Germany with Wellnow and in the U.K. via Rehabplus. So that's the core of the Access ecosystem.

When you look at Champion, you have that beautiful wrapper of that whole ecosystem with an amazing user interface and user experience, that's the perfect starting point to work with our Access ecosystem. Champion, of course, works fantastically well as a standalone in terms of doing employee surveys and having algorithmic distribution of content and education and things that are in place to boost the morale and the productivity and the wellness health of a strong employee base by integrating the care piece into that, as we said in this introduction, is going to be a real homerun for us. Of course, at the back end there with the data Champion, the way that they collect and aggregate and distribute data to employers, to leaders based on what employees put in there, to say, is an amazing experience. That is something that very much continues to ramp this ecosystem in a very, very nice way.

So last slide for me, just reiterating our financial goals here, top line growth, in excess of 30%, watch out for quarterly distribution of our revenue, which is traditionally back of the year heavy. But apart from that, very much reiterating that profit margins, 40% to 45% over time. Charlotte alluded to the -- there's a compacting of margin as with 2 acquisitions, but all of these guys are on track to do the margin expansion that we expect from them from being part of the group that takes growth and profitability very seriously. And of course, last one there, no dividends expected in the short to medium term because we have other homes for that cash notably in a very good M&A program.

So that's it from us for the presentation. We're happy now to open up for questions. And I have initial one here. We can go to this first and then we can go to the phone.

[Henrik Molin, executive]

The acquisition margin of Champion Health seems initially high. Could you elaborate how you see it?

Well, so we have more visibility on growth data from a company like Champion Health, so of course is part of doing an acquisition. You get inside into the inter-workings of a company and notably their financials and their outlook. And so from a snapshot perspective, just looking at the multiple that we paid based on what the run rate was at the end of March, then that 5 or 6 multiple in the context of where the SaaS world has gone in the last few months. It can seem like -- well, I wouldn't state high, but let's just say it's generous. But if you just look a little bit further with Champion and what they have in the book of business, which, of course, is invisible to the outside world at this point in time, and we see what they have in the pipeline, we feel that this was a very, very nice price for this company. And I don't think there's a price I can put on people who are also driven like Harry and Ricky in a business like that. So that's a little bit of transparency there. I hope that's logical.

I have no more questions on the chat, so we can go to the phone.

[Operator]

[Operator Instructions] Our first question comes from the line of Joachim Gunell from DNB Markets.

[Joachim Gunell, analyst]

So starting off with regards to the fact that, okay, obviously, it's very strong year-over-year growth figures against a pretty tough comparable. But from a quarterly or more sequential perspective here, Q4 into Q1, can you talk a bit about what is driving this declining virtual care. I know that the selling cycle is going to be back and heavy, but is this the case also for virtual care? And also perhaps, can you mention a bit about what -- where Fysiotest and PT Courses are in relation to your, call it, growth plans based on the fact that they are showing year-over-year declines in Q1?

[Henrik Molin, executive]

Yes. So I'll start off there, and then I'll hand it over to Charlotte. So in general, SaaS -- sorry, in general, care has been very strong. So -- and there is an outlier, which is a very significant one, but there is an exception to that, which is Fysiotest in the Nordics, but let me just cover the main part of that to begin with. So when you look at there, we are on that growth trajectory that we initially forecasted and that we are very much delivering on that. We're seeing a stability and predictability, notably with Rehabplus in the way that that's developing. We actually see data on a week-by-week basis, and it's very rare that that strays from the forecasts that have been made. So that's very much quality plan.

We have seen some seasonality in Fysiotest's financial performance. That's something that is reflected in the overall care portfolio. This is -- there are some -- there's still some noise with particular business models related to Fysiotest because of COVID and lockdowns and unlock. Of course, there were no lockdowns in Sweden, but just a return to offices, et cetera. So there's a little bit of seasonality there in Fysiotest. That's a thing that I definitely see is going away in the later quarters.

And also I should point out here that companies like Fysiotest have a tendency, what we saw last year as well, has a tendency to be more back of the year heavy. There are more investment decisions that come in that people want to consume budgets towards the end of the year. So this is something that is definitely in play for Fysiotest, a little bit different for Rehabplus. I would say also Wellnow is also a little bit more affected by seasonality, but their strong performance, which we see is actually the reverse COVID effect with lockdowns and restrictions stopping in Germany, for example, and of course, in the build of a nice book. So yes, the data will continue to be a little bit seasonal as -- for a couple of these entities in care, but overall, it's a very, very strong growth there that we can expect over time, especially with Champion coming in, and that's a subscription-based model, as I should point that out with yearly contracts and we can expect low volatility in that new data.

Coming back to the second part of the question, PT Courses. We didn't have any big growth forecasts on PT Courses in the short term because we were observing the fact that we needed to work on their material and we needed to work on enhancing the platform and also to introduce that subscription model in parallel to what they do, which is an a la carte based model. And so as such, we don't see that revenue stream being very buoyant on a standalone basis in the short-term. But what we will see for the U.S. enterprise market, in particular, is that that will be very accretive to the SaaS side of things.

Now it's important not to look too closely at the individual revenue streams of some of our subsidiaries like looking too closely at Physiotools, for example, because there's flow in between the platforms, and it will be the same thing here for PT Courses where you can actually see the PT Courses' bundles boosting the Physitrack side of things. We will be doing deals on that side for our enterprise customers. If you purchase a number of Physitrack licenses, we'll be able to do a very attractive deal, for example, on continuing education and vice versa.

So I hope that's a good answer to that. Joachim, please let me know if that's -- if you want to follow-up there.

[Joachim Gunell, analyst]

No, sure. I guess we'll have the reason to revisit the whole bundled SaaS offering in the U.S. after the summer, I assume. But given the fact that we're 2 months into Q2 already and that your business model entails so much visibility. Can you say anything about how the Q2 has started off in terms of the, I mean, have you reversed some of the trends you saw now in Q1? And then perhaps for the full year, can you say anything about like what products or such or revenue streams here will be the main driver for growth?

[Henrik Molin, executive]

Yes. So we don't see any reversals of any trends. The SaaS side of things, I know Charlotte alluded to that, it is time -- that time of the year to look at the pricing of Physitrack platform. Of course, as I have explained a few times, I do believe that we are an underpriced offering. This is a clinical tool for many people, and it's not just a nice marketing tool to attract customers to your clinic. If you're a private provider, it's very much something that's changing people's lives when they use that. And as such, it has a lot of stickiness. It's not really in the interest of most of our customers on the care side -- sorry, on the SaaS side of things to actually replace systems because they play such an important role in the day-to-day.

And as such, of course, because it is a clinical tool, and there is clinical risk involved in developing that tool, maintaining that tool, the data security and cybersecurity. And of course, there's the production of exercises and features and so on and so forth. It is relatively speaking, a quite expensive tool to deliver to our customers. And there is a lot of understanding for that. And as such, price sensitivity is probably lower for something like the Physitrack SaaS offering than you see for more mainstream or B2C offering.

So there's a continued trend of price races on that side of things. And of course, Physiotools is interesting because they were very, very underpriced, much more underpriced than Physitrack vis-a-vis the value and that price increase process started already in September of 2021, and it's a monthly process that we go through with those customers that are on yearly renewals. And of course it's also -- we also incentivize people to transition from Physiotools to Physitrack and it's also a way for us to release that ARPU arbitrage between the 2 as far as we're concerned because they are priced still at the round 60%, 65% of what the Physitrack ARPU is. So overall, a strong continuing trend for the whole year, reiterating our financial goals, we have no plans to stay from that, if anything, with the help of the acceleration from Champion Health, Wellnow notably and also some interesting things that we're doing for Fysiotest with respect to biometric testing in a remote capacity.

So the ability to scale Fysiotest with using virtual technology for consultations with coaches and also the introduction of mailing tests, we think that can substantially increase the bottom line there and obviously top line of Fysiotest. So these are high important products with stickier revenue streams and this is something that we're accelerating into the back half of the year. So all in all, nothing changes, full speed ahead or pedal to the metal as a wise man once wrote.

[Joachim Gunell, analyst]

That sounds encouraging. But with regards to the chart you showed here with your wellness ecosystem, providing like a more holistic offering now and you painted the picture of how your acquired businesses basically complement each other within virtual wellness. When would you say just painting with very like wide brushes, would you say that you will have that comprehensive holistic offering in place where a customer can basically be able to tap into, yes, call it the whole array of tools provided within virtual wellness.

[Henrik Molin, executive]

So it is actually already available to Fysiotest. It's available to Wellnow. There are some tweaks that we have to do with it in terms of messaging. But on a more or less standalone basis with sort of virtual consultations being the glue, you can actually acquire the whole suite with the exception of remote biometric testing. That's still a couple of weeks away, more to come on that. But if you look at Wellnow and their offering, so they want to be the one-stop shop for everything related to corporate wellness. And that includes the virtual and the physical services that they provide.

We have a target list of, I think, it's a couple of dozen multinationals that are being presented Champion Health, so they can have that as a standalone. And of course, we can have sort of a manual integration of the other components. And so that's very much in play. It's commerciable. It just doesn't have the technological integration and wrapping that makes it into a seamless experience from a user interface perspective. That's likely -- that deep integration is likely to become, I'd say, early 2023, where you can seamlessly get these care services and then also sign up for physical well-being services and biometric testing on a subscription model is through the Champion Health website, for example, that's likely to come early in the next year. We can already buy this. And so we are actually commercializing that as we actually speak or we have already started doing that. And not to give too much away, but Wellnow's run rate has increased several times, several excellent growth since the acquisition because of this holistic thinking about being a one-stop shop. So that's very much happening.

Fysiotest obviously will be boosted very significantly with. We've actually already started talking to multinationals with Champion Health as a standalone via Fysiotest and then complementing that with the coaching services and other remote biometric testing pieces. So we are not sitting around waiting for the Ferrari of integrated Champion Health's Access, which is what it'll be called. We are actually selling this on a standalone basis and we're using Champion Health to open doors. In some cases, we're using Wellnow's physical services to open doors. In some cases, Fysiotest, they have the onsite biometric testing startup that they rely on. So yes, we don't sit around waiting for everything and everything to be perfectly integrated. So a lot happening already, which we will see in the revenue data going forward.

[Joachim Gunell, analyst]

And on the back of that, perhaps just final for Charlotte. Is the level, call it the CapEx intensity that we have seen now through Q4 and Q1, is that the best way to look at things going forward? Or will you have to increase the pace somewhat in order to execute on that opportunity?

[Charlotte Goodwin, executive]

Yes. So in Q4 and Q1, as we've signaled, there's been a bump to CapEx for these system implementations which are now coming to an end. So we'll see a drop off there in that CapEx. We'll also -- I think a lot of the work that we have planned for the Care Access product. We'll now be able to piggyback off the work that's already been done by Champion. I think we'll see a little fall off in that as well. And we will, of course, see Champion's CapEx come into the group. So I think with those 2 things offsetting you'll still see a small decline in CapEx with the largest decline in the current run rate, but then offset slightly by Champion's run rate coming in, but I'd still expect to see it fall to sort of more like $0.7 million or $0.8 million per quarter as opposed to $0.9 million in Q1.

[Henrik Molin, executive]

Chime in a quicker there.

[Joachim Gunell, analyst]

Very clear.

[Henrik Molin, executive]

Sorry, Joachim. I just want to say that we are continuously looking at ways to optimize our CapEx and obviously our OpEx and our CapEx to drop a few of these KPI abbreviations. It's very important for us, as you know, the history of ours is running a business that can continue to accelerate with internally generated funds and customer revenue, et cetera. So we are always looking at those things and I'm happy to say that with so many smart people on board and not to be through these acquisitions. And so for example, getting Champion Health's tech team into place and then combining that with the tech knowhow from Wellnow side of things because they did have that [indiscernible] for wellness services directly aimed at B2C previously. To join forces with smart people like that, you have to -- you can -- you spend less on investments into your tech platform because you can solve problems much faster.

And so what we are seeing over the next few months and quarters, it's actually that our CapEx and our OpEx is mixing and that's very much in line with these promises that we have of expanding margins. So we are -- without compromising on the speed of growth, we're making this into a more profitable place on an EBITDA level and on a net profitability level as well.

So do we have any more questions on the phone? Let me take one from the chat before we jump on the phone.

How are you developing in Sweden and the rest of the Nordics? I believe this is a SaaS question. Do you feel like you are recognized as the go-to option for physios?

Now I'd say I could probably be happier as a human being, but also as somebody who is commercializing physiotherapy software. In the Nordics, we have a nice footprint in the Nordics from Physiotools. I feel that that -- well, it is the go-to in Finland and is the #1 system by far. This is a national treasure still in Finland, but it's very much the go-to system. When it comes to places like Sweden, we have a nice presence with Physiotools. We have a nice presence there with a brand I didn't talk about that much, that was called Mobilus. But I could probably be happier with the pace of penetration of that market.

Now that said, we are tinkering with a few things development wise, that will make this into a more attractive offering, not just enough to translate the library and to localize and adapt it a little bit to the local market tastes. You actually have to look at some of the things that are done, for example, being able to prescribe an exercise program without the patient having to log-in to an app. So this is something that's pushed nicely by a competitor of ours called [ ExorLive ]. And this is something that we are developing so that we can become the go-to in places like Sweden as well.

So it's a mixed bag answer to that question, but I believe over time and obviously, it's a very good start from me being Swedish that we'd love to be that go-to option especially in Sweden.

So that was the last question there on the chat. So anybody else on the phone?

[Operator]

Yes. We have a question from Rebecka Garderup from ABG Sundal Collier.

[Rebecka Gärderup, analyst]

Two questions just regarding the -- 2 of the revenue streams, the maintenance and setup fee that can be fluctuating and the setup fee, for example, was very strong in the quarter. Can you just take us through how we should think about these 2 revenue streams going forward and what drives them?

[Henrik Molin, executive]

Yes. Charlotte, do you want to look at them and take the financial point of view, and then I can look at the commercial point of view, if there's anything for me to add there.

[Charlotte Goodwin, executive]

Yes, absolutely. So the setup fees obviously relates to the sale of our custom apps. All customer apps are not quite equal. So some are sort of real off-the-shelf white labeling and some more deep integrations into our customers' existing website. So there's not a set one price fee for a setup fees. It does vary slightly on the sales, but that's very much driven by number of sales as you'd expect.

The quarterly numbers, I mean, we've seen now strong setup fees for, I think, 4 straight quarters, a very strong setup fees, and we don't see anything in the background that would say that, that would vary. The setup fees continue to be strong. So I'd say that you could continue to expect setup fees roughly in line with what we've seen in the last 4 quarters.

The maintenance fees are a product of the setup fees. So once people have a customer that can place, they have an ongoing maintenance fee. Those are driven by various sort of cost indicating, we put the packages together. But generally, over time, we'd expect to see those increases we implement more and more setup fee, more and more custom apps.

[Henrik Molin, executive]

Yes. And let me chime in on that. Setup fees are very important as -- that's basically a handshake relationship for the customers. So if somebody wants to set up one of these more complex products, we ask them to make an upfront investment to start that on jointly. It's partly due to the fact that you actually put work into it and you put hours into it. It doesn't increase the cost base on a linear basis when you do these things, but it does take time from the development team and from the commercial team. So it is important that you have cost coverage and you have profitability on those.

Now the second part of that is that we want that endowment effect in place when we start the relationship so that if somebody actually invests in the setup of a customer, they put in the work, we put in the work. They are more likely to promote the use of it, they're more likely to be longer term customers of it. And they're more likely also to be more dynamic when it comes to the relationship with if they've actually paid something front. So we could theoretically do things without setup fee, without hurting the bottom line of the business. But we do find it a very, very useful tool for us to make sure that you have a buoyant and accelerating customer relationship with somebody partly because of that effect. So I hope that's answer to that question.

[Rebecka Gärderup, analyst]

Yes. And the maintenance fee, have you seen any patterns in that revenue stream something that we could follow, or have the patterns in that revenue stream?

[Charlotte Goodwin, executive]

Yes. In the prior quarter, so the maintenance fee is also where we classify our PhysiData revenue, which can be a little bit more up and down. Occasionally, people take PhysiData out for a short period to pull a big data set and then -- a little bit of volatility there. But the underlying maintenance fee increases over time as we put the setup fees in place and then the customer apps get online, we might look at pulling that PhysiData out as it's become a bigger number to give you a bit more visibility on that underlying maintenance fee.

[Rebecka Gärderup, analyst]

And last one about the -- or second last one. The PT Courses that you will put on to a subscription basis. How much of that revenue from PT Courses will be on a subscription basis?

[Henrik Molin, executive]

Well, over time, we expect a very vast majority of it to be on a subscription basis. There is some appetite for a la carte, and I think it's important to make sure that we don't let go of that because they are nice revenue streams. They are quite sticky. You have people that are loyal to PT Courses, and they keep coming back. And so there's predictability in that and that we are not planning to let go all of that. The -- but I do see over time, this is something that will be with a very, very vast majority based on subscriptions. And whether that revenue is booked on Physitrack side, you can come in with a bundle that contains PT Courses plus Physitrack or if it comes in on the PT Courses side with somebody or you lead with PT Courses and you add Physitrack, the mix remains to be seen.

So there'll be -- there's some movements in between because PT Courses wasn't a deal where we had an earn-out for the founder, the founder actually -- he's set to retire in the next year or so. There is no need for us to consider where revenue gets booked and how you measure the top line. The most important part is that they are part of that SaaS strategy, and they will -- on an aggregate basis, it will boost SaaS revenue and -- in that subscription model. But overall, just now, I mean, subscriptions will be the very vast majority of that because that's why we bought them, notably because of that bundle situation.

[Rebecka Gärderup, analyst]

Okay. Perfect. And the second last slide of the ecosystem. Can you just describe a little bit more about the different entities? And if you're going to keep them separate or which one you will integrate over time in a long-term perspective, please?

[Henrik Molin, executive]

Yes. That's very good because I can appreciate that sometimes looking at us, they can feel a little bit confusing because you have a lot of brand names there. What's important to remember is that we have the 2 main business lines, SaaS and there's the virtual wellness piece, with SaaS being Physiotools, Physitrack and then PT Courses. And now for the other side of things, you have brands that are right here on the screen. Now the -- there is -- I should say there is no confusion at group level. So we know very much who is in the zoo here, and we have these very strong booking groups. And so we operate like it is one company like -- and regional divisions.

When you look at Fysiotest for the Nordics, Wellnow for Germany, Rehabplus for the U.K., and our Champion Health that as a tech. So to us and to the way that these guys work on a day-to-day basis, it's super optical. So -- but from an outsider looking in, then I can appreciate that there's a little bit of confusion with -- now we are making things a little bit easier for you. So in terms of the reporting, as you've seen, we have been better than singling out the SaaS versus wellness. I'm just having people look at that at the 2 divisions and then being a little bit more careful with being too granular in terms of the components of it.

When it comes to company structures, nobody loves a simple corporate structure setup than Charlotte and her team. And so for example, just looking at the fact that you have a couple of entities in the U.K. There might be something that we can do to simplify while keeping the brands. I think Champion Health is a fantastic brand. And there are no plans to do anything with that. Question is if you have a holistic wellness offering that has an approach, which is everything from wellness to rehabilitation, whether or not it's smart to have a company that has a name rehab in it, remains to be stemmed. They are very strong. They are very -- Rehabplus is a very strong brand in the U.K. market.

So you have to be a little bit careful with those type of things. But there are examples of things that we are contemplating here, just to make things a little bit easier. And also, company identity wise, internally, I think it's just to solidify this feeling of working inside one group and just targeting these local offices, if you wish. Then I think we really want to solidify that. One way of doing that a little bit easier is to look and rename it and that's something that's on our table to think about in the coming months.

I hope that's a good answer for you, Rebecka.

Okay. Are there any more questions on the call?

[Operator]

We have no more questions at this time. So I hand the word back to you, Henrik and Charlotte, for some closing remarks.

[Henrik Molin, executive]

All right. Thank you very much for participating, everybody. If anybody is interested, I am on [indiscernible] TV in 6 minutes. If you want to tune in on that. And I really appreciate the time that you took to participate on this webcast. Thank you for staying tuned and for staying close to the Physitrack story. We wish you a great rest of the day.

[Charlotte Goodwin, executive]

Thank you.