iZafe Group Q1 Interim Report, January-March 2021

Read the full report here.

Summary of financial performance

• Net sales for the quarter totaled SEK 172 thousand (4,438). Sales for the quarter comprised revenue related to Dosell sales. In previous years, this item also included revenue attributable to the Security business area, which has been sold.

• Operating income for the quarter totaled SEK -7,219 thousand (-5,139).

• Income after financial items for the quarter was SEK -8,891 thousand (-5,459).

• Cash flow for the period was SEK 10,789 thousand (-7,467).

• Earnings per share for the quarter, basic and diluted, were SEK -0.3 (-0.2).

• Equity per share at the end of the period was SEK 0.6 (1.0).

• The equity ratio at the end of the period was 52.2 percent (58.4).

• During the quarter, the company secured ongoing access to working capital through the agreement of a credit facility corresponding to SEK 14 million.

Important events in the quarter

• As a result of iZafe Group’s successful pilot projects in 2020 together with partners, pre-orders were received for 450 Dosell 2.0 medication-dispensing robots. The 2.0 model was developed in the first quarter and is starting to be produced in the second quarter with ongoing deliveries.

• iZafe Group’s Italian partner has begun active marketing and negotiations with a large number of pharmacies in northern Italy. In addition, equipment that packages medication in sachets has been installed at a number of pharmacies.

• The pilot project with care service provider Attendo has been completed with good results. A phase of developing Dosell is now underway in close dialogue with Attendo to reach more users in the long term.

• The pilot project with care service provider TioHundra has been completed, with promising potential for the future. Overall, the Dosell medication-dispensing robot has been assessed to be a good solution for supporting day-to-day work at TioHundra.

• iZafe Group has conducted a test period with potential Dosell users in order to start supplying a consumer version of the service from spring 2021.

• iZafe Group has decided to expand the distribution of information to shareholders and other stakeholders to supplement the communication of important events and regulatory news in line with applicable regulations. The distribution of information is being expanded via the iZafe website for continual updates that are not subject to disclosure rules.

• In January 2021, iZafe Group raised just over SEK 4 million through the exercise of series TO 8 B share warrants from the rights issue carried out in 2019. The CEO and Board exercised all their share warrants.

Important events since the end of the quarter

• iZafe Group issued 1,000,000 share warrants (TO9) in connection with the agreement of a credit facility in April 2020. All share warrants were subscribed for, raising SEK 2.6 million for the iZafe Group before issue expenses.

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Comments by the CEO
The ongoing pandemic has continued unabated in Sweden, which in the short term has posed challenges for us, as it has been difficult for our customers to prioritize the practical introduction of Dosell in organizations that support the elderly. Confidence in Dosell as an important building block in a future digitalized healthcare system, in which the dispensing of medication using a dispensing robot is key in a healthcare system, is greater than ever. The pandemic continues to highlight the importance of introducing new technology that not only makes things easier for care providers but also improves safety for users.
 
Interest and belief in Dosell as a key function in this system remain significant and are growing. Our partners have confidence in Dosell as a product and by year-end 2020 we had approximately 450 pre-orders for Dosell 2.0, which was developed in the first quarter and is starting to be produced in the second quarter, with ongoing deliveries. The updated version of Dosell has a range of improvements and new features that make it even better and much more competitive, including a new integrated rechargeable battery with a battery time of more than 48 hours and an enhanced app.
 
During the first quarter we intensified development and training efforts together with our partners to prepare the roll-out of Dosell 2.0. Development is based on close cooperation with our partners, as well as with a number of operators in Sweden and Finland with which we have conducted successful pilot studies. Commercial production of Dosell 2.0 is planned for the end of May for subsequent delivery to our partners and customers based on the pre-orders we have received.
 
As part of our long-term strategy to position iZafe Group as a leading player in the digitalization of medication management, we are also launching a consumer version of Dosell in spring/summer 2021. The launch will create an entirely new private-sector market consisting of the approximately 220,000 people who already take medication using medication sachets and the 500,000 people who medicate manually using, for example, Dosett containers.
 
In the first quarter we focused significantly on our products, with major investments and development costs having a negative impact on income and cash flow. But like all product and development companies, we assume these costs in order to build our long-term competitiveness. We have secured financing to implement the production of Dosell 2.0, the launch of a consumer version and for the marketing of Dosell. Over the next few quarters we will gradually switch our focus from product development to marketing and sales efforts and the launch of Dosell Consumer, with a significant campaign through relevant channels. Expanding our recognition through our own marketing and through partners in the Nordic region and Italy will increasingly mean pitching ourselves as the leader in the medication-dispensing robot market. 
 
Both Apoteket AB and Kronans Apotek offer medication sachets and are continuing to establish the concept, for both private and public health care. Growing awareness of the health risks relating to incorrect courses of treatment or failure to comply with treatment is beneficial for our company. Together with pharmacies, we want to boost medication health and safety for the elderly. Dosell is a safe solution, both for those who want to ensure compliance with treatment and to be certain that combinations of medications work, but also for those who need reminding and want relatives to be involved so they can take action if medication is missed. 
 
Our shareholders have requested more company communication, so we have created a dedicated web page for company updates. I would also remind you to follow our social-media channels for information in addition to what is provided in our press releases. 
 
Early in the year, we performed a market survey through the public opinion and research data firm YouGov. A total of 2,063 men and women aged 18+ in Sweden were surveyed via online interviews during the period of 26 February – 3 March 2021. The survey is representative of the Swedish population and gave us valuable insights into the market.

• Of the 60-year-olds who take medicine daily and use a technical solution, 70 percent use dosette boxes. We see that these users can be transitioned immediately to dose-packed sachets so that they will no longer have to sort and keep track of their medicines.

• 43 percent of all respondents aged 60+ who take medicines daily have a positive attitude towards technical solutions that will enable them to independently take the right medicines at the right time.

• 82 percent of all respondents aged 60+ who take medicines daily think it is very important to take their medicines safely, meaning in the right dosage and at the right time. 

• Of all respondents aged 60+ who take one or more medicines more than once a day, 87 percent say that safety of medication administration is very important.

To sum up, I am really pleased with everything we have achieved with the development of Dosell 2.0 in the first quarter and am confident about 2021 and the gradual return of normality thanks to the vaccination program. I believe the launch of Dosell 2.0 will allow us to achieve the breakthrough we want after the summer, providing many people and their relatives with greater freedom and safety.
 
We have all the necessary factors in place in terms of personnel, processes, partners and a competitive product that is ready to capitalize on the market potential ahead of us. We are more excited than ever about our future growth opportunities. We expect the business climate to improve in 2021 as the ongoing vaccination program allows health care to gradually take the step from pilot projects to full-scale introduction.