Doctor Care Anywhere Group plc (ASX:DOC) Q121 update showed that it continues to grow robustly in 2021, with revenue and consultations up c 260% y-o-y, ending the period with a solid balance sheet (net cash of £35.1m). Management remains confident of the growth potential for the rest of the year and expects revenue in 2021 to grow by at least 100% above 2020 levels. Edison Group have upgraded its FY21 forecasts following a robust Q1 and the company’s upbeat outlook for 2021.
| Year end | Revenue (£m) | PBT* (£m) | EPS* (p) | DPS (p) | EV/Sales (x) | P/E (x) |
| 12/19 | 5.7 | (4.4) | (3.7) | 0.0 | 24.6 | N/A |
| 12/20 | 11.6 | (13.5) | (7.8) | 0.0 | 12.1 | N/A |
| 12/21e | 23.4 | (16.3) | (5.1) | 0.0 | 6.0 | N/A |
| 12/22e | 37.4 | (9.0) | (2.8) | 0.0 | 3.8 | N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Solid Q1 revenue and KPI growth
Underlying revenue (excluding £2m one-off revenue) was up 260% y-o-y to £4.4m in Q121, resulting from 261% y-o-y growth in consultations. Eligible lives increased 39% y-o-y to 2.38m at the end of Q121, already beating our H121 2.25m forecast and underlying the pace at which DOC has grown in Q1. Activated lives at the end of Q121 increased by 183% y-o-y to 495.9k, with DOC remaining comfortably on track to meet our 505.3k forecast for H121. DOC ended Q121 with a robust net cash position of £35.1m (£38.4m at the end of 2020).
Robust growth to continue in 2021
Management is confident of DOC’s growth potential for the rest of 2021 and expects group revenue to grow by at least 100% above 2020 levels, implying at least £23.2m in group revenue in 2021. With pressure on an already embattled UK healthcare system expected to continue, the company anticipates demand for its GP consultations (primary care) to remain high. Additionally, it expects the easing of lockdown in the UK to accelerate growth for its secondary care services.
2021 forecast updated, 2022 largely unchanged
Our updated 2021 revenue forecast now stands 9% higher at £23.4m (£21.4m previously), as we factor in £2m in one-off revenue in Q121. The higher revenue forecast results in gross profitability increasing by 22% to £11.2m (£9.2m previously), which translates into a 9% decline in net loss to £16.2m (£17.8m previously) and our net cash forecast being boosted by 8% to £20.9m (£19.4m previously). The only change to our 2022 forecast is that our net cash position now stands 25% higher at £7.8m (versus £6.3m previously) due to a higher forecast net cash position at the start of the year.
Valuation: Significant discount to peer group
DOC trades at 6x our updated 2021 revenue forecast on an EV/Sales multiple, a 65% discount to the 17.2x average of its peer group of global telehealth companies. We believe this valuation discount to peers will reduce over the next 12–18 months, as DOC builds up a track record on the market and executes on its growth strategy.
