The coronavirus crisis is set to delay new sales over the year but we continue to see significant long-term potential for Zenicor’s EKG solution and expect sales to recover and reaccelerate towards the end of 2020 and in 2021.


? Transitioning to a new sales model. Sales reached SEK5.9m (+5% y/y) in Q1 and were
SEK21m (-2% y/y) on a rolling 12M basis. EBIT w as SEK1m, or SEK0.5m excluding a
positive one-off. Zenicor is currently transitioning from its traditional sales model to a
recurring revenue model based on pay-per-use. This will slow down sales growth in the short
term but we view the strategy change as supportive as it will increase the share of recurring
revenue.

? Cash flow. Cash flow is still poor due to working capital (FCF SEK-3.8m), and the cash
position was SEK1m as of end-Q1. The company expects the recurring revenue stream and
lower costs to be sufficient to support cash flow in 2020 and expects a positive EBIT in 2020.
Longer term, we do not view cash flow as an issue, as we expect gro th and margins to be
strong within a couple of years. New equity could be needed in order to accelerate growth.

? Pressure near term, long-term outlook intact. Healthcare providers use Zenicor"s EKG
solution for early detection of atrial fibrillation (which is closely correlated with stroke) and
we find it positive that customers have continued to use this solution during the coronavirus
crisis. The majority of Zenicor’s revenue is recurring. How ever, we expect the current crisis
will postpone new sales during the year and hold back growth temporarily.

? Estimates and valuation. We adjust our sales estimates for the forecast period by -15 to
-20%, as we expect the coronavirus to slow down growth. We adjust our valuation range to
SEK27-31 from SEK34-40 previously, due to our lowered sales forecasts.

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