Physitrack PLC

STO:PTRK

Earnings Call Transcript 2023-Q3

[Henrik Molin, executive]

Good morning, everybody, and welcome to Physitrack's Q3 2023 results webcast. I'm Henrik Molin, and I'm joined by probably the best CFO in the world of digital health, Charlotte Goodwin. We'll be taking you through the Q3 in short to begin with. We'll look at some business updates. We'll look at the financial results and revisit strategy and outlook, and then we'll move into Q&A. You can use the Q&A function on your screen below and ask us nice questions there at the end. And we'll probably spend around 15 minutes on this presentation and a few minutes on the Q&A.

Let's go. Q3 in short, it was a very nice quarter where we generated EUR 2.9 million in adjusted EBITDA. And just on the quarter, we generated EUR 1.1 million, and so that's nicely up from EUR 1 million, which was the previous quarter, 27% year-to-date 2022 organic revenue growth compared to last year, and this is 100% organic for the first time because we didn't have an acquisition for the last 1.5 years. And so we keep accelerating with the businesses that we have and the leaders that we have there, which is very, very nice, nice year-to-date 2023 revenue growth compared to the last quarter -- last year.

A couple of big focuses down there, obviously, profitability up 27% so that 25% trough that we hit was very much the trough, we keep accelerating upwards. And there's some really nice developments there in terms of how the business is run and how we are optimizing our resources and accelerating with that. We are also selective on revenue opportunities. We like high margin, we like cash flow generative revenue opportunities. And so we have been a little bit selective there in the last quarter in terms of what we want to do. And you can see that filtered through in our margin numbers.

Free cash flow burn EUR 0.3 million, and it was EUR 0.6 million last quarter. And if you compare it to a year ago, EUR 0.9 million. So that's a very positive trend. We will continue -- we'll be exiting Q4 with positive cash flow. We'll be focusing a little bit on innovation in this presentation, and this is something that's been very, very exciting to be part of in the last few quarters, actually, and we will be telling you about some of these AI-based developments later on in this presentation.

Also noteworthy that we completely revamped Physicourses. It's a whole new web page there, physicourses.com. If anybody wants to take a look. And the way that, that offering now integrates with Physitrack is very, very nice because for the first time, we can now offer our enterprise customers' bundles and there's more of a seamless interaction between users on both sides of the Physitrack's Physicourses trends. And there's a lot happening there as well. On the Wellness, I don't think so you saw the [ intraclip ] from amazing Champion Health. We are deep into the development of the new version of Champion, which will start to trickle out to users in this quarter, but will be launched widely in 2024.

Exciting times indeed to be in our business and digital health in general. Looking at the business, just as a little reminder, we have 2 divisions here. There's Lifecare where we put tools into the hands of health care providers so that they can help their patients feel better, faster and hopefully have a little bit fun along the journey. On the right side there, the Wellness division, which puts tools into the hands of employers so that they can help their employees to be healthier, happier and more productive and to have the ability to see what's going on in the businesses using data analysis tools that can help them really pinpoint what they should be focusing on as employers. It's a great, great way to run a business with Champion Health, and warmly recommend that to anybody watching this, that is an entrepreneur or a big enterprise player.

Now the split between the businesses, the division is 63%, 37%. So that's the same as last quarter. In terms of Lifecare, you log on the right side there, nice continued growth in that ecosystem of ours, and we are coming into some newer markets, which will have the opportunity to talk about in the coming quarters. But this is very much a strong offering, and this is something that is becoming the go-to solution for many, many health care practitioners around the world. So strong ecosystem. If you look on the left side there at the bottom, churn down to 1% on a rolling 12 months basis. And so not only do we have a nicely growing ecosystem, it's a very sticky ecosystem as well.

On the top there, so continued focus here on profitability growth and driving efficiencies. And we're not at all in cost-cutting mode. We're in optimization mode, which means that we're getting more out of the resources that we have with the tools that we have, the amazing people that we have, and that's leading to some real nice EBITDA expansion.

Physicourses, as I mentioned in the introduction, nice introduction there to Lifecare. You've seen the lines blur more and more. And what's fun about Physicourses is that it is actually a global offering. And so we're seeing interest and sign-ups and paid usage from all over the world, actually. So it's very, very nice to see that, that solution is finding a home in many places. And we'll talk a little bit more about AI later on, but all of our teams pretty much everybody in our group of almost 140 people have looked at how AI tools can boost their day-to-day tasks and their day-to-day efficiency. And we have implemented a lot of really interesting things in terms of workflow related things across the whole team. So finance and sales and marketing and everything that we do with content production, software development, et cetera, so people are launching new piece of software co-pilots and are testing new things out. And as an effect, we're saving dozens of man hours in total across the group, and we're able to produce some really, really interesting things.

Now in terms of the product development pieces, I will show you a little bit more about that in the coming slides. First, Wellness. Looking on the right side there, really, really nice 100% pure organic growth. So we didn't accelerate with the M&A program, which is a part of what we do with this is pure organic growth based on the great leaders and the people that we have in the subsidiaries. So very, very nice continued development there and more to come there, and you saw just how excited it is to be in wellness with a great solution by Champion Health.

On the second point there, some great new features coming into Champion Health. And we also be seeing localization of Champion Health. We have identified and we are tendering some great technology for AI video to video in terms of getting that library and that's almost 1,000 pieces of content at this point and it keeps growing to get that localized into multiple languages. So that we can cater to multinationals, but also that we can become a strong local player, where we have feet on the ground in places like Germany, very exciting things going on there. And of course, some great wins, and I'm not surprised to see more of these amazing logos in the collection of wins from the Wellness division. So looking at things like Healix or like we announced just last week, E.ON, which is one of the Europe's and one of the top energy providers in the world. So much more to come on that front. Hopefully, we can talk about it because a lot of these companies, they see there's a competitive advantage to use Champion Health in their day to day. But we'll tell you more about that as we can.

Right. Just looking at some of the innovation that's been going on in the business in terms of product and content development. So top left there, very, very exciting things happening there on the content side of things. We are looking to diversify our content. We have wish lists from our clients almost on a daily and a weekly basis, and we're always trying to find ways to produce content faster and something that's very important to us as a business that has 14 nationalities on board from all over the world, diversity in the library in terms of the ethnic focus on the coaches and the models.

And AI is doing some amazing things for us in terms of being able to create content that can have that diversity. And this is something that we're rolling out in the next couple of quarters, and it's a project that will be with us for a while because we have 17,000 exercises and what is the world's biggest exercise library for clinical exercises in physiotherapy. On the right side there, you see some of the work from the AI lab when it comes to the content library. So just making sure that these meta humans or these very lifelike avatars have all the characteristics of real humans that it looks as realistic as possible down to tooth work, as we see there with one of our models.

We have lovely [ Alister ], bottom left, and that's -- I'm not going to play that clip, but that's a clip of Ali speaking, perfect Spanish, lip movements, so everything moving in a tandem with the content that she's delivering. AI is providing us with some amazing opportunities just to reach people in the countries where they are in the languages that they speak without compromising on quality or the local fit. So amazing things happening there.

Bottom right, I'll show a little bit more about that. We have an AI copilot coming to Physitrack that will revolutionize the way that our customers identify and roll out exercises to their patients. A little bit more about that on the next slide. So I thought I'd just give you a little showcase of what the AI library, the content library will look like with these very human like avatars. And as you can see, just the quality here, and I'm hoping that this translates at your end as well with the screen sharing, but just the life-like nature of these -- the way that the models and textiles and hair and everything is moving. You see this lovely diversity we have in terms of the coaches and the models. And this is really something that we feel very, very nice to roll out to all parts of the world where we have customers. So a lot more to come on that.

In terms of the copilot, well, the way that you search and identify exercises in the Physitrack library and how you find contents in a lot of places in the world is by search. So we have algorithmic search in the Physitrack platform right now, you search for exercises based on keywords or filters and you select exercises like you would select exercises and sending them to your friends and family on iPhone, you put them in a basket and then you fire them off to your patient for the rehab. So great way and we've revolutionized the way that we do this with our algorithmic search engine and the speed of this. But with our copilot, this is going to be even more streamlined. So we'll be able to using LLM to have the practitioner just prompt based on conditions and also specific instructions and then generating a program that can then be rolled out very quickly to the patient.

And so this, as you can see, is a more modern way and is a very, very efficient way to get content into the hands of the patient. And this will have a big impact on how our customers see us and, of course, how we'll be able to be seen as the innovator in the space. So this is super exciting. The team has done a fantastic job on this. So we'll see this in the coming quarter on the platform, and we're testing that internally right now.

All right. Some exciting development from me, and I'm now going to pass over to Charlotte for the financial results.

[Charlotte Goodwin, executive]

Thank you. Thank you very much, Henrik. So starting here with a brief overview of the key financials for the 3 months ending September 2023. A quick reminder that we've replaced the pro forma revenue growth metric with an organic revenue growth metric. This includes where relevant the impact of acquisitions as the previous one did, but it also takes into account the impact of foreign exchange year-on-year.

In the quarter, we delivered revenue of EUR 3.9 million, up 14% from EUR 3.4 million in the prior year. Year-to-date, on an organic basis, adjusted for the impact of foreign exchange, revenue increased 27%, broadly in line with our medium-term targets. In the quarter, the Physitrack Group delivered adjusted EBITDA of EUR 1.1 million, up 15% from the prior year, and this results in adjusted EBITDA margins of 27%, flat versus the prior year and up from 25% in Q2. Total EBITDA has increased 16% from the prior period to EUR 0.8 million, and operating cash flow has increased 18% to EUR 2.1 million.

The next slide on to a closer look at revenue. On the left here, you can see group revenue by quarter. Total revenue in the quarter has grown by 17% year-on-year on an organic basis and year-to-date, organic growth was 27%. On the right-hand side, we can see revenues split by Lifecare and Wellness. In Lifecare growth in the quarter versus the prior year was 12%, driven by growth in user numbers and continued upward price momentum offset by a fall in one-off build fees for branded apps.

In the Wellness division, quarter-on-quarter organic revenue growth was 28% against a strong prior year comparator.

So the next slide. Moving on to profit. On the left-hand side, we see the prior year figures. Last year's 9-month EBITDA was EUR 1.2 million, with adjusting items of EUR 1.3 million stripped out, adjusted EBITDA was EUR 2.6 million. In the current year, EBITDA has risen to EUR 2.2 million, an increase of 82%. Within this, there are EUR 0.7 million nonrecurring adjusting items related to costs associated with the integration of acquisitions and the restructure of Champion Health Nordic, previously Fysiotest. But these amounts stripped out, adjusted EBITDA has increased by 14% to EUR 2.9 million.

Adjusted EBITDA margins year-to-date have fallen year-on-year from 29% last year to 26% in the current due to the shift of the group towards Wellness revenues, which currently operates at a lower margin plus investments into future growth. Quarter-on-quarter, these margins have increased from 25% to 27%, flat from Q3 last year. Over the medium term, we expect these to continue to expand and rebound to our target EBITDA margins of 40% to 45%.

Moving to the next slide. On the left here, we have adjusted EBITDA shown by quarter for the prior year and the current year. On the right, we have EBITDA by division. In Lifecare, which is the longest established division, EBITDA margins are at 47%, roughly in line with the prior year. In the Wellness division, margins are currently at 6% compared to 3% in the prior year. We're focused on margin expansion in this division. The gray bar represents group costs such as board fees, listing fees and associated advisory fees, which are flat year-on-year due to the cost of indices realized in head office, offset by inflationary increases.

Moving to the next slide. Now looking at cash. We opened the year with a cash position of EUR 0.6 million. Adjusted EBITDA in the period generated EUR 2.9 million and was offset by a working capital movement of EUR 0.8 million and interest payments of EUR 0.2 million. The working capital impact was driven by proportionately less of our contracts being sold on a 12-month cash upfront basis. Intangible assets and fixed asset additions were EUR 2.5 million and consistent development of the Lifecare tech platform and investment into the wellness technology. These were deferred consideration payments in the period of EUR 1.6 million and related M&A and integration costs of EUR 0.7 million. We do not expect to pay any further deferred consideration in the current year.

In July 2022, we entered into a GBP 5 million revolving credit facility in the 3-year term. In the year, we drew down GBP 2.9 million of this facility. This means the group exiting the quarter with cash of EUR 0.4 million, plus remaining undrawn facility of EUR 1.9 million, giving total available liquidity of EUR 2.3 million. We expect this liquidity to be sufficient for the group's requirements.

Go to the next slide. The slide shows the total free cash flow by quarter, due to spend on M&A and integration costs recognized as adjusting items in the P&L and investments into both the Lifecare and Wellness divisions, we've had a net cash burn in recent quarters. As these investments are completed and operating cash improved, we've seen this cash burn decrease. Year-on-year, the Q3 free cash flow burn has decreased by 67% from EUR 0.9 million to EUR 0.3 million. As expected, quarter-on-quarter, the cash burn has also decreased 50% from EUR 0.6 million to EUR 0.3 million, and we are on track to reach a net cash generation before the end of 2023.

Next slide, on to the group's balance sheet. The first line here includes the internally developed technology platform as well as intangible assets and goodwill arising on acquisition. The full versus last year represents the impairment of the Fysiotest goodwill recognized last quarter. Cash and borrowings, we've already covered, and trade and other receivables will increase in volume with the increase in revenue. Deferred revenue is primarily generated by Physiotools and Champion Health [ bill ] upfront for 12 months or longer contracts. Deferred tax arises on the intangible asset balance recognized on acquisition and is unwinding over the period of the amortization of these assets.

Deferred consideration relates to the Champion Health Plus. We have Plus, Wellnow and Champion Health acquisitions. The deferred consideration relating to Fysiotest has now been released following we signed agreement with former management.

That is all for me. I'll pass you back to Henrik.

[Henrik Molin, executive]

Thank you, Charlotte. Right, just revisiting strategy and outlook. So again, top line there, we have a holistic offering, and you see that how we have diversified the business into the 2 business lines, Lifecare and Wellness. But within the 2 divisions, we have diversification in terms of the product lines that we have there. Very, very important to do that because it makes us into a more robust and it makes it into an all-weather type product, but we find a true market -- product market fit with this. Providers today, patients today, employees today, they don't want 5, 6 places to go when they want to solve problems, they want just a couple of places to go. We uniquely put a lot of things into one holistic solution per division, which is exactly what consumers need today. So great product market fit there.

And the middle one there, we are supported by the macro environment. It is a difficult place to be right now, high inflation and stress and everything that's going on in the world. But what we do is very much supported by that. And second point, there obviously profitable growth is part of our DNA. We're clocking in at almost 50% EBITDA margin on the Lifecare side of things. So we have it in our DNA to make sure that we have a business that is sustainable and as robust and is cash flow generative. That's exactly what we do. And the bottom there, I already mentioned that the balance portfolio, the all-weather nature of the product on both sides of the business, super important for us and something that makes our value proposition absolutely unique.

All right. So just reiterating our financial goals. So we are in a mode where we are not acquiring businesses, and you can see that despite that, despite having the ability to accelerate organically with new leaders coming into the business with great opportunities locally. We are clocking in at our medium-term goals. And we are, as you can see, expanding margins. And the financial goals, they stay in place, and we feel that this is going to be a really, really nicely cash creative business in the coming quarters and with us passing into cash flow positive territory in the next quarter. So exciting times to be part of Physitrack and exciting times to speak to you.

And now we are going to open up for some Q&A and let's just see what's coming here in the Q&A.

[Henrik Molin, executive]

Yes, how -- first one, how realistic are your long-term goals in light of today's results, in particular with regards to long-term growth, 30%?

Well, the goals are medium term, the goals were set in and around the IPO, we have consistently met or surpassed those goals on the top line growth side of things in the environment that we are, and we were even getting to that place without M&A boosting us in terms of organic growth in new markets. When it comes to the longer-term outlook, I'd say as we get more mature as a business, we're probably more likely to set goals based on the yearly outlook. And just to be a little bit tight on that, we had the medium term, which is a 3- to 4-year outlook. And as the size of the business growth, the maturity of it grows, it might be time for us just to take a look at that and see how we do that, but we have no reason to believe that our medium-term goals are going to be missed in any way going forward. Hope, that's a good answer.

We have Jessica from Redeye asking us, could you provide more details on the financial impact of the Healix and E.ON agreements in Q4 '23 and for 2024? And are there expectations for additional enterprise contracts in the Wellness division throughout the remainder of this year?

Well, we can answer the second part of that question. Yes. Very much so, there are additional enterprise contracts in the Wellness division. As I alluded to in my intro there, it is hard to get our enterprise customers to speak openly about what they do with some of these tools. They're seen as a competitive advantage. It's not something that a lot of them want to talk about too much. We saw the E.ON press release, was very simple, quite redacted because it has sensitive information for lot of them. So we keep closing enterprise deals every month in Champion Health. And so there are more of them coming, obviously, perhaps not with the ability to talk about them at all times, but we'll do our best with that.

Financial impact of Healix and E.ON agreements. We saw the impact of E.ON in Q3 a little bit in terms of setup costs, we will be seeing the impact of E.ON over the next few years because it's a multiyear engagement. And it's something that's accrued over the life of the contract, which is a multiyear contract. Healix, we saw the effect on that in Q3, but it was also accrued because it's a subscription situation, but the distribution capabilities of Healix and the way that we can reach their customer base across Europe and in the U.S., that's something that's going to provide for very interesting growth in -- over the next few years as we have that long-term agreement with them, which is great.

Second question, while you made it clear in the previous report that there are no plans to raise additional capital or debt this year, how about in 2024?

No, we don't have any plans to raise any capital, issue any shares or take on new debt. Now we have a revolving credit facility that renews early 2025. And so obviously, we'll be renewing that. We'll see what the cash flow generation situation is and let's just see what we need net-net, no plans for anything new, unless we open up the M&A program, very important to point out that M&A is an interesting side of things. You can see that some of the amazing organic growth that we have had, especially in the Wellness division has been based on M&A. And if there is an opening for us to work with finance partners and to work on some of the great targets that we keep seeing in the space, we will be doing that. But we won't be raising anything for organic expenses.

Do you anticipate that the cash flows and available liquidity will be sufficient to cover the expected earn-outs?

Yes, we do.

What is the margin of safety concerning the covenants associated with the revolving credit facility?

Well, Charlotte can obviously -- I'll let you answer that. But in everything that we do because I believe you only have one shot at building a business like this. So whenever we do things, we do it with braces and belts and we have -- we are really, really focused on having a marginal safety with everything we do. So more specifically on covenants, I'll pass that over to Charlotte.

[Charlotte Goodwin, executive]

Yes, we have plenty of margin and safety on all our covenants, our leverage covenant doesn't include deferred consideration and the definition of debt. So as you can tell, we said at about 1x leverage, so very modest business [ buzz ] and the other covenants involved a base level of recurring revenue and growing since, so we now got [ low degree ] in these covenants.

[Henrik Molin, executive]

All right. Year-to-date, the financial target of 30% yield organic growth has not been fully met?

No, we clocked in year-to-date compared to year-to-date last year at 27%. So a smidgen from that, which we spoke about why we have been selective in terms of revenue opportunities.

Is there a consideration to revise the target for 2023 and 2024?

Now, as I said in the intro to that, I think it would be prudent about just to see at the size, at the maturity over the business, our ability to budget and forecast. And remember, we lift in -- when we did our acquisitions, we lifted in quite young businesses. And it's taken some time just to get everybody to jump on the budget bandwagon to make sure that they're predictable. It could be a time for us just to look at the budgets and targets in terms of yearly outlook, which is what's a more mature business we do. But we have no immediate plans to do that. With 20% year-to-date compared to year-to-date last year, it is very much in line with the medium-term goals. And so we don't have any immediate rush to just get into that.

So a question here about Champion Health and localization. Regarding the statement about the Champion Health platform being positioned for localization and expansion of the non-English-speaking territories, could you provide insights into the geographical footprint of the Wellness division?

We have a really strong presence in Sweden. So, Christopher, Alex have done a great job with Champion Health Nordic, which, by the way, has done an amazing recovery journey following some of the hiccups that we had with the former management team. So kudos there. We expect Champion Health Nordic to revert back to the highs of 2021 in terms of annualized revenue and probably coming into the end of 2024, which is a great testament to their ability to work on the business. But a great footprint in Sweden, a fantastic footprint in Germany. You can see the very rapidly growing Wellnow, Champion Health, Germany business. That's -- those obviously the go-to-markets for this. Germany represents a massive opportunity. And of course, Sweden with the tech [ savvy-ness ] of a big part of that population. There's a lot of potential there as well and potential partnerships that we can get into.

And yes, the go-to-market strategy, obviously, is working with people on the ground that have penetration already with significant customers, and that's a very logical first step into those markets. But there are no limitations. The technology is absolutely fantastic. And once it's localized, we will be launching that, and we won't be looking back.

How concerned are you about the slightly lower revenue quarter-on-quarter in the Lifecare division? Additionally, what growth expectations are there for the Lifecare division moving forward?

Well, I think we were very clear on what we wanted to do in terms of diversifying into wellness because it is a bigger total addressable market. The growth drivers are more extensive in that part of the world. Lifecare and with our almost like a niche focused on predominantly the rehabilitation market is smaller. And we are a very dominant player there. So on an absolute basis, it is hard to generate more than a few million of additional revenue in that space per year. So it's not a B2C type business, and it's not something that moves superfast, that moves an enterprise and SME, but as you saw with some of these tools that we are rolling out the diversity of the library and our ability to go into local markets and cater to the needs there that's building up a lot of interesting growth opportunities there.

Hard to say exactly what growth will be there on a percentage basis. But as I said, it is a mature market. It is more of a narrow niche than wellness. So the 2 play very, very well together in terms of providing that overall growth dynamic for the whole group, which we have seen in the past. So -- but high expectations, obviously, in terms of what we're going to do with that new library, the new tools and new localization.

I have another question here. The 17% organic growth of quarter-to-quarter is almost half of your medium term target of 30%. Was this a result of a difficult third quarter comp? Or are you seeing anything in your markets which suggests growth slowing?

Well, so if you look at year-to-date and compared to year-to-date, which smooths things over in terms of the seasonal variations. And so yes, Q3 2022 was an extremely strong quarter. So that's our comparator. But if you look at the year-to-date, it's 27%, so it's roughly in line. We're not seeing anything in the market that suggests growth slowing. We're not -- we have no reason to believe that there's anything that we do that has the wrong positioning in any way. So I think it's important to zoom out and just look at the year as a whole when you see these things.

Question here further on growth goals. So we reiterated the 30% growth and 45% EBITDA margin, medium-term targets. And I believe we've discussed this, definitely, when you see how -- if you look at EBITDA, specifically 45% EBITDA margins, that's something that we are used to clocking in. And you can see that we are at 47% for the Lifecare division. We don't have any reason to believe that we are unable to expand the margins on wellness, especially as Champion Health grows bigger because Champion Health is more of a higher-margin offering than a lot of the other things that we have there over time. So we have no reasons to believe that we should be adjusting them. And in fact, a successful technology business that does things right with an optimized cost space would have a very, very healthy EBITDA margin. We don't have any reason to see ourselves as an unhealthy tech business in that respect.

Question here on the Healix, E.ON deals, what are they worth? And if they have any effect on Q3?

There was a slight effect on E.ON on Q3 in terms of setup costs, but most of the factors as I explained, will be accrued over the life of a contract, which is 3 years. It's a very, very nicely accretive deal. It's just the start of that relationship. We're catering to the U.K. and everybody in Sweden knows E.ON as a provider with a global footprint. And so there's a lot of room to grow there, which is going to be amazing.

The Healix deal have -- we -- so obviously, that's accrued as well over the life of the contract. There's a lot more to come there in terms of distribution, et cetera. Are there any specific costs recorded for these deals in Q3?

There's nothing out of the ordinary in terms of customer acquisition costs or anything that we've done there to roll those -- roll out.

Question, how far from an entry in the U.S. with Champion Health are you?

Well, interesting enough, Healix provides a great opportunity for us to get our feet wet in the U.S. market without taking much risk. So Healix has some really, really nice Fortune 500-type customers in the U.S. market, and we're actively engaging over market penetration with them, but also directly with some of our customers predominantly in the health care space because we have some really, really big organizations and hospital systems in the U.S. that are our customers.

So how far it is? Well, arguably, we're already there pitching through Healix in terms of breakthrough remains to be seen. But keep an eye on the news tickers over the next few months, and then we'll see what we can deliver.

I think Charlotte has a problem with her connection or she got tired of us. Okay.

Any comments on how Q4 has started and what we can expect going forward?

Q4 is a really, really interesting quarter. There's a lot of interesting things going on, on both sides of the company, a strong start to the quarter and business as usual expectations on what we do.

And there is a question, how do you think 2024 will develop for PTRK as a whole?

Very, very strong expectations overall in terms of market opportunities and growth and what we have in the pipeline in terms of contracts on Champion Health alone makes us very, very positive in terms of what we're seeing. And you can see some of that innovation is really underpinning our growth prospects.

So more questions on the growth and the comparators. And so just reiterating we are -- we have our medium-term goals that we're sticking to. And we'll see what we'll do for next year in terms of having an outlook and being more precise in terms of the forecasting year-on-year, but it's not going to be a big difference in terms of what the growth year-on-year is going to be compared to the medium-term target. So it's just a way to be a bit more precise on how we express that.

How is the self-service solution coming along, which -- will that lead to even more product-led growth versus enterprise sales? And I'm assuming that you're talking about Champion Health.

It's been more of a lead generator for Champion Health than something that's worked on a stand-alone. Most of the companies that come to us are that are so big that you actually have to work on them on a one-on-one basis just to make sure that they roll out and they grow and there are a lot of initiatives that need to be bespoke. So the overwhelming interest that we've had and some of this is coming in through the PLD actually is on the enterprise side of things. So it's going well, but not in the way that we intended to be like a completely stand-alone like self-pay version, but as a lead generator, it's been really, really good.

So here is a more sales-related question. Can you talk a little bit more about the process of signing these bigger enterprise clients? And what are they looking for in a provider like you? Are you meeting any competition in these processes?

Well, so we have done enterprise sales ever since the very, very early days of Physitrack and we are very good at working both with public tenders. We are very good with incoming opportunities. So virtual walk-ins. The virtual walk-ins are the vast majority of what we do actually both in terms of the product-led growth and the enterprise sales side of things. It's usually a multi-month process when you have the really big ones, I'd say enterprise and in that 500, 500 users and up on the Champion Health side of things. And so usually, there's a bit of a song and dance that happens in the first few months across multiple functions and multiple people in anything from HR to top management, depending on the size of the business.

And you can expect to engage with them depending a little bit on what they have, if they have immediate budgets that can deployed, you can probably close an enterprise deal in 3 months, but the most likely time line that we have on that is probably closer to 6 months. And it can be even longer. If you look at health care, it's actually probably a full year where budgets are set at the beginning of the year, tender starts sort of mid-first quarter and then you get RFP responses in by midyear. People think about that they give you a heads up in, around September. And then by the end of the year, you roll out. So that's -- those time lines are a little bit longer.

And yes, you always meet competition, which is healthy because if you have competition. I mean so you're doing the right thing. If we were completely alone in what we did, there would be a sign that the market might not be ready for us. Interestingly enough, we are now coming up to the point where contracts signed in the pandemic are coming up to the sort of the 2-, 3-year mark. So there were a lot of renewals coming in and a lot of retenders that people have signed up for a provider and most probably a competitor of Champion Health in the pandemic. They've seen the shortcomings of that product, and they're opening up the door for new entrants coming in. So where people were kicking in the doors in the pandemic and opening for digital wellness solutions, well, we're very much breaking our way into those open doors now that retenders are coming, and we find ourselves very, very competitive in these situations, especially when it comes to the platform, the way that's built.

Question, what sets you apart in landing these deals with the large enterprise clients?

Well, the holistic nature of the solutions, that's very, very important that we're one beautiful place to go for most of the needs that a customer has. You don't have to combine 4 or 5 different things to achieve a lot of things with your team or individually. That's a really competitive advantage. It was a really competitive advantage for Physitrack for a very long period of time. One place to go with everything, beautifully wrapped platform.

It's probably the #1 thing. I also have to say the innovation like the customers see that we keep -- removing the barrier of where things are in terms of innovation and I think, especially Perry and Ricky and the Champion team supported by the product people, Laura and the developers. They've done an amazing job in just being right there on the cusp of innovation in the wellness space. And that's something that customers invest in because they usually have a multiyear time horizon. They want to know that what you provide is something that is going to stand the test of time, and that's going to keep being the best and the most innovative place to be. I think we saw some examples of that today. I hope that's a good answer.

What kind of margins can we expect on the Wellness leg?

I think it will be a bit of a mixed bag inside of the Wellness division with the subsidiaries. Now as we see more and more tech coming in there, you will see that margins will come up to Physitrack-type levels there, maybe not as high as Physitrack that come in at closer to 50%. But definitely anything that has a big component of digital and a big component of tech in it that will generate a lot higher margins. Some places where we have more physical care delivery, they will have lower margins as a whole, the average will be slightly lower. But you can expect us to come in at probably 30%, 35% across the Wellness division over time as the Champion Health solution becomes more mature and we get to do more things digitally with our customers in that space.

All right. I think that was the end of the Q&A. Thank you so much for taking the time to hang out with us today and stay safe, and we'll speak soon. Take care. Bye-bye.