Pay-Per-Treatment model brings Modulight order intake

Translation: Original published in Finnish on 11/8/2024 at 1:34 pm EET.

Modulight announced on Friday that it has secured contracts with a minimum cumulative value of EUR 1.5 MEUR over the next two years. The revenue stream consists of both clinical trials and commercial pilots. The news adds further visibility to the progress of the revenue and PPT model in the coming years. Our forecasts anticipate strong growth (2026 revenue 10.6 MEUR), to which the new contracts now announced will contribute. The announcement is in line with our growth projections, so we see no need to change our forecasts or view at this stage.

Contracts increase returns on PPT model

Modulight has invested in its Pay-Per-Treatment (PPT) model, where revenue is billed on the basis of the number of treatments performed. In its Q2'24 report, the company stated that the revenue generated by the PPT model exceeded 100 TEUR in the quarter. The contracts now announced are estimated to generate at least 1.5 MEUR over the next two years, or approximately 200 TEUR per quarter. The model's proceeds are thus growing in line with the company's objectives. According to the press release, customers have committed to minimum treatment volumes. Typically, PPT contracts are not subject to upfront commitments. Commitments are understandable, particularly in the case of clinical trials where the number of patients to be enrolled is known based on the study design. These contracts cover approximately 20 sites and involve customers including pharmaceutical and managed care companies, as well as hospitals and clinics in oncology and ophthalmology. We estimate that clinical trials and commercial pilots are project-based for Modulight. Progressing trials or pilots to the commercial stage would also provide the company with long-term ongoing revenue.

Contracts add visibility for the coming years

We expect Modulight’s 2024 revenue to be 3.9 MEUR. For the following year 2025, we forecast a change in revenue in euro terms of +2.8 MEUR, and in 2026 a further +2.7 MEUR. The contracts now announced are expected to generate annual revenue of just under 1 MEUR. The agreements therefore support the achievement of our estimates but are not sufficient on their own to make them a reality. Our forecasts thus include an expectation of further rapid positive developments beyond these new contracts. The news is fully in line with our expectations and supports their achievement. The contracts will contribute to the very welcome visibility of Modulight's revenue development.