March 23, 2021 - 7:29pm EST by
2021 2022
Price: 96.80 EPS 0 0
Shares Out. (in M): 21 P/E 0 0
Market Cap (in $M): 235 P/FCF 30.5 20.0
Net Debt (in $M): -2 EBIT 65 110
TEV (in $M): 232 TEV/EBIT 31 18

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  • Norway
  • SaaS
  • Rollup



Last Sale: kr 96.80

Market Cap: kr 2.0b ($235mm)

TEV: kr 2.0b (kr 20mm Net Cash)

30 Day Avg Daily Volume: ~96k shares/day (~$1.1mm)

Investment Horizon: ~24-48 months




CSAM Health Group (CSAM) is a Nordic e-Health software provider, specializing in niche solutions for clinical healthcare applications.  The company was effectively formed in 2005 by a Norwegian national hospital, and through both organic and inorganic initiatives, the company has grown its product portfolio substantially – today CSAM offers about 20 core software products in six segments.  Like other SAAS businesses, CSAM benefits from strong revenue visibility (75% revenue is recurring) as typical contracts are long in duration and often extend beyond the contract period, resulting in steady and recurring revenue streams with 10–20 years visibility.  CSAM is led by a capable management team who have a strong track record at M&A; this is important as they have laid out an aggressive kr 1b ’25 sales target (or >3x the current run-rate) which they aim to accomplish largely through M&A.  Trading at ~20x ’21 EV/EBITDA, we believe we are paying a relatively fair price (vs peers) for a business that will grow organically at a high single digit rate for many years to come.  Importantly, we believe we are getting a free call option on the roll-up story – should management be successful in executing their M&A strategy we believe the stock can appreciate >100% over the next several years.


Business Overview

CSAM traces its roots back to the late 1990’s with the ICT (information and communications technologies) development initiatives at Oslo University Hospital HF.  CSAM (which stands for Clinical Systems All Managed) included all the methods and solutions needed to plan a holistic approach to the problem complex that results from large hospitals having a significant number of different clinical solutions.  The purpose of the CSAM initiative was to ensure the hospital a safer and more efficient patient treatment through a comprehensive process and integration between systems.  Through the CSAM initiative, solutions were developed which the hospital chose to commercialize in 2005 through its wholly owned research company Medinnova AS.  Subsequently in 2005, Medinnova established the company CSAM Health, which they capitalized on in 2007 through investments from several private investors including Sverre Flatby, who is CSAM’s CEO today. 


Today, the company breaks down its offerings into six categories – see table below for detail.  

To provide some color on their customer base:

  • >400 customers

  • About 99% of sales come from customers located in Sweden/Norway/Denmark/Finland.  

  • >95% sales from public healthcare providers

  • In terms of customer concentration, only one customer, Sykehuspartner, accounts for >10% of sales per management.  And, it should be noted that Sykehuspartner represents the many hospitals under the Norwegian public healthcare provider Helse Sør-Øst.


Investment Thesis

The core tenets of our long CSAM thesis include:

  • CSAM has a very strong market position and its products are well-entrenched with customers

    • As mentioned, CSAM was initially developed by Norwegian national hospitals, so many of its core products are specifically tailored to customer needs.

    • CSAM’s products form an integrated part of complex workflows, creating high switching costs for customers and high revenue visibility for the company. 

    • About 75% of CSAM’s sales is recurring software revenue and contract periods often span 10–20 years.

    • Overall, CSAM typically has visibility for >90% of revenue over next 12 months.



  • TAM – relatively large and benefiting from secular tailwinds

    • According to mgmt. (who cites Gartner, etc) the total Nordic eHealth software market is sized around kr 6b,  40–45% (kr 2.4-2.7b) of which is specialized eHealth (which CSAM operates in).  So, with 11%-13% of the market CSAM is still far from a behemoth.

    • Additionally, the overall European eHealth software market is likely 10x the size of the Nordic market.  This is relevant as CSAM will likely begin to expand outside of the Nordics in the coming years.

    • Increased adoption of technology within healthcare (i.e. digitization) is leading to 5%-10% per annum growth in the Nordic eHealth market, and this trend is likely to continue for some time. CSAM aims for organic sales growth to hit the top end of this range (8%-10%) as they upsell existing customers on new features and modules.


  • Good management team with skin in the game

    • CEO – Sverre Flatby has been with the company since 2006 when he was named Chairman (and he became CEO in 2008). 

    • CFO – Einar Bonnevie has been with the company since 2008.

    • Flatby and Bonnevie together control Equilibrium AS, CSAM’s largest shareholder controlling ~21% of the firm’s equity. 

  • Further roll-up potential

    • As highlighted, CSAM holds ~11%-13% market share in the Nordics, so there remains plenty of opportunity for CSAM to transact in this market.

    • Additionally, the broader European market is 10x the size of the Nordics (and management has indicated they are looking at deals outside of the Nordics so this market is relevant for CSAM).

    • Management has successfully completed about a dozen M&A deals during their tenure, providing a measure of confidence that they can continue executing their roll-up plan (which will require larger deal sizes).

    • And, with the implementation of the EU Medical Devices Regulation (May 2021), we also expect costs for smaller players in the sector to increase, which may accelerate deal flow for CSAM.

  • Compelling valuation

    • At the last sale, CSAM is trading at ~19x ’21 EV/EBITDA or <6x ’21 EV/Sales – far from a demanding multiple for a good business that is organically growing sales 8%-10% per annum and has a long runway to continue executing their M&A strategy

    • Theoretically (and this helps us think about downside) – mgmt. has indicated that if they stopped investment spend EBITDA margins would be ~50% (vs ~30% today).  In this theoretical steady-state scenario the stock is trading <12x EV/EBITDA.

    • Mgmt targets kr 1b run-rate sales and 30% EBITDA margins in ‘25 – under this scenario the stock is trading ~6.5x ’25 EV/EBITDA. 


Key Risks


  • Poor capital allocation – in particular CSAM needs to identify and execute accretive M&A deals to hit their ’25 targets.

  • Higher interest rates

  • Customer losses

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


- Executing M&A deals

- New customer contracts

- New sellside coverage (1 analyst covers today)


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