READ THE FULL MITI RESEARCH REPORT
Mitesco, Inc. (OTC:MITI) recently reported its full-year 2021 results largely in-line with our targets. Top line revenue of $0.1 million met our estimate, and is notable given that two of the Company's four clinics opened at the end of December, and didn't contribute to overall results. Earnings of $(0.06) lagged our $(0.03) expectation for the year; however, as Mitesco is very much at the start of its rollout, small changes in timing and costs can have a meaningful effect on reported results.
Mitesco is seeing strong ramp up in the number of patient visits. From four visits in its first month, the Company saw 1,307 visits by December, in four clinics. When looked at by weekly visits per average number of clinics open in a month, the number of weekly visits was at 31.5/clinic at the end of December. The numbers are highest at Mitesco's first clinic, but management indicates that all clinics are ramping up on a similar trend.
We value Mitesco at $0.53/share based on ten-year DCF for 300 clinics by 2031. Our model builds to $400 million in sales by 2031, with a terminal revenue growth rate of 2%. We model a terminal EBIT margin of 22%, 25% tax rate, and a 12% discount rate. Several factors provide upside to our valuation including: more modest working investment needs at the clinic level, faster time to cash flow breakeven at new clinics, reimbursement from insurers with risk-sharing upside for keeping patients healthy, and robust sales of ancillary products and services.
Mitesco, Inc. is at the very beginning of its growth story, Management has a very specific business plan, one built on collective wisdom and experience – which we believe will mitigate many of the risks typically associated with a startup. Success comes from basic blocking-and-tackling. Importantly, as an owner-operator, Mitesco's interests are aligned with those of its practitioners. While results may be somewhat volatile in the next year or two, we expect this to stabilize as the business grows.
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