Carasent AB (publ) (CARA) Earnings Call Transcript & Summary

Hi, and welcome to Carasent's Capital Markets Day. Really good to see you all. We will start with me introducing a little bit of our background, where we are at the moment, and where we're heading. Thereafter, Svein Martin will talk about our new financial targets and our financial development. And we'll have question and answers at the end. But if you have specific questions as we go along, yes, please go ahead and raise them, and that's for the ones in the room. Everyone on the stream, we'll take at the end. But for the ones in the room, just raise your hand and you will get a mic, and we'll try to answer the questions. So we get a little bit more dynamic. So let's get started. Who are Carasent? Yes, our aim is, with the help of our solutions, to drive efficiency and quality in the world of health care. And this is, as I think most of you know, extremely important. The demand for health care is increasing all the time. We get older and older, therefore demanding more and more care. There are also more and more things that are treatable, driving the need for care even higher. And on top of that, our demands on our health care systems are greater than ever. We expect to live long and healthy lives. We do not accept having a hurting knee when we grow old anymore. So it's a big change from previously. And health care, as all other industries, need digital solutions to be able to tackle these challenges because we don't have more staff to put into the system, maybe a little bit, but not to at all to the amount it's needed. So we have a very important task and how do we fulfill this? Yes, the basis for everything we do are our electronic health record systems. And what is the EHR system? So that's a short version of it. What is the EHR system? It's the heart of a single clinic or a hospital. That's where you have all your information about patients. That's where you do all your planning around what you're going to do in your clinic and you have all your billing and much more. So in a typical clinic or hospital, 95% of the time when you use computer, it is the EHR system you are using. So it's really the heart of our customers' business. On top of that, we have a broad system -- a broad collection of different systems that we sell on top of that. I'll get back to them, but it's a lot -- many of them has to do with business intelligence and patient communication. So building solutions on top of their heart, which is our medical record systems. If we also look at Carasent, we have a proven financial model. We have had a period of time where we grew a little bit too fast, and we didn't really have it fully under control. But the basis for all of Carasent's products are systems that have been growing profitability for many years. We just find our way back to that culture that's already there. So that's much easier than what a lot of other people have to do at the moment. We're growing quickly, both acquired and organic growth. And later today, Svein Martin will go through our new financial targets. If you look at our products, we touch upon many suites and witness every day. So in total, we have 7 million visits in our systems every year in our EHR systems. We have about 2 million digital consultations for our ecosystem products. And on top of that, we have about 90% of all Swedes primary health care data in our systems through our system Medrave, which is quality -- BI system for quality within the private health care sector. And in total, we have a roughly 40,000 active users in our system today. So we're quite a large part of the Sweden, Norwegian health care system, mostly working with private providers. So a little bit about my Carasent story, and my background. So I was the first employee of a company called GHP Specialty Care. About 16 years ago, 2006, I had multiple roles there, I was CEO of [ IFK-Kliniken ] and Orthopedic Clinic. I've been the head of business areas. I've been M&A responsible. And the last 9 years from 2013 until 2022, I was the CEO of GHP Specialty Care until it was acquired by Capio. And during that period of time, I, of course, met many different systems. We were running specialist clinics in the Nordics. We're running hospitals in the Middle East. And we had a business called Solutions, where we took care of the entire business of an insurance company when it comes to health care insurance. And over time, the complexity in health care has been growing very rapidly. There are more and more demands on different type of registration. You need more and more data to run the business. So from a management perspective, we really needed to update our systems. We had so many old and some of my old clinics still have. Systems that look like MS DOS they are blue and white. You tab around it is -- do you remember the square that blinks? It's still within health care sometimes the blue and white square, where you put the next letter. So many of those types of systems. But there's a management to run the business and especially as this integrating solutions where I took over the responsibility for the cost within insurance, we need the data. And Webdoc was the only system that could allow us to get the data out of the system in a good way. It could also allow us to connect to a lot of other systems because Webdoc was built from the beginning to be completely open and connectable to all different solutions that you as a provider wanted to have. And what was even better was that one of my staff in the clinics, we're going to evaluate different systems because in within health care, your staff is really strong. Doctors and nurses, you don't see them immensely. So you have to listen to them, right? When they were evaluated in different systems, Webdoc came up on top also. So for me, as a health care provider, it was a very easy choice to go with Webdoc. Then I also knew from the last part of when I was at GHP, that kind of Webdoc has lost its way a bit. We, as a health care provider, felt that there were more bugs than before. Things were not updated properly. We had some implementations of Webdoc that didn't go very well. So we're a bit upset. It felt like -- they were a bit lost. And that's the same thing I saw when I came on the inside. So when I joined Carasent, roughly a year ago, 1st of November last year, I was really impressed. I liked the knowledge and the energy inside the company. We have so many talented people, both within development, with understanding our customers, within support, sales everywhere, a lot of talent people. But management had grown -- outgrown Webdoc, became Carasent's management, and there was no one filling the vacuum, and it was same with the other products. And there was a new study towards the one Carasent, which took a lot of people's time. So it wasn't strange. It's -- many companies have been through that recently, right, growing too quickly. And now we have to find our way back. So what we have done is we did first a lot with the structures of the organization, setting up a more nimble organization, making sure that people are clearly responsible for different parts of Carasent. You cannot do anything if you don't have someone who's really responsible for delivering, right? We set the financial structure to follow that structure, the organizational structure to really be able to move faster forward and to get closer to our customers again. We also initiated a cost savings program of roughly NOK 40 million. That's still we have plenty of resources to continue to develop. So it's more about becoming efficient than doing less, the cost saving program. And I will get back to that a little bit later. We have also started fixing our capital structure. We were a bit overcapitalized. So we have had a share buyback, and we will also continue with the dividend, if needs to. So now we set the structures internally. We have clear roles and responsibilities. We have all the good, old culture there, and we have a clear way forward. So from that position, I feel that we're in a really strong place. And internally, you can feel the energy now that everyone knows what to do because that's a difficult part when you're growing a bit too quickly. People get a bit lost. What is my task? What should I do every day? We continue with investing in our product. It's on a pretty high level, but it's efficient. And we see that we have a lot of market to gain. So we really want to invest in our products. And we have a strong, still a strong cash position to enable acquisitions. And if you look at the sector we are working with in, health care. So it's quite special sector. I know everybody says it, but everyone has been to health care, they say, oh, here's really different. We had a structural demand. So that's a good basis for everything. It continues to grow. For example, within 10 years, a little bit less than 10 years, the number of 80 years old and over in Sweden will increase by 50%. And these are the big users of health care. The rest of population is kind of flat. So the amount of old needing health care is increasing very rapidly. Same for the entire Western world. The health care industry is digitalization -- is being digitalizing, but it's going very slowly compared to other industries. And the big reason for that is the strength of your doctors and nurses. So if you look at the public sector, every time they try to do something, you will have a doctor and nurse going to them and saying, here we have a patient risk. And if you have thousands of doctors and nurses, you would have somebody who doesn't like a new system and what's the change that demands. So that makes everything very, very slow. And you should also remember that all docs and nurses are licensed professionals. So that means that they have an obligation to choose the right systems. You cannot just say, we're going to use this. You need your doctors and nurses on board. So that's why it's going a bit slowly. And for example, my study within GHP was to always be the second, never the first on a new system because if you try to have a new system in, and it's not really set up, there are some problems that need to [ bear out ] so to speak. Then you will not get a second chance with your staff to introduce a system. So it's very important to meet the health care workers in a proper way and all of them. So it needs to be very, very ironed out, well built and with a lot of knowledge from inside their health care providers. Finally, we have an increased complexity. So health care has always been quite complex. It's increasing all the time from a regulatory standpoint. You have the county putting on different demands. You have the country, Sweden and Norway, putting a lot of demands. And then you have the EU on top of that with GDPR and MDR and so on. So it's always increasing. Then you also have a lot of different parties who want data from the care providers. Every time, the public or the government or someone says that we need to improve on this, then they need data. So our systems are sending data to a lot of different sources on the country level and county level. So it's a very complex environment we're in to. And all of this, various type of data or different types of systems with different interfaces. So it takes time to build these solutions. But if you know the industry, you know how to build solutions for the industry is a very good place to be. It's growing, it's complex, high barriers of entry, but complex. So who are we? And why are we the right ones to do it? The first point, I think, is very important. So all parts of Carasent, and they've been growing up individually, right, and I will get back to what the parts are. But they all have a history of growing profitability. They have not had large cash injections to build their business. They know how to use money wisely. So I think that's a very good and solid foundation to build on that, that culture is there. When I thought I was really impressed within -- second point, and that's really understanding the needs of health care and what I said earlier that you need to meet everyone, not just a top management, but all the doctors and nurses and their needs. You have to make sure that every word is exactly rightly put in the system. That's just a minor thing. But every part of it is important because it's patient safety. So no one can allow any mistakes. And it's also customers who do not like to make big changes. So we're trying to develop all our solutions so you can work with processes and support future processes. Because otherwise, you will have this really situations where the staff just refuses and then you will get nowhere. Thirdly, from a technical point of view, there is basically no types of solutions within health care that we haven't built within the company. We have seen it all. We've done it all, and we continue to invest in new solutions. So there's a high technical competence within the company. And the last point, which is important for all software companies, we do not sit on our own -- in our own room, say you've build solutions and then say here is a ready solution. We work very closely with all our customers. And that's the culture that was already there, and that's why our products historically have been successful. Looking at our growth, historically, we had quite a high growth for a long time. The last 12 months, we grew roughly 30%, and almost half of it was organically, and about 90% of our revenues are recurring revenues. And that's really what we focus on going forward, not consultancy fees and so on. And we're not selling licenses anymore. We want recurring revenues. So what are our products then? The base of everything is the electronic health record solutions. And as I mentioned previously, that's the heart of -- that's where you -- everyone is working within those systems. That's where your actually stay. That is where you have the patient data, that's where you have all your planning of what you're going to do, both in the operating theaters, in the outpatient care, all parts is in that system. That's where you do the billing, that's where you take off patients, the way you communicate internally within the system also. So that's not something you want to change lightly or frequently. The major part is Webdoc. So it's roughly 50% of Carasent. It's in Sweden. It's a pure SaaS solution from the start. That's what I think they've done great all along. So no customer-specific development. Quick in its set up. A perfect system for small to medium and large health care providers up to maybe 150 employees or something like this. Then we have Metodika, which is a great system for enterprises. That's why we have the most customer specific development. So for large enterprises like Aleris in Norway. Denmark use Metodika or Avenova. It's a great tool for -- making sure that you have complete control of your entire organization. And it's very rich in functionality and still winning a lot of customers. In Norway, we have also two niche systems, Ad Curis, which you see within rehab. It's very much focused on processes. So it's rehabilitation. When it comes to history of rehabilitation, it can be drug abuse, also a lot with heal and care. So it's a couple of niches for them. Ad Opus is another niche. That's a system for those in Norway that help people back to work. So it's not a pure EHR system, but it handles the same type of sensitive data. But I would say it's our simpler solution, but it's a very nice one. On top of that, we have Medrave. So Medrave is what all -- basically all Swedish primary care used to compare data and quality outcomes, both from an efficiency and quality point of view. So what they do really well is that they connected to virtually all different EHR systems that are present in Sweden and other countries. They are also in Norway partly. Then they take the data and clean the data. And that's very important because in different systems and different places, you're typing things a bit differently and you use different forms. So the clean data if is comparable, then they show it to you. You can look at your own clinic, you can look at its doctor what they do, how much. If they follow guidelines, you can compare to other clinics, you can compare to other counties, and you can compare to the country as a whole. It also automates all recordings in our National Quality Registries, which otherwise, a lot of work. So it's a great tool, very well liked by all our customers. And roughly, then 90% of all Swedish primary care data is within Medrave. Then on top of that, we have two solutions for patient communication. The first one is Vardrummet which is connected to Webdoc. It's a great tool for video chat, rebooking visits and messages and so on. It's completely integrate into Webdoc, so no double work, which is otherwise the big problem within health care when it comes solutions like this that you have a lot of double documentation. So it's none of that. We also have Confrere, which is something we acquired a little bit more than a year ago. It's a Norwegian video solution. So what we acquired was the customers and the brand, but not the technology. So, so far, we're still using the old technology, and we're paying 100% of the revenue to the old owners of Confrere. And that means that all our costs around Confrere is pure minus business at the moment. But we're moving Confrere over to the same solution as Vardrummet starting next year -- in the beginning of last year. Then we have another company acquired also a little bit more than a year ago, HPI, Health Profile Institute. It's a company formed in their '70s at [ Skane ] started doing a lot of research on importance of people moving. So they're working with occupational health. So they develop these forms for how to evaluate people's healthiness -- healthy people's healthiness. Starting then with disc cutter disks, the [indiscernible] DVDs and now it's a SaaS solution. And then on top of that, we're selling a lot of third-party integrations. So for example, we're selling [ check-in desks ] So when you go to a clinic, you can check-in yourself. There's an external service that we sell and have a good margin on. We also sell, for example, different -- when you want to have speech-to-text solutions, we're also selling that. A lot of different solutions on top, SMS, letters, a lot of different things. And on top of this, we can, of course, add other services going forward. And now we're coming to a picture I want to talk a bit about. And this is an important picture of -- for two reasons. This gives you an idea on how our different parts are doing and what we're doing to correct them. And also we'll give you, I hope, as feeling why I feel confident that we are on the right path, and it's in our own hands. So I was -- here, we have different of our [ seat ] solutions. In size, order, you had revenue, last -- the first 3 quarters. Then you have there, what's called the growth -- year-over-year growth in percentage plus the EBITDA margin. Internally, we work with cash EBITDA margin when we look at this. That's good to know because you have to -- you have to have put your site a bit higher internally than you do externally, right? So starting with Webdoc. They're at 31% at the moment. We have taken down costs quite a lot. We know that we'll grow a lot next year. So I feel very confident that number will go up during next year. That's almost automatic, right? Within the product, we're developing a lot of new functions. So we're coming with a new billing solution during the first half of next year. That's the oldest part of Webdoc, so it needs to be renewed. We're coming with e-refers in Stockholm, especially to start with Stockholm. So that for Stockholm customers -- in Stockholm today, if you choose Webdoc, you typically have to work with two different EHR systems. So as the Stockholm county uses TakeCare, it's again our product, you can send e-refers between different take care installations that they refused to open up to other providers. So today, many of my old clinics and many of Capio's clinic or Aleris' clinic, they have to work in double systems. And typically, what you do is you use TakeCare to get the data and then you write into Webdoc. And then when you done -- finished your work in Webdoc, you write back in TakeCare. And that's not really good when we want to sell to more customers, right? Still, I would say our customers, they prefer Webdoc. My formal clinics, they all preferred Webdoc over TakeCare anyway, even the way they had to do this work. Now we're automating that transfer as an important function coming in the beginning of next year. And finally, we're building an operation module. So if you have a clinic where you do a lot of [ cellular ] like orthopedics or general surgery or things like this, everything comes down to having good planning because you have a lot of fixed cost, all the staff, the facilities or the equipment is fixed. Typically, there's very little movable costs. So we sit every day you start with maybe 100,000 cost per operating theater, and you have to fill it. So everything comes down to planning, and Webdoc did not have a good support for this today. So I say that that's an important factor to increase our sales. And that's especially to large clinics because if your clinical doing surgery is larger than other clinics. Then we have Medrave. As you see, they're growing well and have a good margin. There, we're looking at adding new segments. At the moment, we're moving into children care showing how well are we taking care of the children within our clinic -- to take care of children that was important to record register there. A really interesting part is also doing new research. We have all this data. And it's not just unique for Sweden now. I think it's unique for the world to have so much data. We can get any data out of all the medical record systems for 90% of all primary care in Sweden. So you can do a lot with that. It's not our data to use. So we have to do it together with our customers and together with, for example, [indiscernible] scan and actors like that. But that's extremely interesting. Metodika, the third largest, is doing really well also, both growing and being profitable. There, we're doing a lot of the element for our present and coming customers. But there is a bit more customer-specific development. But it's a great system. If you're running an enterprise and you can use the same system for all parts of enterprise. It's good at occupational health, it's good for plastic surgeries, it's good at basically everything. But it's not as nimble and quick as Webdoc. Then I have Ad Curis, doing quite well. They were refocusing a lot on the customers, almost everyone within -- Ad Curis was working a lot with Webdoc Norway and the One Carasent projects that we used to have. So they're now finding back and meeting customers again. But we have really good leads there. So that also feels very comfortable going forward. Then we come to the less comfortable part, Ad Opus. So Ad Opus is the system for getting people back to work in Norway. The challenge we have there is that some customers have started using CRM systems and Internet. And it's much cheaper, of course, than an a real system because you have so many customers to divide the cost down. We think, and as every legal adviser we speak to also think it's illegal because we have so much sensitive data. Even if it's our simplest solution, there's so much sensitive data in that, and you need to handle it correctly. And I would say the ones using the other system, they cannot use it correctly. So we're doing a lot of legal challenges there at the moment. So I think it's four tender process that we have of this public tender process, we sent in a lot of questions. We work together with our customers also to work with their customers, which is now which -- the government entity buying these services because they are the one who need to put the right demands on their suppliers. So we're really challenging this on many fronts at the moment. And I think with successful [ cost ] that's just the way the law is. And then we have a great position. Of course, the competition is really weak within that sector. And we are, at the moment, launching a new web solution where -- which is really, really nice. So that means that all users can log in just working in the cloud, so it will also lower our costs, and we have a much better process for all everyone working within those customers. It's also the same solution that we're building for Ad Curis when it says new patient direction platform ready for launch. But that challenge -- that legal challenge is extremely important for Ad Opus. We have Health Profile Institute, HPI. You see they also...

Can I ask the question?

Yes, the mic.

Depending on the outcome of that challenging, do you see any really across to the other products or way of working?

No, not at all. So there's no risk. First of all, the other EHR system Webdoc, Metodika and Ad Curis are dealing with much, much more complex processes at their customer sites. So they could then be replaced by the same product that's replacing Ad Opus, at some customers. So that's not changed all. Also, all the other ones are working towards a health care system. And the health care system is used to high regulations. For the Ad Opus' customers, it's a bit new with GDPR and requirements put there. So it's very different, and it's not the same authorities that are Involved. Then we have...

Just a question here.

Yes, one more question.

If you were to succeed with your -- the legal challenges that you've made, I mean, what could be like the impact on, I don't know, revenues for Ad Opus?

So I think there are about 20%, 30% of their market. So I mean, it's still not a huge market. But both from a growth and profitability perspective, it would increase a lot. Now we're showing EBITDA. EBITDAC is even worse. So we need to improve a lot.

So Health Profile Institute, HPI. There, we have put in a lot of efforts in the last couple of years to develop a new part for the platform. The original part are those volunteer tests that you do when you go to occupational health like something this. Then it's typically HPI's platform that those tests are performed within. So to see if you have a good condition and so on, looking at and to wait and all these parts. The new platform is for compulsory test. So that means, for example, if you work night, there are some compulsory tests you have to go through. If you work with tools that vibrate a lot, there's compulsory tests you have to do and so on. There's a lot of that. And today, those tests are done by paper. So the patient goes in, sees the nurse, the nurse fills out his forms. She goes in and she put the note on a doctor's desk who signs it. And that how put it into their medical record system, and employee doesn't know anything, right? So that we build a platform where the employee can be, the doctors in, and the nurses in, all in the same platform. So it can drive a lot of efficiency. The challenge with that is that it requires a big change in process within the occupational health sector. And they are like health care, they're not that good at changing processes. So at the moment, it's the Rule of 40 number is not that good. But starting from December and on, we're lowering costs quite a lot there because we're stopping all development until we see that the customers are picking up on the product. And the last one is Confrere. And as you understand, we're out of the pandemic, the use of video solutions going down a bit at the moment. On top of that, we're paying all revenue to the supplier of the old technology. So it's not a good deal at all at the moment, but we'll start -- we will move them onto our platform in Q1, Q2 next year. So then the margin will go up quite a lot. There is risk of some churn there because we will not overdevelop that solution to fit that customer, which all has some churn and continue forward. What's also very evident from this picture is that most of our problems are in the three smallest products. So I believe in all three of them, for this I've stated. But if you're not successful, we will have to take other measures because we cannot let those three small products drag down Carasent. But that's where most of our product promise are. Then, of course, we want to grow Webdoc. That's my main focus every day. But, but what makes the numbers look a little bit better are most of these three products, the smaller ones. So that's why I actually really confident that it's in our own hands and either we'll get better that way or another way. Looking at our customers. And this is for our EHR systems, and this is specifically Webdoc, which is half of Carasent, right? We have all types of customers. We have the large health care files like Capio, Aleris, you know well. We have the smaller ones who also use Webdoc, which is a great system for them too. And we have the new disruptors also choosing to use our systems because you don't want to build this on your own. It's the most complex part of your digital system -- of all your solutions within health care provider. It don't matter if you're working digitally or not. It is the complex part with a lot of legal requirements on it and where the medical staff is really, really keen on it working really well and that they feel really confident in everything within that product. Looking at sales. What's, I think, is a bit important to understand is that, historically, the sale of all of our solutions, except Confrere, have been word of mouth. So one customer using our systems, really liking it, telling another customer, and they start using it. So for example, within Webdoc, the sales have been going on through e-mails into our inbox saying, hey, we want to buy Webdoc. Then, of course, we have to do a good job around that. But that's how our sales have been going -- always been working like that. And that's even without a good web page. So the first part of ramping up our sales effort is to actually continue to build on that because I think that's the most important part. And as I said earlier, when I left GHP, I knew reputation was that they kind of forgotten about us. We had some implementation of Webdoc, which was really bad. So we actually did some implementations by ourselves instead. So we've been working a lot on improving the product and our delivery process the last year. And some really good first results or that the number of support calls have been lowered by 40%. So that's good for our internal process, but it's even better for our customers who don't have to call our support. So that means a lot of bugs out of the system. Looking at implementation of Webdoc at customers, we have started to measure it. So there we are above 4.5 on a 5-point scale on all implementations in the last couple of months. The same as all support calls, we were above 4.5 on a 5-point scale when we ask our customer, how do you like the support. So we have done a lot to improve both the product and delivery and experience of Webdoc. The next step is to get closer to our customers again and reestablish those relationships where we met Capio and Aleris around Christmas. They were not the best meetings. And now when we had follow-up meetings after summer, they were really positive. And I think the same all over. We've also employed actually more people within this area, and especially in Norway, to ask our -- customers making sure that they think about us that we can solve their solution -- their problems with our solutions. So that's something we're working a lot with. All the money we spend on development has to do with opening up new segments for a future growth. So I spoke about the new segments within Webdoc. We're doing the same within Ad Curis, for example. So we're really investing a lot in our products to offer segments for new growth. We're experimenting with new types of marketing and sales, that's new for the organization. We're testing a lot of things, the simple stuff, new web page, doing ads on these things. We're doing a lot of webinars. We're trying cold calling. We're trying a lot of different things to see what really works for this type of product, for these type of customers. Yes.

Can you just talk about like how the initial results of the efforts that you've made both regarding inbound, but also outbound sales, how they've fared?

Yes. So it's a bit mixed so far, to be honest. So cold calling doesn't work at all. That part of it has been -- yes, that will not continue with. The webinars have been very popular. So people have signed up for them, they have taken part of them. And the feedback has been really good. So I think that's the part I've been working the best so far. The new web page and ads are not up and running yet. We're working on that.

And just a follow-up. Regarding the webinars that you're hosting, are you also doing like efforts to make like a marketing in advance of launching your operation module and so on? Or is it only the current modules?

No. So that's an important part. So we have these new modules coming out. And at the moment, we're working a lot with our present customers, telling them about it. Then we will start advertising for them once we really have a good starting date. But at the moment, we're talking a lot with our present customers because many of them are in the process of which system should I have? Should I change the Webdoc now? Should I use another system for -- planning typically today, you buy Orbit if you have a Webdoc and with many other systems, too. An Orbit is almost as expensive as the medical record system. So we are now telling them, no, you don't have to buy Orbit. We're coming with a good solution. So we had a customer meeting in our facilities, yesterday, actually. So we had -- I think it was 6 or 7 different caregivers at our site to give feedback on what we're doing, but also, of course, to become future customers. Some of them have Orbit today, some of them don't. But we're not doing advertising for them yet. But we're talking a lot with present customers.

And you say that like if they would choose like the competing products that it would be like as expensive as the whole Webdoc. But...

Roughly.

Yes, roughly. But for you, I guess, it would be like less expensive, but how much to like ARPU would you say that it would?

So we haven't decided on how we will charge it, because we have to set a really good structure for it. For Webdoc, we charge per visit. I think that's a really great way of doing it because you're driving efficiency in health care all the time. So the number of visits per user goes up all time. Then on top of that, where the index, right? So to use [ visits-wise ] really good. So we're looking at what is the best way of doing with study. And we're developing study mostly to add new customers to Webdoc. Then the profitability from the same rate is good also, but that's really not why we're doing it. And what I should also mention is that Orbit is a really, really complex and competent product. So it's great for a large hospital. We will not build something that's good for the large hospital with -- we have central surgery where patients coming from all over the hospital, maybe different systems. We're building something really neatly integrate into Webdoc, which is a great for clinic who has their own patients. And that's what all our customers look like except one. So like we will not be able to charge like they do, unfortunately. And then -- yes, okay, one more.

Just a follow-up on [ Jesper's ] question. So just to get a feeling how many clinics each year seek to change to a new EHR system, both established clinics and also newly established clinics? And how big of a percentage do you win, do you estimate?

So for large clinics,, I think, we are on a really high level. We -- there are some of the really small ones that we do not gain, because there are some simple, small, cheaper solutions that some of them use. In Stockholm, there are also some clinics we do not gain because they use TakeCare for e-referral part. So I think that's where we really wanting. They're smaller clinics, single physicians and so on, maybe we're not the best choice, and that's fine, I would say. But I would say that we have quite a good percentage. What we have to do with our efforts here is that to open up the new segments that today cannot change system basically because they sit with old systems. So typically, if you don't have that, if that you don't change. And what I'm hoping with our new marketing and sales efforts is that we can push people to make that decision a little bit quicker. I mean all the years I was CEO of GHP, I knew I need to change those systems. There -- you have random bugs. So -- and it's patient safety, you cannot have random bugs, right? But there was nothing good to change to. And I knew that if and when I change system, the clinic will stand still. And I have all my staff costs there, all my facility costs. So I have like 80% of my costs are still there while we're changing systems. So I really drag my feet on to doing that, right, for that quarter will not be fun. And that's why it's so important that we meet them and that they feel they can really trust us. Then we can get them to change systems. But they have to feel that we will be holding their hand all the way through. And that's why I think, for example, that at my front page, we had an implementation that didn't go very well. That's not good. It slowed down our implementation of Webdoc, GHP implementation of Webdoc a lot within that group. So that's why the first point is really, really important. So it's more about getting people to change, then that they choose something else today.

And the last point, legal challenge that comes through competition, that's the Norwegian system Ad Opus. So what I would like to say also is that, it takes time. It has taken so far a little bit longer than I thought. So word of mouth, I mean, it's not the fastest way of selling, I think. It takes some time because before people know, okay, we're hear from you again now, you can trust us, that will take some time. It does take some time to build new modules. And with a large customer like Metodika typically has or Ad Curis has, it takes a long time before from the start of the conversation until we have revenue, especially recurring revenue. So for example, the LOI, which I spoke about in the last quarter, which is with a large customer. That discussion started in January. It's still not signed a final agreement and recurring revenue will start in 2025. So it takes time before we get all of the sales moving. And in short term, we'll have Ad Opus churn and churn within Confrere. Svein Martin will talk more about it and show you more details. But overall, I feel very confident. This -- we're moving quite a lot and especially on the first point -- a couple of points. I feel we're very confident that we're moving in the right way. So looking at the competitive landscape, as I said previously, the main competition is that people will not change systems. It's not any really good systems out there competing with us, I would say. There can be some at a really small end for the really simple clinics, but not for the large ones in Sweden. The market for -- EHR market for private clinics is roughly NOK 1.3 billion, where I would say roughly half of it is our sweet spot, where they can really -- there we are there, clearly the best choice for them. There are no downsize by choosing us. So the big challenge is to get people to actually change system, to update their system. And most of them feel in it, they know they need to get data, they need to have efficient system, which -- where their employees like to work because your biggest challenge as a health care provider is finding doctors and nurses. So you want systems that they like to work in. Also, you want to connect to other systems and solutions, right? So many of them feeling it, but we need to push them over to really make the decision. Then we have a real challenge. And that is that [indiscernible] have chosen to buy Millennium, which is an American system owned by Oracle. We had it at our hospitals in the Middle East. It's a good system for hospitals. Much less so for a smaller health care provider, which want a really nimble and quick, easy-to-use system and where you have also payments in it where you can connect to insurance companies and so on. So -- but at the moment, both [indiscernible] have said that some of the providers, depending on what type of agreement you have with them, should use Millennium once it gets implemented. It should have been implemented a while ago, and nobody still knows when it will be implemented. It's going really, really slowly as they always do those projects, that's why maybe you shouldn't do them, but that's another topic. But -- so we don't know exactly when we will know how this will play out. It will probably take some time because I spoke with a friend inside of [indiscernible] the other day, how to -- how it's going, still haven't had a chance to see the system. So it's not really moving. So it's something that's there. Unfortunately, also affecting our possible customers, some of them, that could be affected by this, and they don't know yet. But we estimate to be roughly 10% of our revenue at risk in that case. We don't think it will happen. I, as a caregiver didn't think it would happen because I changed systems to Webdoc [indiscernible] even after that decision. And why we don't think it will happen is that it's a really bad system for a private provider. You cannot connect it to anything else because you will be inside, let's say [indiscernible] IT. So you cannot do anything with the system, if you -- whatever you want to do. And lastly, we know that the system from a GDPR perspective doesn't fulfill requirements. It's built for the U.S. market. It doesn't fulfill their requirements, especially when there are multiple caregivers in the same installation, which it will be [indiscernible] in that case. So that's why we don't think it will happen, but that's what's at risk if it will happen. Norway, we're working in some niches. They are roughly NOK 200 million. And as I said earlier, we are in a good position for Ad Curis and Metodika. We're winning customers. The competition is limited, high barriers to entry. Ad Opus is in a bit different market. So we'll see actually how that plays out. We're trying to bring as many legal challenges as we can in order to make it happen quickly, because otherwise, those process can take time. So rollout of -- into Europe. And what's really clear to say is that the Nordic countries are ahead when it comes to digital solutions in health care as within many other areas. But I would say, especially within health care, and the reason is that they're more south to go and also they're more west to go, doctors have a higher and higher standing. So it's becoming more and more difficult for management to push through changes within the organization. So in many Southern countries, the doctors even bringing the patient themselves. So if you lose a doctor, you lose the patient. So it's a completely different position for the caregivers. And that really have slowed down development of digital solutions and implementation, mostly of them. Webdoc is a monolith, which is built for Sweden. So it makes more sense to build a new system for other countries, and that's what we're doing with Webdoc X. It's a micro service built solution. So it's easy to build different parts around it and to adapt it to different markets. And it's built with all the present legal requirements in mind. And what's really good for us is that within EU, most of them are the same. And we especially think that Germany is an extremely interesting market for us. So that's what we're going for. It's Europe's largest health care market. And what's even better is that private providers are an extremely important part of the system, and it's a long traditional offset in Germany. Nobody sits on the private providers in Germany. So they are free to choose any system they want, and you can win one customer at a time. So it's a large market, fragmented market. Looking at the competition, there are many, many systems in the market. So it's not one dominating system. There are many of them that's on-prem, old solutions that look terrible. And we've been doing a lot of visits to Germany. People are not happy with their systems they have today. They are very open for new systems. Our largest competitor will be CompuGroup which is the same as in Sweden. And they own roughly 30% of the market through a couple of systems, but they have the same as we've here that's kind of making the market. So I think we'll come in at a very good time. Germany is also, at the moment, opening up for cloud solutions. They did not allow it until recently. So that's why also they are large -- lot behind. I think [indiscernible] was opened up last year for cloud. Yes, question.

Yes. So in -- I guess, you'll come to that. But in the planned time line, you say that, right? So it's an acquisition in Germany in 2024. How do you think -- you said that there are no like really good solutions currently, but could you just elaborate on how you think?

Yes. So when it comes to the acquisition, you mean?

Yes.

Yes. So at my former place, I entered a lot of new markets and have a great respect for entering a new market. There's always differences and there were differences that you haven't thought about. So you need to sit on the ground, you need presence, you need some size already from the start, because otherwise, you are driving a lot of costs, and it will take a lot of time to build that organization, and for that organization to really learn what it's supposed to do. So that from that point of view, we really feel that we need to do an acquisition to get feet on ground, have support in place, have implementation in place, having people who have built a solution for that market before who knows a lot about the details. And that's why I think an acquisition is clearly the way to go. But also from our experience is when we bought Metodika, they had a lot of installation in Sweden that we have moved to Webdoc. And that worked very well, and we roughly doubled the income per customer. Same when we have in Norway moved customers from on-prem to cloud, roughly doubled the income per customer. So I think there's a good case yet to be done by the acquisition, but the acquisition is also what allows us to grow further in Germany. What's important for us is to buy a system, which doesn't have too great functionality level. So a little bit of -- one of the medium complex systems so that we -- earlier in our progress of [indiscernible] can meet the requirements of those customers and that they do not lose functionality by going on with [indiscernible] because that's when you get the churn. It will build for us to give a much better experience. And when you travel around the Germany, you meet the different [ Phoenix ], they still have -- all of them are servicing their place. I haven't seen that in Sweden for a long time. They all have service there. They all have filing cabinets, doing a lot on paper, and they're quite unhappy with their system. So what we think about is buying an on-prem solution and only one.

And the size of an eventual acquisition?

That I will have to come back to. But it's part of how we decided on how much money to get back to the shareholders.

So where we are at the moment is that we've been looking at all of Europe and think that Germany is the most interesting country. We have been there a lot also in person. I think that's important to really get a feel for it and to meet the caregivers, both large and small. We have initiated the certification process of Webdoc X for Germany. So we're hoping in the first part of next year, and we started looking at M&A opportunities. So our aim is that during 2024 to certify our system, get pilots up and running to really let customers in the system, it's extremely important and do an acquisition. Acquisitions is, as I think all of you know, it's difficult to set a time line on because you have to find the right target, but there are multiple targets issues from. But then you always have to be ready to walk away if it doesn't look good after you spend a couple of months. So we want to make sure to do the right acquisition. Then in 2025, commercial rollout and start transferring customers in the acquired system, that will take a couple of years also. And then in 2026, we think it will have a material impact on our income, on our revenue from Webdoc X. And looking at Webdoc X, what is it? We have taken everything that's been done right within our present systems, put it into it, and we also try to fix everything that did -- is not optimal in our present systems and building it from ground up, using microservices to make sure that we are flexible and building a flexible solution. And it's designed for a private provider. That's an important part, few systems are, because the public and large hospital systems are such a large part of the total turnover of health care. But health care is huge, especially in Germany. So private providers, much less competition. And what they want is an efficient system, easy to use, but you don't need all the complexities that a large hospital need. We bring also with us what we had from the start with Webdoc. So it's an open system, with an open API, everyone can connect to it. We also aim to have different type of third-party integrations that we can sell ourselves over time. And we have one using system so far and it's Mindler, and they seems satisfied. Looking at acquisitions. Our priority now is the acquisition in Germany to buy one open system, transfer to the cloud and get feet on the ground. And we're not trying to do other acquisitions at the same time, then we'll repeat all mistakes. So that's really our aim at the moment. However, we have a long list of potential targets in the Nordic countries, which would be a great fit for our present products. And if they pop up, ready to be sold, then we might take part in such a process. But in general, we're waiting a little bit with that. And also as we said, their price in the private market hasn't come down yet for quality acquisition, as I think they should. But we see exactly. So it's really -- now it's focused on entering a new market, then we start looking at acquisitions again here in the Nordic countries. So looking at the journey ahead. We have a good basis to build on when it comes to organic growth. We're doing really a lot to increase the organic growth. And you've seen the list, I really feel comfortable that, that will translate to more sales. It's going a bit slower than I expected. But if you give it thought, the thoughts are changing, the heart of the clinic takes time. You don't do that overnight. We have lowered our costs. So we have an efficient use of our resources. We do not need to add very many people going forward even if we grow a lot. We have plenty of resources and continue to build with those resources. We aim to launch Webdoc X, as I described earlier, on the time line, and that's really one deferred key to us going forward. However, the last point, which I think we have to talk about today, is AI. We haven't spoken very much about it because it's -- we don't have any products ready to launch, but we're working a lot of different types of products internally now in our own development, both Copilot and Cody, and we see great effects from them. We haven't really attractive into using it everywhere yet, but we're getting there, and I think it can really change a lot on how we work with our development going forward. Also from -- at the customer side, these new LLM models are really interesting. We have one pilot where we record the entire visit during the doctor and the patient in the room, so it's like 20, 40 minutes visit. And then we use [indiscernible] and then we use an LLM model to transcribe it into typical doctor's note. So as a process today is that the doctor when he say goodbye to patient, they sit down, either writing themselves or they read it, into record it, and then someone else writes up or he use speech-to-text at that position. Our aim is that when he say goodbye to patient, [indiscernible] from the computer, it should already be there. And before the summary, the LLM models were not good enough. After somebody, there were a new one coming out, and now it's really quick. So we're experimenting with a lot of these different types of things because what they're really good at is helping with administration. And administration is a really heavy part of health care, but what's also good is the less -- it also a less regulated part of health care. If you talk in decision support, it's a whole ball game. But LLM models are really good administration. So I think we'll do a lot with that. So that's why I put it here because we're doing a lot of projects with that at the moment, but we're not ready to launch anything yet. Now I'll hand over to Svein Martin.

Thank you. As you probably saw, we launched -- we announced a new updated long-term financial targets today, which I will go through in detail in this presentation. We target revenue growth, average annual organic growth of more than 15% between the years 2024 and 2026. And we also target improved profitability with EBITDA margins reaching 25%, and EBITDAC or EBITDA minus CapEx margin reaching 15% in 2026. These targets are long term, and there will, of course, be variations, but they are based on the structure we have today, so not including any acquisitions.

Regarding the revenue growth that you expect, I mean, when you sat down and thinking about these, have you included the potential 10% revenue drop from [indiscernible] VGR like churning?

Yes, I mean, this is what we are -- we think we are able to achieve based on the landscape that we see. So including all of the different factors in all our products, basically.

Okay. So yes, half-ish? Sorry...

No, I mean, they...

So not really -- yes, okay.

[indiscernible] mention in terms of this potential, it's, of course, difficult to calculate exactly, but it might cause churn in Webdoc to increase a bit, but then we see the potential throughout the period to deliver on the targets either way.

So I will talk a bit about -- more about our strategy to achieve the targets. But as Daniel mentioned, we work a lot internally on following up our products on revenue growth and cash profitability. And we have very clear internal targets and requirements for all our products. So some of the products, as you saw, are delivering good results already. Some of the products such as Webdoc has a very predictable path to good results. And then we have some products that has a longer way to go. But for all of them, we have very clear plans on how to get there within a couple of years. And if one of the levers we have, which is growth, doesn't get there, then we can pull on the other lever, which is profitability. So it's very much in our own hands on how we maneuver this going forward. So I will start by looking a bit on the historical growth and how it compares to the targets. We have a long track record of organic growth in Carasent. As you see from this graph, it decreased in Q3, which was driven by -- mainly by decrease in consulting revenues, as you see the recurring revenues on the right-hand side is quite stable. We are back with the customers, and we are doing all -- a lot of initiatives to increase growth and new sales. But as mentioned, it takes time to see effects on the revenues. And we have this short-term issues as well with Confrere for example. So it will take some time to reach the pace that we target in this period, but we believe that all the initiatives we are doing now will get us up to the average growth within this period. Looking at the recurring -- development in our recurring revenues. You see that we have grown very fast. We have more than tripled in size since Q3 2020. And the growth has come from many different routes, including upsell to existing customers, a very low churn, new sales and also acquisitions. And if we look a bit closer at these different components, we see that upsell during last year was 10% or around NOK 4 million. The year before that, NOK 3 million and 11%, and this is driven by three main factors. We have price increases, which was around 4% during the last year. We have volume growth at our customers. As mentioned, our business model is linked to their production, basically. So when they grow, we grow. This has been -- if we look at the last year, this has been a smaller portion of the growth, as we have seen some clinics reducing their volumes quite significantly after the pandemic. So then our business model decreases the revenue as well. But in general, the market continues to grow. And also the final component is the upsell of services. And here, we see a potential also particularly for Webdoc to continue. Given that we are the core system, all the different -- to have an efficient process, all the third parties really need to integrate with Webdoc, which is the core system for the customer, and this gives us a lot of potential as the digitalization increases as well. Churn is very low. I will go into more details on that per product, but around 2% for the group. And new sales has been quite stable, as you can see, 5%, NOK 2 million for the last couple of years. And here is where we are putting a lot of effort, both on the product development side, but also on the operations and sales and marketing side, we're investing heavily into increasing that figure. And then acquisitions have added a lot of revenue, as you see, over the last 3 years. We see a great potential to continue to do M&A at a sensible pace and at a sensible price. So we now have LTM revenues of NOK 235 million. So we have become a large player in the Nordic market. And this, combined with our breadth of product offering, makes us relevant for basically all the customers that we target in terms of size. We have 1,145 customers across all of our products per September, with an average revenue of around NOK 200,000 per year. Our customer base is in general extremely diversified. So we have limited counterparty risk in our customer base. There is no customers that make up a material part of their revenues. And the growth figures at the bottom. I will talk more about when I go through the products now, how it looks. And starting with Webdoc, it's around half our revenues on an LTM basis, 47%, NOK 109 million in revenues. Growth was 17% over the last year, which was driven by net retention rates of 111%. Webdoc is an open platform. So upsell of integrations and different tools, both our own, but also third parties is a key part of our growth strategy for Webdoc and also initiatives such as Daniel mentioned, the AI and different value that we can add to the customers. And we have worked a lot on this over the last year to increase the upsell. I don't know, Daniel, if you want to say a few words about that.

Yes. So yes, at the moment, implementing a CRM system. We didn't have that before. So really make sure that everyone knows what each customer is using, so we can really target to different customers on what we think they need. We know them really well, but we need to put it more into systems to make sure that we're selling what we can. We have also divided the sales force, so not a system, but our sales force towards different customers. So they -- each person has a responsibility for the upsell towards different customers. We have done also the same with customers we don't have today, given responsibility about them. So we're doing really a lot to move our sales.

And we also have a 1% churn, which is extremely low. And bear in mind that this also includes involuntary churn. So companies going out of business or being acquired, et cetera. So the actual churn for Webdoc is very close to 0, I would say, which -- these two figures that the net addition, the churn really shows the position that Webdoc has in Sweden. It is the best system on the market. And then the final figure at the bottom, the market share of 10% also shows that really have a potential there to grow as well in Sweden. The market is large. And our core market -- the sweet spot market that Daniel mentioned, we have 20% approximately. So still plenty of room there. And we think that adding all these components in terms of new functionality, more structured approach in terms of sales and marketing, better operations, all of these factors will contribute to helping customers making their decision to change.

Just regarding the market share, it would be really interesting if you could just like walk through like the different parts of it, like what are tapped by competitors, what are like untappable for you and so on?

Yes. So it's difficult to go into detail about all of it, but an important part is the segment doing surgery to add that as large providers there. So even if there are few, there are many of them really large ones. So a lot of staff. Then we have Stockholm, which is the largest market. We have a lot of customers in Stockholm, but there's so many left still that win. And then it refers really important to gain that. Why we say that the sweet spot is this part, this part we do not calculate in when we say sweet spot is primary care in Stockholm. And the reason why we today do not then include primary care in Stockholm is that, if you are in TakeCare, you can send e-refers to all different providers. And it's easy for us to build it on those referrals from the primary care --specialist care center. But to satisfactory to send refers to all different providers in Stockholm, that's much more difficult for us. So we have one primary customer in Stockholm at the moment. We might gain more, but that's a more difficult area for us and the same with really, really small health care providers, so like a single physiotherapist, single psychologist. And especially also physiotherapists and psychologists, they get quite little paid per visit and per hour. So their readiness to pay is less than for a doctor clinic. So that's roughly. But Stockholm is the big market.

Yes. So that's Webdoc's position. Mark?