Diaceutics PLC ($DXRX)

Good afternoon, and welcome to today's webinar hosted by Diaceutics to discuss the company's full year 2025 results issued earlier today. My name is Simon Geelon, and I manage Diaceutics IR program. on the call today to discuss the results are Ryan Keeling, CEO; and Nick Roberts, CFO. Before I hand it over to Ryan for his formal remarks, I will draw your attention to the forward-looking statement slide in our presentation, which is on screen now and can also be downloaded at diaceutics.com. At this time, I will now turn the call over to Ryan. Ryan, please go ahead.

Thank you, Simon. Good afternoon, and good morning, everybody, from a very warm, should I say, hot London, where we are on day 1 of our investor roadshow. Delighted you all can make some time to be with us today. And Nick and I are going to walk you through the highlights of 2025, of which there are many. I wanted to start at maybe taking a step back and I'm looking at the '25 year as a whole, it was an important year for Diaceutics and in many ways, a validating year for the model. We delivered 20% revenue growth, and that was 24% at constant currency in what was probably the most challenging commercial environment we've experienced in the U.S. pharma market, certainly in the time trading history of Diaceutics. But despite that disruption across the sector, particularly through Q2 and Q3, where we saw quite significant shifts in policy and ultimately, the operating environment for our customers. We still felt we put in a very strong year. We expanded ARR by 19%. We increased our adjusted EBITDA by 80% to GBP 7.6 million. We delivered a 20% EBITDA margin and return the business to profitability. More importantly, I'm very aligned to the strategy that we are on as a business. The quality and visibility of the revenue base continued to improve. We closed the year for a record GBP 38.9 million in order book including GBP 21.1 million visibility into FY '26, giving us increased visibility over the year as revenue and indeed, '27, '28 are also building well. We also grew alongside subscription revenue, enterprise engagements and PMx adoption. All of these we'll get into more detail in a moment. Strategically, the business strengthened meaningfully during the year. We now have 10 enterprise-wide form engagements. We work across 95 brands 53 customers. And we signed our second PMx customer, really symbolic for us, and we'll talk a lot more today about PMx. It is a real halo effect on the business and is driving up the average revenue per brand across the portfolio. And behind PMx, we now have a pipeline of 24 potential PMx opportunities and really heartened to see that 8 of those are already spending with us today. They're not spending at PMx levels. We can't call them PMx customers yet, but the strategy there is to grow these customers that we have identified as PMx targets. We're having that conversation with them. We've picked PMx to them from day 1. These are biotechs predominantly. And we believe that we can convert a sizable number of those into full-blown opportunities, whether we are extracting $2 million, $3 million, $4 million per year average revenue. We also continue to invest deliberately in the long-term ability strategic value of the platform, particularly through U.S.-focused data assets and support our precision for all strategy. We'll talk a lot about precision. We're also very exciting growth opportunity. You heard us last year talk about the TAM expansion on what we saw there. Precision Pros really further articularly view on what that TAM expansion could look like. And we have a lot of validation eye through existing [indiscernible] into customers that are embracing that precision for all approach. Nick is going to walk through the financials in more detail, including cash, working capital, I know that's a key area to dig into today as per some of the analyst notes that and will look into that. And at a high level, we view '25 as a year where the business became more recurring, more visible, more profitable and more strategically embedded with customers. The fundamentals of this business are really going from strength to strength. And we exit the year stronger. I said we have more customers, more brands, more recurring revenue, higher visibility, expanding margins and a significantly larger long-term addressable market opportunity, sets us up really well for continued growth, continued success. And as we dive more into the financials and ultimately the narrative, we can bring some of this to life for you. I want to pass on to Nick, my CFO, to walk you through some of the financials. Next slide, Simon, thank you. Over to you, Nick.

Thanks, Ryan. Yes -- so just a apologies. Sorry about that. So yes, I'll just cover off briefly, and I think Ryan has touched on many of these points, but the financial strengths of the business both seen in 2025 and in past years, and hopefully, you're seeing buildup in the guidance for future years as well. So our return to profitability in 2025. I think a really important milestone as planned and with margins that we expect to see improve over time. So whether that be gross profit margins, adjusted EBITDA margins or indeed, overall profitability, so profitable before tax. Our revenue CAGR over the last 3 years of 25%, again, echoed in 2025 as a result driven by the number of brands that we're working with and ultimately a number of customers and the average revenue per brand. They need 2 important drivers and a bit later, I'll talk about the addressable market opportunity and how we're driving to more customers, more brands and how we've invested in data to do that. We see growing ARR revenues and future visibility through an increased order book. Ryan already mentioned 10 enterprise-wide engagements with blue-chip pharma customers, which is fantastic and a stronger balance sheet, GBP 7.3 million of cash. And a reminder, we have no debt. Simon, can we go to the next slide, please. So let me just cover off the key financial metrics for the year. We have revenue at -- I see Simon is just trying to get the right slide there, but I'm sure we'll get there in a minute. Let me carry on talking. We have revenue of GBP 38.4 million, up 20%, and that's 24% on a constant currency basis. And again, I would expect that 25% 3-year CAGR fantastic top line growth, and as Ryan said, in what is challenging market conditions for pharma. The ARR is up to GBP 20 million up from GBP 16.8 million, so up 19%, almost 20%. NRR for last year was 105%. That's down 4 percentage points on 2024. And we did see and we did observe some churn earlier in the year don't because of more challenging market conditions for pharma, but are very comfortable that, that is under control, and we've seen a trend of [indiscernible] NRR both in the back half of 2025 and the start of 2026, which is really important. Ryan already spoke very nicely to our order book, and we're seeing growth there, not just near term in terms of the next 12 months, but we're seeing a return to growth in the 24- and 36-month outlook as well. And that's giving us confidence, and it's giving us more visibility over our revenue and our future growth rates. On to profitability. Our gross profit margin reduced slightly from 87% to 82%. The primary reason, indeed, the whole reason for that down -- that reduction in gross margin was some data spend, GBP 2 million of data spend, which was expensed for the P&L through COGS during 2025. That data was a new data set. There are several new data sets in there and there's an opportunity to start increasing and investing in future TAM areas. And I'll talk more about that investment and what it opens up in terms of TAM and market opportunity on a later slide. The adjusted EBITDA for 2025 was GBP 7.6 million, slightly ahead of consensus guidance. That's up 80% and a margin of 20%. That's up from 13% margin at GBP 4.2 million of adjusted EBITDA in 2024, a significant milestone. And it's that drive and operational scale that we're seeing drop down further. So profit before tax, 300,000, so just about breakeven compared to a loss before tax of GBP 1.9 million in 2024. So definitely seeing that increase in both revenue growth, scale in terms of profitability and then that dropping down to overall profit. I'll just be an [indiscernible] on the cash here. We finished the cash at GBP 7.3 million. So that's down on the GBP 12.7 million at the end of 2024 and a free -- and cash outflow of GBP 5.3 million. The primary reasons for driving that free cash outflow have mentioned earlier, the 2 million we spent on data and expanded TAM that opens up. But also, we noticed particularly during Q3 and then into Q4, later phasing of revenues, so pharma pausing some of the spending decisions in the year, making those decisions, bringing them back online later in the year. But that in itself, although the revenue ladder in Q4, then the employee in the cash has been pushed across the year-end and into early 2026. We also saw farmer take some shorter-term decisions around delaying credit terms. We still have no bad debts in the business, which is very positive and probably expected given the blue-blue chip customer base we have, but it hasn't meant -- or it's still meant that they have pushed out their credit terms even though those aren't bad debts. And finally, just in terms of the cash, and we can touch on this in a bit more detail. We saw some M&A spend during the year, around about GBP 0.5 million as we start to invest in and explore nonorganic growth methods to augment that strong from 5% per year CAGR that we had. Can we go to the next slide -- I'm sorry, you're already there.

I'll come back in. Thank you, Nick. Those of you who have been following us for some time. You'll have seen this slide every time we present. So I'm not delivered on a too long. Just to remind us kind of what the fundamentals of the business model is. We have invested over the last 10 years in building out the network of laboratories that we partner with in order to get access to diagnostic information pertaining to what disease or patient task and obviously simplifying here quite significantly. That data in itself is transactional data that is derived from the clinical diagnostic activity performed by these arteries. But the real value to us is it tells us in close to real time what disease a particular patient has, assuming, of course, that disease is diagnosed with a lab test. That is the data that is effectively the lifeblood of Diaceutics. We leveraged that in our lead product cost signal, but we've also built a phase of services and other products that the company Signal and our advisory services that didn't [indiscernible] form a full suite. You've heard us reference PMX and will talk more to that. But that really is the foundation of PMx is the lab network, the data and then ultimately delivered to our Diaceutics DXRX platform. The problem that we're solving here is effectively helping pharmaceutical customers, large and small, to better target, better promote a potential treatment to a physician who has a patient that is very recently diagnosed with a disease that the drug is intended to treat and that's different to how the market approaches drug promotion and targeting today. And it's something that is both helpful in terms of driving top line pro forma, but also managing their cost base given it's a much more targeted and less resource-intensive way to go to market. Core -- next slide please, Simon. Core to what we have been investing in as a business, and this was largely investments. So we started in 2023, '24 and again is how we have embedded AI. I feel we were a very early adopter of AI. If you go back to some of our really early press releases in RNS, as you'll see that we had a partnership with Intel. It's part of August 2018. I remember when they shipped us some hardware, it was half the size of our office at that time. So we've come quite a long way in terms of the agentic AI that we're leveraging today in the cloud. But we feel that Diaceutics will be an AI winner if we aren't already. We are doing the obvious things you would expect any business today to be doing AI in terms of operational leverage and the things that they are really good at as it pertains to data operations, ingesting normalization on structural extraction, et cetera. We have really heavily adopted the AI and our, I believe, on the other edge of performance as it pertains to that particular use case. We've also embedded AI in our product road map. So our products are better informed and ultimately leveraging as we go to customers, and that's effectively manifesting in enhancements to how we signal and activate through our data and that includes integration into our customers' workflow intelligence and starting to get toward next best action capabilities. We're not a next best action company. There's lots out there who are doing that, but we're certainly enabling and working around that to better form next best action. And the moat is obviously really important as we look at the defensibility of our business proprietary data is core to that moat. But how we've leveraged AI to really combine our proprietary diagnostic data, disease-specific logic and workflow integration, making it harder to replicate what we do with laboratories. And I think that's something that is ultimately alongside the AI enablement in the product road map and the [indiscernible] better than operations, makes us -- gives us a real enabler in AI. And we think we will be an AI winner here in terms of the business we have, the expectations of customers and how we're leveraging it in the business today as well as helping us actually defend the business model. And certainly, from an AI-native cloud-type threat. We have key assets here that are very hard to replicate even for AI than they would have been and the fundamentals are still very secure. Next slide, please. Thank you. Thank you. The study we work this slide. This is our lead product, Signal. And effectively, what I hear is we now have a lot of evidence to show how Signal is impacting and benefiting our customers in the market. Remember, the challenge here is that we are trying to identify patients in as close to real time as possible that have a specific -- in this instance, mutation in lung cancer. We're trying to intervene with the treating physician for that patient at a moment in time when there's a treatment decision being made. And the timing of that is really critical and the impact ultimately for our customer is that they get more patients on the drug. And in this example, this is real customer data share back of us. We're showing a sustained uplift we're effectively after we switched on our Signal product, we're more or less double the number of patients, and that's growing slightly over time. But key to this is it sustaining. It does drop off because ultimately, it's not that we're finding our physicians where the real-time nature of the data is critical in terms of how it's enabling pharma to promote their asset, their brand to a position on exactly the right moment. The ROI here, you can see is clearly outlined. And our ROI analysis is, I guess, somewhat subjective in that you have to have a lot of variables feeding into it, drug pricing and then there's discontinuing can apply after the effect, et cetera, how long the patient stays on drug. There's lots of variables and you guys as analysts will understand those. But on average, and as we look across the portfolio, it is not inconceivable to see that our ROI is very significant in this example, at $350 for every dollar they're investing with Diaceutics. Next slide, and then I'll pass back to Nick. Again, for those of you who have been following us, you'll have seen that while the business has been very focused on precision medicine, since its inception. That's the thing that has been most consistent about downsides we've been very focused on precision medicine. And to a larger extent, that has meant oncology, precision medicine oncology. It's kind of where change [indiscernible]. Through engagement with our customers over the last few years, we can see that they want to apply our model into non-precision medicine areas. And these are areas like immunology, cardiology, nephrology and areas that are diseases that are identified and diagnosed with a lab test, they wouldn't be precision medicine per se by the strictest definition, they don't have a biomarker or companion diagnostic type play that we see in oncology. But it's very clear that the advantages that we have in precision medicine around data timeliness and patient characterization are also very applicable outside of Precision Medicine. So precision for all is our effectively the concept behind how we want to go to market to address a much broader market opportunity. We are already selling to customers medicine. And that some of our largest customers but also some brand-new customers, some of the data that we acquired off the back end of last year that Nick referred to was to enable that growth into precision for all and really chase that TAM expansion opportunity. And we'll report as we go on this because we feel it's a very exciting evolution for the business and something that now has real evidence to support our ambition in to be much more enterprise-wide for our customers. To put that in context, if we take any typical big pharma today, top 10 pharma, those who of a precision medicine focused, maybe 25% to 30% of their brands are precision medicine and we apply a precision for all, you're now talking about maybe 80% of the brands. That makes us much more applicable at an enterprise level and affords us the opportunity to perhaps start to think about how we sell the Diaceutics at enterprise level beyond the brand -- silo brand approach that we're taking today. Later in the year, we will relaunch the brand. We did some significant work of our marketing agency to the brand in the first business. So I want to say we launch, this will be the first time we've ever done any significant marketing but core to that principle will be positioning Diaceutics to be very applicable in Precision for all as opposed to the more precision hold, precision medicine that we've been in historically. Next slide, Simon. Nick, do you want to talk to PMx?

Yes. Thanks, Ryan. So I think most of you are familiar, but let me just touch on what PMx is. We [indiscernible] solutions. So as it says in the top line here, it's insight-led so its data led, [indiscernible] commercialization model, specifically for precision medicine and rare disease therapies to around our existing solutions is tailored for a customer to ensure that you're hitting 4 of these 5 points below to ensure that you are -- the customer is understanding the market and the behavior of prescribing and testing in that market, driving faster test adoption, binding patients. So talking to that ROI, that case study that Ryan showed earlier. It's about personalized direct to physician omnichannel or digital marketing, right at the point of time where they're making treatment decisions. And it's about the last mile, which is driving education and adoption through physician at a point where education awareness is needed and physician is making a treatment decision on patients, which is absolutely key and really fundamental to our data set and the way that we've built our business. We currently have 2 PMx agreements, which are live. Ryan mentioned this earlier. One is we're a [ Partner Therapeutics ], who we've been working with for about 18 months. The other 1 was a novel U.S. oncology asset with a biotech who we started working wave in Q3 of 2025. This started off this PMx agreement started off as a Signal. It's slowly moved on to the -- to quickly moved on to position [indiscernible] and then it's finally gone on to the expert exchanges that peer to peer conversation and -- and those being the 3 tenets of PMx that became the PMx engagement at the end of last year. PMx has a significant impact on not just the number of brands that we can add, but also the average revenue per brand. The average revenue per brand across all of our brands is some GBP 430,000 per year. The average revenue per PMx brand is between GBP 1.5 million to GBP 3 million of revenue per year. So a significant multiple, 3 to 6x. We have pipeline opportunities, which are ideally moving towards PMx, but at the very least, we will look to move them to be customers of Diaceutics and engage around one of our solutions, be it physician engage or Signal or some of our consulting and scientific services. and we have 8 potential PMx customers that are currently buying solutions for us that we have targeted and had discussions to move them on that journey from a buyer of 1 service to a buyer of multiple and ultimately, the PMx solution. Simon, could you go to the next slide, please. And I won't spend too long on this slide. We've had this in the deck in the past. It outlines 1 of the 5 key stages that our customers think about launching their brands into the market, and it links our individual solutions below those. If you would like that's the a la carte menu that customers can buy from that we sell from. And if they were to adopt the briefing tenants of that plus some additional services, they effectively get the PMx wrapper, and that's an end-to-end solution, which would cover the dark blue on the left, all the way through to the green on the right. Next slide, please, Simon. I'll just finish off on PMx by articulating some of the tangible results we're seeing. First of all, and I talked to this earlier, is a significant increase in the average revenue per therapeutic brand that Diaceutics is generating from that some GBP 400,000 to GBP 3 million of revenue per year per brand. And the reason customers are buying it and the reason it's getting traction is because of the results, which are all very measurable given our targeted data and ability to make the ROI. We've seen in test case -- sorry, in cases that we're actually deploying 100% increase in testing. We've seen 82% of health care professions, such physicians reporting an increased understanding of the disease they're interested in. And most importantly, 60% -- almost 60% of patient signals have engaged and gone on to a treatment. And that is the ROI that our customers see. It's the conversion from awareness of a potential patient to that patient going on to drug. These are very tangible results. Next slide, please, Simon. I mentioned the market opportunity slide, and I'd just like to take a few minutes to talk about this. We set this out in earlier RNS last year about the market opportunities, the number of brands and how we're looking to grow that. The way that we think about 2025 in particular was that those top boxes, so increasing the penetration in our existing market. As Ryan said earlier, we are working with some 95 therapeutic brands across 53 customers in 2025 of a total market opportunity in precision medicine of some 250. We're making really strong progress there in terms of our ARR and a number of brands we're working with. What the investment in the 2 million of data during 2025 at the end of 2025 really enabled [indiscernible] us to expand into that persistency [indiscernible]. So that [indiscernible] package allow us to from the 250 ...

Nick, we've lost you there with the sound. Will you just put on your microphone, please?

Sorry about that, Simon. I think we had a network issue there. So let me continue as Ryan joins. So that investment and that decrease in cash that we saw at the end of 2025 will enable continued top line growth, continued expansion of our margins more profitability and ultimately, cash flow generation in 2026 and beyond. The final box here, as I just conclude on the addressable market is that we will see those 560 brands, so the Precision Medicine plus the Precision for all continue to expand over the next 5 years or so as more drugs come to market that are diagnostically enabled. We are seeing a growth rate of around about 13% overall in the industry, and we expect that to grow from 560 to just over 1,000 by 2030. Simon, can we go to the next slide, please? I know we've included this slide in Dexcom [indiscernible] past. I think it's really important to articulate that there are a lot of really highly qualified individuals in our business that make this success happen and ensure that we're growing, we're innovating and we're driving this business to really impact patient lives. It's not just, Ryan, myself and Jordan that you see on these calls, there's a whole suite of individuals. And indeed, as at the end of '25, 205 employees in total. Thanks, Simon. So I'll start off by concluding just on the final slide here, and then I think we're going to open up for questions just around the investment case and how we're going to continue driving customer success. Our strong competitive advantage, we talked about -- Ryan talked about, our unique network of labs data that we derive from those labs and the platform enabled by AI that's enabling us to scale and drive profitability in our business. It's a significant and compelling value proposition for our customers, really outlined in that 59% of physicians acting on in PMx, the opportunities, the patients that we're flagging to them. And in here, we articulate a $100 for every $1 invested. And we think that is on the light side has proven out by some market studies. Our financial strength is continuing to grow, high margins, recurring revenue, high growth rates and in 2026 and beyond, that move to cash flow generation as well. And we have a multiple track record in precision medicine, now expanding out to Precision for all and really a blue-chip customer base. That is probably the envy of many pharma services and tech companies. We're working with 18 and top 20 global pharma customers. If we go on to my slide, I mean, I think I'll just hand over to Ryan in case he wanted to make any final remarks?

Yes, yes. Thank you, Nick. Apologies. So a bit of a technical issue for me there though. And we're going to pass back now to Simon. I think you want to do some Q&A please. Thank you.

[Operator Instructions] Should we not get to all the questions in the time that we have remaining, please do a follow-up with us at [email protected] if you wish to discuss anything maybe some today's webinar in more detail. [Operator Instructions] We will now take our first question from Chris Glasper at Singer Capital Markets.

Yes, I do have more than 2 questions, but I will limit myself. Just on the cash flow. Obviously, you mentioned it upfront around the working capital and the change in payment terms and that's impacting on your working capital cycle at the moment. Really just a bit of color again, on exactly what the dynamics are there, whether it's related to the longer contract durations, whether it's purely customer led and what you, if anything, you can do to improve your receivables collections.

Yes. No, great question. Thanks, Chris. And I'll let Ryan come in at the end if he wants to, but let me start off by saying, I think what we saw is customer-led. If I think about the market conditions that were in 2025. So some of the pressure that pharma came under from the administrative changes that were made in the U.S. around tariffs and drug pricing. There's certainly a pause and that meant that they're spending and therefore, our revenue, our pipeline closing shifted right during 2025. That late phase in your revenue driven by, I'd say, broadly across the top 18 global pharma an increase or a desire to increase the credit terms of us meant that we saw that the cash shifted to the right. So set of landing in Q4. It's added the other side of the year-end. And we expect that to, I think, continue on an ongoing basis. But we should just accept the status quo there. There are things that we can do and things that I've asked the business to do and that's anything from education with sales teams around using invoice intervals and credit terms to help them with their own contract negotiations, whether it be price or term or the type of products. I've asked finance to look at ways that we could speed up contract to invoice processes and how we can recover debt quicker from customers and legal to help us around some of the commercial terms on standard terms that we set with our customers. So there is definitely behaviors that we can drive in the business, and we will be driving. We have started in 2026 and I expect to see some improvements there. And of course, as we embed ourselves with these the top pharma companies, and we start to move on to preferred vendor status. There is also another opportunity there to help negotiate and bring those credit terms, which they've been pushing out to bring those back down to a level which we feel will be more comfortable.

Okay. And then just on M&A, obviously, you've been incurring some exceptional charges, which are reasonably punchy, I guess, in the context of your business at the moment. Just a comment really on your firepower, given the lower cash levels. I appreciate you've got a small overdraft facility as well, but a bit more color on kind of what you're looking to achieve with M&A? What kind of size of deal we might be thinking about here?

Yes, Chris, I can come in and then maybe Nick will add a bit more color. Look, ultimately, as a Board, we are always keen to fully understand where the potential shareholder value in this business is and therefore, we are exploring or have historically explored all avenues. Through 2025, we did embark on some M&A activity as a potent particularly looking at the U.S. acquisition that would both for us strategically in so many areas. Obviously, we're expanding in the U.S. in terms of our sales team and head count. We also have a significant level of data partners and lab partnerships in the U.S., [indiscernible] of our customer base in the U.S. So it makes strategic sense for us to look at the U.S. as a market. We identified some potential targets, big and small, and we've looked at a range of options for the business to ultimately grow and these are very strategically aligned to where we want to go. To do that properly, it requires investment. And yes, you could look at the investment we made last year significant for a business of our size, but we wanted to do it right. And while that's expensive, it's even more expensive to do it wrong. And we didn't want to end up going down the road of potentially acquiring something or trying to acquire something that was not the right strategic fit. So we're -- there's also a lot of value that we've got from the business in terms of that journey. It's a bit harder to see that value sort of it's less tangible and more strategic in nature, but we're -- it was very intentional. What we did was heavily supported by the Board. We have the right advisers around us. And I think there's a lot of value generated through that activity. And we're comfortable that we did it. Unfortunately, there isn't a deal to announce which would obviously justify the spend. But I think the value that the business card is significant.

Yes. And just to add, as Ryan said, not an insignificant amount, but of course, we wouldn't have made that investment unless one, we believe it is the right thing. And secondly, we could afford to do that. And we could both in terms of the cash we have available to us and the profitability in the year. So we're still able to manage overall profitability, which is a key message to the market that we said we'd do in 2025 when we delivered on, and that's in spite of having those additional costs as well.

And they truly are exceptionals, Chris. So we wouldn't -- we're not going to incur those every year.

Yes. And would you expect any deal to be accretive? Would it contribute to your bottom line into cash flow? Or would it move you.

Yes. So yes, there's obviously a range of different companies you look at, and some of them are pre-profit albeit it will be at a smaller scale. We would expect any acquisition to add to our top line, and we're looking at opportunities to jump our own strategy. Our own growth strategy forward 1 or 2 years. And we'd have to take careful consideration around what that meant to the overall group consolidated profitability, our cash flow and that sort of thing, but we made sure that it was obviously a sustainable and accretive acquisition at that point in time.

In the queue. We will take our next question from Natalia Webster at RBC Capital Market.

This is Charles Weston on for Natalia. Thanks for taking questions. So my two, first of all, precision for all. Can you give us some examples of what precision for all would be in terms of actual potential use cases that you might be looking at that are not should precision medicine? And secondly, your data is sort of clearly an AI's dream. But what are you doing to protect your -- the moat around the lab data? Does the advent of AI's innovation recently make it easier for others to try and get access to the same data and on that topic -- Sorry, this might be a third question. On that topic, are you seeing any change in the rate of consolidation of labs.

Charles, very smart way to get 3 questions in. So I'll answer part 2A and B in. Let me begin with -- sorry, [indiscernible] as I said that I forgot about your first question. Just remind me that.

It was examples of precision.

Yes. So let me give you a few live examples. We are increasingly doing a lot of work in renal disease. Renal disease is diagnosed with lab testing of the blood and it's quite a significant growth area for pharma today certainly is not considered precision medicine in the classic sense, but we're with some of our key customers, and we know it's certainly a good example. Cardiovasculars and other were -- there's -- a test has been around for a very long time, LPA -- or Lp(a) as it's known. And there are new drug targets coming to market that are very focused on Lp(a). So there's another good example of where it's a very different market approach, this cardiovascular disease significantly higher numbers of patients than we will see typically in our kind of precision medicine rare disease area, but very aligned to what we're trying to do with Precision for all. And then you can really go much broader look we're starting to sell [indiscernible] into the GLP-1 space where later entrants into that market are differentiating themselves by being more effective in patients with certain markers that are elevated. And the -- there's a classic case of market. We never thought would be applicable to our approach, but we have the data. We have more of that data than we ever had based on some of the investments we did last year. And the premise here is that we can still get to those physicians at a moment in time when their treatment decision is very relevant, i.e., right in that time frame window. We're not sending a sales rep in to talk to the physician, like we would do in precision medicine on rare disease, but we're not targeting on a per patient level like we were. But we are optimizing the marketing and the reach and promotion that these pharma companies are taking. And our data is second to none when it comes to that real-time targeting. On your second question around AI and ultimately the labs, and then I'll talk about consolidation. One of the things that I'm not sure we've ever actually spoken to the market of bodies just utilizing it is to onboard some of the labs or data suppliers that we work with. It takes about 2 years and not 2 years of work is not look at technology integration, that's working with them to understand that they have the data rights to their compliance models or the HIPAA compliant. Remember, a lot of the partners that we work with have never -- you've never done anything with their data before. We're the first there to really engage with them. And that's, on average, a 2-year journey to bring on a new -- we've done less of that in the last few years because we obviously really heavily invested in through 2020, '21, '22, '23 but that still remains a significant moat and a significant hurdle for others to come. It's not just a technology requirement to engage those partners. Remember, a lot of the data partners we work with are small, medium labs that are small volumes in themselves and less compelling, it's really an aggregate form that makes a whole lot of sense. So there's the feasibility there as it pertains to the sheer number of partners we have, what that ultimately represents in terms of end of labs. And we're also leveraging AI teeming that operation more effective. So we're as equally capable as anyone else as leveraging AI to make that more productive and ultimately a higher quality. And we believe that given the head start we have, which is very significant for this type of offering, we can be a winner here from an AI perspective. And lastly, your question was on consolidation. We do see consolidation in the market, we see about 5% churn, 5% to 10% churn depending on the year in our lab network. Majority of that is due to consolidation, acquisition, primarily some of the smaller labs by bigger lab teams, but also we're seeing new labs created all the time and the availability of technology and the opportunity for labs to start to offer more complex testing even if it's a small local lab, it's something that's a trend that we really hope and to have benefited from over the last few years. There's more molecular genomic testing being done on a local lab than ever before, and that's because it's much easier due to the availability of technology and [indiscernible] pipelines, et cetera, all built into the instrumentation. The local hospital lab can run genomic panel on their patients white having to send out to one of the big labs. That's a trend that we've double kicked on and are really benefiting from.

We'll take our next question from Dr. Julie Simmonds of Panmure Liberum.

A couple of questions. Firstly, just extending on from the questions on the lab network. I'm just wondering how the lab network suits now you're shifting towards precision overall? Is it going to be the same sort of labs given that it might be slightly less genetic testing from what you're talking about then maybe with your sort of historic oncology focus.

There are different labs, Julie, with a different focus. And we're trying to be very intentional there in terms of where we target as we have been historically at the lab network. We talked in the past about the fact that we now have a multimodal data set. And what that effectively means is we're not just reliant on pure lab did any more we bring in other types of diagnostic data set. So while lab is absolutely the cornerstone to that and is our key differentiator. We are augmenting it with other types of data not give everything from social determinants of health data through to imaging data through to other types of dealer like insurance claims and EMR, et cetera. So the network of data suppliers, I guess, we have is broadening out. We're sticking with the lab network kind of framework and conventions. But within that, it is more diverse to your point. And some of this data exists beyond the core labs that we would have worked with in the past.

It contributes very nicely on to my next question, which is about the cost of data that you're now building into this. Clearly, there was an extra GBP 2 million that came into the cost of sales this year. And that number continues to rise. Is there a point at which it sort of starts to even out? Or is it always going to go up as a proportion of the revenue? How do you see that happening?

I'll give you my view and then Nick can give you the financial view of it with actual real numbers. Firstly, yes, the investment in data is intentional. So the cost has not increased in terms of the cost per data set or cost per patient. We're not seeing that. We're not even seeing that area to go up at an inflationary kind of read what we've modeled. So it's been fairly static where we are bringing in more data to increase our coverage or to allow us to compete in new therapeutic areas where we are buying more data to effect. Again, these are strategic calls that we're making. So the deal we have today has been for purpose to service the customers we have and grow at the 20%, 25% rate that we're projecting in the market to grow beyond that, it will be prudent and we would want to invest more in data and as we're able to do that, it makes a lot of sense strategically to this business. We just need to manage that in terms of cost, EBITDA and ultimately cash generation and just picks and troughs and sometimes you're buying it ahead of time, have to catch up, et cetera, and some of that's a part right now today. But we're at -- we're certainly beyond an inflection point in terms of being able to leverage and monetize the data and we see broader opportunity with Precision for all to grow, and it's prudent to bring on the other [indiscernible] a strategically sensible for us to do so.

Yes. Julie, just to add to that, the data spend at the end of -- or during 2025, important to help us open up that TAM, that was a significant one-off spend, and that was from me to acquire retrospective data sets and really get ourselves good base in these precision for all medicines. The cost of that, if we decided to continue to adopt all of that data spend on an ongoing basis, wouldn't be as much, as you can imagine, to refresh that on a quarterly or whatever basis we decide to contract with the [indiscernible] partners with. And as that -- as we continue to invest in that, that cost would be capitalized, which has a different impact obviously on the P&L. It still has the same cash impact and we'd ensure that, that is within the envelope of what we're expecting over the foreseeable future. We saw GBP 6.5 million worth of capitalized date spent in 2025. Some of that was a result of claims data because we changed our claims provider, but a large portion of that would be replicated in future years. And I think we're expecting to see around that sort of GBP 6.5 million in 2026 and beyond. So to your earlier question, no, it doesn't need to increase at the same proportion or growth rate as revenue. But I think as Ryan rightly pointed out, we will make strategic decisions to invest where we see it opening up further envelopes of addressable market.

We'll take our next question from Christian Glennie at Stifel.

In terms of -- I suppose just first one would be following up on the -- on, I guess, the non-Precision, I guess, mostly non-oncology, the extra data. Just to clarify, is it -- are these products or offerings that you are able to sell today? Or is there something that needs to work needs to be going on in the sort of background? And ultimately, I suppose I'm -- what is the real value proposition as I guess you move into more, I guess, it sounds like more sort of mass market diagnostics, what's the real value proposition to the pharma company. And one might assume that the price point is -- might be lower for these kind of diagnostic intel than you're finding every patient with rare disease.

Thanks, Christian. Great question. So firstly, yes, we -- this is a deal that that's hooked up to Signal. So it's not a new product as such, it's just enabling the existing product offering to be applicable in new disease areas. But your -- the premise of your question is correct in that we don't expect to sell. Certainly, we would sell a full suite of services like a PMx to one of these precision for all brands. We have modeled it effectively what we think is going to be most applicable to them is Signal plus physician engage. You'll see us talk a lot about physician engage. It's a real growth area for us. And I'll talk a little bit about it in a moment. But in real terms, our expectation here is that the average revenue per brand for these non-precision medicine brands is going to be sort of between $400,000 and $600,000 that as they take 6 -- sorry, that's a big Signal acquisition engage. We're not seeing a need to price it differently. And that's primarily driven by the fact that even though these the ROI per patient is lower because effectively these drugs are less expensive typically than our -- certainly our rare disease drugs like some of our gene therapies or precision medicine oncology. But on the flip side of that, you're targeting at 10x or more in terms of patients. Some of the drugs we're working on are applicable in millions of patients, whereas in precision medicine, some of the drugs who work on their patient forecast for the years maybe patients. So what you're losing in terms of revenue per patient, you're gaining back quite significantly in terms of the number of patients. And these are typically much bigger brands for the pharma company in terms of overall revenue opportunity because the patient population is so significant. Pharma have already and always been buying data to support promotion and marketing of these therapeutic assets placed in the precision for all assets. We're not knocking on the door saying, "Hey, you should I use data to better target our marketing or promotion". We're not chasing a single patient like we would do in precision medicine. And typically, our data is not being hooked up to CRM for a [indiscernible] team to go and call on a physician to have an individual conversation with a patient. What it is doing is informing physician audience work and ultimately meeting the marketing that the pharma company is already doing much more effective. And that's where our physician engage tool can come in, coupled with our Signal data. We can have a very compelling and targeted approach to marketing. That is different end use case to what we're doing in precision medicine, but the premise is partially the same. Try and get your message to [indiscernible] them a physician at a moment in time when they're making a treatment decision. And more importantly for us in Precision for all, it's typically more competitive. So this is enabling them to have an edge -- commercial edge over competition because they can get in front of the physician faster than our competitors can. And the overall lift is significant because you only need to change out by a few percentage points on the norm to have a significant increase in number of patients.

And follow-up, please, if I can, sort of a related point, just to understand your market opportunity ultimately within, I guess, the core that precision medicine as it relates to rare disease oncology typically. Is it -- you've got roughly sort of nearly 40% share of brands, right? If it's [ 95 to 250 ], but you've got sort of roughly high single digit in dollar terms of that market. So has it just been sort of -- is that still stubbornly resistant to sort of move that spend per brand meaningfully in your favor. Just trying to get a sense for how much you still see real sense of market opportunity here within core Precision versus going after some of these -- these have new adjacent opportunities.

I think the growth in precision medicine is still significant. And ultimately, the average revenue per brand is always going to be higher there, Christian, and it's the -- it's going to be -- they are the brands that we have most right to win on given our association of Precision Medicine or thought leadership position and effectively the evidence points that we have. There are times when precision medicine can be frustrating in terms of the number of new approvals during the year, et cetera, you can take a year like 2024, which was a record year for new approvals. And we had a 40% growth year by year. Last year, that dropped away very significantly. And we want to try to build in some additionality into the business model where we're not so dependent on precision medicine, brand launches and the rate at which precision medicines are coming to market. There's a lot of activity, but sometimes that can drop off in a period of time that it is something that we want to be able to fill in. So I want to make sure that the market doesn't think that we're getting to distract it away from our core focus. We believe that everything we've learned from Precision Medicine is absolutely applicable beyond precision medicine. It's not a model shift. It's busy doing the same thing, but doing it now in the likes of renal disease and cardiovascular, et cetera, that we spoke about. And now that we've built the scale into the data. We built the agent into the data model, so it allows us to really standardize the output and the cost trusted is a compute cost, it's not a people cost. We feel that there's a real opportunity to further sweat the asset. We've talked before about the fact that we will need today sell about 20% of the data we have. And I feel it from [indiscernible] from us not to explore how we will ultimately commercialize the rest of that data. We've had to invest a bit more last year to augment that to really make it compelling, but now we can unlock much more of that data because we have our positioning in our [indiscernible] product offering that can be appealing in these therapeutic areas that we have been on, but we never sold in historically.

I'm conscious that we've gone a little bit over time, so apologies for that. There's a couple of questions that we didn't get to, but happy to pick up with the analysts offline. Thank you, everybody, for joining us today, and we look forward to seeing many of you on the road today and over the coming days. If there's anything we didn't get to, please reach out and contact us, and we hope you find the event useful. Thank you.

Thank you, Simon.

Thanks.

Thanks, guys.