Nightingale Health Oyj (HEALTH) Earnings Call Transcript & Summary

Good afternoon and welcome to the half year results webcast of Nightingale Health. Today, we have the following agenda. I will talk first about Nightingale Health in brief, summarizing the technology and our business. Then we go to the business target of the current fiscal year. Then we will have a business update of the first half. And then we will go to financial review. And then finally, we have Q&A. My name is Teemu Suna. I'm CEO and Founder of Nightingale Health and also Interim's CFO. Let's start. So Nightingale Health, our mission is to build better health care for everyone. Company I's founded 2013, headquartered here in Helsinki. But we are a global company. We have laboratories in United States, United Kingdom, Japan, Singapore and of course, here in Finland. We serve customers in B2B and B2G segments. And the focus is preventative health care and medical research. So what Nightingale Health is all about? We -- our technology is building a global standard that will enable AI-powered preventative health care. The problem in health care at the moment that is that there is no globally standardized clinical great way to measure health trajectories and intervention impact. So now because we cannot measure health and the held trajectories. The health care system is very reactive. So health care system is basically waiting people to get sick and then tries to do something about it. And the reason why it is like this is that we are missing a way to measure health and health trajectories. Nightingale Health solution is that we take 1 blood sample, we run 1 test and we get multi-disease risk detection and tracking. And this can be done in scale, I mean, for everyone. The technology has a world-leading proof. We have run more than 3 million samples. There are more than 900 million peer-reviewed publications and we have multi-market regulatory approvals to be able to serve the health care industry. and we are running labs around the world. And about 2 years ago, we also started national implementation here in Finland. The opportunity with Nightingale is that Nightingale will become the globally standardized measurement [indiscernible] applications. And now when AI is coming to all the industries. It will come also to health care. But the challenge at the moment is that utilizing the current data in health care in electronic health record systems will not work because the consistency, the data quality, it's not there. And for AI to actually work and the AI applications in health care to work, we need standardized data in the background. And this is what Nightingale Health can bring across the health care industry. So if you look at the solution in a bit more detail. As I said, we take 1 blood sample. It can be [indiscernible] sample. It can be finger prick for example. Finger prick example, we collect using our proprietary device. So the whole chain comes from Nightingale. So we have like an end-to-end solution to answer also high quality of the results with the finger prick samples. We run 1 test. The test itself is proprietary and only available from Nightingale. And then as a result, we detect the risk for heart attack, stroke, type 2 diabetes, chronic kidney disease, liver disease and everything in 1 go. And then in addition, you get 40 -- more than 40 clinical biomarkers. So Nightingale is not a traditional diagnostic company because traditional diagnostic companies and the kind of the whole diagnostic industry is basically focused in single biomarkers. And this is a very effective approach if you want to diagnose the disease, but prevention does not work like that because the idea of prevention is that you actually want to lower the risk of developing disease when people are still healthy. So what we do, we quantify the disease risk and then with that information, with that data, we can build -- why the time for preventative health care is now -- the burden of chronic disease is the cost pressure is accelerating all over the world. And this is like the chronic diseases that are preventable. They represent something like 80% of health care costs. Because of this, health care prevention is going in mainstream. So there are more and more population scale programs that try to bring preventative health care into reality. And then number three, all the AI applications, as I said, they need objective standardized molecular data to guide prevention. If you only use different kinds of proxy signals, they work, but the quality of the analysis is not their repeatability is not there, tracking is not there. There are a lot of challenges in health care, particularly in health care, when using AI in disease risk detection. We've been building the company for more than 10 years already. Building this kind of a company, this is a long-term play. This is not something that happens overnight. I think it applies to all of the medical device industry, particularly if you have a medical device that you want to roll out in population scale. So here, you can see what Nightingale has been doing in the market entry -- regarding the market entry over the past 10 years. So we started from Finland. So we established the laboratory in Finland in 2015. Then before like what is the first step before we established the laboratory is that we do pilots without local lab. Then once we get some comfort with the pilots, we build the local lab, then we go and get the regulatory approvals. And then based on that, we can win local pilots, Then based on local pilots, we can win local reference deals. Then based on the reference deals, we can win high-volume deals. And then based on the high-volume deals, we can win broad market penetration. In Finland, we have almost completed the entire journey. We are in the high-volume deals with our partner Terveystalo. More than 200,000 people have already been measured with Nightingale's technology. However, there is still 1 step to go, which is to adopt the technology in public health care and in the -- all of the health care systems in a country. Now what makes this challenging kind of doing the market entries is that you have to do the same thing in every country. So in Japan we established a laboratory in 2019. We are -- we have made good progress, but it takes years. It's not something that happens very quickly. However, you can see there that the pace is accelerating because the more we have been building different laboratories and market entries, the better we also can package the market entry, the better we can -- we can make it work in the market. So Singapore 2024, establishing the laboratory, and we are already quite advanced over there. U.K. 2024 as well, not as far as in Singapore, and U.S. 2025. So now what we believe is that the market entries will significantly accelerate when we move forward. And we have several discussions, commercial discussions underway to expand the laboratories also beyond this list of countries. So my point is that the current lab rollout model is well standardized, and we are in a good position to enter continue expansion in these markets and enter new markets, but building all this has taken 10 years, it's not easy. But on the other hand, it creates a very strong moat for Nightingale. Our business model, we are Nightingale inside meaning that we deliver our data to our customers and then they build the preventative health applications. This is to enable a very scalable model and allows us to run the technology [indiscernible]. The business model is very simply a price per sample. And here, we have 3 different tiers. So basically, different customers have very different volumes. In Tier 1, we talk about longevity clinics. They typically have very -- and then when we go to Tier 3, we have international screening programs, et cetera, where we have very big [indiscernible] sample numbers. So the volume is high, but the unit price is low. And our gross margin structure supports very well all of the tiers. So that puts Nightingale as a growth company, I think, in a very [indiscernible] it has healthy gross margin. So when we build growth, the growth has like a very strong financial foundations. Ongoing across the key segments. And this is basically enabled by multicountry lab availability. There is absolutely no way to do this business in a way that you try to make the deals and then you build the labs. It just doesn't work that way. You have to be in the country. You have to be present. There are some differences, for example, in Europe within the European Union. Of course, the samples can move between the countries. But in the big picture, if you look at the global picture, you have to bring the lab positive -- the lab capability locally available. The market we are looking at here, this is when I mentioned that these chronic diseases are 80% of health care costs. This is the largest health care market in the world. And when I say that, because health care is such a massive thing governments -- in many governments, the health care budgets are 3 to 5x larger than the military budgets. So this is like a massive, massive. One of the biggest markets in the world. And then cardiometabolic burden to which we are focused, that's the largest preventable global disease burden. The budgets are already there, spending is already there. What is missing and what has been missing is that how can you make prevention measurable. So many times, we hear people speaking that it's -- prevention is very problematic because if you, for example, have a lifestyle improvement program, even if you use some trucks. How do you quantify the effect of prevention? And I strongly believe that this is the single biggest reason why prevention has not break through before because these kind of technologies have not existed. But now with Nightingale, the key thing we can do, we can actually measure the impact of the actions that are being done in preventative health care. And then the opportunity here is that when we standardize the measurement layer, that powers prevention across the whole industry. Why Nightingale? I mentioned we have been building the company for more than 10 years. There's a lot of things we have achieved. Here is a list of selected benefits to work with Nightingale. We are heavily validated, more than 900 publications. This number to our knowledge, it's next to none. We are global. We can actually serve our customers across the world. This is very scalable. This is built for population scale because our price point is very, very competitive against, for example, clinical chemistry. In many applications, especially when you go to prevention, we win also with the price point. We are a very efficient company when we look -- when we do like a peer comparison. And now I mean international peer comparison, not local or a Finnish comparison in international comparison, running this kind of a global operation is financially very efficient how we run it. We are independent. This is also something that maybe people don't think about often. There are not a lot of like status quo independent global assets in this blood testing because many of the diagnostic industry, many of the players they are actually connected already to the existing system and then there are very easily some conflicts of interest. This is proprietary, only available from Nightingale from the biotechnology to the applications, it's proprietary. We are publicly listed. We have transparent operations, professional governance. We have massive database world's largest metabolomics database, regulatory approvals. We are the first team that actually brought [indiscernible] technology into health care. And then we are already in a national -- nationwide use. So I would say there is a lot to like. All right. Then let's move to the business targets for the current financial year. We have a single target is to increase revenue by at least 50% compared to the previous financial year. We are on track with this. Our fiscal -- current fiscal year the revenue accumulation is very heavily, second -- is very heavy weight on the second half. So we are reiterating this target. In the longer term, no changes here. But what we are building, we are building a global company. We very strongly believe that there is a huge market for prevention. It has to be done. Governments have to initiate preventative health care programs. And in that context, these goals are feasible. Then we go to the business update, and I will give a brief update of all of the geographical areas that we are working at the moment. It's been the past half. It has been the key focus, the core focus has been to ramp up the commercial activities everywhere. And I think what we have managed to do and what the team has managed to do across the world is that we have heavily, heavily increased the sales activities. And how we build up the revenue is, of course, by selling more. And why we have now started only in the past, only in the kind of -- in the first half of this fiscal year, well, building up the readiness to really ramp up the commercial operation. It takes a long time. But I think now we are in that position. And what I will share with you today is a lot of indications how the sales activities are now increasing. In addition to increasing pipeline, we have done new significant agreements, and we have multiple pilot projects launched. Important thing to remember is that the sales cycles remain long but then on the other hand, what we now see in the sales and the customer feedback, I think the long-term growth prospect is very solid. So in Finland, we have a lot of sales activities ongoing across public sector stakeholders to evaluate how this technology could be adopted across the public sector field. We are also doing commercial investigations to offer our remote blood testing to health care in Finland. Then what we managed to achieve, we have a new strategic agreement with Terveystalo. What is changes is that earlier we were working only in occupational health care with Terveystalo, now we are moving to all of the Terveystalo's customer segments, which is the volumes we are running with Terveystalo internationally very significant. Then pilots with public sector. We have 2 pilots in public sector. These are very important to demonstrate how the technology also works in the public sector side of things. And health care is like it's pretty much kind of the problems are the same. But when you move across different systems, then the implementation is also pretty different. And that's why we need to start with piloting also in the public sector. In United Kingdom, we started last summer to strengthen the U.K. sales team on the ground. And I think this is now very important to appreciate that this only started last summer. So what we have managed to do in the first half is we achieved significant increase in sales activities. We had a lot of engagements with public and private health care providers and pharma. First, pilot projects are launched and several negotiations ongoing to initiate new pilots. Then rest of the Europe that we commercially managed as a separate business. We also started some in last summer. And again, it's important to appreciate the readiness to scale this out commercially has not been strong enough because it doesn't help to run with -- around the customers, if you are not -- if the product is not there. But now based on the feedback, I think the product is there, and we have worked very hard to open discussions in more than 10 countries. And now based on the feedback we are continuing to expand the sales activities and the resourcing in sales. So several pilots already ongoing. And this is, I think, a very good achievement because the sales cycles are very long. In a relatively short time, we have managed to initiate multiple new pilots. And then some of the projects are moving to production stage negotiations. So given the time lines with this business, I was talking earlier about building the company for 10 years. Now putting this time line in relation to what we've been building, I think the progress is very strong. In Singapore, we continued the investments to expand commercial team to accelerate the sales, a very significant update that we did. So because we've been working in Singapore already for a while. And as I mentioned, having the right products, like product market fit is like essential. So based on the feedback that we got from the market, we actually made a significant report update, so updated our product and now we have offered the new report, which is the product and presented it to tens of customers. And now the reception is very, very strong. And when I compare the difference in the conversations with the customers, I think the tone is fundamentally different. So based on this, I think there is a strong long-term growth potential in Singapore. Based on the market dynamics, it's a very significant health screening market. and then the customer feedback. So now in Singapore, first clinics are already ordering services under the updated report. The sample volumes are initially modest, but this is very typical for new markets. So it goes in stages. What we try to do in the ongoing half we are increasing the number of clinics ordering the test and with this improving the market penetration. In Japan, we also used -- made a lot of efforts to strengthen the sales team, which we succeeded to do. Based on this, we have now new sales activities ongoing. We have also similar feedback process that we did in Singapore. We have got good feedback from the customers. We will implement some updates to the business model as well as to the clinical report and then these changes will be gradually implemented during the current fiscal year. So in the ongoing year half and then the results, we expect to see the results in the next fiscal year. We also initiated expansion of presence in medical research in Japan. Japan is a very special market. So otherwise, we manage medical research centralized globally from Finland, but Japan is -- it's rather special market and that's why we have now ramped up also local capabilities to promote the medical research in Japan. So recurring business in Japan is continuing and the sample volumes from key customers are continuing. We have negotiations to close more key accounts in the market. So I think due to the improved sales activities, I think we have now also good prospects to close more accounts. And then we have already signed new deals with medical research customers. So that, I think, it's an early validation for the decision to have like independent medical research sales capability in the Japanese market. In United States, we announced after the -- after it's -- after the first half, we announced in February that we received the [indiscernible] permit in New York. This is a milestone because this is something you, of course, need to clear before entering the U.S. health care market and running the samples locally. And this is the difference to our previous position. Of course, we could offer our services internationally, but now having the local capability on the ground makes a huge difference. There are some steps still required under the [indiscernible] permit that we need to do. But I think the -- maybe the biggest unknown for us has been now -- we have now completed. And now we are starting to -- we have planned a lot of sales activities for the current year half. So -- and some of the deals are actually already in negotiation stages and they are now based on the concept of running the samples in the New York lab. Then in the medical research market, we -- with the team, we made a big effort aiming to increase the sales activity. So ramping up the monthly prospects. And we managed to increase the number by tens of percentages, which is a very strong result. There is strong interest towards multiomics offering, which is a new offering, and we are continuing the investments into sales resources and activities in the current year half. We won a significant project in Italy. We won a significant multiomics deal in Denmark and then, of course, several smaller projects ongoing. But the key message is that the prospect pipeline is growing and that we are expecting to bring also a strong yield in winning the cases. Then we move to the financial review. So a couple of points regarding the numbers. so the revenue increased by 4% compared to last year in the first half. We are still, as I said earlier, we have a strong sales pipeline to support reaching the target of 50% revenue growth. And this is supported by the Albury project because now the revenues from that project, it takes always time before the revenues are recognized from these projects. So that's why the current fiscal year is -- there is a heavy weight towards the second -- towards the second half. And this is largely due to the Albury project. But the order book is strong, and that's why we are maintaining the target for the fiscal -- for the whole fiscal year that we gave earlier. Then a couple of points regarding the first half financials, have said also earlier, but I reiterate that the revenue growth target can be achieved without much pressure to increase the cash burn. So now the investments that we have done to the labs and the production capabilities, they can -- we can have more load to this. We have capacity to run samples and because we have the capacity, the pressure to increase the cash burn is low even though the revenue can increase significantly. The -- if you wonder, the net cash change here, it was impacted by EUR 2 million by renewal of our lease agreement in the headquarter. All right. So that was it, and we have the last segment with Q&A, and I'd like to ask our Chief Operating Officer, Janna Ranta to join me on stage. And I think there are some questions we can walk through now.

Yes. Good afternoon, Teemu. Good afternoon, our live audience, small live audience and good afternoon, our audience also online. So let's kick off this Q&A session. I will be hosting it. So we will start with some questions that have come through online. And then we'll also have the opportunity for our audience to ask questions. So Teemu seems like there has been a lot of things going on during the H1 period. So could you tell me, did the outcomes align with what you were expecting?

Yes. So -- of course, every time you hope that there is -- like you can show more in the numbers that we report. However, like putting this in the scale of building the company for 10 years. I'm more looking at the size of the pipeline, amount of the sales activities. So the actual things we are doing all the time. And with the long sales cycle, that is understanding where the company is going. And when I look at that, I'm actually very pleased we made a huge, huge change in comparison to like a year ago, now this work we are doing, I'm confident that it will turn into results that, that then we can report also with these numbers.

Great. Thank you. Let's talk about the deal that you announced last year. So the big Albury University deal with EUR 2.5 million. What is the current status of that project? And how much revenue was recognized during this first half of the fiscal year?

Yes. So the revenue from this project, and this is very typical with this research projects, particularly, also same in health care, a bit of different dynamics. In research, it usually takes a long time to get the samples to a laboratory and then running the samples, returning the results. So because of these reasons, this revenue is now projected for ongoing year half. So in the first half, no revenue recognized from the -- recognized from the project. In health care, as I mentioned, the dynamics are a bit different there, it's more about sticking to pilot, increasing gradually the numbers. So the slowliness has the kind of different dynamics. But that's something that's part of this business, and I think it's other natural also when looking at the kind of the underlying reasons why it takes time to move the samples, et cetera.

Okay. Thank you. So we can expect some revenue probably this ongoing period. So I would like to ask something about the U.S. market, and you mentioned about the laboratory permit in the State of New York. So can you summarize what it really means and what can be expected in short and long term from the U.S.?

Yes. So what the permit means is that you need to have the permit to offer your services to health care in the United States. Now the permit has like different steps. The first step was to get the kind of the laboratory approved, which was the biggest unknown for us because it's always connected to the local rules and regulations heavily. Now when we have the first step done, then the following steps are more connected to looking at the performance of the individual biomarkers in our platform. This is something we have done across the world. So now we have much better confidence because I mean blood is blood everywhere. So then demonstrating the performance, we are not expecting any differences with this. Of course, the process needs to be -- we need to go it through carefully. But I think now we are in a more confident stage with that. And then what it means, short term, we are now starting to negotiate agreements with our customers, the core of this scaling up the business in the United States.

Yes. So also questions about our U.S. partners. So can you say -- elaborate a bit more what's the status with Boston Heart, for example?

Yes. So we have some partners that the deals were based on the concept that they would send the samples to our international labs. That kind of technically, it works. But of course, the scaling up the business model has some limitations. Now because we got the lab permit, we are moving with all of the partnerships the kind of we will run them under the New York laboratory, but it still takes a bit of time to proceed with the [indiscernible] approval. So updates will follow once we move the CLEP approvals to the next stage.

Okay. So let's go from the U.S. to Singapore. You talked about Singapore already a bit, but can you provide us an overview about the collaboration with Innoquest Diagnostics? And is there any notable outcomes so far?

No. So I think the Singapore what has happened in Singapore is basically the partnership with Innoquest enabled us to provide the technology very broadly in the market. very important part of this is that Innoquest has the logistics change to all of the clinics, which is, of course, like building, even though Singapore is a small geographical area, but building that kind of, I think, it takes time. And then we managed to provide a product to many customers. We collected feedback. We needed to do some changes with the product. Now we have taken the new product to the same customers. And now I think the important point is to compare the feedback before and after. And I think now we are -- the product market is very encouraging. And now we are always already in production, the new report, and we are now working very closely with many customers to increase the adoption.

That's great. Then back to Finland already, but now you're expanding even the partnership. So what can we expect out of this extended partnership.

Yes. Well, I think it's a very positive thing that Terveystalo is so convinced of our technology that they want to expand it to all of their processes. What happens next? So in health care, all of the sample volumes and scaling up the business. it's always about getting the technology as a part of the existing health care workflows. So now we then work together with Terveystalo to evaluate the different other workflows than the occupational health workflow and then increase the adoption through that. So at the moment, we are discussing with them about the new workflows were to utilize Nightingale's technology.

Okay. Let's then stay, as you mentioned during your presentation that there's still something to gain in Finland on the public side. So [indiscernible] are well-being county collaborations. Market is eager to hear how are these pilots going forward? And when are decisions being made about the future?

Yes. So in the public sector. It's the same question like, so what are the workflows where you bring the technology and how you integrate that with the existing operations. In North Karelia, we are going to the occupational health care for unemployed, which is like a very -- kind of -- they have a very strong case with Terveystalo, so we can offer the same services as a part of that workflow. So kind of defining what we've been doing, we've been defining the different workflows, how to -- how they will adopt the technology. I think we are pretty advanced with both of the well-being counties. And the -- there -- you can expect some news in the coming months how the rollout will proceed. And they, of course, will create a very important reference in the public sector.

Yes. You're working actively in several markets. So are you planning to expand to any additional markets in addition to those you mentioned?

Yes. Okay. This is -- it's a very good question because now the markets and the laboratories, and it's important to remember that this is a lot laboratory driven. So now these different laboratories, what I mentioned, these 5 laboratories, they have been the laboratories that we have invested upfront because you just have to go there to be able to do any deal making. Now we have a lot of conversations in other markets as well, but there is much closer connection also to deal-making. So it's very likely that when we expand to new markets, there is also significant customer agreement already in place. So it's closer to the commercial operation. And this maybe describes tells a lot about the maturity of the company. So now we start to be more and more in a position that we can go negotiate the deal and bring the lab at the same time because the customer can validate it, They can run it in the beginning, they can run it service with 1 of our international locations and it's like a more natural expansion than with these new locations.

Okay. Thank you. Let's then wrap up. Revenue has increased slightly for this first half, but the fiscal year target is still some way off. So how confident are you in reaching the target?

I think that it's -- that's just as convincing as it can be. Of course, there is the question about execution, and there are risks around the execution however we have also a lot of insights with these customers with Albury, with some other projects as well. So because of that we are reiterating the goal to increase the revenue by 50%. I think the situation is actually pretty good because you have the orders. I think that's the -- of course, I understand the market is looking at the numbers we report, but the real question to me, do you have the orders, and we have the orders?

Great. So final question from me before we go to our live audience. What can we expect from the second half of this fiscal year?

Yes. So heavy, heavy focus to increasing the sales activities. Like to get sales, you have to sell. And now I think the product and we are there. So that's why a lot of effort is being used to increase the commercial activities, and it's not about, okay, let's just hire more salespeople, this kind of a business doesn't work that way. It's more about being smart, with the activities being more targeted with the customers and sell the value, offer the value. It's more about that. So that's like all the focus is around that. And then all of the development and our data teams, our software development, everyone is supporting then these pilots and new projects to bring the value to the customers that they are looking to get.

Thank you, Teemu. This was the final question, and then we move to our live audience, any questions here? Yes, please.

Okay. [indiscernible] Danske Bank Markets. A couple of questions. starting from the second half outlook, it was already discussed, but I just wanted to check if you think the Albury contract will be delivered in full during the second half of the fiscal year.

Yes. That is at the moment, the expectation, and we are having active dialogue. Also, it's not like a 1 and 0 situation. And then our pipeline is strong also outside of the Albury deal. So we are looking at the big picture and then putting, putting the pipeline together, we have good confidence that we will reach the target.

And then there were a couple of new deals you announced today. starting from the Italian contract, what will be the timing of delivery on this one? And can you comment something on the gross margin? Is it similar to the Albury contract or better?

Yes. So they deal with Italians. It's a deal that is -- it's not a multiomic deal. So it's -- a customer has ordered our platform. At the moment, the orders with the [indiscernible] platform, they have a stronger gross margin than the multiomic deals. There are many reasons for this. One reason that in the multiomic space, we also want to aim to win the market and aim to be very, very competitive with the pricing because it's an increasing marketplace and it's kind of the competition is strong at the moment. And then for the revenues, usually also the deals that we do with the Innomar platform, they have often like we can predict a bit better when the revenues will be recognized.

So would it be already in the second half of the year, think about the Italian contract or?

The Italian contracts, it's ongoing, but I cannot comment the details more.

Okay. And then the other contract was with Terveystalo extension. Are you expecting more revenues from Terveystalo on the back of this expansion?

Yes. But the question is that now making this kind of a deal doesn't automatically mean that the revenues will start growing. We need to have the process together with Terveystalo to which clinical workflows they will adopt the technology. And that's like if you think about from the very practical point of view, that as a health care provider, you have ongoing operation. If you make changes, the timing of the changes, training of people using the technology, maybe also educating the customers. So there are several steps to consider. And that's why making a deal doesn't immediately mean that, okay, now there is revenue. But I think what making the deal means is that we are in a very good position to do the expansion because without the deal, there is no conversation about the expansion. So that's why we are very pleased about the deal and it shows the trust from Terveystalo towards our technology.

And then I wanted to check, you may have said this, but so have you booked revenues from this well-being service county deal in Finland already?

Yes. So the well-being service country deals, they are pilots. So we are not expecting to book revenues from them. And the scope of the pilots is like a rather limited. And the intention is to demonstrate how the technology integrates into the public health care domain as well.

Okay. Then moving on to CapEx. How should we think about the CapEx outlook for fiscal '26. Is it going to be on a similar level? And then last year, I think you mentioned that you have plans to open new labs, when will those happen?

Yes. So I didn't expect a similar level with the CapEx. However, of course, if there is a laboratory expansion in a new country, then we will -- there will be CapEx involved but it's a very different situation. As I mentioned, then it's usually a business deal aligned with the potential CapEx. So I would not see additional CapEx as a concern, provided there is a business deal that also takes the revenue up at the same time. And as I mentioned also earlier, Nightingale can particularly with the NMR technology is actually very good.

Okay. So if you were to open new labs, you would have customers with [indiscernible].

The deal will be very, very different, but that's the idea that it's not setting up a laboratory before having the customer deals. So these are now going more hand in hand because we have already built the reference laboratories across the world.

Okay. And then final question. You talked about focus on sales activities. Just curious how is the funnel looking? And are you expecting to close material deals during the second half of the year in order to grow also next year?

Yes. If I look at the pipeline, definitely, we are expecting to close material deal within this half. Of course, the sales cycles are very -- are long, and it's difficult to predict still at this stage of the development. However, if I compare the pipeline size and quality, what it is today and what it was in August, it's fundamentally different, which justifies the expectation that we will close a material deal before the end of the fiscal year. And that's, of course, the target to then build up the revenue growth also in the next fiscal year.

Yes. And maybe a follow-on question. When you look at the quality of the pipeline, are we talking about mostly research opportunities? Or do you also have a medical deals in the pipeline?

Both. Both, I would say that the pipeline earlier, it was very heavily research business awaited and still the revenue business is the part of the business that has a substantial role in the revenue growth. However, what we have managed to do over the past 6 months in the health care pipeline has also changed that quite substantially. So now when I look at the 2 pipelines, there is an equal opportunity from both sides to bring substantial deal before the end of the fiscal year.

It has become the time to end this Q&A session, Teemu, do you have any final words that you would like to give at this point?

Yes. So I think we are -- it's transforming this kind of a company from very strong technology focus and building it for several years and bring the products to the market, finding the product market fit. And then finally, moving to becoming like a sales organization. It's not a very easy journey. But now when I look the results, especially through the pipeline and the sales. I think we are making strong progress. In 6 months, I think we -- this transformation took like very big steps and I'm expecting that over the current year half, we can make similar progress. So I'm very excited. I'm also very excited when I look at the market, there is a lot of interest in more and more interest in prevention. There is more and more interest in blood testing, than this biomarker. So thinking like beyond the biomarkers that we've been talking for years already. And then the AI is a huge trend that I believe is very beneficial for us because if you want to build a good preventative health care system powered by AI, what is your data to connect to the risk if you are looking at the proxy signals mostly? If you use some data from the like digital data, from the [indiscernible] I really want to understand the risk, which is the core of prevention, you need the molecules. It's molecular. It's an issue of molecular medicine which the algorithms will not solve. So you need the data, and we are 1 of the most advanced companies in the world to bring the data. So I think that's 1 of the megatrends that I believe can be very positive and beneficial for Nightingale. So very excited and we will keep working very hard.

Exactly. Thank you. We will end the session here now, and thank you for following.

Yes. So that's it. We will return in 6 months. And thank you for listening and have a good day.