Nightingale Health Oyj (HEALTH) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Nightingale Health Financial Year '25-'26 webcast. My name is Teemu Suna. I'm CEO and Founder of Nightingale Health. I'm currently also CFO of the company. Today, our agenda is I will first talk about Nightingale Health. Then we will go to the business targets of the past fiscal year. Then we look into the business targets of the current fiscal year. Then we'll have a business update. I go through the different business areas. Then we will have the financial review, then we look at the AGM and financial calendar. Then we have some significant events after the end of the period. And then in the end, we have Q&A, and you can post your questions. We will go them through in the Q&A in the end. So let's start. So Nightingale Health, we are a global health technology company. We've been building the company for more than 10 years. We have a global footprint. We run our own laboratories in the U.S., U.K., Finland, Japan, Singapore. We work in B2B and B2G markets and the main focus is preventive health care. So what Nightingale is all about. We have created a preventive health care platform. And this is a preventive health care platform that enables various AI-powered applications. So the problem with basically all health care applications today is that there is no globally standardized clinical [ grade ] way to measure health trajectories and intervention impact. So we actually take actions in health care, but we don't know what is the impact of those actions. We operate many times blindly. This is particularly true when it comes to lifestyle interventions. The solution is that we take a single blood sample, we run one test, and we detect the risk of developing diseases in the future. So we detect if a healthy individual is at risk of developing many cardiometabolic diseases, type 2 diabetes, cardiovascular diseases, kidney disease, fatty liver disease. This platform has been built, as I said, over the past 10 years. It has very, very strong validation. We have run more than 3 million samples. There are more than 1,000 peer-reviewed publications of the technology and the footprint is global and the technology is already in national use in Finland. The opportunity here is that we enable the standardized global [ measurement ] layer to power all the health care applications, particularly when they are AI native. And then this problem, preventive health care problem is applicable across all the fields of health care, payers, providers, population scale programs. So the solution in a more detailed way is that we take a single blood sample. This is a standard blood sample. It's venous or it can be a finger prick. We have our own proprietary device, how we can collect the sample. Then we take that sample, we run our own biotechnology platform based on NMR metabolomics. And in that test, we detect a very broad biological information from the blood. And because we can detect very broad biological information, more than 40 clinical biomarkers, we have then developed validated risk models that goes beyond the biomarkers. So we detect the risks of developing diseases, heart attack, stroke, type 2 diabetes, chronic kidney disease and liver disease in one go. So we are not a traditional diagnostics company focused on single biomarker. We quantify disease risk. And this is important because if you really think about it, I mean, nobody is interested what is your LDL cholesterol. And a matter of fact, people who have a heart attack, 70% of them have normal LDL. So if nobody is interested about the biomarkers or the biomarkers really don't tell the story, so then the whole industry is kind of working around the biomarkers. So we have created something better. This goes beyond the biomarkers. This quantifies the risk. So instead of knowing what is your LDL, you should know what is your risk of developing a heart attack. And then when you take actions, lifestyle actions, medication, it can be anything, exercise, sleep, diet, then we measure you again and we can quantify if your actual risk is going down. And this is important because why would you measure your blood if you cannot measure if your risk is going down, your risk of developing the actual disease. So that's why we are not a traditional diagnostic company. We actually quantify the disease risk. And this is what other diagnostic companies cannot do. Why the risk detection is very important now. First of all, the chronic disease burden, the diseases that I mentioned, it's all around the world. This is -- if you take all of the health care costs, depending how you calculate this, someone may say this is like 60% of all the costs, you can also argument it's closer to 90% of all the costs, chronic diseases. And the reason is that chronic diseases by nature are long-standing diseases that need attention all the time. So this creates a huge cost pressure and it accelerates around the world. Then the second point, prevention is going mainstream in population scale programs. So it's not something that the market is not there. The market is there, and it's expanding rapidly. When we started this company, I remember like 10, almost 15 years ago, when I was talking about preventive health care, it was something that was mostly in the kind of the -- in your keynote speech, you talk about preventive health care and nobody does anything. Today, the situation is very different. So we have a lot of preventive health care programs ongoing around the world. They are in the early days, but it's very clear that this is going -- this is -- this will be the new -- prevention will be the new standard of primary care. Number three, AI is driving the transformation in health care everywhere. And AI is like many times when we talk about AI, we talk about data centers, we talk about algorithms. If you look now what is the kind of the most advanced conversation around AI, it's all around data because data is the fuel for the AI. If you don't have good data, you cannot generate biological data of people. You have to measure it. You have to get the data. And then on the other hand, when AI applications get the data, if you think about the big health platforms, if they have high-quality objective standardized molecular data, it will transform what these applications can do. And this is what Nightingale will enable, and we have a very, very unique platform to enable it. Building the company, this kind of a company is a long journey, very long journey. The reason for this is that you have various very complicated elements. So we started from creating the biotechnology and building a biotechnology platform, the amount of scientific work, engineering work and particularly the validation work and regulatory work, it's immense. And you have to build all of that first before you can do any applications. In our case, it had like 2 different parts. The first part was to validate the platform to detect the biomarkers. And then the second part was to validate the risk models. And the risk models we have today are something that the level of validation, there is nothing like that in the market worldwide. So we are a global leader in this, but it has taken a decade to build it up. Then building even that is not enough because then you have to build the capability to deliver the product. So you have to build the laboratory network because we are not using the standard laboratories because the equipment and technologies they are using, they are not good for what we want to do. They are not good for what the market actually wants to happen. They are built for single biomarker detection. The market, the future of health care in primary care is holistic health profiling. So we could not go to the existing labs and say, "Oh, we're going to do this with these technologies." And this is very, very heavily validated by many scientific publications where we've been compared against the standard clinical chemistry measurements and the results are very clear that our risk detection performance goes beyond the standard routine protocols in biomarker detection. So how does this journey -- if you put it in a time line, how this journey looks like. So we started from Finland. We built our laboratory in our headquarter starting 2015. First, you do the pilots without the local lab, then you build the local lab, then you get the regulatory approvals, then you win the local pilots, then you try to win the local reference deals and then you try to get the volumes up. Then after Finland, we started to build Japan, then Singapore, U.K., U.S. And now you can see that the time line accelerates heavily. So Finland was 2015 and now in 2 years, Singapore, U.K., U.S. And this is because the expansion model and the kind of how we have standardized the lab rollout, we have it completed. So when we expand to more countries, we can basically take this technology anywhere in the world. And now after these 5 locations, which we needed to invest heavily upfront ourselves, now when going to new regions, we do it with a very commercial model. The business model, as I mentioned, we work with the B2B customers. They embed Nightingale's data in their preventive health applications. We have basically -- you can think this as like a tiered structure, so depending on the volume because this is heavily a volume business. So the more you have volumes, the better you can kind of manage the process, do it more affordable manner, having lower unit prices. This technology is not built for the kind of the longevity -- high-end longevity field where the richest person in the world can use this technology and feel good about it. This is built to build a healthier world. What it means, it means that we need to integrate into the health care systems. But I think more importantly, we need to deliver health information that is built for the humans. And this is what we do. So as I mentioned earlier, instead of telling what is your LDL, what is your ApoB, ApoA1, what is your -- like yes, we tell also that information. But if you think about -- if you take the population, if you really think about health care globally, the real problems and challenges that we need to solve, they are not this kind of a distinct group of people who are very familiar with all the biomarkers and metabolic pathways, et cetera. That's not the point. The point is to deliver information that anyone can use to live a healthier life. And that's what we do. That's the focus. That's why we also aim to high-volume applications. We aim to push the price down, not up. It's a hard thing to do. It's actually a much harder thing to do than going into this high-end luxury market, but that's why we started the company, and that's what we are going to do. And when we get it done, there is also immense global business opportunity that we aim to capture. To that end, the market is there. It's huge. I think the main point in this slide is that if we look at the global wellness economy, I said that this is what we build. We built this for the people. We are not directly going to direct-to-consumer and sell this to people. But the world is full of these major scale health platforms that will significantly benefit of Nightingale's data when they integrate it in their applications. This is how we can reach the global wellness economy. And now the global wellness economy is $6.3 trillion. But that's kind of a reflection of the market that we want to be in. That is the future of health care. Health care will not -- the primary health care will not happen as a part of the health care system that we have currently. It's not hospitals. That's the sick care system. The health care system is where you meet the people. And to connect with people, you need to show them data that they can understand, they can use and they can improve their health, which is the ability to detect the risks and follow the change of the risk when people take actions, change their lifestyle, et cetera. So building the globally standardized clinical trade measurement layer, that is the key that powers the whole world of preventive health care as well as the global wellness economy. And this is the opportunity also with Nightingale. And this being able to detect the risks, the capability of detecting the risks, this is where we are a world-leading company. So why Nightingale and what makes us unique? Validation is next to none. We are global. This is an asset that is not regional. If you think about the current diagnostics industry, you can take the biggest player in the United States, you take Quest Diagnostics, Labcorp of America. They are not global. You take the biggest player in Europe, you look at SYNLAB, they are not global. So -- but we are and then we are independent. We are not dependent on any of the existing laboratory networks. We have built our own. This is only available from Nightingale, what we do in terms of the risk detection and importantly, validated -- clinically validated risk detection, only available from Nightingale. I mean any engineer can build this kind of a model, you just take some biomarkers and you take some data and then you build some kind of a risk model and you say, oh, here is my risk model. But it's not a validated model. It's a completely different thing. And then when you start building global health applications, it's better for all of us if the technologies that the health platforms use are validated with the highest possible standards. And this is what we have. The data that this is based on, we are running this on top of the world's largest metabolomics database. The company is -- we have transparent operations as we are a public company. We have excellent scalability, excellent efficiency in a global comparison, our kind of how efficiently we operate in terms of the use of funds, for example, is exceptional. And then this technology is already adopted by nationwide health care here in Finland. So that's it. So I think it's very important moment in our journey as a company because what we have been building for a long time, now we very strongly feel that the market has also very clear indications that this prevention, holistic health profiling, ability to detect the outcome risks, objective measurements, repeatability, global footprint, remote sampling, if you take this and you take any of the big health platforms in the world, these are the things that are on top of their priority list. And these are also things that building these is immensely difficult, takes a decade, and we have it. And I'm not aware that there is anyone else who is even close to what we have built. I would kind of -- I would call that a moat, which is very, very important now in the situation when the market is taking steps towards prevention and holistic health profiling. All right. Let's go to the business targets of the past fiscal year. Our target was to increase revenue by at least 50%. We landed only 17% increase, didn't achieve the target. This is, of course, disappointing. We had the pipeline. We had the deals. We had everything set up in a way that we would reach the target. Unfortunately, there was about EUR 2 million in revenue that got postponed in a single large project, and this was due to third party. So we could not do anything about the situation. Now this EUR 2 million moved to the current fiscal year, but of course, it was disappointing that we didn't achieve the target. Now when we look at the current fiscal year, so last year, the aim was to increase the revenues by 50%. Now it's approximately double, so approximately 100%. So we aim to achieve revenues of at least EUR 10 million. We have only this single target, and the reason for this is that now the most important thing is to increase the adoption of the technology. And this is to -- revenue is a very efficient way to measure it, and we have full focus in building up the revenue streams across all of our businesses, in our research business, in our health care business, all across the board. The mid-term and long-term business targets are unchanged. We strongly believe that these are still very relevant. And as I said, the problem we are solving here is a global problem, and this is the level what we want to achieve with this technology. Then we have next the business update by geographical areas. So in summary, what we've been very focused on is the commercial activity. I mean, the point here is that now it's time to increase the adoption. So it's to win deals and it's only to win deals. That's what matters now, and we have very strong focus towards that. We have made many changes in the company to enable more time and energy to the commercial activities. So what we have already last fiscal year, we managed to increase the value of the sales pipeline. We signed new significant agreements, and then we had a lot of pilot projects launched. So the work we are doing is -- I think we have done many, many important and right actions. If I look at the kind of the volume of commercial activities, it has increased significantly. We will continue increasing that, but it's also important to remember that in this business, the sales cycles are long. And then even when you win some new contracts, they typically ramp up step by step. It's not like overnight that someone like adopts the technology in large scales. We have also that kind of deals, but it's important to realize that there are like the market dynamics are pretty slow in this industry. We go through country by country. In Finland, I think we have a very strong market position here. We are in nationwide use. We have run more than 250,000 samples for people here in Finland already, which is given the population of 5 million, it's pretty significant. We are also going to public health care use here in Finland. I think that's also very important because this is, as I mentioned earlier, this is a technology that is built to be part of the health system. It's a technology that enables a new kind of a health system. And I'm thrilled to see that in Finland, the government is also -- has a very like progressive thinking to start building the prevention. I said earlier that the current health care system will not build the prevention. I still think this is true in the big picture, but then we have countries and we have programs that actually aim to transform the health care system into the direction of prevention. And of course, this is very -- it's very good to see this happening. In the U.K., we have done a lot of market exploration work in the clinical side. We are very strong in the U.K. in the research business side of things, but now we have also put a lot of effort in the clinical side. Market exploration going, first pilot project launched. I expect more results from the U.K. already in the current year half. In EMEA, a lot of commercial activities over the past fiscal year. We opened discussions in more than 20 countries. We started from a very like market exploration style of activities, aiming to close as much pilot programs as we can. And we have -- the pipeline for the pilots is very, very strong. We have announced some of the pilots already, and there is more to come. And next with these pilots, we are -- there's a lot of conversations to go into production stage negotiations. So the market is building well in EMEA. As I said, it takes time, and it's important to note that last fiscal year was the first one that we had a strong commercial effort starting to build this up. So it takes some time. But when looking at the pipeline and the funnel, it looks very good, and it grows all the time. Singapore, maybe the most important thing we did in Singapore was that we introduced a new version of the product based on the customer feedback. Now there are customers who have been using this -- using the product and the feedback is very good. So we are very happy about it. The volumes are initially modest, but we expect the volumes also to increase steadily. It's also the health screening market that we work in Singapore. It's very kind of -- it's not the same around the year. So there are certain time periods in a year when there is more demand, and we will now see how the demand develops when we move into the high season of the health screenings in Singapore. In Japan, we have also done a lot of work with the customer feedback that we have got from the recurring customers. There are improvements to be launched to the business model and the report over the coming months. Initial conversations have already taken place with the customers and the feedback about the improvements is very good. Having a good product market fit is essential, and that's why we are taking these actions to help to build the business up. But the first commercial results of the new products in Singapore and in Japan are expected also in the current fiscal year. In the United States, I think a very important step was that we managed to receive the CLEP permit from the State of New York, and we have a clear road map to enter the U.S. health care market. Now because of this, we also hired a Chief Commercial Officer located in the U.S., and we have several new sales activities initiated. There are a lot of pilot negotiations ongoing that would utilize the New York Lab. Medical research market, which is still our biggest business area. We took strong actions to increase sales activities in this business area. We introduced the multiomics offering. We announced a strategic partnership with Alamar Biosciences. So there are a lot of very strong commercial actions that we have taken. The pipeline has increased substantially. I'm expecting to see more wins also in this segment in the future. And in the past fiscal year, we closed -- here, we have a couple of important projects that we closed in the past fiscal year. All right. That was the business update. I would summarize it in a way that one of the key strengths of Nightingale is that we are -- I said it in the beginning, I say it again, we are a global company. And the global company structure, even though it's very challenging to build, we have now built it. We have it going. The benefit of that structure is that we can execute in parallel in several markets. We can learn from different markets at the same time. We can get those learnings to build a better product, and then we can deploy the products in these markets. Then if there are some disruptions, as we have seen, there may be disruptions around the world. Politics may change. There are kind of various things may happen. But because we are operating globally, we are also in a position to kind of continue growing the business even if a country faces some challenges. And that's something that we are going to continue building this as a global company, building it parallel. And with that, we can also ensure that the business growth will take place. Then let's have a look at the financial review for the past fiscal year. We had the best half -- year half ever, the last half of the past fiscal year. The second half revenue increased by 30% compared to the second half of the previous fiscal year. And then the revenue of the whole year was EUR 5.5 million. Largest part still came from the research business. This is something that we -- when I look at the kind of forward-looking pipeline, this balance is shifting step by step. So the health care part is taking bigger and bigger part of the revenues. It takes some time to build it up. And it's -- I'm very excited to see also the research revenues growing because it's not that these 2 businesses that we have, they are completely isolated. They are not. So when we win in research, it helps us to win in health care. When we win in health care, it helps us to win in research. It's the same technology. These are interlinked. It's the same company. These are interlinked. And one of the unique abilities we have and what we have demonstrated, we have the ability to translate scientific findings to clinical products. You can make a review and see how successful companies are in this in general. It's very difficult. And we have done it in -- around a very difficult -- with a very difficult market when we look at the primary care market. Now when there are more scientific findings, we can now translate these findings to clinical products very, very rapidly. And I think this is important to remember when evaluating the business between research and health care. They are both very important. Here are the financials. So the revenue growth was 17% compared to the last fiscal year. Change in liquid funds was more or less the same as in the previous year. So we can run the company without increasing the cost burden, which is important. Also when we're looking to increase the revenues, we have strong confidence that we can actually hold this cash position and with the revenue increase even starting to improve it. So I think we have -- and this is because we have the structures in place. Many times, if you look at the numbers in technology growth companies when the revenue starts going up, the amount of money going kind of out increases. In our case, we expect this number to decrease, which is -- which tells a lot about the business structure that we have in place and the ability to grow. We are still in a solid financial position. We have debt-free balance sheet. I -- kind of when looking at the business transformation that we are building, I'm not worried about the financial position. I strongly believe that it's strong enough to take the company commercially to a very different position, and our focus is entirely to build that commercial position to show that our technology is being adopted all around the world, revenues increase and the business increase with that. And I think with that increase, we will be in a very good position financially to take any actions that are then appropriate. And that's something that we will see when we move forward. The Annual General Meeting and the financial calendar is here. So the Annual General Meeting will be held on 5th of November and the calendar is there. There were a couple of significant events after the end of the period. So I mentioned that we are now putting a lot of effort in the deals. So it's deals, deals, deals. And here, you can get some reflection of these deals. So here, we have 4 deals that were announced after the end of the fiscal year. They are all pilots -- in the first piloting stages, some of them already moving also to the more production stage, for example, with [ Genome ]. So kind of the strategy and the kind of the commercial implementation is taking place all the time, and there are also results coming all the time. And the current fiscal year, I believe, will be the transformation in terms of the financial results as well for Nightingale. We have set the target to double the revenue. Reaching that will already take the company -- make the company financially very, very different. And we strongly believe that we are in a very good position to reach that target. And I think investors should follow our releases regarding the deals. The more we can win deals, the more there will be business, the more there will be adoption for the technology. And I think that is the most important thing to follow right now. All right. So that was the review of the agenda, except one point left, which is the Q&A. So let's go to the Q&A. And as usual, Janna Ranta will join me on stage.

Good afternoon to everyone. Good afternoon viewers online. We have received a lot of questions. So I would say we jump right into it. Let's start with an easy one. So summarize the fiscal year in one word, how would you describe it?

One word. Well, I think it's -- that word, I think, would be like commercial. This kind of a company that, as I showed 10 years -- more than 10 years of building the kind of being a technology company, now becoming a commercial enterprise. It's a very difficult challenge, and that has been the focus. We have done tons of things internally to make this transformation happen. And I think there are a lot of -- we have been very successful in many of these things. And then I think the word for this fiscal year is deals.

Okay. Great. Thank you. You were also now answering already my last question, one last question. Let's see how many questions we still receive. So please keep sending the questions. You are projecting EUR 10 million in revenue for this fiscal year with EUR 2 million expected to come from the Aalborg case. So what assumptions underpin this forecast?

Yes. It's based on the pipelines across all the businesses. So the business has -- like the commercial business is like 2 different -- we have 2 different kind of commercial deals that we are aiming for. There is kind of the deals that we are based on our kind of ongoing sales activities. We try to increase the size of the funnel, and it's the quantity of deals that is very important. So build like very traditional sales, build a big funnel and you will land deals. That's like one part of it. And we have -- with all of the businesses, we are increasing the deal numbers in the funnel. Then we have another segment, which is basically like the kind of strategic like landmark deals. That's a more strategic and more targeted effort that we do, and this is also in parallel. But this forecast is based on the idea that this kind of very operational sales activities will make the result. Then if there are the strategic deals that we would land, great, it even accelerates more of the business growth, but it's not -- the forecast is not based on that. It's the kind of what is happening operationally every day.

So how much of the projected revenue is already secured in the order book? And how much still needs to be converted from the open pipeline or the sales pipeline?

Yes. Well, it's obviously -- I cannot reveal the numbers, but you can naturally make a bit of like reflection is looking the result that we did in the past fiscal year without even this EUR 2 million that was a single project. This was kind of a flagship project. We still managed to do EUR 5.5 million, and this is based very much on the kind of the operational sales activities. I'm not expecting this to go smaller. They are -- all of the segments are growing. So maybe based on that, you can imagine that we are in a pretty good position to reach this target. Of course, it's not easy, but you should not make targets that are easy to reach. So I think we are in a very confident position that we will figure it out. And I think for a company, achieving -- doubling the revenue, I think, is okay.

Yes. A lot of interest in the split between research sales and health care sales. So if you can comment on and share some insights what was the split past fiscal year and what can be expected this fiscal year?

Yes. Maybe I can talk a bit about the trend, like how the trend looks like. So earlier, like looking backwards, it's like a very small part of the business has been health care business. It's very strongly research-driven. Now if I take a look at these pipelines, how this will look like in the future, I can see a moment that it kind of goes breakeven, like 50-50. Not saying it happens over this fiscal year. But when I look at the forecast window, I can already see the model -- the moment that this is likely to take place. So what this means is that the health care activities and the pipelines in the health care businesses are all growing. And with that growth, of course, the relative part of that business is getting bigger and bigger, bigger. So that's where we are. Of course, there can be individual projects that change, kind of, the ratio temporarily. But if looking at the trend line, I think it's very clear that the health care businesses are -- there's a lot of traction around -- with them around the world.

Yes. Thank you. So let's talk a bit more about these partnerships. So you have announced some pilots, some -- you mentioned that some of the customers are already like in the production phase, so how many of these partnerships are currently generating revenue? And how does the revenue growth look like in terms of these partnerships that you have announced?

Yes. So basically, almost all of the partnerships generate some revenue. But of course, when we are in the pilot stage, it's very small. And now I would also say that most of the deals by nature are deals that ramp up step by step. So you don't go immediately like big volumes, you go step by step. So the partner -- the customer introduces our technology to their customers and then they start building it like step by step. So it takes some time to build up the revenues. And that's just the nature of this business. I think nobody is in a position to go and say, oh, you kind of -- you take this deal and then you commit to do run like 1 million samples per year. I think nobody is in that position. There are, however, some like can be some strategic partnerships that would include then also this kind of commitments and the kind of the launch moment takes the volumes immediately much, much higher.

Can we expect this kind of partnerships to be announced in the near future?

Yes.