Nightingale and Terveystalo sign strategic partnership agreement

Translation: Original comment published in Finnish on 04/23/2021 at 5:07

On Thursday April 22nd Nightingale Health announced it had entered into a strategic multi-year partnership agreement with Terveystalo. With the agreement, Terveystalo will start developing new well-being services by utilizing Nightingale’s blood analysis technology, which measures the prevention needs related to well-being and health. Based on the cooperation, a new subscription service based on a monthly payment (EUR 9.9 per month) will be built, which will be launched in fall 2021 to all Terveystalo customers. The service will be available through Terveystalo’s app. We believe the agreement is very important for the commercialization of Nightingale's technology, and also offers Terveystalo a profitable and low-risk partnership that builds loyalty.

According to the release, the aim is to provide people with new kind of health information that supports and motivates lifestyle change. The planned consumer service will combine the health insights of Nightingale’s Health Data Platform with the wellbeing services provided by Terveystalo. According to the agreement, Nightingale and Terveystalo will share the revenue from these services. The first version of the service is said to include a set of digital lifestyle coaching, research-based tools to increase your own well-being, and regular measurements with Nightingale technology to encourage lifestyle change.

The agreement provides Terveystalo exclusivity to act as Nightingale’s private healthcare provider partner in Finland, and it commits to providing the service to its customers. The partnership agreement is valid at least until the end of 2025, provided that by 2023 the parties achieve targets that will be defined together during the collaboration. The agreement includes a possibility to expand the collaboration to other Nordic countries and the Baltic region.

We feel the news is a major step forward for Nightingale as this agreement is the first concrete proof of a model that generates scalable revenue being built around Nightingale’s technology. As a result of the release, Nightingale reached its short-term target to sign a partnership agreement with an established health service company during H1’21. With this agreement Nightingale moves forward in launching a business in line with its vision, where its blood analysis and ability to identify disease risks are combined with disease prevention measures and services. The income flow sources expected by the company from customer orders and health services seem to be correct based on this agreement even though there was no information on their magnitude as or yet. The platform is launched in Terveystalo’s app, which in our view may limit Nightingale's opportunities to expand the service portfolio.

The release gave no indication of the potential customer volume the agreement could generate but the service is launched to all Terveystalo customers. Terveystalo has announced that it serves around 1.2 million unique customers per year (some 2.0 million over a three-year period). On the other hand, the fact that the service is subscription-based means that only some of these customers will use the service. If the concept works as expected and the users acquire considerable amounts of health services, we feel the service could in future be offered with a Freemium model. Then users could be acquired for the service with free analysis of other blood samples carried out by Terveystalo and try to finance customer acquisition with later service purchases. Our estimates for Nightingale are based on a scenario where the company proceeds with commercialization. We provisionally expect the agreement to generate significant revenue for Nightingale during 2022 with emphasis on the later half of the year so we do not, at this time, see reason for clear estimate revisions.

For Terveystalo this agreement is well in line with its strategy to act as the customer’s health partner. The company has already earlier introduced new partners (like Yogaia) to its customers through its own digital platform. We estimate that the partnership with Nightingale is low risk for Terveystalo including considerable earnings potential depending on the popularity it achieves. The company already previously announced it is trying to develop pricing packages familiar from other consumer sectors and the service to be launched this fall is the first step toward a fixed-priced service to consumers, where the prevention of diseases is in the interest of both the service provider and customer. The company launches the well-being service at a EUR 9.9 monthly price and parts of the revenue is shared with Terveystalo. Introducing Nightingale's service exclusively on Terveystalo's app also brings the company a clear differentiating factor to its competitors, which may increase loyalty in using its other services as well.