Nightingale Health H1 morning result: Growth was needed, growth was delivered

Translation: Original comment published in Finnish on 3/23/2023 at 10:51 am.

Nightingale's business developed clearly better than we expected and the company's commercial investments now seem to generate significant revenue growth for the first time. Success in ongoing commercial contract negotiations is key to the company's continued growth and to the success of business multiplication. In this respect, we wait for more detailed comments from the company in the earnings call at 2 pm EET. However, at first glance, the report as a whole was more positive than we expected.

Revenue growth was the clear winner among reported figures

Nightingale’ revenue in fiscal H1 (July 1-December 31,2022) strengthened by 76% from the comparison period to EUR 2.24 million (H1’FY22: 1.27 MEUR), while we expected a clearly weaker neutral development. Nightingale had contracts with over 100 hospitals and clinics in Japan at the turn of the year. The source of the growth was, however, the UK that already generated EUR 1.8 million of the Group’s revenue. H1 revenue growth was still small in absolute terms, but the growth is a small positive sign of the commercialization potential of the company's technology and progress in realizing this potential.

Profitability remained clearly negative on all lines as expected, as EBITDA and EBIT were EUR -5.5 million and EUR -8.7 million. As a whole, net cash consumption was slightly slower than our expectations (-6.6 MEIR, Inderes’ estimate around -7 MEUR) and cash amounted to EUR 84.0 million at the end of the year (90.6 MEUR on June 30, 2022). Thus, the company's financial position remained as expected, and sufficient funding does not appear to be a concern in the coming years.

Sales chases bigger contracts to continue the growth path

By June 30, 2023 (in the fiscal year 2022-2023), Nightingale aims to reach a significant commercial contract in the public healthcare sector, win B2B commercial contract(s) with more than 50,000 blood samples, and win contract(s) in medical research with more than 175,000 blood samples. The company reported it had invested in contract negotiations with all targeted sectors (public health care, private sector and scientific research institutions) on the commercial side during the last six months. No contracts have been published yet, so the pressure to reach the targets and publish contracts lies on the next quarter.

In line with its previous press release, Nightingale is setting up a laboratory in the UK during 2023 and it is working on partnering with research operators in the market. In the next phase, the company will also seek to introduce its technology there to private and public health care. The company also continues to invest in the sales and marketing of the Livit consumer service. In addition to these and the fiscal year's targets, other clear guidelines for the focus areas of the company's commercial investments are not known, so we still must wait for clarifying information on future commercial steps.