Nightingale signed an important clinical diagnostics contract in Southeast Asia

Translation: Original comment published in Finnish on 11/16/2023 at 6:27 am EET

Nightingale’s new collaboration partner Innoquest Diagnostics is part of Pathology Asia, one of the largest diagnostic groups in Southeast Asia. This is the company’s first significant international customer relationship, where its technology is made available on a large scale to existing healthcare operators. Nightingale’s investment story has shown promising signs of progress this fall with the signed agreements (Terveystalo’s occupational health and Pathology Asia) and the company is proceeding on the path outlined by our forecasts that anticipate strong growth. We believe the next key milestone in the investment story is an increase in sample analysis volumes produced by the won customers, which would give an even clearer indication of a commerical breakthrough of the company's technology.

An important international opening with the company’s commercial spearhead updated in the fall

Nightingale’s new partner Innoquest Diagnostics operates seven laboratories in Singapore. Innoquest is part of the Pathology Asia group, one of the largest diagnostic groups in Southeast Asia. Pathology Asia, in turn, operates in an area with a resident population exceeding 500 million (Singapore, Malaysia, Vietnam, Philippines, Thailand, Indonesia and Australia). Within the collaboration, Innoquest will launch blood testing services based on Nightingale's technology by the end of H1/2024. The blood test will be offered by Innoquest to healthcare providers in Singapore and in other Southeast Asian countries through the companies within the Pathology Asia group.

In practice, we believe Nightingale’s blood analysis and related blood counts and disease risk predictions will be part of Innoquest's test catalog, from which healthcare operators can order analysis for patient samples. Nightingale’s blood analysis will thus be available in connection with a significant blood sample flow, but the analysis volumes depend on the popularity blood analysis reaches among Pathology Asia's customers. In Singapore, the national "Healthier SG" project for preventive healthcare is being launched, which we believe provides good conditions for building popularity.

The specified commercial angle shows promising signs

In September in its strategy update, Nightingale decided to shift the focus of its strategy to private and public healthcare customers. Thus, the Innoquest cooperation is not surprising in nature, even though winning over a group that operates in several countries is a clear milestone and positive news for the company. Through the cooperation, Nightingale also achieved its target for the financial year 2023–2024 of a significant international reference agreement. Nightingale’s agreement with Terveystalo signed in August concerning occupational health was another collaboration where significant sample volumes are used to build a chain aimed at preventive healthcare.

The Innoquest agreement supports the prerequisites for our forecasts materializing, but does not put immediate pressure on forecast changes. Our forecasts already include an expectation that Nightingale’s revenue will grow strongly from EUR 4.2 million to EUR 15.1 million in the financial years 2023-2026. Visibility into the company’s growth is slightly better with the release, as our forecast is now supported by two customers with significant potential. With the support of these references, the company is also well positioned to win new similar customers. The key uncertainty remains the success of analyzed sample volumes and thus revenue growth, i.e. whether Nightingale will succeed in creating a commercially viable operation around the published collaborations for the customer and for itself. Signs of clear growth would indicate a successful commercial breakthrough of the company’s technology and would reduce forecasting risks more clearly. More information is likely to be available only after the summer of 2024, when the company reports on revenue development for the first time after the start of the contracts (H1/2024).

Correction 11/16/23 at 12:04 EET: Our estimate for Nightingale's revenue development from EUR 4,2 MEUR million to EUR 15,1 million is for financial years 2023-2026, not financial years 2023-2025.