Nightingale Health Oyj

My name is Teemu Suna. I'm CEO and founder of Nightingale Health. And in today's presentation, we will be talking about, of course, about Nightingale. I will give a brief update of our business. Then we move to the business targets. And after the business targets, we go to key achievements in this half year period. Then we have the financial review and then a Q&A. So you can post your questions and then we will go through them in the end. So the same agenda as usual. Let's start. So what we are doing at Nightingale, our mission is to build sustainable health care and reduce health inequalities. So why do we need a more sustainable healthcare system? Well, the current healthcare system is not equal. And the current healthcare system is overburdened with too many sick people with chronic diseases. And importantly, chronic diseases that could have been prevented. So how the healthcare system is addressing this problem? We have the primary healthcare system, and the purpose of the primary healthcare system is to promote health and prevent diseases. So we have the system to manage the problem of chronic diseases, but it's not working. it's not working because the primary care doesn't have the right tools to do preventative healthcare. And the problem we are talking about here, this is the biggest healthcare problem in the world. 90% of healthcare costs comes from chronic diseases. And out of that, four out of five of the diseases could have been prevented. So when we talk about solving healthcare challenges, what we need to talk about, we need to talk about managing, preventing the onset of chronic diseases. So we need a change. What can we do? The answer actually is very simple. We often see when we talk about healthcare and when we read from the news about healthcare, we often hear that it's very complicated. But actually it's not that complicated. We just need better tools to do prevention. And why it is not very complicated, it's actually we know what to do to prevent the disease onset. We know what to do, but we just don't have the tools to create a healthcare system that can do prevention. So if we look at the, so what can we get? when we have the better tools for prevention. So we have the current primary care system, and then we have the primary care system with better tools. So when we can start in a systemic way to prevent diseases, we have several very important outcomes from that. We can reduce the number of sick people. When we reduce the number of sick people, we can save costs. And then we create more sustainability and equality when we can have less sick people. We are increasing the quality of life. So I would say those three things are the most important factors, the most important outcomes that we want to achieve in healthcare. So what Nightingale does, we make this possible. We make preventative healthcare possible. Our health check is an efficient and effective tool for large scale prevention. So let's have a look how it works. We have a comparison here. We compare the current tools in healthcare for risk detection, and then we compare that to the Nightingale HealthSec. And why detecting the disease risks is important? Well, if you think about preventative healthcare, how do you do prevention? Well, first you have to find the people out of the population who have a risk of developing a disease in the future. And what does this mean is that actually the preventative healthcare system is not targeted to people who are sick already. This is a healthcare system that is targeted to people who are healthy. And the purpose is to keep the ones who are healthy We want to keep them that way. So that's why detecting the risk of developing a disease, I would say that's the most crucial asset in preventative healthcare. Without that, you don't have preventative healthcare because you don't know who are the individuals you kind of need to target your preventative actions. Okay, a bit long intro, but anyway, let's have a look at the comparison with the current tools to detect the risk and the Nightingale HealthSec. So with the current risk assessment tools, they offer good performance in risk detection capability, but the problem is that they require a lot of different inputs to do the risk assessment. So for example, they need blood pressure measurement, they need body mass index measurement, they need family history, they may need different kinds of other questionnaires. So a lot of input is required. And who collects that input? Well, it's the healthcare professionals. So it's a burden to do the risk evaluation with the current tools. The current tools also evaluate one risk at a time. So if you are being evaluated with your cardiovascular disease risk, you are not being evaluated with your type 2 diabetes risk or kidney disease risk or liver disease risk. So this leads into a situation that the current tools, they are inefficient, they require a lot of resources, they consume a lot of time. So in other words, they don't scale very well. So to put this into context, as I said, so preventative healthcare is that you detect the risks from the healthy population. which means that you do the risk detection for everyone. So how would you use the current tools to do the risk detection for everyone? Well, you can't. Now let's compare to the Nightingale HealthCheck. So the risk detection capability, we offer equal or superior performance against the gold standard in healthcare today. the input required, we require a single blood sample, AIDS and sex. So basically it's the blood sample and your personal identification number. So you don't need to collect, you don't need the healthcare professionals to collect your blood pressure and BMI and questionnaires, et cetera. Then when we use our technology instead of one one disease risk at a time, we can detect multiple disease risks from every test we run. So it's efficient. It requires minimal resources from healthcare professionals. This can be done for everyone in a nation. And this is why I said that the capability to detect the disease risks is critical. This is why we are saying that the primary healthcare needs better tools. This is the tool. This is the tool that allows to detect the disease risks from an entire population. And that's how you do preventative healthcare. So I wanted to also mention briefly about the performance of this technology in risk detection. This is, of course, often something that people ask us. So how can you do it from just a single blood sample and not needing the clinical parameters? Can the performance be equal or better than the current tools? So we made this comparison. So we do the comparison using a metric area under curve, which is the AUC. That is the most typical way of evaluating performance of risk detection. So your AUC number is between 0.5 and one. And one is like perfect risk detection. And now when we look at the, we have a list here of different diseases that we detect, CVD, MI, stroke, type 2 diabetes, chronic kidney disease, et cetera. And we have in one column, we have the current clinical tool AUC, which is the tool that is being used in the clinic all the time. In the world, hundreds of millions of these tests are being run routinely all the time in healthcare. So there you see the comparison. And indeed, we either match, we have equal performance, or we are better than the current clinical tools. And important to remember that we do this every time. We can do all of the diseases every time. And we do not require the complicated or time consuming clinical parameters to do the risk assessment. So what does it mean if we put this into the... We take a step towards business and we think about like, so what are we actually doing? So because we can detect the risks from the single sample, it changes the value chain in healthcare. Because traditionally, in order to detect disease risks, so what do you need? You need a medical device manufacturer who builds a machine that can run, can analyze blood sample. Then this machine is sold to a diagnostic company that is offering the blood analysis as a service to healthcare providers. And then the healthcare provider is the one who has the customer or the patient. They draw the blood sample and they collect the clinical data. And now in the kind of the traditional way of thinking, you need these three different companies or parts of the value chain. Having these three parts makes it quite expensive. There is no way around it. So what is the breakthrough if we look at this, what I was telling about the risk detection capability? If we look at this from the business point of view, what is the breakthrough? Well, the breakthrough is that we vertically integrate the traditional parts of healthcare value chain into one single solution. It's superior efficiency, superior price point, superior quality. It's just better because we can manage the whole value chain end to end. It naturally takes time to build this kind of a change. This is quite a massive change. You can compare it to any industry when doing these kinds of changes. But I think we are making good progress and I think the end result will be better for everyone. And this technology is available today for healthcare use. You can provide the sample in traditional way at laboratory, or we allow also remote collection, which is then also changing the value chains in a way that you don't need the old way of collecting blood samples. So you can actually enable blood sample collection directly by people themselves, but imagine you can throw the blood sample in the pharmacy. You can throw it basically anywhere. And you can even use this remote collection technology of ours, you can even use it to collect and transport a venous sample. Because many times with venous samples, the problem is that you need 24-hour cold chain and you need very rapid spinning of the sample to separate the cells and the plasma. But with our device, you actually don't need the cold chain. If you put the venous sample into the remote collection device, you have three weeks stability for the sample. So you can build completely different kind of logistics to transport the sample. No need for 24-hour cold chain. I believe that this will also change the way how healthcare operates in the future. Again, it takes time to do this kind of transformation, but I think it's coming because the value is just better. And as I mentioned, this technology is in healthcare use. We are actually running this nationwide in Finland and covering 30% of Finland's workforce. I think the concept of how we have demonstrated that is this risk detection, can it yield value for the clinical workflows? Can you do it large scale? We have basically shown that here in Finland, and I think this implementation is a great example how we can actually make healthcare better. All right. That was the brief intro to our technology. Let's talk a bit about the business targets for the ongoing financial year. So we have three targets, winning new large international deals, increasing revenue, improving efficiency. I don't go now in very much detail into this. I think the only key point to mention here is that, as I said, making this transformation happen around the world, building a better health care system, better primary health care system, solving the world's largest healthcare problem. It takes time, it's quite difficult. We approach it by aiming to win new large international deals. When we win the deals, it demonstrates that this technology is yielding value in the healthcare settings. Like how we have done now in Finland together with Terveystalo, we are now aiming to win kind of the next large deals and with that demonstrate the power of this technology. Our thinking around this is that the value that we can create is so obvious that when we can win more of these demonstrations we believe that the demand will increase after that. That's why we focus on winning the deals at the moment. Of course, increasing revenue is important. We are building also that. But I would say that for us, the more important KPI is to win the large international deals. And then we are very focused on improving efficiency. Our CFO Tuukka will talk more about this. This is very important because we need the timeline to build the business, to make the change in healthcare. That needs time and to have the time, we need the money. And a big part of that story is how we are improving the efficiency. Our mid-term business targets, long-term business targets remains the same. So I think no further comments about these. So we go to key achievements over the past half. I will go through each of these regions. And then I will provide the highlights when we get there. What I can say about the global, if you're looking at the kind of the global progress, we are making strong progress everywhere. We are a small company, but our strategy has been for a long time, a commercial strategy that we we work in a very targeted fashion everywhere we go. And when we work in a very targeted fashion, we can run a global operation with a small team and kind of keeping the high efficiency. Like with small team, the benefit is that you can, the efficiency, you can make it much more efficient than a very large team. But let's go through of this In Finland, Terveystalo is the flagship case here. I think the most important point in this slide is that more than 100,000 health checks were performed by December 24. So the volumes are increasing, the business is going to the right direction. And I think the important point here is that Well, of course, we think about the revenue, but I think if you look at the Nightingale story in the bigger picture, there are more than a thousand healthcare professionals using the technology in their daily work. Getting the technology to be used by people in healthcare, getting something new rolled out in healthcare, when you actually get it to the hands of the people, it's a great achievement. It's not like selling plastic buckets. It's difficult, it's something new, it's something that requires people who are using the technology to adapt the technology and then getting some benefits to their work. So I think that the fact that the volumes are increasing, I think, sends the message that we are creating value for our customer. And that's what we try to do. That's in the center of everything. In Japan, last time we talked about the acquisition of Veltosync. We have now completed the process and the key target with the acquisition was to get a better position in the value chain. This position is now achieved. We are fully managing the customer accounts of Veltus, so we are fully running now the operation that Veltus was running before, but now it runs under Nightingale. And now, because we are in a better position in the value chain, we are exploring multiple new commercial discussions in public and private healthcare sectors in Japan. That work is ongoing. It takes still some time, but I think we are now well positioned and where we want to be. In Singapore, there's been a huge amount of development. We have had two key implementation projects running in parallel in the previous half. One has been Singapore, and the other one has been Boston Heart Diagnostics in the United States. The progress in Singapore... The starting point was that we made a partnership with InnoQuest Diagnostics in Singapore. They are the biggest clinical laboratory in Singapore, and it's part of Pathology Asia. And we are working, the partnership agreement is with them, and we are working with them then later on to expand our technology also beyond Singapore. But now the focus has been purely to make it, to implement it, to make it operational in Singapore. Singapore acts as a kind of a reference for the region. So I think it's a very important step that we have now achieved in the Singapore implementation. So the laboratory is established and it was production ready in December. And then once the lab is production ready, then the next step is to ramp up the commercial operations and the commercial availability will be very soon, so in March. And we are targeting with this new joint product between Nightingale Health and InnoQuest. We call it Health IQ. We are targeting with the Health IQ portfolio the health screening providers in Singapore. And to make this all happen, we also managed to get the regulatory approvals in Singapore. Maybe good to mention, Singapore is one of the most strict regulations in the world. So they really made a very detailed evaluation. And once again, the Nightingale team made great job in getting the approvals in a relatively short time. So the position is great. We tick the boxes, we have the lab, we have the commercial loans. It will be very exciting over the ongoing year half to see the initial reactions also from the market. In the UK, I think the position we are having is good because we have the lab in there. The lab is fully staffed, production is ongoing. We have done the half a million UK biobank samples in the UK, which is, I mean, we have it here in the list because it is a very significant reference in the UK. It's a significant reference to promote discussions with public and private healthcare sectors. And that is what we are doing at the moment. In the United States, we have several very strong customers in the US. We also announced a regulatory plan in the US. So there was a change by the FDA in their ruling. It was maybe the biggest change in several decades. And with that new ruling, I think we are in a better position and I think the rule book is more clear than it used to be. If you read our press release about the regulatory plan, it may seem like that it's not that clear, but I can assure that that's the That's quite clear approach how to go to the market in comparison to the earlier situation. But regulation is always very complicated and of course requires a lot of very detailed expertise. We have a new laboratory to be opened in the state of New York. We are in New York. Maybe the key reason is that the regulatory environment in New York, because in the United States, each of the states have their own rulings also regarding the regulation. New York is a favorable place for us to put the laboratory. And then in the commercial side, I think we have made also very strong progress. We've been working mostly with Boston Heart Diagnostics. We've been working to launch the joint offering to the US market. That project is also going well forward. And we are... We are going to provide more information about that when we move forward before summer. But strong progress also with that account. Then other markets. So the main markets that we have, Finland, Japan, Singapore, UK, US, we have labs now or lab building in all of those. But we are also actively exploring opportunities in other markets. There are like, if you think about the remote health check, it does not The kind of the geographical limitations are very small, so we can actually operate pretty well worldwide. And there's been a lot of discussions and a lot of interest towards Nightingale's technology from Middle East region. And then we announced, we signed an agreement with Enigma Genomics, And they are very keen to then integrate Nightingale's technology as a part of their product portfolio that they are offering in Saudi Arabia and other countries in the region. So I think it's also exciting to move into the new markets. kind of the operational efficiency, we can maintain that in a good level by being very targeted with the customer cases. Working with Enigma, we believe it's a very good match between the two companies. And then when we work with the remote health check, that also gives quite a bit of flexibility, how we then deliver, how we manage, how we do things, how we maintain the efficiency while increasing the business opportunities. This kind of exploration is happening in several markets also outside of Middle East, but we are very critical into which initiatives to engage with, because we have to take good care of the growth and the efficiency. Then outside of the business initiatives, we also announced that we are aiming to transfer our listing from the First North Helsinki into the main list in Nasdaq Helsinki. And also that we are looking to list our shares through the OTCQX market in the United States. Why are we doing this? Well, Nightingale is a very global company. We operate basically almost everywhere. And we have a lot of discussions also with investors around the world. And we feel that it's a very natural part for the company to also improve the visibility in the international capital markets. So this is the, after the first north listing, this is the first step that we are doing. This is the first step that we are doing to increase the visibility and make it easier for potential investors to invest also in the Nightingale's growth story. That's it about the business side and the milestones. Next, we'll go to the financial review, and our CFO Tuukka Paavola will join me on stage. So let's look at the numbers.

Thank you, Teemu. Great to be here again talking about the numbers. So let's start from the cost side and the kind of cash situation. So we have managed to accomplish all the great things that we're explaining now in the first half of this financial year. And we have actually done that with tremendous financial efficiency. So the change in liquid funds in the first half was 6 million euros, and the trailing 12-month burn rate has been 13 million euros. So, of course, why we can do this or be this efficient whilst achieving these great things is that we have actually built this company to be really scalable. And now that we have set up new laboratories in a couple of geographies, we have a strong playbook how to do it, how to go about doing it. So we can actually manage to do that in a rather financially efficient way. So the liquid funds balance of 60 million euros at the end of December last year gives us, of course, a strong financial position to continue the execution of our global growth plan and gives us, even with the current burn rate, multiple years of runway. So all good from that point of view. Looking at the revenue, our revenue in the first half of this financial year was 35% higher than in the first half of the previous financial year. The slight decrease from the second half was due to normal seasonal fluctuation in the research business. The healthcare business and the revenue from healthcare business is actually on a rather stable track, which we get both from Finland and from Japan. I also like to emphasize what Tempo was also talking about earlier, the long sales cycles also in the healthcare business side. So it can take up to 24 months from the starting of a pilot with a new customer to actually starting to receive stable revenues like we now do with Terveys Talo. And that is, of course, explained by the fact that we want to fully integrate our solution to our partners' processes and ways of working. And since we are talking about healthcare here, we, of course, want to be really, really certain. It is of utmost importance that everything is actually working really smoothly. So it takes a lot of time and effort from us and also from our partners to make sure everything is working well. In addition, also want to highlight that we do have a strong sales pipeline with cases that we have been communicating and pilots that we have communicated already. And in addition, a lot of other potential cases, which we of course expect to convert into revenue in the future. So then just to summarize the H1 numbers. So revenue at 2.3 million euros plus 35% year-over-year growth. Improved profitability across the board. So EBITDA, operating profit and net income all improved vis-a-vis the H1 of the previous financial year. Continued financial efficiency, so the 12-month net cash change was at minus 11 million euros, which gives us the net cash position of 58 million euros at the end of December. I'm repeating myself maybe here, but giving us a really strong financial position to continue full speed execution of our global growth plan Thank you. That's it from the numbers. Back to you Teemu.

So how about Q&A? Fantastic. Yes. So this time we have a new person to help us with the Q&A. So we have Janna Ranta. So Janna is leading our strategic partnerships and working very closely with me in several of the projects that were also I mentioned in the milestone. Welcome, Janna.