Nordhealth As

Great. So welcome everyone to our Q1 2025 presentation. As usual, it'll be me presenting, the CEO of Nordhoff and my colleague, Alex Cram, who's our CFO. So we'll start with company updates. Then we'll deep dive into different business units, the veterinary business unit, then the therapy business units. And then Alex will go through a financial updates and we'll leave time for questions at the end. Please hold your questions till the end. And you can ask questions either on the chat or you can raise your hand to be able to ask questions and the latter part of the presentation. Starting with the company update. At the end of Q1 2025, our signed AR stood at 44.9, which entails a 21.5% organic AR growth year over year. The source of the growth was a net retention rate of 115.5%, which was higher than the previous in 2024, and also a churn rate of 4.6, which is lower than the previous quarters. We also have been able to improve our EBITDA minus capex to negative 1.1, which is an adjusted EBITDA minus capex margin of 2.4%. Looking historically, so we've had a 51 organic and acquisition net growth CAGR since 2018. And you can see we've had a consistent history of growth As we have not, we always take a quite conservative approach with signed ARR. So it's only if there are current customers, such as Vet for Pets or Merivet, which are piloting the software. We actually do not, we include the pilot clinics in that number, but we do not include post-pilot rollouts ARR. Looking at how we've been able to grow year over year. The first, let's start all the way at the left. So at the end of Q1 2024 reported was 34.7. Every year we reset the currencies to make sure that we use the December 31st currencies. of the previous year. So that had a negative impact, decreasing the Q1 2024 AR by 34.1, mostly due to the weakening of the NOC. So that's our starting base that we'll be comparing to. If we look at the source of growth, we were able to sign 2 million euros of new AR in the last 12 months, net upsell of 6.9 million and churn of negative 1.6. That's how we break down the 21.5% year of growth. This 20.1% net upsell is primarily driven by this CVS implementation. And we also were able to have 2.1 million of signed not implemented AR, which is a reduction since last year as we've been able to successfully implement CVS clinics. And we also have 1.3 of other businesses which are not veterinary therapy related. If we look at the progression of CapEx, we mentioned that we had a goal to reach a break even plus or minus 2 million euros for the year. And so we can see that we've been consistently improving our profitability. And over the years with LTM Q1 2025 being 1.1. So roughly on par with where it was before year 2024. Now diving into veterinary. From a business standpoint, we can reveal now that Amerivet, which is a 200 plus location US clinic chain, was the US customer that we signed in 2024 and they're piloting this year. So we're really excited to have them as a partner in the US as a first enterprise partner. We've also signed a second, albeit slightly smaller, clinic chain called PetVet365, which is a 35 location US clinic chain in May 2025. In total, SME and Enterprise AR, we've been able to sign in new customers, around 900,000 of AR in Q1 2025. We've also implemented 410 CVS locations as of the end of 2025 and got 89 left to implement. And also, we've been able to acquire ProVet.com, which will be our future domain name. So we'll be dropping the cloud at some point. Now, breaking down how the growth has veterinary, we grew 33.2% year over year. which was driven 1.2 million came from new customers. Net upsell was 5.8, mostly driven by CVS, as we mentioned. And our churn was negative 0.6, which is a 3.4% churn, which is very, very good. And we still have 2.1 of signed, but unimplemented. And you can see that that has come down from 3.5 in Q1, 2024. Now we introduced this new chart to provide some historical view of the main KPIs on the AR side. So you can see the historical growth in 2021 to LTM Q1 2025, which has been roughly 28.3 over this period of time. There's lots of ups and downs, as you can see, because of these enterprise contracts, which can be implemented. in one year and then piloted another, but that has a big difference on AR. If you think about the sources of growth, one is new customer AR, which again has been going up now, but it's around 8.3%. Then we have net upsell of 22.6% as our current customers are spending more of us or implementing more clinics and we're selling net new products to them. And then we've got a churn rate of negative 2.6%. And that's probably the most unique number for us. in the deck, this 2.6% data. Basically, a 2.6% means that they'll stay with us for decades if you look at it mathematically. And the way you get the net retention is basically the net upsell minus the churn rates. And so I want to divide those up too, because I think it's good to highlight the churn rate, which is probably one of the most unique parts of our business. Good to note that churn in 2024 was slightly higher, and that happens because we actually sunsetted two products. And when we sunset products at the end of that period, when we turn off the software, some people decide not to move forward. And you can see the impact of that in 2024 and LTM Q1 2025. Then looking at profitability on the veterinary side, these figures are adjusted by you EBITDA minus capex. They actually include all group allocations. So it's a true view of profitability for the business units. If we can see that LTM Q1 2021 was at negative 2.4, so we've been able to consistently improve our profitability. The main drivers of the improvements in Q1 2025 versus 2024 have been, one is growth, which is the biggest one, which had a $1.5 million impact and recurring revenues. And then we had additional other revenues at around 400,000. However, we've had additional revenues Cost to be able to serve customers around 0.6, so 600,000. And we've continued to invest in product development around 400,000. And there's other costs about 300,000. That breaks down how we've been able to improve over time. Now, where does that growth come from? And let's focus this time on 2021 versus 2024. So we can see we've had growth in the UK as a result of being able to successfully implement CVS, but also implementing other clinics. And secondly, we've had some nice growth as well in Southern Europe, where in Spain, Portugal, we've had customers implement our software. And you can see as well that we've had continued success in the Nordics, which has grown quite nicely in Q1 2025. Looking at a different cut of the data, same data, we can see that a big part of our growth is actually coming from, the majority of our growth is coming from enterprise. So we've got 0.9 coming from enterprise and 0.4 million euros coming from SME customers, which are independents. But one thing that's really important to note is that despite our focus on enterprise, our customer concentration remains low with our top three customers composing around 22% of our AR. Now, looking at the migration, which is one of our other big goals as our strategy is to grow organically, but also by acquisition and migration. So we've been able to successfully migrate from 2023, which was 7.9, a lot of our customers over to our flagship product, Provence. And what we can see is that the cloud share of AR has increased from 40% in 2021 to 78% in 2025 Q1. This is a really important goal for us because if we migrate people on our customers onto the new platform, we have much better opportunity to upsell, much better data security. So we've got a lot of benefits, including not having to maintain two different softwares. We're currently working on the migration of salamalas in Norway and also the migration of VetVision in Denmark. Now, looking at therapy. So on the therapy side, the main focus of this year is migration of Aspet customers to the unified platform. So we were able to migrate 160 Aspet users to the unified platform with only one user journey. The rollout continues at a measured pace, so we can act on early feedback. Our approach to this is implement a certain specific user segment, wait till they're happy. Once they're happy, we roll out the full user segment, and then we go segment by segments. You can think of segments as like private psychologists or public psychologists, and then private physiotherapists and so on. So they've got different feature requirements, and we try to target them very specifically. So and we're being careful with migration as it's a very small market. We want to make sure we maintain a high quality and not make mistakes that others have made and being too aggressive and providing which could lead to churn. The second exciting thing is that we've actually launched an AI scribe in April. First, starting with Norwegian physiotherapists. And within two weeks, we already have over 250 plus or more daily active users. We'll do a demo of that actually later in the presentation. Then third, we also signed about half a million euros of new AR in Q1 2025. And on the booking portal, which we've mentioned a few times in previous presentations, it lists over 1,650 therapists in Finland only, and we process over 3,000 bookings a week. And so that number, we should see that number continue to increase over time as we unlock new different ways of booking, for example, insurance company bookings or telebookings and so on. So... And this is a really big part of our strategy as we want to make sure that we provide the best patient experience so that going through Nordhav.fi and then on the other side that will be powered by the PMS, having that two-sided marketplace. Looking at therapy, our focus is obviously on migration. And so we haven't focused as much on growth this year as we want to have all of our resources on the main priority. But still, we've been able to grow year over year around 6.6%. um as you can see uh the net retention it was one zero one um one of the big drivers of it is that we can have we've got a decision whether either a we can build add-ons to be able to upsell to our user base or b we can uh focus on migration we focused on d only this year uh once the migration is done we'll be able to focus uh more on uh net new add-ons but also on going into the new markets to continue growing this business, just like we've done in VetNec, same strategy. Looking at the therapy long-term averages, we can see we've been growing around 10% a year historically. Our new customer AR has, as you can see, gone down in 2024 and LTM Q1 2025 as a result of our focus on migration. And the fact that we are in our current markets in Norway and in Finland, we've got a lot of users already used our software. So we don't have too much headroom for growth on that one, except for our expansion. Net upsell was 7.2% on average, right? Which has remained relatively stable, right? But our net retention is only 102%. churn again is on average 5.1. There's a big difference between churn in 2021 thereafter, because we bought easy practice, which has a much higher churn, given that they're targeting a slightly different segment of the markets. Over time, however, as we compare easy practice customers, which are the same size and specialty as our DRM and Auspice customers, we actually see a lower churn rate for those customer types. So the churn rate is driven much more by customer mix than by product selection. Now looking at EBITDA minus capex for the BU, we've actually decided to invest a bit more on product development this year. And so that's the main driver in the reduction in BU EBITDA minus capex. These investments are all focused on being able to migrate faster at first, and then they'll be on to the next mission of going to a net new market or going after net new add-ons. similar to veterinary looking at uh how we've grown between 2024 and 2025 we can see that um There's been some growth in Finland. We also see that there's, in Norway, there's been a decrease actually in the AR. This is driven normally by seasonality in that like we have yearly contracts and every Q1, right? The people in yearly contracts, they actually decide to churn just all in the same time, right? So it's mostly due to seasonality, which peaks in Q1. And not a huge amount of changes in Denmark, as we're so focused on migration. The important thing about why this migration is very important is that the Aspet migration will unlock around over 3 million euros of savings by having the people move over, not because of price, but because of efficiency. For example, we don't have to have two development teams. Secondly, we do not have to pay for licenses to be able to provide the legacy software. And then third is our support, the number of support tickets per end user FTEs is significantly lower on the new platform than it is on the Aspect platform, given that it's more intuitive and automated to manage. Looking now at the migration, we can see that we have actually our cloud share of AR has increased from 34% in 2021 to 49%. And you can see an increase between 2024 and 2025 as well. Interestingly, churn for non-cloud products have been 3.7. So we've been able to keep our customers happy while they're on the legacy products. And then I thought we'd actually do a demo of our scribe to show you how we are implementing AI dictation, but also summarization. This is a huge thing for therapists as it enables them to spend more time with the patients interacting and less time looking at their computer while they're with patients. So let me play the video. This is the first one will be an AI dictation video where we'll show you how dictation works. And then the second video will be showing you how we convert that dictation to a summary. It's easy creating a journal entry.

Good morning, Mr. Patel. How have you been since our last session? Morning. It's been all right. The pain in my lower back has reduced a little, but I still feel stiffness, especially in the mornings. That's good to hear. There's some improvement. On a scale of 1 to 10, where would you rate the pain now? Maybe around a 3 in the morning, and it drops to about a 1 or 2 by the afternoon. Okay, that's a positive sign. Have you been doing the exercises we discussed, especially the lumbar stretches and core strengthening routines? Yes, I've been trying to do them daily. I sometimes skip the evening set if I'm too tired, though. That's understandable. Consistency is important, but we'll adjust the plan so it's manageable. Have you noticed any discomfort while doing the exercises? Not really pain, but sometimes there's a pulling sensation in the hamstrings when I do the forward bends.

So a couple of interesting things about this one is the main challenges. One is that we had to make it multilingual. So this is in English, but it's Norwegian. We've got it in Swedish and Finnish and so on. The second one is identify, like the pain points that we have to solve is, especially in a therapist, there are two people talking. It's very easy to figure out who's talking when you're on video call because it uses the microphone. But when you're in a room, right, you have to differentiate with certainty, like who's actually saying what. Is it the therapist saying something or is it a patient? So those are the two problems that we've solved. And also you can see real-time dictation. It's very high quality, actually. Even with background noise going on, we've tried it with music in the background. It's actually, the experience has been very nice for these users. Next is once you have the recording, and it also converts it to clinical notes. So here you can see an example of how that works. In this example, we'll just upload one to make it more efficient. So you got the transcription that was created, and this is for Norwegian, so some of the titles will be in Norwegian. We're not operating in markets for English domain. language, but still for want to show you this in English, because I'm guessing most people's Norwegians here are not great. So you can see it summarizing the the transcription. It's then polishing it to make sure it's according to the different formats that are required for different specialties. You can see here that it actually creates the notes based on this. The therapist is able to fully update these notes as needed and save those. So you'll be able to see the transcription and also the full notes. And this leaves the therapist a huge amount of time, but especially it ensures that they're able to focus on the patient, not focus on adding their notes. So thanks. Now off to Alex for the financial update.

Thanks, Charles. Hello, everyone. Before diving into Q1 financials, I'd like to highlight that since the last call on the 11th of April, we published our annual report for 2024. Our financial results for 2024 were audited by KPMG, and the report provides a more detailed view of our financials following the Q424 presentation that we did in February. The annual report is available to download on the Nord Health website. So looking first at reported revenues in Q1 2025, we did 12.5 million of revenue, which is a 23% increase versus the same quarter last year. Much of that growth has been in our recurring revenues, which grew by 20.7% from 9.2 million in Q1 2024 to 11.1 million in Q1 2025. Our share of recurring revenue remains high at 88.6% in Q1 2025, versus 90.3% in Q1 2024. Looking now at quarterly adjusted EBITDA minus CAPEX, in Q1 2025, we remained broadly in line year on year at 0.9 million. The increase in revenue of 2.3 million naturally resulted in increased COGS and customer service costs, which totaled 0.7 million. Notably, we reinvested much of the additional revenue into product development, an amount of 1 million euros to drive future growth and returns. Sales and marketing investments increased by 0.2 million year on year, as did professional services costs. Turning to adjusted cash flow in Q1 2025, we had a cash inflow of 2.8 million, which is an improvement of 2.1 million compared to Q1 2024. The main driver of this increase comes from movements in our trade debtors, which were 1.9 million more favorable in Q1 2025 than they were last year. The largest individual item here is a payment that we received from one of our large enterprise clients in Q1 2025 for a backlog of their invoices, totaling 1.1 million. Other profitability and working capital changes amounted to a 0.2 million improvement versus Q1 last year. Finally, looking at the March 25 balance sheet, the favorable cash flow results in Q1 meant that cash at March 2025 is 22.2 million, of which 14.9 million is in money market funds. There were no changes to goodwill in Q1 2025, except amortization and changes due to FX. There were no material equity transactions in Q1 2025. There were no movements in treasury shares in Q1 2025, and there was no external financing in Q1 2025. The intangible assets are primarily capitalized R&D, and our equity balance remains healthy at 72 million. The full detailed financial statements for Q1 2025, including the P&L balance sheet and cash flow, are included in the appendices. And I'll now turn back over to Charles for 2025 guidance.

Thank you. So I want to reiterate the guidance that we have is that we're expecting organic growth of 12% to 17% in veterinary therapy recurring revenue with December 31, 2024 constant currency. The reason for that is that there are some fluctuations in revenue. So even though we had a big influx of revenue on veterinary due to CVS implementation in 2024, we have clinics in pilot now, but we will not see as strong growth we were predicting in the veterinary side. And on the therapy side, the focus on migration will impact growth in 2025. But EBITDA bonus capex, even though we can see that it was negative 1.1, right, we will be looking at EBITDA bonus capex to stay within a 2 million euro break even plus or minus 2 million euros, excluding obviously acquisitions. So reiterating that guidance. Then the next presentation will be on the 19th of August, 2025. And you can see the four-year calendar on our website. Now, after Q&A. So I suggest that if anyone has questions, they can ask questions on the chat. And I see we've got a few questions already. So what I'll do is I'll read the questions out and then either myself or Alex will answer the questions. So we got the first question. You're off to a strong start of the year with significant higher growth rates than the guidance. Are you expecting a slower continuation due to migration and therapy, even though product seems to be growing nicely? So thanks for the question. So the first is, yes, we are looking to be within our guidance. And that is a result of one, therapy, focusing on migration. And the second one is, it's quite bumpy, the growth in veterinary. And we're focusing mostly on pilot this year. So we're not, you never know what can happen, but we're not seeing that these full rollouts will be, taking having a big impact on recurring revenue this year. The next question is, what are you seeing within the end clients and their markets for veterinarian therapy? In veterinary and enterprise customers, are they still growing and acquiring new clinics? Do you notice any change in decision time or investment patterns? Let's start with veterinary. What we've seen is a slowdown a bit on the clinic performances. As a result, there's been fewer customers coming in. So that has impacted us slightly in that we have a percentage of revenue with a lot of our customers. They're still growing, but less fast than they were before. The second is that we've on the therapy side that the growth is quite stable however there are some countries such as in Finland where the economic situation is a bit less bad which is actually slightly those two markets however non-cyclical so if the cyclicality is this way it's a way more muted effect for us So I don't see that the cyclicality of these markets affecting our growth performance. It's more our ability to execute. In terms of investment patterns, I think that we benefit in that sense, in that it's a... when the markets are not as good, they cannot actually, they don't get raised money or they're normally less aggressive with acquisitions. And so they've got more operational headspace to be able to do PMS projects if you're in an enterprise clinic. Hope that answers the question. The next one is... Should we worry that AR competition for new customers Dolompi was relatively low at 6% from Christian? So that's a great question. So this is more of an accounting thing. So the way we think and the way we actually account for what's new customers versus net upsell is that it's customers that were added in that quarter. So for example, for CVS or Pets at Home or any big customer, even for the RMK, it's the initial AR in that quarter. So normally, it's only, let's say, one clinic that they have for a bit, and then they roll out all other clinics. So we actually, if you're looking at true, from a business perspective, new AR, right, you have to look at some of it, which is in the new customer, but also some of it, which ended up selling. So That's the, it's hard to unpack, but we have to draw the line somewhere. And so that's why we, so I wouldn't worry too much about that. If we actually look at the, the one we look at is ARPU changes over time. And we can see that ARPU has grown quite a bit less than our total recurring growth in revenue. And so the majority of it is ARPU. because our current customers are actually rolling out net new clinics that they were piloting before, and now they're in the rollout phase. So I don't see that as an issue. Where I do see an issue is basically that in all that ARPU growth, we've been focusing very much on the hard thing, which is acquiring net new customers. We should focus much more on ARPU increase over time, providing additional value. It's a much easier, cheaper sale to do, but we can do that at any time. So we've always been prioritizing capturing net new locations over upsetting those on other products. Next question we have is, what is your go-to-market strategy for the US going forward? What are the key success factors in the UK that you can replicate in the US? How do you intend to contain the high cost of recruiting sales talent there? The strategy for winning in the US is similar to all other markets, which is basically we have to build the best product. And that is a much harder thing to do in the US than it is in other markets because the expectations are much higher, the competition is much higher, right? But we have a bigger team, development team, than any other current player in the US, probably by two times or more. And so it's about... We focused this year and last year a lot on... um improving sort of the core workflows that exist right it's not about fancy net new feature but it's about how do you make how do you reduce number clicks from uh creating that new appointment from three to one or two right so it's getting those efficiencies and being known in the market as the most efficient software out there and that's how having good ux the second thing is that um I believe that there's a huge opportunity to be able to improve the workflows with the new AI models out there. You can see what we've done on the therapy side, and we're doing very similar things on the veterinary side. For example, for patients trying to record the interaction with the patients, where the vet will talk through things that will create automated notes. We're talking about automating patient communication to personalize it. During an average sort of consultation, a vet is there for, it's a 15 to 20 minute consultation. And so think about time it takes to review a patient history during that time. So we can summarize that in minutes. uh for them in a much more uh easy to read easy to understand way so um the strategy uh on is mostly to win on the product on the distribution of go to markets We don't need that many salespeople to be able to grow, right? Especially with the enterprise strategy. It's more about convincing them that having one PMS is the way forward. So if we think about Europe, that was not an argument we had to make. bringing everyone to one PMS because they want to have unified reporting. In the US, that is still not the case where there's middlewares which have create unified reporting if you're on 20 different PMSs. So that's a pain point, which is less obvious. However, the data that you can have from here is way worse than if they had unified PMS, but it's still learning. And the market in the US is much earlier than we are in the UK or the Nordics, for example, with regard to data-driven decision-making. We're looking forward to partnering with these corporates in the U.S. to show that is a big differentiator. Then there was another question, how do you see U.S. competitive landscape evolving and what's your take on Shepard's acquisition of Hippo Manager? There's basically two buckets of competitors in the US. We've got the products which are owned by IDEX and Covetrous, such as EasyBets or Pulse. those we want to compete with in that they're currently doing a migration from their legacy product to their new product, which is a good opportunity for us to actually acquire those customers at that decision point. And the game is all about, can they provide a solution and innovate faster than the second group, which includes us, which is basically Shepard, Fetspar, Instinct, and ourselves, where, and probably other smaller competitors, but those are primary ones, where we are competing for, as the innovators in the market. And the way we're looking to win against them is to compound our sort of R&D advantage over time. And we're, as we said, I mentioned before in Europe, there has been corporatization of veterinary clinics much early on. And so as a result of that, we've seen how enterprises have matured and we've matured with them that software. And we're gonna, so we've got a unique advantage in knowing how enterprise customers wanna work. And so that's why we'll try to win that market with our better knowledge and our lead in that space. There's another question on, you've decided to increase customer acquisition costs. Where are we in these land grant phase? Probably lasting still several years. So we haven't increased our customer acquisition costs significantly year over year. I think it's a, I don't like the term land grabbing because that's with no regard to financial return. The way I think about it is if we look at the last presentation, it's there are two costs required to be able to acquire new customers in new markets. One is the sales marketing costs and implementation costs or net implementation if they pay for it. So it's the net profit or loss that we make from that. That's what I call customer acquisition costs. And the second cost line is the R&D, right? And people often forget about that, but there's problems we can solve. Like, for example, let's take the example of implementation. We can decide to use R&D resources to automate that process. And we have to use R&D to be able to add integrations for the US and so on. So I bunched those all together. And those two components, I'm looking to make an over 20% return on those on an effort. So that's how I think about spending. So when we're looking at the use of cash, I always think is it best to invest in R&D in a certain project or in sales and marketing, or is it better to, let's say, invest in buying a company because it's cheaper than doing sales and marketing. So that's how we think through that. Then we had another question on congrats on the start of the year. DNB Carnegie, formerly known as Carnegie, is currently covering Nord Health. Could you elaborate on how you're engaging with other investment banks to broaden analyst coverage at Nord Health? That's a great question. It's actually one of the things I've been working on over the last year, trying to get a second and hopefully a third bank to be able to cover us as well, as I think that Nord Health is a stock that should have a bit more liquidity. That's one of the points that we're trying to improve over time. We had a question, what are your medium-term expectations for the therapy division once the migration is completed? Can growth accelerate towards 15%, 20% like the vet division, or is it more of a profitability play? So that's a great question. So if we go back to where we started, at first, we only had cash to be able, before the IPO, to finance one of the businesses. And then we chose at that time. And post IPO, the bottleneck was not cash, actually, but the bottleneck to be able to grow both was management capacity, right? So at that point, we started, Walter took over the veterinary business units, and only recently, actually, Karan took over the therapy, which means we've got additional management capacity to be able to grow two things at once. So the team still on the unified platform is still quite small. So I want to focus them on one mission at a time. That's been the big learning since I started, actually. It's better to do things sequentially, but faster than in parallel. So a jack of all trades is master of none. That was a hard lesson to learn, but I think now that's the best way to create value. I think it's the most efficient as well. So first will be... doing this migration and then we'll uh we're always quite pragmatic with things so it's either if we see opportunities to grow organically that new markets will look at that or otherwise uh if we see opportunities to um uh grow by acquisition of migration or we could also look at just expanding our sort of uh share of wallets in our current markets or a combination thereof, right? But so we haven't yet made a decision on medium term on profitability or not. It really depends on the opportunities. For now, we're focused on the migration and our plan will be to do something similar to what we did in veterinary conquering, one new market at a time. But if we don't find opportunities, which I don't believe, I do believe we might find some opportunities to grow. So I believe that we will go after that new market. Then the final question we've got is, are you seeing anything new in the M&A and private equity space in terms of interest in kinds of assets as Nord Health, for example? Has there been any transaction recently? If yes, what has the multiples looked like? So there's a lot of interest in PDPs in the Nordics and specifically in SaaS. So the transactions of similar companies in the Nordics is, I don't have exact multiples of what they trade that. but so I'm sorry I can't help on that there's rumors but I don't want to comment on the rumors of what those are so great perfect well thank you very much everyone for your time and I'm just going to see if there's any other questions no other questions thank you thank you very much everyone for your time have a nice day bye