Nordhealth As

Hi, everyone, and welcome to the Q1 2025 presentation. We'll start with introductions. For those of you that are new, I'm Charles McBain. I'm the CEO of NordHealth, and I'm joined by my colleague, Alex Cram, who's our CFO. So similar to previous presentations, we'll go through a company update. in general, then we'll deep dive into a veterinary BU update, then a therapy BU update. Then we'll go into a deep dive into our AI developments that we're making. And then Alex will go through the financial results, guidance, and we'll leave some time at the end for Q&A. So if you have any Q&A, please hold them until the end. Starting with the company updates. So I just want to remind everyone of the objectives that we've got for 2026 to unlock profitable growth. Number one is what we're trying to do is to build a world-leading AI practice management software across both therapy and veterinary. Second is we're trying to radically reduce the time it takes to go from signed to onboarding, especially for enterprise on the veterinary side. Third, got a big initiative now to localize ProVet for the German market. Our first German customer went live a couple of weeks ago. And so that's very exciting development for us. Fourth, is we want to complete the migrations on the therapy side of Aspect Desktop users to the unified platform. And fifth, if we want to achieve these things with a low growth in cost, right, by not adding in that new headcount to be able to improve profitability. Let's take a look at how we've been doing over the years. And I always like to go through this chart. So since I purchased the company in November 2018, we've grown from 3.4 million euros of AR to almost 50 million euros of AR, which is a 44% CAGR. We have made acquisitions in 2019, 2021, 2022 to help us grow, but the majority of the growth has come from organic growth. Now let's break down the growth over the last 12 months. So in Q1 2025, The reported AOR was 41.5. Every year, we do a reset to make sure that we measure on a stable currency basis to not have any of that fluctuation. So you can see that the Q1 2025 with the 2020 and 2025 exchange rates is 41.2. We've been able to grow 12.2% in the last 12 months to 46.3%. This entails a net retention rate of 108% and our churn has been 3.3%. In addition, we still have a backlog of 1.7 million in signed non-implemented AR and our other businesses beyond Veterinary Therapy PMS still account for a million. If we look at the cloud business for veterinary and therapy specifically, which is the platforms that we're building, they're growing at a significantly higher pace at 25%. The churn rate is 2.2%. And that retention is around 160. We can also see that we've migrated the last four months of a million euros of AR over to the new platform. Now, Going deeper into veterinary, starting with the business update, we've got three primary missions. The first is to continue the expansion in the UK, US, and Germany. We signed 733,000 of new AR into one only. We implemented our first clinic in Germany. And we are focused and we have a dedicated team on German localization to be able to unlock Vetdera's 1,500 clinics and migrate those over to ProVet and also unlock new enterprise opportunities. In addition, to be able to improve our product positioning in the US, we built a new omnichannel messaging feature, which allows you at first to do two-way SMS and MS, soon WhatsApp and VoIP and so on, which is a key requirement for the US. The second is that we're trying to build an AI PMS. And I'll deep dive into what that means later in the presentation, as that applies to both veterinary and therapy. But we are continuing our investment in iterating our AI scribe, which I'll show you in the latter part of the presentation, and also launching a lot of new AI products. Our AI Scribe, for example, is available now on mobile. Our AI Actions, which I'll show you, allows you to automatically build customers using voice. And we're also finalizing building ProVet AI agents, which I'll show you, and an MCP for ProVet so that clinic can access all of their data from whichever LLM that they want. The third is reduce time to value, which is the time from signing to implementing. This is one of the big bottlenecks to growth that we've got. And so we've launched new data migration tooling powered by AI that compresses the onboarding time by over 25%. And there are significantly more opportunities to be able to reduce this time to value, which I'm very excited about, especially on the enterprise side. So looking at the results year over year, we've grown 13%. Our net rotation rate was around 110%, and churn was very low at 2.6%. We still have a backlog, as I mentioned, of 1.7 million euros of AR, which is yet to be implemented. This is the bottleneck I was talking about. If we look just at ProVet Cloud, which is the flagship software, we've been growing 26.4%. We added 0.8 million of new customer error. We had huge upsell and there's two drivers or three drivers of this upsell. One is the fact that our customers are buying more clinics and migrating them over to ProVet. is we are getting more and more customers that are signing up to RAI Scribes and also our ProVit Pay solution. Churn is incredibly low, below 1%, which shows that we've got a product which is incredibly mission critical and sticky and has been improving quality. And we've also migrated around 400,000 clinics, mostly from Salomonas and some from VetVision in Norway. And this one clinic in Germany from Vetra. Now, let's look at the breakdown of the growth. The story here is that at the end of 2025, which is the penultimate boat, as you see, where we ended at 26.3, you can see the UK has been growing nicely. The US has been growing, but less than the UK. We've had in Southern Europe some significant growth as customers are implementing and buying new clinics. And in the DACH region, we're seeing some growth on Vetra, but we expect a lot of growth to come once we launch ProVet formally in the market and exit the pilot stage. The Nordics, the customer count has increased slightly, and so has the average revenue per customer. You can see that in the growth that we've been seeing. As you can see from here, there's a huge opportunity to localize ProVet in the DACH region. in addition to the US and UK. Now, breaking down the composition of our revenue, right? Enterprise now makes up 12.7. Independent Linux make up 12.1. And we've been growing the payments and partner revenue that we've been making to 3.7. So the important thing to mention here as well is that despite our focus on enterprise, and you can see that there's been a huge growth driver for us over the last few years, our top three customers make up less than 20% of our AR. So we don't have a high customer concentration risk either. Now on the therapy side, we've got three missions on therapy team. First, same as ProVet, to build a leading AI PMS. In Q1, we've achieved a total of almost 90,000 hours of transcription and 175 patient summaries generated. Summaries are patient history summaries, to be precise. We ship new features, such as custom templates, which allow therapists to be able to create their own templates through which the scribe creates notes from. And we've also had AI treatment series creation plans, which enables you to create a series of appointments and assign a content to those appointments automatically. We've also unlocked new specialties for AI Scribe in psychiatry and speech therapy, not just psychologists and physiotherapists. And we will continue to expand the new specialties that we offer. Second, the Aspet migration. We had 815 users which had migrated at the end of Q1 2025. And we built now best-in-class Norwegian financial workflows. So we can differentiate with our integrations with Helfo, which is the Norwegian government integration for reimbursements, but also with the insurance companies. Third, on the growth side, we were able to sign just under 800,000 euros in new AR in Q1 2025.6 from new business and also AI upsell. Significantly, this is 41% higher than what we signed in Q1 2025. So you can see the investments our product are creating net new opportunities for us. Year over year, Therapy AR has grown 11.2%. The net retention has been around 106%, and the gross churn has reduced to 4.4%. This net retention has been boosted quite a bit by our AI Scribe initial adoptions. If we look just at our cloud platforms, we've grown 21.5%, and our churn rate is 5.3%. We've also migrated 600,000 in the last 12 months of AR. Now, as you can see, the share of cloud revenue continues to increase as we migrate, but also grow the cloud revenue. Now, I want to go into the AI strategy because it applies to both products. So one is that we want to build the world-leading, not just a good for the Nordics AI platform, for both veterinary and therapy. And we've got a huge amount of defensibility relative to new players as we already have very robust security, compliance, and auditability built in our PMS. We already have... a very large depth of important integrations that are not only difficult to develop, even with AI, but also difficult to negotiate, maintain. The third is the workflow density, in that when you vibe code a practice management software, and I do every time there's a release to try to see where the limit is, what you can see is that it doesn't handle the edge cases. That is the important thing. There's continuously edge cases through this very broad app that we've got. And our job is to continue to solve these edge cases one after the next. And that's what makes it complex. The third is when we thought about AI and the tools that we're building, we saw that there will be fewer users in clinics versus in the past. So this user seat erosion would be an issue. However, there are still practitioner doing the work and doing it more efficiently. So we've shifted from user pricing to practitioner pricing for independence. And for corporates, we still have either practitioner pricing or percentage of revenue pricing. So as they get more efficient and unlock more growth, we can take advantage of that. And the fourth, and this is the very important one is that We are rebuilding and we have built now a world-class product and AI development team, and you can see the rapid progress that we make in our roadmap. Let me deep dive in some of the progress that we've made. So first is, this is the most common problem that we see, is the notes problem. Normally the practitioner finishes their last consultation at the end of the day around 6 p.m., then they write the notes for 40 minutes. before they can go home, or they write it the next day, or on the weekend, or even the next week sometimes, every day. That's a big problem to solve, in that they want to be present with the patient in the room, and then only they want to do the notes. So what we've done on the therapy side, as you can see, we've got an AI sprite that automatically generates the client overview, but also the notes from the clients. And the notes are very thorough. It's not just, here's what was said. It also creates a plan for you. On the vet side, we've got the notes so you can record your conversation. You can see how that looks here. And just like every other scribe in the market, we do record the notes, but we also do more than just record the notes. As you can see here at the bottom, well, at the top, there's a button called AI actions. So you can see the full transcription here. You can add these clinical notes, but you can also see the action that's been generated. And you can see that we've added, for example, a diagnosis. We've added medications automatically. And that is automatically being built. And you can have all of these. This AI assistance enables you to not only provide clinical notes, but all the other information required. So voice-first consultation fully. It's very exciting for our customers. In addition, we also have the AI discharge instructions, which is a lot of the time there's a gap, especially on the veterinary side, with what happened in the room and what the client needs to know. And that takes a long time to create an email to the customer about what happened and so on. And so with AI discharge notes, we... enable that to be created automatically. We see very few edits and the number of edits are going down and down the more we learn about which edits are being made. The second problem is the visibility. So I'll give you an example. So currently, if you wanna know about the number of health plan subscriptions that we have in the clinic, right? You will normally ask your operations manager to export the revenue data, paste into Excel, create reports, and maybe in the next couple of days, they'll share it with you. But imagine you've got follow-up questions that can't be answered by report. You have to go through that whole process again. So what we've built is something we call AskProVet, where you can see, Here, the first one is AI patient history, where you can see the full patient history summary and ask questions to it. The second is the beginning of what we call the agentic PMS, where you've got some questions that are pre-asked, but you can ask your own questions about the health plans. For example, how many of our current clients are on health plans? And it's not a perfect question, but it understands the question, and you can see the answer, 658. But it also gives you additional data on new enrollment this month, cancellation this month. Here's how much MRR this generates, right? And it suggests follow-up questions like, what is our MRR? And it shows you the trend of MRR over time. And the graph formats, you didn't have to say it. It just understood the best way to display this data. And we've taught this, asked ProVet to be able to figure out what's the best way to show each data, different data point that they might ask. The great thing is that we can learn as well about all the questions they're asking, and that can help us in guiding additional use cases And this is the result. As we've been continuously improving product, we have more and more paying users of AI. We've got around 1,600, and that number is continuously growing. We expect it to continue to grow over the next following quarters. And this is only just a small, small part of our current user base. So over time, we can see that growing to 90% plus of our user base using it. Now I'll hand over to Alex for the financial results.

Thanks, Charles. And hello, everyone. So starting with reported revenue, in Q1 2026, we did 13.5 million of revenue, which is a 7.9 increase versus the same quarter last year. Our underlying recurring revenue growth was 11.4%, going from 11.1 million in Q1 2025 to 12.3 million in Q1 2026. It's worth highlighting that this is an increase in the growth rate compared to Q4 2025 year-on-year, and this is because we had a strong quarter of growth in Q1 2026. ARR and our core vet plus therapy businesses grew by 6.6% in Q1 alone, which is a 26.4% annualized growth. Other one-off revenues, slightly reduced versus Q1 last year. As a result, Q1 2026 share of recurring revenue is 91.4% up from 88.6% in Q1 2025. Onto the next slide. Before jumping straight into EBITDA minus CAPEX, I thought it would be useful to provide a bit of context about how we're thinking about profitability. As we've made clear in past announcements and presentations, In 2025, we took the opportunity to step up investments in product development, notably for AI and DAC localization. The graph here shows total headcount by quarter, where in 2025, we grew the team by 13% from 411 people to 464 people. Today, we feel the team is in good shape, including great product and engineering leadership in both business units. So in 2026, we will not be increasing the team size in the same way. In fact, in Q1, we reduced headcount by 2%. We will also be reducing growth and costs more generally. This will allow revenue increases during 2026 to translate into improved EBITDA minus capex as the year progresses. So looking at the quarterly adjusted EBITDA minus capex, as you can see, our quarterly adjusted EBITDA minus capex in Q1, we reduced by 0.6 million year on year to negative 1.5 million. But as explained on the previous slide, the reduction year on year is due to the increased investments made in 2025, particularly in product development. And as the year progresses, we will allow growth in revenues to translate into improving EBITDA minus CapEx in 2026. Looking now at Q1, 2026 cash flow. In Q1, we had a net cash inflow of 1.5 million, which is 1.3 million lower than 2024. Q1 is typically a good month for cash flow as veteran clients pay annually upfront. And this is why we have a positive adjusted cash flow. The variance versus Q1 last year is primarily driven by the 0.6 million difference in adjusted net result, the one-off collection of a backlog of invoices that we had in Q1 of last year, which totaled 1.1 million, and then 0.4 million of other favorable working capital changes. Finally, looking at the March 2026 balance sheet, cash as at March is at 15 million. There were no changes to Goodwill in Q1 except for amortization and FX changes. There was no external financing taken, no material equity transactions in Q1. There were some movements in treasury shares. So in Q1, we granted our annual performance share plan bonuses to employees. And this was a total of approximately 74,000 shares. NordHealth's equity balance remains healthy at $58.3 million, and the company continues to have no interest-bearing debt. Full detailed financial statements for Q1 2026, including the P&L balance sheet and cash flow, are all in the appendices. Now onto guidance. So there are no changes to the 2026 guidance we provided at the last call. For full year 2026, we are reiterating a full year guidance for recurring revenue of between 50 and 53 million, excluding acquisitions. Our Q1 actual was 12.3 million, which annualizes 49.2 million, so on track. Similarly, for adjusted EBITDA minus CAPEX, we are reiterating our full year guidance of between negative 4 million and negative 1 million. Our Q1 actual was negative 1.5 million, but as previously mentioned, we'll be improving EBITDA minus CAPEX as the year progresses. So here as well, we are on track. I'd also like to highlight that since the last call on the 10th of April, we published our annual report for 2025. The financial results for 2025 were audited by KPMG and the report provides a more detailed view of our financials. It's available to download on the NordHealth website. Finally, looking at our financial calendar, the Q2 2026 results presentation and the H1 2026 interim report will be on the 18th of August, 2026. We'll be presenting these as part of a larger capital markets day, which we'll provide more details about in due course. And as always, the full financial calendar is available on the website. I'll now turn back over to Charles for Q&A.

Thanks, Alex. So for Q&A, if people have questions, please feel free to add the questions in the chat. Let's see if anyone has questions. Hey, no questions seem to coming away to talk more. Let's hope there's one question from Martin. Can you please publish gross margins for the veterinary and therapy businesses or any other indicators that showcase the inherent profitability of the underlying businesses? Alex.