Nightingale H1’FY25 preview: Maturing the next wave of pilots

Translation: Original published in Finnish on 3/45/2025 at 7:48 am EET.

Nightingale Health will report its fiscal year 2025 H1 figures (7/1/2024-12/31/2024) tomorrow, Thursday, at approximately 9 am (EET) and will hold a press conference in English at 2 pm (EET). Driven by the Terveystalo partnership, which was successfully launched at the beginning of 2024, revenue is on an upward trend compared to the previous year. As other collaborations, especially those won in 2024, are still maturing, we expect a more moderate increase in revenue compared to the first half of 2024. In the report, we are particularly interested in information on the progress of collaborations and the company's regulatory progress, particularly in the US.

Terveystalo collaboration drives growth, other partnerships are maturing

We forecast Nightingale’s H1 (7-12/2024) revenue to have grown by a strong 70% from a low starting level to 2.91 MEUR (H1’FY24, 7-12/2023: 1.72 MEUR; H2’FY24, 1-6/2024: 2.64 MEUR). The company's revenue base is formed by research customers, whose project delivery timing can affect quarterly revenue. However, growth was driven by a collaboration launched in January 2024 with the occupational health department of Terveystalo, where Nightingale blood analysis was introduced on a large scale. In addition, Nightingale has a number of growth initiatives, having signed several collaborative agreements with international healthcare providers. However, these were not in the volume phase during the period, so their impact on reported revenue is likely to have been marginal.

Profitability remains in the red, but cash runway is long

Nightingale’s H1 profitability has remained clearly negative on all lines, and in our forecasts, EBITDA is -5.0 MEUR and adjusted EBIT -9.2 MEUR. Nightingale uses its cash assets to build up its growth and profitability is in line with this strategy. As a whole, we expect net cash adjusted for lease liabilities to be 58.9 MEUR at the end of December (06/30/24: 65.2 MEUR) and thus cash consumption in the second half of 2024 to be 6.3 MEUR. The company's financial position remains strong, with sufficient cash to last until 2029 at the current burn rate. Nightingale's revenue is high margin (gross margin estimated at 60-90% of revenue), so our current projections are for scaling revenue growth to become cash flow positive before that.

Revenue growth curve will change radically if collaborations move from pilots to working volume phases

Nightingale aims to integrate its disease risk detection service with the blood sample flows of existing healthcare providers. If successful, the company's revenue would grow strongly and profitability would become positive over time (target: positive EBITDA in the medium term). In our view, the visibility of the company's revenue growth is also the main valuation driver for the stock on a 12-month horizon.

The company has taken clear steps in this direction: its technology is already widely used in Terveystalo’s occupational health (01/2024-), has been implemented in Pathology Asia in Singapore (Laboratory opened on December 2, 2024, first customers ~Q1/2025), pilots and research projects that precede possible larger-scale use have been started in the US with several prominent players (Mass General Brigham, Kaiser Permanente, Weill Cornell Medicine, Boston Heart, 23AndMe and Phenome Health), and a pilot has been started in the Middle East with Enigma Health. In the United States, the Boston heart pilot has already entered the commercial phase.

In this report, we are particularly interested in the company’s comments on the progress of these collaborations. We are also seeking more information on the timing of the company's US regulatory approvals and the impact on the advancement of local projects. We understand that the company is already able to serve customers in the US by sending samples to its laboratories in either Europe or Singapore, although the CLEP application for its local laboratory is still pending. However, if the application is delayed, the arrangement could limit the growth in the volume of local cooperation projects and at the very least put pressure on margins.