Nightingale and Boston Heart move from pilot to broader collaboration

Translation: Original published in Finnish on 10/30/2024 at 10:57 am EET.

According to the stock exchange release, the pilot announced by Nightingale and Boston Heart in June has been successfully completed. The companies have now signed an agreement to start providing Nightingale's blood test-based Health Check to Boston Heart's customers. We see the extension of the collaboration as a clear step forward for Nightingale in entering the US market, and we see it as providing the company with additional references to support its expansion in the market.

According to the stock exchange release, the service will be sold separately and will not, for example, be directly integrated into high-volume standard processes, as is the case with Terveystalo's occupational health. As a result, the accumulation of volume and revenue is likely to be slower initially, and the level of scale that can be achieved is difficult to predict, even in the longer term. As such, the news has no direct impact on our view or forecasts that already expect strong revenue growth.

Market is still clearly opening up given the deal, but revenue growth should be patiently awaited

According to the press release, Boston Heart is an innovative heart health focused company that provides a leading, advanced diagnostics platform to help identify and reduce the risk of cardiovascular disease, diabetes, and other chronic conditions which impose large costs on the US healthcare system. Through the partnership, the parties will bring Nightingale Health's solutions to the US market, with Boston Heart acting as a vendor and distributor of the service to healthcare providers.

The collaboration began with a pilot offering the Health Check service to one of Boston Heart's customers. We commented on the launch of the pilot at the end of June here. Following the successful completion of the pilot over the summer, the parties have now agreed to an ongoing service model that will make Nightingale Health's Health Check service widely available to Boston Heart customers. Boston Heart acts as a vendor and distributor of the service to healthcare providers. The impact of the ongoing service agreement on Nightingale Health's revenue will depend on the number of orders, which is not specified in the agreement.

Nightingale has signed a number of interesting partnerships over the past year and the market seems to be opening up for the company. We discussed the status of the company's growth strategy in more detail in our latest report.  A key next step in the company's investment story is the growth of its customer base to a large scale. So far, this has been achieved at least for the sample volumes analyzed at Terveystalo occupational health, where the Nightingale Health Check has been integrated directly into standard high-volume processes. Similar success has not yet been achieved in collaborative models where the Nightingale Health Check has been sold as a stand-alone service. As we understand it, in the Boston Heart partnership, the model hinges on the adoption of the Health Check by the healthcare providers who purchase the service. In addition, volumes depend on the number of orders, so expectations should remain moderate for the time being. In any case, we see an opportunity for the collaboration to evolve, at least over time, toward high-volume standard use of the Nightingale Health Check by healthcare providers. In addition, winning a major healthcare company as an ongoing customer will further facilitate Nightingale's sales efforts in the US and other markets. Nightingale is already forecast to deliver strong revenue growth (2024-2034e revenue CAGR of 34%), so the news does not put material upward pressure on our forecasts or our view of the stock at this stage.