Nightingale reported on its business target achievements for financial year 2022-2023

Translation: Original comment published in Finnish on 7/2/2023 at 10:12 pm.

Yesterday, Nightingale reported on the achievement of its business targets for the financial year that ended on June 30. The company only achieved one of the three targets, but it made cautiously encouraging comments on the progress of the other two targets.

The targets for the financial year 2022–2023 were:

• Win contract(s) in medical research with more than 175,000 blood samples (achieved)
• Win a significant commercial contract in the public healthcare sector (not achieved)
• Win B2B commercial contract(s) with more than 50,000 blood samples (not achieved)
  

The company reported it had achieved its goal of analyzing more than 175,000 blood samples with research institutes. The company commented that the demand for the service provided to scientific research institutes continued as strong and that it had signed significant new commercial contracts. However, so far, the revenue generated by this segment's customers have been relatively low and its significance for Nightingale’s long-term value creation is limited in our opinion.

The company failed to enter a significant commercial contract in the public healthcare sector. However, the company commented that negotiations on a commercial contract are progressing and expects to publish an update concerning this by the end of the calendar year 2023. Based on the release it is impossible to assess the progress of the negotiations or the timetable of a possible contract. However, such a contract could potentially be very valuable, so we follow the progress of the negotiations with interest.

Nightingale did not achieve its target of concluding B2B commercial contract(s) with more than 50,000 blood samples either. However, the company announced on June 10, 2023, that it had signed a letter of intent with Terveystalo, which we comment on here in more detail. Nightingale expects that the letter of intent will significantly increase the blood sample analysis volumes ordered by Terveystalo. Nightingale Health and Terveystalo's target is to announce the agreement of the expansion of the partnership in September 2023 at the latest. We believe that success with Terveystalo at a national level would give Nightingale a valuable reference and first step as the company pursues an international breakthrough in the longer term.

We feel the release did not contain any significant new information on Nightingale’s business so it does not affect our estimates or view of the share. Achieving our estimates, requires the company to sign several successful and significant commercial contracts every year, the biggest in terms of size we do not expect in the near future. Investors need to believe in a commercial breakthrough of the company's technology over the next decade and have a very long investment horizon.