Nightingale 1-6'2025: Eyeing the next commercial breakthrough

Translation: Original published in Finnish on 09/19/2025 at 08:34 am EEST

Source: Inderes

Nightingale’s revenue decreased slightly in the beginning of the year, while investments required for growth weighed on the figures. In light of the earnings release, the company's high-potential international healthcare partnerships are progressing, even though the emergence of a commercial breakthrough is taking longer than we anticipated. This maintains elevated estimate risks and postpones stronger positive drivers. However, the company's research segment has emerged as a near-term revenue growth driver, providing additional time to build stronger growth. With the estimate revisions reflecting this overall picture, we revise our target price to EUR 2.5 (was EUR 1.60) and reiterate our Reduce recommendation.

The beginning of the year was commercially slow, but investments were made in preparation for future growth

Nightingale’ revenue in fiscal H2'25 (1-6/2025) decreased by 10% to 2.4 MEUR (Inderes: 2.7 MEUR, 1-6/2024: 2.6 MEUR), due to what we estimate to be a softer period for research revenue, especially in the US. On the other hand, healthcare partnerships (esp. Pathology Asia, Boston Heart) do not seem to bring strong growth in the near future. The company made growth investments during the period, which pushed EBIT deeper into the red to -10.3 MEUR (Inderes: -9.5 MEUR, 1-6/2024: 9.3 MEUR). Cash burn (approx. 8 MEUR/6 months) temporarily accelerated due to this and one-off investments in the New York laboratory, but the net cash position (IFRS-16 adjusted) was a solid 51 MEUR at the end of the period.

Convincing growth preparations, but the pace is uncertain

Currently, Nightingale's short-term revenue relies on research customers, where it has strengthened its position in light of the large research projects it has secured (Aalborg University 2.4 MEUR, Moli-Sani 0.7 MEUR). However, the company's strategy focuses on integrating its blood analysis service, which identifies disease risks, into existing healthcare value chains. If successful, Nightingale's revenue would multiply, which would also turn profitability positive (target: positive EBITDA in the medium term). The company is advancing in this direction through healthcare partnerships (particularly routine use in Terveystalo's occupational health, diagnostic services in Singapore via Pathology Asia, and in the US via Boston Heart, and the South Savo wellbeing services county pilot) and several pilot or research projects. In light of the company's strong sales pipeline, new partnerships can be expected, but their significant commercial ramp-up will, based on current information, take at least a few years, which pushes our growth expectations slightly further into the future.

Due to the strength of the research segment and the slow outlook for the healthcare segment, we revised our revenue and EBIT estimates by +2–5% and -2–+4% for the coming years. The company's targeted revenue growth of >50% for the 2026 financial year is, in our view, very realistic with the support of research customers, and we expect 59% growth for the period. Further out, the outlook is blurry. We believe that with current information, our estimates rely on a realistic but very high-risk scenario of Nightingale’s business growth (revenue CAGR 41% in 2025-2035e). This requires new healthcare partnerships and existing ones to gradually turn to significantly stronger growth.

We remain on the sidelines given the current valuation

Nightingale’s fundamental-based valuation is very challenging, as possible scenarios vary between destruction and multiplication of invested capital. With current data, our fair value estimate range for the share is wide, EUR 0.9-6.3 (was EUR 0.8-7.). Investors must therefore believe in the company's global commercial breakthrough, take a long-term view of the stock, and accept the risk of capital loss. We believe the company’s track record of customer wins, but still lacking signs of a commercial breakthrough in key partnerships, warrants a valuation in the lower half of the range. Considering this, we feel the share's risk/reward at the current price is not attractive enough for a one-year horizon. On the other hand, we think that the company should be approached with at least a multi-year investment horizon.