Nordhealth As · OSL:NORDH
Nordhealth As — Investor Day (November 2023)
62 slides from Nordhealth As's investor day presentation, Nov 14, 2023
Slide 1: Nordhealth
(X] nordhealth
Slide 2: Capital Markets Day
Capital Markets Day Building the cloud operating system for veterinary and therapy clinics 14 November 2023
Slide 3: Today’s presenters
Today’s presenters Mari Orttenvuori Charles MacBain Valter Pasanen CFO CEO BU Veterinary GM Nordhealth 3
Slide 4: Agenda
Agenda 01 Company Overview 02 Performance Metrics 03 3 year forecast 04 Veterinary 05 Therapy 06 Q3/2023 Performance 07 Financial Update 08 Q&A Nordhealth 4
Slide 5: Company Overview
01 Company Overview Charles MacBain, CEO Nordhealth 5
Slide 6: Our mission
🚀 Our mission Build software that empowers veterinary and therapy professionals to save time so they can focus on delivering great care and growing their business Nordhealth 6
Slide 7: Nordic healthcare SaaS gazelle expanding internationally
Nordic healthcare SaaS gazelle expanding internationally Nordhealth Q3 2023 ARR by country ● #1 vet practice management software (PMS) in Europe, targeting US & UK expansion ● #1 therapy PMS in Nordics Key numbers ● €36.2M signed ARR at the end of Q3 2023 ● €4M additional enterprise ARR signed subje
Slide 8: Strong organic growth accelerated by acquisition and migration strategy
Strong organic growth accelerated by acquisition and migration strategy 9 acquisitions completed since 2005, 7 in last 5 years Migrated Migrated Migrated In Progress In Progress 2005 2009 2019 2019 2019 Acquired Praktiikka Vetserve In Progress In Progress In Progress Flagship 2021…
Slide 9: Very low churn and efficient CAC
Very low churn and efficient CAC 64% 2.5% 113% 31 ARR CAGR gross churn net retention rate LTV/CAC 2019 - Q3 2023 2019 - Q3 2023 2019 - Q3 2023 2021-Q3 2023 Nordhealth 9
Slide 10: We began by building world-class PMS
We began by building world-class PMS … Veterinary Cloud PMS Therapy Cloud PMS Provet Cloud EasyPractice Provet Cloud Nordhealth
Slide 11: Expanded product offering to solve additional customer pain points
… and have now expanded our product offering to solve additional customer pain points Practice Management Appointment Calendar & Electronic Health Inventory management Invoicing Software Online Booking Records Payments Terminal Payments Online payments Recurring payments Pay by email or SMS link Tel
Slide 12: Mission critical software in growing, consolidating markets migrating to the cloud
Mission critical softwares in growing, consolidating markets migrating to the cloud Why veterinary and therapy end-markets? Why practice management software? Trend towards cloud Workflow gravity 70-80% of clinics use on on-premise or hosted legacy solutions will be PMS is core to our customers’ work
Slide 13: Performance Metrics
02 Performance Metrics Charles MacBain, CEO Nordhealth 13
Slide 14: Strong track record of organic and acquisition-led growth
Strong track record of organic and acquisition-led growth Signed ARR ~€4M additional ARR Organic ARR from CVS and Vets for M&A Pets post-pilot rollout not included in Signed YoY organic growth 36.2 ARR 31.8 % R : 64 4.1 AG RC AR 24.2 9.3 11.9 9.6 27.7 4.6 3.4 14.9 45% 4.9 24% 23% 14% ARR Q4 2018 ARR
Slide 15: Mission critical nature seen in our SaaS metrics
Mission critical nature of our products and expanding product range can be seen in our Saas metrics Churn rate Net retention rate Churn rate Average churn rate Net Retention rate Average Net Retention rate 0% 125% -1% 120% 113.4% -2.5% -2% 115% -3% 110% -4% 105% -5% 100% 2019 2020 2021 2022 LTM 2019
Slide 16: We were EBITDA positive in Q3
We were EBITDA positive in Q3 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 0.7 • 18% Revenue growth of EUR 4.1M in total revenue (YoY Q3/23) together with reorganisation activities initiated in Q4/22 continue to have positive impact on profitability development -0.2 • Revenue growth on a constant curre
Slide 17: Tier 1 customers and a highly diversified customer base
Tier 1 customers and a highly diversified customer base Nordhealth serves tier 1 customers… …with limited customer concentration risk Top 3 ~ 18% Top 10 ~ 22% Proven ability to attract the biggest veterinary chains with limited churn after migrating to sticky Nordhealth platforms Nordhealth
Slide 18: 3 year Forecast
03 3 year Forecast Charles MacBain, CEO Nordhealth 18
Slide 19: Targeting 20% organic CAGR excl. M&A over next 3 years
Targeting 20% organic CAGR excl. M&A over next 3 years 1) New PMS add-ons Organic new sales to new customers 2) New clinics / users at existing customers X% 20% + M&A 3) Price increases 4) Migrations 10% 20% 13-14% ~3-4% ~10% Net Upsell Churn Net retention New customers Organic growth M&A Total grow
Slide 20: Targeting 20% EBITDA - CAPEX margins in 2027
Targeting 20% EBITDA - CAPEX margins in 2027 Improvements in professional services profitability and CAC efficiency G&A will not grow Development as % of at the same revenue is currently speed as high due to 20% Reduced software recurring revenue supporting multiple COGS microsoft and growth product
Slide 21: Veterinary
04 Veterinary Valter Pasanen, BU GM Nordhealth 21
Slide 22: Riding the wave of the fast growing veterinary market
Riding the wave of the fast growing veterinary market $120B 7.5% $850M 8.2% Global Veterinary Global Veterinary Service Global Veterinary Global Veterinary Service Market Size Market Growth Software Market Size Software Market 2022 2022 2022 Growth 2022 https://www.grandviewresearch.com/industry-ana
Slide 23: Veterinary 3 year Strategy
Veterinary 3 year Strategy Provet Cloud stands out as the ideal choice for enterprise-level 01 Enterprise Partners clients, due to its highly modular design, robust Open API, and extensive experience in managing enterprise-scale change. Our existing expansion markets (US, UK, Italy, Spain, and DACH)
Slide 24: Nordic champion expanding internationally
Nordic champion expanding internationally Country Clinics Market Share Competitors Nordics 1.665 80% UK* 1.172 25% DACH 1.626 12% US 165 1% Italy 96 11% Spain 320 8% RoW 230 1% *Market share based on signed user amounts (incl. Enterprise client rollout) Nordhealth 24
Slide 25: Strong track record of growth, accelerating in 2023
Strong track record of growth, accelerating in 2023 Veterinary Signed ARR Organic ARR M&A YoY organic growth 19.7 :6 7% 15.8 ● Organic growth accelerated to AGR 32.3% LTM Q3 2023 AR RC 1.7 ● 24% average organic growth 11.8 from Q4/2018 to Q4/2022 0.9 ● Acquisitions boosted growth 8.6 from 24% to 67%
Slide 26: Churn less than 2% and net retention above 115%
Churn less than 2% and net retention above 115% over the last 5 years Churn rate Net retention rate Churn rate Average churn rate Net Retention rate Average Net Retention rate 125% 115.5% 120% 0% 115% -1% -1.9% 110% -2% 105% -3% 100% -4% 2019 2020 2021 2022 LTM 2023 2019 2020 2021 2022 LTM 2023 ● Av
Slide 27: Enterprise customers outpacing average market ARR growth
Enterprise customers outpacing average market ARR growth Veterinary Enterprise A Veterinary Enterprise B Veterinary Enterprise C 22% GR % CA 8% 106 CAG R2 GR 868 184 181 CA 212 200 127 504 100 477 100 94 100 Q3/2020 Q3/2021 Q3/2022 Q3/2023 Q3/2020 Q3/2021 Q3/2022 Q3/2023 Q3/2020 Q3/2021 Q3/2022 Q3/2
Slide 28: Fifth consecutive quarter of improved profitability
Fifth consecutive quarter of improved profitability Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 0.6 • Increased organic growth rate combined with higher efficiency in CAC is yielding continuous improvement in profitability for 5 quarters in a row -0.2 • Revenue growth on a constant currency basis stoo
Slide 29: Therapy
05 Therapy Charles MacBain, CEO Nordhealth 29
Slide 30: Targeting large, fast-growing markets
Targeting large, fast-growing markets $1.09B 10.1% Global Physical Therapy Global Physical Therapy Software Software Market Market Growth 2021 2022-2030 $4.56B 17.4% Global Behavioral and Mental Global Behavioral and Mental Health Health Software Market Software Market Growth 2021-2030 2021 https://
Slide 31: Therapy 3 year Strategy
Therapy 3 year Strategy 01 Migrating Aspit and Diarium customers to EasyPractice will result Migration in a €4M+ cost saving. Timeline for migration is 3-4 years. 70%+ of Danish therapy clinics are using legacy on premise or hosted 02 Danish Expansion software, EasyPractice, as the most advanced clo
Slide 32: Building a Nordic Champion
Building a Nordic Champion Country Users Market Competitors Share* Finland 9,566 80% Minduu Norway 7,020 85% Denmark 8,418 30% Nordhealth 32
Slide 33: Rapid historical growth tempered by migrations
Rapid historical growth tempered in last 2 year by migrations Therapy Signed ARR Organic ARR M&A 16.5 YoY organic growth 16.0 : 58% AGR 2.4 ● Organic growth accelerated to A RR C 12% LTM Q3 2023 vs. 10% 12.4 ● 28% average organic growth from Q4/2018 to Q4/2022 ● Acquisitions boosted growth from 28%
Slide 34: Churn and net retention impacted by self-service model and one-off churn
Churn and net retention impacted by self-service model and one-off churn event in 2023 Churn rate Net retention rate Churn rate Average churn rate Net Retention rate Average Net Retention rate 140% 0% 135% -1% 130% -2% -3.1% 125% -3% 120% -4% 112.5% 115% -5% 110% -6% 105% -7% 100% 2019 2020 2021 202
Slide 35: Strong profitability in Therapy
Strong profitability in Therapy 1.8 1.5 1.5 • Weak NOK and SEK impacting negatively reported revenue growth at 6% YoY Q3/23 1.3 but reorganisation measures initiated in 1.2 Q4/22 have improved profitability 1.1 1.1 • Revenue growth on a constant currency 0.9 basis YoY was 14% vs 6% as reported 0.8 0
Slide 36: Q3/2023 Performance
06 Q3/2023 Performance Charles MacBain, CEO Nordhealth 36
Slide 37: Q3 2023 KPIs
Q3 2023 KPIs 21.9% 112% 4.6% 1.8 CAC / new ARR ** Organic ARR growth net retention rate gross churn LTM Q3 2023 LTM Q3 2023 LTM Q3 2023 LTM Q3 2023 1.3% QoQ EUR 34.6M EUR 36.2M EUR 0.43 ARR growth Implemented ARR Signed ARR ARR per share * Q2 2023 vs Q3 2023 Q3 2023 Annualised Q3 2023 Q3 2023 Annual
Slide 38: 1.3% QoQ ARR Growth in Q3 2023
1.3% QoQ ARR Growth in Q3 2023 +1.3% • ARR grew 1.3% 1.6 36.2 • Expansion in Q3/2023 primarily 0.3 -0.4 34.6 driven by Provet Cloud new 0.6 34.1 add-on sales; downgrade in Therapy products • 50% of ARR on Cloud products in Q3/23 vs. 49% in Q2/23 • Provet Cloud signed not implemented ARR does not inc
Slide 39: 22% YoY implemented ARR growth
22% YoY implemented ARR growth 21.9% • ARR grew 21.9% 1.6 36.2 • New customer acquisition 4.7 -1.3 34.6 accounted for 45% of the growth • Strong expansion in Q3/2023 2.8 primarily driven by Provet Cloud user growth and new add-on 28.4 sales • 50% of ARR on Cloud products in Q3/23 vs. 43% in Q3/22 •
Slide 40: Q3/2023 Veterinary Update
Q3/2023 Veterinary Update Charles MacBain, CEO Nordhealth 40
Slide 41: 5% QoQ implemented ARR growth
5% QoQ implemented ARR growth +5.3% 1.6 19.7 • Implemented ARR growth in the third quarter of 2023 stood -0.1 18.1 at 5.3 % 0.7 0.4 • New customer acquisition 17.2 accounted for 39% of the growth • 56% of ARR on Cloud products in Q3/23 vs. 53% in Q2/23 Provet Cloud signed not implemented New Net cus
Slide 42: 32% YoY implemented ARR growth
32% YoY implemented ARR growth 19.7 +32.3% 1.6 • Implemented ARR growth at 17.2 3.5 -0.2 32.3% in LTM ending Q3/23 18.1 • Net retention rate 123.6%, 1.2 primarily driven by Provet Cloud user growth, new add-on sales 13.7 and price increases • Churn of 1.8% • New customer acquisition accounted for 27
Slide 43: Q3/2023 Therapy Update
Q3/2023 Therapy Update Charles MacBain, CEO Nordhealth 43
Slide 44: -2.7% QoQ ARR growth
-2.7% QoQ ARR growth -2.7% • Growth in the second quarter 2023 was -2.7% 0.3 -0.4 -0.3 • Churn rate high due to loss of 16.9 one enterprise customer which 16.5 will also impact future periods • Low net retention rate (including price increases) 96.0%, primarily driven by net downsell • 67% of new cu
Slide 45: 12% YoY Pro Forma ARR growth
12% YoY Pro Forma ARR growth +12.2% 1.3 -1.1 • ARR growth at 12.2% in LTM 16.5 1.6 ending Q3/23 • Net retention rate (including 14.7 price increases) 101.2% • Churn of 7.3% • New customer acquisition accounted for 90% of the growth • 65% of new customers came from Cloud products New Net customers up
Slide 46: Financial Update
07 Financial Update Mari Orttenvuori, CFO Nordhealth 46
Slide 47: Revenue growth driving profitability despite weak NOK and SEK
Revenue growth driving profitability, despite significant impact of weak NOK and SEK 10.0 90% 94% • Total reported revenues Q3/23 grew +10% 8.0 10% YoY from EUR 8.0M to EUR 8.8M • Share of recurring revenue increased 6.0 from 90% to 94% YoY 4.0 • Q3/23 adjusted EBITDA improved from EUR -1.3M in Q3/2
Slide 48: Recurring revenue growing at a faster rate than revenue
Recurring revenue growing at a faster rate than revenue +14% 8.5 10% 8% • Recurring revenues Q3/23 grew 14% 8.0 5% YoY from EUR 7.2M to EUR 8.3M 8.2 8.3 7.5 0% • Revenue impacted by weak NOK and 7.9 SEK; on a constant currency basis YoY 7.0 -5% growth in recurring revenue would have been 24% vs 14%
Slide 49: Strong financial position and free cash flow improving
Strong financial position and free cash flow improving Free cash flow Q3/22 - Q3/23 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 • Cash flow from operating activities has improved significantly from Q3/22 as a result of -2.9 -0.4 -0.8 -1.8 -0.4 higher revenues and cost cutting measures • Level of CAPEX i
Slide 50: Strong cash position and no debt
Strong cash position and no debt Balance sheet 30 September 2023 5.8 Assets 100 10.2 ● Cash balance remains strong at EUR 27.5 3.6 27.5M of cash and cash equivalents 80 ● Intangible assets primarily consist of 7.9 60 7.9 capitalised R&D expenses 12.2 Liabilities and equity 88.0 40 ● No interest bear
Slide 51: Financial calendar
Financial calendar Q4 2023 results presentation on 5 March 2024. Full year financial calendar can be found on company website.
Slide 52: Conclusion
Conclusion ● Growing end markets, consolidating and shifting to the cloud ● Grew ARR from €3.4M to 36.2M in last 5 years ● Recurring revenue 2023FY at the top of 15-20% guidance ● Targeting 20% growth in recurring revenues (constant currency) for next 3 years ● Targeting 20% in EBITDA - CAPEX margin
Slide 53: Q&A
08 Q&A Nordhealth 53
Slide 54: Key definitions
Key definitions Recurring revenue includes revenues from software subscriptions as well as revenues from of volume-based transactions (e.g., SMS messages) as well as rebates from third parties (e.g. payment solution providers). ARR is implemented ARR that is recurring revenue annualised by multiplyi
Slide 55: Appendix
(X) nordhealth Appendix ay
Slide 56: Profit & Loss statement
Profit & Loss statement Consolidated Income Statement Unaudited Unaudited Unaudited Unaudited Audited EUR in thousands Q3 2023 Q3 2022 YTD Q3 2023 YTD Q3 2022 FY 2022 Recurring revenue 8 270 7 238 24 359 20 834 28 216 Other revenue 568 789 2 337 1 757 2 833 Total revenue 8 838 8 027 26 696 22 591 31
Slide 57: Balance Sheet
Balance Sheet Consolidated Balance Sheet Unaudited Unaudited Audited EUR in thousands 30-Sep-23 30-Sep-22 31-Dec-22 Intangible assets 12 096 8 993 10 280 Deferred tax assets 546 43 585 Other capitalized long-term expenses 120 37 32 Goodwill 50 572 59 046 57 813 Machinery and Equipment 573 816 733 Ot
Slide 58: Cashflow
Cashflow Consolidated Cash Flow Statement Unaudited Unaudited Unaudited Unaudited Audited EUR in thousands Q3 2023 Q3 2022 YTD Q3 2023 YTD Q3 2022 FY 2022 Cash flow from operations Profit before income taxes (1 797) (3 375) (7 498) (9 743) (14 128) Taxes paid in the period 169 33 (31) (20) (153) Oth
Slide 59: KPIs by business segments
KPIs by business segments 🐶Veterinary Therapy Total Cloud Hosted Cloud Hosted Cloud Hosted All 2022-Q3 (€M) € 5.6 € 8.0 € 6.5 € 8.2 € 12.2 € 16.2 € 28.4 2023-Q3 (€M) € 10.1 € 8.0 € 7.4 € 9.2 € 17.4 € 17.2 € 34.6 Growth 78.6% -0.1% 12.7% 11.7% 43.3% 5.9% 21.9% Migration (€M) € 0.2 € -0.1 € 0.0 €…
Slide 60: Business Segments
Business Segments 🐶Veterinary Therapy Cloud Hosted Cloud Hosted Products Provet Cloud Provet Legacy (Finland) EasyPractice Aspit (Norway) Nordhealth Pay Sanimalis (Norway, Sweden) Diarium Vetserve (Norway) Nordhealth Connect Vetvision (Denmark) Navisec Flex Vetera (DACH) Share of recurring…
Slide 61: Organisation size ready for scale
Organisation size ready for scale At the end of Q3/23 total number of employees amounted to 381 (377 at the end of previous quarter) of which 128 (127) work in Therapy, 226 (222) in Veterinary and 27 (28) in HQ G&A. 404 392 400 378 381 377 332 257 Q4/2021 Q1/2022 Q2/2022 Q3/2022 Q4/2022 Q1/2023 Q2/2
Slide 62: Slide 62