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Nord Health reported a strong revenue increase for the fourth quarter of 2024, with a 19.5% year-over-year rise, reaching €12.1 million. The company also posted a full-year revenue of €45.7 million, marking a 24% increase compared to the previous year. This robust performance has contributed to an impressive 53.85% stock return over the past year, according to InvestingPro data. Despite the positive financial performance, Nord Health’s future guidance indicates a more conservative outlook for 2025, with expected recurring revenue growth between 12% and 17%.
Key Takeaways
- Nord Health’s Q4 2024 revenue increased by 19.5% year-over-year.
- Full-year revenue for 2024 reached €45.7 million, a 24% increase from 2023.
- The company aims for 12-17% organic recurring revenue growth in 2025.
- Focus areas include completing CVS rollout and platform migrations.
- Nord Health holds the top position in practice management software for enterprises in Europe.
Company Performance
Nord Health demonstrated robust performance in 2024, achieving significant revenue growth both in the fourth quarter and for the full year. The company’s recurring revenue increased by 21.5% to €40.2 million, reflecting strong demand for its services. With a current ratio of 3.06 and an overall Financial Health score rated as "GREAT" by InvestingPro, the company maintains strong liquidity position despite current unprofitability. Nord Health’s strategic focus on international expansion has paid dividends, with the veterinary segment seeing 46% of its annual recurring revenue (ARR) coming from outside the Nordics, compared to just 6% in 2021.
Financial Highlights
- Q4 2024 Revenue: €12.1 million (+19.5% YoY)
- Full Year 2024 Revenue: €45.7 million (+24% YoY)
- Recurring Revenue: €40.2 million (+21.5% YoY)
- Adjusted EBITDA minus CapEx: Improved from -€6.1 million in 2023 to -€1.2 million in 2024
- Cash Balance: €19.6 million
Outlook & Guidance
Nord Health projects a more moderate growth trajectory for 2025, with recurring revenue expected to grow organically by 12% to 17%. The company aims to achieve breakeven adjusted EBITDA minus CapEx, targeting a range of ±€2 million. With a market capitalization of €282.69 million and analyst consensus showing strong buy recommendations, the market appears optimistic about these initiatives. Key projects include the completion of the CVS rollout and the migration of Aspect customers to a unified platform. Additionally, Nord Health plans to launch AI-driven clinical note dictation in 2025. For deeper insights into Nord Health’s valuation and growth prospects, including exclusive financial metrics and expert analysis, check out the comprehensive Pro Research Report available on InvestingPro.
Executive Commentary
CEO Charles McBain highlighted Nord Health’s leadership position, stating, "We are now the number one provider of PMS to enterprise in Europe." He emphasized the company’s focus on platform migration and innovation as critical to sustaining growth. CFO Alex expressed enthusiasm for the company’s direction, noting, "I joined Nord Health because I think it’s an exciting time for practice management software."
Risks and Challenges
- The therapy business’s platform migration may slow growth.
- Uncertain enterprise implementation timelines could impact revenue.
- Increasing competition in the practice management software market.
- Economic uncertainties in key international markets.
- Potential challenges in executing international expansion strategies.
Q&A
During the earnings call, analysts probed the reasons behind the lower growth guidance for 2025. CEO Charles McBain explained that the focus on therapy migration and uncertain enterprise implementation timelines were key factors. Analysts also inquired about the potential of the U.S. market, with management discussing the promising but challenging nature of expanding in this region.
Nord Health’s strategic focus on innovation and international expansion positions it well in the competitive landscape, but the company faces challenges in executing its growth plans amid a cautious outlook for 2025.
Full transcript - Nordhealth As (NORDH) Q4 2024:
Charles McBain, CEO, Nord Health: Hi, everyone. Everyone goes is doing well. As per usual, this is the q four twenty twenty four presentation for Nordhoff. So as usual, I’d like to start with introductions. I’m Charles McBain.
I’m the CEO of Nordhoff. And I also wanted to introduce Alex. Alex, maybe go ahead. You’re muted.
Alex, CFO, Nord Health: Thanks, Charles. Hello, everyone. I’m pleased to be on this call with you today. I’m Alex. I’m the new CFO at Nord Health.
I’m British, and my background is in fast growing technology companies. Most recently, I was CFO of the Norwegian American creative services company Superside. And before that, I was CFO of the Belgian ebike maker, Cowboy. I joined Nord Health because I think it’s an exciting time for practice management software. There’s an increasing consolidation of practices, creating more large enterprise clients who require more sophisticated systems.
And I think Nord Health has the best team, the best product, and the best strategy to be the winner in this space, and deliver the best experience for healthcare professionals and ultimately for patients. So I very much look forward to working with Charles and the rest of the team to grow this business. And I’ll now hand it back over to Charles for the company update.
Charles McBain, CEO, Nord Health: Thanks, Alex. So as usual, we will start with the company updates, then we’ll dive into veterinary BU specific updates, then a therapy’s, BU specific updates, and then I’ll hand it over to Alex for financial updates. And as usual, we will do a Q and A at the end. So please hold off your questions at the end and you’ll be able to use the Q and A feature to be able to ask questions. So starting with the company update.
In q four twenty twenty four, year over year, we’ve been able to grow our ARR organically by over 20%. That growth was driven by a net retention rate of a 13%, a churn of 5.1, so still quite low churn. And also, we’ve been able to recruit net new customers with sales and marketing efficiency, as you can see from the CAC to new AR being 0.7. These numbers, coincide to get us to 19.6 LTV to CAC, over the last, twelve months ending, twenty twenty four q four. So at the end of q, q four, we had an implemented AR of 42,300,000.0 and assigned AR of 44.3.
The, what’s important to us is the value per share. Right? So that that the AR per share is currently, 53¢ per share. Looking back as we do normally. Right?
So, the in 2018, when I joined the company and we bought North Health, the recurring revenue was 3.4. Right? And today, it’s 44.3. Right? Which is a CAGR of 53%.
In that 44.3, we do not include, Vets or Pets and The US enterprise chain post rollout. So only once rollouts are and pilots are successful, do we actually include those in our signed ARR to be conservative. This is a different way of looking at the charts. This shows the change in ARR year over year. As you can see, every year we’ve actually been able to acquire more or to grow ARR by larger amounts.
Now if we look at how we grew in 2024, we started the year, oh, at 33.9. We were able to get 2,600,000.0 in new customers. Also, we were able to upsell our current customers by 6,200,000. Important to note here is that, this is primarily driven by the CVS implementation given that they were previously a new customer. But as they were current customer now, a lot of the growth and expansion from, as they rolled out new clinics was in the repsa.
And then the second drive primary driver of that is our corporate cloud ARPU and user growth. Our churn was 5.1% over the last twelve months. And important to note on this one is that churn always goes slightly, high when we’re migrating and we’re sunsetting individual products as the last few users actually does that decide not to migrate are now considered churn. We have, then we ended 2024 with 40.8 of AR. We’ve got 2,100,000 signed but not implemented, AR, which leads us to 42,900,000 of AR.
And then our other businesses, which, e trading business and also IT operations business, legacy businesses, ARR was 1,500,000.0. And that’s how we get to our 44.3. So moving on to the next slide, this is a a slide that we brought back in that I want to help investors understand, how we spend money and what our targets are. So when I look at the business, I’m always looking at the ROI that we have on our investments. That’s how I figure out how much to invest in different initiatives.
So let me walk through this slide with you. So as you can see, recurring revenue has grown from around 16.8 in 2021 to thirty seven point four. Right? And you can see the growth rates over there. Then, what we do is we actually look at the contribution margin.
So how much cash have we actually generated despite the fact that we’ve been increasing the revenue? And so, the contribution margin is the best proxy for pre growth investment cash flow. Right? So the way we get to contribution margin, so we take the recurring revenue, we remove the COGS, customer service, maintenance R and D. This is all the development cost to maintain the legacy products which we’ve acquired but have not yet migrated.
And we also take out G and A costs. So the only thing which is not included there, relative to EBITDA and its CapEx is investments in acquisitions, CAC, and r and d. And so that’s what we call total investments. And so how we make decisions is we look at how much we invest in those three areas, acquisitions, CAC, and r and d, relative to the change in contribution margin over the years. And it’s really hard to be able to look at this in a one year because a lot of times these acquisitions pay back over a multiyear period.
The reason why is when we buy a company, immediately when we buy them, we don’t migrate them over. It takes sometimes two, three years to be able to migrate those customers over and see the benefits of that migration in the contribution market. So as you can see, over the last three years, we’ve invested almost €65,000,000 in CAC, R and D, and acquisitions. But we’ve been able to have a change in contribution margin of almost €13,000,000 which is an ROI of 20%. That being said, right, a lot of the we can see the ROI trending up in 2024.
And we foresee that over time as we migrate more, we will see that ROI actually increase, relative to the, 20% average over the last three years. But that’s how we look at the business in the long term. The amount that we invest in either of those three growth investments relative to the change contribution margin. Now let’s deep dive into veterinary. Veterinary had a spectacular year, with almost 30% year over year, implemented ARR growth.
The, particular, reason why we grew was, one, we were we successfully recruited new customers for 1,300,000.0, but also we were successful with the rollout of CBS and other enterprise clients. In addition, our churn, although was 4.8, for overall for the year, if we exclude the impact, that I mentioned previously, which was the impact of Provet Win, Vetserve end of life, leading to, one time churn, the churn rate would have been 2.9%. So it’s a very, very, very low churn on ProBit Cloud, that we can see in other legacy products that were not end of life. Important to note is that in these numbers, Pets for Pets and The U. S.
Enterprise post pilot rollout AR are not included. Looking at profitability, we have been able to improve profitability year over year, where in 2022, the veterinary BU was losing, lost almost €3,000,000 in q four twenty twenty two as we were investing into the product very aggressively. We reduced that to negative 1,100,000.0 in 2023 and you can see that we have a 1,500,000.0 improvement in 2024, Q4 relative to the previous year. The drivers of that have been one, we’ve been able to grow recurring revenue. The second is that we’ve been more efficient with professional services.
So the profitability of those professional services have increased. But we’re still investing more and more in product development, which tappers this improvement. But we’ve also been more efficient in other costs as we’re seeing product developments yield more efficiency through automation. And there’s a small restructuring cost which are also submitted from here, which you can see are around a hundred k thousand euros in q four twenty twenty four and similar amounts in 2023. Now I wanted to break up the growth of veterinary a little bit more to show you what the drivers of growth are.
So in 2021, when we’re at the end of that year, which is the year of our IPO, we had roughly a 10,800,000 of implemented AR. The majority of that came from The Nordics. So 94% of our ARR came from The Nordics. The Nordics has been growing, fine over the last few years. However, the majority of our growth has been boosted by our success in international markets.
So in 2024, 46% of AR at the end of the year came from outside The Nordics, and that contrast to the 6% that we had in 2021. Interestingly, 32% of the AR came from what we call our growth markets, which is The UK, US, and Southern Europe. And you can see some quite nice figures here on our which display our success of organically conquering new markets. And you can see The UK is now at 4,300,000.0 of AR. Right?
The US, grew very well this in 2024 and is now at 1,500,000.0. And we are continuing to grow as well in Southern Europe, which is now at 1,800,000. Interesting as well is that this is implemented AR. However, we do have 2,100,000 signed AR that’s not yet implemented, and 90% of that actually comes from growth markets. So if we looked at signed AR, this would be even more acute.
The second is driver of growth in veterinary has been our success with enterprise. So ProBit Cloud is a very good solution for enterprise. And we are very well positioned to capture the enterprise opportunity as we call it, which is the opportunity to acquire or to provide the PMS for companies which are currently doing the consolidation in countries. If we look at in 2021, right, we were the number one provider of PMS enterprises in The Nordics. Now in 2024, we are now the number one provider of PMS to enterprise in Europe.
And we can see that our share or the enterprise share of total AR has grown from 21% in 2021 to 41%. So enterprise is a bigger and bigger part of our business. And we can also see, just like in the previous slide, international was driving our growth, that enterprise is also driving our growth, where 57% of ARR growth in the last three years has come from enterprise clients. But what’s also important to note in an enterprise strategy is the customer concentration In that despite our focus on enterprise, our customer concentration remains low and that our top three customers together compose less than 21% of our AR. Then our next project is also basically we, we grow organically, but we also grow via acquisition.
And so the key to making sure these acquisitions are successful is the migration. So, our cloud so, basically, percentage of ARR which was on cloud products, private clouds, was 37% in 2021. Now it’s 74%. In 2024, specifically, €1,000,000 of AR was migrated from legacy to private cloud. The churn rate for non cloud products was 9%, in 2024, which is a, good result relative to the previous, migrations.
We were successfully able to sunset that certain Provet win. And now we’re working on migrating Provetnet in Finland, Sanamalus in Norway, and VetDivision in Denmark. Now, on to the therapy updates. Therapy, the focus of therapy has been, to build a unified platform based on the easy practice software that we can migrate all Aspect customers to. Despite our focus on migration, we were still able to grow AR around 9.2%.
As you can see, our net retention rates, including price increases was one zero one. The reason why is that our churn, was 5.4, which was quite good churn for therapy given that we’ve got easy practice and we’re doing migration. And that was a lower churn than in 2023, which is 7.8%. So we can see our improvements in products are yielding less churn and easy practice. And also, we don’t have the one off effect of a physios, churn for the iron.
Looking at profitability, our adjusted therapy BU EBITDA and CAPAC remained positive in 2024. We slightly grew our profitability as and that the drivers of that was one recurring revenue growth, like 4,000,000, but that was offset by an increase in product development of 400,000.0. That product development increase is mostly targeted at additional recruitment of engineers and product managers and designers for the unified platform. We were also slightly more efficient with a decrease in other costs of around a hundred thousand, and we omitted around, 400,000 in restructuring costs in 2022, none in 2023, none in 2024. Similar to the country breakdown for veterinary, we can see the country breakdown for therapy where we have been able to grow in therapy by going international.
In the therapy case though, we have grown mostly through acquisitions in those markets. We have not gone into a net new market, organically with the exception of Finland and other markets. You can see here on the graph that, the 7.6 is mostly Aspen, which was acquired in 2021. We can see then the addition of Denmark and Other in 2022, the acquisition of Easy Practice. And as mentioned on my first slide from therapy, the current focus is migration.
And so that’s why we’ve been seeing slower growth in, 2024 and we should foresee slower growth as well in 2025 due to migration. Once migration is completed, we will resume work on add ons and potentially new country expansion as well. Now let’s take a look at the therapy migration. So in 2021, ’30 percent of our AR was on our cloud products, and today it’s 45. We have only begun the migration for, of Aspets with a hundred thousand of AR migrated in 2024.
But what’s very impressive is that churn for our non cloud products was actually quite low at 2.5%. So what we are the approach we’re taking is to make sure that we would keep that churn as low as possible by having a wonderful migration experience and to make sure there’s good feature overlap between the legacy platform and the new platform. In 2025, we’ll be focused on this migration. We’ll see significant strides towards migration being progress. Now I’ll hand it over to Alex for the financial update.
Alex, CFO, Nord Health: Hello again. So turning our attention to reported revenues. In q four twenty twenty four, we did 12,100,000 of revenue, which is a 19.5% increase versus the same quarter last year. It’s encouraging that the majority of that growth has been in our recurring revenues, which grew by 22.4% from 8,700,000.0 in q four twenty twenty three to ten point seven million in q four twenty twenty four. The largest items contributing to that growth in recurring revenue are the rollout of CVS in 2024 and the growth in, ARPU and new users in Provet Cloud.
The share of recurring revenues in q two q four twenty twenty four was 88.5% up from 86.4% in q four twenty twenty three. On the next slide, we see that through the full year 2024, reported revenues grew by 24% from 36,800,000 to 45,700,000.0. Recurring revenue grew to a healthy rate of 21.5% from 33,100,000.0 in 2023 to 40,200,000.0 in 2024. We also had a large amount of other revenue in 2024 totaling 5,500,000.0. This is primarily related to the implementation work for our large enterprise deals.
Therefore, that other revenue should ultimately translate to increased recurring revenue as those clients roll this out into their clinics. The share of recurring revenue in 2024 was 88% versus 89.8% in 2023. Looking now at quarterly adjusted EBITDA minus CapEx, we’ve seen significant improvements from Q4 twenty twenty three to Q4 twenty twenty four with it improving from minus 2,000,000 to minus 500,000. The primary improvement has been the increase in revenues by 2,000,000 versus Q4 last year. Of that, we reinvested $600,000 into increased product development spend.
As a reminder, adjusted EBITDA minus CapEx for us means that we remove any non recurring items from the standard EBITDA minus CapEx in Q4 twenty twenty four. This adjustment was $100,000 On to the next slide, we see a similar story for the full year adjusted EBITDA minus CapEx. This improved from minus $6,100,000 in 2023 to minus $1,200,000 in 2024. The biggest driver of this improvement is the annual increase in revenues of 8,800,000.0. We reinvested 2,700,000.0 of this into increased product development, and other costs including sales and marketing and G and A increased by 1,200,000.0.
Looking now at cash flow. In q four twenty twenty four, we had a cash outflow of 500,000.0, which is an improvement of 2,700,000.0 compared to q four twenty twenty three. The drivers of this improvement are an increase in profitability of $1,300,000 versus Q4 last year. We also had a good quarter for cash receivables collection in Q4 twenty twenty four, which meant our decrease in trade debtors was $800,000 better than it was in Q4 twenty twenty three. Other working capital changes amounted to a $600,000 improvement versus Q4 last year.
Looking at cash flow annually, the annual adjusted cash flow in 2024 was minus 2,600,000.0, which is an 8,000,000 improvement versus 2023. The main driver of this was the improvement in profitability by 4,200,000.0. The other big item was a one off working capital change in 2023. Here in 2023, we gave certain clients reduced upfront billing terms in exchange for larger than inflation price increases. This created a 3,800,000.0 adverse working capital impact in 2023, which impacted the net cash flow for that year.
Finally, looking at the December 2024 balance sheet, we see very few changes to the balance sheet in, September 2024. There were no changes in goodwill in q four except amortization. There were no material equity transactions in q four. There were no movements in treasury shares in q four, and we didn’t take any financing in q four. Cash as at December is 19,600,000.0 of which 15.5 is invested in money market funds.
The intangible assets are primarily capitalized r and d, and Nord Health’s equity balance is healthy at 73,600,000.0. Full detailed financial statements, including P and L balance sheet and cash flow are are in the appendices. And I’ll now turn it over to Charles to talk about 2025.
Charles McBain, CEO, Nord Health: Thank you very much. So, looking ahead to 2025, I want to highlight a few different initiatives that we have ongoing. On the veterinary side, when the primary one is to complete the CVS rollout, we have migrated the small animal first of the clinics and we’re now migrating the referral hospitals, then the equine hospitals, and some point as well the farm animal clinics. The second is we have signed up Vet for Pets and also this American Corporate. And we wanna make sure that, the pie and also we’ve got, looking to recruit additional.
But for now, we’ve, are looking for pilot success on those two corporates and to begin implementing these customers in UK and US. The third is we wanna be able to sign a net new enterprise customers, given our success with previous enterprise engagements. On the therapy side, the main focus is to migrate the majority of Aspect customers to a unified platform. Unified platform is then renamed, name for easy practice. The actual name of the platform differs depending on country and depending on specialty, But the software is actually called Unify platform.
So you’ll see us mentioning that a few times. And the second one is that we’re launching our AI dictation in clinical notes in 2025, which has the potential also to increase the average revenue per user as we have, providing more value for the users. Now on the guidance, in 2024, our recurring revenue grew 21.8%, versus 2023 with 12/31/2023 constant currency. This is at the top end of our guidance, so we’re happy about that. And adjusted e debottis CapEx improved from negative 6.1 in 2023 to negative 1.2 in 2024.
Right? We did not have a guidance on that but it’s nice to see a good improvement in our profitability. Looking forward to 2025, we are guiding a 12 to 17% organic growth in recurring revenues with 12/31/2024 constant currency, excluding acquisitions. Acquisition would be on top. In addition, our adjusted EBITDA minus CapEx, we’re looking for roughly breakeven plus or minus $2,000,000 excluding acquisitions.
The this provides some flexibility to be able to be more aggressive in case we have a faster rollout or in case there’s great R and D initiatives that we want to get done. Otherwise, the next, meeting, which will be in for the q one twenty twenty five results, will be on the 05/13/2025. And as Alex mentioned, our four year financial calendar can be found on our company website as well as the full financials. Now on to q and a. So if anyone has questions, please use the q and a functionality.
Okay. Alright. Seems oops. So, we’ve got a question, on why lower growth guidance expectation compared to 2024? Thank you for the question.
So, the reason why we have lower growth guidance expectation compared to 2024 is that, we see on the therapy side that the focus is mostly on migration. And we want to continue that focus more aggressively than we did in 2024. We divided our investments partly on growth, partly on migration. And in 2025, we wanna fully focus on migration. So we don’t see we will see the top line, actually growing less fast on the therapy side.
And then, last year most likely. In addition, on the veterinary side, we had a rapid acceleration with CVS. We have a broader range, because the fact that it’s hard to predict the pace at which enterprise customers will actually be implemented. It could be that they they decide to implement quickly, but it could also be that given circuits are out of the control, that they decide to implement slower. So that is why we’ve got a larger, spread.
Alex, CFO, Nord Health: And
Charles McBain, CEO, Nord Health: Any other question? Wait. Wait a minute. Another minute or so. See if there’s any other question.
We’ve got another question. I’ll repeat the question. Can you tell us more about the American new customer? No, not yet is the answer. The current American customer is in pilot phase.
And until they have succeeded with the pilot, they have not yet allowed us to release the full name of the customer. The reason for that is that they want us to to ensure that their current software supplier is informed before making the change. The second question is, what are your expectations for The US in the coming couple of years given Vietnam’s pilots? If the pilot is successful, when do you expect the rollout? So as you can see in, the slide, we have been quite successful in The US in 2024.
We are now 1,500,000.0 recurring revenue. The US is a very competitive market relative to other markets. There are some good competitors there. And so we have to be, execute very well in terms of product development, support quality, and implementation quality in order to be successful in The US. The, I foresee us continuing to be successful with enterprises, especially if we’re successful with this, pilot as, it’ll be a very good reference point for us to be able to use to attract other enterprise customers.
In terms of the second part of the questions, if the pilot is implemented is successful, when do you expect to roll out? That’s always a very hard one. So usually, it’s, the pilot can last between three months to twelve months. And, post pilots, depending on the number of clinics, that can be, and also the speed at which the customer wants to implement. It can be between six months and even twenty four months.
So that is the rough timelines for an average customer. That being said, implementing a PMS software is a big amount of work. And so and not just the work that’s involved in the implementation, but also it’s a culture it’s a time at which they wanna have a digital transformation. And we are one part of that digital transformation. A lot of the times, as part of this rollout, they also, for example, change their pricing, their item of coding, they change their suppliers, they also build apps on top of our software, and that is the real, blocker, for the implementation, not so much our ability to implement or, the software itself.
Any other questions? Great. Well, thank you very much for everyone’s time and have a nice day and we’ll see you again in the Q1 twenty twenty five report.
Alex, CFO, Nord Health: Thanks, everyone.
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