Earnings call transcript: Nordhealth Q1 2025 shows strong revenue growth and US expansion plans

Nordhealth reported its financial results for the first quarter of 2025, showcasing significant revenue growth and strategic advancements in its product offerings. The company’s stock saw an increase of 2.29% following the announcement, reflecting positive market sentiment. According to InvestingPro data, Nordhealth maintains a strong financial position with more cash than debt on its balance sheet, though the company is currently not profitable over the last twelve months.

Key Takeaways

• Revenue increased by 23% year-over-year to €12.5 million.
• Recurring revenue constituted 88.6% of total revenue.
• The launch of AI Scribe has gained traction with over 250 daily active users.
• The US market is a key focus area for future growth.

Company Performance

Nordhealth demonstrated robust performance in Q1 2025, with a 23% year-over-year increase in revenue, driven by strong growth in its veterinary and therapy divisions. The company continues to focus on expanding its cloud-based solutions, which now account for a significant share of its operations.

Financial Highlights

• Revenue: €12.5 million, up 23% year-over-year.
• Recurring Revenue: €11.1 million, up 20.7% year-over-year.
• Cash Inflow: €2.8 million, an increase of €2.1 million from Q1 2024.
• Cash Balance: €22.2 million as of March 2025.

Market Reaction

Following the earnings announcement, Nordhealth’s stock price rose by 2.29%, reaching a value of €35. This positive movement reflects investor confidence in the company’s growth prospects and strategic initiatives, particularly in the US market.

Outlook & Guidance

Nordhealth expects organic growth in its veterinary and therapy recurring revenue to be between 12% and 17%. The company is targeting an EBITDA minus CapEx within a range of ±€2 million. The focus remains on expanding its presence in the US market through product excellence and completing platform migrations. InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score of 2.93, suggesting solid fundamentals to support its growth initiatives.

Executive Commentary

CEO Charles emphasized the company’s growth trajectory, stating, "We’ve had a consistent history of growth." He also highlighted the importance of product quality in the US strategy: "The strategy for winning in the US is similar to all other markets, which is basically we have to build the best product."

Risks and Challenges

• Slower clinic performance in the veterinary market could impact growth.
• The ongoing migration in the therapy division may temporarily slow down growth.
• Competition from established players like IDEXX and Covetrus remains a challenge.
• The US market is at an earlier stage in data-driven decision-making, which could pose adoption challenges.

Q&A

During the earnings call, analysts inquired about Nordhealth’s US strategy, with management reiterating their focus on superior product offerings and workflow efficiency. Questions also addressed the potential for expansion through acquisitions, which remains a possibility as the company seeks to increase its analyst coverage. For comprehensive analysis of Nordhealth’s growth strategy and market position, access the detailed Pro Research Report available exclusively on InvestingPro, part of their coverage of over 1,400 stocks.

Full transcript - Nordhealth As (NORDH) Q1 2025:

Charles, CEO, NordHealth: So welcome, everyone, to our q one twenty twenty five, presentation.

As usual, it’ll be me presenting, the CEO of Nordhelf and my colleague, Alex Kramm, who’s our CFO. So we’ll start with company updates, then we’ll deep dive into the different business units, the veterinary business unit, then the therapy business units. And then Alex will go through financial updates, and we’ll leave time for questions at the end. Please hold your questions till the end, and you can ask questions either on the chat, or you can raise your hand to be able to ask questions in the latter part of the presentation. Starting with the company update.

At the end of q one twenty twenty five, our signed ARR stood at 44.9, which entails a 21.5 organic ARR growth year over year. The source of the growth was a net retention rate of a 15.5%, which was higher than the previous in 2024, and also a a churn rate of 4.6, which is lower than the previous quarters. We also have been able to improve our EBITDA minus CapEx to negative 1.1, which is an adjusted EBITDA minus CapEx margin of 2.4%. Looking historically, right, so we’ve had a a 51 organic and acquisition net growth CAGR since 2018. And you can see we’ve had a consistent history of growth as we have not we always take a quite conservative approach with signed ARR.

So it’s only if there are current customers such as Vet for Pets or AmeriVet, which are piloting the software. We actually do not, we include the pilot clinics in that number, but we do not include post pilot rollout AR. Looking at how we’ve been able to grow year over year, the first let’s start all the way at the left. So at the end of at q one twenty twenty four, reported was 34.7. Every year, we reset the currencies to make sure that we use the December 31 currencies of the previous year.

So that had a a negative impact decreasing the q one twin 24 ARR by 34.1, mostly due to the weakening of the NOK. So that’s our starting base for and that we’ll be comparing to. If we look at the source of growth, we were able to sign €2,000,000 of new ARR in the last twelve months. Net upsell of 6,900,000 and churn of negative 1.6. That’s how we break down the 21.5% year over year growth.

This 20.1% net upsell is primarily driven by this CDS implementation, and we as also were able to have 2,100,000 of signed not implemented AR, which is a reduction, since last year as we’ve been able to successfully implement, CVS clinics. And we also have 1.3 of other businesses, which are not veterinary therapy related. If we look at the progression of CapEx, we mentioned that we had a goal to reach breakeven plus or minus €2,000,000 and for the year. And so we can see that we’ve been consistently improving our profitability. And over the years with LTM q 01/2025 being 1.1, so roughly on par with where it was before year 2024.

Now diving into veterinary. From a business standpoint, we can reveal now that Amerivets, which is a 200 plus location US clinic chain, was The US customer that we signed 2024, and they’re piloting this year. So we’re really excited to have them as a partner in The US as our first enterprise partner. We’ve also signed a second, albeit slightly smaller, clinic chain called PetFed three six five, which is a 35 location US clinic chain in May 2025. In total, SME and enterprise AR, we were able to sign in new customers, around 900,000 of AR in q one twenty twenty five.

We’ve also implemented 410 CBS locations as of the end of twenty twenty five, and we’ve got eighty eight nine left to implement. And, also, we’ve been able to acquire provet.com, which will be our future domain name. So we’ll be dropping the cloud at some point. Now breaking down how the growth has veterinary, we grew 33.2% year over year, which was driven, 1,200,000 came from new customers. Net upsell, was 5.8, mostly driven by CVS, as we mentioned.

And our churn was, negative point six, which is a 3.4% churn, which is a very, very good old. And we still have 2.1 of signed but not implemented with and you can see that that has come down from 3.5 in q one twenty twenty four. Now we we introduced this new chart to provide some historical, historical view of the main KPIs on the AR side. So you can see the historical growth in 2021 to LTM q one twenty twenty five, which has been roughly 28.3 over this period of time. There’s lots of ups and downs as you can see because of these enterprise contracts, which can be implemented in one year and then piloted another, but that has a big difference on AR.

If you think about the sources of growth, one is new customer AR, which, again, has been going up and down, but it’s around 8.3%. Right? Then we have net upsell of 22.6 as we our current customers are spending more of us or implementing more clinics, and we’re selling that new products to them. And then we got a churn rate of negative 2.6%, and that’s probably the most unique number in the tech, this 2.6% data. Basically, a 2.6% means that they’ll stay with us for decades on if you look at it mathematically.

And the way you get the net retention is basically the net upsell minus the churn rate. And so I want to divide those up too because I think it’s good to highlight the churn rate, which is probably one of the most unique parts of our business. Good to note that churn ’20 ’20 ’4 was slightly higher, and that happens because we actually sunsetted two products. And when we sunset products at the end of that period, there’s a we when we turn off the software, some people decide not to move forward. And you can see the impact of that in 2024 and LTM q ’1 ’20 ’20 ’5.

Then looking at profitability on the veterinary side, this is these figures are adjusted BU EBITDA minus CapEx. They actually include all group allocations. So it’s a true view of profitability for the business units. If we we can see that LTM q one twenty twenty one was at negative 2.4, so we’ve been able to consistently improve our profitability. The main drivers of the improvements in q one twenty twenty five versus 2024 have been one is growth, which is the biggest one of which had a $1,500,000 impact and recurring revenues, and then we had additional other revenues of around 400,000.

However, we’ve had additional cost to be able to serve customers around 0.6, so 600,000. And we’ve continued to invest in product development around 400,000, then there’s other costs about 300,000. That breaks down how we’ve been able to improve over time. Now where does that growth come from? And let’s focus this time on 2021 versus 2024.

So we can see we’ve had growth in The UK as a result of being able to successfully implement CVS, but also implementing other clinics. And secondly, we’ve had some nice growth as well in Southern Europe, where in Spain, Portugal, we’ve had customers implement our software. And you can see as well the yeah. We’ve had the continued success in The Nordics, which has grown quite nicely in q one twenty twenty five. Looking at a different cut of the data, same data, we can see that a big part of our growth is actually coming from or the majority of our growth is coming from enterprise.

Right? So we’ve got point nine coming from enterprise and €400,000 coming from SME customers, which are independents. But one thing that’s really important to note is that despite our focus on enterprise, our customer concentration remains low with our top three customers composing around 22% of our ARR. Now looking at the migration, which is one of our other big goals as our strategy is to grow organically, but also by acquisition and migration. So we’ve been able to successfully migrate from 2023, which is 7.9, a lot of our customers over to our flagship product, Provence.

And what we can see is that the it’s in the cloud share of ARR has increased from forty percent 2021 to 78% in twenty twenty five q one. This is a really important goal for us because if we migrate people on our customers onto the new platform, we have much better opportunity to upsell, much better data security. So we got a plethora of benefits, including not having to maintain two different softwares. We’re currently working on the migration of Salamales in Norway and also the migration of Vetvision in Denmark. Now looking at therapy.

So on the therapy side, the main focus of this year is migration of Auspect customers to the unified platform. So we are able to migrate a 60 aspect users to unified platform with only one user churn. The rollout continues at a measured pace, so we can act on early feedback. Our approach to this is implement a certain specific user segment, wait till they’re happy. Once they’re happy, we roll out the full user segment, and then we go segment by segments.

You can think of segments as, like, private psychologists or public psychologists and then private physiotherapists and so on. So there’s they’ve got different feature requirements, and we try to target them very specifically. So and we’re being careful with migration as it’s a very small market. We wanna make sure we maintain a high quality and not make mistakes that others have made in being too aggressive and providing, which could lead to churn. The second exciting thing is that we’ve actually launched an AI Scribe in April, first starting with Norwegian physiotherapists.

And within two weeks, we already have over 250 plus or more daily active users. We’ll do a demo of that actually later in the presentation. Then third, we also signed about half a million euros of new AR in q one twenty twenty five. And on the booking portal, which we’ve mentioned a few times in previous presentations, it lists over a 650 therapists now in Finland only, and we process over 3,000 bookings a week. And so that number we should see that number continue to increase over time as we unlock new different ways of booking.

For example, insurance company bookings or tele bookings and so on. So and this is a really big part of our strategy as we wanna make sure that we provide the best patient experience so that going through Nordhoff.fi or and then on the other side, that will be powered by the PMS, having that two site in the marketplace. Looking at therapy, our focus is obviously on migration, and so we haven’t focused as much on growth this year as we wanna have all of our resources on the main priority. But still, we’ve been able to grow year over year, around 6.6. As you can see, the net retention, it was one zero one.

One of the big drivers of it is that we can have we’ve got a decision whether either, a, we can build add ons to be able to upsell to our user base, or, b, we can, focus on migration. So we focused on b only this year. Once the migration is done, we’ll be able to focus, more on net new add ons, but also on, going into net new markets to continue, growing this business just like we’ve done in VetNIC. Same strategy. Looking at, the therapy long term averages, we can see we’re growing around 10%, a year historically.

Our new customer AR has, as you can see, gone down in 2024 and LTM q one twenty twenty five as a result of our focus on this on migration. And the fact that we are in our current markets in Norway and in Finland, we’ve got a lot of users already used software, so we don’t have too much headroom for growth on that one except for ARPU expansion. Net upsell was, 7.2% on average, right, which has remained relatively stable. Right? But our net retention has is only a hundred and two.

Churn again is, on average, 5.1. There’s a big difference between churn in 2021 thereafter because we bought easy practice, which has a much higher churn given that they’re targeting a a slightly different segment of the markets. Over time, however, the as we look compare easy practice customers, which are the same size and specialty as our Doctor and Aspect customers, we actually see a lower churn rate for those customer types. So it’s more the churn rate is driven much more by customer mix than by product selection. Now looking at EBITDA minus CapEx for the BU, we’ve actually decided to invest a bit more on product development this year.

And so the main that’s the main driver reduction in BU EBITDA minus CapEx. These investments are all focused on, being able to migrate faster at first, and then they’ll be on to the next mission of going to net new market or going after, net new add ons. Similar to veterinary, looking at, how we’ve grown between 2024 and 2025, we can see that there’s been some growth in Finland. We also see that there’s in Norway, there’s been a a decrease, actually, in the ARR. This is driven normally by seasonality in that, like, we have yearly contracts.

And every q one, right, the people in yearly contracts, they actually decide to churn just all of them at same time. Right? So it’s mostly due to seasonality, which peaks in q one, and not a huge amount of changes in Denmark. That’s where our sole focus is on migration. The important thing about why this migration is very important is that the aspect migration will unlock around over €3,000,000 of savings, right, by having the people move over, not because of price, but because of efficiency.

For example, we don’t have to have two development teams. Secondly, we do not have to pay for licenses to be able to make provide the legacy software. And then third is our support the number of support tickets per, end user FTEs are is a is significantly lower, on the new platform than it is on the ASP platform given that it’s more intuitive and automated to manage. Looking now at the migration, we can see that we have actually our our cloud share of AR has increased from 34% in 2021 to 49%, and you can see an increase between 2024 and 2025 as well. Interestingly, churn for non cloud prod non cloud products have been 3.7, so we’ve been able to keep our customers happy while they’re on the legacy products.

And then I thought we’d actually do a demo of our scribe to show you how we are implementing AI dictation, but also summarization. This is a huge thing for therapists as it enables them to spend more time with the patients interacting and less time looking at their computer while they’re with patients. So let me create a video. This is the first one will be an AI dictation video where we’ll show you how dictation works, and then we’ll the second video will be showing you how we convert that dictation to a summary. CC creating a journal entry.

Patient/Therapist, Demo Participants: Good morning, mister Patel. How have you been since our last session? Morning. It’s been alright. The pain in my lower back has reduced a little, but I still feel stiffness, especially in the mornings.

That’s good to hear there’s some improvement. On a scale of one to 10, where would you rate the pain now? Maybe around a three in the morning, and it drops to about a one or two by the afternoon. Okay. That’s a positive sign.

Have you been doing the exercises we discussed, especially the lumbar stretches and core strengthening routines? Yes. I’ve been trying to do them daily. I sometimes skip the evening set if I’m too tired, though. That’s understandable.

Consistency is important, but we’ll adjust the plan so it’s manageable. Have you noticed any discomfort while doing the exercises? Not really pain, but sometimes there’s a pulling sensation in the hamstrings when I do the forward bends.

Charles, CEO, NordHealth: So a couple of interesting things about this one is that the main challenges, one, is that we had to make it multilingual. So this is in English, but it’s Norwegian, but it’s Swedish and Finnish and so on. The second one is identify like, the pain points that we have to solve is, especially the therapist, and there are two people talking. It’s very easy to figure out who’s talking when you’re on video call because it uses the microphone. But when you’re in a room, right, you have to differentiate with certainty, like, who’s actually saying what.

Is it the therapist saying something, or is it the patient? So those are the the the two problems that we’ve solved. And, also, you can see real time dictation. It’s very high quality, actually. Even with background noise going on, we’ve tried it with music in the background.

It’s actually the experience has been very nice for these users. Next is once you have the recording, and it also converts it to clinical notes. So here you can see an example of how that works. In this example, we’ll just upload one to make it more efficient. So you got the transcription that was created, and this is for Norwegians.

So some of the titles will be in Norwegian. So we we’re not operating in markets where English is the main language. But still for want to show you just in English because I’m guessing most people’s Norwegians here are not great. So you can see it’s summarizing the the transcription, and it’s then publishing it to make sure it’s according to the different formats that are required for different specialties. And you can see here that it actually creates the notes based on this, and it’s the patient’s able the therapist’s able to fully update these notes as needed and save those.

So you’ll be able to see the transcription and also the full notes. And this saves the therapist a huge amount of time, but especially it ensures that they’re able to focus on a patient, not focus on that in their notes. So thanks. Now off to Alex for the financial update.

Alex Kramm, CFO, NordHealth: Thanks, Charles. Hello, everyone. Before diving into q one financials, I’d like to highlight that since the last call, on the April 11, we published our annual report for 2024. Our financial results for 2024 were audited by KPMG, and the report provides a more detailed view of our financials following the q four twenty four presentation that we did in February. The annual report is available to download on the NordHealth website.

So looking first at reported revenues. In q one twenty twenty five, we did 12,500,000.0 of revenue, which is a 23% increase versus the same quarter last year. Much of that growth has been in our recurring revenues, which grew by 20.7% from 9,200,000.0 in q one twenty twenty four to 11,100,000.0 in q one twenty twenty five. Our share of recurring revenue remains high at 88.6% in q one twenty twenty five versus 90.3% in q one twenty twenty four. Looking now at quarterly adjusted EBITDA minus CapEx.

In q one twenty twenty five, we remained broadly in line year on year at naught 900,000.0. The increase in revenue of 2,300,000.0 naturally resulted in increased COGS and customer service costs, which totaled naught 700,000.0. Notably, we reinvested much of the additional revenue into product development, an amount of €1,000,000 to drive future growth and returns. Sales and marketing investments increased by naught 200,000.0 year on year as did professional services costs. Turning to adjusted cash flow.

In q one twenty twenty five, we had a cash inflow of 2,800,000.0, which is an improvement of 2,100,000.0 compared to q one twenty twenty four. The main driver of this increase comes from movements in our trade debtors, which were 1,900,000.0 more favorable in q one twenty twenty five than they were last year. The largest individual item here is a payment that we received from one of our large enterprise clients in q one twenty twenty five for a backlog of their invoices totaling 1,100,000.0. Other profitability and working capital changes amounted to a naught 200,000.0 improvement versus q one last year. Finally, looking at the March 25 balance sheet, the favorable cash flow results in q one meant that cash at March 2025 is 22,200,000.0, of which 14,900,000.0 is in money market funds.

There were no changes to goodwill in q one twenty twenty five except amortization and changes due to FX. There were no material equity transactions in q one twenty twenty five. There were no movements in treasury shares in q one twenty twenty five, and there was no external financing in q one twenty twenty five. The intangible assets are primarily capitalized r and d, and our equity balance remains healthy at 72,000,000. The full detailed financial statements for q one twenty twenty five, including the p and l, balance sheet, and cash flow, are included in the appendices.

And I’ll now turn back over to Charles for our 2025 guidance.

Charles, CEO, NordHealth: Thank you. So I want to reiterate the guidance that we have is that the we’re expecting organic growth of 12 to 17% in veterinary therapy recurring revenue with 12/31/2024 constant currency. The reason for that is that there are some fluctuations in revenue. So even the we had a big influx of revenue on veterinary to the CBS implementation in 2024. We have clinics in pilot now, but we will not see as strong growth we’re predicting in the veterinary side.

Nontherapy side, the folks on migration will impact Ralph in 2025. On the EBITDA versus CapEx, even though we can see that it was negative 1.1, right, we will be looking at, EBITDA versus CapEx to stay within a €2,000,000 breakeven plus or minus €2,000,000, excluding, obviously, acquisitions. So just reiterating that guidance. Then the next presentation will be on the 08/19/2025, and you can see the full year calendar on our website. Now after q and a.

So I suggest that if anyone has questions, they can ask questions on the chat or, and I see we’ve got a few questions already. So what I’ll do is I’ll read the questions out, and then either myself or Alex will answer the questions. So we got the first question. You’re off to a strong start of the year with significant higher growth rates than the guidance. Are you expecting a slower continuation due to migration in therapy even though product seems to be growing nicely?

So thanks for the the question. So the first is, yes, we are looking to be within our guidance, and that is a result of one therapy focusing on migration. The second one is it’s quite bumpy, the growth in veterinary, and we’re focusing mostly on pilot this year. We’re not, you never know what can happen, but we’re not seeing, that these, full rollouts will be taking, having a big impact on recurring revenue, this year. The next question is, what are you seeing, within the end clients and their markets for veterinary therapy?

In veterinary and enterprise customers, are they still growing and acquiring new clinics? Do you notice any change in decision time investment patterns? Let’s start with veterinary. What we’ve seen is this slow down a bit on the clinic performances. As a result, there’s been fewer customers coming in.

That has impacted us slightly in the that we have a percent of revenue, with a lot of our customers. They’re still growing, but less fast than they were before. The second is that we’ve on the therapy side, that the growth is quite stable. However, there are some countries such as in Finland where the where the economic situation is bit less bad, which is actually slightly. Those two markets, however, are noncyclical.

So if the cyclicality is this way, it’s a way more muted effect for us. So I don’t see that, the cyclicality of these markets affecting our growth performance. It’s more our ability to execute. In terms of investment patterns, I think that, we benefit in that sense, in that it’s a when, the markets are not as good, they cannot actually they don’t they can’t raise money or they’re normally less aggressive with acquisitions. And so they’ve got more operational headspace to be able to do PMS projects if you’re in enterprise clinic.

Hope that answers the question. The next one is, should we worry that AR competition for new customers, though lumpy, was relatively low at 6% compression? So that’s a great question. So this is more of an accounting thing. So the way we think and the way we we actually account for what’s new customers versus net upsell is that it it’s customers that were added in that quarter.

So, for example, for CVS or pets at home or any big customer, even for the RMK, it’s the initial AR in that quarter. So and, normally, it’s only, let’s say, one clinic that they have for a bit, and then they roll out all other clinics. So we actually if you’re looking at true from a business perspective, new ARR, right, we’ll you have to look at some of it which is in the new customer area, but also some of it which ended up sell. So that’s the it’s hard to unpack, but we have to draw the line somewhere, and so that’s why we so I wouldn’t worry too much about that. If we actually look at the the one way to look at it is ARPU changes over time, and we can see that ARPU has grown quite a bit less than our total recurring growth in revenue.

And so the majority of it is because our current customers are actually rolling out net new clinics that they were piloting before, and now they’re in the rollout phase. So I don’t see that as a issue. Where I do see an issue is basically that in all our that ARPU growth, we’ve been focusing very much on the hard thing, which is acquiring net new customers. We should focus much more on ARPU increase over time providing additional value. It’s a much easier, cheaper sale to do, but, I want that’s the we can do that at any time.

So we’ve always been prioritizing capturing net new locations, over, upsetting those on other, products. Next question we have is, what is your go to market strategy for The US going forward? What are the key success factors in UK that you can replicate in The US? How do you intend to contain the high cost of recruiting sales time there? So the strategy for winning in The US is similar to all other markets, which is basically we have to build the best product.

And that is a much harder thing to do in The US than it is in other markets because the expectations are much higher. The competition is much higher. Right? But the we have a bigger team, development team, than any other current player in The US, probably by two times or more. Right?

And so it’s about, we focused this year and last year a lot on improving sort of the core workflows of the system. Right? It’s not about fancy net new feature, but it’s about how do you make how do you reduce number of clicks from creating that new appointment from three to one or two. Right? So it’s getting those efficiencies and being known in the market as the most efficient software out there, and that’s have having good UX.

The second thing is that I believe that there’s a huge opportunity to be able to improve the workflows with, the new, AI models out there. You can see what we’ve done on the therapy side, and we’re doing very similar things on the veterinary side for, for example, for patients, they try to record the interaction with the patients where the vet will talk through things that will create automated notes. We’re talking about automating patient communication to personalize it During an average sort of consultation, there a vet is there for it’s a fifteen to twenty minute consultation. And so think about time it takes to review a patient history to do that. And so we can summarize that in for them in a much more easy to read, easy to understand way.

So the strategy on it’s mostly to win on the product. On the distribution of go to market, it’s we don’t need that many salespeople to be able to grow, right, especially with the enterprise strategy. It’s more about convincing them that having one PMS is the way forward. So if we think about Europe, there it was that was not an argument we had to make, bringing everyone to one PMS because they wanna have unified reporting. In The US, that is still not the case where they there’s middlewares which have create unified reporting if you’re on 20 different PMSs.

So that’s a pain point which is less obvious. However, the the data that they can have from here is way worse than if they had to do in five PMS, but it’s still learning. And the market in The US is much earlier than we are in The UK or The Nordics, for example, with regard to data driven decision making. We’re looking forward to partnering with these, corporates in The US to show, that’s that is a big differentiator. Then there was another question.

How do you see US competitive landscape evolving, and what’s your take on Shepard’s acquisition of Hippo Manager? The there’s basically two two buckets of competitors in The US. We’ve got the products which are owned by IDEXX and Covetrus, such as EZBets or Pulse. Right? And those, we, wanna compete with in that, they’re currently doing a migration from their legacy product to their new product, which is a good opportunity for us to actually, acquire, those customers at that decision point.

And the game is all about can they provide a solution and innovate faster than the second group, which includes us, which is basically Shepard, Vetspar, Instinct, and ourselves where and just probably other smaller competitors, but those are primary ones where we are competing for, as the innovators in the market. And the the way we’re looking to win against them is to, compound our sort of r and d advantage over time. And we’re as we said I mentioned before, in Europe, we there has been corporatization of veterinary clinics much early on. And so as a result of that, we’ve seen, we’ve seen how enterprises have matured, and we’ve matured with them that software. And we’re gonna so we got a unique advantage in knowing how enterprise customers wanna work.

And so that’s why we’ll we’ll try to win that market with our better knowledge or in our in our lead in that space. There’s another question on, you’ve decided to increase customer acquisition costs. Where where are we, in this land grab booking phase, probably lasting still several years? So we haven’t increased our customer acquisition cost significantly, year over year. So, but I think it’s a, I don’t like the term land grabbing because that’s with with no regard to financial return.

The way I think about it is if we look at the last presentation, it’s there are two costs required to be able to acquire new customers in new markets. One is the sales marketing costs, and implementation costs, or net implementation if they pay for it. So it’s a net profit or loss that we make from that. That’s what I call customer acquisition costs. And the second cost line is the r and d.

Right? And people often forget about that, but there’s problems we can solve. Like, for example let’s take the example of, implementation. We can decide to use r and d resources to automate that process. So I like and we have to use r and d to be able to add integrations for The US and so on.

So I bunched those altogether, and those two those two components, I’m looking to make an over 20% return on those, unlevered. So that’s how I think about spending. So when we’re looking at, the use of cash, I was thinking is it best to invest in r and d in certain project or in sales and marketing, or is it better to, let’s say, invest in buying a company because it’s cheaper than doing the sales and marketing. So that’s how we think through that. Then we had another questions on congrats on the start of the year.

DNB Carnegie, formerly known as Carnegie, is currently covering NordHealth. Could you elaborate on how you’re engaging with other investment banks to broaden analyst coverage at NordHealth? That’s a great question. It’s actually one of the things I’ve been working on over the last year trying to get a second and hopefully a third bank to be able to cover us as well as I think that NordHealth is stock that should have bit more liquidity. That’s one of the points that we’re trying to improve over time.

We had a question. What are your medium term expectations for that therapy division once the migration is completed? Can growth accelerate towards $15.20 cents like the vet division, or is it more of a profitability play? So that’s a great question. So we’ve had, if we go back to, where we started, at first, we only had, cash to be able to before the IPO to finance one of the businesses, and then we chose veterinary at that time.

And post IPO, the bottleneck was not cash, actually, but the bottleneck to be able to grow both was management capacity. Right? So at that point, we started Walter took over the veterinary business units, and, only recently, actually, Karan took over the therapy seat, which means we’ve got additional management capacity to be able to grow two things at once. So the the team still on the unified platform is still quite small, and so we’re I wanna focus them on one mission at a time. That’s been the big learning since I started, actually.

It’s better to do things sequentially, but faster than in parallel. But a so a jack of all trades is master of none. That’s a hard lesson to learn, but I think it’s now that that’s the best way to create value. I think it’s the most efficient as well. So first, we’ll be doing this migration, and then we’ll we’re always quite pragmatic with things.

So it’s either if we see opportunities to grow organically in that new markets, we’ll look at that. Or, otherwise, if we see opportunities to grow by acquisition and migration, or we we could also look at just expanding our sort of, share of wallets in our current markets, or a combination thereof. Right? But, so we haven’t yet made a decision on, medium term on profitability or not. It really depends on the opportunities.

For now, we’re focused on the migration, and our plan will be to do something similar to what we did in veterinary conquering one new market at a time. But if there we don’t find opportunities, which I don’t believe I I do believe we might find some opportunities to grow. So I believe that we will go after a net new market. Then the final question we’ve got is, are you seeing anything new in the m and a and private equity space in terms of interest in kinds of assets as NordHealth, for example? Has there been any transaction recently?

If yes, what has the multiples looked like? So there’s a lot of trend, interest in P2Ps in The Nordics and specifically in SaaS. That means, so the transactions that of similar companies in The Nordics is, I don’t have exact multiples, of what they they trade that. But, so I’m sorry. I can’t help on that.

Yeah. I I there’s rumors, but I don’t wanna comment on the rumors of what those are. So great. Perfect. Well, thank you very much, everyone, for your time, and I’m just gonna see if there’s any other questions.

No other questions. Thank you. Thank you very much, everyone, for your time. Have a nice day. Bye.

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