Earnings call transcript: NordHealth Q2 2025 sees revenue growth, stock dips

NordHealth reported its Q2 2025 earnings with a 5.4% year-over-year increase in revenue, reaching €12.9 million. Despite the growth, the company’s stock price fell by 2.79% to €35.8 in recent trading, reflecting investor concerns over its negative adjusted EBITDA and ongoing challenges in competitive markets. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value calculation, with the company maintaining a "GOOD" overall financial health score of 2.95 out of 5.

Key Takeaways

InvestingPro data reveals several important metrics that complement these results. The company shows strong liquidity with a current ratio of 2.37, and maintains more cash than debt on its balance sheet - two of several ProTips available to subscribers.

• NordHealth’s Q2 2025 revenue increased by 5.4% YoY to €12.9 million.
• Recurring revenue grew by 13.5%, now comprising 87.7% of total revenue.
• Adjusted EBITDA minus CapEx was negative €1 million for the quarter.
• The company is investing heavily in AI and platform migrations.
• Stock price decreased by 2.79% following the earnings release.

Company Performance

NordHealth demonstrated solid revenue growth in Q2 2025, with a 5.4% increase compared to the same period last year. This growth was primarily driven by a 13.5% increase in recurring revenue, which now accounts for 87.7% of the company’s total revenue. Despite these positive figures, the company reported a negative adjusted EBITDA minus CapEx of €1 million, highlighting ongoing financial challenges.

Financial Highlights

• Revenue: €12.9 million, up 5.4% YoY
• Recurring Revenue: €11.3 million, up 13.5% YoY
• Recurring Revenue Share: 87.7% (up from 81.5%)
• Adjusted EBITDA minus CapEx: Negative €1 million
• Cash Position: €20.5 million

Outlook & Guidance

NordHealth has set a full-year recurring revenue growth guidance of 12-17%. The company anticipates an adjusted EBITDA minus CapEx ranging from -€4 million to -€2 million. Large enterprise rollouts are expected in the second half of 2025 and into 2026, potentially adding €4.5 million in additional annual recurring revenue.

Executive Commentary

CEO Charles McBain emphasized the transformative impact of AI on the company’s operations, stating, "AI dramatically changes how work is done." CFO Alex Graham highlighted the strategic focus on AI development and regional localization, noting, "We are accelerating our investments in DAC localization and AI development."

Risks and Challenges

• Competitive Pressure: Emerging AI competitors, particularly in the UK, pose a threat to NordHealth’s market share.
• Financial Performance: The negative adjusted EBITDA indicates ongoing financial challenges that need addressing.
• Market Expansion: Successfully navigating and expanding in diverse regional markets, such as DACH and Nordics, remains complex.
• Investment in Innovation: Significant investment in AI and platform migration could strain resources if not managed carefully.

NordHealth’s Q2 2025 earnings call highlighted both the company’s growth potential and the challenges it faces in maintaining financial stability amid competitive pressures. With a market capitalization of $271.41 million and an Altman Z-Score of 11.18 indicating strong financial stability, the company shows resilience despite current headwinds. Discover more detailed financial analysis and exclusive insights with InvestingPro, including access to over 1,400 comprehensive Pro Research Reports.

Full transcript - Nordhealth As (NORDH) Q2 2025:

Charles McBain, CEO, NordHealth: That’s I’m Charles McBain. I’m the CEO of NordHealth, and I’m joined by my colleague, Alex Graham, our CFO. Then we’ll go through four different topics today similar to previous presentation and end with a q and a. So we’ll start with a general company update, then we’ll do a slight deep dive into the veterinary BU, then the therapy BU, and Alex will end the presentation with a financial update. And please leave all the questions for the end, and we will I can either answer them if you add them into the chat, or you can just raise your hand, to be able to ask questions.

Thank you. So starting with the company update, I always like to take a historical view, so we can see where we came from as there’s lot of fluctuations year over year. So over the last over six years, we’ve actually been able to grow the business at a CAGR of 49%. As you can see, the majority of this growth has actually come from organic growth and some from m and a, but we have not made m and a acquisitions in 2025 so far, 2012, ’24, or 2023. We are still looking, though, for opportunities from time to time if we can find some that fit our criteria and the right price.

Next. So if we look at the business year over year ending q two twenty twenty five, you can see that our ARR overall owning grew 9.5%. And it’s important to note that this 9.7% excludes the Vets Per Pets and Amerivet post pilot rollouts. But if we break down the growth and where it came from, at the June 2024, we stood at our AR stood at 38.6. We added 1,800,000 new new ARR from new customers.

Our current customers also spent 3,600,000.0 more of us, and we had a churn of negative 1.6. Important to note is that this 9.2% net upsell is primarily driven by a proven expansion within existing enterprise clients. This is not big rollouts that we’ve seen in 2024, and we’ll see in the latter parts of 2025 and 2026. And you can also see the churn rate of 4.2, which is quite a low churn rate. The story here is that in 2024, we the h one, we had the CVS rollout.

And in h one twenty twenty five, we’ve been very much working on ensuring a successful pilot of our two next big rollouts, which are Amerivets and Events for play pets, which will take place in h two twenty twenty five and 2026 as well. If we go now to the next slide, here we can see the breakdown of this growth over time, so not just as natural in time, but within a historical context. The main point here is that our growth has slowed down in LTM q two twenty twenty five relative to previous years due to, first, as I mentioned in the previous slide, the large enterprise rollouts being slated for h two twenty twenty five and 2026 versus the last twelve months. And the second part to understand is that we are also driving to acquire new customers, and it’s quite a healthy LTV CAC that we’ve got ratio. This is especially driven by our low churn rate.

If you’re in the next slide, we can see that in the last twelve months, we’ve added 2,500,000.0 in net new spending for r and d and CAC investments. However, that’s been offset 1.5 that has been offset by improved revenue, so minus the COGS and customer service. So the additional revenue that we brought on board has offset 1,500,000.0 of that cost, resulting in a net change in EBITDA balance CapEx of negative 1,000,000. Now we’ll talk more in about the additional investments in the veterinarian therapy BU deep dives, but the two big buckets that we’re investing in are, one, versus what we had predicted is we wanna be more aggressive in our localization for the DACH Region for our veterinary business units. The DACH Region is the largest met veterinary market in Europe, and we also wanna be able to accelerate the migration of our Vetra clients on the private cloud.

The second is we see a massive opportunity in our potential to develop and upsell AI features to our current customers and making this a unique value proposition for new customers, which are coming from us from legacy systems. So we see that as a big potential for a catalyst for change. If we think through the one of the biggest issues with growing in this business, which is the fact that the churn is very low. It’s very low for us, but it’s also very low for our competitors. So a lot of these competitors have been in a legacy software, server based software, hosted software, and they they cannot, as fast as we can, develop these new features.

And so we see that our ability to be at the forefront here will enable us to convince a greater proportion than historically customers to migrate over. It’s a reason to switch of sorts. Now let’s go into the veterinary update. So a couple key business topics. One, the big news is Amerivet, which is a 200 plus US corporate chain location corporate chain, approved the pilots and full migration.

This is a big, big deal for us. It’s our first flagship US customer that’s a corporate, and it’s I’m very happy with the team and our progress on this one. It was we’re expecting that the full migration will happen in h two and 2026 over time. And it’s important to note that this the ARR from this decision is not included in our signed ARR that we previously put as the approval happened at the ’2. But you will see this in the q three signed AR numbers.

The second is we actually did get a second smaller US enterprise customer, and we’re currently rolling them out. It’s called PetPet three six five. We’ve rolled out as of the ’16 of 27 locations, and that rollout is continuing. Third is we’ll talk about it and do a little bit more of a deep dive in the next slides, but we’ve launched our first Provet AI features, which are scribe, discharge notes, and patient summary. We’ll go through and show you those in the next few slides.

The pilot started in August. 44 vets have already signed up even before the product was out of beta. So there’s a very, very strong demand for these features. Fourth is we made decision to accelerate the Vetra migration through investments in private organizations for the DAC market, so accelerating those existing front is what we had expected before. Fifth, we were able to sign 1,900,000 new customer AR in and lastly, we’ve migrated a 109 clinics to dates.

And we’ve actually successfully sunsetted ProvetNet, which was a platform in Finland. They’ve all migrated over to ProvetCloud, so we can now focus more of our re development resources on our core product. Now let let me show you a bit about these new AI features that we’ve launched. So let me put you in the world of a veterinary clinic. In a vet clinic, especially a first opinion clinic, these appointments are fifteen to twenty minutes.

And the history so the patient history can be pages and pages long with lots of PDFs, lots of attachments, especially if they can referral letters and so on. The vet has minutes, if not tens of seconds, to be able to go through that whole patient history to figure out the important information. So we’ve come up with a solution with where we take all this information and highlight the most important information in many different parts of the system so they don’t have to go through the full history. They can see the most important information just in one click. If we go to the the next one is a scribe.

So after they’ve reviewed the patient history, they will start what we call a consultation, which is an appointment where sometimes the pet owner’s there, sometimes it’s not. But the vet will give instructions and, for example, provide certain medicines, so on, and do procedures. All of these voice notes are actually recorded through an ambient recording, transcribed, and then that transcription is sent to OpenAI to be able to generate very clean clinical notes. So in the previous world, right, people were typing in notes, not paying attention to the pet parent which was in the room, not having their hands free. Right?

And so they had to do it after the appointment happened. So now they no longer have to type anything, right, everything in the clinical notes, and they just have to focus on patient care more. The first situation of this will be just the clinical notes, but we’re looking to have a fast follow with adding treatments, identifying for example, when someone says that they gave a certain amount of a certain medicine, it would identify that and add the charges. If, for example, a vet would say a new updated weight, it would add figure out the weight, add it, and structure data. And then we see a huge potential in sort of get converting our unstructured data into structured data for improved care analysis.

So this is a really, really big feature that we developed for therapists, and we initially trialed there. We’ve now brought it to vets, and there’s a big interest in this one. Go to the next one. The last one that we’ve developed so far in our clinical AI bundle for vets, as we call it, is the AI discharge instructions. So after the clinic the appointment is done, the pet parent usually receives an email or or printed document in some clinics where with a summary of what happened in pet parent language.

Right? So it’s not medical language. So this allows you to, with one click, generate a discharge instructions from the consultations. And it saves many, many minutes for the event, And a lot of the consultations actually do not have discharge questions. They don’t have the time to do it.

And so the pet parent is left going home without a real idea of what exactly happens, what are the instructions for medicine, so on. So this elevates care in addition to saving loads of time. So we’re very excited about this one too. Now beyond the features, looking at the numbers, as we said, we grew 13% year over year. Right?

The net retention rate was a 109, which was primarily driven by small expansions from enterprise clients rolling out new clinics, but we have not had a significant rollout of corporate clinics like we did in, for example, h one twenty twenty four and in the future looking at the Amerimet and pets and home rollouts. Our churn remained extremely low at 3.4%. And if we exclude the impact of the migrations that we’ve been doing, that would actually be 2.9, but even both numbers are quite spectacular. Lastly, it’s really important to note that the Vets for Pets and AmeriVet post pilot rollout AR is not included, and that is estimated at 4,500,000. That is the amount that is net needed to be implemented, not included the amount that they have of AR based on pilots.

If we go now to look at the trend over time. Right? So in 2021 and 2022, we also did not have a big enterprise customer rolled out. And so you can see that impact in our numbers relative to what we saw in 2023 or 2024 when we did. Right?

So we do have some seasonality based on when they decide to implement. And you can see that our new customer AR is around 4%, which is slightly lower than our average four seven point eight. That is one place where it’s impacted. And the second primary place was impacted is in that upsell where it was 12.4% versus the historical average of 19 and a high of 35 in 2023 and twenty seven point six in 2024. The upcoming large enterprise rollouts and revenue from AI features will support net retention in the future.

Other interesting other interesting to look at is how we’re performing in terms of our profitability. So if we look at 2025, the last q two, the last twelve months before that, we’ve roughly remained on the same level as last year. We’ve been able to add additional revenue, which has brought us a additional contribution margin of 1,300,000. We spent 1,200,000.0 to accelerate tech and r and d, So we have slightly improved profitability. And those investments have been in two areas that we discussed before, the first being the acceleration AI.

And the goal there is to transform Provet from a passive system of record where the majority of the information is inputted manually by typing, clicking into a proactive operating system that can anticipate workflows, automate admin as we soften describe, or the discharge notes with the aim to boost initially clinician prod productivity, and in the future, other user personas, for example, the receptionist or the inventory management person. The second big bucket that we’re spending on is to be able to accelerate our DAC rollout. We’ve had very strong interest from enterprise customers in the DACH region that are looking to get a cloud solution to replace their legacy solutions, some of which are, ours, Vetra, some of which are on Etsy, and some of which are on third other third party softwares. And so this will not only unlock this a 500 clinics which are on Vetra today and be able to unlock efficiencies in that we don’t have to have two development teams. We do not have to have as well a lot of support tickets, are generated by service based softwares.

But, also, we believe that there’s gonna be a big opportunity for us to upsell our current add ons like AI, integrated payments, and so on. Go to the next slide. Now looking at our growth split by country, we can see in ’20 at the 2024, we had 4,500,000 UK. That is now 5,400,000 in the June 2025, some of which is CVS. The US has grown, but there was due to currency issues have been changed.

The Southern Europe has continued to growing nicely. There’s some corporate which are slowly increasing the amount of locations that they have driving our growth. In the DACH region, we remain relatively stable with our Vetra products, but we’re excited about the potential when we bring our cloud product to market. And you can see in The Nordics, we’ve also slightly grown. If we look at The US, just dive deep diving on that, it’s in addition to currencies, in q two twenty twenty five, the PIMs AR actually increased by 15%.

However, there was also big volatility in private pay volumes. So that was one another one of the big drivers. Next slide. Looking at the revenue split by product, you can see that we have our SME is growing quite nicely in the last twelve months ending of June 2025. We have had slower growth than previously in enterprise due to no big rollouts, but our payments and partners and add ons are becoming a bigger share of revenue as we have more and more partners coming on board of our marketplace.

And it’s always look good to look at despite our folks at enterprise, our customer concentration remains low with our top three customers composing 21% of our AR. Looking at the migration. So the in 2021, 40% of our ARR came from clouds. And as of June year, it’s 83. So we’ve made a big dent in our migration.

Vetserv and ProvetNet for Sunset in 2024 and ProvetNet in oh, sorry. ProvetWin and ProvetNet in q two twenty twenty five. We still have to migrate. PetVision in Denmark, Salamales in Norway, and Petra at some point in the DACH region. Now going over to therapy, the therapy business has focused on migration of the aspect users to a new unified platform.

So so far, we’ve migrated a 193 aspect users to a unified platform, but as of the June. The rollout continues, but I measure pace. So we can act on feedback that we get from customers and make sure that we protect our reputation, thereby protecting retention. We estimate migration volumes will increase in h two twenty twenty five. We also have had over 500 users, which is still small.

Less than 5% of our practitioners have activated the AI assistance, which provides an AI scribe. And we’ve delivered over 25,000 AI generated summaries and over eleven thousand hours of transcribed in q two alone. And lastly, we also signed 410 new ARR in q two. Looking at the growth, as we discussed before, the main focus, the primary focus of the therapy business unit is this migration. And so but despite that, we still have seen some growth in current markets despite our low headroom for growth in these markets.

Given our market share, we grew at 4.3%. Our net retention rate was 98.9, and churn of 5.4%. Looking over time, our long term average churn has been around 5%. So you see it’s slightly above the long term average despite the fact that our revenue mix has shifted quite significantly. So if you look at 2023, which is the the year when we acquired Easy Practice, we’ve been working very hard at reducing the churn of Easy Practice, and you can see that trend in 2024 and 2025.

In LTM q two twenty twenty five, our new customer ARR was impacted at 5.4 given our focus on shifting the asp everyone onto the new unified platform aspects. And secondly, the fact that we are no longer targeting actively non therapy professionals, which were targeted before with easy practice. This is what has driven our churn down as we wanna focus on therapists only. And looking at the BU EBITDAIX CapEx, we have made our additional revenue has generated a contribution margin of an additional 400,000. However, we’ve invested 1,400,000.0 additional in order in CAC and r and d to be able to speed up the migration of Aspect customers to our unified platform.

And the rationale behind that that that unlocks €2,800,000 in annual savings. And second, it’s accelerate our investments in our AI Scribe to empower practitioners to be able to focus on patient care and reduce time on administrative tasks. Looking at development by country. So we can see that Aspirin was acquired in 2021 and Easy Practice in 2022. So this was you can see why the the drivers of those growth.

And growth has been slow as we’ve focused on r and d on the migration. Once the migration is completed, we’ll resume work on add ons and new country expansion. And as you can see, there is a no a decline in Norway from 9.4 to 8.6. The Norway decline in ARR is due to seasonality. In q one, you see high churn.

It’s the peak churn. And Finland ARR grew after implementing price increase. Now looking, our cloud share of AR increased from 34% in 2021 to 51% in 2025, so we have made some leeway on migration. The churn for non cloud was 3.5, so it’s quite a low churn. And if we go to the next slide, Over to Alex for the financial update.

Thank you.

Alex Graham, CFO, NordHealth: Thanks, Charles. Hello, everyone. To begin, I’d like to let you all know that in addition to this q two update, today, we also published our interim financial report for h one twenty twenty five. You can find this on the company website. It includes further details on many of the headline numbers that we’ll be running through today.

So looking first at our reported revenues. In q two twenty twenty five, we did 12,900,000 of revenue, which is a 5.4 increase 5.4% increase versus the same quarter last year. It’s important to note that our underlying recurring revenue growth has been much higher at 13.5%, going from 9,900,000.0 in q two twenty twenty four to 11,300,000.0 in q two twenty twenty five. The reason for the decline in other nonrecurring revenue is due to a spike in implementation revenue that we saw in q two twenty twenty four because q two twenty twenty four was a period of rapid enterprise rollout in veterinary with with CVS. Correspondingly, the share of recurring revenue in q two twenty twenty five is 87.7%, up from 81.5% in q two twenty twenty four.

For h one reported revenues, we see a similar story. Total reported revenue grew by 13.4% to 25,300,000.0 in h one twenty twenty five. But, again, reported recurring revenues were higher, growing 17% from 19,100,000.0 in h one twenty twenty four to 22,300,000.0 in h one twenty twenty five. Our share of recurring revenue in h one twenty twenty five is 88.1%, up from 85.5% in h one twenty twenty four. It’s also worth noting that our core veterinary and therapy business units have been outperforming our much smaller other businesses.

So recurring revenue for the two core business business units has grown by 18.9% year on year. Looking now at quarterly adjusted EBITDA minus CapEx. In q two twenty twenty five, we reduced by 1,000,000 year on year to an adjusted EBITDA minus CapEx of negative 1,000,000. Revenue grew by naught point 7,000,000 year on year. COGS and customer service also grew by naught point 6,000,000.

This naught point 6,000,000 growth is higher than proportional to the revenue growth due to the temporary need for extra client support for the early migrated therapy clients. The largest item impacting adjusted EBITDA minus CapEx is the product development, which is by itself a 1,100,000.0 increase in expenditure versus h one twenty twenty four. The increased product development expenditure is for new features, platform scalability, and enterprise client custom work, although most of the custom work is is charged to clients. And as per our recent update, we are stepping up investments in AI feature development and DAC localization. For h one adjusted EBITDA minus CapEx, this was negative 1,800,000 compared to negative naught point 9,000,000 in h one twenty twenty four.

The h one variances are mainly driven by the variance in q two because the variance in q one twenty twenty five was only 100 k versus versus last year. Next, turning to adjusted cash flow. In q two twenty twenty five, we had a cash outflow of 1,200,000.0, which is an improvement of 1,300,000.0 compared to q two twenty twenty four. The main driver of this increase comes from changes in deferred revenue of naught 900,000.0. As we saw, q two total reported revenue had a higher share of implementation revenue, and this is typically billed later than our recurring revenue.

Other profitability and working capital changes amounted to a naught 400,000.0 improvement versus q two last year. Now looking at h 01/2025 adjusted cash flow. In h one twenty twenty five, we had a cash inflow of 1,700,000.0, which is an improvement of 3,400,000.0 compared to h one twenty twenty four. 1.3 of this comes from the q two variance discussed on the previous slide. The q one variance was primarily driven by 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, which totaled about 1,100,000.0. Finally, looking at the 20 the June 2025 balance sheet, cash as of June 2025 is 20,500,000.0, of which 13,500,000.0 is in money market funds. There were no changes to goodwill in q two twenty twenty five except amortization and changes to FX. There was no external financing taken in q two twenty twenty five. There were movements in treasury shares.

In q two twenty twenty five, we transferred approximately 48,000 treasury shares to participants of our performance share plan. We also completed a share buyback after the balance sheet date in July, which I’ll talk about in the next slide. Our balance sheet remains healthy with equity at 68,200,000.0, and the company has no interest bearing debt. The full detailed financial statements for q two twenty twenty five, including p and l, balance sheet, and cash flow, are are in the appendices. So next, looking at the share buyback.

In July, we settled the transaction to purchase 300,000 shares at a price of NOK 36 per shares. So as at the settlement of that transaction, the company owns 1,377 thousand 793 shares in the company. A key use of these shares is the performance share plan. The company is moving towards equity as its primary form of bonus compensation. And in 2025, we expanded our PSP scheme from 16 participants in 2024 to 55 participants in in 2025.

For our 2025 guidance update, we’re reiterating our full yield full year guidance on Vet plus therapy recurring revenue based on December 2024 constant currency and excluding acquisitions of 12 to 17% growth. As discussed during this presentation, our focus in h one twenty twenty five has been on preparing for the large enterprise rollouts in veterinary, and these will lay the foundation for strong revenue growth in h two twenty twenty five and 2026. On adjusted EBITDA minus CapEx, as we announced earlier this week and discussed in the presentation today, we’re accelerating our investments in DAC localization for our veterinary business unit and in AI development across both business units. We believe the timing is right for both of these investments to optimize growth in the coming years. So the adjusted EBITDA minus CapEx guidance for 2025 is being updated to between minus four and minus 2,000,000, excluding acquisitions.

From, it was plus or minus 2,000,000, excluding acquisitions. Lastly, a reminder on our financial calendar that the q three twenty twenty five presentation will take place on the 11/11/2025. The calendar can be seen on the company website as can our history of of presentations. I’ll now turn back over to Charles for for q and a.

Charles McBain, CEO, NordHealth: Thanks, Alex. So just as a reminder, feel free to add questions in the q and a functionality on Zoom. If you only see one question, or you can also raise your hand if you would like. So just going through the questions. We had one three questions in the chats.

The first was, how do you currently perceive the competitive landscape in the DACH region, The UK, and The Nordics? Are you seeing new startups emerging with modern tech stack and strong customer proposition? So let’s we’ll target I believe that question was aimed for veterinary given the the three of them. So we’ll talk about each different regions first, both in terms of emerging startups, but also the competitive landscape. So in the DACH region, we are the number two player with Vetra.

The all of our clinics, except for a handful, which are on private cloud, are on Vetra. The number one player is EasyVet or VetZ, which not to be confused with the New Zealand EZvet, which was bought by IDEXX in 2021. That company was independently owned, then was purchased by a diagnostics manufacturer, which was then purchased by Mars. So Mars is the ultimate owner of this company. And there are a few sort of low functionality cloud flavors in the DAC market.

For now, people aren’t as we can see from our Vetra, people are not looking for a new solution, and so churn has been relatively flat, how especially from this me. However, we have been receiving inbound interest from corporate, which are on our solution and also our competitive solution, and that is why we’re actually accelerating that opportunity. In that, the current cloud pages in the market are are do not currently accommodate have functionality to accommodate cloud, the these large enterprises in the cloud. And so that’s the primary reason why we wanna go after it. There’s no other entrance which into the in PMS space in that region, are significant threat.

And in The UK, there are some upstarts that such as Lupa in the markets, which do not have a full fledged PMS yet, but have a AI scribe. The there will be more competition from these AI scribe trying to go into the PMS markets. It’s a I think that once they enter the PMS market, they realize how big of an endeavor it is to build a full ERP system. However, I am a strong believer in only the paranoid survive. So we the reason why we’re investing heavily in AI is to make sure that we are seen as the front runner in these markets as if you’ve got the PMS plus the integrated AI, that is way better than having an an integrated AI value proposition.

Think about the there’s no need to copy paste. We know both the history of the clients and what happens in that certain consultation. We also can add in clinical notes is the one of it, but you’ll also be able to add structured data if we are the ones who actually provide that as a service. So we we we have a right to win in terms of the value problem product perspective. And, also, the second is this is a paying add on, and this which we can afford to sell at a lower price than the competitors because we don’t have to offset the full CAC given that they’re already our customer.

And in The Nordics, we have not seen any major competition on the vet side. There are some upstarts which have created an add on for scribes and so on, but they they have not actually launched a PMS solution. And similar to in all markets, we’ll keep vigilant in that. By having a great AI solution, there’s no reason for our customers to go to a third party. Then you mentioned the modern more modern tech stack.

Provet is a Python back end and VGS front end for hosting the AWS. We’ve got a very modern tech stack, and so we don’t see any competitors with a more modern tech stack, especially at scale. Right? So we’ve done a lot of work to migrate our front end over the last few years, and we’re continuing on that work. But we don’t see a big risk from a more modern tech stack coming on board.

And in terms of value propositions, there are there was one theory from this great investor VC fund called Tidemark. I highly recommend that you take a look at their website. They’ve got this vertical markets software project where they detail a lot of the ways that vertical market software can grow. And so there’s a strategy that our competitors could use called integrate and surround, which is basically, at first, you integrate the PMS, then you surround them by slowly adding feature after feature. So that’s what we’re trying to protect against because we have the core PMS.

And if we don’t develop these additional features, right, at some point, our customers will ask us to to integrate with these, startups, which are providing the same feature, even if they’re slightly worse. And so and over time, they can add more and more features and slowly surround fully in order to become the PMS. So that’s what we have to prevent against. The second, question was the what is your view on AI in terms of both threats and opportunities for NordHealth? Do you believe you can monetize new AI powered features, and how do you you see AI impacting the efficiency of your software development processes?

So this question is is twofold. One, it’s about how do we see it’s, leveraging AI to be able to improve our products and our our business model, and then secondly, internally, how we can, use those. So on the value proposition, I’m so excited by the potential. If we think through, like, my the original value proposition that we thought we had with cloud was that people don’t wanna have to have the hassle of servers and servers burning out and so on. So they want to move to cloud as well to access their data from anywhere.

The even though that value proposition did cause migration, it didn’t dramatically change the way people work. So the catalyst to change was less intense. Right? The AI dramatically changes how work is done. If you think about a clinician, right, the amount of time that that clinician can spend on admin can be like, typing clinical notes, can be reduced by 95% of these features.

So there’s a huge opportunity to dramatically transform how work is done. With cloud, it was a nuisance for the practice manager, but not so much for every single practitioner. And so this is quite a unique time in that I believe it will be a big catalyst to change if you’ve got a much more than it was for the shift with the cloud. The from a business model perspective, prices are a bit all over the places. People are startups are trying to figure out what pricing should be they should charge for their AI solutions.

For Describe alone, we’ve seen anywhere between 69 on the low end to all the way to a €129 per user for Describes only in both the vet side and on the human side. So this is a huge this has a potential to almost double our average revenue per vet or per therapist if we are looking at the higher end of that. So there’s a big, big opportunity from our to be able to increase our average revenue per account. Internally, there’s a couple places where AI is particularly adapt at at being able to provide improved efficiencies. The first, if we go to the top of our p and l, it’s or looking at the cost, customer service, where as we grow, we’ve got more and more customer support tickets.

Right? And so the ability of us to we use both Zendesk and Intercom, so we’re trialing two different softwares and two different business units to be able to experiment. And we’ve seen that AI is particularly adept at answering a lot of the how to questions. So that’s the one of of a a big will be a big cost saving if we look at percent of revenue basis over time. The second is on our development where the if we think about the development software development life cycle from there’s a discovery process, right, which is done by a product manager to figure out which problem should we solve, and AI is really good at figuring out all the information that you get from your customers internally from support tickets, collating that to figure out what are the most pressing problems to solve.

Right? For the second one is design where his or in discovery process was a product manager will create a what’s called a document outlining the problem and so on. Right? Now they don’t have to do that. They actually can go all the way to create a prototype, which in in the end, a document can be confusing to some.

A prototype, everyone understands it very easily, and it it get it gets you to align much easier. On the design side, right, you can leverage AI to create designs way faster than you did before. Right? And on the development side, both on we we use tools such as cursor or cloud and so on to be able to accelerate development, and also other tools to be able to test and improve our safety and our quality of our code to make sure it matches our standard. So big potential internally.

The third question is ProvidCloud and DACH. When do you expect to have a fully market ready ProvidCloud offering for the DACH Region? So although we mentioned the DACH Region, there’s three countries. And in those countries, they’ve got three specialties. A small animal or companion animal, as you call it, dog, cats, and exotics, equine, and production animal, cows, sheep, and so on.

So we’re first going to focus we’ve got a few clinics in Austria, and so we’ve got an initial focus to for small animal in Austria, which we’re almost localized for. Then we’ll go after small animal in Germany. Then after that, we we’ll we’ll see. But so we’re going to segment by specialty and by country. The one is really hard to say because the the way we go about localization is we do have a good understanding of the gaps that we’ve got in terms of features, but ways are working slightly different.

And so it’s a bit like an iceberg in that it’s hard to set out an exact date because the we only move on to the next segment when the first segment does happen. And so the definition of satisfaction can be different. But we’ll continue to update you on progress as we continue rolling out more and more in the Kinsdak region. The next question we had was preparing the rollout for AmeriVet and Vets for Pets to take place in h g twenty twenty five and 2026. When will we see the full effect of the 4,500,000.0 in reported ARR numbers?

Could you help us think about phasing on both ARR growth and revenue growth in h two twenty twenty five and 2026. So the total amount of AR, which is not rolled out as of the ’2, is around €4,500,000. Right? That’s an estimate because there’s transaction fees and so on for those two. When they roll out is really hard for us to predict because the enterprises have certain requirements that they want, and those requirements change.

They have to upgrade their their Internet sometimes, upgrade their equipment. And so it’s really hard for us to predict exactly when that will happen in that phasing. But as we’ve we’ve guided, this will happen in h two twenty twenty five and 2026. So you should see the full 4.5 by the 2026. The next question is beyond headcount and other OpEx investments in the AI and DACH launch, should we see any impact on gross margin in h two and twenty twenty six?

We don’t provide forward looking guidance on this. But, Alex, any comments?

Alex Graham, CFO, NordHealth: Yeah. I mean, I think, as we’ve discussed, one of our biggest projects is is in the therapy business, migrating clients from the legacy Aspect platform to the the unified platform, and that that should help us realize the the the savings that that that Charles mentioned on that on that rollout. Now, you know, in the meantime, it costs a little bit more to migrate, but then the savings from the migration will will will help support gross margin and and other cost lines into h two and and certainly into 2026 when the the larger volumes of migrations will will start to come through.

Charles McBain, CEO, NordHealth: Thanks, Alex. The next was, could you share some more insight into why the time is right to accelerate your DAF efforts now? So as I mentioned in the presentation, the main reason we’re doing it now and accelerating it versus what we had initially planned is the strong inbound request we’ll be getting from enterprise. So they wanna migrate, and a lot of them are on both both on our system, but also on our competitor system. And we see a big opportunity to be able to do work in parallel.

We onboarded a new CTO, James, this year, and which I’m very confident in his ability to be able to do prods in parallel. So the our capability internally to be able to do it, ramp up net new teams, and the second one is the the strong demand from enterprise. Then there was another question from Eric. The €2,800,000 in annual savings in the therapy from migration of ASPIT, did you see any of those gains in q two, or is that an h two twenty twenty five, twenty twenty six story? So the savings in from the migration on the therapy side come up with probably a few different areas.

First, it’s the license fees that we pay for. So, basically, we pay for license fees to be able to provide the aspect legacy products to Microsoft and to remote desktop providers, Citrix. And so once they migrate, those are no longer needed. So that’s one big area. Right?

The second is the efficient. So a lot of the changes that are required to be made are made manually. So someone has to contact support to be able to make. So the number of support tickets on the Aspect platform is much higher than it would be on a new cloud platform. And so as a result, we should see a decrease.

And the third one is that we don’t have to support two different platforms. We only have to support one. And so there’s those are the three categories of savings. So the first the first one is we get and the second one, we get as people migrate. And the the third one comes only when we shut off the system properly.

And that should happen. We don’t have an exact end of life. Right? But we should see this improvement in mostly 2026. The next question was, are the financial targets communicated at the Capital Markets Day still valid, or should you assume they have effectively been abandoned?

Nope. The in the Capital Markets Day, we had communicated our growth targets, and those are still valid. Right? As we see that there are some fluctuations over time. Right?

And we’ve seen that historically in our revenue numbers as well, for example. But these are still valid as of today. Great. Any other final questions? Perfect.

Well, thank you very much, everyone, for joining.

Alex Graham, CFO, NordHealth: Thanks a lot, everyone.

Charles McBain, CEO, NordHealth: Nice day. Bye.

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