Nightingale acquires the rights to manufacture the blood collection device for its at-home test

Translation: Original comment published in Finnish on 2/1/2023 at 5:58 am.

Nightingale has acquired a worldwide license and rights to manufacture the Velvet blood collection devices used in its at-home testing from Weavr Health. The license gives the company the right to independently manufacture the Velvet devices and commercially use them in connection with its services. Prior to acquiring the license the company purchased the devices from Weavr based on a distribution agreement.

The agreement brings blood collection devices largely into Nightingale’s own hands

Nightingale invested about EUR 3.5 million in Weavr Health with a convertible bond in summer 2021. At that time, the company deepened its partnership with Weavr, making a distribution agreement for blood collection devices required for Nightingale’s at-home tests and use of Weavr's intellectual property rights. We believe the now published release in practice transfers the manufacture and further development of blood collection devices from Weavr to Nightingale. The license now acquired by Nightingale is royalty-free and permanent, in return for which the company waives its rights under the convertible bond.

We believe Weavr is a small and early development stage company. If Weavr had faced a difficult financial position, its delivery capacity and thus also the ability to deliver Nightingale’s at-home test service, could have been interrupted. As the manufacture and development of blood collection devices is transferred to Nightingale, this risk is effectively eliminated and it is also easier for the company to develop the device as part of its service offering. In addition, we estimate that the agreement allows Nightingale to reduce the cost of at-home tests and improve their margin level.

In the fiscal period that ended on 6/30/2022, the value of Nightingale’s Weavr investment had already been written down and revised to EUR 1.2 million (after IFRS amendment) so the impact of the related transferred rights is limited on the company. We also believe that at-home tests play a complementary role in the company's growth story, so the release does not have an immediate impact on our view of the company