Nightingale H1 on Thursday: A look at sprouting growth seeds
Translation: Original comment published in Finnish on 2/22/2022 at 8:09 am.
Nightingale, a provider of preventive healthcare technology, will publish its fiscal year H1 report (7/1/21-12/31/21) on Thursday. Since its listing a year ago, the company has actively worked on the commercialization of its technology. Construction of Nightingale’s business is currently progressing on several fronts and our attention is focused on signs that these projects are progressing. Considering the company's development phase, the figures in the report are still completely on the sidelines, although the company may already report its order book for the first time. The market remains strongly skeptical about the conditions for success of the company and the valuation approaches the book value (2022 P/B 1.2x) that focuses on cash at hand.
Update on the progress of opened commercial paths sought from the report
Since the September report, Nightingale has promoted its commercial projects and partnerships, progress of which has been sporadically reported in press releases. Since fall, the company has offered continuous well-being services in Finland together with Terveystalo. In Japan, the company has piloted corporate health services at the headquarters of its investor the conglomerate Mitsui in Tokyo. Nightingale has also launched a preventive health service at the Japanese Shin-Oyama City hospital through Mitsui’s subsidiary Welltus. The company has carried out at-home blood testing pilots and launched a service model based on them through Yliopiston Apteekki in Finland. In addition, in January, Nightingale expanded to genetics through an acquisition, aiming to achieve the ability to consider genetic factors next to current lifestyle-related disease risks. The projects are all at an early stage and do not yet generate significant income flow, but in the report, we look for signs of their potential to grow to a significant size.
Revenue is still only forming, growth investments depress profitability
With regard to the figures, we expect revenue for H1 to have grown slightly and still be low at EUR 1.2 million. The revenue we expect is still practically generated from income received from universities and research projects. We expect profitability to be clearly in the red and EBIT to be EUR -3.2 million. The low profitability that we expect is explained by Nightingale’s growth strategy that’s in its investment phase, as well as the virtually non-existent revenue that will slowly start to form during the ongoing calendar year. The company's fiscal year ends on June 30 and, therefore, differs from the calendar year. Nightingale’s target is to reach an order backlog of EUR 5 million by the end of the fiscal year ending on June 30, 2022, and the company may report the order backlog for the first time in the upcoming report.
Despite commercialization progressing, valuation is approaching the balance sheet value
Nightingale’s valuation has continued in a deepening decline from the listing level (EUR 6.75 per share), approaching the company's balance sheet focusing on cash in hand collected in the IPO (2022 P/B 1.2x). The market seems to still be skeptical about a large-scale success in commercializing the company's technology. It will take years to gradually improve visibility on this, so the expectations for this report are not particularly high in our view.
Nightingale Health
Nightingale Health operates in medical technology. The company specializes in the development of medical devices. The product portfolio is broad and includes platforms and services in blood tests that are used for disease prevention purposes. In addition to the main business, service and associated ancillary services are also offered. The business is run globally with the largest presence in Europe.
Read more on company pageKey Estimate Figures2021-09-16
2021 | 22e | 23e | |
---|---|---|---|
Revenue | 2.1 | 2.9 | 8.8 |
growth-% | 31.88 % | 39.36 % | 203.45 % |
EBIT (adj.) | -5.3 | -7.1 | -13.2 |
EBIT-% (adj.) | -253.63 % | -245.37 % | -150.02 % |
EPS (adj.) | -0.13 | -0.13 | -0.23 |
Dividend | 0.00 | 0.00 | 0.00 |
Dividend % | |||
P/E (adj.) | - | - | - |
EV/EBITDA | - | - | - |