Nightingale 1-6'2025 preview: We moderate our expectations before the earnings call

Translation: Original published in Finnish on 09/10/2025 at 07:30 am EEST

In light of the summer profit warning, Nightingale’s growth in the first half of 2025 fell short of our expectations, and clear signs of the commercial success of its key partnerships have not yet emerged. In light of this, we cut our estimates for the company's revenue growth. We believe the share price decline (-17%) prices this in correctly, and thus the stock's risk/reward profile is not attractive enough over a one-year horizon. We reiterate our Reduce recommendation but lower our target price to EUR 2.4 with the estimates (was 2.9).

Partnership ramp-up not visible in the figures earlier this year

Nightingale will publish its financial statement release on Thursday, September 18, from which we seek an update on the progress of the company's partnerships. With the profit warning, we now expect Nightingale’s revenue for 1-6/2025 to remain roughly at the previous year’s level of 2.70 MEUR. The revenue base still relies primarily on research projects, but the growth potential lies in healthcare partnerships. In light of the low revenue growth, however, the ramp-up of partnerships has been somewhat slow, which is not uncommon in healthcare. The direction of partnerships is still likely good, as the company has continued growth-supporting investments (e.g. New York laboratory opening, commercial expansion in Europe and Singapore). For these reasons, profitability has slightly declined, and we expect EBITDA and EBIT for the period to be -5.8 MEUR and -9.5 MEUR, respectively (1-6/2024: -5.1 and -9.3 MEUR). We expect net cash (excl. lease liabilities) burn to be 6.5 MEUR, and remaining strong at 53.4 MEUR at the end of the period.

Business is growing, but its trajectory remains unclear

Nightingale aims to integrate its disease risk detection service with the value chains of existing healthcare providers. If successful, the company's revenue would grow strongly and profitability would become positive over time (target: positive EBITDA in the medium term). The company has taken clear steps in this direction with healthcare clients (Terveystalo occupational health routine use, diagnostics services in Singapore via Pathology Asia and in the US via Boston Heart, and the South Savo wellbeing services county pilot). Nightingale also has other pilots and research projects preceding potential broader use. We also believe the company will announce at least one significant partnership within the next 12 months.

Although a broad partner base already mitigates commercialization risks, the visibility of the company's growth remains blurred and highly dependent on successful partnering roll-out, and especially their commercial success. In light ofthe recent news flow, we cut our forecasts for revenue and EBITDA by 5-25% and 10-20%, although the Moli-Sani research project mitigated this effect. We believe that our estimates rely on a realistic but very high-risk scenario of Nightingale’s business growth (revenue CAGR 39% in 2025-2034e). This requires successful ramp-up of existing customers and continuous new commercial contracts. Investors must therefore believe in the company's global commercial breakthrough, take a long-term view of the stock, and accept the risk of capital loss.

We expect a more attractive return for taking risks

Nightingale’s fundamental-based valuation is very challenging, as possible scenarios vary between destruction and multiplication of invested capital. With current data, our fair value estimate range for the share is wide, EUR 0.8-7.0 (was EUR 1.0-7.3). We feel the company's track record of customer wins, but on the other hand, the still missing signs of growth in key partnerships, support pricing at the lower end of the range (target price EUR 2.4 per share). Although there are potential positive drivers in sight (new customer wins, signs of growth in Pathology Asia and Boston Heart partnerships), we believe these are already priced into the stock, and its risk/reward ratio is not attractive enough for a one-year horizon. On the other hand, we think that the company should be approached with at least a multi-year investment horizon.