Just to give a start of an introduction, I'm Charles McBain. I'm the CEO of Nord Health. I started my career in in consulting where I worked with quite a few clinics and hospitals, and I was exposed to the state of EHRs and practice management softwares. And that was where my first interest in the area started. Given that these softwares were causing a lot of pain and to the practitioners in the clinic and health care professionals.
And As a result, I've always had in the back of my mind that this has been an area which needs disruption. Right? After consulting, I went to work at a private equity fund called Promodg Capital, based in Switzerland. Thereafter, I went to Harvard Business School where I learned about the search fund model. And upon graduation and started for a search for a company in this practice management software space, decided to focus first on veterinary, given that it's the area of the health care, which is least regulated and then therapy, which is a second least regulated area.
And after a year of searching, I ran across NordHealth based in Helsinki. And, we've acquired the company in November 2018 and it's been quite a journey ever since. Walter, do you want to introduce yourself?
Thank you, Charles. Good morning, everyone. My name is Walter Parsonen. I'm the CFO of Nord Health. I joined NordHealth shortly after Charles had joined.
Before that, I was working in various financial roles, 6 years also in Germany, most recently at Ertel. That's Fisted on the Nasdaq in Stockholm. And that I was at that time looking to consolidate the German market, and I was responsible for acquisitions and integration there. At the most recent role I helped, I was CFO of Aetna Germany and before getting the amazing opportunity to join this company two and a half years ago.
Thanks, Walter. So I want to start off with our vision. So what are you trying to do? So we're trying to build software tools that help empower healthcare professionals to save time so they can focus on what matters most, right, delivering great care, great experiences, and growing their business. So what is Nordhealth?
So Nordhealth is one of the leading Nordic healthcare SaaS company. It was founded in 2,001. We we developed electronic health records and practice management softwares in currently 2 attractive healthcare niches of veterinary and therapy. In addition to developing our own, we also acquire electronic health record and practice management and software providers to help us accelerate our interest into new markets. By new markets, I mean new geographies for new specialties.
To date, we've been able to successfully acquire and integrate over 8 acquisitions. We've got 2 core products currently, which all of our veterinary and therapy clients will be unmoved to. 1 is Provet Cloud for the veterinary market and second is Doctor for the therapy market. Today we've got around 230 employees working to design, develop, implement, support and sell our products. This year, we're targeting 23,000,000 to 25,000,000 of ARR by year end 2021.
The reason we, IPO'd the company in Duda this year is because we saw that there's a window of 5 to 7 years, a window of opportunity to capture these clinics as they're shifting from legacy on premise or hosted software to cloud based software. And we want to do be able to do use those proceeds to accelerate our growth through a combination of m and a and organic growth as we've done in the past. If we think about our business today, the ARR annual recurring revenue splits by segment is roughly half veterinary and half therapy. For a small part of the incubator where we create new add on products and we upsell them to both our veterinary and therapy customers. In terms of geography, just over half of our customers come from Norway following the acquisition of Aspect.
24% come from Sweden, Finland and then 12% come from Sweden. The rest are spread out to the other 22 Southern sub countries. So what what are our products? So the core of the product is the electronic health record software. Right.
And those are specific to veterinary. We've got one of the world leading positions in cloud software and but also physiotherapists, occupational speech therapists and psychotherapists. And over time, we will look to expand beyond those. Then Attached to that electronic record software fully unified is a practice management software, which enables our users to manage appointments in their clinic or hospital, right, schedule shifts, allow customer users to book on or customers of those clinics to book online, right, allowed them to communicate via SMS or text messages in a unified way or manage their inventory and also do full invoicing. In addition, we've also created something called Nord Health Pay, which enables our clinics to be able to add fully integrated payments to this solution.
Right? So they're able to pay in clinic with the terminals that we provide, do online payments, do recurring payments, and also pay by email or SMS link. This is all supported by our integrations. And our here, we're a bit different than some of our competitors. We believe we are an open system.
We will continue to be an open system, open to many third parties to be able to build, and integrate with our products. We're not going to be the best at every single part. Right? But with our 3rd party partners to integrate FUS, we can be. Right?
So we've got a lot of different integration, some that we do ourselves and some that we actually, you have third parties do for us. Telemedicine, for example. We've got our own solution for telemedicine, right, called BV Health, right, that we integrate. For imaging, right, we integrate with all the different x-ray MRI machine, CT scan and so on. Right?
Now the accounting side, we integrate all the local accounting providers. Right, because all the different clinics use different local accounting providers. They're all the local wholesalers, right, to make sure you can order directly from the software. When the orders are received, you can easily add those orders to your stock. And then insurance companies.
There's a growing amount of insurance in veterinary and in therapy. There's a lot of different, insurances. We integrate directly with them to make sure that claims are processed. And lastly is the lab where, and there are 2 types where we integrate with local labs or what we call in clinic labs for blood tests and so on. And then second, we integrate with 3rd party external labs as well.
Right? We have to send out the blood samples or which is your samples to a 3rd party. And so that's the core part. And some of our enterprise customers go even further. So we've got an open API, which enables some of our enterprise customers to build apps on top of our software.
And we've got many customers that are building customer mobile apps or some building AI tools for diagnosis. There's a very exciting things that are happening beyond and that are enabled by our software. So that's a bit of a now a little bit of the about the company updates in q2. So let's start with the KPIs. Right?
89% of our revenue is recurring. That's the first thing. Right? 2nd, from 20 the first half of twenty twenty to the first half of twenty twenty one, Our AR grew by a 124%, of which 36% was organic AR growth. And that's driven by 2 factors.
1, organic net retention was a 118%. And 2, We had 18% coming from organic customer recruitments. And again, very, very low churn rate of 3%, right, which entails that people stay with us these 33 plus years. A little bit, but what happened operationally. So first, we made a lot of new hires.
Right? But I just want to highlight a few key new hires that we've made. First, we've hired 3 new country managers. And to understand the importance of this, the way we run our business is very localized because The the country managers and their teams make the majority of the decisions for their markets, and that's what enables us to scale. So the country managers are really key position for us.
Right? We hired, 1 for the US, 1 for the UK, and 1 for Spain. In the US, we hired Chris, and he was previously working at a software company selling into veterinary clinics. And he was able to ramp up sales at that company from 0 to 1200 plus clinics in 5 years. 2nd, we hired Scott who's got about 12 years of experience in UK B2B Software with a particular focus on enterprise sales and customer success.
And 3rd, in Spain, we recently hired Jordi, who joined us actually at the beginning this week as country manager. And he was also selling into vet practices, with, 2, companies which had startup operations. So quite an entrepreneur as well. In addition to that, we've also promoted 2 of our own internal employees in the therapy business units to country managers in Finland and in Norway. Next is customer wins.
So We, we won 2 big corporate chains in the US, right, which has proven that we're getting more and more localized for that market, and we're competing better with, the incumbents there. We also sadly lost 1 to a competition. Right? The rough So ARR from those, 2 customer gains is roughly $250,000 Then we also won a corporate chain in Spain, and we won a UK University tenure. Now new market entries.
Right? As we said before, right, there are 2 ways that we acquire or we we go into new markets. Right? 1 is organically and second is through acquisitions. We've actually entered 2 new markets for acquisition.
The first is the Norwegian psychotherapy and physiotherapy market with the acquisition of Aspens. And second is, we entered a Danish veterinary market with the acquisition of NovoSoft. For those 2, we've got the same strategy as we have had in the past, right, understand, make sure their their employees and customers feel safe, do a gap analysis to figure out what great features they have in their software that we should bring into our software. And the third step is the migration where we bring them all on one platform. Lastly, we also launched a new product.
We launched what's Nord Health Pay, which is our unified omnichannel payment solution that allows clinics to do in clinic and online payments. Now, maybe Walter, do you want to go through the financial updates?
Thank you, Charles. Right. So let's dig a bit deeper into that ARR growth we saw earlier. So in, Q2 and Q2 twenty, We had an ARR of 10,000,000. We then signed new ARR with 1,800,000 resulting in the 18% new organic customer recruitment process, then had net ups of 2,100,000 and a churn of 300,000, so 30% there.
And in total, Those 2 together, the net retention rates of 118%, resulting in the 36% organic growth rates, Organically leading us to a 13,600,000 by the end of Q2 'twenty one. When we then add on top of the acquisitions, we closed in the Q2 of 2021, and then ended the year at 22,400,000 ARR. If we then look at the quarter The quarter development, we, in the end of Q1, had $12,700,000 of ARR. We then had organic growth of 7%, Leading again to a €13,600,000 in the end of Q2 organically. And again, the €8,800,000 getting to €22,400,000 by the end of Q2.
So 76% growth in ARR in 1 quarter. Then to go through some of the, reported financials. So for relevance, we have adjusted revenues For the divest consulting business, which we divested in the last quarter of 20. So these were basically customers that, mainly didn't have any relation to our Retinarian therapy, products. And, that's why they were also not part of the IPO ARR in that.
But to understand the underlying growth rates For our continuing business, we have adjusted for those. Now the adjustments in the first half of twenty are €50,000 So it's mainly about the 2020 numbers where we adjusted roughly for €800,000 in revenues. So when we look at the adjusted revenues, They grew year to year in the first half for 52%. Recurring revenues grew by 53% year over year in the first half. And, when we look at the EBITDA, we have for the first half of 21, taking out the IPO and m and a cost and adjust for those Understand the underlying sort of comparable EBITDA.
So that was at 1,900,000 in the first half of twenty twenty one and showed a growth rate year over year of 56%. Then to look a little bit on the quarter to quarter development for the same numbers. So then quarter to quarter, From q2222021, we saw an adjusted revenue growth of 83%, so quite significantly higher, and Recurring revenue growth of 73%. And the adjusted EBITDA also grew from 600,000 to 1,100,000, showing 74% growth rate there. Then a chart that perhaps you might know from the IPO process, we continued here for the first half of twenty twenty one.
So, we showed the scaling operations and the positive EBITDA we've had. Now we've again adjusted adjusted for the IPO and M and A costs only in there in the first half of twenty twenty one. So when we then look at that, we see that we have an adjusted EBITDA of 1,900,000 as mentioned, And I adjusted free cash flow of 3,100,000. So still generating very positive cash flow, which we're happy to see, even though it's not our main focus We're mainly focusing on growing, grabbing as much of that ARR as possible. Then going through the P and L.
So we provided a bit more details on the Q2 reports, but shortly some of the main items here. So it's important to note that these reported financials now include our acquisitions, from the date of closing. So Aspitt from the start of June And Novosoft from the start of April. So the total revenues were at £8,100,000 growing at 41% year over year. Recurring revenues and the reported revenues were up 49%.
So ending at $7,200,000 in the first half. And adjusted EBITDA, as mentioned, was €1,900,000, so 24%. When we look at the first half of twenty twenty, it It was actually 22%, so there's actually a slight increase in EBITDA year over year. Then a quick look at the balance sheet. The significant changes there are in the total non current assets, a big increase in goodwill resulting from the acquisitions Post in the Q2.
Then in the intangible assets, we see capitalization of product development expenses. And then in the current assets, We see, of course, a big increase in cash, which is resulting from the private placement and subsequent listing to Euronext Growth. On the other side of the balance sheet, we see in the liabilities that most interest bearing liabilities were repaid in the 2nd quarter. So we reduced those by £1,700,000. And then also we see that advances received from customers grew quite significantly.
So As you might remember from the IPO process, all of our customers pay us in advance pretty much, and, some of them pay a half year, some of them pay a quarter, so that Increased quite a bit and the big increase there coming also from Hospice. And equity, of course, increased a lot also due to the Private placement, at least, into Euronext Growth. Then going through the cash flow statement. 1st of all, net cash flow from operations positive at 2,300,000 driven by net working capital. But then when we adjust also for the exceptional IPO and IPO and M and A cost, we would have had a CHF 4,700,000 net positive cash flow.
Then looking at the investment impact. So the net cash flow from investments was at minus €42,000,000 if you round up and €40,000,000 of that's coming from the acquisitions. And then in the financing items, we can see the changing debts at 1.6. So the interest bearing debt we repaid was 1.7. There were some positive impact there as well.
So totally at minus 1.6. And the new equity received, already mentioned. And then we also had a payment of of dividend And, pre IPO in the spring in order for the majority owner and, and CEO to repay some of the debt that he Had originally used to purchase the company back in 2018. So net cash flow from financing plus 112,000,000 ending at a cash balance of 76,400,000 in the end of Q2.
Thanks, Walter. So before we close, I just want to summarize a bit both the so yes, we've been quite Busy over the first half of the year, right, doing a private placement, subsequent listing to raise the 120,000,000 euros. I've got new customer wins, the acquisition of NovaSoft, the acquisition of Aspets, and also the integrations at those of those. Right? So, However, we do also have some challenges, right?
The a couple of challenges to mention. 1 of the big ones is that We're as as you saw, we've got our increasing free cash flow. This is not what we're looking for, actually. Right? We're looking to grow fast, and it's really the and growing fast means recruiting more and more great people.
And that's always a challenge, especially in this market now to recruit great sort of product team members like designers, developers, right, product managers, also recruiting local team members, right, in veterinary and therapy, which are 2 very busy industries at the moment. So I'm working very hard to be able to recruit new people. And, that's probably one of the biggest projects We have we've got great ideas and lots of projects. Right? We just want to make sure that they're well resourced, especially given that it there's a ramp up period of before, for example, implementation, it could be 3 to 6 months to be able to ramp that person up to be able to do them independently.
So that's one of the big challenges that we have. Right. But overall, we're very happy with the performance in this first half. And I want to thank our employees who've done a wonderful job and worked really hard over this first half to accomplish these amazing feats. Thank you.
So as I next, we'll update you again, for the q3 2021 updates on the 30th November 2021. Now if there's any questions, please feel free to ask. And the way to ask questions probably is to, you can use the the chat. And I'll repeat the questions that you've added into the chat, and then I will answer them. And you can find the chat icon at the bottom.
Okay. I think we have one question, Charles.
One question. Here we go. So, why did you lose a US corporate customer to a competitor who won the contract? That's the first question. So on this one, we lost the U.
S. Corporate chain as one of their requirements for selecting a provider was to get a big investment in that a controlling stake in that provider. So they decided to go with Rhapsody, which was a local startup that they could get a control investment in. That's the reason. So it's for us, what's Wonderful about that is that we had to discuss during the IPO that this happened as well thus far.
So there's basically there were basically 2 main cloud based competitors that were independent at that time. Right. There was Vetspar, which was acquired by a corporate chain fully. And now there's Rhapsody, which has been invested in by another corporate chain. Right?
So as a result, a lot of different, chains in the US who were using that product or are now a bit afraid in coming to us because they don't want their competitors owning, having access to their data. That was Hope that answers the question. The second is, what is your approximate win ratio for U. S. Corporate chain tenders?
These, it's it's hard to say exactly based on very few data points. Right? And the majority of not not tenders and but, overall, we've probably, won over half of those that we've gone after, right. But again the sample size is probably around 4, right? So 3 or 4.
So it's not a huge amount. Hope that answers your questions. Any other questions? We've got a question here. How is the ramp up of the payments module?
So payments is is is a core part of part of our of our future strategy, to be able to help out Receptionists sort of improve their workflow. And, however, payments is also a core part of the clinics operations. So we have currently a pilot ongoing in Infinil for a few weeks now, and we've rolled out quite a few locations for corporate chains in Spain as well. So for now, The initial part is going well. We are being slowed down, however, somewhat by the chip shortage in that, the availability of payment terminals is quite limited.
However, we're working with Adyen on that one. But we're very happy with the progress so far. And, the product's working quite well actually with customers. So we're quite happy. And we have another question.
Can you give us more color on the contract wins in Spain and the UK? Yeah. Sure. So in Spain, there is a customer, which owns a sort of quite a few hospitals, so referral hospitals, much bigger hospitals. We actually work with another company that this the end company HKP owns.
Right? So this was We had taken over their 1st opinion clinics, and we are now taking over their referral hospitals, which they bought. So that's one in Spain. Right? And in Spain, we've had good relations with those the corporate chains, and we're gaining the trust of the market in there.
It's a a market which has, where the NPS scores are quite high as well. The the second is that the the UK, where we won a Liverpool University. So, we're currently implementing the Liverpool University. And we really like this university project we had mentioned in the IPO, right, because It's it's a place where all the new the new generation of vets are trained. And if you can be trained on our system, right, then then when they would go back to clinics, which are using a legacy salt system that looks at Windows 95.
Right? They can be the agents of change in that clinic. Hope that answers the question. Then we got another question. How does the M and A pipeline look now?
We try not to discuss too much in the power plant, but the strategy is still the same for M and A is that we are continually looking at targets in the veterinary and therapy PMS space, as well as targets that could provide us with add on software that could we could then upsell to our 2 different veterinary therapy clients. In addition, we are looking at some outside of those specialties to create new specialties. But just for, we try not to give too much information on m and a given that you never know what could happen until the deal is signed. So I don't for not to jinx it on these things. But we are we are confident that that acquisition will continue over time.
We also we did acquire 2 big companies in the first half of this Yeah. Right. One big company and one smaller one. And, we want to make sure that, we've got the resources and time to be able to properly integrate those. Any other questions?
Good. If there's no other questions, well, oops, sorry. We have one. What are some of the things that, you're doing to help hiring people? Well, there's a couple of things.
One is the big thing was the rebranding as part of the IPO. We've seen the quality of candidates increase a lot, right, for that. The second thing that we're doing is that we've invested more in HR, right, to be able to help source candidates outbound. Right. And the third is the key hires were those for local hires, were those country managers who have local networks in those countries.
On the product side, we've got many jobs open. Right? And we are looking to to to pay a sort of size above average for developers and designers. And the reason why it's taking us time is that we have raised the bar as well for for hiring. So, we want Great people to join us for many, many years.
And so we don't want to rush it. And, I could rush and fit all those positions tomorrow. Right. But We really want to make sure that we get people that have a spectacular ability and also fit in our culture well. And those two things are important because, again, in most of these positions, right?
The ramp up time is is quite significant because a designer who just starts with no veterinary therapy experience, right, We'll have to have time to understand the workflows of reception in the vet clinic or therapy clinic and so on. Right? Especially the medical workflows, which are more complex, for example, in a referral hospital for veterinary. But, the big thing we're doing is shifting to outbound. We actually are one of the position we have open is a recruiter, right, a corporate recruiter for products, which, will hopefully help us being able to do more targeted outbound.
Okay. Well, this wait. Maybe a couple seconds to see if there's any other questions. Otherwise, there's more questions. Well, thank you very much for everyone for attending.
I think, and And again, thank you for our employees for a wonderful time. So we look forward to updating you again in for the Q3 results on the 30th November.
Thank you
for your time. Bye.
Bye.