Thank you for making the time. We are actually recording the presentation, so the recording just started. Welcome to the Q4 2021 presentation. I want to start off by introducing myself to those who don't know me. I'm Charles MacBain, the CEO of Nordhealth. I also want to introduce our new CFO, Mari. Mari, would you like to introduce yourself?
Yes. Hello, everyone. My name is Mari Orttenvuori. I joined Nordhealth as of the beginning of the year as a CFO. I have worked in various senior financial management positions over the last 20 years or so. Most recently, I worked for six years as a CFO in two different companies. I worked as a CFO for a company called Enfo, that is an ICT consultancy company operating both in Finland and Sweden with a turnover of some EUR 130 million. Prior to that, I worked for a company called M-Brain, who offer media monitoring and analysis services on a global scale. I'm very excited to be here.
Thanks, Mari. We'll start off with company updates. Just reiterating the mission that we're trying to achieve, right? One of our mission is to improve the daily lives of healthcare professionals through software, right? For those that have joined us for the first time, I want to recap a bit about the business. Nordhealth is a healthcare SaaS company which has a strong presence in the Nordics. We actually build and acquire practice management software in select healthcare niches, currently veterinary and therapy. In therapy, we have multiple sub-niches such as physiotherapy, psychotherapy, and occupational speech therapy clinics. We are the market leaders in the Nordics veterinary therapy PMS markets, and we're rapidly expanding internationally with strong beachheads in Spain, U.K., and U.S.
Charles, we lost your sound. At least I did.
Today we serve over 30,000 healthcare professionals, which are located across 11,000 clinics in over 30 countries. One interesting piece of news is that actually as of February 2022, we actually hired and recruited our 300th employee. In June 2021, we raised EUR 120 million to accelerate our international expansion, ramp up product development, and be able to fund follow-on acquisitions. We did this as practice management software is very sticky, right? You'll see that from our churn rates, right? On the flip side, it makes it very hard to dislodge incumbents which are in the clinics.
However, right, we have a once in a lifetime opportunity, window of opportunity over the next five years to recruit non-board clinics because they will be making the shift from legacy or on-premise hosted software to cloud-based software. If we look at where the business is today, around half our business is therapy practice management software, and the rest is veterinary practice management software. Just over 1/2 our revenue comes from Norway. However, almost a 1/4 from Finland, right, 13% Sweden, and the other sort of 37 countries are actually, splits, and, make a small percentage of the revenue, but the fastest-growing percentage. A little bit about our growth strategy. Number one, right? Software is all about people.
The number one role that we see management do is to hire, develop, and empower A players, which build great teams, and will help us scale to our goal of EUR 110 million ARR business, right? The second is focusing on attractive healthcare niches, right? Currently, the first two that we started with are veterinary and therapy, and we'll continue to focus on these for the next few years, right? As there's a huge amount of opportunity. In the future, we will continue going up markets, right? Third is we want to build one easy to use, efficient, cloud-based software per healthcare niche that attracts customers through word of mouth.
Fourth is we want to continue building on our initial successful scaling outside Nordics within the attractive healthcare niches that we're in organically and through acquisition, but normally one country at a time. Fifth is, we're continuously investing in making the product more intuitive so that we can scale faster via what we call product-led growth, which means in contrast to sales-led growth, requires very limited sales or onboarding for SME customers. In addition, we will continue, ramping up our targeted outbound strategy for larger target accounts. Seventh is once we have the PMS, there's a lot of opportunities to expand, our product offering within that customer.
We're looking to continuously expand our product offering range organically and by acquisition and add things such as payments or consumer apps and so on. Last but not least is that we acquire legacy practice management softwares in current healthcare niches, study their product closely post-acquisition, incorporate their unique features and functionality that improve our cloud products, right? Then train their employees on our cloud product and migrate them over to the cloud platform. We've done this a few times now, right? In 2005, with the acquisition of Provet. In 2009, with the acquisition of Praktiikka, right? Again in 2019 with the acquisition of Trofast, Sanimalis, and Vetserve. In 2021 with Novasoft and Aspit, and most recently with EasyPractice.
We've definitely learned a lot from this acquisition migration strategy, but it has historically worked quite well for us. We foresee it working quite well in the future as well. Little bit about our KPIs. Organic net retention rates in 2021 was 114%, right? Our organic new customer recruitment was around 10%. Which means that our organic ARR growth was 23%, excluding acquisition. However, including acquisitions, it was 102%. 92% of our recurring revenue in Q4 was recurring revenue. The second is that I want to introduce a new metric and which is ARR per share, which was around EUR 0.30 at year-end 2021.
The reason I want to introduce it is because I think in the medium term, this is the best proxy for intrinsic value per share. As a CEO, I will look to always focus on maximizing ARR per share, not total ARR, because ARR per share is the best proxy for long-term free cash flow per share as the cost of R&D, G&A declines as a percentage of recurring revenue, which will happen as the companies scale. The next KPI is one that we've seen before, right? It's our ARR gross churn, which is 1.5%, right? Remember, this is gross churn, not net churn, right? That's the total amount of customers that left over the year, right?
The last one is our ARR, which was EUR 24 million in signed ARR year-end 2021, which is right in the middle of our forecast that we gave between 2023 and 2025. Let's talk a little bit about the history. I joined the company in November of 2018. At that time, we were roughly around EUR 3.4 million in ARR, right? We grew quite fast in 2019, right, to EUR 9.6 million. Also, this was supported by the acquisition of Vetserve, Sanimalis, and Trofast, right, which you can see in the EUR 5.4 million. Thereafter, in 2020, I was a bit too conservative. We didn't make any acquisitions that year, and we grew from EUR 9.6 million to around EUR 12 million, right?
We were focusing on conserving cash there just with the risk of COVID. We weren't sure how the impact was gonna be. In hindsight, that was too conservative, right? We resumed our quite aggressive growth in this last year, right, by growing from around EUR 11.9 million to EUR 24 million, right? We made two acquisitions within this EUR 10.5 million. One was Novasoft, and the second was Aspit. Breaking down 2021 a little bit more detail. We started at EUR 11.9 million, right? We signed EUR 1.2 million in new ARR from new customers, right? Second, from our current customer base, we were able to get another EUR 1.8 million. Within that, you can start seeing the impacts of the payments that we're offering now to our current customer base, right?
Specifically, the deals that we've done with Nets and with Adyen. Then you can see our churn, which was 0.2%, right, to get us to EUR 14.7 million. We acquired Aspit and Novasoft, which had a revenue at the time, at the beginning of the year, of EUR 8.8 million combined, but they grew as well by 0.5%. You can see, the acquisitions are currently growing slower than the core business that we have, right? At least Aspit and Novasoft, and that was known in that until they're migrated to our cloud-based software, it is much harder to be able to upsell them. That ended up at us at EUR 24 million. I want to give you a better flavor of, okay, so how do we convert ARR, right, to this future free cash flow proxy then?
Using 2021 numbers, I want to give you an insight about how I look at the business, in today, but also how that will look longer term. If we look at 2021, our recurring revenue was about EUR 18.45 million, right? If we take out the COGS, which are hosting costs, SMS costs mostly, right? Take out customer service and support, which is currently a bit inflated because we're growing in many new markets where we have to hire first a senior person, right? also we're ramping up these support people, which can take three-six months to ramp up. As we grow, this support and service cost is quite inefficient, and so we'll look to see it become more efficient over time. Regardless, this is the actual number, right, of EUR 2.79 million.
The last sort of bucket in this is maintenance developments. Right? I want to pause here and explain a bit about how we think about maintenance development. We made an assumption that was gonna be roughly 10% of our 2021 development costs. It's not the same as the development portion that we allocate to the operating expenses versus CapEx. Because within our operating expense product development, we actually include quite a few projects, right, base work, which cannot be CapEx or a lot of bugs that are created because we do a lot of new developments.
It's a bit of a chicken or the egg, 'cause if we at scale, we're doing much less product developments, new product development as a percentage, right? Our bugs would also be low. This was a good approach to see like at scale, what is the actual contribution, variable contribution margin that we would have. That's just over 65% currently, despite the inefficiencies that we have, for example, in customer service, and also we don't have any scale benefits from hosting in our COGS. After that, we should add the G&A costs, right? The EUR 5.7 million. This is still quite high, as a percentage of revenue, and that's because when I was building the team, right?
I wanna make sure we build the team with people that can scale to EUR 110 million ARR, right? That gets us to a contribution margin two of around 34%. In 2021, we invested huge amounts in new projects, right? In new growth investments, right? We invested a total of net, because there's also revenues from professional services, in professional services to onboard customers, in sales and marketing to onboard and upsell new customers, right? In product development, which is the biggest part of it. This is both the capitalized part and the expense part of product development, right? We invested a total of EUR 7.44 million this year on growth investments. There are two main things we invest.
We made significant investments in 2021 in go-to-market in marketing, sales, professional services in the U.S. and U.K. Second is investing a lot in our product development organization so that we can scale quicker and localize our product faster for new markets. Despite that, the change in net working capital and some other cash items means that our adjusted free cash flow was still EUR 4.56 million at the end of 2021. Now, a little bit on what happened and a little bit more details on the 2021 operations of that. In Q4, we actually hired 34 net new employees. Five in support, 16 in sales, marketing, and onboarding, 12 in product development, and one in G&A.
You can see that we're focusing a lot on recruiting new go-to-market people in our growth markets and also in product developments FTEs to ensure we can localize faster and more efficiently. Second is we saw in the previous slides the high net retention, and that is driven by the adoption of the Nets and Adyen's payment solution, right? It's a big contributor, and we foresee it continuing to be a big contributor over time. The third is the majority of new customers that signed up in Q4 were some SME customers and clinics and hospitals. We're quite happy about that, is that we've been building a sort of an outbound strategy and training our sales team on outbound, which is a new sort of sales strategy for us.
Before, most things came in inbound, so we're trying to work on this outbound strategy for both veterinary and therapy. We're quite happy to have sort of successfully started and seen and see results from the small clinics on that strategy. The larger enterprise deals, which happen every couple quarters, right, are mostly owned by the country managers, not so much by the salespeople. The last one, but not least, is we began the development and pre-sale of a new digital treatment sheet and whiteboard add-on module for veterinary clinics, which we should be able to upsell to our current client base. That's a bit on the business. Now I'll have Mari go through some of the financial updates.
Thank you, Charles. In our final quarter, we had a strong ARR growth of 5%. That compares to the previous quarter, ARR growth of 2.6%. This was strong growth in both our veterinary and in our therapy business units. As Charles already mentioned, we had a positive impact on net upsell from the partnership agreement, which was signed with Nets in the final quarter of the year. We also had a very low churn at 1.5% during the quarter, leaving us with EUR 24 million end of the year ARR. In the final quarter, our adjusted revenue was EUR 6.4 million. That was up by 78% in comparison to the previous year. The adjusted recurring revenue was EUR 5.9 million.
That was up by 92% year-over-year. Also as discussed, we have invested now in ramping up operations in the U.S., and also we have invested a lot in new employees within sales and marketing and product development. That has increased our costs and had a negative impact on our EBITDA as planned. Still, our strategy continues to be highly profitable in the established markets where we operate, while we are then reinvesting the profits to grow new ARR. Our ability to generate cash flow was strong. The positive operating cash flow is driven very much by the negative net working capital and the adjusted free cash flow, as mentioned, EUR 4.6 million.
That includes a cash-based adjustment of the IPO and M&A expenses of EUR 2.4 million. The final quarter recurring revenues amounted to EUR 5.9 million. Those were up by 85% year-on-year. Total revenues were up by 66% at EUR 6.4 million. Recurring revenues amounted to 92% of our total revenues in the final quarter. The decrease in other revenue is driven somewhat by a change in the pricing model where we're shifting other revenue to recurring revenues. What this means in practice is that previously we have recognized revenue from implementation projects as a one-off revenue within other revenue and with the change in the pricing model, we are now incorporating this revenue in our monthly fees.
EBITDA in the final quarter was negative EUR 0.2 million and we can see the reflection of the high activity in the talent acquisition impacting here. Also with the COVID at least a little bit temporarily shifting during the final quarter of the year, we saw some increase in travel and meeting expenses. Also we have had some additional marketing activities impacting EBITDA. Amortization of goodwill is much higher. That is driven by the acquisitions completed during the second quarter of the year, mainly Aspit. Financial items mainly relate to the revaluation of foreign currency items. We have seen big changes on our balance sheet during the year. Some highlights to mention.
We transferred EUR 46.5 million of cash that was received as proceeds from the IPO. That was transferred to fully liquid money market funds. That EUR 46.5 million also was the fair value of those funds as at the end of the year. Our net interest-bearing debt was EUR -73 million and our goodwill balance was increased due to the acquisitions that were completed during the year. We have repaid our interest-bearing liabilities EUR 1.9 million during the year. Another big change is in the increase of advances received from customers. That is also driven by the acquisitions that were completed during the year. Cash flow from operating activities was positive.
Again, as mentioned already a few times, driven by the negative net working capital. If adjusted with the IPO and M&A related costs, then cash flow from operating activities would have been EUR 7.9 million. Cash flow from investing activities is EUR -92.1 million. This is due to the conversion of cash into the liquid money market funds, EUR 46.5 million, and also the acquisition of Aspit and Novasoft during the year amounted to EUR 42.2 million. Cash flow from financing activities was very positive. This was due to the private placement and listing. Also we can see the change in net debt.
That includes the repayment of the debt EUR 1.9 million, and also some repayment of earnout debt related to a previous acquisition.
Thank you, Mari. Now we'll go through the 2022 forecast a little bit, giving a bit more flavor on what we're doing this year and where we're planning to go. As I said in my previous call, we are forecasting ARR to increase by 20%-25% organically in 2022. That's excluding acquisitions. What does that mean? Right? We ended the year at EUR 24 million, right? It means organic growth, excluding the 2022 acquisitions, but including the 2021 acquisitions will be between EUR 4.8 million and EUR 6 million, right? And EasyPractice, which we acquired in late January 2022, will add another EUR 2.2 million-EUR 2.4 million.
In addition, we've got quite a broad M&A pipeline, and we're expecting to close further acquisitions in during 2022, which should increase that. But as previously right, to ensure we have a good negotiating position, we do not announce any or forecast any acquisitions within our forecasts, right? 'Cause you never know what happens with the market. What are we doing in terms of investments is we're doing a significant ramp-up in product development spending, right? That is what has been our biggest bottleneck to growth, right? There's a couple different areas within that that I wanna tell you about where we're investing. One is accelerating the localization of Provet Cloud in growth markets such as U.S., U.K., and Spain, right? The Provet Cloud is localized and being used by quite a few customers in those markets, right?
They are happy with it, but there are still some things that are not perfectly up to business sort of needs in those markets. Not legal requirements, but business needs, right? When you compare to competitors and so on. Investing in those to make sure we've got a great product for the markets. The second thing is the differentiator in our products that we wanna have is not being a feature store where you can have every feature you want, but really doing the basics incredibly well. We've ramped up quite significantly, and we will continue to our design system team and our design team to be able to have sort of a very seamless and elegant sort of UX and UI for the most commonly used workflows in our software.
The third is we're working to upgrade the Diarium platform to replace Aspit in Norway and enable Diarium to expand internationally, just like we did before with Provet Cloud in 2015. Next is we're developing a new pet parent app, which is exciting, which will connect fully to Provet Cloud and enable us to sort of get some exposure to the pet parent side or consumer side of the veterinary industry. Next is, we're developing a new workflow companion app, right, which will provide digital treatment sheets and a whiteboard solution for veterinary professionals. Right. This is mostly for larger clinics and hospitals.
Lastly, we're continuing the developments and of the patient portal that we have in Finland called Navisec Health, and we'll expand it as well to Norway to be able to upsell that to our Aspit customers. The second main area that we'll be investing is continuously ramp up the U.S., U.K., and Spanish veterinary go-to-market team, right? The reason why we're ramping up quite aggressively is that even though we've ramped up quite a bit as well already in 2021, is because the fact that it takes a long time to be able to train people, right? Three-six months, depending on the role. As a result, we wanna make sure we've got the people ready to onboard new customers when they come.
The reason we're investing way more than we did in 2021 this year in those areas is because of the fact that this will unlock growth, right? Currently, our growth, because we've got quite a lot of market share in current countries, right? With the acquisition, for example, of Aspit, we've got quite good market share in therapy space in Norway, for example. Diarium already has quite a good market share in Finland. We're somewhat blocked on the therapy side. We're still growing on the veterinary side, but we wanna be more aggressive so that both can continue growing quite fast. We're expecting that the investments we'll make in 2022 will enable us to increase organic growth in 2023 and onwards. That's on the forecast.
In terms of next steps, we'll be releasing the 2021 group financial statements, updates on the 29th of April 2022, and our Q1 2022 presentation will be on the 20th of May 2022. Thank you very much. Does anyone have questions? Maybe I'll stop sharing so I can see people. If you've got a question, just raise your hand or add questions to the chat. We have one question from Oliver. Oliver asked, "Some gross margin contraction quarter-over-quarter. What is that driven by? What is the gross margin on payment services?" Good question. Thanks, Ollie. Oliver. The gross margin contraction quarter-over-quarter, let's go back to that slide maybe, was, it's not driven by products reducing the gross margin reducing, it's by the product mix.
When we acquired Aspit is a server-based solution or hosted solution, which is much more expensive on a variable basis to maintain. That's sort of. Because we acquired Aspit, which is a big asset, right? Their gross margins are worse than our gross margins in our historical cloud products. As we shift the Aspit customers over to our cloud solution, we should see that gross margin improve. That's on the gross margin traction quarter-over-quarter. The second is what is the gross margin payment services.
The payments service that we come in, it's pretty much on the Nets one is pretty much 100% conversion to pre-tax free cash flow in that we don't put the total value of the payment flow, but just the commission we get from the payments. On the Adyen side, we do have some costs in order to onboard customers, and then some very rare support costs. It's probably a 90% something margin on that. We're quite happy about these payment services given the high margin. Hope that answers your question. Any other questions on the chats or by people raising their hands? Another question, how has the commercial traction been in the U.S. during Q4? We're very happy with our progress in the U.S.
As we had mentioned before, right, we had began onboarding the two corporate chains that we recruited, so we're quite happy with that. We're also selling to quite a few additional clinics. We're looking forward in this year as well to have a strong performance again in the U.S. The key I think to winning the U.S. market will be making sure that we've got all the sort of legal and business requirements done in an elegant way, and also ensuring that we have to build a good reputation with the team in the market.
We've recruited a very good team in the U.S. market, and they're trained, and the initial feedback we're getting from the first customers is quite strong in terms of the quality of the implementation, the quality of the support, and so on. We're very bullish on the U.S. opportunity. Any other questions? Good. Well, there's no more questions. Thank you very much everyone for your time, and I look forward to seeing you again in the next quarter's presentation. Thank you. Have a wonderful day. Bye.