Hi, and welcome to Carasent's Capital Markets Day. Really good to see you all. We will start with me introducing a little bit of our background, where we are at the moment, and where we're heading. Thereafter, Svein Martin will talk about our new financial targets and our financial development. We'll have a question and answers at the end, but if you have specific questions as we go along, just please go ahead and raise them. That's for the ones in the room. Everyone on the stream, we will take at the end. But for the ones in the room, just raise your hand and you will get a mic, and we'll try to answer the question, so we get a little bit more dynamic. Let's get started. Who are Carasent?
Yeah, our aim is, with the help of our solutions, to drive efficiency and quality in the world of healthcare. This is, as I think most of you know, extremely important. The demand for healthcare is increasing all the time. We get older and older, therefore demanding more and more care. There are also more and more things that are treatable, driving the need for care even higher. On top of that, our demands on our healthcare systems are greater than ever. We expect to live long and healthy lives. We do not accept having a hurting knee when we grow old anymore. It's a big change from previously, and healthcare, as all other industries, need digital solutions to be able to tackle these challenges, 'cause we don't have more staff to put into the system.
Maybe a little bit, but not at all to the amount that's needed. So we have a very important task, and how do we fulfill this? Yeah, the basis for everything we do are our electronic health records systems. And what is a EHR system? So that's the short version of it. What's an EHR system? It's the heart of a single clinic or a hospital. That's where you have all your information about patients. That's where you do all your planning around what you're going to do in your clinic, and you have all your billing and much more. So in a typical clinic or hospital, 95% of the time when you use computer, it is the EHR system you are using. So it's really the heart of our customers' business.
On top of that, we have a broad system, a broad collection of different systems that we sell on top of that. I'll get back to them, but it's a lot... Many of them has to do with business intelligence and patient communication. So building solutions on top of the heart, which is our medical record systems. If you also look at Carasent, we have a proven financial model. We have had a period of time where we grew a little bit too fast, and we didn't really have it fully under control. But the basis for all of Carasent's products are systems that have been growing profitability for many years. We are finding our way back to that culture that's already there. So that's much easier than what a lot of other people have to do at the moment.
We're growing quickly, both acquired and organic growth, and later today, Svein Martin will go through our new financial targets. If you look at our products, we touch upon many Swedes and Norwegians every day. So in total, we have 7 million visits in our systems every year, in our EHR systems. We have about 2 million digital consultations through our ecosystem products, and on top of that, we have about 90% of all Swedes' primary healthcare data in our systems through our system, Medrave, which is quality BI system for quality within the primary healthcare sector. And in total, we have roughly 40,000 active users in our system today. So we're quite a large part of the Sweden and Norwegian healthcare system, mostly working with private providers. So a little bit about my Carasent story and my background.
So I was the first employee of a company called GHP Specialty Care about 16 years ago, 2006. I had multiple roles there. I was CEO of IFK Kliniken, an orthopedic clinic. I've been the head of business areas, I've been M&A responsible, and the last 9 years, from 2013 until 2022, I was the CEO of GHP Specialty Care, until it was acquired by Capio. And during that period of time, I, of course, met many different systems. We were running specialist clinics in the Nordics, we were running hospitals in the Middle East, and we had a business called Solutions, where we took care of the entire business of an insurance company when it comes to healthcare insurance. And over time, the complexity in, in healthcare has been growing very rapidly. There are more and more demands on different types of registration.
..You need more and more data to run the business. So from a management perspective, we really needed to update our systems. We had so many old, and some of my old clinics still have, systems that look like MS-DOS. They are blue and white, and, you know, you tab around it. Do you remember the square that blinks? It's still within healthcare sometimes, the blue and white square where you put the next letter. So many of those type of systems. But as a management, to run the business, and especially as this within Solutions, where we took over responsibility for the cost within insurance, we need the data. And Webdoc was the only system that could allow us to get the data out of the system in a good way.
It could also allow us to connect to a lot of other systems, 'cause Webdoc was built from the beginning to be completely open and connectable to all different solutions that you as a provider wanted to have.... And what was even better, was that when my staff in the clinics were going to evaluate different systems, 'cause in, within healthcare, your staff is really strong. Doctors and nurses, you don't sit on them easily, so you have to listen to them, right? When they were evaluating different systems, Webdoc came out on top also. So for me as a healthcare provider, it was a very easy choice to go with Webdoc. Then I also knew, from the last part of when I was at GHP, that kind of Webdoc has lost its way a bit.
We, as a healthcare provider, felt that there were more bugs than before. Things were not updated properly. We had some implementations of Webdoc that didn't go very well, so we were a bit upset. It felt like they were a bit lost, and that's the same thing I saw when I came on the inside. So when I joined Carasent, roughly a year ago, first of November last year, I was really impressed. I liked the knowledge and the energy inside the company. We have so many talented people, both within development, with understanding our customers, within support, sales, everywhere, a lot of talented people. But management had outgrown Webdoc, became Carasent's management, and there was no one filling the vacuum, and was the same with the other products.
There was a new strategy towards the One Carasent, which took a lot of people's time. So it wasn't strange. It's many companies have been through that recently, right? Growing too quickly, and now we have to find our way back. So what we have done is, we did first a lot with the structures of the organization, setting up a more nimble organization, making sure that people are clearly responsible for the different parts of Carasent. You cannot do anything if you don't have someone who's really responsible for delivering, right? We set the financial structure to follow that structure, the organizational structure, to really be able to move faster forward and to get closer to our customers again. We also initiated a cost-savings program of roughly NOK 40 million. That's still, we have plenty of resources to continue to develop.
So it's more about becoming efficient than doing less, the cost-saving program, and I will get back to that a little bit later. We have also started fixing our capital structure. We were a bit overcapitalized, so we have had a share buyback, and we will also continue with the dividend with EGM . So now, we have set the structures internally. We have clear roles and responsibilities. We have all the good old culture there, and we have a clear way forward. So from that position, I feel that we're in a really strong place, and internally, you can feel the energy now that everyone knows what to do, 'cause that's the difficult part when you're growing a bit too quickly, people get a bit lost. What is my task? What should I do every day?
We continue with investing in our product. It's on a pretty high level, but it's efficient, and we see that we have a lot of market to gain, so we really want to invest in our products. And we have a strong, still a strong, strong cash position to enable acquisitions. And if you look at the sector we are working within, healthcare. So it's a quite special sector. I know everybody says it, but everyone who's been to healthcare, they say, "Oh, here it's really different." We have the structural demand, so that's a good basis for everything. It continues to grow. For example, within 10 years, a little bit less than 10 years, the number of 80-year-olds and over in Sweden will increase by 50%, and these are the big users of healthcare.
The rest of the population is kind of flat. So the amount of old needing healthcare is increasing very rapidly. Same for the entire Western world. The healthcare industry is digitalization, digitalizing.
Thank you.
Thank you. Digitalizing, but it's going very slowly compared to other industries. The big reason for that is the strength of your doctors and nurses. So if you look at the public sector, every time they try to do something, you will have a doctor or nurse going to the newspaper saying, "Here we have a patient risk." If you have thousands of doctors and nurses, you will have somebody who doesn't like the new system and what's the change that it demands. So that makes everything very, very slow. You should also remember that all doctors and nurses are licensed professionals, so that means that they have an obligation to choose the right systems. You cannot just say, "We're going to use this." You need your doctors and nurses on board.
So that's why it's going a bit slowly, and for example, my study within GHP was to always be the second, never the first on a new system, because if you try to have a new system in and it's not really set up, there are some problems that need to be ironed out, so to speak, then you will not get a second chance with your staff to introduce a new system. So it's very important to meet the healthcare workers in a proper way and all of them. So it needs to be very, very iron tight, well built, and with a lot of knowledge from inside the healthcare providers. Finally, we have an increased complexity. So healthcare has always been quite complex. It's increasing all the time from a regulatory standpoint. You have the county putting on different demands.
You have the country, Sweden or Norway, putting on a lot of demands, and then you have the EU on top of that... with GDPR and MDR and so on. So it's always increasing. Then you also have a lot of different parties who want data from the care providers. Every time, the public or the government or someone feels that we need to improve on this, then they need data. So our systems are sending data to a lot of different sources on the country level and county level. So it's a very complex environment to go into, and all of these various data are different types of systems with different interfaces. So it takes time to build these solutions. But if you know the industry, you know how to build solutions for the industry, it's a very good place to be.
It's growing, it's complex, high barriers of entry, but, but complex. So who are we, and why are we the right ones to do it? The first point, I think, is very important. So all parts of Carasent, and they've been growing up individually, right? And I will get back to what the parts are. But they all have a history of growing profitably. They have not had large cash injections to build their business. They know how to use money wisely. So I think that's a very good and solid foundation to build on, that, that culture is there. When I started, I was really impressed with the second point, and that's really understanding the needs of healthcare and, and what I said earlier, that you need to meet everyone, not just the top management, but all the doctors and nurses and their need.
You may have to make sure that every word is exactly rightly put in the system. That's just a minor thing, but every part of it is important because it's patient safety, so no one can allow any mistakes. And it's also customers who do not like to make big changes. So we're trying to develop all our solutions so you can work within present processes and support future processes, 'cause otherwise you will have this really situations where the staff just refuses, and then you will get nowhere. Thirdly, from a technical point of view, there is basically no types of solutions within healthcare that we haven't built within the company. We have seen it all, we've done it all, and we continue to invest in new solutions. So there's a high technical competence within the company.
The last point, which is important for all software companies, we do not sit on our own, in our own rooms and just build solutions and then say, "Here is a ready solution." We work very closely with all our customers, and that's the culture that was already there, and that's why our products historically have been successful. Looking at our growth historically, we've had quite a high growth for a long time. The last 12 months, we grew roughly at 30%, and almost half of it was organically, and about 90% of our revenues are recurring revenues. That's really what we focus on going forward, not consultancy fees and so on, and we're not selling licenses anymore. We want recurring revenues. What are our products, then? The base of everything is the electronic health records solutions.
And as I mentioned previously, that's the heart of the clinic. That's where everyone is working within those systems. That's where you exchange data, that's where you have the patient data, that's where you have all your planning of what you're going to do, both in the operating theaters, in the outpatient care. All parts is in that system. That's where you do the billing, that's where you take care of patients, that's where you communicate internally within the system also. So that's not something you want to change lightly or frequently. The major part is Webdoc, so it's roughly 50% of Carasent. It's in Sweden. It's a pure SaaS solution from the start. That's what I think they've done great all along. So no customer-specific development, it's quick and easy to set up.
Perfect system for small to medium, large healthcare providers, up to maybe 150 employees or something like this. Then we have Metodika, which is a great system for enterprises. That's where we have the most customer-specific development. So for large enterprises like Aleris in Norway, Denmark, uses Metodika or Avonova. It's a great tool for making sure that you have control, complete control of your entire organization, and it's very rich in functionality, and still winning a lot of customers. In Norway, we have also two niche systems. AdCuris, which is within rehab, it's very much focused on processes, such rehabilitation, when it comes to physical rehabilitation, it can be drug abuse, also a lot with children care. So it's a couple of niches for them.
AdOpus is another niche, and that's a system for those in Norway that help people back to work. So it's not a pure EHR system, but it handles the same type of sensitive data. But I would say it, it's our simplest solution, but it's a, it's a very nice one. On top of that, we have Medrave. So Medrave is what all, basically all Swedish primary care use to compare data and quality outcomes, both from efficiency and quality point of view. So what they do really well is that they're connected to virtually all different EHR systems that are present in Sweden and other countries. They are also in Norway, partly. Then they take the data and clean the data, and that's very important because in the different systems and different places, you type in things a bit differently, and you use different forms.
So they clean the data, so it's comparable. Then they show it to you. You can look at your own clinic, you can look at each doctor, what they do, how much, if they follow guidelines. You can compare to other clinics, you can compare to other counties, and you can compare to the country as a whole. It also automates all recordings in our national quality registries, which otherwise is a lot of work. So it's a great tool, very well-liked by all our customers. And roughly than 90% of all Sweden's primary care data is within Medrave. Then on top of that, we have two solutions for patient communication. The first one is Vårdrummet, which is connected to Webdoc. It's a great tool for video chat, video chat, rebooking visits, sending messages, and so on.
It's completely integrated into Webdoc, so no double work, which is otherwise the big problem within healthcare when it comes to solutions like this, that you have a lot of double documentation. So it's none of that. We also have Confrere, which is something we acquired a little bit more than a year ago. It's a Norwegian video solution. So what we acquired was the customers and the brand, but not the technology. So far, we're still using the old technology, and we're paying 100% of the revenue to the old owners of Confrere. And that means that all our costs around Confrere is pure minus business at the moment. But we're moving Confrere over to the same solution as Vårdrummet, starting next year, in the beginning of next year.
Then we have another company acquired also a little bit more than a year ago, HPI, Health Profile Institute. It's a company formed in the 1970s. At Scania, they started doing a lot of research on the importance of people moving, so they're working with occupational health. So they developed these forms for how to evaluate people's healthiness, healthy people's healthiness. Starting with then with disk disketter disks, then CD-ROMs, DVDs, and now it's a SaaS solution. And then on top of that, we're selling a lot of third-party integrations. So for example, we're selling check-in digital desks. So when you come to a clinic, you can check in yourself. That's an external servers that we sell and have a good margin on.
We also sell, for example, different--when you want to have speech-to-text solutions, we're also selling that. A lot of different solutions on top, SMS, letters, a lot of different things. And on top of this, we can, of course, add other services going forward. And now we're coming to a picture I want to talk a bit about. And this is an important picture for two reasons. This gives you an idea on how our different parts are doing and what we're doing to correct them, and it also will give you, I hope, a feeling of why I feel confident that we are on the right path and it's in our own hands. So, what's here, we have the different of our SaaS solutions. In size order, you have the revenue last the first three quarters.
Then you have what's called the Rule of 40 year-over-year growth in percentage, plus the EBITDA margin. Internally, we work with cash EBITDA margin when we look at this. That can be good to know 'cause you have to put your sights a bit higher internally than you do externally, right? So starting with Webdoc, they're at 31% at the moment. We have taken down costs quite a lot. We know that we'll grow a lot next year, so I feel very confident that number will go up during next year. That's almost automatic, right? Within the product, we're developing a lot of new functions, so we're coming with a new billing solution during the first half of next year. That's the oldest part of Webdoc, so it needs to be renewed.
We're coming with e-Referrals in Stockholm, especially to start with Stockholm, so that for Stockholm customers— In Stockholm today, if you choose Webdoc, you typically have to work with two different digital systems. So, as the Stockholm County uses TakeCare, a CGM product, you can send e-Referrals between different TakeCare installations, but they refuse to open up to other providers. So today, many of my old clinics, and many of Capio's clinics or Aleris's clinics, they have to work in double systems. And typically, what you do is you use TakeCare to get the data, and then you write it into Webdoc, and then when you're done, finished your work in Webdoc, you write back in TakeCare. And that's not really good when we want to sell to more customers, right?
Still, I would say our customers, they prefer Webdoc. My former clinics, they all preferred Webdoc over TakeCare anyway, even that they would they had to do this work. Now we're automating that transfer, so that's an important function coming in the beginning of next year. And finally, we're building an operation module. So if you have a clinic where you do a lot of surgery, like orthopedics or general surgery or things like this, everything comes down to having good planning. 'Cause you have a lot of fixed costs, all the staff, the facilities, all the equipment is fixed. Typically, there's very little movable costs. So we sit every day, you start with maybe NOK 100,000 costs per operating theater, and you have to fill it. So everything comes down to planning.
Webdoc do not have a good support for this today. So I see that as an important factor to increase our sales, and that's especially to large clinics, 'cause typically, a clinic doing surgery is larger than other clinics. Then we have Medrave. As you see, they're growing well and have a good margin. There, we're looking at adding new segments. At the moment, we're moving into children care, showing how well are we taking care of the children within a clinic to take care of children, and also reporting to the quality register there. A really interesting part is also doing new research. We have all this data, and it's not just unique for Sweden. Now, I think it's unique for the world to have so much data.
We can get any data out of all the medical record systems for 90% of all primary care in Sweden. So you can do a lot with that. It's not our data to use, so we have to do it together with our customers and together with, for example, Karolinska and actors like that. But that's extremely interesting. Metodika, you see, the third largest, is doing really well also, both growing and being profitable. There, we're doing a lot of development for our present and coming customers, but there is a bit more customer-specific development. But it's a great, great system if you're running an enterprise, and you can use the same system for all parts of the enterprise. It's good at occupational health, it's good for plastic surgeries, it's good at basically everything. But it's not as nimble and quick as Webdoc.
Then we have AdCuris doing quite well. They were refocusing a lot on the customers. Almost everyone within AdCuris was working a lot with Webdoc Norway and the One Carasent projects that we used to have. So they're now finding back and meeting customers again. But we have really good leads there, so that also feels very comfortable going forward. Then we come to the less comfortable part, AdOpus. So AdOpus is the system for getting people back to work in Norway. The challenge we have there is that some customers have started using CRM systems and intranet, and it's much cheaper, of course, than a real system 'cause you have so many customers to divide the cost on. We think, and every legal advisor we speak to also think it's illegal because you have so much sensitive data.
Even if it's our simplest solution, there's so much sensitive data in that, and you need to handle it correctly. And I would say the ones using the other system, they cannot use it correctly. So we're doing a lot of legal challenges there at the moment. So I think it's four tender process that we have, of this public tender process, we're sending a lot of questions. We work together with our customers also to work with their customer, which is NAV, which is the the government entity buying these services, 'cause they are the one who need to put the right demands on their suppliers. So we're really challenging this on many fronts at the moment, and I think we'll be successful 'cause that's just the way the law is.
And then we have a great position, 'cause the competition is really weak within that sector, and we are at the moment launching a new web solution, where, which is really, really nice. So that means that all users can log in, just working in the cloud, so it will also lower our costs, and we have a much better process for all everyone working within those customers. It's also the same solution that we're building for Adcuris, when it says, "New patient interaction platform ready for launch." But that challenge, that legal challenge, is extremely important for AdOpus. Then we have Health Profile Institute (HPI). You see, they also do-
Can I ask a question?
Yeah. Just, the mic.
Does it work?
Yeah.
Okay. Depending on the outcome of that challenging, do you see any read-across to the other products or way of working?
No, not at all. So, there's no risk. First of all, the other EHR system, Webdoc, Metodika, and AdCuris, are dealing with much, much more complex processes at their customer sites. So they, they couldn't be replaced by the same product that's replacing AdOpus at some customers. So that's not a chance at all. Also, all the other ones are working towards the healthcare system, and the healthcare system is used to high regulations. For the AdOpus customers, it's a bit new with GDPR and requirements put there. So it's very different, and it's not the same authorities that are involved. Then we have H-
Just a question here.
Yeah, one more question.
If you were to succeed with your the legal challenges that you've made, I mean, what could be like the impact on, I don't know, revenues for AdOpus?
So I think they're about 20%-30% of their market. So I mean, it's still not a huge market, but both from a growth and profitability perspective, it would increase a lot. Now, we're showing EBITDA, EBITDA is even worse, so we need to improve a lot. So Health Profile Institute, HPI, there we have put in a lot of efforts the last couple of years to develop a new part for the platform. The original part are those volunteer tests that you do when you go to occupational health, like Feelgood or something like this. Then it's typically HPI's platform that those tests are performed within. So to see if you're have a good condition and so on, looking at your weight and all these parts. The new platform is for compulsory tests-...
So that means, for example, if you work night, there are some compulsory tests you have to go through. If you work with tools that vibrate a lot, there is compulsory tests you have to do, and so on. There's a lot of that. And today, those tests are done by paper, so the patient goes in, sees the nurse, the nurse fills out these forms. She goes in, and she put the note on the doctor's desk, who signs it, and then someone puts it into their medical record system. And the employee doesn't know anything, right? So there we built a platform where the employee can be, the doctor is, and the nurse is in all in the same platform. So it can drive a lot of efficiency.
The challenge with that is that it requires a big change in process within the occupational health sector, and that they are like healthcare, they're not that good at changing processes. So at the moment, it's the rule of 40 number is not that good, but starting from December and on, we're lowering cost quite a lot there 'cause we're stopping all development until we see that the customer are picking up on the product. And the last one is Confrere. And, as you understand, we're out of the pandemic, the use of video solution is going down a bit at the moment. On top of that, we're paying all revenue to the supplier of the old technology, so it's not a good deal at all at the moment.
We will move them onto our platform in Q1, Q2 next year, so then the, the margin will go up quite a lot. There is risk of some churn there 'cause we will not overdevelop that solution to fit that customer. We'd rather have some churn and continue forward. What's also very evident from this picture is that most of our problems are in the three smallest products. So I believe in all three of them, for the reasons I stated, but if we're not successful, we'll have to take other measures, 'cause we cannot let those three small products drag down Carasent. But that's where most of our product problems are. Then, of course, we want to, to grow Webdoc. That's my main focus every day. But, but what makes the numbers look a little bit bad are most of these three products, the smaller ones.
So that's why I feel really confident that it's in our own hands, and, and either we'll get better that way or another way. Looking at our customers, and this is for our HR systems, and this is specifically Webdoc, which is half Carasent, right? We have all types of customers. We have the large healthcare providers like Capio, Aleris, who you know well. We have the smaller ones, who also use Webdoc, which is a great system for them, too. And we have the new disruptors also choosing to use our systems, because you don't want to build this on your own. It's the most complex part of your digital system of all your solutions within a healthcare provider, no matter if you're working digitally or not.
It is the complex part with a lot of legal requirements on it, and where the medical staff is really, really keen on it working really well, and that they feel really confident in everything within that product. Looking at sales, what I think is a bit important to understand is that historically, the sale of all of our solutions, except Confrere, have been word of mouth. So one customer using our systems, really liking it, telling another customer, and they start using it. So for example, within Webdoc, the sales have been going on through emails into our inbox, saying, "Hey, we want to buy Webdoc." Then, of course, we have to do a good job around that, but that's how our sales have always been working like that. And that's even without a good webpage.
So the first part of ramping up our sales effort is to actually continue to build on that, 'cause I think that's the most important part. And as I said earlier, when I left GHP, I knew the reputation was that they'd kind of forgotten about us. We had some implementation of Webdoc, which was really bad, so we actually did some implementations by ourselves instead. So, we've been working a lot on improving the product and our delivery process the last year. And some really good first results are that the number of support calls have been lowered by 40%. So that's good for our internal process, but it's even better for our customers who don't have to call our support. So that means a lot of bugs out of the system.
Looking at implementation of Webdoc at customers, we have started to measure it. So, we are about 4.5 on a 5-point scale on all implementations the last couple of months. The same as all support calls, we are about 4.5 on a 5-point scale when we ask our customer: "How do you like the support?" So we have done a lot to improve both the product and the delivery and experience of Webdoc. The next step is to get closer to our customers again and reestablish those relationships. When we met Capio and Aleris around Christmas, they were not the best meetings. And now, when we had follow-up meetings after summer, they were really positive, and I think the same all over.
We've also employed actually more people within this area, and especially in Norway, to just go out, visit the customers, making sure that they think about us, that we can solve their solution, their problems with our solutions. So that's something we're working a lot with. All the money we spend on development has to do with opening up new segments for future growth. So I spoke about the new segments within Webdoc. We're doing the same within AdCuris, for example. So we're really investing a lot in our products to open segments for new growth. We're experimenting with new types of marketing and sales that's new for the organization. We're testing a lot of things, the simple stuff, new webpage, doing ads and these things. We're doing a lot of webinars. We're trying cold calling.
We're trying a lot of different things to see what really works for this type of product, for this type of customers. Yeah, of course.
Could you just talk about, like, how the initial results of the efforts that you've made, both regarding inbound but also outbound sales, how they've fared?
Yeah. So it's a bit mixed so far, to be honest. So cold calling doesn't work at all. That part of it has been, yeah, that we'll not continue with. The webinars have been very popular, so people have signed up for them, they have taken part on them, and the feedback has been really good. So I think that's the part that's been working the best so far. The new webpage and ads are not up and running yet. We're working on that.
And just to follow up, regarding the webinars that you're hosting, are you also doing, like, efforts to make, like, marketing in advance of launching your operation module and so on? Or is it only the current modules?
No, so, so, that's an important part. So we have these new modules coming out, and at the moment we're working a lot with our present customers, telling them about it. Then we'll start advertising for them once we really have a good starting date. But at the moment, we're talking a lot with our present customers because many of them are in the process of: which system should I have? Should I change to Webdoc now? Should I use another system for the surgery planning? Typically today, you buy Orbit if you have Webdoc, or and with many other systems too, and Orbit is almost as expensive as the medical record system. So that we are now out telling them, "No, you don't have to buy Orbit. We're coming with a good solution." So we had a customer meeting in our facilities yesterday, actually.
We had, I think it was six or seven different caregivers at our site to give feedback on what we're doing, but also, of course, to become future customers. Some of them have Webdoc today, some of them don't. But we're not doing advertising for them yet. But we're talking a lot with present customers.
Just say that, like, if they would choose, like, the competing product, it would be, like, as expensive as the whole Webdoc?
Yeah.
But, uh-
Roughly.
Yeah, roughly. But for you, I guess it would be, like, less expensive, but how much to, like, ARPU would you say that it would?
So we haven't decided on how we will charge yet, 'cause we have to set a really good structure for it. For Webdoc, we charge per visit. I think that's a really great way of doing it because you're driving efficiency in healthcare all the time, so the number of visits per user goes up all the time. And then on top of that, we have the index, right? So to use visits, that is really good. So we're looking at what is the best way of doing with surgery, and we're developing surgery mostly to add new customers to Webdoc. Then the profitability from the surgery module is good on its own, but that's really not why we're doing it.
And what I should also mention is that Orbit is a really, really complex and competent product, so it's great for a large hospital. We will not build something that's good for the large hospital with, you know, we have central surgery, where patients coming from all over the hospital, maybe different systems. We're building something really neatly integrated into Webdoc, which is a great for a clinic who has their own patients, and that's what all our customers look like, except one. So it... We will not be able to charge like they do, unfortunately. And then... Yeah, okay, one more.
Thanks. Just to follow up on Jesper's question. So just to get a feeling, how many clinics each year seek to change to a new EHR system, both established clinics and also newly established clinics, and how big of a percentage do you win, do you estimate?
So for large clinics, I think we are on a really high level. There are some of the really small ones that we do not gain, 'cause there are some simple, small, cheaper solutions that some of them use. In Stockholm, there are also some clinics we do not gain 'cause they use TakeCare for the e-referral part. So I think that's where we really want to aim. The smallest clinics, you know, single physical therapist and so on, maybe we're not the best choice, and that's fine, I would say. But I would say that we have quite a good percentage, and what we have to do with our efforts here is that to open up the new segments that today cannot change system basically, 'cause they sit with the old systems.
So typically, if you don't have that, is that you don't change. And what I'm hoping with our new marketing and sales efforts is that we can push people to make that decision a little bit quicker. I mean, all the years I was CEO of GHP, I knew I need to change those systems. They, they are, you know, you have random bugs, so. And it's patient safety, you cannot have random bugs, right? But there was nothing good to change to, and I knew that if and when I change system, the clinic will stand still. And I have all my staff costs there, all my facility costs. So I have, like, 80% of my costs are still there while we're changing systems. So I really drag my feet for doing that, right? For that quarter will not be fun.
And that's why it's so important that we meet them and that they feel they can really trust us, then we can get them to change systems. But they have to feel that we will be holding their hand all the way through, and that's why I think, for example, at my former place, we had an implementation that didn't go very well. That's not good. It slowed down our implementation of Webdoc or GHP implementation of Webdoc a lot within that group. So that's why the first point is really, really important. So it's more about getting people to change than that they are choosing something else today. And the last point, legal change of run-through computation, that's the Norwegian system, Adopus. So what I would like to say also is that it takes time.
It has taken so far a little bit longer than I thought. So word of mouth, I mean, it's not the fastest way of selling, I think. It takes some time because before people know, "Okay, we're here for you again now. You can trust us," that will take some time. It also takes some time to build the new modules. And with a large customer, like Metodika typically has or AdCuris have, it takes a long time, from the start of the conversation until we have revenue, especially a recurring revenue. So like, for example, the LOI, which I spoke about at the last quarter, which is with a large customer, that discussion started in January. It's still not signed the final agreement, and recurring revenue will start in 2025.
So it takes time before we get all of the sales moving. In the short term, we'll have AdOpus, churn and churn within Confrere. So Martin will talk more about it and show you more details. But overall, I feel very confident this... we're moving quite a lot, and especially on the first point, couple of points, I feel very confident that we're moving in the right way. Looking at the competitive landscape, as I said previously, the main competition is that people do not change systems. It's not any really good systems out there competing with us, I would say. Like, there can be some at the really small end for the really simple clinics, but not for the large ones in Sweden.
The market for EHR market for private clinics is roughly NOK 1.3 billion, where I would say roughly half of it is our sweet spot, where they can really-- that we are clearly the best choice for them. There are no downsides by choosing us. So the big challenge is to get people to actually change system, to update their system, and that most of them feel the need. They know they need to get data. They need to have efficient system, which where the employees like to work, 'cause your biggest challenge as a healthcare provider is finding doctor and nurses. So you want systems that they like to work in. Also, you want to connect to other systems and solutions, right?
So, so many of them feel the need, but we need to push them over to really make the decision. Then we have our real challenge, and that is that Västra Götaland and Skåne have chosen to buy Millennium, which is an American system owned by Oracle. We had it at our hospitals in the Middle East. It's a good system for hospitals, much less so for a smaller healthcare provider, which wants a really nimble and quick, easy-to-use system, and where you have also payments in it, where you can connect to insurance companies and so on. So, but at the moment, both Skåne and VGR have said that some of the providers, depending on what type of agreement you have with the region, should use Millennium once it gets implemented.
It should have been implemented a while ago. Nobody still knows when it will be implemented. It's going really, really slowly, as they always do with those projects. And that's why you maybe shouldn't do them, but that's another topic. But so we don't know exactly when, we will know how this will play out. It will probably take some time because I spoke with a friend inside of Sahlgrenska the other day. I asked how it's going. "I still haven't had the chance to see the system." So it's not really moving, so it's something that's there, unfortunately, also affecting our possible customers, some of them, that could be affected by this, and they don't know yet. But we estimate to be roughly 10% of our revenue at risk in that case. We don't think it will happen.
I, as a caregiver, didn't think it would happen 'cause I changed systems to Webdoc in Västra Götaland, even after that decision. And why we don't think it will happen is that it's a really bad system for a private provider. You cannot connect it to anything else because you will be inside Västra Götaland's IT. So you cannot do anything with the system if you whatever you want to do. And lastly, we know that the system, from a GDPR perspective, doesn't fulfill requirements. It's built for a U.S. market. It doesn't fulfill the requirements, especially when there are multiple caregivers in the same system installation, which it will be in Västra Götaland in that case. So that's why we don't think it will happen, but that's what's at risk if it will happen. Norway, we're working in some niches.
They're roughly NOK 200 million. And as I said earlier, we are in a good position for AdCuris and Metodika. We're winning customers. The competition is limited. There are high barriers to entry. Other places in a bit different market, so we'll see exactly how that plays out. But we're trying to bring as many legal challenges as we can in order to make it happen quickly, 'cause otherwise those processes can take time. So rollout into Europe. And what you-- what's really clear to say is that the Nordics are ahead when it comes to digital solutions in healthcare, as within many other areas. But I would say especially within healthcare, and the reason is that the more south you go, and also the more west you go, doctors have a higher and higher standing.
So it's becoming more and more difficult for management to push through changes within the organization. So in many southern countries, the doctors even bring in the patient themselves. So, you know, if you lose a doctor, you lose the patients. So it's completely different position for the caregivers, and that, that really have slowed down development of digital solutions and implementation, mostly often. Webdoc is a monolith which is built for Sweden, so it makes more sense to build a new system for other countries, and that's what we're doing with Webdoc X. It's a microservice-built solution, so it's easy to build different parts around it and to adapt it to different markets. And it's built with all the present legal requirements in mind.
What's really good for us is that within the EU, most of them are the same. We especially think that Germany is an extremely interesting market for us, so that's what we're going for. It's Europe's largest healthcare market, and what's even better is that private providers are an extremely important part of the system, and there's a long tradition of that in Germany. Nobody sits on the private providers in Germany, so they're free to choose any system they want, and you can win one customer at a time. It's a large market, fragmented market. Looking at the competition, there are many, many systems in the market, so there's not one dominating system. There are many of them that's on-prem, old solutions that look terrible. We've been doing a lot of visits to Germany. People are not happy with their systems they have today.
They are very open for new systems. Our largest competitor will be CompuGroup Medical, which is the same as in Sweden, and they own roughly 30% of the market through a couple of systems. But they have the same strategy as here, that's kind of milking the market. So, I think we'll come in, in a, at a very good time. Germany is also, at the moment, opening up for cloud solutions. They did not allow it until recently. So that's why also they are large, lot behind. I think Bavaria was opened up last year for cloud. Yeah, question?
Yes. So in, I guess you'll come to that, but in the planned timeline, you say that... All right, so as an acquisition in Germany in 2024. How do you think-- You said that there are no, like, really good solutions currently, but could you just elaborate on how you think?
Yeah. So, when it comes to the acquisition, you mean?
Yeah.
Yeah. So, at my former place, I entered a lot of new markets and have a great respect for entering a new market. There's always differences, and there will be differences that you haven't thought about. So you need feet on the ground, you need presence, you need some size already from the start, 'cause otherwise, you'll be just driving a lot of costs, and it will take a lot of time to build an organization and for that organization to really learn what it's supposed to do. So from that point of view, we really feel that we need to do an acquisition to get feet on the ground, have support in place, have implementation in place, having people who have built a solution for that market before, who knows a lot about the details.
And that's why we think an acquisition is clearly the way to go. What's also from our experience is when we bought Metodika, they had a lot of installation in Sweden that we have moved to Webdoc, and that worked very well, and we roughly doubled the income per customer. Same way we have in Norway, moved customers from on-prem to cloud. We roughly doubled the income per customer. So we think there's a good case just to be done by the acquisition, but acquisition is also what allow us to grow further in Germany. What's important for us is to buy a system which doesn't have a too great functionality level.
So a little bit of one of these medium complex systems, so that we earlier in our progress of Webdoc X can meet the requirements of those customers, and that they do not lose functionality by going over to Webdoc X, 'cause that's when you get churn. It will be easy for us to give a much better experience. And when you travel around in Germany and meet the different clinics, they still have service in the place. I haven't seen that in a Swedish clinic for a long time. They all have service there. They all have filing cabinets, doing a lot on paper, and they're quite unhappy with the system. So what we think about is buying an on-prem solution, an older one.
And the size of an eventual acquisition?
That we'll have to come back to, but it's part of how we decided on how much money to give back to the shareholder, shareholders. So where we are at the moment is that we've been looking at all of Europe and think that Germany is the most interesting country. We have been there a lot, also in person. I think that's important to really get a feel for it and to meet the caregivers, both large and small. We have initiated the certification process of Webdoc X for Germany. So we're hoping in the first part of next year, and we started looking at M&A opportunities. So our aim is that during 2024, to certify our system, get pilots up and running to really have customers in the system, it's extremely important, and do an acquisition.
Acquisitions is, as I think all of you know, it's difficult to set a timeline on 'cause you—it's—you have to find the right target. But there are multiple targets to choose from, but then you always have to be ready to walk away if it doesn't look good after, even if you have spent a couple of months. So we want to make sure to do the right acquisition. Then in 2025, commercial rollout and start transferring customers in the acquired system. That will take a couple of years also. And then in 2026, we'll think it will have material impact on our income, on our revenue from Webdoc X. And looking at Webdoc X, what is it?
We have taken everything that's been done right within our present systems, put it into it, and we also tried to fix everything that did, is not optimal in our present systems. And building it from ground up, using microservices to make sure that we're flexible and building a flexible solution. And it's designed for a private provider, that's an important part. Few systems are, because the public and the large hospital systems are such a large part of the total turnover of healthcare. But healthcare is huge, especially in Germany. So private providers, much less competition. And what they want is an efficient system, easy to use. But you don't need all the complexities that a large hospital need. We bring also with us what we had from the start with Webdoc. So it's an open system with an open API, everyone can connect to it.
We also aim to have different type of third-party integrations that we can sell ourselves over time. We have one user in the system so far, and it's Millennium, and they seem satisfied. Looking at acquisitions, our priority now is the acquisition in Germany, to buy one on-prem system, transfer it to the cloud, and get this on the ground. We're not trying to do other acquisitions at the same time. Then we'll repeat old mistakes. So that's really our aim at the moment. However, we have a long list of potential targets in the Nordic countries, which would be a great fit for our present products. And if they pop up, ready to be sold, then we might take part in such a process. But in general, we're waiting a little bit with that.
And also, as we see it, the price in the private market hasn't come down yet for quality acquisition, as I think they should. But we'll see exactly. So it's really now focused on entering a new market, then we start looking at acquisitions again here in the Nordics countries. So looking at the journey ahead, we have a good basis to build on when it comes to organic growth. We're doing really a lot to increase the organic growth, and I've—you've seen the list. I really feel confident that will translate to more sales. It's going a bit slower than I expected, but if you give it a thought, the processes are changing, the art of a clinic takes time. You don't do that overnight. We have lowered our costs, so we have an efficient use of our resources.
We do not need to add very many people going forward, even if we grow a lot. We have plenty of resources and continue to build with those resources. We aim to launch Webdoc X, as I described earlier on the timeline, and that's really one of the third key to us going forward. Now, the last point, which I think you have to talk about today, is AI. We haven't spoken very much about it because it's, we don't have any products ready to launch, but, we're working a lot with different types of products internally now in our own development, both Copilot and Cody, and we see great effects from them. We haven't really turned it into using it everywhere yet, but we're getting there, and I think it can really change a lot on how we work with our development going forward.
Also from the customer side, these new LLM models are really interesting. We have one pilot where we record the entire visit between the doctor and the patient in the room, so it's like 24, 30, 40 minutes visit. And then we use speech-to-text, and then we use an LLM model to transcribe it into a typical doctor's note. So the process today is that the doctor, when they say goodbye to patient, they sit down, either write it themself, or they read it into record it, and then someone else writes up or you use speech-to-text at that position. Our aim is that when you said goodbye to the patient, you sit in front of the computer, it should already be there. Before the summer, the LLM models were not good enough.
After summer, there were a new one coming out, and now it's really quick. So we're experimenting with a lot of these different types of thing, 'cause what they're really good at is helping with administration. And administration is the really heavy part of healthcare, but what's also good is it's also the less regulated part of healthcare. If you're talking decision support, it's a whole another ballgame, but the LLM models are really good at administration. So I think we'll do a lot with that. So that's why I put it here... 'cause we're doing a lot of projects with it at the moment, but we're not ready to launch anything yet. Now I'll hand over to Svein Martin.
Thank you. As you probably saw, we launched, we announced a new updated long-term financial targets today, which I will go through in detail in this presentation. We target revenue growth, average annual organic growth of more than 15% between the years 2024 and 2026, and we also target improved profitability, with EBITDA margins reaching 25% and EBITDAC or EBITDA minus CapEx margin reaching 15% in 2026. These targets are long-term and there will, of course, be variations, but they are based on the structure we have today, so not including any acquisitions. Sure.
Regarding the revenue growth that you expect, I mean, when you've sat down and thinking about these, have you included the potential 10% revenue drop from Skåne and VGR, like, churning?
Yeah. Yeah, I mean, this is what we are, we think we are able to achieve based on the landscape that we see. So, including all, all of the different factors in all our products, basically.
Okay. So, yeah, half-ish? Sorry, so-
No, I mean,
Yeah. Okay.
As Daniel mentioned, we in terms of this potential, it's of course difficult to calculate exactly, but it might cause churn in Webdoc to increase a bit. Then we see the potential throughout the period to deliver on the targets either way. I will talk a bit about more about our strategy to achieve the targets. As Daniel mentioned, we work a lot internally on following up our products on revenue growth and cash profitability. We have very clear internal targets and requirements for all our products. Some of the products, as you saw, are delivering good results already. Some of the products, such as Webdoc, has a very predictable path to good results.
And then we have some products that has a longer way to go. But for all of them, we have very clear plans on how to get there, within a couple of years. And if, one of the levers we have, which is growth, doesn't get there, then we can pull on the other lever, which is, profitability. So, so it's very much in our own hands on how we, maneuver this going forward. So I will start by looking a bit, on the historical growth and how it compares to the targets. We have a long track record, of, organic growth in Carasent. As you see from this graph, it decreased, in, Q3, which was driven by, mainly by a decrease in consulting revenues. As you see, the recurring revenues on the right-hand side is quite stable.
We are back with the customers, and we are doing a lot of initiatives to increase growth and new sales. But as mentioned, it takes time to see effects on the revenues, and we have these short-term issues as well with the Confrere and the AdOpus, for example. So it will take some time to reach the pace that we target in this period, but we believe that all the initiatives we are doing now will get us up to the average growth within this period. Looking at the development in our recurring revenues, you see that we have grown very fast.
We have more than tripled in size since Q3 2020, and the growth has come from many different routes, including upsell to existing customers, a very low churn, new sales, and also acquisitions. If we look a bit closer at these different components, we see that the upsell during last year was 10% or around NOK 4 million. The year before that, NOK 3 million, 11%. And this is driven by three main factors. We have price increases, which was around 4% during the last year. We have volume growth at our customers. As mentioned, our business model is linked to their production, basically. So when they grow, we grow.
This has been, if you look at the last year, this has been a smaller portion of the growth, as we have seen, some clinics reducing their volumes quite significantly after the pandemic. So then our business model decreases the revenue as well. But in general, the market continues to grow. And also the final component is the upsell of services. And here we see potential also, particularly for Webdoc to continue. Given that we are the core system, all the different to have a efficient process, all the other third parties really need to integrate with Webdoc, which is the core system for the customer, and this gives us a lot of potential as the digitalization increases as well. Churn is very low.
I will go into more details on that per product, but around 2% for the group. New sales has been quite stable, as you can see, 5%, 2 million NOK for the last couple of years. And here is where we are putting a lot of effort, both on the product development side, but also on the operations and sales and marketing side. We are investing heavily into increasing that figure. And then acquisitions have added a lot of revenue, as you see, over the last three years. We see a great potential to continue to do M&A at a sensible pace and at a sensible price. So, we now have LTM revenues of NOK 235 million.
So we have become a large player in the Nordic market, and this, combined with our breadth of product offering, it makes us relevant for basically all the customers that we target in terms of size. We have 1,145 customers across all of our products per September with an average revenue of around NOK 200,000 per year. Our customer base is, in general, extremely diversified, so we have limited counterparty risk in our customer base. There is no customers that make up a material part of their revenues. And the growth figures at the bottom, I will talk more about when I go through the products now, how it looks. And starting with Webdoc, it's around half our revenues on a LTM basis, 47%, NOK 109 million in revenues.
Growth was 17% over last year, which was driven by net retention rates of 111%. Webdoc is an open platform, so upsell of integrations and different tools, both our own, but also third parties, is a key part of our growth strategy for Webdoc. And also initiatives such as Daniel mentioned, the AI and different value that we can add to the customers. And we have worked a lot on this over the last year to increase the upsell. I don't know, Daniel, if you want to say a few words about that.
Yeah.
That's sound.
Yeah. So yeah, at the moment, we're implementing a CRM system. We didn't have that before, so really make sure that everyone knows what each customer is using, so we can really target the different customers on what we think they need. We know them really well, but we just need to put it more into systems, to make sure that we're selling what we can. We have also divided the sales force, so not the system, but our sales force, towards the different customers. So they each person has a responsibility for the upsell, towards different customers. We have done also the same with customers we don't have today, given responsibility about them. So we're doing really a lot to move our sales.
Then we also have a 1% churn, which is extremely low. And bear in mind that this also includes involuntary churn, so companies going out of business or being acquired, et cetera. So the actual churn for Webdoc is very close to zero, I would say. Which these two figures, that the net retention and the churn, really shows the position that Webdoc has in Sweden. It is the best system on the market. And then the final figure at the bottom, the market share of 10%, also shows that we really have potential there, to, to grow as well in Sweden. The market is large, and our, our core market, the sweet spot market that Daniel mentioned, we have, twenty percent, approximately. So still plenty of room there.
And we think that adding all these components in terms of new functionality, more structured approach in terms of sales and marketing, better operations, all of these factors will contribute to helping customers making their decision to change. Yes.
Yeah, just regarding the market share, it would be really interesting if you could just, like, walk through, like, the different parts of it. Like, what are tapped by competitors, what are, like, untapped for you, and so on.
Yeah. So, it's difficult to go into detail about all of it, but an important part is the segment doing surgery. To add that, there's large care providers there. So even if they're few, there are many of them, really large ones, so a lot of staff. Then we have Stockholm, which is the largest market. We have a lot of customers in Stockholm, but there's so many left still there to win. And then the e-Referrals are really important to gain that. Why we say that the sweet spot is this part, the parts that we do not calculate in when we say sweet spot is primary care in Stockholm....
The reason why we today do not then include primary care in Stockholm is that if you are in TakeCare, you can send e-referrals to all different providers, and it's easy for us to build e-referral answering on those referrals from the primary care at specialist care center. But to set the structure to be able to send referrals to all different providers in Stockholm, that's much more difficult for us. So we have one primary care center in Stockholm at the moment. We might gain more, but that's a more difficult area for us, and the same with the really, really small healthcare providers, so like a single physiotherapist, single psychologist, and especially also physiotherapist and psychologist, they get quite little paid per visit or and per hour, so their readiness to pay is less than for a doctor clinic.
That's roughly, but Stockholm is the big market.
Yeah, so that sums up Webdoc's position. Mark?
Sorry, but would Webdoc X be possible to sell to the single clinic, like when one or two people work at the place? Because it's so flexible and small.
So it could be, but then you really have to adapt the price. But, when talking about pilots... So, an important part also is that it makes much more sense for us to develop Webdoc X towards a larger market. So we're not trying to get small Swedish clinics into Webdoc X. It's not a big market, and they're not really ready to pay. But if you talk then about Germany, then for us to get some psychologists and physiotherapists in the system now would be great because they don't need all the functionality that the doctor clinic needs. So to start with, that's a good place to get the user input, the user, real users using the systems every day and all parts of the systems, which minor doesn't, is really important.
So we might get some of those customers in there, hopefully, as pilots. But over time, we're aiming for the same market as we have in Webdoc, a more complex clinic. That's really what we're good at. We're good at meeting those type of customers. We're good at meeting the complexity of such a clinic. If you are a single user, it's I mean, then you're almost competing with some of them. In some countries, you know, use Excel and things like this, so that's not the market for us.
Looking at the then next product category, we have, looking at the other EHR solutions that we have, which is AdCuris, Metodika, and AdOpus. In general, these represent NOK 70 million or 30% of our revenues LTM. If you look at AdCuris and Metodika, that's 56 of those million. And we have a growth of 10% over the last year, which was mainly driven by existing customers, as you see, and a transaction of under 9%. And this is typically more driven by the, by price increase and volume growth, customers adding more user licenses, rather than add-ons, which we sell more for Webdoc, but some additional modules as well. Churn is very low.
These systems are, as with Webdoc, a critical system for our customers, deeply integrated into their operation, illustrated by the churn. And in terms of market share, we have around 25% of the addressable market, so still plenty of room to grow. And we are also here, doing a lot of work on sales and also functionality-wise, to increase the new sales. And for these two products, one contract could typically have a major impact, such as we won, Kirkens Bymisjon for AdCuris a couple of years back, and that drove growth for a couple of years. So that's the sort of sales process that takes time, but we see a lot of promise in our dialogues, and as I mentioned, the LOI we have signed as well for Metodika.
So that has a good potential to drive growth going forward. AdOpus has a bit of a different profile, as you see, where we have churned, it's NOK 15 million or 6% of our revenues. So quite a small product, but we have had struggles with churn to these low-cost competitors, and that will cause some headwinds for growth also in the coming quarters. But we have a concrete plan on how to address it, and we believe that we believe in how we are approaching it, that it will generate results going forward. Finally, the ecosystem solutions. We have Medrave HPI, which are truly market leaders within their niches. The category is NOK 55 million or 23% of the revenues, LTM.
Medrave HPI is the majority of that, with a growth of 15% year-over-year. Net retention, as you can see, is almost all the growth, and that is natural because both Medrave and HPI, which are working in primary care and occupational care, basically almost have all the customers within these two verticals on the list, and the growth is more related to delivering more value, more functionality to these customers, which we have done successfully. We can also go into new segments, but particularly for Medrave. As you see, churn way below 1%, it says something that there is really not an alternative product for these two. The only alternative for customers is to build it themselves. Some have tried that in the past and come back, basically.
It's very difficult to change these systems for customers. Confrere is a bit of a different profile. As mentioned, it's the independent video solution that will have a different financial profile as well, given that it's not as critical to the customers. It's simpler to replace, so it will be a bigger inflow and outflow of customers. We have high costs there now. The aim is to migrate to our own solution. That will probably increase the churn for some period, but it will also generate significant margins when it's over. Summing up, our growth and how it's composed, the majority of our systems are extremely critical to the customers, which is illustrated by the very low churn and very strong net retention rates.
So it's an excellent position to build from, and we believe that given that the competition as well is quite limited and there is a lot of market still to gain, market share to gain, we believe that by investing quite a lot into these products now, both in terms of functionality, but also in terms of sales and market, marketing, we can really stand out from the competition. Then we have these two small ones. It's in total 10% of our revenues, but and we have concrete plans on how to address that development. We have also taken steps on the cost side. We have a cost reduction program of NOK 40 million that we did in Q2. As you see, costs have decreased NOK 50 million from Q1 to Q3. We...
There is some seasonality there as well, we, as you see, but we still, if you look at the profitability development, it's affected by the growing costs. And in Q3, you see that we still have a high cost base compared to our revenues, which is the reason for that is that we try to optimize our cost base for the long term. We continue to invest, I would say, more than ever, into future growth. A large part of that cost base is investments into future growth, and we will, of course, monitor this investment closely, that they generate the required returns.
Then given that we have such high predictability on the revenue side, not maybe new sales, but that our base is very much set, we can also monitor closely and take measures if the growth does not materialize. So we are quite confident that it's in our own hands to achieve these profitability levels that we target. So in summary, the track record, combined with the initiatives we are doing, supports our target for growth and profitability. Development has been negative, but we believe now the core part of the strategy is basically to grow our revenues and keep the costs quite stable during this period.
We have also taken steps to adjust the capital structure, where we did a share buyback in September of NOK 170 million, and an additional cash distribution is proposed of NOK 133 million. That will bring the total distribution to NOK 250 million. If you look at the adjusted cash balance per Q3, it's still close to NOK 400 million, so we still have a significant cash position. The reason for this is that we have seen that this can be a real interesting asset to have in this economic environment. We also see that we can do this acquisition in Germany.
That's part of the use that we need, but also on the Nordic side, after that's done, we believe that prices will come down and that there will be a lot of interesting opportunities we can view. This is something, of course, we will be pragmatic about, and if the right asset at the right price is not available, we will not keep the cash forever, but this is how we view the optimal capital structure as of today, given that we see many opportunities. So we believe that now we are capitalized to implement our strategy. We will be capital efficient and financially prudent. We also have an attractive working capital profile in that customer pay in advance, and we pay after the invoices.
We are also exploring the potential to relist to Stockholm in the coming years, given that that's where our core operations are based. Back to you, Daniel.
Yeah, just to sum up. So what we feel is that we are in a great position with mission-critical solutions at the core of our business of our customers. They are extremely well-liked by our customers, and they all know how to run a profitable business, so we're just going to build on that. The last year, we've done really a lot of things to put us on the right path going forward. For a while, we were growing a bit too quickly, and maybe not growing too quickly, but doing a little bit too much at the same time, and that's always difficult. So we found our way back. We know where to go, and that's where we're aiming for going forward. So it's a high growth.
We're doing a lot of initiatives there, using our resources extremely efficient, and we do not need more resources as we grow. Launch Webdoc X will be the real challenge over the next 1-2 years, and the important part to get right. And then we have the joker of AI, which I think will transform a lot the coming years. And the same for us, the important part is to test and explore and be at the forefront. So that's what we had planned to present today, and now we'll open up for questions. And we have both questions in the chat from the online audience, but we start in the room if there are any additional questions.
Yeah, yeah. All right, so just regarding Webdoc X, so is the plan to basically only try to enter the German market first, and then, I mean, the other markets that you mentioned, they are optional for later, or will you spend any efforts, like approaching them immediately?
No, no. We, we'll have to put full, full focus on Germany, to start with. Then, always there can be changes, of course, but, I think it's very important to focus on one market, doing that really well, then we have those options.
So you mentioned that Medrave mostly is growing with its current customers, but you talked a bit about new segments as well. Could you expand a little bit on that?
Yeah. So, for example, we're now implementing BHVQ, so that's Barnhälsovårdens kvalitetsregister. So that's a new part to sell to our existing customers, both within Webdoc and outside of Webdoc. For the surgery module, we're at the moment looking at having Medrave to automatically report into those quality registers. That would be a great add-on, which the competition I spoke about earlier doesn't have. So I think that'll be really good, and also to present statistics. Because looking at surgery statistics is what you do all your planning from, so it's extremely important. When did you start in the morning? When was the last surgery done? What's the average time per types of surgery, and so on. So Webdoc, Medrave would be a great tool for that.
We're also looking at other specialties to support, especially registering into different quality registers.
A question about the EBIT, the minus CapEx margin. So is that target flexible if you find good or better growth opportunities, or is it fairly stable?
So, you mean if we start to invest even more into... I mean, you should always be open to doing things better, and then we would have to communicate it. I think it's unlikely because we're investing so much into our products now. So to put it this way, if I would have been the CEO a couple of years ago, we wouldn't have this much staff. But we have it, it's really good, the staff, so we use that to really charge our growth. But we, we're doing a lot of development at the moment, so we can really handle quite large projects.
I think also a key part of the strategy we have today is also prioritization and simplification, because we had too many growth investment areas at the same time. I think it will be a prioritization to choose the right ones within the scope.
Yeah, right. And, and just a question about this. A couple of a year ago or two years ago, there were a lot of talk about this One Carasent. Could you just talk a little bit about why that didn't work as expected and what you've learned from that?
So, the Carasent project was, part of it was to try to put all EHRs on the same platform. So to develop one platform for all different EHRs. And if you look at EHRs, they have very different functionality. Both the Norwegian ones are very process-oriented. Metodika has a very rich functionality and also support enterprise. Webdoc is very quick, easy to use, simple to set up. So different types of customers with different needs, it would be very difficult to put it all into same system. And even if it was possible, the calculation was that it would take really a lot of time to build it. So after a couple of years of a lot of people, we would hopefully have a system that fulfilled all the present users, and that doesn't make sense, I think.
It's better to build a system to put Webdoc X towards Germany, where there's a new large market for us. So that's part of it. The other part was a key for us to be successful is to be close to our customers and to understand their needs, that all development is happening close to them. All parts of our business need to be really close to customers. And then, because it was also a point of having one organization, and the products are so different, the customers' needs are so different that it's more important to be close to customers than being one organization. And typically, if you're a really large organization, you get kind of top-heavy. That's also. That's the reason. There's still really a lot we can do together.
Many of the projects here are either the same technology between different products, but even more so, the same knowledge about how to build the solutions. So we have a certain module within Metodika, for example, so we know how that it can look. So if you have the recipe, you can use it. When we win new customers from Metodika in Norway, for example, we can use a lot of knowledge in AdCuris. There are different code bases, so that's fine, but half of the work is really getting the right demands of what to develop. And then we have all of the recipes from the other products. So there's still a lot we do together. We have staff moving between the different parts, but it's very important with clear responsibilities.
Yes, I had a couple of questions. One question about these two, I would say, clearly underperforming businesses, AdOpus and Confrere. So, I mean, they are growing -5%, and if I do a little bit back-of-the-envelope of the numbers, there's significantly negative margins as well. How much patience do you have here? Because I think you've said a couple of times that you had too many businesses, and maybe now you streamlined a little bit, but you also have a new, new project in Germany, et cetera. So, some comment about the patience.
So, yeah, that's a bit sensitive data, of course, for multiple reasons. But, to put it this way, what's really important, what we've done already, is to put the responsibility of those product at certain individuals. So we don't, me and Martin doesn't put too much time into those products. That's not where we create the most value. When it comes to AdOpus, I think those legal challenges, we're trying to drive it as much as we can. That's why I also think it's important that we help our customers overturn tenders where the wrong system, where a user of the wrong system won, so to speak. So then you can get a much quicker reaction than if we're just trying to send letters to the government. That will take forever, right?
But, the rules are as they are. We have great new functionality coming out in AdOpus also. So I think we should win that, and we should be able to gain a lot of customers. I do not put too much time into it, so I think that's an important part. None of the management do. So that's... We, I think, we parked it there. We will not have patience forever, but I will not give you a strict timeline on that. Confrere, we will start moving to our platform now. So you can say that there, kind of our patience ran out. We do not continue to develop to have the perfect product to fit Confrere, to fit the present system.
We'd rather try to win more customers at other places, and then we move over the customers we have at Confrere to our platform. So that will change the profitability quite a lot for that product.
Okay, I have one more question on Webdoc. Because, again, if I do a bit of back-of-the-envelope, it looks like you have, yeah, 15-70% growth, and you have about 14%, margins or something like that in that business. Will that margin come up to the 25%, the EBITDA target? And is that sort of - obviously, that has to be a big part of your financial target in a sense, but... Or will you get that from other parts of the business more?
So I will not give a target for Webdoc as such, but, but what I can say is that, we addressed costs in, at Webdoc, and we're growing it, at a good pace, and we hope to increase that pace. And keeping costs still, then we should have a good, very good development of the margin in Webdoc. So I'm, I'm, I feel very confident about Webdoc's performance when it comes to margin going forward.
Thank you.
I think we have some questions also online.
Yes, we have a few here. First, a couple of questions regarding AdOpus. I think we can take them together. First of all, what is the timing of the legal challenges? When will you know the outcome, and what is the timing of the rollout of the web-based AdOpus system?
Yeah, so the legal challenges, they're ongoing. I think it's three different tender processes where we have sent in questions saying that you need to be clear on these points. Then there is one tender process where a user of the wrong system won, where we're helping one of our customers push that. I'm not an expert at tender processes in Norway, but typically in Sweden, it will take a couple of months to know how that went. Then we're also pushing the central government, the central body who's responsible for this, called NAV, and we'll also bring Datatilsynet, it's the name in Norway, into it. So I think we should know quite a lot in the coming three to six months... And the rollout of AdOpus Web, we're doing a lot of demos.
We've been doing a lot of demos since just before the summer. Very good response. Our largest customer is using it a lot already, called Fretex, it's Frelsesarmeen, and they're extremely happy. So I think when I first saw the product, I thought it was among the best I've seen. So, it's just, it's a bit more expensive than what you possibly could use at the moment, depending on how you view different rules. But it's being rolled out at the moment.
Great. Next question is also regarding AdOpus. What type of market share do you have in this segment? What is the growth potential? So we show the market share, it's approximately 25%, as of today. And meaning that the market is basically NOK 50-NOK 60 million. So there is some potential there, but the market is quite niched. You had a period with high consulting revenues on Metodika and AdCuris, AdOpus. Can you explain what type of development projects these are, and to what extent you are developing something you can leverage going forward, rather than build custom solutions for a customer? If this is not the case, why are you prioritizing this?
So we're not prioritizing consultancy fees going forward, but to address what's been done there. So both for AdOpus and AdCuris, it's the rollout of the new web interface. So it's the same system where we've been doing work together with customers, which we will be able to use also with other customers. For example, Fretex, then with AdOpus, which I mentioned. We built schemes for all the different types of end users. So it's a really neat interface for both the end user and our customer to work in the same interface with very clear processes, and we built that together with one customer who has helped finance that. We are free to use those schemes with other customers starting, I think it's next year.
Mm-hmm.
So it's not just for one customer, we can sell it to others. It's the same for AdCuris, but a different type of customer, a rehab station. When it comes to Metodika, it's more customer-focused development. So when you're talking with these large enterprises, they typically expect to get they want to kind of steer what type of solutions they have much more than a small caregiver. So in Metodika, we have, and we'll continue to have, development for senior customers, but for new customers, we're not selling any license anymore. We're charging every year. So that's a big difference for them. And I should also say that a lot of what we're getting paid from one customer to develop, we also can sell to other customers.
So it's, it's not just for one customer always, but it's the customers who decides more on what to develop within Metodika. It's not the same in the other systems.
Next question. You are still, still developing solutions that are spread across a variety of segments or, and markets that are maybe not considered your core business. How are you able to stay focused?
So, I think it's the new organizational structure is really important. So for each sort of product, I have a person responsible, who drives that business so that the management team can focus on where we create the most value. And that's really, I think, the solution to make sure that who's responsible for this, what's the budget? How are they keeping in line with that budget? What's the plan for next year? And then we have a lot of cross-learning. But it's really the new organizational structure that helps us run all those products.
On the smaller clinics that are using competing solutions, are you evidence that you are taking customers from these competitors when these clinics are growing in size, if this is the case?
Sorry, I didn't follow.
I think it's relating to if the small clinics choose another system when they start up-
Mm-hmm.
Then they grow, if they choose Webdoc.
Yes, I don't have data to follow that. So we have many who starts new clinics who choose Webdoc, so most of our new customers are people who start a new clinic when we have new sales. But the ones choosing other systems are typically like single physiotherapists, single psychologists, and so on, or a few of them. So it's a different group. So it's where you get less paid per visit, and you don't need all the functionality we have in Webdoc. So it's the same as our system is not ready for a large hospital. Their smaller systems are not ready for a larger clinic. But it's a bit of a different customer group, even when they grow, I would say.
And I think also the small customers that we typically sign when they start up is also a key driver of our net retention in the long run, as they typically add more tools along the way, or services, and also grow their business in size.
That's really fun, I must say, 'cause I've been working in healthcare since 2006, and there are so many startups. That was not my feeling. But we have on our internal Slack, every week, a couple of clinics starting, and you read about them. Oh, so that's, there's really a lot going on, and there's a lot of startups happening, and we win, I would say, a really large part of them. But it's difficult to know exactly who we don't win. But part of the new sales strategy is also when someone start a new clinic, they'll get a starter package from us to make sure that they think about us as well.
... Next question on the situation in Västra Götaland. Are there any key event in the near to medium term that we should be aware of?
Unfortunately, I don't think so. I think it will take time. So I think that it takes time to help us from a practical point of view, because it gets more and more obvious it's not good to put everyone in the same system. And more and more parts of Västra Götaland do not have to go into the system. For example, anesthesia, which is a core part of your surgery business, and I mean, we're talking about large hospitals, will not be within Millennium, because they said that it's a patient safety issue with Millennium. So it just shows you how bad the caregivers typically are at pushing through systems, and the more parts that get taken out, the better for us.
But on the other hand, it takes longer for us then to give clarity to you and also to customers who think, potential customers who think they might be affected, and therefore are slow at changing systems. So I would prefer it that it now was clear, 'cause then we could handle it, and instead of having something unclear. But, unfortunately, I think it will take some time, and there is no clear timeline. The timelines that were, they, they're long past.
Are there any particular parts of Germany that are more interesting than others? Does regulatory frameworks differ between Bundesländer?
So, yeah, we thought a lot about that 'cause, I mean, you have quite strong Bundesländer in Germany. But from a healthcare perspective, the differences seems much smaller than in Sweden between the different landsting. Also, many of the systems that are there today, they are spread out. So we were kind of expecting to see that system is large in Bavaria, that one is large in Berlin. It doesn't look like that, it seems. So it seems to not be that closely linked to Bundesländer. The regulation is the same, certification is for entire Germany. The price structure is the same, which is not the case in Sweden, but the price structure is the same, all over Germany. Where there's a difference is that you have this,
Yeah.
Yeah, you have the ones who uphold GDPR for each Bundesland. They may take a different view of it. So in Bavaria, they said: "No, no, you're not allowed to use the cloud," they said up until recently. Then they changed that person, and now it's fine. In Berlin, it's still a bit unclear to us if the cloud has to be located in Berlin, and not at the clinic anymore, but in Berlin or not. It shouldn't make a difference, but it seems like some people believe that it still has to be located in Berlin. We'll see. But in overall, the differences are much smaller than within Sweden, actually.
Great. Next question: Can you elaborate on the financial targets per product, more specifically for Webdoc? What are you targeting of growth from that solution, and how long do you expect to continue to grow?
So we're not giving any financial targets per product. We wanted to give you an overview of the different products, so you can get a feeling for how it's going and why I feel confident that we will succeed. So we'll not give targets for each product. Talk about Webdoc, we feel that we're in a good position. We continue to take customers. We're adding a lot of functionality to add more customers. We're improving on the product as it is and on our services around the product, which will help us add customers. So we feel strongly that we will be able to take customers for a long time going forward.
You also saw that, the market share is still quite low, so there is a lot of market still to, to gain for Webdoc. Next question, I think I can take this. As seen in the general meeting agenda, you're planning to buy back further shares. How are you planning to structure that program, and what are you thinking about buying-- How are you thinking about buying back shares? There is no concrete plan on buying back additional shares. What we have proposed to the general-- What the board has proposed to the general meeting is a, a extra, cash distribution of NOK 133 million, and, the board has also asked for an authorization, to buy back additional share, which is more, I would say, market practice to have that flexibility for the board.
Yeah.
The final question that we have gotten is: You mentioned that your systems are different because they are supporting different segments and regions. How do you expect Webdoc X to develop over time? Any specific segments or type of customers you will target, which in turn will determine how you prioritize functionality developed for that system over time?
So Webdoc X, we target roughly the same group as with Webdoc. The reason being that it's quite easy to build a system for the single users, the really small ones. So there's quite some competition there. For hospitals, there are a lot of people going after hospitals, and that's not really our core functionality. And then when I talk a hospital, then I'm talking about a hospital with multiple specialties, and you have acute care and so on. So we're targeting basically the same segment as Webdoc, as we know it really well, and we think that. And there are really a lot of caregivers in, for example, Germany, in that segment, and they are underserved. So we think it's a really good place for us to be, and we know it well.
So that's the type of functionality we're also focusing on in Webdoc X.
That was the final one, digitally, at least.
Okay. I would like to thank you all for listening today, both here and on the web. Thank you, all.
Thank you.