Welcome to Carasent Q1 Report for 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now I will hand the conference over to CEO Daniel Öhman and CFO Svein Martin Bjørnstad. Please go ahead.
Good morning and welcome to our presentation of the first quarter of 2025. My name is Daniel Öhman, and I will start to present, and then I will hand over to Svein Martin Bjørnstad, our CFO, to take the rest of the presentation. Looking at the first quarter, we continued to improve rapidly. We have our EBITDA margin going from - 8% to + 6%, and that's our most important financial metrics internally. Performance is in line with our plan overall. We have slightly higher costs in the quarter than we had planned for, and that's not a lot we're talking about. We're talking about SEK 1 million - SEK 2 mill
ion more costs than we would have liked to have.
It is not a big deviation, and this deviation is due to partly that we have chosen to invest more into AI, and then we are talking AI in our products, AI in our development. We have been working with it for a long time. We have been able to offset most of the costs of development in AI by getting rid of other costs, but some of it has increased our total costs. We also had to do some write-down of the receivables from the companies that went bankrupt that we spoke about in the last quarter. We also have had discussions in the board about capital allocation, and I will get back to that later on in the presentation. I feel that we have good progress in our large development projects. That is surgery for Sweden.
E-prescription, there's a new regulation around e-prescription called NLL in Sweden, which means that in all EHR systems, you will be able to see all prescriptions from all other systems, and you will also be able to change those prescriptions. That would be a really good thing for our customers that even if you're not in one of the regional systems, you will still be able to see all, everything around medication and that way around also. Volvat is proceeding according to plan, the implementation of Methodica in Norway. We're also building our patient platforms for Norway. That's going well. WebDocX continues to develop for the German market with a lot of new functionality. In total, I think that we see really good progress in our development projects nowadays.
The bankruptcies for some WebDocX customers, the one we spoke about in the last quarter, there are no major new ones, put a bit higher pressure on sales now. We are selling better and better. Every quarter, we get a bit better at selling, so I feel that's really good, and we can follow that. We're learning. We do new things in marketing. We see that we can do different things and that our reputation is getting stronger and stronger, which makes it easier to sell. That's really positive, and we need that because of those bankruptcies. Signed not invented ARR is now at SEK 12 million, so that's slightly down, and that's because we have implemented MedRate for VGR, so that's why that's and we have not signed any new major contracts. We have 14% organic recurring revenue growth and 26% contract ARR growth.
So as we have started talking a bit about AI in our products, i just want to take the opportunity to talk a little bit about what we're doing and how we're thinking about it. Just briefly, there are basically two types of AI support in our products that we could do. One is clinical decision support, so that's when we help doctors, nurses, and physiotherapists to take decisions on what to do with the patients. That could be automatic triage where AI decides on the severity of the patient's problem and automatically guides them to the right care level. This type of decision support, we never aim to build ourselves.
That's because this type of AI solutions, or solutions in general, it doesn't have to be AI, puts you in a very difficult legal framework called Medical Device Regulation ( MDR), and you basically become a research company, and you have to prove in large studies that you always do the same thing and that your advice is the right ones and so on. That will never be our aim to build those types of solutions, either with or without AI. It's also not a big topic for our customers. We sell mostly to the private sector. The private sector has a bit easier patients. That's what they're there for. The clinical decisions are not what takes a lot of time for our customers.
The other type of support is administrative support, and this is what our customers really hate and what eats a lot of their time, all the reporting to different places, for example. We already do a lot with it, so one being our systems are really user-friendly, easy to use, good workflows. We also have a lot of automatic reporting connections and so on between systems. Using our products, you have to do much less administration than in many other systems. But still there are things we can do and w hat we invest in at the moment is what's called Ambient Listening. That means that the AI is listening into the patient meeting and then automatically proposes a medical record for you. We've been playing around for it for quite some time.
I think like two years we've been playing with it, and now we felt that actually last quarter, we felt that now it's time to start really putting it into our products. We don't really feel that we have to be the first mover or the opposite, actually. We want to see that first that the use cases are there, that customers really appreciate new technologies, new solutions, and having a strong EHR position where we are the dominant provider of a system to our customers. It's difficult to change the system. We don't have to be the first mover. It's easy to just replace whatever they're using, or quite easy at least.
Our advantage in these types of scenarios is that we can build it directly into the system, so we get really tight integrations, and we have access to all types of data around the patients and visits and whatever it is within the clinic. That means that we can build support that uses all that knowledge. That's why I think that sometimes it's right that we do it, but not always. That's what I want to show you on this next picture. Different situations, different customers have different needs, and we will not try to solve all by ourselves. This is some examples when we talk about Ambient Listening, what we're selling now or start selling now. There are really big international companies like Nuance that's owned by Microsoft that have, I mean, really large resources, large training data.
What they lack is knowledge about how an EHR or medical note is supposed to be written in Sweden, how we set diagnosis and so on. They are good at certain things, but less good at other things. We sell their products today, and they are really good at, for example, speech-to-text where the doctor or physiotherapist just talks, and it writes exactly what the doctor or nurse or physiotherapist says. Their Ambient Listening is not as well suited for certain circumstances at this point in time. There are also specialized products. Another example is Tandem, which many of our customers appreciate t hat solution is built for our type of customers. They are niched, so they can really focus on this, and they can really invest in it in another way than we do and take higher risks than we would do with this type of solutions.
They would be the right for certain types of customers. For example, they built an app so that you can take the listening with you when you leave your outpatient office. If you're a physiotherapist and you go out to the training floor, you can take that with you and record the entire meeting. It might not make sense for us to build such an app, for example, because it's maybe 10% of our use cases for our customers. We can have our own integrated. The advantage we have is that we can build really seamless workflows as we do with other things. It's always the right patient, y ou start it all within the same system. You don't have to switch windows, y ou don't have to go into other things. You don't have to copy things.
We also build for our type of customers, and we have access to all the data that could be needed to write a really good medical record. I think all three of them probably have their place, and it is also difficult to foresee exactly where technology will take us and what will happen. We do not put everything on one horse or whatever to call it. We are doing all these three things. We think that for many customers, our solutions are probably the best choice, and we aim to make sure that it is. It is a little bit how we are thinking about AI in our products. Over time, we see that we will add more and more administrative support in our systems. That is why it is important to start releasing those types of features in our systems.
Also worth mentioning is that the thing we're releasing now is for all our systems. It is already included in WebDocX SC in pilots and also in WebDocX for Germany. It will soon be in our Norwegian systems, and it is all using the same backend, but it has been trained on different languages. So slightly different backend, but in the same organization that builds it. Moving on, we talked about how we use our capital and looking at how we grow. New sales is, of course, very important. What's worth noting is that most new sales are to startups, so clinics that start new, and then we grow with them. New sales are extremely important, more important than it looks like in the numbers, because it is with those new startups that we then grow the coming years. New sales is very important, even if they often are small.
With surgery, we aim to also move over larger clinics and to increase that part of new sales. We grow with existing customers, as mentioned. That's both since they are growing, but also since we add more and more value into our systems and different add-ons we can sell. We have acquisitions. What's really worth and important to note here is that we do not aim to start making acquisitions and looking at different types of structured processes that come out from advisors and so on. We have a few companies that we know would add a lot of value to our organization that we would over time like to acquire. What this means is that we would go and knock on the door and say, "Hi, we think that we could add value to create more value together," and then have a discussion.
That is very different from the acquisitions of old in this company, but it is the same story we had in Germany where we looked at all different providers and we knocked on a few doors and said, "Hey, we think that together we would be a good fit." That is how I have done acquisitions before also. I think that is where you really can create a lot of value, that you have chosen this and this and this company slash product fits really, really well with our company. We are not aiming at becoming a serial acquirer or so, but we see that there are some opportunities to create real value and good value and strengthen positions. That is what we are talking about. It will not be many acquisitions and not in a rapid pace.
What that means for our capital allocation is that we see that we want to do some acquisitions, but they are very targeted, and we know exactly who those are, and we have no hurry to do those. That means that we want to keep some cash on hand for that. We also have on hand already SEK 253 million, and we have a rapidly increasing cash flow. That means that we will do recurring share buybacks. The exact size of those will depend on the discussions we have with those M&A talks I spoke about earlier. The board will each year decide on how much to buy back when they think it is the right time to do it.
I hope that quite soon after 8:00 A.M., we'll be able to come back with you all on that and what size it is at this year. I cannot give you that answer today. We see that share buybacks is a good way of distributing cash to our share owners. We will be looking at a few very selective M&A opportunities. Looking ahead, it continues to have a big focus on growth, of course. We have pilots in three very high-potential projects ongoing at the moment. We have surgery. We have Volvat, where the first pilots are live now. Also MedSun, that's our Ambient Listening solution. We also have pilots live. Three very high-potential projects that will be really fun to follow.
We continue to focus on efficient use of resources every day, every month, every quarter, becoming more and more efficient in all parts of what we do. I think that's extremely important. That's how we'll be able to scale in a really good way. Cost control is then vital. Finally, launching WebDocX in Germany. There we also have our largest high-potential project, so the fourth one, with the first German pilots live, as you know. We aim to replace DataCur, their older product in DataAlg, during 2025. With those words, I will hand over to Svein Martin.
Thank you. Starting off by looking at high-level metrics, we improved a lot also in Q1. Our ARR grew 26% to SEK 321 million, including the backlog.
Our organic recurring growth was more or less in line with previous quarter's net returns rate as well at 110%. Margins also improved. We did expect margins to improve a couple of percentage points more, but we had this additional cost that was mentioned but o verall, quarter in line with our plan. If we take a closer look at the P&L, you see strong improvements year- over- year. Revenue growth was 29%. We have highlighted some points there where WebDocX grew at 15%. There you see that it is slightly lower than what we posted last year. This is because this bankruptcy or churn took full effect from the end of Q1. Going into Q2 as well, the pace will be affected by this churn. On the other hand, we did have a very strong quarter on the sales side in WebDocX in Q1.
We expect them to be back on track quite fast. Overall growth, as mentioned, 29% driven by the acquisition of DataAlg and strong organic growth. You see also consulting revenues was very high. This was due to these big implementation projects being at full speed and also sort of weak comparable last year it was quite slow on consulting. Third point, SEK 10 million EBITDA improvement or 14 percentage point increase in margins. Worth noting as well is that in the first quarter, we were close to being neutral on EBITDA for our German operations. This was because of a very strong quarter on profitability side for DataAlg, which had good consulting revenues, which helps, of course. Also that we have gone through the cost base after acquisition and removed, particularly on the OPEX and COGS side, removed unnecessary costs and also negotiated with suppliers.
The underlying profitability now is better than before the acquisition. If we look into the growth, ARR growth, it was, as mentioned, more or less in line with previous quarters in the reported figures. There are some effects that pull in opposite directions. As Daniel mentioned, we implemented the VGR contract for MedRate and also implemented some clinics for Frelsesarmeen in Norway, which also contributed to the growth. That would have increased the growth a couple of percentage points. The WebDocX churn for the bankruptcies took full effect in these figures. That pulled in the other direction. Overall, it was quite stable. If we look at profitability, it is improving rapidly. We have gone from minus 30% margin two years ago to + 6% now. We are, of course, still far away from our potential.
The key, given that we have a strong backlog of revenue to implement and a good underlying growth momentum, will be to convert as much as possible of those revenues into profits. If you look at this slide, it shows how we are doing with this over the last year. The left-hand bar shows the revenue growth, the revenue increase, excluding Confrier, which was sold, and DataAlg, which was acquired over the last year, so the organic business. We had the COGS increase naturally. OPEX was quite flat. The personnel expense increased SEK 2.6 million. Last year, we had some one-offs related to layoffs of SEK 1.7 million. If we remove those from the comparison figures, it increased SEK 4.3 million. CapEx decreased by a similar amount.
In total, we were able to convert 90% of the revenue increase into EBITDA. If we adjust for the non-recurring last year, it was 73%. We have set an internal target to convert around 80%. Yeah, we did have this extra cost this quarter. Next quarter, we will have around SEK 1 million in extra cost for the new incentive program. It will be key that we succeed on these cost initiatives that we are taking. Over the last year, we have removed roles that were not necessary and also replaced consultants for employees, which typically generates a good saving. That is why we are able to keep these costs quite flat, even though, of course, we have wage increases, etc., and add roles in other areas. Finally, the cash flow. We had, as mentioned, good improvements in profitability and lower investments.
We had working capital headwinds. I mentioned this in the last report, that we had a lot of outstanding invoices for the relisting at the year-end. These were paid in Q1. This was an effect of around SEK 12 million-SEK 13 million. If you look at the figures, it would have been quite strong if we had not had these effects on the cash flow. So overall, financially, we developed, despite some smaller items on the cost side, we developed according to plan and in line with our financial targets for the year, which we maintain. The key to reach those will be to roll out the implementation projects in time and also, of course, keep the cost control. With that, we can open up for Q&A.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue.
If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Fredrik Nilsson from Redeye. Please go ahead.
Thank you. Good morning, Daniel and Svein Martin. I want to start with the new AI functionality. Could you perhaps elaborate a bit on what share of customers do you believe will be interested in your solution relative to third-party solution? Also, if you could say something about the pricing.
Yeah, sure. Thanks, Fredrik. Good morning. I believe that over time, we will be able to sell to a really large portion of our customers this type of solutions. It has the potential to, I mean, what doctors, even an outpatient day office therapist or nurses for that matter, is that they meet the patients, but then they have a lot of documentation to do afterwards.
The more we can automate that for them, they can really help more patients. It is really a big potential in time saving for the user. Of course, none of the AI solutions today, I mean, deliver 100% of that time saving, but they are doing a really good job. Therefore, over time, I think that we will see a really large part of our customers using these types of solutions. I think that also our solution will have clear advantages by being completely connected into the system and just being a part of it. It is a natural part of the EHR system. It is not a system on the side. You have to pay to get access to it, and then it opens up, and then you have access to it in the system or in our systems, so to speak.
I think the potential is really strong. Healthcare is always slow to take on new technology. I think it will take some time before it grows really big. The reason why we have chosen to kind of over-invest compared to plan is that I believe that the potential is really strong, and the pricing from our side will be very competitive. We build our solution based on open-source products. That means that our costs will be quite low, and we are hosting it with our own hosts, so to speak, just like we do with our other systems. That means that we can scale costs in a very good way compared if we would use ChatGPT or similar solutions.
We can also make sure that there is no access from the U.S. to our solutions, which you cannot do it 100% if you are on Azure Cloud. I think that we have some clear advantages, and the pricing will also be lower than the competition. In general, these types of solutions today that are sold are more expensive than what the EHR system's license is per month. We will be priced a bit lower than what the EHR license is. Just in WebDocX, I think we have 18,000 users. Our estimate is that more than half of those generate medical notes. The potential is really strong. I mean, over time, that could really be an area for growth. That is why we have taken this choice to over-invest a bit.
Most of the costs will be able to offset by, I mean, just have had to complete other projects. We have removed some roles we maybe haven't before planned to remove. I think that's been a priority for us. That wants to, yeah, there are really big potential in these types of solutions. I think over time, we will see more and more built-in AI support, just like we have over time built more and more integrations that automate other types in other ways, automate reporting for our customers. Given that the types of customers we sell to, we can be very quick at implementing these types of solutions. If you're selling to the public system, it's completely different because they have to go through the tenant process, and they have to go through all the committees.
We can be a couple of years before that easily. I think it's also an advantage when comparing different systems. That was share of users, you said. I think that over time, we will be able to sell to most. I think that our solution is likely to become the most popular around our users, but it's hard to tell exactly where these types of technologies go. I think it's important not to put all eggs in the same basket, and we're selling our own and we're selling the other solutions too. I think it's fine. Of course, for our monies, are much better when we sell our own solutions. Did that answer your question, Fredrik?
Yeah, yeah, absolutely. That was a good answer, I think.
I have some questions about the opportunity for WebDocX outside of the three largest regions in Sweden. What is the time like relative to the three large regions, and what can you do to potentially open up additional re gions?
What's the timeline i n that market?
Okay, sorry
I mean, look at it as a long-term timeline.
Yeah, yeah. Private healthcare is by far the largest in the three largest regions, and by far it's Stockholm that's the largest. Stockholm is really the big market, so the most important market. There are private caregivers around the country. We have customers in all regions. Where we really are locked out kind of in many regions is primary care. You have a few primary caregivers, like two, three in a region. Then it's really no or maybe 10.
I mean, that's very few, not much revenue. In total, all those regions, that adds up to something. We're working a bit on it to open it up. We have projects in or a project in one region where they've now rolled out Cambio, and the private caregivers are really not happy. We have a discussion where Cambio is positive, and we see if the region is positive, but we might be able to do something. I think it will not generate a lot of revenue, but I think the point of that project is just to prove it and to show that it works well. I think that over time, we will have the new regulation, EHDS, I should probably say, which says that all systems have to be able to and have to actually exchange information with each other.
I think that for us is an excellent opportunity. All those arguments go away because all systems have to be able to talk with each other. That should be implemented in most areas by 2030. There is a lot of work going on with that. We are sitting in those committees working on those proposals together with other EHR providers. That will also open up a lot of markets. At the moment, we are fully focused on taking those. I mean, there are so many caregivers to sell to, and we can grow so much within existing potential markets that we do not need to focus really on the other markets.
I mean, potentially in VGR, if they go for one of the proposals that's been proposed there, is that they will have a floor of different systems, then potentially we could sell to the public primary care centers. That's never been a focus for us, and it's not included in our TAM numbers. If that would be the case, that would open up. It's not really, we don't need to fight to get those types of new situations where there are so many customers we can sell to already.
Okay, I see. That makes sense. Thank you. Lastly, just a clarification regarding the churn. As you mentioned, in the last quarter, you will see an uptick in churn in the beginning of this year. Is all of that taken in Q1, or should we expect a further increase in Q2?
The full effect of that was in the March figure. In our ARR, it is taken.
Great. That is clear. Thank you very much. That is all for me.
Thank you.
The next question comes from Elmer Rolder from Carnegie Investment Bank. Please go ahead.
Good morning, Daniel and Svein Martin. I hope you can hear me. Congratulations on a good report, solid growth. I have a couple of questions, more nitty-gritty nature, if I may. You mentioned that the OPEX increased partly due to the increased investment into AI, but also that there were some write-down of receivables for these customers that have gone bankrupt. Would it be possible to split? Or you said that the AI investments was SEK 1 million-SEK 2 million. How much were the write-downs of receivables? So we get a feeling for the size there.
In total, the extra costs were SEK 1 million-SEK 2 million. Nothing dramatic, but slightly higher than we expected. The write-off of receivable was the majority of that.
Okay. If we think on the AI cost or the AI cost, you said that you were able to offset most of it here in Q1. How should one think about that for the rest of the year? I mean, how much will that drive an increase in OPEX if you look at compared year over year, or will you be able to offset it still, or how should one think about that for the rest of the year?
Yeah, no, we should be able to continue to offset most of it.
What possibly could happen, because I think you need to be a bit flexible on these kinds of things, is that if we see that now we're running pilots, when we start selling, if we see that it really starts selling well, I think we might invest more in it. We have chosen to invest more in it and go a little bit beyond our budget just because we see that there's so great potential in it over time. We have kind of made it a little bit more difficult for us to live up to the targets for this year. We still think we can do it, but made it a bit more difficult for us to deliver short term. But for the long term, we feel strong that that will create more value.
The choice we have taken, we try to offset most of it, and we continue to have that offset. It is just prioritization between different roles and different projects. We have chosen not to offset it completely because we believe strongly in many of the projects we had planned to run. This is starting to really show some great potential. I think it is also important that I think this will be one of the technologies that will be used in our products. I think it is very important that we also start learning how to commercialize those types of technologies. Most of it will be offset, and it will not be a major factor.
Okay, great. A bit related to the AI investments then, is there any hardware adaptations or anything you need to do on that front?
I know that some of these AI assistants and so on use a specific hardware that is adapted to that assistant or something. Is there anything you can do there? Is it just plug and play? You need just an ordinary mic? It's a bit of a weird question, but.
No, no, that's a good comment.
What you need to do.
Yeah, there's some good points made there. We're not running our own data centers. I think that's important. We do set them up ourselves. It's private clouds. I think that's important for our customers and the type of data we handle. We're the one configuring all of it, but it's not our hardware. With the AI, we use much more hardware than we do for our normal solutions. That means that COGS for these types of solutions is higher than what we used to.
They will be around 25%-30%, somewhere around there, I think. It's difficult to foresee exactly. We're playing around with smaller LLM models also. If you train them, they can be really good. Then you can get those costs down quite a lot. At the moment, our focus is not to get them down the most. It's to have really good quality in the outcomes. After that, we can try to go to smaller models and in that way to have a better margin. First, we want to win customers. I think we will not buy any hardware, but we will have COGS of 25%-30% on those products to start with at least. That's just all the data centers. Yeah.
Okay. Okay, cool. A bit on Germany, I guess.
Can you comment a little bit on the initial feedback you have gotten there with WebDocX? And how should one, I mean, how should one think when you're ready to fully sell the first version of WebDocX for actual use and so on? How's the timeline there?
Yeah, the first pilots seem happy, but those pilots, when we talk about the AI project, that's called MedSun. And also when we talk about Siri, those are full-scale pilots. They're using the systems every day, all the time, and in all circumstances. WebDocX does not have the full functionality to be used and completely replace your existing systems. That's a big difference from the other pilots we have, where they have completely chosen away other types of solutions. They use it full-time, all the time, every day.
These are users testing functionality for us, but they also have to use the normal system. That is because we still have, for example, a billing you cannot do yet in our system in Germany. We know exactly what to build. The DataAlg organization is really good at making sure that we build exactly what the customers need. There is a clear roadmap. During this year, our aim is to replace all of the users that use Data Cur today with our new product. That means that by the end of the year, we should have around 80 paying customers, I think, in WebDocX for Germany. I mean, that is quite okay. It is done in physiotherapy, so they pay a little bit less than doctors. In general, clinics in Germany are a little bit smaller than in Sweden.
If you look at WebDocX Sweden, we have 800 customers, a bit more. The average size is much bigger than those German first 80 clinics. From there on, we can continue, of course. We move into doctors the year after. That is the timeline we are working towards and aiming for.
Okay, perfect. I think that was all from my end. I'll get back in line to see if there are any further questions. Thank you so much, guys. Have a good day.
Thanks.
Thank you.
There are no more questions at this time. I hand the conference back to the speakers for any written questions.
Okay, we have gotten quite a few questions in the chat here. First one's from Jesper. Are you able to charge extra for the AI transcription feature that you are launching?
Yeah, yeah, for sure.
The cost for that would be roughly 70%-80% of the license cost, somewhere around there.
Next one, you mentioned strong new sales in WebDocX. What has improved from before? Is it sales efforts or improved product?
I think it's very difficult to break those two things apart. The product is improving. I think it will be improving more and more all the time because we get quicker and quicker in our development. That really helps. I think also within sales and marketing, we're learning and improving all the time. I think I mentioned on this call before that add-on sales were something we were not that good at. It took a bit longer than we had hoped for it to get started. After the summer last year, we really started to get moving on that. It has continued to improve.
For all months so far this year, we're selling both new customers and add-ons at a higher pace than planned. The plan was a bit up from last autumn. In our plans, we have increasing sales all the time. We get better and better and better at it. That's a little bit of the everyday improvement I've been talking about.
Next question is from Rasmus Persson. First one, can you give us more information on the operations module? How many trials do you have? Have you closed any deals yet? Any large customer discussion? What do you expect from it by the end of the year?
Yeah, we have one pilot using the Siri module fully. They are really pleased with the functionality. They're just all happy.
As I remember the contract, they will stop paying in half a year. I guess now, four months or something like this. Four months. We're getting the second pilot up and running any day now. It could be already up and running. I'm not really sure. They will also be paying customers after a couple of months. We have a third one going online quite soon also, who will be paying customers. All of these are existing WebDocX customers that have been lacking this functionality. For sure, it adds some revenues for us. That's good. The real aim of this model is to add new customers, the large new. We are in those discussions. It takes time to convince if you have a small hospital of a couple of hundred or a hundred users. They are not the quickest to change.
They want to see that everything is top-notch in all parts of it before they change systems. I can understand them. As their previous customers, you've been promised a lot from software companies, and then they don't really deliver what they've said on time. They want to see everything in place, all parts before committing. I can understand that. I think that month after month, we should really have good development within new customers, and it will help us add new customer sales. It will not be like going from 1 - 200 in a couple of months. It will be customer by customer. We have a new good tool to take on large customers. We have a big advantage to the competitors. I think that step by step, you will see sales increasing, partly thanks to the Siri module.
Great. Next one, if you can give an update on your customer's actions against VGR and Millennium?
Yeah. So Förvaltningsrätten judged against our customers. We believe that it was a very faulty judgment, of course, we think. I think that anyone would think so because the reason they used, saying that it was not proven, that it was much less work or less, what's the right word? They said it was not proven that it would be much easier for our customers to live with our existing system than changing to Millennium. That was not something that VGR tried to say it wasn't the case. It was not part of what was actually discussed. They just ruled on something that was not discussed and not part of what should not be part of the ruling.
It should only be things that the parties are not agreeing on that should be ruled on. Typically in these cases, when you are in this type of course, it's only around 12%-14% of the ones when you try to appeal that actually get to go to an appeal. It's not like normal courts. We believe that our customers have a good case of getting their appeal through. They have appealed, and we think they should be able to get the ruling in an appeal court. It's not given that since normally only 14% of all appeals go to the next level. That being said, I think that Millennium is a bit difficult to see how Millennium could go forward in its present form.
We have good discussions with primary care centers in VGR about switching to WebDocX now. Fingers crossed, we will have some new primary care customers in VGR within not too long.
Great. Next one is on quantification of the receivable loss?
I think i will addressed that. A question for me, 80% revenue to profit. Is that target for 2025 or long term?
That is an internal goal that we have set. It is basically reflective of that we are at a level on the margin side that we think, as I said, we are far from our potential margins. We think we can be able to grow for quite some time without increasing the cost base significantly. That is sort of the internal target. From
Jesper, that is also on the VGR appeal. I think we can skip that.
The final question we have gotten is also related to this. 80% incremental EBITDA implying that basically all additional gross profit translates into EBITDA. Is that correctly understood?
Our gross profit is around 85%. It basically allows us to add some roles where we see the need. Yeah, not a lot of wiggle room there. I think that's important as well if we should deliver on the plan we have to increase margins rapidly.
Yeah. Also to mention last part, we have a large capacity when it comes to development. We become more efficient in all roles. I think that's what it builds on. That were all the questions we had for today. Thank you all for listening in. Just reach out if you have any further questions.
Thanks for this morning.
Thank you.