Omda AS: Questions to Sverre Flatby | Value Bridge

Archieve - Everything Sverre Flatby Said

Business Summary

Omda AS (formerly CSAM) is a Nordic-based healthcare software consolidator specializing in highly niche medical and emergency solutions. Since 2005, it has built a portfolio of long-lived, mission-critical systems with <2% churn over 10 years, serving hospitals, blood banks, and emergency services. Growth comes from both organic expansion at 5–10% annually and disciplined M&A, with 17 acquisitions completed to date. Typical acquisition multiples have been 1–2x EV/sales, focusing on recurring revenues. Revenue has grown tenfold since 2015 to nearly NOK 500 million, with a 30% EBITDA margin ambition supported by decentralization, cost efficiencies, and AI-driven productivity gains. The company finances acquisitions primarily through bonds (currently €500 million outstanding, with capacity to double via tap issues) and cash, explicitly avoiding equity issuance at current valuations.

Catalysts & Milestones

2005 - Began building proprietary M&A target database in Nordic healthcare systems

2015 - Revenue base from which company has grown tenfold to nearly NOK 500m by 2025

2016 - Public safety revenue at NOK 15m, later scaled above NOK 150m via acquisitions

2017 - Acquired Saab ambulance software, reinforcing emergency care capabilities

2018 - Closed acquisition after discussions dating back to 2008, showing long-cycle M&A approach

2020 - IPO and €150m Carmenta acquisition; raised funds via equity and bonds to finance M&A

2021 - Acquired MedSciNet and Optima; Health Analytics unit expanded via M&A

2022 - Acquired additional analytics provider; 15 acquisitions reached since inception

2023 - Delivered national blood management system in Denmark; ProSang in full production

2025 - Sales near NOK 500m with 5–10% organic growth plus targeted M&A; bond capacity available to double

Investment Highlights

• Revenue grew tenfold since 2015 to nearly NOK 500m

• Completed 17 acquisitions, typically at 1–2x EV/sales multiples

• Churn below 2% over the past decade across mission-critical software

• Ambition for 30% EBITDA margins by 2026–2027 supported by decentralization

• Current bond financing at €500m, with tap issue capacity to double
  
  

Future Growth Drivers

• Continued M&A pipeline of ~300 projects, with 20–30 in active dialogue

• Cross-selling within emergency care, e.g., triage, acute care, and ambulance modules

• Expansion of Health Analytics and public safety through targeted acquisitions

• AI deployment for customer-side modules and internal code/productivity gains

• Strong recurring revenue base enabling leverage of up to 5x EBITDA for acquisitions
  
  

Risk Factors

• Heavy reliance on bond refinancing with €500m outstanding; margin subject to markets

• Integration complexity from 17 acquisitions, requiring cultural and technical alignment

• Margin drag from long-cycle projects such as LIMS (contracted until 2027)

• Personnel restructuring (e.g., Philippines divestment of ~50 FTEs) may disrupt operations

• Customer concentration risk, e.g., Carmenta’s >50% sales with SOS Alarm in 2020

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Capital Allocation

27/11/2020 Can you achieve NOK 240 million this year and how is the M&A market?

We are focused on improving sales and guiding based on Q4 effects and currency impacts, which influence results. Adjustments in CSM’s currency exposure provide the options investors look for. The M&A market remains highly fragmented, and we are the leading consolidator in our chosen niche of specialized components. Many Nordic and Northern European companies want to join us because of our structured approach to certification and industrialization. We see positive trends and clear opportunities over the next five years.

27/11/2020 What multiples do you pay for M&A targets?

We focus on EV/sales multiples because not all targets have strong EBITDA. Recurring revenue strength matters, but so far our acquisitions have been in the 1x to 2x EV/sales range.

27/11/2020 Are you in advanced acquisition discussions?

Any material developments must be reported under Stock Exchange rules. That said, we have completed seven acquisitions in the past five years and will continue to pursue similar opportunities. This is a constant part of our strategy.

26/02/2021 Why pay €150,000,000 upfront for Carmenta instead of partly in shares with lockup? Will management and employees stay on, and what incentives do they have?

We have already integrated Carmenta’s people, who are excellent and motivated to stay with us, so we do not see retention as a major risk. The structure of each deal depends on negotiations with the seller. We have used various methods in the past, including seller credit, vendor notes, cash, and shares. For Carmenta, cash was appropriate. Remember, we raised funds through our IPO and bond issue specifically to finance acquisitions, so deploying cash was the right approach here.

26/02/2021 How many acquisitions are you screening simultaneously, and what size companies do you typically consider?

Since our founding in 2005, we have tracked specialized clinical solution providers, first in the Nordics and later across Europe. We maintain a database managed by our Strategy Director, who continuously evaluates relevant targets. Out of tens of thousands of potential companies worldwide, about 200 are relevant to us, and we have engaged with many for years. For example, one acquisition completed in 2018 began discussions as far back as 2008. This long-term approach supports our 40% growth plan.

26/02/2021 Can you describe your M&A integration process, including sales and cost synergies and cultural aspects?

Our profitability stems from integration. We do not acquire companies to leave them standalone; instead, we build one CSAM by sharing resources and competencies and creating a unified culture. This approach works because our acquisitions are highly specialized components that align with our focus. The people behind these solutions are essential, and by developing these niches together over time, the culture naturally integrates.

26/02/2021 How many acquisitions can you manage per year, and what is your annual target?

CSAM is built as an M&A machine, with the entire organization continuously working on acquisitions and integrations. Because these solutions are long-lived and stable, growth primarily comes from add-on components and acquisitions. We have the resources and methodology to manage this, and depending on size, we can handle around 2 to 4 acquisitions per year, which aligns with our growth targets.

26/02/2021 Why was there a long gap between previous large acquisitions, and should we expect this frequency going forward?

Yes, we are now speeding up. The IPO, bond issue, and related preparations in 2020 required significant management attention, which delayed acquisitions. With those processes completed successfully, we are fully resourced and prepared to accelerate activity. We will not be slowing down.

26/02/2021 What is the payment structure in Carmenta? Is it annual upfront, and how much of 2020 sales were software and recurring revenue?

In the DE Health business, much of the payment structure is front-loaded, often invoiced upfront. Service and maintenance contracts, which are recurring, are typically invoiced in advance, annually, semi-annually, or quarterly. Professional services are usually invoiced at completion. Carmenta has the same basic working capital profile as CSAM, though there is always room for optimization. Regarding the revenue mix, recurring income comes from long-term contracts. Historically, these businesses begin with consulting, then move into product, services, and software. The software share is lower than our norm, but increasing it is part of our buy, integrate, and build model.

26/05/2021 Do you plan to keep CapEx around 9–10% of sales, or will it change?

We have guided CapEx at around 10%, and that remains the expectation. One quarter it may be 9%, another 11%, but roughly 10% is the level. It is important to remember what CapEx represents for hospitals: business cases where we create components that customers buy to add recurring revenue. It adds value for them and future recurring revenue for us. We do not want CapEx to be too low since it represents growth potential and is not only about financials.

26/05/2021 What are the main challenges in accelerating acquisitions?

The challenge is to secure an accelerated pace of acquisitions. We already have a conservative plan that we can reach, but I work constantly to see how we can accelerate. This requires making the right decisions at the right time, selecting the right niches, and targeting the right geographies. It is always a challenge to do the right thing every time, but we view it as part of the game rather than a problem.

26/05/2021 What were M&A transaction costs and other nonrecurring items in Q1?

We do not report M&A or one-off costs separately; all are included in reported numbers. Naturally, a large transaction like Carmenta and high M&A activity in general impacted Q1 results. Audit costs, which were booked in Q2 last year, were fully booked in Q1 this year. For a fair comparison, you could add €1–1.5 million to this year’s Q1 EBITDA, since it was burdened by costs recognized in Q2 last year. That means EBITDA this quarter is actually a little stronger than it appears. We choose not to adjust EBITDA because M&A is a constant part of our business.

30/06/2021 Why is R1 RCM divesting the Optima business now?

In my view, this is not a strategic fit for them. Most of R1’s operations focus on managing administrative and economic software for healthcare organizations. They acquired Optima through another transaction, and it never aligned closely with their core strategy. We have been in dialogue with them for some time, much like when we acquired ambulance software from Saab in 2017. In both cases, the seller had more than 90% of its business in other areas. Optima fits better with us than with R1, though ultimately R1 must speak for itself.

I see this as a homecoming for the Optima employees. We will take care of them, and divestment is not in our DNA. I am confident this transaction will be well received.

30/06/2021 How is the acquisition of Optima similar to and different from MedSciNet?

The similarity is that both are niche businesses with long-term recurring revenues and an emphasis on analytics. That is the common thread.

The difference is that MedSciNet allowed us to create generic national register components and then add analytics. Optima, by contrast, is tightly focused within public safety. It has built a strong and viable position in that specific niche over many years. While its components could be applied more broadly, its main strength is in this dedicated domain.

30/06/2021 How much room do you have to acquire companies without raising capital?

It depends on the purchase price and settlement structure. Historically, we have done transactions at EV/sales multiples around 1–2, using various combinations of cash, seller debt, seller credit, and shares. If everything were settled purely in cash, we still have capacity. Earlier this year we raised NOK 200 million in a bond tap issue and have only used a small fraction of it, which will carry us at least through this year and likely well into next year.

30/06/2021 How will acquisitions be financed to reach NOK 1 billion revenue by 2025?

We believe CSAM should maintain a mix of debt and equity. With our stable recurring revenues from public customers, it is fair and efficient to apply some debt to the capital structure. A leverage ratio of up to 5x EBITDA would not be uncomfortable. The exact mix will depend on shareholder decisions and risk appetite, but it will be a blend of debt and equity.

19/05/2022 How has the M&A pipeline and private market valuations developed lately?

It is easy to see what is happening with valuations in listed companies, and many are now sobering up. Valuations in private markets are beginning to harmonize with those of listed peers. As a result, there are more targets available, and in my view at better prices.

Looking at our own position, if you compare the balance sheet at the end of Q1 with the end of last year, despite acquiring a company and paying cash, our cash position is nearly identical. That gives us a lot of flexibility. It feels like a tidewater effect, many growth and tech companies face low tide, but our ship is loaded with cash.

19/05/2022 How large is the relevant M&A space for you?

We started building a database in 2005, categorizing hospital systems in Norway. That work has since expanded to cover vendors in the Nordics, Europe, and beyond. In the Nordics, the specialized healthcare market is about NOK 3 billion. Based on our Q1 sales, we have roughly a 10% share, so there is ample room for further acquisitions. The EU market is about ten times larger, meaning the volume of potential targets is not the problem.

The key is selecting the right targets. For example, public safety grew from NOK 15 million in 2016 to more than NOK 150 million in annual sales, built systematically through targeted M&A. Health Analytics followed the same pattern, with one acquisition in 2021 and another in 2022. For us, the priority is acquiring the right recurring revenue streams and sticky businesses rather than chasing volume. That strategy has worked with the 15 acquisitions we have done, and it supports our goal of reaching SEK 1 billion in 2025.

19/05/2022 How will new acquisitions be funded? Will you use bonds, bank financing, or issue shares?

There are many ways to structure funding, and it depends on the situation, whether the seller is a financial investor, an entrepreneur, or a family succession case. Each case calls for a different approach.

We currently have a strong cash position, sufficient to support 40% annual growth without additional funding. That said, the bond market remains open to us because of our strong recurring software revenue, low churn, and high-quality counterparties. Other tools include seller credits and earn-outs. Overall, we believe cash and financing options will be available without issuing new shares at today’s price level.

19/05/2022 Why does it take the same time to integrate small and large acquisitions in your buy–integrate–build model?

Customers behave the same way regardless of contract size. Almost all hospitals in the Nordics, and an increasing number abroad, handle vendors through long processes. Whether the contract is small or large, you must negotiate, deliver, adjust payment terms, and sell add-on modules. These steps always take time.

Our model reflects the reality inside hospitals, not just a PowerPoint plan. For example, if you need to reduce staff, you cannot do it in a single quarter. These processes are specific and time-consuming, which is why both small and large acquisitions require the same integration timeline.

30/08/2022 Are you too selective with acquisitions, and how do you convince owners to sell?

We are picky, but not excessively. Stability and predictability in recurring revenue streams are critical for both bondholders and shareholders. Many companies lack the income quality we want, so we pass. Strategic fit is also essential. While we could grow faster by acquiring less specialized businesses, our strength lies in highly specialized components that sustain recurring revenue and keep churn near zero.

We aim for €1 billion in revenue, but only with the right targets at the right time and price. Over the years, we have positioned CSAM as a good home for these solutions, which strengthens our brand and builds trust with sellers. That long-term dialogue has gotten us where we are, and we believe it will take us to our SEK 1 billion goal in the next couple of years.

30/08/2022 How do you plan to finance new acquisitions?

We have several options. Our balance sheet shows €260 million in cash, which gives us flexibility. We can also use seller credits, vendor notes, and earn-outs.
For short- to medium-term acquisitions of similar size to those we have recently completed, we have both the ability and capacity to finance them without issue.

30/08/2022 What acquisition multiple is too high to pay?

There is no exact answer, but historically CSAM has paid between 1 and 2 times sales on an enterprise value-to-sales basis. Many of our acquisitions were loss-making or break-even, so we do not use EBITDA multiples as the primary reference.
Exceptions may exist where a company justifies a higher multiple, but we have been prudent in the past and intend to remain so going forward.

30/08/2022 What was the worst deal you made in the company’s history?

I once hired a CFO that did not work out, and that was probably the worst decision. More importantly, we have looked at five or six acquisitions that we dropped very quickly once we saw how unstructured they were. In other cases, we were further along in the process before realizing issues such as unclear ownership of intellectual property or third-party dependencies.

Avoiding those deals protected our model, which depends on controlling our own IP and maintaining gross margins above 90%. Looking back, I do not regret any of the acquisitions we actually completed and integrated. The only real regret remains that CFO hire.

30/11/2022 How should we think about M&A pace and size to reach 2025 revenue target?

We are working on about 300 projects of varying size, mostly small and mid-sized like those we have done before, though some are larger. We always compare targets to our current size, and discussions are ongoing with companies as large as half our size as well as with smaller ones we have known for years. To reach the SEK 1 billion pro forma goal by 2025, we estimate needing SEK 100–150 million in additional sales over 2023–2025.

Our project pipeline gives us confidence we can reach this through a mix of larger and smaller acquisitions. 2022 was a slower year, but dialogues are returning and valuations are normalizing. We expect to continue acquiring both small and larger businesses relative to our size.

30/11/2022 With valuations more reasonable, are you seeing more competition for M&A targets?

On larger deals, yes, we compete with excellent acquirers like VTech and Constellation Software. But most of our 300 database targets are highly specialized, often underperforming, and not attractive to private equity or larger industrial buyers. These niche businesses may focus on a single discipline in one country, which makes them less relevant for others. So while competition exists on bigger targets, smaller opportunities remain less contested.

30/11/2022 How is your M&A pipeline divided between Nordic and non-Nordic companies?

We do not publish exact statistics, but the pipeline is broad. In the Nordics, where we have roughly 10% market share in specialized healthcare, there are still many targets, enough that we could theoretically reach SEK 1 billion there alone. However, we aim for balance.

Carmenta strengthened us in the Nordics while also opening opportunities in Spain, Moldova, and Greece. Optima, acquired from the U.S., gave us exposure to the U.K., U.S., and New Zealand while also serving Nordic customers. Going forward, we expect a mix, perhaps 50/50 or 70/30, between Nordic and non-Nordic deals. The volume of opportunities gives us confidence we can reach €1 billion regardless of geographic split.

30/11/2022 Have you lost any deals to competitors due to valuation or other reasons?

No, we have not lost deals because we were outbid. We have walked away from some transactions for strategic or valuation reasons, and others we have paused with plans to revisit discussions later.

30/11/2022 Why are you buying back shares?

We repurchase shares to have flexibility in settling acquisitions partly or fully with shares. At current share levels, buying back stock makes more sense than issuing new shares. It is simply another tool in our M&A toolbox.

28/02/2023 How likely is it that no acquisitions will be done in 2023?

It is very hard to guide on that. It is like asking how likely it is that there will be no sunny day this summer. There is always a chance, but I would bet there will be at least one day of sunshine.

28/02/2023 How would you use cash from a divestment?

It is quite simple. A divestment is just the reverse of an acquisition. First, you will see the effect in the P&L in the quarter when it was divested. Second, whatever proceeds go into the bank, we typically use for new acquisitions. The priority for cash from a divestment would be to reinvest in something more strategic through M&A.

01/03/2023 How do you allocate capital between investments, M&A, and share buybacks?

CapEx for internal development is guided at about 10% of revenue. For M&A, we aim for 10% organic growth plus 25–30% through acquisitions annually. Share buybacks are linked to M&A, since repurchased shares can be used for partial or full settlement in transactions. Our bond agreements prevent us from canceling shares or paying dividends with them.

01/03/2023 Do you use hurdle rates when allocating capital?

Yes, we apply a weighted average cost of capital of 12%. Prioritization between CapEx, M&A, and buybacks follows the framework I described, with M&A and buybacks considered together.

01/03/2023 Did the 2020–2021 acquisitions meet your hurdle rates and goals?

Yes. Using our “buy, integrate, and build” methodology, the Health Analytics acquisition is still within its two-year margin expansion framework and should complete in the first half of this year. Other acquisitions are now run as decentralized, organic businesses with no further integration needs. This should provide predictability going forward.

01/03/2023 What have you learned from M&A deals since the IPO, and would you change your approach?

We should have decentralized earlier, as the buy, integrate, and build methodology within one business area is easier to manage, scale, and measure without disturbing others. That was the most important lesson, reinforced by insights from American shareholders familiar with acquisitive companies. We also see that some activities can be done faster, supported by digital tools developed over the last two years, such as automated invoicing. This positions us to extract more value from acquisitions more quickly going forward.

01/03/2023 Do you expect near-term M&A, and in which segments?

It always takes two to tango, so timing depends on negotiations with sellers. Our proprietary database, built since 2005, gives us an overview of targets and long-standing dialogues across all business areas. While no deals closed in 2023, discussions were active, and I expect us to achieve 25–30% annual M&A-driven growth. The exact area depends on negotiations, but we are well prepared and confident.

01/03/2023 How has refinancing the bonds affected your M&A capacity, and what are seller expectations?

We now have cash available and a bond framework capped at 500 million, with flexibility for earn-outs and seller credits. This gives us a war chest to execute deals of various sizes, up to about half our own size. Our target lists include attractive opportunities, both small and large, that can accelerate progress toward our growth goals. Seller expectations remain a factor, but financially we are well positioned to pursue the right deals at the right time.

01/03/2023 Do you see buybacks as a better use of capital than M&A?

It makes sense to buy back shares when the price is below intrinsic value. Under the new bondholder agreement, we can repurchase up to $50 million of shares on a revolving basis. The next AGM will likely address this. However, compelling acquisition opportunities often compete with buybacks, so capital allocation decisions balance both options.

12/05/2023 How do you enforce capital discipline in business areas, and what is your hurdle rate for M&A and internal investments?

Capital discipline means allocating CapEx only to solid business cases, not spreading funds evenly. If a business area has a good case, it receives investment, otherwise not. Business area managers also improve working capital by invoicing customers upfront and extending supplier payment terms from 14 days toward 30, 60, or 90 days.

For both M&A projects and internal investments, we apply the same hurdle rate. We view acquisitions and internal growth initiatives under the same cost of capital lens, essentially “buy or build.” Currently, the hurdle rate is around 12%, reassessed regularly based on our weighted average cost of capital, bond trading levels, and base rates. M&A remains a core growth strategy, as it has been for the past 15 years.

25/08/2023 Why are there still no new acquisitions?

It is difficult to discuss acquisitions before they are signed, but we have many processes ongoing. Most of our acquired targets have been in dialogue with us for years, so we know them well.

Our database of potential targets is growing, both in current and new markets. We will continue our M&A focus, and you will see acquisitions and eventually acceleration. Still, we must buy the right target at the right time and the right price, since we can only use the money once.

25/08/2023 Liquidity reserves decreased by NOK100 million since the IPO. Where was this spent?

Funds were spent on four acquisitions since the IPO, as well as on software investments recorded under CapEx and on reorganizing operating activities.
For detailed breakdowns, the quarterly and annual reports provide full cash flow analysis.

25/08/2023 What is your CapEx guidance in the short to medium term?

We generally expect CapEx to be around 10% of sales. As sales increase, it may be somewhat above or below that, but roughly 10% remains our guiding level.

25/08/2023 What about the bond loan and its renewal?

That is correct, financing costs have increased and the loan market is tougher. The total terms depend on the market, including the VIX and iTraxx, the base rate, and last but not least CSAM’s performance, which explains the margin. We expect to refinance and probably expand the current bond loan, backed by strong EBITDA results.

We are in dialogue with bondholders and investment banks. No specific steps have been taken yet, but our focus is on what we can control, namely our performance, while continuing to monitor the market.

25/08/2023 What is a prudent expectation for refinancing the 2024 bond, and what debt type will replace it?

It depends on the market’s confidence, interest rates, and CSAM’s performance. Our preference is to refinance and possibly expand the bond, supported by EBITDA strength.

We are working with market participants and investment banks. While we cannot control the market, we can ensure strong results, which is our main priority.

08/11/2023 How many M&A targets fit your business areas, are you in due diligence, and what sizes are they?

I cannot discuss ongoing unpublished processes, but in general, we have maintained high activity even if deal flow has been slower the past couple of years. We started one deal this year that will close in Q4, but we also have multiple ongoing discussions with both small and larger targets. For example, the company we just announced had been in discussions with us for more than five years. Overall, I am confident that the funnel is strong enough to reach the targets set at IPO, even if we are behind the original timeline.

08/11/2023 How many newly issued shares will be bought back, how much dilution is expected, and what are your acquisition advantages versus other acquirers?

We have repurchased approximately NOK 30 million of shares, as detailed in the report. Buybacks cause no dilution. Dilution only occurs if we issue new shares as acquisition compensation. Our competitive advantage lies in being the best home for certain solutions. For example, the acquisition we announced recently involved a triage solution with 20 years of proven value. Combined with our contracts and processes, it creates strong synergies that benefit customers and employees, making us attractive to sellers.

08/11/2023 What is the size of the seller’s credit?

Currently, there is no seller credit, so nothing off balance sheet. Our bond agreement has a carve-out allowing up to NOK 100 million in seller credit, but at present the amount is zero.

10/11/2023 What can you say about M&A activity and valuations?

We had very high activity in 2023 in terms of acquisition dialogues, though not many transactions were completed. The market is moving in our favor, and many ongoing discussions are progressing well. The pipeline includes targets that can be added without hurting profitability, which is an important consideration for us. Since our IPO, we have doubled in size, so the impact of acquisitions is smaller relative to the whole company. We are happy with the pipeline and expect more to come.

On valuations, we have been cautious. In 2021, some entrepreneurs had expectations that were too high, reflecting what Warren Buffett called irrational exuberance. Now, sellers are becoming more realistic, and valuations are reaching more sober levels. This creates opportunities where we can bridge gaps and find workable solutions, so we see more potential on the valuation side as well.

10/11/2023 How do you look at different levers of financing potential M&A deals?

There are several options. We can pay cash upfront, settle in shares, or use our share buyback program to settle wholly or partially in kind. We can also use earnouts and seller credits. We have all these tools available, and it comes down to using the right one for the right situation.

10/11/2023 Could you give an update on the bond refinancing process?

As announced in the press release this morning, alongside Q3 results, we mandated Carnegie and DNB to help refinance the current €500 million bond. The coupon is 3-month LIBOR plus 500 basis points. We are launching a roadshow next week, meeting existing and new investors, with the goal of rolling current exposure into the next stage of our journey. Once results are in, we will share them immediately.

10/11/2023 Are you aiming for the same bond size, and what margin do you expect?

Yes, initially we aim to refinance the same €500 million size. The current margin is 3-month LIBOR plus 500 basis points. Whether we can keep roughly the same margin will depend on the process. The bond is trading slightly above par, which is a positive indicator, but final terms will be determined in the market.

10/11/2023 Going forward, will you target M&A deals with higher EBITDA margins to avoid dips after acquisitions?

Historically, we created value by acquiring underperforming companies with valuable recurring revenue, which we could restore to 30%+ EBITDA margins. That was the focus rather than the starting profitability. However, the current pipeline includes many targets performing better than those we acquired in 2022.

In 2024 and 2025, I expect average targets to be performing at or above normal levels, so we will likely see fluctuations rather than heavy dips after acquisitions. This should provide a smoother earnings profile compared to the turnaround-heavy acquisitions of the past.

10/11/2023 Can you comment on the share buyback program?

We are buying back shares, but there are limitations. Bondholder agreements restrict us, and EU MAR regulations limit how much of the free liquidity we can buy each day. These rules mean we cannot operate entirely freely in the market, so the program has boundaries we must follow.

14/05/2024 Can you comment on M&A market dynamics, multiples, and how Onda can benefit?

Activity has increased, partly triggered by MDR requirements. A year ago, multiples were higher, but dialogues today are more rational and within our range. We will act when the right business case appears, and I expect acquired growth to return to earlier levels. Multiples have come down, which is positive.

Multiples are only proxies for valuation; what matters is analyzing cash flows and remaining disciplined. Many targets are rejected because they lack strategic fit, strong financials, or quality of earnings. Saying “no” is also activity. We benefit by broadening our candidate list, initiating more dialogues, and staying active while remaining selective.

14/05/2024 Are the share buyback plans still in place?

Yes. At the recent general meeting it was confirmed we can buy back up to NOK 50 million of our own shares at any time, within bondholder limits. Currently NOK 20 million has been repurchased, leaving capacity for NOK 30 million more. The program is active and can be replenished if shares are used for acquisitions.

23/08/2024 In which business areas are acquisitions most likely?

It is difficult to be specific since it takes two parties to sign a deal. I cannot say which business area will close first, but all areas have relevant prospects. We have dialogues that sometimes last more than 10 years, and currently discussions are ongoing across all areas.

We will continue to acquire, and there are many interesting targets with strong business cases and growth potential. I cannot reveal which one will happen first, but it will happen soon.

23/08/2024 Why did you distribute a dividend instead of using the capital elsewhere?

In Norway, there is a wealth tax and a high dividend tax for individuals. This small maintenance dividend allows Norwegian shareholders to cover those taxes.

We believe this is better than shareholders, including myself, having to sell shares to pay the wealth tax. It is not ideal, but it is a fact of our environment.

23/08/2024 When will CapEx investments show more effect given slowing software revenue growth?

We have always guided CapEx at 10% of sales, and this quarter was slightly lower than the same quarter last year. On organic growth, we guide 5% to 10%. This quarter was 5.5%, and the last four quarters averaged about 7.5%. So we are on track, with normal quarterly fluctuations, not a downward trend.

When we launch a CapEx project, an idea becomes a simple project calculation: identify development costs, then estimate income from hospitals or emergency institutions. We isolate cash flows, discount them over seven years, add terminal value, and use a 12% weighted average cost of capital. It is like an M&A case since both compete for funding. CapEx is negative at first, then income arrives over time. That is how we have always done it, and will continue to.

23/08/2024 How many M&A targets are in your database, and how many are active?

There are thousands of companies in the database. We have built an M&A platform over 15 years, and around 100 companies are in ongoing dialogue. In total, there are about 20–30 dialogues active at any given time.

The definition of a “lead” varies, but between calculating business cases, negotiating, and selecting the right targets at the right time, we have many opportunities, enough to meet our original targets.

23/08/2024 What remains to be determined in the Philippines divestment project?

The term sheet is signed, but details are still being worked out. It will close later this or next quarter. Once finalized, we will publish the facts.

The purpose is replacement: inshoring combined with new tools like AI for efficient development. It is not an overnight transition, but the outcome is certain, like a pregnancy, you know the result nine months ahead.

20/12/2024 How does the cash position affect acquisitions?

The improved cash position and stronger performance from Q4 onward give us confidence to continue acquisitions. Smaller, smart deals are definitely on the table, and we will also pursue larger ones case by case with appropriate funding. The business platform into 2025 is solid, with organic growth and profitability supporting our ambitions. Decentralizing the emergency sector was delayed due to sensitive contract negotiations in several countries. This hurt results in 2024, especially in Q2–Q3, but it was a deliberate decision and we believe it was the right call.

20/12/2024 What is your CapEx guidance for 2025 and beyond?

We maintain the same CapEx guidance, historically around 10% of revenue. If anything, it may trend toward 8%–10% rather than 10%–12%. With about 15% cash EBITDA translating into roughly 25% EBITDA, this range is consistent.

26/02/2025 Will future M&A deals use less stock and more cash, and what are your biggest worries?

We do not plan to settle transactions in shares at current levels, as the stock trades well below our view of intrinsic value. Cash, seller credit, and earn-outs are more attractive options, and we have used them in recent deals. Shares are not the preferred option today.

As for worries, I am optimistic. Our organic business is stable, predictable, and strong. The M&A market has shifted in our favor compared to years after the IPO when valuations were high. Now opportunities look better. So to be precise, I am not worried.

14/05/2025 Have valuations of acquisition targets decreased?

Yes, the hype we saw a couple of years ago is gone. Valuations are now more sober and realistic. Of course, sellers still want higher prices, while buyers seek reasonable levels, but as we saw last year, expectations can meet. All the targets we are currently discussing should allow for agreements to be reached.

14/05/2025 What lessons have you learned from past acquisitions and integrations?

We have completed 17 acquisitions and learned a lot. Our buy, integrate, and build model usually follows a two-year plan, but in many cases we can accelerate integration. We now look more closely at each target’s contracts and customer relations, ensuring recurring revenue is secured through invoicing and CPI or price adjustments. The key lesson is to avoid being too standardized and instead focus on the unique characteristics of each acquisition.

14/05/2025 What are your profitability requirements when evaluating acquisitions?

We do not mind if a target is unprofitable or a turnaround candidate; some of our best acquisitions fit that profile. What matters is the current business and cash flow, plus the synergies we can create on costs or income. We buy for the future, not the past, so we assess how the business and cash flow will develop once improved. Generally, we identify cash flows, discount them over seven years, add a terminal value if reasonable, and apply a weighted average cost of capital of 12%. This is the same approach we use for CapEx projects.

14/05/2025 Are there cross-selling opportunities from past acquisitions?

Our M&A strategy focuses on value chains. For example, in emergency care we added Predicare, which provides decision support and triaging, and Averia, which supports acute hospital care. These acquisitions extended our scope from planning and call-taking to acute treatment. Cross-selling in OMDA means that customers using one component, such as acute care, may also adopt complementary components, like ambulance modules, and vice versa. It is always within the same value chain. Cross-selling is not, for instance, a cancer software customer suddenly adopting maternity software.

14/05/2025 How do you plan to finance ambitious growth plans?

Since 2015, sales have grown tenfold to nearly NOK 500 million through 5–10% annual organic growth and acquisitions. For acquisitions, we use a mix of upfront payments, leverage, and creative structures like earn-outs, seller credits, and vendor notes. These are especially relevant when dealing with entrepreneurs who remain involved, less so with industrial sellers. We currently have NOK 500 million outstanding on our bond with capacity to double through a tap issue, contingent on meeting criteria. With the results we are showing, that should be achievable. Importantly, we have no plans for equity issuance.

29/08/2025 How do you balance inorganic growth with liquidity, and how can you reach 10%–20% inorganic growth?

Several factors. First, organic growth of 5%–10% adds to our cash position. Second, while we historically paid one to two times sales, every acquisition is based on discounted cash flow, not just multiples, so the actual multiples vary.

Third, we are not always paying fully upfront in cash. We use seller credits, earn-outs, or other structures. Fourth, we have bond market access, so we can borrow when needed. Taken together, reaching 10%–20% inorganic growth is fully manageable with our cash position and financing flexibility.

29/08/2025 Why are recent M&A deals closing at lower multiples and with less cash upfront, is this due to your philosophy or market conditions?

A few years ago the market went crazy, and we withdrew because people were paying too much. For us, it must make sense both strategically and financially. Today, sellers and the market overall are more prudent. Many of our discussions with targets have been ongoing for years, allowing trust to build.
We also structure deals differently, not always paying full cash upfront. Seller credits and earn-outs can align incentives, letting both parties share the upside. These earn-outs often create the best business cases for OMDA as well as the sellers. The market has simply become more sensible, and we are disciplined in taking advantage of that.

29/08/2025 How do acquisition targets screen on valuation relative to buybacks?

We always run discounted cash flow analyses, though multiples may be used as translation. Depending on whether you look at past, present, or future projections, targets can screen very differently. Some sellers present hockey-stick forecasts, but we evaluate carefully.

If it doesn’t make sense financially, we will not do it. When it does, acquisitions can be highly attractive relative to buybacks.

Competitive Advantage

26/05/2021 What is your view on competition for your 2030 ambition to be number one?

We are not alone, but we have been unique in creating a Nordic portfolio of highly specialized solutions. No competitor has built exactly this kind of portfolio. Competitors exist within each niche, but many are also acquisition targets. Broader competitors like Constellation Software or Nexus will also be active acquirers in this market. Still, by focusing narrowly on specialized niches and building our pipeline database since 2005, we are confident we can dominate in Europe and expand globally. After 10 years of training our acquisition model, we are in a strong competitive position.

30/06/2021 When acquiring a business like Optima, how do you increase margins so dramatically? Is it by raising prices or cutting costs?

Looking back at our 2015 and 2016 acquisitions, the same pattern applies. These types of software come with strong recurring revenue streams because customers rely on them daily. Our advantage is scale: we can integrate common functions such as quality management systems and test centers, making operations far more efficient.

Even more important, we can provide additional functionality that customers need. That has consistently delivered 5% to 10% growth from existing customers over the long term, sometimes more. So while cost savings play a role, the principal driver here is income growth through added value and cross-sales. Integrating Optima into our eHealth and public safety domains will make the business stronger and more focused.

30/06/2021 Are data analytics more prone to cloud disruption?

Yes, analytics are easier to migrate to the cloud compared to operational systems in acute care. That makes them more open to competition. However, once customers have invested time and effort to configure systems and integrate data into workflows, the switching cost is very high. The real cost is organizational change, not the software itself, which makes churn unlikely even in cloud environments.

30/08/2022 How does CSAM retain an entrepreneurial ethos and avoid bureaucratic paralysis as it grows?

That is an excellent and vital question. In my 40 years in eHealthcare, I have seen that small, specialized entities succeed only when they stay close to customers. Our new business-area structure is the only scalable way to preserve that. Traditional matrix models are too rigid and risk cultural stagnation.

Each business area maintains its own culture, while CSAM as a whole has one overarching culture. Top management’s role is to provide service and support to these teams rather than impose bureaucracy. This way, we nurture a strong portfolio of entrepreneurial teams that can deliver sustainable growth.

25/08/2023 How do differences in acquired technical platforms affect integration and economies of scale?

Our customers pay for systems already in production, often for decades, and typically integrated with legacy platforms like EPIC, DIPS, or Tieto in Scandinavia. So platform differences are not the main issue.

Economies of scale come from CapEx projects, where each business case creates components that integrate across multiple platforms. For example, we run two types of maternity software in different countries. New components are designed to work with both, reducing the need for big platform shifts. Over 10 to 20 years, products will converge, creating a common platform while we maintain CapEx at around 10% or just below.

25/08/2023 How will you stay relevant with a diverse product portfolio and higher CapEx for an aging project portfolio?

CapEx is not used for maintenance, it is for new development. Maintenance CapEx does not exist at CSAM. It is important to clarify that point.

The technology is not “ancient.” The real value comes from the patients, healthcare workers, and the outcomes our software enables. We add new technology over time, which customers are buying, as shown by the 16% recurring revenue increase this quarter. This demonstrates strong demand for add-on components and ensures future development opportunities.

25/08/2023 Why is EBITDA margin only 10% for recurring software with 91% gross margin, and are there synergies between business areas?

The 10% figure is not a claim but a calculation. Synergies are not the primary lens through which we view business areas, but there are some. For example, integration components in Connected Healthcare can be used across other areas.

The focus is on long-term production systems where customers pay for user value. We continue to leverage both existing and new technology to secure that value, and we also use artificial intelligence initiatives internally to increase efficiency in development and delivery.

08/11/2023 How many newly issued shares will be bought back, how much dilution is expected, and what are your acquisition advantages versus other acquirers?

We have repurchased approximately NOK 30 million of shares, as detailed in the report. Buybacks cause no dilution. Dilution only occurs if we issue new shares as acquisition compensation. Our competitive advantage lies in being the best home for certain solutions. For example, the acquisition we announced recently involved a triage solution with 20 years of proven value. Combined with our contracts and processes, it creates strong synergies that benefit customers and employees, making us attractive to sellers.

14/05/2024 What is MDR, why did you do it, and what are the costs?

The European medical device directive was replaced with the stricter medical device regulation (MDR). Over the last two years, we transformed processes, documentation, and quality controls to comply. This has been a huge turnaround and very costly. It involved auditors, consultants, training, and disruptive surprise audits by notified bodies. Costs run into many millions.

This investment strengthens our position with existing customers who value MDR-certified vendors, and gives us an advantage versus acquisition targets struggling with high MDR costs. Certification also helps explain why professional services revenue is lower, but once secured, it will open opportunities for increased services and customer business in 2024.

26/02/2025 How will you compete with larger European VMS acquirers outside Norway and Sweden?

Our recent acquisitions show our strength: small but highly specialized companies that fit our model with strong synergies and shared customer components. These are often too small, complex, or niche for private equity or generic serial acquirers.

We maintain dialogues across Europe and globally, and we believe we are seen as a good long-term home for these businesses. Our specialized approach makes us competitive in this landscape, and I am confident we can continue to win attractive deals.

29/08/2025 Who were you competing against for the Prosang contract extension with Karolinska, and what factors led to Omda winning?

It lies in our generic strategy within specialized areas like the blood establishment business. The history goes back to 1965, and we have maintained continuous dialogues with Nordic blood establishment managers ever since. Working together for decades, we ensured that every detail, quality element, and procedure complied with regulations.

This long process allowed us to build what is probably one of the best products in the world. Institutions like Karolinska, the Austrian University Hospital, and others in Denmark see our strong position and trust built over forty years. Competitors coming in from the outside cannot easily replace that history of detailed software development.

Operations

27/11/2020 How modern is your software stack and what needs improvement?

Hospital software changes are large, slow processes. We modernize continuously by adding requested functionality and reusing technologies, such as single sign-on, across niches. Over time, our technology stack improves gradually. What matters most is functionality in complex medical processes, not the technology itself.

26/02/2021 Carmenta reported 32 employees in 2019, but your release states about 50. Has headcount grown that quickly, and why?

Yes, it has. The acute sector’s demand for digital tools has grown rapidly, and COVID-19 accelerated this trend. Carmenta needed to scale up to meet contract obligations. The result has been real growth in both income and employee numbers.

26/05/2021 How do Q2 results usually compare to Q1, and is there any seasonality in Carmenta?

With Carmenta, as with our other niches, recurring revenue has no seasonality. Seasonality mainly comes from new projects, services, or smaller license deliveries. That makes results fairly predictable. For this year and previous years, there was no major difference between Q1 and Q2. Q2 is normally an ordinary and robust quarter, neither especially weak nor strong. We have no indications this year will be any different. Carmenta just tags along, so nothing special there.

30/06/2021 Where is Optima’s organization based, and how many employees does it have?

Optima has about 25 employees. Most are based in Auckland, New Zealand, where the company originated and its development department remains. The rest are mainly in Reading, United Kingdom, with a few in the United States.

30/06/2021 Will you keep Optima’s software development in New Zealand?

Absolutely. The team has built a fantastic capability by focusing on one complex problem and solving it effectively over time. In larger organizations, they may not have been prioritized, but our strategy is to develop this as a niche within a niche. We intend to keep and further strengthen the New Zealand team, which will benefit both us and our customers.

We admire what they have accomplished and will build together with them. I am confident we will achieve a 30% margin within two years.

30/06/2021 How are Optima’s customer contracts structured?

They are a combination of short-term project revenues and recurring revenue streams. Contracts may be annual or longer. However, the real driver is the specialized nature of the solutions. Once installed, they remain in place for years regardless of contract length, so contract management is more important than contract duration.

30/06/2021 Does Optima sell directly or through distributors?

It is a mix, but primarily direct sales to customers. That model helps us stay close to users and continuously improve the product. We expect to continue with direct sales as the main channel.

19/05/2022 Personnel costs rose as a percent of sales, unrelated to M&A. How do you expect this to evolve?

The observation is correct. Compared with Q1 2021, most cost items were unchanged or down, including COGS, but salaries increased. Part of this relates to M&A. Another factor is the need to add or replace competence as we scale. Additionally, a higher order backlog requires more staff.

We faced a choice between delaying projects or hiring temporary staff. We chose to hire, and will gradually replace temporary personnel with permanent staff. That shift will reduce costs, and in the long run we expect personnel costs to return to historic levels.

30/08/2022 Do you now have the organization in place for the SEK 1 billion target, and can admin functions scale?

Yes. That is why we secured key management roles such as HR and Marketing and Communication Director, which we previously lacked. This setup is critical for our growth plan.

We do not expect further structural changes on the journey to SEK 1 billion. Our organizational model will scale, allowing us to acquire and integrate enough companies to reach that goal.

28/02/2023 Are there plans to grow headcount or add support staff?

Yes. Behind each business manager there is support staff, though not uniform across areas. As CFO, I have a team of accountants, business controllers, and a finance manager. Operational services like internal IT are also staffed. These are among the larger groups. We try to be lean and focused, but necessary support is in place. What can be done in the business areas will be done there.

28/02/2023 What functions will see downsizing besides consultants, R&D, and marketing?

It is twofold. First, in corporate services we have slimmed down and focus only on what absolutely has to be done, leaving more to business areas, which often handle tasks more efficiently. Second, in R&D and development, we now prioritize what needs to be developed and is paid for. Developers, sales resources, and non-strategic projects are being reduced.

We have also used many consultants for sudden delivery projects that required immediate action without people on board. It was costly, but the alternative would have been worse. You should see consultant use start to decline from Q2.

01/03/2023 How will you use internal resources for large projects going forward?

The main example was our Denmark contract, delivering national blood management software. Without external consultants, EBITDA in the second half of 2023 would likely have been 30% higher. That project is now finalized, with only ongoing functionality and version updates, all handled internally. From Q2 2023 onward, there are no similar large projects requiring external consultants, so I am confident our employees can manage the business without major consultant use, aside from smaller items.

01/03/2023 Are cost controls and salary focus risking talent retention or recruitment?

This is not about cutting employees or salaries but reducing reliance on external consultants. We are confident in maintaining our current business without resorting to margin-improvement projects that reduce headcount. We actively track employee feedback and will act if needed, but our focus is consultants, not employees, so I am not concerned about losing key talent.

01/03/2023 When will the LIMS and emergency projects end?

The emergency project is smaller, focused on an AI engine to support 911 operators, developed with the University of Valencia. The larger LIMS project runs until 2027. Major milestones were achieved in 2023, with Denmark’s capital regions using our blood management software in production and receiving positive feedback. Going forward, work will involve adding versions and components, leading into decades of recurring revenues and add-ons typical after such a major delivery.

01/03/2023 How do tenders and bidding processes work in your markets, and do price increases cause churn?

Tenders are rare because our systems typically run in production for decades. We prefer acquisitions and organic growth from existing customers rather than tenders, which can take years without results. For example, some Nordic tenders lasted decades without installation. Our Denmark project is an exception, with installations already in place before a tender invitation. A typical tender involves two years of planning, two years of execution, and 5–10 years of implementation, reaching ordinary operations after 15 years. This is why tenders are not central to our strategy or budgets. Our 5–10% organic growth target is based on existing customer contracts, not tenders.

12/05/2023 How did FirdSoft, Carmona, MedSinet, and Carmenta costs contribute to profit decline from 2020 to 2022?

The reported business area EBITDA includes corporate overheads, as all common services are distributed across business areas. The Q1 figures you saw do not yet reflect the effects of Project Riginto, our cost reduction program. We chose to allocate costs across areas rather than show marginal contributions, which makes the margins appear weaker. The underlying contributions are much better. The reorganization was necessary because we had grown too large under a centralized structure, which is why Project Riginto was initiated.

12/05/2023 How does closing the sales force in Q1 affect your ability to grow organically?

It is actually the opposite of a closure. The reorganization created a stronger and more focused sales force. With a customer-centric model, business area managers and their teams are now directly responsible for sales, allowing closer relationships and faster follow-up with customers. Since close to 90% of sales are to existing customers, this new model makes the sales force more effective and stronger than ever.

12/05/2023 Did workforce reductions land at the low or high end of the 25–35 range?

We are roughly in the middle. Headcount declined from 317 in Q4 to 297 entering Q2, with further reductions ongoing in Q2. Including consultants, the reduction aligns with the 25–35 range previously communicated.

25/08/2023 How is the blood management delivery in Denmark progressing?

The project is going well. All of Denmark is now using CSAM ProSang in production, which was the most critical milestone. There are other functional and technology milestones still in progress, but the main delivery was completed in Q2, though a bit later than planned.

The delay increased certain costs, such as external consultants, which had an impact on profit. However, considering the 40-year life cycle of ProSang and the importance of the Danish installation, this quarter is a success despite what the numbers might suggest.

25/08/2023 What is causing the EBITDA margin delay, and how many consultants are still needed?

A specific team of project managers and test managers has been kept full time for a couple of extra months. That adds costs of about NOK1 million, not NOK100,000. This temporary use of consultants has delayed margin improvement.

08/11/2023 What is the problem with emergency and what are you doing to address it?

The fundamental issue is that emergency has not been decentralized. It is complex software, involving several different types of solutions. To create synergies and achieve strong performance across all business areas, clarity and responsibility are crucial. We are appointing four leaders who will take responsibility, and from 1 January the business will operate in a decentralized structure. That shift will solve the problem. Overall, we are satisfied with the development.

08/11/2023 What is the status of Professional Services, what has been done, and what are the effects so far?

Every business area has reviewed performance in detail, assessing how each individual is contributing. All employees, including myself and Einar, log hours to maintain complete company-wide statistics. Based on that, managers have conducted thorough reviews. Most areas are performing well and showing positive effects compared to last year in Q3. The exception is emergency, where progress has been slower than expected. Decentralization, transparency, and stronger accountability will address this.

10/11/2023 Can you deliver according to customer demand given headcount reduction?

Yes, we can. The successful rebranding and decentralization made it easier to work closer to customers. We recently upgraded major solutions with them, and we are operating with the right number of employees compared to our income. This is a healthy combination of staffing levels and recurring revenues, supported by an efficient central organization.

It is now more transparent, as reflected in our business area reporting, where you can clearly see developments in each segment. Overall, the model is working better than before.

10/11/2023 Are your software developers dedicated, and how similar is the technology across acquisitions?

Yes, developers are tied to business areas because they need deep domain knowledge. For example, algorithms for cancer treatment require specialized expertise beyond coding. Key people stay within their areas, but we also use shared consulting resources to scale projects, add testers, and accelerate development when needed.

As a serial acquirer, we inherit diverse technologies, but this is not a problem. These systems remain in production for decades, and the focus is on the value they deliver, not the underlying technology. Platform migrations occur gradually, often over 5 to 10 years, to satisfy customers. In practice, we apply common methodologies and certifications so that, regardless of technology, our software looks and functions consistently under the Onda brand.

14/05/2024 How much higher would you have wanted professional services to be?

Many millions more would have been natural. But you never fully control professional services bookings since income depends on milestones. If milestones are not reached, revenue cannot be booked in that quarter. We expected some projects to contribute millions more than what is shown this quarter.

14/05/2024 Are part-time consultants affecting EBITDA margin, and are they related to LIMS?

No, they are mainly linked to Emergency. The AI project with University of Barcelona requires external personnel, but this is temporary and will end after H1. It is strategically important software to improve operator efficiency in critical situations. LIMS, on the other hand, is trending positively and showing high growth, as reflected in the report.

The certification project is also nearing completion, a milestone that shifts focus back to customers. MDR-certified products increase value for customers and support pricing power. Historic costs were high, but the certificate strengthens competitiveness going forward.

23/08/2024 What will be the impact of cost-cutting and divestment actions?

The combination of reducing developers, working closer to customers, and using AI tools like CoPilot creates immediate efficiency gains of 20% to 30% when migrating legacy systems. Remote sourcing has worked well for 20 years, but going forward, home sourcing with smaller teams near customers will be much more efficient.

This quarter already showed millions in personnel savings. For the quarters and years ahead, the math is simple: fewer people will be needed to accomplish the same tasks, resulting in significant cost savings.

23/08/2024 How much cost will be reduced from the Philippines divestment and reshoring?

We have signed an agreement to divest, though it is not yet formalized. We will publish details when completed in the second half. What matters is that there will be a significant reduction in employees at Omdar. Around 50 employees are there, and since we will work more efficiently, it is not a one-to-one replacement. You can make your own calculations on the savings.

23/08/2024 How will divesting low-cost Philippines resources improve margins, and why do it now?

This may sound counterintuitive, but it is important to understand the history. About 20 years ago, we began cooperating with the Philippines for development of one product, and for two decades that worked well.

However, the shift now is about efficiency and alignment with how we want to operate. By reshoring and changing how teams are structured, we believe we can improve margins even if costs per head are higher. The focus is on smaller, more effective teams closer to customers, supported by new tools, rather than on maintaining low-cost development resources abroad.

23/08/2024 Why divest the Philippines subsidiary now, and was this tied to Q2 performance?

This is not about Q2. When we decentralized after the IPO, we gained transparency in each business area and saw that remote development was too complex. Some areas had already shifted, and now it is time to act company-wide. We have worked on this for years, including with the original founders in the Philippines, who remain available while we reduce remote resources.

At the same time, modernization and AI tools give us new productivity possibilities. With legacy code, AI creates significant efficiency, but effectiveness requires close customer collaboration on functionality, quality, security, and regulation. Smaller, roundtable-style teams near our main offices are far more efficient. The first step will be executed this year, then gradually in 2025 and onward. Ultimately, we will run the same operations with fewer people, and the Philippines is no longer that low-cost either, so the net value is higher than it may appear.

23/08/2024 Were developers in the Philippines less efficient due to communication or time zones?

Yes. Complex development tasks are more efficient when solved around a table together. Sending descriptions to someone on the other side of the world, who may be asleep, slows problem-solving. That makes remote work harder when the tasks are highly complex, which is the real reason for the divestment.

23/08/2024 What will be the cost impact from Nordic inshoring, and why is this decision being made?

We are confident costs will be lower. With migrations, modern tools, and close collaboration with large customers, we see much greater efficiency. Please do not think of this as a very low-cost part of the company, because it carries costs to maintain that entity as well. Overall, the business case is strong.

In addition to visible costs, there are invisible ones such as productivity, speed of development, code quality, delivery pace, and faster cash flow. These factors strengthen the case for inshoring.

23/08/2024 What is the average salary in the Philippines on an FTE basis?

We have not disclosed that figure. It will become more visible once the divestment is completed and we begin reporting accounts without those operations. Until then, we will have to wait and see.

23/08/2024 Will the use of external consultants remain high in the second half of 2024, and why is it higher than expected?

Most consulting relates to emergency projects, including the AI project I mentioned. We also have CapEx projects underway within emergency that use consultants. The usage will gradually decline as those projects finish, though not disappear entirely.

We have kept consultants because once a project is finalized, we also have products to sell to customers, which drives recurring revenue. Even if we pay, for example, the University of Barcelona for AI components, it remains a good operational investment.

23/08/2024 When will results from the Professional Services overhaul be visible?

Every hour is logged, including mine and Einar’s. Since Q1 this year, we have complete statistics. By May, we knew exactly what to do, and actions taken in Q2 already showed improvements in June compared to April.

The results will gradually strengthen through the second half of the year.

20/12/2024 How many employees will you have after acquisitions?

That is a very good question. All new employees from Predicare and the two signed acquisitions are included in the 2025 numbers. The exact figure, whether 263 or 266, is less important than the trend. Completed actions already bring the number down, and the new hires linked to phasing out outsourcing are included. This creates a sustainable platform for our business. With current staff handling customers and products plus the new acquisitions, we expect performance to align with the EBITA margin interval shown. This supports our outlook for 2026–2027, when 30% EBITDA should be the ordinary level, with 5%–10% organic growth.

20/12/2024 What are your expectations for FTEs and personnel expenses entering 2025?

We have not published a specific run rate, but the presentation shows about 270 FTEs at the end of 2024, including new acquisitions. As consulting agreements, including the Filipino contract, expire, the number will fall below 265 during the first half of 2025. This level is expected to support 20% EBITA in the first half and about 30% EBITDA in the second half of 2025. Exact personnel expense figures are not disclosed, but the trend reflects completed efficiency measures and reduced reliance on consultants.

20/12/2024 Will you report revenue and cash EBITDA for each emergency business unit in 2024?

No, we will not. While we are splitting the emergency area internally, we do not plan to report results per unit in the annual report. We will, however, provide sufficient information for investors to make informed decisions.

26/02/2025 Can you quantify planned headcount reductions in 2025, especially external consultants?

We had just below 50 employees in the Philippines, of which 20 were released at the end of Q3. We entered Q4 with 30 employees, and by June they will also exit. This is part of ordinary phasing out of resources tied to ongoing projects.

At the same time, we have included necessary new employees to fully insource operations. The net effect is reflected in our guidance. The cost effect is about NOK 30 million, plus a few additional consultants being phased out in H1. This gives us good cost predictability for H2 2025.

29/08/2025 How do you leverage existing platforms and infrastructure when acquiring in new geographies, and which cost base elements are affected?

When entering a new geography, it must be within specialties where we already have competence and solutions, or we add new specialties, but not both at once. We do not generate profits by integrating platforms, but rather by delivering software, not platforms.

Hospitals’ IT organizations usually handle on-premises strategy, so our focus is on medical procedures and routines. Acquisitions increase our value chain components, which we integrate into our offering and sell as software. The key synergies come on the income side, not from cost structures like R&D or hosting.

29/08/2025 Are you using AI beyond development, and is it central to achieving 50% employee cost targets?

There are two areas. First, AI on the customer side. We are embedding AI and machine learning in our solutions, such as with the University of Valencia to help emergency operators make faster decisions. These modules create customer value and increase our recurring revenues. This market is slow moving, but nearly all our customers include AI in their roadmaps.

Second, internal efficiency. We phased out many full-time equivalents in the Philippines, replacing processes with tools like ChatGPT and Copilot. For example, in Finland, code conversion estimated at thousands of hours was done with only 10% of that time using AI. Some areas show huge potential, while others remain more complex and require safeguarding our intellectual property. AI supports cost efficiency today and offers even greater potential in development, testing, and documentation in the years ahead.

29/08/2025 How many FTEs from recent acquisitions are in the February base, and what efficiency opportunities exist?

Of the three latest acquisitions, around $20,000,000 worth of employees are included in the February base. Efficiency gains are possible on both cost and income sides. While there are opportunities in FTEs and other costs, the most important gains come from revenue synergies in existing contracts.

29/08/2025 What is the contribution of Filipino consultants to employee costs?

Filipino consultants make up about 10% of the employee base but less than 10% of employee costs, probably between 3% and 5%. Efficiency gains are not only about reducing external consultants but also improving development productivity. The math goes beyond headcount, it is about overall efficiency in processes.

29/08/2025 Are organic CapEx modules based on explicit customer demand, and do customers co-fund development?

It always starts with a business case. Typically, several customers request a module before we begin developing it. Sometimes a single customer funds development, but even then we build a product we can replicate and sell broadly. We never create pure bespoke solutions.

Many components and even acquisitions originate from customer demand to extend their value chain. Co-funding is a common and ordinary way of cooperating with customers, ensuring developments are both useful and commercially viable.

Competition

26/02/2021 How much of Carmenta Public Safety’s €81,000,000 in 2020 sales did SOS Alarm represent?

SOS Alarm was by far Carmenta’s largest customer, representing more than half of sales in 2020. This is not seen as a problem but as a mutual collaboration that benefits both sides going forward.

30/06/2021 With customer concentration falling in Norway and Sweden, do customers gain more leverage?

In this type of software, the market behaves differently. Our systems typically stay in place for years, often decades. There are very few tenders, unlike larger systems where organizational overhauls are common. For our niche solutions, mergers of regions, whether 19, 5, or 1, make little difference.

The decisive factor is not political or organizational structure, but the life-and-death importance of the solutions. This protects us as long as we stay focused on specialized systems. Our track record shows only about 1% churn over five years, which proves the resilience of this model.

30/06/2021 Which other market consolidators do you admire?

Locally, Visma is a Nordic company that has executed a highly successful M&A strategy. We learn from such examples, including AdTech and Constellation Software, but remain focused on specialized niches, which differentiates us from them.

30/11/2022 Have you seen company valuations change during the year?

Yes, we have. Many private company owners came from a period of rising valuations and did not fully grasp the correction in global tech markets. Through Q2, Q3, and even Q4, the adjustment has been difficult for some to accept. That said, the trend is positive. Dialogues that were paused are now returning, and processes are getting back to normal.

01/03/2023 What private market multiples are you seeing in Nordic software?

The gap between entrepreneur expectations and actual private market transactions is significant. Entrepreneurs often see emotional value, while we negotiate on enterprise value. Historically, our acquisitions have been at 1 to 2 times enterprise value-to-sales, and I believe transactions will continue in that range, even though seller expectations are often higher.

08/11/2023 Can you expand on slower growth in emergency, competition, and last year’s strong growth? Did we lose customers?

No, we have not lost any customers. The slower growth is tied to a large implementation project that included significant professional services, which now stands as a separate business area. Within emergency, we see the same pattern as in other areas, where growth depends on the balance between ongoing projects and available staff. When we look at decentralization, factors like income efficiency and invoiced hours matter, as well as the number of full-time employees (FTEs). The actions I presented earlier are designed to address these challenges in emergency.

29/08/2025 Why do a few customers churn, and what typically causes it?

While everyone wants 0% churn, it is not possible. Sometimes a customer with one of our specialized components merges with another entity using a different system, and the larger or stronger one prevails. In other cases, legacy systems that include bespoke development become unviable over decades and are phased out, sometimes by us deliberately.

Over the last ten years, churn has been below 2%. We expect similar rare cases to occur in the future, but churn will remain below that level.

Growth

27/11/2020 How much of organic growth comes from price increases?

Very little this year is due to pricing. Annual recurring revenue, which is growing 16% and faster than total sales, includes inflation adjustments, but inflation has been low. Most growth comes from cross-selling modules and extensions to existing customers.

27/11/2020 Why did the Q3 growth chart in the September 26 presentation show a 10% decline from Q2?

I do not have that graph in front of me, but nothing unusual occurred in the last weeks of the quarter. On the contrary, results are highly predictable.

26/02/2021 What was Carmenta’s organic growth historically, and what synergies do you see with the deal?

Over half of Carmenta’s sales are tied to SOS Alarm, which can be viewed as a risk or an opportunity. We see it as an opportunity because of synergies in competencies and complementary components within emergency and acute care. Growth has historically come from adding new digital solutions and projects, especially with SOS Alarm in Sweden and also in regions like Valencia. Since specialized solutions have very long lifespans, growth comes from adding functionality to existing installations.

26/02/2021 In which parts of Europe are most of Carmenta’s customers, and what opportunities exist for expansion?

Spain is the largest market, with Valencia as the biggest customer, roughly comparable in size to Norway in terms of target citizens. Other Spanish customers are showing interest, and we see significant opportunities there. Carmenta’s software is mission-critical, with 20 years of reliable operation, and we aim to accelerate growth by supporting current demand and working with international partners. Many past deliveries have come through large industrial partners, and we plan to continue that model to expand further.

26/05/2021 How is growth split between organic, M&A, and FX effects?

Organic growth in our niches is normally 5%–10%, almost entirely from current customer sales. Hiring more salespeople does not change this, as the niches are predictable and stable. For Q1 2021, growth included contributions from acquisitions like FirdSoft and Carmenta, which added incremental revenue. FX also played a role, with the Norwegian kroner strengthening versus trading currencies, the opposite effect of last year. As a rule, we do not report FX effects specifically. Overall, value creation relies far more on acquisitions and building recurring revenue streams than on organic growth.

26/05/2021 Recurring software revenues in Q1 were 25%. How should investors view this versus total sales?

This is essentially a variation of the organic versus acquired growth question. Recurring revenue composition often changes after acquisitions. During the first 24 months post-acquisition, we typically renegotiate contracts to improve income composition. That is why recurring revenue growth can look different from total revenue growth. There is room for improvement, and we expect to improve recurring revenue shares as integration progresses.

26/05/2021 Organic growth in Q1 looked above 10%. What explains this strong growth?

Q1 was indeed strong, above 10% organic growth, but we see this as natural quarterly variation. Market growth is 5%–10%, and we aim to grow along with it, sometimes a little more. Nothing unusual explains Q1 beyond normal fluctuation. Investors should focus on the long-term picture, where we grow 5%–10% organically and the rest through acquisitions to reach the NOK 1 billion target. Management’s priority is acquisitions that can secure 50% growth, rather than pushing organic growth from 6% to 7%.

30/06/2021 Are Optima’s product features relevant for other customers beyond SOS Alarm?

We cannot speak for SOS Alarm or for R1, but this is relevant across our customer base. All of our clients handle millions of critical medical transactions, and the only way they can improve performance is by gaining better analytics and control over the data. This supports planning and dispatch functions more effectively.

So yes, this capability is on the priority list for most of our customers. It is clearly relevant in a broader perspective, not limited to any single client.

30/06/2021 What growth do you expect for Optima, and what CapEx is required to support it?

We expect Optima to grow in line with the market, about 5% to 10% annually, which has been its historical growth rate. There may be fluctuations with larger installations, but on average that is the story. It is a highly specialized niche, consistent across markets.

On CapEx, we maintain the same guidance as for the rest of CSAM, around 10% of total sales. Optima’s business and software are no different in this respect.

30/06/2021 What has Optima’s historical growth been?

As mentioned, Optima’s growth has been similar to CSAM’s overall history, averaging 5% to 10% annually with some ups and downs. This reflects the steady nature of its niche market, where no major shifts occur from one year to the next.

30/06/2021 What is driving the 5% to 10% market growth?

Growth comes from niche-specific developments. For example, in maternity software, thousands of database fields feed national registers and algorithms that guide decisions. As processes evolve, customers need add-ons, such as an abortion module to ensure proper registration or a digital whiteboard in maternity wards to display critical data. These add-ons create recurring revenue, are good for patients, and provide efficiency for customers.
In addition, growth comes from more users and built-in inflation adjustments. Because niche organizations plan years ahead, this makes our organic growth predictable and transparent.

30/06/2021 You said the shift to the cloud will be a long process. Can this further grow the business?

Specialized healthcare software often handles life-or-death processes, such as cancer treatment, and most of these remain on-premise for security reasons. Hospitals and institutions are reluctant to take risks, which is why I have said cloud migration will take a long time.

However, outside-facing processes, such as patient collaboration or certain analytics functions, are well-suited for cloud. For example, MedSciNet is cloud-based and its growth has been easier to accelerate. So we see two tracks: gradual migration of core systems, and immediate growth opportunities in analytics and external collaboration.

30/06/2021 Why has Optima, founded in 1998, reached only USD 2.8 million in sales by 2020?

This is typical for our niches. Growth is slow because large institutions take years, sometimes a decade, to adopt new systems. For example, our cancer application Cytodose took eight years from initial discussions to implementation. Once installed, the lifespan is often 10 years or more.

Optima follows the same pattern. Customers move slowly, even in the U.S., because adopting new systems requires changing how they work. The opportunity lies in expanding functionality for existing customers and building recurring revenues. Organic growth above 10% is rare in this industry, but predictability is high. MedSciNet, founded in 1995, reached about USD 15 million by 2020. That is the reality of this sector.

19/05/2022 Revenue per product group seemed down year on year. How does that reconcile with 5–10% annual organic growth?

Before Q1 2022, we had not measured or reported organic growth. We said we would start from Q1 2022, which we have now done. So previously we could not comment, but going forward we will report consistently and build a track record for you to follow.
To clarify, the 10.5% organic growth noted in the annual report is year-over-year, measured quarter by quarter. Specifically, it is Q1 2022 versus Q1 2021. Sorry for any confusion in the wording.

19/05/2022 Why were almost all revenue lines per group down year on year in 2021, including LIMS, despite 5–10% organic growth?

This is essentially a repetition of a previous question. We did not calculate or publish organic growth for 2021. From 2022 onward, we are reporting organic growth, and Q1 2022 versus Q1 2021 shows the measure. Historical figures were not provided.

30/08/2022 Why were there no new license sales this quarter, and when will organic growth pick up?

License sales are tied to milestones in large projects, often spanning 12 to 18 months. For example, in the blood management area, about 20 customers require upgrades, but deliveries occur at different times. Some may land in one quarter, others in three quarters. This makes results lumpy. If we had a few milestones in Q2, it could have meant SEK 7 million in licenses, similar to Q1.

Historically, license sales average 5–10% of revenue, and we expect that to continue. We also see stronger demand after COVID as customers return to offices. Q2 was at the lower end, but we believe growth will strengthen going forward.

28/02/2023 What are the main levers for organic growth in 2023?

I would say three things. First, we are pushing for a more sales-oriented and sales-driven organization through decentralization into business areas. What we focus on and measure is what gets done, so we now measure business area managers the same way as we measure ourselves, on organic growth and EBITDA. That ensures focus on growth.

Second, we will get some tailwind from high inflation. Most of our contracts are linked to some type of inflation index, not always the consumer price index, but always something, and that has been higher recently than in past years. Third, there may be some FX effect. We cannot budget for it, but currently we are experiencing tailwind from FX as well, with the Norwegian kroner weakening against almost all trading currencies.

01/03/2023 What is driving your strong organic growth guidance for 2024?

We continue to guide 5–10% growth, as we have for the past five years. Recently, results have been at the upper end, even above 10% in the last three quarters. This reflects increased volume, added components, and integrations that continue to grow. I therefore believe growth will remain closer to the upper part of the interval rather than declining.

12/05/2023 How much of the 6% organic growth comes from repricing existing customers versus new business?

Organic growth is calculated from license sales, recurring revenue, and professional services, measured in local currency. The 6% growth in Q1 2023 is partly masked by unusually high license sales in Q1 2022. As for the split, we have not reported exact figures, but roughly 90% of growth typically comes from existing customers. With more than 750 contracts, customer demand continues to drive 5% to 10% stable growth over time. New business contributes as well, especially in areas like emergency solutions outside the Nordics, but the majority remains current customers.

12/05/2023 Can you elaborate on organic growth and margins per business segment going forward?

Results are lumpy due to the timing of delivery projects. For example, LIMS looks negative now but has a strong pipeline, and projects may span over a year, so quarterly results are not indicative. Historically, organic growth averages 5%–10%, and we expect that to continue, alongside acquisitions. Some quarters will show extra license sales or professional services that lift recurring revenue, creating lumpiness, but the long-term trend remains intact.

Our largest area, public safety and emergency response, shows strong organic growth, so the biggest segment is also the strongest performer. Stripping out license sales would show a smoother picture, but overall, we expect 5%–10% organic growth on average, with quarterly lumpiness continuing.

25/08/2023 How much of organic growth comes from price indexation?

About 4% to 5% comes from CPI-linked price increases. The rest is driven by higher user numbers and volumes, so it is real underlying growth.

25/08/2023 Where will CSAM be in five years?

We have evolved from a Norwegian company to a Nordic leader, with 17% of revenue now outside the Nordics. We aim to become a notable European player and eventually a preferred niche software provider worldwide.

Our strategy is to focus on smarter ways of delivering value with specialized products, rather than pursuing large “big bang” projects that often fail. We are confident that this approach positions us for sustainable global growth.

10/11/2023 How do you see 2024 shaping up in terms of organic pipeline opportunities?

Many dialogues have been ongoing for years and have increased in recent quarters. Entering 2024, I am confident we can close several of them. These are targets of the right size, big enough to matter but not too large to disrupt us, with some performing well already. Closing a handful could put us back on track to grow 40% annually, which was our original plan.

The number of targets in our database is increasing, including many outside the Nordics and in emergency response organizations. Adding them strengthens our value chain. So beyond M&A for turnover and profitability, this strategy supports our long-term positioning. We see 2024 as an acquisition year and are optimistic about the opportunities ahead.

14/05/2024 How much of Q1 organic growth came from price escalators versus new contracts?

Roughly half came from price escalators. The other half is real growth, mainly from strong new license sales, higher than in many past quarters. Not all price escalator potential has been realized yet, but it will be in Q2 and later. We remain confident in our 5% to 10% growth ambition.

26/02/2025 What happened to organic growth in Emergency?

It is quite simple. In one year, we had many implementation projects that generated significant invoicing. The following year, those projects were not there, and the large, non-decentralized organization could not adjust its cost base quickly enough. Meanwhile, the software side is still growing.

So overall, the issue was related to consulting services. It is statistical noise, not a structural problem.

Financials

27/11/2020 What was organic growth in Q3 excluding currency effects?

Organic growth would have been stronger. Adding the SEK 6 million currency effect to the top line would also have improved EBITDA. The already strong results would have looked even better if adjusted in this way.

27/11/2020 What are the pros and cons of switching from NGAAP to IFRS?

The pros are easier comparability for international investors and eligibility for listing on the Oslo Stock Exchange main list. The cons are cost and time requirements, as we would still maintain local GAAP and add IFRS consolidation on top. Overall, IFRS would open important opportunities.

26/02/2021 Adjusted for currency effects, what were Q4 net sales, and why did professional services more than double versus Q3? Was this seasonality?

The hospitals and regions in the Nordics were affected by COVID-19, which impacted the composition of income. Many customers postponed projects that would have initiated license sales and instead asked us to provide other services, such as creating new fields in systems to support COVID-19 needs. As a result, professional services increased while license sales were lower.

26/02/2021 What would Q4 net sales have been adjusted for currency effects, and can you explain the one-off costs reported in Q4?

Net sales would have been approximately 2.34, give or take. The one-off costs totaled SEK 9,000,000, which included salary and personnel-related items, other costs, and one-time adjustments of government grants. We also adjusted the amortization schedule of software and government grants. These had minimal cash effect but impacted income recognition.

26/02/2021 What was adjusted EBITDA in Q4 net of one-offs?

Adjusted EBITDA was approximately 30%, versus reported EBITDA of 16%. Even including all one-offs, EBITDA improved from 11% last year to 16% this year.

26/05/2021 How do you manage working capital, and has anything changed recently?

We have an active view on working capital and maintain a negative level, which is positive. Our target is minus 10 or better, and today it is better. Typically, customers pay annually, quarterly, or semiannually in advance, so we are cash rich at the beginning of the year and then deplete reserves through operations. This has been consistent since the IPO, and nothing has changed. We do not report working capital specifically, but we continue to manage it actively.

26/05/2021 Can you explain EBIT adjusted for goodwill depreciation, PPA amortization, and other intangibles?

On a last-twelve-month basis, PPA effects from tangible assets are almost nothing. The balance sheet is dominated by intangibles, mainly from acquisitions. In each acquisition, we analyze what is purchased: intellectual property (IP), customer contracts, or goodwill. Goodwill and contracts are amortized over 10 years, IP over 5 years. The current Q1 level is fairly representative, but amortizations have increased from prior periods. As acquisitions such as Carmenta (€150 million) are made, amortizations rise further. Any new acquisitions will again increase amortizations, which directly affect EBIT.

26/05/2021 Do you plan to move to another stock exchange or adopt IFRS accounting?

Currently, there are no plans to move away from Euronext Growth. A move to the main list in Oslo or Stockholm would require switching to IFRS, but at present we remain under NGAAP and local GAAP across countries. The differences compared with IFRS are not extreme, mainly amortization and office leases. While it may change in the future, there are no current plans, and you would be the first to know.

30/06/2021 Is the 5x net debt/EBITDA covenant linked to the bond?

The covenant was a condition for the tap issue, but there are no running covenants on the outstanding bond.

30/06/2021 How are Optima’s revenues distributed by products and regions?

We do not usually provide detailed breakdowns, but Optima’s products are used in more than 10 countries across Asia, North America, Europe, and the Nordics. The portfolio is split between two main product groups, Predict and Live. Revenue is well distributed, with no high customer concentration.

19/05/2022 Can you explain license sales in more detail and how they relate to recurring software revenue?

Normally, a license sale is a one-time event where you sell the right to use software. But in the contracts, customers also pay an annual fee of about 25%. It differs slightly, but on average 25% of a license sale becomes recurring revenue. So if we sell licenses, that percentage normally converts into recurring revenues in addition.

In Q1, for example, we sold several license objects, including ProSang Blood Management in Denmark, along with maternity and medication management systems. They are different products, but the contract structure is the same: a one-time license plus 25% recurring revenue.

19/05/2022 With significant amortizations and interest, when will you show a positive net profit?

Amortizations are linked to intangible assets such as IP, goodwill, or customer contracts, typically amortized over 5 to 10 years. Since booked equity value is close to zero, almost the entire acquisition price appears as intangibles, which are then amortized. These are non-cash costs; the cash left the company when the acquisitions were settled. Current amortization is a little above SEK 20 million per quarter.

Interest expense, which is cash-based, is around SEK 7 million per quarter. As long as we continue to grow quickly through acquisitions, we will have large amortizations, but again they do not affect cash flow. The transactions have been sensible, with enterprise value to sales multiples around 1–2x, so while reported profit is affected, operational cash remains strong.

19/05/2022 Do your customer contracts include CPI-based adjustments?

Yes. Since our contracts come from 15 different acquisitions, terms vary slightly across countries. However, more than 90% include an inflation adjustment, most commonly linked to the consumer price index (CPI). This provides ordinary inflation protection.

19/05/2022 Why do you disclose revenue per product group, such as LIMS, in the annual report?

It is required by accounting standards under NRS and NGAAP. We simply comply with regulation by disclosing revenue per product group in the annual report.

30/11/2022 Why did you change auditor mid-season in autumn 2022?

We hired the previous auditor from RSM, which meant RSM could no longer serve as our auditor due to independence rules. After 17 years with them, it was likely time for a change anyway. We appointed PricewaterhouseCoopers, and there was no other reason or drama behind the decision.

30/11/2022 When will finance operations be fully up and running?

Our finance operations are already up and running; otherwise, we could not report our numbers. They will continue to improve over time. Reporting by business area will start with Q1 2023, as presented earlier.

28/02/2023 How are you preparing for upcoming bond loan repayments?

This relates to profitability and prioritizing organic growth. The bond matures in Q3 2024. We aim to demonstrate over 30% margin in Q3 2023, about one year before maturity. With decent EBITDA and cash flow, plus CapEx discipline, say 30% EBITDA and 20% cash EBITDA, we can give bond investors comfort that we are bankable. Profitability and sufficient free cash flow are what will unlock further bond financing.

28/02/2023 Could you elaborate on one-off costs not related to restructuring?

These include travel, legal, and accruals for extraordinary consultancy work above the annual average. On the cost side, examples are marketing or branding projects. These are not recurring but tied to specific projects. As you know, we normally do not present adjusted numbers. The only prior case was our IPO, where it was fair to adjust for IPO costs since that is not recurring.

This is the second time since we went public that we adjusted numbers, and we believe it is fair given the special project. In the report, each item is specified for transparency so you can analyze whether you agree it is a one-off. We want to make it clear and detailed for investors, but the math is yours to do.

01/03/2023 Why did you not have better visibility on Q4 salary costs by Q3?

I do not agree there was a lack of visibility. Under Swiss GAAP, we accrue holiday pay throughout the year, and when employees take vacation, their salary is drawn from these accruals rather than current payroll. This has always been our method. Some may argue for an average method more in line with IFRS, but we prefer consistency and transparency, as changing practices would confuse rather than clarify. There is nothing new in how we account for salaries or holiday pay.

01/03/2023 Why was Q4 OpEx and CapEx higher, and what are Q1 cost expectations?

Most employees are in Norway and Sweden, where holiday pay accruals dominate accounting. Under Swiss GAAP, we accrue holiday pay during the year, which is then used when employees take time off. This explains recurring Q4 effects. CapEx is also higher in Q4 because fewer holidays mean more coding and output. Last year Q4 CapEx was 12%, this year 30%. Our annual CapEx guidance remains 10%, not quarterly. Sales timing can also shift between quarters. For Q1, we have not guided specifically; instead, we emphasize annual ambitions and priorities. Progress on organic growth and costs shows we are on track, even if not perfect.

01/03/2023 At what revenue level will 30% EBITDA margins be easily achievable?

We do not need significant cost base scaling to achieve 30%. COGS and OpEx are already lean, and heavy investment in digitization has improved efficiency in accounting, IT, and other support areas. Personnel levels are appropriate, and reductions during the cost-saving program affected mostly administrative roles. With these measures, we are positioned to scale and sustain 30% EBITDA margins as revenues grow.

01/03/2023 Do counterparties worry about your leverage, given mission-critical systems?

If we achieve our 2024 ambitions, net debt to EBITDA will be around 3.0x and net debt to recurring revenue 1.3x. While this could be considered high, it is well within bondholder agreements. Counterparties have not expressed concerns about our leverage.

12/05/2023 What was the impact of FX on price increases and organic revenue growth in Q1?

Organic growth is measured from license sales, recurring revenues, and professional services. License sales in Q1 2023 were lower, but when you average 2022 license sales across four quarters, the result is around 3 million per quarter, which aligns with Q1 2023. This makes growth appear flat but masks the underlying trend. The main FX effect is visible in recurring revenue. We have previously guided that contract price escalators provide about 5% uplift, though this varies widely across contracts. That 5% applies to recurring revenue growth, not total organic growth.

12/05/2023 How has high inflation impacted results?

On revenue, inflation helps through price escalators built into most customer contracts. On costs, inflation raises expenses such as housing and supplier contracts, though disciplined cost control and reducing full-time employees are more important factors. Most customer contracts are Consumer Price Index (CPI) adjusted, though terms differ across hundreds of contracts acquired over time and across geographies. Escalators range from about 1% to 11%, with an average near 5%. These escalators roughly balance higher salary costs.

12/05/2023 Were there any restructuring costs or severance packages this quarter not adjusted for?

No, everything is included. We have not presented any adjusted numbers, so all Q1 costs are fully visible in the P&L. What you see are the true numbers. We could have made adjustments, but we are not a company that favors recurring one-offs.

12/05/2023 What share of personnel expenses in Q1 related to external consultants?

We have not disclosed exact figures. As guidance, Project Riginto aimed to save NOK 60 million, mostly from salary and personnel, roughly split between employees and consultants. Most consultants remained in Q1 and will be phased out during Q2. Rather than counting consultants, note they were tied to delivery projects expected to generate recurring revenue once live. Their use will fall in Q2, with minimal reliance expected in Q3.

12/05/2023 How many external consultants did you have in Q1 versus expected in Q3?

We had consultants in Q4 and Q1 connected to delivery projects. These projects will start generating recurring revenue once live. Consultants will gradually be phased out in Q2, with minimal use assumed in Q3.

12/05/2023 Were there one-offs this quarter not adjusted for, and how large were they?

We have not calculated or disclosed exact amounts. Some costs fell in Q1, others in Q2, as noted in our commentary. These are not enormous figures. Most costs from Project Riginto and severance were already booked in Q4 last year, so little remains beyond minor adjustments.

12/05/2023 What was recurring revenue growth in Q1 year on year in constant currencies?

We have not calculated or presented that number, but you can estimate it. Reported growth year over year was 18%. Assuming a 5% effect from currency and price escalators, the underlying organic recurring revenue growth is somewhat above our previous guidance.

25/08/2023 How is Aygo performing financially, and why was it removed from reports?

It was never removed. From the beginning, we said Aygo was in a build-up and transitional phase through Q1 and Q2, so it was not included in reporting. Starting in Q3 this year, Aygo will be reported.

The business has been building up as planned, and formal reporting will begin with Q3 results.

25/08/2023 How connected are hardware sales with future software sales?

Hardware is sometimes included, for example in ambulances where pre-installed systems are required. However, most large customers handle hardware procurement themselves, so hardware will play a smaller role over time.

We still expect some hardware and cost of goods sold, but overall gross margin should move from about 91% closer to 95% as hardware declines in importance.

25/08/2023 Why was cash flow from operations minus €22,000,000, and prepayments from customers minus €20,000,000?

This is explained in the cash flow statement and quarterly report. It mainly reflects natural variations and the dissolution of Traginta accruals. Prepayments from customers are also linked to total sales.

25/08/2023 Why is your accounting function larger than comparable companies?

It is actually smaller than comparable companies. That is the fact.

08/11/2023 What will the effect from FTE reductions be on personnel expenses in Q4, and what cost effects are expected in emergency?

We have not published specific numbers this quarter. However, the personnel trends are available in the presentation, which you can download and use for your own calculations. Decentralization shows there are reductions in emergency as well. The combined effect of ramping down remote sourcing and implementing decentralization in emergency will bring us back to the cost level we are targeting, which is the most important thing.

08/11/2023 Did headcount reduction affect OpEx in Q3? What was the timing, and when will the additional 30 FTE reductions occur in 2025?

The 30 FTEs left on the last day of Q3, so there was no impact in that quarter. The effect will be seen in Q4. For the additional 30 employees, the three business areas using them have plans to ensure a complete ramp down within the first six months of next year. Decentralization will add further reductions in emergency.

08/11/2023 How do Philippines OpEx and FTE costs compare with group levels?

When we first acquired Cebu operations in 2008, the cost difference was substantial. Over time, salary increases in the Philippines have been higher than in the Nordics, inflation has been higher, new pension schemes have been introduced, and the Norwegian krona has weakened against the peso. The large cost advantage has therefore diminished. It still exists, especially for lower-paid employees, but higher-paid staff are approaching Nordic salary levels.

08/11/2023 What explains the increase in personnel expenses from Q3 last year to this year?

The increase comes from several factors. One is the annual salary increase. Another is simply having more people. A third factor is the use of consultants, most of whom are within emergency. Altogether, it is a cocktail of these elements.

08/11/2023 What is the seasonality effect on salaries?

There is a clear effect in Q3 tied to holiday pay arrangements and accounting under GAAP, SGAP, and NGAAP. This effect amounts to roughly NOK 10 million when comparing Q2 to Q3.

10/11/2023 Please explain the drag on cash flow from working capital prepayment, and when you will collect.

When we accrued expenses last year for releasing personnel, this included salaries, severance, holiday pay, taxes, and public duties. These were recorded as debt in one quarter’s P&L but paid out later, when cash left the bank. That timing difference caused working capital to deteriorate.

10/11/2023 What specific actions are you taking to improve working capital, and how is the organization incentivized?

Operationally, we work to extend supplier credit days while collecting cash from customers as quickly as possible. Business area managers are responsible for this, and it is part of their KPIs. They are measured directly on these outcomes. Accrual-timing issues resolve themselves, but operational discipline can always improve, and we pursue continuous improvement.

14/05/2024 Is there a negative Easter effect in Q1 growth or cash flow numbers?

Yes, in cash flow. A couple of large invoices were due late March but paid on 3rd or 4th April due to the Easter period. Had cutoff been 15th April, net working capital would have been significantly higher.

14/05/2024 How do you think about interest cost, amortization, and net profitability?

We have a NOK 500 million bond loan running at 3-month NIBOR plus 600 bps, currently around 10%, which is about €12 million per quarter. On amortization, we focus more on cash metrics than accounting net profit. Cash EBITDA minus interest costs is our main measure.

Last year we revised the amortization schedule with support from BDO to better reflect the actual asset lifespan. We plan no further changes. This approach gives us limited tax exposure, which we expect to continue. Yes, we aim for net profitability, but cash focus comes first.

23/08/2024 Why is unearned revenue not shown separately on the balance sheet, and how is net working capital calculated?

Unearned revenue is included in other short-term liabilities. For example, when a customer is invoiced annually upfront, we record all the money as a liability, then recognize one-twelfth of it each month, reducing the liability.

Net working capital is calculated according to textbook methods, the same as any other company.

23/08/2024 What about interest expenses?

I would like them to be lower. They are linked to 3-month NIBOR plus 600 basis points under the OMDO 2 Pro bond. While it trades higher than that, recent trades suggest room for lower rates. Still, with floating rates, the expense is currently high.

20/12/2024 How are you managing cash and working capital?

We rarely present adjusted EBITDA, but this time it is useful since cost reductions and personnel changes include severance and other nonrecurring items. Isolating these shows the real run rate. In Q4, we focused heavily on cash management, improving aged receivables, tightening invoicing practices, accelerating annual recurring revenue invoicing, and renegotiating supplier terms. These actions, along with lower salary and operating costs, should leave us with a year-end cash position close to last year’s, despite paying CHF 10 million in dividends, CHF 12 million for Predicare, and another CHF 10 million in dividends. This is a strong underlying improvement, provided customers pay on time.

20/12/2024 Does Avaria’s negative cash EBITDA make profitability harder to achieve?

Avaria does not have 12 employees, but 6, as stated in the press release. The business may run at a limited negative cash EBITDA, perhaps between SEK 0 and SEK 2.5 million. That is essentially what we are paying upfront for the company. We would not have acquired it without seeing strong upside potential.

Avaria’s contracts align well with large Nordic regions that want this type of software, which is hard to sell standalone due to tendering requirements. Since it is integrated with our Rett methodology and ambulance software, we can package it with pricing and add-on modules, creating a full value chain. This gives us confidence we can turn it positive quickly. Together with Predicare, Avaria strengthens our offering and is expected to be very beneficial for us.

26/02/2025 Was Q4 net working capital performance structural or timing-related?

It was mainly discipline and structure. In Q3, we flagged delayed invoicing and high receivables. We tightened focus, which explains much of the Q4 improvement. There is always some timing, whether invoices fall in Q4 or Q1. Minus 31% is strong, but we have been close before, for example minus 26% in Q1 2020.

That said, minus 31% is not sustainable every quarter. We guide for minus 10% or better. Seasonal fluctuations will remain, but the overall trend is better discipline and structure, and we will keep focusing on that.

14/05/2025 Where do the cost cuts come from, and are they sustainable?

None of the actions were taken in the first quarter. They are sustainable and based on a long-term plan, starting in 2022 when we decentralized specialized health care within OMDA, followed in 2024 by decentralizing the emergency part. This combination forms a sustainable platform with further potential for margin improvement, as some consulting costs will still be removed. Overall, the cuts are sustainable and provide additional margin potential going forward.

14/05/2025 How do you expect net working capital to develop in the coming quarters?

We will continue to focus on net working capital, especially with upfront annual invoicing, which should improve results in acquired businesses. There is seasonality: we invoice heavily before Christmas in the fourth quarter, leading to high cash reserves, which then deplete through the year, usually bottoming in the third quarter. This pattern will remain, but overall we expect net working capital to improve this year compared with last year.

14/05/2025 What do you expect the free cash flow conversion rate to be?

If you start with EBITDA and deduct roughly 10% for CapEx, that gives you cash flow from operations. Then subtract financing and interest costs. As we approach one billion in sales, and with bond interest at three-month LIBOR plus 600 basis points, around 10%, another 10% is deducted. The remainder is effectively free cash flow.

29/08/2025 Why was there a difference between 2024 reported results and the Q4 report last year?

The difference stems from a reassessment of the tax refund arrangement in Sweden. This was explained in the Q4 report and detailed again in the annual report. It reflects only the status assessment, nothing structural.

Outlook & Guidance

27/11/2020 Is the NOK 1 billion 2025 goal with 30% annual growth still realistic?

Yes, it is still realistic. Over the last five years we have achieved similar growth, mainly through acquisitions. Our current plan continues to combine organic performance with add-on M&A processes. Organic growth is stable, but acquisitions are what allow us to grow beyond what is possible organically.

26/02/2021 What are the main risks regarding the Carmenta acquisition?

The positive side is that most of Carmenta’s budget is already contracted, and highly specialized solutions tend to stay in place for many years, providing predictability. The main risk, as always with software, is delivery. We are accustomed to managing this and will continue to do so.

26/02/2021 What growth rate do you expect Carmenta Public Safety to generate in the coming years, closer to 5% or 10%?

Carmenta’s business is similar to ours in other niches. The main growth driver is the recurring revenue base that comes with the acquisition. Beyond that, we expect growth between 5% and 10%, consistent with our broader recurring revenue trends. Our focus is not on small percentage differences but on accelerating growth through further acquisitions.

26/02/2021 When can Carmenta reach a 30% EBITDA margin under your buy-integrate-build model? Closer to 1 year or 2 years?

It is closer to 2 years. Carmenta is a large acquisition with important customers, and our priority is ensuring they remain satisfied while we improve profitability. We will support Carmenta with resources and methodology to raise margins to our 30% target, but this takes time. The business is critical in acute situations, so integration must be handled carefully. As with past acquisitions, the same model will apply, and while it may seem “boring,” the consistent results speak for themselves.

26/05/2021 Based on Q1, will you exceed the NOK 1 billion sales target faster than planned?

Yes. If you look at the Q1 sales bubble from Einar’s presentation, pro forma including Carmenta and Firdsa, growth is already more than 50%. Midway through Q2, we are not slowing down and feel ahead of plan. The market is there, and we are continuing as before. We are comfortable saying we are on track and likely ahead of schedule.

26/05/2021 When will you reach your sales target?

We will not give a specific quarter or year, but based on Q1 results and the pro forma model showing 50% growth, we feel ahead of plan. As long as we stick to our acquisition strategy and execute consistently, we are comfortable we will deliver on our 2025 targets. At minimum, we will keep that promise, and our intention is to perform even better.

30/06/2021 When do you expect Optima margins to reach breakeven and align with group targets?

We follow our buy, integrate, and build model. Typically, we acquire companies with unrealized potential and work to unlock it. We have three defined milestones: after 3 months, 12 months, and 24 months. By following this recipe, we gradually improve margins and operations, and within two years we expect margins to reach the group average of around 30%.

30/06/2021 Do you plan to move to the Oslo main list in the near term?

We are very comfortable on Euronext Growth, where we have attracted high-quality investors. If circumstances change and it is to the benefit of the company and all stakeholders, we will consider it. For now, there are no plans, but we evaluate listing options from time to time.

30/08/2022 Do you still target 30% EBITDA margins within 24 months of acquisitions, or has this been abandoned?

Not at all. The ambition and ability to reach 30% margins remain. Previously, with a centralized integration portfolio, it was harder to measure progress. We now use a seven-business-area split with simpler KPIs: turnover growth of 5–10% and headcount development. The buy, integrate, and build process remains the same but distributed, which makes responsibility and measurement clearer.

We believe this model makes it easier to both track and achieve the 30% margin target. It is not a reduction in ambition, but rather an improvement in transparency and accountability.

30/08/2022 How will you increase EBITDA margins when acquisitions often come with lower margins?

When companies reach milestone M3 after about two years, our current operations should achieve 30% EBITDA margins. Acquiring a company with zero margin dilutes that, but the effect diminishes as we grow larger. The mix of smaller and bigger targets also matters, and the overall dilution impact decreases with scale.

Going forward, we will show results in two steps: the performance of existing operations and the contribution of acquired businesses. Once fully integrated, they are measured together. For example, MedSinet (2021) and Carmona (2022) will be reported as a single business area that is expected to reach 30% margins over time.

30/08/2022 What should normalized EBITDA margins be at NOK 1 billion in revenue, given ongoing acquisitions?

We expect to gradually reach 30%. As the company grows, each new acquisition has less dilutive impact. At the same time, maturing businesses can exceed 30% margins due to economies of scale, cost trimming, and insourcing of services currently provided by third parties.

The 30% level is not a ceiling. With size and efficiency gains, we can go beyond it while continuing to focus strategically on our core business.

30/11/2022 Why does it take so long to improve EBITDA margins, and what could speed it up?

Healthcare processes are stable and predictable, but that also means change takes time. Reaching 30% EBITDA margins requires renegotiating contracts or cross-selling add-ons, which often depends on customers’ annual budget cycles. This creates a natural 12–24 month timeline for improvements.

We manage this through a two-year integration process. With five projects underway and acquisitions scaling up, it is not realistic or wise to try to force margin improvements in a single quarter. Our approach ensures we reach 30% margins in a controlled and sustainable way.

30/11/2022 How will you reach 30% EBITDA margins in the next 12 months if you acquire new companies?

The 30% target refers to our current business. Acquired companies, often turnaround cases, may dilute overall margins temporarily. For example, if we acquire a company with SEK 100 million in sales and zero margin, we still expect 30% margins on our existing operations.

With the new business area structure, it is easier to monitor integration and profitability separately. From Q1 2023, investors will see clearer reporting by segment, making it easier to track both integration progress and margin restoration.

30/11/2022 How feasible is refinancing your bond given changed market conditions?

The NOK 500 million bond was issued in 2020 and matures in 2024. It is callable at 102.5 in fall 2022 and 101 in fall 2023. Refinancing depends primarily on CSAM’s performance. Delivering strong results will allow us to refinance at competitive terms when market windows open. Market conditions, measured by indicators like iTraxx and the VIX, fluctuate constantly. Our focus is on executing well so we are ready to act when opportunities arise.

30/11/2022 Why have margins declined sharply despite stable management?

Several factors are at play. First, we are building the structure to grow from SEK 400 million to SEK 1 billion in revenues. Second, we are running parallel delivery projects that add cost without immediate income. These weigh on EBITDA margins, and cannot be changed quickly.

We expect recovery through Project Triginta, which coordinates both integration and delivery efforts. Our target remains 30% EBITDA margins in current business by Q3. The investments in delivery projects are necessary to keep customers satisfied, even if quarterly results look weaker in the short term.

30/11/2022 Will you keep the same quarterly reporting structure in the medium term?

Yes, we will. Starting in Q1 2023, we will expand reporting to show development by business area, but the overall structure will remain the same.

28/02/2023 When do you expect EBITDA margins to improve?

You should expect maybe slight signs of improvement in Q1, but real improvements will come in Q2. We aim to reach target margins in Q3. Expect to see initial signs in Q1 and then the proof of the pudding in Q2. That is what you should expect.

01/03/2023 With decentralization, what do your duties look like now?

We focus on growth initiatives while ensuring each business area executes effectively to sustain 30% EBITDA margins. In 2024, we will devote more attention to acquisitions, as we see significant opportunities. At the same time, oversight of decentralized business areas remains critical. The balance is driving profitable growth while maintaining discipline.

12/05/2023 Can margins reach 30% after reducing external consultants?

Our use of consultants is tied to specific delivery projects, mainly in LIMS (Laboratory Information Management Systems), Blood Management, Public Safety, and partly Connected Health. These projects start and stop, so consultants are not permanent staff. Because several projects are scheduled to finish in Q2, consultant use will decrease, but Q1 still showed high levels. We prioritize retaining employees for long-term competence in software and development. Based on this structure, we are confident consultant reductions will progress as planned and margins should improve toward 30% by Q3.

12/05/2023 Do you expect LIMS to remain a negative contributor to margins in Q3?

Not all segments will be at 30% margins, some will be higher, some lower. LIMS has decades of recurring revenue but is in a technology transition, releasing a new version this year. That requires higher CapEx, customer-related costs, and carries a long project pipeline, including a large national project in Denmark. These factors weigh on near-term margins, but the long-term outlook is unchanged, and LIMS should eventually reach 30%. On average, across segments, we still expect margins around 30% in Q3.

25/08/2023 Do you still guide for 30% EBITDA margin in Q3?

Yes, that remains our target. We have strong visibility for 25% or higher, but we will see where we end up.

25/08/2023 Why was Q2 EBITDA margin lower than expected compared to Q1 guidance?

Several one-offs affected Q2, including costs related to the earthquake in Trojinta, consultancy, legal, and travel expenses. Delays in deliveries also added costs, especially the LINZ project, which slipped from April to June. That required large consultant teams for two extra months at high burn rates, hitting margins.

The 30% margin target is meant as a sustainable long-term goal, not a one-off. We still aim to reach it in Q3, but the key is achieving 30% margins consistently in coming years.

25/08/2023 Can you explain the bridge from 10% to 30% EBITDA margin?

There are three main cost elements: cost of goods sold, other operating expenses, and salaries. Our target mix is 5%, 15%, and 50% of sales respectively. On the other side, growth in income is equally important. The bridge is therefore a combination of cost efficiency and revenue growth.

25/08/2023 Do you expect EBITDA margin expansion in Q4 compared to Q3?

It is difficult to forecast Q4 precisely. Q3 benefits from holiday pay, but lower professional services activity during vacations offsets that. Q4 typically has stronger sales. With NOK206 million in first-half sales, matching or growing that in the second half supports our target of €400 million for the year.

The 30% margin goal is not meant as a single quarter achievement. It is a long-term margin ambition, and we remain focused on both cost and income drivers to sustain it.

08/11/2023 What will be the effect of the Philippines divestment, and what results will we see in Q4, Q1, and Q2 next year?

We have not published specific breakdowns, but the simple calculation is this: the reduction in Q4 comes from decentralizing emergency, and the first two quarters of next year will finalize the ramp down in the Philippines. The combined effect brings us back to the level we are targeting, which is the essence of my calculation.

08/11/2023 How will ongoing initiatives bridge to your 30% EBITDA margin target, and what is the timing?

If you use the graph in today’s presentation, you can calculate the bridge yourself. The key drivers are strong growth in recurring revenue and the reduction of FTEs. To think about timing: we launched the deramping in Cebu, sold part of that operation, and about half of those employees left at the end of Q3. They will not be in Q4, and the rest will be phased out by Q2 next year. At the same time, the decentralization of emergency will be completed in Q4. These steps combined take us toward our 30% margin goal.

10/11/2023 Can you comment on growth and profitability by segment, and why performance differs? How long do you expect LIMS to outperform?

Each segment is at a different stage of maturity. LIMS has a 40-year history of recurring revenue and decades of potential ahead. Short-term fluctuations do not change the long-term outlook. We are shifting technology to make add-on components, licenses, and recurring revenue easier and faster to deliver. This is a multi-quarter process, but with contracts like the national deal in Denmark, we expect LIMS to return to a 30% margin and higher growth. Medication Management and Woman and Child, which have been with us for 15 years, perform very well, above the 30% EBITDA margin, with strong potential. Health Analytics is still being integrated after its 2022 acquisition, and that will be completed by mid-2024, so some volatility is expected. Public Safety is performing extremely well, but large customer deliveries create quarterly fluctuations.

Connected Healthcare and Medical Imaging are combined into one entity due to customer overlap. They are transitioning products into a single platform, which requires investment, but customers remain engaged, with tens of thousands of users. New platforms launch in 2024, with income and profitability to follow. These fluctuations are not like the deep dive we faced during reorganization and the Triginta project. Overall, the portfolio is stable, with recurring revenue and strong long-term customers.

14/05/2024 What can we expect in Q2 and beyond regarding MDR?

The certification process will demand less work than the two years of preparation. With standardized processes in place, we expect greater efficiency in development and delivery. While structures can feel bureaucratic, they will also raise software and delivery quality. This milestone allows us to focus more on income growth rather than internal restructuring.

14/05/2024 Can you share details on OpEx levels and 2024 margin expectations?

OpEx is not elevated. Other costs are down compared with both Q1 last year and Q4, even more so when adjusted for inflation. Personnel costs are stable when adjusted for CapEx and average salary increases of about 4%. In constant currency, total costs are down SEK 10 million.

We continue to target a 30% margin. That guidance remains unchanged, and we see room for further efficiency.

14/05/2024 What are your expectations for 2024 given the 30% EBITDA margin target?

Our target remains intact. The focus is on revenue growth, especially recurring revenue, new contracts, and Professional Services, where ambitions are higher. While cost ratios may shift slightly between COGS, personnel, and other costs, the 30% margin target absolutely remains.

23/08/2024 Is the 2025 goal of NOK 1,000,000,000 in sales and high EBITDA margin still realistic?

I do not think it is a remote dream. On the SEK 1,000,000,000 sales target, we may be slightly delayed, but with both large and small targets in hand, we still have the ability to close them within 24 months. We are just below €500,000,000 now, and I believe the growth is possible.

On EBITDA, I also do not think it is far-fetched. After the recent divestment of 50 people, we are on €295,000,000. That transition provides a significant boost to achieving a stable margin at a higher level. I remain optimistic despite the disappointing numbers this quarter.

23/08/2024 When will the company become cash flow positive?

It is hard to say if it will be in the third or fourth quarter. A 10% EBITDA margin means we still burn cash, while 20% means stability. We are not far away, and the initiatives on both income and cost sides should make it achievable. It will not be easy, but it is not mission impossible either.

23/08/2024 What is happening with the LIMS business after heavy 2023 investment and negative margins?

I agree the numbers look weak now, with minus 18% EBITDA margin, but LIMS is a very long-term business. National projects have costs upfront for years before revenue flows. The final delivery on the current contract will likely be in 2028, after which recurring revenue and add-on sales will last decades.

Quarterly results can look poor because costs and income vary by delivery milestones. Over 40 years, this business has proven strong and will continue to be, but it will not improve quickly on a quarter-to-quarter view.

23/08/2024 When will EBITDA margin reach the 30% target?

That is the big question. Fundamentally, with our recurring revenue model and contract structures, the business should deliver 30% EBITDA over time. We are delayed, but I expect you will already see signs of improvement this quarter.

However, we are focused on securing a stable, long-term margin rather than rushing to show a quick gain. The 30% target remains intact, and you will see traces of progress soon, though it will not happen overnight.

23/08/2024 Is 50% of revenue still a realistic target for salary and personnel costs?

Yes, the level is too high now, but 50% remains the target. It will not happen overnight, but with improved development processes and growing productivity in professional services, we will move closer to that level. That is why we initiated a company-wide approach to development productivity.

Keep in mind that under GAAP, the holiday pay effect is pronounced in Q3. So 50% on average does not mean 50% each quarter. The cost base is currently too high relative to income, but with recurring revenue and professional services potential, there is room to improve.

23/08/2024 How poor is your cost visibility given rising costs after Project Riginta?

The higher personnel cost this quarter is part of transitioning to a more efficient model. We cannot just divest in one area and immediately recruit in another. It is a planned transition, more important than the specific quarterly number.

Costs are not sticky, and we have control. The process is taking longer than expected, but we will reach the goal with only a slight delay.

20/12/2024 Why not reach 30% EBITDA in the first half of 2025?

That is a good question. We must remember the seasonality effect in Omdur. Because we account under GAAP and most employees are in Norway and Sweden, we have the so-called holiday pay effect. Salary cost is recognized lower in Q3 compared to other quarters, making the second half more profitable. On average, the full year must be considered. Profitability will always be lower in the first half and stronger in the second half due to this effect. As long as most employees are in Norway and Sweden, the holiday pay impact will remain very visible in the accounts.

20/12/2024 Why is 2025 EBITDA guidance 23–25% instead of 30%?

We have reduced FTEs, phased out outsourcing agreements, and decentralized emergency, giving us a stronger run rate into 2025. This supports reaching close to 20% EBITA in the first half of 2025 and about 30% in the second half once consulting agreements expire in June. The full year will average 23%–25%. Stable recurring revenue, predictable growth, and lower churn make this possible. The reason we guide below 30% for the full year is simply the holiday pay seasonality in the first half. By the second half of 2025, we expect to hit 30%, and from 2026 onwards we see this margin level as sustainable.

26/02/2025 Why does organic growth fluctuate, and can guidance change?

If you look at Medication Management, it is a useful case study. We acquired it in 2008 and it has stayed within Omdur without further acquisitions, so it reflects pure organic growth. Between 2020 and 2023, it shrank by 16%, an annual decline of 4%. Some investors even suggested divesting it. But from 2009 to 2024, the business quadrupled in size with nearly 9.4% annual growth. The lesson is that growth is lumpy, just like missing the best days in the stock market impacts long-term returns.

Quarterly or annual numbers often deviate significantly from the long-term trend, so the signal can be obscured by noise. That is why we maintain our 5% to 10% organic growth guidance. We remain focused on specialized healthcare for emergency and clinical disciplines, serving a stable public-sector-oriented customer base with recurring revenue and low churn. We will continue to target 5% to 10% long-term organic growth, complemented by acquisitions when opportunities arise. We are not in a hurry to do poor deals but will act decisively when the right ones appear. Entering 2025, our income and cost run rate is strong, restructuring is complete, and we are prepared to integrate acquisitions efficiently while pursuing further M&A opportunities.

26/02/2025 Will the 26% margin target require further cost cuts or restructuring, or only operating leverage?

It is the latter. The margin improvement will come through ordinary budgeting and operations, not new restructuring. The only ongoing measure is the phase-out of external consultants, which will conclude in June. That is why we guide for 20% margin in the first half of 2025 and 30% in the second. By 2026, each business unit leader will be operating under normal budgeting without additional restructuring.

Of course, if we acquire something substantial, we would reassess. But for current operations, including recent acquisitions, we expect to operate in an ordinary mode. In effect, the restructuring is complete, and our twentieth anniversary gift to ourselves is moving forward with regular operations.

26/02/2025 Why was organic growth slower in 2024, and what are the drivers for 2025?

You are right, 2024 showed low organic growth. The main reason was weak performance in Emergency, especially early in the year. This was about large projects not repeating from 2023. Our software and recurring revenue continue to grow, but when you lose big projects without reducing related costs, the top line suffers. That was the main driver in 2024, but it will not repeat in 2025.

There is no negative trend in our software business or customer markets, quite the opposite. Based on our run rate and current operations, growth in 2025 and 2026 looks healthy and predictable. The restructuring also makes it easier to measure cost growth in our decentralized model.

14/05/2025 What is your net debt to EBITDA guidance for the next 12–24 months?

For the first half of 2025, EBITDA margin guidance is 18–22%, rising to 25–35% in the second half. If we reach 30% on NOK 500 million in sales, that equals NOK 150 million EBITDA. With net debt around NOK 400 million, the ratio would be below 3x. At the current run rate, we are rapidly deleveraging the company.

14/05/2025 Do you have debt repayment or refinancing needs in the coming years?

No. Our OMDA bond matures in December 2028, and until then we only service interest. Seller credits are self-financing, always linked to sales and cash EBITDA. Therefore, we have no refinancing or repayment needs before maturity.

29/08/2025 If you had a magic wand to remove one problem today, what would it be?

I would not get rid of you first. The business is very resilient. Crises like the financial downturn or political changes have not affected us. Recurring revenues are now approaching the same level as our fixed costs, and combined with low churn, this gives us a very strong position.

So no, we do not really need a magic wand. That is the honest answer.

29/08/2025 What should investors understand better about OMDA that has been poorly communicated?

Two points. First, the difference between target margin and guidance. Our first formal guidance to reach target margin was given in December 2024, but earlier statements created misunderstandings and impatience. Some investors did not see the underlying value creation.

Second, we have a unique strategy: highly specialized components within healthcare and emergency response. This gives us organic growth potential, profitability, and many relevant acquisition targets. We are not just a serial acquirer. Our role in society motivates employees, provides resilience, and explains the stability of recurring revenues. Finally, it is important to understand we are now guiding with crystal clarity for 2025 and 2026.

29/08/2025 What net debt to EBITDA ratios do you expect for 2025 and 2026 year-end?

At 500,000,000 in sales, which is our 2026 guidance, and a 30% EBITDA margin, we would generate about 150,000,000 in EBITDA. With gross debt of 500,000,000 and around 100,000,000 or slightly more in cash, net debt would be about 400,000,000. That gives a net debt to EBITDA ratio based on those figures.

29/08/2025 Could you double current revenue within existing countries of operation?

Yes, it is absolutely possible, though not overnight. In 2015, when we IPOed, sales were around NOK200 million, almost entirely Nordic. Today we are approaching NOK500 million with more than 100,000,000 from the Nordics alone, meaning we already doubled in that region since IPO.

With the same focus and time, doubling again within our current geographies is realistic, though it will take steady execution.

Risks & Macro

27/11/2020 Do you expect sales impact from recurring coronavirus in Q4?

Our financials have not been negatively affected. Instead, income has shifted: hospitals prioritize COVID-related system adjustments over implementing new versions or add-ons. It is more a change in income composition than a reduction in sales.

19/05/2022 How do you view liquidity under current market conditions, as cost of capital has increased and share price declined?

Liquidity is always an issue. We are fortunate to have a shareholder base made up largely of long-term institutional investors who buy and hold, which limits trading liquidity. That is the trade-off.

As long as we do not need to issue new shares, the current share price does not change our strategy. As Warren Buffett said, in the short run the market is a voting machine, in the long run it is a weighing machine. Our job is to continue executing operationally, and over time we believe the share price will reflect that.

26/02/2025 Is artificial intelligence an opportunity or a threat for Onda?

AI is very important, and we see three main action points. First, in administration, we have already been using AI tools to increase efficiency. Second, in coding, AI helps create and maintain code, which supports our insourcing project and reduces the cost base. This combines centralized competence with input from business areas.

Most importantly, we are developing AI functionality for customers. We are cooperating with the University of Barcelona to deliver AI within emergency, and the Dermicus acquisition added an AI-based imaging component to our stack. So overall, we see AI as a positive driver for Onda going forward.

29/08/2025 What challenges do you face running OMDA given global uncertainties?

Running a business always brings challenges, but it is important to reflect that in a world with war, tariffs, customs, and shipping constraints, OMDA’s underlying demand does not really change. Macro issues do not affect the number of accidents, births, or cancer cases. The demand for our software and services remains untouched by these events.

Personal Questions

28/02/2023 What is your personal opinion about stock-based compensation?

If it is compensation or about being a shareholder, I think it is a very good idea. Any initiative that aligns interests is positive in my opinion. If part of a bonus scheme is settled in shares, I personally think that is a good idea. All is good when you have skin in the game.

08/11/2023 Would you sell the company at 4–5 times sales, and what is your succession plan?

Any bid for the company would be handled under laws, regulations, and good corporate governance. The board would evaluate an offer, make a recommendation, and shareholders would decide. Regarding succession, our plan is to continue leading the company until we reach our goals. We enjoy what we are doing and believe we are on the right track, so you will not get rid of us easily.

10/11/2023 How are business area managers incentivized?

Their incentives reflect our consolidated KPIs: organic growth, profitability, capital discipline including CapEx, and the speed of integrating new acquisitions. They are measured on these few KPIs, with integration being particularly important for driving faster growth.

Other

30/06/2021 Are you seeing growing interest from non-Nordic institutions to become CSAM owners?

Yes. CSAM is increasingly regarded as an international company with Nordic roots. We already have strong interest and commitments from European and American investors, and as we grow outside the Nordics, we expect that interest to continue.

30/06/2021 What is Optima’s churn rate?

Churn is negligible, the same as the rest of CSAM. Once software is installed, it becomes deeply embedded in operations, improving logistics and quality. Customers have little business case to replace it. Annual fees are relatively small, but they are stable and recurring.

25/08/2023 Were there mistakes in past acquisitions that proved harder to restore to profitability?

The main regret is that we did not reorganize into business areas earlier. The decentralized model is far more efficient for integration than the central portfolio matrix we used before.

We do not view the acquisitions themselves as mistakes. The products, recurring revenue streams, and people brought in are all strong. The learning was about structure. Moving faster into decentralization would have been better, but now we are there, and overall we are happy with the situation.

10/11/2023 Do you have any views on the share price? Why is it weak, and are you cheap compared to peers?

Whether we are cheap depends on perspective. As a shareholder, I suggest comparing our performance, cash flow, and growth trajectory against peers, both listed and private. That analysis will show where we stand. We are buying back shares, which may itself be an indication.

The share price is what it is. Management is focused on improving the business, and I believe a strong business will ultimately be reflected in the share price. As Warren Buffett said, in the short run the market is a voting machine, but in the long run it is a weighing machine.

14/05/2024 Any final remarks?

Quarterly variations are natural in our business. What matters most is the annual run rate, now above €300 million, supported by strong license sales and recurring revenue. Do not focus too heavily on single-quarter fluctuations. We look forward to presenting Q2 results on August 23. Until then, enjoy summer and stay safe.

Disclaimer:

The following transcript and Q&A have been generated with the assistance of Artificial Intelligence (AI). While we strive for accuracy, completeness, and clarity, the content may contain errors, inaccuracies, or misinterpretations. Neither the company featured in this document nor ValueBridge assumes any responsibility or liability for the accuracy, reliability, or completeness of the information presented.

This material is for informational purposes only and should not be construed as official company communication, financial advice, or a definitive representation of the company’s views. Readers should independently verify any information before making decisions based on it.