EQL Pharma

October - December 2023

• Consolidated sales during the third quarter, October to December amounted to SEK 70.2 (80.2) million. Adjusted for non-recurring sales in the comparative quarter Q3 2022/23, the revenue amounted to 70.2 (56.1) MSEK, an increase of 25%.
• Gross profit amounted to SEK 33.5 (35.5) million for the quarter, but the gross margin increased from 44% to 48%.
• EBIT amounted to SEK 9.8 (15.5) million, a decrease of 37%. The operating margin was 14% (19%).
• EBITDA margin was 17%.
• Costs related to preparations for uplisting to NASDAQ main list in the quarter of 3.0 MSEK and adjusted for these costs, operating profit (EBIT) amounted to 12.8 MSEK and operating margin to 18%.
• EBITDA margin adjusted for uplisting costs was 21%.
• Earnings per share before dilution were SEK 0:22 (0:41) for the quarter. Earnings per share after dilution were 0:22 (0:40).
• Cash flow from operating activities amounted to SEK 2.5 (-0.2) million for the quarter.
• Cash and cash equivalents were SEK 10.4 (26.2) million at the end of the quarter.

April - December 2023

• Consolidated sales during the period April – December amounted to SEK 186.0 (199.6) million. Adjusted for non-recurring sales in the comparison period April – December 2022/23, the revenue amounted to 186.0 (150.3) MSEK, an increase of 24%.
• Gross profit for the same period amounted to SEK 83.6 (87.8) million, but the gross margin increased from 44% to 45%.
• EBIT for April-December amounted to SEK 24.2 (35.3) million.
• EBITDA margin was 18%.
• Earnings per share were SEK 0:62 (0:92) for the period. Earnings per share after dilution were 0:60 (0:90).
• Cash flow from operating activities amounted to SEK -8.5 (0,3) million during April-December.
• Cash and cash equivalents were SEK 10.4 (26.2) million at the end of December.

CEO’s comments

In the third quarter of the financial year 2023/24, EQL once again delivers growth and profitability despite significant impact from the global antibiotic shortage and affected supply chains, which negatively affect sales and profitability. Sales of Covid-19 tests in the quarter partially compensate for these problems, although to a lesser extent than in previous years. Covid test sales are reported from this quarter as recurring revenue, as we have now been selling tests for three years and expect sales to continue, albeit to a lesser extent. The growth forecast for the full year remains around 30%.

Third quarter summary

The sales for the third quarter of 2023/24 amounted to 70.2 (56.1) MSEK, an increase of 25%. From now on, sales of Covid-19 tests will be reported as recurring sales. Operationally, this is a better representation of the business, even though the comparison in Q3 is somewhat inconsistent. The sales of Covid-19 tests were significantly lower than in the comparative quarter.

Operating income (EBIT) amounted to 9.8 (15.5) MSEK. The operating margin was 14% (19%). The EBITDA margin was 17%.

In the third quarter, EQL incurred costs of 3.0 MSEK related to the potential future listing on NASDAQ, which in 2021 was postponed. Adjusted for these costs, EBIT was 12.8 MSEK (18%) and the EBITDA margin was 21%.

Financial goals and full-year forecast

Our long-term financial goals remain unchanged, as does the sales forecast for the full year 2023/24, where we forecast growth of around 30%.

Products and market

Two new niche generics for the Nordic region have been added to our pipeline, which now grows from 37 to 39 products. We are actively working to identify new products for our pipeline and will provide updates on progress.

The work to register and launch our strategic key products Mellozzan and Memprex outside the Nordic region is ongoing. We have submitted applications to authorities in several European countries and are preparing for submissions in others. Mellozzan is in the launch phase for the German market. As usual, we will provide regular updates when material developments occur.

In the quarter, sales of Covid-19 tests occurred due to the spread of the virus in November and December. This is the third consecutive year we are selling Covid-19 tests, and we expect it to continue in the coming years. Therefore, we have chosen to discontinue the one-time classification of test sales that we previously used. Our current assessment is that EQL will sell Covid-19 tests in the range of 5-15 MSEK in the coming years, primarily in the third quarter when the spread of the virus is highest.

Other

The global antibiotic shortage significantly influenced Q3. Our antibiotic stocks are relatively good at the end of the quarter though, and we are ready to meet patients' needs in the fourth quarter, when the flu season for infectious diseases often peaks.

EQL’s transport partners must, since mid December, choose the longer route around the Cape of Good Hope, instead of the usual route through the Suez Canal due to the attacks carried out by Yemeni Houthi rebels in the Red Sea. This extends the lead time by 2-3 weeks and leads to significant cost increases. We are closely monitoring the situation and continuously balancing the use of sea transport with the significantly more expensive and environmentally unfriendly air transport.

EQL Pharma was once again named a Gazelle company in Skåne by Dagens Industri for the second year in a row, ranking 6th out of a total of 98 Skåne Gazelles.