EQL Pharma

CEO’s comments

EQL achieved sustained growth and profitability in the fourth quarter. Sales escalated by 46%, adjusted for non-recurring sales in the comparison quarter. The growth was driven by the launch of several new products and the replenishment of previously unavailable antibiotics. While the operating profit was adversely affected by expenses totaling 3.8 MSEK due to NASDAQ uplisting costs and increased shipping costs due to disruptions in the Red Sea, the adjusted EBITDA margin reached 19%. Throughout fiscal year 2023/24, EQL consistently expanded, fulfilling the growth projection of approximately 30%, adjusted for non-recurring sales in the comparison period. Looking ahead to the fiscal year 2024/25, we anticipate a growth rate of around 40%, with a target EBITDA margin of more than 25%.

Detailed Fourth Quarter Financials

In the fourth quarter of 2023/24, sales surged to 78.1 MSEK, up 46% from 53.5 MSEK in the previous year, adjusted for non-recurring sales in the comparison quarter. The operating profit (EBIT) increased by 38% to 8.4 MSEK, compared to 6.1 MSEK in the past year, with an EBITDA margin of 14%. After adjusting for 2.2 MSEK in costs related to NASDAQ and 1.6 MSEK for heightened shipping fees, the adjusted operating profit (EBIT) was 12.2 MSEK, resulting in an EBITDA margin of 19%.

Financial Objectives and Projections for the Upcoming Fiscal Year

For the full year 2024/25, we project a sales growth of around 40%. Achieving this would align with our long-term sales objectives as outlined in our five-year financial plan. We aim to reach an EBITDA margin of at least 25% in 2024/25. We will also articulate our financial goals for the next five years during this period, aiming to sustain growth and elevate our market ambitions.

Product Launches and Market Dynamics

This quarter saw the introduction of eight new products, primarily catalyzed by successful procurement bids in Finland, Sweden, and Denmark that came into effect. Additionally, the Mellozzan Oral Solution was launched, marking significant progress in our Branded product range.

Major milestones were reached for our strategic products: Mellozzan, approval in the UK with a target to launch in the next fiscal year, and Memprex, for which submissions have been made in France— thus procedures are ongoing in France as well as Germany – two markets that will form a base for the future expansion of this product.

Other

From December, our shipping routes were affected by ongoing conflicts in the Red Sea, prompting our transport partners to navigate via the lengthier Cape of Good Hope route, extending lead times by 2-3 weeks and escalating costs, which in turn impacted our margins for this quarter.

The past year posed numerous challenges, including antibiotic shortages, heightened shipping costs, NASDAQ uplisting fees, and dwindling Covid-19 test sales. Despite these hurdles, EQL closed the year with 30% growth, adjusted for non-recurring sales in the comparison period, and an adjusted EBITDA margin of 19%. As we move into 2024/25, our focus will remain on driving growth and enhancing our operational efficiency to improve profit margins.