Boule Diagnostics AB (publ) Year-end report January–December 2020

Progress in development but the pandemic impact continued

Quarter October–December 2020

  • Net sales amounted to SEK 92.7 million (129.3), down 28.3 percent. Adjusted for the change in exchange rates, this corresponds to a decrease of 23.4 percent.
  • The number of instruments sold amounted to 834 (1,231), a decrease of 32.2 percent.
  • Cash flow from operating activities amounted to SEK 25.3 million (19.7).
  • Operating profit/loss was SEK -41.6 million (15.1) which corresponds to an operating margin of -44.9 percent (11.7). Excluding the SEK 40.0 million write-off of intangible assets, operating profit/loss was SEK -1.6 million.
  • Net profit amounted to SEK -32.6 million (7.2).
  • Earnings per share before and after dilution amounted to SEK -1.68 (0.37).

Full year January–December 2020

  • Net sales amounted to SEK 400.5 million (498.9), down 19.7 percent. Adjusted for the change in exchange rates, this corresponds to a decrease of 18.3 percent.
  • The number of instruments sold has since March been negatively affected by the pandemic and was 3,047 (4,598), a decrease of 33.7 percent.
  • Cash flow from operating activities amounted to SEK 75.2 million (54.0).
  • Operating profit/loss was SEK -5.9 million (70.0) which corresponds to an operating margin of -1.5 percent (14.0). Excluding the write-off of intangible assets, operating profit was SEK 34.1 million, corresponding to an operating margin of 8.5 percent.
  • Net profit/loss, including the write-off of the holding in the associated company biosurfit, amounted to SEK -48.0 million (37.5).
  • Earnings per share before and after dilution amounted to SEK -2.47 (1.93).
  • The Board of Directors proposes a dividend of SEK 0.55 per share for 2020 (0,00).

Significant events during the quarter
Boule´s proprietary technology at the core of the company’s new platform, write-down of acquired laser technology
The development of the next generation diagnostics platform has now reached a defining milestone regarding design, specification and choice of core technology. During the development process, different solutions were evaluated, one of which included the acquisition of laser optics technology. However, as a consequence of other considerations and choice of technology, a different development path has proven to yield better results, why the acquired technology and associated investments are written down by SEK 40 million. The write-downs did not affect cash flow but will impact the fourth quarter earnings of 2020.

Significant events after the period
No significant events have occurred since the end of the year.

Comments from CEO Jesper Söderqvist
The corona pandemic’s global progression had a continued significant impact also on the fourth quarter. We summarize 2020 to a challenging year in terms of sales and profitability. At the same time, we made important progress in our product development, which admittedly triggered a need for a write down but also substantiated future growth. Despite these challenges, we managed cash flow well, nurtured our relationships with our distributors and continued to develop processes and the organization.

Important milestone reached in Boule´s platform project
In December, the development of the next generation diagnostics instruments platform, that will reach a larger and faster growing market, reached an important milestone in terms of design, requirement specifications and choice of technology. During the year, we made great progress in the project, meaning that we specified all significant technology choices, where Boule’s proprietary laser technology will be at the core for the new platform. We have outlined a clear plan for our first release, which will be an advanced 5-part instrument for the human market, with a planned launch in late 2022. The decision to continue with our proprietary laser technology meant that the technology acquired in 2018 became redundant and the investment was written down by SEK 40 million, which affects profit in the fourth quarter 2020.

Increased impact from COVID-19 at the end of the year
The optimism that many markets signaled in mid-autumn was reversed as a second, or in some regions a third, wave of corona led to new restrictions and shutdowns in many of our main markets. The restrictions reduce the number of doctor visits and thus result in lower test volumes, which decreases our sales of consumables. Given the health care priorities, it also remains difficult to install and sell new instruments.

Net sales amounted to SEK 93 million in the fourth quarter and decreased by 28 percent compared to the previous year. Thus, the positive sales trend we saw in the third quarter was broken. For the full year, net sales were SEK 400 million, which is 20 percent lower than the record year of 2019. The gross margin for the fourth quarter decreased by 2 percentage points when compared to the previous year, which is primarily explained by low sales but also by costs for write-downs of inventories due to a change of suppliers and the phasing out of products and components. For the full year, the gross margin was 44 percent, which is significantly lower than both our ambition and potential.

The quarter’s operating profit was charged with the write-downs of the acquired laser technology and amounted to SEK -42 million in the quarter and SEK -6 million for the full year. Excluding write-downs, operating profit for the quarter was SEK -1.6 million and for the full year SEK 34 million, which corresponds to an adjusted operating margin of 8.5 percent for the full year 2020.

During the year, we worked persistently to ensure the operating cash flow required to enable continued pushes in our strategic investments. Our available cash and cash equivalents have increased by SEK 5 million.

Progress in new areas
Despite the fact that the pandemic has a negative effect on market activities, Boule has had full focus on the growth agenda. At the beginning of the year we won a public procurement of instruments for blood banks in India and towards the end of the year we also sold instruments to private blood banks in the same market. The entry into the blood bank market is in line with our strategy to broaden our offering to new segments.

We also work with continuous product improvements and implementation of additional analyzes for existing products. In our veterinary portfolio, we launched a new panel for our clinical chemistry instrument Exigo C200 during the quarter with tests to measure infections in cats.

Several training webinars have been held, which has been much appreciated by the company’s global distributors. We work hard to continue to offer the market’s best customer experience and to keep a digital presence. Education is an important tool to maintain and deepen our relationships with our distributors who form the basis for our long-term growth and profitability.

The work on establishing local production of consumables in Russia continued according to plan and we expect production to start at the end of the first quarter of 2021.

The way back to growth and profitability
The COVID-19 pandemic has temporarily reduced demand and there is a continued uncertainty about how quickly the markets will recover. We plan for a normalized demand in the latter half of 2021. In the long term, we see a continued stable growth for the decentralized near-patient market that Boule addresses.

Through hard work, we have created an excellent position to return to growth in 2021. We work focused on securing our market position after the pandemic by:

  • Giving support when necessary for the installed base of instruments that have been shut down so that they are quickly put back into operation as they drive the sales of high-margin consumables
  • Increase marketing and presence when procurements of new instruments start anew
  • Continue the work of streamlining our processes and increasing our productivity

The return to good growth and profitability is based on the pandemic giving way. We make many efforts to take advantage of the many opportunities that still exist, and we trim and prepare for a more normal market situation, which makes me hopeful for the coming year.

Finally, I would like to extend a warm thank you to all distributors, suppliers and to Boule’s employees for amazing efforts during a challenging year.”

THE YEAR-END REPORT FOR JANUARY–DECEMBER 2020 IN ITS ENTERITY IS FOUND BELOW

For further information, please contact:
Jesper Söderqvist, CEO and Group President, Boule Diagnostics AB, phone +46 (0)70-689 05 90
Christina Rubenhag, CFO, Boule Diagnostics AB, phone +46 (0)70-546 72 22

About Boule Diagnostics AB (publ)
Boule Diagnostics AB is a global diagnostics company that develops, manufactures and markets instruments and consumable products for blood diagnostics. The company serves hospitals, clinics, laboratories and companies within blood diagnostics, in both human and veterinary hematology. The company operates via subsidiaries in Sweden, the USA, Mexico and Russia. The company products are sold globally primarily through distributors, supported by Boule’s own local sales and support personnel. The Boule shares are listed on Nasdaq Stockholm since 2011. http://www.boule.com

This information is information that Boule Diagnostics AB is obliged to make public pursuant to the EU Market Abuse Regulation.
The information was submitted for publication, through the agency of the contact person set out above at 15:00 CET on February 3, 2021.

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