Boule Diagnostics Interim Report Q1 2025

Quarter January-March 2025

• Net sales amounted to SEK 112.9 million (147.8), corresponding to a decrease of 23.6 percent. Organic sales growth amounted to -25.1 percent, currency effects amounted to 1.5 percent.
• The number of instruments sold decreased by 58.1 percent to 543 (1,377).
• Gross profit amounted to SEK 53.5 million (68.3), corresponding to a gross margin of 47.4 percent (46.2).
• Adjusted operating profit amounted to SEK 17.0 million (19.1), corresponding to an adjusted operating margin of 15.1 percent (12.9).
• Non-recurring expenses amounted to SEK 23.5 million (3.7), attributable to expenses related to the closure of the BM950 project of SEK 18.5 million and the impairment of the Group’s assets in Russia of SEK 5.0 million.
• Operating profit amounted to SEK -6.4 million (15.4), corresponding to an operating margin of -5.7 percent (10.5).
• Profit for the period amounted to SEK -10.3 million (9.8).
• Earnings per share before and after dilution amounted to SEK -0.27 (0.25).
• Cash flow from operating activities amounted to SEK -7.8 million (12.5).
• The Group’s available cash and cash equivalents, including unutilised overdraft facilities, amounted to SEK 38.1 million (100.1) as of 31 March.

Comments from the President and CEO

First quarter impacted by geopolitical instability
The first quarter of the year was negatively impacted by the continued geopolitical instability. Despite satisfactory order intake, we were unable to deliver all customer orders due to longer than usual lead times in the supply chain and delayed payments from key customers due to increased local banking restrictions. As a result, we are entering the second quarter with an increased order backlog.

Sales in Q1 amounted to SEK 113 million and decreased organically by -25.1%, partly driven by an unfavorable comparison with the previous year where we delivered an unusually large order to India of 600 instruments, and partly due to delayed orders caused by the geopolitical situation. As a result, sales of both instruments and consumables decreased compared to the previous year. Currency effects had a positive impact of 1.5% during the period.

OEM sales continued the positive trend from the previous year with 9% growth. We also renewed and expanded one of our long-term OEM supply agreements with a leading global IVD company.

Continued progress towards higher profitability
In 2024, we took significant steps to improve our overall profitability and in the first quarter of 2025 we saw full impact of these initiatives.

The gross margin improved to 47.4% (46.2%), despite declining sales. The margin was positively impacted by a favorable mix, growing license fees from India, strong OEM sales and continued incremental efficiency improvements in our production.

Adjusted operating profit amounted to SEK 17.0 million (SEK 19.1 million) and the adjusted operating margin improved to 15.1% (12.9%). This is a result of our extensive restructuring activities last year when we simplified organizational structures and significantly reduced annual expenses. During the first quarter, we also reduced annual expenses by a further SEK 13 million.

Termination of the BM950 project
In March, we announced that we would be shutting down the BM950 5-part hematology instrument project due to new technical issues that significantly impacted the project’s time to market and overall profitability.

The termination of the project resulted in an impairment of intangible assets of SEK 92 million recognized in 2024 figures and approximately SEK 18 million in additional shutdown and restructuring expenses in Q1 2025.

Boule Diagnostics has for many years had a successful collaboration with technology partners to complement and strengthen our proprietary portfolio. Going forward, we will move away from in-house development of instruments and instead build a growth portfolio in collaboration with leading technology partners. We will continue to leverage our sales channel to bring cutting-edge innovations from our partners to market more quickly and cost-effectively.

New portfolio strategy implemented
In January, we announced the first step in our portfolio strategy by signing an exclusive distribution agreement with VitalScientifics for their clinical chemistry portfolio in the US. Like Boule, VitalScientifics develops and manufactures high-quality instruments for the decentralized segment. With this agreement, we are taking the first step in our effort to build a more diversified and synergistic portfolio that meets our customers’ needs. We expect to start sales in the first half of the year.

In March, we extended our technology partnership agreement for our current M51 5-part instrument to ensure we have a competitive 5-part offering in the market.

Finally, we are accelerating investments in our OEM reagents and blood control business, an area where we have unique capabilities and where there is significant growth potential. In 2024, we established a dedicated OEM organization with a mission to expand our business pipeline and further develop our active projects. We are expanding our manufacturing capabilities to meet the growing demand for our products, and we aim to develop a broader portfolio of generic reagents and controls that offer cost-effective, high-quality solutions.

In conclusion, I would like to express my gratitude to our shareholders, partners and stakeholders for your trust and commitment and to the entire Boule organization for their hard work and dedication. 2025 looks to be an exciting year where we will continue to make Boule more efficient, return to a positive cash flow and shift our focus towards a growth agenda.
 
Torben Nielsen,
President and CEO