BioGaia AB - Year-end Report 2021

FOURTH QUARTER 2021

• Net sales amounted to SEK 206.2 million (187.6), an increase of 10% (excluding foreign exchange effects, 11%).
• Net sales in the Paediatrics segment reached SEK 150.1 million (139.6), an increase of 8%.
• Net sales in the Adult Health segment amounted to SEK 55.2 million (47.3), an increase of 17%.
• Operating expenses amounted to SEK 105.9 million (94.7), an increase of 12%. Operating expenses included costs of evaluation of acquisition candidates of SEK 6.7 million and restructuring costs of SEK 5.7 million. Excluding these costs, operating expenses amounted to SEK 93.6 million, a decrease of 1%.
• Operating profit increased by 17% to SEK 53.1 million (45.3), which corresponds to an operating margin of 26% (24%).
• Profit after tax was SEK 38.3 million (38.5), a decrease of 0.5%.
• Earnings per share amounted to SEK 1.90 (2.02) before and after dilution.
• Cash flow amounted to SEK -43.6 million (1,177.6).
• Cash and cash equivalents at 31 December 2021 amounted to SEK 1,484.7 million (1,467.9).

Key events in the fourth quarter of 2021

On 13 October, BioGaia announced that the company’s profit for the third quarter exceeded market expectations.

On 30 December, BioGaia announced that the company, through its USA subsidiary BioGaia Biologics, had signed an agreement to acquire all shares in Nutraceutics. Nutraceutics held all shares in Everidis, which was BioGaia’s exclusive distributor of BioGaia branded products in the USA. The shares will be acquired in two steps, of which the first step took place on 31 December 2021 when BioGaia acquired 80% of the shares through an acquisition of shares and a new share issue for a consideration of USD 9.7 million and USD 5 million, respectively. BioGaia will acquire the remaining 20% of the shares during either 2027 or 2028 (determined at BioGaia’s sole discretion) for an amount based on the net revenue for the year directly prior to the acquisition of the remaining shares. The purchase price for the remaining shares is estimated currently, based on Everidis’ long-term sales plan, to be approximately USD 22 million.

JANUARY – DECEMBER 2021

• Net sales amounted to SEK 785.1 million (747.1), an increase of 5% (excluding foreign exchange effects, 12%).
• Net sales in the Paediatrics segment reached SEK 603.7 million (583.1), an increase of 4%.
• Net sales in the Adult Health segment amounted to SEK 176.9 million (161.2), an increase of 10%.
• Operating expenses amounted to SEK 329.2 million (318.8), an increase of 3%. Operating expenses included costs of evaluation of acquisition candidates of SEK 9.3 million and restructuring costs of SEK 13.1 million. Excluding these costs, operating expenses amounted to SEK 306.9 million, a decrease of 4%.
• Operating profit increased by 11% to SEK 253.7 million (228.2), which corresponds to an operating margin of 32% (31%).
• Profit after tax amounted to SEK 196.3 million (179.7), an increase of 9%.
• Earnings per share amounted to SEK 9.72 (10.07) before and after dilution.
• Cash flow amounted to SEK 13.1 million (1,256.6).
• Cash and cash equivalents at 31 December 2021 amounted to SEK 1,484.7 million (1,467.9).

In accordance with the dividend policy, the Board proposes that the upcoming Annual General Meeting on 6 May 2022 approves an ordinary dividend according to policy of SEK 3.63 (3.41) per share plus an extra dividend of SEK 11.29 (0) per share resulting in a total dividend of SEK 14.92 (3.41) per share corresponding to SEK 301.3 million (68.8). The extra dividend corresponds to an extra dividend of SEK 3.63 per share for 2021 and the cancelled extra dividend due to the covid-19 situation at the time of SEK 4.25 per share for 2019 and SEK 3.41 per share for 2020. The Board further proposes a provision to the Foundation to Prevent Antibiotic Resistance of SEK 2.9 million (2.8). The Board further proposes a 5:1 split of common shares (class A and B shares).

Key events after the end of the fourth quarter

On 3 February, BioGaia announced that BioGaia’s probiotic reduces inflammation in patients with diverticulitis.

CEO’S COMMENTS

Despite the pandemic, 2021 was a good year for BioGaia with sales growth of 5%, or 12% excluding foreign exchange effects. We are particularly pleased with the sales trend for our Adult Health segment, which grew 10% (excluding foreign exchange effects, 16%) aligned with our strategic focus to offer BioGaia’s probiotics at every stage of life. Our Paediatrics segment grew 4% (excluding foreign exchange effects, 10%).

We are very satisfied with sales in APAC, which noted growth of 26%, primarily from online sales in China, e-commerce sales in Japan, positive demographic trends in countries such as Indonesia and Vietnam and sales in Australia. The Americas are again growing, by an impressive 15%, with sales in the USA exceeding SEK 100 million on a full-year basis for the first time in BioGaia’s history, which demonstrates the relevance of our omnichannel strategy.

Latin America has been heavily impacted by the pandemic, but our distributors, mainly Aché in Brazil and Abbott in the rest of Latin America, have shown endurance and creativity in gaining market share. EMEA was also heavily impacted during the first two quarters from recurring lock-downs, which affected our sales at pharmacies and led to difficulties for our distributors in meeting their customers. Over the past six months, the sales trend has been encouraging with an increase of 22%, driven by our efforts in Italy and our “back to school” campaigns at pharmacies and online. 

As I look back on 2021, three areas in particular spring to mind. The first is naturally the ongoing pandemic. Even if the pandemic is now under more control from a health perspective, it still results in uncertainty and restrictions that require flexibility and measures to minimise risk in order to continue developing the business both internally for our employees and externally for our customers and partners.

The second area is our efforts to create an even more consumer-centric organisation. We have now completed our reorganisation with the creation of our consumer marketing department to strengthen BioGaia’s global brand and our own BioGaia Digital department to accelerate our route to the market through marketplaces such as Amazon or our own e-commerce solution.

The third area is that we have modified and strengthened our business model in several markets. The acquisition of our American distributor in December has brought us closer to consumers and offers us a greater presence in the world’s largest probiotics market and means we can decide ourselves how much we want to invest to foster growth. We assumed control of marketing and distribution under our own management in Sweden (in January) and the UK (in November). In Finland, which is a traditionally strong probiotics market, we also took control of marketing and distribution under our own management (in April) and could therefore launch our established product portfolio under our own BioGaia brand.

All of this was made possible by our colleagues around the world, who are focusing on achieving BioGaia’s aim to make probiotics with a scientifically proven effect on health and wellbeing available to everyone.

But naturally, none of this would have been possible without our invisible heroes, our patented bacteria that show in clinical study after clinical study their undisputed superiority in a number of indications.

For more information see attached interim management statement.

Teleconference: Investors, analysts and the media are invited to take part in a teleconference on the year-end report to be held today, 4 February 2022, at 9:30 a.m. CET with CEO Isabelle Ducellier and CFO Alexander Kotsinas. To participate in the teleconference, please call +46 8 505 583 66. More information about the teleconference is available here: https://financialhearings.com/event/41584

BioGaia AB Box 3242, SE-103 64 STOCKHOLM 
Street address: Kungsbroplan 3A, Stockholm
Telephone: 46 8 555 293 00, Corp. Identity no. 556380-8723, biogaia.com

This disclosure contains information that BioGaia is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 04-02-2022 08:00 CET.