Interim Report April - September 2024

Sales and operating profit growth, new products added to the pipeline

July - September 2024

• Consolidated sales during the second quarter, July to September amounted to SEK 85.2 (59.6) million, an increase of 43%.
• Gross profit amounted to SEK 34.7 (23.9) million, an increase of 45%.
• Operating profit (EBIT) amounted to SEK 14.3 (6.6) million, an increase of 117%. The operating margin was 17% (11%).
• EBITDA margin was 20% (14%).
• Earnings per share before dilution were SEK 0:33 (0:16) for the quarter. Earnings per share after dilution were SEK 0:33 (0:16).
• Cash flow from operating activities amounted to SEK 1.4 (1.0) million.
• Cash and cash equivalents were SEK 11.8 (20.8) million at the end of the quarter.

April - September 2024

• Consolidated sales during the period April to September amounted to SEK 168.0 (115.8) million, an increase with 45%.
• Gross profit amounted to SEK 71.7 (50.1) million, an increase of 43%.
• Operating profit (EBIT) amounted to SEK 29.6 (14.5) million, an increase with 104%. The operation margin was 18% (13%).
• EBITDA margin was 20% (16%).
• Earnings per share were SEK 0:69 (0:40). Earnings per share after dilution were SEK 0:69 (0:39).
• Cash flow from operating activities amounted to SEK -18.3 (-11.0) million.
• Cash and cash equivalents were SEK 11.8 (20.8) million at the end of September.

CEO’s comments

In the second quarter, EQL delivered a sales growth of 43% and an increase in operating profit (EBIT) of 117%. The increase was driven by product launches carried out during the previous financial year, new launches in Q1, as well as sales of previously backordered antibiotics. The gross margin was negatively impacted by ongoing logistical challenges related to the situation in the Red Sea. For the full year 2024/25, we expect a growth rate of around 40%.

Financial Overview for the second Quarter

In the second quarter of 2024/25, sales increased to 85.2 MSEK, an increase of 43% from 59.6 MSEK the previous year. Operating profit (EBIT) increased by 117% to 14.3 MSEK compared to 6.6 MSEK the previous year, with an EBITDA margin of 20%. The operating margin was negatively affected by ongoing transport disruptions in the Red Sea. Freight costs were higher, and all transport takes longer, leading to delayed goods and missed short-term sales opportunities. See more under Other in this text. Cash and cash equivalents amounted to 11.8 (20.8) MSEK at the end of the quarter. Additionally, there is an unused working capital credit of 8.6 (20.0) MSEK.

Financial Objectives and Projections for the Fiscal Year

For the full year 2024/25, we project a sales growth of around 40%. Achieving this would be in line with our long-term sales goals as outlined in our five-year plan. Our goal is to achieve an EBITDA margin of at least 25% during the last quarter of 2024/25. We will communicate our financial goals for the upcoming five-year period during the year, likely in conjunction with the Q3 report, which will project continued growth and ambition.

Product Launches and Market Dynamics

No new products were launched during the quarter, leaving the portfolio with 40 launched products.

Four new niche generics were added to our pipeline, which now grows to 35. Three of these are development products, part of a larger procurement of new development projects. Signing fees for the projects are the reason that CAPEX is somewhat higher in Q2 than in previous quarters.

The number of launches in 2025/26 has been adjusted downwards based on our assessment of how hospital product procurements will be conducted by Regions and that we are seeing longer lead times with authorities to start reviewing applications. We currently see no significant negative impact on next year’s growth as a result.

Our strategic key product Mellozzan, launched in Germany and Austria during Q1, is now also launched in Switzerland. Initial signals from the important German market are positive in that both the market and our partner’s market share are growing. Preparations for a launch in the UK are underway and may take place in the first half of 2025. In France, Italy, Turkey, and Kazakhstan, regulatory procedures are ongoing. Dialogues are in progress for several substantial regions outside Europe, but no concrete agreements have yet been made.

For Memprex, our other strategic key product, regulatory procedures are ongoing in Germany and France. These markets will form a base for future expansion of the product to more countries. Launches can occur during the financial year 2025/26.

Other

From December 2023, our transport routes are affected by ongoing conflicts in the Middle East, which have led our transport partners to navigate via the longer route around the Cape of Good Hope. This extends lead times by 2-3 weeks and increases costs. It also led to stock-outs on individual packaging sizes, where under normal circumstances, we have access to quick solutions. The aggregated effect of these temporary stock-outs negatively impacts the gross margin by a few percentage points.

This disclosure contains information that EQL Pharma 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 06-11-2024 07:00 CET.