The first quarter saw a continued favourable revenue development. The Lab segment delivered strong organic growth whereas our pharmaceuticals business affected the Group negatively. The changing product mix resulted in lower margins. Work continued to optimise the capital structure and profit for the period improved.
January - March 2024
Net revenue for the period was SEK 413.4 million (310.5), an increase of 33.1%
On an organic basis, net revenue declined by 9.5%. Excluding pharmaceuticals, organic growth was 3.6%.
EBITDA for the period was SEK 99.1 million (84.2)
Profit/loss for the period was SEK 42.9 million (35.6)
Earnings per share for the period amounted to SEK 0.22 (0.20)
Cash flow from Operations for the period was SEK 55.3 million (123.3)
CEO's comment
Continued growth and improved profit for the period
The first quarter saw revenue grow by 33% to SEK 413 million (310), in line with our long-term financial target. Organic growth was -10%, driven by the normalisation of demand within our US-based pharmaceuticals business which performed very strongly during 2023. This product category accounted for 9% of sales in the quarter, compared with 23% in the same period of last year. Pharmaceuticals is an attractive, high-margin product category, but sales are subject to fluctuations depending on changes in reimbursement schemes or insurance coverage. We are in the process of launching several new drugs which we expect will drive a return to growth within the product category.
Organic growth excluding pharmaceuticals was 4%, driven by robust market activity across both Healthcare and Lab in the Nordics as well as within our project-based cleanrooms business. The Lab segment had a strong quarter with 26% organic growth. Our value proposition resonates well with customers, which builds loyalty and enables us to grow our share of wallet with healthy profitability. Our capital goods-focused businesses in the US experienced a more challenging quarter; we expect these to benefit from an uptick in demand as interest rate cuts materialise. We have further strengthened our operations team in the US to ensure we can provide our companies with the necessary support to drive continued growth.
The quarter also saw the onboarding and full consolidation of the four acquisitions completed during the second half of last year. All are performing in line with or above our expectations and contributed to a more balanced geographic exposure in the quarter. We continue to see opportunities to strengthen our offering in the right areas through further acquisitions.
The change in product mix, with lower pharmaceuticals sales and strong growth within climate- and cleanrooms, affected profitability in the quarter. The gross margin was 55% (64%) and the EBITDA margin was 24% (27%). Earnings per share amounted to SEK 0.22 (0.20) which is the strongest result in a single quarter to date. Return on capital employed was 18% (18%).
Cash flow from Operations amounted to SEK 55 million (123), corresponding to a cash conversion of 56% (147%). During the quarter we saw a build-up of working capital, as opposed to a substantial release last year driven primarily by our pharmaceuticals business.
During the quarter we took several actions to optimise our capital structure and facilitate continued profitable growth. Among others we raised our first dollar-denominated bond, in an amount of USD 60 million. Most of the proceeds from this issue were used to partially repurchase our outstanding SEK-denominated bond. This results not only in a more balanced currency exposure but also improves our debt maturity profile. Net leverage at the end of the quarter stood at 2.4x.
The first quarter has clearly demonstrated the value of a broad and diversified base of products, customers and markets within the structurally important areas healthcare and lab. Irrespective of economic backdrop, the need for products and services which save and extend people's lives remains strong.
Rikard Akhtarzand, CEO
For further information, please contact:
Rikard Akhtarzand, CEO
+46 (0)76-525 90 71
rikard.akhtarzand@addvisegroup.se
Oliver Humlen, CFO
+46 (0)70-916 26 97
oliver.humlen@addvisegroup.se
Important information:
This information is information that ADDvise Group AB is required to disclose under the EU Market Abuse Regulation. The information was submitted for publication on April 18, 2024 at 07:45 CEST.
ADDvise's financial reports are available on ADDvise's website, https://www.addvisegroup.com/investor-relations/financial-and-annual-reports/
The interim report is published in Swedish and English. The Swedish version represents the original.
About ADDvise
ADDvise is an international life science group. Operating a decentralised ownership model, we develop and acquire high quality companies within the business areas Lab and Healthcare. The Group comprises more than 20 companies and generates annual revenues of close to SEK 2 billion. ADDvise is listed on Nasdaq First North Premier Growth Market. Mangold Fondkommission AB, +46 8 503 015 50, CA@mangold.se, is the Company's Certified Adviser. Additional information is available at www.addvisegroup.com.
