Sales and operating profit growth, significant product acquisition signed
October - December 2024
- Consolidated sales during the third quarter, October to December amounted to SEK 92.2 (70.2) million, an increase of 31%.
- Gross profit amounted to SEK 37.7 (33.5) million, an increase of 13%.
- Operating profit (EBIT) amounted to SEK 14.8 (9.8) million, an increase of 52%. The operating margin was 16% (14%).
- EBITDA margin was 19% (18%).
- Earnings per share before dilution were SEK 0:35 (0:22) for the quarter. Earnings per share after dilution were SEK 0:34 (0:22).
- Cash flow from operating activities amounted to SEK 7.6 (2.5) million.
- Cash and cash equivalents were SEK 15.6 (10.4) million at the end of the quarter.
April - December 2024
- Consolidated sales during the period April to December amounted to SEK 260.3 (186.0) million, an increase with 40%.
- Gross profit amounted to SEK 109.4 (83.6) million, an increase of 42%.
- Operating profit (EBIT) amounted to SEK 44.4 (24.2) million, an increase with 83%. The operating margin was 17% (13%).
- EBITDA margin was 19% (17%).
- Earnings per share were SEK 1:03 (0:62). Earnings per share after dilution were SEK 1:00 (0:60).
- Cash flow from operating activities amounted to SEK -10.7 (-8.5) million.
- Cash and cash equivalents were SEK 15.6 (10.4) million at the end of the period.
CEO's comments
The third quarter 2024/25 was eventful for EQL Pharma. The first acquisition of significant character was signed, sales grew by 31%, and operating profit by 52%. After the end of the quarter, financing for the acquisition has been secured, and closing of the deal was performed on 31st January. The ambitions for the coming four year period are being refined and will be presented on Friday, March 7, at EQL's first ever capital markets day. Sales growth for the full year 2024/25 is forecasted to be around 40%.
Financial Overview for the third Quarter
During the quarter, sales rose to 92.2 MSEK, an increase of 31% from 70.2 MSEK the previous year. Operating profit (EBIT) increased by 52% to 14.8 MSEK compared to 9.8 MSEK the previous year, with an EBITDA margin of 19%. The operating margin was negatively affected by continued transport disruptions in the Red Sea, which pressured the gross margin to 41% (48%).
There was no significant sale of Covid-19 tests during the quarter, this means that the entire growth was driven by increased pharmaceutical sales.
Liquid assets amounted to 15.6 (10.4) MSEK at the end of the quarter. In addition, there is an unused working capital credit of 10.5 (9.6) MSEK.
Financial Objectives and Projections for the Fiscal Year
For the full year 2024/25, we project sales growth of around 40%. Achieving this would be in line with our long-term sales goals as stated in our five-year plan. In addition to the sales target, our goal is to achieve an EBITDA margin of at least 25% during the last quarter of 2024/25.
Product Launches and Market Dynamics
An asset acquisition consisting of four niche originals was signed during the quarter. The products are Buronil, Folimet, Hydromed, and Marplan. These are typical EQL products with stable sales that have been on the market for a long time. The portfolio is expected to add approximately 51 MSEK in sales and 28 MSEK in EBITDA, with a gross margin of 71%, on annual basis. The acquisition also provides access to new markets and the opportunity for certain optimizations by consolidating manufacturing and launch in new markets. After the end of the quarter, financing was secured via a bond, which was heavily oversubscribed. The bond interest rate, which was 3M STIBOR + 4.0%, combined with the great interest in the bond, is seen as a vote of confidence in investors' view of EQL's business model and development opportunities.
Other
With a new President in the USA and cautious signals that the situation in the Middle East is de-escalating, we hope that the de facto blockade of the Suez Canal will end in 2025. We are closely monitoring developments, and when the situation is deemed safe, our transporters will start using the Suez Canal again. This would, in turn, lead to lower transport costs and thus strengthened gross margins, with a certain time lag, as a large part of the current inventory has been transported at a higher cost.
Furthermore, we will present our new strategic plan at a capital markets day on March 7. This will be the first time EQL Pharma calls for a capital markets day. The idea is to communicate the new financial goals and explain how these will be achieved, as well as the opportunities and risks we see. We will also go through our operations in a more detail than we can do in the usual quarterly presentations. We hope that as many as possible will participate, either on-site, at Carnegie in Stockholm, or via live video link.
This disclosure contains information that EQL Pharma is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014) and the Swedish Securities Markets Act (2007:528). The information was submitted for publication, through the agency of the contact person, on 05-02-2025 07:00 CET.
For more information contact:
Axel Schörling,
CEO & President EQL Pharma AB (publ)
Phone: +46 (0) 76 317 90 60
E-mail: axel.schorling@eqlpharma.com
Web: www.eqlpharma.com
EQL Pharma AB (publ) in short
EQL Pharma AB specializes in developing and selling generics, i.e., drugs that are medically equivalent to original drugs. The company currently has more than 40 niche generics (i.e., generics with limited competition apart from the original drug) launched in the Nordic markets. In addition to these, there is a significant pipeline of additional niche generics for launch in 2025 and beyond. The business is currently focused entirely on prescription drugs, including hospital products, in the Nordics and selected European markets. EQL Pharma AB has its operations in Lund and is listed on Nasdaq Stockholm. EQL Pharma AB carries out extensive development work in collaboration with leading contract manufacturers and major pharmaceutical companies in the EU and Asia, among others.
