BIOGAIA AB Interim Management Statement
January - March 2024
Q1 2024
FIRST QUARTER 2024
For balance sheet items, figures in parentheses refer to year-end 2023 figures. For income statement and cash flow items, they refer to the same period last year.
Net sales amounted to SEK 369.8 million (365.8), an increase of SEK 4.0 million, or 1% (excluding foreign exchange effects, 2%).
Net sales in the Pediatrics segment amounted to SEK 292.3 million (306.0), a decrease of 4% (excluding foreign exchange effects a decrease of 4%).
Net sales in the Adult Health segment amounted to SEK 74.8 million (56.6), an increase of 32% (excluding foreign exchange effects an increase of 33%).
Operating expenses amounted to SEK 122.6 million (114.5), an increase of SEK 8.1 million (7%). Operating expenses, excluding items affecting comparability, increased by 5% to SEK 117.6 million (112.1).
Operating profit decreased by 3% to SEK 143.2 million (148.0), which corresponds to an operating margin of 39% (40%).
Adjusted operating profit decreased by 1% to SEK 148.2 million (150.4), which corresponds to an adjusted operating margin of 40% (41%).
Profit after tax amounted to SEK 121.8 million (115.9), an increase of 5%.
Earnings per share amounted to SEK 1.21 (1.15) before dilution and SEK 1.21 (1.15) after dilution.1)
Cash flow amounted to SEK 40.9 million (93.7).
Cash and cash equivalents amounted to SEK 1,591.4 million (1,544.2).
Key events after the end of the first quarter
No key events that are not mentioned in this interim management statement took place after the end of the first quarter.
Operating | Change in | |
Jan - Mar | sales | |
margin | 1 % | |
2024 | 39 % | |
2 % excl. | ||
FX |
Jan - Mar 2024
Operating
profit
143
SEK million
Jan - Mar 2023
Net sales
370
SEK million
Net sales, SEK 000s | 369,796 | 365,821 |
Growth in net sales | 1% | 29% |
Operating profit, SEK 000s | 143,183 | 147,998 |
Operating margin | 39% | 40% |
Profit after tax, SEK 000s | 121,847 | 115,945 |
Number of shares, thousands, before dilution | 100,982 | 100,982 |
Number of shares, thousands, after dilution | 100,992 | 100,982 |
Earnings per share, before dilution, SEK 1) | 1.21 | 1.15 |
Earnings per share, after dilution, SEK 1) | 1.21 | 1.15 |
- Key ratio defined according to IFRS. For definitions of other key ratios, see page 17.
This information is information that BioGaia AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the CEO, at 08.00 a.m. CET on 7 May 2024.
BioGaia AB (publ.) Interim management statement, January - March 2024 | 2 |
Q1 2024
BioGaia AB (publ.) Interim management statement 2024
The Board of Directors and the CEO of BioGaia AB hereby present the interim management statement for the period 1 January - 31 March 2024.
CEO's comment
Embarking on a dynamic year ahead
After a strong record year for 2023, the first quarter shows overall good results with a strong Operating Margin of 39% and Net Sales of SEK 369.8 (365.8) a Sales Growth of 1% (2% excluding foreign exchange effects) impacted by some one-time events related to the 4th quarter last year including prelaunch inventory build-up in Brazil and impact of Nestle's Gerber stopping the sales of their Gerber/BioGaia co-branded product.
Our region Asia Pacific continued its positive performance and sales increased in EMEA by 13%. Sales declined in Latin America and declined slightly in North America for reasons mentioned above.
The Pediatric segment decreased by 4% compared to the previous year. The Adult segment is growing by 32% compared to the previous year, and our products Gastrus, Prodentis, and Protectis tablets stand out with strong performances.
Thriving activity in our market areas
EMEA increased sales by 13% driven by the UK, France, Spain, and Eastern Europe. In the UK, we launched BioGaia Protectis Baby Drops 5ml into the UK's biggest Pharmacy chain, Boots both in-store and online. In addition, we are now in over 1,000 independent pharmacies in the UK. We have launched a successful Continuous Professional Development learning module for healthcare professionals which has led to an increased motivation to recommend our product by 38% among midwives, pharmacists, and general practitioners within the UK.
Sales in the APAC region, driven by China, Indonesia, and Japan, grew by 6% during the quarter. In China, our digital marketing efforts continue to be successful, particularly sales through live streams on diverse marketplaces and social platforms such as JD, Tmall, and TikTok. Meanwhile, in Japan, our primary focus lies within the dental consumer market, where we see that our omnichannel strategy is developing successfully.
In the Americas, we had several product launches during the quarter. In the USA, we launched a new product, Nurture & Grow, which is a triple-benefit,once-daily probiotic, that eases digestive discomfort, provides immune support, and promotes healthy gums & teeth. In 2023, we did a pilot launch in the USA of our first probiotic skin health product, Aldermis which is a skin ointment for infants and children to treat dry and sensitive skin. Due to successful results in the USA, we decided to launch Aldermis in Canada this quarter. In Canada, our most recent direct market, sales are accelerating rapidly. With the launch of Aldermis, Canada broadened its product assortment towards consumers. In addition, Canada relaunched Prodentis with mint flavor for adults and introduced Prodentis apple flavor for kids. So far, these products are available on two e-commerce channels, Amazon and Well.ca. To support the launches of Prodentis, Canada partnered with multiple dental associations and key opinion leaders, developed an accredited educational program, and launched a series of virtual clinic learning sessions. In the USA, we had a slight decrease in sales in the quarter as mentioned mainly due to Gerber's decision to discontinue the sale of their co-branded Gerber/BioGaia products in the 4th quarter last year to concentrate solely on their own products. Meanwhile, we have continued strong growth (38%) on Amazon in the USA.
In Latin America, we had a decline in sales in Brazil as mentioned due to prelaunch stocking in the 4th quarter. At the same time, Chile, where we have Abbott as our partner, stands out with good results. We were delighted to convene with our Latin America partners during a regionally organized workshop in the quarter. Additionally, we conducted a speaker training session with healthcare professionals, focusing particularly on new evidence of additional product benefits for Gastrus.
A solidified strategic framework
Going into 2024, we have further solidified our strategic framework and focus on the three strategic pillars for the company: Grow the core, Expansion through direct markets, and Breakthrough innovation.
The first strategic pillar: Grow the core means focusing on our existing strong product portfolio within gut health, immune health, and oral health with further strengthened marketing and commercial excellence, launching new products and line extensions, and through our omnichannel approach. Our second strategic pillar: Expansion through direct markets, means that we want to continue to grow our existing direct business model that we have successfully introduced in the USA, Canada, UK, Finland, and Japan, and continue to expand our direct distribution model to consumers. This strategy has been very successful to date and gives us more flexibility when it comes to product launches, marketing our products, and collecting and analyzing insights and consumer behaviors. Our third strategic pillar: Breakthrough innovation, is critical for our future long-term growth and creation of new market opportunities. As a probiotics company at the forefront of microbiome research, it is essential that we keep innovating and launching new products, for additional indications and health areas beyond our core.
I am confident that this solidified strategic framework will continue to guide us to take actions and decisions to create value, allocate resources toward achieving our goals, and sustain long-term success in a competitive landscape.
As we navigate the ever-evolving landscape of health and wellness, I remain confident in our collective ability to drive meaningful impact and sustained growth. We will continue to make evidence-based targeted investments in marketing, sales, and innovation with the intention of continuing the growth of our pediatric and adult products.
Theresa Agnew
President and CEO, BioGaia
7 May 2024
Teleconference: Investors, analysts, and the media are invited to take part in a teleconference on the interim management statement to be held today, 7 May 2024, at 09:30 a.m. CEST with CEO Theresa Agnew and CFO Alexander Kotsinas. More information about the teleconference is available here https://financialhearings.com/event/49309.
BioGaia AB (publ.) Interim management statement, January - March 2024 | 3 |
Q1 2024
Revenue
SEKm | Jan - Mar | Jan - Mar | Change | ||
2024 | 2023 | ||||
Pediatrics | 292.3 | 306.0 | -4% | ||
56.6 | |||||
Adult Health | 74.8 | 32% | |||
Other | 3.3 | ||||
2.7 | -17% | ||||
Total | 369.8 | 365.8 | 1% | ||
SEKm | Jan - Mar | Jan - Mar | Change | ||
2024 | 2023 | ||||
EMEA | 161.5 | 143.3 | 13% | ||
80.8 | |||||
APAC | 85.8 | 6% | |||
141.7 | |||||
Americas | 122.5 | -14% | |||
Total | 369.8 | 365.8 | 1% | ||
SALES FIRST QUARTER
Consolidated net sales amounted to SEK 369.8 million (365.8), which is an increase of SEK 4.0 million, or 1% (excluding foreign exchange effects, 2%). Over the past 12-month period, sales rose 10%.
Sales in EMEA amounted to SEK 161.5 million (143.3), an increase of 13%, which was due to higher sales mainly in the Adult health segment. Sales increased mainly in Spain, South Africa and the United Arab Emirates.
Sales in APAC amounted to SEK 85.8 (80.8), an increase of 6%, which was due to higher sales in the Pediatrics segment. Sales increased mainly in Indonesia, Japan, and Thailand.
Sales in Americas totaled SEK 122.5 million (141.7), down 14% due to decreased sales in the Pediatrics segment. Sales mainly decreased in Brazil, Mexico and USA. In USA sales were negatively affected by the discontinuation of the Gerber products. In Brazil sales were negatively impacted by the inventory build-up in the fourth quarter of 2023 due to the launch of Easy Dropper in Brazil.
Net sales bridge first quarter | |||
SEKm | Change | ||
2023 | 365.8 | ||
Foreign exchange | -3.6 | -1.0% | |
Organic growth | 7.6 | 2.1% | |
2024 | 369.8 | 1.1% |
BioGaia AB (publ.) Interim management statement, January - March 2024 | 4 |
Q1 2024
Pediatrics
The Pediatrics segment accounts for approximately 80% of BioGaia's total sales. BioGaia Protectis drops remain the most sold product and are sold in more than 100 countries. Other key products within the Pediatrics segment include Protectis tablets, Pharax, oral rehydration solution as well as cultures to be used as ingredients in licensee products.
SEKm | Jan - Mar 2024 | Jan - Mar 2023 | Change |
Pediatrics | 292.3 | 306.0 | -4% |
SALES FIRST QUARTER
Sales in the Pediatrics segment amounted to SEK 292.3 million (306.0), a decrease of 4% (excluding foreign exchange effects a decrease of 4%). Over the past 12-month period, sales rose 5%.
Sales of BioGaia Protectis drops decreased compared to the corresponding period last year. Sales decreased in Americas (mainly in Brazil and USA) while sales increased in APAC and EMEA.
Sales of BioGaia Protectis tablets within Pediatrics decreased compared to the corresponding period last year. Sales decreased in Americas and APAC, mainly in Brazil and South Korea.
BioGaia AB (publ.) Interim management statement, January - March 2024 | 5 |
Q1 2024
Adult Health
The Adult Health segment accounts for approximately 20% of BioGaia's total sales. Sales mainly comprise BioGaia Protectis, Bi oGaia Gastrus, BioGaia Prodentis, BioGaia Osfortis, as well as cultures as an ingredient in a licensee's dairy products and Nutrace utics' own products.
SEKm | Jan - Mar 2024 | Jan - Mar 2023 | Change |
Adult Health | 74.8 | 56.6 | 32% |
SALES FIRST QUARTER
Sales in the Adult Health segment amounted to SEK 74.8 million (56.6), an increase of 32% (excluding foreign exchange effects, 33%). Over the past 12-month period, sales rose 30%.
Sales of BioGaia Protectis tablets increased compared to the corresponding period last year. Sales increased in EMEA and Americas, mainly in South Africa and Peru.
Sales of BioGaia Gastrus increased compared to the corresponding period last year. Sales increased in all regions, mainly in USA and Spain.
Sales of BioGaia Prodentis increased compared to the corresponding period last year. Sales increased in Americas and EMEA, mainly in USA and Germany.
BioGaia AB (publ.) Interim management statement, January - March 2024 | 6 |
Q1 2024
Earnings
FIRST QUARTER
Gross margin
The total gross margin amounted to 72% (72%).
The gross margin for the Pediatrics segment amounted to 75% (73%) and for the Adult Health segment to 57% (63%).
Operating expenses and operating profit
Operating expenses amounted to SEK 122.6 million (114.5), an increase of SEK 8.1 million (7%). Operating expenses, excluding items affecting comparability, increased by 5% to SEK 117.6 million (112.1). Items affecting comparability in the quarter primarily include litigation fees in connection with the termination of the distribution agreement in Italy.
Selling expenses amounted to SEK 96.0 million (88.1), an increase of 9%, mainly due to higher costs for sales and marketing activities.
R&D expenses amounted to SEK 25.1 million (18.7), an increase of 34%.
Administrative expenses amounted to SEK 13.9 million (9.8), an increase of 42%. The increase in administrative expenses was primarily due to litigation fees in connection with the termination of the distribution agreement in Italy.
Other operating income refers to exchange gains on receivables and liabilities of an operating nature and amounted to SEK 12.5 million (2.1).
Operating profit amounted to SEK 143.2 million (148.0), a decrease of 3%. The operating margin was 39% (40%).
Adjusted operating profit amounted to SEK 148.2 million (150.4), a decrease of 1%. The adjusted operating margin was 40% (41%).
Net financial items amounted to SEK 10.4 million (2.6). Net financial items were impacted by the adjustment of the value of the earn-out in relation to Nutraceutics in the amount of SEK -1.2 million (-1.5).
Profit after tax and earnings per share
Profit after tax amounted to SEK 121.8 million (115.9), an increase of 5%. The effective tax rate was 21% (23%). Profit after tax is impacted by a non-taxable financial expense or income from the adjustment of the value of the additional purchase price. The effective tax rate in the same quarter last year was higher due to impact on profit before tax from subsidiaries in tax jurisdictions with higher tax rates.
Earnings per share amounted to SEK 1.21 (1.15) before dilution and SEK 1.21 (1.15) after dilution.
BioGaia AB (publ.) Interim management statement, January - March 2024 | 7 |
Q1 2024
Balance sheet and cash flow
Balance sheet 31 March 2024
Total assets amounted to SEK 2,480.0 million (2,333.2).
Goodwill from the acquisition of Nutraceutics was adjusted for currency translation. The financial liability for the additional purchase price was value adjusted. For more information, see Note 3.
Compared with 31 December 2023, receivables and payables increased whereas inventory is at approximately the same level.
Cash and cash equivalents amounted to SEK 1,591.4 million (1,544.2).
Cash flow first quarter
Cash flow amounted to SEK 40.9 million (93.7).
Cash flow from operating activities amounted to SEK 51.9 million (98.4). The decrease in cash flow from operating activities was mainly due to lower operating profit and increased receivables.
Investments amounted to SEK 8.8 million (1.3). The increase was primarily attributable to investments in BioGaia Production.
Significant risks and uncertainties - Group and Parent Company
Significant risks and uncertainties are described in the administration report of the annual report for 2023 on pages 109 and 110 and in Notes 26 and 27. No significant changes in these risks and uncertainties are assessed to have taken place at 31 March 2024.
Related party transactions
Annwall & Rothschild Investment AB owns 3,703,340 class A shares and 500,000 class B shares, corresponding to 4.2% of the share capital and 27.9% of the voting rights in BioGaia AB. Annwall & Rothschild Investment AB is owned by Peter Rothschild and Jan Annwall. Peter Rothschild is Chairman of the Board of BioGaia AB and receives a director's fee of SEK 730,000 per year. During the quarter, Peter Rothschild received additional remuneration for significant working duties, in addition to his assignment on the Board, of SEK 150,000 in accordance with the decision of the Annual General Meeting and the Board of Directors.
Other disclosures
Employees
The number of employees in the Group at 31 March 2024 totaled 211 (211 at 31 March 2023).
The company has an incentive program for all employees based
partly on the company's sales and profit and partly on individual
targets. The maximum bonus is equal to 12% of annual salary. In addition to this program, BioGaia has also implemented a subscription warrants program as resolved by the 2021 Annual General Meeting. The program involves the issue of a maximum of 365,000 warrants where each warrant shall entitle the holder during the period from 6 July 2024 through 6 November 2024 to subscribe for five (previously one before the 2022 share split) new Class B share in BioGaia for a subscription price per share that amounts to SEK 115.6 (previously SEK 578.2 before the 2022 share split). A total of 89,730 warrants were subscribed for in the program and on 31 March 2024 following repurchases only 71 850 remains.
Future outlook
BioGaia's goal is to create strong value growth and a good return for its shareholders. This will be achieved through a greater emphasis on the BioGaia brand, online sales, increased sales to both existing and new customers and a controlled cost level.
The long-term financial target is an operating margin (operating profit in relation to sales) of at least 34% with continued strong growth and increased investments in research, product development, brand building and the sales organization. BioGaia's dividend policy is to pay a shareholder dividend equal to 50% of profit after tax in the Group excluding non-recurring items. For the coming years BioGaia intends to give extra dividends of 50% to 100% of profit after tax in the Group excluding non-recurring items, provided that the future cash flows are in line with BioGaia's projections.
In view of the company's strong portfolio consisting of an increased number of innovative products that are sold predominantly under the BioGaia brand, successful clinical trials and a strong distribution network that covers a large share of key markets for BioGaia, BioGaia's future outlook remains bright.
Key events in the first quarter of 2024
Launches in the first quarter of 2024
Distributor | Country | Product | |||
Pediact | France | BioGaia Prodentis | |||
Eczacibasi | Turkey | BioGaia Protectis tablets | |||
BioGaia | Canada | BioGaia Aldermis | |||
Canada | |||||
BioGaia USA | USA | BioGaia Nurture & Grow | |||
MTC Pharma | Vietnam | BioGaia Prodentis tablets with | |||
new flavor (apple) | |||||
BioGaia AB (publ.) Interim management statement, January - March 2024 | 8 |
Q1 2024
Key events after the end of the first quarter of 2024
No key events that are not mentioned in this interim management statement took place after the end of the first quarter.
Accounting policies
This interim management statement was prepared in all material respects in accordance with Nasdaq OMX Stockholm's guidance for preparing interim management statements. Disclosures according to IAS 34 Interim Financial Reporting are provided both in notes and elsewhere in the interim management statement. The accounting policies applied in the consolidated income statement and balance sheet are consistent with the accounting policies applied in preparation of the most recent annual report. The financial accounts and segment information correspond to the statements used in interim financial reporting prepared in accordance with IAS 34 to provide comparability in the presentation between quarters. The interim management statement includes a Message from the CEO, even if this is not a requirement of Nasdaq Stockholm's guidance. The information is nevertheless deemed important in satisfying user needs.
New accounting standards
Management's assessment is that new and amended standards and interpretations that came into force in 2024 have not had a material effect on the Group's financial statements. Management's assessment is that new and amended standards and interpretations that have not yet come into effect will not have a material effect on the Group's financial statements for the period of initial application.
BioGaia AB (publ.) Interim management statement, January - March 2024 | 9 |
Q1 2024
Summary of consolidated statements of comprehensive income
(Amounts in SEK 000s) | Jan - Mar | Jan - Mar | Jan - Dec | Apr 2023 - | Apr 2022- | ||||||
2024 | 2023 | 2023 | Mar 2024 | Mar 2023 | |||||||
Net sales (Note 1) | 369,796 | 365,821 | 1,296,506 | 1,300,481 | 1,185,923 | ||||||
Cost of sales | -103,967 | -103,309 | -346,316 | -346,974 | -323,690 | ||||||
Gross profit | 262,512 | ||||||||||
265,829 | 950,190 | 953,507 | 862,233 | ||||||||
Selling expenses | -95,982 | -88,114 | -363,256 | -371,124 | -336,877 | ||||||
Administrative expenses | -13,926 | -9,773 | -39,249 | -43,402 | -38,528 | ||||||
Research and development expenses | -25,114 | -18,684 | -106,776 | -113,206 | -100,585 | ||||||
Other operating income | 12,511 | 2,057 | 2,194 | 12,648 | 27,919 | ||||||
Other operating expenses | -135 | - | - | -135 | - | ||||||
Operating profit | 143,183 | 147,998 | 443,103 | 438,288 | 414,162 | ||||||
Financial income | 2,758 | ||||||||||
11,961 | 41,532 | 50,735 | 90,529 | ||||||||
Financial expenses | -1,545 | -195 | -15,801 | -17,151 | -3,884 | ||||||
Profit before tax | 153,599 | 150,561 | 468,834 | 471,872 | 500,807 | ||||||
Tax | -31,752 | -34,616 | -103,482 | -100,618 | -87,386 | ||||||
Profit for the period | 121,847 | 115,945 | 365,352 | 371,254 | 413,421 | |||||||
Gains/losses arising on translation of the statements of | 15,868 | -1,079 | -9,762 | 7,185 | 21,455 | |||||||
foreign operations | ||||||||||||
Comprehensive income for the period | 137,715 | 114,866 | 355,590 | 378,439 | 434,876 | |||||||
Profit for the period attributable to: Owners of the | 121,847 | 115,945 | 365,352 | 371,254 | 413,421 | |||||||
Parent Company | ||||||||||||
Non-controlling interests | - | - | - | - | ||||||||
121,847 | 115,945 | 365,352 | 371,254 | 413,421 | ||||||||
Comprehensive income for the period attributable to: | 137,715 | 114,866 | 355,590 | 378,439 | 434,876 | |||||||
Owners of the Parent Company | ||||||||||||
Non-controlling interests | - | - | - | - | ||||||||
137,715 | 114,866 | 355,590 | 378,439 | 434,876 | ||||||||
Earnings per share | ||||||||||||
Earnings per share before dilution, (SEK) *) | 1.21 | 1.15 | 3.62 | 3.68 | 4.09 | |||||||
Earnings per share after dilution, (SEK) *) | 1.21 | 1.15 | 3.62 | 3.68 | 4.09 | |||||||
Number of shares (thousands) | 100,982 | 100,982 | 100,982 | 100,982 | 100,982 | |||||||
Average number of shares before dilution, (thousands) *) | 100,982 | 100,982 | 100,982 | 100,982 | 100,982 | |||||||
Average number of shares after dilution, (thousands) *) | 100,992 | 100,982 | 100,982 | 100,985 | 100,982 | |||||||
*) In view of the 5:1 share split, which took place in May 2022, historical key ratios based on the number of shares have been restated.
BioGaia AB (publ.) Interim management statement, January - March 2024 | 10 |
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BioGaia AB published this content on 07 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 06:06:06 UTC.
