THIRD 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 304.0 million (317.7), a decrease of SEK 13.7 million, or 4% (excluding foreign exchange effects a decrease of 2%).

Net sales in the Pediatrics segment amounted to SEK 225.8 million (255.8), a decrease of 12% (excluding foreign exchange effects a decrease of 9%).

Net sales in the Adult Health segment amounted to SEK 76.6 million (59.2), an increase of 29% (excluding foreign exchange effects an increase of 33%).

Operating expenses amounted to SEK 180.9 million (116.3), an increase of SEK 64.6 million (56%). Operating expenses, excluding items affecting comparability, increased by 11% to SEK 128.9 million (116.3).

Operating profit decreased by 65% to SEK 41.4 million (119.5), which corresponds to an operating margin of 14% (38%).

Adjusted operating profit decreased by 22% to SEK 93.4 million (119.5), which corresponds to an adjusted operating margin of 31% (38%).

Items affecting comparability in the quarter primarily include an impairment loss attributed to the MetaboGen acquisition of SEK 51.2 million. The net income impact after tax is SEK -41.7 million. Of the total impairment losses SEK 5.3 million impacts goodwill and SEK 45.9 million impacts R&D projects in progress, both reported on the line-item research and development expenses. The impairment loss was caused by a clinical study that did not meet its primary endpoints.

Profit after tax amounted to SEK 36.6 million (101.5), a decrease of 64%.

Earnings per share amounted to SEK 0.36 (1.01) before and after dilution[1].

Cash flow amounted to SEK 111.4 million (88.4).

Cash and cash equivalents at 30 September 2024 amounted to SEK 1,114.6 million (1,544.2).
 

Key events in the third quarter of 2024

On 19 July, BioGaia announced that it has entered into an exclusive distribution agreement with Recordati in Italy for BioGaia's probiotic products.
 

JANUARY - SEPTEMBER 2024
(Figures in parentheses refer to the corresponding period last year, unless otherwise specified).

Net sales amounted to SEK 1,057.9 million (998.7), an increase of SEK 59.2 million, or 6% (excluding foreign exchange effects an increase of 7%).

Net sales in the Pediatrics segment amounted to SEK 822.9 million (793.5), an increase of 4% (excluding foreign exchange effects an increase of 5%).

Net sales in the Adult Health segment amounted to SEK 229.6 million (198,8), an increase of 16% (excluding foreign exchange effects an increase of 17%).

Operating expenses amounted to SEK 452.2 million (362.6), an increase of SEK 90.0 million (25%). Operating expenses, excluding items affecting comparability, increased by 10% to SEK 398.0 million (361,1).

Operating profit decreased by 12% to SEK 320.0 million (362.6), which corresponds to an operating margin of 30% (36%).

Adjusted operating profit increased by 3% to SEK 374.2 million (363.7), which corresponds to an adjusted operating margin of 35% (36%).

Items affecting comparability primarily include an impairment loss attributed to the MetaboGen acquisition of SEK 51.2 million. The net income impact after tax is SEK -41.7 million. Of the total impairment losses SEK 5.3 million impacts goodwill and SEK 45.9 million impacts R&D projects in progress both reported on the line-item research and development expenses. The impairment loss was caused by a clinical study that did not meet its primary endpoints. Furthermore, items affecting comparability also includes litigation fees in connection with the termination of the distribution agreement in Italy of SEK 2.1 million.

Profit after tax amounted to SEK 269.5 million (298.0), a decrease of 10%.

Earnings per share amounted to SEK 2.67 (2.95) before and after dilution[1].

Cash flow amounted to SEK -429.9 million (-33.6). Cash flow includes dividends of SEK 696.8 million (292.8).
 

Key events after the end of the third quarter of 2024
On October 17, BioGaia announced that BioGaia's results for the third quarter would be lower than market expectations.

[1] Key ratio defined according to IFRS. For definitions of other key ratios, see page 17.
 

CEO'S COMMENTS
Mixed results in our third quarter

The third quarter shows an overall sales decline of 4% (2% excluding foreign exchange effects) and an adjusted operating margin of 31% (38%), excluding the non-cash impairment loss attributed to the MetaboGen acquisition.

Over the quarter, we have experienced a mix of results. While certain areas have performed below our expectations, we are pleased with key successes in establishing direct presence in Australia, scaling up our business in Canada, record-breaking sales in the online sales channel in USA, strong growth in China and strong performance of our adult portfolio. Despite these short-term fluctuations in the quarter, we remain confident in our long-term strategy and the solid foundation we are building for sustainable growth.

Quarterly performance across segments and regions

The Pediatric segment declined driven by weak sales in EMEA which we are taking actions to improve. We are pleased with the performance of our Adult business with strong growth in Prodentis, Protectis tablets, and Gastrus tablets in the third quarter.

The Asia Pacific and Americas regions continue to show growth with Asia Pacific developing particularly strongly, driven primarily by our digital marketing efforts in e-Commerce and consumer channels. Performance declined in EMEA and LATAM due to country-specific challenges.

Sales declined in EMEA in the quarter due to poor performance in certain markets, such as Turkey, South Africa, and Spain. Turkey's high inflation has resulting in reduced consumer spending and has placed pressure on both consumer demand and our partner's business operations in Turkey.

Looking at the development year-to-date in Italy, we are facing increased competitive pressures alongside a delay in the market uptake of our products, attributed to the transition to our local distributor partner, Recordati.

Our direct market, the United Kingdom, continues to perform well. BioGaia Protectis drops achieved an expansion in distribution in Boots pharmacy chain after a successful launch in January and since August our drops are now in 1,200 stores.

Looking at the Americas, the USA and Canada continue to grow ahead of the market. The USA continues to show robust performance, particularly on online platforms such as Amazon. At the same time, we continue to be negatively affected by Nestle's decision to stop selling their co-branded Gerber/BioGaia products. In Canada, we have enhanced our sales by cultivating strong relationships with healthcare professionals, such as pediatricians and dental hygienists, through congresses, educational sessions, and other engagements. Simultaneously, we are boosting our brand awareness by actively participating in various events and social media platforms to connect with consumers directly. We have also heightened our focus on our oral health product, Prodentis, which we re-launched in Canada at the beginning of the year.

Sales in Latin America decreased slightly over the course of the quarter, mostly due to some order variability in Brazil. Mexico is developing well for the quarter, and we had strong growth in government tenders in Guatemala.

APAC is progressing steadily. Indonesia continued to show a positive in-market sales trend due to consistent marketing activities conducted by our partners. They have also participated in roadshows across major cities, focusing on the colic indication, alongside sales campaigns implemented in local retail pharmacy chains. In China, our partner participated in multiple national medical congresses promoting BioGaia's portfolio. To further increase the accessibility of BioGaia's products in the country, we opened a brand store for cross-border trade at Jingdong, one of the leading marketplaces in China.

MetaboGen clinical study results

The impairment loss is mainly related to the results of a recent clinical study, led by our colleagues at the Gothenburg laboratory (previously known as MetaboGen AB). The study aimed to prove the efficacy of a next-generation probiotic product for individuals with metabolic syndrome. It is a randomized, double-blind, placebo-controlled study that assessed the clinical efficacy of F. prausnitzii DSM 32379 and D. piger DSM 32187 in 108 prediabetic subjects. The primary endpoint, change in blood glucose over 12 weeks, unfortunately showed no significant difference between the probiotic and placebo groups. Additionally, no changes were observed in liver function or other prediabetes-related physiological parameters. However, a significant improvement in the Triglycerides/Glucose (TyG) ratio was noted in the probiotic group. Microbiome analysis is ongoing, with a clinical study report and manuscript in preparation.

Since the primary endpoint in the clinical study was not achieved, we recorded a non-cash impairment loss of SEK 51.2 million relating to this. With this said, we will continue to pursue other opportunities in the field of next-generation probiotics. While we are disappointed in the outcome of the clinical study, we expect no material change to our growth plan and strategy based on this outcome.

Flying start in our new direct markets: Australia and New Zealand

The launch activation for BioGaia in Australia and New Zealand is well underway. Our pharmacy sales team is securing premium shelf placements for our products, providing pharmacy staff training, and enhancing merchandising efforts. BioGaia's Chief Scientific Officer, Gianfranco Grompone, recently visited Sydney, Melbourne, and Brisbane to support the local team in their Healthcare Professional educational program. Training was provided to General Practitioners and Pharmacists, including at Chemist Warehouse, Australia's largest pharmacy chain. The sessions attracted high attendance and strong interest in BioGaia.

Australia's and New Zealand's BioGaia brand campaigns have been active since September. We participated in our first Parenting & Baby Expos, engaging thousands of parents. BioGaia was also featured on Australia's "Today Show" by Mumfluencer and Olympic swimmer Emily Seebohm, who mentioned our brand while discussing newborn crying solutions. In October, she will also share BioGaia content with her Instagram followers.

A solid foundation for managing an evolving landscape

Our focus remains on building our BioGaia brand, driving our direct businesses, and partnering with our distributors to drive future growth. We continue to invest in brand awareness and digital transformation, and to collect consumer insights and behavior changes to ensure we remain competitive in an evolving landscape. We will continue to make targeted investments in marketing and sales in our key direct businesses with the intention of driving future growth in our pediatric and adult products. We are optimizing operations and investing in new product development that will drive long-term growth and profitability, ensuring we continue delivering value to our shareholders and customers.

We are committed to enhancing the long-term competitiveness of BioGaia and driving growth beyond industry averages over the coming years. We remain committed to achieving our long-term operating margin target of at least 34%.

Theresa Agnew
President and CEO, BioGaia
October 22, 2024
 

You find the complete report with tables in the attached PDF or on https://www.biogaiagroup.com/investors/reports-and-presentations/financial-reports

Teleconference:
Investors, analysts, and the media are invited to take part in a teleconference on the interim management statement to be held today, October 22, 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/49311.

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Contacts:
Alexander Kotsinas, CFO
Email: alexander.kotsinas@biogaia.com
Phone: +46 735 00 11 11
Mikaela Idermark Stern, Corporate Communications
Email: mikaela.idermark.stern@biogaia.com
Phone: +46 730 95 61 50

About BioGaia
BioGaia is an innovative Swedish healthcare company that develops, markets, and sells probiotic products with documented health benefits. The products are sold through local distribution partners or via own distribution in over 100 markets. The class B share of the Parent Company BioGaia AB is quoted on the Mid Cap segment of Nasdaq Stockholm. biogaiagroup.com (https://www.biogaiagroup.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 set out above, at 08:00 a.m. CEST on October 22, 2024.