BioGaia AB Interim Management Statement – January – March 2022
FIRST QUARTER 2022
Net sales amounted to SEK 283.9 million (202.0), an increase of SEK 81.9 million, or 41% (excluding foreign exchange effects, 32%) of which the acquisition of Nutraceutics accounted for an increase of SEK 15.8 million (8%). Organic growth was 24%.
Net sales in the Paediatrics segment amounted to SEK 222.5 million (161.6), an increase of 38% (excluding foreign exchange effects, 29%).
Net sales in the Adult Health segment amounted to SEK 60.8 million (38.7), an increase of 57% (excluding foreign exchange effects, 47%).
Operating expenses amounted to SEK 106.9 million (81.0), an increase of SEK 26 million, or 32%, of which the acquisition of Nutraceutics accounted for an increase of SEK 20.5 million (25%). Operating expenses included costs of evaluation of acquisition candidates of SEK 0.8 million (2.5) and restructuring costs of SEK 3.9 million (7.5). Excluding these costs, operating expenses amounted to SEK 102.2 million (71.0), an increase of 44%.
Operating profit increased by 48% to SEK 95.3 million (64.2), which corresponds to an operating margin of 34% (32%).
Profit after tax amounted to SEK 76.3 million (50.4), an increase of 51%.
Earnings per share amounted to SEK 3.78 (2.50) before and after dilution.
Cash flow amounted to SEK 85.8 million (17.2).
Cash and cash equivalents at 31 March 2022 amounted to SEK 1,571.7 million (1,486.8).
Key events in the first quarter of 2022
On 3 February, BioGaia announced that BioGaia’s probiotic reduces inflammation in patients with diverticulitis.
Key events after the end of the first quarter
On 25 April, BioGaia announced that the company’s profit for the first quarter exceeded market expectations.
Following on from a good 2021, we had a very robust start to the year with an increase in our sales by 41% compared with last year’s first quarter. I am pleased to see that the Paediatrics segment (+38%) and the Adult Health segment (+57%) have grown globally, entirely according to our target The excellent result was driven by a few factors. First and foremost were eased or lifted Covid-restrictions in Europe, which have allowed our partners to actively revisit healthcare workers and pharmacies and for consumers to return to a normal life. This has meant that consumers were more exposed to infections, such as the common cold, which has increased demand for BioGaia’s products and led to outstanding sales growth of 60% in EMEA, mainly in Italy, Spain and Eastern Europe. In Italy, which was a problem child during the pandemic, sales have returned to almost pre-pandemic levels. Our Italian distributors have adapted their way of working during the pandemic and, in addition to medical marketing, have increased their online expertise, which means they are also regaining market shares from competitors.
Secondly, our initiative with direct markets is working better than expected. USA is producing good results due to the successful integration of our distributor Everidis, now BioGaia USA, and its omnichannel strategy. On the basis of medical and consumer marketing, we have quickly launched our latest innovations (Prodentis Kids and Pharax) with record quarters on both Amazon and Walmart.
In Finland, we have established BioGaia in 543 of 800 pharmacies since the launch of the BioGaia brand in September 2021. We are gradually increasing our retail sales and launching new products, such as Gastrus, using TV campaigns. Progress in the UK is better than planned, especially at pharmacies. We are broadly investing in campaigns on social media via mumfluencers to drive traffic to our own online store and pharmacies. Our operation targetting dentists in Japan has been negatively impacted by pandemic restrictions but we have partly offset this through our own online store. In Sweden, our sales are increasing at pharmacies both online and in retail outlets.
Latin America has continued to perform well and we are particularly satisfied that our latest market, Argentina, met its entire budget for 2022 in a single quarter.
In APAC, the quarter was positive, driven by our new omnichannel distributors in South Korea, a recovery in Hong Kong compared with poor results last year and by good sales in Vietnam. However, China is suffering from Covid restrictions with many cities in lockdown. Our distributor is reducing risks by opening new warehouses to ensure properly functioning logistics.
Commercial success is not possible without a firm scientific foundation. In Paediatrics, we are rolling out one of our new key products, Pharax, for upper respiratory tract infections based on the successful randomised placebo-controlled clinical study published in 2021 that showed a combination of two reuteri strains can significantly reduce the duration and severity of clinical symptoms in children with tonsillitis and
pharyngitis. We are evaluating the opportunity to develop another adult product based on two positive studies on a new strain.
Our marketing department has never been more active, particularly on social media with #supportingyourinvisibleheroes and in supporting the global launch of Pharax and Prodentis Kids with adequate materials for healthcare personnel, influencers and consumers.
We are working hard to implement our sustainability strategy, have received an A rating from MSCI and are planning to introduce science-based target tracking to limit our impact on the environment. Last, but by no means least, we are conducting quarterly employee surveys to ensure that we offer a healthy and attractive workplace. Feel free to read our first sustainability report in accordance with GRI.
The very strong first quarter means we are optimistic about 2022. We are controlling costs to keep these at a healthy level relative to sales, which has helped to improve operating profit by 48%. The current high level of inflation may, however, affect the purchasing power of our target group and there is a risk that the zero-tolerance policy towards Covid in China may impact sales in one of our focus markets.
I would like to thank all of our employees, from St Louis in the USA, to Hiroshima in Japan via South Africa, the UK, Finland, Singapore and Sweden. Thank you to our 70 partners across the globe. Together, we will achieve our vision “To be the most trusted probiotic brand in the world.”
President and CEO BioGaia
6 May 2022
For more information, see attached Interim Management Statement.
Teleconference: Investors, analysts and the media are invited to take part in a teleconference on the interim management statement to be held today, 6 May 2022, at 9:30 a.m. CEST with CEO Isabelle Ducellier and CFO Alexander Kotsinas. To participate in the teleconference, please call +46 8 505 583 58. More information about the teleconference is available here: https://financialhearings.com/event/43468
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, on 06-05-2022 08:00 CET.