BioGaia AB (publ)

Welcome to Biogea Q3 report for 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Teresa Agnew and CFO Alexander Katsinas. Please go ahead.

Hi, this is Teresa Agnew, CEO of BioGaia, and Alex and I are here to present our Q3 results. So sales were 327 million SEC, which is an increase of 7% due to higher sales in America as well as Asia Pacific. Growth overall was 14% when excluding currency effects. Year to date, our growth is 8% excluding currency effects and 4% including currency. Our sales in Asia Pacific for the quarter increased by 17%, in Americas increased by 10%, and in EMEA decreased by 4%, primarily due to sales in Eastern Europe. We saw strong growth following increased media investments in the US and other prioritized direct markets such as Canada, the UK and Australia. With our increased media, we've been attracting new consumers, new consumers to the brand and enhancing our brand awareness. For the quarter, our EBIT is 86 million sec, and our EBIT margin is 26%. And as you can see, this compares to 14% EBIT margin last year. This was lower due to the metabogen impairment loss of 51 million sec. Our year-to-date EBIT margin is now 27%. Just to remind you of our BioGaia company strategy, We have three strategic pillars. The first is grow the core in which we focus on gut health, colic, oral health, as well as immune health. Our second is expansion through direct markets. And our third is breakthrough innovation. So this is where there are market creation opportunities for using probiotics in new areas. The foundations of our company are, of course, our people and culture, investing for profitable growth, digital as an enabler of our business, as well as our go-to-market, driven by science, which has been a foundation for over 30 years for the company, and sustainable solutions with a strong focus on sustainability. We are delivering on our strategy. In terms of our Grow the Core, we're driving growth of our pediatric and adult segments. We're investing in marketing and selling activities to drive strong growth in our direct markets, as I mentioned, such as in the US. We're successfully launching new products in our core health areas. Last year, we launched BioGaia Gastrous Pure Action, and this quarter, we're rolling it out to more markets. This quarter, we also launched Prudentis Fresh Breath, which is a new product that combines our probiotics with zinc. So it works on gums, teeth, as well as giving you fresh breath. we're rolling out many of our other products in partner markets and direct markets as well. In terms of our second strategy, expansion through direct markets, we launched France as a direct market in Q2, and that market is starting to do well in Q3. We're preparing to launch Germany and Austria in early 2026. And actually in Q3, France had its strongest month with record sales in September. So we have a high ambition in France to continue our growth into next year. Australia, which we launched in 2024, now with all of our marketing and selling efforts, BioGaia Protectus Drops is now number one in the market. We also have record sales in the US market due to the investments that we've been putting into that market. And our direct markets are growing ahead of our partner markets. In terms of our third strategic area, breakthrough innovation, as you may have seen in a press release, we've established a new subsidiary called BioGaia New Sciences that will focus on skin health, which is a new breakthrough innovation area for us. And we are rolling out our BioGaia probiotic ointment to more markets. So now you will see we have new launches of our probiotic ointment. So speaking of launches, this shows you all the launches we have had of products as we expand our new products into more markets for the quarter. So we have rolled out our probiotic ointment in Sweden, Finland, and the UK. We launched Prodentis Fresh Breath lozenges, as I mentioned, in the US. In Argentina, we rolled out a number of our products. Slovakia. And in the U.S., we launched our BioGuy gastrous pure action capsules that we had launched in Finland for the first time last year. And then also in Australia and New Zealand, we also rolled out gastrous pure action capsules. All of these launches are doing very well, especially gastrous pure action is driving increased sales in our adult gut health area. As well, it's continuing to do extremely well in Finland after a year of launch without cannibalizing our chewable gastrous product. Some of the key events that happened during the quarter. As I said, we launched our BioGuy New Sciences subsidiary. At an extraordinary general meeting in August, we resolved to elect Maurizio Graber as our new chairman of the board. Also, Maurizio entered into an agreement to purchase some Class B shares from the anchor shareholder, Anatom Holding. BioGaia also announced a distribution in Germany and Austria for the future. So we will be starting that in early 2026. We also announced the launch of a new product, Prodentis Fresh Breath. And as I said, that launched first in the US in the quarter. And more recently, we announced the publication of a study on our new patented strain, L. reuteri BGR46. This has actually been published in a journal called Beneficial Microbes. And we also introduced a press release on this, talking about how, as expected, this new strain, it's a new patented strain, is safe and well characterized. In terms of sales per segment, so in our pediatrics area in the quarter grew by 7%, and if you exclude currency effects, it's 14%. This is mainly due to increased sales of protectors drop in Asia Pacific, Latin America, specifically some markets that did very well were Indonesia, Vietnam, and Mexico. In terms of adult health, our sales increased by 6% in the quarter, increasing 13%, excluding currency effects. We saw particularly strong growth of BioGuy Gastros in the U.S. and BioGuy Predentis, mainly in the U.S. as well. And as you can see, our pediatric business remains at about 75% of our sales. In terms of the regions, As I said earlier, EMEA sales decreased by 4%. This was mainly due to Eastern Europe and Italy. But one comment on Italy, Italy is growing well for us this year. So the decline that we saw was mainly due to order variability because we saw higher orders in Q2. In France, as I said, we achieved record sales in September. We're driving increased distribution, We're driving recommendations through pharmacies, so we anticipate that this will continue. And in Turkey, we have signed a long-term distribution agreement with one of our partners, Abbott. Abbott is actually a longstanding BioGaia partner. We partner with them in the Middle East, in Latin America, some other Asia Pacific markets. So we have now signed an agreement with Abbott Turkey for the market of Turkey. So in Asia Pacific, our sales increased by 17%. This was mainly seen in Vietnam, Australia, as well as Indonesia. And specifically in Australia, one of our direct markets, we are expanding distribution, we're increasing our marketing activities, and we're growing market share in the market. In the Americas, our sales increased by 10%. This was mainly due to the U.S. and Mexico growth. And in particular on the U.S., we're achieving record-breaking sales in the quarter. We successfully launched the two new products, as I said, which is Biogaia Gastris Pure Action Capsules and the Biogaia Prudentis Fresh Breath. Both products are getting off to a fast start in the U.S. So I will now turn it over to Alex to go through our financials in more detail.

Thank you, Theresa. So if we just summarize the key financials, we see that our sales grew 7% from 304 million to 327 million. Our gross profit grew 9% and our EBIT grew 108% from 41 million to 86 and a margin of 26% in the quarter versus 14 in the same quarter last year. If we look at the sales, as we heard previously, we had a sales growth of 7%. However, excluding currency effects, we had an organic growth of 14%. The gross margin improved from 73% last year to 74% this year, mainly due to an improved margin in pediatrics, which is the largest segment, but also an improvement in the adult health. And if we just, the main explanation for the improved margin is mainly different geographical sales compared to a year ago, more favorable geographic shift, for example, in direct markets where we do have a higher gross margin. But also partly due to some price improvements, price increases, which we have done during the last year, which are obviously impacting the margin positively. And year to date, then we have a gross margin, which is flat compared to a year ago. Down 1% in pediatrics, however, up 6% in adult health. Move on to our expenses. Our total expenses were 157 million in the quarter, which is then 13% lower compared to one year ago. If we look at the different lines, sales and marketing cost at 116 versus 96 last year, that's an increase of 21%. This is an effect of increased sales and marketing activities, mainly in our subsidiaries, and then mainly, of course, in North America and the US, where we have the largest operations. And that is why the sales and marketing costs have increased due to those increased investments. In terms of R&D, R&D cost decreased to 26 million due to the, as Theresa mentioned previously, due to the MetaboGen impairment loss, which we took in the same quarter last year. And excluding that, we had a growth in R&D spending in the quarter. Administration costs at 11 million, an increase of 18. There are some startup related costs to go indirect, which are included in this line. But other than that, it's basically the same costs. And then we have other OPEX, which is basically exchange losses on receivables at the cost of 4 million in the quarter. And also worth to note that it's substantial cost in year to date of 33 million. We move on to the next, the profit and loss. Just to summarize, our sales grew 7%, our cost grew 13%, and therefore our EBIT, the adjusted EBIT, declined 8%. And the adjustment again was this impairment loss one year ago. If we move on to the cash flow, the cash flow from operating activities increased by 10 million SEC to 110. mainly due to positive change in working capital. And the positive change in working capital is related to lower receivables. We had quite high sales in the second quarter this year, and a lot of those payments came in the third quarter. So the receivables decreased with 49 million, we had higher payables of 2 million, and this was offset by higher inventory of 10 million. All of these variations are basically normal variations that we have. There's no one offs or anything like that. and that leads to a cash flow for the period of 107 million versus 111 last year so basically a flat cash flow and a cash at the end of the period of 728 million versus 1.11 billion in the same quarter last year so with that i hand over to teresa for some concluding remarks