BioGaia AB (publ)

Welcome to BioGAIA Q1 Report for 2026. 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 we are here to present our Q1 2026 results. So in terms of the highlights, we have growth excluding currency effects of 15%. Our EBIT margin for the quarter is 27%. And overall, our free cash flow is 67 million SEC. Our net sales reached 373 million SEC, and as I said, organic growth of 15%, 2% growth when you include currency effects. By region, our Asia-Pacific region increased by 6%, excluding currency effects. In the Americas, we increased by 12%, excluding currency effects. And for Europe, Middle East, Africa... we increased by 24%, excluding currency effects. Our operating profit for the quarter was around 101 million SEC, which is 4% growth, and our EBIT margin, as I said, was 27%, comparing to 27% same quarter last year. To remind you of our company's strategy, we have three strategic pillars – Grow the core, where we focus on growing our core health areas, gut health, of which colic is a part, oral health, and immune health. Our second strategic pillar is what we call expansion through direct markets. So focusing on growing our current 12 direct markets and focusing our marketing and selling and investment activities in those markets to drive growth ahead of market growth. And our third strategic pillar is what we call breakthrough innovation, where we work on new products that are in new areas, new market creation opportunities for probiotics. And our foundations are, of course, our people and our culture, investing for profitable growth, using digital as an enabler of the business, both in how we go to market in our omnichannel approach, as well as how we digitize internally to make us more productive and efficient, driven by science, which has been a foundation for us for over 35 years, and sustainable solutions. So, how are we delivering on our strategy? In terms of Grow the Core, for the quarter, we are driving growth in both the pediatric and adult segments. We are investing, as I said, in marketing and selling activities to drive strong double-digit growth in direct markets. We're continuing the rollout of new products. We launched a new product, Gastros Pure Action, in Finland originally in October 2024. And now we have rolled it out to approximately 12 markets. And it is now the third highest growth contributor to our overall business in terms of million sec for a second quarter in a row. It was our third largest growth contributor in Q4 and again now in Q1 2026. And we are also rolling out a new product, Preventus Fresh Breast, which launched last year in Q3, and we continue to roll that out into more markets. In terms of expansion through direct markets, we launched Germany in Austria earlier in Q1, and that is doing really well with strong growth ahead of our plan. France and Canada actually had record sales in Q1, so both of those direct markets doing very strongly. And then U.S. continues in Q1 with its strong double-digit growth trend. So direct markets performing extremely well. In the breakthrough innovation area, we have our BioGuy and New Sciences focus, which is on skin health, and we continue to roll out our probiotic ointment to more and more countries around the world. And we have some exciting news to announce a new product launch in our pediatrics area, This is called BioGaia Protectus Plus. This is our next-generation patented probiotic baby drops, which I think, as you know, this is a dual-strain product. So this contains our original protectus strain, which is BSM-17938, and a new patented strain, which we call BGR-46. Our current protective drops will remain available in the market. So this will be an additional product launch, which will round out our premium portfolio in terms of baby drops. We just completed a clinical study where we achieved positive results both in efficacy and safety. So we will be writing a manuscript and submitting this for publication for the clinical study. So with this product, we get the benefit of additive probiotic effects. So it's supported by numerous preclinical studies that have been published, such as things about the survival and the activity in a bio-rich environment, which is very important for bacteria to survive. The BGR46 also increases melatonin induction in the intestinal cells. So this is a really positive differentiator in this strain. This new strain also has higher production levels of anti-inflammatory compounds, such as adenosine. And this new strain is even better adapted to the infant gut in a milk-rich environment. So there are a number of things that we've studied preclinically about this new strain, BGR46, which provide additive probiotic effects. But as I said, this is a new product that will be available in addition to our original BioGaia protective straw. Our first launch is actually this week in the UK, and then we will follow with additional rollouts by market over this year and into next year. So, very exciting news for us in terms of a new product launch, our next generation probiotic drops. In addition, with other launches in the quarter, as always, our existing product portfolio, we talk about other launches as we expand into new countries. So just a couple of the examples. In Sweden, we launched our Prudentis Fresh Breck lozenges. In Germany, of course, we launched some new products in the quarter as we started our direct market presence in the quarter. Also, Prudentis Fresh Breck lozenges launched in the U.K. and Finland in this quarter. Malaysia launched our BioGaia skincare probiotic ointment. So a number of other launches of products within the quarter. And some of the other key events, we had quite a bit of news in the quarter. February 3rd, we announced that our fourth quarter would exceed market expectations. In February, we signed a renewed distribution agreement with a longstanding partner, Evo Pharma, and they cover Central Eastern Europe as well as Switzerland for us. On March 17th, we also announced exercising the option to acquire the remaining 20% of the shares in NutraSuitics, which is our company in the United States. On March 20th, we announced also an exciting clinical study publication. It's a 10-year follow-up study from when infants were given our protective drops, and we saw that there was a markedly lower prevalence of functional abdominal pain in these children after they had received our drops in the first three months of life. And then finally, at the end of April, we also published new scientific findings around our patented longevity guard technology, which is our desiccant strip that goes into our drops products as well as our probiotic ointment to improve the stability and shelf life of our probiotics so that they last through the life of the product, the 24-month shelf life. So a lot of interesting, exciting news that we had during the quarter. In terms of growth, as we look at it across our segments, you can see the past growth by quarter. So in pediatrics for Q1, we grew by 13%, excluding currency effects. And in the adult segment, we grew by 18%, excluding currency effects. In pediatrics, we saw very high sales in the U.S. and also France in the quarter. And in adults, we saw very high sales in EMEA, Asia Pacific, and we saw a strong growth in South Africa as well as Japan. In addition, as you look at our segments of pediatrics and adult health, for the quarter in pediatrics, we grew 13%, excluding currency effects. Adult health, we grew 18%, excluding currency effects. So, strong growth for both segments. And currently, for the quarter, 73% of our sales is in the pediatric segment. In terms of our regional sales, I highlighted this in the beginning. EMEA grew 24%, excluding currency effects. Asia Pacific grew 6%. and America's grew 12%. With EMEA, we saw strong growth in both the pediatrics and adult segments. In Asia Pacific, we saw strong growth in Japan and Australia, our direct markets in Asia Pacific. Also, sales for the quarter were negatively impacted by some quarterly variations that we saw for China between Q4 and Q1. And in the Americas, as I said, we saw 12% growth, excluding currency effects, with strong growth in the U.S. and Canada, and growth in the quarter also strong for both the pediatrics and the adult health segment. So now I will turn it over to Alex to go through the financials in some more detail.

Thank you, Teresa. So to summarize, we had a sales increase in millions of SEC of 2%, from 373% to 1%. from 366 to 373 million SEK. We had a gross profit decrease of 1%, with a margin from 73% to 72%. We had an EBIT increase of 4%, and a margin of 27%. If we look at the sales, as we heard, we had an increase organically of 15%. However, we had very strong negative currency effects of 13%, and the net increase then was 2%. The gross margin for the quarter was 72% versus 73 in the same quarter last year. We had a slightly lower margin for both pediatrics and adult. And the main reason for the lower margin is the strengthening, Swedish crown versus mainly the dollar that is affecting the gross margin here. In terms of our operating expenses, the operating expenses were 166 million versus 171 in the same quarter last year. which is 3% lower compared to last year. This is mainly due to the other OPEX line where we have a negative cost of 6 million versus a cost of 24 million in the same quarter last year. If you exclude that effect, we have an increased sales and marketing cost of 17%. The main reason for the increased sales and marketing cost is that we are have this increase in sales in different markets, and therefore we have higher costs. We're basically investing in our growth here. In terms of R&D, we also have a slight increase of 13%, and admin is also an increase of 24%. It's partly due to some periodization of some costs. If we look at then our P&L, like we heard, we had sales of 375. So 373 million, OPEX 166, and thereby an EBIT of 101 million versus 97 million in the same quarter last year, an increase of 4%. And a profit after tax of 79 million versus 80, which is a slight decrease of 1%, and earnings per share of 0.78, which is a slight decrease of 1%. If we go over to the cash flow, We have a cash flow from operating activities before changes in working capital of 66 million, and we have a positive change in working capital of 5 million, leading to a cash flow from operating activities of 70 million versus 36 million in the same quarter last year. We have a very low cash flow from investing activities of only 1 million. It was also low in the same quarter last year. and the cash flow for financing of minus of 2 million SEC, leading to cash flow for the period of 67 million versus 33 million in the same quarter last year, and cash at the end of the period of 871 million versus 1.25 billion SEC last year. So with that, I hand over to Lisa.

Okay, so in conclusion, as we said, our first quarter showed growth excluding currency effects of 15%. We are happy to report that both our pediatric segment and our adult segment grew double digits. And as we said, this increase is primarily driven by our bioguide protectors drops, our bioguide preventives, and our bioguide gastric pure action, one of our new launches from 2024. Europe, Middle East, Africa is regaining momentum in some of the key markets. We had last year a period of transition as we were going from a partner-run business to now taking some markets direct. So we are through that period of transition for one of our largest markets, France. So that is really showing in our results. And overall, as we said, in Europe, Middle East, Africa, our sales increased by 24%, excluding currency effects. And as I said, France performed well. Germany also performed very well. We just launched in January, and as I said, we are ahead of plan. So both of those markets have contributed strongly to our performance in Europe, Middle East, Africa. In Asia Pacific, as I said, we had strong growth in Australia, Japan, Vietnam. We had some order variability in China in the quarter. And then specifically in Australia, the gastrous product line was a key contributor to the positive development in our sales, as well as our biogas protective struts. And in Japan, we saw increased sales through not only our own e-commerce channel, but also very strong collaboration with local wholesalers for distribution in bricks and mortar retail. The Americas overall delivered strong performance with 12% growth when you exclude currencies. Both of our direct markets, Canada and the U.S., had strong double-digit growth, strong sales of adult products such as BioGuy Preventus as well as BioGuy GastroSpure Action, and then also strong double-digit growth of protective drops in the U.S. And as we said, our operating margin at a 27% for the quarter. And as a company, we remain focused on driving this sustainable growth. We leverage our scientific foundation. As you heard from us, a number of different scientific publications in the quarter. Now also in second quarter, a launch of a new product that has a strong scientific foundation with all of our preclinical studies and now a new clinical study. And we are expanding our presence in our key markets. and we're increasing our brand visibility with a strong focus on our marketing and selling activities. So I open it up now for any questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Matthias Babson from SEB. Please go ahead.

Good morning. Thanks for taking my questions. First one relates to the Next Generation Patented Probiotic Drops, and that's the question list this morning. So a few questions there. So there are additive effects of the combination, as you say, observed pre-chemically, but they have also been positively studied, as you mentioned, and shown to be safe in the randomized double-binded clinical study. So just to clarify exactly maybe what that means and also to that, do you see the prior Colectrox product being cannibalized now when you launch in the market and also towards what year does the patent last? Sorry for many questions but those were the thoughts I had.

Yes, thank you for that. So the Protectus Plus product, the next generation, we have a clinical study. So as we said, a double-blind, randomized, placebo-controlled study. So we are not talking specifically about the results of that study yet because we are submitting it for publication. But when we say a positive study, meaning in efficacy as well as safety, As well, this product will be premium to the existing product, so around a 15% price premium. We do expect some cannibalization over time. It will take a while for the new product to be launched in numerous markets because it is a new strain, and in many markets it requires specific registrations. for a new strain. So, you know, this will happen over time. But we do eventually expect some cannibalization. But it will be premium priced.

Okay.

And the year for which the patent... So it's a full patent of 20 years.

And can you share the plans as to when to launch it in the U.S.? ?

For the U.S., we need to get what's called gross approval for a new strain. So that process is starting, and we can't really predict exactly how long that takes. It depends on the review by the regulatory authorities.

Okay, good. Yeah, that's good news, and I'm looking forward to read the publication later. On the Gustris Pure Action product... I'm just keen to hear how many markets it has been launched in, and if you say in major countries, we'd expect a rollout coming month here. That's the second one.

So it has been launched thus far in 12 countries. So, you know, there will be more markets that will be coming through. We don't specifically announce which markets when, because it all depends on registrations and regulatory requirements. We have launched it, though, already in some of our bigger markets, such as the U.S. and Canada. And we have pending to launch it in some of the European markets. So, We will be launching it upcoming in Italy, for instance, so it hasn't launched there yet. And then in Asia, it has launched in a number of our larger markets, but mainly through online channels.

That's very clear. Thank you. Then I was keen to hear the status on Eastern Europe, if that has recovered in line with your expectations, and if you So the new agreement with Evopharma, is that similar to the prior one or any changes there?

No, no major changes. It's very similar to the prior one. We just, when we do these new contracts, we then agree on minimum quantities in terms of volume. So no major changes.

Okay, thank you very much.

The next question comes from Mattias Heggblom from Handelsbanken. Please go ahead.

Thanks so much for taking my questions. So firstly on the margin expansion, I think the messaging into 2026 has been around operating leverage and margin expansion. And if we adjust for other operating income, which was mainly FX, was positive this year and a large negative last year. We're looking at an EBIT margin contraction and not flat year-over-year, which is the reported one. So was this quarter an outlier or have you, to an extent, walked away from the previous commitment of expanding margins for 2026? And then secondly, again, on the new strain and press release this morning, you highlight a number of characteristics that make But I guess for parents with infant colic, crying times is what matters. So on more hard end points, can you talk about how the product differs, if at all, versus the original protective? Thanks so much.

Yeah, so I can start with the margin. So we're still committed to improve our margin during this year. that will, you know, that is definitely our plan. And it should happen in the coming quarters, basically. And that's a combination of cost control and also increased sales. That will improve our margin in percentage. Then for the new strain, maybe Teresa can give some comments.

Yes. So we did see in our clinical study a positive reduction in crying times. So overall crying time as well as what we call unsuitable crying time. So that was significant. We did not compare the product specifically to Protectus because we use gold standard protocols to do double-blinded placebo-controlled trials. So the percentages of the reduction in crying time were higher than we've seen with the original protectus, but we can't share the specific details because we want to get it published, and we did not compare the two products specifically.

Thank you so much.

The next question comes from Christopher Lilyberg from DNB Carnegie. Please go ahead.

Hi. Quite a number of questions. I might take a few and then get back in the queue. But start first. Could you describe how you view the underlying growth momentum, given that you were growing a strong 15% organically here, despite that there should have been negative phasing effects between Q1 and Q4?

Yes, so we've seen some strong growth in Q1. This has been driven very strongly by our direct markets. So our direct markets are doing very well overall in terms of the performance in each market versus the competition growing ahead of the overall category. So, you know, we feel really good about the momentum we are seeing in our direct markets.

And how large part of sales is in direct markets now?

For the quarter, it was actually 50-50. So 50% direct markets and 50% partner markets. But that's also we had some order variability. So some of our larger partners like China and Italy had some order variability. So we don't. We don't anticipate that 50-50 will continue, but we will be getting to 50-50 overall, as we said before, in the next year to year and a half.

Okay, great. Thanks. And the strong group in EIA here, which I think is primarily driven by Europe, how sustainable do you see this is, given that This region hasn't been growing for the last three years, more or less.

I think it's overall sustainable for this year in terms of double-digit growth. We have strong performance, as we said, in France. So now that we're through kind of the inventory that we see where we have higher inventory, the partner, and now our own direct market, We also have a new agreement that has started with a partner in Turkey, so Abbott Turkey. So we anticipate that will show some nice growth in the back half of the year. So overall, we feel we will continue with some strong double-digit growth in EMBA.

And do you think it's sustainable also 2027 and forward?

Yes, I do think it is sustainable. because we have this presence of our direct markets that are large markets overall in the region, and also, you know, other markets that are partner markets doing well in addition, such as we talked about South Africa, you know, hopefully we look at Turkey where, you know, we've had a lower Q1 and first half of this year for Turkey, so we should see some nice growth next

Okay. I'll do two more questions. I hope that's okay. Follow up on Mattias' previous question on selling cost here or operating cost in the quarter. And I think he said that you would have a combination of cost control and higher sales driving better margin for the year. But when you say cost control, could we expect selling cost to become lower for the remainder of the year, or is this the level where it should stay at?

Yeah, we won't really provide that level of detail of guidance, but I mean, overall, like I said, I mean, we will keep our costs under control. I think we have said previously that we will, our ambition is to keep them fairly flat compared to the last year overall. And then we will have an increase in sales like we have now in the first quarter. So it will vary a bit between the quarters. We have some natural seasonal variations and so on between the quarters, for example. But overall for the year, the ambition is basically for the total cost to be fairly flat, excluding then maybe some currency effects that could go a bit in different ways.

Yeah. So that's important. flat operating costs that adjust for the FX in the other line.

Yeah, I mean, assuming that there are no major FX effects going up or down, so to speak. So it's... Okay. Yes.

Yeah, okay. And then my final one on protectors, if you could confirm the price premium, was it 15%, i.e. 1.5%? Yes. And also... That's correct, okay. And then... When it comes to the clinical data, the crying time, is it possible to say just that that was statistically significant?

Yes, yes, we can say that, that it is statistically significant.

Great. Thank you very much.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Mattias Heggblom from Handelsbanken. Please go ahead.

Yeah, thanks so much. I just had a follow-up question on the gross margin. Strength of Swedish krona versus the dollar was said to explain the gross margin contraction. But, I mean, this strength started already in Q2 last year, and I can't recall this FX relationship has been brought up before, often when we've had individual quarters with weak gross margin is often historically related to product mix and campaigns or, you know, certain mix effects. So is there something I missed here, or how should I think about that for the next couple of quarters then?

No, that's correct. I mean, it's partly a mixed effect here also in the quarter, for sure. But it is the effects effect, which, as you say, I mean, of course, we've had that effect previously as well. But it's a bit stronger in this quarter, actually. And then we still have, you know, mixed effects in the quarter affecting things here.

Okay. Good. That's all from me. Thanks so much.

The next question comes from Matthias Vatsen from SEV. Please go ahead.

Thanks. A few more questions. So one is to hear a bit more about Germany. In the CEO letter, you said it contributed positively, which sounds quite good if it contributed to organic growth already now. So just make sure I catch that correctly. And also, is it a fair assumption that Germany's sales was fairly limited Q2 through Q4 in 2025?

Yes, that is correct. So, yes, it is contributing already in Q1 organically. So that's very positive for us as we do that business in Germany. And then you're correct with that statement as well, that we had lower orders from our partner from Q2 to Q4.

Good. Thank you. And then in the U.S., the growth in the U.S. specifically in low currencies? Was that 15, 20, or 30%? Can you comment on that?

Well, we will share the U.S. at the end of the year, you know, one time a year. We don't specifically comment on it, but we can say that it is double-digit growth.

Okay. Thank you. And then... R&D expenses quite low in the quarter. Should we expect the seasonally higher R&D costs to come through in Q2, or will it be lower now as this study is more or less done?

Well, one thing is we are doing what we call bridging studies, clinical studies, whereas we look at our new patented strains. and we'll be bringing out further products, we will be spending in clinicals. So we will be looking at different indications for our BGR46 protective plus combination, as well as other strains. So we will continue with clinical costs. But it is true, you know, we have our one study that is completed, but then we have other studies also that are ongoing. I don't know if you want to add something more.

Yeah, and then there will be some variations between the quarters depending on, you know, those clinical studies when they start or end or include the subjects, et cetera. So it is a bit volatile, so to speak, that cost. But it's probably, it will probably increase going forward.

Good. And then last one should be fairly quick. So AIPACs with the 6% growth, if the phasing effects wouldn't be there, would it be a growth more in line with past year's performance for AIPACs?

Yes, overall, without that order variability, it would be more in line with previous.

Okay. Thank you very much.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

So thank you for your time and listening to our Q1 2026 results. Thank you for your questions, and we will end the conference now.