Bonesupport Holding AB (publ)

Welcome to Bone Support Q1 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 Torbjörn Schold and CFO Håkon Johansson. Please go ahead.

Thank you, Operator. Welcome, everyone, to Bone Support's Q1 2026 results call. My name is Torbjörn Sjöld, CEO of Bone Support. With me here today is our CFO, Håkan Johansson, and together we will use the next 25 minutes to guide you through the Q1 presentation and then open the line for questions. Before starting the presentation, I would like to draw your attention to the disclaimers covering any forward-looking statements we will make today. So let's look at the financial and operational highlights of the quarter. Q1 was another strong quarter with solid execution across the business. Net sales came in at 224 million SEC, corresponding to a growth at constant exchange rates of 31% versus Q1 2025. Reported growth was 14%, showing that there was a continued strong currency impact on our figures for the quarter. Our adjusted operating result excluding incentive program effects was 85 million SEC corresponding to an adjusted operating margin of 26%. Reported operating result was 72 million SEC. We saw another quarter of solid cash generation with operating cash flows reaching 75 million SEC resulting in a cash position of 455 million SEC at quarter end. We continue to see strong traction for CermetG in the U.S., with sales reaching 222 million SEC for the quarter, compared with 178 million SEC in Q1 2025. The sequential CermetG growth, quarter over quarter of 2.6 million U.S. dollars, was the strongest ever. In Europe and rest of the world, we saw strong momentum across all markets with a growth of 16% at constant exchange rates compared to a very strong Q1 2025. Notable was also that our first Cermet sales in India were achieved during the quarter. During the quarter, the regulatory process for Cermet V progressed according to plan within the framework of the de novo process. As communicated in early December, the FDA submission for Ceramide V was transferred from a 510K pathway to the de novo process in close dialogue with the FDA. If granted market authorization, Ceramide V will constitute an entirely new product category, like Ceramide G did in 2022. Just as in the review of the de novo application for CERAMENT-G, both CDER, FDA's Center for Drug Evaluation and Research, and CDRH, Center for Devices and Radiological Health, are involved, and the lead review team, which sorts under CDRH, remains the same as during the 510K process. Bone Support has received questions within the scope of the de novo process and is working purposefully to address the requested details and clarifications. Responses are to be submitted no later than end of August. We are progressing with the early stage launch of Cerament BVF for spine in the U.S. in line with plan. The introduction in Spine is an important step as we continue expanding our portfolio of indications and applications. Now, let's move on to the sales development. Next slide, please. The chart shows total last 12 months reported sales in Swedish krona by quarter since 2019 in stacked bars per region and product category. As you can see, the launch momentum for CERAMIC-G in the US is exceptionally strong. Given that we keep bringing new strong clinical studies and opening up new market segments and new indications, a product like CERAMIC-G will remain in launch phase for many years to come. However, throughout 2025 and in the first quarter of 2026, we have seen strong influence from the US dollar to Swedish crown depreciation, which influences the optics of the graph, but not the in-market performance, as you will see in Horkam's slides later in the presentation. Last 12 months, growth in Q1 of 22% in the graph corresponds to an even stronger 35% at constant exchange rates. So the quarter-over-quarter slowdown in last 12 months' sales is mostly due to strong currency impact. U.S. Cermet BVF last 12 months sale was flat year over year at constant exchange rate. In total, antibiotic eluting Cermet grew with 48% last 12 months in the quarter at constant exchange rate. Next slide, please. In U.S., sales amounted to 267 million seconds. representing growth of 35% at constant exchange rates. We continue to experience strong growth of ceremony, driven by both increased access to new accounts and new surgeons, as well as wider adoption among existing users. We see growth from all three prioritized platforms, foot and ankle, trauma, and arthroplasty. At the American Academy of Orthopedic Surgeons Congress in March, Presentations and discussions confirm the strong clinical interest in the CERAMENT platform and the commercial momentum in the U.S. Dialogues with surgeons and distributors show that CERAMENT-G is perceived as a clinically relevant and practically useful solution in a broad range of procedures where there is a need for combined bone healing and effective infection control. During the quarter, clinical evidence was further strengthened through the publication of positive data for Sermon G. In February, the first U.S. clinical pilot study in trauma was published, describing surgical technique and treatment results with Sermon G. The study, conducted at a U.S. Level 1 trauma center and published in OTA International, provides practical and real-world insights into how Ceramid-G is used in clinical practice in the U.S. Additional support was added in March through the first U.S. clinical case series focused on infection prevention in open fractures. By demonstrating how local antibiotic release can be combined with existing surgical techniques, the study highlights the clinical relevance Ceramid-G has within a segment with a high risk of infection. Despite the limited scope of the studies, they are of great practical importance as they provide concrete support regarding application techniques and expected outcomes for surgeons introducing CERMENT-G into their daily clinical practice. As part of our ambition to modernize an outdated standard of care in the U.S., we have successfully opened one market segment after another, starting with foot and ankle, followed by trauma, and now moving into arthroplasty. Interest continues to grow for CERMAT-G in revision arthroplasty and periclostatic joint infections, two areas where the clinical needs remain substantial and where the evidence supporting our antibiotic eluting technology has resonated strongly with surgeons. We have built a solid foundation for our spine strategy over the past quarters by establishing distributed coverage and preparing the market. In Q1, we continued the early stage launch of CERMAT-BVF in spinal procedures. with distributors now actively engaging spine surgeons across both existing and new partnerships. The surgeon access and early stages of adoption in spine follow plan and indicate the strength and potential of this segment. As this is a new clinical segment for us, more clinical data is needed to support broader market penetration. Importantly, the performance of Cermet BVF in spine will help confirm the value proposition for the Cermet platform, which will pave the way for the future antibiotic-eluting Cermet launch. We've made strong progress in evaluating and preparing the regulatory pathway, and we'll share more on the path forward at our Capital Markets Day this spring. After Q1, USCMS, Center for Medicare and Medicaid Services, announced a proposed ruling, full year 27 IPPS, inpatient prospective payment system, including changes that improve payments for the use of Ceramid-G in the treatment of complex orthopedic infections, such as periprocentric joint infection, fracture-related infections, and diabetes-related boning. In parallel, CMS proposes the introduction of more specific procedure and identification codes for Cerament-G and Cerament-V consistent with the company's submission. CMS also proposes new technology add-on payment, MTAP, reimbursement for Cerament-V effective October 1st, 2026, provided that FDA grants the company's de novo application by April 30th, 2026. If FDA approval is obtained at a later point in time, we plan to submit a new NSTAP application with a potential for additional payment from October 1st, 2027. Although this is a proposed ruling, this is very positive for bone support, as it validates the uniqueness and value Cerament brings and reduces the potential financial barriers for using Cerament in daily clinical practice. The company intends to submit additional classifications to the CMS during the ongoing 60-day public comment period. A final decision from CMS is expected in late summer 2026. Now, let's turn to Euro. Next slide, please. Sales in Euro came in at 57 million SEC, representing 16% growth at constant exchange rates. This is compared to Q1 2025, where we saw strong growth in euro, thus a very strong comparative quarter. We saw strong development across our three market structures, direct, hybrid, and distributor markets. In our direct markets, the UK continued the recovery we saw during the fourth quarter of 2025. Our investments in hybrid markets developed well, underlining clear continued potential ahead. In our distributor markets, Cerament was launched as planned in India with a focus on the private market. We note some uncertainty in the Middle East where geopolitical unrest is affecting market presence and logistics in the short term. Now, I'll leave a deep dive into the numbers to Håkan.

Thank you, Torbjörn. Net sales improved from 284 to 324 million. equaling a growth of 14% in reported sales growth or 31% in constant exchange rates. Turbine has already spoken about the solid performance in especially the U.S. and the major drivers behind the sales growth, but after large movement in U.S. dollars compared with the first quarter last year, somewhat hides a continuous strong trajectory in the U.S. I would like to share the U.S. sales performance in U.S. dollars. Sermon G is the growth driver in the U.S., and this slide shows the quarterly Sermon G sales in the U.S. in U.S. dollars. And what we can note is an all-time high sequential growth resulted in accelerated growth in sales per workday. The contribution from the U.S. segment improved by 25.5 million versus Q1 2025, and the amounted to 122.7 million. the improved contributor relates to increased sales after the effect of increased costs. Selling and marketing expenses during the quarter amounted to 128.4 million compared with 1.1.6 million previous year, of which sales commissions to distributors and fees amounted to 85.1 million compared with 78.8 million the same quarter last year. From the graph at the bottom of the screen, Showing net sales as bars and gross margin as the orange marker, it can be noted that the gross margin remains stable and strong at 94.5%, with a minor decline in the period following a gradual impact from tariffs. In Europe and the rest of the world, a contribution of 12.7 million was reported, to be compared with 15.4 million previous year. Selling and marketing expenses increased by 6 million, mainly related to the previously communicated commercial investments in the so-called Eurobooster program. From the lower graph and the orange marker, a minor improvement in gross margin can be noted, mainly impacted by market mix. Selling expenses excluding sales commission fees increased by 11.6 million, following commercial investments in both the US and Euro, but also related to high intensity in terms of marketing activities. Research and development remained at a stable level and focused on the execution of strategic initiatives, such as the application studies and spine procedures and the marketable persuasion submissions for Sermon V in the US. And finally, administrative expenses, excluding the effect from the long-term incentive programs, remaining stable with an increase of 1.4 million in the period. The adjusted operating result amounted to 84.9 million with only minor currency effects impacting. I will come back to this on a later slide. The newly introduced tariffs in the United States have gradual impact on costs in the quarter. The full effect of a 15% tariff will equal an impact of 0.8 percentage points on U.S. gross margins, and this will come gradually with full effect later in 2026. The difference between adjusted and reported operating results are costs regarding our long-term incentive programs. amounting to an expense of 12.8 million in the quarter, compared with an expense of 10 million previous year, as you can see on the previous slides. The increase in expense includes 1.6 million related to the long-term incentive program approved by the AGM in May 2025, which was included in the accounts for the first time this quarter. Operating cash flow was strong in the period, partially supported by inflow of customer payments deferred from December to after the holiday season. During the period, the Swedish krona has experienced volatility against the US dollar, with a minor weakening towards the end of the period, and with only minor exchange gains and losses reported as other operating income and expenses. The graph on this slide shows The gray bars how the relationship between the US dollar closing rate and the Swedish krona has varied over time. This is read out on the right eye axis. The blue dotted line read out on the left eye axis shows adjusted operating result. The adjusted operating result excluding translation exchange effects is the orange line and gives a more comparable view on the underlying trend in operating results. In the table below the graph, you can see that the FX adjusted operating margin of 25.5% in the period, compared with 22.6% in the same quarter last year. In the shorter term, the operating margin is impacted by the commercial investments made in both Euro and in the US. The gradual return to improvement in operating margin is expected as these investments are assumed to have positive impact on future sales growth potential. The relation between the US dollar and the Swedish krona has been stabilizing over the last four quarters, which becomes visible when comparing the adjusted operating results, including and excluding translation exchange effects on a rolling last 12-month basis. By the reported figures in Q1 this year, it is noticeable that the difference between including and excluding translation exchange effects is becoming narrower, following a more stable relation to the US dollar. The strengthening of the Swedish Krono over time impacts both net sales and operating results as visible in the graph. A solid cash conversion has been reported continuously since third quarter 2024, with an average cash conversion of 81%, visible as a dotted line in this graph. Q1 this year reported ahead of the average, mainly due to the previously mentioned timing effects from customer payments. And with this, I hand back to you, Torbjörn.

Thank you, Håkan. So, to summarize Q1 2026, sales grew by 31% at constant exchange rates, reflecting steady and consistent progress. Highlights were sequential 7G growth in the U.S. of 2.6 million U.S. dollars, euro growth versus a strong prior year of 16% at constant exchange rates, and record-strong cash flow of 75 million SEC, underscoring the strength of the business and its scalability. I'm convinced that the most exciting part of our journey in bone support still lies ahead of us. And as said, to provide a clearer view of what that journey will look like, we will host the Capital Markets Day in Stockholm on the 26th of May this year, which you are, of course, all welcome to join. Now, with that, we're opening the line for questions. Thank you.

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 Christopher Lilliburg from DNB Carnegie. Please go ahead.

In fact, I have three questions. First on the increased selling expenses here in the quarter. Would you say that you have reached a new level now, or should we expect them to continue to increase sequentially? And related to that, how you think about operational leverage here going forward? Notice underlying EBIT has been more flat here sequentially. So would you expect it to pick up again here coming quarters? My second question relates to the sales commission in the U.S. That seems to be down a percent of sales. I notice they are flat sequentially despite the higher sales, if you could explain that. I know there's other variable costs included in that maybe as well. And then when it comes to the novel process for settlement V in the U.S., if you could maybe a little bit what type of questions that FDA has and why you sound so confident that the product will eventually be approved and the risk of not receiving an approval.

Thank you. Thank you, Kristoffer. And I will start answering the first two questions and then I will hand over to Torbjörn to answer the question on the de novo process. So let's start with the increased selling expenses. And again, as we have communicated also previously, we will continue to do gradual commercial investments if we believe that this is beneficial to sales growth. On that theme, we have been both investing in the so-called euro booster program, but we have also continued to strengthen our US organization in terms of medical education activities, natural accounts management, and also more sales-related functions, et cetera, to continue supporting the growth and the aspirations in the three main segments in the USA. So, again, a gradual increase can be expected, but as we also mentioned in the call, we expect this to have beneficial impact also on sales and sales growth going forward, and we also expect us to come back with a gradual improvement in operating margins. When it comes to sales commissioner fees, I'm glad that you noted that there is a reduction in the percentage to sales in Q1. And there's one main driver in this, and that is an activity that we've been running in the US in the theme of balance sheet and process efficiency. And it's been a program to move customers from paying with credit cards to pay electronically over our bank systems. And this is an activity that has resulted in a lower cost for credit card fees And that is moving down sustainably, the fees down a percentage point. So that's the main driver by the reductions. There are some other reductions in the quarter, but they are more seasonality-driven than anything else. But the main impact comes from reduced credit card charges.

And what did you say? That impact as a percentage of sales?

It's one percentage cost. 1% saving.

Okay, so this is a sustainable effect. Yes. Okay, thank you.

Okay, and then to the third question that you had around de novo. So, the way that we look at this and interpret this is, first of all, the de novo process compared to a 510k process. It sets a higher bar. It sets a higher standard. That is not only a negative, it's actually also a positive, meaning that it strengthens the moat. What we also see is the pattern that we see from the FDA is very, very similar to the de novo process that we had for Sermon G. What I said on the call, and I think is also important to highlight, is that as part of the 510 process, The department of the FDA that was involved was the CDRH, so the Center for Devices and Radiological Health. They were involved, they are still involved, and they are still leading the audit. As we move to a de novo process, and as this product is a combination product, so it's a device with drug-eluting properties, then the CDER, so the Center for Drug Evaluation and Research, is also involved. They're brought into the process. The questions that we have received are more of the nature of being explanatory, clarifying, rather than anything else. The three areas, which is also fully expected and planned for, are in the areas of preclinical, clinical, and biocompatibility. Now, we're working on these questions diligently, and we want to answer them in a disciplined and robust way. to make sure that we properly inform, educate, if you will, the FDA to understand what this technology does with Cerament-V, what it already does with Cerament-G, which is FDA-approved. And also, this is a product, Cerament-V is a product that has been approved outside of the U.S. for many, many years. It is used every day in patients. So... With that, I feel comfortable that it's more of not so much an if we get approval, it's more of when we get it. And having said that, we control what we can control, how FDA reacts and responds, that is outside of our control. But I feel comfortable that we're on the right path, and we will get it to market.

It's more a question of when. It's not that they're requesting more data, similar to what happened with CRM-NG.

So far, it's more explaining and more details of the existing data that we have already provided.

Okay, great. Thank you.

The next question comes from Matthias Vadsen from SEB. Please go ahead.

Yeah, hi. Good morning, Kildren Håkan. Thanks for taking the question. I have a few. So I think as you pointed out, the solid quarter-to-quarter sales growth in the U.S. So if you just tell me if there is something non-recurring or extraordinary supportive in the quarter or if this is, you know, purely better penetration. And if so, what are the key contributors? You mentioned all of the areas, but, yeah, anything to point out there. That's the first one.

Okay, so a boring answer. No, it's no one-timers. It's no non-recurring. It is more of the same that we've seen in the past. And the growth comes from all the three segments, foot and ankle, trauma, and arthroplasty. And in absolute numbers, you know, all three contribute positively. Of course, there's a lot of excitement internally and externally about in our two newer segments, so trauma and orthoplasty, but all three segments contribute in a meaningful way in the quarter. When we look at existing and new accounts, it's very much the same trend that we saw in 2025 throughout the year and also at the end of the year, meaning that we get meaningful growth from both existing accounts increasing their adoption as well as we see meaningful growth coming from shifting from awareness to access with access on many different layers layers so um yeah unfortunately there's no there's nothing more exciting than that matthias to your first question no thanks that helps um

My next one, I was curious a lot in terms of working days. Were they the same in Q1, basically Q4? And what do you see here in the second quarter coming up?

So it's correct. So it's on the same level as Q4. So it's 61 days. And the number of work days is increasing in Q2. The Spice Mouse starting with Easter holiday. And with a risk of remembering wrong, but I believe it is 63 days in Q2.

Thank you. I have a few more. In terms of CMS proposing changes that improve the payment for using 7-2, as you mentioned also in the presentation here, can we say anything on magnitude, and can you refresh just how important the CMS exposure is for both support and so on?

Yeah, so first of all, it is a proposed ruling, so it has not been approved. It's not been decided on yet. That's one piece. Number two, this full year 27 IPPS document, it's fully public, so all of you can go ahead and read it, knock yourself out. It's 1,600 pages of text, of a very small portion of that, but still quite a bit of text related to Sermon. As it's complex, as it's many different codes impacted and several indications impacted, and when we look at it and when we also have... advisors looking at it, it also, there is a bit of interpretation in it. So we don't want to draw too many conclusions and too many specific conclusions yet. However, on a total level, on a high level, it is very, very positive. And pretty much everything that we requested in our submission pretty much went to. We have a couple of clarifications. on how we should interpret it. But overall, it's very, very positive. And there are many layers in this proposed rule. And I think some of them you can sort of peel out or take out separately. One is the proposed ANCAP for Sermat-V. It's pretty standard. We would have been disappointed if we didn't get it. So that's one thing. The other thing is the extension of ANTAP for ThermaT for open fractures. That is also sort of expected and you can strip out. So if we strip those out, and those are very positive for us, what remains still is, in my mind, even more sort of strategically important for bone support because it highlights a couple of things. Number one, it highlights that CMS continues on the path to pay more for outcomes rather than activities. Why that is important for bone support is that, yes, we have a very expensive product, but the whole value proposition with Cerament is to avoid infections, avoid revision surgery, avoid readmissions. It is clear, not specifically only to Saramant, but in general in this proposed rule, that CMS is going in that direction. So that is very positive. And then you can see in diabetic foot infection, you can see it in also fracture-related infection and also periprosthetic joint infection. CMS proposes to incentivize technologies like Saramant. And also, to a certain extent, almost used Sermon as a trigger point for a higher reimbursement because Sermon is very much linked to cases that have higher complication, higher comorbidities. And I know you guys want a specific number, how much will sales go up. We cannot provide that. We don't know yet. It's complex material. We're analyzing it. But we're very, very pleased and satisfied with the proposed ruling and look forward both to the clarifications that we expect in the next couple of weeks and also the ruling to come into effect later this year with full effect next year.

I hope that's helpful. Thank you very much. Lastly, I have a follow-up to Christopher's question regarding Summit V in the U.S. If I catch this correctly, the 150-day review period will pause, and it will resume when you submit your answers or call it clarifications. So with this in mind, what kind of delay do you think we're looking at here in the process? Is it a couple of months or? And also, August, is that sort of a formal last date? It's not necessarily means that Bonesport will resubmit in August, I guess.

So I'll answer. Number one, you're correct in your first statement about the timing and the clock there. That's number one. Number two is knowing how FDA and what FDA will do is impossible for us to guess. So, you know, whether it's the delay or not, it depends on who you ask. Now, what we want to do and want to make sure is that we answer the questions in a disciplined, robust way so that we get the approval in a way that we want it to. Not only as fast as possible, but in a robust way as possible. So that's what we're doing. But again, you never know with the FDA. Now, the end August timeline that we communicate, that's the formal deadline. I mean, we will use that if we feel that it is necessary and we feel that it is good for the process. If we feel that we can submit it faster than end August without risking the quality of the material and the outcome of the process, we will, of course, do that. But end August is the latest formal deadline that we have.

But it's still reasonable to expect it to be cleared in 2026 with all of this in mind.

Well, you know, it's always difficult to guess what FDA does. I feel comfortable that we're on a good path. It's not so much a question if it could be in 2026. That's my best guess. But, you know, if it needs to be extended to 2027, it's worth waiting for, for sure, if we put it that way.

Okay. Thank you very much.

The next question comes from Sten Gustafson from ABG Sundal Collier. Please go ahead.

Good morning. Thank you. Just sorry for going back to this ceremony. I'm not sure if I got it right here, but could you please confirm that you do not need to carry out any additional work clinical studies in order to be able to answer the questions from FDA. Is that correct?

That is our current hypothesis and our current assumption. So, yes, that's correct.

Perfect. Thank you. My second question is regarding sort of the – if you look at the sales split of Sermon G and Sermon B in Europe, is it possible for you to see – in how many cases you use both products at the same time, i.e. where there's a super broad infection, whether doctors use it in combination.

So, just so I understand the question, are you referring to OUS products?

Yeah, I mean, in Europe, for example, where both products are approved and being used, Cermen G and Cermen B, do you have a feeling for how many procedures doctors use both products at the same time?

We know anecdotally that it happens, but we have no data-driven substance that we can lean towards, etc. But we know anecdotally that it happens. By that, it is not extensive in terms of using both.

I get it. Excellent. Thank you. And the split, do you have a feeling for that? in terms of procedural usage?

With some volatility, it's somewhere between 25, 75, 20, 80, where the largest use is on Sermon G. So roughly 25, 75.

Okay, perfect. Thank you. My last question is regarding Germany. I'm not sure if I missed it in the report, but are there any comments on how Germany is developing for you?

So Germany is, in a way, somehow positive because it's stable. And what I mean with that is that somehow it feels like somehow it's – trending on the same level as previous quarter, meaning that we don't see a decline. And I think that's, of course, a good sign. Again, as we have commented, we're still focusing on Germany. We still have strong relations to German hospitals and German surgeons, etc. And I think that's small for Q1. We're glad that we see that the development is stabilizing.

Perfect. Thank you very much.

The next question comes from Eric Castle from Dansky Bank. Please go ahead.

Hello. Hi. Good morning. I wanted to focus a bit on the trauma centers in the U.S., which you gave figures for in last quarter. I mean, penetration rate was obviously quite high, but is it possible to know that, I mean, they've done pilots potentially up to a year ago to talk a bit about the current, say, conversion rates from pilot to continued use. And then also if you can say anything on how high, say, the continued use is as of now and how many of those are still in sort of an evaluation phase.

Okay. Thank you, Erik. I mean, we don't provide – we will not provide any numbers. to answer your questions, but we can provide a bit more color on your question related to trauma in the U.S. So, as I mentioned, we saw that all three segments contributed in a meaningful way for the quarter. That includes also trauma. So, we see that the journey that we're on in trauma follows the plan and follows the expectations I also said that there's a lot of excitement internally as well as externally around trauma and arthroplasty that speaks to it. I think what creates internal and external excitement and helps us on this journey that you referred to are the two studies that we talked about earlier. I know that actually you quoted that those were not really meaningful studies. I would argue against that and say that they are very meaningful for us from a commercial perspective, and they get traction because it's a great way for us to talk about our products in a practical, evidence-based way. So we're seeing in FOMA this continued excitement. We continue to move from awareness to adoption, sorry, from awareness to access to adoption. So now we're becoming more in the access and adoption phase. with many, many more years to come in trauma, partly supported by the evidence that we provided. But we don't really give on a quarterly basis any data that you're asking for, Erik.

Okay, that's fair enough. And then I also wanted to sort of repeat the question from Christopher and see if we can get a bit more detail on it. I mean, you said in the report that the commercial occasion costs are going to peak this year, sort of. But is it possible to maybe quantify or frame it in a bit more detail, the implied cost ramp we're going to see this year and how that also transitions into 27? Because it makes it sound like the incremental margins this year might be a bit worse than what we normally see. So I just want to make sure that we get the expectations right on this.

It's a fair question, Erik. And again, I think that has been a repeated theme from our side is that we will, and I promise you, we will continue to do commercial investments if we believe that this will be beneficial for continued strength growth. And on that team, we We have the Eurobooster, as we've communicated, it's more than a year ago, and that the Eurobooster is adding 10 million SEK in incremental cost, and it will take at least 18 months until that program is returning some sales that covers the costs. In the U.S., we have been gradually strengthening the organization. And if we just look at current plans, that means that from during the second half of last year and going into this year, we are adding 10 heads into our U.S. organization because we believe that this will be beneficial for the U.S. sales growth. That will create in the shorter term somehow a reduced positive trend in terms of operating margin. But as we said on the call, we are strong in our review and believe that this will come back to continue rather improvements in the operating margins.

Absolutely. And on top of that, I mean, if we look at this case on a more of a couple of years basis, There's plenty of operational leverage in this business with what we're doing. We've taken quite substantial investments, both in Euro as well as in the US. So if you take a more longer-term perspective, there's no change in the potential of the operational leverage of this business. On the contrary, when we look at that internally and strategically in the more longer-term horizon.

Okay, thank you. And then I wanted to touch upon the US BVF sales. That was, I guess, a soft point in this report. Previously, you more talked about the BVF product perhaps becoming an add-on to Sermon G, so that you get newer towns doing Sermon G, and then they also start to use the BVF product. Now it more looks like that there's cannibalization on the BVF product. Have you changed what you're seeing for BVF and sort of the, say, longer term implication of that? Or are we actually seeing any Sermon G accounts also picking up BVF?

I think that in the longer term, we stay firm with that view, because again, we continue to see that surgeons that have been bringing on some of our banks to ceremony are also using the BVF product for surgeries where there is none to very low infection risks. I think that what we've seen in the first quarter is in a way not negative for the longer term, because what we've seen that somewhat explains some of the software sales of the DVF in the U.S. is surgeons that have been traditional and solid DVF users have converted and increased its use of CERMA-G. We believe that is positive, even though it may have a short-term impact on the DVF sales. But again, some of the statistics shows that somehow 7G as a growth engine bringing in new surgeons, we also see that those surgeons are using VBF. So over time, we believe the VBF first will stabilize, but then we will see low-digit annual growth coming back.

Okay, but on the timing of that, it now looks like it's cannibalization. Do you think that will continue, or is this sort of a stable rate, you think, for that product?

I think it's too early to say because it was really visible this quarter in a stronger way than what we've seen, etc. So, Eric, I'm sure let's come back to that question of the Q2 and see if that trend remains.

Okay, thank you. Just the last one, if I may. On the gross margin headwind from tariffs, I understand that as you're Of course, manufacturing the products with contract manufacturers. Is it possible to, say in the medium term, transfer production locally to the U.S. to offset this, or is the relative cost in the U.S. basically too high, so it wouldn't be enough of an offset to actually do that?

From a purely practical point of view, that could be a consideration. But from a regulatory point of view, to move production is a very timely and costly process. So we will continue to ask the business in the U.S. growth to look at various options when it comes to manufacturing. But here and now, when to offset tariffs, it's not a helpful strategy.

Okay, fair enough. Thank you very much.

The next question comes from Oscar Bergman from Red Eye. Please go ahead.

Hello, everyone, and thank you for the very interesting report, as always. I have a few questions left. I think maybe the first one, if you could just sort of clarify the constant exchange rate growth for CRMG in the U.S., I think it would be helpful.

Yeah, so explaining in terms of?

Just the current, the customs currency exchange code for US 1721.

So again, as we showed in the graph somehow, the sequential growth of 7G in the U.S. was 2.6 million U.S. dollars. And that is somehow what's supporting the statements and the numbers reported in May. So I'm sorry, maybe it's too early morning for me, but I think you have to clarify really what you're after, Oskar.

Yeah, I was just thinking, okay, maybe I'll have to check the report again for those numbers. Maybe it was too early morning for me as well. I think we can move on to the other question instead. Yeah. I know BVF for Spine is in very early stage, and you don't report this separately, but can you see some sort of ballpark figure or anything that's helped me sort of decipher the contribution so far?

Yeah, so the Spine BVF launch follows plan, and the plan, just to remind everyone, but this is very important, it is that we take a very, very focused approach on Spine BVF, and we've said that from a revenue perspective, we will not have any material impact on the overall numbers, on the total, or even on the BVF side, so So it's really small numbers for Spine BDF. And the reason for that is simply we're not in Spine. We're not going after Spine to sell BDF. Our hypothesis on Spine is that it's a very attractive segment for us offering a product that does the two things that Samet does best, meaning healing bone and in a very controlled, predictable way, elute antibiotics. So from a sales point of view, spine BVF, I wouldn't put any material numbers in that if that's what you're going after. However, what is very positive to see in spine is that our hypothesis and assumptions about that segment in terms of the strength of the value proposition is being confirmed in the corker. But also, just to manage expectations, to come with a product, an antibiotic-eluting product into spine is a couple of years out. We need the clinical evidence. We need the regulatory approval. So that still remains the same, so no change really. But Q1 in spine with BVF, confirm at least what we see that we're on the right track and our assumption and hypothesis so far remain valid.

But can you share any numbers on maybe a number of customers that have tried out the product or yeah?

I mean, we don't provide any specifics on that. But we have wanted to keep it low. That's how we want it. And we're being very selective in which accounts we're going after. And to be fair, we could have gone for more accounts if we wanted to and actively promoted it more. But we want to keep it very strict, very disciplined, very controlled. so that we do it in the right steps for the long-term case of cerament in spine.

And I guess it's a fair assumption that you are targeting customers where you already have some experience with terminology for extremities or are you going for hospitals outside your sort of current customer base?

We're doing both, to be honest, because, I mean, again, it comes back to that. You want the right surgeon, you want the right hospital that believes in our hypothesis of serum at the spine, that believes and acknowledges the fact that infection is an issue, and that also believes and buys into the characteristics of experiments. Sometimes they come in already existing partnerships with our independent sales reps in extremities. Sometimes they come outside. So we're not fundamentalistic that they have to come from the existing distributors. So we see a combination of both.

And I know you have a CMD in about a month's time, and I guess we'll hear more about the spine segment there, but do you still expect it to be registered as a medical device and not having to go through a registration process?

Yeah, I mean, so our approach here is that we're a medical device company. We want to remain a medical device company, similar to what we have done with Cermat-G and Cermat-D. And that's also our plan and thinking on Spine.

Okay, and maybe a final question. The launch in India, I'm very happy to hear that you have first sales there already, but I suspected very small numbers. Can you give some words on the progress here and maybe what we should expect for the full year?

Yeah, no, absolutely. I mean, I sit here next to our CFO. He's super excited because it's not like we've only launched and we've only also sold it. We've actually done cash collection. So for once, Hawkeye is in a good mood when it comes to India. So that's great, which is positive. But you're absolutely right. It's just a start. And in Q1, it's small numbers. And it's going to be small numbers, as it always is when we enter a new country. With India, it's very exciting for a couple of reasons, meaning that if you look at the size of the total population, it's massive. We're not going after that. We're going after a niche. segment of that population, so private pay and closely sort of managed with private hospital chains where we have a good collaboration and good trust. But even in our smallest estimates, the segment that we're entering, it's a sizable country or it corresponds to a sizable country in Europe with margins that are similar to distributor margins in Europe. So that's why we are excited. But it's early days. It takes time. But so far, very pleased with what the team has done there and the progress that we've seen. But again, small numbers in Q1. And hopefully, we'll work to make those numbers grow fast in a couple of years.

Okay. Well, thanks very much. I'll see you at the C&D. Thank you. Thank you also.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Okay. We have a couple of minutes left, and we also have a couple of questions on the chat. And then we'll just quickly read through. One question is, and I'll leave this to Håkan. So I'll read, Håkan, and then you'll prepare. So Håkan, can you please help us on the R&D spend for 2026? Should we expect a similar ratio versus sales as seen in Q1 and 2025?

So again, I think that what we've seen is a very stable run rate at the last four quarters. I think there's a good baseline to start from. The uncertainty that we have is pending the discussions with the FDA and the regulatory pathway to get an antibiotic-luting product approved for spine. And we believe that that will include and involve clinical studies. And the absolute cost levels and the timing of these costs remains to be clarified. And that will add to the run rate.

Okay. Another question we have is around dividends and capital allocation, and I'm going to read it, and then, Håkon, you will answer it. So, why do you not consider a dividend appropriately this time? What do you intend to do with the assets and the cash position of nearly 500 million?

It's a good question. And again, it's good to have a solid underlying cash flow, because that builds also confidence in the business for any future investments, etc. But also saying that we understand and we see that we are generating more cash than the business needs in short term. There is also good reason why the board proposed to the ADM, the upcoming ADM in early May, to get a mandate to buy back shares in the market as one way to allocate the funds that the business is generating.

Okay. And then we have another question related to Sermon V on the chat, and it goes like this. Do you expect that you will reply to FDA's questions regarding Sermon V before summer? So what we've said is that we, the deadline that we have is end August. And we will reply to the FDA questions before end August. So we confirm that, what we already said. And then I believe there's one last question on the chat. It relates to the Solario study. And it says, when will the full report of the Solario study be fully published or won't it be? So we, I mean, again, we don't manage the submission to the scientific journal. This is done by the lead authors. But we have good reasons to believe that the Solorio study will be published. in the near term exactly when and in exactly which journal remains to be seen but we have good reasons to believe that it will be published as per plan and we also have we believe that it will confirm this paradigm shift that we see and hear about related to using systemic antibiotics versus local antibiotics. So, we feel we have a good and positive outlook on the Solaria study. So, hope to see something there in the short to medium term. I believe that is it. That concludes. That concludes. So, with that, right on time, thank you all for dialing in and Again, a warm welcome to the Capital Market State in Stockholm on May 26th. Thank you very much.