CellaVision AB (publ)

Welcome to Cellavision Q1 Report 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 Simon Ostergaard. Please go ahead. Thank you very much.

And thanks for dialing in to this quarterly financial call. I have our CFO, Monica Jensen, with me, and we are pleased to present our result and answer any questions you may have subsequent to the presentation. So we just released the first quarterly report, and it was with the header, Soft Quarter Due to Lower Sales in EMEA. The quarter... resulted in net sales that decreased by 14.6% to a revenue of 166 million. So that's an organic decrease of 6.6% as we had almost 8% headling on currency. EBITDA amounted to 40 million, so that corresponds to 24%. And as we say in the report, And given the title here, EMEA is affected by inventory adjustments with our main distribution partner, and that is what has caused this significant negative growth compared to the comparable quarter last year. So that's the bad news. There are no fundamental changes to our business model or the market conditions, but this is the situation that we announced today. We are also announcing that we have continued momentum in our strong region in Americas, and we continue to see double-digit organic growth in Americas. And furthermore, and this is getting more broader, within APAC, we see traction to convert labs, and we see positive development coming out here in Q1. With regards to our strategic direction, since we've been investing in new product development for quite some years, now we're starting to launch these new components, and there are good examples coming out here in Q1. So, we have launched the Cellevision's bone marrow aspirate application. after we received CE mark that was planned for Q1, but we got it just before Christmas 2025. So, we have started our Show Me campaigns, we've started participating at conferences, and we're in the process of training our distribution partner, Cisnex, to really position this, I would say, great product to the clinical community. So we expect to see a funnel being built throughout 2026, and that will result in revenues contributing in the second half of this year. We've also launched globally our updated software. This is the largest software upgrade for our platform ever. So it contains both user interface, improved workflow features, and also features In fact, for new DI60s, higher turnaround, so more blood samples can be processed. So it's a very, very powerful package that is now available, both to upgrade existing networks, but also as part of the new DI60s. And then finally, in our investment program, it is important to emphasize that we are still extremely confident and we're pushing our next generation solutions with FDM. both for hematology, and then we're exploring our opportunities very successfully to also be deployed in other areas, such as cytology and pathology. So let's unpack the P&L. So as said, 166 million, excuse me, representing minus 15% growth or minus 6.6% organic growth up against last year. We had a growth margin of 68%, and that entails also an increase in our amortization of capsulized development expenditures, given the bone marrow and the upgraded software program that I just talked about. So here we are now depreciating 3 million versus 2 million. Operating expenses landed at 51% versus 41%. In fact, it's equivalent to a higher spend of operating expenses of 5 million. And that 5 million is actually also the difference in terms of what we are capitalizing. So EBITDA, 40 million assets, so 24%, which is of course lower than our expectations, just like which is a function of the miss in top line, that I will explain a little bit later. We're still investing in our R&D, but there are changes also to the maturity or the early stage program that we are running, which is also a function of how much we can capitalize. So that's That's also part of the reason why you see a different capitalization of 12 million this quarter versus in the comparable quarter, 18 million. So we had a lot of hardware investments in the comparable quarter, which are not sitting in this quarter. So that's a function of the program. And then finally, operating cash flow wise, 62 million. We had a 40 million and then plus the working capital. We had accounts receivable that contributed positively to our operating cash flow of 62. And then we had investments and financing activities that deducted and that results in a total cash flow of 42 million. So still, as always, a positive cash flow and now with cash and cash equivalents, the company is has 230 million sitting on the balance sheet. So the regional highlights. So America here, it is really important for me and the team and our partner to emphasize the strong momentum we have with 13% organic growth. So 2%, but negative currency effect of 12 gives us the 13% growth. And we saw continued strong adoption of our integrated large instruments for the hospital community around the U.S. We are focusing and pushing the concept of connected labs to position the DC-1 in these integrated health networks. So we are working very strongly together with our American partner organization to push this. We also saw a little bit on speaking about the small lab segment that is served by the instrument DC-1. We saw actually a little bit of instrument decline, but there was also a little bit of a pent-up purchase of small instruments given the tariffs and uncertainties throughout 2035. There's a lot of activities going on to really serve this segment, and there's a lot of appetite for that value proposition of connecting that with our integrated solution. For EMEA, yes, we mentioned some market uncertainties. I'd say demand-wise, there is still really an ongoing appetite to digitalize the labs across the different markets that are immature and mature in very different degrees. So what we hear is that public funding is a little bit under pressure given the defense situation of Europe, which does delay certain tender specs. So that's kind of the market condition. The minus 32% growth or minus 26% organic growth. is not related to the market. This is really a situation around the temporary reduction in excessive inventory that hit us in this Q1. So the root cause here is penned up a number of units sitting in multiple affiliates. Probably over some time that has happened to mitigate delivery risk from ERP implementations. So here, as our partner CISMEX comes to their fiscal year, which ends by the end of March, then there's been a strong push to cut down and really examine where they have inventories. And that has resulted in obviously less orders, significantly less orders for us in this quarter. And that is really what we're reporting here. It's important for us to emphasize that we flat that. Is it over? Is all inventory done in Q1? We cannot promise that. There may be something that sits in the second quarter. So stock may still remain in Q2. However, we expect better instrument sales in Q2. And we don't expect negative growth. But it's a little bit too early to say what growth will come in Q. So we're being extremely transparent and conservative here, but I think it is really the best of the knowledge that we have currently. But as I said, it's early days with one month into future. APAC, here we landed at 10% growth, so 22 million, of course, up against them, as It's a smaller number, so to speak. Having said that, the positive thing is that we start to see traction across APAC. We have previously been very exposed in China, and we're seeing diversification and a broader demand for our solutions across Southeast Asia, which is super positive. We'll take the numbers, which on this slide is cut per product category. And, yeah, for the instruments, I think what I'll highlight there is that the MIS that amounted to, so from the 86 million in instruments versus the 115 million in the comparable quarter, that is essentially the EMEA MIS that we are seeing here. For the reagent business, the stable business, I would say what we have managed to do is over the years, if you followed APAC, which has been insignificant, now we're getting to a level where it starts to really contribute. It's across multiple countries as we have launched our RAL classic stain portfolio across APAC together with Sysmex. And this quarter, we reached almost 4 million versus a comparable figure of 1. So we're starting to see some traction here, which is really the signal of a long journey, which is extremely positive. For software and others, minus 2%, so pretty much flat. I would say, though, that the software is less than it was in the comparable quarter, and that is a function of less instruments. And then there's a little bit more on others, which entails spare parts and also our FX. So on this slide, the final slide here, our key takeaways. Yes, we are extremely transparent around our software quarter, which is really due to the lower sales in the media. And this is the root cause for having only minus 7% organic growth, which is, of course, not in line with our expectations. However, we still think that there is opportunities across EMEA, and that is also the signal we get from our partner, that there are multiple opportunities across the different segments we are operating. For Americas, strong momentum, it continues. And also here, I would say there are opportunities with new products, and that leads me into the bone marrow segment. Another news that we report is that we have filed to the FDA our bone marrow application. So we're in process of registering our bone marrow application as a 510 and get clearance for that for the US so we can start commercializing the bone marrow application together with the DC1 and our remote review software as a package to support the clinical that are diagnosing leukemias, lymphomas from bone marrow. And then again, I mentioned our software upgrade. There are multiple global training activities going on across the Sysmex organization to position our software 7.2, which allows the hospitals to get improved user interface and a better workflow, more speed if they go with the new DI60s. So that's really another pivotal thing. And then as also mentioned in the beginning, we are extremely confident but also extremely committed development-wise to continue to push our relatively mature development program for our next generation solution that entails our new microscopy type of technology under the name of FPM, four-year typographic microscopy. and which we're also exploring and seeing opportunities in adjacent segments such as cytology and pathology. So with that, I think I will close the presentation, and then Monica and myself would be happy to take any questions you may have. 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 Simon Larson from Danske Bank. Please go ahead.