OssDsign AB (publ)

Hello and welcome to today's webcast with Osterstein, where CEO Morten Henneveld and CFO Anders Svensson will present the Q4 report for 2024. After the presentation, there will be a Q&A, so if you have any questions, you can send them in via the form to the right. And with that said, I hand over the word to you guys. Thank you.

Thank you very much and good morning and welcome everyone. My name is Morten Henneveld. I'm the CEO of Osterstein. And as always, I have our CFO Anders Svensson with me today. Today we want to walk you through our fourth quarter and full year 2024 results. This report also marks the one year anniversary as a pure play of a biologics company. And I'm pleased to report that Ossesign continues to deliver sustained high growth, whilst at the same time significantly improving profitability and cash flow. The normal disclaimer, as always, If we move on to the highlights of the fourth quarter, this is very much in line also with the highlights of the year overall. Firstly, during the year and in particular in the second half, we've consistently proven that what we said a little more than a year ago when we made the announcement to become a pure play of a biologics company. And I think we've clearly demonstrated how attractive Orthobiologics is and that this business is highly scalable. Secondly, AusDesign is a high growth company and we continue to demonstrate high growth above a hundred percent. Third point, the fourth quarter also clearly shows the operating leverage in the company with a very high gross margin. and an even better cashflow result than the strong third quarter. We're also seeing a very strong improvement in the fundamentals in the company. Growth is driven by positive development in the underlying business, meaning broader access in the market and increasing customer base, and also higher usage among existing account. And last, but certainly not least, We are building, and in particular during 24, we've built a very solid repository of preclinical and real-world clinical evidence with numerous publications, and we'll come back to that a little later. And with that, I'll hand you over to Anders to walk you through the financial results for the fourth quarter and the fourth year.

Thank you, Morten. So just before we dig into the numbers we've mentioned, in our previous quarter presentations that since we no longer operate in the cranial space, we will only compare in 24 to previous periods of orthobiologic cells. But when it comes to gross margin, this cannot be separated out. We will therefore compare to the previous blended period. So as Morten mentioned, we continue to see high growth in the company during the quarter. We reported the growth of 54% compared to the same period last year. Now, the Q4 23 comparison period was substantially distorted by about 4.3 million in one-off orders to a single hospital system that actually moved facilities during that quarter. So adjusting for that one-off occurrence, the underlying Q4 growth was 84%. And the exchange rate impact in the quarter was negligible. Now, if we look at the full year 2024, we ended at almost 134 million, which corresponds to an impressive year-over-year growth of 107%. And on a reported basis, constant currency-wise, it was 108%. So as you see, again, a very negligible exchange rate effect. Now, as we've also said before, growth will not necessarily be linear. So it will more take the form of a staircase where we increase accounts and users in one quarter and then may slow down somewhat in the following quarter as we get those new customers up and running. And then it could increase again. And I appreciate that this is not actually what we've seen in the last two quarters, where we have continued a strong quarter-over-quarter increase. But we're, of course, very pleased with this development. We continue, however, to believe that the best way to look at the underlying momentum in the company is to look at the last 12 months or LTM run rate. This of course now aligns with the full year 2024. So as you can see for the fourth quarter, the strong trajectory continues and that's an excellent performance that we are really highly satisfied with. Moving to the gross margin then. Now in the quarter, it remained at a very high level, 96.8%, which is up some 24% against the blended rate in Q4 23. Continued improvements in production have again enabled the realization of production efficiencies. And in Q4, it was also supported by very favorable US dollar SEC exchange rate effects, which has brought the Q4 margin in line with the reported margin in Q3. For the full year, we've now delivered a gross margin of 95.4% against the 74.6% in 23. which is an increase of around 21 percentage points. Now, given the release of provisions from earlier quarters, the full year margin is a more reasonable reflection of the current underlying margin in the business. And it's also higher than the guidance that we've given of above 93% going forward. Moving to the cash flow. Cash flow from operating activities amounted to approximately minus 7 million for the quarter. And that's a really substantial improvement compared to 26.5 million negative in Q4 23. It's also even an improvement of the previous quarter in 24. Now improved operating leverage, as evident in the operating result, was an important driver behind this cash flow development, as was the positive working capital improvement. Now for the full year, cash flow from operating activities was minus 62 million compared to minus 95 million in 23, which is again, solid underlying improvement. And this is despite about minus 12 million outflows earlier in the year related to the non-recurring items from the discontinued cranial business end of 23. So adjusting for those outflows would bring the underlying cash flow from operations to around about 50 million. And as highlighted in previous quarters, the underlying network in capital development has actually trended positive all year, with the reported numbers in the first two quarters being distorted by these previous 23 mentioned effects from non-recurring items. In Q3, 24, we could see a more representative picture of the underlying performance starting to emerge, also in the reported numbers. Now, this development continued in Q4 with even better reported numbers. And in Q4 also, the receivables have returned to a more normalized development after the substantial improvements in earliest quarters. So all in all, we're very pleased with the underlying cash flow development. And I will now hand you back to Morten. Thank you, Anders.