OssDsign AB (publ)

Hello, and welcome to OsterSign's Q1 presentation. My name is Elvin Rolder. I work here at D&B Carnegie, and I will be moderating the presentation and questions and answers session. I'm joined here by Mark Waugh, the CEO of OsterSign, and Anders Svensson, the CFO, who will give the presentation now.

Thank you. Welcome, everyone. Again, my name is Mark Waugh, and I'm the CEO of OSH Design. And if you're new to our quarterly calls, I'll just mention briefly that I joined the company January this year. As Elvin mentioned, I have our CFO, Andrew Svensson, with me. And today, we want to walk you through our first quarter 2026 results. As usual, when we do these presentations, the normal disclaimer. Before I go into the details, I do want to make one comment about our Q4 results call. And then I'm gonna give you my view of the highlights in the quarter. It's important for me to communicate that we had a significant technical challenge during the Q4 call. And unfortunately, when the call began, Anders and I could hear multiple other earnings calls on the conference line. So imagine trying to deliver our company results while being interrupted continuously. Thankfully, we don't believe those listening to that call could hear the same crosstalk. I will say that our conference operator also informed us that there were no questions, but we learned later that there were indeed a queue of individuals who wished to ask a question. And I just want to apologize for that technical issue. It was so unacceptable to us that we actually switched our call hosting provider going forward, so I have confidence that today's call will be delivered much more smoothly. Now on to the highlights. I believe I said this during our Q4 release, but I just want to reiterate that I joined Ost Design because I was drawn really into catalyst-strong clinical performance, the robust underlying science that the companies generated, and the significant market opportunity in the U.S. Those reasons remain very valid, and I'm confident that the factors contributing to our first quarter sales challenges are identifiable and addressable. I want to say that this was really not the start of the year that I would have wished for, and I don't believe it's acceptable. As communicated, revenue for the period January through March 2026 totaled approximately U.S. $4 million or SEC $36.9 million, a decrease of 3.6% in U.S. dollar terms compared to the same quarter of 2025. That significant difference that you note between the USD and SEC results, a 3.6% decline in U.S. dollar terms versus a 17.1% decline in SEC terms, is due entirely to the depreciation of the dollar against the SEC during the comparable periods. Adjusted EBIT for the quarter was SEC minus $13.4 million with marginal exchange rate impact due to the nature of the cost base. This sales outcome really fell short of our expectations, and as I communicated prior to this report, is also below market expectations. Since joining as the CEO, I've continued to get up to speed on our history, and I now understand that due to the volatile capital market in Q1 2025, Ost Design's proposed share issue was delayed until June of last year. The result of that delay was some of the activities were executed in the plan a bit more slowly or even paused. Second, we had a slowdown in recruitment and hiring within the sales team during the latter part of 2025 that weighed on sales growth into the fourth quarter of last year and its effects carried into Q1 2026. I've stated previously that my goal is to build a high-performing commercial organization, and that's a very deliberate activity. When the hiring slows, the impact to our forward revenue growth is definitely impacted in the following period, and that really materializes quarter as well. I also spent some time in the recently released annual report talking about shifting our culture. As we made some deliberate changes, some less highly performing sales employees did leave the company. We also experienced temporary slowdowns in certain accounts due to extended contract renegotiations. And none of what I just covered were isolated events. They really converged in the same quarter, which amplified the pressure on the top line. I want to stress, however, that the recent sales results should not reflect badly on the product, the core science, or its market potential. In my opinion, Haas Design Catalyst should be the number one synthetic bone graft option in the spinal fusion market. Our real-world clinical data and results continue to be collected in complex patient groups, and that reinforces our truly great performance. As I mentioned in our formal release comments, catalyst strengths are naturally attracting attention from our competitors, and I expected this when I took the role. I am confident we're making the right investments in clinical, marketing, and sales to ensure that Ostesign is a fierce and respected competitor in this market, and I'm pleased to tell you that we had strong surgeon-to-surgeon clinical presentations at the Selby Spine, ISASS, and NASS Evidence and Technology Spine Summit meetings during Q1. I think I'm most pleased today to tell you that we have implemented concrete measures to energize and focus our hiring process and consistently expand our sales team with more high quality driven individuals. As a CEO, we now have leadership based in the U.S., and that allows us to accelerate and address issues promptly. In addition to managing and working with our leadership team to develop and expand the U.S. organization, I'm able to more directly support our sales endeavors by interacting in person with our key opinion leaders, our distributors, and hospital systems. In other words, there are benefits to being in market with a commercial team, especially when it's a market I've worked in for many years. Now, regarding that commercial expansion, We continue to strengthen our sales foundation, and over the past 90 days, there's been excellent progress in identifying and hiring new commercial team members. I would say that the groundwork has been laid this quarter, and I'm excited to see early progress among some of our new hired team members. Additionally, discussions have been ongoing with several key accounts that face slowdowns due to contract renegotiations, and I anticipate that purchasing patterns will return to normal once the agreements are finalized. I've committed to transparency with the organization as our shareholders and we're working to transform into a more open, bold and dynamic culture. I mentioned this during our last call. When I joined, I really believed in the product and I still do. I believe there are very tremendously huge opportunities ahead of the company and I'm confident in our potential to deliver increased sales and I also remain confident in our potential to create value for shareholders. The other part of working to lead Ostesign is I get to be part of this great team that supports surgeons by providing a product that benefits their patients. The market we participate in for spinal fusion is large, growing, and very receptive to products that actually show differentiated, evidence-based results and unique properties, which is what Catalyst offers. I believe we're building the right team, we're investing in additional clinical data, and the existing clinical data continues to speak for itself. We have the right product to win in our market, and I remain confident of hitting our SEC $400 million revenue target as set out in the scale-to-profit strategy we communicated in 2025. I think the first step in delivering improved commercial momentum is in the second half of 2026, and I look forward to reporting on that in the coming quarters. I'll now hand it over to Anders to walk you through the financial results for the quarter in more detail. Anders?

Yes, thank you, Mark. So... As Mark mentioned, in Q1, we saw a decrease in sales compared to the first quarter of 25. Now in SEC, we did 36.9 million, as you can see in this chart, compared to 44.5 million last year, which translates to a 17.1% decrease. Now, although a decrease is obviously neither good nor anything we're happy with, the underlying development is not quite as severe as the SEC numbers suggest, due to the US dollar headwind. As you can see in the growth chart to the right, the bulk of the SEC decrease is actually not organic, but rather exchange rate related, with an actual underlying decrease in US dollars of 3.6%. Now, as we've also said many times before, Growth for us is not likely to be linear over time, rather more likely to take the form of a staircase with higher and lower quarterly increases, and even some where the staircase step is flat. Now, granted, we did not expect any step to be negative, but that is unfortunately what happened in the first quarter for a number of reasons, as outlined earlier by Mark. This is also evident from the LTM chart. for the latest 12-month period, as you can see in this slide. But what is also evident here is that the latest 12-month period sales are about 28% higher than they were in the 12-month period leading up to Q1 2025. Be that as it may, as stated earlier, we've had to make a few changes in terms of corrective measures, and we expect those measures to deliver improved commercial momentum in the second half of 26. Moving over to the gross margin. Now, as you can see, the gross margin followed suit on the lowest sales in the quarter. Those two are quite interconnected. And so it came in at 91.6% versus the 96.4 in the comparison quarter. Now, in addition to the sales-related or sales-level-related effect, we also experienced some negative mix effects, both on product and customer mix in the quarter. And of course, on top of that, we also have the US dollar headwind, which continue to weigh on COGS. And that's especially on raw materials, because as I'm sure you know, we've talked about before, the products that we sell in a quarter were produced quite some time ago, more expensively at a much higher US dollar sec exchange rate. So all in all, a lot of negative effects converging in a single quarter. which makes it all the better to note that all those effects that we've now mentioned are variable and therefore temporary. And I will now hand you back to Mark. Thanks, Anders.