BICO Group (Stockholm:BICO) Q1 2026 Earnings Call

0:01 Hello, and welcome to BICO Group's Quarter one twenty twenty six Earnings Call. I'm Maria Fors, President and CEO, and I will, together with BICO's CFO, Eva Linzetti, present this interim report. Here is today's agenda. I will open today's session by summarizing quarter one twenty twenty six and also describe how BICO serves the world's leading pharma and biotech companies with solutions that transform how labs operate, innovate, and solve our customers' challenges. Following that, Eva will present the group's financial performance. I will then comment on our r and d pipeline with our ongoing product development efforts. Additionally, I will highlight some recent and upcoming product launches. The session will conclude by highlighting our focus for 2026 before we open up for Q and A.

0:50 A strong start to the year with 11% organic growth, navigating in a dynamic market still affected by geopolitical uncertainty and a weak academic funding in The U. S. Due to continued currency headwinds, our total reported growth was negative 1.4%. All numbers presented are in 1,000,000 unless otherwise stated. EBITDA was negative SEK 42,000,000 with adjusted EBITDA of negative SEK 11,000,000. And the difference is mainly relates to a restructuring cost of SEK 52,000,000, of which SEK 30,000,000 affected EBITDA. Cash flow from operating activities totaled SEK 47,000,000. BICO successfully issued senior secured bonds of DKK 40,000,000 and the new capital puts us in a position to support further growth and capture market recovery, while navigating ongoing macroeconomic uncertainty.

1:47 A property in Oulu, Finland carved out from the divestment of Denolis was also divested for a total of EUR 3,500,000. We settled our convertible bonds originally issued in 2021 with a total outstanding amount of 1,080,000,000 in full on their scheduled maturity date. Before Eva provides more details on our financial performance, I will present how BICO serves the world's leading pharma biotech companies with solutions transforming how labs operate and innovate, which is what our vision is about. Our customers all share one ambition, reducing time to market and increasing the probability of success. With our leading software suite Green Button Go together with off the shelf automation products as well as bioprinting, our portfolio is in the sweet spot of meeting that ambition and solving their core challenges with long and costly development cycles.

2:47 Our solutions enable smarter, faster and more efficient labs, and here lies an underlying strong demand. Pharma and biotech companies all face the same fundamental challenge, long costly development cycles for new therapies. The development of new therapy often takes more than ten years and costs between US2 billion and US4 billion dollars with the probability of approval after Phase one at just 10%. To overcome this, our pharma and biotech customers are investing heavily in automation and AI to increase efficiency, speed and quality to bring innovations to market faster and at a lower cost. Our products and services enable our customers to connect data across systems and apply AI tools to plan, run and optimize experiments in real time.

3:36 We are enabling AI driven drug discovery workflows through our green button go platform, connecting workflows and data streams. The AI acceleration shifts the bottleneck to the wet lab where our automation solutions are at the core. Now I'll explain how Green Button Go enables AI powered automation in the wet lab to ease this bottleneck. AI accelerates discovery and then the wet labs become the new bottleneck. Generative models and predictive biology dramatically speed up hypothesis generation, yet the wet lab validation remains the hard constraint. In fact, more AI driven candidates need more experiments, not fewer, intensifying pressure on lab throughput, system uptime and data reproducibility.

4:26 This means that wet labs become more critical rather than obsolete. AI breakthroughs have made wet labs even more central to R and D. The lab is now a biological compute cluster, validating AI predictions, so high throughput automation and trusted data become mission critical. So all in all, BICO Lab Automation provides the trusted execution and validation layer that converts AI generated hypothesis into proven experimental evidence. We have already integrated assistive AI into our platforms, bringing natural language workflow creation and troubleshooting in Green Dot and Go, making automation accessible to every scientist. And we are also developing next generation systems like Crexendo to scale up experiments while keeping human in the loop oversight.

5:19 So by emphasizing reliability, data integrity and compliance, we ensure the coming surge of AI driven experiments can run at scale without compromising quality or uptime. This execution focused strategy cements our platform as indispensable infrastructure in an AI powered biotech landscape, making AI an opportunity for us rather than a threat. And this leads us to our vision, which have been updated this quarter. BICO's updated vision have been developed to position us as more visionary and with a clear portfolio cohesion and direction in line with the BICO 2.0 strategy and portfolio. And from this quarter, we are reporting BICO as one operating unit, which reflects the integrated operating model, shared resources and joint strategic initiatives across the group.

6:13 Our updated vision is to enable life science labs to accelerate the discoveries that change lives. With a mission where BICO leverages a global portfolio of pioneering brands, fusion automation, intelligence and data to unlock scientific discovery at scale. Ultimately, we support customers to advance science so therapies can reach people faster. Customers using BICO Lab Automation Solutions consistently report measurable gains in productivity and reliability, including reduced hands on time, faster turnaround times and higher instrument utilization. Let me show you one example that emphasizes the value BICO delivers to our customers. The data shown here are from one of the top pharma customers we are serving.

7:00 And they kindly share their efficiency improvements by using our lab automation solutions. Downstream process and assay development was reduced by 75%. And the capacity with existing equipment they already had was revved up by 400% because parallel processing and variable driven robotic processes just allow for more uptime to be squeezed out of each piece of equipment in the lab. And ultimately, these productivity increases mean that their scientists are able to achieve 200% of their original productivity. And this is because the automation was coming alongside them, supporting them, taking over the manual steps, and running concurrently in ways that a person just can't manage alone. And this is just one example of lab of a lab leveraging b, but, and go.

7:46 And we're taking technology and using it to augment the work of humans, using technology to get to innovation faster. So to summarize, we lead the way in solving the challenges in life science with speed, accuracy, and efficiency. All in all, our customers can run their processes faster, improve their quality of data, and ultimately make better decisions. I will now hand over to Eva to present the results for the first quarter. Thank you, Maria. I will now give some more details to the numbers presented by Maria. After a strong start in January with a positive outlook, the market was again affected by geopolitical uncertainty with tariffs and war. The weak academic funding seen in 2025 has continued during Q1, where academic end markets remain soft with cautious spending and delayed capital equipment purchases.

8:44 Despite this general trend, we see some pockets of improvement sales also in the Academia segment during the quarter. Total organic growth was 11%. As from this quarter, we are reporting BICO as one single operating segment. Following the divestments of three bioprinting companies, a step towards a more consolidated business, the portfolio is now more focused on lab automation and software intelligence across our entire business. And this reinforces the one BICO approach, where strategic decisions and performance evaluations are made on a consolidated basis. This reporting, which is now focused on the group as a whole, reflects the integrated operating model, shared resources and joint strategic initiatives across the group.

9:42 Navigating these dynamic market conditions, sales in Q1 amounted to million, an organic growth of 11%, mainly deriving from strong desktop instrument sales. The 12 percentage points difference between reported and organic growth can be explained by FX headwinds, mainly due to the weaker U. S. Dollars against the Swedish krona. To align with industry standards, we have revised our reported sales categories into instruments, consumables and service and other. Lab automation projects have previously been grouped as a single category and are now split into instruments for the product part and into service and other for the software and installation parts.

10:29 In Q1, we saw growth in the segments Instruments and Consumables. EBITDA amounted to a negative CHF42 million and adjusted EBITDA being negative GBP 11,000,000. The difference mainly relates to one off restructuring costs of GBP 52,000,000, of which GBP 30,000,000 affected the EBITDA. These restructuring costs are connected to a program launch during the quarter. The aim is to improve cost efficiency, further simplify the operating model and improve the R and D pipeline execution in one of the business units. The programme includes organizational streamlining as well as a planned closure of one site in Europe.

11:15 We also have aligned some group functions to our current business needs. These programs will yield annualized savings of about DKK30 million. Even if we see a decline in the gross profit margin compared to the same quarter last year, mainly due to unfavorable product mix, the adjusted EBITDA improved as a result of increased sales as well as continued cost control activities. One example is legal costs, where we have invested in legal competencies in house, which has led to reduced external legal costs. In a growing, yet still emerging increasingly demanding market, we continued during the quarter to address execution challenges in parts of our lab automation business, primarily related to complex projects.

12:04 These initiatives are receiving focused management attention, and we are actively implementing targeted measures to strengthen execution, enhance scalability and reinforce our competitiveness going forward. Cash flow from operating activities amounted to GBP 47,000,000, impacted positively by working capital changes of DKK 79,000,000. During the quarter, we settled our convertible bond and also issued new senior secured bonds. We sold our finished property with a net proceeds of DKK 32,000,000. The total cash flow during the first quarter amounted to minus SEK $547,000,000 due to the settlement of the convertible bonds of SEK 1,800,000,000.

12:54 Cash reserves by the end of the period were SEK744 million. As mentioned on the previous slide, the effect of changes in working capital amounted to a positive effect of SEK79 million compared to the previous quarter. Operating receivables decreased by GBP 146,000,000. Inventories increased by GBP 13,000,000. Operating liabilities decreased by GBP 55,000,000. In percentage of the last twelve months sales, net working capital in the quarter corresponded to 7%. The low working capital is a consequence of reduced accounts receivable as our sales normally are lower in the first half of the year, but also fewer new large projects started.

13:42 Over time, we expect working capital in relation to sales to be in line with industry standard of closer to 20% of sales. As earlier mentioned, we issued senior secured bonds in January with a total nominal value of €40,000,000 The bonds have a tenure of four years and a carrying floating interest rate of three months Urebber plus a margin of 5.9%. As Maria has mentioned earlier, the new capital puts us in a position to support further growth and capture market recovery, while navigating ongoing macroeconomic uncertainty. The transaction also serves as a clear testament to the capital markets continued confidence in BICO.

14:29 I will now hand over to Maria to present the R and D portfolio and some recent product launches. Thank you, Eva. One focus area for growth is continuous product innovation. And we have a solid R and D pipeline and roadmap in place at BICO. And this is based on the portfolio strategy, which is part of BICO 2.0. On this slide, you can see our comprehensive product development pipeline within BICO's prioritized focus area. The majority of the R and D investments are made in software development and the use of AI, while there are several upgrades of the instrument portfolio meeting customer needs. One example of a software upgrade is the AI powered VCD and cell counting on the upside. AI is more than large language models and chat prompts. In this case, AI is used for image based pattern recognition to detect and segment sales quickly and precisely even under challenging conditions.

15:27 And thanks to the new software update, in combination with other features, the upside offers a solution that is 10 times faster to results versus sequential viable cell count on the industry standard. And savings are estimated to 200,000 to SEK 300,000 per mid sized cell line development lap. Multiple launches are planned for this year and these include both software, instruments and consumables. We have already launched a few products in quarter one and some more are around the corner and those were pre launched at the major Lab Automation Congress, SLAS in February this year. The G station generation two automates the next generation sequencing library prep workflow, enabling the scalable, cost efficient production of consistent, sequencing ready libraries for genomics and drug discovery applications.

16:21 The dPure generation two automates DNA purification, delivering rapid, reproducible, plastic tip free sample cleanup for seamless next generation library prep workflows. And these are just two examples of technology and solutions delivering customer value, which are the results of our efforts within R and D. As presented earlier in this call, we have already integrated assistive AI into our platforms, bringing natural language workflow creation and troubleshooting in Green Button Go, making automation accessible to every scientist. In our in our r and d roadmap for Green Button Go, we're also developing next generation systems like Crexendo to scale up experiments while keeping human in the loop oversight and data integrity end to end.

17:10 So by emphasizing reliability, data integrity and compliance, we ensure the coming surge of AI driven experiments can run at scale without compromising quality or uptime. Before the Q and A session, I will repeat our strategy, give some concluding remarks and highlight our focus for 2026. Here you can see our strategy BICO 2.0 on a page. Our five strategic focus areas to drive our top line and profitable growth are enabling end to end lab automation and scientific workflow solutions, coupled with further development of integrated data, AI and software solutions. To enable increased sales to pharma, we need to ensure regulatory compliance readiness.

17:56 We also want to expand strategic partnerships such as the one with Satoris and Beck and Dickinson, as well as increasing the recurring revenue. In 2026, we have and we will continue to execute our strategy with focus on commercial excellence, an R and D pipeline that delivers clear customer value and financial discipline for profitable growth. And with our strengthened cash position, we can accelerate commercial as well as R and D initiatives and also more seriously engage in dialogues for bolt on acquisitions strengthening our portfolio further. The new capital puts us in a position to support further growth and capture a market recovery. We have also increased our innovation efforts, including software solutions and the use of AI, as I just presented.

18:45 And above all, we remain committed to supporting research. I strongly believe in BICO's updated vision, which is to enable life science labs to accelerate the discoveries that change lives. By providing innovative instruments, software, services and consumables into one continuous operating system, We create labs where data flows seamlessly, every experiment advances the next and breakthroughs move with efficacy from idea to impact. Together, we enable our customers to deliver what matters the most, the discoveries that advance human health. This was our final slide before the Q and A. I will now hand over to the earnings call host for further instructions. The next question comes from Ulrich Trotter from DNB Carnegie.

19:48 Please go ahead. Thank you very much and good morning. And a few questions on my end. 11% organic growth is obviously strong and you talk about or highlight strong Desk Top Instruments sales. Can you just sort of highlight what the development had been here through the quarter and changes you're seeing in the dynamics of the market? And I guess you're still seeing delayed purchasing cycles for larger projects. And and if you can highlight which products or or subsidiaries that are are going particularly strong, that would be helpful. Yeah. So as as you say, Ulrik, there there are desktop instruments that are mainly growing in the quarter and while larger projects still take longer time to to come to complete in terms of business cycles.

20:45 So it's our German based companies that are driving the growth when it comes to the desktop instrument sales mainly. Okay, great. And is there any sort of I know that you like to sort of segment it into academic or R and D based sort of focused companies. But is there any direction of the sort of subsidiaries, I. E, is it early research? Is it sort of genomics, diagnostics? What is the general industry trend that is helping you sort of towards the double digit organic growth?

21:32 I would say that we have there are still some effects of muted US academia market where our companies that are exposed to US academia have had it tougher. At the same time though, in for instance, next generation sequencing, we can see that there are strong sales growth and also in customers that have OEM business there we start to see that the business is starting to have brighten up a bit. Okay, that's great. That's kind of what I've been seeing as well. I was trying to get everything in line. And just on the sort of restructuring savings, how much should come through in 2026 versus 2027?

22:25 I'm not sure you might have addressed it, but I missed it. Can you please repeat that again, Ulrik? How much of the sort of restructuring savings that should come through in 2026 versus sort of, I guess, would be fully run-in 2027? I think you can start seeing some savings maybe the last quarter of twenty twenty six. So the main parts will not fall in until the 2027. Okay, great. And last question on my end before getting back into the queue. Q1, obviously, seasonally the smallest quarter on your end. Have you sort of deciphered any type of quarterly sales level where you can reach a positive adjusted EBITA on a sustainable basis? Or is this fluctuating?

23:25 It's a good question, Ulrik. I think given that we have done so much transformation of the business and we have one pedal on the gas and one foot on the gas pedal on the brake, I think it's too early to say where those level ultimately lies. So we'll have to come back to you on that one. Sure, yes. That's fair enough. Thank you very much for and last question, sorry, squeezing one additional in. Obviously, a very strong cash flow here in Q1. Is there any spillover effect from sort of late deliveries in Q4 or anything? I do note some changes here in working capital helping the cash flow for Q1, but it looks fairly strong.

24:17 So any type of one offs that we should not extrapolate? I think that I don't think there were any delays in the deliveries. What we can see is the we had a really strong Q4 and also some larger entities might pay on the wrong side of the year end. That is a small effect that you can see. But otherwise, it's more that we had a strong Q4 and the sales is not as strong in the Q1. So that's the main reason. Okay. Great. Thanks for taking my questions, and I will get back into the queue. Thank you. The next question comes from Ludwig Lundgren from Nordea. Please go ahead.

25:06 Yes, hi, and thank you for taking my questions. Starting off with a bit of a follow-up to Ulrik's question there. You highlight that you were somewhat affected by the geopolitical uncertainty during the quarter. So maybe if you can just elaborate a bit on how the quarter developed and also if this implies that customers might be a bit more hesitant with instrument orders here in the second quarter? Yeah, happy to do so. So as you saw in my CEO comment, the year started really, really strong in January. And then in February, we got both new tariff discussions as well as some uncertainty in the Middle East region and that halted some of it was clearly seen in February that that affected business decisions.

25:59 As always, the end of the quarter is always better. So we saw things coming back in March again, which then all in all in total, deal the quarter with strong organic growth of 11%. So some muted academia in The US still. But as I said to Ulrik's question before, we still saw some good growth in other parts of the business both when it comes to OEM as well as in next generation sequencing. Okay, thanks. Very clear. And just if you can elaborate bit on your exposure to The Middle East, do you have any significant sales there? No, we don't. It's more that, I mean, prices of transports and the general uncertainty is, of course, affecting our business as anyone else operating in a global world, but not anything directly.

27:00 Okay, fair enough. And then a final one from my side, just on lab automation and BICO, which started off a bit slower here, it seems, in Q1. So I just wonder what to expect for Q2 and the rest of the year. Is this current activity level a good indicator for where what BICO Group will deliver in the next few quarters? Yeah, thank you, Ludwig, for that question. I think as we have been very open about the past quarters, we are investing heavily to make sure that we can close legacy projects, freeing up capacity. And all the different initiatives with different target measures will both strengthen our execution, enhance our scalability, and and also reinforce our competitiveness moving forward.

27:51 So as we never guide forward, I cannot comment on quarter two or forward, but we're doing everything in our power to make sure that we can scale that business. Okay, thanks. Very clear. I'll jump back into the queue. Thank you, Ludwig. The next question comes from Philip Einersen from Redeye. Please go ahead. Okay. Hello, everybody. So I have actually I mean, the presentation was focusing a lot on AI, and I wanted to follow-up with a few questions on that. So you sort of emphasized building a data backbone for AI driven lab automation. Is it possible to quantify sort of the percentage of your installed base currently connected and generating usable data to train AI models?

28:49 Every single instrument that is used by a customer are generating data that can be used. And in our development that we have now that we're doing in Crescendo, for instance, we're utilizing years of of data from different installations to to feed our algorithms. But overall, it's all instruments that are used in customers are generating data. And instruments are roughly 75% of our sales this quarter, 65. Overall, you should see it, Filip, as a as a continuous operating lab flow where data from the dry lab feeds into the wet lab where we are present and then data flows back to the dry lab again.

29:37 So it's a continuous loop where several different instruments and players are involved in that total workflow. Okay, got it. And maybe then if you could elaborate a little bit on how sort of the monetization opportunities of the AI and data you're generating. Maybe you could give us some pointers here. Are we talking like subscriptions or usage based pricing or what should we expect? I think that that's difficult to to quantify to put I mean, overall, as I said in in the presentation, AI is an opportunity for us. But to put a number, how much that would generate in terms of sales connected to our instruments overall, that that's super, super difficult to say.

30:43 Okay. Sorry. I had a hard time hearing what you said. Something with the connection. Maybe you could repeat. Okay. So when it comes to AI and and monetizing, that that is difficult to do. Overall, AI is an opportunity for us rather than a threat. And we put our tech stack together to ensure that whatever AI model that our customers are using that could be used together with our different solutions. Okay, okay. Thank you. That's all for me. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Thank you for all the questions received and thank you for your continued interest and support in BICO Group. Together with Eva, I wish you all a great Wednesday. Thank you and goodbye.