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Introduction & Market Context
Boule Diagnostics (STO:BOUL) reported its first quarter 2025 results on April 28, showing a significant sales decline but improved profitability margins. The company’s stock closed at SEK 8.16 and fell 3.03% during the presentation day, reflecting investor concerns about the substantial revenue drop despite operational improvements.
The diagnostic equipment manufacturer faced challenges in its core hematology business while seeing strong growth in its OEM segment. CEO Torben Nielsen and CFO Holger Lembrér presented a quarter marked by strategic portfolio adjustments and efficiency improvements.
Quarterly Performance Highlights
Boule reported total sales of SEK 113 million for Q1 2025, down 23.6% compared to SEK 147.8 million in the same period last year. Organic growth was negative at -25.1%, partially offset by positive currency effects of 1.5%.
As shown in the following financial summary table, despite the revenue decline, the company improved its gross margin to 47.4% (from 46.2%) and adjusted operating margin to 15.1% (from 12.9%):
The company’s hematology segment, which remains its core business, saw a 31% decline in sales. Instrument sales were particularly affected, with only 543 units sold compared to 1,377 in Q1 2024. This decline was attributed to an unfavorable year-over-year comparison and a business model change in India.
The following chart illustrates the decline in hematology sales:
In contrast, Boule’s OEM business showed remarkable growth of 166%, becoming a bright spot in the quarterly results. The company noted that the sales funnel for new OEM projects continues to grow, creating significant future growth opportunities:
Strategic Initiatives
Boule is implementing several strategic changes to improve long-term profitability. A key development is the shift in its instrument portfolio strategy, moving from proprietary development to technology partnerships for faster access to new technologies with reduced investment requirements:
The company is also optimizing its manufacturing footprint through site consolidation in Spånga, Sweden, implementing LEAN manufacturing principles. These efficiency improvements, along with restructuring initiatives from 2024, contributed to the improved gross profit and operating margin.
The cost breakdown as a percentage of sales shows how the company has managed to improve its adjusted operating margin despite the sales decline:
Forward-Looking Statements
Boule outlined several initiatives aimed at returning to growth while maintaining improved margins. The company expects to commercialize its clinical chemistry distribution in the US by Q3 2025 and has extended its technology partner agreement for the M51 5-part human hematology analyzer to 2027.
The company’s liquidity position has weakened compared to the previous year, with available cash at SEK 38 million versus SEK 100 million in Q1 2024. However, management stated they secured an additional loan of SEK 20 million in April 2025 and aim to be operational cash flow neutral in Q2 2025 and positive in the second half of the year:
Boule’s strategic priorities for 2025 focus on expanding operating margins through disciplined execution, accelerating growth through strategic investments, and building a stronger portfolio:
Detailed Financial Analysis
The quarterly sales decline of 25.1% represents a significant challenge for Boule. The company’s regional performance varied considerably, with particular weakness in regions affected by geopolitical challenges and restricted access to US dollars, especially in the Middle East and Africa.
Cash flow from operating activities turned negative at SEK -7.8 million compared to a positive SEK 12.5 million in Q1 2024, reflecting the challenging sales environment. However, the company’s adjusted EBIT of SEK 17.0 million, while lower than the SEK 19.1 million from Q1 2024, represents a higher percentage of sales at 15.1% versus 12.9%.
The company’s shift to a license business model in India is expected to impact annual instrument sales by approximately SEK 30 million but should have a positive effect on margins. This transition represents a strategic pivot from equipment sales to recurring revenue streams.
The Q1 highlights slide summarizes the key developments for the quarter:
In conclusion, Boule Diagnostics faces significant challenges with declining sales but has shown resilience through improved operational efficiency and strategic repositioning. The company’s ability to deliver on its cash flow targets and successfully implement its portfolio strategy will be critical factors for investors to monitor in the coming quarters.
Full presentation:
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