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BioGaia reported robust financial results for the fourth quarter of 2024, driven by significant sales growth and strategic product launches. Sales for the quarter rose by 23% to SEK 365 million, while the full year saw a 10% increase, reaching SEK 1.4 billion. According to InvestingPro data, the company has demonstrated impressive revenue growth of 215% over the last twelve months, with a market capitalization of $311 million. InvestingPro analysis suggests the stock is currently undervalued based on their proprietary Fair Value model. The company’s earnings per share improved to SEK 0.81, compared to SEK 0.67 in the previous year. Despite a stable cash flow of SEK 99 million, BioGaia’s strategic shift towards direct business models and increased R&D investments were notable highlights.
Key Takeaways
- BioGaia’s Q4 2024 sales grew by 23% year-over-year.
- New product launches include BioGaia Gastro Pure Action (WA:ACT) and Prodentis Mint lozenges.
- The company is transitioning to a direct business model in key markets.
- Regional sales growth was strongest in the Americas, with a 32% increase in Q4.
- Proposed dividend of SEK 6.90 per share.
Company Performance
BioGaia demonstrated a solid performance in Q4 2024, with sales growth across all major regions. The company’s focus on innovation and product launches, such as the BioGaia Gastro Pure Action capsule and Prodentis Mint lozenges, contributed to its growth. The transition to a direct business model in several markets, including France and the US, is expected to enhance profitability and market reach.
Financial Highlights
- Revenue: SEK 365 million in Q4, a 23% increase from the previous year.
- Full Year Revenue: SEK 1.4 billion, up 10%.
- Earnings Per Share: SEK 0.81, compared to SEK 0.67 last year.
- EBIT: SEK 103 million for Q4, a 28% increase.
- EBIT Margin: 28% for Q4, 30% for the full year.
Outlook & Guidance
BioGaia plans to continue its investment in direct markets and digital marketing campaigns, aiming to sustain its growth momentum. The company has proposed a dividend of SEK 6.90 per share. InvestingPro analysis highlights BioGaia’s high shareholder yield and strong financial health score, though analysts expect net income to decline this year. Discover detailed growth projections and 1,400+ comprehensive Pro Research Reports available on InvestingPro. It is also focusing on mitigating inventory risks in its US operations, which were discussed during the earnings call.
Executive Commentary
"Our pediatric business now represents around 77% of our total sales," stated Theresa Agnew, CEO, highlighting the significant contribution of the pediatric segment to BioGaia’s overall revenue. Alexander Kacinas, CFO, addressed concerns about inventory issues, noting, "The write-down was a one-time effect we do not expect to happen again."
Risks and Challenges
- Transitioning to a direct business model may pose short-term operational challenges.
- Increased R&D costs, primarily from clinical studies, could impact profit margins.
- Market competition in the probiotic sector remains intense.
- Supply chain disruptions could affect product availability and sales.
BioGaia’s Q4 2024 results underscore its strategic focus on innovation and market expansion, positioning the company for continued growth in the coming years.
Full transcript - Biotest AG ST O.N (BIOG) Q4 2024:
Conference Moderator: Welcome to BioGaia q four report for 2024. For the first part of the conference call, the participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing 5 on their telephone keypad. Now I will hand the conference over to CEO Teresa Agnew and CFO Alexander Kacinas. Please go ahead.
Theresa Agnew, CEO, BioGaia: Hi. This is Theresa Agnew, CEO of Biogaya. We’re here to present our Q4 results. As an overall executive summary for the quarter, our sales were SEK $365,000,000, which is growth of 23% and excluding currency effects, that’s growth of 24%. Sales in Europe, Middle East, Africa increased by 24% in Asia Pacific by 10% and in The Americas by 32 for the quarter.
Our EBIT was SEK103 million, which is growth of 28% and our margin of 28% for the quarter. If you look at the total year, the total year for 2024, we had sales of approximately SEK1.4 billion, which is growth of 10%. We had an EBIT margin of 30%, adjusted EBIT margin of 34%, which is without the Metabogen impairment loss. And if you look at the regions for the total of 2024, Europe, Middle East, Africa grew 3%, Asia Pacific grew 20 and The Americas grew 10%. Some of the key events in the quarter, the board has proposed an ordinary dividend of SEK1.95 with a total dividend of SEK6.90 per share.
This is corresponding to SEK698 million. On November 4, we made an announcement of a new shareholder, Anatom Holding, which is a Switzerland based investment firm, and they acquired shares following the exit of the EQT (ST:EQTAB) public value fund. On December 5, we announced the launch of a new product, very exciting, BioGaia Gastro Pure Action. This is our first clean ingredient capsule. It’s a double strength probiotic, which is FODMAP friendly, which is something that is recommended by gastroenterologists for people with irritable bowel syndrome.
So this is a product designed to support consumers with sensitive stomachs and digestive issues. On January 16, we announced that we terminated the distribution contract with our partner in France, and we will be taking that business direct later this year. And then on February 4, we announced our results for the fourth quarter and that it would exceed the market expectations. Some of the launches that we had in the quarter, as you can see in Mexico, we launched Prodentis Mint lozenges across many of our Central Eastern European markets. We launched our BioGaia Phyrex drops, which is for immunity.
So it was perfect timing for the cold flu season. We launched BioGaia Gastro Pure Action, as I said. We launched that in one of our direct markets, Finland, and we also launched the ten ml of our BioGaia Protectis drops in The United Kingdom (TADAWUL:4280). In terms of sales, as I said, for the quarter, sales increased 23%. Our pediatric business, the sales increased 23% mainly due to increased sales of our drops and mainly in The Americas and EMEA.
And sales increased significantly in Brazil, The US and The UK. Our adult segment sales increased by 20% and that was mainly due to ProDentis as well as Gastrus. And ProDentis sales increased in South Korea and The US protected tablets decreased in Bulgaria and South Korea. So as you can see here then for the year, our pediatric business grew 8% for the year and our adult health business grew 17% year for for the year. This actually makes our pediatric business now for the year around 77 percent of our total sales.
When you look at it by region, our sales increased 24% in EMEA and some of the markets with the highest growth were The UK, Belgium, and Spain. Asia Pacific, our sales increased by 10% and that was mainly in South Korea, Japan and also Vietnam. And in The Americas, our sales increased by 32% and that was driven mainly by The US, by Brazil and Canada. And as you can see for the year, in the Europe, Middle East, Africa region, our sales grew 3% for the year. In Asia Pacific, our sales grew 20% for the year.
And in The Americas, our sales grew 10% for the year. So if you look at the segments in terms of regions, The Americas for the total year of 2024 now represents 38% of our sales, EMEA represents 36% of our sales and Asia Pacific represents 26% of our sales. So now I will turn it over to Alex, who will go through in more detail our financials.
Alexander Kacinas, CFO, BioGaia: Thank you, Theresa. So to summarize the quarter four, as we have heard, we had revenues of SEK $365,000,000, which was a growth of 23% in the quarter. Our operating profit was SEK 103,000,000, which was a growth of 28% versus the same quarter last year, and the margin was 28% versus twenty 7 1 year ago. Earnings per share were SEK 0.81 versus SEK 0.67 and cash flow was SEK 99,000,000, in line with the same quarter last year. If we move on to the sales, as we heard, we had a growth in the quarter of twenty approximately 23%.
And excluding currency, the growth was one percentage point higher at 24%, and we therefore had a negative currency effect of 1% in the quarter. And also year to date, we had a growth of 10% in total with a negative currency effect of 1% and an organic growth of 11%. If we look at the gross margins, for the quarter, our gross margin was 71%, which was lower than in the same quarter last year, where it was 76%. However, if we look year to date, our gross margin was 72 versus 73 last year, so almost in line with last year. If we look at pediatrics then, we start with pediatrics for the quarter, we had a gross margin of 72 versus 78, which is lower.
The main reason for the lower pediatrics margin is both some mix effects and some inventory cost of goods related inventory write down in PKIA USA. This is unfortunate and nothing we expect to happen going forward, but there was an inventory write down which affected the margin negatively. And again, in combination with a mix effect in geographies also. And in adult health, gross margin at 67% was fairly stable compared to the same quarter last year. And for the year to date figure, 63% versus 67% last year, somewhat lower, and that is also due to mix effects.
If we move on to the operating expenses, they grew with 7%. There were no adjustments in the quarter. Sales costs increased due to a larger proportion of direct sales in subsidiaries and some strategic investments in sales and marketing activities. In terms of our R and D costs, they grew with 18% mainly due to increased clinical study costs in the quarter. And then we have some other OpEx, which were a positive SEK 12,000,000, that is positive currency effect.
So all in all, total OpEx grew with 7%. And year to date, our OpEx grew with 20%. But if you adjust for mainly then the Metapogen write off, our total OpEx increased with 9%, which is in line with sales or slightly below the increase in sales. Look at the profit and loss then to summarize, we had a sales growth of 23%, our OpEx grew with 7% and our EBIT then grew with 28% at SEK 103,000,000. And the adjusted EBIT was the same in the quarter, which then led to a margin of 28% in the quarter versus 27% in the same quarter last year.
And then year to date, we have a margin EBIT margin of 30% versus 34%, but on an adjusted basis, the margin was 34%, which was in line with the same quarter last year. Turning to the cash flow. Cash flow from operating activities decreased by 15% to 103%, and this decrease was mainly due to some higher payment of taxes. We have the same taxes basically, but it’s a periodization of taxes effect here. Then in terms of cash flow for the period, it was same as last year, SEK 99,000,000 versus SEK 100,000,000 last year.
And the cash at the end of the period was SEK 1,220,000,000.00 versus SEK 1,540,000,000.00 in the same quarter last year. So with that, I hand over to Theresa for some concluding remarks.
Theresa Agnew, CEO, BioGaia: So in summary, our net sales increased by 23%, which was 24% excluding the currency effects for the quarter. As we said, our direct markets have strong performance and they continue to show that performance. And The US, Canada, and Japan are among our top five markets. Europe, Middle East, Africa sales increased by 24%, mainly due to higher sales in the pediatric segment, and we saw larger increases in The United Kingdom, Belgium, and Spain for the quarter. Asia Pacific continues solid growth with 12 I’m sorry, 10%, which was due to higher sales in both pediatrics and in adult segments, and the sales mainly increased in South Korea, Japan and Vietnam for the quarter.
Whereas in The Americas, sales increased by 32% in the quarter, mainly due to increased sales in pediatrics and adult segments, and we saw larger growth in The U. S, Brazil and Canada for the quarter. As Alex said, our operating expenses grew by around 7%. Our EBIT growth was 28% with an overall EBIT margin of 28% for the quarter and 30% year to date with the adjusted EBIT margin being at 34% for the year. Our dividends that are suggested are at 6.90 per share.
And we will continue with the ramp up investments to drive continued growth where it makes sense, specifically in some of our direct businesses such as The US, The UK, and Canada, Australia, where we are taking our business direct. And also, as we go into and continue into this year, in France, we will be increasing investments as we take that business direct as well. So, we open it up, to any questions that you may have.
Conference Moderator: If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. The next question comes from Matthias Hegblom from Handelsbanken. Please go ahead.
Matthias Hegblom, Analyst, Handelsbanken: Yes. Good morning. Thank you so much for taking my questions. I have two. And sorry if you touched upon some of this during your prepared remarks.
I had some technical issues coming online. So firstly for Theresa, if you could talk about the new comprehensive digital consumer campaign, perhaps help us understand what that entails and how we should expect effects from that in terms of translating into sales benefits. Is that already happening? Should it happen early twenty twenty five? Or how should we think about any benefit from that?
And then secondly, for Alex, on the gross margin, you called out write downs in Baguio USA as well as mix. So I was curious to better understand what was what the gross margin for Pediatric, which is typically very strong in the fourth quarter, was maybe five, six percentage points lower than normal. So how much was mix and how much was write down to explain this? Thanks so much.
Theresa Agnew, CEO, BioGaia: Okay. So first, I’ll take the first question. So we are consistently doing marketing in the digital space across our markets. So we do you know, video, social media influencer campaigns. But what we have done is we’ve created some new content, last year that we can use globally.
And so we’ve started some of additional media focus in some of our direct markets with our new content. So that has started this year. I won’t share all the specifics just for confidentiality and competitive reasons, but, you know, it it is a digital campaign targeting consumers with our brands. You know, we’re starting to see some good sales in certain markets. So this is something that we’ve started.
We continue to monitor it. We adjust spending. You know, we look at it week on week, month on month in terms of how it’s growing our business. So, you know, this is something that we will continue to look at for the future and invest to drive brand awareness, but also to drive sales and conversion through our channels.
Alexander Kacinas, CFO, BioGaia: Good. And then when it comes to the gross margin, just try to answer that. I mean, we will not quantify how much was the write down or how much was the mix. But I mean, both but the write down was quite substantial part of it. And again, it’s sort of a one time effect.
We don’t foresee that this will happen again unless it’s very unfortunate. But it was a fairly substantial part was the actual write down in The U. S. And then there were some mix effects also affecting depending on, for example, in which countries we sell.
Matthias Hegblom, Analyst, Handelsbanken: Two follow ups, please. So firstly, for maybe for Theresa. So one of the things the outside world struggled to understand was the SEK 75,000,000 to SEK 85,000,000 additional OpEx that you highlighted in the mid year report for the second half. So how much of that did actually materialize and what did not and why? And then maybe the second one for Alex, anything particular we can understand from the write down?
Is that just natural course of business? Sometimes this happens and any additional color on the write down would be helpful.
Theresa Agnew, CEO, BioGaia: Yes. So in terms of the OpEx, so in terms of our additional investments as we had planned, those went forward as planned in our direct markets. Over the course of the year, as we saw some of our sales in EMEA, being lower, we controlled for some costs in spending in other areas. But also, you know, as you look at the back half, our R and D expenses were lower than anticipated in so some of that was lower than anticipated, I would say, from an R and D standpoint. And then we, of course, controlled for some costs as we went through and we saw sales were declining in certain areas.
But the other kinds of additional investments that we made in sales and marketing efforts continued as we wanted.
Alexander Kacinas, CFO, BioGaia: And just to add to that comment, actually one part of the actual why the cost was lower, quite the large explanation as well is that we had lower we had some positive FX effects that lowered the costs, so to speak. That’s part of the explanation also. Then coming to the gross margin, yes, unfortunately, to go direct means that you will handle a larger part of the inventory and take some inventory risks. So it will be an increasing part of our business. However, to this extent that we saw here, we do not foresee that this should happen again.
I think we have changed how we work with that locally in The US. So of course, again, going direct will mean some increased level of these type of risks, but we will try to mitigate this in the future.
: As a reminder, if you wish
Conference Moderator: to ask a question, please dial 5 on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Theresa Agnew, CEO, BioGaia: Okay. Well, thank you very much, for listening, and, we appreciate it. And we will talk to you next quarter. Thank you.
Matthias Hegblom, Analyst, Handelsbanken: You you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you
Theresa Agnew, CEO, BioGaia: Hi. This is Theresa Agnew, CEO of Biogaya. We’re here to present our Q4 results. As an overall executive summary for the quarter, our sales were SEK665 million, which is growth of 23% and excluding currency effects, that’s growth of 24%. Sales in Europe, Middle East, Africa increased by 24%, in Asia Pacific by 10% and in The Americas by 32% for the quarter.
Our EBIT was SEK103 million, which is growth of 28% and our margin of 28% for the quarter. If you look at the total year, the total year for 2024, we had sales of approximately SEK1.4 billion, which is growth of 10%. We had an EBIT margin of 30%, adjusted EBIT margin of 34%, which is without the Metabogen impairment loss. And if you look at the regions for the total of 2024, Europe, Middle East, Africa grew 3%, Asia Pacific grew 20% and The Americas grew 10%. Some of the key events in the quarter, the board has proposed an ordinary dividend of SEK1.95 with a total dividend of SEK6.90 per share.
This is corresponding to SEK698 million. On November 4, we made an announcement of a new shareholder, Anatom Holding, which is a Switzerland based investment firm, and they acquired shares following the exit of the EQT public value fund. On December 5, we announced the launch of a new product, very exciting, BioGaia Gastro Pure Action. This is our first clean ingredient capsule. It’s a double strength probiotic, which is FODMAP friendly, which is something that is recommended by gastroenterologists for people with irritable bowel syndrome.
So this is a product designed to support consumers with sensitive stomachs and digestive issues. On January 16, we announced that we terminated the distribution contract with our partner in France, and we will be taking that business direct later this year. And then on February 4, we announced our results for the fourth quarter and that it would exceed the market expectations. Some of the launches that we had in the quarter, as you can see in Mexico, we launched Prodentis Mint lozenges across many of our Central Eastern European markets. We launched our BioGaia Pharex drops, which is for immunity.
So it was perfect timing for, the cold flu season. We launched BioGaia Gastro Pure Action, as I said. We launched that in one of our direct markets, Finland, and we also launched the ten ml of our BioGaia PROJECTUS drops in The United Kingdom. In terms of sales, as I said for the quarter, sales increased 23%. Our pediatric business, the sales increased 23% mainly due to increased sales of our drops and mainly in The Americas and EMEA.
And sales increased significantly in Brazil, The US and The UK. Our adult segment sales increased by 20% and that was mainly due to ProDentis as well as Gastrus. And ProDentis sales increased in South Korea and The US protected tablets decreased in Bulgaria and South Korea. So So as you can see here then for the year, our pediatric business grew 8% for the year and our adult health business grew 17% year for the year. This actually makes our pediatric business now for the year around 77% of our total sales.
When you look at it by region, our sales increased 24% in EMEA and some of the markets with the highest growth were The UK, Belgium, and Spain. Asia Pacific, our sales increased by 10% and that was mainly in South Korea, Japan and also Vietnam. And in The Americas, our sales increased by 32% and that was driven mainly by The US, by Brazil and Canada. And as you can see for the year, in the Europe, Middle East, Africa region, our sales grew 3% for the year. In Asia Pacific, our sales grew 20% for the year.
And in The Americas, our sales grew 10% for the year. So if you look at the segments in terms of regions, The Americas for the total year of 2024 now represents 38% of our sales, EMEA represents 36% of our sales and Asia Pacific represents 26% of our sales. So now I will turn it over to Alex, who will go through in more detail our financials.
Alexander Kacinas, CFO, BioGaia: Thank you, Theresa. So to summarize the quarter four, as we have heard, we had revenues of SEK $365,000,000, which was a growth of 23% in the quarter. Our operating profit was SEK 103,000,000, which was a growth of 28 versus the same quarter last year, and the margin was 28% versus twenty seven one year ago. Earnings per share were SEK 0.81 versus SEK 0.67 and cash flow was SEK 99,000,000, in line with the same quarter last year. If we move on to the sales, as we heard, we had a growth in the quarter of twenty approximately 23%.
And excluding currency, the growth was one percentage point higher at 24%. And we, therefore, had a negative currency effect of 1% in the quarter. And also year to date, we had a growth of 10% in total with a negative currency effect of 1% and an organic growth of 11%. If we look at the gross margins, for the quarter, our gross margin was 71%, which was lower than in the same quarter last year, where it was 76%. However, if we look year to date, our gross margin was 72% versus 73% last year, so almost in line with last year.
If we look at pediatrics then, we start with pediatrics for the quarter, we had a gross margin of 72 versus 78, which is lower. The main reason for the lower pediatrics margin is both some mix effects and some inventory cost of goods related inventory write down in VKIA USA. This is unfortunate and nothing we expect to happen going forward, but there was an inventory write down which affected the margin negatively, and again, in combination with a mix effect in geographies also. And in adult health, the gross margin at 67% was fairly stable compared to the same quarter last year and for the year to date figure, 63% versus 67% last year, somewhat lower, and that is also due to mix effects. If we move on to the operating expenses, they grew with 7%.
There were no adjustments in the quarter. Sales costs increased due to a larger proportion of direct sales in subsidiaries and some strategic investments in sales and marketing activities. In terms of our R and D costs, they grew with 18%, mainly due to increased clinical study costs in the quarter. And then we have some other OpEx, which were a positive SEK 12,000,000, that is positive currency effect. So all in all, total OpEx grew with 7%.
And year to date, our OpEx grew with 20%. But if you adjust for mainly then the Metapogen write off, our total OpEx increased with 9%, which is in line with sales, so slightly below the increase in sales. Look at the profit and loss then to summarize, we had a sales growth of 23%, our OpEx grew with 7% and our EBIT then grew with 28% at 103,000,000 And the adjusted EBIT was the same in the quarter, which then led to a margin of 28% in the quarter versus 27% in the same quarter last year. And then year to date, we have a margin EBIT margin of 30% versus 34%, but on an adjusted basis, the margin was 34%, which was in line with the same quarter last year. Turning to the cash flow.
Cash flow from operating activities decreased by 15% to SEK 103,000,000, and this decrease was mainly due to some higher payment of taxes. We have the same taxes basically, but it’s a periodization of taxes effect here. Then in terms of cash flow for the period, it was same as last year, SEK 99,000,000 versus SEK 100,000,000 last year. And the cash at the end of the period was SEK 1,220,000,000.00 versus SEK 1.504 in the same quarter last year. So with that, I hand over to Theresa for some concluding remarks.
Theresa Agnew, CEO, BioGaia: So in summary, our net sales increased by 23%, which was 24 excluding the currency effects for the quarter. As we said, our direct markets have strong performance and they continue to show that performance. And The US, Canada, and Japan are among our top five markets. Europe, Middle East, Africa sales increased by 24%, mainly due to higher sales in the pediatric segment, and we saw larger increases in The United Kingdom, Belgium and Spain for the quarter. Asia Pacific continues solid growth with 12 I’m sorry, 10%, which was due to higher sales in both pediatrics and in adult segments, and the sales mainly increased in South Korea, Japan and Vietnam for the quarter.
Whereas in The Americas, sales increased by 32% in the quarter, mainly due to increased sales in pediatrics and adult segments, and we saw larger growth in The U. S, Brazil and Canada for the quarter. As Alex said, our operating expenses grew by around 7%. Our EBIT growth was 28% with an overall EBIT margin of 28% for the quarter and 30% year to date with the adjusted EBIT margin being at 34% for the year. Our dividends that are suggested are at 6.9 per share.
And we will continue with the ramp up investments to drive continued growth where it makes sense, specifically in some of our direct businesses, such as The US, The UK, and Canada, Australia, where we are taking our business direct. And also as we go into and continue into this year, in France, we will be increasing investments as we take that business direct as well. So, we open it up to any questions that you may have.
Conference Moderator: If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Matthias Hegblom from Handelsbanken. Please go ahead.
Matthias Hegblom, Analyst, Handelsbanken: Yes. Good morning. Thank you so much for taking my questions. I have two. And sorry, you touched upon some of this during your prepared remarks.
I had some technical issues coming online. So firstly for Theresa, if you could talk about the new comprehensive digital consumer campaign, Perhaps help us understand what that entails and how we should expect effects from that in terms of translating into sales benefits. Is that already happening? Should it happen early twenty twenty five? Or how should we think about any benefit from that?
And then secondly, for Alex, on the gross margin, you called out write downs in Baguio USA as well as mix. So I was curious to better understand what was what the gross margin for Pediatric, which is typically very strong in the fourth quarter, was maybe five, six percentage points lower than normal. So how much was mix and how much was write down to explain this? Thanks so much.
Theresa Agnew, CEO, BioGaia: Okay. So first, I’ll take the first question. So we are consistently doing marketing in the digital space across our markets. So we do you know, video, social media influencer campaigns. But what we have done is we’ve created some new content, last year, that we can use globally.
And so we’ve started some of additional media focus in some of our direct markets with our new content. So that has started this year. I won’t share all the specifics just for confidentiality and competitive reasons, but, you know, it it is a digital campaign targeting consumers with our brands. You know, we’re starting to see some good sales in certain markets. So this is something that we’ve started.
We continue to monitor it. We adjust spending. You know, we look at it week on week, month on month in terms of how it’s growing our business. So, you know, this is something that we will continue to look at for the future and invest to drive brand awareness, but also to drive sales and conversion through our channels.
Alexander Kacinas, CFO, BioGaia: Good. And then when it comes to the gross margin, just try to answer that. I mean, we will not quantify how much was the write down or how much was the mix. But I mean, both but the write down was quite substantial part of it. And again, it’s sort of a one time effect.
We don’t foresee that this will happen again unless it’s very unfortunate. But it was a fairly substantial part was the actual write down in The U. S. And then there were some mix effects also affecting depending on, for example, in which countries we sell.
Matthias Hegblom, Analyst, Handelsbanken: Two follow ups, please. So firstly, for maybe for Theresa. So one of the things the outside world struggled to understand was the SEK 75,000,000 to SEK 85,000,000 additional OpEx that you highlighted in the mid year report for the second half. So how much of that did actually materialize and what did not and why? And then maybe the second one for Alex, anything particular we can understand from the write down?
Is that just natural course of business? Sometimes this happens and any additional color on the write down would be helpful.
Theresa Agnew, CEO, BioGaia: Yes. So in terms of the OpEx, so in terms of our additional investments as we had planned, those went forward as planned in our direct markets. Over the course of the year, as we saw some of our sales in EMEA, being lower, we controlled for some costs in spending in other areas. But also, you know, as you look at the back half, our R and D expenses were lower than anticipated in terms of some of the studies that we were spending on and that has to do just with patient flow, in terms of enrolling patients in studies. So some of that was lower than anticipated, I would say, from an R and D standpoint.
An R and D standpoint. And then we, of course, controlled for some costs as we went through and we saw sales were declining in certain areas. But the other kinds of additional investments that we made in sales and marketing efforts continued as we wanted.
Alexander Kacinas, CFO, BioGaia: And just to add to that comment, actually, one part of the actual why the cost was lower, quite the large explanation as well is that we had lower we had some positive FX effects that lowered the costs, so to speak. That’s part of the explanation also. Then coming to the gross margin. Yes, unfortunately, to go direct means that you would handle a larger part of the inventory and take some inventory risks. So it will be an increasing part of our business.
However, this to this extent that we saw here, we do not foresee that this should happen again. I think we have changed how we work with that locally in The US. So of course, again, going direct will mean some increased level of these type of risks, but we will try to mitigate this in the future.
: As a reminder, if you wish
Conference Moderator: to ask a question, please dial 5 on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Theresa Agnew, CEO, BioGaia: Okay. Well, thank you very much, for listening, and we appreciate it. And we will talk to you next quarter. Thank you.
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