Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CellaVision AB (CLVSF, Financial) reported an 11% growth for Q2 2024, with organic growth at 10%, achieving SEK188 million in revenues.
- The company achieved an EBITDA of SEK60 million, corresponding to a 32% margin, surpassing their financial ambition of 30%.
- Strong performance in the APAC region, with a record high growth of 198%, driven by multiple jurisdictions including Japan, China, and Australia.
- Successful completion of internal clinical and preclinical studies for bone marrow applications, with external clinical validation set for autumn.
- Continued double-digit growth in small instruments, particularly in the Americas, indicating strong market demand and potential.
Negative Points
- Temporary slowdown in the Americas, particularly in the large instrument segment, due to operational matters impacting installation pace.
- Gross margin remained at 66%, slightly lower due to increased material and product costs, with price increases yet to significantly impact.
- Operating cash flow was reduced to SEK40 million due to outstanding accounts receivable, resulting in a total negative cash flow of SEK44 million.
- Reagent sales showed only 1% growth for the quarter, indicating a softer performance compared to previous periods.
- Increased operating expenses to SEK75 million from SEK73 million in the comparable quarter last year, partly due to inflation and regulatory requirements.
Q & A Highlights
Q: Could you elaborate on the temporary decline in the Americas and the operational matters impacting installation? Will this pick up in Q3?
A: The decline is due to operational matters on the partner side, not within CellaVision. We expected more orders for large instruments, but partners focused on installing existing orders. We believe this is temporary and should be resolved soon.
Q: APAC showed significant growth. Are you seeing any impact from competition, and is there a risk of inventory build-up?
A: Growth in Japan and Australia is due to true consumption, not inventory build-up. In China, consistent shipments indicate strong demand despite competition from Mindray. Australia shows promising digitalization trends similar to Canada.
Q: Are you experiencing budget restrictions in EMEA post-pandemic, and how is software adoption progressing?
A: While there are macro-level budget pressures, we see healthy traction and growth in EMEA. Software adoption is increasing, particularly with remote review capabilities, tying together DC-1 with large instruments.
Q: Can you explain the delay in price effect on gross margins and the impact of increased production capacity?
A: The delay is due to a change in the timing of price adjustments, now implemented in Q2 instead of Q1. Increased production capacity will gradually improve gross margins over time.
Q: What is the expected impact of price hikes on Q3 sales and gross margins?
A: While specific quantitative details are confidential, we expect a positive impact from price increases. The effect will be more visible in Q3, influenced by product mix and FX factors.
Q: How does your bone marrow product compare to competitors like Scorpio?
A: While we can't comment on our product until registration, we believe our workflow solution will be superior, catering to a broader range of slides and leveraging our existing installed base and remote review capabilities.
Q: Can you elaborate on the collaboration efforts with Sysmex and its impact?
A: Collaboration with Sysmex has deepened, with more exposure at the country level and joint efforts in training and deploying digital cell morphology systems. This will become more visible in the market over time.
Q: What is the sales share of small versus large instruments, and how is the growth trend?
A: While we don't report the split for competitive reasons, small instruments continue to show double-digit growth, particularly in the Americas. We expect further uptake in Canada and Brazil, with potential in EMEA.
Q: Are there opportunities to increase gross margins for reagents in the medium term?
A: Yes, there are opportunities for gradual improvements in gross margins for reagents over the coming years, driven by ongoing projects and capacity expansions.
Q: How does the product mix influence gross margins, and what is the impact of recent investments?
A: Product mix significantly influences gross margins. Recent investments, particularly in production capacity, will gradually improve margins, but the immediate impact is more related to product mix and pricing adjustments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
