BICO Group AB (publ) ($BICO)

Hello, and welcome to BICO Group's Quarter 1 2026 Earnings Call. I'm Maria Forss, President and CEO, and I will together with BICO's CFO, Ewa Linsater, present this interim report. Here is today's agenda. I will open today's session by summarizing quarter 1 2026 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, Ewa will present the group's financial performance. I will then comment on our R&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&A. 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 million Swedish kroners, unless otherwise stated. EBITDA was negative SEK 42 million with adjusted EBITDA of negative SEK 11 million and the difference is mainly related to our restructuring cost of SEK 52 million, of which SEK 30 million affected EBITDA. Cash flow from operating activities totaled SEK 47 million. BICO successfully issued senior secured bonds of EUR 40 million and the new capital puts us in a position to support further growth and capture market recovery while navigating ongoing macroeconomic uncertainty. A property in Oulu, Finland carved out from the divestment of Ginolis was also divested for a total of EUR 3.5 million. We settled our convertible bonds originally issued in 2021 with a total outstanding amount of SEK 1.08 billion in full on their scheduled maturity date. Before Ewa provides more details on our financial performance, I will present how BICO serves the world's leading pharma and 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. 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 10 years and cost between USD 2 billion and USD 4 billion, with the probability of approval after Phase I 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. 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. And I will 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 mean more experiments, not fewer, intensifying pressure on lab throughput, system uptime and data reproducibility. This means that wet labs become more critical rather than obsolete. AI breakthroughs have made wet labs even more sensitive to R&D. The lab is now a biological compute cluster, validating AI predictions for high throughput automation and trusted data become mission-critical. So all in all, BICO lab automation provides a 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 Button Go, making automation accessible to every scientist. And we are also developing next-generation systems like Crescendo to scale up experiments while keeping human in the loop oversight. So by emphasizing reliability, data integrity and compliance, we ensure the coming search 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 position 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. 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, fusing 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 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 a lab leveraging Green Button Go 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 Ewa 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. 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 divestment of 3 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. Navigating these dynamic market conditions, sales in Q1 amounted to SEK 330 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. In Q1, we saw growth in the segments Instruments and Consumables. EBITDA amounted to a negative SEK 42 million and adjusted EBITDA being negative SEK 11 million. The difference mainly relates to one-off restructuring costs of SEK 52 million, of which SEK 30 million 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&D pipeline execution in one of the business units. The program includes organizational streamlining as well as a planned closure of one site in Europe. We also have aligned some group functions to our current business needs. These programs will yield annualized savings of about SEK 30 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 and increasingly demanding market, we continued during the quarter to address execution challenges in parts of our lab automation business, primarily related to complex projects. 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 SEK 47 million, impacted positively by working capital changes of SEK 79 million. During the quarter, we settled our convertible bond and also issued new senior secured bonds. We sold our Finnish property with a net proceeds of SEK 32 million. The total cash flow during the first quarter amounted to minus SEK 547 million due to the settlement of the convertible bonds of SEK 1.08 billion. Cash reserves by the end of the period were SEK 744 million. As mentioned on the previous slide, the effect of changes in working capital amounted to a positive effect of SEK 79 million compared to the previous quarter. Operating receivables decreased by SEK 146 million. Inventories increased by SEK 13 million. Operating liabilities decreased by SEK 55 million. In percentage of the last 12-month 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. 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 EUR 40 million. The bonds have a tenure of 4 years and the carrying floating interest rate of 3 months Euribor 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. I will now hand over to Maria to present the R&D portfolio and some recent product launches.

Thank you, Ewa. One focus area for growth is continuous product innovation and we have a solid R&D pipeline and road map 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&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 UP.SIGHT. AI is more than large language models and [indiscernible]. In this case, AI is used for image-based pattern recognition to detect and segment sales quickly and precisely even under challenging conditions. And thanks to the new software update in combination with other features, the UP.SIGHT offers a solution that is 10x faster to results versus sequential viable cell counts on the industry standard. And savings are estimated to SEK 200,000 to SEK 300,000 per midsized cell line development lab. Multiple launches are planned for this year and these include both software, instruments and consumables. We have already launched a few products in quarter 1 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 2 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. The G.PURE Generation 2 automates DNA purification, delivering rapid, reproducible, plastic tip-free sample cleanup for seamless next-generation library prep workflows. And these are just 2 examples of technology and solutions delivering customer value, which are the results of our efforts within R&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 R&D road map for Green Button Go, we're also developing next-generation systems like Crescendo to scale up experiments while keeping human in the loop oversight and data integrity end-to-end. So by emphasizing reliability, data integrity and compliance, we ensure the coming search of AI-driven experiments can run at scale without compromising quality or uptime. Before the Q&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 5 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. We also want to expand strategic partnerships such as the one with Sartorius and Becton 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 and R&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&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 market recovery. We have also increased our innovation efforts, including software solutions and the use of AI, as I just presented. And above all, we remain committed to supporting our customers' 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 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&A. I will now hand over to the earnings call host for further instructions.

[Operator Instructions] The next question comes from Ulrik Trattner from DNB Carnegie.

A few questions on my end. 11% organic growth is obviously strong and you talk about or highlight strong desktop instrument sales. Can you just sort of highlight what the development has 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 if you can highlight which products or subsidiaries that are going particularly strong, that would be helpful.

Yes. So as you say, Ulrik, there are desktop instruments that are mainly growing in the quarter and while larger projects still take longer time to complete in terms of business cycles. So it's our German-based companies that are driving the growth when it comes to the desktop instrument sales mainly.

Okay. Great. And if there are any sort of -- I know that you like to sort of segment it into academic or R&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 a double digit organic growth?

I would say that we have -- there are still some effects of a muted U.S. academia market where our companies that are exposed to U.S. 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.

That's great. That's kind of what I've been seeing as well. Just trying to get everything in line. And just on the sort of restructuring savings, how much should come through in '26 versus '27? 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 '26 versus sort of, I guess, would be fully run in 2027?

I think you can start seeing some savings maybe the last quarter of 2026. 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 EBITDA on a sustainable basis? Or is this fluctuating?

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 put on the gas and on the rate, I think it's too early to say where those levels ultimately lies. So we'll have to come back to you on that one.

Sure. That's fair enough. Last question, sorry, squeeze in 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. So any type of one-offs that we should not extrapolate?

I think -- I don't think there were any delays in the deliveries. What we can see is 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.

The next question comes from Ludvig Lundgren from Nordea.

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?

Yes, happy to do so. So as you saw in my CEO comments, 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. 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 a quarter with strong organic growth of 11%. So some muted academia in the U.S. 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. Very clear. And just if you can elaborate a 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.

Okay. Fair enough. And then a final one from my side, just on lab automation and Biosero, 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 Biosero will deliver in the next few quarters?

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 also reinforce our competitiveness moving forward. So as we never guide forward, I cannot comment on quarter 2 or forward, but we're doing everything in our power to make sure that we can scale that business.

The next question comes from Filip Einarsson from Redeye.

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?

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 [indiscernible] of data from different installations 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%. But overall, you should see it, Filip, 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. 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 the monetization opportunities of the AI and the 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's difficult to quantify to put -- I mean, overall, as I said 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's super, super difficult to say.

Okay. Sorry, I had a hard time hearing what you said with the connection. Maybe you could repeat.

Okay. So when it comes to AI 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.

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 Ewa, I wish you all a great Wednesday. Thank you, and goodbye.