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Boule Diagnostics AB (publ) Interim report January – September 2018

All-time high in number of delivered systems and net sales for an individual quarter  

Quarter July–September 2018

  •  Net sales amounted to SEK 110.9 million (109.7), up 1.1 percent. Adjusted for the change in exchange rates, this corresponds to a decrease of 4.7 percent.
  •  Number of instruments sold in the quarter was 1,161 (1,116), an increase of 4 percent.
  •  Cash flow from operating activities amounted to SEK -0.6 million (10.0).
  •  Operating profit was SEK 12.8 million (28.2) which corresponds to an operating margin of 11.5 percent (25.7).
  •  Net profit amounted to SEK 9.8 million (21.6).
  •  Earnings per share before dilution amounted to SEK 0.50 (1.13) and after dilution to SEK 0.50
    (1.12).

Interim period January–September 2018

  •  Net sales amounted to SEK 318.2 million (320.5), a decrease of 0.7 percent. Adjusted for the change in exchange rates, this corresponds to a decrease of 1.4 percent.
  •  Number of instruments sold in the period was 3,063 (3,255), a decrease of 6 percent.
  •  Cash flow from operating activities amounted to SEK 16.1 million (33.6).
  •  Operating profit was SEK 51.4 million (39.5) which corresponds to an operating margin of 16.2 percent (12.3).
  •  Net profit amounted to SEK 39.6 million (29.2).
  •  Earnings per share before dilution amounted to SEK 2.04 (1.52) and after dilution to SEK 2.04 (1.51).

Significant events during the quarter

Boule secured major tender in India
In July, Boule secured a major tender in India, including 650 instruments, associated reagents and controls. Deliveries started during the third quarter and will continue in the fourth quarter of 2018.

Significant events after the quarter

Warning letter received from US food and Drug Administration
Following a routine inspection of Boule’s Swedish instrument manufacturing site in May 2018, Boule received inspectional observations from the US Food and Drug Administration (FDA). Boule has dedicated significant resources to address these observations, and has responded to the FDA with an action plan according to the timelines, and implemented procedure improvements accordingly. The warning letter states that the implemented procedure improvements are not adequate and that further evidence of implementation and staff training on the new procedures, as well as retrospective review, is required.

Boule takes compliance with regulations very seriously, and this matter has the highest priority in the company. The warning letter does not cause limitations on production or sales of products.

Comments from CEO Fredrik Dalborg

” During the third quarter Boule’s sales exceeded SEK 110 million in a single quarter for the first time. An increase in the USD exchange rate contributed to the strong sales figures. Instrument production levels were very high, and a new record for a single quarter was achieved with 1,161 units sold. Roughly 400 of the total 650 instruments for the major tender in India have been shipped. However, due to generally low instrument prices in India and the size of the tender, the price level is relatively low. Some shipments to countries with higher average selling prices have also been postponed to meet the Indian delivery requirements. The combined effect was a record high volume of instruments sold, but with a lower sales revenue per instrument and a decreased gross margin for the quarter. The instruments in the Indian tender are expected to generate good sales of reagents in the future and in the third quarter, sales of reagents worldwide remained strong.

Quality assurance improvements continue with highest priority
In October, Boule received a warning letter from the US FDA. The company has over the past 18 months made significant investments to raise the Group’s level of quality assurance. Employees with solid FDA experience are now included both in the Group Management and the Quality Assurance department. In addition, the manufacturing process development team and the service teams in the US and Sweden have been strengthened. Support from external consultants has been introduced to identify areas of improvement, and quality and compliance are parts of the new strategies and core values. Despite these efforts, Boule still has more work to do. These efforts have the highest priority, and additional consultancy support with extensive experience in working with the FDA has been brought in. Boule is committed to do everything needed to comply with the FDA's requirements and sent the formal reply to the warning letter on October 22.

Broadening of the product portfolio
In line with the strategy to broaden the product portfolio, a new hematology system will be launched in November 2018. The new system is a 5-part system focused on customers with relatively low test volumes and will be a good addition to both Boule’s current and future customer offering. The system has been developed in cooperation with an external supplier and will be sold under the Swelab and Medonic brands.

The development work on the new 5-part system platform continues and significant progress has been made during the quarter. The new platform will focus on customers with higher test volumes and is expected to offer additional analysis parameters.

Continued growth and efficiency initiatives
Boule is constantly working on production efficiency initiatives, and the process of implementing the new cost-reducing electronics module for the instruments is being prepared. In order to increase production capacity and streamline the production process, investments in the manufacturing of controls have been made in the Florida plant. In addition, investments in new automation solutions for the production of instruments were made during the quarter, which over time are expected to streamline the production of current and future instrument generations.”

THE INTERIM REPORT FOR JANUARY-SEPTEMBER 2018 IN ITS ENTERITY IS FOUND BELOW.

For further information, please contact:
Fredrik Dalborg, CEO and Group President, Boule Diagnostics AB, phone +46 (0)705-58 51 05
Christina Rubenhag, CFO, Boule Diagnostics AB, phone +46 (0)705-46 72 22

About Boule Diagnostics AB (publ)
Boule Diagnostics AB is a global diagnostics company that develops, manufactures and markets instruments and consumable products for blood diagnostics. The company serves hospitals, clinics, laboratories and companies within blood diagnostics, in both human and veterinary hematology. The company operates via subsidiaries in Sweden, the USA, Mexico and Russia. The company products are sold globally primarily through distributors, supported by Boule’s own local sales and support personnel. The Boule shares are listed on Nasdaq Stockholm since 2011. www.boule.com 

This information is information that Boule Diagnostics AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above at 15:00 CET on November 6, 2018.