Biohit H2 on Wednesday: Groundwork for the new strategy period

Translation: Original comment published in Finnish on 2/8/2024 at 6:16 am EET

Biohit publishes its H2 report on Wednesday, February 14 at 9:30 am EET. We expect revenue of 5.9 MEUR and EBIT of 0.4 MEUR, driven by the improved efficiency in company operations and extensive utilization of growth drivers. We do not expect dividends as future growth investments require capital. In addition to the figures, we are interested in information on the sales of Gastropanel® products, and especially the new fingerprick test, and its outlook

Growth driven by the fingerpick blood test

Our H2 revenue estimate is 5.9 MEUR, which corresponds to a growth of some 23% from the comparison period. Biohit's 2023 guidance is revenue of 12-13 MEUR, which means 5.5-6.5 MEUR for H2. This growth is driven by the extensive growth already initiated by Biohit in subsidiaries in Italy and the UK, for example, and by the supply chain challenges related to Gastropanel® products easing. Our forecasts are conservative due to low visibility, so positive surprises in terms of revenue are also possible. In addition to the figures, we are interested in further information, especially on the development of demand for the Gastropanel® quick test, which should be the key driver of the company’s growth in the near future.

We expect the healthy profitability achieved last year to continue

Our EBIT forecast is 0.4 MEUR, which means a profit turnaround from the 0.2 MEUR loss seen in the H2’22 comparison period. Biohit’s guidance for 2023 is that EBIT will grow from EUR 1.1 million last year. This would mean an operating result of at least -0.3 MEUR for H2 (H1’23: 1.5 MEUR). The key drivers for the expected improved operating result are revenue growth that improves profitability through excellent sales margins and tight cost control. Biohit has so far had no capitalized new product development costs in its balance sheet. However, the company has referred to possible capitalization in the future. Their materialization could reduce costs in the income statement and thus lead to better reported results than expected. However, capitalization does not have a cash flow effect. We monitor the development of capitalization with interest, as it can have a significant impact on the reported operating result.

The new growth strategy outlines the targets for the next few years

Inderes’ full-year revenue forecast of 12.4 MEUR and operating result forecast of 1.9 MEUR are in line with the company’s guidance. The outlook for the coming years is illustrated by Biohit’s renewed strategy 2024-2028, announced in November, which aims to achieve 15-20% revenue while the EBIT margin remains at least at 10%. Our revenue forecast for 2024 is 14.1 MEUR (+14%) and EBIT forecast is 1.9 MEUR (+0%). We expect growth investments to depress profitability in the early part of the strategy period, which means that the operating result will fall below the revenue growth rate in 2024.