Modulight: Operational efficiency improved and pay per treatment model implementation proceeded well
Modulight Corporation | Company Release | April 26, 2024 at 13:00:00 EEST
This release is a summary of Modulight's interim report for January-March 2024. The whole report is attached to this stock exchange release as a pdf file, and is also available on the Modulight website at https://modulight.com/reports-presentations/.
The figures in parentheses refer to the corresponding period of the previous year. This interim report is unaudited.
Highlights in January–March 2024
- R&D pipeline with 28 (27) projects, the company concentrated on advancing projects already in phase 3. Implementation of the pay per treatment (PPT) business model expanded in several projects.
- Two new pharmaceutical companies became customers; additionally, in the biomedicine segment, a prototype order from a new customer for Modulight’s generic laser platform.
- Revenue was EUR 1,059 (1,493) thousand. Revenue increased 4% quarter on quarter but decreased 29% year on year.
- EBITDA was EUR -1,314 (-1,429) thousand. Profitability improved due to improved efficiency despite increased investments in product development projects and geographical expansion.
- EBITDA margin was -124.1 (-95.7) % of revenue.
- Operating result (EBIT) was EUR -1,978 (-1,903) thousand.
- Operating result (EBIT) margin was EUR -186.8 (-127.5) % of revenue.
- Earnings per share was EUR -0.04 (-0.04).
Key figures
| Group EUR 1,000 unless otherwise noted | 1–3/2024 | 1–3/2023 | 1–12/2023 1) |
| Revenue | 1,059 | 1,493 | 4,025 |
| EBITDA | -1,314 | -1,429 | -8,539 |
| EBITDA-% | -124.1% | -95.7 % | -212.1% |
| Operating result (EBIT) | -1,978 | -1,903 | -12,132 |
| Operating result (EBIT) -% | -186.8% | -127.5 % | -301.4% |
| Earnings for the period | -1,872 | -1,739 | -11,861 |
| Earnings per share (EPS, EUR) | -0.04 | -0.04 | -0.28 |
| Acquisition of fixed and intangible assets | -1,205 | -3,483 | -9,735 |
| Free cash flow from operating activities | -2,519 | -4,912 | -18,274 |
| Cash and cash equivalents 2) | 22,452 | 37,675 | 25,131 |
| Net debt 2) | -16,444 | -29,811 | -18,586 |
| Gearing ratio 2) | -30.5% | -45.3 % | -33.4% |
| Equity ratio 2) | 87.0% | 86.6 % | 87.1% |
| Headcount (FTE) 2) | 70 | 63 | 70 |
1) Audited
2) Figure refers to the end of the review period
Outlook for 2024
Modulight has not issued guidance for revenue or profitability in 2024. As the company’s customer projects are still distributed across varying early stages of development, and predicting developments in the market remains challenging, it is difficult to forecast performance in 2024. However, the company expects that changes in the operating environment caused by macroeconomic and geopolitical uncertainty will still impact its financial performance in the short term.
Seppo Orsila, CEO
Modulight's year 2024 started well with the expansion of the implementation of the pay per treatment (PPT) business model. During the first months of the year, we also received orders from two new pharmaceutical companies, which expand the adoption of Modulight's unique technology in indications that we are already working on with existing customers. Our investments have led to new customers and increased interest in our expertise. Our product development projects progressed through PPT implementation, and in addition to the USA, the geographical expansion in other regions has got off to a good start.
Revenue in the first quarter amounted to EUR 1.1 million, which was 4% more than in the previous quarter and 29% less than in the corresponding period of 2023. Revenue development is affected by the transition to the PPT business model in line with our strategy and by delays in some projects. With the PPT model, the revenue is initially generated more slowly, and we aim to compensate for this by expanding our customer base. We believe that the PPT model will grow in popularity among our customers, as it brings new opportunities for our customers to expand their use of the treatment and benefits our cloud service patients and customers.
EBITDA was EUR -1.3 million (EUR -1.4 million). Our profitability improved thanks to improved operative efficiency, although we simultaneously increased our investments in new product development projects and geographical expansion. We estimate that we have both the financial ability and business reasons to maintain this high level of business growth and product development. Despite the increased number of employees, our costs took a downturn as expected, as the commissioning of new equipment investments was mainly completed during 2023. One-off commissioning costs have already decreased significantly, and the impact of the end of our investment program will be reflected in our figures this year.
At the beginning of the year, we have continued our work with several hospitals and clinics to expand the use of the PPT business model to various cancer treatments and treatments for age-related macular degeneration, for which we received an FDA approval in January last year. Our PPT model has grown in popularity, and customers who have adopted it are expanding their use of our services. The security audits related to the PPT model have gone faster, and based on the feedback we have received, the security of our cloud service has been excellently handled. At the beginning of the year, we also received the ISO 27001 information security management system certificate.
Our focus on expanding the business is in the United States, where the new sales director has increased our pace of local business development. We have also progressed in geographical expansion in Europe and Asia, where our strategy is to partner with various distributors.
At the beginning of the year, two new pharmaceutical companies joined our customers, one of them a major Japanese pharma. New customers may lead to growth in the product development pipeline in the future. We estimate that our co-operation will focus on the same cancer treatments where other customers are already using Modulight’s ML7710 cancer treatment platform. The first indications are likely to include brain, esophageal and lung cancers. Increasingly, customers are choosing our cloud-based technology for the same indications where we already work with one or more pharmaceutical companies. We are particularly happy to be able to take advantage of the diverse possibilities of our unique product platform and PPT business model with many new customers.
We continued to advance the 28 projects in our R&D pipeline. The customer projects that in 2023 progressed to research phase 3 are major investments for our customers and indicate that these projects have a good chance of progressing to the commercial phase. In the first quarter, we focused on promoting particularly these Phase 3 projects. The most significant progress in the development of the R&D pipeline is the accelerating expansion of PPT implementation in several indications and with several customers. In addition, our investments in the biolab will directly support the acceleration of product development for many customers and further strengthen our unique offering.
Our laser platform is also of interest to customers in laser-based microscopy used in biomedicine. In this segment, we received a prototype order from a new customer for both an existing production version and a future model.
A lot is also happening in ophthalmology, both in cancer and other indications. The FDA approval we have received for treatments for macular degeneration is also important for the future, as second- and third-generation drugs progress to widespread adoption and approval. Second and third generation photoimmunotherapy drug therapies are estimated to bring significant improvements in cancer treatment. In addition, we see new strategic opportunities in the development of drug delivery and substances.
Our previous investments in state-of-the-art laser technology and talent contribute to our opportunities for an increasing number of projects with significant commercial potential in the future. Our financial position allows us to maintain our research and development activities at a high level. This year, we will continue to focus on actions in line with our growth strategy, such as expanding our PPT model, advancing projects and leveraging technology more extensively in the short term, without forgetting long-term strategic opportunities. We believe that our actions and strengths in line with our growth strategy will contribute to our business returning to strong, profitable growth during our strategy period extending to the end of 2025.
Financial reporting in 2024
In 2024, Modulight will publish the following financial reports:
- Half-year report January–June 2024: August 16, 2024
- Interim report January–September 2024: October 18, 2024
Webcast
Modulight's CEO Seppo Orsila will present the result in an English-language webcast, which will be held on Monday April 29, 2024, at 2:00 p.m. EEST. The broadcast can be followed at https://modulight.zoom.us/webinar/register/WN_2ZGCvCXqQvCSXFssiRIMsw.
Questions are to be submitted in writing in the webcast portal. CFO Anca Guina will also be present to answer questions. Presentation materials will be available before the start of the event on the company’s website at https://modulight.com/reports-presentations/.