A tough quarter for EQL
Comments from the CEO
The second quarter of 2025/26 was marked by unforeseen delivery disruptions, resulting in sales growth of only 1%. The EBITDA margin, which was naturally affected as well, amounted to just 10%, as the company's fixed cost base is adapted to a higher expected sales volume. On a more positive note, Mellozzan received marketing approval in Turkey and was launched in the United Kingdom. Sales growth for the full year 2025/26 is forecast at around 15%. The quarter's delivery setbacks and their consequences are not expected to impact our long-term targets for sales growth and profit margins.
Financial Overview for the Second Quarter
During the quarter, sales rose to SEK 86.4 million, an increase of 1% from SEK 85.2 million in the previous year. Operating profit (EBIT) fell
by 75% to SEK 3.6 million compared to SEK 14.2 million a year earlier, with an EBITDA margin of 10%. The gross margin was 38% (41%).
Cash and cash equivalents amounted to SEK 78.3 (11.8) million at the end of the quarter. Additionally, there was unused working capital credit of SEK 30.2 (8.6) million.
CAPEX was SEK 9.7 (10.9) million during the quarter.
The effect of the delivery failures on EBITDA meant that leverage during the quarter reached 4.0x EBITDA. We will closely monitor the level
of indebtedness and take necessary measures to ensure it does not increase further. The most important aspect, of course, is to ensure that sales and EBITDA development follow the targets.
Long-term Financial Targets and Forecasts for the Current Financial Year
Sales grew by 1%, which is far below the company's ambitions for the new five-year period 2024/25-2028/29, where the target is to achieve an average growth rate of 30%. The EBITDA margin amounted to 10%, also well below the goal of stabilizing the EBITDA margin at 25% during the first half of the new five-year period, and then above 25%. Sales growth for the full year 2025/26 is forecast at around 30%, EBITDA expected to be around 20%, and the company's long-term targets remain unchanged.
Product Launches and Market Dynamics
The weak sales and profitability during the quarter are mainly due to several interrelated delivery disruptions. As a result of these, EQL is currently out of stock on a number of key high-margin products and is forced to postpone two planned launches from the second to the fourth quarter. A root cause analysis of the delivery delays and their impact on EQL have been carried out, and a number of improvement initiatives have been identified. Among other things, we will deepen the transparency between us and key suppliers upstream in the supply chain and, in connection with this, also implement an ERP system for increased control and traceability in our total supply chain. EQL has grown by an average of 40% since 2020. With such rapid growth comes a need for new processes and forums for collaboration between organizations in the supply chain. All
in all, we see our current challenges as typical 'growing pains' for a fast-growing company. It is clear to us what we need to improve in order to continue our growth journey going forward, and we see no reason to alter our long-term goals regarding sales growth and profit margins.
For our strategic key product Mellozzan, EQL's partner in Turkey received marketing approval during the quarter. Furthermore, our partner Medice launched Mellozzan in the United Kingdom.
Work to expand geographically and build niche generic portfolios for the German and Dutch markets also began during the quarter. Two colleagues with many years of experience in these markets have been onboarded, and the aim is for sales in these markets to reach a significant
level during the current five-year plan.
Other
The situation for our carriers in the Red Sea has not changed significantly since the previous quarter and remains problematic. This sometimes
requires the use of alternative transport routes and methods.
EQL has no exposure to the United States or direct impact from potential US tariffs. Moreover, sales of our pharmaceuticals are not affected by the economic cycle, which means that demand for EQL's products remains stable, even in a more uncertain global environment.
EQL is in a phase where there is a strong focus on ensuring that we can deliver on the new five-year plan over the long term. In this context, we are placing great emphasis on working with our suppliers to improve delivery reliability in the long term, including by increasing traceability throughout the supply chain, optimizing transport options according to the circumstances, and strategically ensuring redundancy at the production stage for our key products.
This disclosure contains information that EQL Pharma is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 05-11-2025 07:00 CET.
For more information contact:
Axel Schörling,
CEO & President EQL Pharma AB (publ)
Phone: +46 (0) 76 317 90 60
E-mail: axel.schorling@eqlpharma.com
Web: www.eqlpharma.com
EQL Pharma AB (publ) in short
EQL Pharma AB specializes in developing and selling generics, i.e., drugs that are medically equivalent to original drugs. The company currently has 46 niche generics (i.e., generics with limited competition apart from the original drug) launched in the Nordic markets. In addition to these, there is a significant pipeline of additional niche generics for launch in 2025 and beyond. The business is currently focused entirely on prescription drugs, including hospital products, mainly in the Nordics and European markets. EQL Pharma AB has its operations in Lund and is listed on Nasdaq Stockholm stock market. EQL Pharma AB carries out extensive development work in collaboration with leading contract manufacturers and major pharmaceutical companies in the EU and Asia, among others.
