Bactiguard Holding (Stockholm:BACTI B) Q2 2026 Earnings Call

0:00 Thank you, operator, and a warm welcome to everyone joining us for Bactiguard's second quarter presentation for 2026. I'm joined today by our CFO, Patrick Buck, and I'll take you through the quarter's strategic highlights and then hand over to Patrick for a closer look at the numbers before we open the line up for your questions. Today's title, Solid Performance Driven by Revenue Growth, captures exactly where we landed this quarter. Strong top line momentum across the business confirming that the slower start to the year was simply a matter of timing rather than any change in trend. So let's dive straight into the quarter. And let's start with the numbers. We're pleased to report second quarter net sales growth, excluding currency, of 16%.

0:51 The main driver was a recovery in BD revenues alongside one of the strongest quarters our wound management portfolio has ever recorded. This quarter confirms that the softer start to the year was a matter of timing, not a change in trend, as I said, and our strategy execution is on track. Adjusted EBITDA came in at 5,600,000, up from SEK 4,400,000 a year ago, lifted by sales growth and continued cost discipline. It's a good illustration of how top line growth flows through to earnings in a scalable license business, and it gives us room to keep investing in future growth. Cash flow from operations amounted to $12,400,000 a clear step up from the $1,700,000 in the same quarter last year.

1:42 Strategically, it was an eventful quarter two. We signed a new long term agreement that deepens our already thirty five year partnership with BD. We're seeing growth in the use of patients of Bactiguard coated implants with Zimmer Biomet, and we had strong momentum in our early partner dialogues. Let me take you through these one at a time. Let's turn to BD. In May, we announced a new long term agreement with BD, deepening a partnership that goes back to 1990, more than 35. Few things illustrate the long term value of our coating technology that creates for partners better than this, or how embedded Bactiguard coated products become in patient care once adopted.

2:33 What started as a collaboration covering select markets has steadily grown into a true global partnership. Today, it spans the full value chain from technology development to global market execution and is focused on expanding adoption of our infection prevention technology. The restated agreement modernizes the partnership terms and strengthens that foundation further. It builds on the December 2023 extension under which BD was granted worldwide exclusivity for Bactiguard coated Foley catheters outside of China. Alongside the commercial terms, a key part of the agreement has been aligning on the regulatory approvals needed to support smooth market transitions, something that's been a shared focus with BD over the past two years and that has now enabled recent launches in The Nordics, Poland, and parts of The Middle East.

3:28 We have backed each of these commercialization initiatives with technology training across the regions, and we continue to transition our KOL relationships and former customers to support market access and commercial execution for BD. As I said when we announced the agreement back in May, this is a great example of the power and potential of our license focused strategy, a partnership that's global, growing and built on shared success. In the quarter, BD revenues came in 50% above the weak second quarter of last year and are also up 8% so far this year, reaching $28,200,000 on a reported basis. As in prior quarters, BD revenues are shaped by the timing of concentrate shipments into their supply chain, which can create variation from one quarter to the next, but we continue to see underlying growth both from existing and new markets.

4:29 Now to Zimmer Biomet. Our partnership continues to focus on driving commercial adoption. Bactiguard is leading the work to transition the trauma implants to the MGR regulatory requirements in Europe and supporting the post market clinical studies. We are very pleased to note that the first of the ongoing multicenter studies is now complete, which is an encouraging step, and the key comparative study is progressing according to plan. We are especially pleased to see growing use of Bactiguard coated implants in patients. There's still meaningful headroom here given how small a share of the total trauma market coated implants represent today. Overall, we see the partnership as financially stable with revenues of $3,800,000 in the quarter, in line with our expectations, double digit growth in product sales and clear long term potential as adoption continues to build.

5:30 Let's turn to business development. We spent a good part of the quarter on new business development, meeting potential future partners at conferences and in direct discussions across The U. S. And Europe. Since launching our five focused therapeutic areas back in March 2025, we have now completed a full annual calendar of conferences across all of them, where we focus on business development activities. The need to find infection prevention solutions is especially recognized in orthopedics, and it is clear that the strongest engagement with Bactiguard is here. We are also enabled to capitalize on this category by having rights in various orthopedic segments available for licensing since amending our agreement with Zimmer Biomet at the end of twenty twenty five.

6:20 We remain focused on advancing these discussions with potential partners while recognizing that in a licensed business, dialogues like these can take time to mature into signed agreements. Now to Wound Management, which had a standout quarter. The portfolio delivered very strong performance indeed with 67% revenue growth for the quarter and 25% over the first six months. Our flagship HydroSyn Aqua line led the way, supported by stabilization in sutures, with growth in the portfolio across The Middle East, Europe and Asia. Tender business in select regions also gave a positive boost in the quarter. Alongside execution, we continue to strengthen the product portfolio, invest in availability of products in new markets and build out our operational setup in Malaysia.

7:18 As we've said before, we continue to expect double digit growth from the combined wound management portfolio, fueled by high double digit growth from HYDRS and Aqua and a stable contribution from Sutures. And this quarter confirms that we continue to be on track. With that, over to Patrick for a closer look at the numbers. Thank you. Thank you, Christine. We are very happy to present solid growth this quarter. For Q2, we report both revenue growth, continued profitability, increased cash generation, and we see positive momentum across the business. Total revenue came in at SEK 57,000,000, up from 52,000,000. Total revenues grew 12%.

8:05 Net sales grew 16% excluding currencies. As said, this is driven by strong growth in BD revenues and a very strong quarter from our management portfolio, in fact, strongest quarter and the strongest revenues on a rolling twelve months basis ever. Looking closer at our core license business, we see license revenues lifted by the strong growth in BD, which came at 28,200,000. This is up 50% versus a weak second quarter last year, but up 8% versus the first half of last year. And as said, we see strong continued underlying momentum in the BD business and the BD partnership.

8:53 Semobiomed contributed with approximately 4,000,000 in the quarter, in line with our expectations, reflecting in fact a double digit growth in the sales of the C and N Bactiguard coated nails. The reason for the decline in the total license revenues is found in the high comparable on SEMA last year, in which Q2 included a full year of minimum royalties from the previous agreement. As communicated, fixed fees in our new agreement will be consistent across the quarters going forward. Across both partnerships, we continue to see positive in market volume growth, and we are excited to see the future demand from customers and clinicians for our technology, which underpin and adds to the risk reduction efforts healthcare professionals must deal with on a daily basis.

9:49 On OpEx, we remained cost conscious and with cost discipline during the quarter while also investing selectively to support growth. This includes, for example, within our regulatory capabilities, within business development activities, as well as strengthening our teams and operations globally, including in our Malaysian business. For the quarter, we did see an increase of total OpEx of 11%, while the half year period holds about a one and a half percent total increase in OpEx. The q two increase mainly pertains to timing effects on bonus accruals, which was reversed in q one twenty twenty six versus q in q two last year in '25, I. E, a lower comparable for q two.

10:37 As communicated previously, we will continue to operate with a cost discipline while ensuring the right investments in growth. On adjusted EBITDA, we came in close to DKK6 million for the quarter, up from DKK4.4 million in Q2 last year, driven by sales growth and, as said, continued cost discipline. Our margin on adjusted EBITDA increased to 10% for the quarter as well as approximately 10% for the first six month period. Net profit for the quarter was minus 8,200,000 in line with the $8,100,000 in Q2 last year.

11:25 On cash flow, we see cash flow from operating activities amounted to a bit more than $12,000,000 for the quarter, a substantial improvement of more than $10,000,000 versus the 1,700,000 in Q2 last year. Also, cash flow total cash flow for the period was positive at 7,400,000. And our total cash and cash equivalents at the quarter end amounted to 43,500,000, up from 35,000,000 approximately at the end of Q1. So with that, back to you, Christine. Thank you, Patrick. With growth across all of our businesses, including double digit increase in wound management, our focus now is on converting these investments into sustained traction.

12:14 We are on the right track, and we will keep executing towards our strategic targets. I want to be clear that nothing about previous quarters changes our strategic direction or the fundamentals of the business. Our targets for 2030 stand unchanged. We remain focused on strengthening our partnerships, continuing to invest in our key knowledge areas that help advance our partners through regulatory approvals and to commercialization, and building long term value through disciplined execution across the portfolio. To sum up, this was a quarter of broad based growth with net sales up 16% and further improvements in both EBITDA and cash flow.

13:04 We renewed and deepened our 35 partnership with BD, and we continue to see growing momentum with Zimmer Biomet with double digit growth in product sales as coated implant use in patients builds. Wound management delivered one of the strongest quarters ever, up sixty seven percent, and we have a strong partnership pipeline building, particularly in orthopedics. Taken together, we remain firmly on track. With that, let's open up for questions. If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. The next question comes from Maria Carlson Osipova from DNB Carnegie.

13:54 Please go ahead. Hi, Christine and Patrick. Maria here from DNB Carnegie. Thanks for taking my questions. Great quarter, so congratulations on that as well. Some questions, however, on the COGS level. Historically, we've seen some lumpy gross profits, and we see COGS increasing this quarter. How should we think about the gross margin profile going forward? I mean this is mostly a wounded portfolio effect, but still, what do we see going forward? Yeah. Thank you, Maria, for your question. You're absolutely right. We have seen historically a bit lumpy COGS profile. We obviously try to have it less lumpy going forward.

14:41 I think what we see in Q2 is not the same picture you will see going forward. Part of what drives the Q2 is product mix. We saw a higher sale of wound management, obviously, the high growth on wound management. And we've also had some additional scrapping in q two. So going forward, I think you can assume the level that we have seen consistently in the past periods. Alright. Thank you. And talking about wound management, is this high growth repeatable? I mean, you mentioned high single digit growth there, and you also mentioned tender business positive boost.

15:27 Is there any proportions that you can talk to us about? I think in in short, we would love if we continue to report plus 50%, 60% growth for management, But that, I think, is certainly not our expectations to the business. As we've said before, we have a confident long term view on the business to deliver sustained double digit growth. That includes both the hydrogen part of the business and the sutures business combined. As we've said before, we see the sutures business more as a stable business, whereas in our hydrogen portfolio, we see continued high double digit growth, which we expect going forward. I think with this quarter, obviously, we have continuous confirmation that we see positive demand by customers, obviously, from our distributors of the hydrogen portfolio.

16:26 And as we've said, we have seen a stabilization of the sutures business this year, which affected us a bit last year. So we have a continued positive view on the growth coming from our Malaysian based wound management business. As we've talked about before, we see growth across the regions, notably from the Middle Eastern region, from Europe as well as our legacy markets in Asia. All right. And just a little more focus on costs. The MDR spend, have you guided previously on what do you expect in total MDR expenses to be? What should we wait in the second half of the year?

17:12 And maybe some time lines, how long are you planning to carry the work with MDR? Yeah. Appreciate the question. I think in short, no no, we have we have not guided regarding that for the full year. We have, this year, an increased amount of nonrecurring costs that we can single out that relates to MDR. This is what we highlight in the report in the adjusted EBITDA as related to MDR costs. We have highlighted in that that we see this potentially in 'twenty six and 'twenty seven. I do believe that we will see more cost and the majority of the cost in 'twenty six versus '27, and we're halfway through the year.

18:03 But we don't have a specific guidance on on the total number of costs. But we will obviously continue to incur costs that are MDR related and that we see nonrecurring also in the remaining q three and q four of this year, certainly. Obviously, in addition to to these regulatory costs, we have we have normal regulatory costs in our business, which we obviously do not single out. But we will continue to to report these MDR related nonrecurring costs in the report for q three and q four as well, obviously. And, Maria, this is Christine. From a qualitative standpoint, we can also comment that with BD, the underlying Foley product portfolio has already been upgraded to the MDR regulatory guidelines. So that product portfolio is complete from an MDR standpoint and is approved and is currently regulated under MDR.

19:01 And we are currently working on both the transitions of the Zimmer Biomet trauma implants as well as the portfolio for our wound management portfolio, all of which are, of course, device related under the MDR regulations. Alright. Thank you for the addition there. That was all my questions. Thank you very much. And yet again, congrats on the good quarter. Thank you. Thank you. The next question comes from Matthias Vadsten from SEB. Please go ahead. Hi. Thanks for taking my questions. I think it was good to see the BD revenues normalizing this quarter, a quite good step up from Q1. I just want to ask if you would say this represents the sort of run rate you're at right now and with no specific item either helping or carrying it down?

19:55 And if we are likely to see lower volatility in the BD revenue line going forward or if the volatility will still be there based on your understanding? Yes. Thank you, Matthias, for your question. We are, of course, also very happy to be able to report numbers that I think sustain what we have communicated is a very solid and positively underlying sort of growing partnership and and and momentum for for BD. What what we have stated and obviously what we've talked about in the past quarters is that we did see an effect of of some of the delayed registrations in Europe.

20:44 We we believe, and we, of course, work as as much as we can to ensure that there will be less volatility going forward. So that is what we expect. That is what we hope. That is what we focus on, Matthias. What you see in in the q two for this quarter is obviously more similar to to q three and to q four of the last year, which were as we also reported as more normal quarters. So I believe, yes, in short, this is this is about sort of the level that we are very happy to see from BD. And from there on, of course, we we still continue and expect to grow. But we do expect sort of less volatility going forward, but, of course, it's it's sometimes out of our hands, and we're not able to guide fully on this.

21:37 But as we said before, we see continued positive underlying growth in the BD business with mid single digits, at least for the sort of volume volume growth in the markets. And as Christine also communicated, we see a positive response from many new geographies preparing or already sort of having products available with Bactiguard codifolies in in in sort of BD's markets. I think that's a very clear answer. The next question relating to BD would be what share of the revenues there that are new markets sort of outside U. S, Japan, etcetera? Do you have that level of insight?

22:29 Thanks for your question, Matthias. Just to understand, so what share of revenue is in the new markets that they will potentially or have launched in versus the existing markets? Yes. Such as India and Europe that were added to the agreement you had before with the deal. I mean, in in short, we don't have sort of their or the split on these markets. And I think, in fact, which is what obviously we and and BD are trying to do together is is not to necessarily capture market share from from from existing other coated catheters. This this, really exists, but to rather build the markets.

23:17 We know today that, obviously, the existing markets with The US being the biggest, has the biggest potential. So, of course, we're trying to build a lot of additional markets that in in size will will will not obviously be bigger than than the existing business. And it will take time, but this is this is the work that we are committed to and that BD is committed to, and we see very positive response from from these markets that have not had coated catheters available before. And we see positive response from their sales teams that they would like to offer this to their customers and to the patients ultimately. So we believe that the additional markets that obviously we have now under the new global agreement will definitely sustain positive growth for BD going forward.

24:07 But obviously, for the foreseeable future, it will be it will still be a lesser portion on on on the total revenue base versus the existing markets. Thank you very much. Those were the questions I had today. Thank you, Matthias. There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments. Thank you, operator. Thank you for all your questions and for your continued interest in Bactiguard. We appreciate the dialogue and look forward to updating you at our next available opportunity. And with that, back to you, operator, for closing out the call.