Photocure (Oslo:PHO) Q1 2026 Earnings Call

0:00 Alright. Well, great. Welcome everyone to Photocure ASA's first quarter twenty six results. I'm Dan Schneider, president and CEO. Today, with me will be Dick Peters. He's controller for Photocure. Eric Dahl, our CFO, is out ill today, and also Priyam Shah, vice president of relations. Just a reminder, the usual disclaimers are in effect for today's presentation. So Photocure's corporate strategy is built on three priorities guiding execution and capital allocation. The first pillar is strengthening the core HEX VIX and SYSVUE business, driving disciplined revenue and EBITDA growth while expanding operating leverage.

0:47 US, we wanna scale the blue light cystoscopy mobile VorTeq along with the tower installations and upgrades with the goal of increasing BLC inactive and upgraded accounts, so increasing that throughput. And in The EU, we wanna increase penetration in the key EU markets through BLC expansion, image upgrades, and broader distribution reach, and we'll talk more about these today. We also wanna be a lead in the standard, establishing BLC as a primary precision diagnostic across detection, surveillance, and the monitoring of non muscle invasive bladder cancer. We also support next generation high def BLC adoption via the OEM upgrades and new OEM entrants. As we mentioned in today's presentation, Stryker has now entered the blue light cystoscopy market in Europe, and that is extremely exciting, if you know anything about the Stryker organization.

1:44 And then partner with Richard Wolff to grow FlexVLC in Europe while advancing our co development of the four k global system for a proprietary launch in 2027 on a global scale. And the third pillar, expanding our platform. We wanna build a broader uro oncology and precision diagnostic platform, be it biomarkers, artificial intelligence, technologies like flex, etcetera. We also wanna leverage our partnerships to scale mobile and four k solutions, and we wanna advance innovation and pursue m and a to accelerate our corporate growth. The result, near term near term growth and strengthen long term competitive positioning. Q one highlights.

2:32 Extremely excited about this quarter's results. Very, very strong. Overall, we had 18% product revenue growth. Ex FX, it's 11%, including FX. In North America, we delivered 26% unit growth and an equivalent 26% product revenue growth. Ex FX. It's 11% including FX with those headwinds. The installed base of Saphira updated blue light equipment continued to increase with four new tower placements and seven tower upgrades in The US in q one, reminding you upgrades in every situation have produced double digit growth impacts for those accounts. So this is extremely important part of our strategies, is to keep the technology as cutting edge. We had a fantastic 26% unit growth in the rigid surgical market, inclusive of Fortech mobile solution.

3:24 As a reminder, Fortech has 24 towers in their national fleet of rentals, underscoring the growing demand for BLC. As you recall, six were added towards the end of third quarter into fourth quarter of last year, fully operational now in 2026. The number of active accounts increased by 21% year over year to 413, setting the stage for continued momentum into the future. In Europe, revenue was up 11%, units up 8%. We continue to execute the EU with strong growth across all key markets, driven by continued execution focus and tower upgrades, which now account for over 15% of all EU accounts generating double digit growth. The launch early last year of the Olympus Viscera three BLC state of the art equipment continues to gain momentum now with 75 Viscera installs in the field and growing.

4:19 Upgrades throughout the world have proven to increase the use of BLC with HEX VIX SYSVUE, and encouraging accounts to upgrade means remains a priority for the organization. We generated positive adjusted EBITDA of 15,300,000 NOK. That's a 128,300,000 NOK of reported EBITDA, inclusive of milestone. We now report that adjusted EBITDA as our key profitability metric, in line with conventional practice to better reflect the underlying operational performance and scalability of the organization. Q one marks the twelfth quarter or the third year in a row of positive EBITDA, as we continue building organizational operating leverage.

5:05 We had approximately 10,400,000 NOK in business development expenses in q one on various strategic initiatives. And during the quarter, we also made a minority investment of 28,700,000 NOK or 3,000,000 USD in Vessica Health, who's developing and launching a precision diagnostic multiomic urine biomarker test called AsureMDx for early detection of bladder cancer with a best in class performance. This investment is consistent with our long term priorities, and as you recall from the slide prior, the third pillar in of making precision diagnostics a key strategic move, which I will elaborate elaborate on further in today's call. At the end of q one, we have a strong balance sheet with 192,700,000 NOK in cash. This is before the Osiris payment.

5:57 And post q one, we received that 82,300,000 NOK or 8,600,000 USD in milestone payments from Osiris. On the NMPA approval of Savara in China and the acceptance by EMA in Europe, which will be reflected in the cash balance in q two when we deliver it later in July. And lastly, the organization carries no debt. On the news flow, as a very important regulatory and strategic update, the FDA has finally provided clarity on reclassification pathway for the OAY related equipment or it's the internal product code for BLC. And this is super exciting because as everyone knows who's been involved with Photocure, we have been highly active, highly engaged trying to move this process forward. This unlocks a tremendous opportunity for Photocure.

6:52 And following the response to Carl Storz's citizen petition, they have now confirmed that they will initiate a proposed reclassification process in the second half of this year. This marks an important step towards a more structured and predictable regulatory framework for BLC equipment in The US market. For photocure, reclassification has the potential to be a major step change driver for the business, unlocking a significant larger commercial opportunity as we towards double digit penetration across an expanded market to much more today. We will talk about the magnitude of the decision later in the deck, but safe to say this provides Photocure with tremendous opportunity to go after market opportunity that's more than 10 times today's current business.

7:40 Taking account multiple manufacturers, peak penetrations of at least 40% of rigid alone, this this unlocks a tremendous opportunity for the organization, and we're super excited about it. Our partner Osiris and Richard Wolff have had several updates this quarter as well. The System Blue BLC equipment developed by Richard Wolff, the market approval in China to work in synergy with HEXFIX, which was approved back in late twenty twenty four. This marks the moment where Osiris and Richard Wolff will begin the commercialization in China in the coming months. Also, Survivorib was approved in China by the NMPA as a first in class noninvasive therapy for cervical precancerous lesions. This was on the heels of and ASA announcing that the EMA has also accepted market authorization application for Savira in Europe.

8:33 And finally, staying on the subject of Savira. Savira was included in the joint consensus of four prestigious medical societies in China that recommend Savira with class 1A evidence, establishing a new benchmark for noninvasive treatment of cervical precancerous lesions. Events and publications on January 8, a key publication of laser three examined twelve months recurrence free following photocoagulation of bladder tumor versus TRVT. Photocure has supported this program and the specific study in Denmark since 2016. The study was published in the Journal of Urology in January, and the author authors concluded that office based laser photocoagulation of bladder tumor is non inferior, or said another way, is as good as a TRBT performed with blue light TRBT performed in the hospital under general anesthesia and is safe, efficient treatment of recurrent low grade bladder tumors. So basically, combining the two in the office gets them the same results as if they did a TRBT in the Operating Room under general anesthesia.

9:39 On March thirteenth through sixteenth, the European Association of Urology held its Congress. There were two trials in progress that were presented. The Cutlass randomized clinical trial, which is investigating whether second look TRBT can be safely omitted by combining perioperative stage accuracy of MRI using BLC and VRADS as the mechanism to avoid that second unnecessary TRVT. And the second trial in progress was the evaluation of urinary minimal residual disease and outcomes at high risk non muscle invasive bladder cancer with blue light compared to white light cystoscopy. The urinary biomarker EuroAMP from Convergent Genomics, which we had announced several quarters ago, detects minimal residual disease in the bladder. By enhancing tumor margin visualization, BLC may improve TRVT completeness.

10:38 This randomized controlled trial enrolls high risk non muscle invasive bladder cancer patients receiving either the standard of care of white light or blue light and UROAMP, And this will be evaluated for the cleanliness of resection in each modality. So we're super excited about where that particular study can go. Let's move on to segment trends. So we had strong unit sales in both regions. Both North America and Europe delivered continued growth. In North America, the rigid surgical market had 29% unit growth in Q1 to an all time high with the addition of VorTeq mobile solution. There are 11 Safira towers installed, seven upgrades for new, adding active account growth of roughly 21% year over year. And I'll remind you that this this growth account has been consistent over quarters, consecutive quarters, so it bodes extremely well as we look into the future.

11:34 Fortech mobile solution now covers 187 accounts as as of the start of the service, and over 300 different or let's call it new physicians are now trained since launch, demonstrating the growing momentum and and from an otherwise inaccessible market segment. Said another way, this business we're getting from Fortech is inaccessible because of capital budgeting constraints, etcetera. But these physicians are demanding it, and Foretech is delivering this service, and patients are benefiting from it. The Foretech mobile solution and Survivor upgrades are the key drivers to The US business. Access to BLC in The US remains a top priority demonstrated by our ongoing efforts with the FDA reclassification and reimbursement initiatives, which we'll talk about some more today. Supporting this growth are many discussions and presentations at US congresses, such as the upcoming AUA next week, where there's a growing belief that BLC's ability to see more assures physicians of their ability to perform a more complete TRVT, which then leads to accurate pathology, staging, and risk stratification, and ultimately helps urologists make an informed precision medicine decision.

12:46 And I I think we're seeing that in the business. There is wind catching into the sails with BLC, and just it's got its own momentum going. We're we're we're super stoked about that. In Europe, the q one units hit an all time high of 8% growth. Europe is beginning to see the impact of the Olympus Viscera three upgrades roll up, particularly in Dock, Germany, Austria, France, and The Nordics. There are 75 Viscera three installs so far through q one with more in the pipeline for 2026. Upgraded accounts now represent over 15% installed base, delivering positive double digit impacts. 40% of the EU is dominated by Olympus, and that primarily is concentrated in The Nordics, Austria, Germany, and France.

13:34 Europe growth also remains strong with a solid 10% growth in the dock countries, which make up a majority of the revenue, and the priority markets of France, UK, and Italy, where we see in all markets double digit growth and continued momentum. Taking a look at it at The US specifically in active accounts, there was significant growth of 21% in active accounts in The US, which are accounts that have ordered in the past twelve months. Over the past six quarters, we have consistently seen accelerating year over year growth in account as an ongoing trend fueled by VorTeq and the increased interest and importance of blue light cystoscopy, along with the upgrades of the the the Sophira system and in new implementations and installations.

14:21 The VorTeq program continues to exceed everyone's expectations. The reactivated accounts with BLC upgrades along with new account remains an important initiative as upgrades provide double digit uplift in sales in the accounts that do those upgrades. We continue to see growing momentum and increasing interest in the adoption of BLC with SISU in The US as the market continues to evolve in bladder cancer. So I wanna take a moment on this slide. And what we're representing here or illustrating is the unlocks, the inflections, the opportunities as they unlock throughout The US market, whether it be the reclassifications, the entrance of OEMs, the flex launch, the reimbursement changes. These all have tremendous impacts on the business. Despite the accelerating growth today, less than 10% of the market is serviceable by Photocure despite a very large US bladder cancer market. And there's strong clinical validation and demand for BLC. It's just getting to it, having accessibility to patients. And we'll talk a little bit about some of the things that are that are taking place.

15:32 What changes the trajectory are three clear expansion drivers. This graph represents the potential addressable market and serviceable market with each unlock. First, additional manufacturing capacity removes historical access constraints, immediately opens up a 100% of the rigid market. Said another way, additional VMs who have strongholds in in the other 65% of the hospitals in The US, if they offer blue light cystoscopy, it offers an opportunity, a base for us to to build on. We believe the FDA reclassification, which begins second half of this year, and and I will remind everyone, and alternative pathways that certain OEMs are pursuing currently will unlock the rigid market compared to what we service today. And I believe that could happen as soon as the end of this year, certainly into '27.

16:24 Second, the flex reentry will allow us to move into a lucrative and growing important surveillance market, driving broader and repeat usage. The Richard roof Wolf has an interim solution that is already launched in The EU, combining a white light scope with a system blue system, combining that if they have those materials in the hospital, they're able to perform a flex blue light solution. But that is not the long term solution. We have, as you know, have entered into a global or into a development program to launch a global state of the art solution we are co developing with Richard Wolff. It's expected to be ready to be approved and launched in 2027.

17:10 And we believe the reclass, which the FDA has announced, will also facilitate BLC flex relaunch assessing a market vastly larger than what we currently are servicing today depicted in the graph below. That flex market is three times plus the size of the rigid market, and you gotta keep that in mind. So if you take a look at the rigid market, we're only getting access to a third of that. If we get the reclass or OEMs enter, we got a 100% of that. That 100% market is only a third of the size of the flex market, and both markets are imminent for us to access. Taken together, these drivers support long term growth trajectory for The US business that is both scalable and sustainable. We have a proven product, a growing clinical endorsement. You see the constant publications and presentations and discussions that are happening both in our control and out of our control, quite frankly. We go to AUA and EAU, and there's countless presentations where blue light cystoscopy is mentioned as a key element to the study and to the diagnosis and staging of those patients. And it is an enormous under penetrated market, giving us strong near term upside as these catalysts materialize.

18:23 And then the final one is is is the reimbursement. And I will mention this. We've worked with congressman Dunn and So to. They're both bipartisan. Dunn is Republican, So to is Democrat. They submitted a bipartisan bill to Congress called the FAIC Act, or F A I C Act. That is a bill that the Congress is currently debating. It's got growing momentum. The essence of that bill, and you can find it online, is basically to say that patients need access to things like SIS View. And I say that broadly because the bill, when you read it, we are in it, but there's several companies that we brought together are also facing the same challenges where they're not we would like them to decouple the product from the procedure. So currently, when you reimburse in white light cystoscopy or blue light cystoscopy, you get a certain reimbursement.

19:16 The difference is a margin. Right? The cost of HEX fix has to be taken out of the blue procedure, and so that margin gets squeezed a little bit. We are asking them through the FAC act with the support of congress to turn it into a law that will force CMS to make this decision, and that is to decouple it like they did in the radiopharma business. This is a bold move by Photocure. I'm super excited about the progress we made. It took a lot of work to get it there, and we're super excited. We're looking forward to seeing how that progresses through Congress. If that happens, they will force CMS to decouple it, meaning whether you do white light or blue light, same amount. And if you do a blue light procedure with HEXFIX, you get a special reimbursement for HEXFIX on top of it, and that immediately changes the economics for blue lysisoscopy, and most importantly, up access to patients.

20:06 So bladder cancer remains a major unmet need in The US. Each year there are over eighty five thousand new cases and seven thirty thousand patients living with the disease. There are over four you know, three hundred fifty to 400,000 TRVTs and eight hundred thousand surveillance cystoscopy performed each year, and the total addressable market for flexible cystoscopy alone exceeds 1,300,000,000 USD globally. Blue light cystoscopy is uniquely positioned to capture a meaningful portion of that opportunity, particularly as there are five precision medicines out there that are looking for patients that blue light is uniquely positioned to find. CIS, high grade, high risk patients. That is exactly what blue light cystoscopy does. And we're super excited about it, this market and its evolution.

20:54 I wanna take an opportunity to provide some additional color on the FDA reclassification because I know everyone has a lot of questions around that. There's no statutory timeline per se. However, there is a process they go through. The basic reclassification under five thirteen e paragraph on the FDA's website indicates that the proposed new class had sufficient regulatory controls to provide a reasonable assurance of safety and effectiveness of the device. In order to re classify, the FDA must do the following. They must publish a proposed order in the Federal Register. That's the first step. That's what we talk about when we say the FDA will begin the process in the second half of this year. Second half of this year could be anywhere from July to December December. So we're we're we're particularly optimistic that it'll be sooner than later. This is followed by a comment period, which the FDA must consider any comments received, leading to an issuance of a final rule with an effective date, and there's some other potential steps. What's really interesting about this in our exchange with the FDA, and what I took particular note in, was when they closed the systems petition with Carl Storrs, they were really explicit in what they were looking for, which led led led us to believe that they have done more than just think about this. They have carried this a little bit further down the track, and that's why we're particularly optimistic in the timeline on this. It seems as if they've already got an idea of what they want to do. I believe those special controls will look very much like

22:26 the paper PMA route of linking up clinicals with the device and making sure it's a nice tight package. We'll wait and see, but I am excited about that. I think that the way they wrote that closure on the systems petition and then responded to us reopening it was quite eye opening and very good for us to hear. The FDA may convene a device classification panel that to reclassify a device from three to two, the available scientific evidence must show general and special controls are sufficient to provide a reasonable assurance of safety and effectiveness of the new device. And the FDA has communicated to Photocure that they plan on initiating this, as said, in the second half of this year. Let's take a moment to talk about growth initiatives, because I think in this space, we've got a lot of really good stuff going on.

23:17 These are things that are adding to the momentum of blue light cystoscopy adoption. And let me reemphasize our organic growth initiatives, and then we'll talk about the inorganic. For VorTeq, we have a 187 VorTeq accounts with over 300 different new users gaining experience. It's it's growing to roughly 15% of business and continues momentum. Whose patients these are patients who would otherwise not benefit from blue light cystoscopy. Fortech has proven to be a key driver for The US business growth, and particularly as flex the old flex system has deteriorated till we bring out the new Wolf system. This has actually over, you know, over performed, and it was able to cover off on that on that that, you know, leakage, so to speak, of the old flex business that pushed out that was 15 to 20% of our total business. 90% of Foretech accounts would not be using blue light cystoscopy if it were not for Foretech.

24:16 That is 15% of our business versus last year. I think it was approaching 10%, and it continues to grow the momentum. Richard Wolff, our development partnership with Richard Wolff is progressing well. A flexible BLC interim solution has been made available in The EU, and it has received positive feedback. And physicians are currently using it, but they're super excited for the new system when we come out with it. The system blue is a BLC. This interim solution is a BLC light source, which is then connected to an already approved flexible scope to perform the procedures. The interim solution is intended to keep the excitement, build the data, build the experience behind the launch of the high def Mamba blue light system that we intend to launch next year with Richard Wolff in 2027. The Claritas ISC AI partnership is is progressing well. Our partnership with Intelligent Scopes Corporation is a US, based subsidiary of Claritas Healthtech is to develop AI software for real time tumor detection using blue light cystoscopy.

25:17 This collaboration will result in an intelligent diagnostic platform designed to improve the accuracy and consistency in tumor detection. Look no further than the GI space with GI Genie and what AI has done to colonoscopies. We believe we can do the same in the bladder cancer space. The joint development work is underway since Q4 of twenty five, and the Enable clinical study, which we announced, has been initiated in both The US and Europe with patients already beginning enrollment. Post development, the FDA and CE submissions are planned with Photocure holding the exclusive the exclusive global commercialization rights software receives its clearance. This initiative extends Photocure's technology moat around data driven precision care, paving the way for future AI enabled diagnostic in uro oncology.

26:08 And importantly, it adds a high margin scalable software subscription component to our business model, creating durable value beyond our high gross margin recurrent SISVU HEXFIX consumable. And why do we feel so strong about BLC adoption? The environment and the organic growth under this is getting stronger and stronger. The guidelines from AUA and EAU in various individual countries now recommend BLC and the newer updated guidelines keep getting stronger in the use of BLC. We we recently had upgrades into the Italian guidelines. Super strong. We're expecting updates on The UK guidelines. Again, continued strengthening the use of BLC, which is extremely encouraging as physicians turn to guidelines to guide their their daily decisions.

27:00 The science itself, from 300 publications and multiple well powered randomized studies, provides a wealth of clinical evidence. There are over 40 independent studies confirming the improved detection and reduced recurrence. We now have The US's largest bladder cancer patient registry with over 4,000 patients, and that is producing tremendous treasure trove of real world evidence that continues to generate and reinforce the importance in, not only the clinical importance, but the economic advantage of using blue light cystoscopy. Our OEM partners are investing in anticipated volume growth, rising tides in bladder cancer diagnostics by upgrading their systems with rollouts of four k and high def systems, and new OEMs are increasingly wanting to enter the market to offer BLC as a new c as such, and particularly the now CE Mark Stryker blue light compatible system in Europe, the '17 88, is now launching in Europe after a little bit of a test phase. That is super exciting as Stryker is a very strong med tech player.

28:07 And we look forward to more development with Stryker. Taking a look at the therapeutic landscape and the rapidly evolving, conditions of it, provides other opportunities for Photocure. Another major source of tailwinds behind the interest in bladder cancer diagnostics is the rapidly evolving therapeutic landscape in bladder cancer. Bladder cancer remains a prevalent malignancy and high recurrence rates despite standard therapy. BCG is the cornerstone of treatment for many decades. However, nearly half the patients experience a relapse or develop a resistance, highlighting the need for alternative strategies and therapies. There are now five recently approved novel drugs in over 40 total active non muscle invasive bladder cancer pipeline programs with clinical trial reviews and a wide variety of novel agents across multiple modalities.

29:04 Why is this important? Well, as these therapies are becoming more advanced, they're also becoming more expensive, and missing a disease becomes even more costly. Every non muscle invasive bladder cancer case will become more complex with the new personalized treatments with combo immunotherapies and bladder sparring options. Improving the outcomes and guiding the future management of bladder cancer will depend on precision pathways, starting with a precision diagnostic like blue light cystoscopy with sysio and hexics, to offer a more comprehensive approach to detection, risk assessment, surveillance, and treatment planning. And that is the underpinnings of the market itself and the swell up in the interest in blue light cystoscopy. Looking at the inorganic opportunities or things that we're working on, investments we've made, and we announced one today as well in a minority investment in Vesca Health. The future of bladder cancer is precision diagnostics, and expansion into biomarkers, AI, and surveillance will be critical in bladder cancer patient care continuum.

30:10 Blue Light cystoscopy is the foundation of that ecosystem, and Photocure is building towards an integrated future of molecular digital framework. We've spent a significant time and effort in evaluating the right areas to focus on to expand our portfolio of offerings, and we believe these are targeted areas will truly allow us to advance in the continuum of bladder cancer diagnostics and management. We have disclosed this quarter a $3,000,000 investment in Veska Health, as mentioned earlier, who is developing and launching a multiomic biomarker called Assure MDX in hematuria. Hematuria is a $6,800,000,000 opportunity as a market. And shifting the paradigm, similar to what we've seen across other cancers such as colon cancer, the upstream opportunity is very large in bladder cancer. Patient flow into cystoscopy is determined upstream by non invasive modalities or products such as Vesicle Health Assure MDX, and which may provide appropriate risk stratification.

31:13 And this is tied to the physician's confidence on who should get scoped, when they should scoped, and obviously this leads to blue light cystoscopy. This is how it all ties together. Vesika Health's Assure FPX test for hematuria. In other words, it's blood in the urine can identify more high risk patients, which blue light cystoscopy is very important for, and increase the appropriate referrals to cystoscopy. It helps more patients enter the BLC TRVT pathway. This may result in a higher yield per procedure and per patient and can improve clinical efficiency for the provider. Simply, more patients will be identified with more targeted cystoscopies, more BLC usage. Better risk stratification, there'll be a higher conversion to BLC versus white light because these patients will be identified sooner and identified as high risk. And it all builds clinical stickiness with urologists.

32:09 We will have more granular updates in the future on our developing partnership with Vessica. We continue to see further opportunities to gain access and optionality that fits into our broader precision diagnostic strategy. This approach is a stepping approach. It's a step towards it. We're investing in them. We're interacting with them. Part of it is we have a very strong presence in bladder cancer, as everyone knows. And so this part with Vesca Health is a win win for both companies. The approach aligns more with where we are strategically and where the external landscape is evolving. The commercial opportunity in operating and commercial leverage potential remains our top focus for the organization. And let me just kinda move off to Survivor. Our partnership with Osiris also continues to make progress. We have taken in over 26,000,000 in milestones, both across XVIX and the Survivor program to date from Osiris with the potential for additional milestones on regulatory milestones for, like, such things as EU approval, if it comes or when it comes, and royalties on sales in China and eventually, hopefully, Europe as well and looking towards The US as these programs advance through regulatory and commercial goalposts.

33:27 Last month, Richard Wolff Blue Light System received its approval in China after a lot of work with Chinese authorities. They will be launching with Osiris HEXFIX in China. Both companies will begin that process in the coming months. Survira was approved in China by the MPA, and the MMA MAA accepted by EMA. So it's been approved in China, and the package has been and is under review in Europe. Both events triggered milestones to Photocure in amounts of 11,000,000 for the Chinese approval and 2,000,000 for the European acceptance of the package to begin the review. Osiris has also engaged the FDA and disclosed interest in additional indications. We announced a few re weeks ago, we have a dispute with Osiris on the milestone owed to Photocure over the Chinese approval of Savira, in which Osiris paid us 6.6 of the 11,000,000 owed.

34:22 We believe we have a strong legal standing and will aim to resolve this dispute as swiftly as possible. I'd like now to turn it over to Dick Peters, our corporate controller, to review the financials. Dick, over to you. Hello, everyone. My name is Dick Peters, and I'll be presenting the first quarter twenty twenty six financial results to you today. First off, we start with a consolidated income statement. We started the year strong with 139,000,000 kroner in HEX VIX and SYSVUE product revenue. That's an increase of 11% including the effects headwinds we faced in The US or 18% excluding those FX impacts. During the quarter, we have also invoiced a series for milestone achievements related to the approval of Survivorate China and the market authorization submission acceptance in The EU.

35:14 Total milestone revenues came in at SEK125.6 million. With that, revenues came in at SEK264.4 million for the quarter compared to SEK 116,200,000 in Q1 twenty twenty five. Gross profit ended at SEK 254,300,000 in total and the gross profit margin of Hex VIXU revenue remained stable at 93% of sales, that's the same as last year. Operating expenses at BD were 115,600,000, that's a 3% increase versus prior year, but excluding the favorable impact of FX on expenses, the increase was higher than that. This expense increase was mainly driven by an increase in bonus accrual in line with a higher sales versus prior year, and of course the usual merit and inflation.

36:04 Beyond that, expenses remained relatively flat versus prior year. Business development expenses were roughly 10,000,000 kroner in the quarter and they relate to our strategic efforts to diversify our business. Overall, reported EBITDA was then 128,300,000, a significant increase versus Q1 twenty twenty five and that is of course driven by the increased sales, but also by the milestone revenue recognized in the quarter. Therefore, we have introduced a new adjusted EBITDA metric that excludes milestone revenues, business development expenses and certain other ad hoc and non cash expenses. All details about this new metric can be found later in this presentation and of course in the earnings release report. We will continue reporting on this adjusted EBITDA metric going forward.

36:53 And in Q1 twenty twenty six, the adjusted EBITDA was 15,300,000, up from 9,700,000 versus Q1 twenty twenty five. And the consolidated impact of FX on this adjusted EBITDA is less than 1,000,000 kroner, because we have a natural hedge on FX. Further down the P and L we report a net financial loss of 11,300,000, which is mainly driven by the payments of Ipsen earn outs and FX impacts on intercompany loans. Then you'll see tax expense of 26,000,000, an increase due to the increase in total revenues and therefore net earnings before tax. And earnings after tax then come in at 83,400,000 kroner for Q1 twenty twenty twenty six.

37:40 And with that, we have reviewed the P and L, we can go over to the next slide. On this slide, we will look deeper into the segments. In the North American market, we grew revenues by 26% FX, but we faced significant headwinds from the weakening of the American dollar versus the Norwegian kroner. The revenue growth including the impact of FX is therefore 11%. Gross profit was 50,900,000 or 94% of revenue, and that's pretty much in line with prior years. In North America, direct costs increased by 4% or to a total of 46,300,000 kroner. As explained earlier, this increase is driven by the increase in sales bonus accruals in line with the increase in sales.

38:27 And the increase was partially offset by the tailwind of FX on expenses. Then the result in contribution margin in North America is 4,600,000 versus 2,000,000 in the prior year, that's 9% of revenue versus 4% last year. And lastly, EBITDA, which includes allocations of non direct overhead expenses, ended at negative 7,900,000, still an increase versus negative 10,600,000 last year. In Europe, revenues were 83,400,000 in the quarter. That's an increase of 9% including FX impacts or excluding FX impacts, which were smaller in Europe, that was 11% growth. The growth was mainly driven by sales increases in the DACH region, that's Germany, Austria, Switzerland, by 10%, and 13% in the high priority growth markets France, UK and Italy combined.

39:18 Direct costs in Europe increased by about 5% to a total of 33,100,000 kroner, and that's just mainly due to merit and inflation. Contribution margins ended at 43,500,000 or 52% of revenue, and also there that's an increase from the 38,200,000 or 50% of revenue last year. Finally, EBITDA in Europe increased from 19,000,000 in Q1 twenty twenty five to 28,400,000 in Q1 twenty twenty six. And that concludes the presentation of the segment reports, and then we go to the next slide where we look at the cash flow statement and the balance sheet. Firstly, about the cash flow statement. During Q1, we delivered operational cash flow of 800,000.

40:04 That's mostly driven by the EBITDA adjusted for non cash expenses and working capital changes. The large change in working capital is the result of the timing of the invoice of the milestone payments to our shares during Q1 and the partial payments received during Q2. The cash flow from investments in the quarter was a negative 34,400,000 and that's mainly driven by the investment in Besika Health Inc, as Dan explained. The cash flow from financing was 12,600,000 negative and that's mainly due to the payments to Ipsen during the quarter of 9,900,000 kroner. And with that, the total cash flow in Q1 was a negative 26,200,000 and the cash balance at the end of the quarter was 192,700,000, but as explained, this does not yet include the paid milestones during Q2.

40:54 And when we look at the balance sheet, we see a total of non current assets of SEK 325,600,000. That mainly includes intangibles and goodwill related to the Ipsen transaction. We also have inventory and receivables of 267,700,000, and that includes invoiced, but by the end of Q1, not yet paid milestones from ASA. And as mentioned, cash and cash deposits at the end of the quarter were 192,700,000. Shareholder equity was 577,900,000 or 74% of assets and long term liabilities, which include a liability for the future Ipsum payouts of about 95,000,000 were included in those long term liabilities. Current liabilities were 96,600,000, and that includes the financial section of the presentation today.

41:45 We can go back to Dan for the rest of the earnings call. I think I'm gonna give I'm gonna give you key performance metrics. You wanna make a comment? Yeah. Just the trend. Yeah. Okay. To slide 22, please, with the adjusted EBITDA trends. So as I mentioned earlier, we have introduced a new adjusted EBITDA metric, which we believe reflects the underlying business performance in the best way possible. And what we see on this slide is a clear upward trajectory of adjusted EBITDA on a yearly basis. This reflects disciplined cost control and growing operating leverage as the core business scales. Quarterly variations are there, but the yearly trend remains up.

42:32 We will keep reporting this metric in the future. On the next slide, you can see the adjusted EBITDA historically. We have reconciled this metric for transparency purposes and for our audience to really be able to understand how we get adjusted EBITDA metric over a long time. I hope this puts the financial into context and allows everyone to understand our underlying performance. And with that, I give it back to Dan. Very good. Thank you, Dick. Appreciate it. Alright. Gonna wrap it up here. Summary of twenty six q one results. Again, a very solid core with 18% product revenue growth in q one. We've now had 12 quarters or three years in a row of positive EBITDA.

43:23 Adjusted EBITDA, as Dick explained, came out at 15,400,000 as we continue to invest in key growth initiatives that we believe will, one, position us for long term success, two, generate future revenue growth, three, increase our operating leverage, and four, protect the business. The North American unit sales were plus 26%. We we grew our US accounts by 21%. That's both new and reactivated by upgrades. Again, that is multiple quarters. I think it's six quarters in a row of something like 20% plus account growth. We continue to work with Carl Storrs to grow the installed base of blue lysisoscopy equipment in The US, and we expect this to continue to expand. The four tech national mobile rollout continues to grow traction and continues to contribute to our growth significantly.

44:12 It's creating a new business by expanding access to otherwise inaccessible accounts with a novel mobile business model. In Europe, revenue was super strong at plus 11%, 8% unit growth with double digit growth in dock in the priority growth markets. We continue to facilitate image quality upgrades, we believe that Olympus blue light upgrade will help us strengthen this initiative. You know, again, upgrades in in accounts produce double digit growth. There are 75 Viscera three installed since early twenty five. That's in Germany, France, and The Nordics with which is now kicking in with a strong pipeline and aligned interest in Olympus. Strong momentum for BLC has caught the attention of Stryker who have now entered into the EU market with and meanwhile, Richard Wolff, the blue light system was approved in China. This is new and exciting data continues to be generated to help position BLC as a leading precision diagnostic in the rapidly evolving non muscle invasive bladder cancer space.

45:16 We have a strong cash balance, as Dick mentioned, at 192.7, but that does not include the recent additional payments coming in from Osiris in cash, and we have no debt on the balance sheet. Finally, we will continue to advance several business development initiatives in the next, you know, meeting the next generation of precision diagnostics. Anticipated milestones, we maintain guiding seven to 11% top line growth, all with the adjusted EBIT expansion margin, and we realize that that further operating leverage commercial business. We continue to increase HEX VIX and SYSVUE account utilization through upgrades, installs, and mobile solution. We wanna advance the development of next next generation state of the art four k high def blue blue light flex system, which will gain us access to a market that's three times two to three times larger than the current rigid market in The US.

46:14 Our strategic partnership with ICS Claritas developing a BLC AI will be a game changer in bladder cancer precision diagnostics and detection surveillance with a high margin offering to our customers. The parallel exploration of upstream opportunities such as Vessica Health can further unlock the use and the importance of using blue light cystoscopy in the sooner and more accurate diagnosis. We'll continue the data generation of novel pathways and health economics to help position BLC as a go to precision diagnostic in bladder cancer. We'll increase access to BLC in The US through FDA reclass and alternative OEM pathways that are currently en route, and of course, support the Osiris progress of both HEXFIX and SYSU and resolve our current disagreement.

47:03 And with that, I think we can go to q and a. Thank you so much, Stan, and thank you to all of you who have submitted questions. We are already on our index time, but we will make room for some questions. The first one is regarding Osiris. Can you provide some clarity on the Osiris milestone payments and if they have been received? Yes. So on the milestone payments, we received the 6,600,000 instead of the 11 that we believe they owe us, and that was for the approval in China for for Survivra. And then the submission of the Survivra or the submission and the acceptance by the EMA of the Survivor package for Europe triggered another 2,000,000. So both of those, the 6.6 and the 2,000,000, or a total of 8,600,000 US has been received, and it's not reflected in q one because we received it in q two. You'll see it in the q two results in the cash balance.

48:00 The disputed 4,400,000, we believe, and we've had more than one law firm look at the contract between the organizations, we feel we're in a very strong position. And if not, the dispute isn't whether they will ever pay owe us or not owe us. It's it's it's really about timing on it a little bit. And so we believe that we have a very strong position, and we will pursue what by whatever means we need to to secure the the remaining 4,400,000. The second leg of that question was how is the outlook for the ASA ERIS partnership? It's it's good. Honestly, I sent a contingent to China, god, about two weeks ago. So in the midst of all this, all the folks within the organization worked very closely together, whether it's, you know, supporting Savira in China, EU, or US, HEXFIX on a global scale, particularly in China, but also some other initiatives.

49:01 So our individuals and their individuals, everyone's working good together. It's just it's just a disagreement currently on what they owe us on the approval, and I think we'll resolve it. Then we do one more question, and that is about Vesika. Why did you make this minority investment in Vesika Health, and what is the strategic rationale? Yeah. So this is a disciplined strategic investment in an adjacent urology diagnostic asset, and it expands our understanding of a broader ecosystem through complementary product. And when you look back at the slide that I presented today, we've shown it before without the names in there actually, but we had check marks, but still the same mentality. We wanted to be more clear for everyone.

49:53 We patient see pathway and all the needs to get a precision diagnostic to get that right so that patient gets the best care possible. Most of that is driven by the fact that you got five new therapeutics out there that can cost upwards of a million dollars administration in The US. They need to make sure those decisions are made soon and they're made accurate completely. So we saw this as an opportunity when a patient presents, see their physician with hematuria, blood in the urine, micro hematuria or gross hematuria. Vesca Health, in particular, is a very, very good asset with Asure MDX. It has a very good profile in identifying patients, and you can get on their website and look at the specifics around Asure MDX. It's been used in over 8,000 patients in its trials.

50:42 It's it's progressing quite well for its reimbursements, and we just see a real opportunity for the two companies to work together. It's a win win for both organizations. We believe in what they're doing, so much so that we extended them a $3,000,000 investment in their organization to further their development, which actually helps us as well. And it aligns strategically in where the external landscape is evolving, representing a commercial opportunity. And we're gaining tremendous insight with this arrangement. So super excited about being involved with them. And again, we're gonna continue to look opportunities, those patient pathway and the check marks in products, etc, are just demonstrations of this ambition we have to be the leader in precision diagnostics for bladder cancer.

51:34 That were the questions we had within our time frame, and I leave it to you to wrap it up. All right, well, great. Well, listen, thank you, everyone, for joining. Super excited. The kickoff of the year was extremely strong. A lot of exciting things going on in the organization. I look forward to seeing everyone at q two, the end of July. So have a great day. Thank you.