Equity Research Nosa Plugs: First impression Q2, 2024

This morning, Nosa Plugs reported its Q2 2024 earnings. Below are our first impressions of the report.

• Net sales came in significantly higher than Q2 of 2023 at SEK 4.2 million (2.7), a growth YoY of 53%. The outcome came in just marginally below our estimate of SEK 4.4 million, a 4% difference. For H1 2024, Net sales landed on SEK 7.0 million (4.8) representing a growth of 45%, just down 4% compared to our estimate of SEK 7.3 million . The growth was attributable to the strong performance of the smell training plugs and the accelerating penetration of markets in Europe, Australia and New Zealand.
• EBITDA came in at SEK -1.9 million (-2.9) compared to our estimate of SEK 0.0. For the half-year this corresponded to an adjusted EBITDA (excluding extraordinary items) of SEK -4.9 million (-4.5) compared to our estimate of SEK -3.0 million.
• EBIT came in at SEK -2.4 million (-3.3) as compared to our estimate of SEK -0.6 million. For the half-year this represents an adjusted EBIT of SEK -5.8 million (-5.3) as compared to our estimate of SEK -4.2 million. Investments in, e.g., drug delivery, have weighed on the profitability.

The results are mostly in line with our expectations although profitability has improved at a slower pace than what we expected. This being said, we are still pleased to see that the quarter broke the record for both sales and gross margin. Many new distributor agreements came in during the quarter as well as a listing on an NHS framework. We expect the different agreements to start boosting revenues for H2 in 2024. We are pleased to see the strong start and growth in Australia and New Zealand with distributor CH2, representing the biggest order in company history, as was discussed in our Mrkt BUZZ in June. Furthermore the packing operation in Poland is fully operational, boosting margins as a result. It is reiterated again that Nosa drug delivery is in the works, with testing slated for Q3 and revenues expected to start coming in next year. The robot and packing machine for the new production line ordered in the start of 2024 is expected to be delivered in the end of September and be operational in October. With production at max capacity, this means a risk of bottlenecks for Q3, possibly stunting growth.

In summary, we are pleased to see a quarter with strong news flow, many new agreements and market entries as well as great publicity in Swedish media for the smell training plugs. On the profitability side, the outcome came up a bit short, however, with the strong liquidity in the company we do not see this as a major problem. With efforts being taken to improve margins during H1 2024, we remain confident that NOSA will achieve positive cash flow, in line with their financial goals.

Please see the news coverage regarding the smell training plugs (Swedish) here.

Watch our interview with CEO, Adrian Liljefors, in conjunction with the report here

Read our latest update on Nosa Plugs here

Disclaimer

Carlsquare AB, www.carlsquare.se, hereinafter referred to as Carlsquare, conducts business with regard to Corporate Finance and Equity Research in which areas it, among other things, publishes information about companies including analyzes. The information has been compiled from sources that Carlsquare considers to be reliable. However, Carlsquare cannot guarantee the accuracy of the information. Nothing written in the analysis should be regarded as a recommendation or invitation to invest in any financial instrument, option or the like. Opinions and conclusions expressed in the analysis are intended only for the recipient.

The content may not be copied, reproduced or distributed to another person without the written approval of Carlsquare. Carlsquare shall not be held responsible for any direct or indirect damage caused by decisions made on the basis of information contained in this analysis. Investments in financial instruments provide opportunities for value increases and profits. All such investments are also subject to risks. Risks vary between different types of financial instruments and combinations of these. Historical returns should not be considered as an indication of future returns.

The analysis is not directed to U.S. persons (as defined in Regulation S of the United States Securities Act and interpreted in the United States Investment Company Act 1940) nor may it be disseminated to such persons. The analysis is also not directed to such natural and legal persons where the distribution of the analysis to such persons would result in or entail a risk of a violation of Swedish or foreign law or constitution.

The analysis is a so-called Commissioned Research Report where the analyzed Company has signed an agreement with Carlsquare for analysis coverage. The analyzes are published on an ongoing basis during the contract period and for a usual fixed remuneration.

Carlsquare may or may not have a financial interest in the subject of this analysis. Carlsquare values the assurance of objectivity and independence and has established procedures for managing conflicts of interest for this purpose.

The analysts Herman Kuntscher and Niklas Elmhammer does not own and is not allowed to own shares in the Company analyzed.