Biohit H2’24 preview: Growth subdued in H2, but profitability excellent

Translation: Original published in Finnish on 02/11/2025 at 07:00 am EET

Biohit publishes its H2 report on Wednesday, February 12 at 9:30 am EET. The revenue and result are already known with reasonable accuracy based on the preliminary data published in December. Interest in the report focuses on the guidance for this year. Based on releases in recent months, we expect growth from the launch of the new product, distribution partnerships and a new market opening around the middle of the year, referred to by the company in its Q3’24 IR blog. A strong balance sheet enables dividend payments, but there is no further information on the company's dividend plans ahead of the report.

H2 figures are already largely known

Our H2'24 revenue estimate is 6.9 MEUR, which corresponds to a growth of 5.3% from the comparison period. Biohit’s revenue growth will slow down clearly from H1 (+14%), which, according to the profit warning issued in December, is due to a single delayed delivery to the Middle East. Based on preliminary data, revenue should be in the range of 6.7 to 7.1 MEUR. Biohit’s strategic target for 2024-2028 is 15-20% growth, so the target will be missed in the first year of the strategy period. We expect the delayed delivery to be completed in 2025 and contribute to H1’25 figures.

We expect an operating result of 1.2 MEUR, which corresponds to an EBIT of 17%. The company’s guidance is 16-18%. Profitability is remarkably strong in H2, and we believe it indicates that the company has sold a large volume of its own high-margin products. We estimate that the gross margin was approximately 70% for H2, which is well above the company’s long-term trend (~65%). Biohit's gross margin has historically varied significantly, between 56-72% in recent years' reports, so we don't necessarily believe this data points to a more permanent increase in gross margin yet. Thanks to the good result for 2024 and cash flow, the company’s balance sheet is very strong and would enable dividend payments. However, Biohit has not yet announced plans to pay dividends.

Another year of profitable growth expected in 2025

We expect a strong 23% revenue growth this year. Our expectation is partly explained by the communicated postponement of a large order to 2025, which supports our H1'25 growth forecast. Adjusted for this item, our growth forecast is close to the bottom of the company’s strategic growth target of 15-20%. Biohit has announced progress this year, including new distribution agreements and the launch of a new sample collection product. The company also announced in its Q3’24 IR blog that it expects another significant market opening around mid-2025. This news modestly increases the predictability of Biohit's future, which has traditionally been at a low level. In terms of earnings, the company’s target is an EBIT of at least 10% of revenue. Our estimate is 2.8 MEUR ( 15.7% of revenue). According to our estimate, profitability is significantly affected by the relative share of high-margin own production and lower-margin contract manufacturing in sales. The sales related to the distribution cooperation agreements announced earlier this year are also, in our estimate, lower-margin. As a whole, we expect Biohit to have another year of profitable growth, although visibility on growth and profitability is quite low.