Good morning, everybody, and welcome to the fourth quarter's earnings call for Boule Diagnostics. I'm Holger Lembrér, CFO for Boule Diagnostics. With me, I have our CEO, Torben Nielsen, and after our presentation, we will open up for questions. Please also feel free to write questions in the chat field. With that, I'm handing over to our CEO, Torben Nielsen.
Thank you, Holger. Good morning, everybody. The fourth quarter brought a challenging market environment, with currency headwinds from a weakened U.S. dollar and lower instrument sales in India as a direct consequence of our planned transition to a licensed manufacturing model in India. At the same time, our OEM sales continued to perform steadily, providing stability and demonstrating the resilience of this part of the business. While sales performance reflects these external factors, I'm pleased with the sequential operational improvements we've made. From a profitability and cash perspective, there were several positive developments. Gross margin improved year-over-year, supported by a more favorable product and geographical mix. We also delivered our third consecutive quarter of positive operating cash flow, which reflects improved operational discipline and working capital management.
Finally, during the quarter, we inaugurated our new headquarters in Sweden, an important milestone that strengthens our operational platform and supports future growth. In summary, while Q4 had some short-term top-line pressure, we see progress in margins, operating cash flow, and strategic execution, positioning Boule well going into the next period. Taking a closer look at the Q4 financials for the group, we've reported Q4 sales of SEK 120.2 million , down organically by 11.7%, primarily driven by lower instrument sales from the planned transition to licensed manufacturing in India and affected by a 4.3% unfavorable currency impact. Gross profit landed at SEK 57.8 million , down from SEK 63.8 million due to lower sales and a weakened U.S. dollar.
Gross margin came in at 48.1%, an improvement of 3.5 percentage points over last year, driven by a more favorable mix. We reached SEK 12.9 million in Adjusted EBIT and achieved positive operating cash flow of SEK 5.5 million, despite challenging conditions, making Q4 the third consecutive quarter of positive operating cash flow. Available liquidity end of the quarter was SEK 35 million. Looking at the full year financials for the group, we reported sales of SEK 489.7 million, down organically by 7.2%, primarily driven by lower instrument sales from the transition to licensed manufacturing and affected by a 5.1% unfavorable currency impact from the U.S. dollar. Gross profit landed at SEK 213.8 million, down from SEK 252.2 million.
Gross margin came in at 43.7%, down 1.5% from last year. We reached SEK 46.2 million in Adjusted EBIT and an operating cash flow of -SEK 0.3 million , which is a significant improvement from last year, where we reported a negative operating cash flow of SEK 33.7 million . Please keep in mind that the closure of the BM900 project in the first quarter cost us about SEK 20 million in Q1 and Q2 combined. Available liquidity end of the year was SEK 35 million . As we have only recently begun reporting in two business segments, Boule Diagnostics and CDS OEM, let's make a quick introduction of each segment in turn, starting with our diagnostics business.
We describe Boule Diagnostics as a global provider of diagnostic solutions focused on decentralized human and veterinary healthcare, with a clear specialization in hematology. In this segment, our core customers are small to medium-sized laboratories, clinics, and remote healthcare settings, places where fast, reliable diagnostics close to the patients are essential. We operate through a strong global distribution network, which gives Boule broad geographical reach without relying on large direct sales footprint. This allows us to serve both developed and emerging markets very effectively. From a product perspective, Boule Diagnostics offers a complete hematology solution, instruments for both human and veterinary diagnostics, and a full range of reagents, calibrators, and blood controls. Our integrated offering ensures consistent performance, regulatory compliance, and recurring revenue through consumables. Overall, Boule Diagnostics is positioned as a specialized, reliable partner in the decentralized healthcare, supporting clinicians and veterinarians.
Our diagnostics business is built on an RFID-protected razor blade model, with approximately 60% recurring revenue from reagents, consumables, and service, providing strong visibility and margin stability. We operate in the decentralized human hematology, a market estimated at SEK 8 billion, growing roughly 3%, and we operate in veterinary hematology, a SEK 3 billion market growing faster at about 8%. During Q4, instrument unit sales declined, primarily due to the planned transition to licensed manufacturing in India, which expectedly affected both volume and top-line revenue. Reagent sales remained stable, reflecting the resilience of our installed base and recurring revenue model. Service performance improved materially during the year, and in the fourth quarter, the service business turned profitable for the first time, reflecting improved efficiency, scale, and cost discipline.
In Q4, Boule was selected as the number one of three preferred hematology providers in a nationwide tender in Italy, reinforcing our product quality and continued trust with large institutional customers. In the quarter, we saw declines across most regions, reflecting a more challenging operating environment, including longer delivery times and delayed customer payments, which created near-term headwinds. Western Europe and the Middle East were notable exceptions, delivering year-over-year growth, supported by stronger regional execution and a more resilient demand. In the U.S., we adjusted our go-to-market approach and transitioned to a more direct selling model, which is showing early positive momentum and encouraging customer engagement.
To summarize Q4 in our diagnostics business, sales declined with 16.5%, explained by strong comparative figures due to a combination of strong Q4 last year, a year of record instrument unit sales, and the planned transition to instrument license manufacturing in India. Organic growth was -14% and currency was -3%. Gross margin improved because of favorable product mix, with higher sales of reagents and license fees relative to instruments. Operating expense was lower due to restructuring implemented in the last 12 months, and currency was negatively affecting the margin due to a lower U.S. dollar. In addition to our branded diagnostics offering, Boule operates a strong OEM and contract manufacturing business under CDS, Clinical Diagnostic Solutions. CDS is a contract development and manufacturing organization focused on OEM reagents, calibrators, and blood controls for leading in vitro diagnostic companies.
We support partners across the full life cycle, from development to manufacturing, including both proprietary and private label solutions. A key strength is our deep expertise in blood controls, particularly products with long shelf life and high stability, which are critical for global distribution. Operationally, we have the flexibility to run small, medium, and large production batches while maintaining consistently high quality and regulatory standards. Our OEM business is built on long-term partnerships, serving both large multinational IVD companies and innovative startups, providing a stable revenue base and strong customer retention. Overall, the OEM business complements Boule Diagnostics business by leveraging our technical know-how, manufacturing scale, and quality systems to serve the broader IVD industry. We operate in the OEM reagent market, which is estimated at around SEK 350 billion, growing at around 6%-8% annually.
Our subject matter expertise allows us to play in a sizable part of that market, where our capabilities are a strong fit. In addition, we address the hematology blood controls market, estimated at SEK 1.9 billion and growing roughly at 3%-5%. The business is characterized by long-term partnerships, typically structured around multi-year contracts. These partnerships provide strong visibility and have supported consistent sequential growth over recent periods. Our 2025 OEM business, restated for restructuring and currency effects, performed slightly better than 2024. An important feature of the OEM model is that new projects have a relatively long incubation period. Programs require development, validation, and regulatory approval before entering production, which means revenue builds gradually. As a result, growth in the OEM business tend to follow a stair-step pattern, with periods of incubation followed by clear step-ups in revenue as new projects are commercialized.
While this requires patience upfront, it supports durable, predictable growth and attractive profitability over time. Recently, we extended and expanded our supply agreement with a leading global IVD player. This strengthens our long-term partnership, increases volume visibility, and reinforces Boule's position as a trusted OEM supplier. With an established pipeline, we expect to begin commercializing new OEM projects in 2026, followed by the launch of new competitive blood control products in 2027. If we double-click on the Q4 performance for the OEM business, sales declined in the quarter by 15%, but this was primarily due to significant currency headwinds from U.S. dollar and timing of orders. Organic growth was -6%. Gross margin improved for the quarter from 53.3%, up from 47% last year. Operating margin declined as we purposely increased our operating expenses by SEK 4.6 million .
This is to be seen as an investment into commercializing new OEM products, building a new blood controls portfolio, and investments in our sales organization and project funnel build to help fuel future growth. With that, I'll hand it over to you, Holger, to take a closer look at the financials.
Thank you, Torben. Start with the financial summary for the quarter. Organic sales growth was negative in the quarter with 11.7%, as a result of the lower instrument sales and partly, partly driven by the impact of a conversion to license business in India. Stronger SEK against mainly U.S. dollars impacted the sales with -4.3%. Our cost of goods sold decreased as a result of lower sales, a more favorable mix with conversion to license factoring in India, which, which in total improved our gross margin to 48.1% from 44.6% last year. Gross margin was negatively impacted from the stronger SEK against U.S. dollars as we run a relatively high cost in SEK for the diagnostics segment, given manufacturing in Sweden.
Given that about 75% of our sales is in U.S. dollars, the lower U.S. dollars will unfortunately continue to be a headwind to our gross margin as the currency rate stands now in the coming quarters. Operating expenses decreased by 9% from last year if we include the restructuring cost we had in last year. If you also include the spend we had for the BM900 project platform last year in Q4, the total operating spend decreased to a 36%. If you're looking at our current quarterly run rate for operating expenses, it's about SEK 45 million per quarter, as you see on the table. In the last 18 months, we have done a lot of changes to bring down the spend and expenses, but we have more to do to further reduce our cost base.
One example is the recent site consolidation done in Spånga to right-size our facilities for the current organizations we have in Sweden. Operating profit was lower than last year, mainly as a result of the lower gross profit and the fact that we now expense R&D as we go and no longer are capitalizing any R&D. Operational cash flow was positive for the quarter. If you're taking a closer look to our operating cash flow, also including investments in fixed assets and intangible assets, we had ambition for the year to bring it back to a positive level, which we have now seen for the last three quarters. In the fourth quarter, we were able to bring down our inventory with SEK 8 million.
However, collection remains a challenge from some parts of the world, and that is holding back the cash flow with about SEK 6 million in the quarter. We do not see any risk for significant collection losses and bad debt, and we have partly also collected some of the due invoices now in the beginning of 2026. Taking a look on the liquidity and credit facilities, we ended the quarter with a cash position of SEK 20 million and an unused credit facility of SEK 15 million. In total, liquidity decreased slightly compared to last quarter, and that was an effect of amortization of debt in the quarter. With that, I'm handing over to you, Torben.
Thanks, Holger. In recap, in 2025, we moved decisively from strategy to execution. Compared to where we started the year, Boule today is a leaner, more focused organization with a stronger growth platform and a more coherent portfolio. Starting with margins, we delivered concrete structural improvements. Through manufacturing initiatives, we reduced COGS and improved operational efficiency. At the same time, we lowered overall operating spend by 36% year-over-year, reflecting the disciplined cost control and organizational simplification. A key milestone was the consolidation of our Swedish operations from two sites into one. This has reduced complexity, improved efficiency, and lowered our fixed cost base. As a result, our margin improvements are not temporary. It is structural and repeatable. On growth, we strengthened our commercial foundation.
During the year, we established new sales offices in the Philippines and Indonesia, expanding our local presence in attractive growth markets. We launched a new brand identity and strengthened our digital presence. This has translated into increased digital marketing activity and improved lead generation, supporting a more scalable and cost-effective growth model going forward. Compared to last year, we now have both a broader geographical reach and a stronger demand generation capability. Within our portfolio, we made tangible progress towards a more diverse and growth-oriented offering. We advanced the preparation for a new veterinary hematology instrument, which is on track for global launch in mid-2026. In addition, we expanded our footprint in the clinical chemistry through new distribution in the US, and we defined and launched our new blood controls portfolio pipeline. Together, these actions strengthen our core, expand our addressable market, and improve long-term portfolio resilience.
2025 has been a year of significant change and improvement, and I'd like to take this opportunity to thank the entire Boule organization for all their hard work and dedication. This has truly been a team effort. Finally, and before we open up for questions, I'd like to take this opportunity to extend a big thank you to our current CFO, Holger Lembrér, who will leave Boule at the end of the month, for all his valuable contributions. Holger has played an instrumental role in the significant restructure Boule has gone through in the past 18 months. And at the same time, I'm excited to introduce Mikael af Winklerfelt, who will step in as CFO from today. Mikael, would you like to introduce yourself, please?
Yes, thank you. Let me first start by also saying thank you, Holger, for your great work, as Torben pointed out, during these years. Coming in, I see a very strong finance organization with very solid processes, and we're having a very smooth transition, I must say. Thank you also, Torben, for your confidence in me and for the onboarding, which is ongoing. Just as a brief introduction to who I am, I have long international experience from business in various finance roles in leading companies. I have now 10+ years specifically in the life science sector and with medical device. And since 2019, I've worked as a CFO in Sweden for Life Science companies. Coming into Boule at this point, I'm very happy to join the company.
I think it's been clear from both, the comments of, of Torben and Holger, that there is a very, very challenging environment for the company, but there is also quite clear that it's, there are a lot of opportunities out there, going forward. And just after a bit more than a week, it, it's also obvious to me that this is a very capable organization, a very now much leaner organization, and one that I think will be able to capture these opportunities. Thank you.
Thanks, Mikael. With that, Holger, let's open up for questions.
Yes. So please, if you have any questions, raise your hand, and I will give the word. It is also okay to write a question in the chat field if you prefer. It looks like we don't have any questions online for today. So with that, we thank you, everybody, for listening in to our fourth quarter earnings release. Thank you, everybody.
Thank you.