Good morning, everyone. My name is Jesper Söderqvist. I'm the CEO of Boule Diagnostics. Thank you for joining our call here, where we will present our earnings results for the last quarter of 2022. 2022 has indeed been an eventful year, with a lot of challenges, but also a lot of opportunities. I must say that towards the end of the year, I'm very pleased to see that we have progressed and added a number of milestones so that we can move into 2023 with full confidence. Looking at some of the highlights in the last quarter, important to notice that the testing or at our installed base is back at the pre-pandemic levels, so that our consumable sales remain stable and growing.
In the Q4 , we saw a decline in number of sold instruments, particularly in Asia. Bear in mind that this was compared to a very, very strong quarter in 2021. The drop is less dramatic than shown. Okay, now they point to me that I have missed to flip the slide. I'm sorry for that. Also, we saw a strong growth of the gross margin improved both to the previous quarter but also compared to the previous year. That was mainly thanks to two things, favorable product mix, but also that our price increase realization had a full effect in this quarter. We're also making progress with our strategic programs, in particular the development of our new product platform.
It's really nice to see that we now have, you know, more and more prototypes coming out, and we do more and more testing, which is really, you know, creating a lot of energy in the organization, and it gives me a lot of excitement for the future. We also accomplished a first formal release on a new platform, which was the release of our cloud software. Another initiative we have for going into 2023 is to set up local manufacturing in India for the local market, and that project is progressing as planned. We are targeting to ship our first products to the customer in the Q3 of 2023.
In the end of the year, we did a rights issue, which was significantly oversubscribed, which we improved our financial position significantly, which means that we can now execute our plan to develop our new product platform at the speed that we really want. If you look at the financials for this quarter, the overall growth was 6%, but that was thanks to a strong dollar. If you look at organic growth, it was a decline of 8%. Very important is that we increased our gross profit margin both the previous year by three and a half percent, and with four percentage points compared to the Q3 in 2022.
Still, we see an effect of the supply chain issues that we have been facing for quite some time. What was very positive is that even if we see that there are spot purchases, which is equivalent to about three percentage points in for the gross margin in the Q4 , we saw a decline towards the end of the year. It seems that the market is really improving. Overall, our operating margin decreased by three percentage point, and we have an EBIT margin of 7%. We invested about SEK 15 million into our new technology platform.
If you zoom out now and look at how our sales and business are developing, I really like this graph because I think it shows the strength of the business model that Boule has, where we place instruments that use consumables for the lifetime of the instruments, which is like seven to eight years. As you can see here, the blue bars are the number of instruments placed per quarter. And that we have fluctuations, and usually we ship around 1,000 instruments per quarter. The red line is the rolling 12-month revenue from consumable sales. You can see that that has been increasing, you know, before the pandemic, and then we had a dip during the pandemic.
Since early 2021, we have seen a quarter-by-quarter increase, and that continues, which is nice to see. As you can see, we have a significant drop in the number of instruments placed in the Q4 . That is, I think it has two effects. It comes both with that we shipped quite a lot of instruments in the beginning of the year, and we also shipped the instruments to distributors late in both the Q2 and the Q3 , which means that the purchase of additional instruments has been pushed forward.
We also see that there is limitations in how much they can invest and do payments due to the weak local currencies in several of the emerging markets where we have quite a large part of our business. As you can see, the revenue remains almost stable, thanks that we have increased prices mid of last year, and also that we also get that effect of a stronger dollar as we now have price lists in dollars and euro. If you look at the sales in the quarter per product, we saw a drop in instruments, which is quite a lot in the number of instruments, but the decline in revenue is less severe as we are realizing higher sales prices.
The sales of consumables to our installed base grow or thanks to the price increases and the stronger dollar, but it remains roughly at the same level as it has been. The real positive sign in this quarter was the growth of our sales to our OEM business, which actually increased by 49%. During 2022, we saw a significant uptake of that business, so which, you know, we really have good momentum there also going into 2023. If you look across the regions, you can see that the growth is really coming from U.S. Thanks to the currency again, but really, very much also that we see continued growth of our OEM consumables.
If you look at Asia, the main reason for decline are less instrument sales to India, but we do see a lot of opportunities in other Southeast Asian countries. In Eastern Europe, the decline is mainly driven by lower sales to Russia. Africa and Middle East is a region which I think we have a lot of opportunities going forward. However, in several of the central banks, have restrictions in the amount of payments in foreign currencies since there is lack of dollars in those countries. One example is that we had some orders to Egypt that was actually postponed from the Q4 into the Q1 of this year due to the limitations of payments.
If you look at the profitability, we saw a positive contribution from increased volume that was driven by the strong dollar. Gross margin improved, both due to the product mix, but also that the price increases that we implemented mid last year had a full effect in the Q4 . As I said, Spot Purchase are still negatively impacting our gross margin, and thus our profitability. We saw some very positive trends towards end of the quarter. Going into 2023, I see some light in the tunnel. Our OpEx has increased during 2022 compared to the previous year.
Some of the costs are related to the supply chain issues that we've had to mitigate. We also had some additional expenses of one-time nature to some regulatory work that we're doing. Also very positive is that we are now attending exhibitions, we are traveling, we're seeing customers again, which is very, very positive. There's also a category here which is, says others. That's mainly related to the currency effect, both in terms of purchases of material, but also for the expense of our US organization. If you look at our cash flow, we did an investment of SEK 15 million in a new development.
The operating cash flow was SEK 13 million, but of course a big part of the cash flow of this quarter was the financing of this when we did the rights issue. After all the costs, we added like SEK 139 million into our balance sheet. We leave 2022 with available liquidity of SEK 156 million . Looking ahead, you know, I think we are still in a very volatile market, and we know that we have to be very lean and mean and to manage all of the things that happen in the market. Good thing is that we had a good order intake towards end of the quarter.
We know that some of the supply chain issues will remain, but we see that they are less pronounced now at the end of the year. In U.S., we have a strong momentum in our consumer business to the OEMs. In Asia, we continue to see there are opportunities in many countries also outside India. For next year, a very important initiative is, of course, to set up local manufacturing that will help us win also public tenders. Eastern Europe is, of course, an ongoing concern. We don't see any end of the terrible war in Ukraine.
Our business is not limited by sanctions, but we do have limitations in restrictions on payments to the banking system. Overall, I could say this, that the uncertainty of the business in Russia remains, we'll see how that develop. That's something, of course, that I'd be following and trying to consider what we should do, you know, on a weekly basis. Middle East and Africa is a region where we have invested to have more local presence. We see that we have momentum in getting new distributors, discussing new tenders. This has not really yet been reflected in order intake and sales, mainly due to that there are payment restrictions in many of those countries. We know that going forward it will create positive revenue growth for us.
One concern could be in this kind of very volatile market is, of course, that we don't really know how the public tenders will be affected when there are less money available, and particularly in the emerging markets. So far, we see that there are, you know, some slowdown, but overall the business continues. Of course, we will keep an eye on that. If you look at our progress, both with our strategic and operational plans, of course, the new product platform and the renewal of Boule's product portfolio is, of course, of great importance. That's also why we are investing, and that's also why we did the rights issue to ensure that we can execute on that strategic plan.
In the Q4 , we did the first technical release of our cloud software, which is a, you know, great achievement for the organization. It really gives me, you know, confidence that we will be ready to have these connected instruments once we release the first instruments. The first release on this platform is an advanced five part instrument. We have now built a number of prototypes that is now used for verification and that will be used for clinical validation during the H1 of this year. To drive growth, to improve profitability and improve cash flow, we have a number of initiatives. Over the last, you know, two years, we have really been affected by the limitations in the supply chain.
Good thing is that we see there's a decline towards the end of the Q4 . It feels that we are in a much more stable situation entering 2023 than we were earlier this years. We have also taken initiatives to reduce staff, particularly in instrument production and some support functions, to make sure that we have expenses at a level that can be supported also by some lower instrument sales in the near term. We also have initiated a program to save and improve productivity and increase digitization. I feel that the first step of the savings has now been implemented during January. I feel that we are really on good track to improve our profitability.
Of course, happy customers cannot be achieved if you don't have employees that are passionate and dedicated and like what they're doing. I must say that I'm very proud of the our organization because they really have a lot of passion and energy and really want to deliver our solutions to customers globally. There is always opportunities to improve. We have reduced the size of the executive team in the beginning of this year to make us more faster and more nimble. We're focusing a lot on our culture and talent management. That has been elevated, and we have a new HR head that is really driving these initiatives, which makes me very positive about the future.
Very importantly is that we both in the Q4 and planning also now in the Q1 , we are participating in exhibitions. We were at MEDICA in Germany in November. That was very positive to see the customers again. Next week, we are traveling to Dubai for Medlab Middle East, where we're meeting customers. After almost three years with the teams meeting, it's really great to meet customers again, and I think it creates a lot of energy in the business, and it opens up new opportunities. To summarize where we are, I'm pleased with the progress and the milestones we passed in the Q4 . We move into, you know, this year with confidence, and we have good plans.
What I take with me is that we saw improved gross margin in the Q4 . We'll continue along that way, going into this year. We started this efficiency saving program to drive profitability further in 2023. I'm sure there's a lot we can do and will do. Of course, very important is that we did the rights issue, which means that we have a financing in place so that we can deliver at with full speed on our strategic plan to bring new products to market. Given that we recently did a new rights issue, the board is not proposing a dividend. I would like to stress that our financial targets remain. I'm sure that we can hit both our profitability targets and our growth targets quite soon.
With that, I would like to thank you for listening in to this call and open up for questions.
We have a question from Gonzalo.
Yes. Can you hear me, Jesper?
Yes.
Oh, hi. Good morning, Jesper, thank you for taking my call, my questions. The first one is you're mentioning that the gross margin increased is due to a higher favorable product mix, which seems to be now shifted to a higher share of consumables, right? My question is, how do you see margins going forward? I mean, you explained that by the shift from a 3-part to 5-part systems, but can we expect that the instrument sales will remain lower on average than previous years, in the upcoming quarters? If so, what do you think that these numbers will? When do you think that these numbers will shift back to the higher end?
Well, I, we usually don't give a forecast going forward, but I think two things when it comes to the gross margin. You know, we have initiatives in place now, and we already have taken measures to lower our production cost by reducing our staff in production. I think we will see, you know, slightly lower volumes that we saw in 2021 going forward. Remember that we do have entry level 5-part instruments also. I mean, it's not that we need to wait that we have the only the new products to drive sales also in the 5-part instruments segment.
Okay, great. Thank you. Another question is regarding the observations noted by the FDA in the U.S. I mean, you mentioned that you're correcting them now, could you give us some words on the path forward here? I mean, once they are corrected, do you expect to a notification from the FDA closing, let's say, this case or? What about here in Europe in your Swedish operations?
I mean, there's not like a process where you really get a closure from the type of observations that we had. That's only if you have a Warning Letter. Usually a Warning Letter is issued, you know, quite soon after a Form 483 is issued. I'm, you know, I'm not too concerned about that we will get the Warning Letter anymore. I must say that we of the observations we had in the U.S., we put a program in place in August to address all of those observations, and we have really delivered on all those, you know, activities. We have also reported on a monthly basis to FDA, and we haven't heard anything from them, which I see as a good sign.
FDA also conducted an FDA inspection in Sweden, we had two smaller observations that already has been addressed.
Okay, it's more like an ongoing process that you... We shouldn't expect any kind of notification sooner or later?
No.
Okay.
That's not what I'm expecting.
Great. Great. Thank you very much.
Thank you.
We have a question from Christian.
Yeah. Yes. Good morning. I have two questions, please. You mentioned that you have initiated efficiency and cost reduction program. Would it be possible to quantify what kind of improvement in profitability you expect from this and when you expect the full impact from this program?
As you know, Christian, we don't, you know, give out any forecasts. What I could say is that, about, you know, 20 people have been affected by the saving programs. Some of the reductions was done late December, and the rest was done now during January.
Okay. Thank you. My second question is that you mentioned that you saw the order intake improving at the end of the quarter. Was that for all your product categories and in all geographies, or could you please elaborate?
I mean, I don't want to say too much about, you know, going forward, but, I mean, it was, you know, across, you know, basically all geographies. I would say that the order intake is stronger on the consumable side than on the instrument side.
Okay. Excellent. Thank you very much.
Any more questions? Okay. Seems that there's no more questions. I would like to thank you for listening in to us today, and I look forward to, you know, hear and speak to you soon again. Have a great day. Take care. Bye-bye.