Good morning, everyone, and thank you for joining us today. My name is Jesper Söderqvist. I'm the CEO of Boule Diagnostics. I'm here together with our CFO, Jan Benjaminson, and today we will present the business highlights and the results for the first quarter. I am very pleased that we can report that we have improved profitability both at the gross profit level and also at the EBIT level. We had a soft start of the year, but we saw that sales and order picked up in March so that we could deliver an okay quarter. The price increases we implemented last year are helping with increasing the profitability, but we also get help from an improved supply chain situation where we see that the supplies, of particularly electronic component, is normalizing. Compared to previous years, we had significantly lower purchasing cost related to the electronic components.
We live in a time with a lot of uncertainty, therefore, we have started an efficiency and saving program to ensure that we can drive profitability and also deliver stable supplies. Last year, we started to collaborate with FUJIFILM regarding sales of veterinary products in Southern Europe. The initial customer feedback has been very good, also the collaboration with Boule and FUJIFILM has worked very well. We have now extended the distribution of the veterinary products to five additional countries in Europe. I'm also very pleased that we can... % versus last year, it's also consecutive improvement versus the fourth quarter of last year. EBIT increased by 1.1 percentage point. In this quarter, we have invested about SEK 15 million in the development of our new product platform.
The cash flow, operating cash flow for the quarter was negative, that is mainly related to that the accounts receivable increased as we shipped many products late in the quarter. We have now seen that many of those invoices have been paid during the month of April. If you now look at how the revenue is distributed between the product lines, we can see that the instrument is flat, despite that we have shipped around 1,000 instruments, which is about 200 instruments less than last year. However, price increases and currency tailwind maintained the revenue level at the same level as last year. The growth is driven by consumable sales to our own installed base that grow by 15%.
If you look at how sales has developed in the different markets, we see that the growth has really been in Africa and Middle East. In late 2020, we invested in establishing local presence in Middle East and Africa, and those activities are now paying off, and we see that we have more and more opportunities in Africa and the Middle East. This growth, which was quite significant in the quarter, is despite that the biggest market for us in Africa, Egypt, had a slow quarter. The decline in Eastern Europe is due to the Russia situation. We don't expect that that situation will improve.
Looking at how profitability has developed, as I said, the gross margin developed very well during the quarter, thanks to the price increases we implemented last year, but also the improved supply situation, and we also have done efficiency improvements in our production. As you can see, our operating expenses increased. That is mainly due to two reasons. One is that we have one-off items related to layoffs in the beginning of this quarter, but also that we have a currency effect as we have quite a few people employed in the U.S. In the end, our EBIT is SEK 12 million and a EBIT margin of 8.5%. If we zoom out and look at how sales has developed in the last few years, we can see here the instrument and consumable sales.
The blue bars here are the number of instruments delivered quarter by quarter, and as you can see, we have fluctuations. We had some downturn in second half of last year. Now we see that instrument sales are coming up again. Despite that we are comparing to one of our record quarters in Q1, we have maintained the revenue levels of the instruments. For reagent consumable revenue, we continue to see a steady growth. This is really good, and I think it really show the strength of the business model that Boule are using, where we place instruments in the market that is then used in consumables for the lifetime of the instruments. I would also like to draw your attention to that The OEM consumable sales has developed the last two years.
We have actually doubled our revenue from OEM consumable sales, and we continue to see a solid sales growth from our OEM customers. The great increase the last few years is really driven by a new product launch by one of our partners. We also see that we have a very nice pipeline of new opportunities with new OEM customers. That we can be a supplier to these other hematology providers is really a recognition of our capabilities when it comes to development of consumables as well as our manufacturing capabilities. Looking at the market, we see that there's an underlying growth for laboratory diagnostics in general and in hematology in particular, both for three-part and five-part instruments. The growth for five-part is significantly higher than three-part, despite that, we see a growth for the three-part.
We see that there's a growing demand, an accelerating demand, both from mature markets, but also from some of the emerging markets in Asia. Despite that we live in a world with a pretty chaotic geopolitical situation, we see that the supply chain and logistics continue to normalize, which is very positive, as this will minimize our cost for the supplies. If you look at the different markets where we are active, we see that the U.S. market continues to develop well, with continued growth of our OEM consumable sales. In Asia, India is the most important market for us. They have a requirement for made-in-India products to participate in public tender. Therefore, our initiative to establish local manufacturing of reagents in India is very important.
That project we kicked off last year and is progressing as planned. We target to deliver the first products to customers in the end of the third quarter. Western Europe now looks very promising, thanks to the addition of new products but also that we have Fuji as a new distribution partner in Europe. We have had fairly poor coverage of the European market. With Fuji, we'll get a strong partner that where we will penetrate the European market significantly better than we have done in the past. We see that the revenues from Eastern Europe will continue to decline, as we see that there's no end of the Russian war in Ukraine in sight. As I, you know, alluded to before, Middle East and Africa looks very promising.
We have signed up several new partners, and we have good momentum in the sales and new opportunities lining up. Let's look at our product offerings. The last few years, the veterinary sales have accounted for about 10% of the overall full revenue. Our flagship product for the veterinary market is our 4-part hematology analyzer, Exigo H400. It's a compact device ideal for the smaller midsize laboratory. It has several unique features, with multiple sampling options, and particularly important is the micropipette adapter, which uses a very small sampling volume, ideal for small pets. We also have a built-in mixer, which is, you know, space-saving but also allows for a very consistent sampling preparation. We also have the chemistry analyzer, Exigo C200, which is a dry chemistry analyzer, maintenance-free, which bundled with the Exigo H400 is a very attractive offering.
Now I am very pleased that we, in the second quarter, will also launch a entry-level 5-part hematology analyzer. In the veterinary market, there is a demand for 5-part analyzers, and that is particularly pronounced in the European market. This new analyzer has several unique features, and it will be launched in Europe in the second quarter, and we expect that this will contribute to our sales in the veterinary market in the H2 of 2023. Of course, we are also continuing our development of our new platform, which will also include more advanced 5-part instruments. For this development, the focus is on the human market.
This new advanced 5-part instrument that we're planning to launch in end of 2024 will be fully connected to an advanced data management cloud software for remote monitoring and or performance, and later on, we will also add additional functionality. It also has several unique technologies when it comes to digitizing the signal processing and also the 5-angle optic laser that will be used for the differential of the white blood cells, as well as counting immature red blood cells, also referred to as retics. With this, we will have product platform and the new advanced 5-part product for the human market. We will have a very strong offering in the 5-part market. The program is progressing as planned.
We're working hard now to finalize the product for the clinical validation. We target to launch the product in end of 2024. We'll see significant contribution from sales of these new products in 2025. To summarize the first quarter, we are pleased to see that the profitability is improving. We have now lined up new opportunities with new distributors, both in Middle East and Africa, but also improved coverage of the veterinary market in Europe. We're in the phase where we're preparing a launch of a new veterinary product that will contribute to our growth in 2023. We have an efficiency saving program that we're starting in the beginning of the quarter that has already started to give positive results. I expect that that will further help improve our profitability in 2023.
Of course, very importantly, we are continuing to make progress with the development of our new product platform. Thanks a lot for joining us here today, and with this, I conclude my presentation and open up for questions. I see, Gonzalo, you have raised your hand, so please go ahead.
Yes. Hi, Jesper. One question on your instruments, segment. You're saying that the demand for the 5-part instruments seems to be increasing in so- like, more established markets, but also in Asia. My question is, how will this affect your current instrument sales moving forward for the rest of 2023 and also for 2024 until you launch your new segment? Are you expecting sort of a decline in sales of instruments, or you will aim to maintain these levels as they are now? Yeah, I mean, how do you see this moving forward until you launch? Thank you.
As you know, we don't give a detailed forecast of our revenue, but I could respond like this, that we see an increase of growth in the 3-part market, which is quite moderate, and I expect that our 3-part sales will remain roughly at the level we have right now. But as you know, our instrument sales are fluctuating from quarter to quarter. I expect that the 3-part revenue will remain roughly at the same level as it has been over the last few years. In addition, we have our 5-part offerings, which will also generate revenue and also establish an install base of 5-part instruments that we can later upgrade with our new instrument that we will launch.
Okay. Thank you. Clear. A second question if I can. It's regarding your 5-part instruments but for veterinary use, the one that you will launch next, like, launch next quarter.
Yeah.
Can you give us some color on the market for this, and how much can we expect this to impact the veterinary segment moving forward? I mean, a little bit if you could expand on that market?
Yeah. This, you know, again, I will not give a detailed revenue forecast, but it's clear that in particular in the more mature markets that there is a demand for 5-part instruments, for veterinary clinics. By that, we now are adding a 5-part instrument to our already strong product portfolio, means that we have a full offering. This will help us drive revenue both of these new 5-part instruments, but it will also generate sales of our existing portfolio.
All right. Very clear. Thank you very much.
Thank you. I think Christian has raised his hand as well. Please, Christian.
Yes. Thank you. Good morning. I was wondering about the strong gross margin of 46.6%. Is this a level we can expect during 2023? Would it be possible to break down how much of the improvement that was related to improved efficiency, price adjustments, and improved supply situation? Thank you.
We, you know, again, we don't give a detailed forecast, and we are... we can break down this, but we will choose not to do it. Clearly the improved supply chain situation, if you remember last year, we had, you know, several SEK million in additional purchasing costs per quarter. That is now significantly reduced. There was also some additional cost during this quarter, but all of those purchases was decided on last year. During this quarter, we have not taken any new decisions on additional purchasing costs. I expect that the supply chain situation will continue to drive gross margin improvements. We are, we have done some changes in the management and the staffing of our manufacturing operations. This has started to yield good results.
I expect that we will continue to see gross margin improvement.
Got it. Could you please Elaborate a little bit on the price adjustments. I think, yeah, your ASP for instruments increased by 16% compared to Q1 last year. You mentioned that you have price adjustments and favorable currency effects that supported that growth. Since you had tailwind of 11% from currencies, would it be fair to assume that you have implemented price adjustments of around 5%?
I think the price adjustments has been actually higher than that if you look across the market. I mean, it's a both a product and geographic mix that blends into this. It is quite difficult to analyze it. You're right that it's a significant currency effect that contribute to the increased ASP. I think the actual price increase is slightly above what you have what you stated.
All right. Okay. My final question, please. I was wondering if you could elaborate a little bit on the increase of account receivables. Do you see any risk of having bad debts?
No, not at all. I mean, if you look at the history of Boule, we have had very few bad debts. We don't see any risk of bad debts in our current pipeline.
Okay. That's crystal clear. Thank you very much.
Who else? Are there any additional questions? I think you mentioned crystal clear, Christian. It seems like it's crystal clear because we don't get any new questions. I would like to take this opportunity also to thank my colleagues, our distribution partners, and also our suppliers, you know, for, you know, how we managed the business in these quite turbulent times and also how we're mastering the increased inflation, cost pressure. I'm very pleased with the development going forward, and look forward to see you soon again. Thank you very much for attending this call, and please reach out to us if you have any further questions. Have a nice day. Bye-bye.