Good morning, everyone, and welcome to this call with Boule Diagnostics, where we report the progress in the Q3 . I'm here in Spånga at our headquarters, together with our CFO, Jan Benjaminson. I will today run the presentation and then open up for questions after the presentation. If you want to place questions during the call, you can use the chat functions and place them also during the presentation. So, the third quarter was a quarter where Boule made progress in a number of areas, and most importantly, we returned to growth. We saw strong growth for our OEM business, where we sell consumables to other hematology providers. Our systems business, we saw the highest growth in Latin America, and that was thanks to a larger strategic order of five-part instruments that we took to secure future consumable revenue.
Also, if you remember and follow us, we launched a new veterinary product in the Q2 and that growth in Europe. But I must say also, not only the new instrument had a good sales development, but also our well-proven four-part instrument also delivered significant growth in the quarter. I'm also very happy to see that our efforts to work with our working capital has paid off, and we report a strong operating cash flow in this quarter. As we continue to develop our business around the world, we also... In this quarter, we signed a license agreement for instrument manufacturing in India, and I will come back with some details on that.
For our strategy, the development of the new product platform and the release of the new instrument, the first instrument, which is a five-part instrument, is progressing well. If you remember, we reported this summer that we had identified a number of improvements. They are now implemented, and we're now in the preparation for preparing the clinical validation. So overall, I would say this was a good quarter, where we made progress in a number of areas. So let's see how that plays out when we look at our financial figures. As I said, we saw growth in Swedish crowns. We record 11% growth, but in constant currency, it was a 4.3% growth overall, and our revenue was SEK 140 million.
We saw a slight improvement of the gross margin, despite that we have an unfavorable product mix in this quarter. Our operating profit, we landed at 5.7%, which is an improvement of 2.8 percentage points. A very strong part of this report is that our operating cash flow was almost SEK 28 million, and that is thanks to the activities we have ongoing to lower our inventory levels. We've also managed to decrease our receivables, and the good thing is that we have actions ongoing to further reduce our working capital. When it comes to the investments, we invested SEK 21 million in this quarter in a new platform development.
That is significant, above what we have seen in the previous quarters, and that is due to that we are now in a phase where we are preparing production, and we have purchased material for pre-series production, and we're also investing in production fixtures and production equipment that will be used for serial production later on. Let's look at how our sales has developed. We saw strong growth in the U.S., and that was mainly driven by our OEM consumable sales, but also, in the second quarter, we secured a larger order, from a hospital chain, and some of those instruments were also delivered during the third quarter.
As expected, Eastern Europe continued to decline due to Russia's war in Ukraine, and LATAM was the biggest growth, as I previously noted, and that was thanks to this strategically priced five-part order. In Western Europe, the growth comes from our veterinary sales. If you look at Africa, and some of our larger countries, like Egypt, had a slight decline, but thanks to our efforts to expand our footprint in Africa and signing up new distributors, we saw growth in this region, and this quarter, there was some new distributors in Algeria, Kenya, and Gambia that secured new business for us. So overall, a pretty good development for sales.
We should keep in mind that it's a pretty tough market out there and a lot of other factors that are causing headwinds. Overall, I would say that our sales team performed well in this quarter. If you look at how our gross margin, EBITDA, develops, the reported gross margin is slightly above Q3 last year, and that is despite an unfavorable product mix, and also that we had one larger order that we took at a lower price to secure this five-part position in a market in Latin America. Activities that we have ongoing in the production is really paying off, and I'm really pleased to see that this development will continue.
We will continue to lower our cost for producing instruments in particular, and that will drive our gross margin going forward. As you can see, our OpEX increased by SEK 2.3 million. That is mainly due to the currency effect, and it's related to that we have both sales and R&D expenses that we are paying in U.S. dollars. So, an EBITDA improvement, but still I'm not pleased until we hit our target of 15%. So we'll continue to work on the improvements, and I'm positive that that will continue to deliver good results, and that will also be visible in our reported financial figures going forward.
So if we zoom out and look at the bigger picture, how the business is developing, as you can see, we have a higher share of instruments in the last quarter. If you look here, the blue bars are the number of instruments sold per quarter, and the gray line is the rolling twelve-month revenue from instruments. So you can see that despite that we are not selling more instruments, we see an uptake in revenue, and that's thanks to the price increases that was implemented last year. We sold about 1,000 instruments, and we got some help from Latin America, where we sold these five-part instruments, and also from in Europe, where we sold about 100 instruments more than we usually do in a quarter.
If you look at the red line, it's the rolling 12-month revenue from consumable sales. It has stabilized now at a level, and that is mainly due to that we see a decline of reagent sales in Russia and in some markets where that have difficulties to pay. So we are waiting to deliver order to some countries, but where the distributors cannot really pay us due to the restrictions of payments. But overall, it's the business has stabilized, and we continue to see growth of the instruments. Looking at our OEM consumable business, it continues to grow, and in this quarter, we saw a good growth of 21%, and the recorded growth for the first nine months is 12% versus previous year.
So this is a business that is with where we have a number of contracts with customers that are extending over multiple years. So, and it's a business that we expect will continue to deliver growth in the coming years. Another event in this quarter was that we signed this agreement for local manufacturing in India. As you know, India is a very large market with a very good GDP growth, where the government are investing in building a healthcare infrastructure that includes diagnostics for the entire population. So there will be a lot of investments in India the coming years in diagnostic infrastructure. However, to participate in these public tenders, there is a requirement to have Make in India products.
For that reason, we started a collaboration and a partnership with one of our partners in India last year, building a reagent manufacturing factory in India, in Lucknow. And where they will produce reagents for us, and we get the royalty revenue on the sales there. The state-of-the-art facility is now ready. It was ready already in August. We have not started deliveries from that factory, and that is because we're waiting from approvals from the authorities. Now we take the next step in building this strong position in India by also planning for instrument manufacturing.
So we have licensed our older technology to our partner that will now transfer production of these instruments to India and set up local supply, and we will get a royalty revenue on those instruments. We expect that this production transfer will take about one year, so towards end of 2024 or 2025, we will see that revenue from this initiative. This also means that the revenue from India will go from a product sales revenue to a royalty revenue. But it will not generate the same top-line growth, but will increase our profitability in India. We take a broader look at the market. You know, there's been a number of tragic events lately, with wars in multiple locations and very uncertain economic and political developing in many parts of the world.
So we are operating in an increasingly complex market landscape. And the good thing, though, is that what we have seen that the supply chain and logistics has normalized compared to 2022. So I would say that all our deliveries, all the supplies are, you know, back to normal since beginning of this year. And Boule being a supplier to the healthcare sector, we benefit from the macro factors where, you know, an aging population, a higher standard, higher investments also in the developing markets, in infrastructure for healthcare, which create an underlying growth for diagnostics that we benefit from. If you look at what's important for us in the various markets, in the U.S., it is clear that our OEM business that continue to drive our growth.
In Asia, we see that there is a lot of countries like India that favor local manufacturing. The step we now take in India is important. Here in Asia, we see an intense competition from suppliers in China and Southeast Asia, so that we build this position in India is important for our future sales in Asia and Southeast Asia. Eastern Europe in the tragic situation with Russia's war in Ukraine, and we don't see any solution in sight, and we expect to see further declines. LATAM is really a market which has really turned to more and more five-part testing, and we see that more and more of the volumes are going into the five-part instruments.
So that we are now using our entry-level five-part instruments and building an installed base in LATAM is important, also, when we now launch our new product next year. Middle East and Africa is a region that we have high hopes for in the future, and we see that, you know, the investments we've done to hire local staff in Middle East and sub-Saharan Africa is paying off. We have signed up a number of new distributors that bring new business, and that's particularly true for Africa. However, in Middle East and, particularly in Egypt, we see that there is some headwind, and there are payment restrictions and weak currencies that really currently limit our sales. So let's...
It's a little bit uncertain how the Middle East will develop now, given the recent events, but we see that we are building a momentum in Africa. Our most important strategic development is, of course, the investments we've been doing into modernize our product portfolio, and we start there with an advanced five-part hematology instruments for the human market. It will be a fully connected advanced system, you know, aimed for the premium segments. And very importantly, it will have an autoloader, and you can see the autoloader here at the side of the instruments, which is a very compact way to have a walk-away solution for high-volume testing. This instrument is also capable of doing retics measurements, meaning that we can measure also immature red blood cells. The product has made a significant progress over the summer.
The improvements we identified this spring is implemented. We're now in an intense phase to prepare for the clinical validation, and we're working on the production readiness. And, we're also preparing a regulatory submission that we will we expect that will happen towards end of next summer. And we expect that this products will start contribute significantly to our sales growth in 2025. So, you know, a good quarter for, for the development of both sales and our product development. So in summary, we had a strong operating cash flow in the quarter.
The efficiency savings programs that we implemented early this year have delivered, and they will continue, and we particularly focusing on our working capital to release cash, and we also have, you know, very promising initiatives to reduce our production cost for instruments the coming year. I'm very happy to see that the new product platform is making significant progress, and we are really approaching a market launch, and we will have some pre-launch promotion starting early next year. So with that, I will open up for questions, and thank you very much for your attention. I see a question. Sten raised your hand. Please.
Yes. Yeah, good morning. Sten Gustafsson from ABG. A few questions. You talk about a decline in future-
I've been told here by the technician in the background that I should raise the volume.
Can you hear me? Can you hear me? Can you hear me? I guess not.
... Sten, can you please try again?
Yeah, can you hear me?
I cannot hear a question.
Can you hear me now? I don't know. Should I
Looks like we have some technical problems because I cannot hear any questions. Can someone try to speak here to see if... I see many are, have
Yeah. Can you hear me? We can hear Sten.
I see our technicians are working on this here in the background. I do apologize for this. Okay. Can you try again?
Sure. Can you hear me now?
I do apologize for this. Can we use the chat function and maybe get started? I see that Bjorn can hear Sten, so I assume there's something wrong here at our end. We're powering up an alternative computer here to see if we can, you know, hear the questions. So I do apologize for this delay, and it's good that you can hear each other, but I cannot hear you. So if there's anyone want to place a question using the chat function, I would appreciate that. Trying to figure out here what was wrong. Hello, can we try now?
Yeah. Can you hear me now?
I can hear you.
Fantastic. Great.
Yes, I do apologize for this delay.
No, don't worry about it. Don't worry about it. So, my first question would be with regards to the investments of the new five-part system. And you write-
Mm-hmm
In the report that you expect the investment to come down on a quarterly basis. If you could quantify that, what we should expect going forward, the coming quarters, in terms of capitalization of R&D.
In the past, we have been capitalizing between SEK 15 million-SEK 20 million per quarter, and we will be down in that range fairly soon.
15-20 is what we should expect for, let's say, Q4 and the first part of 2024 on a quarterly basis?
Exactly. And thereafter, things will wind down. And I mean, this quarter was exceptionally high due to the investments we're doing in production, both buying material and also by investing in production equipment.
Excellent. My second question is regarding, I believe it was slide number 9, where you talked about sort of the market update. And I was wondering if you would be willing to provide some sort of conclusion, quantitative conclusion on that, what we should expect in terms of sales growth and margin development in the near term, given all the moving parts.
No, I think it's difficult to quantify how the world's happening around us. Sorry, I do have a severe echo here. So, no, so in terms of giving a quantified forecast going forward, we don't make any forward-looking statements. So, and it's very difficult to quantify how some of the things that are happening in some of the markets where we are active will affect our business, even short term.
Okay. Thank you.
Okay. Christian Lee is raising his hand, so please.
Yes, good morning. I have a follow-up question to the one Sten asked. And I was wondering how much of your consumable sales you have in India on annual basis?
So, so what was the question? How much sales we have in,
Yeah, of your consumables.
Specifically in India for consumables?
Yeah. Yes.
No, we don't report per country. We only report per region. So, the numbers you see in the geographic segments in the quarter report is the granularity that we will report on.
Okay. So how much would Asia account for of consumable sales on annual basis?
To make sure that I respond correctly, I will. I've asked our CFO to come back with the exact numbers, and in the meantime, maybe you could place a second question.
Yeah, sure. You wrote in the report that you sold more five-part instruments in Latin America at lower prices. Is that related to your strategic decision to increase the installed base in the market, or is LATAM characterized by price pressure in general?
I think it's both. I mean, LATAM is one of the bigger five-part markets, and that has kind of so it's important for us to build an installed base and to be present there, you know, given our upcoming product release of our own developed five-part instrument. So, you know, so we want to be present in that market. Also by placing instruments in this market, we also get access to high-volume testing sites that drives future consumable sales. So we will regain, you know, the lower margin that we recorded in this quarter due to this order.
Okay, great. Understood.
Mm-hmm.
Thank you.
Yep. Thank you. Alban, you had a question about our OEM business. Can you please place it?
Yes, I was just wondering, you have a nice growing business there with the reagents. So I was wondering, is that due to new business coming in, or are you increasing prices? Are you getting more volume from the customers that you already have? Where are you seeing this growth?
So the growth that you see recorded in this year is increased sales from our existing customers and existing contracts. And the nature of this business is that it, we have been part in developing the consumables for their new product platforms. And two years ago, we signed, or 2.5 years ago, we signed an agreement with one of our long-term customers, and a lot of the growth is really coming from that, the rollout of that new product. At the same time, we have increased our sales efforts towards this segment. So 2.5 years ago, one of our key members of our team has been focused on OEM, and also in this year, we have added sales and marketing efforts towards that segment.
It takes some time to build up this relationship and also start up this type of products and production. But it's a long-term revenue. So many of these contracts extend for 10 years, and very often, the supplies is ongoing for almost 20 years.
Okay, thank you for that.
Do we have any more questions? No more questions. Then I would like to thank you so much for your attention, your interest in Boule. And I do apologize for the technical difficulties we had here during the Q&A session. But you're always welcome to reach out to us if you have any specific questions, and we look forward to see you soon again. Have a nice day. Take care. Bye-bye.