Modulight Q2’24 earnings preview: Will revenue return to growth?

Translation: Original comment published in Finnish on 8/14/2024 at 7:00 am EEST.

Modulight will publish its Q2 results on Friday, August 16 at 1:00 pm EEST. Our revenue forecast of 1.3 MEUR expects relative year-on-year growth. EBIT is expected to be -2.5 MEUR, a slight deterioration year-on-year due to higher fixed costs. Commercialization prospects and cash flow development will again play a key role in the report. 

Ongoing Phase III trials to drive growth in first half

There was no significant operational news from Modulight during the second quarter and therefore the outlook for the company remains unchanged. Our revenue forecast implies strong growth in relative terms compared to the same period last year, but revenue is still low in absolute terms. We expect the Phase III clinical trials announced in the Q4'23 report to generate revenue as patient enrollment is expected to commence. However, there is little visibility on the level of revenue from these and other projects, so surprises are likely in one direction or another. Our EBIT forecast is lower than for the comparison period. The main reason was an increase in fixed costs, mainly due to recruitment. Forecasting EBIT is complicated by depreciation and amortization, the level of which has fluctuated significantly. In addition to revenue and earnings, the focus is on cash flow and cash position. The company's cash reserves are still substantial, but cash flow losses mean that cash adequacy risks are increasing.

We expect growth in 2024, but visibility into the future is scarce

Modulight does not provide guidance, but the company's strategic goal for 2023-2025 is strong annual revenue growth and strong profitability at the EBITDA level. The lack of visibility makes it difficult to assess the realism of business goals. For the full year, we expect revenue of 6.0 MEUR and EBIT of -9.4 MEUR. The forecasts are subject to considerable uncertainty. Revenue during the year will be driven by the commercialization of a laser for macular degeneration in the U.S. and Phase III trials initiated last year. The company has also announced projects that are nearing commercialization and we expect to hear more about them soon.