Revenio Q1'25 preview: Risks have increased significantly

Translation: Original published in Finnish on 4/22/2025 at 7:00 am EEST.

Revenio will publish its Q1 report next Tuesday at around 9.00 am EEST. We expect revenue and EBIT to grow significantly in a seasonally weak first quarter. We do not expect any negative impact from the US tariffs in the first quarter, but positive effects are possible if customers anticipated the tariffs. The import tariffs imposed by the United States on Europe, which are critical for Revenio, seem to remain reasonable, but at the same time, the strong appreciation of the euro (EUR/USD) is creating additional headwinds for the outlook. Macro factors are causing significant uncertainty for expected earnings growth, but for the time being, we assume the headwinds are temporary and made only minor forecast revisions in connection with the preview. 

We expect healthy growth from a weak comparison period

We expect Revenio's revenue to have been around 25.4 MEUR in a seasonally weak Q1, which would represent a moderate year-on-year growth of just over 7%. Q1 was sluggish last year and while we estimate that the market has remained relatively quiet, the company should be well positioned for healthy growth in Q1. We expect growth to come largely from the usual suspects, namely gradually increasing sales of tonometers and probes, and increasing volumes of imaging devices (particularly iCare DRSplus and EIDON). On the tonometer side, the new iCare ST500 supports growth, but on the imaging side, sales of the MAIA microperimeter only started after Q1 (comment on FDA approval). Approximately half of the revenue comes from the US, which is why US tariffs can have a significant impact on the company. Q1 is unlikely to have had a negative impact; on the contrary, it is possible that some customers have brought forward their orders to avoid tariffs. However, our forecast does not include this. The EUR/USD exchange rate was mainly at a low level in Q1, but the euro strengthened strongly towards the end of the period. Through this, currencies have also turned against the company recently.

We expect a slight improvement in profitability

We expect Q1 EBIT to be 5.6 MEUR (Q1’24: 5.1 MEUR), which would translate to an EBIT margin of 22.2% (Q4’24: 21.8%). Thus, we expect clear earnings growth and a slight improvement in relative profitability from a relatively weak comparison period. The most significant factor here is reasonable revenue growth with a gross margin of around 70% (Q1'24: 70.5%), but we also estimate that the costs related to the FDA application for the iCare ILLUME screening solution will be lower than in the comparison period (Q1'24: 0.6 MEUR). To our understanding, Q1 has been quiet in terms of clinical trials, as the company has been reassessing the FDA requirements. For this reason, we slightly raised our Q1 estimates in connection with the pre-commentary, but at the same time we made slightly negative changes to future quarters. The number of employees increased significantly as last year progressed, which likely led to a clear year-on-year increase in personnel costs also in the first part of the year. In addition, other expenses are clearly increased by the marketing related to the company's new products (such as iCare ST500 and MAIA), but the fruits of the investments will be reaped mainly later. Our earnings estimates appear to be below consensus estimates for Q1.

US tariffs, exchange rates and potential health care cuts weigh on the outlook

The 2025 guidance given by Revenio in connection with the financial statements was for currency-adjusted sales to grow 6-15% year-on-year and for profitability excluding one-off items to be at a good level. The growth guidance range was wide because it included the materialization of certain risks. Of these risks, the most significant was a potential trade war initiated by the United States, which has since partially materialized. The company's management indicated in connection with the financial statement that the bottom end of the guidance would be relevant in a full-blown trade war scenario.

Roughly half of Revenio's revenue comes from the US, and the company's products are manufactured in Europe (Finland and Italy), as a result of which the company would suffer from tariffs imposed on the EU. Currently, the "base level" of 10% is in effect for almost all imports to the United States, while higher tariffs were given a 90-day transition period. If the EU tariff level remains at 10%, we do not see this as a particular problem for Revenio, considering the company's 70% gross margin and transfer pricing to its US subsidiary. To our knowledge, the largest competitors also manufacture their products mainly outside the United States. However, no one knows how the situation will develop in the coming months, and uncertainty remains high. In addition, in our view, the United States has planned significant cuts to the healthcare sector, which may also disrupt Revenio's market. Revenio is not particularly dependent on, for example, Medicare and Medicaid packages, but uncertainty related to the entire sector is currently exceptionally high.

In the current situation (10% tariff), we estimate that the direct effects on Revenio would remain moderate, and the more significant negative impact would currently come through the EUR/USD exchange rate. The EUR/USD exchange rate has risen in a short time from almost parity to its current level of 1.14. This will naturally not affect Revenio's guidance for currency-adjusted growth, but it would weaken the euro-denominated figures in the short term. Uncertainty related to the overall situation may freeze customers' decision-making and may have an impact on product pricing and margin structures. On the other hand, a 90-day transition in potential higher tariffs could encourage customers to place orders now. The overall effects are difficult to assess, which is why the company's comments on the outlook, currency effects and customer reactions to the situation are critical. We slightly lowered our growth and earnings estimates for the coming quarters in connection with the preview, but we left larger changes for the earnings update. Currently, the EUR/USD exchange rate is the most significant source of negative pressure, but its next movements are difficult to predict.