Translation: Original published in Finnish on 04&23&2025 at 07:00 am EEST

Modulight will publish its Q1 results on Friday, August 25 at 1:00 pm EEST. In its previous Q4 report, the company reported an increase in the order book and the number of hospitals using its products. Based on this message, we expect growing revenue for the quarter.  However, our growth expectations are still moderate due to the early stage of the projects. Our forecast indicates a slight weakening in earnings due to increased depreciation. We do not expect operating costs to have increased otherwise. The weakened operating environment and dollar in the US impact the company negatively, but at this stage, the company's ability to increase revenue and progress in achieving an earnings turnaround is key.

Order book and number of care facilities support revenue

In its Q4'24 report, Modulight reported its order book grew by 3 MEUR year-on-year. According to the report, the good progress also continued in early 2025. The number of care facilities using Modulight’s products grew from around ten per cent to around fifty in a year, which supports revenue in 2025. Our Q1 revenue forecast of 1.44 MEUR implies strong relative growth from the comparison period (Q1’24: 1.06 MEUR). However, the absolute estimate is still low relative to the company's cost structure and history. We expect the Phase III clinical trials announced in H2'23 to generate recurring revenue through ongoing patient enrollment. Revenue is also generated by the ophthalmic laser commercialized in the US starting from 2023, as well as several smaller projects, as is typical.

Our EBIT forecast of -2.08 MEUR roughly translates to a result at the level of the comparison period (Q1'24: -1.98 MEUR). The forecast is based on operating cost control and, on the other hand, on clearly increasing depreciation, which depresses earnings. The reported figures for the previous two quarters and management's comments have indicated cost-cutting, as the number of personnel has fallen below the level of previous quarters. Other operating expenses have also been declining. We expect stricter cost control to continue also this year. The company's cash assets are still substantial (net cash of 12.9 MEUR at the end of 2024), but profitable revenue growth naturally needs to start fairly soon to achieve an earnings turnaround.

The situation in the US affects Modulight, but succeeding in growth is essential

The US is clearly Modulight's most important single market, so tariffs and the weakening of the dollar negatively impact the company. The EUR/USD exchange rate has had a slight positive impact during Q1’25, but the current outlook is that the wind will turn during the rest of the year. Key to Modulight's investment story is growing revenue by moving from development phase projects towards the commercial phase. In terms of the investment case, success here is more important than customs duties or exchange rates.

Expecting a year of growth and reduced losses

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. During the first two years of the strategy period, the targets were not met. We felt the Q4’24 report hinted at a better year in 2025. The signs are still cautious, and the progress of the earnings turnaround is therefore on an uncertain footing. For the full year 2025, we expect revenue of 7.7 MEUR, but we note that our forecasts have been overly optimistic so far. Our EBIT forecast for 2025 is -6.9 MEUR, which means an improvement on the comparison period (2024e: -8.1 MEUR). The view is based on growing revenue and continued tighter cost control.