Bioretec: Earnings turnaround is slipping further away

Translation: Original published in Finnish on 12/17/2025 at 7:00 am EET.

Bioretec updated its strategy and financial targets for 2026-28. The company cut its 2028 revenue target to 10 MEUR (was 65 MEUR). The earnings turnaround was also pushed further out, and the company does not expect profitability during the strategy period. We are lowering our forecasts, especially regarding earnings, for the coming years. We slash our target price to EUR 0.60 (was EUR 1.05) and downgrade our recommendation to Reduce (was Accumulate) due to changes in forecasts.

Targets were lowered exceptionally sharply

Bioretec's revenue target was radically cut from the previous 65 MEUR to 10 MEUR. However, even a large reduction in targets was not a complete surprise, as we had considered the company's previous targets to be unrealistic. The updated revenue target is roughly in line with our forecast (Inderes 2028e: 11 MEUR).

The decrease in the earnings outlook was another significant change. The company does not expect to achieve a positive result during the strategy period due to investments in research, development, and commercialization. Previously, the company aimed for cash flow positivity by the end of 2027. The financing outlook clearly weakened with the earnings expectations, and the company stated that it is currently evaluating financing options to implement the new strategy.

Bioretec also stated its goal is to maintain a gross margin of over 70%. The target is moderate, considering that the company has previously communicated that the RemeOs product family would bring upside potential to the gross margin. We believe the relatively low margin target indicates pricing pressure in China, where the volume-based model has driven down product prices.

The product development pipeline now has more flexibility than before

Bioretec plans to launch new trauma screw models in the US, as well as a new DrillPin product, within the next 18 months. In addition, a cannulated screw will be launched from the Activa family. In the medium term (18-36 months), a new, more precisely undefined RemeOs launch is planned, and in the long term (over 3 years), the RemeOs product family will be expanded with plates, IM nails, and a spine portfolio. No timelines were provided for individual products, and the company appears to be incorporating more flexibility than before regarding the content and timing of future launches.

Profitability and cost structure are weakening in our forecasts

Our revenue forecasts for the coming years remain largely unchanged. Our previously significantly cut estimates realistically reflect, in our opinion, the company's updated targets. However, we are making moderate cuts to our long-term revenue forecasts based on slower-than-expected progress in product development. We are slightly lowering our gross margin expectations due to the company's cautious targets. We are moderately revising our operating costs upwards, reflecting increasing R&D and sales investments. Bioretec's cash flow outlook has turned significantly negative, and we expect the company to undertake at least two funding rounds. The first of these is expected to be implemented by summer at the latest.

Low valuation and high risks

The valuation of the stock has fallen to a very low absolute level due to the difficulties. EV/S multiples (2026 6x) are not particularly high in relation to the growth and profitability potential. On the other hand, the substantial financing need entails the possibility of significant share dilution. The lack of evidence for the commercial success of RemeOs products, combined with high financial risk, turns our view on the risk/reward ratio negative. Furthermore, based on the DCF model, we do not currently see any upside in the stock.