Interim Report April - June 2026

Comments from the CEO

The first quarter of the new financial year was, as expected, weak. Sales amounted to SEK 106.9m (107.2m) and OPEX to SEK 31.5m (25.7m), both in line with expectations. The gross margin of 17% (43%) and EBITDA margin of -6% (24%) were exceptionally low due to inventory write-downs of SEK 20m. Adjusted for these, the gross margin was 35% and the EBITDA margin 12%. Two products were launched and three were added to the pipeline. Mellozzan received marketing authorization in Kazakhstan, and Spain was added as a new territory for Memprex, which has also been launched in Germany under EQL's own brand Cystohipp. EQL is going through a challenging period, with supply disruptions and technically more complex products in the launch phase, which has caused delays. The sales forecast for the full year 2026/27 remains at around 15%. After the end of the quarter, Oskar Karmlid was presented as the new Chief Supply Chain Officer (CSCO).

Financial overview for the first quarter

Sales amounted to SEK 106.9m, essentially unchanged from the previous year. The risk of inventory write-downs, flagged in the Q4 report, unfortunately materialized in full at SEK 20m. It mainly relates to hospital products where procuring authorities did not call off the indicated volumes in the original contract. EQL has tried to mitigate this through sales in other channels. The company considers hospital products to remain structurally attractive, provided inventory purchasing , supply and planning are improved. Operating profit (EBIT) decreased to SEK -13.7m (20.5m), and the EBITDA margin to -6% (24%). The adjusted EBITDA margin was 12%, far below the company's ambition but representative of a quarter burdened by previous supply disruptions. Cash and cash equivalents amounted to SEK 61.1m (56.1m), and the unutilized working capital credit facility to SEK 26.6m (27.2m). CAPEX was SEK 16.2m (27.2m), and leverage was 9.8x EBITDA, above the target. This is mainly being addressed by temporarily slowing new pipeline products and ensuring that EBITDA recovers according to plan. Leverage is expected to remain above target for much of 2026/27 and then stabilize at lower levels.

Financial targets and forecasts for the current financial year

The sales forecast for the full year 2026/27, at around 15%, is below the long-term target of 30%, which remains unchanged. The situation regarding supply disruptions looks better ahead for Q2 and the rest of the year. If this continues, the remaining quarters will improve and Q1 will mark the low point in EQL's challenging period. The Company continues to monitoring the valuation of inventories and other balance sheet assets to products have now been signed for Germany, with a pilot launch planned during the current year. ensure that carrying values appropriately reflect current business conditions and available information. While these assessments remain ongoing, additional write-downs or impairment charges relating to inventories and other balance sheet items may be recognized during the remainder of the financial year should future developments or updated assumptions warrant such adjustments. Leverage will remain elevated relative to EBITDA until operating profit returns to healthy levels. This does not affect EQL's ability to pay bond investors, provided liquidity is managed responsibly. The products in the launch phase are mainly the last development products created with Cadila. They are technically more complex, which has caused delays. The pipeline contains many newer products for launch over the next two-three years, of a simpler technical nature. The delays are therefore considered temporary. The target remains seven launches in 2026/27 and then 10-15 per year.

Product launches and market dynamics

Two products were launched during the quarter, increasing the portfolio to 49 products. Three products were added to the pipeline and one was removed, bringing the total to 44 products. Since the company is closely monitoring liquidity, it is taking a cautious approach to new signings until the challenging period is over. At present, only products where the rights payment model is back-end loaded are being signed. Expansion in Germany and the Netherlands is progressing according to plan, with evaluation of existing and new products. A number of niche generic For Memprex, Spain has been added with partner Gebro. The application is expected to be submitted in the autumn, with expected approval and launch in 2027/28. Launch has been completed in Germany, and preparations are ongoing in France and Israel. Progress is also being made in the BeNeLux RUP procedure, where the national phases are complete and final approval is expected in the autumn. For Mellozzan, EQL has received marketing authorization in Kazakhstan, with launch expected in 2027/28. Applications are ongoing in the GCC, and launch preparations continue in Italy and Turkey. Medice continues to increase sales, mainly in Germany. Discussions on additional territories are ongoing for both Mellozzan and Memprex.

Other

EQL delivered strong growth and good profitability from 2017 to September 2025. Since then, the company has been in a more challenging period, which is natural for a growth company. This challenging period had a beginning and will have an end. The focus is to emerge from it stronger and ready for the next phase of growth. Alongside urgent problem-solving, there is therefore a strong focus on structural mea sures to create a robust and scalable platform.