Olink(OLK) - 2022 Q1 - Quarterly Report

Directors' Report Business Overview Olink Holding AB (publ) provides proteomics products and services, generating revenue from Kit and Service sales - The Group's core business is to provide a proteomics platform (products and services) to biopharmaceutical companies and academic institutions to deepen the understanding of human biology and advance healthcare[6] - The company serves approximately 750 customer accounts in over 40 countries, including 30 of the world's largest 40 biopharmaceutical companies[8] - Revenue is generated from two main segments: 'Kit' sales, where customers run analyses themselves, and 'Service' sales, where Olink performs the analysis for customers[8] - Sales are geographically concentrated, with 44% of 2021 sales coming from biopharmaceutical and academic customers in the U.S.[9] Significant Events and Future Development Olink completed its Nasdaq IPO in 2021, planning market and product development with increased R&D expenses - In March 2021, Olink successfully listed on the Nasdaq, New York, becoming a publicly traded company[12] - The company plans strong future development through continued market investments in the USA, Netherlands, UK, Japan, China, Singapore, and Germany, and by enhancing its product portfolio[14] Research and Development Expenses | Year | R&D Expenses (USD) | | :--- | :--- | | 2021 | $22.1 million | | 2020 | $9.6 million | - Following its IPO, the Group repaid its external loan and had no borrowings as of December 31, 2021[18] Impact of Covid-19 COVID-19 disrupted customer labs causing project delays, but Olink increased inventory and saw gradual revenue recovery - The COVID-19 pandemic primarily disrupted customer operations, with labs running at reduced capacity, causing project delays[22] - The company increased its inventory levels in 2020 and 2021 to ensure operational continuity and has not experienced material disruptions to its own production or supply[22] - As of December 31, 2021, management concluded there was no evidence of material changes to the recoverability risk of business assets like deferred tax assets and trade receivables due to the pandemic[22] Financial Overview Group revenue grew to $95.0 million in 2021, total assets increased, and equity ratio improved to 88% Group Financial Development (in thousands of US Dollars) | Indicator | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Revenue | 94,973 | 54,067 | 41,693 | | Loss after financial items | (46,545) | (7,259) | (18,530) | | Total assets | 539,778 | 425,325 | 346,919 | | Number of employees | 416 | 172 | 118 | | Equity ratio* | 88% | 70% | 59% | Parent Company Financial Development (in thousands of SEK) | Indicator | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Revenue | 17,255 | - | - | | Loss after financial items | (149,593) | (52,835) | (21,387) | | Total assets | 4,714,785 | 2,679,336 | 2,466,306 | | Equity ratio* | 100% | 99% | 84% | Consolidated Financial Statements Consolidated Statement of Income Revenue increased to $95.0 million, but operating expenses doubled, leading to a $44.7 million operating loss Consolidated Statement of Income (in thousands of US Dollars) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | $94,973 | $54,067 | | Gross Profit | $58,209 | $36,611 | | Operating Loss | ($44,652) | ($5,370) | | Net Loss for the period | ($38,339) | ($6,780) | | Basic and diluted loss per share | ($0.43) | ($1.10) | - Total comprehensive loss was $76.0 million in 2021, compared to a total comprehensive income of $30.0 million in 2020, primarily due to a negative $37.7 million adjustment from the translation of foreign operations[29] Consolidated Statement of Financial Position Total assets increased to $539.8 million, liabilities decreased, and total equity rose to $475.7 million Consolidated Statement of Financial Position (in thousands of US Dollars) | Category | As of Dec 31, 2021 | As of Dec 31, 2020 | | :--- | :--- | :--- | | ASSETS | | | | Total non-current assets | $339,111 | $358,015 | | Total current assets | $200,667 | $67,310 | | TOTAL ASSETS | $539,778 | $425,325 | | EQUITY AND LIABILITIES | | | | Total equity | $475,676 | $299,700 | | Total non-current liabilities | $32,519 | $97,158 | | Total current liabilities | $31,583 | $28,467 | | Total liabilities | $64,102 | $125,625 | | TOTAL EQUITY AND LIABILITIES | $539,778 | $425,325 | Consolidated Statement of Changes in Equity Total equity increased to $475.7 million in 2021, primarily driven by a $249.3 million new share issue Changes in Equity for 2021 (in thousands of US Dollars) | Description | Amount | | :--- | :--- | | Equity at Dec 31, 2020 | $299,700 | | Net loss for the period | ($38,339) | | Other comprehensive loss (FX translation) | ($37,659) | | New share issue | $249,283 | | Share based compensation program | $2,691 | | Equity at Dec 31, 2021 | $475,676 | Consolidated Statement of Cash Flows Operating activities used $53.7 million cash, while financing generated $179.1 million, increasing cash by $110.4 million Consolidated Statement of Cash Flows (in thousands of US Dollars) | Category | 2021 | 2020 | | :--- | :--- | :--- | | Cash flow used in operating activities | ($53,686) | ($6,789) | | Cash flow used in investing activities | ($14,960) | ($15,842) | | Cash flow from financing activities | $179,062 | $25,595 | | Net cash flow during the period | $110,415 | $2,946 | | Cash at bank at the end of the period | $118,096 | $8,655 | Notes to the Consolidated Financial Statements Note 5: Segment and Revenue Information Revenue is from Kit and Services, with Services at $60.2 million in 2021, and Americas as the largest market Revenue and Gross Profit by Segment - 2021 (in thousands of US Dollars) | Segment | Revenue | Cost of Goods Sold | Gross Profit | | :--- | :--- | :--- | :--- | | Kit | $26,797 | ($4,112) | $22,685 | | Services | $60,221 | ($28,299) | $31,922 | | Corporate / Unallocated | $7,955 | ($4,353) | $3,602 | | Consolidated | $94,973 | ($36,764) | $58,209 | Revenue by Geography - 2021 (in thousands of US Dollars) | Region | Revenue | | :--- | :--- | | Americas | $42,343 | | EMEA (excluding Sweden) | $38,747 | | Sweden | $6,694 | | Japan | $2,982 | | China | $2,773 | | Rest of world | $1,434 | | Total | $94,973 | Note 14: Goodwill and Other Intangible Assets Intangible assets were $308.1 million in 2021, and impairment tests using a 19% WACC showed no impairment Net Book Value of Intangible Assets (in thousands of US Dollars) | Asset Type | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Goodwill | $168,431 | $186,020 | | Customer relations | $29,754 | $37,418 | | Technology | $72,768 | $86,967 | | Brands and Licenses | $26,211 | $28,368 | | Development Costs | $10,960 | $8,614 | | Total | $308,124 | $347,387 | - The annual impairment test for goodwill and indefinite-lived assets was performed using a 10-year cash flow projection, a 19% WACC, and a 2% terminal growth rate No impairment was required[177][178][179] - Sensitivity analysis showed that an impairment would only occur if the pre-tax discount rate rose above 25.9% for the Kit segment or 23.0% for the Services segment[180] Note 17: Financial Instruments and Debt The Group had no outstanding loan facilities in 2021, repaying $65.6 million of borrowings post-IPO - On March 30, 2021, the company repaid $65.6 million of outstanding loan facilities plus $1.9 million in accrued interest using proceeds from the IPO[198] Total Interest-Bearing Loans and Borrowings (in thousands of US Dollars) | Liability Type | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Lease Liabilities | $8,379 | $4,436 | | Facilities | $0 | $61,675 | | Total | $8,379 | $66,111 | Note 21: Share Capital and IPO Olink completed its IPO in 2021, issuing 13.2 million ADSs and raising $245.4 million in net proceeds - On March 16, 2021, the company reorganized its multiple share classes into a single class of common shares and conducted a reverse share split[210] - The company completed its IPO on March 29, 2021, raising net proceeds of $245.4 million after deducting underwriting discounts and other costs[211] Share Capital Reconciliation | Description | Number of Shares | Share Capital (kUSD) | Other Contributed Capital (kUSD) | | :--- | :--- | :--- | :--- | | Balance at Dec 31, 2020 | 257,227,062 | $27,224 | $257,774 | | New Share Issuance (IPO) | 13,235,294 | $3,740 | $245,543 | | Reverse stock split | (151,455,294) | - | - | | Balance at Dec 31, 2021 | 119,007,062 | $30,964 | $506,008 | Note 22: Stock-Based Compensation The 2021 Incentive Award Plan granted stock options and RSUs, with total compensation expense of approximately $3.0 million - The 2021 Incentive Award Plan was approved in March 2021 to grant share-based awards to employees, consultants, and directors[215] Stock-Based Compensation Grants in 2021 | Award Type | Number Granted | Vesting Period | 2021 Expense (kUSD) | | :--- | :--- | :--- | :--- | | Stock Options | 620,675 | 4 years | $1,000 | | Restricted Stock Units (RSUs) | 344,271 | 4 years | $2,000 | Note 24: Related-Party Transactions Related-party transactions included a loan conversion, a $2.4 million management fee, and $4.0 million in key management compensation - A shareholder loan from Knilo InvestCo AB, with an outstanding balance of approximately $41.1 million at the end of 2019, was fully converted into equity in May 2020, with no such loan existing in 2021[221] - A management service agreement with Summa Equity AB was terminated upon the IPO, with a final payment of $2.4 million[225] Compensation of Key Management Personnel (in thousands of US Dollars) | Component | 2021 | 2020 | | :--- | :--- | :--- | | Wages and salaries | $2,732 | $839 | | Share-based payment | $96 | - | | Social security costs | $876 | $179 | | Pension costs | $303 | $90 | | Total | $4,007 | $1,108 | Note 25: Earnings Per Share Basic and diluted loss per share was ($0.43) in 2021, based on a $42.5 million net loss Basic and Diluted Loss Per Share Calculation (Amounts in thousands, except per share data) | Item | 2021 | 2020 | | :--- | :--- | :--- | | Net loss for the period | $(38,339) | $(6,780) | | Less accumulated preferred dividend yield | $(4,205) | $(16,900) | | Total loss for calculation | $(42,544) | $(23,680) | | Weighted average number of shares | 99,261 | 21,439 | | Basic and diluted loss per share | $(0.43) | $(1.10) | - As of December 31, 2021, 442,789 outstanding stock options and 335,449 restricted stock units were considered anti-dilutive and therefore excluded from the diluted EPS calculation[228][229] Parent Company Financial Statements Parent Company Financial Summary Parent Company reported SEK 17.3 million revenue and SEK 123.2 million net loss, with SEK 4.71 billion assets and 100% equity ratio Parent Company Key Financials (in thousands of SEK) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 17,255 | - | | Loss after financial items | (149,593) | (52,835) | | Loss for the year | (123,190) | (13,185) | | Total Assets | 4,714,785 | 2,679,336 | | Total Equity | 4,703,251 | 2,656,997 | - The Parent Company's cash flow from financing activities was SEK 1.14 billion in 2021, driven by proceeds from the new share issue[234] Notes to the Parent Company Financials Parent Company financials follow Swedish RFR 2, differing from IFRS, with 100% of 2021 sales to group companies - The Parent Company applies Swedish accounting standard RFR 2, which has differences from IFRS, notably in accounting for subsidiaries (cost method) and financial instruments[235][237][241] - 100% of the Parent Company's sales in 2021 were to other group companies[273] - A shareholder loan from Knilo InvestCo AB was converted into common and preferred shares in May 2020, eliminating the liability from the Parent Company's balance sheet[274] Certification of the Board - The Board of Directors and the CEO certify that the annual report and consolidated financial statements provide a true and fair view of the Group's and Parent Company's financial position and results[285] - The financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU[285] - The annual report was approved for issuance by the Board of Directors and the CEO on March 16, 2022[285]