Selvita sums up Q3 2023 and presents an outlook for 2024

Krakow, Poland – November 15, 2023 – Selvita S.A. [WSE: SLV], one of the largest contract research organizations in Europe, has published its financial results for Q3 2023.

• In Q1-Q3 2023, Selvita Group revenues⁽¹⁾ amounted to EUR 57.9 million (compared to EUR 57.8 million reported a year earlier), while the EBITDA margin reached 21.6% (29.7% in the same period last year). These results were significantly influenced by both exchange rates and the costs associated with underutilized resources⁽²⁾.
• In response to a more challenging financing landscape faced by the biotech companies, Selvita is focusing on strengthening collaborations with pharmaceutical companies, especially among Big Pharma⁽³⁾ companies. Contracting to this type of companies has increased by 23% in 2023, as compared to the total value for 2022. The effects of collaborations established this year and ongoing CRO selection processes should become apparent in 2024.
• Backlog for 2023⁽⁴⁾ amounts to EUR 74.0 million and is comparable to that reported a year earlier. Backlog for 2024⁽⁵⁾ indicates a 28.4% increase in contracting compared to the same period last year (EUR 18.4 million vs. EUR 14.0 million) and positive dynamics in both Drug Discovery as well as Regulatory and Drug Development Studies.
• Strengthening the business development and scientific team, as well as investing in the development of service portfolio and infrastructure, are considered the key factors for the Group’s growth in 2024.

Boguslaw Sieczkowski, co-founder, Chief Executive Officer, comments:

• Thanks to increased sales and optimization efforts, we are maintaining revenue at last year’s level and EBITDA margin above 20%, despite a very challenging market. The almost 30% increase in the backlog for 2024, shows that we are on track to return to sustainable growth next year.

Milosz Gruca, PhD, Executive Vice President and Chief Commercial Officer, comments:

• Sales to major pharmaceutical companies have grown by more than 20% in 2023. Very lengthy selection processes have led to Selvita being selected as the partner of choice for two of the customers from the pharmaceutical industry this year.  Furthermore, we are at an advanced stage of discussions with additional customers. We anticipate this will have a significant impact on Selvita’s results in 2024.
• In the past few months, we have significantly strengthened our business development team, particularly in the United States. Our sales activities are now supported by a dedicated group of highly experienced scientists located in the key markets. Their presence allows us to establish deeper customer relationships and build our position as a scientific partner for the drug discovery processes. Simultaneously, alongside intensified sales efforts targeting the Big Pharma customer group, we continue cooperation with biotech companies.

Selvita’s backlog for 2023 related to services provided to big pharma companies amounts to EUR 13 million⁽⁴⁾, reflecting a 23.1% increase in revenues from this customer group compared to 2022. The share of sales to Big Pharma is now 17%, up from 14% a year earlier.

Dariusz Kurdas, Chief Financial Officer and Management Board Member, comments:

• Foreign exchange differences had a significant impact on our third-quarter results. Both, in case of revenue as well as EBITDA results, its burden  is several percentage points. The pressure on net income was even greater, attributed to the revaluation of bank loans and leasing contracts. This year’s results remain affected by underutilized resources. Nevertheless, EBITDA profitability exceeded 20% in every quarter of this year. The anticipated increase in contracting will significantly impact our efficiency. The Group’s financial position remains very good; the cash position at the end of the third quarter exceeded EUR 14 million, with secure debt financing ratios. This allows us to pursue both organic growth activities and consider potential acquisitions.

In Q1-Q3 2023, Selvita generated EUR 57.9 million in revenues, compared to EUR 57.8 million reported last year. Revenues from drug discovery services generated EUR 45.1 million (a decrease of 7% y/y), while services in the area of regulatory research amounted to EUR 10.6 million (an increase of 18% y/y).

The EBITDA profit totaled EUR 12.5 million compared to EUR 17.2 million a year earlier (profitability of 21.6% as compared to 29.7%, respectively).

Selvita’s backlog for 2023⁽⁴⁾ amounts to EUR 74.0 million, comparable to the value reported with the results for Q3 2022.

At the same time, Selvita has published its backlog for 2024⁽⁵⁾, which indicates a 28.4% increase in contracting as compared to the same period last year (EUR 18.4 million vs EUR 14.0 million). This backlog demonstrates positive dynamics in both Drug Discovery as well as Regulatory and Drug Development Studies.

1. Without Ardigen S.A. which is valuated using the equity method.
2. The results do not include the non-cash costs of the non-dilutive employee incentive program.
3. Big Pharma is defined as a global pharmaceutical company with revenues exceeding USD 5 billion in the last financial year.
4. Backlog for 2023 as of November 13, 2023, and November 06, 2022.
5. Backlog for 2024 as of November 13, 2023, and November 22, 2022.