Photocure ASA Signals Strong Core Growth Despite Headwinds

Photocure ASA ((NO:PHO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Photocure ASA’s latest earnings call struck a notably upbeat tone, with management emphasizing strong underlying product growth and rising procedure volumes despite softer headline revenue. Executives framed 2025 as a year of commercial momentum and strategic positioning, arguing that expanding usage, a larger installed base and cash-backed flexibility more than offset temporary headwinds from lost milestones, FX and one-off costs.

Record Hexvix/Cysview Revenue Underscores Product Momentum

Photocure reported its highest-ever quarterly Hexvix/Cysview product revenue at NOK 135 million in Q4, up 9% year-on-year in constant currency. Full-year product revenue reached NOK 530 million, representing 10% growth in constant currencies and landing at the top end of management’s guidance range, underscoring strong demand for blue light cystoscopy.

North America Leads With Double-Digit Growth and Rigid Strength

North America remained the growth engine, with Q4 revenue up 17% in constant currencies on the back of 13% unit growth and roughly 4% price increases. The U.S. rigid and mobile surgical markets were particularly robust, with rigid surgical unit volumes rising 19% in Q4 as surgeons expanded blue light use in operating rooms.

Broader U.S. Account Base and ForTec Mobile Access Drive Adoption

The company continued to deepen market penetration, with active accounts increasing about 22% year over year to 384. ForTec’s mobile solution is now present in 134 accounts and has trained more than 230 physicians, materially contributing to U.S. unit growth by lowering equipment barriers and broadening access to blue light technology.

European Markets Benefit From Equipment Upgrades and Rollouts

In Europe, Photocure delivered steady progress, with Q4 revenue and unit volumes each up 4%. The rollout of Olympus’s Visera III platform gained traction, with 60 installations through year-end and double-digit growth emerging in priority markets such as the DACH region, Nordics, France, Italy and the U.K., as hospitals upgrade to newer imaging systems.

Profitability Improves as Operating Leverage Kicks In

Commercial EBITDA excluding business development and milestones climbed to NOK 5.9 million in Q4 from NOK 1.6 million a year earlier, reflecting better leverage on growing sales. For the full year, commercial EBITDA on the same basis was NOK 46.2 million versus NOK 24.0 million, marking 11 consecutive quarters of positive EBITDA and lifting the commercial EBITDA margin from 7% to 11% over three years.

Solid Balance Sheet Supports Growth and Future M&A

Photocure ended the year with a cash balance of NOK 238.9 million and no term debt, giving it ample financial flexibility despite recent cash outflows. Equity stood at NOK 484 million, representing 68% of total assets and providing the balance-sheet strength management sees as key to funding organic growth and pursuing potential M&A from 2026 onward.

Strategic Partnerships and AI Initiatives Expand the Platform

Management highlighted continued progress with strategic partners, including Richard Wolf on a flexible 4K blue light system and Claritas/Intelligent Scopes on BLC-focused AI. An interim flexible solution has already been introduced in the EU, while the ENAiBLE study has been initiated to advance AI software, which could add a higher-margin digital component to Photocure’s offering.

Chinese Milestones and BLC Data Bolster Long-Term Optionality

The company has so far received more than USD 18 million in milestones from partner Asieris across its Hexvix and Cevira programs. Hexvix already holds marketing authorization in China, with commercial launch expected once device approvals are secured, supported by a pivotal trial in which blue light cystoscopy found additional lesions in 43.3% of patients using modern high-definition equipment.

Headline Revenue Muted by Absence of Milestones

Total Q4 revenue came in at NOK 136 million and full-year total revenue at NOK 532.6 million, up just 1% year on year due to the lack of milestone income in 2025. Management stressed that the comparison is skewed by NOK 34 million of milestones booked in 2024, masking what they see as much stronger underlying product performance and recurring sales momentum.

Net Loss and Softer Operating Cash Flow Reflect Timing Effects

Photocure posted a Q4 net loss of NOK 8.0 million and a modest full-year net loss of NOK 1.5 million, despite underlying EBITDA improvements. Cash flow from operations fell to NOK 26 million from NOK 76 million in the prior year, a decline largely attributed to milestone timing and unfavorable working capital swings rather than a deterioration in core commercial dynamics.

Higher COGS and One-Off Costs Pressure Margins Near Term

Cost of goods sold increased to NOK 10.0 million in Q4 from NOK 7.5 million a year earlier, driven by higher volumes, IFRS-related inventory adjustments, adverse currency moves and investments to expand production capacity. Management guided that these cost pressures are temporary and expects COGS to normalize gradually over the 2026–2027 period, improving gross margins.

Foreign Exchange Headwinds Damp Reported Growth

Currency movements worked against Photocure, with a weaker U.S. dollar creating an unfavorable FX impact of around NOK 5.6 million on revenue for the quarter. This translation effect reduced reported growth versus constant-currency figures and partly explains the gap between strong unit momentum and more modest headline revenue expansion.

U.S. Flex Market Phase-Down Creates Short-Term Drag

The company acknowledged that declining use of Cysview in flexible blue light surveillance in the U.S. weighed on sales earlier in the year. Flexible procedures now represent less than 5% of the U.S. business, down from roughly 17–20%, and Photocure expects this segment to remain a headwind until Richard Wolf’s interim and final flexible solutions are launched in the coming years.

Cash Outflows From Earn-Outs and Buybacks Weigh on Net Cash

Full-year net cash flow was negative NOK 55 million compared with a positive NOK 34.4 million previously, reflecting strategic cash deployment rather than operational distress. The decline was driven by earn-out payments tied to the Ipsen deal and a NOK 29.6 million outlay to repurchase 500,000 shares, while a NOK 100 million Ipsen-related liability remains on the balance sheet as a long-term obligation.

Regulatory and Reimbursement Timing Adds an Element of Uncertainty

Management flagged ongoing uncertainty around the timing of device approvals for the Richard Wolf system, other OEM entries and further Asieris milestones. They also continue to pursue potential CMS reimbursement changes in the U.S., with a decision targeted for late summer 2026 and possible implementation in 2027, but emphasized that these catalysts are not guaranteed and remain outside the company’s direct control.

Guidance and Outlook Emphasize Growth and Operating Leverage

Looking ahead, Photocure reiterated its 2026 topline guidance for 7–11% growth, with management expecting incremental revenue to translate disproportionately into higher commercial EBITDA. The company anticipates North America to grow in the high teens, led by rigid and mobile solutions, Europe to post mid-single-digit gains with double-digit growth in key markets, and additional upside potential from CMS reform, regulatory clearances, OEM entries and renewed flexible market readiness around 2027.

Photocure’s earnings call painted a picture of a business in transition from milestone-driven spikes to steadier, procedure-based growth, backed by a solid balance sheet and expanding commercial footprint. While FX, one-off costs, flexible headwinds and regulatory timing still pose risks, investors heard a confident message that rising utilization, strategic partnerships and operating leverage are building a stronger earnings base for the next phase of expansion.