On February 6th, Eevia Health Plc (publ) (“Eevia” or “the Company”) published the Company’s quarterly report for Q4-24. The following are some points that we have chosen to highlight from the report:
- Strategic Turnaround Plan Aimed at Streamlining Operations
- Rights Issue Enabling Eevia to Execute on the Turnaround Plan
- Planned Divestments Creates Broad Commercial Exposure
- Weaker Sales and Increased COGS Impacted Margins Negatively
- New Board Members with Experience
Comprehensive Turnaround Plan Aimed at Streamlining Operations
During Q4-24, Eevia initiated a strategic turnaround plan aimed at streamlining operations, by repositioning the Company to focus on higher-margin, science-backed health solutions, particularly addressing gut, kidney, and urinary health. This transition aims to enhance revenue traction, profitability, streamline operations, and align the Company with fast-growing consumer health trends, reducing reliance on price-sensitive standard extracts. As part of the streamlining initiatives, Eevia is planning on divesting assets to protect the value of market opportunities for Eevia’s shareholders. These divestments include the Company’s assets related to the eye health compound, Retinari™, and manufacturing assets related to berry-based extracts.
At the core of this transformation is the commercialization of proprietary, scientifically validated products, including MaxBIOME™, a gut health formulation utilizing concentrated proanthocyanidins from berry extracts, leveraging Eevia’s existing products experience. Preclinical research has demonstrated promising results, why Eevia is seeking non-dilutive R&D funding of EUR 570k to conduct a clinical study, with early results expected during Q3-25. Being able to show study results and demonstrating the positive impacts on humans are a crucial component in positioning the brand and attracting customers. The Company plans to introduce MaxBIOME™ to the market in Q4-25, with initial commercial agreements anticipated during summer and early fall of 2025.
Rights Issue of SEK 12.1m to Strengthen the Financial Position
Following the end of the fourth quarter, Eevia announced the Company’s intention to execute a rights issue of approx. SEK 12.1m, before deduction of transaction related costs, with preferential rights for existing shareholders. The purpose is to fund Eevia’s strategic reorientation and turnaround plan. The subscription price amounts to SEK 0.09 per share and EUR 0.0077 per share for shareholders through Euroclear Finland, reflecting a Pre-Money valuation of SEK 6m. All existing shareholders receive one (1) subscription right per share, where each right entitles them to subscribe for two (2) new shares. The subscription period runs from January 28 to February 18, 2025, in Sweden, while the corresponding period in Finland is from January 29 to February 20, 2025. The issue is secured in writing by external investors through top-down underwriting commitments covering 27%, from 100% down to 73%.
Upon full subscription, Eevia would receive approx. SEK 12.1m before deducting transaction costs of SEK 1.9m, including SEK 0.4m for underwriters. The net proceeds will be allocated to working capital (39%), repayment of bridge loan and other debt (32%), equity part in product R&D-projects (20%), as well as other purposes (10%), such as the sales organization.
Following the end of the quarter, the Company secured a bridge loan of EUR 200k in connection with the rights issue, which was crucial as the Company’s cash balance amounted to EUR 10k at the end of Q4-24. Following the end of the quarter, Eevia announced ten new sales orders of products totaling EUR 66k from various European and US customers, one of which is a new customer. A key highlight is that, except for the tart cherry extract, Feno-Ceraus 5, all products are currently in stock, positively impacting working capital and cash flow. All in all, the ongoing rights issue is set to strengthen the Company’s financial position, enabling Eevia to execute on the new turnaround strategy.
Divestments Set to Unlock Hidden Value
As part of the streamlining initiatives, Eevia is planning on divesting assets to protect the value of market opportunities for Eevia’s shareholders. The first divestment is for assets related to Retinari™, a potential game-changing prophylactic designed to prevent the onset and progression of age-related macular degeneration (AMD), a progressive eye disease that damages the macula and leads to central vision loss, primarily affecting older adults. Eevia has agreed to sell the assets to Havu Health Oy to an amount of EUR 800k, which will paid in shares that are planned to be distributed to Eevia Health’s shareholders as a tax-free dividend, subject to pre-approval from Finnish Tax authorities. The second divestment concerns Eevia’s berry-based extract manufacturing assets, which will be sold to Baccas Salus Oy for EUR 2.5-3.0m, a startup focused on cost-efficient and sustainable berry extract production. Similar to the priorly mentioned divestment, Eevia will receive shares in Baccas Salus as payment for the assets, which will be distributed to shareholders. A smaller fraction of the divestment will be paid in cash, which will be used to reduce Eevia’s debt, improving net working capital.
Sales and Profitability
During Q4-24, net sales amounted to EUR 263k (317), corresponding to a decrease of 17% YoY. Adjusting for product returns and credit notes, due to reorganization of distributor stock, which were credited and re-invoiced by other distributors, with some invoices going to 2025, the net sales were EUR 401k. Furthermore, other income boosted the total revenues during the quarter, as it includes a non-recurring net gain from the sale of fixed assets of EUR 677k (Retinari™). On a positive note, Eevia’s largest customer, paused on one key item, resumed orders in December after approving the Company’s high strength bilberry extract.
The gross margin, excluding the positive one-off effect from the sale of Retinari™, came in at 15.7% during Q4-24, and 37% when including the one-off effect. This was a drastic decrease both Q-Q and Y-Y, when the gross margin amounted to 47% (Q3-24) and 61% (Q4-23), respectively. The main reason for the reduction in gross margin was Eevia’s efforts to sell out the inventory by lowering prices, hence reducing the margins while raw material prices increased due to volatility stemming from foreign labor issues in Finland and Sweden. There was no effect on gross margin from side-stream products in Q4-24.
The EBITDA of Q4-24, amounted to EUR 257k (incl. one-off effect), compared to EUR -148k during the same period last year. However, the adjusted EBITDA, which gives a fairer view of the underlying profitability, amounted to EUR -267k during Q4-24. The improvement in adjusted EBITDA Q-Q (Q3-24) was EUR 32k, mainly stemming from lower operational- and personnel cost.
In reflection of the full year 2024, the EBITDA amounted to EUR -345k (753), excluding the non-recurring net gain from sale of fixed assets of EUR 677k, the adjusted EBITDA amounts to EUR – 1 022k. All in all, 2024 was a challenging year for Eevia in terms of sales and profitability, as the efforts in H1-24 to regain sales momentum through a “switch strategy” fell short. Additionally, the profitability was hampered by a shortage of foreign labor in Sweden and Finland which disrupted the wild berry harvest in Q3-24, which led to increased raw material costs, impacting margins negatively.
Looking ahead, the new turnaround plan will enable a more capital-light and streamlined business model, focusing on a new value proposition targeting a vast market opportunity, which has a great potential to generate solid revenue streams during the coming years.
New Experienced Board Members and Scientific Advisors
During Q4-24, the Board of Directors was significantly strengthened with the addition of Terry Virts as the new Chairman and Dr. Diane Clayton as a new member, adding new competence as well as a strong network to the Company. Furthermore, Dr. Diane Clayton will strengthen the science advisory board which is under formation. In January, Marinus Blaabjerg Sørensen joined the Board through the filling of a vacancy. Blaabjerg Sørensen is the founder and principal owner of New Nordic Healthbrands, a successful nutraceutical company listed on Nasdaq, Stockholm.
In conclusion, Eevia delivered a Q4 report without any surprises in terms of sales and profitability. The main highlight in the quarter is the new and comprehensive turnaround plan, aimed at streamlining operations. By divesting assets related to Retinari™ and berry extract manufacturing, Eevia aims to streamline operations, enhance profitability, and adopt a capital-light business model, leveraging the Company’s expertise in bioactive compounds. This turnaround plan allows investors to retain exposure to former operations without the financial risks of plant extract production. With a clear strategy set by the new and experienced board, Eevia is well-positioned to capitalize on the expanding gut health market and recover to profitable growth, thereby unlocking the underlying value within the Company. Overall, Analyst Group believes the ongoing rights issue presents an attractive entry point for investors at a Pre-Money valuation of SEK 6.0m.
