Translation: Original published in Finnish on 11/13/2026 at 8:00 am EET.

Bioretec’s Q3 business review was stronger than we expected in terms of both revenue and, in particular, earnings. Growth came from all regions, but the US shows the clearest upward trend. The improvement in the gross margin and well-contained expenses narrowed the loss more than we had forecast. On the back of the good performance, we raise our forecasts for the coming years moderately. Risks related to delivering on the growth forecasts and to funding remain high. The emerging growth trend in the US and narrowing losses, however, turn our view of the risk/reward positive. We raise our target price to EUR 0.027 (was EUR 0.024) and our recommendation to Accumulate (was Reduce).

US delivers triple-digit growth

Q3 revenue grew by 86% from a weak comparison period to 1.33 MEUR, beating our 1.20 MEUR forecast. Growth came from all regions: the US grew by 143%, Europe by 69%, and the rest of the world by 64%. The US share of revenue rose to one-third, with a clear quarter-on-quarter growth trend. In the other regions, the trend is less clear, and revenue has been more stable this year. In September, the company received FDA clearance for the ActivaScrew Cannulated COM screw, which should gradually support sales growth. Also in September, the Activa product family passed 500,000 implants sold, demonstrating the solid foundation of the legacy product family.

Gross margin and cost discipline narrow the loss

Q3 EBIT was -1.81 MEUR (Q3'25: -1.82 MEUR), clearly better than our -2.17 MEUR forecast. The adjusted gross margin rose to 68.7% (Q3'25: 59.4%), close to the strategy period’s target of over 70%. We believe the gross margin improvement reflects the growing share of US sales, where product prices are higher than in the rest of the world. Operating expenses were lower than expected, mainly due to a smaller headcount of 56 (Q3'25: 64). The change negotiations launched in October are expected to generate an additional ~0.3 MEUR in annual savings. The company expects its overall cost level to remain stable and under control in the near term despite investments in product development, and it aims to keep improving the gross margin. Cash and cash equivalents stood at 9.3 MEUR at the end of Q3. We expect the company to carry out a share issue next year.

Moderate estimate hikes

We raise our 2026–2028 revenue estimates by 2–3% following stronger-than-expected Q3 growth. Our EBIT estimates rise more (by 6–14%), as the improved gross margin and lower cost level are reflected throughout the forecast period. For 2026, we now forecast revenue of 5.2 MEUR and EBIT of -7.2 MEUR. Our Q4 forecast already assumes revenue more than doubling from a weak comparison period, so expectations are high to begin with. EBIT remains negative throughout the forecast period in our estimates. In our forecasts, EBIT turns positive in 2029.

Risk/reward turns attractive

As the business is loss-making, we base our valuation on EV/S multiples and the DCF model. On our updated estimates, the share’s EV/S multiples for 2026–2027 are ~4.3x and 3.7x. We consider the multiples attractive, even though the recent rise in interest rates weighs on acceptable multiples and increases our required return. In our base case, our DCF model indicates a share value of EUR 0.027. The DCF values range from EUR 0.01 in the pessimistic scenario to EUR 0.08 in the optimistic scenario. The Q3 business review gave further support to the company’s growth outlook in the US. On the other hand, ongoing losses and a likely financing round next year keep the risk level high. Overall, the improving business performance turns the risk/reward positive.