Olink Holding AB (OLK) 6-K Olink reports first quarter 2023 financial results

Exhibit 99.2

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (UNAUDITED)

		Three months ended March 31,
Amounts in thousands of U.S. Dollars	Note	2023		2022
Revenue	4	$	27,457	$	22,677
Cost of goods sold		(9,843)		(9,360)
Gross profit		17,614		13,317
Selling expenses		(11,995)		(9,465)
Administrative expenses		(16,381)		(14,399)
Research and development expenses		(6,387)		(5,985)
Other operating (expense)/income		(170)		328
Operating loss		(17,319)		(16,204)
Interest income		78		1
Interest expense		(121)		(131)
Foreign exchange, net		(165)		1,765
Other finance income		17		—
Loss before tax		(17,509)		(14,569)
Income tax benefit	5	3,552		2,399
Net loss for the period (Attributable to shareholders of the Parent)		$	(13,958)	$	(12,170)
Other comprehensive loss:
Items that may be reclassified to profit or loss:
Exchange differences from translation of foreign operations		3,102		(11,292)
Other comprehensive income/(loss) for the period, net of tax		3,102		(11,292)
Total comprehensive loss for the period, net of tax		(10,856)		(23,462)
Total comprehensive loss for the period (Attributable to shareholder of the Parent)		$	(10,856)	$	(23,462)
Basic and diluted loss per share	9	$	(0.11)	$	(0.10)

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INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

Amounts in thousands of U.S. Dollars	Note	As of March 31, 2023 (Unaudited)		As of December 31, 2022 (Audited)
ASSETS
Non-current assets
Intangible assets		257,170		257,480
Property, plant and equipment		16,649		15,056
Right-of-use asset		9,248		9,891
Deferred tax assets	5	15,330		10,846
Other long-term receivables		613		571
Total non-current assets		$	299,010	$	293,844
Current assets
Inventories		50,908		44,246
Trade receivables		28,290		52,743
Other receivables		894		2,562
Prepaid expenses and accrued income		8,202		7,786
Cash at bank and in hand		172,595		75,109
Total current assets		260,890		182,446
TOTAL ASSETS		$	559,900	$	476,290
EQUITY
Share capital	6	32,221		30,988
Other contributed capital	6	611,045		514,133
Reserves/(Deficit)		(55,486)		(58,588)
Accumulated Deficit		(89,805)		(75,848)
Total equity attributable to shareholders of the Parent		$	497,974	$	410,685
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings	7	7,139		7,322
Deferred tax liabilities	5	21,880		22,196
Total non-current liabilities		$	29,019	$	29,518
Current liabilities
Interest-bearing loans and borrowings	7	1,828		2,113
Accounts payables		6,515		6,885
Current tax liabilities		1,758		1,389
Other current liabilities	10	22,806		25,700
Total current liabilities		32,906		36,086
Total liabilities		$	61,926	$	65,605
TOTAL EQUITY AND LIABILITIES		$	559,900	$	476,290

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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022 (UNAUDITED)

Amounts in thousands of U.S. Dollars	Notes	Share Capital		Other Contributed Capital		Reserves		Accumulated Loss		Total Equity
As of December 31, 2022		$	30,988	$	514,133	$	(58,588)	$	(75,848)	$	410,685
Net loss for the period		—		—		—		(13,958)		(13,958)
Other comprehensive loss for the period		—		—		3,102		—		3,102
Total comprehensive loss for the period		—		—		3,102		(13,958)		(10,856)
New share issue, net	6	1,233		94,993		—		—		96,226
Share-based compensation	6	—		1,919		—		—		1,919
As of March 31, 2023		$	32,221	$	611,045	$	(55,486)	$	(89,805)	$	497,974
Amounts in thousands of U.S. Dollars	Notes	Share Capital		Other Contributed Capital		Reserves		Accumulated Loss		Total Equity
As of December 31, 2021		$	30,964	$	506,008	$	1,701	$	(62,997)	$	475,676
Net loss for the period		—		—		—		(12,170)		(17,120)
Other comprehensive loss for the period		—		—		(11,292)		—		(11,292)
Total comprehensive loss for the period		—		—		(11,292)		(12,170)		(23,462)
New share issue, net		24		—		—		—		24
Share-based compensation		—		2,316		—		—		2,316
As of March 31, 2022		$	30,988	$	508,324	$	(9,591)	$	(75,167)	$	454,554

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

		Three months ended March 31,
Amounts in thousands of U.S. Dollars	Note	2023			2022
Operating activities
Loss before tax			$	(17,509)				$	(14,569)
Adjustments reconciling loss before tax to operating cash flows:
Depreciation and amortization		4,319				4,436
Net finance expense/(income)		190				(1,635)
Loss on sale of assets		32				464
Share-based compensation expense	6	2,105				2,179
Other		25				(56)
Changes in working capital:
(Increase) in inventories		(6,299)				(3,702)
Decrease in accounts receivable		24,708				17,662
Decrease in other current receivables		1,286				3,182
(Decrease)/Increase in trade payables		(414)				2,098
Decrease in other current liabilities		(3,053)				(2,408)
Interest received		78				1
Interest paid		(121)				(131)
Other finance income			17				—
Tax paid		(3)				(985)
Cash flow from operating activities			$	5,362				$	6,536
Investing activities
Purchase of intangible assets		(370)				(327)
Purchase of property, plant and equipment		(2,424)				(2,090)
Proceeds from sale of property, plant and equipment			5					—
Increase in other non-current financial assets		(41)				—
Cash flow used in investing activities			$	(2,830)				$	(2,417)
Financing activities
Proceeds from issue of share capital	6	100,205				24
Share issue costs	6	(5,026)				—
Payment of principal portion of lease liability		(530)				(748)
Cash flow from/(used in) financing activities			$	94,649				$	(724)
Net cash flow during the period		97,180				3,395
Cash at bank and in hand at the beginning of the period		75,109				118,096
Net foreign exchange difference		306				(1,280)
Cash at bank and in hand at the end of the period			$	172,595				$	120,211

The following accompanying notes are an integral part of the interim condensed consolidated financial statements (unaudited).

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NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. General information

On January 27, 2021, Knilo HoldCo AB was registered as a Swedish public limited company and renamed as Olink Holding AB (publ) (Olink or the “Company"). The Company has eleven wholly-owned subsidiaries. The Company and its subsidiaries develop, produce, market and sell biotechnological products and services along with related activities. The Company is located at Uppsala Science Park, Dag Hammarskjölds väg 54A, SE-752 37 UPPSALA, Sweden.

On March 29, 2021, the Company completed its initial public offering (the “Offering”) in the United States. The Company’s American Depositary Shares (“ADSs”) were approved for listing on The Nasdaq Global Market (“Nasdaq”) under the trading ticker symbol “OLK”. Trading on Nasdaq commenced at market open on March 25, 2021. The ultimate parent of the Company is Summa Equity Holding AB, Stockholm, Sweden.

The Company’s interim condensed consolidated financial statements were authorized for issue by the Board of Directors on May 11, 2023.

2. Basis of preparation and summary of significant accounting policies

2.1. Basis of preparation

The interim condensed consolidated financial statements for the three months ended March 31, 2023, and 2022 have been prepared in accordance with IAS 34 Interim Financial Reporting. The Company has prepared the financial statements on the basis that it will continue to operate as a going concern. The Directors consider that there are no material uncertainties that may cast doubt over this assumption and that the Company has adequate resources to continue in operational existence for the foreseeable future, and not less than 12 months from the end of the reporting period.

The interim condensed consolidated financial statements are presented in thousands of US dollars unless otherwise stated.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the

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Company’s annual report filed on Form 20-F on March 27, 2023, for the fiscal year ending December 31, 2022.

2.2. New standards, interpretations and amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2022, except for the adoption of new standards effective as of January 1, 2023. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Several amendments apply for the first time in 2023, but do not have an impact on the interim condensed consolidated financial statements of the Group.

3. Significant accounting estimates and judgments

In preparing these interim condensed consolidated financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation and uncertainty were the same as those applied to the consolidated financial statements for the year ended December 31, 2022.

The COVID-19 pandemic has adversely affected, and we expect will continue to adversely affect, elements of our business. COVID-19 has primarily disrupted the customer end of the supply chain, with our customers’ labs operating at reduced capacity for extended portions of 2020, in particular as customers have had issues accessing their labs. Our production and manufacturing facilities are located in Uppsala, Sweden and Waltham, Massachusetts and we have not experienced any material disruptions to our production or supply of goods to date. We increased our inventory level in 2020 and 2021 in order to operate with a higher level of inventory than we have done historically.  Although we have seen a reduction in demand due to the lingering impacts of the COVID-19 pandemic, we have not observed any significant changes in our underlying customer base, and we have been and will continue to serve our customers, even at reduced levels, until their activities return to normal. The gradual recovery of revenue we have seen compared with previous levels reflects the underlying factors affecting demand, including the easing of lockdown restrictions and the partial or full reopening of academic and biopharmaceutical research laboratories around the world. We are continuing to closely monitor how the pandemic and related response measures and the armed conflict between Russia and Ukraine, are affecting our business. On March 31, 2023 we concluded there was no evidence of material changes to recoverability risk of business assets, including deferred tax assets and trade receivables. Olink does not have significant sales or direct supply from Russia, Belarus, or Ukraine, though the impact from the armed conflict between Russia and Ukraine on macro-economic conditions is currently uncertain and could in the future have a negative effect on our results of operations, cash flows, financial condition, or growth plans. Although we have not yet detected an increase in cyberattacks or attempted cyberattacks, we continue to

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closely monitor our IT systems based on the general risk of potential cyberattacks by state or quasi-state actors as a result of the conflict between Russia and Ukraine.

4. Segments and Revenue from contracts with customer

4.1. Description of segments and principal activities

Operating segments are reported based on the financial information provided to the Chief Executive Officer (“CEO”). The CEO is identified as the Chief Operating Decision Maker (“CODM”) of the Company. The CODM monitors the operating results of its operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Evaluation of segment performance is primarily based on revenue growth. Profit or loss is measured consistently with net profit or net loss in the Interim Condensed Consolidated Financial Statements. The CODM monitors the operating segments based on revenue growth and gross profit under two segments: Kit and Service. All other operating segments have been aggregated and are included within the Corporate / Unallocated heading.

The Company’s research and development activities, sales & administrative activities, financing (including finance costs, finance income and other income) and income taxes are managed on a corporate basis and are not allocated to operating segments. Such expenditure is included in corporate/ unallocated.

4.2. Revenue and Gross Profit

The following tables presents the Company’s key financial information by segment:

			Three months ended March 31,
			2023				2022
Kit
Revenue from external customers			$	13,534			$	3,994
Total segment revenue	$	13,534			$	3,994
Cost of goods sold	$	(2,511)			$	(603)
Gross profit	$	11,023			$	3,391
Service
Revenue from external customers			$	10,422			$	16,607
Total segment revenue	$	10,422			$	16,607
Cost of goods sold	$	(4,583)			$	(7,663)
Gross profit	$	5,838			$	8,944
Corporate / Unallocated
Revenue from external customers			$	3,501			$	2,076
Total segment revenue			$	3,501			$	2,076
Cost of goods sold	$	(2,749)			$	(1,095)
Gross profit	$	752			$	981
Consolidated
Revenue from external customers			$	27,457			$	22,677
Total segment revenue	$	27,457			$	22,677
Cost of goods sold	$	(9,843)			$	(9,360)
Gross profit	$	17,614			$	13,317

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4.3. Disaggregation of revenue from contracts with customers

The Company derives revenue primarily from the sales of its own-produced finished goods and services to customers in the following geographical regions:

							Corporate /
For the three months ended March 31, 2023	Kit		Service			Unallocated	Total
Sweden	1,090			482			147		1,719
Americas	7,266			6,407			1,000		14,673
EMEA (excluding Sweden)	3,501			2,658			960		7,119
China	1,044			69			1,029		2,142
Japan	400			470			121		991
Rest of world	233			336			244		813
Total	$	13,534		$	10,422		$	3,501	$	27,457
							Corporate /
For the three months ended March 31, 2022	Kit		Service			Unallocated	Total
Sweden	113			265			172		550
Americas	2,359			6,589			758		9,706
EMEA (excluding Sweden)	877			7,828			872		9,577
China	504			21			176		701
Japan	63			1,402			29		1,494
Rest of world	78			502			69		649
Total	$	3,994		$	16,607		$	2,076	$	22,677

4.4. Seasonality of operations

The Company experiences seasonality in revenue due to customers’ annual budget cycle. The seasonality results from several factors, including the procurement and budgeting cycles of its customers, especially government or grant-funded customers, whose cycles often coincide with government fiscal year ends. Similarly, biopharmaceutical customers typically have calendar year fiscal years which also result in a disproportionate amount of purchasing activity occurring during the fourth quarter. The seasonality impacts both segments; therefore, higher revenues and operating profits are usually expected in the second half of the year rather than in the first six months. This information is provided to allow for a better understanding of the results; however, management has concluded that this is not ‘highly seasonal’ in accordance with IAS 34.

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5. Income tax

	Three months ended
	March 31,
Amounts in thousands of U.S. Dollars	2023	2022
Current tax benefit/(expense)	(407)	18
Deferred tax benefit	3,959	2,381
Income tax benefit	3,552	2,399
Effective tax rate	20%	16%

The Company operates in multiple jurisdictions globally with significant operations outside Sweden. Accordingly, the consolidated income tax rate is a composite rate reflecting earnings and the applicable tax rates in the jurisdictions where the Company operates.

6. Share capital

(A)New share issue

On March 29, 2022, the Company issued 91,056 shares, associated with the vesting of Restricted stock units ("RSU") in the incentive award plan.

(B)Public offering

On January 18, 2023 the Company launched a public offering of 5,831,028 ADS each representing one common share of the Company (the “ADSs”), consisting of 4,250,000 ADSs offered by the Company and 1,581,028 ADSs offered by certain selling shareholders of the Company (the “Selling Shareholders”). In addition, the Company granted the underwriters a 30-day option to purchase up to 874,654 additional ADSs. The Company will not receive any proceeds from the sale of the ADSs by the Selling Shareholders. The offering closed on January 23, 2023, with respect to the initial 4,250,000 ADSs offered by the company and 1,581,028 ADSs/shares offered by the selling stockholders. The option granted to the underwriters closed February 13, 2023 with a total of 760,253 ADSs offered by the company pursuant to the time period. The net proceeds from the offering were $96.2 million, after deducting the underwriting discounts, net of deferred taxes, and other public offering costs associated with the filing. The net proceeds of the public offering per the condensed consolidated statement of cash flows of $95.2 million do not reflect the non-cash movement related to the tax-deductible portion of the underwriter fees and other public offering costs.

(C)New share issue

On March 22, 2023, the Company issued 234,344 shares, associated with the vesting of RSUs in the incentive award plan. Following the new share issue, the Company has 124,342,715 shares outstanding.                                                                                                         

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(D)Incentive award plan

On April 7, 2022 at the Annual General Meeting, our shareholders resolved to adopt two long-term incentive programs, LTI I 2022 and LTI II 2022 and simultaneously approved and made effective our Amended and Restated 2021 Incentive Award Plan (the “Plan”). The Plan amends and restatesthe2021 Incentive Award Plan, which was initially adopted by the Company on March 16, 2021, and approved by the shareholders of the Company on March 16, 2021, in connection with approval by the Company’s shareholders of LTI 2021 (the “Original Plan”). The principal purpose of the Plan is to attract, retain and motivate selected employees, consultants, and directors through the granting of share-based compensation awards and cash-based performance bonus awards. The Company has previously filed a registration statement on Form S-8 covering 1,085,900 shares under the Original Plan and has now registered an additional 594,403 common shares under the Amended and Restated 2021 Incentive Award Plan. A total of 1,680,303 shares are available for issuance pursuant to a variety of stock-based compensation awards, including stock options, restricted stock unit awards and performance-based restricted stock unit awards; provided, however, that no more than 1,680,303 additional shares may be issued. Shares available under LTI 2021, LTI I 2022 and LTI II 2022 will, subject to the terms and conditions of the Plan, be issued when the awards under the respective program vest over a four-year period from the grant date, and, in case of stock options, upon the option holder exercising the option. The expiration date on stock options awarded under the programs is five years from grant date.

In connection with the closing of the initial public offering, the Company granted options to purchase an aggregate of 620,675 common shares out of the Original Plan, of which 442,789 options were granted to certain executive officers and directors, in each case with an exercise price equal to 125% of the initial public offering price of $20.00. During the second quarter of 2022, 107,074 options that had been approved at the Annual General Meeting on April 7, 2022, were awarded to certain executive officers and directors, in each case with an exercise price of $17.39. Such options shall vest over four years, subject to the terms and conditions of the Plan. The expiration date on the options is five years from grant date.

The share-based compensation cost is calculated according to the following: Fair value per option at grant date multiplied by the number of outstanding share options multiplied by the number of days passed and divided by the total number of days in the vesting period. To calculate fair value per share option at the grant date, the principles of the Black-Scholes model have been used. The expense associated with these stock options amounted to $0.1 million for the three months ended March 31, 2023, and amounted to $0.3 million for the three months ended March 31, 2022. These are recorded within selling, administrative and research and development expenses within the income statement.

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A summary of stock option activity under the Company's Plan relating to awards to certain officers and directors as of March 31, 2023, and changes during the three months ended March 31, 2023, are as follows:

	Outstanding Stock Options	Weighted Average Exercise Price (USD)
Balance as of January 1, 2023	549,863	23.52
Granted	—	—
Forfeited	(26,271)	—
Balance as of March 31, 2023	523,592	$	23.44
Vested and exercisable as of March 31, 2023	212,643

As of March 31, 2023, 855,917 RSUs were outstanding, whereof 245,019 RSUs relates to the 2021 Incentive Award Plan and 610,898 to the Amended and Restated 2021 Incentive Award Plan. Of the total outstanding RSUs 210,290 were outstanding to our executive officers. The RSUs will vest during a four-year period; new shares will be issued when the RSU’s vest.

The expense associated with these RSUs amounted to $2.3 million for the three months ended March 31, 2023. The expense associated with these RSUs amounted to $2.2 million for the three months ended March 31, 2022. These are recorded within selling, administrative, research and development and cost of goods sold expenses within the income statement.

The following is a summary of the RSU activity under the Company’s plan and related information as of March 31, 2023, and changes during the three months ended March 31, 2023:

	Outstanding Restricted Stock Units	Weighted Average Grant Date Fair Value (USD)
Balance as of January 1, 2023	847,143	19.38
Granted	26,338	23.53
Forfeited	(17,564)	—
Vested and released	—	—
Balance as of March 31, 2023	855,917	$	19.45

7. Fair values

As of March 31, 2023, and December 31, 2022, respectively, the fair values of cash at bank, accounts receivables, other receivables, accounts payable, and advance payments from customers approximate their carrying amounts largely due to the short-term maturities of these instruments. There were no loan facilities as of March 31, 2023, nor as of December 31, 2022.

8. Related-party transactions

The Company did not enter any related party transaction agreements in the period current and prior year.

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9. Earnings per share

Earnings per share for the Company is calculated by taking the net loss for the period divided by the weighted average of outstanding common shares during the period.

	Three months ended
	March 31,
	2023	2022
Net loss for the period	(13,958)	(12,170)
Less accumulated preferred dividend yield	—	—
Total	(13,958)	(12,170)
Weighted average number of shares (thousands)	122,955	119,010
Basic and diluted loss per share	(0.11)	(0.10)

As of March 31, 2023, the Company has the following potential common shares that can be potentially dilutive but are anti-dilutive as of March 31, 2023, and are therefore excluded from the weighted average number of common shares for the purpose of diluted loss per share:

i.523,592 outstanding stock options related to the Amended and Restated 2021 Incentive Award Plan (see note 6)

ii.855,917 restricted stock units related to the Amended and Restated 2021 Incentive Award Plan (see note 6)

As of March 31, 2022, the Company has the following potential common shares that can be potentially dilutive but are antidilutive as of March 31, 2022, and are therefore excluded from the weighted average number of common shares for the purpose of diluted loss per share:

i.442,789 outstanding stock options related to the 2021 Incentive Award Plan

ii.264,800 restricted stock units related to the 2021 Incentive Award Plan

10. Other current liabilities

Other current liabilities consist of the following:

Amounts in thousands of U.S. Dollars	As of March 31, 2023		As of December 31, 2022
Salaries and wages	10,565		13,274
Advance invoiced customers	3,310		1,694
Royalties	3,527		2,321
Other current liabilities	5,404		8,411
Total	$	22,806	$	25,700

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11. Subsequent events

The Company performed a review of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring recognition or disclosure in the financial statements.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Results of Operations

		Three months ended March 31,
Amounts in thousands of U.S. Dollars	Note	2023		2022
Revenue	4	$	27,457	$	22,677
Cost of goods sold		(9,843)		(9,360)
Gross profit		17,614		13,317
Selling expenses		(11,995)		(9,465)
Administrative expenses		(16,381)		(14,399)
Research and development expenses		(6,387)		(5,985)
Other operating (expense)/income		(170)		328
Operating loss		(17,319)		(16,204)
Interest income		78		1
Interest expense		(121)		(131)
Foreign exchange, net		(165)		1,765
Other finance income		17		—
Loss before tax		(17,509)		(14,569)
Income tax benefit	5	3,552		2,399
Net loss for the period (Attributable to shareholders of the Parent)		$	(13,958)	$	(12,170)
Other comprehensive loss:
Items that may be reclassified to profit or loss:
Exchange differences from translation of foreign operations		3,102		(11,292)
Other comprehensive income/(loss) for the period, net of tax		3,102		(11,292)
Total comprehensive loss for the period, net of tax		(10,856)		(23,462)
Total comprehensive loss for the period (Attributable to shareholder of the Parent)		$	(10,856)	$	(23,462)
Basic and diluted loss per share	9	$	(0.11)	$	(0.10)

The following analysis includes EBITDA, Adjusted EBITDA, Adjusted Gross Profit and Adjusted Gross Profit Percentage which are measures not calculated in accordance with IFRS. For more information regarding our use of these measures and reconciliations to the most directly comparable financial measures calculated in accordance with IFRS, see the section titled “Non-IFRS Reconciliations” below.

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Revenue

Revenue for the three months ended March 31, 2023, was $27.5 million compared to $22.7 million for the three months ended March 31, 2022. The increase of $4.8 million, or 21%, was driven primarily by Explore Kit revenues, with the Kit segment growing 239%. The Service segment declined with 37% year over year. The Explore platform accounted for 61% of Q1 2023 revenues.

Gross Profit/Gross Profit Percentage

Gross profit for the three months ended March 31, 2023, was $17.6 million compared to $13.3 million for the three months ended March 31, 2022. The increase of $4.3 million, or 32%, was mainly due to year over year kit revenue growth.

The increase in gross profit percentage of 5% was driven primarily by increased Kit share in the revenue mix.

Operating Expenses

Total operating expenses for the three months ended March 31, 2023, were $34.9 million compared to $29.5 million for the three months ended March 31, 2022. The increase of $5.4 million, or 18%, was largely due to expansion and investments in the overall Olink organization as well as costs related to the capital raise.

Segment Information

Kit Revenues

Kit revenues represented 49% of revenues for the three months ended March 31, 2023, compared to 18% for the three months ended March 31, 2022 and grew 239% year over year primarily as a result of continued Explore and Target revenue growth. The Company generated an adjusted gross profit percentage of 83% on Kit revenues for the three months ended March 31, 2023, compared to 89% for the three months ended March 31, 2022. The decrease in adjusted gross margin for kits was primarily due to increased supplier costs and logistics expenses.

Service Revenues

Service revenues represented 38% of revenues for the three months ended March 31, 2023, compared to 73% for the three months ended March 31, 2022 and declined primarily as a result of the total product mix moving towards the Kit business.

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We generated an adjusted gross profit percentage of 62% on Service revenues for the three months ended March 31, 2023, compared to 58% for the three months ended March 31, 2022. The increase in analysis services margin was driven primarily by improved operational efficiencies.

Non-IFRS Reconciliations

We present these non-IFRS financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We also believe that the use of these non-IFRS measures facilitates investors’ assessment of our operating performance. We caution readers that amounts presented in accordance with our definitions of Adjusted EBITDA, Adjusted Gross Profit and Adjusted Gross Profit Percentage may not be the same as similar measures used by other companies. Not all companies and Wall Street analysts calculate the non-IFRS measures we use in the same manner. We compensate for these limitations by reconciling each of these non-IFRS measures to the nearest IFRS performance measure, which should be considered when evaluating our performance.

EBITDA and Adjusted EBITDA

We use the non-IFRS measures of EBITDA and Adjusted EBITDA. We define EBITDA as profit for the year before accounting for finance income, finance costs, tax, depreciation, and amortization of acquisition intangibles. We define Adjusted EBITDA as profit for the year before accounting for finance income, finance costs, tax, depreciation, amortization of acquisition intangibles, and management adjustments and share-based compensation expenses. Management adjustments generally consist of certain cash and non-cash items that we believe are not reflective of the normal course of our business. We identify and determine items to be unique based on their nature and incidence or by their significance. As a result, the composition of these items may vary from year to year.

 We present Adjusted EBITDA because we believe this measure can provide useful information to investors and analysts regarding the operational results of the business, as EBITDA is a common metric with which market participants are familiar.

A reconciliation of Adjusted EBITDA to operating loss, the most directly comparable IFRS measure, is set forth below:

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		Three months ended
		March 31,
Amounts in thousands of U.S. Dollars	2023		2022
Operating loss		(17,319)		(16,201)
Add:
Amortization	2,733		2,974
Depreciation	1,586		1,462
EBITDA	(13,000)		(11,765)
Management Adjustments	1,501		444
Share-based compensation expenses	2,104		2,198
Adjusted EBITDA	(9,395)		(9,123)

Management adjustments for the three months ended March 31, 2023, amounted to $1.5 million and primarily include costs related to our January 2023 capital raise. Management adjustments for the three months ended March 31, 2022, amounted to $0.4 million and mainly refers to costs related to recruitment of new board members. Adjusted EBITDA for the three months ended March 31, 2023, includes an add back of $2.1 million of share-based compensation expenses associated with our Amended and Restated 2021 Incentive Award Plan. Adjusted EBITDA for the three months ended March 31, 2022, includes an add back of $2.2 million of share-based compensation expenses associated with our Amended and Restated 2021 Incentive Award Plan.

Adjusted Gross Profit, including Adjusted Gross Profit Percentage

We use the non-IFRS measure of Adjusted Gross Profit, including Adjusted Gross Profit Percentage. We define Adjusted Gross Profit as revenue less cost of goods sold, which is then adjusted to remove the impact of depreciation and the impact of material transactions or events that we believe are not indicative of our core operating performance, such as share-based compensation expenses.

We believe that Adjusted Gross Profit, including Adjusted Gross Profit Percentage, provides important information to management and to investors regarding our core profit margin on sales. These are primary profit or loss measures we use to make resource allocation decisions and evaluate segment performance. Adjusted gross profit assists management in comparing the segment performance on a consistent basis for purposes of business decision-making by removing the impact of certain items we believe do not directly reflect our core operations and, therefore, are not included in measuring segment performance.

Reconciliations of Adjusted Gross Profit to gross profit, the most directly comparable IFRS measure, are set forth below:

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	Three months ended
	March 31,
Amounts in thousands of U.S. Dollars, unless otherwise stated	2023		2022
Revenue	27,457		22,677
Cost of goods sold	(9,843)		(9,360)
Gross Profit	17,614		13,317
Gross Profit %	64.2	%	58.7	%
Less:
Depreciation charges	707		824
Share-based compensation expenses	94		66
Adjusted Gross Profit	18,415		14,207
Adjusted Gross Profit %	67.1	%	62.6	%

Adjusted gross profit percentage for the three months ended March 31, 2023 was 67.1% compared to an adjusted gross profit percentage of 62.6% for the three months ended March 31, 2022. Adjustments to arrive at Adjusted gross profit for the three months ended March 31, 2023 and for the three months ended March 31, 2022 consists of $0.7 million and $0.8 million, respectively, related to depreciation charges and $0.1 and $0.1 million respectively related to share-based compensation expenses.

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Reconciliation of adjusted gross profit to gross profit, the most comparable IFRS measure, by segment:

	Three months ended March 31,
Amounts in thousands of U.S. Dollars unless otherwise stated	2023	2022
Kit
Revenue	13,534	3,994
Cost of goods sold	(2,511)	(603)
Gross profit	11,023	3,391
Gross profit margin	81.4%	84.9%
Less:
Depreciation charges	157	132
Share-based compensation expenses	40	36
Adjusted Gross Profit	11,220	3,559
Adjusted Gross Profit %	82.9%	89.1%
Service
Revenue	10,422	16,607
Cost of goods sold	(4,583)	(7,663)
Gross profit	5,839	8,944
Gross profit margin	56.0%	53.9%
Less:
Depreciation charges	550	693
Share-based compensation expenses	54	30
Adjusted Gross Profit	6,443	9,667
Adjusted Gross Profit %	61.8%	58.2%
Corporate / Unallocated
Revenue	3,501	2,076
Cost of goods sold	(2,749)	(1,095)
Gross profit	752	981
Gross profit margin	21.5%	47.3%
Less:
Depreciation charges	—	—
Share-based compensation expenses	—	—
Adjusted Gross Profit	752	981
Adjusted Gross Profit %	21.5%	47.3%

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