Q2 2022 figures
<ul>
<li>Net sales amounted to SEK 32,9 thousand (15.7)</li>
<li>OPEX amounted to SEK -8.0m (-8.4m)</li>
<li>The result for the quarter amounted to SEK -7.9m (-5.5m)</li>
<li>Cash flow from operating activities amounted to SEK -8.3m (-5.1m)</li>
<li>The cash balance at the end of the quarter amounted to SEK 6.7m</li>
</ul>
(The numbers in parenthesis refer to the corresponding quarter of last year)
Sales in the second quarter should be attributable to the initial orders of limited commercial value that Calmark has previously communicated. Owing to the high sales volatility in early commercialization, where single orders can significantly impact the quarterly reports, we estimate Calmark’s sales yearly. On that note, Calmark recently announced a revised launch plan, where the company will focus on the following countries:
<ul>
<li>Vietnam, Laos, and Cambodia</li>
<li>India</li>
<li>Saudi Arabia</li>
<li>Iraq and Egypt</li>
<li>Greece</li>
<li>Italy</li>
<li>Certain countries within VIA Global Health, not yet specified</li>
</ul>
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In light of this, Calmark recently reported an order for 50 instruments and 2000 test cassettes from its distributor R2 Diagnostics in India and one from its distributor in Vietnam for 40 instruments and 3000 test cassettes. Both orders are for Neo-Bilirubin. We estimate the commercial value of the combined orders SEK ~0.5m. 
The registration process for the test cassettes is ongoing and should be completed shortly in both geographies, opening up for more orders being communicated from India and Vietnam. Following today&#8217;s report, we cut our FY 2022 estimate of SEK 10.3m to SEK ~5m. On the cost-side, Calmark reported OPEX of SEK 8m which corresponds to similar levels of the same quarter last year and SEK ~1m lower than Q1 figures.
<img loading="lazy" class="alignnone size-full wp-image-852839" src="https://res.cloudinary.com/redeye/w_555,h_141,c_fill,dpr_2.0/cms/app/uploads/2022/08/calmark-near-term-est2.png" alt="" width="555" height="141" />
The company reported SEK 6.7m cash on the balance sheet at the end of Q2. As mentioned in our previous report <a href="https://www.redeye.se/research/843168/calmark-q122-our-comments">comment</a>, we estimated a capital injection of ~19 million shares to raise SEK ~25m (SEK ~1.35 per share) to be announced in H2. In conjunction with today’s report, Calmark announced a SEK 26m rights issue at SEK 1.6 per share, covered to 80% by guarantee and subscription commitments. The rights issue includes warrants that could raise up to SEK 13.1m in August 2023 provided full subscription. We lower the WACC in our modeling to 14% (15%). The net proceeds will primarily be used to strengthen Calmarks sales organization.
Other recent operational highlights include Calmark reporting initial orders from its distributors in Greece and Italy in the past few months. It also communicated an initial order from Kenya through VIA Global Health at the start of Q3. The company now has received initial orders from more than ten different geographies. New distribution agreements have been signed in Saudi Arabia, Greece, Vietnam, Cambodia, and Laos.
Share price development and valuation  
The results of the lowered 2022/2023 forecasts, the lowered WACC, and minor cost adjustments is a slightly trimmed Base case of SEK 4.5 (5). Our Bull- and Bear case amounts to SEK 7.5 and SEK 1.5, respectively. We will make the final adjustment to accommodate the rights issue once the subscription rate is reported, estimated in mid-October; however, this will most likely have a minor effect on our fair value range.
<img loading="lazy" class="alignnone size-full wp-image-852836" src="https://res.cloudinary.com/redeye/w_638,h_262,c_fill,dpr_2.0/cms/app/uploads/2022/08/calma-dcf2.png" alt="" width="638" height="262" />
In the wake of the macroeconomic turbulence in 2022, the Calmark share has performed poorly. However, following the recent newsflow, the share has bounced sharply (ahead of the rights issue announcement) since it bottomed out at SEK 1.6 in July. Completed registration in essential geographies such as India and Vietnam remains important operational milestones that should allow for larger follow-up orders. We emphasize such orders as the most critical catalysts to reignite the sentiment around the share and close the valuation gap (the share closed 39% up following the announcement of the order from India this Friday).
Shortly we will publish an interview with CEO Anna Söderlund where we discuss the Q2 report, recent orders, and the rights issue.