Ypsomed Holding AG

to Ipsomed Half Year Results 2025-2026 Earnings Conference Call. Today, with CEO Simon Michel and CFO Samuel Künzli, we'd like to go over our first half year results. We'll go over the key achievements and the financial drivers for this first half year. After a short presentation, we will open the floor to questions.

thank you for for joining us again and a warm welcome to all without further ado i'll pass on then to simon please thank you very much sam for introduction uh good morning everybody great to take the time uh for us here this morning we have a great results you have seen it this morning let us deepen it i will do a channel overview and then hand over to samuel for the financials And as you know me, I always start with our purpose. This is why we get up every morning. IpsiMed is making self-care simpler and easier. And those four are our structural growth drivers. Therapy, go home, drugs have to be injected. More and more biosimilars are available. And the new large new class of GLP-1 incretins that is giving IpsiMed a strong push. So we profit a lot. We have a lot of tailwind that supports Ipsumet in its growth. And we are really well set up. Ipsumet is a pure play injection specialist. We are a leader in innovation. We have our operations under control and we have very robust financials. I will deepen now with you the first three pillars and then Samuel will go with you through the financials. Let me start with the injection specialist focus. As you all know, we have done our homework. We have finished the transformation after three years, a very clear path, selling DIA-X to Medic in 23, selling Penelis to MTD in 24, selling diabetes care to techmed this year and selling ipsotec last week to calista with that ipsomed is now really clear set up really focused self-injection specialist focusing on the high profit high margin self-injection b2b business so the new ipsomed is a delivery systems only company i will not further deepen the figures i will leave that on on to samuel in a couple of minutes Innovation leadership. IPSAMED is strong with by far the broadest portfolio of devices. The auto injectors to the left with the IPSA dose for larger volumes, the pens to the right and the digital assets. And as you may have read, we have received FDA approval as the first company at all with a digital device in America to support clinical studies, clinical trials with smart devices. also very proud that we were able to launch and present three new platforms to the community in our industry ipsodot ipsoflow and ipsoloop ipsoflow is a flex touch like device it's a spring driven disposable device for insulins for glp1 ipsodot is a glp1 optimized device a click very simple device And Ipsolu is the next-gen autoinjector. And what is in common for those three platforms is that they are all recyclable. They consist of one or maximum two different plastic parts. They used to have seven different plastic types. Now we are down to two different plastic types and that makes them recyclable. And that's our new technological S-curve. And it gives us at least four, not even five years of advantage towards competition. We are really, really much further now here in the new cycle. And Big Pharma Biotech, they want to all the devices that can eventually be recycled. So is Ipsomate net zero, Ipsomate zero, the first version, be reduced by 22% and Ipsolub now is reducing 64%, remaining us at 85 grams of carbon equivalent. And this, of course, then in the end we can offset and we'll further work on in the recyclable scheme. So the main focus of Ipsomate on the innovation is sustainable devices for our pharma partners. We have launched 12, 13 new products. We just mentioned three here. We are very proud to be the partner of Innovent with Mastudite. That's a GLP-1 incretin, the first of its kind in mainland China. We had a very good start. We are producing both out of Switzerland and out of China now. And we will move, of course, the volumes there to deliver out of China 100%. We have a client for Alzheimer's out of Japan, you may know, and we have a Japanese client here as well on a new innovative autoimmune therapy in the space of psoriasis. So very high value drugs that we present here, especially in the 2.25 format. I mean, a very important topic probably is how we are set up. And now we always hear IPSA made this dependency on GLP-1s. We have indeed over 30 deals in the space of Incretins and GLP-1s. Absolutely. But they make only at the moment a small part, much less than 10%. Overall, we have not one client that is delivering more than 15%, 1.5% of revenue. And that's important. It will stay even in the foreseeable future, next five years. Not one client will make more than 15%. And that's very important. So we don't have this clump risk, this risk of being too dependent of one client, of one molecule, really brought this up with 130 clients, 230 projects, 70 in the market, 160 in the pipeline. This is how Ipsumit is set up. And this shows also this graph here, how broad we are active. So we work in a large range of indications, in a large range of therapy areas, as you see here on this slide. IpsMed is not a diabetes company. IpsMed is not an obesity company. We are very broad. We are an injection therapy company. That's what we are doing for all kinds of therapies, and many more will follow in the coming years. And IpsMed is winning not only because of its unique platform portfolio, we are also winning because we do excellent service, because we pick up the phone after three times ringing, because we answer the emails in 24 hours. It's the way we work with our clients, the way we listen, the ability to customize devices, but still have to manufacture on the same lines. So we have now a setup that really lets us to accelerate, really lets us to profit from what we have been installing over the past years. Let me give you a couple of insights on the operation side. So what has happened? I mean, the main topic, obviously, is our big plan to move to one billion device capacity to the beginning, the end of this, the beginning of next decade. One billion installed Capacity today we are at 350-ish, so we almost tripled the capacity in the coming three years. It doesn't mean that we will deliver one billion devices end of the decade, but we are ready to deliver in a five, six, seven days model such volumes. And you see on this graph here where this is going to happen. So Switzerland is remaining an important place. Switzerland here in Solothurn, we are moving old contract manufacturing out, then we move new auto-injected Ipsumate in, will still be a very important site with roughly one quarter of the total volume. But the main site, obviously, is Schwerin, with tripling our current installation, our so-called Schwerin 2 program. And then also China, Changzhou, which had an excellent start in the team there, and Holly Springs near Raleigh, which we are going to sign this week and then really start installing the factory. So Ipsumit is becoming a much more global company. We have a footprint closer to our clients. This makes sense from a client perspective. It makes also sense from an ecological perspective. We have much less freight, much less cost on that end. So this is how Ipsumit is going to be positioned in the future. China for mainland China, US for North America, Switzerland and Germany for EU and rest of the world. As I just mentioned, Solothurn remains a very important place. Diabetes care business now moved out, so we have some office space left. We are going to fill that over the time. This is not the first priority. The main priority is manufacturing. We are installing a new high beam warehouse. We are installing a new tool shop, as you know, and we are installing two lines for auto injectors. In China, we had the opening in June. Great team, really ready, really proud. The team wants to succeed. They want to show us how it works. We want to learn from our friends in China. I have a very good feeling here that they will succeed. In Germany, we had the topping up ceremony with the Minister-President Schwesig a couple of weeks ago. You see here just a small glimpse on the new warehouse for 15,000 pallet places. This is now being built. It will be 40 meters high. It gives you an idea on how large this site will be, tripling basically in two phases our current Schwerin I site, which is going to be full by end of 26. North America, in the research triangle, so we decided for North Carolina, a bit more south on the east coast, a great area, fastest growing state in America, Raleigh, third fastest growing city in northern America, Raleigh, the research triangle with most big pharma being very close to our site, Holy Springs, a small town, we are able to buy here, acquire a finished finished building 15,000 square meters. It will take us now 18 months to install our equipment in, to install first lines in and then to be live end of 27, deliver first devices 28 for our customers in America. It's very important that we have now this message out there since SHL also delivered the site in in in america we are now also present that's important now that we are really close to our clients that is no longer an argument for our customers that we are not in america so very proud you found that spot that was there last week i had a very good impression i met the governor i met many chances of universities Also on the people side with the community colleges, the apprenticeship programs they have, they acquire 150,000 people per year that move to North Carolina. So I believe we will have not an issue here finding good staff, well-educated people to ramp up our site in the course of 2017. My last slide before I hand over to Samuel, this gives you a glimpse on the people side. As you see here, we are still growing a bit in Switzerland, but the main growth is now happening obviously in our manufacturing sites in Germany and in China. And that will also be the case in the coming years. Switzerland will only grow slightly, some specialty functions in R&D here and there, but the main growth of colleagues here is going to happen in Germany. uh china and then in two years in america in germany we are going to move from 500 people to 1 000 people over the course of the next three years so this is this is where the music is going to play this is where we're going to manufacture but we don't need more people in in in overhead in admin in r d so the main growth now is happening on variable side on on volumes on factory side 780 people as you see here moved out now last week they are now part of the tech mech group roughly 250 in Switzerland and 500 in the countries. It's no longer part of the EBSMED family, but many of them are nearby in Burgdorf. So with that, I would like to hand over to Samuel, who will give you an insight on where we are on the financials and how we are set up financially. Samuel, please.

Thank you, Simon, and a warm welcome also from my side. I will give you the highlights of the semi-annual result in the next 10 to 15 minutes. Let's start with the top line. We reported sales of 363 million Swiss francs in the first half year. On the left side, you see the breakdown. I do start with the green part, the diabetes care business. 75 million of sales, the infusion pump business realized in the months April to July. You remember, end of July, we had the closing of that business. 21 million Swiss francs. That is in the red part. This is all discontinued operations, and this includes Ipsotec. You heard we sold that business end of October. So in the first six months that was fully included. This includes also still the phase out of the pen needle and BGMS business. And this includes now also what we started for diabetes care, the contract manufacturing for infusion sets and reservoirs. Now let's focus on the core business, the remaining business, the delivery system business. Here we had sales of 267 million Swiss francs in the first half year. Let's deepen that. You see, we grew from 220 million Swiss francs last year to 267 million so a 21 percent top line growth in the core business so we are on track with what we guided you remember we said we will grow in the core business around 20 in the business year 25 26. What is especially a good sign and what I want to highlight is how the project revenues developed. We grew from 43 million to 52 million, so around 20% growth in the project business, pen and auto injectors together. And that is a very strong signal that we have a good pipeline because those project sales, so the clinical devices we sell, the customizing we do for our customers, They translate into mid-term commercial sales and this is the future then for the commercial sales. Now, the commercial sales, there we also had a very strong development. The main growth drivers were the auto injectors. They grew by 46%. Now, what did we earn? How does the profitability look? We reported an EBIT in the first half year of 152 million Swiss francs. That EBIT is high. It needs some explanation because we had certain one-off effects. I want to highlight that. Let's also have a look on the left side of this graph. The diabetes care business in those four months in which it was consolidated in our P&L made a loss of 5 million Swiss francs. So that business was not yet break even. In other, we report a profit on EBIT line of 70 million Swiss francs. The main driver was the book profit we realized from selling the diabetes care business. This profit was 75 million Swiss francs. Some of you expected a higher profit from this sale. We were reading numbers in your reports from 90 to 100 million. Therefore, I want to explain why we have now the 75 million Swiss francs profit. One important factor, and we mentioned that when we sold the diabetes care business, is the earn-out components. So the earn-out depends on the sales of the business we sold for the next three years. value earn outs in a balance sheet you always have to assume a certain uncertainty because the competition in that business insulate tandem they are not sleeping so from this total possible earn out of 90 million you see that in our books we took 45 million in our books The second point I want to mention, why this profit is maybe not so high as some of you expected, have in mind, we sold a business which still was also at the closing not break even. So we had still minus five negative EBIT and this of course does also not help for this book profit. Now let's focus on the core business. In delivery systems, we earned 87 million Swiss francs. This is an EBIT margin of 32.4%. Let's have a look now at how we make sure that we also grow and that we are profitable in the future. For that, we did the investments and these are mainly growth capex. You remember, we have our growth plan to reach this one billion device capacity by the beginning of the next decade. For this, we want to invest around 1.5 billion Swiss francs until end of the decade. This program we started already last business year. Partially, this is financed also by customers, have that in mind. But you see here very well, we are on track with those investments, with the fixed assets. Simon showed you the investments we did in Schwerin. So from this 126 million, the biggest part, roughly 120 million went to the core business, to the delivery system business. And yes, Schwerin is a very important site now we invest. We invest in Solothurn, but we invest also in China, in Changzhou. That were the main drivers on the fixed asset side. The intangibles as well, we developed the future platforms, the PEN auto-injector platform Simon showed you, the Ypsilop, the DOT and the FLOW. We have invested around 20 million overall. Roughly half of it is for the delivery system business. When you compare that number with the previous year for the intangibles, you see that in the previous year we still capitalized 39 million of intangible assets. And the main driver was that the diabetes care business in the previous year was six months included and was heavily investing at that time. So it's not that we invested less in R&D in the core business. Could we finance the growth capex with the operating cash flow? For this, we look now at the cash flow statement. Let's start with the operating cash flow. Again, have in mind, this is the operating cash flow for all the businesses, including the diabetes care and the discontinued operations. The 130 million is for everything. If we just look at the core business, that number is even slightly higher. We would be above 140 million cash flow we generate from the operations. And that is a very strong number. Then the cash flow from investment activity needs an explanation because you just saw we roughly invested 150 million. So why net we are here positive? The reason is we sold the diabetes care business and received a little bit more than 300 million already now in cash. So that makes this cash flow from investment activity positive, roughly 160 million. so the free cash flow around 290 million so even if you take that extraordinary cash we got from techmed for the sale of the diabetes care out you see we are only slightly negative so we nearly managed to finance with the operating cash flow Our growth capex, so having in mind that operating cash flow from the core business is even a little bit higher. So we would nearly finance that with the operating cash flow. What did we do now with this money? we paid back our short-term financial liabilities. We deleveraged. The net cash amount on our bank accounts at the end of September was roughly the same as it was at the end of March. since we are in a capital intensive industry we have to look also at our balance sheet and for us not only ebit margin counts for us counts the capital efficiency and we measure that with the return on capital employed and for us a very important number is this rosy in the core business so we realized again We created value, we realized the growth of around 21% in the core business and that shows that we create value for our shareholders. Then, the second point I want to mention, our balance sheet is very solid. We have an equity ratio of around 67% and the ratio net debt to EBITDA from the last 12 months is 0.3. So, the last 12 months EBITDA was 245 million Swiss francs and that is a very high and important number. The last 12 months EBITDA 245 million. So, as you see, we are well set, we are on track to finance that organic growth, growing up to 1 billion device capacity, investing in total this 1.5 billion with some co-investment from customers, with our own cash flow and our own resources. Now, let's finally look forward. We confirm our guidance for this business here. I mentioned already the top line. We expect to grow around 20% with the sales, with the delivery system business. And the EBIT, remember in the first half year we had now 87 million. So mathematically, we are not on half. But you need to have in mind that for us, typically the second half year is stronger than the first half year. So we are also comfortable to reach that EBIT range between 190 million and 210 million Swiss francs. In the last slide, I want to even look further in the future. our mid-term ambition many of you followed our capital market day and you saw our mid-term announcement we want to grow with our sales between 900 million swiss francs and 1.2 billion swiss francs so that is basically when you look at the delivery system sales of 24 25 which was around 500 million that is basically doubling the top line We want to reach between 280 and 340 million of EBIT. We also want to clarify, so this time we wrote it also, that the EBIT margin stays above the 30%. I last time only mentioned it on the oral way, so we want to really clarify this. This is our ambition and the capital efficiency should stay on the level we have now, around 20% ROC. With that, I want to finish the presentation and we want to open the floor for questions and I give back to Sam. Thank you, Samuel.