Ypsomed Holding AG

Good afternoon. Welcome to Eastermed's full year results presentation for the 2025-2026 financial year. We're delighted to have you all here with us in Zurich in person and for all of those online. Before we begin, please note this presentation contains forward-looking statements that naturally come with a certainty. Turning to today's agenda, our CEO, Simon Michel, will open with our strategic priorities, go over our business and operations updates. Then followed by CFO, Samuel Künzli, with a review of the financial results. We will then open the floor to your questions, first to the people that are joining us here in person and then online. If you'd like to ask a question, please raise your hand, state your name and the company you work for, and then we'll unmute your mic, or bring you a mic if you're here in person. Also note, the presentation is recorded, and we'll make the recording available after the session online. And without further ado, I will now pass on to Simon, please.

Thank you very much, Sam. Good afternoon from my side as well, and a very warm welcome here in Zurich. I really look forward to spending the next hour with you. I would like to start with making three points before I dig into my strategic slides. Number one, we can really say this company has delivered. We have delivered on our financial targets. We have a record win of new projects, not only new projects, also new innovation on IP side. So phenomenal year, number one. Number two, The transformation that we went through over the past four years, selling also the B2C business, selling diabetes care is done. This is now a pure play company, very focused, a company that we will all have a lot of fun with. And number three, this is also a very disciplined organization. When I look into Ipsomed, how we are set up, how we take lean as a serious measure, our Ipsosit program, and Samuel will deepen that, is core to us. We spend a lot of money on IT, on our new manufacturing operating model, and in AI. We have a huge AI program. It's not just co-pilot. It's actually very deep in our roots. It's very deep in our operations. We try to be more efficient with new technology. So these three points being said, let me start. And as always, we are starting with our purpose. This is why we get up every morning. We make self-care simpler and easier for people with chronic conditions. And we are good at that. We do that for 40 years. And customers trust us. They come to us because they know we deliver. And as you all know, and some of you have seen these slides now for a couple of years, but I have to show them every single time. We have a lot of tailwind. Therapy go from hospital to home. Because it makes sense. It makes sense from a healthcare perspective. It makes sense from a patient perspective. IV therapies go sub-Q, because it's cheaper and better. Number two, more and more drugs have to be injected, because the molecules are too big. They cannot be swallowed. The stomach, the acid will destroy them. GLP-1 is a small exception. We will deepen that today. But all other drugs have to be injected, also tomorrow. Number three, biosimilars. The golden age of biosimilars is here. Hundreds of millions of new drugs reaching the market in areas where there have not been these possibilities. So it's about access. It's about the responsibility. And this is not only delivering to originators, but also to biosimilar organizations. That's our promise. And number four, of course, the incretins. this new wave that will help the society by making life and life quality better, by losing weight and not being affected by all those consequences that you have with obesity. The transformation is now history. For us, it was a lot of work. But when I look back those four years, selling the needle business, selling the eye expert, the training business, stopping BGM, selling the pumps, we have done the right thing. This is now a company which is easy, much easier to lead, very clearly focused, very clearly structured. Our focus is operational excellence. We will deepen that today as well. This is a company that has one focus, to make self-care simpler and easier by providing best packaging for pharma and biotech. That's our mission, the B2B story, high margin, fast growth, clear story. So when we look at how we invest our money, we always have those three, four things in mind. Number one, the platforms. We are and remain a platform company, and we will shortly introduce to you three new platforms that will bring us to the next S-curve. Innovation. So we continue to invest significant amounts of money in innovation. Operational excellence. Lean, lean, lean. Every meter, every second, every square meter is money. We get rid of it. And this is a standardized program we have within the group. And the financial, the responsibility towards you and the shareholders is at the core of how we work. So cost and IPSO fit is an element which is deeply rooted, and we will have to deepen that with you today. So have a look at the platforms. This is our portfolio. And I think the important thing here is that we are the only organization out there that offers both a complete auto-injector portfolio for syringes and pens for cottages. So this is one core reason why. So SHL only has the auto-injectors. We have both platforms, and that's core. We have now the first clients who buy from us for the same molecule two platforms. Look at InnoVent. They launched mat-to-diet incretin in mainland China. They have launched it in the old injector, and now they got the approval two weeks ago for the Unopen, the pen. So these companies come deliberately to us because they can breathe with us. They may not know how successful old injectors are or when pens kick in, so they are happy to be able to have flexible deals with Ipsomet. So if they need less auto-injectors, they will buy more Unopens, and they have flexible contracts. And that's a huge USP. More and more molecules will be available in both formats. When we look at the trajectory and what we've achieved, this is a record. We have never had more than 40 deals in a year. 44 deals. When I deepen a bit those deals, then about half of them are in biosimilars. So you see these drugs being more successful, but only one-third in emerging markets. So the developed markets are still in the lead, and they look at the different fields of therapy. It's very broad. So 15 out of those 44 is incretins, different formats of GLT1. 15 is different old-immune diseases, from polyarthritis to morbus crown to lupus, very diverse. You have a couple of very new, interesting drugs against mid to severe psoriasis. Then you have drugs for oncology, neurology, hormone therapy. So it's very broad. So this is an important message today. We have a very broad spectrum. And with over 130 clients, we have no real risk. The largest client for us makes not even 15% in revenue. The top 10 customers together make less than 50% in revenue. And we add more and more clients every day. And over time, obviously, this will even grow. When we look at the spectrum of different indications, we are now at 25. 80 products launched. 80 devices in the market. On the left side, the pens and the auto-injectors, syringe-based. Apart from the 80 approved ones, we have 180 in our pipeline. So in total, we look at 260. 80 in the market, 180 new ones that we work with. Of those 180 that are in the pipeline in those indications and new ones, roughly 70% will hit the light. Our hit rate is two-thirds to 70%, which means 70% that are reaching the light will actually leave the market. Some of them obviously will be stopped because they are sold, because they don't reach the output in a clinical trial. But out of the 180... Roughly two-thirds, 120-ish, will actually reach the market in the coming two to five years. So there's this huge flow of new products reaching in order for us to deliver the growth that we and you expect. So the platform logic is still the basis for our success. But we want to grow and we want to build upon this platform logic. So that's why we continue to invest in innovations. And the three new innovations we have presented to the world last November at the large conferences is IpsaLoop, IpsaDot and IpsaFlow. IpsaLoop, that's the green device here to the right, that's a new generation autoinjector. What is in common to those three platforms, they're all recyclable. They are from one to two plastic types. They can be recycled. It's a totally new domain. When you think back how we created, how the industry created products, we were always looking at the function. The device needs to bring drugs in your body. Then we have looked at automation. How can they be automated on a big line? Then the focus was on usability so people don't make a mistake because nobody reads IFUs. And now suddenly it's a new domain in engineering. It's called Engineer to Recycle. And we have taught our organization six years ago with the eco-design guidelines how to do that. And we are now creating every new innovation must be based on this logic. And this is not just because of Brussels or Paris or whoever. It's because we are convinced the world will need to loop the existing goods. We need to loop the raw material as high as possible. We need to stay in the loop and not down cycle. It's easy to form a chair out of our pens, but our vision is to form a pen again, a pen into a pen into a pen. So we will build the basis with those new platforms that customers can recycle if they want. And because Big Pharma decides today for the next 10 to 12 years, they will probably think twice if they have the choice of a recyclable or a non-recyclable platform. And when we talk to our customers, they are really willing to look at those three new platforms. So it's a new auto-injector and it's two new pens. The Ipsodot in the middle, it's a GLT1 optimized device for injection. Click, click, click. I think we have a demo device over there. And the Ipsoflow is a spring-driven device. pen, like the FlexTouch that you all know from Novo. So these are our three new innovations. We won a couple of prestigious awards. This is the new platform generation that will bring our patent cliff from 2034, 2036 to the 40s. As you know, our S-curve from an IP perspective is In the Western world, not in China, in China we have competition. Outside of China there is very, very, very few competition. We have to bring our clients from the existing level to the new S-curve, to the new technological S-curve with the new IP protection until the 40s. So this is our work and what we have to do over the coming years to convince our clients. But I believe we have hit the trend. And not only in Europe, also in the U.S. people are looking very carefully into the eco-design logic. The eco-design logic is not just device. It's very deeply rooted in our DNA, responsibility as a corporate value. We've used the supply chain carbon emission by pushing our pressure down to our 500 most important suppliers. We gave them clear targets to deliver less carbon emissions. And we have decided to zero every building. So once we open a factory, once we open infrastructure, we net zero them with certificates and we have less CO2 in our products. And this has benefits because it reduces dependencies more sources on the granulate. We meet the customer's demand today and especially tomorrow because they will be forced to deliver less Scope 3. And in the end of the day, this leads to lower cost of goods. It leads to lower utility costs. If you can build better buildings, you have a lower energy bill. And we are a very energy demanding industry. So we have a lot of benefits also from a from a monetary perspective. It's not just an ecological logic. Apart from our innovation in the space of ecology, we have the innovation in the space of services. We have decided to look very carefully in the customer journey. And it's not only the product, it's actually the service. And one key element on the customer side is Time2Clinic. So while on average it took us 18 months from Time2Clinic in the past, with the new program, Clear2Clinic, we are down to six months. Large pharma are usually well-planned, but this is not only large pharma. There are many clients out there who at some point in time, oh, yes, we need a pen. And now we are ready to deliver a device in a couple of months to go into clinic, and that's a huge benefit for small biotechs. And as you know, small biotech invent big pharma by small biotech. So we want to be in the pipeline of the small biotech to then end up in the hands of of pharma. So our clinical program saves a lot of time by pre-document, pre-validate, verify, and to be ready from a product perspective. So there's much, much, much less testing, much less paperwork, and that makes life easier for the customer. Platform, innovation, and the third piece, before I hand over to Samuel, is operational excellence. Operational excellence, obviously, the core and what is in interest to you is our footprint and where we are, and IpsMed is becoming more and more global. You have read the news over time. Let me just introduce a couple of the achievements in the last 12 months. We have opened in Solotun our new and second tool shop. We have now a capacity of up to 100 plastic molding tools per year, which makes us much, much less dependent from third-party suppliers. We are employing roughly 100 people in Burgdorf, and we are now ramping up with a second tool shop about the same size for our own plastic molding tools. In Solothurn, apart from plastic molding tools, we have a huge program. We call it Hermes. This is basically moving out the old contract manufacturing business and moving in our new Ipsenate lines. This is a program in two phases, and it's delivered until end of 26. Very important to us because it delivers demand and capacity and work for people for the next 10 to 20 years. A huge upgrade. We invest over 200 million Swiss francs in Zolotun. Currently, the project is well on track. Also well on track is China in Changchun. As you know, we have opened in June. We are operational since end of last year. And we deliver devices both to clients in India at the moment, Russia, and also in China. Main focus obviously will be China for China. At the moment, we want to fill a bit capacity, so we deliver products to clients outside of mainland China. But it's a China for China factory. It runs very well. highly pleased on the cost of goods. So they are already below every other site after half a year. Very motivated, highly motivated, very eager, very professional team. The team tells me every day, we want you to learn from me. So very pleased with how China works. Apart from China, we have our large program in Schwerin. So this is Schwerin 2. This is where we invest a large chunk of our CapEx. You see on the right side, on the left side, the existing factory, the 250-meter-long building with the 200-passing molding machine, which is full now. Some of you have seen the site. And then this huge cube in the middle, that's a 40-meter-high, 15,000-pallet warehouse with 10 trucks, delivery lots and then you see this building phase one this has capacity for roughly 250 to 300 million devices and then we can add another such building with another 250 million devices in 29, 20, 30 we have to see where we prioritize where we prioritize in China the second factory where we prioritize in the U.S. or whether we build a second factory here. This will be something that we have to decide in roughly a year from now. But what you see here is the new building, which is a drone picture from before yesterday. So somehow we want to ramp up this in October. So there's some work to do, but we don't need the trees. I know we can start ramping up without the trees and the grass. So it will be fascinating how we ramp up the first lines. Then we have a nice inauguration in April. for the site, which will deliver products for mainly Western Europe and with a huge growing demand. And then the next and newest program in infrastructure for us is Holy Springs. As you know, we have decided for North Carolina for many, many reasons. North Carolina is the fastest growing state in the U.S. a very high density of universities and community colleges, so they have a functional apprenticeship program. They have learned a lot from former President Schneider-Ammann. He has been one of the forces in this state to actually implement apprenticeship programs, which is really in place, and you can go to desks and demand for people, and they support you. So I'm quite positive to find the people here. The program is up now. This is a finished building, but it's empty. So we are now staffing and moving in the material. So by end of 27, we will be ready to deliver to the clients. With that, I already come to the end, ladies and gentlemen, and just a short picture on the development of our staff headcount. Obviously, almost 800 people left us. They went from IPSMED to MyLife Diabetes Care with the pump business. We have sold Ipsotech, as you know, and we have added 245 new jobs. So we are roughly at 2,100 now. For the new year, we see roughly 150 new functions, roughly 50 in Switzerland and 100 abroad. Obviously, it's less. We are able to profit now from the from the operational leverage. We are able to profit now from the installed capacity. We are able to profit now from the platforms that we have delivered. With that, I would like to hand over. I can tell you, you made a wise decision to spend some time with us. This is a great company and thanks for the trust. And I hand over to Samuel, please.

Thank you, Simon, and welcome also from my side. I will now walk you through the financials, 25, 26. Let us start with our top line. The transformation into a sales injection specialist to a pure play company is now also clearly visible when we look at our sales split. We report that 731 million Swiss francs of sales, and out of it, more than 80%, 601 million Swiss francs is delivery systems, our core business. 75 million is from the diabetes care business in the months April to July, in the time the business was still with us, and 56 million is In the other segment, this is mainly the contract manufacturing we still do for diabetes care. Then the phase-out of the pen needle business and BGMS business. And as well, Ipsotec, which was with us from April to October 25. Let's look at the core business, at the delivery system business. We achieved our goal today. We reached 20% growth in that business. We grew from 501 million Swiss francs to 601 million Swiss francs. What were now the main drivers of that growth? When we look at our platforms, the main driver were the auto-injectors, especially the 1 milliliter and the 2.25 milliliter. When we look at the therapeutic areas, One driver was incretins, roughly one-third of the growth. So think of it like 30 to 40 million. Out of that 100 million, growth is coming from GFP1s. But you see, it's not the main growth driver. All our other therapeutic areas are still heavily contributing to our growth in the core business. Project revenues are important. On high level, they are above 80 million Swiss francs, 86 million we reported in 25, 26. compared to $88 million in the previous year. For those who follow us closely, have in mind that we now don't show the capacity reservation fees. The sales from that we don't show anymore in the project revenue, but in the commercial sales. Have that in mind, especially when you look at the previous year. Now let's look at the bottom line. Also on EBIT level, we reached, we achieved our goal. You remember our guidance here was to be between 190 and 210 million Swiss francs. We reached 196 million Swiss francs of EBIT. That represents a 33% EBIT margin. we had in the four months diabetes care was still with us, we had a loss there of $6 million, and we had a profit of $56 million in others. The two main drivers of that profit was, on the one side, we had a profit from $68 million when we sold diabetes care, and on the other side, we had a loss of around $12 million when we sold Bibsotec, that were The main drivers. Let's compare also with the previous year. In the previous year, 24-25, we reported 113 million Swiss francs of EBIT. Now, 246 million. So, more than double as much in EBIT. In the center of that slide, you see the growth of the profitability in delivery systems. So we grew by roughly 30 million from 167 million of EBITs to 196 million. We not only doubled our EBIT, we also propose to our AGM to double the dividend. We stay with our policy that we want to pay out roughly 35% of our profits to our shareholders. Let us now focus on cash. Exceptionally strong was the operating cash flow. That shows us how well our business is generating cash. More than 300 million operating cash flow. Looking at the cash flow from investing activities, we should have two things in mind. On the one side, we look at our growth investments. I come to that on the next page. And on the other side, we divested diabetes care. And from that divestment, we got 307 million Swiss francs in. So net in the cash flow from investing activity was only roughly 30 million. So we ended up in a free cash flow of... 280 million Swiss francs, and we used that money. As you know, on the one side, we bought shares back, 150 million, and we reduced our loans. Where did we invest the money, the growth capex? You saw the pictures which Simon showed, mainly in fixed assets. 295 million went into our factories. Schwerin being a big part of it, but as well in Switzerland, in Solothurn, and as well the U.S. side. You saw the building in Holy Springs and the site, and also our factory in China, in Changzhou. We keep innovating. We also invest in intangibles in R&D. We invest a total of $28 million. When you compare that with the previous year, yes, it's significantly lower. But have in mind, in the previous year, the diabetes care business was still part of those intangible investments. In the actual business year, 25-26%, We invested roughly 20 million is roughly capitalized development costs for the delivery system business. And you saw, we launched three new platforms. When we put that investment, that growth investment into the wider context, those who follow us for many years, they know roughly two years ago, we announced our platform. our growth investment program of 1.5 billion Swiss francs. Now being two years in the program, our actual planning shows that we will spend roughly 1.3 billion in those six years until end of the decade. One key driver of that was our policy. operational excellence program, our IPS of it, and I come to that later. We have the goal, as Simon mentioned, to increase our utilization rate, to improve our OEs, and we work every day on that. We have a strong focus in building a flexible and modular manufacturing system, and we have a strong focus on capital efficiency. In the business year 25-26, We realized a row C return on capital employed of roughly 20%, so we created clearly shareholder value. Co-financing stays a key element of that big CapEx program. Roughly 30% is co-financed by our customers. And the main instrument we use there are capacity reservation fees. You see that amount now also growing in our balance sheet when you look at our report. And now we are still having a... a year with high capex ahead of us. You see that in this illustrative simulation, 26, 27 capex are still high, comparable to the year we had. In 27, 28, we expect them already to be a little bit lower, and we expect them to cover with our operating cash flow in 27, 28. So we expect to be in 27, 28, free cash flow positive. Now we look at our robust balance sheet. We have more than 55% equity and we have a very low debt level. Net debt to EBITDA is on 0.8, so below 1. The number I also want to highlight because it shows how well the delivery system business is generating cash is the EBTA from delivery systems, $278 million. That's a very strong result. And that balance sheet and that cash flow generation allows us to fund our organic growth with our own balance sheet. That's the message here. Before we now come to the outlook, I want to illustrate a few important elements of our resilient business model. As you know, we have very long-term contracts, typically up to 10 years, because a drug stays with us until this drug loses the exclusivity. So for that time, it's bound to our device. What is, of course, also common when you have long-term contracts is that you have indexations. That is especially now important looking at the current geopolitic situation in which you can have also inflation pressure. So it's crucial that you have an instrument that you can hand over those costs also to your customers. And we have indexation for our main cost blocks, so for plastics, the granulates, the energy, and as well labor. And this mechanism is also aligned with our supply chain, with our suppliers. When it comes to potential downside protection, two elements I want to highlight. First, the capacity reservation fee. That's something a customer pays independently if then this capacity is used or not. So in case a customer wants less volume, this money we still have. Then also the volume-based pricing, also that protects us from volatility in customer demand, because that means simply if a customer orders less, then the price per device is higher. And that is a very important downside protection for us. Then the Swiss francs. Yes, we are a Swiss-based company, and a lot of functions are in Switzerland, a lot of R&D, but... We have a natural hedge. Majority of our contracts are in Swiss francs, so that's nothing we have to worry about. And have also in mind, our device sits in the FDA master file, so that makes it difficult for our customers to exchange us as a supplier. We are not in an industry in which you have typical dual sourcing. We are the single source, the single supplier to our customers, and that is an important element of our business model as well. The second topic I want to touch before we come to the outlook is our IpsoFit program. So we want to get fit for the growth, and we also want to be lean because, yes, we also want to protect our margin. We have also to work on our cost base. And we have four pillars defined on which we work. The one, the operational efficiency, you heard already, the goal is we are in a capital-intensive industry for us with a high operating leverage, so to have as much OEE as possible, that is key for us, and on that we work with different initiatives. Then, as an organization, we are growing, and we still want to be fast, because also our competition, especially in Asia, is fast. So we want to take decisions fast. We want to take them where the decision should be taken, at the front line, close to the customer, at the shop floor. And for that, we also have initiatives running. Then yes, you hear that from many companies, but of course, we also want to take advantage of AI. We want to have a competitive IT cost base. That's something where we feel we can also differentiate ourselves and where we can save costs. And where we hope for the biggest saving is actually in procurement. Because procurement also, when you gain scale, when you grow as we do, you have a certain volume you buy. You get a certain negotiation power. So, we want to use that better. We want to do more dual sourcing and take advantage of better prices. Now, let's finally look forward. We guide for the next year a sales growth of 12 to 15% in delivery systems with own devices. What do I mean now with these own devices? The 601 million Swiss francs we reported, 25, 26, that includes still around 40 million contract manufacturing for pens. As you heard from Simon, that is something we phase out. So, we take that away, and the starting point for that guidance for the new one is the 560 million Swiss francs, which you see here on the left side. So, from that, growing 12 to 15 percent would mean a midpoint of roughly 635 million Swiss francs. The contract manufacturing for the pens, that is phasing out, and that still will be 15 to 20 million. So add that, and also add another 50 million for the contract manufacturing we do for diabetes care, the infusion sets and the reservoirs. So the reported EBIT will still be around 700 million Swiss francs. Looking at the profitability, we guide an EBIT between 210 and 230 million Swiss francs. There you can take as a starting point more or less the 196 million because the contract manufacturing for the pens, as you know, is a cost-plus business and now in the phasing out, so there is no significant profit in there. We want to stay above 33% EBIT margin in the next business year. Now in the last page, I want to even look out further. We announced our mid-term ambition in September 25 at our Capital Market Day. And from there, you know, we want to grow with sales in a range between 0.9 and 1.1 billion Swiss francs until end of the decade. With our core business, the delivery system business, you see by then everything is phased out. Also, the contract manufacturing process. for the diabetes care. And the EBIT should stay between 280 million and 340 million Swiss francs, always above 30% EBIT margin. And I mentioned we have a strong focus on capital efficiency. The ROSI should stay all over these years around 20%. Now we have Look forward to your questions, and I hand over to Sam.