Embla Medical Hf S/Adr

Welcome to EMPLA Medical Q1 2026 conference call. Today's call is being recorded. If you have any objections to this, please disconnect your line. All participants will be in a listen-only mode throughout the presentation. And afterwards, there will be a question and answer session. To ask a question, please press 5 star on your telephone keypad. I would like to introduce President and CEO, Sven Silverson. and CFO Arne Svensdottir. Sven, please begin.

Thank you very much. Good morning, and welcome to the AmpliMedical conference call, where we will review the first quarter results for 2026. I'm Fred Salvestrøm, President and CEO of AmpliMedical, and joining me on today's call is our Chief Financial Officer, Arne Svensdottir, and AmpliMedical's Head of Investor Relations, Carl Sindahl. The presentation should take approximately 15 minutes, after which there will be an opportunity to ask questions during a Q&A session. Now, if you would please go to the next slide. We are seeing good progress at the beginning of 2026. Sales in the first quarter amounted to 232 million, representing reported growth of 15% and organic growth of 4%. We delivered strong performance in prosthetics and neuro-orthotics, driven by continued momentum and solid volume growth across reasons and categories. Growth in rating and support was moderate, and patient care experience was off course, largely driven by timing effects in Europe. Our EBITDA margin for the quarter came in at 17%, and is down one percentage point from the comparable quarter last year, largely due to external factors such as effects and tariffs. We delivered strong net profit, growth driven by growing operating results and favorable changes in net financial expenses. During the first quarter, we continued to roll out of our promotion brand in patient care, and the global re-branding rollout is now more than 90% complete and expected to conclude during the second quarter. In patient care, we are seeing the, or starting to see the benefits from the change in initiatives we implemented in the second half of last year to enhance long-term goals and profitability in our patient care business. And I will cover the performance in patient care factor later in the presentation. I also wanted to highlight progress in RFD in the first quarter with the launch of the AeroFit event, a liner that minimizes sweat accumulation in the soil. Lastly, we are reiterating our earlier guidelines of 5 to 8% organic sales growth and 20 to 22%, even the most. If you please go to the next slide. In APAC, sales growth was strong in the first quarter with 14% organic growth driven by strong performance across all three segments. EMEA and Americas also posted good growth for the quarter driven by prosthetics and neuro-orthotics, which, however, was partly offset by softer growth in the other business segments. And we cover the specifics and dynamics in each of our segments on the following slide. And if you please go to the next slide. Prosthetics and neuro-orthotics delivered 9% organic growth. In EMEA, we continue to see strong regional momentum with a broad-based contribution from bionics, our feed products, and other key categories. In addition, our neurobiotics business continues to progress well across several European markets, reflecting our strategy to expand the current Gens portfolio internationally. Growth in Americas was also strong, driven by recently launched innovation in bionics, as well as our feed solutions across both our Australia and College Park brands. Pure Robotics has begun to ramp up in the U.S. with a more meaningful contribution expected during 2026, as we brought in the launch of our first bionic metron, which received a reimbursement quote last summer in this important market. Lastly, we saw a very strong quarter in APAC across key markets and all product categories. If you turn to the next slide, please. Sales and pricing and support grew 1% in the first quarter. In America, sales growth was flat, and the market continues to be affected by shifting dynamics and competitive pressure, including increased price sensitivity. In EMEA, sales were soft, consistent with trends seen in Americas. Lastly, our basis for business and impact delivered strong growth in Polo 1 across the region with strong growth contribution in Asia and as well as Australia and New Zealand. We turn to the next slide, please. Sales in patient care declined 1%. In Europe, we saw sales underperform here in the first quarter, largely due to timing effects, as we are both following a strong fourth quarter from 25, and Easter volatility has partly overlapped into March. We expect the patient care business in Europe to return to more consistent sales performance in line with market during 26. Sales in America recovered in the first quarter in line with the internal change initiatives implemented during the second half of 25. In ATAC, sales performance in patient care remained solid in Australia. We remain confident that the patient care business in both America and Europe will deliver in line with the structural growth of the OMP industry as the year progresses, as well as gradually contribute to increasing margins as we see profitability moving in the right direction during quarter one. With this overview of our performance for the first quarter, I would like to hand it over to Artna to go through the financials in more detail. Artna, please.

Thank you, Fred. Please turn to the next slide for an overview of our financials. In the first quarter, the gross profit margin was 62% compared to 63% in quarter one, 2025. The gross profit margin was positively impacted by strong sales in the prospective renewal prospects. but offset by all items such as FX and TARIS in the U.S. All tax was 52% of sales in Q1. This is the same ratio of sales as in the comparable period. OPS grew 3% organic in line with our continued focus on cost control. Consequently, we delivered an EBITDA margin of 17%. This is one percentage point below the comparable quarter, mainly due to FX headwinds and TARIS. The negative effects on our EBITDA margin come from changes in currencies amounting to roughly 50 basis points, net of hedging in Q1, when compared to the same period in 2025. Finally, I'm very pleased to see that we delivered strong net profit in the quarter, as our net profit grew 21%. The increase is driven by growing operating shows and favorable changes in net financial expenses. If you please turn to the next slide for the status on our cash flow and leverage. During the first quarter, CapEx was $5 million, or 2% of sales, which is below a normalized level of 3% to 4% of sales due to timing of investments. Our cash flow generation was lower than comparable period last year, mainly driven by negative effects related to timing in our net working capital. In addition, it was highlighting that cash flow generation is seasonal low in the first quarter. That amounted to 2.4 times at the end of the quarter, which is in line with our target range of two to three times. We therefore continue with our share buyback program. And during the quarter one, we bought back $2.6 million worth of shares. And this is our view on our financial and hand-holding steps before we close in remarks and comments around the guidance.

Thank you, Anna. Please turn to the next slide. Despite the variability in performance across regions and segments, we're up to a reasonably good start in 26 in an environment with higher uncertainty on the global economic outlook. Our guidance for 26 remains unchanged, where we expect organic sales growth to be in the range of 5% to 8%. and EBITDA margins would be in the range of 20% to 22%. With this overview, our presentation is now concluded, and we would like to open the call for questions. Operator, please move to the next slide, and the Q&A can begin.

Thank you. If you do wish to ask a question, please press 5-star on your telephone keypad. To withdraw your question, you may do so by pressing 5-star again. We will have a brief pause while questions are being registered. The first question is from the line of E-Way Joe from ACB. Please go ahead. Your line will now be unmuted.

Hi, it's Wei from S&P. Thank you for taking my questions. I have three questions, and I'll do one on time. Firstly, just looking at the pricing support, I recall that historically this segment carried a lower margin. And then after the tariff payments now, I understand it's $2 million in a quarter, and if we analyze that, Can you confirm that in that segment you still have a healthy probability going forward? And is there a possibility to increase sales price? And you can comment on this first.

Thank you. Hi, I appreciate your question. Yes, the tariffs. are mainly impacting our bracing business. You're correct. We manufacture most of our bracing products in Southeast Asia, China, or with third-party vendors in China and Taiwan. And when it comes to margin in the bracing business, the bracing business is a profitable business, and it contributes positively to the overall margin of the company. With that said, obviously an impact from the tariffs and we've had very little pass-through to our customers. At the end of the day, the racing business is a competitive market place with many companies that compete in especially the U.S. marketplace and with reimbursement being fixed, it has provided very limited opportunities for pass-through of these tariffs.

Okay, and can you confirm that you still have a healthy margin? Yes, absolutely, absolutely. Okay, okay, okay, enough. Thank you. And my second question regarding the Aprahams portfolio in the prosthetics. I realized that there recently have been a change in the U.S. reimbursement. Can you comment on this? What would be the net effect on your business?

Okay. Yeah, there was a reimbursement. Wait, is it possible for you to mute the line? Well, there's some background noise. Sorry about that. Yeah, so there was a reimbursement ruling here on the offer X product line here in the beginning of the year, which was unfavorable, which means that There are certain aspects that impact our business negatively, while there are other aspects which are more neutral to positive. We are still working through the exact impact of this, but this is not something that will have a meaningful impact on our overall growth trajectory. We see lots of opportunity in the operations business, especially also on the mechanical Finco range, with very little... which is a category with extremely low penetration. So on balance, a slightly negative ruling on reimbursement, but not something that will change our overall outlook for the year.

Is it possible to remind us what is the growth trajectory in that portfolio?

Our upper expenses has been showing sort of

strong high single digital organic growth rates it's going to be okay thank you uh last question on the ebd emerging guidance um you gotta i mean if you look at the 20 22 percent compared last year uh the high end is one percentage point uh higher than your guidance last year But if you're looking at Q1, it's usually lower because of the tariff payments and also affect category. I mean, what is your assumption for it to reach the 22%?

Yeah, that's a good question, Wei. Remember, quarter one now is sort of the last quarter where we're comparing to a period from last year where we're not paying tariffs. So let's keep that in mind. The other sort of, or the main consideration with regard to our EBITDA margin guidance range goes back to our patient care business. We talked a lot about our efforts in building a global patient care business, rolling out one ERP system, rolling out one brand, bringing more consistency into our ways of working for our patient care platform. That is probably the single biggest topic which will determine where we'll end up ultimately in the range. What we see here in Costal One is that despite our being 1% down in patient care, we still see more margin contribution from our patient care business, which tells us that we are moving the business in the right direction. So as we will see more top line contribution from patient care in the latter part of the impact our our margins so that is the single biggest biggest topic to look out for when it comes to where we land up in the range cool thank you and can you confirm that the rebranding and the restructuring initiatives now have been completed during june 1. Yeah, so we mentioned in our material here that we're 90% through the rebranding exercise and we'll finish here in quarter two. So there were two sort of big losses for us here in quarter one, one in France and the other one in the last region in the US. So there is some, you could say, impact of that here in quarter one. But we are, yeah, we're almost... almost across the line on the planting rollout. Great. Thank you. Thanks, Greg.

The next question is from Ms. Beatrice from Berenberg. Please go ahead.

Your line will now be unmuted. Thank you for taking my questions. Just on the process of the new orthotics segment, could you elaborate a little bit more on how demand has been across the Osler and College Park brands, particularly on the Navi and Icon products? And you noted that that segment growth was largely volume-driven. Could you potentially... Discuss a little bit how much you've seen from price and mix and whether or not you're seeing any impact from that kind of Medicare reimbursement change and how that's progressing.

Hi Beatrice, thanks for the question. There was some background noise there in the beginning. I'm not sure I caught the whole question, but on sort of going back to Bionics, it's a big part of our goal story here in Quarter One. And when we look at the Americas business, that's both our icon and the Navi, which are doing very well. And that is, we believe, partly due to the reimbursement expansion in the U.S. We don't have full transparency when it comes to what type of patients are being fitted with a third-party clinical customers, but we certainly believe that that's part of the reason for, let's say, the good trend lines we see in our bionics business in the United States. But generally across all major markets, we see good progress in our bionic range on a volume side. So when you look at the high single digit growth rates we are posting in our new prosthetics and neurosurgery business, that is then ultimately a party mix because our bionics range is growing faster than our mechanical range.

Great, thank you.

Thank you very much. The next question is from the line of Tom Winfield. Please go ahead. Your line will now be unmuted.

Tom Winfield calling from Internal Health Research here. Just building on the Medicare K2 expansion question, how are you currently sizing the K2 patient population in the U.S.? ? which uh what proportion do you realistically expect to capture uh and what is the reimbursement rate uh per k2 fitting versus your existing k3 and k4 afps thanks for the question i mean if we if we look at just the medicare uh data that is uh publicly available the

The lower active population is approximately similar in size as the higher active population. And when it comes to pricing, the reimbursement code for Bionics for lower active patients is the same as it is for higher active. patients in the united states and and remember this is uh this change that was implemented um or when that's when medicare opens up for reimbursement for lower active patients this will take some time to take effect fully there's a limited clinical capacity in the system you will have many k2 patients that have recently been or recently before the reimbursement change had received an upgrade or a new need and will until three, four years down the line. So this is a change that will impact the industry for many years to come. And we are well positioned to take part in that expansion. We have our Navi, we have our Icon, we have the VioNeed, and we are also in the process of developing a need that is specifically designed for the least active patients. So this is overall a positive change for the industry.

That's great, thank you.

Thanks. And before we take the next question, let me just remind you, if you wish to ask a question, please press five star on your telephone keypad. And next up we have Martin Plainew from Nordea. Please go ahead, your line will now be unmuted.

Thank you for taking my questions. I just have two questions as a starting point. Maybe just to understand a little bit how we should bridge the margin guidance versus the performance that you did here in Q1. Just to deliver on the midpoint of your guidance, you need to deliver 22% of the DA margin consecutively for the next three quarters. Can you maybe explain how you bridge that and how likely you think that is or whether we should start to realize that we're probably going to be in the lower end of the guidance range? Thank you.

Hi, Martin. Thanks for your question. I'm going back to patient care. Because if we are bridging from where we were last year to how we've guided for 26, we closed 25 with a 20% increase in the muscle. We've guided 20 to 22. We noted also when we set guidance that there's some Let's say impact around Paris, there's some impact around Aftex, but if we look aside from that, the main topic is the patient care business. We continue to expect high single-digit organic growth rates for our prosthetics and neuro business, which drives positive mixed impact. We expect low single-digit organic growth rates for the bracing business. For the patient care business, we expect during the year to gradually deliver at market growth rates. And when that happens, we will get much more operating leverage on our baseline costs. So going back to the initiatives we've been doing on the patient care side, we have taken some measures to reduce our overall cost base. We have taken measures to... also on the procurement side and measures to increase the productivity or enable our CPOs to see more patients. And we see very clearly that these initiatives are paying off here in the US. The US has been the biggest integration for us over the last year. This is where we have had most when it comes to multiple acquisitions in one single region. And it's been a very, lots of heavy lifting and integrating that business. And now we see here in quarter one, nice growth rates and a very sort of positive contribution on the marketing side. However, that is neutralized by the impact in Europe. But Europe, there's no structural change in Europe. The Europe patient care business has been contributing nicely over the last couple of years. We see some slowness here in quarter one, which we attribute mainly to sort of timing impacts, a big quarter four, as well as some easter impact leading to some loss of capacity utilization. watching or believing in the continual momentum we see in our patient care business. Because when that business starts to deliver more talk then we will see a big impact on the market side. So that is the single biggest topic in terms of bridging the guidance range.

Thank you, Sven. And it's almost like you have read my questions prior to me asking them, because my second question was exactly to actually the patient care, because as an outsider, it's very hard to see the improvements you have been doing in patient care in this quarter. But it sounds like we are at the verge of the inflection point here in patient care. So based on what you're saying, should we already start to see this as of now in patient care globally or do you see some headwinds in Europe sort of in the very short term that we should pencil in for the next couple of quarters?

I mean, what we've said is that we, during 26, will return to market growth in patient care. The patient care business is, as a global business, it's a very healthy business. We have seen impact in our patient care business because of all the integration effort both in terms of implementing systems, rolling out new brands. And if we look at the last 18 months, our biggest head point in patient care has been in the US. We've had stable contribution from our APAC patient care business as well as our Europe business. However, here in 41, we see the turnaround in the US, which is super encouraging. However, Europe was slow. Again, we don't have any structural issues in the European patient care business and expect that to get back on track. So that is This is the main topic, Martin, to watch out for when it comes to our ability to deliver on our e-commerce events.

Okay, that's super helpful. Thank you for taking my questions. Yeah, thanks, Martin.

And we have a follow-up from Tim Winfield. Please go ahead. Your line will now be unmuted.

Hi, Tom from Intran again. I just wanted to ask one final question on the Stripe and IDA integration so far. In particular, have you seen any revenue synergies from your other business segments?

Thank you. Yeah, hi, Tom. Thanks for the question. If the logic for buying or acquiring Stripe and IDA was to strengthen our position in in certain markets and enhancing especially our ability to serve clients in more price sensitive private pay markets. And we are starting to see those in CPS and we are also starting to see progress on our integration case when it comes to marketing. in the first quarter, but as we move into the latter half of this year, beginning of next year, we'll see less dilution from this important acquisition.

That's great. Thank you very much.

Thank you. We have another follow-up from Ms. Beatrice. Please go ahead. Your line will now be unmuted.

Hi. I just had one follow-up question. Are you seeing any impact from cost inflation at the moment? And if so, would you be able to give some color on what's getting impacted and how you do it?

Sorry, I didn't hear. So impact from what, sorry?

Cost inflation, if any at all.

Well, there are... some vendors have flagged that they expect to raise prices because of oil spiking and we are at the moment we don't see this materially impacting our our cost picture for the year but with that said we i think it's fair to say that we are more cautious, taking some measures to increase our ability to weather some changes here in the second half of the year, but as all companies we are watching this very closely.

Thank you. Thank you, Petrus. As there are no further questions from the telephone, I'll hand it back to the speakers.

Thanks, everyone, for participating this morning. I encourage you all to reach out to our investor relations team if you have any follow-up questions. Enjoy the rest of your day.