Vimian Group AB (publ)

Good morning and welcome to Vimeon's first quarter earnings call in 2023. I'm Fredrik Ullman, CEO, and with me here today on the call, Kaliwan. I'll jump in to the first quarter highlights right away. So I'm very pleased to present a strong quarter for Vimeon and a positive start to 2023 in all four segments. to reactivate organic growth were successful, and we delivered 30% total growth, of which 13% organic in total, and 16% in companion animals. As we stated, we'd have a PULP program in MedTech, and if we compensate for that, the growth in companion animals is still double-digit. We delivered €88.1 million in sales, with an adjusted EBITDA margin 29.6%, which is a sequential strong increase. We maintain our focus on the integration of acquired companies with several key initiatives ongoing. And we continue to focus on innovation and successfully launched some very exciting platforms I'll tell you more about in a little bit. We also expanded our geographical reach in customized specialty pharmaceuticals with the acquisition of the non-regulated part of Bova in Australia. a milestone in our ambition to build a global position in specialty pharmaceuticals. With that, I would like to hand over back to Carl Johan to talk a little bit about the numbers.

Thank you very much, Fredrik, and good morning, everyone. As Fredrik mentioned, we delivered 30% revenue growth, achieving 88.1 million euros in revenue in the first quarter. Organic growth in the companion animal segment that accounts for 94% of our overall business was strong at 16% and overall organic growth was 13%. We have seen strong growth in many areas of our business boosted by the annual order program and pull forward of sales in Medtech. But adjusting for the pull forward sales, organic growth in the companion animal segment was still double digit in the quarter. Growth in diagnostics continued to be held back by the phase out of COVID sales, but this is the last quarter with significant impact on comparables relating to COVID. Adjusting for COVID sales, we report good organic growth in all our segments in the quarter, despite the challenging macroeconomical environment. The FX tailwind continued in the first quarter, although slowing down a bit from previous year, supporting our revenue growth with 2%. The adjusted EBITDA increased by 27% to 26.1 million euro for the first quarter. This sequel to an adjusted EBITDA margin of 29.6%, which is slightly below same period last year due to phase out of COVID sales in diagnostics and investments in especially specialty pharma. Overall, we see a stable or improving gross margin, which strengthened with 0.7 percentage points in the quarter, where our price increase of an average 5% in the quarter have mitigated cost increases and inflation. We as Vimian Group have a good diversified geographical footprint, with Europe and North America accounting for approximately 45% of overall revenue each. With our successful growth in the annual order program in MedTech, as well as specialized nutrition in specialty pharma, we have increased share of revenue in North America during the quarter. But with the recent acquisitions of Bo of Australia and Vetter, APAC will increase its share of overall revenue and even further diversify our geographical sales going forward. The strong development recorded in the last couple of quarters continues. And as of the first quarter, our performer revenue was 321 million euro. Since 2020, we have more than tripled the business through organic growth and continuous strategic acquisitions. Revenue growth has also supported strong profit increase. Since 2018, adjusted EBITDA have increased with 106% in average per year, growing our profitability ahead of revenue reaching a pro forma adjusted EBITDA of 84 million euros in the first quarter. We continue to actively drive several organic growth initiatives and synergies within and between our segments and acquired entities to drive continued strong revenue and profit development. With that, I would like to hand over back to Fredrik for some further insights to the quarter and business update per segment.

Thank you, Carl Johan. So as you know, we run four attractive verticals, and I'll go into each of them, starting with the specialty pharmaceuticals vertical, which is accounting for 43% of our last 12 months' revenue. The specialty pharmaceuticals had a revenue of 9% organically, and we actually accelerated that organic growth. led by the therapeutic air specialty nutrition and specialty pharmaceuticals that delivered exceptional 40% growth in the quarter. Geographically, we see strongest growth in the US and Benelux, lowered somewhat by the UK. The margin of the quarter reflects investments in the new allergy test and investments in the shift to direct sales in key geographies. On the operational side, we completed the launch of our next generation allergy test, which was positively received in the market. And we launched more than 25 new products in the quarter and hosted our annual education week with more than 2000 veterinarians participating. The development of the new allergy vaccine is also proceeding according to plan with positive outcome from the most recent studies on laboratory dogs. In line with what we've communicated last quarter, we have now established Direct distribution for our dermatology and specialty care products in France and Belgium. A good example of how we integrate products from acquired companies into our country organizations and take out the middlemen. All in all, we see a continued positive trend in specialty pharma with good growth and a very exciting product development and innovation pipeline. And we're also building a strong brand and have now transitioned Avakta to next-gen UK labs. now doing all lab in the UK. Dermacent in France has transitioned to Nexmune France. And AXA Eco has become Nexmune Scandinavia Logistics. And in addition to that, we have progressed on the organization integration of most recent acquisitions. Moving on to the MedTech segment, which accounts for 37% of revenues on the last 12 months basis. Here we saw 24% growth. We had an exceptional performance in the quarter driven also by the annual ordering program that grew with many new customers and now into the full of our brand portfolio. But the segment grew also double digit, even taking that effect out of the equation. In the program, customers buy their full year demand in the first quarter and pay in monthly installments. This drives the sales and margin, but it also increases receivables in the first quarter. Over the year, we'll see growth in margin normalize. Operationally, the program frees up time for the sales force to focus on new customer acquisition in the coming quarters. And we also see improved efficiency and reduced number of shipments. The team is now very focused on bringing the acquired companies closer together. And in particular, we are focusing on supply chain optimization and sourcing optimization. to drive profitability and cash flow improvements from this segment. But with the management transition now completed in Mavora, I'm very confident we'll make significant progress over the coming quarters here. Moving on to the veterinary service segment, accounting for 13% of our revenue. Here we saw 16% organic growth. So veterinary service had a strong quarter with good organic growth improvement and also improved profitability, driven by successful renegotiation of supply contracts, new member growth. Most markets delivered double-digit organic growth, and we saw an accelerated transition to upgrades of members into higher-tier programs. We also welcomed Vector to complement our Australian services offering and added one clinic in Sweden. We now have more than 5,300 member clinics and enjoy a very strong position as a leading member service platform globally. Moving on to diagnostics. Diagnostics accounts for 7% of our revenue. And here for the last quarter, we had this COVID overhang. So that is why we saw a minus 18% organic growth. But taking that out of the equation, we saw 6% organic growth in the core business, excluding COVID. Our cost, and this is actually where we see competitive organic growth in the core business here. Our cost program is starting to generate results, and we are reinvesting part of the savings into new growth initiatives. And one of them that is particularly exciting is a new parasitology platform that we have just launched in the first quarter. And it's an AI-enabled platform to detect and analyze and quantify parasites in animals. In essence, we're replacing a time-consuming and manual process with a user-friendly, cost-effective, AI-driven, point-of-care diagnostic tool that takes only a few minutes to complete and gives a higher accuracy than the human eye. So in the first quarter, we started to commercialize the platform in Germany, Switzerland, Austria, and France. And so far, only for equine, but we will launch in more species further on. And the customer feedback has been very, very positive. It's still early days, but I'm very excited about the progress we're making in this new technology. So with that, I'd like to hand over to Kalyuan. to go a bit deeper into the numbers.