Vimian Group AB (publ)

Good morning, and thank you very much for joining us today. Welcome to Vimeo's Q4 and year-end earnings call. I'm Patrick Erickson, and I joined Vimeo as the CEO in January. With me here today is our CFO, Carl Johan Satterberg, who will present the quarterly results, and Guy Sperry, our CEO of Movora, who will give you an update on our MedTech segment. I've been with Vivian now for a few weeks, spending most of my time getting to know the business thoroughly, visiting our different sites and our customers, the veterinary clinics. I've met a committed and highly dedicated team. I think we have a strong product portfolio of well-known brands with attractive exposure to high growth market niches and strong relationships with the veterinary community, including several key opinion leaders. I've spent the past 20 years of my career leading global med tech businesses with up to one and a half billion dollars in revenue. For almost a decade, I worked for Danaher, a New York stock listed company, which has very many similarities with Vimeo as a decentralized, fast growing group of life sciences businesses. I'm very excited to join Vimeo and take part of this journey, which I believe can create tremendous value for animals, our people and our shareholders. I will hand over to Carl Johan to present the fourth quarter results and to Guy to give a deep dive on our MedTech segment. At the end of the presentation, I will give some initial reflections from my side. Now over to you, Carl Johan.

Thank you very much, Patrick. We deliver a solid fourth quarter with continued good growth and improved profitability as focus on efficiency and improving processes deliver results. Our efforts also support further improvement in cash flow from operating activities and reduce networking capital. We continue to pay down debt by another 18.5 million euros, reducing leverage to 2.9 times at the end of the quarter. Let us take a deeper look into the numbers. Organic growth was 7% in the quarter with a revenue of 82.5 million euros. This is driven by continued double-digit growth in specialty pharma and strong 22% growth in veterinary services. Diagnostics had a tough quarter with lower levels of disease outbreaks and testing. The quarter was also slower in medtech, held back by the U.S. market. Full-year growth at 10% better reflects the development of our medtech business given its seasonality. Acquisitions contributed 5% to revenue growth partly offset by 3% negative FX impact. The strongly adjusted EBITDA margin of 27.5% includes the fuller impact of 2 million euro higher R&D capitalization in specialty pharma, as we work to improve and streamline financial processes in acquired entities. On a life-for-life basis, excluding the capitalization effect, the Q4 margin is 25.0%, an improvement compared both to Q3 of this year and Q4 2022. For 2023, despite the challenging macroeconomic environment, we are pleased to deliver 11% organic growth ahead of the animal health market and 26.3% adjusted to beta margin, an improvement compared to the previous year. Let us take a short deep dive on our four different segments and start with Specialty Pharma. In Specialty Pharma, we reported 10% organic growth in the quarter with double-digit growth in specialized nutrition, dermatology, and our European allergy business. We delivered 46% growth in adjusted EBITDA and margin increase to 35.5%. This includes the full year impact of higher levels of R&D capitalization of 2 million euros. On a life-for-life basis, excluding the capitalization effect, the Q4 margin is 29.8%, which is an improvement sequentially compared to the third quarter and year-over-year compared to the fourth quarter of 2022. We completed one bolt-on acquisition, acquiring a dermatology portfolio to strengthen and complement our US offerings. Overall, the positive momentum in specialty pharma continues, with double-digit growth and improving profitability as efficiency measures start to deliver. For the full year, organic growth was 14% and margin 28.6%. In MedTech, we deliver higher absolute sales and adjusted EBITDA compared to the third quarter of this year. But the year-over-year growth is impacted by slightly softer trading in the U.S. In Europe, we see continued high single-digit organic growth and strong acceleration in APAC with double-digit growth in the quarter. Full-year growth, organic growth of 10% ahead of the veterinary orthopedics market. eliminates the seasonality effects of the annual ordering program and better reflects underlying performance in the segment. The fourth quarter margin recovers from the third quarter low, but it's below last year's level due to lower sales and investments in organization. Margin for the full year was stable at 30.3%. Following co-CEO Colleen Fleischer's departure in December, we have successfully merged the European APAC and US organizations under the lead of one Movora CEO, Guy Sperry. In veterinary services, the strong performance continued in the quarter with 22% organic growth and significant uplift in profitability. This is driven by a high growth in new members and conversion to higher membership tiers. as well as attractive partner agreements and the broad service offering. Our co-owned clinics delivers a strong quarter with 8% revenue growth, ahead of the market and margin improvement. For the full year, veterinary services delivered a revenue growth of 47% and adjusted the beta growth of 76%, improving the margin with 4.3 percentage points. Diagnostics had a tough quarter with lower levels of disease outbreaks in key regions, primarily DACH. As previously communicated, the overall livestock market remains under pressure going into 2024, but we remain confident in a long-term structural growth drivers in diagnostics. Looking at the full year, excluding impact of COVID phase out, diagnostics delivered 9% organic growth. The margin declined slightly in the fourth quarter as lower sales offset the benefit of the cost program. Despite this, margin is relatively robust compared to livestock peers who report mid to high single digit margins. The recently launched Ovasight platform, the AI powered parasitology platform, is developing as per plan with good ramp up in installations and usage in the equine and large animal segment during the quarter. We're quite excited about this launch and received lots of positive feedback from the veterinary community. Now in 2024, we plan to launch the companion animal solution. We continued to progress on our ESG agenda and in the fourth quarter completed a double materiality analysis as part of ensuring readiness for the new EU directive CSRD. We are strengthening supply control and have now centralized access to all supply data for improved control, trained all employees in purchasing positions, and established processes to screen our most material suppliers. And back to the numbers for the fourth quarter, giving you some further details. We report EBIT, of 2.7 million euro, which is down from 11.4 million last year. The reported EBIT is impacted by an 8 million euro reduction in the valuation of the non-current receivable related to the US patent litigation, as we have agreed with our auditors to take a conservative accounting approach. Adjusted for this, reported EBIT is 10.7 million euro, EBIT includes items affecting comparability of 14.3 million. This is mainly in MedTech with costs related to the US litigation, including the valuation adjustment and other non-recurring costs relating to M&A in specialty pharma and the group CEO change. Net financial items of 9.1 million consists of three parts. Financing costs of minus 6.5 million with an average interest rate for the quarter of 6.7%. On continuing considerations, we have a net impact of minus 0.6 million. And finally, a negative FX impact of minus 2.2 million. Positive tax for the quarter of 0.1 million reflects the reversal of previously accrued taxes and the utilization of group contribution rights between Swedish entities. Net debt amounted to 285.6 million with leverage at 2.9, which is down from 3.0 times at the end of the third quarter. Cash flow from operating activities sees sequential improvements reaching 17.2 million in the quarter. Our efforts to improve working capital have started to deliver results with networking capital at the end of the year of 71.1 million euros. This is driven by lower inventory in MedTech and accounts receivable as annual ordering program customers pay their final installments. We're happy to see improving trends through the year and continue our efforts to drive cash flow and reduce networking capital going forward. To conclude, we closed 2023 with 18% revenue growth, reaching €331.7 million and 19% growth in adjusted EBITDA to €87.3 million. In an uncertain and challenging year, we stayed close to our customers and delivered strong organic growth of 11% ahead of the animal health market. The adjusted beta margin improves as we progress efficiency measures and improve processes across the group. Excluding the litigation payment, cash flow from operating activities reached 37.1 million. On current trading, we see high single-digit growth for the group in January. Continued strong growth in specialty pharma and veterinary services. Remember that we ran an extended annual ordering program last year. This year we will return to normal program, smaller than last year. This will balance the growth and margin profile for the year, but as a consequence, we expect no year over year growth in the first quarter for Medtech. Trends seen in diagnostics in the fourth quarter has continued into 2024. and we will continue our positive focus on efficiency measures and cash conversion. Now, I would like to hand over to Guy for an update on Medtech.

Thank you, Karl-Johan. Before starting the presentation, I would like to introduce Movoro's mission as it describes in a quick way our purpose and what we do every day. Our mission is to support our customers, the veterinary community, with industry-leading solutions education, and best-in-class service so that they can deliver the best outcomes for their patients. So over the past three years, Movora has built a global market leader in veterinary orthopedics through both organic initiatives and strategic M&A. More to that on the next slide. Since the IPO in 2021, we have outperformed the veterinary orthopedic market on a number of dimensions. and established a new brand, Movora, with strong reputation in the market. We doubled the size of our business and delivered 15% organic growth CAGR ahead of the market. We have strengthened the product portfolio through strategic acquisitions and entered organically into new categories like imaging with the VetClarity brand. We are convinced that our direct approach in core markets is key as it gives us the direct connection to our customers without distributors in the middle. To achieve this, we have acquired distributors in core markets and entered new growth markets organically, such as Japan, where we today have a strong sales team serving our customers locally. We have put a lot of focus on integrating our acquisitions by building the One Movura organization with clear roles and responsibilities for our 230 employees to achieve strategic alignment and scale effect. We have rolled out the full portfolio in all key geographies and leveraged education facilities across all brands. In addition, we have consolidated in the US four warehouses into one central warehouse and in Europe from two to one warehouse. Today, we are one of top two global orthopedic players with a strong brand recognition going forward and our ambition is to be the clear number one player in all key markets we maintain an entrepreneurial mindset and a customer-centric approach that allows for local decision making movora has the broadest orthopedic product range in the veterinary industry, including more than 20,000 SKUs. Our offering covers all key orthopedic areas from knee or stifle solutions, which accounts for 39% of the business, to a full portfolio to handle all type of fractures and several total joint replacement solutions, as for example, total hip replacement, which are the most advanced orthopedic implants you can find in the market today, as well as with the best track record for patient outcomes. In addition, we are offering several key surgical products like instrumentation, power tools, imaging devices, sutures and pins to simplify the life of an orthopedic surgeon. Today, Movora owns more than 65 patents, of which half were developed in the last six years. We have a strong innovation pipeline, including a 3D printing manufacturing facility using the latest techniques to produce tailor-made implants for individual patients. Movora has a global reach with a strong focus on our local presence in key markets. We serve roughly 4,000 customers in more than 50 countries with 14 offices to ensure local language, fast delivery, and a high level of customer support. We go direct wherever it's possible, and we sell our products to veterinary clinics, universities, and large hospitals. We have four Moora education centers where we offer customers post-university education. And over 60% of our business is in the US and Canada, 22% in EMEA, and 15% in APEC. We see significant potential to continue deliver above market growth. There's three key drivers. There's a growing willingness to pay driven by the humanization of pets and increase in pet insurance levels. We pet owners are increasingly aware of treatment options. And there is an increased knowledge among veterinarians through post university education. And most importantly, There is significant unmet medical need in our space. For example, cruciate ligament disease or the anterior cruciate ligament in human knees is one of the most common diseases among dogs. It is underdiagnosed, undertreated, and only one in three dogs in need of a cruciate ligament surgery get one. Only one in 100 dogs in need of a total hip replacement get one. Today, patients which are diagnosed are mainly treated with painkillers as a short-term solution. Dogs will continue to limp, whereas a total hip replacement will take the dog back to normal walking, running, jumping, and they can enjoy their life. Total elbow and total knee replacement are barely available in the market, and there are even more untreated pets suffering. So overall, we see a significant upside potential in current treatment rates. Training and education is key to drive total market growth, to improve quality of care, and to generate sales. The best products are only as good and effective at the hands of the surgeon who puts them in. Today, there is a shortage of veterinary surgeons. By providing specialist education, we can teach more veterinarians to outperform the more advanced surgeries and unlock the wide space. Our training sessions are also an instrumental part of the sales process. We host more than 100 in-person workshops every year, which range from simple fracture repair to complex joint replacement. We have four fully equipped training facilities and collaborate with several education institutions globally. In addition to the in-person trainings, we offer a full range of digital training modules, on our Movora online learning platform. And in total, we train roughly between 1500 to 2000 veterinarians every year. Our Movora growth strategy is centered around four pillars. The first three pillars focus on our current orthopedic business. Firstly, we want to provide products and services that meet or exceed the highest industry standards in terms of quality, sustainability, and technology. We strive to be the leading innovator of new products and services to push the standard of care forward. Secondly, we drive education to untapped white space, as elaborated before. And thirdly, we strive for local presence to support our customers where they are. We are service-minded, we go the extra mile, and we are easy to deal with. And the fourth pillar is all about our next chapter. We are actively exploring to enter new areas of med tech organically or through M&A. Like for example, imaging that we started to build up in 2021. We have identified several other areas of interest where we see unmet medical needs, where we are convinced that we can replicate our success model from orthopedics. So to round up, we have closed a solid year delivering above market growth and capturing market share globally. Looking ahead, our journey just started. We remain very focused on reaching full potential in orthopedics whilst in parallel looking into other areas of medtech to over time become the global leader in veterinary medtech. Thank you and over to you, Patrick.

Thank you very much, Guy. Vimeon has a strong platform for profitable growth, and I'm very excited about the value potential I see in the company. In my conversations with the board, they've been very clear that the overall strategy remains unchanged. We will continue to build strong global market positions in niches of the animal health market with unmet medical needs. We will do this both through organic and inorganic growth. I spent the majority of my career in decentralized organizations, and I'm a strong believer in the model with a high degree of freedom and clear accountability in each operating unit. I also see potential to further optimize the business by focusing on key levers for value creation and ensuring that we have the right processes to drive organic growth profitability and cash flow. This will be a key priority for me going forward. At the same time, acquisitions with a clear strategic fit remain a key value driver for Vimeo. And we need to be active in the market to strike the right opportunities at the right price. The team has spent significant time in the past year to consolidate and integrate acquired businesses. And I believe that we are ready to execute on a selected number of acquisitions during 2024. We continue to work on our pipeline, and I see potential for some discussions to pick up momentum in the first half of this year. With that, we can open up for the Q&A. So over to you, Andreas.

Thank you. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue If you wish to withdraw your question, please dial £6 on your telephone keypad. The next question comes from Blanca Porcolab from Barclays. Please go ahead.

Good morning. I have two questions, please. First one is for Patrick. What, to your mind, is the key strength of Vimean and what is the strategy to further improving performance across the group in the coming year? And then my second question is, could you give some colour around how we should think about phasing of growth in the year and when you expect diagnostics to turn around? Thank you.

Thank you very much. Those are good questions. I'm going to ask, answer the first one and I'm going to defer the second one to call your one. Vimion is a group of fantastic brands that we're now driving synergies within each of our segments and also across the segments. So continuing to build those strengths of the brands is a key to value creation. The other key is that this is a group of almost 50 acquisitions altogether and building robust standard work and processes to drive organic growth, profitability, and cashflow generation is going to be a great key value driver for us as well.

Okay. Thank you, Patrick. And good morning, Blanca. Good questions that Patrick said. On your second question, thinking about basing and growth for the year, and also specifically on our diagnostic segment. Maybe to start with diagnostic segment, as you said, we've seen that the diagnostic segment have been challenging in 2023, and we see that the overall livestock market remains under pressure going into 2024, but we remain confident in the long-term structural growth drivers in the diagnostic segment. In terms of phasing of sales, I said, or we are in attractive niches of animal health, where we see that we can grow ahead of the animal health market that we expect to grow between 5 to 7% in general. The key change maybe from a phasing perspective will be in the medtech segment, where as communicated in the call, We are running what we call more normal AOP program this year, which will be smaller compared to 2023, but not compared to 2022. While we will see a more phased growth throughout the year in the MedTech segment, where Q1 is likely to be flattish compared to the first quarter of 2023.

Brilliant, thank you.

The next question comes from Kavya Deshpande from UBS. Please go ahead.

Morning. This is Kavya from UBS. Thanks for taking the question. I've got two, please. So first, it's just on the M&A front. You have a compelling organic growth profile. Given where interest rates are, is it reasonable to assume any further M&A this year will be bolt-on to still allow the balance sheet to be kept strong? And then the second one is just on vet visit growth, because there's been a lot of talk about this, and it seems that your peers are saying it's normalized now after having been rebased by the pandemic. Just wanted to check whether you're seeing something similar, and if so, what sort of growth are you expecting for vet visits this year broadly? Thank you.

Okay, thank you very much. Just so I understand your second question, you mean on the Veterinary businesses in general and what we think about sort of market outlook in growth going forward.

Yes, absolutely.

Yeah. Okay. No good. Thank you. Just wanted to clarify So to start with on on M&A and also relevant question Acquisition is one of sort of several avenues we have and we work with to execute on our strategy We have a number of in we have an interesting funnel with good strategic and financially healthy companies and we see potential for some processes to pick up momentum during this year it's of course very difficult to know exactly if and when those acquisitions will materialize but as said we have a an interesting funnel and we see potential for some of the discussions to pick up historically We have primarily financed acquisitions through our own cash flow and debt financing. If the right acquisition opportunity will surface, we'll of course determine the right financing solution case by case. But we'll continue to work to improve cash flow and to create financing room for acquisitions. And we also have a strong support from our majority shareholders in our strategy. On the market growth, And second question relevant. And as you said, yes, we did see a spike in growth throughout the pandemic in the animal health space. But I would say the animal health market has shown great resilience if we look historically and grown year over year, essentially every year for a very long period of time. And we see growth continuing in the animal health space where our expectation for 2024 is similar to 2023 of around 5% to 7%, as the macroeconomical outlook is still a little bit uncertain, just as we saw in 2023. That's why we're very happy that we delivered 11% organic growth for the full year of 2023, despite mid-single-digit market growth and uncertain macroeconomical environments.

Thank you very much.

The next question comes from Ricard Anderkrans from Handelsbanken. Please go ahead.

Good morning and thank you for taking my questions and thank you for the update on the Monvora business as well. Much appreciated. So I have a few questions starting with the softer current trading dynamic in the US. It seems that there's a market data pointing to actually around 2% decline in this surgical hospital purchasing development in January in the US. Does that sound reasonable and could you add some Commentary around this this software development. Is it a sort of a macroeconomic? Thing in your view or if you could add some commentary on your expectations for the underlying development in the medtech market Thanks Good.

Thank you for the question. And I think The market and I said by call your home before in the US resilient, but not unaffected by the macroeconomic environment Looking at the market data for the U S veterinary market, I think clinic revenue has in quarter four, like has continued to show solid growth. And we think like, um, that is driven by, or by price increases and higher growth of more advanced treatments. While the number of clinic visits have flat or declining. And I think that's a trend maybe going forward now in 2024. Um, but for the veterinary market, veterinary orthopedic market, we estimate like the U S you know, grew like as well, like mid single digits during 2023, which is a slowdown compared to previous two years. But U S inflation also comes down towards the end of the year. So we believe we can be positive for the market sentiment going into 2024. And yeah, I think I'm positive about 2024. We, and our mission and ambition is to grow our business and to be clear number one player in the veterinary orthopaedic market. I hope that answers your question.

All right, that's helpful. Just a question on a little bit of the full year dynamics for 24. So what are your anticipations in terms of price increases versus 23 and Are you committed to delivering adjusted EBITDA margin improvement in year over year in full year 24?

Thank you. As you say, looking at full year and price increases. One, I would say looking at 2023, we have a strong market position where we've seen that we have the opportunity to pass on price increases that we see in our business to our customers. And that's why we could see in 2023, and as we commented in previous quarters, that we sort of maintained or improved our gross margin throughout the year. Going into 2024, we sort of continue to have a balanced view on price increases. We are looking into sort of low-mid single-digit price increases across the business for 2024. And on your comment on sort of Are we committed to delivering EBITDA and margin improvement for the year? As we said, our ambition is to continue to grow ahead of the animal health market and to continue and have the ambition to deliver margin improvement and margin expansion throughout the year and going forward.

That's very clear and just a quick follow up as well if I could on previous question on the M&A funnel and what you're thinking about. So are you looking at some larger deals or is it mainly bolt-ons? And it sounded like if you're sort of initiating conversations here in H1, maybe we should expect deal volume to come through in the second half of the year in terms of timing. So that would be super helpful to add some commentary around that, please.

Yeah. No. And as I said, we have a funnel of interesting potential acquisitions with think good companies strategically where the strategic rationale makes sense and financially healthy and operationally strong companies and we do see potential for some processes to pick up momentum throughout this year it's difficult to speculate exactly sort of timing on specific discussions and when they materialize so that the difficult to give you a good color on sort of if and when certain acquisitions could happen. But as I said, we have an interesting funnel and we do see potential for some of the processes to pick up.

All right, I just didn't get fully clarity on you know the size and and sort of the magnitude I mean you're close to your three times leverage target you're just that's why I'm asking in terms of the you know size of the deals you're looking to close this year potentially.

We have a mixed pipeline in the funnel so we have both sort of interesting quite small acquisitions and also maybe interesting more strategic larger potential acquisitions in the pipeline. And again, it's difficult to say which of these acquisitions will materialize if and when they will materialize throughout the year. But as I said, the pipeline, it's a mixed bag.

Okay, thank you for taking my questions.

Thank you.

The next question comes from Peter Verdelt from Citi. Please go ahead.

Thank you. It's Pete here from Citi. Three quick questions, please. Forgive me, I'm a biopharma analyst, so I'm always used to seeing R&D getting expensed through the P&L. So can you just explain why you're capitalizing R&D in spec pharma? And just so we understand fully, what was the magnitude of capitalized R&D spend? across the group in 2023. I think you called out 2 million in spec file. I just want to make sure I've got my numbers right and understand what's being capitalized and why you're doing that. Sorry for that sort of painful question. Secondly, just on the guidance for 2024, I think you're calling out high single-digit organic growth expectations. It doesn't sound like there's going to be a huge acquisition contribution. So just your level of comfort with where consensus has expectations for revenues to grow in the low to mid-teens on a reported basis. Just wanted to kick the tires and engage your level of comfort there. And then just, sorry, just to wang on about business development, I'm not going to ask you about the size and quantity of deals. I think that's a bit unfair. What I am going to ask you is in terms of potentially financing any deals. Are you comfortable to go above three times or should we be preparing ourselves for, or are you willing to use equity to finance anything that you think strategically meets your goals? Thank you.

Okay. Thank you very much. And let me try to answer sort of each of your questions and help me out if there's anything that I missed in my answers, but relevant questions. So if we start with R&D and capitalization, one, we capitalized the costs throughout the group and as we acquire companies, we continue to ensure we improve financial processes and other processes, bringing them into how we treat the financing I'm sorry, how we achieve financial processes across the group. So what we've done in the quarter is just making sure that one through the area within specialty pharma have gone into the same processes as we have within the rest of the group. And as I said, the effect in the fourth quarter and for the full year is 2 million. For total R&D expense for the year, That's roughly 9 million euros total R&D for the year. So I think if that covers your question on R&D. Then sort of growth for the year and a little bit on consensus. I said we expect the animal health market to grow mid single digit in the year. Our ambition is to outgrow the animal health market. We've seen trading in January starting good with strong growth continuing in specialty pharma and in veterinary services. In med tech, we see good momentum, but having that said, and as we communicated, we will run more of a normal AOP program throughout this year, where we receive more balanced growth throughout the year if we look compared to 2023. The livestock segment, we've seen the challenging sort of market conditions from 2023 continuing into 2024. Did cover your sort of thoughts on 2024?

And then lastly, your willingness to use equity to finance any deals?

Yeah. So historically, we have primarily financed acquisitions through our own cash flow and debt financing. If the right acquisition opportunity surface, we'll, of course, determine the right financing solution case by case. But we'll continue to work to improve cash flow and to create financing room. We have good headroom to our accountants. And we do have strong support from our majority shareholders in our strategy.

Thank you.

The next question comes from Adela Dashian from Jefferies. Please go ahead.

Good morning, everyone. Just one follow-up from me on the AOP program and the decision to not run an extended version this year. Could you give us some more explanation as to why that decision has been made? Is it a reflection of not seeing enough demand, or is it more of what you previously stated, that you want the more balanced performance throughout the year?

Thank you. Maybe I go a step back and we do the AOP program because it's highly appreciated by the customers as they can really secure access to orthopedic implants for the full year. And by doing so, they can free up capacity for the clinic staff and really focus on more value creating tasks than reordering stock from us all the time. It means for us that we can finish servicing our existing customers in the beginning of the year, and then, you know, liberate time for our salespeople to go after new, um, um, accounts, uh, for the reminder of the quarters. So we like we had the extended program last year, um, was exceptional. Um, we tried, uh, we added more, uh, to that and we go now back to a more balanced approach that we can really like throughout the year that we have more balanced financial finance that we see more balanced financials throughout the year that's what i think is a better for the business and better for us and from a phasing point of view as well so would you say that you were kind of testing the waters last year with the more accelerated approach or

Was it because you just saw an exceptionally high demand?

So, you know, we have brought together several companies over the last couple of years. And at the beginning, just one company has had this AOP program and we added more customers from the other brands. So we tested the water there. And right now, as I said before, we balance it out throughout the year and go back to a normal AOP program. Correct.

Okay, great. Yeah, that makes total sense. And then maybe hopefully a last and final one on this M&A discussion. Could you provide us some more insight into in which segments you're seeing the most robust pipeline from here on out? Or is it a balanced mix there?

I would say to a large extent, yes, as you say, it's a balanced mix, but Primarily, we are seeing interesting opportunities in specialty pharma, in medtech, and within veterinary services.

Great. Thanks a lot.

The next question comes from Arvid Nikanda from Carnegie. Please go ahead.

Thanks for taking my questions. So first off on MedTech with the normal AOP program for 2024 and expectations for a flat dish growth in Q1. Do you expect the distribution of full year sales through 2024 to broadly follow the trend in 2022? Or could there be other factors such as stocking up effects ahead of price increases? that I might suggest this might not be the case. Could you give any additional input on how you expect sales to develop through the year in 2024?

Ian, good morning. And sort of relevant additional color to MedTech and sort of growth in that segment, what we expect for the year. And as we sort of discussed in the number of questions throughout the call, yes, we are seeing a more balanced growth throughout the year, 2024, with a more normal AOP program in the first quarter. Why? Yes, we expect sales in the first quarter in the MedTech segment compared to the first quarter of 23 to be more flattish, but then to see a balanced growth throughout the year. And as you say, so it's more maybe a pattern that we've seen historically than taking 2023 off the table. And for Orthopedic, just as Guy mentioned before, we see great potential continuing in the orthopedic segment. In many geographies in Q4, we continue to grow. As we said, Europe was high single-digit growth in the quarter. APAC, we saw an acceleration of growth with double-digit growth. And the US market, although maybe slightly softer, but it did grow compared to the third quarter of 2023. So we see a positive development also in the US orthopedics market in the fourth quarter.

Okay, thanks. And then on diagnostics, could you give us a bit more insight into the market dynamics here? Do you believe you're losing market share or are you essentially growing in line with the market for your specific niches?

The diagnostics market in general, and if we look at many of our peers and into the overall market, we've seen that this market has been a challenging market due to several, especially macroeconomical factors that impacted, and especially livestock diagnostics significantly. If we look at our full year performance, excluding the COVID phase out, with an organic growth of 9%. That's ahead of the diagnostics livestock market where growth is more low single digit from looking at the market and peers.

Okay, thanks. And the last one for me then. I guess asking one of the previous questions in a slightly different way. With your investment in product development and diagnostics, when do you expect to be able to launch the first products that could have a meaningful impact on sales? In diagnostics specifically? Yes.

And as we've discussed before, and we talked a little bit about in the call as well, we have recently launched The oversight platform, which is our AI-powered parasitology platform. And that's us moving into companion animal diagnostics. This is a product that we see great potential in. It's a market-disrupted product tapping into a market that's roughly 500 million euros annually on a global basis. We just launched it into equine and large animal. And in 2024, we plan to launch a companion animal solution. Of course, we need to make sure that this product becomes a success and that we ramp up sales. But we are extremely excited about the technology, the improvement this brings to veterinarians and to companion animals. And of course, hope that this will generate good sales in the future.

Okay, great. Thanks for that. That's it for me. Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Well, thank you very much for joining us today. It was very nice to meet you all. I look forward to this journey together, and that concludes our call today. Thank you very much. Have a lovely day.