Vimian Group AB (publ)

Welcome to the Vimean Group Q4 Report 2025 presentation. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, CEO Alireza Tajbash and CFO Carl Johan Zetterberg-Boudry. Please go ahead.

Good morning, everyone, and welcome to Vimean's 2025 year-end and fourth quarter earnings call. I'm Olli Taibach, the new group CEO since the end of last year after leading the veterinary service segment for the past four years. To give you some background, during my four years as head of veterinary services, the business developed from a northern European purchasing organization into a global service platform with over 10,000 member clinics. I personally experienced Vimyans ability to attract talent and entrepreneurs and take something relatively small with potential and build it into global scale and a market leader. I'm a firm believer in our strategy of organic and acquisition driven growth, and we operate in an exciting and resilient industry going through change. I know the sector, the customers, the business and our organization well, and I'm confident about our industry and Vimyans future. We will now go through Vimyon's full year and fourth quarter, and Karl-Johan will later give you deeper insights into the financials. Looking back at full year 2025, Vimyon delivered revenue growth of 13% and adjusted beta growth of 11%. We saw broad-based growth across most of our businesses, not least in specialty pharma, veterinary services, and our med-tech dental businesses. We also put in focused efforts to address the headwinds within medtech orthopedics, in particular in the US. In fall, we received a positive judgment in the US indemnification process, and all counterparts have now, as per year end, paid us in full share. The year also delivered a strong operational cash flow of 105.7 million euros, corresponding to a cash conversion of 101%. Last but not least, we also completed the list change to NASDAQ main market, where we are now a large cap company. Going deeper into Q4 and looking at the quarter, we delivered a solid finish to 2025 with 6% organic growth and 6% adjusted EBITDA growth. Excluding currency effects, it adjusted EBITDA growth by 12%. We saw continued momentum within our specialty pharma segment. We saw strong finish with medtech dental, while active measures were taken in the quarter within medtech orthopedics. Veterinary services continued to perform at scale, reaching over 10,000 members. And in the quarter, we increased our M&A activity with three acquisitions across three different segments and expanded our M&A pipeline the past few months ahead of 2026. IVET, an important milestone for a diagnostic segment, was signed just before Christmas and is an acquisition to strengthen the companion animal offering within that segment. The quarter also delivered strong cash conversions. Looking at Q4, we had 4% revenue growth to 109 million euros. Our organic revenue growth was 6% driven by specialty pharma, veterinary services and our med tech dental business. 3% contributions from acquisition and we saw 4% negative impact from currency movements, in particular the movements within US dollars. We improved our margin by 60 basis points versus Q4 2024, driven by Bolton acquisitions and delivered 6% adjusted EBITDA growth for the quarter. And as I said before, excluding currency effects, adjusted EBITDA growth was 12%. Looking at specialty pharma, we continue to see positive performance in the fourth quarter with 6% organic growth following an exceptionally strong Q4 24, where we reported 22% organic growth. Normalizing the positive effects from the national sales campaign in the US in the fourth quarter 2024, the underlying organic growth was double digit in the fourth quarter this year. All four therapeutic areas delivered growth in the quarter, with the strongest contribution from our dermatology portfolio. Overall, organic growth continues to be driven by our innovation, cross-sales activities and veterinary education. Adjustability grew 4% or 7% adjusting for currency effects to 13.8 million euros, which is an all-time high quarter for us. The margin improved from 29.4% to 30% driven by revenue growth at stronger gross margin. For the full year, Specialty Pharma grew 6% to 182.4 million and adjusted the beta by 10% to 53.9 million. In January, our head of Specialty Pharma, Magnus, announced his departure after 10 years in the company. I believe the business stands strong and the recruitment process for success is ongoing. And we've secured a strong transition plan with Carl Johan as interim head of specialty pharma. As interim head of MedTech since end of July, I'm happy to see the accelerated momentum in our dental business in the quarter, as well as early operational improvements within our orthopedic business, although we still have work to be done and the market remains soft. In total, we delivered 4% organic growth in the fourth quarter, supported by strong growth in our dental business and orthopedics in Europe and APAC. Within Orthopedics, we have implemented a reorganization in the quarter with focus on strengthening commercial performance. We built out our field sales organization in the U.S., and we reviewed and rationalized our product portfolio where we had over 22,000 SQs and have decided to discontinue over 4,000 overlapping SQs. We are still in transition phase in U.S. Orthopedics during the initial period of 2026. We continue to drive sequential sales improvements, but do not expect orthopedics to deliver year-on-year growth until later in spring. The recruitment for a permanent head of method is ongoing and progressing well. The margin in the quarter of 24.6% is a 370 basis point improvement versus Q4-24, mainly driven by the consolidation of Bolton acquisition within Dentistry in 2025. Adjusted to beta grew 23% in the quarter and 32% excluding currency effects. For the full year, Medtech grew revenues by 25% to 155.5 million euros, where our acquisitions within dentistry contributed 30%. Full year adjusted to beta grew 15% to 39.6 million euros. Veterinary services deliver another strong quarter with 10% organic growth. In October, we completed the acquisition of a local service platform in Belgium with 300 member clinics and passed the 10,000 milestone when it comes to member clinics, closing the year with 10,900 member clinics. As previously communicated, we are accelerating our investments into new geographies and services in the quarter, taking the margin to 26.6%. For the full year, veterinary service increased revenues by 11% to 64.3 million euros and an adjusted EBITDA growth of 9% to 18.4 million euros. Michael Tonell, who has been part of Veterinary Services since 2018, was appointed head of Veterinary Services when I became CEO. And I'm pleased to see how the team has come together and continue to build momentum as the global leading veterinary service platform. Our diagnostic business reported 5% organic growth in the quarter and a margin of 9.2%, reflecting our investments in new products and personnel to strengthen the companion animal offering. The growth was supported by blue-tongue outbreaks in Europe and avian influenza globally. For the full year, diagnostic grew by 9% to 22.9 million euros, while adjusted data declined 3% to 2.2 million euros. As I said initially, we welcomed five new businesses in 2025 that expanded our portfolio and geographic footprint. We've seen improving M&A momentum towards the end of the year with three out of these five acquisitions coming in the fourth quarter. We've built a stronger pipeline over the past months and I'm optimistic about the M&A opportunities going into 2026. We continue to focus on successful entrepreneurial-led businesses that can grow and reach their full potential faster as part of Vimyam. A good example of that is IVET that we signed in December. IVET is one of the top three in companion animal diagnostics in Italy and forms an important addition to our diagnostic segment. IVET is a typical Vivian acquisition, high growth, successful and entrepreneurial-led business, where the entrepreneur Daniele is highly motivated and will continue to lead the business as part of Vivian. Annual revenues of 5.6 million euros, where two-thirds of the revenues comes from laboratory services, where they have three ref labs in Italy, and the remaining third is from sales and in-clinic diagnostic tests. IVET also has a well-known educational platform with over 100 courses annually and offer residency program in partnership with universities. Looking at our sustainability, as we now close 2025, we can see that we continue to make important progress within our ESG agenda. Our sustainability agenda is closely integrated into the core of the business and focuses on animals, our people and the planet. During 2025, we educated 65,000 veterinary professionals to improve animal health and we launched 94 new products to advance veterinary medicine. Our employee net promoted score reached 30 and we have exceptionally high scores from our teams in areas of inclusion, trust and autonomy. On the environmental side, we continue to reduce our emissions in total with 25% since 2022. We also received external recognition for our work with an improved rating at both MSCI to AA and Sustainalytics for low risk. That run-through of the year and the quarter, I will now hand over to Kali Wang.

Thank you, Ali. And let me give you some further insights to the financials for the fourth quarter and full year. Adjusted EBITDA in the fourth quarter was 26.1 million euros, an increase of 6%. This represents a margin of 24.0% for the quarter. The margin increase is primarily an effect of consolidation of bolt-on acquisitions within Medtech dentistry during 2025. Also, our largest segments, especially pharma, contributed to the margin expansion supported by operation leverage in the business. We report an operating profit of 19.2 million euro, a significant 54% increase from last year's result of 12.5 million. Items affecting comparability decreased in the quarter and totaled minus 0.7 million euro. The majority of items affecting comparability is relating to Medtech. This consists of minus 1.6 million euro in restructuring costs from organizational changes and inventory write-down as a consequence of the product portfolio rationalization, as well as 2.7 million relating to payments net of litigation costs in the U.S. indemnification dispute. Acquisition-related costs amounted to 1.1 million in total for the group. Net financial items amounted to minus 7.5 million euro and consists of four main parts. Financing expenses of minus 4.1 million with an average interest rate of 4.5% during the quarter. A quarterly discounting impact of minus 1.6 million and a negative impact of minus 3.1 million from probability adjustments related to contingent considerations. The probability adjustments primarily relates to stronger performance in our acquired dental businesses. A negative result of 0.7 million from liquidation and divestments of subsidiaries. And lastly, a positive impact of 2.2 million from exchange rate effects on the revaluation of debt. Income tax expense for the quarter was €0.8 million with an effective positive tax rate of 7%. In the fourth quarter, the tax expense as percentage of pre-tax profit was positively affected by recognition of deferred tax on tax losses carried forward at year-end amounting to €3.7 million. The effective tax rate was inflated by non-deductible expenses, mainly probability adjustments of contingent liabilities. In total, this results in a profit for the period of 12.2 million euro, with an earnings per share of 2 euro cents for the quarter. Cash flow from operating activities reached 55.7 million, including payment from US indemnification dispute of 28.7 million in the quarter. Excluding the litigation payment, cash conversion was 92% for the fourth quarter. Networking capital amounted to 96.6 million euro at the end of the quarter, equal to 23% of revenue. a decrease from 102.2 million at the end of the third quarter, which equaled 24% of revenue. The majority of the 5.6 million decrease in working capital relates to lower current receivables and increase in trade payables. Cash flow from investing activities amounted to minus 17.5 million, primarily relating to acquisitions, earn out payments and investments in tangible and intangible assets. Cash flow from financing activities on minus 35.5 million Euro from repayment of borrowings. At the end of the quarter, net debt amounted to 245.4 million, which is down from 253.5 million at the end of the third quarter. Cash and cash equivalents amounted to 55.0 million, an increase compared to 51.3 million at the end of September. External lending was 223.3 million at the end of the fourth quarter. This resulted in a leverage at the end of the quarter equal to 2.0x, which is down from 2.1 at the end of the third quarter. And we remain well capitalized with an ability to execute on our strength and acquisition pipeline. With this financial review, I hand the word back to Ali for concluding remarks.

Thank you, Khalil. We deliver a solid finish to 2025, and we are well positioned in a resilient market that continues to grow. I'm a firm believer in our strategy of combining organic and acquisition-driven growth, And my focus is to accelerate what is working well and address the areas we need to improve. We have an attractive platform for entrepreneurs, and I'm optimistic about our M&A pipeline going into 2026. I hear frequently from industry peers and partners that the entrepreneurial spirit and the quality of our people consistently stands out. This is something we take pride in and will continue to build upon. With our focus on global market niches with unmet medical needs and high growth potential, with a strong team in place and with the products and services we offer, I am confident we can deliver a good 2036. Thank you.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Kavya Deshpan from UBS. Please go ahead.

Good morning. Thank you for taking my questions. I have a couple, please. The first was on organic growth from here after the very good exit you've had in Q4. I understand you don't give annual guidance, but could you give us a sense of how significant an organic acceleration we can expect in 2026? I ask because you have a long-term guidance for double-digit organic growth to 2030. You're at 7% for the first two years of the plan. Consensus has you at only single digits for 2026, so that obviously implies quite a ramp towards the end of the decade. Are you comfortable with this cadence? Or do you think we can start to get closer to that double-digit organic growth target sooner?

Thank you for the question. I think we see an overall – the overall animal health market continues to grow, and we have positive business momentum, as I said, in most parts of India. So I think we should be able to deliver good growth in 2026.

Brilliant, thank you. And my second question was just on spec pharma and the cross-selling initiatives there. If I have it right, it slowed a fair bit sequentially in terms of the contribution to the divisional organic growth in Q4, off Q3 and also off Q2. Are you just reaching sort of the end of this programme? And if not, then how much of a contribution can we expect to come from cross-selling for spec pharma and group organic growth in 2026, please?

Yes, thank you. Cross-selling... has been and continues to be a robust contributor to organic growth. We saw in 25, just as we saw in 24, that one third of the organic growth was driven and supported by our cross-selling initiatives. And we are launching and will launch new cross-selling initiatives going forward. In 2026, eight new cross-selling initiatives will be launched, while we see continuous runway for a solid contribution from cross-sales in 2026 and beyond.

Just to clarify, so is it one-third of organic growth in the quarter because the press release says in 2025, and I think the previous ones give it as year-to-date. Just to confirm, that would be great.

The one-third is the year-to-date number. So for 2025, a third of the organic growth was reported by cross-sales.

Okay. All right. Thank you.

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

Good morning, gentlemen. Ali, congratulations on the new appointment. A couple of questions for me as well. Firstly, we start with MedTech. I believe you said here that you don't expect an acceleration or a year-over-year growth until spring. Should we read that? as some sort of guidance that you do expect next day to return to double digit organic growth by Q2.

We see early operational improvements, but we are undergoing significant change with the new sales team fully in place as of January. So I think Q1 or the spring will be a transition phase for us, but we continue to drive sequential sales improvements, but we don't expect it, as you said, to deliver year-on-year growth until late this spring. I think that's all we can say at this stage. But I think a full recovery would probably require the market to regain momentum as well.

And by a full recovery, you mean double digits?

Yes, the market remains soft right now. So I think the combination of our efforts into the operational side of the business and the market returning to better growth is needed to get to double digits.

I see. And then you mentioned also a number of SKUs being discontinued. Could you just – have those already been discontinued, or is this an effort that will take place now in 2026 as part of the new commercial efforts?

We've already initiated the work of discontinuing those SKUs, but there are a few that will be transitioned and discontinued now early this year as well.

would it be possible to quantify what the impact of that was on sales in 2025?

Limited. This is overlapping SKUs. So the SKUs we are discontinuing, we have equivalent products that are better and more relevant for our customers to buy.

Okay, great. And then lastly, on veterinary services, still a high pace of investment. What's the, I guess, basing of that? Do you expect a continuation even in 2026? or slow down at some stage.

We see continued momentum in veterinary services. It's been one of our segments performing very well for a long period of time, and we see that to continue. The investments we're doing is to ensure that we capture the full potential and the inbound need we get from our partners and veterinarians across the world.

Okay, thank you. I'll stop there.

The next question comes from Stan Gustafson from AVG Sundal Collier. Please go ahead.

Thank you, and good morning. I was wondering if you could give us a little bit of color on the M&A market right now in terms of number of opportunities, price levels on targets, and also where you focus your efforts on? Where do you want to grow? What areas specifically are you looking to go after?

We see an increased M&A momentum. As we stated, three out of the five acquisitions we made in 2025 happened in Q4. We're also confident about the building of our pipeline going into 2026, where we see Vimyam being a good and interesting platform for entrepreneurs within animal health to join. With the acquisition of Ivet in Diagnostic, I think we now have four active verticals looking at interesting bolt-on platform acquisitions.

And in terms of price points, has there been any change compared to a year ago?

Morning. No, I wouldn't say that we see a change. We have a historical average of approximately nine times EBITDA, and we are around that average. As previously communicated, typically platform acquisitions such as IM3 within the dental space come with a slightly higher multiple. whereas add-on acquisitions comes with a lower multiple, but the average is 9x.

Okay, perfect. Thank you. And then a quick question on the U.S. medtech market. What do you hear from your customers? What kind of feedback and what do they tell you in terms of the market sentiment and activity levels?

I think the feedback from our customers are similar going into 2026 than during 2025 from a market sentiment perspective. But with our approach of now building a field sales team in the US, this allows us to come even closer to our customers and together with them, support them in growing the business into the future.

What are they waiting for in terms of for the market to return? Is that sort of higher consumer confidence or what's the sort of inflection point that will drive the market back to normal levels?

A simplified question of that is, of course, macroeconomics in general. There is still, I mean, this is advanced care, but I think the macro return, we will see impacts on the business as well.

Okay. Thank you very much.

The next question comes from Arvid Nikatter from DNB Carnegie. Please go ahead.

Good morning, and thanks for taking my questions. So, first off, on Spec Pharma, do you expect this segment to be able to return to double-digit organic growth in 2026? And if so, it would be great to sort of get your view on what would be the main drivers for this surge in growth. And then, secondly, on MedTech, comparisons have become a bit easier, of course, but if we look at the industry data, it seems to have stabilized somewhat since mid-year. Do you view this as a genuine infection point, and how would you characterize the overall market sentiment right now?

Good morning, Arvid. I'll start with your question on specialty pharma. So we have a good momentum in specialty pharma. If we look through the full year and if we look at the fourth quarter 2025, all of our four therapeutic areas, grew and had a good momentum. In the end of the year, in the fourth quarter, we delivered 12 percent organic growth if we exclude or normalize for the national sales campaign that we did in Q4 of 2024 that we did in Q3 of 2025. So we see a Continued positive momentum in specialty pharma and we see that as a double-digit growth business in terms of what will take us to continue to deliver on a good growth momentum. We have a two-pronged strategy in terms of organic growth and inorganic growth. From the organic growth perspective, we are focusing, as we discussed before, on cross-phase, on innovation, and on education. And we see that all those three organic initiatives will drive and contribute to continue good momentum in organic growth, especially to pharma.

Okay. Just a quick follow-up on that one. How would you characterize the pipeline for 2026 versus 2025, if you would sort of size the growth opportunities?

We have a continued good momentum in the business, and we see continued opportunities to expand in existing areas and to find new growth in new areas.

Okay. Fair enough.

And then to your MedTech market question. I think going into 2026, we see the US surgery market condition remaining relatively unchanged. There's signs of stabilization, but I don't think it's returned to healthy growth yet. With that said, I mean, we are confident in a strong product portfolio and the brands we offer. And combining that with actions I mentioned we're taking, over time i think we will get back to good growth and also beat the market but given that we have a new sales team fully in place as of january we believe that q1 and spring is still a transition phase and we see but we see sequential sales improvements quarter by quarter great thanks a lot those are all my questions

The next question comes from Adrian Elmland from Nordia. Please go ahead.

Hi, guys. Pleased to meet you, Olli, and good morning to you as well. I have a few questions, please. So first off, could you provide perhaps some more details here into the field sales organization build-up in the METIC business in the U.S.? And kind of also, we've had a previous question regarding portfolio streamlining, but can Connor, could you give some more color, I guess, on what to expect this will impact the business over the coming year? Could there be some positive mix effect?

I think with the sales in place as of January, we're convinced that that's the right strategy going forward, being close to our customers and together through our educational platforms and efforts we do drive growth. Given that it's a new sales team in place and investment we're doing into that, we believe that As I said before, the spring and Q1 of the spring will be slightly soft, but over time with driving sales up on the back of having a strong and present field sales with our customers, that will also drive margin up. With that said, we expect the margin to be fairly flat beginning of the year.

And there's no specific mix effect with reducing the SQs there? In terms of gross margins or EBIT margins?

Nothing substantial.

No. Okay. Another question regarding mixed effects. You had some negative ones in the VET family business. What should we expect going forward and kind of what were the results there?

I think the family margin, as we guided throughout last year as well on the back of these investments, has gone down, although there are some mixed effects as well. But we believe the margin will improve throughout the year on the back of these investments starting to show signs of effect.

Right. Okay. And regarding here the recruitment of a potential successor here for Kjellberg of next June, Kind of what profile are you prioritizing here, and could his departure perhaps prompt any shifting in strategy in any way, shape, or form?

No, I think Magnus has been a very appreciated colleague and has built specialty pharma throughout the last 10 years. We believe that with him departing, we will look for a strong operator, somebody that can help us take the business and continue the successes we've had to take the next step. There's so much more things we believe specialty pharma can do and continue to grow. At the same time, the leadership bench within Specialty Pharma and also Vimeo is very strong. So I believe the business is run by our strong operators in the markets. So I'm confident that what we've built up until now will continue to drive similar success in the future.

Okay, thanks. Last question here. I don't know if I missed this, but what was the main reason here behind a large change in the operating receivables in the quarter? Is this purely the patent litigation, or did I miss something?

To a large extent, that's driven by the patent litigation, as we received 28.7 million euros in the quarter.

That was all for me. Thank you very much.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

No, thank you very much for listening in on our Q4 call. As I started off with, we are extremely ready for 2026. We delivered a solid finish to 2025, and we look forward to continue growing the business together with all the fantastic employees we have within Vina. Thank you very much.