Vimian Group AB (publ)

Good morning and welcome to Vimean's second quarter earnings call 2026. I'm Ali Taybach, Group CEO, and together with me I have our CFO Khalil Ansattabai Budhi presenting our results for the second quarter. We at Vimean continue building upon a good start of the year and report a second quarter with strong revenue and earnings growth as well as margin expansion. Our double-digit growth in the quarter is well ahead of the global animal health market coupled with strong adjusted EBITDA growth. We have also closed four acquisitions here today and continue to advance our M&A pipeline with active discussions across all four segments. We've also achieved recognition for our ESG achievements with a new AAA rating with MSCI. Turning to the numbers a bit more in detail, we report 17% revenue growth and reach 121.6 million euros in revenue in the second quarter. Organic growth was 12% with double-digit growth in specialty pharma, medtech and veterinary services, our three largest segments. 6% contribution from acquisitions and we had a 1% negative impact from currency movements. Adjusted EBITDA grew 17% to 29.7 million with strong earnings Growth ACROSS ALL FOUR SEGMENTS. MARGIN IMPROVED TO 24.5% DRIVEN BY THE CONSOLIDATION OF ACQUIRED BUSINESSES IN MEDTECH DENTAL SEGMENT. MOVING INTO SPECIALTY PHARMA, SPECIALTY PHARMA DELIVERS ANOTHER STRONG QUARTER WITH ORGANIC GROWTH OF 14%. ALL FOUR THERAPEUTIC AREAS DELIVER SOLID GROWTH AND THE STRONGEST CONTRIBUTION IN THIS QUARTER COMES FROM SPECIALTY PHARMACEUTICALS AND SPECIALIZED NUTRITIONS. In Specialized Nutrition, we completed another successful sales campaign together with a US retailer. A similar campaign took place in the third quarter of 2025. These campaigns make growth vary between quarters, but the underlying business momentum is continued good. During the quarter, we also launched 25 new products and opened our new R&D hub in France, focused on developmental biological pharmaceuticals. Adjusted the beta group 13% to 15.4 million euros, and we maintain a strong margin at 30.1%. Before we move on to the other segments, in our last quarter presentation, we gave you a short business snapshot about our Medtech dental platform and veterinary services upcoming market expansion. In this quarter, we will continue our series of business snapshots by having Kaliwan giving some more insights into our innovation work within specialty pharma.

Thank you, Olli. And let me spend a few minutes on innovation as I've had the pleasure for the last couple of months to be close to the specialty pharma team and segment working as the interim responsible for the specialty pharma segment. So innovation is really at the heart of specialty pharma's growth strategy. Innovation is one of the four pillars of our strategy. We focus on identifying unmet clinical needs and bringing differentiated products to market through internal R&D, scientific collaborations, and selective partnerships. This approach is delivering consistent output. Over the last 12 months, we've launched 75 new products and have more than 60 additional products in the pipeline. These products span multiple therapeutic areas and technologies, creating a balanced and sustainable innovation engine. As you can see from the quarterly launch cadence, innovation remains a continuous process supporting long-term organic growth and reinforcing our leadership positions in attractive specialty markets. Let me now make our innovation strategy a little bit more tangible by looking at two of our therapeutic areas, allergy and specialty pharmaceuticals. In allergy, Our ambition is to further strengthen our position as the global leader in veterinary allergology. PAX2 is a great example of that and a further innovation of PAX, the Pet Allergy Explorer that we launched three years ago. By incorporating an additional 25 novel allergens identified by NexMune, we're further enhancing the clinical value of our diagnostics platform with commercial launch targeted around one of the world's largest dermatology congresses, ESVD-ECVD, in the autumn of 2026. In specialty pharmaceuticals, our ambition is to build differentiated compounded drugs portfolio through internal innovation, combined with partnerships with biotech companies and leading universities. One example of how we're delivering on this ambition is through our newly established division Nexium Bio. NextBeanBio significantly strengthens our biological capabilities through a dedicated R&D team, a development facility and an established biologics pipeline, creating a platform for future prescription innovation across therapeutic areas. Our innovation strategy extends beyond prescription diagnostics and prescription drugs and into our OTC portfolio, where we continue to develop differentiated products addressing clear unmet needs. In dermatology, our ambition is to strengthen our leading position in skin and ear care through continued innovation, while leveraging that expertise to expand into adjacent therapeutic areas. A good example is Irilac, our first in-eye ophthalmology OTC product. It expands our presence into eye care with a preservative-free formulation designed to restore tear film stability and improve patient comfort. In specialized nutrition, our ambition is to continue building a differentiated portfolio of nutritional solutions based on scientific evidence and targeted innovation. A good example is UNA10, a microbiota-focused supplement supporting gut health. Its differentiated formulation enables targeted release and reflects our focus on translating science into products that address real clinical needs. Across our therapeutic areas, our approach is consistent. Focused R&D investments, a deep understanding of unmet clinical needs, and a steady pipeline of differentiated innovations. Together, these capabilities provide a strong foundation for sustainable organic growth in specialty farming.

Thank you very much, Colin Wong. Moving on to Medtech. Medtech returned to double-digit growth of 11% with double-digit growth both in the dental and orthopedic businesses. As expected, our U.S. orthopedic business returned to growth on the back of our consistent efforts to strengthen commercial performance and operation despite unchanged market conditions. Our focus on education to unlock long-term market growth in both orthopedics and dental remains, and we educated over 1,300 veterinarians in the quarter. Adjusted EBITDA grew 27% to 11.2 million euros and adjusted EBITDA margin improved to 25.8%. mainly driven by the consolidation of acquired businesses in the veterinary dental part of the segment. Moving on to veterinary services, veterinary service continues its momentum and delivers a strong organic growth of 10% with continued momentum in new member growth and strategic partnerships. At the end of the quarter, we reached 11,900 members across four continents. Adjusted EBITDA grew 18% and the adjusted EBITDA margin reached 28.2%. As expected, somewhat lower than previous year due to mixed effects from acquisitions and our communicated growth investments in new markets and services. Looking into diagnostics, diagnostics delivered 7% organic growth in the quarter, adjusted the beta group 32% and adjusted the beta margin of 9% was driven by product mix with higher level of extraction sales. We communicated earlier this year that we entered 2026 with a stronger M&A pipeline and we see continued improvement in our M&A activities and momentum. We have year-to-date closed four acquisition and continue to have a very active Activity and pipeline going forward as well across all four segments. The latest acquisition is the crematorial business Verona PEP within our diagnostic business in Italy. From a sustainability perspective, we continue to deliver our sustainability agenda. In spring, we received further recognition through the rating upgrade from AA to AAA within MSCI. We are now among top 19 of MSCI-rated peers globally and a leader among 153 healthcare equipment and supplies companies. This concludes the run-through of the quarter, and I will hand over to Columa for deeper insights into the financials. Thank you again, Olli.

And let's jump into more specifically on the numbers for the second quarter. Adjusted EBITDA in the second quarter was 29.7 million euros, corresponding to an increase of 17%. And that translates into an adjusted EBITDA margin equal to 24.5%. The margin increase compared to the same period last year is primarily a result of positive margin development in our MedTech dental business. Central costs amounted to minus 3.0 million, an increase from minus 2.2 million last year. This increase is mainly a result of expenses related to our long-term incentive programs, in total 0.8 million euro in the quarter. And during the end of the second quarter, we implemented LTI 26 as approved by the annual general meeting in April, where we will see the full effect from the third quarter onwards. These are non-cash IFRS expenses that will recur for the duration of the three-year programs. We report an operating profit of 22.3 million euro, a significant 54% increase from last year's result of 14.5 million. Items affecting comparability decreased in the quarter compared to the same period last year and total minus 0.9 million euro. The majority of items affecting comparability relates to acquisition costs in veterinary services and in diagnostics of total minus 0.5 million. Net financial items amounted to minus 8.0 million euro and consisted of three main parts. Financing expenses of minus 3.1 million with an average interest rate of 3.9% during the quarter, partly offset by interest income of 0.2 million. A quarterly discounting impact of minus 1.0 million and a negative impact of 2.5 million from probability adjustments related to contingent considerations mainly relating to new acquisitions. A negative impact of 1.6 million from exchange rate effects on the evaluation of debt. Income tax expense for the quarter was minus 5.5 million at an effective tax rate of 39%. In the quarter, the tax expense as percentage of pre-tax profit was negatively affected by probability adjustments related to continuous considerations and other non-deductible expenses. In total, this results in a profit for the period 8.8 million euro with an earnings per share of 2 euro cents for the quarter. Looking at cash flow from the second quarter, where cash flow from operating activities reached 3.8 million for the second quarter. The operating cash flow was negatively impacted by timing of taxes paid and networking capital effects. Networking capital amounted to 114.1 million euro at the end of the quarter, equal to 26% of revenue. an increase from 92.8 million at the end of the first quarter, which equals 21% of revenue. The majority of the 21.3 million increase in working capital relates to increasing receivables after strong finish to the quarter, as well as specific inventory build-up to support continued customer demand. Cash flow from investing activities amounted to minus 22.9 million, primarily consisting of acquisitions and earn-out payments, And finally, cash flow from financing activities of 20.5 million euro from proceeds from borrowings. At the end of the quarter, net debt amounted to 273.7 million, which is up from 258.4 million at the end of the first quarter. Cash and cash equivalents amounted to 51.6 million, an increase compared to 50.4 million at the end of March, with external lending of 261.7 million at the end of the second quarter. All in all, this resulted in the leverage at the end of the quarter equal to 2.1x unchanged compared to the end of the first quarter. And we continue to be well capitalized with an ability to execute on our strengthened acquisition pipeline. With this financial review, I hand the word back to Ali for concluding remarks.

Thank you, Kalioban. Summarizing the first half of 2026, I'm pleased to see that improved execution of our three strategic focus areas have been successful. The quarter was strong, with double-digit organic revenue growth, strong earnings growth and improved margin, all well ahead of the global animal health market. We've closed four acquisitions here today and have a highly active pipeline across all four segments. For the remainder of the year, during the second half, our focus will be on executing on an M&A pipeline while continuing to drive strong organic growth and building strong culture. Thank you for your attention. And with that, we can open up for Q&A.

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've got two, please. My first one was on US VEP also growth. So your comps look a little bit tougher in the second half of the year. or more like flattish growth versus double-digit declines in H1. Should we continue to see sort of organic growth at a low single-digit level here or is your strategy making you think that an acceleration actually might be possible here? And my second question was around the spread of margins between dental and VET also. It seems like this is quite different today to where it used to be given the investments in ortho and the margin expansion in dental.

Thank you for the questions. I think if I start off with your first question, we expect that the changes we've implemented to drive kind of continued growth in the US orthopedic business will continue and we expect a continuous low single digit growth in the second half of the year as well. We still see unchanged market condition. The market is soft. So depending on how the market develops as well, that could of course impact that number, but we are very happy and confident with the management team and the execution of the changes we implemented the last six months.

And on margins, so overall for the Medtech business, I think we have a good margin business within Medtech in total. If we take orthopedics and dentistry more specifically, in orthopedics as communicated, we have taken deliberate and focused investments to make sure that we get back to growth, as Ali just mentioned. But we do see as we continue on the growth path, those investments will make sure that we continue on the growth path and improve margin steadily over time within orthopedics. In dental, We continue to improve the margins, both operationally and in the second quarter, there's also been an impact with the addition of Alacem that we acquired June last year, and we get the full effect this quarter that has a higher margin profile than the rest of the MedTech and the dental business. But all in all, we see that MedTech is developing positively and we are confident that with continued growth we will see a steady margin improvement in the segment over time.

Thank you very much. If I could just ask a quick follow-up on that dental margin, please. How far do you feel you are from the ideal margin for that business? I understand the gross margin in general is a little bit lower in dental than for ortho, but could we feasibly ever see the dental margin in the 30s like VET also used to be before the US market decline?

So we definitely believe in the dental part of Medtech that we'll continue to see margin improvement. then we will continue to invest for future growth as well. Because I think as you see in this report and what we believe going forward, there are a lot of interesting opportunities in the dental segment where we want to make sure that we invest for continued solid growth in our dental business. While having that said, we do see that margins will improve over time also in the dental area within Medtech.

Alistair, thanks very much.

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

Good morning and thanks for taking my questions. So the first one on spec form, I was just wondering if you can quantify the contribution from the National Sales Campaign and I guess just overall how you characterize the underlying demand in the different sub-segments here. And then secondly, on M&A, you seem to be increasingly positive on the outlook here and highlighting a highly active pipeline. So should we expect the activity to accelerate in the second half of the year? And I guess overall, how would you characterize the size of the opportunities that you're more upbeat on for the near term? I'll start there. Thanks.

Good morning, Arvid. Let me address the first question regarding SpecPharma. We haven't disclosed the total size of this national sales program that we did in Q2 of this year. that we did Q3 of last year. The program implemented this year is a little bit larger than the program we did last year. So there is a positive effect from that sense. As Ali communicated during the presentation, we will see, you could say, an effect of the program being implemented in Q2, having a good contribution, whereas we will see, you could say, the flip side in Q3, where we had the program last year. Having that said, so the organic growth adjusting for the National SAVES Program in the second quarter of this year was 9%. And going back to sort of your second part of the question, What I'm encouraged about is that we see a good growth in underlying momentum in all the therapeutical areas within specialty pharma. We did have some very strong growth in US specialized nutrition on the back of the national sales program, but the other therapeutical areas grew well also in the quarter and for the first half year.

Moving on to the second question. So as we said before, we entered 2026 with a stronger pipeline than before. We've built upon that pipeline the last few months and I feel positive about the opportunities of welcoming new strong businesses and entrepreneurs during the second half of this year. But it's difficult to speculate exactly when and how because the key for us is always to make sure it's the right acquisition at the right So all in all, we are positive about the conversations and the attractiveness we can offer strong entrepreneurs in the animal health space. In terms of size, it's a mixed bag. We see both smaller bolt-ons and bigger acquisitions in the pipeline. Exactly when and how and if they materialize depends on how the development goes in the second half of the year. But we remain equally optimistic about our business momentum we currently have as well as our M&A momentum.

Great, understood. Thank you. I'll jump back in the queue.

The next question comes from John Onwin from Barclays. Please go ahead.

Hi, good morning. Thank you for taking my questions. I actually just wanted to follow up on the dental margin question. I think you gave some good detail. But when you acquired IM3, I think the margin in that business was like high teens, low 20s. Is that materially different today? Have you managed to improve it? Or, and I'm thinking excluding the Alzheimer acquisition, just thinking more about IM3 specifically. That's my first question. And then in vet services, over what timeframe do you expect the investments that you're doing in organic growth to sort of be complete and also to translate into the organic growth you want to see? And then my third question is on orthopedics in medtech. The market you said in the US remains soft, but how are you thinking about the market and the growth possibilities outside the US sort of in the back half of this year and into next year? Thank you.

Thank you. And let's start with the margin question on dental and excluding Alacem. So yes, we have seen a positive margin trajectory since the acquisition of IM3 and the other Bolton acquisitions that we've done excluding Alacem in dental. So there's been a sort of underlying positive margin trajectory in the dental business excluding Alacem as well.

To the second question in terms of veterinary services and the investments and the margin, I think we talked a bit more deeper into the market service expansions we're doing in the last quarter of the presentation. And as we see the margin of veterinary services is improving quarter by quarter on the back of the development of the business. We believe that a healthy margin in veterinary services should be around 28%, which is where it is today. and it normally takes us a year and a half to 12 months to a year and a half to break even a new market when we enter that from a revenue service perspective. In terms of the third question, which I believe was in the MedTech ortho outside of the US, we've now had two quarters with double digit growth outside of the US markets in Europe and APAC. We see strong momentum in the business and and the combination of our market position, product portfolio and quality and the team we have, we believe we can continue strong momentum outside of the US for the rest of the year as well.

Great. Thank you very much.

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

Hi, guys. Good morning. I just have one question really. It's been a couple of months now with you as Acting Head of Specialty Pharma, Carl-Johan. Perhaps, could you give us any updates on the search of this permanent segment head? And if not, if this expands for a longer period, what are your plans for these segments?

So the recruitment for a new Head of Specialty Pharma is ongoing. It's been a couple of months, but always when you're looking to recruiting a senior hire in the management team, you want to ensure you take the time to find the right profile and candidate for not just especially the pharma, but Demian as a whole. At the same time, I'm extremely happy with how Kaliugan and the rest of the team has managed and developed the business in the last six months. I would like to remind that we run a very decentralized model, so our four therapeutic areas have strong leaders, which is reflected upon the performance last two quarters. So we want to make sure we find the right candidate and it takes the time it takes to do so. During that time, I'm very confident that the specialty pharma business will continue to build upon its business momentum. And as you saw Kalu on presenting, there's a lot of exciting innovations, product developments and so forth going on in the segment to enable future growth.

Right, okay, fair enough. Just one quick follow-up. Maybe I missed this, but you have some 60 products in the pipeline, right, for Specialty Pharma. Is there anything, like, especially of interest in that pipeline that we should take note of?

In that development pipeline, it's a mix of both to improve formulations of existing products, you could say lifecycle improvements as well as larger or more exciting innovations. But it's a mixed portfolio across our pipeline of roughly 60 products today.

But near term...

Thank you very much, guys.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Sten Gustafsson from ABG Sundal Collier. Please go ahead.

Good morning. To start off with a clarification maybe on, I think you talked about in one of the first questions about the expected growth rate for the MedTech division in the second half. I didn't get the number if you could maybe comment on that. And then secondly, with regards to the sort of transformation that you have done in the US Medtech business, are there more actions for you to take there or is this sort of now all set and we're basically seeing your execution on actions you have already taken?

Thank you. Thanks for the question. So I think when you, from an operational standpoint, look into implementing changes and improving a business, it is continuous improvement. So although we've done some, if you call it, larger changes, we have a new head of METEC in place in Lotta and so forth. I believe Lotta and the rest of the management team will continue to tweak the business to make sure we are where we want to be and continuously improve. And that's the same case across all four of our segments. So I am expecting continuous tweaks, changes to make sure that we are where we want to be and that we are prepared to unlock the potential and the white space within MedTech and Orthopedics & Dental going forward. In terms of growth in Medtech in the second half, we don't give specific guidance, but we believe that the changes we've implemented in U.S. orthopedics as well as the business momentum we have across Medtech in general with double-digit growth in the quarter allows us to enter the second half of the year with good momentum. But as I also said, the U.S. orthopedic market in the U.S. is continuous soft. Depending on development of that, you could get head or tailwinds as well. But in general, we're confident about the performance of the team. We're confident with the products we have in our portfolio. And we believe that we have the right management in place to make the continuous enhancements and improvements in the business to unlock future growth.

Perfect. Thank you very much for your answers. Thank you.

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

Hi, it's Rami again. I was wondering if I could ask a follow-up on the operating receivables point, please. I was just wondering if the increase was related in any way to the transformation strategy and also I know you've been trying to push on education efforts and get new GPs implanting and Similar industries that sometimes comes with working capital effects. So yeah, I was wondering if there was a link there and if so, should we continue to expect a high receivable to the rest of the year?

Yes, thank you. No, I would. So receivables in the quarter say working capital was higher in the quarter than what we've seen in the previous quarter and also in relation to sales said that was mainly an effect of higher receivables and the higher receivables was driven by a very strong finish of the quarter. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you very much for listening. As I said before, we're very happy with the start of the year and finishing it off the second half of 2026 with DoubleDigit Growth. We're pleased to see business momentum across all four of our segments and the active M&A pipeline we have gives an exciting future ahead, being able to welcome strong entrepreneurs into the Binian family. With that said, I wish all of you a good upcoming summer and look forward to get back to doing second half of the year. Thank you.