Vitrolife AB (publ)

Welcome to Vitrolife Q3 2025 earnings call. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Please start by asking one question followed by a follow-up question. It's then fine to queue up again for more questions. Now I will hand the conference over to CEO Bronwyn Brophy and Per Eerskog. Please go ahead.

Good morning, everyone. I would like to welcome you to the Vitralife Group Q3 2025 Earnings Report. My name is Bronwyn O'Connor and I'm joined this morning by our new CFO, Pad Iadarsgog. So I will now move you on to the first slide with our Q3 2025 highlights. I would like to start by highlighting three key achievements during the quarter. The first highlight is that we delivered 5% organic growth in local currencies, excluding discontinued business, despite the fact that the reproductive health industry as a whole has continued to face substantial macroeconomic and geopolitical challenges during the quarter. The second highlight I would like to bring to your attention is our growth in Americas. Sales increased by 11% in local currencies with strong growth across the entire portfolio and in all markets in the regions. And finally, we delivered strong operating cash flow of 255 million SEC related to positive contributions from our networking capital. We'll now move to the key financial highlights. So starting with the market, conditions remain challenging in some of the key markets in the IVF industry. However, we did see some small and early signs of recovery in Americas. In EMEA, Western Europe is performing well. However, the market in the Middle East remains impacted by the geopolitical situation. APAC also shows some signs of recovery with the exception of China. Cycle growth in APAC overall remains below the other regions. Sales. So sales in the quarter amounted to 835 million SEIC, an increase of 5% in local currencies excluding discontinued business and minus 4% in SEIC impacted by minus 7% due to currency effects. Gross margin stable, in fact, slightly positive at 58.9%. And EBITDA was 253 million SEC in the quarter. An EBITDA margin of 30.3. This was also impacted by a negative currency impact. And then strong operating cash flow of 255 million SEC from our net working capital, as I mentioned previously. We will now move on and take a look at our sales and growth per geographic segment. We're very pleased, in fact, with our sales performance in Americas, delivering 11% growth. And even more pleasingly is we saw growth across the entire portfolio and in all markets. So just bear in mind, Americas is the US, North America, and also South America. IVF cycle growth is showing early signs of recovery in the US. However, share gains drove our growth rates above the market growth rates. Growth in EMEA was 4%, excluding discontinued business. Once again, we delivered strong growth in consumables as a result of share gains in key markets in Western Europe. The geopolitical situation in the Middle East has impacted the region overall, but all other markets in EMEA remain strong for the Vitralife Group. Sales in APAC increased by 1%, the first positive quarter for the Vitralife Group year to date. We delivered strong growth across all markets in the APAC region, with the exception of China, where cycles remain depressed despite improved reimbursement. And then another point that I think is critical to point out is the healthy regional revenue contribution of our company. This has been instrumental in helping us navigate the challenging economic environment. So if you look at our share of total sales, we now have 33% coming from Americas, 37% coming from EMEA, and 30% coming from APAC. Okay, we'll now move into market region EMEA and take a closer look. So EMEA remains our largest region delivering sales of 309 million sec in the quarter and an organic growth of 4% in local currencies. Again, this quarter, Sales in consumables were strong, plus 7% in local currencies, excluding discontinued business due to share gains in key focus markets in media and disposable devices. Sales in technologies, plus 6% in local currencies, driven mainly by customer wins for our lab-controlled solutions, which is really nice to see. We are seeing demand steadily increase for our witnessing solution and customers also really like the integrated embryoscope and e-witness solution. Genetics performance was negatively impacted by the Middle East, however, a strong performance by our genetics business in Western Europe. Okay, we'll now move on to market region Americas. A very strong quarter in our America's region, despite the fact that cycles have not fully recovered in the United States. With an organic growth of 11% and strong growth across the entire portfolio in all markets in the region, we believe we are fully leveraging our relevance to our customers. The strategic investments that we have made in sales and marketing in the US resulted in us delivering our strongest quarter in 11 quarters, which share gains in key parts of the portfolio. Strong growth in technologies driven by increased adoption of embryo scope across the region, which is great to see. This has been a key focus area for us, as many of you will know. And we are also starting to build a healthy pipeline of customers seeking to install our witnessing solution. So the combined offering of embryoscope and witnessing is also starting to gain traction in North America, as we are experiencing in this quarter in EMEA. Okay. And then our market region, APAC. APAC, the first positive quarter of the year to date. So APAC delivered an organic growth of 1% with strong growth in all markets across APAC with one exception, that exception being China. We delivered share gains in disposable devices and our media market position remains very strong across the region. Coming back then to China, despite the increasing reimbursement, we don't yet see an uplift in cycles. Consumer confidence, we expect, is also impacting the timing of patients presenting for IVF. I do want to point out that we are focusing on other key markets in the region where the Vitrolife Group holds strong positions and cycle growth is increasing. I will now hand over to Pad and he will take you through our geographical segments.

Thank you, Bronwyn. We are now on page nine, where I will provide some more details of the geographical segments, America, EMEA and APAC. On America, sales amounted to 276 million SEK, reflecting 11% organic growth in local currencies and 1% growth in SEK, negatively impacted by currencies. The strong growth can be seen across the portfolio. Gross income amounted to 149 million SEK with a gross margin of 54. This compares to the last year's gross income of 144 million SEK and a margin of 52.7%, an improvement of 1.3% points compared to previous quarter, mainly driven by product mix. Selling expenses for the quarter rose from 69 to 77 million SEK, reflecting ongoing investments in sales and marketing in the US as previously announced. The market contribution margin for the quarter was 26.0 compared to 27.5 last year, impacted by the increased investment into sales and marketing capabilities in Americas. Moving to EMEA, sales declined by 2% in local currencies and by 6% in SEC, totaling to 309 million SEC. The sales were negative, impacted by currency of minus 4%. Excluding the discontinued business, sales increased by 7% in local currencies. Gross income was 192 million SEK with a gross margin of 62.0 compared to 198 million SEK and a margin of 60.4 last year. Also here mainly driven by the product mix. The selling expenses decreased from 73 million SEK to 68 million SEK. The market contribution margin for the quarter was 39.9% compared to 38.1%, explained by an improved gross margin and lower selling expenses. In APEC, sales amounted to 250 million SEK, reflecting an increase by 1% organic growth in local currencies, but a 6% decrease in SEK, negatively impacted by currency. Gross income was 151 million SEK, with a gross margin of 60.4%. which is lower than previous year's gross income of 167 million SEK and a gross margin of 62.8, a decline of 2.4 percentage point compared to previous quarter. Negatively impacted by currency and negative product and market mix within APEC. Selling expenses decreased from 48 million SEK to 46 million SEK. The market contribution for the quarter was 42.1 down from 44.7 last year. Let's move to the next slide. Then Q3 financial highlights. As earlier mentioned, the sales amounted to 835 million SEK compared to previous year, with the sales of 867 million SEK corresponding to 3%. growth in local currencies and 4% decrease in SEC and 5% increase in local currency excluding discontinued business. The gross income amounted to 492 million SEC compared to 508 million SEC previous year, corresponding to a gross margin of 58.9, margin up from 58.6 previous year. The margin improved from a positive product mix, despite the negative impact from the currencies. In the third quarter, the increase in operating expenses was mainly driven by investment in capabilities, especially within IT and digitalization. All in all, that gives us an EBITDA of 253 million SEC compared to 289 million SEC previous year. which gives us an EBITDA margin of 30.3 compared to 33.4. The decrease in margin is mainly impacted by currency fluctuation as well as an increase in investment in capabilities, especially within IT and digitalization. Let's move on to the next slide. Some comments about the operating expenses. In Q3, our operating expenses were 20 million lower than Q2 this year, but compared to Q3 last year, OPEX was 40 million sec higher, though last year's Q3 was lower than normal levels. Overall, Q3 aligns well with our average OPEX level over the past seven quarters, reflecting a consistent and stable cost trend. On the selling expenses, we had higher selling expenses in the US due to the investment in sales and marketing, but it was offset by lower cost in the other regions, so it stayed stable. On administrative expenses, it was increased by the strategic investment in IT and digitalization. Our R&D expenses slightly decreased year over year, mainly due to timing. And then on other operating expenses, this is mainly related to currency fluctuations. Next slide, please. And then finally, we will comment upon the year-to-date numbers. Sales for the first nine months amounted to 2.5 billion SEK, corresponding to 1% growth in local currencies, a 4% decrease in SEK, and a positive 4% growth increase in local currencies, excluding discontinued business. The gross margin decreased It decreased from 58.6 to 58.1, mainly due to currency fluctuations. The EBITDA amounted to 253 million SEC compared to 888 million SEC, corresponding to an EBITDA margin of 29.5 versus 33.5 previous year. The decrease in margin is heavily impacted by currency effects driven by a strengthened SEC against other currencies. The margin was also negatively affected by the increased selling expenses, of 577 million SEK in the US, but also negatively by the product and market mix. Net income amounted to 301 million SEK compared to 375 million SEK previous year, heavily impacted by currency fluctuations, which gives earning per share of 2.23 Swedish krona compared to 2.76 Swedish krona previous year. Our operating cash flow amounted to 475 million SEK for the first nine months compared to 640 million SEK previous years, where of 255 million SEK came from Q3. Changes in working capital had a negative effect of 97 million SEK this year compared to 97 million SEK last year. Our leverage net debt to EBITDA improved to 0.7 compared to 0.8 previous year by the end of the quarter. And by that I will now hand over to you again Bronwyn.

Thank you, Pat. So you will have seen me present this slide several times. And what I would like to highlight is that we are delivering on our commitments and doing what we say we will do. So this slide I I have presented, I think this is my third time to present it. It highlights what the focus areas were for 2025 and beyond growth, innovation and operational excellence. Just if we take a look at growth, continue to drive share gain in key markets, leveraging the full breadth of the portfolio. This is exactly what we are doing in America's as an example. So we're doing what we say we will do, accelerate the penetration of our combined embryoscope and lab control solutions. This is what we're doing in EMEA. You can see it in the quarterly results. When it comes to innovation, if I could highlight, strengthen market access capabilities to bring new products to market faster. We've launched ultra rapid warm blast, We received regulatory approval for embryo calf in Europe and the United States this quarter. So again, here we are doing what we say we will do. On the operational piece, automate manufacturing to increase capacity of key growth drivers. We have significantly increased capacity at one of our sites in the United States due to automation. And then the macroeconomic environment. Well, I think we would all agree it's been a challenging year for the medtech industry as a whole. It's been a particularly challenging year for the reproductive health industry. We continue to assess multiple parameters, not least of which is the impact of the US presidential IVF announcement, the most recent one on the 16th of October 2025. And of course, we continue to monitor the development of the situation in the Middle East and the impact that the recent peace agreement may have on IVF cycles in the region. Before we open up for questions, I would like to thank the exceptional team at the Vitrolife Group for all of your hard work and dedication. I would also like to thank our shareholders for your support and your belief in the Vitrolife Group. Thank you very much. And we will now 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. Please start by asking one question followed by a follow-up question. It's then fine to queue up again for more questions. The next question comes from Ulrich Trattner from DNB Carnegie. Please go ahead.

Thank you very much and good morning. And I will have kind of a broad-based question regarding consumables and the different geographies. So just looking at consumables in America, will it continue to drive your market share gains? And the same question goes for EMEA. And I guess for EMEA, it's more on the case of one of your competitors being in a restructuring phase, just trying to figure out how long this sort of gains could last for. And as for APAC, I hear all what you're saying in terms of demographical challenges, one-child policy having its effect, but don't you believe that this is more of a consumer confidence kind of issue? I guess sort of the demographical changes in APAC has not really changed since the 2019 or pre-pandemic, while the general economic health of China has? That would be my first question, please.

Okay, thank you for your question, Ulrich. Yeah, so the performance of the consumables in all our regions, as you, well, it's positive. It's positive everywhere. I would say that in 2024, we took a lot of media share. We are now leveraging that even stronger media position to take share across the rest of the portfolio. I can't tell you who we're taking share from because We have one competitor who reports externally, but we don't get a breakdown. And the other large competitor, as you know, is privately held. But what we do know is that our growth is significantly up versus the cycle growth that our customers tell us across the various regions that they are experiencing. So I can't say who we're taking share from, but we are firmly of the belief that we're taking share with the growth rates that we experience in in the different regions. And what we see from our own numbers is it's across the entire consumables portfolio now. Then your question on APAC, we think it's a combination. So yes, obviously we have the endemic issues in APAC in terms of desire to have children and low fertility rates. But we do believe that the macroeconomic conditions in China are exacerbating the situation. As we know, reimbursement has improved in the country, but we haven't yet seen an uptick in cycles. So it's likely multifactorial. I think what's interesting to note, and you'll see that in my CEO comments, is we do see growth across the rest of the region. So China is... is becoming an outlier in APAC in terms of the growth that we can deliver for our company. So hopefully that helps to answer your questions, Ulrich.

Yes, thank you very much, Brian. And a follow-up. Like a year ago, year and a half ago, a lot of talk about the Indian market. So the Indian underlying market growing at a very rapid pace. You tagging along with that market. It's been quite silenced. sort of ever sort of in the last few quarters. Can you provide us with some type of update on what's happening in India?

Yeah, so that's intentional. It's intentional because this market has become increasingly competitive and everybody wants to know where the growth and profitability is. So that's why we don't break down our APAC numbers or we don't give additional detail. I'm sure we would have some very interested competitors probably listening in this morning wondering what the India breakdown is. India is a very large market, of course, with a lot of potential. Usually in medical devices, it's also a low-priced market. So while it may have high growth potential, it doesn't always have high growth that's profitable or at least profitable to the levels that we would need at the Vitrolife Group. But it is clearly a driver. It does form part of our APAC region. But it's not the largest market in APAC for us. So that's probably about as much detail as I would like to give on India for obvious reasons.

Great.

Thanks, Ulrike.

I'll take that. Thank you, Bronwyn.

OK. I'll come.

The next question comes from Susanna Quekborner from Handelsbanken. Please go ahead.

Hello, Susanna Quekborner from Handelsbanken. I have a more broad question. I'd like to get your opinion on how or where you see Beachlife going with the future M&A agenda and whether your stance has changed regarding this recently.

Yeah, great question. Thank you, Susannah. So I guess like all companies in the space where we're monitoring potential acquisitions, I think with the consolidation that has happened in more recent times, a lot of the larger scale acquisitions are off the table now. And for us, I think as we've always said, we have a very clear strategy in terms of building an end-to-end platform. So any of the targets that we are looking at would need to be synergistic with that strategy. They would also need to be able, preferably, to deliver accretive growth. And then the profitability needs to be broadly in line with our profitability levels, which are uh typically significantly higher than most of the other players so i'm not saying there's nothing for us to buy they're clearly are um but of course those those targets need to satisfy our key m a criteria um and they also need to be available at at the right price um multiples have come down a lot in in medtech so um Yeah, I guess from an industry perspective, it's probably a good moment to buy, but still, it has to be the right company at the right price with the right fit for the Victor Life Group. So that's probably as much as I can say right now, Susanna.

Just to quickly follow up on that, are there any areas that you're particularly interested in more than others?

Yeah, I would say there are one or two areas which I'm not going to divulge, which would be of interest more interest. I mean, we, you know, we have a broad portfolio now. We have a lot of differentiation. It's really, a lot of it is about bolstering the position that we have and staying ahead technologically. But there are a couple of, yeah, I guess what I would call tuck-ins, potential tuck-ins from a portfolio standpoint.

Great. And then as a second question, with regards to your strategy in the US, we now see that you have 11% organic growth. You've made some investment in sales and marketing. How should we think about that going forward?

Yeah. So from an expense perspective, I think sales and marketing line for America will be stable. sorry to use an American phrase, but we're kind of fully loaded for now. The investments that we made, they're driving the growth that we saw in the quarter. So we probably don't need to do anything additional for now. Obviously, we have to very closely monitor the effect of the announcement on the 16th of October and see what that means as we head into 2026. But for now, I think it's sort of steady as it goes on the sales and marketing investments in North America.

Very good.

Thank you.

Thank you, Susannah.

The next question comes from Johan Anneris from SB1 Markets. Please go ahead.

Thanks for taking our questions. Could you provide perhaps a bit further insight into the growth margin? It's pretty impressive or strong given the circumstances, FX headwinds, different product solution mix, and presumably some tariffs as well.

Yeah. So, hi, Johan. Thank you for the question. Yeah, there are multiple factors in there. So, it's mixed, for sure. So, product mix and regional mix. I think our team have done a really excellent job in terms of managing the tariff impact. We did mention during our during our previous earnings that we did have to increase our prices to help mitigate against that tariff impact. And the team in North America in particular did a superb job there. So that largely helped to insulate us from that. And then I guess we're being more strategic in terms of where we're doubling down from a portfolio standpoint. So all of these factors are playing a role there. I don't know, Pat, if there's anything that I that I've missed.

No, but on the currency part there, we see on top line negative 7%. It's very much driven by the strengthening of SEC towards US and Euro, but of course, all currency. And that, of course, flows through the whole income statement down to bottom line, the impact of the currency.

Great. And, yeah, follow up on the U.S. side. It's pretty healthy, your performance in the U.S. this quarter. Of course, there are quarterly variations, but also you're putting in effort to go-to-market investment in OPEX. What is the dynamic here? How much is sort of natural variations, your early attraction from improved go-to-market strategy or something else?

yeah um so i i think it's a couple of things first of all thank you for the question i think it's a couple of things i think it's the increased investment i think it's the adjustments that we've made to our go-to-market model um we've ramped up our marketing which has increased our awareness we've sharpened our branding um i mean the the the virtual life group is is synonymous with with quality and service. And Americans like high quality and they like best in class service. And that is synonymous with our company. So I think it's a combination. I think it's the investments, the go to market, the high quality products, the really good service, all of these things are leading to share gains and wins in key accounts across the United States and Canada, it has to be said as well. And in fact, well, I should also call out, I mean, America is, it's Canada, as I said, US and LATAM. We have growth across all of the markets and all of the portfolios. Big Brother is U.S., but the other markets are also performing nicely for the company.

Excellent. And congratulations. Pretty good quarter given the circumstances.

Thank you, Johan. We won't get ahead of ourselves, but it's a good quarter. Yeah. Thank you.

The next question comes from Jakob Lemke from SEB. Please go ahead.

Yes, thank you very much. I also have a question on the US and Americas. And my question is, do you expect that the strong market share gains you're currently seeing, that they are sort of on a similar level as recent quarters, or are they accelerating? And also, if you think that this momentum will continue into next year, also considering that you mentioned that you expect to invest less in the US commercially here going forward.

yeah so thank you for the question jacob um i think they're accelerating because obviously we see the breakdown by by product we don't we don't report that externally so we can see in some of our key product groups if we look at the rolling 12 that it's actually accelerating um and we think this is a return on the investments that uh that we've made there How sustainable is that going forward? Well, I mean, if you look at our five-year strategy, our number one double down focus market is the United States. If we are going to win and deliver on our mission of becoming the leading global player here, we're gonna need to keep this type of momentum up in North America. I'm sure our competitors will have something to say about that, but we're not gonna have it all our own way, nobody does. But certainly our ambition is to keep this momentum up. Where can it accelerate and where are we going to become increasingly challenged? technologies embryo scope with with witnessing that's a key differentiator for our company um and and i think we we you know should be able to gain increasing traction there on the consumable side continuing to take this level of share um we're we're going to have a battle on our hands but we have to be ready for that and we have to back ourselves um so I mean, this is the plan. What you're seeing in this quarter is what you're starting to see. Again, I don't want us to get too ahead of ourselves. It's very important not to be complacent, especially in America. But what you're seeing in this quarter is a return on the investments that we've made, staying focused on our strategy, despite the fact that we had to navigate some fairly bumpy quarters as an industry. And then I think the team, the team that we have on the ground there, we've recruited top industry talent there. and complemented it with a lot of in-house experience that had been built up in the company over many years. So it's a lot of different factors, Jacob. But I think the key thing here is not to be complacent. It's a good quarter. We need to keep up the momentum. We need to stay focused. Don't get distracted and stay the course. That's the plan.

Okay, and then just a follow-up also on the US genetics business. I mean, it seems to be developing quite nicely. Would you say that you have finally now turned that around and that you're confident that you can also take market share there going into next year and increase profitability?

Yeah, so... Genetics had actually had an excellent quarter in North America. Genetic services. So obviously in genetic services, we have the services business and we have the kits. The services part is doing extremely well. Can we continue this momentum in North America into next year? Yes, we should be able to because we have some large network wins there. So we have some good tailwinds. Yeah, what I would say is that the genetics business has been impacted in the Middle East. So you can see that in our EMEA numbers. We do have a, not very large, but a sizable genetic services business in the Middle East. That has been impacted. But broadly, the genetic services side is, yeah, it's pretty steady and holding up a lot better than it has in previous quarters. I never like to get ahead of myself and say, you know... We're going to shoot out the lights, but it's certainly looking a lot more stable than it has, certainly in the couple of years that I've been the CEO of the company. So, yeah. Hopefully that answers your question, Jacob.

Yep, thank you. I'll get back into the queue.

Okay.

The next question comes from Ludvig Lundgren from Nordia. Please go ahead.

Yes, hi and thank you for taking my questions. So continuing on the US and Americas. So you highlighted that cycle growth like recovered late in Q3 at the second part of the Q3. So then I assume the exit rate was a bit higher than the average or total growth rate in a quarter. So just to set some recent expectations here for market development heading into Q4 and 26. Are you able to share how much difference we have seen throughout the quarter in cycle growth?

Yeah, so I can't share exact... So first of all, thank you for your question, Ludvig. I can't share exact percentages, but we did start to see a pickup. It was really just in the last month of the quarter, to be honest. The first two months of the quarter, we didn't see a pickup, but there is also a seasonal effect there which can impact that. Despite the fact that we saw a pickup, we still don't believe that cycles have fully recovered in the US. So it remains to be seen what the impact of the announcement on the 16th of October will be um but it was more a case ludwig of a slow steady increase in the last month of the quarter there was no explosion of pent-up demand or anything like that i mean it wasn't you know we're not we're not talking about a very sizable jump um more slow steady flow of ivf patients coming back to the to the clinics

Okay, understood. So yeah, a slight improvement then I suppose to thank you for. But then just to follow up on the IVF announcement last week. So like, do you expect this to yield any significant change in either cycles or like IVF insurance coverage, maybe into 26 or, yeah, ahead?

Yeah, so I have the White House statement here in front of me. You can actually print it. You can print it off. Anybody can access it. um look this is good news for the ivf industry it's not brilliant news okay it but it is good news so if you sort of if you remove a lot of the hype and you get down into the facts what does this actually mean what it actually means is a reduction in the price of the drugs of the fertility drugs for patients If you look at the White House fact sheet, there's talk of estimates, you know, women, and I quote, women can save up to $2,200 per cycle of fertility drugs. In the United States, nobody pays less price for drugs. So I think that's the maximum amount that a patient would expect to save. Nonetheless, it is a saving. So it's a saving. It's not huge, but it is a saving. So that's a good thing. The insurance piece is more complicated, but it is positive. So essentially what happens with the way the insurance piece is now designed is you have typically in the United States, you have healthcare coverage. And then usually people will have additional or supplemental things like dental. It can be dental, it can be hearing. And now... there will be the opportunity to have supplemental fertility coverage. That is also a good thing, but that's going to take time. It'll take time for that to come through the system. So what we are expecting, our interpretation, okay, and there can be various interpretations, is that Yes, it's positive. Are we going to see an explosion and pent up demand and suddenly employers all over the US will grant coverage, fertility coverage to their employees? No, it's more likely to be a slow, steady improvement in terms of fertility coverage for employees. So good news, more likely to lead to slow, steady improvement as opposed to a very significant pickup. I guess my own personal assessment is at least we now have clarity because what we had in in quarter two and and and in yeah for most of quarter three was uncertainty are we getting an announcement are we not getting an announcement what is it going to tell what is it not going to entail the really good thing to come out of all of this from the 16th of October is patients now have clarity and they can decide how they want to time their IVF treatment. So personally, I see this as the biggest advantage of all. So yeah, hopefully that helps to answer your question, Ludwig. There's a lot to unpeel in that announcement. If you separate the hype from the facts and the 2,320% reduction, this is essentially what it means. Yeah.

Okay, thanks. Thank you. Very clear. And then I just wanted to squeeze in one more for per on operating expenses up 4% year over year. And I think it's mainly explained by these IT investments in admin. So just if you could give some flavor on these investments, like how is it up from Q2? And how should we expect this to develop in Q4 and into 26?

Yeah, as I explained, it's the investment in IT and digitalization across the company in various functions, in manufacturing, in admin and so on. We have invested in the last couple of quarters somewhat more on IT and digitalization. And the increase compared to the quarter last year is not only item digitalization, but it's a big part of that increase. But compared to Q2 and Q1, it's more or less in line, slightly higher perhaps, but more or less in line.

Okay, perfect. Thank you very much.

The next question comes from Ulrik Trattner from DNB Carnegie. Please go ahead.

Great. Thank you very much for taking my add-on questions as well. A little bit different angle here. Sentiment for genetics and predominantly PGTA. I know from a lot of focus on SRA and ASRM on workflow protocols, how to manage PGTA workflows. So where is the customer sentiment and where are we at in terms of your commercial traction both in EMEA and in the US? I know that you're saying that you're having a bit of struggle in the Middle East in part, but good traction in the Western Europe and the US is obviously doing it quite well. So where are we at sentiment-wise?

Yeah, so thank you for the question Ulrik. PGTA, it's accelerating for our company. We're doing very well. And when I say PGTA, you know this, Ulrich, I mean the PGTA family of tests, PGTA and PGDM. The growth is more than robust. It's very strong in North America, and it's also strong in EMEA and in Western Europe. I do agree with you on the workflow piece. In terms of, you know, guidelines and bringing more consistency and standardization to that workflow. But we see that as a positive thing. Standardization is good. Guidelines are good. We welcome that. And it tends to positively impact us as opposed to negatively. So, yeah, I mean... The PGTA family of tests is a key growth driver. And for us in our key markets, it's very healthy.

And how about the embrace test and essentially your entire non-invasive family of tests? How are those received and how is that looking?

so also very well received high growth albeit from a much lower base um very strong growth for embrace actually um so yeah it's it's non-invasive is i i suppose in many ways the future But a lot of people like the standard test as well. But if you look at our portfolio, the non-invasive piece in general, the growth rates from lower base are significantly above the growth rates across the rest of the genetics portfolio.

So you're spot on there. Would you say that customers have overcome the issues with potential maternal cell contamination of non-invasive TGTA, or has that been less of an issue in reality versus what was implied technically?

Yeah, I think it's less of an issue because there's much more education around that now. So, I mean, you know, initially clinics would push back Ulrich on the contamination piece because they didn't understand it. Now, I think with increased education and understanding, they appreciate the benefits of the contamination factor now. So it's not so much an issue anymore at all, really.

And an additional follow-up on that, because this leads into potentially the million-dollar question on your end. When can we expect a combination of a non-invasive PGTA test, an error test, and time lapse? or your embryoscope on the US market?

Well, that's a million dollar question or a billion dollar question, which I could never reveal because it's such a source of strategic and competitive advantage to our company. But we have our R&D programs and we're working on them steadily. And most of them are on track or slightly ahead of schedule. And that's about as much as I would like to say on that topic.

Okay, great. And last question on my end, and since we have Pat on board, I need to ask, looking at the balance sheet and potentially another direction beyond M&A, I guess you're happy with your current portfolio, could add a few product XC cryogenetics, but I guess platform acquisitions are out of the picture. How about not just exploiting the option of doing buybacks?

Yeah, thank you. That's a good question. Yeah, we are looking into different alternatives, what to do with the access cash. And we will, of course, have our view and recommendation to the board. But ultimately, this is, of course, a board decision.

But you have suggested it to the board of directors.

I have not suggested anything yet. I'm only three weeks in here, but we are looking into that. And down the road, we will suggest our proposals to the board. But ultimately, that is the board decision.

Okay, great. Well, thanks for taking my additional questions.

Yeah. Oh, it's a pleasure, Ulrik.

The next question comes from Susanna Quekborner from Handelsbanken. Please go ahead.

Hello. Just one more question relating to the U.S. share gains. So you said that you've been taking share gains across the entire portfolio. I was wondering if within genetics there's been the long-term ambition to sell more high margin tests versus low margin tests. Can you maybe talk a bit about this dynamic in terms of the lab testing companies and whether you've been able to make that transition?

Yeah, fantastic question. Thank you, Susannah. So within our PGTA family of tests, we do have uh levels of differentiation so obviously i mean you know this very well with your background we have pga pm uh we have pga plus um and uh some of those tests i won't reveal which but some of those tests have higher margin profiles so what we are doing is is obviously focusing our efforts on the more differentiated higher margin tests uh in order to improve the profitability Essentially, we're doing exactly what you're asking in your question. How do we go about that? It's doubling down on the differentiated areas where we can command a premium price because of the level of differentiation. That could be SNPs, it can be flow, it can be seed, there's various different elements in there. Does that answer your question, Susannah?

Yes, I think it does, yeah.

Okay, you're welcome. Thank you.

Thank you. The next question comes from Jakob Lemke from SEB. Please go ahead.

Thank you. I have two further questions. Firstly on APAC, I mean 1% growth here in the quarter and you say that regions outside of China grow well. I guess we could almost infer then that China is declining. So given this, could you maybe break down your expectations for APAC growth next year, sort of what you see in China and outside of China?

Yeah, thank you for the question, Jacob. So, yeah, I mean, China had the entire IVF industry and China is impacted, as we know. And obviously, we have a lot of conversations with our colleagues in the drug company. So, you know, they're seeing the same dynamic. But what's interesting is the rest of APAC is performing pretty robustly, at least it is for us. So the key question for everyone is when does China start to improve? When do the improved... reimbursement, when or do the improved reimbursement conditions start to kick in? I think to one of the earlier questions, how much of this is linked to macroeconomic sentiments? There is an element of that. So it's complicated, Jacob, to sort of assess when does China turn? I think what's key for for us is that we hold our very strong position in China. Like we have market leadership positions in certain key categories, very strategic and important ones. So making sure that we continue to hold very firmly there and we are. and then accelerating our growth across the rest of the region. And we're also doing that. I mean, as I'm speaking to you, I can see our growth rates in the other markets across the region. So it's really a case of holding our position firmly and strongly in China as hopefully market conditions improve there and then accelerating our growth across the rest of the region. and reducing our reliance on China. And that's how we've been able to turn APAC positive this quarter. Hopefully that answers your question, Jacob. I need to be rather circumspect in terms of the level of detail I give on APAC.

Yeah, I understand. That's fine. My second question is, So the follow up to the admin costs, which has been surprisingly high this year, both here in Q3, you mentioned IT investments, and they were also quite high in Q2. So if you can give any thoughts on admin costs for 2026, if they will continue to expand or sort of normalize or maybe decline. Yeah.

Yeah, no, as I said, the Q3 operating expense align well with our average OPEX level over the past seven quarters. So we see this consistent and stable cost trend and we don't have any plans to increase that from this level. Of course, we are exposed to inflation and stuff like that that we will have to handle, but we don't have any major plans to increase. But of course, Our strategic investments in IT and digitalization is important for us, and we will continue to further develop our capabilities in that area.

Yeah, if I would add, I think the OPEX, to Pär's point, has been very stable for seven quarters. What has changed is the mix. So obviously we've been trying and had very tight cost control measures throughout the year. So we do see some areas coming down, but other areas where we're strategically investing in a very premeditated way and IT and digitalization is key there. So, yeah. Hopefully that helps to answer your question, Jacob.

Yeah, and maybe if I can take a short final question. Just on technologies, it was a very strong quarter Q4 last year. What do you see there for Q4 this year?

Yes, it was. It was a huge quarter. Typically, it is our largest quarter of the year. The comps will be challenging. So there's kind of pros and cons on this one. Challenging comps, that's a headwind, but typically Q4 is the strongest quarter. So that's a tailwind. We do have a very good pipeline, very robust pipeline. And as I mentioned earlier, the combined embryoscope and e-witness is starting to gain traction. So that's a tailwind. But throughout this year, I think across the entire medtech industry, capital purchases have been delayed and postponed. We ourselves see that the selling time of embryoscope has lengthened. We do very tight funnel management using Salesforce across all of our regions on Embryoscope so we can see the metrics and we know it takes longer for the deals to come in. But we don't see cancellations of orders and we don't see leads dropping out of that funnel. Yeah, I think there are pros and cons going into quarter four. The team are very focused on driving that. Yeah, I guess that's about as much as we can say for now. Thanks, Jacob.

Okay, thank you very much. That's all for me.

The next question comes from Ludvig Lundgren from Nordia. Please go ahead.

Yes, thank you. So just a very quick question. I'll follow up to Jacob's question there. So yeah, quite stable OPEX year over year, but you also should have some headwinds on the OPEX side from FX. Like looking at OPEX to sales, you're up a bit year over year, right? So then I just wonder like, yeah, for us modeling, is it possible to share a organic like OPEX increase year over year? and how that has developed here in Q3 specifically.

Sorry, can you clarify that question again, please?

Yeah, so basically what I'm requesting is if you have an organic operating expense increase, because we saw a 4% increase reported but you probably have some tailwind on the cost side from FX.

Yeah we have of course that as well so yeah and then we have an organic increase partly offset with the currency impact of course.

Okay so is the organic number closer to 10 or like just to get a sense of how much costs are growing here into Q4?

uh yeah um we don't disclose that number exactly but it's of course it's higher than than four and and closer to ten that's that's a good estimate okay perfect thank you very much but you are correct ludwig there is a there is a obviously a currency element in there there's currency elements everywhere it's flowing through all of the financials as you as you can see

Yeah. Yeah. Thanks.

Great. Yeah. OK, I think we need to finish up there. Thank you all for your time, your attention, your engagement and your questions.