Q1 2025 Coloplast AS Earnings Call

Operator.

I would like to remind you that all participants will be in listen only mode and the conference is being recorded.

Presentation will be followed by a Q&A session.

Register for questions at any time by pressing star one on your telephone.

For operator assistance, Please press star and zero the conference must not be recorded for publication or broadcast.

Speaker Change: At this time, it's my pleasure to hand over to Christian Williamson President and CEO. Please go ahead.

Christian Williamson: Good morning, and welcome to our Q1 'twenty four 'twenty five conference call.

Speaker Change: Christian <unk> from the CEO of coal plus and I'm joined.

Speaker Change: By our CFO on this morning's call on our Investor Relations team.

Speaker Change: We will start with a short presentation by Anders and myself and then open up for questions. As we usually do please turn to slide number three.

Speaker Change: Yes.

Speaker Change: We delivered 8% organic growth in our reported EBIT margin before special items of 27%, which was in line with our expectations.

Speaker Change: Adjusted return on invested capital after tax and before special items was 15% on par with last year.

Speaker Change: Let me start today's call with a few highlights.

Speaker Change: On the 14th of November 2024.

Speaker Change: The final local coverage determination policy for skin substitutes was announced.

Speaker Change: <unk> was one of the few products that was added back to the final list of covered products as a result of the strong clinical evidence backing the efficacy of the fishkin technology.

Speaker Change: Following a freeze of all regulatory guidance not yet in effect by the New U S administration. The implementation date of the final LCD policy has been moved by two months to the 13th of April 2025.

Speaker Change: <unk> products are currently covered number remain covered once the final LCD policy is implemented and as such this updated implementation timeline is not expected to impact current trading.

Speaker Change: Next in December 2024, we announced the divestment of our skin care business.

Speaker Change: The divestment is a key initiative from the simplicity and profitability improvement program for our advanced wound care business area, which will result in a positive impact on the group EBIT margin of around 30 basis points This financial year the.

Speaker Change: Ladies and gentlemen, welcome to the Coloplus AS Q1 2024-25 Earnings Release Conference Call.

Speaker Change: The divestment will reduce reported revenue for 2025 with around 350 million Danish kroner or around one five percentage points impact on reported revenue growth.

Speaker Change: I am Valentina, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone.

Speaker Change: Now, let's look at a few performance highlights from Q1.

Speaker Change: Our chronic care business is off to a good start with both Ostomy care incontinence care outgrowing the market.

Speaker Change: Continence care Q1 marked the first quarter in which <unk> was the main contributor to growth driven by the male catheter.

Speaker Change: For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Wilhelmsen, President and CEO. Please go ahead.

Speaker Change: We continue to receive strong feedback on <unk> and its micro <unk> zone technology from both users and health care professionals. We also continue the rollout of the female version of the catheter now available in nine markets with the U S. As the latest launch market.

Christian Willemsen: Good morning and welcome to our Q1 2425 conference call. I'm Christian Willemsen, the CEO of Coloplast, and I'm joined by our CFO, Anna Sloning-Skogol, and our investor relations team.

Speaker Change: Our two newest additions to the portfolio <unk> medical and <unk> are also off to a good start with continued strong momentum and double digit growth in the quarter.

Christian Willemsen: We'll start with a short presentation by Anderson, myself, and then open up for questions, as we usually do. Please turn to slide number three.

Speaker Change: Finally, Q1 also marked a soft start in our interventional urology business and our emerging markets region.

Christian Willemsen: We delivered 8% organic growth and a reported EBIT margin before special items of 27%, which was in line with our expectations.

Speaker Change: And then interventional urology growth in the quarter was impacted by a voluntary product recall related to packaging.

Christian Willemsen: Adjusted return on invested capital after tax and before special items was 15% on par with last year.

Initiated in December 2020 for the.

The issue with the packaging has been resolved and we will resume sales of the affected products here in February.

Let me start today's call with a few highlights.

Christian Willemsen: On the 14th of November, 2024, the final local coverage determination policy for skin substitutes was announced.

Speaker Change: Emerging markets growth was impacted by a high baseline last year, but despite the softer start I expect an improvement.

Speaker Change: In both businesses during the year.

Christian Willemsen: Kerasys was one of the few products that was added back to the final list of covered products as a result of the strong clinical evidence backing the efficacy of the FishSkin technology.

Speaker Change: Now, let's look at today's results in more detail could I ask you to please turn to slide number four.

Speaker Change: In Ostomy care, both organic growth and growth in Danish kroner was 7% in the first quarter.

Christian Willemsen: Following a freeze of all regulatory guidance not yet in effect by the new U.S. administration, the implementation date of the final LCD policy has been moved by two months to the 13th of April 2025.

Speaker Change: The <unk> portfolio was the main growth contributor in Q1.

Speaker Change: Our latest addition to the Ostomy care portfolio since <unk> in Black is off to a good start in the 12 markets, where the range has been launched Brava.

Christian Willemsen: Kerasys' products are currently covered and will remain covered once the final LCD policy is implemented and as such, this updated implementation timeline is not expected to impact.

Speaker Change: Bravo range of supporting products also made a solid contribution to growth, while Austin SURA and a sore alternative portfolios continue to drive growth in emerging markets.

current trading.

Thank you.

Speaker Change: Next, in December 2024, we announce the divestment of our skin care business.

Speaker Change: From a geographical perspective growth in Q1 was driven by solid contributions from Europe, and the U S. Emerging markets region was impacted by a high baseline last year as mentioned earlier and.

Christian Willemsen: The divestment is a key initiative from the Simplicity and Profitability Improvement Program for our Advanced Wound Care Business Area, which will result in a positive impact on the group EBIT margin of around 30 basis points this financial year.

Speaker Change: <unk> delivered a softer Q1.

Speaker Change: The U S posted double digit growth in the quarter, which includes solid underlying demand and.

Christian Willemsen: The divestment will reduce reported revenue for 2024-2025 with around 350 million DKK or around 1.5 percentage points impact on reported revenue growth.

Speaker Change: Also some benefit from a lower baseline last year.

Speaker Change: In continence care, both organic growth and growth in Danish kroner were 7% for Q1.

Now, let's look at a few performance highlights from Q1.

Speaker Change: The larger portfolio was the main growth contributor in the quarter driven by the male catheter in the UK and Germany.

Christian Willemsen: Our chronic care business is off to a good start with both ostomy care and continence care are growing the market. In continence care Q1 marked the first quarter in which Louja was the main contributor to growth driven by the male catheter.

Speaker Change: The speed of catheter <unk> catheter has also contributed to growth in the quarter.

Speaker Change: Our two smaller segments in continence care ball care and collecting devices, both contributed to growth in Q1.

Christian Willemsen: We continue to receive strong feedback on Lugia and its microhole zone technology from both users and healthcare professionals. We also continue the rollout of the female version of the catheter now available in nine markets with the U.S. as the latest launch market.

Speaker Change: From a geographical perspective growth was driven by Europe, and the U S. While growth in emerging markets was impacted by a high baseline as mentioned previously.

Voice and respiratory care posted 11% growth for Q1 with growth in Danish kroner of 10%.

Christian Willemsen: Our two newest additions to the portfolio, ATOS Medical and Kerasys, are also off to a good start, with continued strong momentum and double-digit growth in the quarter. Finally, Q1 also marked a soft start in our interventional urology business in our emerging markets region.

Speaker Change: Strong performance.

Speaker Change: <unk> and voice in respiratory care continues to be driven by broad based contributions from both laryngectomy in tracheostomy, both of which grew at a double digit rate in Q1.

Speaker Change: And then injected knee growth was driven by an increase in the number of patients served in existing and new markets as well as an increase in patient value driven by the <unk> portfolio.

Christian Willemsen: An interventional urologic growth in the quarter was impacted by a voluntary product recall related to packaging initiated in December 2024. The issue with the packaging has been resolved and we will resume sales of the affected products here in February.

Speaker Change: A recent example of how we continue to develop the laryngectomy market comes from France.

Speaker Change: While reimbursement for heat moisture exchangers was expanded from one <unk> per day to <unk>.

Christian Willemsen: The emerging markets growth was impacted by a high baseline last year, but despite the softer start, I expect an improvement.

Speaker Change: Multiple <unk> per day, allowing users better choice.

Speaker Change: Better situational use of the products.

in both businesses during the year.

Speaker Change: Growth in tricky ought to be in the quarter was driven by continued solid demand and an increase in the number of patients served from a geographical perspective, all regions contributed to growth led by Europe and the U S.

Christian Willemsen: Now, let's look at today's results in more detail. Could I ask you to please turn to slide number four?

Christian Willemsen: In honest to me care, both organic growth and growth in Danish corn was 7% in the first quarter.

Christian Willemsen: The Sonsora Mew portfolio was the main growth contributor in Q1. Our latest addition to the Austimy Care portfolio, Sonsora Mew in black, is off to a good start in the 12 markets where the range has been launched.

Speaker Change: In advanced wound care organic growth was 12% for Q1 and growth in Danish kroner was 7%.

Speaker Change: Reported growth includes four percentage points negative impact from the divestment of the skincare business, reflecting one month of impact.

Christian Willemsen: The Bravo range of supporting products also made a solid contribution to growth while Asensura and Asura Alternative portfolios continue to drive growth in emerging markets.

Speaker Change: <unk> was the main growth contributor in advanced wound care with continued solid momentum and growth of 32% in Q1.

Christian Willemsen: From a geographical perspective, growth in Q1 was driven by solid contributions from Europe and the U.S. The emerging markets region was impacted by a high baseline last year, as mentioned earlier, and delivered a softer Q1.

Speaker Change: Growth was broad based with contributions from both the inpatient and outpatient segments in.

Speaker Change: <unk> operating profit margin, excluding PPA amortization was 12% in the quarter in line with expectations.

Christian Willemsen: The U.S. posted double-digit growth in the quarter, which includes solid underlying demand and also some benefit from a lower baseline last year.

Speaker Change: The advanced wound dressings business grew 6% in Q1.

Speaker Change: From a product perspective bite and fiber was the main growth contributor followed by <unk> silicone in October 2020 for addressing portfolio was strengthened with the launch of <unk> Super absorbers are soft and another piece of dressing for the treatment of warrants with high volumes of exited.

Christian Willemsen: In continence care, both organic growth and growth in Danish Kona were 7% for Q1. The Luger portfolio was the main growth contributor in the quarter, driven by the male catheter in the UK and Germany.

Christian Willemsen: The speedy cath and emittent catheters also contributed to growth in the quarter.

Speaker Change: Product has been launched in key European markets with very positive feedback.

Christian Willemsen: Our two smallest segments in continence care, bowel care and collecting devices, both contributed to growth in Q1.

Speaker Change: In international Urology, both organic growth and growth in Danish kroner or 1%.

Speaker Change: As mentioned earlier growth in the quarter includes negative impact from the voluntary product recall in bladder health in surgery of around 25 million Danish kroner.

Speaker Change: We expect continued negative impact from the product recall in the second quarter of around 15 million Danish kroner and as I mentioned earlier sales of the effective products will resume here in early February.

Peace.

Christian Willemsen: Boys in respiratory care posted 11% growth for Q1, with growth in Danish corona of 10%.

Christian Willemsen: Strong performance in voice and respiratory care continues to be driven by broad-based contributions from both laryngectomy and tracheostomy, both of which grew at a double-digit rate in Q1.

Speaker Change: We expect to recover the majority of the lost revenues in the second half of the year as we continue to see unmet demand in the market for the affected products.

Speaker Change: The negative impact from the product recall was partly offset by a solid quarter in the endo urology business driven by our laser equipment, the sodium fiber laser drive.

Christian Willemsen: And laryngectomy growth was driven by an increase in the number of patients served in existing and new markets as well as an increase in patient value driven by the Provox Life portfolio.

Speaker Change: On the men's health business in the U S. Also contributed to growth while the women's health business had a neutral impact on growth.

Christian Willemsen: A recent example of how we continue to develop the linojectumine market comes from France, where reimbursement for heat and moisture exchangers was expanded from one HME per day to multiple HMEs per day, allowing users better choice and better situational use of the products.

Speaker Change: From a geographical perspective, the U S was the main growth contributor in Q1, while Europe detracted from growth due to the product recall.

Speaker Change: I'll now hand over to Anders who will take you through the financials and outlook in more detail.

Speaker Change: Please turn to slide number five.

Anders: Thank you Christian and good morning, everyone.

Anders: Reported revenue for Q1 increased by 420 million, Danish kroner, or 6% compared to last year.

Anders: Organic growth contributor around 500 million Danish kroner around 8% to reported revenue.

Christian Willemsen: In Advanced Womb Care, organic growth was 12% for Q1 and growth in Danish Kona was 7%.

Anders: Revenue from divested operations, mostly related to the divestment of the skincare business in December 24, reduce reported revenue by 47 million Danish kroner or around 1%.

Christian Willemsen: Reported growth includes four percentage points negative impact from the divestment of the skin care business reflecting one month of impact.

Christian Willemsen: Care Assist was the main growth contributor in advanced care with continued solid momentum and growth of 32% in Q1.

Anders: Foreign exchange rates reduced reported revenue by 32 million things Kona or around 1%, mostly related to the depreciation of a basket of emerging market currencies, such as the Argentinian peso, the Brazilian real against the things as well as the Japanese yen against the Danish kroner.

Christian Willemsen: Growth was broad-based with contributions from both the inpatient and outpatient segments. And Care Assist's operating profit margin excluding PPA amortization was 12% in the quarter, in line with expectations.

The Advanced Owned Dressings business grew 6% in Q1.

Anders: This negative impact was only partly offset by the appreciation of the British pound against the Danish kroner.

Christian Willemsen: From a product perspective, biotin fiber was the main growth contributor, followed by biotin silicone. In October 2024, our dressing portfolio was strengthened with the launch of biotin super absorber, a soft and non-adhesive dressing for the treatment of wounds with high volumes of exudate.

Anders: Please turn to slide number six.

Anders: Gross profit for Q1 amounted to $4 8 billion things chemo corresponding to a gross margin of 68% on par with last year.

Anders: Gross margin was positively impacted by favorable development in input cost price increases and country and product mix.

Christian Willemsen: The product has been launched in key European markets with very positive feedback.

Christian Willemsen: In interventional urology, both organic growth and growth in Danish corona were 1%.

Anders: The positive development in the above mentioned factors was partially offset by ramp up cost of our manufacturing sites in Costa Rica and possible.

Christian Willemsen: As mentioned earlier, growth in the quarter includes negative impact from the voluntary product we call lymph bladder health and surgery of around 25 million Danish kroner.

Anders: Gross margin also included a negative impact from currencies of around 40 basis points.

Anders: Operating expenses for Q1 amounted to around $2 8 billion Danish kroner, increasing by 6% compared to last year.

Christian Willemsen: We expect continued negative impact from the product recall in the second quarter of around 15 million Danish kroner and as I mentioned earlier Sales of the affected products will resume here in early February

Anders: The distribution to sales ratio for Q1 was.

Anders: 33% compared to 32% in Q1 last year.

Christian Willemsen: We expect to recover the majority of the lost revenues in the second half of the year as we continue to see unmet demand in the market for the affected products.

Anders: Kris and distribution costs was driven by continued commercial investments in <unk> and higher sales activities across markets.

Christian Willemsen: The negative impact from the product recall was partly offset by a solid quarter in the indoor urology business, driven by our laser equipment, the thulium fiber laser drive, and the men's health business in the U.S. also contributed to growth, while the women's health business had a neutral impact on growth.

Anders: The distribution costs also included around 20 million Danish kroner extraordinary costs related to the new distribution center in the U S.

Anders: The admin to sales ratio for Q1 was 4% compared to 5% last year, primarily impacted by a high baseline as well as benefits from synergies from the <unk> medical integration.

Christian Willemsen: From a geographical perspective, the U.S. was the main growth contributor in Q1 while Europe detracted from growth due to the product recall.

Christian Willemsen: With this, I'll now hand over to Anders, who will take you through the financials and Outlook in more detail.

Anders: The R&D to sales ratio for Q1 was 3% of sales compared to 4% last year.

Please turn to slide number 5.

Anders: Overall this resulted in an operating profit before special items of $1 9 billion Danish kroner in Q1, and a 5% increase compared to last year.

Anders: Thank you, Christian, and good morning, everyone. Reported revenue for Q1 increased by 420 million Danish kroner, or 6%, compared to last year. Organic growth contributed around 500 million Danish kroner, or around 8%, to reported revenue.

Anders: The EBIT margin before special items for Q1 was 27% compared to 28% last year.

Anders: The EBIT margin continues to include a negative impact of around 100 basis points from kocis, including the PPA amortization costs.

Anders: Revenue from divested operations, mostly related to the divestment of the skin care business in December 2024, reduced reported revenue by 47 million Danish kroner, or around 1%.

Anders: <unk> also had a negative impact on the reported EBIT margin of around 40 basis points, most related to the depreciation of a basket of emerging market currencies as well as the Japanese yen against the Danish kroner.

Anders: Foreign exchange rates reduced reported revenue by 32 million Danish Kroner or around 1%, mostly related to the depreciation of a basket of emerging market currencies such as the Argentinian Peso, the Brazilian Real against the Danish Kroner, as well as the Japanese Yen against the Danish Kroner.

Anders: Financial items in Q1, and an expense of 69 million Danish kroner compared to a net expense of 253 million Danish kroner in Q1 last year.

Anders: Driven mostly by interest expenses related to the financing of the answers medical acquisition.

Anders: This negative impact was only partly offset by the appreciation of the British Pound against the Danish Kroner.

Anders: <unk> expenses were partly offset by gains in balance sheet items against the loss and balance sheet items in last year.

Please turn to slide number 6.

Anders: Gross profit for Q1 amounted to 4.8 billion Danish Kroner corresponding to a gross margin of 68% on par with last year.

Anders: The ordinary tax expense in Q1 was 342 million Danish kroner with an ordinary tax rate of 22% on par with last year.

Anders: The gross margin was positively impacted by a favorable development in input cost, price increases, and country and product mix. The positive development in the above-mentioned factors was partly offset by ramp-up costs of our manufacturing sites in Costa Rica and Portugal.

Anders: However, the total tax expense and effective tax rate was impacted by an extraordinary tax expense of 336 million things corner related to the transfer cases in today's for privacy from Iceland to Denmark.

Anders: The gross margin also included negative impact from currencies of around 40 basis points.

Anders: As a result of the extraordinary tax expense.

Anders: Operating expenses for Q1 amounted to around 2.8 billion Danish Kroner, increasing by 6% compared to last year.

Anders: Effective tax rate in Q1 amounted to 41%.

Anders: The <unk> IP transfer has made to ensure consistency with our tax model and will help us maintain simplicity in our infrastructure as we initiate the integration of <unk>.

Anders: The distribution to sales ratio for Q1 was 33% compared to 32% in Q1 last year. The increase in distribution cost was driven by continued commercial investments in carriages and higher sales activities across markets.

Anders: The IP transfer will have a similar quarterly impact on the tax expenses for the rest of this financial year as a result of the IP transfer and extraordinary tax payment impacting cash flows will be made in Iceland.

Anders: The distribution cost also included around 20 million Danish Kroner, extraordinary cost related to the new distribution center in the US.

Anders: 26 27 at the earliest.

Anders: The payment in Iceland will be fully offset by reduced tax payments in Denmark for a period of around seven years, starting from 2495.

Anders: The admin to sales ratio for Q1 was 4% compared to 5% last year, primarily impacted by high baseline as well as benefits from synergies from the access medical integration.

Anders: Adjusted for the <unk> IP transfer net profit before special items in Q1 was $1 4 billion Danish kroner or 17% increase compared to last year adjusted diluted earnings per share before special items also increased by 17% to $6 three eight Danish kroner.

Anders: The R&D to sales ratio for Q1 was 3% of sales compared to 4% last year.

Anders: Overall, this resulted in an operating profit before special items of 1.9 billion Danish Kroner in Q1 and a 5% increase compared to last year.

Anders: The EBIT margin before special items for Q1 was 27% compared to 28% last year.

Anders: Please turn to slide number seven.

Anders: Operating cash flow for Q1 was an inflow of 2 billion Danish kroner compared to an inflow of $1 8 billion Danish kroner in Q1 last year.

Anders: The EBIT margin continues to include negative impact of around 100 basis points from caresses, including the PPA amortization costs.

Anders: Development in cash flows was mostly driven by positive development and changes in working capital driven by trade receivables and inventories, partially offset by an increase in interest payments.

Anders: Currencies also had a negative impact on the reported EBIT margin of around 40 basis points, mostly related to the depreciation of a basket of emerging market currencies, as well as the Japanese Yen against the Danish Kroner.

Anders: Cash flow from investing activities was an outflow of 133 million Danish kroner compared to an outflow of 267 million things Kona last year. The development in cash flow from investing activities. In Q1 includes positive impact of 192 million Danish kroner from the divestment of the skincare business.

Anders: Financial items in Q1 were a net expense of 69 million Danish Kroner compared to a net expense of 253 million Danish Kroner in Q1 last year.

Anders: driven mostly by interest expenses related to the financing of the Asos Medical Acquisition. The finance expenses were partly offset by gains on balance sheet items against the loss on balance sheet items last year.

Anders: Capex in Q1 amounted to 308 million Danish kroner with a capex to sales ratio of 4% on par with last year.

Anders: As a result of the free cash flow for Q1 was an inflow of $1 9 billion Danish kroner compared to an inflow of $1 5 billion things corner last year.

Anders: The ordinary tax expense in Q1 was 342 million Danish Kroner with an ordinary tax rate of 22% on par with last year.

Anders: <unk> the positive impact from the skin care divestment, the adjusted free cash flow with.

Anders: However, the total tax expense and the effective tax rate were impacted by an extraordinary tax expense of 336 million Danish kroner, related to the transfer of Kaos's intellectual property from Iceland to Denmark.

Anders: It was an inflow of $1 7 billion Danish kroner.

Anders: 11% increase from Q1 last year.

Anders: The trailing 12 months cash conversion was 85%.

Anders: As a result of the extraordinary tax expense, the effective tax rate in Q1 amounted to 41%.

Anders: Net working capital amounted to around 25% of sales on par with last year.

Anders: Now, let's look at the guidance for 'twenty four 'twenty five financial year, Please turn to slide number eight.

Anders: The Kerasys IP transfer is made to ensure consistency with our tax model and will help us maintain simplicity in our infrastructure as we initiate the integration of Kerasys.

Anders: For the 24 25 financial year, we continue to expect organic revenue growth of 8% to 9% and an EBIT margin before special items of around 28%.

Anders: The IP transfer will have a similar quarterly impact on the tax expenses for the rest of this financial year. As a result of the IP transfer, an extraordinary tax payment impacting cash flows will be made in Iceland from 2026-2027 at the earliest.

Anders: The assumptions on both organic growth and EBIT margin before special items outlined in November still lastly, Holt.

Anders: The payment in Iceland will be fully offset by reduced tax payments in Denmark for a period of around 7 years, starting from 2024-2025.

Anders: Reported revenue growth in Danish kroner is now expected to be around 7%.

Anders: Which includes around one five percentage points impact from the skincare divestment and the neutral.

Anders: Adjusted for the Caos' IP transfer, net profit before special items in Q1 was 1.4 billion Danish Kroner or a 17% increase compared to last year. Adjusted diluted earnings per share before special items also increased by 17% to 6.38 Danish Kroner.

Anders: Impact from currencies.

Anders: On organic revenue growth guidance assumes continued good momentum and stable supply and distribution of products across the company.

Anders: And key developments since November as the product recall international urology, which creates a higher level of uncertainty, but as mentioned earlier.

Please turn to slide number 7.

Speaker Change: Mystic, maybe can recover majority of the lost sales in the second half of the year.

Anders: Operating cash flow for Q1 was an inflow of 2 billion Danish Kroner compared to an inflow of 1.8 billion Danish Kroner in Q1 last year.

Speaker Change: On <unk>, we continue to expect contribution of around one percentage point to group organic growth and the updated timeline for implementation of the final LCD does not change our expectations.

Anders: The development in cash flows was mostly driven by positive development in changes in working capital, driven by trade receivables and inventories, partly offset by an increase in interest payments.

Speaker Change: On EBIT margin before special items, we continue to expect benefit from low inflationary pressure across cost categories and benefit from the profitability improvement initiatives in advanced wound care of around 30 basis points, mostly related to the skincare divestment.

Anders: Cash flow from investing activities was an outflow of 133 million Danish Kroner compared to an outflow of 267 million Danish Kroner last year. The development in cash flow from investing activities in Q1 includes positive impact of 192 million Danish Kroner from the divestment of the skin care business.

Speaker Change: We are also starting to see a gradual improvement in the extraordinary costs related to the establishment of the U S distribution syndrome, and we are on track to reach a more.

Anders: CAPEX in Q1 amounted to 308 million Danish Kroner with a CAPEX to sales rate of 4% on par with last year.

Speaker Change: Our normalized cost level at the end of Q2.

Speaker Change: But curious as we continue to expect the year with improved profitability. However, the impact for the group is still expected to remain at around minus 100 basis.

Anders: As a result, the free cash flow for Q1 was an inflow of 1.9 billion Danish Kroner compared to an inflow of 1.5 billion Danish Kroner last year.

Speaker Change: Basis points.

Speaker Change: Finally currencies are expected to have a limited positive impact on the EBIT margin with improvement expected as of Q2.

Anders: Excluding the positive impact from the skin care divestment, the adjusted free cash flow was an inflow of 1.7 billion Danish Kroner, or an 11% increase from Q1 last year.

Speaker Change: In terms of facing we expect both organic growth and the EBIT margin to be second half weighted.

The Trading 12-Month Cash Conversion was 85%.

Speaker Change: For 'twenty four 'twenty five I continue to expect around 130 million Danish kroner and special items.

Anders: And net working capital amounted to around 25% of sales on Powell last year.

Speaker Change: The net financial expenses for 'twenty four 'twenty five is still expected at around minus 750 million things corner.

Anders: Now let's look at the guidance for 24-25 financial year. Please turn to slide number 8.

Speaker Change: Mostly related to interest expenses from the financing of medical acquisition.

Anders: For the 2024-2025 financial year, we continue to expect organic revenue growth of 8-9% and an EBIT margin before special items of around 28%.

Speaker Change: Our ordinary tax rate for 2425 is still expected to be around 22%. However, as a result of the <unk> IP transfer from Iceland, Denmark, the effective tax rate is expected to be around 40% for the year.

Anders: The assumptions on both organic growth and the EBIT margin before special items outlined in November still largely hold.

Speaker Change: Our long term expectations for tax rate of around 22 or 23% unchanged.

Anders: Reported revenue growth in Danish kroner is now expected to be around 7%, which includes around 1.5 percentage points impact from the skin care divestment and a neutral impact from currencies.

Speaker Change: Kevin do you still expect it to be around $1 4 billion things corner and includes investments related to the establishment of new manufacturing site impossible.

Anders: On organic revenue growth, Guidance assumes continued good momentum and stable supply and distribution of products across the company.

Speaker Change: Our net working capital I still expect the net working capital to sales ratio in 2425 in line with our long term expectations of around 24%.

Anders: A key development since November is the product recall in interventional neurology, which creates a higher level of uncertainty. But as mentioned earlier, we are optimistic that we can recover majority of the lost sales in the second half of the year.

Finally, before we move to Q&A I would like to mention that would be the host our capital markets day in Denmark on the second of September 25.

Speaker Change: Wherever you will present, our new five year strategy to the market.

Anders: On Kerasys, we continue to expect contribution of around 1 percentage point to group organic growth, and the updated timeline for implementation of the final LCD does not change our expectations.

Speaker Change: We will share further details about the event in due time.

Speaker Change: Look forward to seeing many of you in person in September.

So thank you very much operator, we're now ready to take questions.

Anders: On EBIT margin before special items, we continue to expect benefit from low inflationary pressure across cost categories and benefit from the profitability improvement initiatives in advanced wound care of around 30 basis points, mostly related to the skin care divestment.

Speaker Change: We will now begin the question and answer session and anyone who wishes to ask a question may path.

Speaker Change: One on the telephone you will hear it <unk> concern that you have entered the queue.

Speaker Change: If you wish to remove yourself from the question queue, you May press star and two.

Anders: We are also starting to see a gradual improvement in the extraordinary cost related to the establishment of the U.S. Distribution Center, and we are on track to reach a normalized cost level at the end of Q2.

Speaker Change: Question is on the phone are requested to disable the loudspeaker mode. When asking your question anyone who has a question you May press star one at this time and the first question comes from Hasan <unk> from Barclays. Please go ahead.

Anders: For kerosene, we continue to expect a year with improved profitability, however the impact for the group is still expected to remain at around minus 100 basis points.

Speaker Change: For taking my questions I have three please firstly a high level question on execution Cola plus given recent distribution center issues as well as the small glad to help recall what gives you confidence that these are isolated issues and that we should see more call it plus like perform.

Anders: Finally, currencies are expected to have a limited positive impact on the EBIT margin with improvement expected as of Q2.

Anders: In terms of phasing, we expect both organic growth and the EBIT margin to be second half weighted.

Speaker Change: <unk> going forwards.

Anders: For 2024-2025 I continue to expect around 130 million Danish Kroner in special items.

Lee on top line guidance, Christine you talked about the lower end of the range, reflecting an adverse outcome on the LCD last year. So is the upper end of the range now more likely what are the key pushes and pulls to your mind when it comes to growth for the full year and as Lou just still tracking ahead of internal expectation.

Anders: The net financial expenses for 2024-2025 are still expected at around minus 750 million Danish Kroner, mostly related to interest expenses from the financing of Atos medical acquisition.

Anders: Our ordinary tax rate for 2024-2025 is still expected to be around 22%.

Speaker Change: And then thirdly longer term within interventional urology can you talk about how you're thinking about deepening penetration in the Ips segment, which is low today.

Anders: However, as a result of the Kyrgyz's IP transfer from Iceland to Denmark, the effective tax rate is expected to be around 40% for the year.

Speaker Change: As <unk> launches and how you see coverage developing in this segment. Thank you.

Anders: Our long-term expectations for tax rate of around 22 or 23 percent are unchanged.

Speaker Change: It sounded an awful like five questions to me Hassan but.

Anders: CAPEX is still expected to be around 1.4 billion Danish Kroner and includes investments related to the establishment of new manufacturing site in Portugal.

Speaker Change: Why don't I take a step take a stab at that so on the first question high level on an execution.

Anders: On net working capital, I still expect a net working capital to sales ratio in 2024-2025 in line with our long-term expectations of around 24%.

We don't run a perfect company.

Speaker Change: But we've had two setbacks over the last 12 to 18 months, one related to a distribution center and a quality problem.

Anders: Finally, before we move to Q&As, I would like to mention that we will host a Capital Markets Day in Denmark on the 2nd of September 2025.

Speaker Change: In urology.

Speaker Change: We have dealt with us I will say the distribution center went back to service levels.

Anders: where we will present our new 5-year strategy to the market.

Speaker Change: And there'll be a little bit of cost lingering effect that we will very soon the out of we have taken the learnings the consequences from this.

Anders: We will share further details about the event in due time.

Anders: We look forward to seeing many of you in person in September.

Anders: So thank you very much. Operator, we are now ready to take questions.

Speaker Change: And then I will say.

Speaker Change: The company manufactures.

Speaker Change: More than one five of 1 billion medical devices from time to time.

Bye-bye.

Speaker Change: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from a question queue, you may press star and 2.

Speaker Change: Quality issues happen you should expect that we run a high level high quality execution company.

But not that we.

Speaker Change: We run a perfect company Hassan, but these are certainly aberrations that I do not expect to repeat.

Speaker Change: Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press Star and 1 at this time. And the first question comes from Assan Alwekhil from Barclays. Please go ahead.

Speaker Change: On top line range, we are still guiding for eight to nine.

Speaker Change: So we're also guiding for a profile to growth this year, where we are weighted to the second half what will drive what will drive.

Assan Alwekhil: Thank you for taking my questions. I have three, please. Firstly, a high-level question on execution at coloplasts given recent distribution center issues, as well as the small bladder health recall. What gives you confidence that these are isolated issues and that we should see more coloplast-like performance going forward?

Speaker Change: Pickup in second half.

Speaker Change: It is of course that we get out of the back order situations that we've had around IU. We still continue to get good contributions to growth from from innovation and of course that our new acquisitions continued to deliver.

Assan Alwekhil: Secondly, on top-line guidance, Christian, you talked about the lower end of the range reflecting an adverse outcome on the LCD last year.

Speaker Change: A little too early to guide, where we are on the range with just one quarter in.

Speaker Change: We also.

Speaker Change: We also would like to see the LCD take effect of course, but so far we're maintaining guidance and I expect that we will land comfortably in our range.

Assan Alwekhil: So is the upper end of the range now more likely? What are the key pushes and pulls to your mind when it comes to growth for the full year? And is LUJA still tracking ahead of internal expectations?

Speaker Change: On IQ and the question on <unk>.

Speaker Change: For me right now.

Assan Alwekhil: And then thirdly, longer term, within interventional urology, can you talk about how you're thinking about deepening penetration in the ITNS segment, which is low today, as Antibia launches and how you see coverage developing in this segment? Thank you.

Speaker Change: Everything is about the clinical trial Hassan and.

Speaker Change: What we can do with that technology will depend on the quality of the results that we get.

Speaker Change: And.

Speaker Change: And we will talk a lot more to how we think about commercializing the technology once we have the clinical data.

Speaker Change: That sounded an awful like five questions to me Hassan, but why don't I take a stab at that. So on to the first question, high level on execution.

Speaker Change: We have of course thought about.

Speaker Change: How you do that with the commercial investments look like what kind of training programs you put in place what the commercial plan will look like but at the end of the day the strength of the clinical data will determine what kind of reimbursement that we will be able to command and therefore also the strength of the case that we can make to clinicians in the market. So.

We don't run a perfect company.

Speaker Change: We've had two setbacks over the last 12-18 months, one related to a distribution center and a quality problem.

Speaker Change: in urology. We have dealt with those. I'll say the distribution center, we're back to service levels and there'll be a little bit of cost lingering effect that we will very soon be out of. We have taken the learnings and the consequences from this.

Speaker Change: I would like to speak more to that once I've got more clinical data.

Speaker Change: In hand, and and then we can share what the commercial plan will look like.

Speaker Change: Yes.

Speaker Change: Perfect. Thank you I'll jump back in the queue.

Next question comes from Derek <unk> from RBC capital markets. Please go ahead.

And then I'll say the company manufacturers.

more than 1.5 billion medical devices.

Speaker Change: Hi, guys. Thanks for taking the questions.

Speaker Change: From time to time, quality issues happen. You should expect that we run a high-level, high-quality execution company, but not that we run a perfect company, Hassan. But these are certainly aberrations that I do not expect to repeat.

Speaker Change: And so starting with carrier.

Speaker Change: The FDA.

Speaker Change: The hearing commentary coming from different.

Speaker Change: The different manufacturers.

Speaker Change: Around the scope for the products included on the Reinvestments to benefit from the reduced number of products available on the market.

Speaker Change: Given the potential for the LCD <unk>.

Speaker Change: On top line range, we are still guiding for 8 to 9.

Speaker Change: Lead to the market to contract can you talk us through what kind of gives you confidence that Cola plus we see volumes increase in.

Speaker Change: So, we're also guiding for a profile to growth this year where we are weighted to second half.

Speaker Change: April giving us confidence has your thinking around medium term margin for care system. So.

Speaker Change: What will drive a pickup in the second half is EM.

Speaker Change: Second question was on the manufacturing ramp up costs. So I was wondering if you could quantify what costs from.

Speaker Change: It is, of course, that we get out of the backorder situation that we've been in.

Speaker Change: This had been included in the cost of goods in the quarter and remind us of your expectations for these costs going through the remainder of the year.

Speaker Change: We've had around IU, we still continue to get good contributions to growth from innovation and of course that our new acquisitions continue to deliver.

Speaker Change: And then my last question is from Larry I'm wondering whether you can quantify the contribution from the increase in patients.

Speaker Change: It's a little too early to guide where we are in the range, we're just one quarter in. We also would like to see the LCD take effect, of course, but so far we're maintaining guidance and I expect that we will land comfortably in range.

Speaker Change: The increase in patient value.

Speaker Change: How much kind of runway you see for patient value has increased over the medium term. Thank you.

Speaker Change: So why don't I take question, one and question three and then Andrew can take the question on manufacturing ramp up costs. So on LCD.

On IU and the question on IT&S.

Speaker Change: For me right now, you know, everything is about the clinical trial, Hassan, and what we can do with that technology will depend on the quality of the results that we get.

Speaker Change: We are we are.

Speaker Change: Or on the debt.

Speaker Change: The final policy you will no doubt like I commented on that the implementation date has been postponed.

Speaker Change: And we will talk a lot more to how we think about commercializing the technology once we have the clinical data.

Speaker Change: <unk>.

Speaker Change: We are on the list for <unk>, but not for <unk>. We've also indicated that deal use today is low single digit share of the of our.

We have, of course, thought about

Speaker Change: How you do that, what the commercial investments look like, what kind of training programs you put in place, what the commercial plan will look like, but at the end of the day,

Speaker Change: Portfolio.

Speaker Change: It's too early to talk about what kind of pick up will will happen. We are of course deep in the operational planning on this and if you imagine that we have a reduction from a couple of hundred products to less in 'twenty that will be of course quite a bit of commercial opportunity.

Speaker Change: The strength of the clinical data will determine what kind of reimbursement that we'll be able to command and therefore also the strength of the...

Speaker Change: the case that we can make to clinicians in the market. So I'd like to speak more to that once I've got more clinical data in hand and then we can share what the commercial plan will look like.

Speaker Change: In that space.

Speaker Change: We are ready.

Speaker Change: Have we have the volume of product.

Have the team in place.

Perfect. Thank you. I'll jump back in the queue.

Speaker Change: And exactly how it's going to play out we don't know yet.

Jay Cranwell-Clarks: Next question comes from Jay Cranwell-Clarks from RBC Capital Markets. Please go ahead.

Speaker Change: We don't know yet so the way that we're thinking about <unk>.

Jay Cranwell-Clarks: Hi there, thank you for taking the questions. I would have had three, please.

Speaker Change: Continuing the momentum and of course, it has the opportunity to accelerate if if if this plays out in our favor when it comes to Larry.

Speaker Change: And so starting with Kerasys and DFU, there's some kind of differing commentary coming from the different manufacturers.

Speaker Change: I'm very happy with the performance from a toss up both Larry and <unk>.

Speaker Change: around the scope for the product included on the reimbursed list to benefit from the reduced number of products available on the market.

Speaker Change: The growth model for the Larry business is part volume, so basically winning patients.

Speaker Change: given the potential for the LCD to lead to the market to contract. Can you talk us through what gives you confidence that Coloplast will see volumes increase in DFU in April? And given this confidence, how's your thinking around medium-term margin for Kerasis developed at all?

Speaker Change: Getting them onto right product by product mix and the right use of product.

Speaker Change: And this has this has always been.

Speaker Change: The Formula you should remember that the <unk> business runs a quite a large share of.

Speaker Change: The second question was on the manufacturing ramp-up costs, so I was wondering if you could quantify what costs from this have been included in the cost of goods in the quarter, and remind us of your expectations of these costs going through the remainder of the year.

Speaker Change: The business in our own channel.

Speaker Change: We are speaking with patients on a monthly basis, we can.

Speaker Change: Introduce new products to patients on a monthly basis and as you heard. The example, now from France.

Speaker Change: And then my last question is on Larry, wondering whether you can quantify the contribution from the increase in patients versus the increase in patient value and how much kind of runway you see for patient value to increase over the medium term. Thank you.

Speaker Change: We've worked on reimbursement changes over over the past year and a half we managed to.

Speaker Change: To get the allowance for heat moisture exchange has moved from one to multiple and of course that allows us that allows us to inform all patients that this reimbursement has take has taken effect.

Speaker Change: So, why don't I take question one and question three and then Andrews can take the question on manufacturing ramp-up costs. So on LCD.

Speaker Change: And it drives a relatively immediate pickup so it will be my expectation.

Speaker Change: We are on the final policy. You will know now, like I commented on, that the implementation date has been postponed.

Speaker Change: Is that it remains a key component of driving.

Speaker Change: Good service to patients right product right volume of product mix.

Speaker Change: We are on the list for DFUs but not for VLUs. We've also indicated that VLUs today is a low single-digit share of our portfolio.

Speaker Change: Okay.

Speaker Change: Jack Let me take your second question around the manufacturing cost. So as you saw in our numbers gross margin for Q1 is ballpark at the level of last year.

Speaker Change: It's too early to talk about what kind of pickup will happen. We are, of course, deep in the operational planning.

Speaker Change: Q1 gross margin level.

Speaker Change: It's driven by a couple of things so first of all the the.

Speaker Change: Input costs.

Speaker Change: On this, and if you imagine that we have a reduction from a couple hundred products to less than 20, there will be, of course, quite a bit of commercial opportunity in that space.

Speaker Change: <unk> is coming down we are seeing is that the.

Speaker Change: Low inflation levels.

Speaker Change: Can see impacting.

Speaker Change: Our input costs in a positive way that we have hitched.

Speaker Change: Energy prices at a lower level and.

Speaker Change: We are ready. We have a volume of product. We have the team in place.

Speaker Change: That is then partly offset by the higher manufacturing costs related to the ramp up in Costa Rica. So we are still ramping up in Costa Rica.

Speaker Change: And exactly how it's going to play out, we don't know yet.

Speaker Change: And then we are initiating the ramp up in impossible, where we are starting with the investments, especially into white collar and the other one that is offsetting the positives that foreign exchange rates. So those are the key moving parts on our gross margin for our first quarter.

Speaker Change: So, the way that we're thinking about CARES is continuing the momentum, and of course it has the opportunity to accelerate if this plays out in our favor.

Speaker Change: When it comes to Lary, I'm very happy with the performance from ATOS on both Lary and Trach. The gross model for the Lary business is part volume, so basically winning patients.

Speaker Change: Thanks, very much Jess.

Speaker Change: Any follow up.

Speaker Change: The next question comes from Lee <unk> from <unk>. Please go ahead.

Speaker Change: Getting them on to the right product and the right product mix and the right usage of product.

Speaker Change: Thank you very much good morning, just two questions from me. Please the first one on <unk>.

Speaker Change: And this has always been the growth formula. And you should remember that the ATOS business runs quite a large share.

Speaker Change: I was wondering if you'd give any additional color on the traction youre seeing in the women's product I think you've added a further four markets since your full year results and disinterested ticket hip feedback on late additions and also how we should think about phasing of further market rollouts from here.

Speaker Change: of the business in our own channel. So we are speaking with patients on a monthly basis. We can introduce new products to patients on a monthly basis, and as you heard the example now from France.

Speaker Change: That's the first one and the second one I just to follow up on gross margin and particularly the ramp up cost in Costa Rica, Portugal and would it be post foods to to quantify the size of that headwind on gross margin and then thinking about.

Speaker Change: to get the allowance for heat and moisture exchanges moved from one to multiple. And of course, that allows us to inform all patients that this reimbursement has taken effect.

Speaker Change: The forward looking impact how we should think about that headwind.

Speaker Change: In future periods and when it starts to Rajiv. Thank you.

Rajiv: Thanks, Richard So deluge of rollout continues.

Speaker Change: and it drives a relatively immediate pickup. So it will be, my expectation is that it remains a key component of driving good service to patients, right product, right volume of product, right mix.

Rajiv: The mail product has said top 12 markets now.

Rajiv: In nine markets now with the larger female.

Rajiv: And it's getting it's getting good traction I am looking at similar pickup curves to the to the mail product of course for.

Speaker Change: Okay, Christian, then, Jack, let me take your second question around the manufacturing cost. So, as you saw in our numbers, gross margin Q1,

Rajiv: For the purposes of moving the entire the entire catheter franchise, we need a full offering too.

Speaker Change: It's ballpark at the level of last year's Q1 across Martin level.

Rajiv: Both males and females I'm glad to see that.

Rajiv: And you'll see that rollout continue we will be in the same market. So in top 12 markets also with the female product net rollout will be happening during during this year.

Speaker Change: It's driven by a couple of things so first of all the

Speaker Change: The input cost pressure is coming down. We are seeing that the low inflation levels are impacting our input costs in a positive way. We have hedged.

Rajiv: And to your second question around the gross margin, so I talked to the moving parts for Q1.

energy prices at a lower level.

Rajiv: And I look at the full year I'm expecting our gross margin to improve to sit around the 6% to 8% level as we have guided for so similar.

Speaker Change: And that is then partly offset by the higher manufacturing costs related to the ramp-up in Costa Rica. So we are still ramping up in Costa Rica. And then we are initiating the ramp-up in Portugal.

Rajiv: Moving parts as Q1, so we are looking at a lower pressure from input cost. We are we have hits the energy prices at a lower level.

Rajiv: Compared to last year, we also have increased salaries in Hungary at a mid single digit level.

Rajiv: Last year it was a double digit level and then and then yes, we are ramping up as I said earlier in the in Costa Rica is still and we also starting up in political and that is offsetting some of the benefits we see on the other categories and then the final thing is the foreign exchange rates had a negative.

Rajiv: We have headwind on that in Q1 and I'm expecting from Q2, we will start to see.

Rajiv: Some tailwind from FX. So those are the moving parts for the full year gross margin.

Speaker Change: Thanks, Anthony maybe just to follow up on the on the ramp up costs in Costa Rica in Portugal, I mean should we think about that getting potentially more of a headwind through the year neutral or slightly better from here.

Rajiv: The phasing of those projects.

Speaker Change: I am expecting.

A similar level.

Speaker Change: Remember also throughout the year as normal our revenue absolute revenue will be at a higher level. So we will also have some scalability.

Speaker Change: As a consequence of higher absolute revenue throughout the year, but it's basically the ramp up in the in Costa Rica will start to.

Speaker Change: To be finalized.

Speaker Change: Over the course of the year.

Speaker Change: Got it thank you very much.

Speaker Change: The next question comes from <unk> <unk> from Jpmorgan. Please go ahead.

Speaker Change: And we now have a question from Lisa Clive.

Speaker Change: Bernstein. Please go ahead.

Speaker Change: Hi, three questions for me first of all.

Speaker Change: Women in continent at just thinking through when the decline there.

Speaker Change: Okay.

When I believe from your.

Speaker Change: Areas disclosures that Linda and continents is probably around 11% of urology in recent years at least.

Speaker Change: Perhaps that business declining almost 50% last year. So just wanted to confirm that that now maybe 5% of that portfolio and just trying to understand whether we're nearly at the bottom that will annualize.

Second of all.

Speaker Change: Well, you know the Medicare patients and physicians.

Speaker Change: Youre, obviously not included apologies if I missed it.

Speaker Change: Have a trial underway, it's an area where you are.

Speaker Change: Focused on trying to get reimbursement or because you tend to be more focused on the hospital channels.

Speaker Change: Yes.

Speaker Change: And then lastly on Halo just update.

Speaker Change: On the outlook for reimbursement and market entries and just thoughts on the ramp up over the next 12 to 18 months.

Lisa Clive: Thanks Lisa.

Speaker Change: Once.

Speaker Change: First off on women's and urology.

Speaker Change: Yes.

Speaker Change: Sorry, we lost the connection with the Speaker, we have now a question from Julien <unk> from Jefferies. Please go ahead.

Julien: Hi, good morning.

Speaker Change: I think the connection with management I guess on a rifle.

Speaker Change: The connection with the speaker of the conference will be.

Speaker Change: <unk> continue shortly.

Speaker Change: Okay.

Speaker Change: You are now connected again okay.

Speaker Change: Okay.

Speaker Change: So Stefan.

Speaker Change: Can we just China.

Speaker Change: No.

Speaker Change: You can go ahead with your question.

Speaker Change: Yes.

Speaker Change: Can I just check that you have audio from our side.

Speaker Change: Yes, yes, we do.

Speaker Change: Okay.

Speaker Change: Apologies.

Speaker Change: Before we move Julian before we move onto the next question I think I owe Lisa.

Speaker Change: These ahead at least I had a few questions that I would just I would just address.

Speaker Change: Women's health.

Speaker Change: We had a flat performance in the quarter. So the business. The business decline has stopped and of course the decline last year has taken the share of our portfolio down now the strong focus is.

Speaker Change: Is to drive the <unk> product and the clinical evidence that we have around that product to serve customers and of course, the big news for that portfolio is going to be the entyvio entyvio product, but the business decline has stopped.

Speaker Change: On the question of deal use for <unk>, we have a trial underway.

Speaker Change: And of course, we expect to also be.

Speaker Change: To be admitted.

Speaker Change: Once that once that trial has has concluded and then finally the question on Halo and the payers in Germany. Unfortunately, I have no news to report on that side the German authorities.

Speaker Change: We have not provided a.

Speaker Change: In answer to us.

Julien: With that I think we can go onto you Julien.

Julien: Hi, good morning, everyone. So I also have three questions if I may.

Lisa Clive: The first one relates to voice and respiratory care, obviously, a pretty strong Q1, but I just noticed that the comps get significantly tougher for the remainder of the year. So how should we think about the growth in that space and you mentioned some positive reimbursement evolution. So.

Lisa Clive: Anything there that could explain the relative confidence in sustained momentum for the next few quarters.

Lisa Clive: Second question relates to <unk> and the delay in the implementation of the NCD.

Lisa Clive: There's also some speculation around that maybe could be due to some political backlash in some providers asking for more time.

Lisa Clive: What is your degree of confidence that we're at.

Lisa Clive: The take place in April from April onwards.

Lisa Clive: Third question.

Speaker Change: Could you just shed more light on this 26 million Euro management restructuring charge that you had in Q1, sorry, if I missed that.

Speaker Change: Sizable announced so just curious as to what you predict.

Speaker Change: Julian Thank you let me let me take the first two and then Anders.

Speaker Change: We will take the last question voice in respiratory care. It is of course, when you run a double digit growth business the comps gradually get harder I am expecting the business to deliver a year around double digit.

Speaker Change: One of the one of the callouts that's positive on the Laryngectomy side is is the increased reimbursement in France, we've guided for the business when we acquired it that it would deliver between 8% to 10%.

Speaker Change: Definitely comfortable.

Speaker Change: In that range and I'm glad we're starting it at the high end of the range.

Speaker Change: The Tracheoscopy business is doing well good good good momentum so all told.

Speaker Change: Really really good progress also on the also on the integration side.

Speaker Change: <unk> LCD.

Speaker Change: The delay as we understand it is following a freeze of all regulatory guidance.

Speaker Change: That's not yet in effect by the New U S administration.

Speaker Change: So it's not if you will a something that is LCD specific but it's one of these blunt instruments that have been.

Speaker Change: <unk> by the incoming U S administration, there is of course always uncertainty.

Speaker Change: With these types of transitions, but for now I have no evidence to suggest that this would not go into effect come April.

Speaker Change: And Julian your third question related to the $26 million Dana's corner that's related to the.

Speaker Change: Thank you.

Speaker Change: Leadership changes, we made back in November.

Speaker Change: Alright, Thank you very much.

Speaker Change: Sure.

Speaker Change: The next question comes from Stefan <unk> from Kepler. Please go ahead.

Speaker Change: Hi, Yes. Good morning, Thank you very much for taking my questions.

Speaker Change: Have to first of all Kristen I was wondering if you could provide us a bit of an update on what you're seeing in the U S. Chronic care sales post the disruption of the distribution center.

Speaker Change: In our call last year late last year, you mentioned that you will only it will take some time to understand what do they have been some market share losses, whether you can claim back those patients I was just wondering.

Speaker Change: If you have more color to share on that and then my second question.

Speaker Change: How are you seeing the situation in China levels has there been any any material or noteworthy change that you would like to talk about it. Thank you.

Speaker Change: Thank you Maya two good questions.

Speaker Change: The U S business strong first quarter here.

Speaker Change: Remember, we had relatively benign comps also for for this quarter.

Speaker Change: I will say when I when I look at the sales out momentum of the business, it's sitting at at high single digits, suggesting that.

Speaker Change: We've come we've come through with come through the rough.

Speaker Change: Without too much damage, but of course I would like a few more months and quarters under my belt before calling final verdict on that but so far so good I am expecting the business to deliver a high single digit growth growth year.

Speaker Change: In China hospitals look good momentum in hospital look good, but I'd say on the whole really no change.

Speaker Change: I am expecting a mid single digit year. It is was up mid single digit Q1.

The outlook for the economy and the way the consumers behave we're really not seeing anything that makes us more optimistic at this stage.

Speaker Change: Great. Thank you very much.

The next question comes from Neil <unk> from Carnegie. Please go ahead.

Neil: Hey, Thanks for taking my questions. Two if I may could you first talk about the sustainability of your R&D to sales ratio of which.

Speaker Change: It seems to be on a continuous slight down.

Neil: Secondly.

Could you talk about your.

Neil: Expect to pay tax rate.

Neil: Once the transfer of your IP rights, Denmark has been completed thank you.

Speaker Change: So thanks, a lot Melissa let me take that.

Speaker Change: Two questions. So first of all in terms of R&D to sales ratio was around 3% for Q1.

Speaker Change: As a bit of timing and then also please remember we have now include <unk> and excess where the ratio is lower than the total ratio.

Speaker Change: I am expecting the ratio for the year to sit something around 335%.

Speaker Change: Of sales.

Speaker Change: That's how we look at the R&D to sales ratio for this financial year.

Speaker Change: In terms of your second question.

Speaker Change: Around the IP transfer line and the tax so as I explained earlier, we have done this because we are now starting up the integration of <unk> into our it infrastructure and we will complete that work later this year and as part of that.

Also.

Speaker Change: Moving the IP rights over the closest to Denmark and that has an extraordinary impact on our tax rate for this financial year.

Speaker Change: In terms of the payments. So the cash flow you will start to see that from the financial year 'twenty six 'twenty seven.

Speaker Change: And onwards, and that would be a net effect of around one three.

Speaker Change: One four.

Speaker Change: Billion Danish kroner from 26% to 27% so that's my.

Speaker Change: My high level assumptions.

Speaker Change: And for how many years would you benefit from that.

Speaker Change: So.

Speaker Change: The overall benefit it's around the seven years that we are expecting.

Speaker Change: So that's my assumption.

Speaker Change: Thank you.

Speaker Change: The next question comes from <unk> from Morgan Stanley. Please go ahead.

Speaker Change: Hi, Good morning, Thanks for taking my question I had just two.

Speaker Change: The first one is on the continence care business are you able to break out in terms of catheter segment growth in particular, and whether you are seeing any solid share wins, there just with belt with the launch of a new flagship platform like <unk>, you might see a stronger growth developments for contingents in the first quarter.

Speaker Change: And then my second question is a follow up on MTBE does your guidance for 2025 contemplate any sales contribution from or commercial investment into the launch of this product or are you in kind of a wait and see mode until you get the pivotal data in June and then you will announce some commercial initiatives in the fourth quarter.

Speaker Change: Hey, guys.

Speaker Change: Two good questions. So.

Speaker Change: Lucia launch continues.

Speaker Change: Doing well.

Speaker Change: So we can see a very consistent market share gains on the mail side, we started with the with the mail product, which is about 60% of that market with more than 60% of the market. We're now rolling out female.

Speaker Change: Seeing a similar pickup curve on launch so I'm also expecting of course once we have a full offering in the market that youre going to see.

Speaker Change: Youre going to see impact on the on the franchise bear.

Speaker Change: Bear in mind that when we report the continence care business, we have two of the product categories. In there one is Apollo management or Paul care franchise and are collecting devices business.

Speaker Change: But the impact on that business. This quarter is really phasing in the underlying growth in the catheter business is strong and it's picking up.

Speaker Change: When it comes to <unk>.

Speaker Change: And.

Speaker Change: And investments there that will be some costs. This year that were basically preparing for that.

Speaker Change: In.

Speaker Change: Ahead of the launch but of course, we do not start to spend.

Speaker Change: Significantly until we know the strength of.

Speaker Change: The clinical data and I don't have visibility to that until we get into.

Speaker Change: The other side of summer of this year commercialization, what happened 25, 26% I forgot who asked the question earlier, but but but the entire investment thesis will rest on the strength of the clinical data and the resulting.

Speaker Change: The resulting reimbursement level.

Speaker Change: So the clinical data is absolutely critical for decision on an investment level, but there is a bit of cost already.

Speaker Change: Thank you.

Speaker Change: I could follow up with one question on the wound business I think you have lagged some destocking behavior in December in anticipation of the LCD coming into effect in February.

Speaker Change: His customer behavior evolved since then and could you are curious is gross come well above the 30% target. This year given the combination of delayed limitation in any accretion for DSA.

Speaker Change: Okay.

Speaker Change: So we haven't seen too much change in terms of customer behavior.

Speaker Change: So the all the products that.

Speaker Change: Our at risk of.

Speaker Change: Or that will disappear from the market. When the final policy takes effect are of course now still in market. There are a number of companies start promoting them.

Speaker Change: Sure.

Speaker Change: And it is still too early to speculate but like I said to a.

Speaker Change: One of the previous callers who asked the question about this of course this creates an opportunity.

Speaker Change: If we reduce the number of products from 202 less in 'twenty.

Speaker Change: We have prepared for the opportunity.

Speaker Change: In terms of ensuring that we've got significant volume ready in the market and of course, we've got commercial plants.

Speaker Change: We are in close dialogue with customers.

Speaker Change: Got it but the final effect TBD.

Thank you very much.

Speaker Change: The next question comes from <unk> <unk> from Bank of America. Please go ahead.

Speaker Change: Thank you very much for taking my questions. The first one is is a quick follow up on wound care.

Speaker Change: And could you provide maybe an update on the curious the strengths youre seeing today, and especially trying to understand if you've seen some customers already shifting from competitors' product to <unk> or asking for samples.

Speaker Change: And maybe trying to prepare ahead of the LCD implementation.

Speaker Change: And my second question is on voice and respiratory could you share. If there are any key countries yet to prove reimbursement like you had pulled in for example here in how big of an opportunity could be for the rest of this year. Thank you.

Speaker Change: So on <unk> of course, that's been a lot of noise in the market related to this many customers who are asking questions about how the policy is going to pan out.

Speaker Change: And of course, we are active in those in those dialogues.

Speaker Change: And some customers are of course also getting samples. We've also seen a few orders, but we haven't seen a major market shift.

Speaker Change: Sure.

Speaker Change: So we expect that once we get closer to implementation date more customers will change behavior like I said to the previous caller we are ready.

Speaker Change: On a toss this is.

Speaker Change: This arc of opening up access for the products and reimbursement for the product is part of the as part of our growth model is by the way also part of the growth model for the content business in the Ostomy business.

Speaker Change: Of.

Speaker Change: <unk> previously talked about those businesses. The Ostomy business has grown for 17 years cotton business has grown for 35 years.

Speaker Change: The <unk> business right now.

Speaker Change: 35 year old category, it's still growing penetration is relatively low.

Speaker Change: So we've got good penetration in Northern Europe, you go to southern Europe, We've got about half the half the penetration of northern Europe of treatment.

Speaker Change: And we move to the U S penetration is lower and there's hardly any use.

Speaker Change: So this will remain a growth lever for for many years to come.

Speaker Change: And we've got at any given point in time, we've got a portfolio of projects that we're working on to open a reimbursement. So you sort of if you will.

Speaker Change: Probably also here in the coming years, hopefully more good news.

Speaker Change: But it's not one where we have one waiting in the.

Speaker Change: In the immediate pipeline that we would expect would dramatically change the trajectory of the business. It's part of running a business that's sitting comfortably in the 8% to 10% growth range.

Speaker Change: Okay. Thank you very much.

Speaker Change: The next question comes from Martin <unk> from Nordea. Please go ahead.

Speaker Change: Hi, Thank you very much for taking my questions Christian and Andaz.

Speaker Change: I try to keep it.

Speaker Change: Just.

Speaker Change: Questions. Please the first one would be on emerging markets, which has come out a bit slower than the double digits that you are aiming for and that you expect to.

Speaker Change: To come back in the next quarters can you maybe just put some color on how much of that is just phasing of orders how much is maybe less hyperinflation and.

Speaker Change: Okay.

Speaker Change: How should we see this going forward is that already a Q2 thing.

Speaker Change: See a pickup or how will that look like that's the first question.

Speaker Change: And then the second question would be I think Christian you have implied a few times on this call that you are ready for exploration. After the LCD is implemented on <unk>.

Speaker Change: But I guess you expect this to be effective in two weeks from now so have you ramped up sales costs here.

Speaker Change: The anticipation of the LCD implementation, but we're going to see.

Speaker Change: The numbers.

Speaker Change: That would be the second question and then just the third question is a bit to understand.

Speaker Change: If we should.

Speaker Change: Potentially to see anything on this but there have been some investigations have been concluded that Colo plus the small margin squeezing Steve just with its dominant position just are you aware of any.

Speaker Change: Other markets, where Colo plus has a dominant position in web al undergoing similar position investigations that we should be aware of.

Speaker Change: That would be the third question. Thank you.

Thank you Martin three good questions on emerging markets remember tough comps last year, we grew.

Speaker Change: I think 19% last year.

Speaker Change: In the quarter very very strong quarter.

Speaker Change: This is largely phasing.

Speaker Change: A more volatile region is as you know it's phasing related to.

Speaker Change: Eastern Europe, Russia, and a bit of middle East I am expecting I am expecting the.

Speaker Change: The reason to deliver a high single digit growth year.

Speaker Change: LCD.

Speaker Change: I have the footprint I need for now.

Speaker Change: So you could say that the number of people that we've got in market where it is.

Speaker Change: Like we've ramped up dramatically we are trying to run a very strong growth business of course every year, we put on salespeople and try and get them onboard make them effective.

Speaker Change: Part of the commercial model here will be just to to really become very good at that we continue to deliver on it but we have the footprint we're ready.

Speaker Change: Fact that it comes two months later it doesn't really change the plans.

Speaker Change: So I'd say the <unk> team also grew as you can see 32% in the quarter, it's not like we.

Speaker Change: We've run out of what to do and opportunities to pursue so.

Speaker Change: More to come once we see the the.

The go live date.

Speaker Change: On the on the Danish Court case from the competition authorities I'm not going to comment too much I will say we are in fundamental disagreement with the verdict we have appealed it.

Speaker Change: And it will play it will play its way through the.

Speaker Change: Through the appeal system and courts.

Speaker Change: We are not aware of any type of case like that anywhere else in the portfolio of countries that we serve.

Speaker Change: That's that's very clear. Thank you so much for the thorough answers.

John <unk>: The next question comes from John <unk> from Citi. Please go ahead.

John <unk>: Hi, guys. Thanks for taking the question I am following the trend of having any questions as well.

John <unk>: Question is just a quick check in terms of your full year guidance on margin industry.

Speaker Change: Industry leaders.

Speaker Change: Can you see margin improvement in AWP in advance wound care, whereas in the previous release VSAT in advanced wound care.

Speaker Change: Correct, Dave I was wondering if there is anything to read into their team supporting perhaps if any cost savings identified and corrected.

Speaker Change: First question. The second question is in terms of the U S distribution center cost.

Speaker Change: Any more color that we should be expecting in the remainder of this.

Speaker Change: This year and last.

Speaker Change: Last question thinking of the bladder health recall I understand the sale.

Speaker Change: In February.

Speaker Change: How do you assess viscous mouthfeel for per capita.

Speaker Change: Janus product a question rather than being the comments you made in EMEA.

Speaker Change: Alright, let me start with the two first questions.

Speaker Change: So in terms of.

Speaker Change: Margin guidance for the year I'm expecting that.

Speaker Change: That the divestment of the skincare, including some margin optimization activities within the dressings business will contribute to around 30 basis points to our margin guidance. So I hope that clarifies. The first question on question number two whether we are expecting more.

Speaker Change: Costs related to the distribution challenges in the U S I'm expecting a bit more here.

Speaker Change: In Q2, and the level of $10 million.

Speaker Change: My current estimate.

Speaker Change: And then finally to your question on bladder health.

Speaker Change: That's always a risk when you have quality problems like we've been through.

Speaker Change: We've lost some customers we are quite optimistic.

Speaker Change: It's been a relatively quick process, we've got product in market now waiting to be released.

Speaker Change: And we are seeing a good demand there are.

Speaker Change: A number of our competitors in the market who are also we've also had some supply supply issues. So there's strong demand in markets. So I'm optimistic that we're going to recover.

Speaker Change: The significant majority of.

Speaker Change: What affected us here in Q1.

Jay: Thanks Jay.

Jay: The next question comes from Carsten Madsen from Danske Bank. Please go ahead.

Speaker Change: Excellent. Thank you very much.

Speaker Change: Two questions left the first one is.

Speaker Change: If you look at the <unk> and the new reimbursement.

Speaker Change: Caring for the carriers as product could maybe be to talk about the individual patient value. So one thing is how many new patients you will be able to get but what will be the value per patient. One once this is implemented.

Speaker Change: On a yearly basis being allowed to produce more dressings at a lower price.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Also from memory I will just check.

Speaker Change: Alexandra would just check while I'm answering from from memory, they will still be I think an.

Speaker Change: An opportunity to use a sixth dressings.

Speaker Change: As part of the of the updated policy. When you look at our current you said market. When we look at the average of our current use.

Speaker Change: It is it is sitting around five to six and Alexandra just correcting me that the value per patient.

Speaker Change: Thats covered by the LCD is actually eight dressings over over 12 weeks now.

Speaker Change: A little difficult to predict because that doesn't mean that everybody will be using eight of course, it will meet its basically a number where you could use up too.

Speaker Change: So.

Speaker Change: So the the final impact on patient value.

Speaker Change: I don't know yet.

Speaker Change: Person to the patient.

Speaker Change: To save money, because making a pretty big burst of zinc.

Speaker Change: The room, so I'm, hoping as I hope I guess because their wounds heal.

Speaker Change: Okay.

Speaker Change: So so so the intent of the policy is to drive good clinical outcomes.

Speaker Change: And of course.

Speaker Change: If youre healed after you've used five or six dressings, then you shouldnt be.

Speaker Change: You shouldn't be using more product.

Speaker Change: Okay.

Speaker Change: And then secondly.

Speaker Change: Great.

Speaker Change: You have this new deal with the macro technology, but some of your competitors.

Speaker Change: Some campaigns.

Speaker Change: Micro led technology.

Speaker Change: You have a feeling anything in the market in terms of.

Speaker Change: Pressure from marketing campaigns.

Speaker Change: No.

Speaker Change: No.

Speaker Change: Okay.

Speaker Change: Ladies and gentlemen that was the last question I would now like to turn the conference back over to Kristen Wilson for any closing remarks.

Speaker Change: No.

Speaker Change: Wanted to apologize.

Speaker Change: We lost connection therefore.

Speaker Change: For a couple of minutes during the call. We look forward to engaging with all of you on the road here over the coming days and weeks and please reach out to our Investor Relations Department should you have any follow up questions related to today's call. Thank you very much.