Full Year 2025 Coloplast AS Earnings Call
By structuring our business into 2. Distinct units, chronic and acute care. We will, we will, uh, to an even larger extent be able to honor the differences in market dynamics, customer needs patience, uh, Pathways and business models.
And with a new and strengthened executive leadership team. We now have a balanced mix of commercial and Technical expertise.
And a strong team to lead coloplast into the next strategy. Period.
Please turn to slide number 4.
Looking ahead, I believe the Investments. We have made in slide. 105 combined with the structural changes that we made this year. Provide School price with a strong foundation and key building blocks for the future value creation.
Our addressable market for chronic care and acute care has a combined value of more than 120 billion Danish kroner, and we have the strongest product portfolio that we have ever had.
There's ample opportunity to go for uh and we are well, positioned to capture it.
With our new strategy, impact 4. We'll utilize our solid foundation while setting a new direction for the company with a strong focus on customers and relation.
The impact 4 focus is on 4 prior, uh growth uh, through Innovative offerings on unlock Next Level efficiency gains.
Embrace technology, including AI to elevate our user experience and scale, and finally cultivate a winning and sustainable company.
And these promises are supported by clear Financial targets. Uh, the first is to deliver an organic Revenue kegger of 7, trade percent through 2930.
Then to grow a bit in line with or above Revenue growth and finally to achieve a return on investor Capital about 20% by 20 2930.
By putting customers at the center. We aim to deliver best-in-class products, services and support reinforcing our ambition to double our impact and reach 4 million, people long term.
In the Strategic period. We will also maintain a strong focus on sustainability, and we have set, clear targets to reduce our environmental impact, uh, through emissions reductions and less material used in our products and packaging.
Finally, we aim to positively impact Society by improving reimbursement ensuring access for users and Healthcare professionals to the best products and services as well as investing by in initiatives that benefits people and communities.
Now, let's shift gears for a moment and look at today's results in more detail. Please turn to slide number 5.
organic growth was 6% for the full year and growth and danish Corner was 4% organic growth for in Q4 was 7% and growth in Danish Corner was 1%
I was ensuring a meal portfolio continues to be the main driver a growth driver. Followed by Brava a range of supporting products, our ensure and assure Elena portfolios continue to contribute to growth in Emerging Markets.
Product geographical perspective. Growth in the quarter was broad based across regions with good growth in Europe.
A high Baseline in the US due to the resolution of the supply disruptions in Q4 last year.
And strong growth in Emerging Markets, driven by increased 10 activity.
Days in China, the clients reflecting reader con weaker consumer sentiment and competitive pressures.
In continent care. Organic growth was 8% for the full year and growth in Danish Corner was 5%.
In Q4 organic growth for 9% and growth in Danish Corner was 3%.
Due to our new, intermittent catheter with the micro wholes Zone, technology was the main growth contributor in the quarter, especially the famous female female version.
uh, driven by solid contribution in from Europe and the
From a geographical perspective or regions contributes to growth.
Growth in Europe was driven by France, the UK, and Italy.
In Emerging Markets, growth was less robust and was led by LatAm.
Boys and Respiratory Care. Posted 9% organic growth. For the full year with growth and danish corner of 8% in Q4. Organic growth was 9% and growth in Danish Corner was 7%.
A good performance, invoice and Respiratory Care continues. To be driven by broad broad-based contribution from both low. Inject me and psychiatry
with high single data growth in their inject, me and double digits in. Try ottimo
In W and tissue repair, organic growth was 8% for the full year and growth. In Danish, Corona was minus 3%, which reflects 8% uh, percentage points next to your impact, from the Skin Care w.
Organic growing to 4 was 5% and growth in Danish Corner, was minus 11%.
which includes an 11% negative impact from the skin care wastement.
The advanced wound dressing business in isolation declined. 6% in the quarter as China. Detracted significantly.
Uh, from growth due to the product return in initiated in Q3 from a product perspective, by its in super absorber and by 10 fiber, continue to perform well.
Revenue from Cesis amounted to around 1.3 billion Danish kroner in the full year, of which 339 million Danish kroner was generated in Q4.
The organic growth in the quarter was 20%, an improvement compared to Q3, as expected.
The inpatient setting continued to deliver solid growth and was the main growth contributor. The outpatient setting saw improved momentum in Q4.
This uh, was in line with our expectations, that the impact from our LCD for postponement, and the resulting Market shift to higher price products would be most pronounced in Q3.
In Interventional reality, organic also is 2% for the full year and growth in Danish Corner was flat.
A growth in the quarter was driven by a good momentum in the men's health business. Our Flagship product within Men's Health. The Titan Pine implant continued to perform well
with the patient foreign positively impacted by our patient Support Program. Targeted at prospective patients
The Women's Health business also contributed to growth in the quarter.
Within kidney and bladder health, the Julio fiber laser Drive continued to deliver solid growth contribution, but the segment overall attracted from growth due to the impact from the product recall.
We have begun to see early signs of recovery across key accounts, but expect some negative impacts to persist into q1.
With this, I'll now hand over to Anna who will take you through the financials and Outlook in more detail. Please turn to slide number 6.
Revenue for the full year increased by 844 million Danish corner of 3% compared to last year.
Organic growth, contribute 1.8 billion Danish corner or around 7% to report a revenue.
Divested businesses, mostly related to The Skin Care, by investment in December 24, reported revenue of 352 million Danish kroner or around 1%.
US dollar and the basket of Emerging Markets currencies against the Danish corner,
Please turn to slide number 7.
Gross profit for the full year amounted to 18.9 billion Danish Corner because bonding to a gross margin of 68% on par with last year.
Because Martin was positively impacted by a favorable development in the input cost.
Pricing increases and Country and product. Mix partly offset by Rambo cost. At our manufacturing site in Costa Rica and possible.
The gross margin. Also include a small Legacy of impact from currencies of around 20 basis points.
Operating expenses for the full year amounted to around 11.3% increased from last year.
The distribution-to-sales ratio for the full year was 33% on the power of last year.
The increase in distribution cost was driven by continued commercial investments, in carouses, and higher sales activities across business areas.
The admin to sales ratio for the full year was 5% on par with last year.
The R&D to sales ratio for the full year was 3% on sales also on part of the last year.
The special items expenses were extraordinary high in 2425 and amounted to 469 million Danish corner.
The special items were related to profitability Improvement initiatives, including the skincare divestment management, restructuring, and the integration of atos medical.
Overall, this, this resulted in operating profit before special items.
Corner in the full year and at 5% increase compared to last year.
The margin before, specialising for the year. Was 28% compared to 27% last year.
Debit margin included negative impact of around. 110 basis points from the inclusion of kosis including PBA, amortization costs.
In line with the expectations as well as around 30 basis points.
Currencies had a small negative impact on the reported ebit margin of around 30 basis points.
Related to the depreciation of the US dollar and the basculer of Emerging Market currencies against the Danish owner.
Carlton. Currencies ebit before special items. Grew 6% in full year 2425
1 billion and 44 million Danish Corner, compared to a net expense of 925 million, the Danish Corner last year. The increase in net expenses was mostly due to a non-cash effect from currency exchange rate adjustments, which includes losses and balance sheet items driven by the distribution of the US dollar against the, the Danish corner.
The ordinary tax expense for the full year was 1.4 billion Danish kroner, with an ordinary tax rate of 22% on parking last year.
The total tax expense for the full year was 2.5 billion days Corner impacted by the transfer of cosas intellectual property from Iceland to Denmark.
As a result of the extra tax expense, the effective tax rate amounted to 41%.
As a result, net profit before special items for the full year was 4 billion Danish kroner compared to 5 billion Danish kroner last year. Diluted earnings per share before special items decreased by 21% to 17.76 Danish kroner, adjusted for the extraordinary. The tax expense is related to the IP transfer. The net profit before special items was 5.1 billion Danish kroner, a 123 million Danish kroner increase compared to last year.
Adjusted diluted earnings per share before special items increased by 2% to 22.84 Danish kroner. Please turn to slide number 8.
Operating cash flow for the full year was an inflow of DKK 6.6 billion compared to an inflow of DKK 2.8 billion last year.
The positive development in cash flows was mostly driven by lower income tax paid as 2324 included 2.5 billion Danish Corner, extraordinary impact from the transfer of assets, medical intellectual property.
Changes in working capital and adjustment of non-cash. Operating items also had a positive impact on the cash flows from operating activities.
Cash flow from investing activities was an outflow of 1.25 million Danish kroner compared to an outflow of 1.13 billion Danish kroner, and included a positive impact from the divestment of the skin care business of 192 million Danish kroner.
Related to the new manufacturing site in a possible.
Expected to be, um, operational in 2526.
As a result, the free cash flow for the full year was an inflow of 5.4 billion Danish kroner compared to an inflow of 1.4 billion Danish kroner last year.
He adjusted free cash flow for the full year was 5.2 billion in his Corner compared with 3.9 billion Danish Corner last year.
Or at 32% increase.
The trading 12 months cash conversion was 82%. Meanwhile, the adjusted free cash flow to sales was 19%, compared to 15%.
Last year.
That working capital amounted to around 26% of sales, compared to 25% last year.
Impacted by increased inventories and decreased trade and payables.
Now, let's look at the guidance for the 2025 financial year.
Please turn to slide number 9.
For the 2526 Financial year. We expect organic Revenue growth of around 7% and around 7%. EB growth in constant currencies before special items.
We also expect a return on invested capital of around 16%.
Around 1% this point from 15% adjusted last year.
The organic revenue growth guidance of around 7% assumes continued good momentum in chronic care, including voice and respiratory care, and improvement in momentum in both the bun and tissue repair and interventional reality.
In chronic care, we expect a good contribution from our recent product innovation.
In continent care. And
We expect Lucha to continue driving the momentum in intermittent catheters.
In Austin care, we expect the recent line extensions, such as Sensu.
new black backs and
offering to continue their good launch trajectory and support growth.
In wound tissue repair.
We expect an improved momentum driven by Carrows, which is expected to deliver growth of around 25%.
Partly offset by the negative impact from the product return in advanced wound dressings. In China, from Q1 to Q3.
On COLOPLAST’s performance, there is a higher degree of volatility due to the expected changes to the skin substitutes coverage.
The payments, uh, in the outpatient setting, as of January 1st, 2026,
In international reality, we expect roles to improve to Route, missing digit in 2526.
up from low single digits, uh, last year,
We expect continued strong momentum in our mental health business, driven by the Titan penal implant and stable performance in our Women's Health business.
Kidney and bladder health. We expect to see a recovery as the impact from the product recall will lapse.
December 25.
After which, we are up against an easier baseline.
Report, a revenue growth in Danish corner is expected at 4 to 5, percentage 2 to 3 percentage points, negative impact from currencies.
It's basically the U.S. dollar and, to a smaller extent, the British pound and the Chinese yuan.
As well as 2 months, there was a negative impact from the skin care. Deanmont.
The growth in constant currencies of around 7% assumes stable inflation levels, a continued ramp-up in Costa Rica, and possible.
The EB growth also assumes that carros will deliver an ebit margin uplift to around. 20% driven by scalability in non-sales functions and sales force, efficiency improvements.
Enabled by a good topline momentum and a high gross profit margin of around 90%.
Furthermore, the EB growth guidance, includes the initiation of impact for Investments, including global technology, Investments, and AI Investments towards a new bowel care opportunity in the US and Investments related to, in CBN?
In terms of facing, we expect the organic Revenue growth to be a second half. Weighted with a soft starting q1 where we will have the impact from the product recalls in both Advanced wound dressings and intervention reality.
Furthermore, we expect a soft start in Austin care due to a high Baseline in the US and Order facing in Emerging Markets.
For 2025, we expect around 50 million Danish Corner and special items.
From acquisition related integration costs. The integration of address medical is pro progressing according to plan and we will be finalized during the year.
The net Financial expenses for 2526. I expected at around minus 500. Million Danish Corner down from around 1 billion Danish Corner in 2425.
Of October 31st and to a small extent, lower net interest, interest expenses due to low. And it's that interesting bearing depth and lower interest rates.
The effective tax rate for 2526 is expected to be around 22%.
That profit is expected to significantly increase year-over-year. As FY 2024/25 has been impacted by extraordinary high special items, high financial items due to negative exchange rate adjustment, and the extraordinary tax expense related to the transfer of Caros' intellectual property.
The cab to sales ratio is expected at around 5% and includes Investments to complete, the new manufacturing site and possible.
Investments in new machines for existing and new products, as well as IT and sustainability investments.
On networking capital, we expect a networking capital to sales ratio in 2526 of around 25%, down from 26% in 2425.
Our guidance is based on the knowledge we have today, and in terms of material impact from tariffs, we expect our products to remain exempted.
And no impact.
From healthcare reforms in the year.
On October 31st 25, the centers for Medicare and Medicaid services in the US issued. A final rule on your Medicare efficient physician fee schedule for calendar year. 26 with a fixed payment of 127 uh dollars per square, centimeter for all products in the Physicians, the private office in.
In the outpatient setting.
We consider both this rule, as well as the final LCD policy as possible for the market and chaos is in the long term and will be closely monitored or and we will closely monitor Mark developments in relation to these initiatives.
With this, I will hand it over to Lars for final remarks. Please turn to the slide.
Number 10.
Thank you, honest.
We are now entering an exciting phase as we begin to unfold the potential of our new impact for strategy.
Uh, and I look forward to continuing to lead this work until a new Co tax office.
As we move into Impact 4, we do so from a position of strength, with a strong product offering, a clear structure, a strong leadership team, and an ambitious strategy towards 2030.
I'd like to thank our customers, my colleagues, and our investors for.
Your trust and support in 2012425.
Your engagement and partnership have been instrumental in advancing our mission, making a positive impact for patients, healthcare systems, and society.
Corporate is well positioned to set the standard of care at scale, create lasting value for all stakeholders, and continue making life easier for people with intimate healthcare needs.
Thank you very much, operator. We are now ready to take questions.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone, and you will hear a return to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. In the interest of time, please limit yourself to 2 questions.
Anyone with a question may press star and 1 at this time.
Our first question comes from Hassan Alva from Barclays. Please go ahead.
Good morning. Thank you for taking my questions. I'm going to try and sneak in three, please. Firstly, can you talk about the China rostomy business, the increased competition in the community channel, and whether consumer sentiment is getting worse given the decline here? How are you thinking about business development in 2026?
Secondly, um, if you can, uh, expand on the drivers for the Carrows margin ramp this year and the phasing of that improvement, given some of the volatility you've observed around reimbursement changes. And then finally, Lars, uh, when we met recently, you talked about slower volume uptake in the UK for Halo. Um, how is this trending? And to what extent are you shelving potential launches elsewhere? And in hindsight, what went wrong? Thank you.
That's uh, that was a good. That was a good, a good opening. Uh, so um, so the China um,
The China situation first. Uh, so it's more or less flat growth that we are seeing.
We actually see that we are quite competitive in the market.
The market, we don't see that we are losing traction.
uh, but we, um,
We we have a uh a consumer sentiment which is super important because it's out of pocket in in the Chinese market, uh uh in the in the community market. Um, we have a consumer sentiment which is negative and uh, and and that basically reflects on how much
consumers are willing to spend,
um,
We don't have an increased number of competitors. We still have a lot of competitors in the market, but the total market here is still super low. So, we feel that our competitors' competitiveness is intact.
But the market sentiment basically is the reason why we don't grow in China.
Uh, on, um, on the caress of smart in. Yes. We, we expect to have a significant and better margin this year, uh, than we uh, uh, than we had in the year that we're coming out of. Uh, and and it is it is basically due to scale. Uh, so now we, now we start to be a little bit more of a mature business. Uh, it's not that we're not investing, uh, but, but we, we do have, uh, more sales per head in the, in the organization and we don't need to scale to the same. Same extent all over the place when we are growing. Uh, and that is basically what is sitting in in the increased margin for cases. Uh, and yes, there is volatility as as we go into, um,
Into this year. And as you all know Friday night, we received news on the LCD and, uh, and the physician fee schedule changes. Uh, and I expect that we will also talk to that a little bit later, but but that that means that there's some turbulence as we go into the year. Uh, but we I'd like to say from the get-go. We consider the changes to be positive for us, um, but of course, it also means that we will have a bit of, uh, of volatility as we go into, uh, into the year and then for Halo
Uh, what went wrong? Um, super good question. We are addressing the most uh, pronounced problem, that any Osman patient has to understand how much of the adhesive that are still in check that this is a given point in time and how much of it has have given up and we can show that via the mobile phone. Uh, we haven't found a way to fill this where we get the object that we expect to have. Uh, we uh, we give it still a chance to do that in what we consider to be the most advanced Market in the world for us to make in in in Great Britain. Uh, and we are not going to go anywhere else until we have found a way to solve that in that market.
Thank you very much.
The next question comes from Jack Reynolds Clark from RBC Capital Markets. Please go ahead.
Uh hi there. Thank you for taking the questions. Um, my first 1 was on the 8th of integration. You mentioned, you're expecting that to be completed next year, um, because what, what's left to do on that. Uh, and when do you expect that the benefits to start kind of come coming through uh, meaningfully there? Um, then the next question was on, uh, treky off to me. Um, I think for the last couple of quarters uh, growth here has been a bit lower than than it has been in the past. Uh, is this a function of a lower of a higher base? Or is there something else kind of going on here? Um, and how should we think about this, uh, going forwards?
Have answers into our IT infrastructure and into our processes, our shared services and all of that here during this financial year. And what we are—it's basically.
Speaking markets that are left. So it's the US, the UK that we are currently focusing on and then uh, the integration will be finished. Uh, and we will also uh, re the senators of around the the 100 million that we have communicated. When we acquired access some years ago,
in terms of tracking,
Um, yes, we have seen a little bit of a Slowdown uh, recently. Um, it's also because we are against, uh, a high Baseline. So, um, last year or the year before, um, we had a quite significant sales uptake due to forward integration and when that is said the, uh, the tracker asked me business is developing very, very well. Uh, also compared to to the
Position case, we did some years ago and, uh, we actually expect that our track after we will support our growth.
We are currently sitting with a market share of around 10%, uh, and we actually feel we have a okay product platform, uh, and this will be 1 of the key Focus areas towards the 2030 and also an area, we will invest a further in. Um, so so the tractor asked me business is is an area that we are very optimistic about going forward.
Okay, thank you very much.
The next question comes from Martin, Bako from Seb. Please go ahead.
Yes. Uh Martin Parker is e d to, I don't know, 2, I guess. Um, just on your guidance. Uh I just want to to get you confident level because uh you know uh you you starting you're saying that it will be back and loaded and that gave me some kind of for the last couple of years. Um how are you confident level this year of this actually will will will materialize. Uh, do things. You have been more prudent this year and you have been in in previous year are there above of potential hiccups which you have faced the last couple of years. And then second question, is just on the ASP development. Uh, what kind of ASP development, have you assumed in your guidance for this year? And maybe you can talk a little bit to to that across, uh, your business areas.
Yes, Martin. Let me take your 2 questions on the guidance. Uh, side. Um, as as we have communicated today, we expect organic growth, uh, to be around 7% uh, for the year and we are. As I also said, seeing some headwinds here in q1, due to the product recalls that we had last year. So, um, uh, so the Urology recall will um, we will lap that in December. And the recalls we have in China on the dressings part will still impact Us in q1, but also Q2
But overall we are very confident that we are able to deliver on on our organic growth guidance. Uh also back on back of a very challenging year and last year where we also had some uh challenges that we did not expect back to the the product recalls but also back to as last said earlier our Chinese uh moment.
Play out as we anticipate.
So that's how we see it. Um, and um, I would also highlight that the continent's business, the absent business, is strong, and we also expect those to continue.
As well as as the chaos as business throughout the year. So, um, when you are your second question around, what that was asp?
Mhm.
Um, we are expecting uh small positive on uh, on ASP development. Uh um.
We are not expecting any bigger, Healthcare forms.
We are expecting a small positive impact from ASP.
It is especially, uh, uh, within your allergy. Uh, we are also expecting some on the chronic side, um, and that is again, primarily in emerging markets. And then we get the yearly inflation adjustment in the UK. So those are some of the main, uh, reasons for us being positive on the ASP.
Thank you.
The next question comes from Martin brand new from Nora, please go ahead.
Thank you for taking my questions. I'll build a bit on on the, on the other mountains. Uh uh question here. Uh, we learned at the CMT that you held early in the year that you have, uh, quite normally, uh, 2 or 3 uh recalls, uh, during during a year. And I just wonder, uh, how much you have baked into potential recalls, uh, in in this year and how, how you have if you have a financial buffer?
Uh thought that potential outcome and then secondly uh on caresses um would be interesting to to to hear how you expect to to re-accelerate, 500 basis points. Uh, a few words on what is going to drive it in terms of uh product launches uh new geographies? Anything like that, thank you.
when you, when you produce the
Products in the numbers of billions then. Then, of course, uh, of course, I can be from time to time.
uh,
Recalls. Uh, what we saw from, um, Mighty.
is is something which, uh, which, uh, which which we see, very, very rarely and, uh, and and I like to take this opportunity to remind everybody that
That the product returns that we have seen in China.
Has nothing to do with, uh, products that don't work or complaint rates or anything like that.
so, that was um, the reason for that for that was actually
um,
Reasons that we have never seen before and and that that we could not have done anything internally to avoid.
uh, I would say, uh, so so therefore, uh, we, we do not have a buffer for, uh, very large recalls, and it is something that we, that we don't see what we have seen of real, uh, events over the last couple of years, has been
the Distribution Center event that that to to difficulties in delivering and uh, and then uh, what we saw in
Us completely um unexpected and and uh and to a very large extent internally driven so so we could have avoided them and that's what we have tightened the system to make sure that we don't get into that situation. Having said that you can't run a business and do not and never have issues.
What we do have is significance or not significant, but...
Realistic purposeful.
On the um your question is how we are going to get the object on the on the iFit Martin?
Yes.
Oh sorry. No. Not on on organic growth.
ah,
uh, so, uh,
so, as we
As as I started, by saying we, we actually consider this to be um, the the changes to uh The Physician fee schedule should be positive for us. Um, and and we also see that we have strong momentum. We are not in a situation where we have
Fully utilized the, um, uh, our sales muscle, so, to speak. Uh, so so we are, we are, of course, still hiring
Um, uh, sales reps to just go to the market. Uh, but we see it as we get more access, uh, with what is happening now, because there will be fewer.
There will be fewer, uh, companies to serve the same customer group, as we had before. Uh, and uh, and, and that is definitely going to
Just need to see it, played fully out before we we start to become too positive. But, uh, what we think that, uh, that is where we are. Now, we can have a, an optic because the turmoil that we saw in Q3 is not going to come back.
Thank you, last.
The next question, Council. Aisha. From Morgan Stanley, please go ahead.
Hi, good morning. Thanks for taking my question. My first question is on the competitive bidding program in the U.S. for chronic care products. You mentioned in the press release that any changes would take effect in 2028 at the earliest, but your peers are flagging that this could even, you know, be a bit later, as in 2029. I'm just curious what your internal assessments involve regarding this timeline and whether you have any renewed thoughts on the potential magnitude of the sales impact for you.
Uh, my second question is just a quick 1 on the wound. Uh, recall impact in China. Could you help us quantify the negative impact? Uh, that you are calling out in q12 and 3 for 2026. Thank you.
Yeah, let me take, um, the competitive bidding. Um, uh, question. So as you all are aware, um, this is something that is currently going on. Um, and we expect some kind of an outcome, uh, as we understand it during this quarter, uh, we however, believe that if there will be
Impact and that is still highly uncertain that it will not impact us uh until 28 at the earliest.
um, so so that's the information we are, are currently um, sitting with
Uh, in terms of the uh, wound uh, recall in China. Uh, as as we have said, a number of times, now, we expect that to have an impact, the q1 Q2 Q3.
And my estimate per quarter is something around 25 million.
Uh, based on on the knowledge that we have.
Thank you very much.
Come out from JP Morgan. Please go ahead.
Hi, good morning, thank you for taking my questions. Um, the first question is just around gross margin, how should we think of growth margin development over FY 2 6.
And then the second 1 was just around. Um, if you could provide us an update on how the search for the new CEO is going or the expectations still for having announced a replacement by, um, spring next year,
I can let me take the first 1, um, so our grass margin. Um, my high high level assumptions, um, are that we are looking into a year with a pretty stable inflation levels. That also means that our raw material prices, utility costs, uh, Freight Etc. Are pretty flattish compared to to last year.
Um but uh we will also have some headwind still from high salary inflation in Hungary. Uh, we are still seeing um a very intense labor market.
And then we are investing in uh in ramping up our facilities um still as some ramp up in Costa Rica. But next year, we will really start to ramp up in the possible. We are expecting possible to be in operation.
In Q4 of 2526, those are the main moving parts on our gross margin into 26.
And uh on the CEO. So it's um, so in a sense, uh, what I have said before the search is going on, um,
Uh, it's like it's like a funnel, right? You start. You start Broad and then you, then the, the field is narrowing down and, and that's of course where we are now.
Uh, we haven't, um,
uh, signed any contracts at this point in time, uh, but but we have a number of qualified candidates uh, and
uh, and once uh, we have a signature
It would be the first to know, and then, of course, it depends.
On, uh, what kind of garden leave or or other terms does that person have? And, uh, and, and that will then put, uh, put a a date on when a person can start and on until then it will be
The team that you are meeting today will be running the company together with the rest of the leaders in Cooler Class.
Perfect, thanks! And maybe just a quick follow-up on margins, please. Um, are you able to provide or quantify the effects headwind to margin for 426?
To ebit margin.
so, um, so
On the top line. Um, we will, we are expecting a reported growth uh in the level of 4 to 5% and that is uh also again a driven by the US dollar, uh, to a large extent.
On, uh, the EP growth, we will see some headwind, uh, also coming from the US dollar, also some on the British pound and the Hungarian forint.
Okay, yeah, thank you.
The next question comes from Veronica dooba from City. Please go ahead.
Um, hi, good morning, Larson, Anders. Thank you for taking my questions. I'll keep it to two, please. One, obviously looking at the revenue growth and the EBIT growth guidance, and I appreciate, Anders, you don't want to talk about gross margin guidance, but it does seem to me that there is.
A fairly large amount of Investments going into the business obviously year on year. Um, especially stripping out carouses, which is, you know, delivering a nice little tail into profitability. I was just hoping you could maybe talk about, what are some of the areas of the business where you are investing, meaningfully, um, with this High single digit, kind of Opex growth guidance. Um, that would be, um, super helpful. Um, and then I just want to Circle back on the China competition answer because it wasn't clear to me, um, Lars from your comments at the beginning. We see if, if I look at the press release, you are calling out competition in China, for the first time, it wasn't in the prior releases. So just trying to understand what really has changed. What has prompted you to put it into the release? And I guess is that competition from local players or is it from other multinationals? That are becoming more focused in the market. Thank you so much.
How impactful strategy. And as we also set at the capital markets, we are going to invest into new initiatives, both to drive.
Uh, the Topline growth but also to, to support our EP growth. The ambition
And what we will initiate, uh, this year is investments, uh, primarily into our U.S. chronic business. Uh, we see quite a few opportunities also with the new opportunity within about care.
We will also initiate Investments, uh, in urology, uh, to support the launch of inia. We are expecting um, um, when we get approval from the FDA that we will launch in tibia into 2627. So we will also initiate Investments here and then uh, we will initiate a quite a bit of investments into technology and AI both to support uh, improvement in our user, uh, experience. But definitely also to support uh activities to
Automate and optimize um, back office activities, especially order management. The prescription management through AI.
So those are some of the, the things that that we will initiate, um uh basically to support our long-term growth and uh, value creation agenda.
And for for China. Um,
Yeah, that I think is it's, it's actually a very appropriate, follow-up Veronica. Thank. Thank you for that. Um, that gives me the opportunity to say that. We have our Community Markets here in a is is very, very high in China. Uh and uh and we are not um yeah. Well more than 60% so. So and and as we are not seeing growth like we used to um, it is
Primarily because we uh, we have a consumer sentiment that is not the Super positive, but but of course, we also feel, uh, the pressure every single day that somebody would like to, to take away some of the, the market shares that we are having. Uh, we are seeing very able competitors, uh, in in China.
a very, very even though we have many local competitors. They have a very, very small markets here. Uh, very low single digit, I would say, and therefore, it is uh, it it is, uh,
Maybe just the way that we are writing. It is not because we see an increased, uh, local competition. But of course we feel local competition. Also in China. Uh, but it has not worsened. So that's not how we used to treat it.
Very clear. Thank you.
Yes uh good afternoon. Thanks a lot for taking my questions. Um,
So the question is also on curves, and you mentioned this mark shift towards the higher price products.
Can you just elaborate a little bit more about the Dynamics and how sustainable you regard this shift. And, uh, the the second question is about, um, still also the operating cost development. So follow up on Veronica. So, if I do the math and calculate, a stable, gross margin and let's say, also a stable, even I it margin and still the amount of operating leverage, you should have. Um, it it would be great if you if you can dive deeper into respective course. And yeah you you mentioned the wrap-up for in Tia but I calculate still a quite significant operating leverage which is according to your augmentation eaten up so would be great to have a little bit more
Transparency regarding the cost positions and how the math works. Thank you.
so uh, on your first 1, um, Olivia
So the physician fee schedule changes uh to uh to the payment. Um as as we have you know, you know we we are we are running right now with an average price of 10010 per square centimeter
And the new fixed price is $1,007.
3 per square. Centimeter from 1st of January 2026.
That is of course positive uh on an average basis. Uh there will also be uh fewer. Um
that has not been uh, has not come out yet, but we expect before 1st of January, that we'll have a full list of who has coverage
and that dynamic all together means that as the
progresses. And as uh, as the stocks that have been built, they are being uh, consumed uh, that we will be in a better position.
To compete, we are at this point in time because there are fewer competitors, and what we compete with has a higher average price. That's how we see it. That's also why we think that, at the end of the day, this is a positive change seen from our point of view.
To your second question around our cost development. I think I I talked to the gross margin moving path earlier. Um, I also um, talked to where we are going to invest. Um,
Back to Veronicas question and uh and you should as I also said, earlier, and you should expect our inflation levels or the inflation levels salary regulation, Etc, to be pretty stable also compared to to last year. So we are really, um,
The Leverage effect we have. We, we really invest that back into new initiatives. Uh, and I explained those initiatives earlier, so it's a us, it's in tibia. Uh, and then also investing into technology AI to support. Uh, long-term growth and long-term value creation.
Okay, thank you.
The next question comes from. Julia from Jeffrey. Please go ahead.
Hi, good morning La. Good morning Anderson. Thanks for taking my question. Uh, the first 1 relates to continents, uh, we should have the the coding change taking effect in January of 26. So just curious what are your latest thoughts on this? And how you, uh, ambition to to, to make the most of that coding change. And whether we should see any positive impact in 26, or is it more a mid to long term benefit? We, we should, we should observe.
And the second question is trying to dissect a little more into the guidance for 26. Uh, particularly in chronic care. Uh, you have highlighted continued momentum in the business, but is it fair to assume that continents will continue to outperform our studies as it has in the recent past and also considering the regulatory changes the recent product launches and so on. So just curious whether we should remain slightly subdued compared to to continents in to the next year. Thank you.
Um, thanks a lot Julian. Let me uh start with the the US. Um, uh coding. Yes. It's going to have a effect here, from from January. But we also, um, are aware that there will be quite a lot of operational activities going on in moving. Uh, the coding from the, the previous way of the previous reimbursement codes and now to specific hydrophilic codes. Uh, so there will be, um, quite a big operational activities in our us business. To get that fully implemented, and it is still forced to early to, to call out, uh, the, the impact. But over time, we expect this to be positive
Um, in terms to your second question around uh, guidance on The Chronic side as you have seen. Um, also last year we have a a good momentum within the continents, um, driven by our intermittent, catheters driven by the Lugia launch, but we also seeing good momentum within our bowel care, uh, business
And and we see that momentum uh also continue into uh into 2526 uh and um and remember the awesome your franchise as last. Also, as mentioned, a number of times, now are also impacted by um, low growth or flat-ish growth the um, in China. So so that is the main headwind, uh, OC versus CC
But overall, we are expecting that the Chronic business will continue with good momentum also into 2526.
Thank you.
The next question comes from Sam England from Bernberg. Please go ahead.
Hi. Thanks for taking the the questions. So, the first 1 is just a follow-up on the investment and margins piece. Can you talk a bit about how the impact for investment evolves over the plan period, um, to understand how margins might trend from here. Is it pretty much front end weighted?
Just wondering if you're expecting any more positive momentum on reimbursement, during 2026 following the improved reimbursement that you saw in France for for hmes earlier this year and then you expecting any other new markets. Invoicing Respiratory Care to open reimbursement in 26. Like we saw with with Poland this year. So,
Yeah, so thanks Sam, uh, to your first question around, uh, Investments, during the impact 4 period. There are the ones we have talked about today that is, uh, yeah. Front loading some of the activities to support the growth, uh, and also value creation over the period. Uh, so we are, uh, yeah. As I said a couple of times now front loading, uh, activities within the US, uh, in tibia, and, and Technology, AI to reap the benefits. Um, later in the Strategic period,
On voice and Respiratory Care. Um, we we expect, uh, the momentum we have seen in recent years to continue. Uh, we have seen some reimbursement openings, um,
In some of our smaller emerging markets.
Uh, but also in France. Um, but you should not expect any bigger ones, at least not. Um, a short term.
Right. Thanks very much.
The next question comes from Graham Doyle from UBS. Please go ahead.
What are you guys? Thanks for taking my questions. I just 1 1 for Andrews and 1 for Lars and and it's just in terms of the Q4 it looked like there was a fairly sizable Step Up In other operating income, which seems to be related to a transition Services agreement. And it was kind of like 2, 3% of, uh, of the bit and how sustainable is that? And when should we expect that to sort of run off? Um, and then just a point on on reimbursement. Um, for Lars here, when you look at the skin Subs, is there, not a danger if the sealing reimbursement. I, what a doctor receives is capped at 127. Why would there not be a race to the bottom to products for like 20, 30 $40, where you make this spread so it's just just understand how you think. Doctors balance, patient outcomes with. I suppose Financial incentives would be would be helpful. Thank you.
Well, thanks a lot, Graham. Let me take the first 1. Uh, if um, we have a, a step up in in operate other operating income throughout the year and this is really related to our um, TSA or our services to the buyer of our skin um, a business.
In the US.
Uh but actually uh the cost to do these services are sitting in the individual cost items. So when I knit it up,
In our P&L, it's actually a neutral effect.
Um, you should expect the um, uh, uh yeah. The other operating income also to continue, uh, into 25/26, and we expect to be done with the services towards the end of the year. But for the total, uh, EB. It's a neutral, uh, impact.
so on, on the cases, uh,
um,
But I think, you know, at least as much as I do about the dynamics, uh, the financial dynamics of, uh, of, um.
Of the skincare market in the U.S. Um, the way I see this change is.
that um, for most
Vendors. They will get into a space where they have a significantly lower, uh, pay per square centimeter than
they had before and we come into a space where we have more
The windows that are left in that space. Now, um,
It can only be there when they have good quality clinical data.
uh and the clinical data that you have to obtain to be in that market, you you can only get those when you have a certain
uh,
investment in the
in in, in the, in the quality of those data uh, and
and, and I think,
That the it's hard to see.
Uh, with the kind of investments that you have to do to both create these products, but also to document them.
That is going to be substantial risk to the bottom.
Data.
We also have a very competitive setup when it comes to to the cost on this. Um, so so we we of course prepared to
um,
to compete.
but we, um,
We we just don't think that that we are in a space where uh what you described there is, there's a logic that that will just be the right or the first thing that happens. But
We might be proven wrong and this, of course, uh, but but I really think that what happens, the steps that have been taken here.
That gives a choice for, uh, the society to offer.
Very, very strong.
Products.
At a reasonable price uh and those who would like to compete on that is in that space. That's how I see it.
Thanks l. No, I completely hear you. I just, uh, it was just, um, something I thought about as we looked at how some of the higher price products are trending today. Thanks a lot for that.
Yeah. Should I think that we will have to end with the next question because we are over time. But, uh, but could we take 1 more,
The next question comes from Carson. Lindborg marsan. From dansky bank, please go ahead.
Excellent. Thank you very much for squeezing me in. Uh, I was just hoping that you could talk a little bit about the scenarios for the LCD. Um, because there is, of course, a sort of continuous rumors about it not being implemented and maybe being canceled. So what will actually happen with your organic Revenue growth guidance for 20 for next financial year and if it's should be in a situation where the LCD is not being implemented,
Um, Castle, let me take that 1. Our assumption around cures is for, for the coming year is the growth of around, 25%. And remember, uh, around 70% of our business, that's the hospital business and the hospital business. We have a very strong, uh, growth quarter over quarter. And it's really the outpatient setting where we discuss the LCD and the price levels where we have some volatility, uh, but we are, um, uh, we expect to deliver, um, growth of around the 25% for our chaos as business, uh, 2526.
Okay, and then maybe a quick follow-up to this in terms of the venous leg. Also, I cannot completely remember your plans for submitting data and maybe potentially getting onto that list as well. Could you help me remember it?
Here. Um,
So, so that's the the current assumption.
Thank you.
Okay, so so I actually I changed my mind that had that happened sometimes in life. Uh so yes by if you're still online you can you can ask your questions because you're the last 1 who's left. So that would be like almost personally if we leave you out here.
The next question comes from yesterday from DMP Carnegie. Please go ahead.
I'm sorry for taking the time. Um, just maybe on the bulky opportunity that you mentioned in regards to your uh, increased investments into the next financial year. Could you just elaborate a bit on on that opportunity and and what kind of contribution you expect to, to get from that? And then, lastly, on on Halo, um, and the, the special items that you have a special as specified. Um, so my understanding you don't do capitalization of your R&D and just trying to understand what's what's
Specifically driving that and and and to, to some extent. How how big that uh, set cost is X?
When we had the CMD back in, uh, in September and described our impact 4 ambient. Also, for the us, we also talked to an opportunity, we are seeing in the US for our bowel care, uh, business
Um, so, um, the good news is that we are now getting a reimbursement for bowel care in the US. And, uh, that's why we are now initiating investments into this specific area. And, uh, that's what we have been planning to do this year.
Uh, in terms of your second question, uh, related to Halo. Uh, yes, we have evaluated the um,
the current sales in the, uh, in the UK and our plans not to, to launch in other markets and therefore, we have, uh, included, um,
Um a quite significant amount in our special items and its related to the it Investments that we have done. So to develop the solution and uh to develop the app,
Um, and therefore we have reassessed the uh basically the depreciation um, for for the Halo solution. And that's what we have included in special items.
Thank you.
Thank you very much, everyone. I look forward to seeing many of you over the next period. Thank you.
Ladies and gentlemen, and thank you for participating in the conference. You may now disconnect your lines, goodbye.