Coloplast Q1 2026 Coloplast AS Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Coloplast AS Earnings Call
Speaker #1: Ladies and gentlemen, welcome to the Coloplast interim financial statements for Q1 2025/26 conference call. I'm Moira de Coros, Coloperator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded.
Operator: Ladies and gentlemen, welcome to the Coloplast Interim Financial Statements for Q1 2025-26 Conference Call. I am Moira, the call's call operator. I would like to remind you that all participants will be in listen-only mode, and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. 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 Lars Rasmussen, Interim CEO. Please go ahead.
Operator: Ladies and gentlemen, welcome to the Coloplast Interim Financial Statements for Q1 2025-26 Conference Call. I am Moira, the call's call operator. I would like to remind you that all participants will be in listen-only mode, and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. 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 Lars Rasmussen, Interim CEO. Please go ahead.
Speaker #1: The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone.
Speaker #1: 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 Lars Rasmussen, interim CEO.
Speaker #1: Please go ahead.
Speaker #2: Thank you, and good morning, and welcome to our Q1 2025-26 conference call. I'm Lars Rasmussen, interim CEO of Coloplast. I'm joined by CFO Anders Lonning Skovgaard and our investor relations team.
Lars Rasmussen: Thank you and good morning, and welcome to our Q1 2025-26 conference call. I'm Lars Rasmussen, interim CEO of Coloplast, and I'm joined by CFO Anders Lonning-Skoggaard and our investor relations team. We will start with a short presentation by Anders and myself, and then open up for questions. Please turn to slide number 3. We delivered 6% organic revenue growth and 3% EBIT growth in constant currencies before special items. Return on invested capital after tax and before special items landed at 15% on par with last year's adjusted figure. We had a soft start to the year as expected, however, with a significantly more turbulent quarter in Kerecis than we would have anticipated. I'll get back to that in a moment. For the year, we maintain our guidance of around 7% organic growth.
Lars Rasmussen: Thank you and good morning, and welcome to our Q1 2025-26 conference call. I'm Lars Rasmussen, interim CEO of Coloplast, and I'm joined by CFO Anders Lonning-Skoggaard and our investor relations team. We will start with a short presentation by Anders and myself, and then open up for questions. Please turn to slide number 3. We delivered 6% organic revenue growth and 3% EBIT growth in constant currencies before special items. Return on invested capital after tax and before special items landed at 15% on par with last year's adjusted figure. We had a soft start to the year as expected, however, with a significantly more turbulent quarter in Kerecis than we would have anticipated. I'll get back to that in a moment. For the year, we maintain our guidance of around 7% organic growth.
Speaker #2: This is a short presentation by Anders and myself. We will start with an overview and then open up for questions. And please turn to slide number three. We delivered 6% organic revenue growth and 3% EBIT growth in constant currencies before special items.
Speaker #2: Return on invested capital after tax and before special items landed at 15%, on par with the figure. We had a soft start to the year, last year's adjusted as expected.
Speaker #2: However, it was a significantly more turbulent quarter in currencies than we would have anticipated. I'll get back to that in a moment. For the year, we maintain our guidance of around 7% organic growth.
Speaker #2: We lower our growth expectations for currencies to around 10% amid significant market uncertainty in the outpatient setting, but raise our outlook for interventional reality to high single digits following a strong start and improved outlook for the year.
Lars Rasmussen: We lower our growth expectations for Kerecis to around 10% amid significant market uncertainty in the outpatient setting, but raise our outlook for Interventional Urology to high single digits following a strong start and improved outlook for the year. Before we dive further into the quarterly performance and outlook for the year, let me begin with a brief comment on our leadership team. In December, we announced two important changes to the executive leadership team. EVP of People and Culture, Dorthe Rønnau, has decided to leave Coloplast to pursue the next chapter in her career, and Tommy Johns, Executive Vice President of Interventional Urology, has decided to retire after more than a decade in Coloplast and more than three decades in the global life science industry.
Lars Rasmussen: We lower our growth expectations for Kerecis to around 10% amid significant market uncertainty in the outpatient setting, but raise our outlook for Interventional Urology to high single digits following a strong start and improved outlook for the year. Before we dive further into the quarterly performance and outlook for the year, let me begin with a brief comment on our leadership team. In December, we announced two important changes to the executive leadership team. EVP of People and Culture, Dorthe Rønnau, has decided to leave Coloplast to pursue the next chapter in her career, and Tommy Johns, Executive Vice President of Interventional Urology, has decided to retire after more than a decade in Coloplast and more than three decades in the global life science industry.
Speaker #2: Before we dive further into the quarterly performance and outlook for the year, let me begin with a brief comment on our leadership team. In December, we announced two important changes to the executive leadership team.
Speaker #2: EVP of People and Culture, Dorte Rønnau, has decided to leave this chapter in her career, and Tommy Johns, Executive Vice President of Interventional Reality, has decided to retire after more than a decade at Coloplast and more than three decades in the global life science industry.
Speaker #2: An external search to identify a new leader is currently ongoing for the global People and Culture function, while Kevin Harditz will step into the role of EVP Interventional Urology on February 9th.
Lars Rasmussen: An external search is currently ongoing to identify a new leader for the global People and Culture function, while Kevin Hardage will step into the role of EVP Interventional Urology on 9 February. Kevin brings extensive experience from the global medtech industry, including senior leadership experience from Teleflex in the urology space, and I look forward to welcoming Kevin to Coloplast. Dorthe and Tommy have both played key roles in ensuring a smooth leadership transition. I want to thank them for the continuity and stability they have provided throughout this period and wish them all the best in their future endeavors. Additionally, I would like to mention that the search for Coloplast's new CEO is progressing well and remains on track. I would also like to put a few words to key developments in Q1.
Lars Rasmussen: An external search is currently ongoing to identify a new leader for the global People and Culture function, while Kevin Hardage will step into the role of EVP Interventional Urology on 9 February. Kevin brings extensive experience from the global medtech industry, including senior leadership experience from Teleflex in the urology space, and I look forward to welcoming Kevin to Coloplast. Dorthe and Tommy have both played key roles in ensuring a smooth leadership transition. I want to thank them for the continuity and stability they have provided throughout this period and wish them all the best in their future endeavors. Additionally, I would like to mention that the search for Coloplast's new CEO is progressing well and remains on track. I would also like to put a few words to key developments in Q1.
Speaker #2: Kevin brings extensive experience from the global metric industry, including senior leadership experience from Teleflex, in the reality space. And I look forward to welcoming Kevin to Coloplast.
Speaker #2: Dorte and Tommy have both played key roles in ensuring a smooth leadership transition. I want to thank them for the continuity and stability they have provided throughout this period and wish them all the best in their future endeavors.
Speaker #2: Additionally, I would like to mention that the search for Coloplast's new CEO is progressing well and remains on track. I would also like to put a few words to key developments in Q1.
Speaker #2: Interventional reality delivered a strong start to the year with 8% organic growth, driven by the mental health business. The product recall in kidney and bladder health is now behind us, and we are looking at very healthy business at a very healthy business expected to deliver high single digit growth in 2025-26.
Lars Rasmussen: Interventional Urology delivered a strong start to the year with 8% organic growth driven by the men's health business. The product recall in kidney and bladder health is now behind us, and we are looking at a very healthy business expected to deliver high single digit growth in 2025-2026. During the quarter, we reached the important milestone of submitting Intibia, our investigational inhibitory nerve stimulation device, to the FDA. This marks an important advancement towards a future launch of the device and our goal of bringing innovative and clinically differentiated solutions closer to the patients. Intibia plays an important role in delivering on our Impact4 strategy for Interventional Urology, and I'm encouraged by the fact that we continue to see clear external confirmation of the relevance of the implantable inhibitory nerve stimulation space.
Lars Rasmussen: Interventional Urology delivered a strong start to the year with 8% organic growth driven by the men's health business. The product recall in kidney and bladder health is now behind us, and we are looking at a very healthy business expected to deliver high single digit growth in 2025-2026. During the quarter, we reached the important milestone of submitting Intibia, our investigational inhibitory nerve stimulation device, to the FDA. This marks an important advancement towards a future launch of the device and our goal of bringing innovative and clinically differentiated solutions closer to the patients. Intibia plays an important role in delivering on our Impact4 strategy for Interventional Urology, and I'm encouraged by the fact that we continue to see clear external confirmation of the relevance of the implantable inhibitory nerve stimulation space.
Speaker #2: During the quarter, we reached the important milestone of submitting in CBIR our investigational GBL nerve stimulation device to the FDA. This marks an important advancement towards a future launch of the device and our goal of bringing innovative and clinically differentiated solutions closer to the patients.
Speaker #2: In CBIR, we play an important role in delivering on our Impact Four strategy for Interventional Urology, and I'm encouraged by the fact that we continue to see clear external confirmation of the relevance of the implantable GBL nerve stimulation space.
Speaker #2: Industry activity and investments in implantable GBL nerve stimulation continue to increase, indicating broader confidence in the therapy area and the role it may play in the future management of overactive bladder.
Lars Rasmussen: Industry activity and investments in implantable inhibitory nerve stimulation continues to increase, indicating broader confidence in the therapy area and the role it may play in the future management of overactive bladder. These developments reinforce our long-term view of the opportunity within this segment. I would also like to highlight that we are further strengthening our product portfolio in Interventional Urology through an agreement to purchase the outstanding shares of Uromedica, a commercial-stage company with a minimally invasive solution for treating stress urinary incontinence, complementary to our existing Men's Health business. The transaction is expected to close here in February, and we have an immaterial impact on the group financial performance in 2025-2026, while being accretive to Interventional Urology's financial metrics in the second half of the Impact4 strategic period. Finally, I would like to spend a moment addressing the development we have seen in Kerecis in Q1.
Lars Rasmussen: Industry activity and investments in implantable inhibitory nerve stimulation continues to increase, indicating broader confidence in the therapy area and the role it may play in the future management of overactive bladder. These developments reinforce our long-term view of the opportunity within this segment. I would also like to highlight that we are further strengthening our product portfolio in Interventional Urology through an agreement to purchase the outstanding shares of Uromedica, a commercial-stage company with a minimally invasive solution for treating stress urinary incontinence, complementary to our existing Men's Health business. The transaction is expected to close here in February, and we have an immaterial impact on the group financial performance in 2025-2026, while being accretive to Interventional Urology's financial metrics in the second half of the Impact4 strategic period. Finally, I would like to spend a moment addressing the development we have seen in Kerecis in Q1.
Speaker #2: These developments reinforce our long-term view of the opportunity within this segment. I would also like to highlight that we are further strengthening our product portfolio in interventional urology through an agreement to purchase the outstanding shares of Uromedica, a commercially staged company with a minimally invasive solution for treating stress urinary incontinence, complementary to our existing men’s health business.
Speaker #2: The transaction is expected to close here in February, and we have an initial impact on the group financial performance in 2025-26, while being accretive to Interventional Reality's financial metrics in the second half of the impact four strategic period.
Speaker #2: Finally, I would like to spend a moment addressing the development we have seen in currencies in Q1. Currencies delivered 10% of only 1%. While we continued to see organic growth in the quarter with an EBIT margin in Q1, currencies' overall performance was subdued due to significant sales disruption from Medicare reimbursement changes in the outpatient setting, which resulted in negative growth in the outpatient setting.
Lars Rasmussen: Kerecis delivered 10% organic growth in the quarter with an EBIT margin of only 1%. While we continued to see a healthy momentum in the inpatient setting in Q1, Kerecis' overall performance was subdued due to significant sales disruption from Medicare reimbursement changes in the outpatient setting, which resulted in negative growth in the outpatient setting. Effective 1 January 2026, Medicare has introduced a single fixed payment of $127 per square centimeter for all products in the outpatient setting covered by Medicare. At the same time, Medicare has withdrawn the already announced LCD also set to go into effect 1 January. Combined, this has triggered significant uncertainty in the skin substitute market as the channel adjusts, and we expect the heightened market uncertainty to persist throughout the year.
Lars Rasmussen: Kerecis delivered 10% organic growth in the quarter with an EBIT margin of only 1%. While we continued to see a healthy momentum in the inpatient setting in Q1, Kerecis' overall performance was subdued due to significant sales disruption from Medicare reimbursement changes in the outpatient setting, which resulted in negative growth in the outpatient setting. Effective 1 January 2026, Medicare has introduced a single fixed payment of $127 per square centimeter for all products in the outpatient setting covered by Medicare. At the same time, Medicare has withdrawn the already announced LCD also set to go into effect 1 January. Combined, this has triggered significant uncertainty in the skin substitute market as the channel adjusts, and we expect the heightened market uncertainty to persist throughout the year.
Speaker #2: Effective January 1, 2026, Medicare has introduced a single fixed payment of $127 per square centimeter for all products in the outpatient setting covered by Medicare.
Speaker #2: At the same time, Medicare has withdrawn the LCD, also to already announced set to go into effect January 1st. Combined, this has triggered significant uncertainty in the skin substitute market as the channel adjusts, and we expect the heightened market uncertainty to persist throughout the year.
Speaker #2: As part of the shift toward a fixed payment rate, the Shield product brand will be phased out of the Medicare market and replaced by a renewed portfolio of the product brands Meridian.
Lars Rasmussen: As part of the shift towards a fixed payment rate, the Shield product brand will be phased out of the Medicare market and replaced by a renewed portfolio of the product brand MariGen, which is well positioned to take market shares under the new fixed rate. This shift will create a negative mix effect as MariGen volumes are scaling. There is no doubt that the many unprecedented changes by CMS and the recent pivot with regards to the LCD in fiscal Q1 has made the operating environment increasingly difficult to navigate as a manufacturer. Similarly, we have seen an increased level of customer hesitancy to place large orders amid the significant market uncertainty. However, when looking ahead, we remain optimistic about the outlook for the category and Kerecis long term.
Lars Rasmussen: As part of the shift towards a fixed payment rate, the Shield product brand will be phased out of the Medicare market and replaced by a renewed portfolio of the product brand MariGen, which is well positioned to take market shares under the new fixed rate. This shift will create a negative mix effect as MariGen volumes are scaling. There is no doubt that the many unprecedented changes by CMS and the recent pivot with regards to the LCD in fiscal Q1 has made the operating environment increasingly difficult to navigate as a manufacturer. Similarly, we have seen an increased level of customer hesitancy to place large orders amid the significant market uncertainty. However, when looking ahead, we remain optimistic about the outlook for the category and Kerecis long term.
Speaker #2: Which is well positioned to take market shares under the new fixed rate. This shift will create a negative Meridian—volumes are scaling. There is no doubt that the many unprecedented changes by CMS and the recent pivot with regards to the LCD in fiscal Q1 has made the operating environment increasingly difficult to navigate as a manufacturer.
Speaker #2: Similarly, we have seen an increased level of customer hesitancy to place large orders amid the significant market uncertainty. However, when looking ahead, we remain optimistic about the outlook for the category and currencies long term.
Speaker #2: We support CMS's efforts to clean up the market, and we see both the now-canceled LCD and the fixed payment rates as evidence that currencies remain well positioned to compete and win in the skin substitutes market.
Lars Rasmussen: We support CMS's efforts to clean up the market, and we see both the now canceled LCD and the fixed payment rate as evidence that Kerecis remains well positioned to compete and win in the skin substitutes market. Only 18 out of more than 300 products were in the final LCD, and of these, two were Kerecis' products. That is a clear testament to the clinical efficacy and differentiation of Kerecis' product offerings. Kerecis is the only product in the market based on intact fish skin. It has a high resemblance to human skin and is proven to be more effective than the standard of care in healing severe wounds. In addition to being incredibly potent, the technology is also highly scalable based on its unique waste-to-value proposition, allowing for a highly efficient production setup.
Lars Rasmussen: We support CMS's efforts to clean up the market, and we see both the now canceled LCD and the fixed payment rate as evidence that Kerecis remains well positioned to compete and win in the skin substitutes market. Only 18 out of more than 300 products were in the final LCD, and of these, two were Kerecis' products. That is a clear testament to the clinical efficacy and differentiation of Kerecis' product offerings. Kerecis is the only product in the market based on intact fish skin. It has a high resemblance to human skin and is proven to be more effective than the standard of care in healing severe wounds. In addition to being incredibly potent, the technology is also highly scalable based on its unique waste-to-value proposition, allowing for a highly efficient production setup.
Speaker #2: Only 18 out of more than 300 products were in the final LCD, and of these, two were Currencies products. That is a clear testament to the clinical efficacy and differentiation of Currencies product offerings.
Speaker #2: Currencies is the only product in the market based on intact fish skin; it has a high resemblance to human skin and is proven to be more effective than the standard of care in healing severe wounds.
Speaker #2: In addition to being incredibly potent, the technology is also highly scalable based on its unique race-to-value proposition, allowing for a highly efficient production setup.
Speaker #2: No other products in the market share the unique characteristics of the fish skin. And we have moved quickly in response to the changes. We have enhanced our go-to-market model to align with the new requirements and will roll out a series of product launches during the year to support this updated approach.
Lars Rasmussen: No other products in the market share the unique characteristics of the fish skin, and we have moved quickly in response to the changes. We have enhanced our go-to-market model to align with the new requirements and will roll out a series of product launches during the year or during this year to support this updated approach. I'm deeply impressed by the agility, ingenuity, and the grit of the Kerecis' team and the way that they have handled this situation. Long term, we therefore continue to believe Kerecis will see continued strengthening of its competitive position relative to peers due to its unique technology and strong clinical documentation. With this, let's now take a closer look at the details by business area. In Ostomy Care, organic growth was 4%, and growth in Danish kroner was flat in the first quarter.
Lars Rasmussen: No other products in the market share the unique characteristics of the fish skin, and we have moved quickly in response to the changes. We have enhanced our go-to-market model to align with the new requirements and will roll out a series of product launches during the year or during this year to support this updated approach. I'm deeply impressed by the agility, ingenuity, and the grit of the Kerecis' team and the way that they have handled this situation. Long term, we therefore continue to believe Kerecis will see continued strengthening of its competitive position relative to peers due to its unique technology and strong clinical documentation. With this, let's now take a closer look at the details by business area. In Ostomy Care, organic growth was 4%, and growth in Danish kroner was flat in the first quarter.
Speaker #2: I'm deeply impressed by the agility, ingenuity, and grit of the currencies team and the way that they have handled this situation. Long term, we therefore continue to believe currencies will see continued strengthening of its competitive position relative to peers.
Speaker #2: Due to its unique technology and strong clinical documentation. With this, let's now take a closer look at the details by business area. In orthopedic care, organic growth was 4%, and growth in Danish kroner was flat in the first quarter.
Speaker #2: Osteopedic care delivered a soft start to the year as expected, due to negative growth in China, a high baseline in the US, and order phasing in emerging markets.
Lars Rasmussen: Ostomy Care delivered a soft start to the year as expected due to negative growth in China, a high baseline in the US, and order phasing in emerging markets. Rest of the year, we expect the growth momentum to pick up. In the US business, the underlying performance continues to be strong, and in Q1, Premier has renewed Coloplast Group's purchasing agreement. The contract remains multi-source and effective for three years starting 1 April 2026. In China, sales declined in the quarter impacted by a continued weak consumer sentiment and competitive pressures from domestic players in a community channel, further amplified by a high baseline last year. From a product perspective, the SenSura Mio portfolio was the main contributor to growth, followed by the Brava range of supporting products. The latest product launches within SenSura Mio, the black bags, and the new two-piece offering both continue to perform well.
Lars Rasmussen: Ostomy Care delivered a soft start to the year as expected due to negative growth in China, a high baseline in the US, and order phasing in emerging markets. Rest of the year, we expect the growth momentum to pick up. In the US business, the underlying performance continues to be strong, and in Q1, Premier has renewed Coloplast Group's purchasing agreement. The contract remains multi-source and effective for three years starting 1 April 2026. In China, sales declined in the quarter impacted by a continued weak consumer sentiment and competitive pressures from domestic players in a community channel, further amplified by a high baseline last year. From a product perspective, the SenSura Mio portfolio was the main contributor to growth, followed by the Brava range of supporting products. The latest product launches within SenSura Mio, the black bags, and the new two-piece offering both continue to perform well.
Speaker #2: For the rest of the year, we expect the growth momentum to pick up. In the US business, the underlying performance continues to be strong, and in Q1, Premier has renewed Coloplast Group's purchasing agreement.
Speaker #2: The contract remains multi-source and effective for three years, starting April 1, 2026. In China, sales declined in the quarter, impacted by continued weak consumer sentiment and competitive pressures from domestic players in the community channel.
Speaker #2: Further amplified by a high baseline last Sensura year. From a product perspective, the Mule portfolio was the main contributor to growth, followed by the Brava range of supporting products.
Speaker #2: The latest product launches within SenSura Mio, the Black Bags, and the new two-piece offering both continue to perform well. Additional variants of the Black Bags were launched in Q1, and further variants are expected throughout 2025-26. Growth in Danish kroner was 2%.
Lars Rasmussen: Additional variants of the black bags were launched in Q1, and further variants are expected throughout 2025-2026. In Continence Care, organic growth was 7%, and growth in Danish kroner was 2% for Q1. The Luja portfolio was the main growth contributor in the quarter, driven both by the male and female catheters in Europe, most notably in the UK, France, and Germany, and also in the US. Growth in the SpeediCath portfolio was driven by flexible catheters in the US and Latam. Within our two smaller segments in Continence Care, Bowel Care made a strong contribution to growth while collecting devices saw a slight decline in the quarter. From a geographical perspective, growth was driven by Europe and the US, while growth in emerging markets was impacted by order phasing. Voice and Respiratory Care posted 8% organic growth for Q1 with growth in Danish kroner of 5%.
Lars Rasmussen: Additional variants of the black bags were launched in Q1, and further variants are expected throughout 2025-2026. In Continence Care, organic growth was 7%, and growth in Danish kroner was 2% for Q1. The Luja portfolio was the main growth contributor in the quarter, driven both by the male and female catheters in Europe, most notably in the UK, France, and Germany, and also in the US. Growth in the SpeediCath portfolio was driven by flexible catheters in the US and Latam. Within our two smaller segments in Continence Care, Bowel Care made a strong contribution to growth while collecting devices saw a slight decline in the quarter. From a geographical perspective, growth was driven by Europe and the US, while growth in emerging markets was impacted by order phasing. Voice and Respiratory Care posted 8% organic growth for Q1 with growth in Danish kroner of 5%.
Speaker #2: In Constant Care, organic growth was for Q1. The Lugia portfolio was the main growth contributor in the quarter, driven by both the male and female catheters in Europe—most notably in the UK, France, and Germany—and also in the US.
Speaker #2: Growth in the SpeedyCath portfolio was driven by flexible catheters in the US and Latham. Within our two smaller segments in constant care, bowel care made a strong contribution to growth, while collecting devices also performed well.
Speaker #2: We saw a slight decline in the quarter. From a geographical perspective, growth was driven by Europe and the US, while growth in emerging markets was impacted by order phasing.
Speaker #2: Voice and respiratory care posted 5%. Laryngectomy delivered high single-digit growth in the first quarter in Danish kroner, driven by an increase in the number of patients served in existing and new markets, and an increase in patient value driven by the Provox Life portfolio.
Lars Rasmussen: Laryngectomy delivered high single-digit growth in Q1, driven by an increase in the number of patients served in existing and new markets and an increase in patient value driven by the Provox Life portfolio. Tracheostomy delivered mid-single-digit growth driven by solid underlying demand, partly offset by phasing in distributor markets. Growth in tracheostomy is expected to be back-end loaded and will pick up momentum in the second half of the year. In Wound and Tissue Repair, organic growth was 5% for Q1. In Danish kroner, sales declined 8 percentage points or 8% due to 8 percentage points negative impact from the skincare divestment in December 2024. As mentioned earlier, Kerecis delivered a soft quarter with 10% organic growth due to the significant sales disruption from the Medicare reimbursement changes in the outpatient setting. The Advanced Wound Dressings business declined 3% in Q1.
Lars Rasmussen: Laryngectomy delivered high single-digit growth in Q1, driven by an increase in the number of patients served in existing and new markets and an increase in patient value driven by the Provox Life portfolio. Tracheostomy delivered mid-single-digit growth driven by solid underlying demand, partly offset by phasing in distributor markets. Growth in tracheostomy is expected to be back-end loaded and will pick up momentum in the second half of the year. In Wound and Tissue Repair, organic growth was 5% for Q1. In Danish kroner, sales declined 8 percentage points or 8% due to 8 percentage points negative impact from the skincare divestment in December 2024. As mentioned earlier, Kerecis delivered a soft quarter with 10% organic growth due to the significant sales disruption from the Medicare reimbursement changes in the outpatient setting. The Advanced Wound Dressings business declined 3% in Q1.
Speaker #2: Tracheostomy delivered mid-single-digit growth, driven by solid underlying demand, partly offset by phasing in distributor markets. Growth in tracheostomy is expected to be back-end loaded and will pick up momentum in the second half of the year.
Speaker #2: In Wound and Tissue Repair, organic growth was 5% for Q1. In Danish kroner, sales declined due to an 8 percentage point negative impact from the Skin Care divestment, or 8% due December 2024.
Speaker #2: As mentioned earlier, currencies delivered a soft quarter with 10% organic growth due to the significant sales disruption from the Medicare reimbursement changes in the outpatient setting.
Speaker #2: The advanced wound dressings business declined 3% in Q1. China detracted significantly from growth, impacted by the product return initiated last year, with a negative revenue impact of around DKK 25 million in the first quarter.
Lars Rasmussen: China detracted significantly from growth, impacted by the product return initiated last year with a negative revenue impact of around DKK 25 million in the first quarter. From a product perspective, Biatain Superabsorber was the main growth contributor. The contract manufacturing business posted solid double-digit growth in the first quarter, reflecting a front-end loaded year. In Interventional Urology, organic growth was 8%, and growth in Danish kroner was 3% for Q1. As mentioned earlier, the men's health business in the US delivered a strong first quarter and was the main contributor to growth. Our flagship products within men's health, the Titan Penile Implant, continue to perform well with the patient fund positively impacted by our patient support program, targeted at prospective patients. The women's health business and the kidney and bladder health business also contributed to growth.
Lars Rasmussen: China detracted significantly from growth, impacted by the product return initiated last year with a negative revenue impact of around DKK 25 million in the first quarter. From a product perspective, Biatain Superabsorber was the main growth contributor. The contract manufacturing business posted solid double-digit growth in the first quarter, reflecting a front-end loaded year. In Interventional Urology, organic growth was 8%, and growth in Danish kroner was 3% for Q1. As mentioned earlier, the men's health business in the US delivered a strong first quarter and was the main contributor to growth. Our flagship products within men's health, the Titan Penile Implant, continue to perform well with the patient fund positively impacted by our patient support program, targeted at prospective patients. The women's health business and the kidney and bladder health business also contributed to growth.
Speaker #2: From a product perspective, Biogen Superabsorber was the main growth contributor. The contract manufacturing business posted solid double-digit growth in the first quarter, reflecting a front-end loaded year.
Speaker #2: In Interventional Urology, organic growth was 8%, and growth in Danish kroner was 3% for Q1. As mentioned earlier, the Men's Health business in the US delivered a strong first quarter and was the main contributor to growth.
Speaker #2: Our flagship products within Men's Health, the Titan Penile Implant, continued to perform well, with the patient funnel positively impacted by our patient support program.
Speaker #2: Targeted at prospective patients. The Women's Health business and the Kidney and Bladder Health business also contributed to growth. With this, I'll now hand over to Anders, who will take you through the financials and outlook in more detail.
Lars Rasmussen: With this, I'll now hand over to Anders, who will take you through the financials and outlook in more detail. Please turn to slide number 5. Thank you, Lars, and good morning, everyone. Reported revenue for Q1 increased by DKK 17 million or 0% compared to last year. Organic growth contributed around DKK 393 million or around 6% to reported revenue. Divested businesses related to skincare in December 2024 reduced reported revenue by DKK 77 million or around 1%. For an exchange rate, reduced reported revenue by DKK 299 million or around 4%, mostly related to the depreciation of the US dollar, the British pound, and a basket of emerging market currencies against the Danish kroner. Please turn to slide number 6. Gross profit for Q1 amounted to DKK 4.7 billion, corresponding to a gross margin of 67% compared to 68% last year.
Lars Rasmussen: With this, I'll now hand over to Anders, who will take you through the financials and outlook in more detail. Please turn to slide number 5.
Speaker #2: Please turn to slide number five. Thank you, Lars, and good morning, everyone. Reported revenue for Q1 increased by DKK 17 million, or 0%, compared to last year.
Anders Lonning-Skovgaard: Thank you, Lars, and good morning, everyone. Reported revenue for Q1 increased by DKK 17 million or 0% compared to last year. Organic growth contributed around DKK 393 million or around 6% to reported revenue. Divested businesses related to skincare in December 2024 reduced reported revenue by DKK 77 million or around 1%. For an exchange rate, reduced reported revenue by DKK 299 million or around 4%, mostly related to the depreciation of the US dollar, the British pound, and a basket of emerging market currencies against the Danish kroner. Please turn to slide number 6. Gross profit for Q1 amounted to DKK 4.7 billion, corresponding to a gross margin of 67% compared to 68% last year.
Speaker #2: Organic growth contributed around DKK 393 million, or around 6%, to reported revenue. Divested businesses related to skin care in December '24 reduced reported revenue by DKK 77 million, or around 1%.
Speaker #2: Foreign exchange rates reduced reported revenue by DKK 299 million, or around 4%. This was mostly related to the depreciation of the US dollar, the British pound, and the basket of emerging market currencies against the Danish kroner.
Speaker #2: Please turn to slide number six. Gross profit for Q1 amounted to DKK 4.7 billion, corresponding to a gross margin of 67%, compared to 68% last year.
Speaker #2: The gross margin was negatively impacted by currencies of around 30 basis points and ramped-up cost in Costa Rica and Portugal. This was partly offset by a favorable impact from lower inflation on raw materials, freight, and utilities.
Lars Rasmussen: The gross margin was negatively impacted by currencies of around 30 basis points and ramp-up cost in Costa Rica and Portugal. This was partly offset by favorable impact from lower inflation on raw materials, trade, and utilities. Country and product mix also had a positive impact. Operating expenses for Q1 amounted to around DKK 2.9 billion or 2% increase compared to last year. The distribution to sales ratio for Q1 was 33%, on par with last year. In absolute terms, the distribution costs were also in line with last year. The flat development in distribution costs reflects DKK 20 million in one-off logistics costs in Q1 related to the new distribution center and lower sales costs in China following the organizational restructuring in Q1 last year. This was partly offset by one-off costs to enhance Kerecis' go-to-market model under the new Medicare reimbursement model.
Anders Lonning-Skovgaard: The gross margin was negatively impacted by currencies of around 30 basis points and ramp-up cost in Costa Rica and Portugal. This was partly offset by favorable impact from lower inflation on raw materials, trade, and utilities. Country and product mix also had a positive impact. Operating expenses for Q1 amounted to around DKK 2.9 billion or 2% increase compared to last year. The distribution to sales ratio for Q1 was 33%, on par with last year. In absolute terms, the distribution costs were also in line with last year. The flat development in distribution costs reflects DKK 20 million in one-off logistics costs in Q1 related to the new distribution center and lower sales costs in China following the organizational restructuring in Q1 last year. This was partly offset by one-off costs to enhance Kerecis' go-to-market model under the new Medicare reimbursement model.
Speaker #2: Country and product mix also had a positive impact. Operating expenses for Q1 amounted to around DKK 2.9 billion, or a 2% increase. The distribution-to-sales ratio for Q1 was 33%, on par with last year.
Speaker #2: In absolute line with last year. The flat development in distribution costs reflects terms; the distribution costs were also DKK 20 million in one-off logistics costs in Q1 related to the new distribution center, and lower sales costs in China following the organizational restructuring in Q1 last year.
Speaker #2: This was partly offset by one-off costs to enhance carriers' go-to-market model under the new Medicare reimbursement model. The development in distribution costs was also positively impacted by the depreciation of the US dollar against the Danish kroner.
Lars Rasmussen: The development in distribution costs were also positively impacted by the depreciation of the US dollar against the Danish kroner. The admin-to-sales ratio for Q1 was 5% compared to 4% last year and includes around DKK 15 million in one-off advisory costs incurred by Kerecis in connection with the recent CMS regulatory changes in the US outpatient setting. The R&D-to-sales ratio for Q1 was 4% compared to 3% last year, reflecting phasing of costs within continence care R&D and high activity levels in Kerecis. Overall, this resulted in operating profit before special items of DKK 1.9 billion in Q1. In constant currencies, EBIT grew 3% compared to last year, while reported EBIT declined 3%. The EBIT margin before special items for Q1 was 26% compared to 27% last year, negatively impacted by the significantly reduced EBIT margin in Kerecis due to lower organic growth and large one-off costs.
Anders Lonning-Skovgaard: The development in distribution costs were also positively impacted by the depreciation of the US dollar against the Danish kroner. The admin-to-sales ratio for Q1 was 5% compared to 4% last year and includes around DKK 15 million in one-off advisory costs incurred by Kerecis in connection with the recent CMS regulatory changes in the US outpatient setting. The R&D-to-sales ratio for Q1 was 4% compared to 3% last year, reflecting phasing of costs within continence care R&D and high activity levels in Kerecis. Overall, this resulted in operating profit before special items of DKK 1.9 billion in Q1. In constant currencies, EBIT grew 3% compared to last year, while reported EBIT declined 3%. The EBIT margin before special items for Q1 was 26% compared to 27% last year, negatively impacted by the significantly reduced EBIT margin in Kerecis due to lower organic growth and large one-off costs.
Speaker #2: The admin-to-sales ratio for Q1 was 5%, compared to 4% last year, and includes around DKK 15 million in one-off advisory costs incurred by carriers in connection with the recent CMS regulatory changes in the US outpatient setting.
Speaker #2: The R&D to sales ratio for Q1 was 4%, compared to 3% last year. This reflects the phasing of costs within chronic care R&D and high activity levels in Carriers.
Speaker #2: Overall, this resulted in operating profit before special items of DKK 1.9 billion in Q1. In constant currencies, EBIT grew 3% compared to last year.
Speaker #2: While reported EBIT declined 3%. The EBIT margin before special items for Q1 was 26% compared to 27% last year, significantly reduced EBIT margin in Carriers due to lower organic growth and large one-off costs.
Speaker #2: Currencies also had a negative impact on the reported EBIT margin of around 30 basis points, mostly related to the depreciation of the US dollar, the British pound, and the basket of emerging markets currencies against the Danish kroner.
Lars Rasmussen: Currencies also had a negative impact on the reported EBIT margin of around 30 basis points, mostly related to the depreciation of the US dollar, the British pound, and a basket of emerging markets currencies against the Danish kroner, as well as appreciation of the Hungarian forint against the Danish kroner. Financial items in Q1 were a net expense of DKK 24 million compared to a net expense of DKK 69 million in Q1 last year, reflecting lower interest expenses and gains on exchange rate adjustments, mostly related to the US dollar. The blended interest rate was around 2.6% in Q1, down from around 3.1% in Q1 last year.
Anders Lonning-Skovgaard: Currencies also had a negative impact on the reported EBIT margin of around 30 basis points, mostly related to the depreciation of the US dollar, the British pound, and a basket of emerging markets currencies against the Danish kroner, as well as appreciation of the Hungarian forint against the Danish kroner. Financial items in Q1 were a net expense of DKK 24 million compared to a net expense of DKK 69 million in Q1 last year, reflecting lower interest expenses and gains on exchange rate adjustments, mostly related to the US dollar. The blended interest rate was around 2.6% in Q1, down from around 3.1% in Q1 last year.
Speaker #2: As well as the appreciation of the Hungarian forint against the Danish kroner. Financial items in Q1 were a net expense of DKK 24 million, compared to a net expense of DKK 69 million in Q1 last year.
Speaker #2: Reflecting low interest expenses and gains on exchange rate adjustments, mostly related to the US dollar. The blended Q1 was down from around 3.1% in Q1 last year.
Speaker #2: The tax expense interest rate was around 2.6% in Q1. It was DKK 394 million, compared to an ordinary tax expense of DKK 389 million last year and a total tax expense of DKK 725 million last year.
Lars Rasmussen: The tax expense in Q1 was DKK 394 million compared to an ordinary tax expense of DKK 389 million last year and a total tax expense of DKK 725 million last year due to a non-recurring expense of DKK 336 million related to the transfer of Kerecis' intellectual property from Iceland to Denmark. The tax rate was 22%, on par with ordinary tax rates last year. As a result, the net profit before special items and adjusted for the non-recurring tax expense last year decreased by DKK 14 million in Q1, and adjusted diluted earnings per share before special items decreased by 1%. Please turn to slide seven. Operating cash flow for Q1 was an inflow of DKK 2.2 billion compared to an inflow of DKK 2 billion in Q1 last year.
Anders Lonning-Skovgaard: The tax expense in Q1 was DKK 394 million compared to an ordinary tax expense of DKK 389 million last year and a total tax expense of DKK 725 million last year due to a non-recurring expense of DKK 336 million related to the transfer of Kerecis' intellectual property from Iceland to Denmark. The tax rate was 22%, on par with ordinary tax rates last year. As a result, the net profit before special items and adjusted for the non-recurring tax expense last year decreased by DKK 14 million in Q1, and adjusted diluted earnings per share before special items decreased by 1%. Please turn to slide seven. Operating cash flow for Q1 was an inflow of DKK 2.2 billion compared to an inflow of DKK 2 billion in Q1 last year.
Speaker #2: of DKK 336 million due to a non-recurring expense related to the transfer of carriers' intellectual property from Iceland to Denmark. The tax rate was 22%, on par with the ordinary tax rate last year.
Speaker #2: As a result, the net profit before special items and adjusted for the non-recurring tax expense last year decreased by DKK 14 million in Q1, and adjusted diluted earnings per share before special items decreased by 1%.
Speaker #2: Please turn to slide seven. Operating cash flow for Q1 was an inflow of DKK 2.2 billion, compared to an inflow of DKK 2.0 billion in Q1 last year.
Speaker #2: The positive development in cash flows was mostly driven by lower financial items, partly offset by higher income tax paid. Cash flow from investing activities was an outflow of DKK 412 million, compared to an outflow of DKK 133 million last year.
Lars Rasmussen: The positive development in cash flows was mostly driven by lower financial items, partly offset by higher income tax paid. Cash flow from investing activities was an outflow of DKK 412 million compared to an outflow of DKK 133 million last year. The increase partly reflects a low baseline due to the DKK 192 million impact from the divestment of skincare business last year. CAPEX in Q1 amounted to DKK 414 million with a CAPEX-to-sales ratio of 6% compared to 4% last year. CAPEX in Q1 includes around DKK 97 million related to the new manufacturing site in Portugal, which is expected to be in operations in Q4 this year. As a result, the free cash flow for Q1 was an inflow of DKK 1.8 billion compared to an inflow of DKK 1.9 billion last year.
Anders Lonning-Skovgaard: The positive development in cash flows was mostly driven by lower financial items, partly offset by higher income tax paid. Cash flow from investing activities was an outflow of DKK 412 million compared to an outflow of DKK 133 million last year. The increase partly reflects a low baseline due to the DKK 192 million impact from the divestment of skincare business last year. CAPEX in Q1 amounted to DKK 414 million with a CAPEX-to-sales ratio of 6% compared to 4% last year. CAPEX in Q1 includes around DKK 97 million related to the new manufacturing site in Portugal, which is expected to be in operations in Q4 this year. As a result, the free cash flow for Q1 was an inflow of DKK 1.8 billion compared to an inflow of DKK 1.9 billion last year.
Speaker #2: The increase partly reflects a low baseline due to the DKK 192 million impact from the divestment of the skin care business last year. Capex in Q1 amounted to DKK 414 million, with a capex-to-sales ratio of 6%.
Speaker #2: Compared to 4% last year. Capex in Q1 includes around DKK 97 million related to the new manufacturing site in Portugal, which is expected to be in operation in Q4 this year.
Speaker #2: As a result, the free cash flow for Q1 was kroner, compared to an inflow of 1.8 billion Danish kroner and 1.9 billion Danish kroner last year.
Speaker #2: Excluding the benefit from the divestment last year, free cash flow increased by 8% in the first quarter. The free cash flow to sales ratio was 26%, compared to 24% last year, and the trailing 12-month cash conversion was 82%.
Lars Rasmussen: Excluding benefit from the divestment last year, the free cash flow increase in the first quarter was 8%. The free cash flow-to-sales ratio was 26% compared to 24% last year, and the trailing 12-month cash conversion was 82%. Net working capital amounted to around 25% of sales, on par with last year. Finally, the return on invested capital after tax and before special items was 15%, on par with last year, adjusted for the impact from the carries' IP transfer last year. In January, we refinanced our EUR 800 million credit facility, retaining the facility's existing terms and conditions. The structure remains a standard credit facility, and the facility now matures in 29 January 2029. Now, let's look at the guidance for the 25-26 financial year. Please turn to slide number 8.
Anders Lonning-Skovgaard: Excluding benefit from the divestment last year, the free cash flow increase in the first quarter was 8%. The free cash flow-to-sales ratio was 26% compared to 24% last year, and the trailing 12-month cash conversion was 82%. Net working capital amounted to around 25% of sales, on par with last year. Finally, the return on invested capital after tax and before special items was 15%, on par with last year, adjusted for the impact from the carries' IP transfer last year. In January, we refinanced our EUR 800 million credit facility, retaining the facility's existing terms and conditions. The structure remains a standard credit facility, and the facility now matures in 29 January 2029. Now, let's look at the guidance for the 25-26 financial year. Please turn to slide number 8.
Speaker #2: Net working capital amounted to around 25% of sales, on par with last year. Finally, the return on invested capital after tax and before special items was 15%, on par with last year, adjusted for the impact from the carriers' IP transfer last year.
Speaker #2: In January, we refinanced our €800 million credit facility, retaining the facility's existing terms and conditions. The structure remains a standard credit facility, and the facility now matures in January 2029.
Speaker #2: Now, let's look at the guidance for the 2025-26 financial year. Please turn to slide number eight. For the 2025-26 financial year, we continue to expect organic revenue growth of around 7% and around 7% EBIT growth in constant currencies before special items.
Lars Rasmussen: For the 2025-2026 financial year, we continue to expect organic revenue growth of around 7% and around 7% EBIT growth in constant currencies before special items. We also continue to expect a return on invested capital of around 16%, up around 1 percentage point from 15% adjusted last year. The organic revenue growth guidance of around 7% assumes continued good momentum in Chronic Care. In Interventional Urology, we now expect high single-digit growth versus mid-single-digit growth previously, following a strong quarter. In Wound and Tissue Repair, we now expect Kerecis to deliver growth of around 10% versus around 20% previously, reflecting the significant sales disruption from Medicare reimbursement changes in the outpatient setting and the high uncertainty around the timing of the recovery. Within advanced wound dressings, we continue to expect negative impact from the product return in China in the first nine months of the year.
Anders Lonning-Skovgaard: For the 2025-2026 financial year, we continue to expect organic revenue growth of around 7% and around 7% EBIT growth in constant currencies before special items. We also continue to expect a return on invested capital of around 16%, up around 1 percentage point from 15% adjusted last year. The organic revenue growth guidance of around 7% assumes continued good momentum in Chronic Care. In Interventional Urology, we now expect high single-digit growth versus mid-single-digit growth previously, following a strong quarter. In Wound and Tissue Repair, we now expect Kerecis to deliver growth of around 10% versus around 20% previously, reflecting the significant sales disruption from Medicare reimbursement changes in the outpatient setting and the high uncertainty around the timing of the recovery. Within advanced wound dressings, we continue to expect negative impact from the product return in China in the first nine months of the year.
Speaker #2: We also continue to expect a return on invested capital of around 16%, up around 1 percentage point from 15% adjusted last year. The organic revenue growth guidance of around 7% assumes continued good momentum in Chronic Care.
Speaker #2: In intervention urology, we now expect high single-digit growth versus mid-single-digit growth previously, following a strong quarter. In wound tissue repair, we now expect Carriers to deliver growth of around 10% versus around 20% previously.
Speaker #2: Reflecting the significant sales disruption from Medicare reimbursement changes in the outpatient setting, and a high uncertainty around the timing of the recovery. Within advanced wound dressings, we continue to expect negative impact from the product return in China in the first nine months of the year.
Speaker #2: Reported revenue growth in Danish kroner is now expected at around 4%, down from around 4 to 5% previously, and assumes around 3 percentage points negative impact from currencies.
Lars Rasmussen: Reported revenue growth in Danish kroner is now expected at around 4% from around 4% to 5% previously and assumes around 3 percentage points negative impact from currencies, up from around 2 to 3 percentage points previously. The resultant currency outlook is mostly driven by the further depreciation of the US dollar. For the year, we continue to expect the negative currency impact to be driven primarily by the US dollar and, to a smaller extent, the British pound, the Chinese yuan, and now also the Japanese yen. The EBIT growth in constant currencies of around 7% assumes stable inflation levels and continued ramp-up costs related to our manufacturing sites in Costa Rica and Portugal. The EBIT growth guidance also includes the initiation of Impact4 investments, including global technology investments and AI, investments towards the new Bowel Care opportunity in the US, and investments related to Intibia.
Anders Lonning-Skovgaard: Reported revenue growth in Danish kroner is now expected at around 4% from around 4% to 5% previously and assumes around 3 percentage points negative impact from currencies, up from around 2 to 3 percentage points previously. The resultant currency outlook is mostly driven by the further depreciation of the US dollar. For the year, we continue to expect the negative currency impact to be driven primarily by the US dollar and, to a smaller extent, the British pound, the Chinese yuan, and now also the Japanese yen. The EBIT growth in constant currencies of around 7% assumes stable inflation levels and continued ramp-up costs related to our manufacturing sites in Costa Rica and Portugal. The EBIT growth guidance also includes the initiation of Impact4 investments, including global technology investments and AI, investments towards the new Bowel Care opportunity in the US, and investments related to Intibia.
Speaker #2: Up from around 2% to 3% previously. The worsened currency outlook is mostly driven by the further depreciation of the US dollar. For the year, we continue to expect the negative currency impact to be driven primarily by the US dollar and, to a smaller extent, the British pound, the Chinese yuan, and now also the Japanese yen.
Speaker #2: The EBIT growth in constant currencies of around 7% assumes stable inflation levels and continued ramp-up costs related to our manufacturing sites in Costa Rica and Portugal.
Speaker #2: The EBIT growth guidance also includes the initiation of impact for investments, including global technology investments and AI, investments towards the new bowel care opportunity in the US, and investments related to Intibia.
Speaker #2: For Carriers, we expect a significant EBIT margin uplift for the rest of the year, around double digits compared to 1% in Q1. We expect currencies to have a negative impact on the reported EBIT margin of around 50 basis points, driven by the depreciation of the US dollar and the British pound against the Danish krone, and the appreciation of the Hungarian forint against the Danish krone.
Lars Rasmussen: For Kerecis, we expect a significant EBIT margin uplift the rest of the year, with Kerecis' full-year EBIT margin around double-digit compared to 1% in Q1. We expect currencies to have a negative impact on the reported EBIT margin of around 50 basis points driven by the depreciation of the US dollar and the British pound against the Danish krone, and the appreciation of the Hungarian forint against the Danish krone. In terms of phasing, we expect the organic revenue growth and EBIT growth in constant currencies to be second-half weighted, following a soft start here in Q1, as expected. For 25-26, we continue to expect around DKK 50 million in special items, and we also continue to expect net financial expenses of around -DKK 500 million based on spot rates as of 4 February, down from around DKK 1 billion in 24-25.
Anders Lonning-Skovgaard: For Kerecis, we expect a significant EBIT margin uplift the rest of the year, with Kerecis' full-year EBIT margin around double-digit compared to 1% in Q1. We expect currencies to have a negative impact on the reported EBIT margin of around 50 basis points driven by the depreciation of the US dollar and the British pound against the Danish krone, and the appreciation of the Hungarian forint against the Danish krone. In terms of phasing, we expect the organic revenue growth and EBIT growth in constant currencies to be second-half weighted, following a soft start here in Q1, as expected. For 25-26, we continue to expect around DKK 50 million in special items, and we also continue to expect net financial expenses of around -DKK 500 million based on spot rates as of 4 February, down from around DKK 1 billion in 24-25.
Speaker #2: In terms of phasing, we expect the organic revenue growth and EBIT growth in constant currencies to be second-half weighted following Q1, as expected. For '25-'26, we continue to expect around DKK 50 million in special items.
Speaker #2: And we also continue to expect net financial expenses of around minus DKK 500 million based on spot rates as of February 4th, down from around DKK 1 billion in 24-25.
Speaker #2: The effective tax rate for '25–'26 is still expected to be around 22%. Net profit is expected to significantly increase year over year, as '24–'25 was impacted by extraordinarily high special items, high financial items due to negative exchange rate adjustments, and finally the extraordinary tax expense related to the transfer of carriers' intellectual property.
Lars Rasmussen: The effective tax rate for 2025-2026 is still expected to be around 22%. Net profit is expected to significantly increase year over year as 2024-2025 was impacted by extraordinary high special items, high financial items due to negative exchange rate adjustments, and finally, the extraordinary tax expense related to the transfer of Kerecis' intellectual property. The CapEx-to-sales ratio is still expected at around 5%, and net working capital is still expected at around 25%. Our guidance is based on the knowledge we have today and assumes immaterial impact from tariffs as we expect our products to remain exempted. Thank you very much, operator. We are now ready to take questions. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you've entered a queue.
Anders Lonning-Skovgaard: The effective tax rate for 2025-2026 is still expected to be around 22%. Net profit is expected to significantly increase year over year as 2024-2025 was impacted by extraordinary high special items, high financial items due to negative exchange rate adjustments, and finally, the extraordinary tax expense related to the transfer of Kerecis' intellectual property. The CapEx-to-sales ratio is still expected at around 5%, and net working capital is still expected at around 25%. Our guidance is based on the knowledge we have today and assumes immaterial impact from tariffs as we expect our products to remain exempted. Thank you very much, operator. We are now ready to take questions.
Speaker #2: The capex-to-sales ratio is still expected at around 5%, and net working capital is still expected at around 25%. Our guidance is based on the knowledge we have today and assumes immaterial impact from tariffs, as we expect our products to remain exempted.
Speaker #2: Thank you very much, Operator. We are now ready to take questions. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone.
Operator: We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you've entered a queue.
Speaker #2: You will hear a tone to confirm that you've entered a queue. If you wish to remove yourself from the question queue, you may press star and two on your phone as requested to disable the queue.
Lars Rasmussen: If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Hassan Al-Wakil from Barclays. Please go ahead. Good morning. Thank you for taking my questions. Three, please. Firstly, just on the reiterated guidance, can you talk us through the offsets you see given the Kerecis' lower growth and margin expectations for the full year and how they should be a headwind to group profitability? Secondly, can you help us unpack the further weakness you're seeing in skin substitutes and why you expect this to persist over the course of the year? And you've obviously noted more favorable pricing versus peers.
Operator: If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Hassan Al-Wakil from Barclays. Please go ahead.
Speaker #2: Questioner's loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Hassan Al-Wakeel from Barclays.
Speaker #2: Please go ahead.
Hassan Al-Wakeel: Good morning. Thank you for taking my questions. Three, please. Firstly, just on the reiterated guidance, can you talk us through the offsets you see given the Kerecis' lower growth and margin expectations for the full year and how they should be a headwind to group profitability? Secondly, can you help us unpack the further weakness you're seeing in skin substitutes and why you expect this to persist over the course of the year? And you've obviously noted more favorable pricing versus peers.
Speaker #3: Good morning. Thank you for taking my questions. Three, please. Firstly, just on the reiterated guidance, can you talk us through the offsets you see given the carriers' lower growth and margin expectations for the full year, and how they should be a headwind to group profitability?
Speaker #3: Secondly, can you help us unpack the further weakness you're seeing in skin substitutes, and why you expect this to persist over the course of the year? And you've obviously noted more favorable pricing versus peers.
Speaker #3: What is the level of growth you're seeing in the inpatient setting, and how do you see this over the course of the year? And if you can put all of this into context with your longer-term ambition for Continence Care, that would be helpful.
Lars Rasmussen: What is the level of growth you're seeing in the inpatient setting, and how do you see this over the course of the year? And if you can put all of this into context with your longer-term ambition for Kerecis, that would be helpful. And then thirdly, if you can walk us through the confidence that you have in terms of the raised Interventional Urology guide, where you see Women's Health and Men's Health growing in Q1 and expectations for the full year. Are we past the risks from bulking agents to the Women's Health business? Thank you. Yes. Hello, Hassan, and thanks for your questions. I will start with the first one. As I understood your question, that was the moving parts on our organic growth and EBIT growth guidance.
Hassan Al-Wakeel: What is the level of growth you're seeing in the inpatient setting, and how do you see this over the course of the year? And if you can put all of this into context with your longer-term ambition for Kerecis, that would be helpful. And then thirdly, if you can walk us through the confidence that you have in terms of the raised Interventional Urology guide, where you see Women's Health and Men's Health growing in Q1 and expectations for the full year. Are we past the risks from bulking agents to the Women's Health business?
Speaker #3: And then, thirdly, if you can walk us through the confidence that you have in terms of the raised interventional urology guide, where you see women's health and men's health growing in the first quarter and expectations for the full year. Are we past the risks from bulking agents to the women's health business?
Speaker #3: Thank you.
Lars Rasmussen: Thank you. Yes. Hello, Hassan, and thanks for your questions. I will start with the first one. As I understood your question, that was the moving parts on our organic growth and EBIT growth guidance.
Speaker #4: Yes. Hello, Hassan, and thanks for your questions. I will start with the first one. As I understood your question, that was the moving parts on our organic growth and EBIT growth guidance.
Speaker #4: So, as I just mentioned, we are keeping our organic growth and EBIT growth guidance in fixed currencies at around 7%. We are expecting our urology business to improve.
Lars Rasmussen: So as I just mentioned, we are keeping our organic growth and EBIT growth guidance in constant currencies of around 7%. We are expecting our urology businesses to improve after a good first quarter, but also due to the fact that we have now the recall of the product we made last year behind us. The underlying men's health business continued to be strong. So that is an important assumption. Secondly, we see good growth in the rest of the year for our chronic business, and that is then offset by the adjustment in terms of the Kerecis' outlook for the year. As just mentioned, we have reduced our outlook for Kerecis to now around 10%.
Lars Rasmussen: So as I just mentioned, we are keeping our organic growth and EBIT growth guidance in constant currencies of around 7%. We are expecting our urology businesses to improve after a good first quarter, but also due to the fact that we have now the recall of the product we made last year behind us. The underlying men's health business continued to be strong. So that is an important assumption. Secondly, we see good growth in the rest of the year for our chronic business, and that is then offset by the adjustment in terms of the Kerecis' outlook for the year. As just mentioned, we have reduced our outlook for Kerecis to now around 10%.
Speaker #4: After a good first quarter, but also due to the fact that we now have the recall of the product we made last year behind us, the underlying men's health business continued to be strong.
Speaker #4: So, that is an important assumption. Secondly, we see good growth in the rest of the year for our chronic business. And that is then offset by the adjustment, in terms of the carriers' outlook for the year.
Speaker #4: As just mentioned, we have reduced our outlook for carriers to now around 10%. In terms of the EBIT growth guidance, I also just mentioned that.
Lars Rasmussen: In terms of the EBIT growth guidance, I also just mentioned that we are expecting the rest of the year that EBIT growth will improve as a result of higher growth, but also as a result of significant improvement in the underlying Kerecis' margin. We had in Q1 quite significant one-offs related to Kerecis, and we expect that to be fully behind us. So that's the other key element. So we are expecting the Kerecis' underlying margin to improve to double-digit levels. So that's some of the key moving parts. Lars. Yes. So on the Kerecis' side, this is a really strange situation to be in because we have known for such a long time now that there would be an LCD that was finally announced on 16 December.
Lars Rasmussen: In terms of the EBIT growth guidance, I also just mentioned that we are expecting the rest of the year that EBIT growth will improve as a result of higher growth, but also as a result of significant improvement in the underlying Kerecis' margin. We had in Q1 quite significant one-offs related to Kerecis, and we expect that to be fully behind us. So that's the other key element. So we are expecting the Kerecis' underlying margin to improve to double-digit levels.
Speaker #4: We are expecting the rest of the year that EBIT growth will improve. As a result of higher growth, but also as a result of significant improvement in the underlying carriers' margin, we had in the significant one-offs related to carriers.
Speaker #4: …behind us. So that's the other key element. We are expecting the carriers' underlying margin to improve to double-digit levels. So those are some of the key moving parts.
Hassan Al-Wakeel: So that's some of the key moving parts. Lars.
Speaker #4: last. Yes. Second.
Lars Rasmussen: Yes. So on the Kerecis' side, this is a really strange situation to be in because we have known for such a long time now that there would be an LCD that was finally announced on 16 December.
Speaker #5: Carriers, so on the side, this is a really strange situation to be in because we have known for such a long time now that there would be an LCD.
Speaker #5: That was finally announced on the 16th of December. So I can't even imagine what kind of situation we'll be in if we had not been on the shortlist of 18 products when we were having this discussion.
Lars Rasmussen: So I can't even imagine what kind of situation we would be in if we had not been on the shortlist of 18 products when we were having this discussion. We are very satisfied to see that out of 340 products, we had one or two of the products that were mentioned on the list of 18 products that were covered by the LCD. We had two products in the market. Therefore, it's everything that we had in the market that was covered by that. There was also a price point on $127 per square centimeter. One of the products could pass that one, and that is the MariGen product. We have immediately also taken steps to enlarge that portfolio of products to be more competitive, even more competitive in this space in the future.
Lars Rasmussen: So I can't even imagine what kind of situation we would be in if we had not been on the shortlist of 18 products when we were having this discussion. We are very satisfied to see that out of 340 products, we had one or two of the products that were mentioned on the list of 18 products that were covered by the LCD. We had two products in the market. Therefore, it's everything that we had in the market that was covered by that. There was also a price point on $127 per square centimeter. One of the products could pass that one, and that is the MariGen product. We have immediately also taken steps to enlarge that portfolio of products to be more competitive, even more competitive in this space in the future.
Speaker #5: So, we are very satisfied to see that we, out of 340 products, were one of the two products that were mentioned on the list of 18 products that were covered by the LCD.
Speaker #5: And we had two products in the market, so therefore it's everything that we had in the market that was covered by that. There was also a time or a price point on this—on $127 per square centimeter.
Speaker #5: And one of the products could pass that one, and that is the Meridian product. So, we have immediately also taken steps to enlarge that portfolio of products to be even more competitive in this space in the future.
Speaker #5: We also see that there are a pretty large number of competitors that would not be able to meet the price criteria. So, therefore, we actually see this movement in, you could say, the 20% of the total sales of carriers that are the outpatient Medicare-covered part of the portfolio.
Lars Rasmussen: We also see that there are a pretty large number of competitors that would not be able to meet the price criteria. So therefore, we actually see this movement in the, you could say, the 20% of the total sales of Kerecis that are the outpatient Medicare covered part of the portfolio. We actually see that as a positive future omen, so to speak. The other positive part about this is that more or less the rest of the portfolio we have is in inpatient. And that is an environment where clinical data historically have been much more important. And now we basically have Medicare's own verdict that the clinical efficacy of our products is or are superior. So in that sense, we see this really as a short-term disruption.
Lars Rasmussen: We also see that there are a pretty large number of competitors that would not be able to meet the price criteria. So therefore, we actually see this movement in the, you could say, the 20% of the total sales of Kerecis that are the outpatient Medicare covered part of the portfolio. We actually see that as a positive future omen, so to speak. The other positive part about this is that more or less the rest of the portfolio we have is in inpatient. And that is an environment where clinical data historically have been much more important. And now we basically have Medicare's own verdict that the clinical efficacy of our products is or are superior. So in that sense, we see this really as a short-term disruption.
Speaker #5: We actually see that as a positive future omen, so to speak. The other positive part about this is that, more or less, the rest of the portfolio we have is in inpatient.
Speaker #5: And that is an environment where clinical data historically have been much more important. And now we basically have Medicare's own verdict that the clinical efficacy of our products is—or are—still there.
Speaker #5: So, in that sense, we see this really as a short-term disruption. And the disruption is that the payers, or the offices—the private offices—that are using our products, they don't have clarity at this point in time about what is covered by Medicare and what is not.
Lars Rasmussen: The disruption is that the payers or the offices, the private offices that are using our products, they don't have clarity at this point in time of what is covered by Medicare and what is not. And therefore, we basically see some hesitancy from the professionals to buy the products right now. But the fact of the matter is that there are fewer products available in the market to cover the same number of wounds that we had before. So we see this as positive. And then we have question number three. Yeah. Question number three, Hassan. That was related to urology, as I remember. And I think, actually, I talked a bit to it earlier. But overall, the urology business, as I said, is off to a good start in Q1.
Hassan Al-Wakeel: The disruption is that the payers or the offices, the private offices that are using our products, they don't have clarity at this point in time of what is covered by Medicare and what is not. And therefore, we basically see some hesitancy from the professionals to buy the products right now. But the fact of the matter is that there are fewer products available in the market to cover the same number of wounds that we had before. So we see this as positive. And then we have question number three.
Speaker #5: And that is, therefore, we basically see some hesitancy from the professionals to buy the products right now. But the fact of the matter is that there are fewer products available in the market to cover the same number of wounds that we had before.
Speaker #5: So we see this as positive. And then we have question number three, yeah.
Lars Rasmussen: Yeah. Question number three, Hassan. That was related to urology, as I remember. And I think, actually, I talked a bit to it earlier. But overall, the urology business, as I said, is off to a good start in Q1.
Speaker #4: Question number three was related to urology. As I remember—and I think I actually talked a bit about it earlier—but overall, the urology business, as I said, is off to a good start in Q1.
Speaker #4: We had, or continue to have, good men's health development in Q1—actually, as we had last year in the second half as well.
Lars Rasmussen: We had or continue to have a good men's health development in Q1, actually, as we had last year in the second half as well. So we expect that to continue. And then the other important factor is that now the recall of the product we had last year is now fully behind us. So we are actually seeing a good underlying development within our urology business. And that's also why we see that business to deliver high single-digit growth for this financial year. Very helpful. Thank you both. The next question comes from the line of Jesper Ingildsen from DNB Markets. Please go ahead. Yeah. Hi. Thanks for taking my questions. Also, just on Kerecis. So you mentioned in the outpatient setting, there was decline here in Q1.
Lars Rasmussen: We had or continue to have a good men's health development in Q1, actually, as we had last year in the second half as well. So we expect that to continue. And then the other important factor is that now the recall of the product we had last year is now fully behind us. So we are actually seeing a good underlying development within our urology business. And that's also why we see that business to deliver high single-digit growth for this financial year.
Speaker #4: So we expect that to continue. And then the other important factor is that now the recall of the product we had last year is now fully behind us.
Speaker #4: So, we are actually seeing a good underlying development within our urology business. And that's also why we see that business delivering high single-digit growth for this financial year.
Speaker #4: year. Very helpful.
Hassan Al-Wakeel: Very helpful. Thank you both.
Speaker #3: Thank you
Operator: The next question comes from the line of Jesper Ingildsen from DNB Markets. Please go ahead.
Speaker #1: The next question comes from the line of Jester Ingelsson from DMB Carnegie. Please go ahead.
Speaker #1: ahead. Yeah, hi.
Jesper Ingildsen: Yeah. Hi. Thanks for taking my questions. Also, just on Kerecis. So you mentioned in the outpatient setting, there was decline here in Q1.
Speaker #2: Thanks for taking my questions. I was just curious—so, you mentioned in the outpatient setting there was a decline here in Q1. I was curious to hear what you have seen here at the beginning of the year after the implementation of the fixed price cap.
Lars Rasmussen: I was curious to hear what you have seen here at the beginning of the year after the implementation of the fixed price cap. And then maybe also, if you could specify how much of a one-off effect you had in Kerecis' EBIT margin here in Q1, just to understand where the underlying margin would be. And then also, if you could just give us an indication of what it would take to end up in a situation where you would have to write off this asset. Thanks. So in terms of your questions, Jesper, thank you for that. Lars now just talked about Kerecis. We expected the Kerecis' growth for this financial year to be around the double digit. And we are still expecting some turmoil in Q2 before it's starting to improve in the second half.
Jesper Ingildsen: I was curious to hear what you have seen here at the beginning of the year after the implementation of the fixed price cap. And then maybe also, if you could specify how much of a one-off effect you had in Kerecis' EBIT margin here in Q1, just to understand where the underlying margin would be. And then also, if you could just give us an indication of what it would take to end up in a situation where you would have to write off this asset. Thanks.
Speaker #2: And then maybe also, if you could specify how much of a one-off effect you had. I'm curious if it might have been here in Q1, just to understand where the underlying margin would be.
Speaker #2: And then also, if you could just give us an indication of what it would take to end up in a situation where you would have to write off this asset.
Speaker #2: Thanks.
Lars Rasmussen: So in terms of your questions, Jesper, thank you for that. Lars now just talked about Kerecis. We expected the Kerecis' growth for this financial year to be around the double digit. And we are still expecting some turmoil in Q2 before it's starting to improve in the second half.
Speaker #4: So in terms of your questions, thank you for that. Last, I'll just talk about the carriers—we expected the carriers' growth for this financial year to be around the double digits.
Speaker #4: And we are still expecting some turmoil in Q2 before it's starting to improve in the second half. But overall, for the year, we are looking at growth, with the current knowledge, of around double digits.
Lars Rasmussen: But overall, for the year, we are looking at growth with the current knowledge of around double digit. In terms of EBIT margin, as I mentioned, we have included some one-offs in Q1 related to advisory in relation to the reimbursement changes. And we have also included one-offs related to our go-to-market model. And in total, it is around DKK 30 million. So that is fully behind us. And that's also why we now expect from this quarter and onwards that the underlying Kerecis' margin will improve. But it will not improve to the levels we had anticipated when we started the year. So right now, I'm expecting the underlying Kerecis' margin to be around the double digit. And the last question, can you just repeat that?
Lars Rasmussen: But overall, for the year, we are looking at growth with the current knowledge of around double digit. In terms of EBIT margin, as I mentioned, we have included some one-offs in Q1 related to advisory in relation to the reimbursement changes. And we have also included one-offs related to our go-to-market model. And in total, it is around DKK 30 million. So that is fully behind us. And that's also why we now expect from this quarter and onwards that the underlying Kerecis' margin will improve. But it will not improve to the levels we had anticipated when we started the year. So right now, I'm expecting the underlying Kerecis' margin to be around the double digit. And the last question, can you just repeat that?
Speaker #4: In terms of EBIT margin, as I mentioned, we have included some one-offs in the first quarter related to advisory in relation to the reimbursement changes.
Speaker #4: And we have also included one-offs related to our go-to-market model. In total, it is around DKK 30 million, so that is fully behind us.
Speaker #4: And that's also why we now expect from this quarter and onwards that the underlying carriers' margin will improve—not improve to the levels we had anticipated when we started the year, but it will improve.
Speaker #4: So right now, I'm expecting the underlying carriers' margin to be around the double digits. And the last question, can you just repeat—
Speaker #4: that? Just the, I mean,
Lars Rasmussen: I mean, clearly, the growth has decelerated and margins to some extent compared to what you expected from when you originally bought the asset. So I'm just wondering if this doesn't improve, will we end up in a situation where you'll have to do a write-off of the book value of the asset? Yeah. Okay. Thanks. And what scenario will we end up in, what will require to get to that? Yeah. So it's clearly that this year, the third year after we acquired Kerecis due to the turmoil that Lars described earlier, is not developing as we had anticipated. But we see this as a temporary dip. We are still focusing a lot on delivering on the case. And we also see that the case is intact long-term. But short-term, we have some challenges this year related to the growth and the margin.
Jesper Ingildsen: I mean, clearly, the growth has decelerated and margins to some extent compared to what you expected from when you originally bought the asset. So I'm just wondering if this doesn't improve, will we end up in a situation where you'll have to do a write-off of the book value of the asset?
Speaker #2: Clearly, the growth has decelerated, and margins to some extent compared to what you expected. From when you originally bought the assets, I'm just wondering if, if this doesn't improve, will we end up in a situation where you'll have to do a write-off of the book value of the assets?
Speaker #4: Yeah. Okay, thanks.
Lars Rasmussen: Yeah. Okay. Thanks. And what scenario will we end up in, what will require to get to that? Yeah. So it's clearly that this year, the third year after we acquired Kerecis due to the turmoil that Lars described earlier, is not developing as we had anticipated. But we see this as a temporary dip. We are still focusing a lot on delivering on the case. And we also see that the case is intact long-term. But short-term, we have some challenges this year related to the growth and the margin.
Speaker #3: End up, what will it require to get to that?
Speaker #4: Yeah. So it's clear that this year, so the third year after we acquired the carriers, due to the turmoil that I described earlier, is not developing as we had anticipated.
Speaker #4: But we see this as a temporary dip. We are still focusing a lot on delivering on the case, and we also see that the case is intact long-term.
Speaker #4: But short term, we have some challenges this year related to the growth and the margin. In terms of your other question, the impairment test, it's something we are evaluating on an annual basis but again, we are looking at a business that we believe will deliver the long-term expectations that we also communicated at the Impact Four strategy back in September last year, where we said that the overall Wound & Tissue Repair business would grow around double digit.
Lars Rasmussen: In terms of your other question, the impairment test, it's something we are evaluating on an annual basis. But again, we are looking at a business that we believe will deliver the long-term expectations that we also communicated at the Impact4 strategy back in September last year, where we said that the overall Wound and Tissue Repair business would grow around double-digit. Thanks. Thank you. The next question comes from the line of Jack Reynolds-Craig from RBC Capital Markets. Please go ahead. Hi. Thanks for taking the questions up through also, please. The first is on Kerecis' profitability. So thinking kind of longer-term, given the new environment, have your assumptions changed around where peak profitability for Kerecis could be in terms of EBIT margin? The next question on wound, on dressings. So excluding the recall and obviously the contract manufacturing business, growth here still looks challenged. What drove this?
Lars Rasmussen: In terms of your other question, the impairment test, it's something we are evaluating on an annual basis. But again, we are looking at a business that we believe will deliver the long-term expectations that we also communicated at the Impact4 strategy back in September last year, where we said that the overall Wound and Tissue Repair business would grow around double-digit.
Jesper Ingildsen: Thanks. Thank you.
Speaker #3: Thanks.
Speaker #4: Thank
Speaker #4: You. The next question comes from the line of...
Operator: The next question comes from the line of Jack Reynolds-Craig from RBC Capital Markets. Please go ahead.
Speaker #1: Jack Reynolds Clark from RBC Capital Markets. Please go ahead.
Speaker #5: Hi there. Thanks for taking the questions. I have three as well, please. The first is on carriers' profitability. So thinking longer term, given the new environment, have your assumptions changed around where peak profitability for carriers could be, in terms of EBIT margin?
Jack Reynolds-Clark: Hi. Thanks for taking the questions up through also, please. The first is on Kerecis' profitability. So thinking kind of longer-term, given the new environment, have your assumptions changed around where peak profitability for Kerecis could be in terms of EBIT margin? The next question on wound, on dressings. So excluding the recall and obviously the contract manufacturing business, growth here still looks challenged. What drove this?
Speaker #5: The next question on Wound, on Dressings. So, excluding the recall and obviously the contract manufacturing business, looks challenged. What drove this, and was this in line with your expectations? And what are your expectations for the remainder of the year?
Lars Rasmussen: And was this in line with your expectations? And what are your expectations for the remainder of the year? And then my last question was on Intibia. So now that it is submitted for PMA approval, can you share any data on clinical performance? When do you expect approval? And can you talk about your expectations for launch? Thank you. Yeah. So thanks a lot, Jack. Your question around the Kerecis' EBIT margin. Yes. As I mentioned earlier, we had anticipated that the EBIT margin would improve further this year. Originally, as I explained earlier, to a level of around 20%. Now it is sitting that's at least our expectation around 10%, including the one-offs in Q1.
Jack Reynolds-Clark: And was this in line with your expectations? And what are your expectations for the remainder of the year? And then my last question was on Intibia. So now that it is submitted for PMA approval, can you share any data on clinical performance? When do you expect approval? And can you talk about your expectations for launch? Thank you.
Speaker #5: And then my last question was on Enthesia. So now that this is submitted for PMA approval, can you share any data on clinical performance? When do you expect approval, and can you talk about your expectations for launch?
Speaker #5: Thank you.
Lars Rasmussen: Yeah. So thanks a lot, Jack. Your question around the Kerecis' EBIT margin. Yes. As I mentioned earlier, we had anticipated that the EBIT margin would improve further this year. Originally, as I explained earlier, to a level of around 20%. Now it is sitting that's at least our expectation around 10%, including the one-offs in Q1.
Speaker #4: Sorry. Yeah. So, thanks a lot, Jack. Your question around the carriers' EBIT margin—yes, as I mentioned earlier, we had anticipated that the EBIT margin would improve further this year, originally, as I explained earlier, to a level of around 20%.
Speaker #4: Now, it is sitting—that's at least our expectation—around 10%, including the one-offs in the first quarter. But I'm still expecting that, over the Impact Four strategy, we will improve also the underlying EBIT margin of Careers to a level of around the group margin.
Lars Rasmussen: But I'm still expecting that over the Impact4 strategy, we will improve also the underlying EBIT margin of Kerecis to a level of around the group margin, as we have said when we acquired the Kerecis' business 2.5 years ago. Last number two on. On the wound care. Well, yes. Technically, it is a recall. I would say that it's maybe a kind of it's basically a consequence of the long-term plan for China to be self-supplying inside of pharma and medical devices. And there are no product flaws on the product that we have taken out. But it's basically just been replaced with a Chinese product in the market. And that was, of course, unexpected when it came last year. But we can say that we have not heard that this is a movement that happens in that country.
Lars Rasmussen: But I'm still expecting that over the Impact4 strategy, we will improve also the underlying EBIT margin of Kerecis to a level of around the group margin, as we have said when we acquired the Kerecis' business 2.5 years ago. Last number two on. On the wound care. Well, yes. Technically, it is a recall. I would say that it's maybe a kind of it's basically a consequence of the long-term plan for China to be self-supplying inside of pharma and medical devices. And there are no product flaws on the product that we have taken out. But it's basically just been replaced with a Chinese product in the market. And that was, of course, unexpected when it came last year. But we can say that we have not heard that this is a movement that happens in that country.
Speaker #4: As we have said, when we acquired the carriers' business two and a half years ago.
Speaker #4: Last number two on. On the
Speaker #3: wound care well, yes, technically it is a recall. I maybe a kind of it's basically a consequence of the long-term plan for China to be self-supplying inside of pharma and medical devices.
Speaker #3: And we—there are no product flaws on the product that we have taken product in the market. And that was, of course, unexpected when it came last year, but we can say that we have not heard that this is a movement that happens in that country.
Speaker #3: And many of our other industries and also other competitors have experienced the same. However, we still have a very large business in China that we are protecting to the best of our abilities.
Lars Rasmussen: Many of our many other industries and also other competitors have experienced the same. However, we have still a very large business in China that we are protecting to the best of our abilities. It means that our growth has temporarily been set back. It also means that we don't foresee that we will have growth in China, which is more than low single digits in the coming or in the strategic period that we are in. We still expect that that will be the case. Yeah. Your final question, Jack, related to Intibia. It is following the plan. We have submitted it to FDA. We are still expecting that we will be able to launch next financial year, 2026, 2027.
Lars Rasmussen: Many of our many other industries and also other competitors have experienced the same. However, we have still a very large business in China that we are protecting to the best of our abilities. It means that our growth has temporarily been set back. It also means that we don't foresee that we will have growth in China, which is more than low single digits in the coming or in the strategic period that we are in. We still expect that that will be the case.
Speaker #3: But it means that our growth has temporarily been set back, and it also means that we don't foresee that we will have growth in China, which is more than a low single digit in the coming strategic period that we are in.
Speaker #3: And we still expect that that will be the case.
Speaker #3: case. Yeah.
Lars Rasmussen: Yeah. Your final question, Jack, related to Intibia. It is following the plan. We have submitted it to FDA. We are still expecting that we will be able to launch next financial year, 2026, 2027.
Speaker #4: And your final enthesia. It is following the plan. We have submitted it to the FDA, and we are still expecting that we will be able to launch next financial year, '26/'27.
Speaker #4: And we still have high expectations for this technology to support our long-term growth ambition for the Urology business to be in the high single-digit level.
Lars Rasmussen: We still have high expectations for this technology to support our long-term growth ambition for the urology business to be in the high single-digit level. So that is tracking as planned. Thanks very much. The next question comes from Oliver Metzger from Oddo BHF. Please go ahead. Yeah. Good morning. Thanks a lot for taking my questions. The first one is also on Kerecis. So you described, well, also the positive dynamics. So according to your statement, the inpatient settings should be pretty fine. But if outpatient is just 20% of Kerecis and you reduce your segmental guidance for Kerecis by 10 percentage points, it means mathematically that the outpatient sales experience a very hard stop. Could you, therefore, also comment about some inpatients' dynamics? Whether you see there any underlying growth deterioration? And the second question is on Ostomy Care.
Lars Rasmussen: We still have high expectations for this technology to support our long-term growth ambition for the urology business to be in the high single-digit level. So that is tracking as planned. Thanks very much.
Speaker #4: So, that is tracking as planned.
Speaker #5: Thanks very
Speaker #5: Much. The next question comes from
Operator: The next question comes from Oliver Metzger from Oddo BHF. Please go ahead.
Speaker #1: Oliver Metzger from OdoBHF.
Speaker #1: Please go ahead. Yeah.
Oliver Metzger: Yeah. Good morning. Thanks a lot for taking my questions. The first one is also on Kerecis. So you described, well, also the positive dynamics. So according to your statement, the inpatient settings should be pretty fine. But if outpatient is just 20% of Kerecis and you reduce your segmental guidance for Kerecis by 10 percentage points, it means mathematically that the outpatient sales experience a very hard stop. Could you, therefore, also comment about some inpatients' dynamics? Whether you see there any underlying growth deterioration? And the second question is on Ostomy Care.
Speaker #5: Good morning. Thanks a lot for taking my questions. The first one is also on carriers. So, you described well also the positive dynamics. So, according to your statement, the inpatient settings should be pretty fine.
Speaker #5: But if outpatient is just 20% of carriers and you reduce your 10 percentage points, it means segmental guidance for carriers by mathematically that the outpatient sales experience a very hard stop.
Speaker #5: Could you, therefore, also comment about some inpatient dynamics—whether you see there any underlying growth deterioration? And the second question is on ostomy care.
Speaker #5: So you said about a pretty harsh headwind coming from China. So can you comment on how ostomy care growth would have been excluding this China effect, please?
Lars Rasmussen: So, you said about a pretty harsh headwind coming from China. So, can you comment how Ostomy Care growth would have been excluding this China effect, please? So, on Kerecis, in a sense, the inpatient part of the sales should be completely unchanged. There is a little bit of effect on it because some of the vendors that have only participated in the outpatient setting, they are now testing their products, of course, in the inpatient setting. So that gives a little bit of turmoil there. But prices and everything else is completely unchanged on the inpatient side. And, as also said, it is a very clinically driven environment. And we have just gotten sort of a very strong underlying testament to the fact that our products, they really have strong clinical efficacy. So we actually see that as an opportunity.
Lars Rasmussen: So, you said about a pretty harsh headwind coming from China. So, can you comment how Ostomy Care growth would have been excluding this China effect, please? So, on Kerecis, in a sense, the inpatient part of the sales should be completely unchanged. There is a little bit of effect on it because some of the vendors that have only participated in the outpatient setting, they are now testing their products, of course, in the inpatient setting. So that gives a little bit of turmoil there. But prices and everything else is completely unchanged on the inpatient side. And, as also said, it is a very clinically driven environment. And we have just gotten sort of a very strong underlying testament to the fact that our products, they really have strong clinical efficacy. So we actually see that as an opportunity.
Speaker #3: So on carriers, in a sense, the inpatient part of the sales should be completely unchanged. There is a little bit of effect on it because some of the vendors that have only participated in the outpatient setting, they are now testing setting.
Speaker #3: So their products, of course, in the inpatient, that gives a little bit of turmoil there. But prices and everything else are completely unchanged on the inpatient side.
Speaker #3: And as also said, it is a very clinically driven environment. And we have just gotten sort of a very strong underlying testament to the fact that our products, they really have a strong clinical efficacy.
Speaker #3: So that's where we actually see opportunity. But it is a strong growth environment also in the inpatient clinic. So, of course, over time, that is also covering for what is happening now on the outpatient side.
Lars Rasmussen: But it is a strong growth environment also in the inpatient clinic. So, of course, over time, that is also covering for what is happening now on the outpatient side. The whole reform's aim and purpose was to take value out of the outpatient segment seen from a Medicare point of view. And that is definitely happening. But as I said before, we see this as a potential upside for us. So longer-term, we definitely see this as a positive development. We understand the actions that the government are taking. And we see ourselves in an even better position than we would have hoped for in this situation. On the Ostomy Care side, I don't think we give a number when we take China out. But, of course, we are market leaders in China. We have a very, very high market share in the community market.
Lars Rasmussen: But it is a strong growth environment also in the inpatient clinic. So, of course, over time, that is also covering for what is happening now on the outpatient side. The whole reform's aim and purpose was to take value out of the outpatient segment seen from a Medicare point of view. And that is definitely happening. But as I said before, we see this as a potential upside for us. So longer-term, we definitely see this as a positive development. We understand the actions that the government are taking. And we see ourselves in an even better position than we would have hoped for in this situation. On the Ostomy Care side, I don't think we give a number when we take China out. But, of course, we are market leaders in China. We have a very, very high market share in the community market.
Speaker #3: The whole reform's aim and purpose was to take value out of the outpatient segment, seen from a medical point of view. And that is definitely happening.
Speaker #3: But as I said before, we see this as a potential upside for the longer term. We definitely see this as a positive development. We understand the actions that the government are taking.
Speaker #3: And we see ourselves even better positioned than we would have hoped for in this situation. On the ostomy side, I don't think we give a number when we take China out.
Speaker #3: But of course, we are market leaders in China. We have a very, very high market share in the community market. So the fact that we have this part not growing—that impacts the numbers.
Lars Rasmussen: So the fact that we have this part not growing, that impacts the numbers. But we are going to see much better numbers in ostomy care in the rest of the year. We are basically just having a very low Q1 due to comparison numbers. So we see that going up. Okay. Thank you. Just a very quick follow-up. So for the inpatient setting at Kerecis, so would you describe a 20% growth momentum still as valid? So I don't have a comment to the exact number there. But it's definitely a very healthy double-digit growth. Okay. Thank you. The next question comes from the line of Ayesha Noor from Morgan Stanley. Please go ahead. Hi. Good morning. Thanks for taking my question. My first one is on the Uromedica acquisition or agreement to acquire.
Lars Rasmussen: So the fact that we have this part not growing, that impacts the numbers. But we are going to see much better numbers in ostomy care in the rest of the year. We are basically just having a very low Q1 due to comparison numbers. So we see that going up.
Speaker #3: But we are going to see much better numbers in Ostomy in the rest of the year. We are basically just having a very low first quarter due to comparison numbers.
Speaker #3: So, we see that going up.
Oliver Metzger: Okay. Thank you. Just a very quick follow-up. So for the inpatient setting at Kerecis, so would you describe a 20% growth momentum still as valid? So I don't have a comment to the exact number there. But it's definitely a very healthy double-digit growth. Okay. Thank you.
Speaker #5: Thank you. Just a very quick, okay, follow-up. So for the inpatient setting at Carriers, would you describe a 20% growth momentum still as valid?
Speaker #3: So, I don't have any comments on the exact number there. But it's definitely a very healthy double-digit growth.
Speaker #5: Okay. Thank
Speaker #5: You. The next question comes from the line.
Operator: The next question comes from the line of Ayesha Noor from Morgan Stanley. Please go ahead. Hi. Good morning.
Speaker #1: Of ICRNOR from Morgan Stanley. Please go ahead.
Speaker #6: Hi, good morning. Thanks for taking my question. My first one is on the Uromedical acquisition, or agreement to acquire. Can you talk a bit about the competitive KPIs of this product versus Velcamed or the standard of care?
Ayesha Jawad: Thanks for taking my question. My first one is on the Uromedica acquisition or agreement to acquire.
Lars Rasmussen: Can you talk a bit about the competitive KPIs of this product versus Bulkamid or the standard of care, and why you think this product could take share? And then my second question is on the MariGen phase-out. So what's the mix of the MariGen versus Shield product in your outpatient sales today? And why do you think those customers will shift over to your new MariGen products? And will this come with new costs embedded in the double-digit margin guide for Kerecis? Thank you. So on the Uromedica side, as I said, this is complementing our portfolio in the Men's Health. So today in Men's Health, we have the penile implants for erectile dysfunction. And we basically have one competitor in that space. And they also address urinary incontinence in men in the same space. And that's also what we do with this device.
Lars Rasmussen: Can you talk a bit about the competitive KPIs of this product versus Bulkamid or the standard of care, and why you think this product could take share? And then my second question is on the MariGen phase-out. So what's the mix of the MariGen versus Shield product in your outpatient sales today? And why do you think those customers will shift over to your new MariGen products? And will this come with new costs embedded in the double-digit margin guide for Kerecis?
Speaker #6: And why do you think this product could take share? And then my second question is on the Marigen phase-out. So, what's the mix of the Marigen versus Shield product in your outpatient sales today?
Speaker #6: And why do you think those customers will shift over to your new Marigen products? And will this come with new costs embedded in the double-digit margin guide for carriers?
Ayesha Jawad: Thank you. So on the Uromedica side, as I said, this is complementing our portfolio in the Men's Health. So today in Men's Health, we have the penile implants for erectile dysfunction. And we basically have one competitor in that space. And they also address urinary incontinence in men in the same space. And that's also what we do with this device.
Speaker #6: Thank
Speaker #6: you. So on the
Speaker #3: Uromedical side, as I said, this is complementing our portfolio in men's health. So today in men's health, we have the penile implant for erectile dysfunction.
Speaker #3: And we basically have one competitor in that space. And they also address urinary incontinence in men, in the same space. And that's also what we do with this device.
Speaker #3: The difference is that this is minimally invasive, and therefore, we see it as a very good way to complement our product portfolio and increase our competitiveness in this specific market segment.
Lars Rasmussen: The difference is that this is minimally invasive. Therefore, we see it as a very good way to complement our product portfolio and increase our competitiveness in this specific market segment. Those are really the benefits. We know it works. It is in the market already. It is accepted by the professionals. Now we can put effort behind it and thereby also help getting it into the market and educating much more doctors to use it. Could you take the second question, Lars? I didn't write it down. The second question was around MariGen and Shield. We have not really disclosed the split between these two from a revenue point of view. We have said that the Shield product price was above the cap of $127 per cm². MariGen is lower than the cap.
Lars Rasmussen: The difference is that this is minimally invasive. Therefore, we see it as a very good way to complement our product portfolio and increase our competitiveness in this specific market segment. Those are really the benefits. We know it works. It is in the market already. It is accepted by the professionals. Now we can put effort behind it and thereby also help getting it into the market and educating much more doctors to use it. Could you take the second question, Lars? I didn't write it down. The second question was around MariGen and Shield. We have not really disclosed the split between these two from a revenue point of view. We have said that the Shield product price was above the cap of $127 per cm². MariGen is lower than the cap.
Speaker #3: So those are really the benefits. We know it works. It is in the market already. It is accepted by the professionals. And now we can put effort behind it and thereby also help get it into the market and educate many more doctors to use it.
Speaker #3: Could you take the second question, Anna? I didn't write it.
Speaker #3: down. So the second
Speaker #4: Question, it was around Marigen and Shield. So we have not really disclosed the split between these two from a revenue point. Said that, the Shield product price was above the cap of $127 per square centimeter.
Speaker #4: And the Marigen is then the cap. And the whole work lower is now about to convert, from the Shield to the Marigen. And that's what we have initiated.
Lars Rasmussen: The whole work is now about to convert from the Shield to the MariGen. That's what we have initiated. That's the focus we are having the rest of the year, including launching new products within the MariGen portfolio. So that's really the focus we are having. Thank you. If I could follow up with Lars on the Uromedica comment, I know you mentioned the impact on financials is immaterial. But do you anticipate having to ramp up the sales force for this business? Or can your existing urology sales force sell this product? Thank you. It fits directly into the existing sales force that we have because it's the same call points that we're having. But, of course, when we see it take off, we also are going to step up accordingly. But from the beginning, it's going to be in the hands of us.
Lars Rasmussen: The whole work is now about to convert from the Shield to the MariGen. That's what we have initiated. That's the focus we are having the rest of the year, including launching new products within the MariGen portfolio. So that's really the focus we are having. Thank you. If I could follow up with Lars on the Uromedica comment, I know you mentioned the impact on financials is immaterial. But do you anticipate having to ramp up the sales force for this business?
Speaker #4: And that's the focus we are having the rest of the year, including launching a new product within the Marigen portfolio. So that's really the focus we are—
Speaker #4: having.
Speaker #6: Thank you. And if I could follow
Speaker #6: Follow-up with Lars on the Uromedical comment. I know you mentioned the impact on financials is immaterial, but do you anticipate having to ramp up the sales force for this business?
Speaker #6: Or can your existing urology sales force sell this product? Thank you.
Ayesha Jawad: Or can your existing urology sales force sell this product? Thank you. It fits directly into the existing sales force that we have because it's the same call points that we're having. But, of course, when we see it take off, we also are going to step up accordingly. But from the beginning, it's going to be in the hands of us.
Speaker #3: So it fits directly into the existing sales force that we have because it's the same call points that we're having. But of course, if and when we see takeoff, we also are going to step up accordingly.
Speaker #3: But from the beginning, it's going to be in the hands of us. And we have significantly higher sales pressure in the market than the owner.
Lars Rasmussen: And we have significantly higher sales pressure in the market than the former owner. Okay. Thank you so much. The next question comes from the line of Veronika Dubajova from Citi. Please go ahead. Thank you, guys. Good morning. And thank you for taking my questions. I apologize. But I'm going to go back to Kerecis. And I want to ask a couple of questions here. The first one, I think, Lars, you've described the disruption at the moment as temporary. I guess I'm curious to hear what gives you the confidence. In conversations we've had with physicians, many of them are simply discontinuing the use of skin substitutes and switching instead to traditional wound care dressings. So I'd love to kind of get your perspective as to why you think this issue is temporary and why you think the market will recover.
Lars Rasmussen: And we have significantly higher sales pressure in the market than the former owner. Okay. Thank you so much.
Speaker #6: Okay. Thank you so much.
Operator: The next question comes from the line of Veronika Dubajova from Citi. Please go ahead. Thank you, guys.
Speaker #1: The question comes from the line of Veronica Dubayova from CT. Please go ahead.
Speaker #1: ahead. Thank you, guys.
Speaker #7: Good morning, and thank you for taking my questions. I apologize, but I'm going to go back to carriers, and I want to ask a couple of questions here.
Veronica Dubajova: Good morning. And thank you for taking my questions. I apologize. But I'm going to go back to Kerecis. And I want to ask a couple of questions here. The first one, I think, Lars, you've described the disruption at the moment as temporary. I guess I'm curious to hear what gives you the confidence. In conversations we've had with physicians, many of them are simply discontinuing the use of skin substitutes and switching instead to traditional wound care dressings. So I'd love to kind of get your perspective as to why you think this issue is temporary and why you think the market will recover.
Speaker #7: The first one, I think, Lars, you've described—the disruption at the moment is temporary. I guess I'm curious to hear what gives you the confidence. In conversations we've had with physicians, many of them are simply discontinuing the use of skin substitutes and switching instead to traditional wound care dressings.
Speaker #7: So, I'd love to kind of get your perspective as to why you think this issue is temporary, and why you think the market will recover.
Speaker #7: And I guess that sort of also feeds into my sort of second question, which is: Would your expectation be that carriers can be back at around a 20% growth rate as we move into fiscal '27?
Lars Rasmussen: And I guess that sort of also feeds into my sort of second question, which is, would your expectation be that Kerecis can be back at sort of around 20% growth rate as we move into fiscal 2027? And if it's not, what implications does that have on midterm guidance? So that's my first question. And then I have a follow-up. But maybe I'll let you answer this one first. Yes. So I think that's a super good question, Veronika, because we are talking about the outpatient clinic here. And as I said, of our total sales in Kerecis, the 20% comes from Medicare-reimbursed outpatient setting. And there's no doubt that that has been an exceptionally fast-growing market. So if you see the market data on it, you just see that it's literally exploding within the last three years.
Lars Rasmussen: And I guess that sort of also feeds into my sort of second question, which is, would your expectation be that Kerecis can be back at sort of around 20% growth rate as we move into fiscal 2027? And if it's not, what implications does that have on midterm guidance? So that's my first question. And then I have a follow-up. But maybe I'll let you answer this one first. Yes. So I think that's a super good question, Veronika, because we are talking about the outpatient clinic here. And as I said, of our total sales in Kerecis, the 20% comes from Medicare-reimbursed outpatient setting. And there's no doubt that that has been an exceptionally fast-growing market. So if you see the market data on it, you just see that it's literally exploding within the last three years.
Speaker #7: And if it's not, what implications does that have on midterm guidance? So, that's my first question. And then I have a follow-up, but maybe I'll let you answer this one first.
Speaker #4: Yes. So I think that's a super good question, Veronica, because we are talking about the outpatient clinic here. And as I said, out of our total sales in Care, 20% comes from the Medicare-reimbursed outpatient setting.
Speaker #4: And there's no doubt that that has been an exceptionally fast-growing market. So if you see the market data on it, you just see that it's literally exploding within the last three years.
Speaker #4: So it makes a lot of sense that it's being addressed, of course, by the payers. So for some doctors, of course, they would discontinue using it because the financial incentive to use it is simply too low compared to what they have been used to.
Lars Rasmussen: So it makes a lot of sense that it's being addressed, of course, by the payers. So for some doctors, of course, they would discontinue using it because the financial incentive to use it is simply too low compared to what they have been used to. And I don't know the price of the products that they're shifting to. But you also know that these are real businesses that we are selling into. These kind of wounds, they don't go away. So there will still be lots of need for these kind of products. But it's, of course, a different price level. It is, however, a price level that we have been used to living with. That's what we have been making most of our sales on. And therefore, we don't see that the need goes away.
Lars Rasmussen: So it makes a lot of sense that it's being addressed, of course, by the payers. So for some doctors, of course, they would discontinue using it because the financial incentive to use it is simply too low compared to what they have been used to. And I don't know the price of the products that they're shifting to. But you also know that these are real businesses that we are selling into. These kind of wounds, they don't go away. So there will still be lots of need for these kind of products. But it's, of course, a different price level. It is, however, a price level that we have been used to living with. That's what we have been making most of our sales on. And therefore, we don't see that the need goes away.
Speaker #4: And I don't know the price of the products that they're shifting to. But you also know that these are real businesses that we are selling into.
Speaker #4: These kinds of wounds, they don't go away. So, there will still be lots of need for these kinds of products. But it's, of course, a different price level.
Speaker #4: It is, however, a price level that we have been used to living with. That's what we have been making most of our sales on.
Speaker #4: And therefore, we see we don't see that the need goes away. But of course, since it's both a doctor and a business person, they will find a way to try to substitute in the most—sort of—with a good fit between what is helpful for the patient and what is a good financial outcome also for the doctor.
Lars Rasmussen: But, of course, since it's both a doctor and a businessperson, they will find a way to try to substitute in the most sort of with a good fit between what is helpful for the patient and what is a good financial outcome also for the doctor. With the prices that we are having and the efficacy of MariGen, we think that we are super well-positioned. So that's the reason why we think that we're in that position. This whole change is then not affecting the biggest part of our business, which is the inpatient part, that goes on as it was before. We just think that we have a better position, or we have a better yeah, we potentially have a better position than we had before because we have Medicare's own assessment of all the clinical data they have received.
Lars Rasmussen: But, of course, since it's both a doctor and a businessperson, they will find a way to try to substitute in the most sort of with a good fit between what is helpful for the patient and what is a good financial outcome also for the doctor. With the prices that we are having and the efficacy of MariGen, we think that we are super well-positioned. So that's the reason why we think that we're in that position. This whole change is then not affecting the biggest part of our business, which is the inpatient part, that goes on as it was before. We just think that we have a better position, or we have a better yeah, we potentially have a better position than we had before because we have Medicare's own assessment of all the clinical data they have received.
Speaker #4: With the prices that we are having, and the efficacy of Marigen, we think that we are super well-positioned. So that's the reason why we think that we're in that position.
Speaker #4: This whole change is then not affecting the biggest part of our business, which is the inpatient part. That goes on as it was before.
Speaker #4: We just think that we potentially have a better position than we had before, because we have Medicare's own assessment of all the clinical data they have received.
Speaker #4: And we simply have super strong clinical data that we can take to these payers and users, and that puts us in a better position.
Lars Rasmussen: We simply have super strong clinical data that we can take to these payers and users. And that puts us in a better position. And that is such a big part of the business. And it's growing so fast that it is also covering parts of the downside that we see in the outpatient clinic on the short term, on the outpatient segment. But we see the outpatient segment will have a healthy growth going forward after we have sort of having this shake-up. And we think that we are super well-positioned for that. Okay. Thank you. And then my second question is for Anders. It's a bit financial in nature. But just obviously looking at the year, I know you always said to us we'd start below the full-year guide.
Lars Rasmussen: We simply have super strong clinical data that we can take to these payers and users. And that puts us in a better position. And that is such a big part of the business. And it's growing so fast that it is also covering parts of the downside that we see in the outpatient clinic on the short term, on the outpatient segment. But we see the outpatient segment will have a healthy growth going forward after we have sort of having this shake-up. And we think that we are super well-positioned for that. Okay. Thank you. And then my second question is for Anders. It's a bit financial in nature. But just obviously looking at the year, I know you always said to us we'd start below the full-year guide.
Speaker #4: And that is such a big part of covering parts of the downside that we see in the outpatient clinic in the short term.
Speaker #4: On the outpatient segment. But we see the outpatient segment will have healthy growth going forward after we have sort of had this shakeup.
Speaker #4: And we think that we are super well-positioned for that.
Speaker #7: Okay. Thank you. And then my second question is for Anders. It's about financial in nature. But there's obviously looking at the year. I know you always said to us we'd start at the below the full year guide.
Speaker #7: But I see, especially on EBIT growth, we still have quite a ways to go to get to the full year. So I don't know, Anders, if you can give us a little bit of color on how you'd expect the growth phasing, both from an organic sales perspective and from an adjusted EBIT perspective, to look like through the remainder of the year.
Lars Rasmussen: But I see, especially on EBIT growth, we still have quite a ways to go to get to the full year. So I'd know, Anders, if you can give us a little bit of color on how you'd expect the growth phasing, both from an organic sales perspective and from an adjusted EBIT perspective, to look like through the remainder of the year. Thank you, guys. Yeah. Thanks a lot, Veronika, for your second question. So for the rest of the year, first and foremost, we are expecting growth will improve from this quarter and onwards, driven by the factors we have been discussing. So we are expecting Ostomy Care, the chronic business to improve. We are expecting the urology business to continue at the levels we have seen in Q1.
Lars Rasmussen: But I see, especially on EBIT growth, we still have quite a ways to go to get to the full year. So I'd know, Anders, if you can give us a little bit of color on how you'd expect the growth phasing, both from an organic sales perspective and from an adjusted EBIT perspective, to look like through the remainder of the year. Thank you, guys. Yeah. Thanks a lot, Veronika, for your second question. So for the rest of the year, first and foremost, we are expecting growth will improve from this quarter and onwards, driven by the factors we have been discussing. So we are expecting Ostomy Care, the chronic business to improve. We are expecting the urology business to continue at the levels we have seen in Q1.
Speaker #7: Thank you, guys.
Speaker #8: Yeah, thanks a lot, Veronica, for your second question. So, for the rest of the year, first and foremost, we are expecting growth will improve.
Speaker #8: From this quarter and onwards, driven by the factors we have been discussing, we are expecting ostomy slash the chronic business to improve. We are expecting the urology business to continue at the levels we have seen in Q1.
Speaker #8: And then we have been talking about the carriers quite a few times during the call, that we are expecting that business to sit around the double-digit.
Lars Rasmussen: And then we have been talking about Kerecis quite a few times during the call that we are expecting that business to sit around the double-digit. So overall, we are expecting growth to improve versus Q1. So that's an important factor. Secondly, gross margin ballpark at the levels we had anticipated for Q1. However, the FX impact is, yeah, real, also due to the Hungarian forint. But I'm expecting the gross margin to develop as we have said previously. And then on the cost side, I have or we have talked quite a bit now to the one-off cost related to Kerecis. That is behind us. We are expecting the underlying Kerecis margin to improve. We will continue to also run a prudent cost across the business.
Lars Rasmussen: And then we have been talking about Kerecis quite a few times during the call that we are expecting that business to sit around the double-digit. So overall, we are expecting growth to improve versus Q1. So that's an important factor. Secondly, gross margin ballpark at the levels we had anticipated for Q1. However, the FX impact is, yeah, real, also due to the Hungarian forint. But I'm expecting the gross margin to develop as we have said previously. And then on the cost side, I have or we have talked quite a bit now to the one-off cost related to Kerecis. That is behind us. We are expecting the underlying Kerecis margin to improve. We will continue to also run a prudent cost across the business.
Speaker #8: So overall, we are expecting growth to improve versus Q1, so that's an important factor. Secondly, gross margin, ballpark in at the levels we had impact is, yeah, real.
Speaker #8: Also due to the Hungarian for rent. But I'm expecting the gross margin to develop as we have said previously. And then on the cost side, I have, or we have, talked quite a bit now to the one-off cost related to carriers.
Speaker #8: That is behind us. We are expecting the underlying carriers' margin to improve. We will continue to also run a prudent cost across the business.
Speaker #8: But we have also agreed to initiate the impact for investments, especially related to some of the opportunities we see in the US. We have this bowel care opportunity.
Lars Rasmussen: But we have also agreed to initiate the Impact4 investments, especially related to some of the opportunities we see in the US. We have this Bowel Care opportunity. We are initiating investments in technology, AI. And then when we are ready, we will also initiate the investment to support the Intibia launch. So overall, we are expecting both the top-line growth but also the EBIT growth to improve from this quarter versus Q1 to deliver the full year of around 7% organic growth and 7% EBIT growth in constant currencies. Okay. The next question comes from the line of Julien Dormois from Jefferies. Please go ahead. Hi. Good morning, Lars. Good morning, Anders. Thanks for taking my questions. I have free. And I'm going to give you a break from Kerecis. The first one relates to Voice and Respiratory Care.
Lars Rasmussen: But we have also agreed to initiate the Impact4 investments, especially related to some of the opportunities we see in the US. We have this Bowel Care opportunity. We are initiating investments in technology, AI. And then when we are ready, we will also initiate the investment to support the Intibia launch. So overall, we are expecting both the top-line growth but also the EBIT growth to improve from this quarter versus Q1 to deliver the full year of around 7% organic growth and 7% EBIT growth in constant currencies.
Speaker #8: We are initiating investments in technology, AI, and then, when we are ready, we will also initiate the investment to support the Interdry launch. So overall, we are expecting both top-line growth but also EBIT growth to improve from this quarter versus Q1, to deliver for the full year around 7% organic growth and 7% EBIT growth in constant currencies.
Operator: Okay. The next question comes from the line of Julien Dormois from Jefferies. Please go ahead. Hi.
Speaker #9: Okay.
Speaker #7: Anders.
Speaker #9: Yeah. The next question
Speaker #10: Comes from the line of Julianne Dormois from Jefferies. Please go ahead.
Speaker #10: ahead.
Speaker #9: Hi. Good morning, Lars. Good morning, Anders. Thanks for taking my questions.
Julien Dormois: Good morning, Lars. Good morning, Anders. Thanks for taking my questions. I have free. And I'm going to give you a break from Kerecis. The first one relates to Voice and Respiratory Care.
Speaker #9: I have three, and I'm going to give you a break from carriers. The first one relates to voice and respiratory care. You have indicated that tracheostomy was a little weaker in Q1.
Lars Rasmussen: You have indicated that tracheostomy was a little weaker in Q1. You ascribed that to the phasing in distributor markets. So just curious, what's your visibility on the pickup in the back half of the year? Just remind us of it, what is the proportion of sales in tracheostomy that are made in the distributor markets that would be helpful? The second and third question relate to the Wound and Tissue Repair. So the first one is just we'd love to know what was the growth in the business overall if you exclude Kerecis and you exclude the China recall effect. Just wondering whether the underlying business was growing when you exclude those two elements. The last one, still in Wound and Tissue Repair, you have also commented that Contract Manufacturing business helped a lot in Q1. You had double-digit growth.
Lars Rasmussen: You have indicated that tracheostomy was a little weaker in Q1. You ascribed that to the phasing in distributor markets. So just curious, what's your visibility on the pickup in the back half of the year? Just remind us of it, what is the proportion of sales in tracheostomy that are made in the distributor markets that would be helpful? The second and third question relate to the Wound and Tissue Repair. So the first one is just we'd love to know what was the growth in the business overall if you exclude Kerecis and you exclude the China recall effect. Just wondering whether the underlying business was growing when you exclude those two elements. The last one, still in Wound and Tissue Repair, you have also commented that Contract Manufacturing business helped a lot in Q1. You had double-digit growth.
Speaker #9: And you ascribe that to the fading in distributor markets. So just curious, what is your visibility on the pickup in the back half of the year? And just remind us, what is the proportion of sales in tracheostomy that are made in the distributor markets? That would be helpful.
Speaker #9: And the second and third questions relate to wound and tissue repair. So the first one—I would just love to know what was the growth in the ex-China carriers and your business overall if you exclude the China recall effect.
Speaker #9: Just wondering whether the underlying business was growing when you exclude those two elements. And the last one is still in Wound and Tissue Repair. You have also commented that the contract manufacturing business helped a lot in Q1.
Speaker #9: You had double-digit growth. So I just want to recall: what's the proportion of sales you make in the contract manufacturing business, just to get a sense of how this could impact the remainder of the year?
Lars Rasmussen: So I just can't recall what's the proportion of sales you make in the contract manufacturing business just to get a sense of how this could impact the remainder of the year? Thank you very much. Thanks a lot, Julien. Let me start with the first one related to our Wound and Tissue Repair related to our Voice and Respiratory Care business. So we delivered 8% growth in Q1. Our Laryngectomy business continued to develop really well with high single-digit growth. We continue to see our Laryngectomy business to perform well here in Europe, but also in the US and across our distributor markets, also supported by the Provox Life launch that is still ongoing in a few markets as well. The Tracheostomy business was a little bit more soft than we also anticipated. So it was growing mid-single digit.
Lars Rasmussen: So I just can't recall what's the proportion of sales you make in the contract manufacturing business just to get a sense of how this could impact the remainder of the year? Thank you very much. Thanks a lot, Julien. Let me start with the first one related to our Wound and Tissue Repair related to our Voice and Respiratory Care business. So we delivered 8% growth in Q1. Our Laryngectomy business continued to develop really well with high single-digit growth. We continue to see our Laryngectomy business to perform well here in Europe, but also in the US and across our distributor markets, also supported by the Provox Life launch that is still ongoing in a few markets as well. The Tracheostomy business was a little bit more soft than we also anticipated. So it was growing mid-single digit.
Speaker #9: Thank you very much. Thanks a lot, Julian. Let me start with the first one, related to our wound and tissue—no, related to our voice and respiratory care business.
Speaker #9: So we delivered 8% growth in the first quarter. Our laryngectomy business continued to develop really well with high single-digit growth. We continue to see our laryngectomy business perform well here in Europe, but also in the US and across our distributor markets.
Speaker #9: Also, supported by the POVOX Live launch that is still ongoing in a few markets as well. The tracheostomy business was a little bit more soft than we also anticipated.
Speaker #9: So, it was growing mid-single digit, but it's really due to some order phasing in our emerging markets. And we expect that to improve for the rest of the year.
Lars Rasmussen: But it's really due to some order phasing in our emerging markets. And we expect that to improve the rest of the year. But overall, 8% growth in Q1 was okay. But we also expect the total Voice and Respiratory Care business to improve, especially driven by the Tracheostomy business the rest of the year. And on the Wound and Tissue Repair, so we don't break it down to that level where we take the growth when we have taken out a couple of the more problematic areas. But actually, when we take them out, it's actually quite positive. And then the Contract Manufacturing, it's double-digit growth in Q1. But we don't have a lot of visibility on it, to be honest. So therefore, we believe it to be flat for the year. But that can vary. We don't expect it to be more negative than that.
Lars Rasmussen: But it's really due to some order phasing in our emerging markets. And we expect that to improve the rest of the year. But overall, 8% growth in Q1 was okay. But we also expect the total Voice and Respiratory Care business to improve, especially driven by the Tracheostomy business the rest of the year. And on the Wound and Tissue Repair, so we don't break it down to that level where we take the growth when we have taken out a couple of the more problematic areas. But actually, when we take them out, it's actually quite positive. And then the Contract Manufacturing, it's double-digit growth in Q1. But we don't have a lot of visibility on it, to be honest. So therefore, we believe it to be flat for the year. But that can vary. We don't expect it to be more negative than that.
Speaker #9: But overall, 8% growth in Q1 was okay. But we also expect the total Voice and Respiratory Care business to improve, especially driven by the tracheostomy business, for the rest of the year.
Speaker #9: And on the wound and tissue at that level where we take the growth when we have taken out a couple of areas. But actually, when we take them repair so we don't break it down to the more problematic out, it's actually quite positive.
Speaker #9: And then the contract manufacturing, it's double-digit growth in Q1. But we don't have a lot of visibility on it, to be honest, so therefore, we believe it to be flat for the year.
Speaker #9: But that can vary. We don't expect it to be more negative than that, but we keep it in our own books that we keep it just neutral.
Lars Rasmussen: But we keep it in our own books, that we keep it just neutral. The next question comes from the line of Tobias Berg Nielsen from Danske Bank. Please go ahead. Thank you for taking my question. I have a few also. This time, going back to Kerecis, if you can talk a little bit more to the assumed timeline for stabilization here in the Medicare outpatient challenge and what the really key drivers are for this, and what visibility you have at this point, and what the key risks are for driving growth for Kerecis below the 10% you're guiding for for the full year. Are we looking into an inflection in the second half of the year? Or is it likely to remain heavily disrupted?
Lars Rasmussen: But we keep it in our own books, that we keep it just neutral. The next question comes from the line of Tobias Berg Nielsen from Danske Bank. Please go ahead.
Speaker #10: The next question comes from the line of Tobias Bergnissen from Danske Bank. Please go ahead.
Tobias Bjork Nielsen: Thank you for taking my question. I have a few also. This time, going back to Kerecis, if you can talk a little bit more to the assumed timeline for stabilization here in the Medicare outpatient challenge and what the really key drivers are for this, and what visibility you have at this point, and what the key risks are for driving growth for Kerecis below the 10% you're guiding for for the full year. Are we looking into an inflection in the second half of the year? Or is it likely to remain heavily disrupted?
Speaker #11: Thank you for taking my question. I have a few, also going back to carriers. If you can talk a little bit more to the assumed timeline for stabilization here in the Medicare outpatient challenge and what the really key drivers are after this.
Speaker #11: And what visibility do you have at this point, and what are the key risks after driving growth for Carriers below the 10% guidance for the full year?
Speaker #11: Are we looking into an inflection in the second half of the year, or is it likely to remain heavily disrupted? And then, also, just on potential spillover to the inpatient segment here.
Lars Rasmussen: And then also just on potential spillover to the inpatient segment here, how confident are you that we will not see a downward pricing pressure over to this area, which is still 70% of Kerecis' revenue? And then just the last one on urology, 8% organic growth this quarter, very strong. Can you talk to how much, if any, was due to some one-off factors related after this, you can say, post-recall catch-up? And how much of this growth phase is sustainable for the rest of the year? Thanks. Yes. I would love to have an answer to the timeline on this also. We have not tried this before, to be quite honest. I don't think that the market has seen anything like this before. So what we do know is that Medicare is changing their prices.
Lars Rasmussen: And then also just on potential spillover to the inpatient segment here, how confident are you that we will not see a downward pricing pressure over to this area, which is still 70% of Kerecis' revenue? And then just the last one on urology, 8% organic growth this quarter, very strong. Can you talk to how much, if any, was due to some one-off factors related after this, you can say, post-recall catch-up? And how much of this growth phase is sustainable for the rest of the year? Thanks. Yes. I would love to have an answer to the timeline on this also. We have not tried this before, to be quite honest. I don't think that the market has seen anything like this before. So what we do know is that Medicare is changing their prices.
Speaker #11: How confident are you that we will not see downward pricing pressure over to this area versus still 70% of carriers' revenue? And then just the last one, on urology.
Speaker #11: 8% organic growth this quarter, very strong. Can you talk to how much, if any, was due to some one-off factors related after this? You can say post-recall catch-up.
Speaker #11: And how much of this growth rate is sustainable for the rest of the year? Thanks.
Speaker #9: Yes, I would love to have an answer to the timeline on this as well. We have not tried this before, to be quite honest. I don't think that the market has seen anything like this before.
Speaker #9: So what we do know is that Medicare is changing their prices. It shouldn't be hard because there is a limit to what you can get now, the $127.
Lars Rasmussen: It shouldn't be hard because there is a limit to what you can get now. They're $127. But we have asked, what is the normal timeline when Medicare is changing their pricing? They have a database with all the prices in them. That's normally three months. So that's at least what we anticipate will happen. It's important that the price list is updated for people who are using Medicare's or using products that are covered by Medicare. So it is within three months. That's also why we say that we expect that the effect will be the hardest in this quarter. Any sort of effect on the inpatient side. It's a very different market dynamic. It's also different products that you have inside in the inpatient setting and in the outpatient setting. So we don't anticipate a lot of turmoil going in that direction from it.
Lars Rasmussen: It shouldn't be hard because there is a limit to what you can get now. They're $127. But we have asked, what is the normal timeline when Medicare is changing their pricing? They have a database with all the prices in them. That's normally three months. So that's at least what we anticipate will happen. It's important that the price list is updated for people who are using Medicare's or using products that are covered by Medicare. So it is within three months. That's also why we say that we expect that the effect will be the hardest in this quarter. Any sort of effect on the inpatient side. It's a very different market dynamic. It's also different products that you have inside in the inpatient setting and in the outpatient setting. So we don't anticipate a lot of turmoil going in that direction from it.
Speaker #9: But we have asked what is the normal timeline when Medicare is changing their pricing, and they have a database with all the prices in them.
Speaker #9: And that's normally three months, so that's at least what we anticipate will happen. It's important that the price list is updated for people who are using Medicare or using products that are covered by Medicare.
Speaker #9: So it is within three months; that's also why we say that we expect that the effect will be the hardest in this quarter. Any sort of effect on the inpatient side—it's a very different market dynamic.
Speaker #9: It's also different products that you have inside in the inpatient setting and in the outpatient setting, so we don't anticipate a lot of turmoil going in that direction from it.
Speaker #9: What the government has been addressing here is the explosive cost, so to say, in the outpatient setting. And it's not the same picture internally.
Lars Rasmussen: What the government has been addressing here is the cost, explosive cost, so to say, in the outpatient setting. And it's not the same picture internally in the hospitals or in the inpatient setting. So we don't assume anything there. I don't know if it's a help to you. But what I can do here is I can share with you what we know. And of course, we're also guessing how long time does it take for us to be on the safe side. But we expect, in the way that we see it right now, that it's bottoming out in this current quarter. Yeah. And to you a little bit. Thanks, Lars. Yeah. The second one, that was, again, the urology business. So no, there was no one-offs in Q1.
Lars Rasmussen: What the government has been addressing here is the cost, explosive cost, so to say, in the outpatient setting. And it's not the same picture internally in the hospitals or in the inpatient setting. So we don't assume anything there. I don't know if it's a help to you. But what I can do here is I can share with you what we know. And of course, we're also guessing how long time does it take for us to be on the safe side. But we expect, in the way that we see it right now, that it's bottoming out in this current quarter. Yeah. And to you a little bit. Thanks, Lars. Yeah. The second one, that was, again, the urology business. So no, there was no one-offs in Q1.
Speaker #9: In the hospitals or in the inpatient setting, so we don't assume anything there. I don't know if it's a help to you, but what I can do here is I can share with you what we know, and of course, we are also guessing how long time it takes for us to be on the safe side.
Speaker #9: But we expect, in the way that we see it right now, that this is bottoming out in this current quarter.
Speaker #9: Yeah, I mean, Tobia, let me take that. Thanks,
Speaker #11: Lars.
Speaker #9: Yeah. The second one, that was again the urology business. So, no, there were no one-offs in Q1. And again, the men's health business has actually been looking very solid from a growth point of view for quite a number of quarters in a row now.
Lars Rasmussen: Again, the Men's Health business has actually been looking very solid from a growth point of view for quite a number of quarters in a row now. So I just want to remind you that last year, both Q3 but also Q4, so last year's second half, was also at a double-digit level. And we saw that again in Q1. So the underlying momentum in Men's Health is strong. And we are expecting that to continue for the rest of the year. And on top of that, we had this recall last year that we have now fully behind us. So that's why the underlying momentum within urology we have increased to now high single-digit versus mid-single-digit when we started the year. And we are a couple of minutes after the hour. So that was, unfortunately, the last question.
Lars Rasmussen: Again, the Men's Health business has actually been looking very solid from a growth point of view for quite a number of quarters in a row now. So I just want to remind you that last year, both Q3 but also Q4, so last year's second half, was also at a double-digit level. And we saw that again in Q1. So the underlying momentum in Men's Health is strong. And we are expecting that to continue for the rest of the year. And on top of that, we had this recall last year that we have now fully behind us. So that's why the underlying momentum within urology we have increased to now high single-digit versus mid-single-digit when we started the year. And we are a couple of minutes after the hour. So that was, unfortunately, the last question.
Speaker #9: So I just want to remind you that last year, both Q3 but also Q4—so last year's second half—was also at a double-digit level.
Speaker #9: And we saw that again in Q1. So the underlying momentum in Men's Health is strong, and we are expecting that to continue for the rest of the year.
Speaker #9: And on top of that, we had this recall last year that we have now fully behind us. So that's why the underlying momentum within urology we have increased to now a high single-digit, versus mid-single-digit when we started the year.
Speaker #9: And we are a couple of minutes after the hour, so that was unfortunately the last question. But we will have a chance to catch up in the near future.
Lars Rasmussen: But we will have a chance to catch up in the near future. Thank you very much, everybody.
Lars Rasmussen: But we will have a chance to catch up in the near future. Thank you very much, everybody.
