Fredrik Dalborg: Good morning, everyone, and most welcome to the AddLife Q3 presentation. We will take you through the Q3 today, and then you will have opportunity to ask questions. After the call and after the Q&A session, you will have the opportunity to stay on to watch a brief video. Normally, these videos are about one of our companies in the group. This time around, since it is a special year for AddLife, we are celebrating 10 years as an independent company.
Fredrik Dalborg: We have a brief video talking about our history with our roots that go actually 120 years back from Bergman & Beving and Addtech and so on, and it describes our entrepreneurial and decentralized business model that has been so powerful for us. Let us now get going. The positive development that we have seen in the company for some time now continued in the Q3.
Fredrik Dalborg: On top of that, we also saw an increased acquisition activity. Sales increased by 7%, supported by organic momentum, but also acquired growth. Margins strengthened overall up to 11.5%. A strong increase on the Labtech side and a minor decrease on the Medtech side, but still quite stable, I would say. Operating cash flow improved significantly, and we saw that overall sales was really in a positive trend.
Fredrik Dalborg: Advanced products continue to help us grow and improve margins, and we added new products to the portfolio during the quarter. We had a little bit of fewer instrument deliveries during the summer months, which is quite normal, and the ongoing healthcare dispute that we saw in Spain held us back somewhat. We saw stable development in the Nordics, good growth in UK and Ireland, and also in Eastern Europe, a continued strong development.
Fredrik Dalborg: We are really pleased to note that acquisition activity has really increased. We completed the Unicam acquisition during the quarter, and in October, we completed the acquisition of LEHNEN.
Christina Rubenhag: Revenue growth in the quarter was 7%. Organic growth was 4%, assuming we adjust for the endoscopy business, and acquired growth contributed with additional 3%. Organic growth of 4% reflect market growth. In Labtech, we had 2% following a very strong Q3 last year with 9% organic growth. Medtech had 5% organic growth. The adjusted EBITA increased with 11%.
Christina Rubenhag: This is, of course, supported by organic growth, mainly driven by increased gross margins and acquisitions contributing with 8%. Adjusted EBITA exclude contingent considerations, and the earnout has been reevaluated, and in some cases it has gone up, in some cases it has gone down, and there is a positive net of SEK 32 million over the profit and loss. Revenue increased with 7%. Underlying organic growth was 4%, and acquired growth was 3%. Gross margin continue to increase. In this quarter, it was 1 percentage point.
Christina Rubenhag: This is driven both by price management in the companies, but also by a higher share of advanced products contributing with a higher gross margin. In the quarter, we had unusually high OpEx. This is due to growth investments into the companies, advanced products being one of them, but also, of course, OpEx relating to acquired companies and acquisition costs relating to acquisitions.
Christina Rubenhag: Extraordinary items is the contingent considerations. The adjusted EBITA margin increased to 11.5%, and profit before tax was up 61%. EBITA margin has clearly improved over the past years. Year to date, we were at 12.2% compared to 11.9% last year. The Labtech margin, that was 12.9%, a clear year-on-year improvement, mainly driven by strong gross margins improvements in the companies and the addition of acquisitions.
Christina Rubenhag: Medtech margin was 11.3%, slightly below last year, but also here we see continued positive margin development in selected areas. Margin expansion remain a top financial priority for us. Operating cash flow increased with 62% in the quarter, and the improvement was mainly and primarily driven by lower working capital tied up.
Christina Rubenhag: Cash conversion remained strong, about 100%, and working capital efficiency is a continued focus going forward. Operating cash flow was SEK 236 million, and working capital was negative SEK 58 million. Working capital was impacted by collection of account receivables, payments of account payables, and also inventory increased slightly.
Christina Rubenhag: This is partly driven by the introduction of new products, but probably we also have a small build-up entering the Q4 and the last quarter of the year. So inventory represented 18% of sales, which is slightly higher compared to the 17% we saw in the H1 of the year.
Christina Rubenhag: Acquisitions relates to Unicam. Looking at the net debt, it was slightly up in the quarter. This was impacted by FX translations, and that had an impact of SEK 91 million in the quarter. When we talk about net debt, we include bank loans, lease liabilities, contingent considerations, pension liabilities, the provisions, and then we deduct cash. After quarter end, the bank facilities has been refinanced. It is a 3-year term, and there is two 1-year extension options in addition. Leverage was at 2.5, which is below the ambition of being at 3 or below. Net debt to equity ratio was 0.8, and since a year back, the balance sheet supports both organic and acquisition-driven growth. With that, I will hand over to Fredrik again.
Fredrik Dalborg: Labtech had a strong quarter in Q3. The growth was 7%, and with a quite significant acquired addition of 5%. EBITA margin improved significantly to 12.9%, compared to 11.2% in the corresponding quarter of last year. Diagnostics remained stable and strong, I would say, and research activity was seasonally a little bit lower during summer, which is a pattern we normally see.
Fredrik Dalborg: Eastern Europe continued to show strong development, supported by investment in advanced technology. We are quite happy with the fact that Unicam was added to the mix towards the end of the quarter. This is a great company that strengthens our position further in Southern Europe. Medtech also had a strong quarter, with a good growth and an addition of acquired growth as well. EBITA margin was slightly lower, 11.3% versus 11.6% in the corresponding quarter of last year.
Fredrik Dalborg: Nordics delivered a really good growth, while Spain was still affected by the ongoing healthcare dispute that we have seen now for some time. UK activity improved with higher surgical volumes and the delivery of capital goods that were ordered in the previous quarter that we highlighted at that time. We are really pleased to see that those deliveries are indeed happening. Home Care continued to develop well, further strengthened by the acquisition of Lehnen after the closure of the quarter. This is also very much in line with the strategy that we have communicated. Moving on to the acquisitions. A very warm welcome to Unicam. We are happy to welcome them to the team and to the AddLife family. This is a Portuguese company focusing on advanced analytical laboratory equipment, primarily in the areas of chromatography, spectrometry, and microwave technology.
Fredrik Dalborg: They are really well renowned in the market for a super strong technical and clinical and application service. This fits really well into the model that we have. This will, of course, become part of the Labtech business. in October, we were very pleased to complete the acquisition of Lehnen, a company that will become part of the Home Care business. Lehnen is a family-owned company with manufacturing of high-quality stainless steel products. They have a strong position in the German market and other markets in Central and Eastern Europe. They are a very nice addition to the Home Care business. We wish the Lehnen team a warm welcome to the AddLife family.
Fredrik Dalborg: Decentralization and entrepreneurship is really part of AddLife's DNA, as many of you know, and you can also see if you decide to stay on to watch the video after the Q&A session. It is a powerful model, and it is something we are living, really, in our day-to-day activity. I want to give you a few examples of what we have recently done. MBA, a successful company in Spain and Portugal, have created three specialized divisions to drive their respective product portfolio. That has proven to be extremely successful. In Healthcare 21, we have organized in country-specific organizations, and we have created specialized commercial divisions with a high level of autonomy. Finally, in AddVision, we have removed a significant group function and really, again, decentralized decision-making and responsibility to the local entities. All of these measures have been very successful in efficiency and drive and agility.
Fredrik Dalborg: What are, in summary, the benefits of our decentralized model? I think it makes us agile and efficient. The subsidiaries have the freedom to act quickly and work efficiently, close to customers and suppliers. That is very important. Also in M&A, we can really use our deep market knowledge and have a higher capacity for acquisitions. The acquisition work has been delegated to the business unit leaders, and they own the acquisition funnel, and they are supported by the experienced advisors as well as the subsidiary resources. Finally, decentralization certainly attracts and retains talent. It helps us give opportunity for people to develop and evolve. It also attracts individuals, and also, last but not least, is very attractive to potential acquisition targets that we are in dialogue with.
Fredrik Dalborg: So decentralization has been a part of our model for 120 years now, and it is still a very powerful piece of the AddLife DNA. Moving on to a summary and outlook. We do see continued consistent positive development, and that is fantastic. Sales, earnings, operating cash flow developed well in the quarter. We see stable development in the Nordics, good growth in UK and Ireland, and strong development in Eastern Europe.
Fredrik Dalborg: We are continuing to introduce and drive advanced products, and I am pleased to note that we have during the quarter added important product portfolios to the mix. The decentralized model continues to support efficiency and agility, and it helps us drive acquisition, attract, develop, and retain talent. Finally, we are pleased to note that we are seeing an increased acquisition activity, and we have been for a while and continue to strengthen resources in that area.
Fredrik Dalborg: So we can expect a continued high acquisition activity going forward. With that, we open up for questions. Okay everyone, I think we are ready for questions, and we have Albin. I think you raised the hand first, so please go ahead, Albin, and please don't forget to unmute.
[Analyst]: Nice. Thanks for taking my questions there. I just wanted to start off with the decentralized stuff you mentioned in the addition and other. Of course, this is something that you believe in long term, but is it possible to quantify the direct effect of those measures you expect in the coming quarters?
Fredrik Dalborg: That is a great question. I think it is a very powerful model and something we do continuously, not only when we make acquisitions, but also how we take care of the companies we already have. I don't think we can quantify exactly the impact of it. I think in addition, it clearly led to a significant cost reduction. That was absolutely so. But I think probably the most important factor is an increased responsibility and increased drive, increased efficiency among the companies and the divisions that are given that extra trust, so to speak. I think that is harder to measure, but it is very tangible. It is very clear. Motivation, drive, speed, customer focus. We all know that is important, but it is hard to measure it, I would say.
Fredrik Dalborg: Sorry, we cannot give you a firm number on that, but I think it is clearly helping us reduce costs and more importantly, drive more business.
[Analyst]: All right. Fair enough. How much of the operating cost here is resources for new advanced products, like M&A team build up and transaction? Because I think Christina said something about it, but if you can split the OpEx growth and also quantify maybe what is normal.
Christina Rubenhag: I think the main increase in the quarter is relating to sales employees, definitely for sure. I think that looking at the gross margin that has increased with 1%, it is really driven by the addition of advanced products with higher margins that also reflects on the OpEx. That is the majority. We are building the organization to be able to handle those more advanced products and also the additional new product portfolios. Sometimes you need to add the resources before you really have seen the sales, which is the case a bit in this quarter. I would say sales driven, definitely.
[Analyst]: Okay. That is clear. Just the last one from me, Italy down from SEK 170 million to SEK 141 million in sales Q2. What happened in Italy? Is this timing or structural or gap?
Fredrik Dalborg: I would say timing. I think we have a lot of research related business in Italy. We are selling normally quite a lot of advanced instruments there. That normally slows down a little bit in the summer months. That happened this year as well. I think there has also been a little bit of an effect of EU funding and so on that has been high at a certain period and now a little bit lower. So a mix of those two, I would say, but nothing alarming. It is a stable and solid business we have there.
[Analyst]: Okay, great. That is all from me. Thanks for taking my questions.
Christina Rubenhag: Thank you.
Fredrik Dalborg: Thank you very much. Let us move on. I think we have Gustav here. Are you ready for us?
Gustav Berneblad: Yes, good morning.
Fredrik Dalborg: Good morning.
[Analyst]: Morning.
Christina Rubenhag: Good morning.
Gustav Berneblad: Yeah, perfect. I thought maybe just to build a bit more on the decentralization you have done here on the platforms, but maybe can you talk a bit about the changes to the M&A organization? How does it look now compared to five years ago? And then also should we expect more deals to be closed internally now than previously?
Fredrik Dalborg: Yes, I think we should expect more deals that we are able to find ourselves through the organization. I think we have gone from responsibility more centralized for the M&A to a clear responsibility with the business unit leader. So each business unit leader is driving their own acquisition agenda. Of course, they are closer to the business. They are quite knowledgeable in their respective fields. So they drive it. They have the ability to find good targets. They have the ability to really assess the quality of the target as well. They find them, they are good at that. Then, of course, when the acquisition happens, they are the ones responsible for taking care of it going forward as well. So that is quite important. That is an important dynamic.
Fredrik Dalborg: Then, of course, they do get support from their respective companies, of course, who help them find companies and assess them. We have also introduced a group of senior advisors, people who have worked for us in the past as CEOs and business unit leaders. They support the work of identifying, contacting, assessing companies. So they work also together with the business unit leader. On top of that, we have been building up the transaction capability. So we have two people working on transactions purely, and closely then together with the business unit leaders. In addition to that, we are adding even more resource on the lead generation side, our proactive approach to analyze markets, identify potential targets, contact them on our own, so to speak, so that the vast majority of the companies that we are in process with are indeed exclusive dialogues.
Fredrik Dalborg: Many times companies we have found ourselves, and we expect that to continue and become even stronger, probably with the continued strengthening of the M&A activity. So now each business unit has the funnel of their own. So there is more manpower and more manpower close to the market.
Gustav Berneblad: No, that is very helpful. Can we just get some sense of the current pipeline now compared to one year ago?
Fredrik Dalborg: Well, I think the pipeline looks quite good and it is more like four or five different pipelines, right? That makes it more resilient and deeper. Many more companies, more dialogues continuously ongoing. That works well.
Gustav Berneblad: Perfect. Then just moving on to Medtech. Is it possible to give a bit more color on the slightly softer margin? Is that mainly due to the strikes in Spain and also the slightly weaker performance in one of the subsidiaries that drove the positive one-offs, or are there anything else?
Fredrik Dalborg: No, I think it is partly, of course, that we were in the middle of the summer months. Then we normally see less activity, and that is primarily in elective surgeries. So that kind of slows us down a little bit. At the same time, we have been building resources for the increased share of advanced products. So we have taken on a little bit extra cost to support those more advanced products. Of course, we are happy to see that the gross margin is coming up in both business areas. So it is working, so to speak. But, of course, when you have that little bit extra cost and then slightly lower volume during the summer months, that has a little bit of a negative impact on the margins. But there is nothing that we are worried about over the long term.
Fredrik Dalborg: I think we see it more of an investment for future growth in high margin areas.
Gustav Berneblad: Perfect. I will get back in line. Thank you.
Fredrik Dalborg: All right. Thank you very much. Thank you. Then we have Sten. Sten, are you ready for us?
Sten Gustafsson: Yes. Good morning. Thank you for taking my questions. I am happy to hear you talk about future margin improvements. I guess you have elaborated a little bit on it, but could we perhaps go back to some of the drivers here and what is the scope and timeline for this? Is this from internal work, or is it from recently acquired companies you expect to drive these improvements? Or where can we find the drivers for future margin improvements and also a little bit maybe on the timeline. Is this gradually over the coming years or. If you could give us some color on that, it would be very helpful.
Fredrik Dalborg: Yeah.
Sten Gustafsson: Thank you.
Fredrik Dalborg: Thank you. First of all, we always work with margin improvements, cost reduction, efficiency improvements, cutting out low margin products and so on. That is day-to-day business. On top of that, I think there are three major areas where we can see margin improvements going forward. One is there are a handful or two of companies that are maybe not performing at the level that we want them to. So we have targeted programs for them, and I am really pleased to note that is really making some nice progress. We were seeing clear and tangible and long-term results of that. That is quite positive. Then we touched upon advanced products. We do not stick to products that are becoming commoditized or under margin pressure. We cut them out, but we replace them with advanced products.
Fredrik Dalborg: Advanced products that really have a chance to alter the way the healthcare system is working to improve efficiency, and that aligns very well with value-based procurement and so on, that is being emphasized in many countries. So adding new and advanced products increases the gross margin that is evident in the numbers, but it also requires us to be able to support the customer at the clinic, at the lab, to make it work in their hands. That makes us a trusted partner. But there is a cost associated with it. But I think that is another one, clearly. Then of course, acquisitions. We are pleased to note that the acquisitions we have made over the past few years have all been at margin levels clearly above the group average. So absolutely, they are contributing to margin increase as well.
Fredrik Dalborg: So day-to-day efficiency measures and then focusing on those few companies that are not quite at the level we want them to be, adding new products and acquisitions with high margins. So that is the formula we are working on, and I think you are seeing results of it, but it can vary a little bit quarter to quarter. But the long term trend is clearly there. So I hope that was an answer to your questions then or-
Sten Gustafsson: Sure. No, absolutely. Thank you very much. Would it be possible to quantify the share of the business today? We have seen the Home Care business, now it is not dilutive to the margins. But would it be possible to quantify the amount of companies in terms of sales that are not performing according to your expectation.
Fredrik Dalborg: It would be.
Christina Rubenhag: Yes.
Fredrik Dalborg: Do you want to say that?
Christina Rubenhag: Yes. I think we talked about when we had the CMD three years ago?
Fredrik Dalborg: Yeah, time flies.
Christina Rubenhag: Time flies, yeah. Then we have this matrix where we have profit or working cap and then EBITA margin. If you are down in the left-hand corner based on total revenue, I think we were at around 25%. Now that has gone down. So end of 2025, it was around 20%, and that is, of course, progressing and improving year over year. It is not only that you go out of the box, which is a 10% EBITA margin and 45% profitable working cap. It might also be that you move inside of that box, of course. Then the aim is to have everyone up in the right-hand corner. So that percentage of revenue has gone down over the years, and we are continuing to work on that, pushing them out of that one.
Fredrik Dalborg: Yes. So good progress, but there is more work to do.
Christina Rubenhag: Yes.
Sten Gustafsson: Perfect. Thank you very much.
Fredrik Dalborg: All right. Thank you. Good question. Zino, are you ready for us?
Zino Engdalen: I am, and hopefully you are ready for me. Yes. If we go back to Medtech and talk a bit about the margin, I think you made it relatively clear that the investments you are making there is maybe diluting it a bit in the quarter, but you also highlight that you converted these equipment or capital equipment in the UK, which we have talked about before. Can you help us understand the possible positive effect that came from that?
Fredrik Dalborg: Yes, I think in the previous quarter, we talked about the fact that even though the start of the year had been a bit slow in UK, we did see capital orders increase. Capital sales have been quite slow in the H1 of the year. So we saw those orders starting to come in, and we were pleased to know that many of those deliveries actually did happen now in Q3. So that is a good sign, and of course, it helps sales and margins as well. Then on top of that, of course, number of surgical procedures is normally a bit low during the summer months, but there was a positive trend in surgical procedures performed in UK. So that is also a positive sign. The waiting lists are still long and are not coming down, but procedures performed increased a little bit.
Fredrik Dalborg: I think it is a more positive environment in the UK right now compared to what we saw earlier in the year. So we are pleased to note that, of course. But I cannot give you an exact number how much is each of those factors, but clearly improvement is there and a little bit more optimistic outlook. Was that an answer to your questions, Zino?
Zino Engdalen: Yes.
Fredrik Dalborg: Yeah.
Zino Engdalen: Yes, that was a good answer. Following up on that, would you say that the order book of these capital equipment are normalized towards the UK?
Fredrik Dalborg: Yeah, I would say so. I think it looks better.
Christina Rubenhag: Yes, I think it.
Fredrik Dalborg: Order books in general are healthy.
Zino Engdalen: Good. You mentioned that activity also improved in September. I think the trend during the quarter, so to say, was good. Can you give some more color on that? Was it very broad, or were there particular areas that stood out?
Fredrik Dalborg: I think it.
Zino Engdalen: Geographies
Fredrik Dalborg: I think the activity is normally lower in primarily research and in elective surgery during the summer. Lower activity there as expected, I would say. We did emphasize that order intake has improved during September. You would expect that, but it is also good to see it in the numbers. I want to refrain from picking out special countries or companies where we saw that trend, but it is clearly a general trend in both business areas.
Zino Engdalen: Very good. Just one final one for me. In Labtech, the margin was quite strong. Of course, you have a good contribution from M&A. Would you say that there is anything standing out, so to say, in the quarter? Or is this just a fair underlying margin?
Fredrik Dalborg: Nothing of the one time impact type, really. I think it is the things that we have talked about in the past. It is that we have been winning tenders and the impact of that. It takes a while to fully materialize installation of instruments, gradual pickup of sales. That is still there. Addition of new products. We are pleased to note that we took on some significant product portfolios during the quarter, and that had a partial impact during the quarter. We expect to do more of that. I think we have great positions, and we are an attractive partner to suppliers. Then, of course, finally, acquisitions clearly are improving the margins in Labtech and Medtech, but I think it is even more pronounced on the Labtech side.
Christina Rubenhag: We can add the continuous improvements in a few other companies.
Fredrik Dalborg: Yeah, that's a good point. In Eastern Europe, we saw a continued very healthy development, so we are pleased with that. I think it reflects two things really. It reflects a quite buoyant underlying demand in Eastern Europe. Economies are growing nicely, increased investment in healthcare and research, but also a long-term effort to work with the companies in question to evolve, improve efficiency, add new products, raise margins, and that has really worked really well.
Zino Engdalen: Very good. Thank you for taking my question.
Fredrik Dalborg: Thank you so much. Okay, let's move on. We have Charles raising his hand, so we are ready for you.
Charles Weston: Hi. Thanks for taking the question. Charles Weston from RBC. Two, please. First of all, I will go back onto acquisitions again. You talked about the acceleration being largely, I think, driven by self-help, more efforts on your part. I was wondering whether there has been anything changing in the minds of the vendors themselves. Is there anything from their side, perhaps, across Europe that might have accelerated their desire to exit?
Fredrik Dalborg: Great question. I would not say anything dramatically changing. I do think that what we see oftentimes is people do see the value of belonging to a group that could be a nice peer group of competent people for exchanges of experience and learning from each other. I think people really do value that. Sometimes we can be supportive in a transition period for a company where they want to grow further, they want to take on new product groups or new geographies. Then they oftentimes feel there is a benefit of having connections within a group that can help support that growth, since we have done it many times before. I think it is more of the same, really. What we find is oftentimes very competent, very knowledgeable, very proud entrepreneurs they tend to like what we have to offer. The support, but still light touch and the decentralized model.
Fredrik Dalborg: I think, yeah, it is attractive to them. Nothing drastically changing, I would not say, but continuing on a good logic.
Charles Weston: Okay. Thank you.
Fredrik Dalborg: I do not know if that answers your question. Yeah.
Charles Weston: Yeah, it was. My second question, please, is just on regional observations. You mentioned Spain is still tough. Is that normalizing now or improving? You said there was an improvement in elective procedures in the UK. Are there any other regions where you are seeing any meaningful changes in activity?
Fredrik Dalborg: Yeah. So cautious optimism over UK, like you correctly stated. Spain, we do have the strikes or the labor dispute that has been ongoing. It has been a little bit calmer during the summer months, of course, but I think the underlying issue is not resolved. So I think we will probably see more strikes in the coming months, I am afraid. So that does stand out a little bit, and that of course, has an impact on surgical procedures performed. But again, those patients are not going away. They still need that surgical procedure. So over time, we hope and think they will be getting it as they need. So it is a bit of a shorter term effect, but it should be resolved in a not too distant future, we hope. So I think UK and Spain, positive. Like I mentioned, Eastern Europe is going quite well, fairly stable in the Nordics.
Fredrik Dalborg: So I think those will be the geography-related comments at this point. Anything you would like to add to that?
Christina Rubenhag: No, I think you
Fredrik Dalborg: Yeah
Christina Rubenhag: covered them all. Yeah.
Fredrik Dalborg: Yeah.
Charles Weston: Great. Thank you very much. That is it from me.
Fredrik Dalborg: All right. Thank you, Charles. We have Elvin, right?
Elvin Rolder: Yes, good morning. Can you hear me?
Fredrik Dalborg: I can hear you. Good morning.
Elvin Rolder: Great. Thank you. Maybe tying into a previous question about the margins in the Labtech segment, which look really strong. As stated, I guess M&A is one part of that bucket on the improvement year to year. Considering the still low organic top line contribution, there is very high operating leverage still on the organic side of that. Is it possible to split that between what is improving suboptimal units within Labtech and what is incrementally better business from an already solid base? If you understand. What are these tender wins that you have got that are improving the overall quality and what is helping the problem children and what is the M&A contribution on a year to year basis, if it is possible to split that?
Fredrik Dalborg: The M&A contribution we can more clearly describe. Do you want to speak to that maybe, Christina?
Christina Rubenhag: Yeah. If you look in the report, you will see the revenue from acquired companies and also reading under the section with acquisitions, then you can see that the EBITA margin contribution for all acquired companies is about 30%. Clearly acquisitions is contributing and that is both in Medtech and Labtech.
Fredrik Dalborg: That is one we can fairly well quantify. The others are a little bit more tricky to split up, so to speak. I think it is really a combination of continuing to build on what the product portfolio we have and winning more business with it, given the trust that we have built over time with the customers as a solid partner. Right? That is one piece of it. We have talked in the past of a number of big tenders, one primarily in Scandinavia. Then again, it is also a constant addition of new products that we either start to build up the market acceptance for, or in some cases we take over complete portfolios, including team members. That has also happened in the quarter.
Fredrik Dalborg: I think I would refrain from trying to put them in different buckets and quantifying the number in each bucket. All of those three are indeed contributing. Of course, they feed from each other in a way because if we are a trusted partner in established products, well, a supplier that is considering a change in their commercial model will, of course, look at that and see that we are a trusted partner. We would be a good home for an additional product portfolio. So it interlinks in a way.
Elvin Rolder: Great. Thank you. Perhaps relating a bit to the M&A organization and M&A in general, over the past years, you have been a bit hindered in the magnitude of deals you have been able to complete, but you have, in my eyes at least, picked out what seems to be very good companies, and this year as well, especially. Now, if we play with the idea that leverage comes down towards Q4 and that you are able to perhaps acquire more to a double-digit end of contribution, should we expect you to be able to find equally as qualitative companies? Or will you have to be able to trim on the quality somewhat? How should we look on those dynamics as you pick up the pace in the total contribution as well, compared to the quality of the companies you acquire?
Fredrik Dalborg: Yeah, that's a great question, and we are quite picky, to be frank. We'd rather say no than go ahead with something if we think it doesn't really match our criteria or the way we like the businesses to be. So we will continue to be picky. We are picky, and we will continue to be picky. I would say also that more and more, we have had more to choose from as we've become better at building pipelines. It is long-term work. But as we've become better at that, improving processes, strengthening the team, the organization getting more used to that way of working, the list of companies that we are in discussions with is growing. So we have more to choose from now than we have had in the past.
Fredrik Dalborg: I don't think that we should lower the threshold, so to speak, and I don't think we have to either. So we continue to be picky, and we are optimistic. We're building the resources to handle more.
Elvin Rolder: Okay, great. Thank you so much. I think that was all for me. Thank you so much.
Christina Rubenhag: Yeah.
Fredrik Dalborg: All right. So we have Christian raising his hand as well. Hello.
Christian Glennie: Yeah. Thanks for taking the question. It is Christian Laine with Stifel. Within the Medtech business, any particular segments within that that are of particular note, both in terms of attractiveness in terms of growth, but then also in terms of the M&A piece, in terms of where you think you want the strategy there, in terms of is it about segments or is it maybe geographies and things that you are more focused on?
Fredrik Dalborg: It is more segments, really, because we have listed a number of segments for Home Care and for hospital that we think are particularly attractive, and that list is fairly long. It is around 4 sub-segments for Home Care and about 10, 15 for hospital. So we have outlined those with some that can be found in our annual report and so on. They are all characterized by being relatively advanced, meaning that it is not a me-too product. It is a clearly differentiated product. It is a product that can actually help the healthcare system to become more efficient if it is handling more surgical procedures with the surgery team you have, or if it is allowing for patients to stay at home for longer and not burden the hospitals and so on with the help of various technologies that can adapt the home.
Fredrik Dalborg: That is the underlying theme, advanced products improving the efficiency of the healthcare system, but requiring strong support, customization and so on. That is the underlying theme. We look for those, and that is where we like to grow, both organically and through acquisitions. I do not know if that was an answer to your question, Christian. Is there something more you would want to follow up there?
Christian Glennie: Yeah. No, that is helpful. Thank you.
Fredrik Dalborg: Good. So with that, I think we are starting to wrap up. Are there any more questions you would like to ask? So please raise your hand. If not, you are more than welcome to call or email us after the call as well. But with that, I think let us wrap up, and thanks for spending a few minutes with us here. And if you have a few more minutes still, we do encourage you to watch the video that describes the history of our business model going 10 years back, but actually to the roots already 120 years ago, and you will find entrepreneurship and decentralization being key themes. So thank you, and talk soon. Bye.
Christina Rubenhag: Thank you.
[Video Narrator]: In 2016, AddLife was listed on Nasdaq Stockholm as an independent company, formed from Addtech's former life science business area. This gave the company a clear identity and focus on medical and laboratory technology in the Nordic region. For the first 2 years, the focus was strictly Nordic. That changed in 2018 with the acquisition of Biomedica Group, with entities in 13 countries.
[Video Narrator]: This marked the start of a broader European journey, expanding into Central and Eastern Europe. The pandemic in 2020 tested the decentralized business model. While competitors waited for central directives, AddLife's local companies were able to act quickly and stay close to customers. The subsidiaries rapidly shifted to COVID tests and critical medical technology to support strained healthcare systems. The pandemic years generated strong cash flows, which enabled continued European expansion through acquisitions, primarily in Medtech.
[Video Narrator]: As societies reopened, the market turned and COVID related revenues subsided. Following several major acquisitions and higher debt level, AddLife shifted its focus on consolidating the new, much larger organization and prioritizing margin improvement, organic growth, and cash flow. Now, after several years of work, AddLife is entering a new active phase with an accelerated acquisition pace.
[Video Narrator]: At the same time, the company has rolled out a group wide AI platform faster than many industrial peers and scaled its internal academy digitally to reach hundreds of employees across Europe. Today, AddLife is a European life science group operating across many high-end segments such as robotics, advanced diagnostics, and next generation sequencing. AddLife is younger than its sister companies, but the heritage is the same. Small scale entrepreneurship within a large scale framework where decisions are made by the people closest to the customer.
