Q3 2026 Coloplast AS Earnings Call

Moritz: Ladies and gentlemen, welcome to the Coloplast Interim Financial Statements for Nine Months 2025, 2026 conference call. I am Moritz, your call's call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Gavin Wood, interim President and CEO. Please go ahead, sir.

Speaker #1: The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and 1 on your telephone.

Speaker #1: For Q3 2026. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Gavin Wood, Interim President and CEO.

Speaker #1: Please go ahead, sir.

Speaker #2: Good morning, everyone, and welcome to the Coloplast Q3 2025-26 conference call. I'm Gavin Wood, President and CEO of Coloplast. I'm joined today by our CFO, Anders, and our Investor Relations team.

Gavin Wood: Good morning, everyone, and welcome to Coloplast Q3 2025, 2026 conference call. I am Gavin Wood, President and CEO of Coloplast. I am joined today by our CFO, Anders, and our investor relations team. Anders and I will take you through the quarter and then we will open up the call for questions. Please turn to slide number 3. Over my first 100 days at Coloplast, I have spent a great deal of time with our businesses, customers, users, and colleagues. When we last met, I spoke about what attracted me to Coloplast, its purpose, its people, and its ambition. What I have seen since joining has reinforced that initial view. Coloplast is fundamentally a strong company. We operate in attractive markets, hold leadership positions across our businesses, and continue to generate sustainable growth, profitability, and cash flow. The Impact4 strategy provides a strong foundation.

Speaker #2: Anders and I will take you through the quarter, and then we'll open up the call for questions. Please turn to slide number 3. Over my first 100 days at Coloplast, I've spent a great deal of time with our businesses, customers, users, and colleagues.

Speaker #2: When we last met, I spoke about what attracted me to Coloplast—its purpose, its people, and its ambition. What I've seen since joining has reinforced that initial view.

Speaker #2: Coloplast is fundamentally a strong company. We operate in attractive markets with leadership positions across our businesses, and continue to generate sustainable growth, profitability, and cash flow.

Speaker #2: The impact force strategy provides a strong foundation. As we progress through the rest of the year, I will continue to evaluate our priorities and the choices that will be critical to driving growth and long-term value creation.

Gavin Wood: As we progress through the rest of the year, I will continue to evaluate our priorities and the choices that will be critical to driving growth and long-term value creation. Today, I want to highlight a few. Starting with the core of Coloplast, Chronic Care. We have to sustain and extend our leadership in Chronic Care. Chronic Care is the foundation of Coloplast. It represents more than 75% of group sales and is our main engine of growth, profitability, and cash generation. We have number one positions in attractive categories, deep customer relationships, and an annuity-based business model that provides a stable and predictable revenue stream. Combine this, it creates a unique opportunity and a powerful competitive moat. One of the things that has stood out to me is the quality and clinical differentiation of our products.

Speaker #2: Today, I want to highlight a few. Starting with the core of Coloplast—chronic care. We have to sustain and extend our leadership in chronic care.

Speaker #2: Chronic care is the foundation of Coloplast. It represents more than 75% of group sales and is our main engine of growth, profitability, and cash generation.

Speaker #2: We have a number one position in attractive categories, deep customer relationships, and an annuity-based business model that provides a stable and predictable revenue stream.

Speaker #2: By doing this, you create a unique opportunity and a powerful competitive moat. One of the things that has stood out to me is the quality and clinical differentiation of our products.

Speaker #2: SenSura Mio combines body-fit technology with a secure-fit design to prevent leakage and protect the skin. The Illusia range of intermittent catheters has been proven to enable complete bladder emptying in one free flow without the need for repositioning the catheter.

Gavin Wood: SenSura Mio combines BodyFit Technology with a secure fit designed to prevent leakage and protect the skin. The Luja range intermittent catheters has been proven to enable complete bladder emptying in one free flow without the need for repositioning the catheter. I believe we have an outstanding product portfolio, which gives us a strong starting point as we prepare for the next innovation cycle. We also have a strong capability in opening and developing markets. This has been an important source of growth throughout the company's history, and there is still considerable potential ahead. In Continence Care, for example, we see strong double-digit growth rates in markets with recent reimbursement openings. Looking ahead, our objective is to extend that leadership. We will increase our investment in innovation, shorten time to market for new products, and strengthen commercial execution.

Speaker #2: I believe we have an outstanding product portfolio, which gives us a strong starting point as we prepare for the next innovation cycle. We also have a strong capability in opening and developing markets.

Speaker #2: This has been an important source of growth throughout the company's history, and there is still considerable potential ahead. In incontinence care, for example, we see strong double-digit growth rates in markets with recent reimbursement openings.

Speaker #2: Looking ahead, our objective is to extend that leadership. We will increase our investment in innovation, shorten the time to market for new products, and strengthen commercial execution.

Speaker #2: We have a solid pipeline today, but we also have to look beyond the immediate launch cycle and develop products that will shape our categories over the longer term.

Gavin Wood: We have a solid pipeline today, but we have to look also beyond the immediate launch cycle and develop products that will shape our categories over the longer term. We are well-positioned to deliver on these priorities. The second priority I want to touch on is our US opportunity. We have to capture a larger share of the largest healthcare market globally. It represents our biggest value creation opportunity and only accounts for around a quarter of group sales today. We are seeing strong momentum with high single-digit to double-digit growth across Chronic Care and Interventional Urology. At the same time, our position remains below its full potential when we look at current positions. In US Ostomy Care, we are number three, with a market share of around 15% to 20%. In Continence Care, we are number one, but our share is around 30%.

Speaker #2: We are well positioned to deliver on these priorities. The second priority I want to touch on is our U.S. opportunity. We have to capture a larger share of the largest healthcare market globally.

Speaker #2: It represents our biggest value creation opportunity and only accounts for around a quarter of Group sales today. We are seeing strong momentum with high single-digit to double-digit growth across Chronic Care and Interventional Urology.

Speaker #2: At the same time, our position remains below its full potential when we look at current positions. In U.S. ostomy care, we're number three, with a market share of around 15% to 20%.

Speaker #2: In incontinence care, we're number one, but our share is around 30%. In both categories, our U.S. position is still well below our global average. We also see considerable potential in men's health, the fastest growing part of interventional urology.

Gavin Wood: In both categories, our US position is still well below our global average. We also see considerable potential in Men's Health, the fastest-growing part of Interventional Urology. Here we hold the number two position and have a strong platform from which to grow. The US, in our opinion, should therefore play a much larger role in our strategic and investment choices going forward. We will be more deliberate about where we invest and more focused in our execution, with a clear ambition of accelerating growth and strengthening our market positions. Moving on to Wound & Tissue Repair. We continue to see attractive long-term opportunities in Biologics. The recent market reset in the US has been challenging, but it has also given us a much clearer view of where we can win. The right customer segments, specialties, and care settings. We increasingly see Biologics moving toward the inpatient setting.

Speaker #2: Here, we hold the number two position and have a strong platform from which to grow. The US, in our opinion, should therefore play a much larger role in our strategic and investment choices going forward.

Speaker #2: We will be more deliberate about where we invest, and more focused in our execution, with a clear ambition of accelerating growth and strengthening our market positions.

Speaker #2: Moving on to wound and tissue repair. We continue to see attractive long-term opportunities in biologics. The recent market reset in the US has been challenging, but it has also given us a much clearer view of where we can win.

Speaker #2: The right customer segments, specialties, and care settings. We increasingly see biologics moving toward the inpatient setting. Caresis is very well-positioned there, supported by strong clinical evidence, favorable healing outcomes, and clear product differentiation.

Gavin Wood: Kerecis is very well-positioned there, supported by strong clinical evidence, favorable healing outcomes, and clear product differentiation. It is also where the majority of Kerecis sales are already generated. We will continue to concentrate our resources on priority accounts and specialties and continue to deepen our presence in inpatient care. At the same time, we will restore profitable growth. That means increasing field productivity, sharpening commercial execution, and continuing to build on our clinical capabilities. As announced yesterday, Fertram will step down from his position as Executive Vice President of Wound and Tissue Repair and transition into a new role in Coloplast as Chief Innovation and Technology Advisor to the CEO. The Wound and Tissue Repair business will report into me on an interim basis while we sharpen the organization and priorities to support the next chapter of this business.

Speaker #2: It is also where the majority of CareSIS sales are already generated. We will continue to concentrate our resources on priority accounts and specialties, and continue to deepen our presence in inpatient care.

Speaker #2: At the same time, we will restore profitable growth. That means increasing field productivity, sharpening commercial execution, and continuing to build on our clinical capabilities.

Speaker #2: As announced yesterday, Firtram will step down from his position as Executive Vice President of Wound and Tissue Repair and transition into a new role at Coloplast as Chief Innovation and Technology Advisor to the CEO.

Speaker #2: The Wound and Tissue Repair business will report to me on an interim basis while we sharpen the organization and priorities to support the next chapter of this business.

Speaker #2: I want to thank FIRTRAM for its exceptional contribution to Coloplast over the past three years, and I'm very pleased that Coloplast will continue to benefit from its experience and innovation mindset.

Gavin Wood: I want to thank Fertram for his exceptional contribution to Coloplast over the past three years, and I am very pleased that Coloplast will continue to benefit from his experience and innovation mindset. I have now given you an idea of where we will focus and what we believe will drive value for Coloplast, and we will need to also continue to fund our growth journey and continuous productivity improvement and disciplined capital allocation has to be a central part of it. Coloplast has a strong record of operational discipline, productivity, and cost management. These capabilities underpin our industry-leading profitability and remain an important competitive strength. Going forward, we need to apply the same discipline to how we allocate resources and capital.

Speaker #2: I have now given you an idea of where we will focus and what we believe will drive value for Coloplast. We will also need to continue to fund our growth journey, and continuous productivity improvement and disciplined capital allocation have to be a central part of it.

Speaker #2: Coloplast has a strong record of operational discipline, productivity, and cost management. These capabilities underpin our industry-leading profitability, which remains an important competitive strength. Going forward, we need to apply the same discipline to how we allocate resources and capital.

Speaker #2: We will direct investment towards opportunities with the greatest potential for sustainable growth, value creation, and operating leverage, supported by clear accountability and rigorous investment governance, enabling us to make smarter investments.

Gavin Wood: We will direct investment towards opportunities with the greatest potential for sustainable growth, value creation, and operating leverage, supported by clear accountability and rigorous investment governance, enabling us to make smarter investments. I want to conclude this topic with which you have heard me speak about before, the importance of people and culture. I am deeply impressed by the people I have met across Coloplast. There is a strong sense of purpose and a deep commitment to users and customers across the organization. We will build on this foundation by strengthening accountability, giving teams greater clarity and room to act, and aligning our performance expectations to our ambitions and priorities. We will focus on developing the capabilities for the future and ensure that our strongest people are working on the priorities that matter most. A stronger talent pipeline and clear succession plans will be essential.

Speaker #2: I want to conclude this topic with something you've heard me speak about before: the importance of people and culture. I'm deeply impressed by the people I've met across COLOPLAST. There's a strong sense of purpose and a deep commitment to users and customers across the organization.

Speaker #2: We will build on this foundation by strengthening accountability, giving teams greater clarity and room to act, and aligning our performance expectations to our ambitions and priorities.

Speaker #2: We will focus on developing capabilities for the future and ensure that our strongest people are working on the priorities that matter most. A stronger talent pipeline and clear succession plans will be essential.

Speaker #2: An important first step is the appointment of our new Chief People Officer. I'm very pleased to welcome Amanda Rajkumar to Coloplast and into the executive leadership team.

Gavin Wood: An important first step is the appointment of our new Chief People Officer. I am very pleased to welcome Amanda Rajkumar to Coloplast and to the executive leadership team. With three decades of global HR experience, Amanda brings deep expertise in leadership dynamics, employee culture, succession planning, remuneration, and talent development. This was a recap of my first 100 days and my perspective on the priorities and choices that will be central to driving long-term value creation. At our full year results, we expect to provide a broader update on what they will mean for our strategic priorities, value drivers, and execution within the Impact4 framework. Let me now turn to our performance in the Q3. Please turn to slide number 4. I am pleased to share that we delivered a Q3 with 6% organic revenue growth and 5% EBIT growth in constant currencies before special items.

Speaker #2: With three decades of global HR experience, Amanda brings deep expertise in leadership dynamics, employee culture, succession planning, remuneration, and talent development. So, this was a recap of my first 100 days and my perspective on the priorities and choices that will be central to driving long-term value creation.

Speaker #2: At our full-year results, we expect to provide a broader update on what they will mean for our strategic priorities, value drivers, and execution within the Impact for Growth framework.

Speaker #2: Let me now turn to our performance in the third quarter. Please turn to slide number four. I'm pleased to share that we delivered a third quarter with 6% organic revenue growth and 5% EBIT growth in constant currencies before special items.

Speaker #2: Return on invested capital after tax and before special items was 15%, in line with last year's adjusted level. Performance in Chronic Care and Interventional Urology was also strong, while Biologics continued to be affected by the recent reimbursement changes.

Gavin Wood: Return on invested capital after tax and before special items was 15%, in line with last year's adjusted level. Performance in Chronic Care and Interventional Urology was also strong, while Biologics continued to be affected by the recent reimbursement changes. Net profit and free cash flow also developed strongly. Let me take you through the performance by business area. Please turn to slide number 5. In Ostomy Care, organic growth was 5% for the first nine months, and growth in DKK was 2%. In Q3, organic growth was 5%, with growth in DKK of 4%. Across Europe, US, and emerging markets, excluding China, Ostomy continued the strong performance and grew 7%. Growth in the US was a strong double digit, continuing the momentum in the H1 and benefiting from recent product launches.

Speaker #2: Net profit and free cash flow also developed strongly. Let me take you through the performance by business area. Please turn to slide number five.

Speaker #2: In Ostomy Care, organic growth was 5% for the first nine months, and growth in Danish kroner was 2%. In Q3, organic growth was 5%, with growth in Danish kroner of 4%.

Speaker #2: Across Europe, the US, and emerging markets excluding China, Ostomy continued the strong performance and grew 7%. Growth in the US was a strong double-digit, continuing the momentum in the first half and benefiting from recent product launches.

Speaker #2: In China, the implementation of our new channel strategy resulted in a significant inventory reduction in the third quarter. This temporarily affected growth, but is expected to improve channel economics over time.

Gavin Wood: In China, the implementation of our new channel strategy resulted in a significant inventory reduction in the Q3. This temporarily affected growth but is expected to improve channel economics over time. From a product perspective, SenSura Mio remained the main contributor to growth, led by the Convex segment. Our latest launches with SenSura Mio continued the good performance with further variants expected to launch next year. In Continence Care, organic growth was 7% for the first nine months, and growth in DKK was 5%. In Q3, organic growth was 8%, and growth in DKK was also 8%. Growth was led by the US and Europe. The US delivered strong double-digit growth supported by Luja and a positive phasing effect between Q3 and Q4. Luja was the main product contributor. Bowel Care also performed well, delivering strong double-digit growth in the quarter.

Speaker #2: From a product perspective, SenSura Mio remained the main contributor to growth, led by the Convex segment. Our latest launches with SenSura Mio continued the good performance, with further variants expected to launch next year.

Speaker #2: Incontinence Care: organic growth was 7% for the first nine months, and growth in Danish kroner was 5%. In Q3, organic growth was 8%, and growth in Danish kroner was also 8%.

Speaker #2: Growth was led by the US and Europe. The US delivered strong double-digit growth, supported by Luja and a positive phasing effect between the third and fourth quarters.

Speaker #2: Luja was the main product contributor. Bowel care also performed well, delivering strong double-digit growth in the quarter. Since launch, Luja Male has been a key contributor to sustained high single-digit growth in the male catheter business, and Luja Female has lifted growth in the female catheter business to high single-digit today.

Gavin Wood: Since launch, Luja Male has been a key contributor to sustained high single-digit growth in the male catheter business, and Luja Female has lifted growth in the female catheter business to high single digit today. These are both very encouraging early indicators and demonstrate the value of meaningful innovation. Voice and Respiratory Care delivered 7% organic growth for the first nine months, with growth in DKK of 5%. In Q4, organic growth was 6%, and growth in DKK was 5%. Laryngectomy delivered high single-digit growth in the quarter, while tracheostomy was softer due to order phasing in the distributor markets with the affected orders expected to move into Q4. In Wound and Tissue Repair, organic growth was 2% for the first nine months, and growth in DKK was -4%, with 2 percentage points negative impact from the skincare divestment in December 2024.

Speaker #2: These are both very encouraging early indicators and demonstrate the value of meaningful innovation. Voice and Respiratory Care delivered 7% organic growth for the first nine months, with growth in Danish kroner of 5%.

Speaker #2: In Q4, organic growth was 6%, and growth in Danish kroner was 5%. Laryngectomy delivered high single-digit growth in the quarter, while tracheostomy was softer due to order phasing in the distributor markets, with the affected orders expected to move into the fourth quarter.

Speaker #2: In Wound and Tissue Repair, organic growth was 2% for the first nine months, and growth in Danish kroner was minus 4%, with a 2 percentage point negative impact from the skin care divestment in December 2024.

Speaker #2: In Q3, organic growth was 3%, and the growth in Danish kroner was also 3%. Advanced wound dressings returned to growth, increasing 4% in the third quarter. The improved momentum was driven by strong momentum in the US, phasing in Germany and the Middle East; China remained a headwind due to the product return initiated in the third quarter of last year.

Gavin Wood: In Q3, organic growth was 3%, and the growth in DKK was also 3%. Advanced wound dressings returned to growth, increasing 4% in the Q3. The improved momentum was driven by strong momentum in the US, phasing in Germany and Middle East. China remained a headwind due to the product return initiated in the Q3 of last year. Biologics declined 6% in the quarter, but in line with our expectations. The decline reflects the continued impact from the reimbursement reform in the outpatient setting. In the inpatient setting, momentum remains healthy with double-digit growth year to date. In Interventional Urology, organic growth was 8% for the first nine months, and growth in DKK was 4%. In Q3, organic growth was 7% and reported growth in DKK was 8%.

Speaker #2: Biologics declined 6% in the quarter, but this was in line with our expectations. The decline reflects the continued impact from the reimbursement reform in the outpatient setting.

Speaker #2: In the inpatient setting, momentum remains healthy with double-digit growth year to date. In interventional urology, organic growth was 8% for the first nine months, and growth in Danish kroner was 4%.

Speaker #2: In Q3, organic growth was 7%, and reported growth in Danish kroner was 8%. Growth in the quarter was led by men's health in the US, particularly Titan, our flagship inflatable penile implant. Titan has delivered double-digit growth for several quarters in a market growing at a mid-single-digit rate.

Gavin Wood: Growth in the quarter was led by Men's Health in the US, particularly Titan, our flagship inflatable penile implant. Titan has delivered double-digit growth for several quarters in a market growing at the mid-single-digit rate. Our next-generation penile implant, Titan Prime, has received FDA approval in the US, and we expect to launch the product in the next couple of months. We are also seeing strong performance ahead of expectations in Uromedica, the company Coloplast acquired back in February. Given the recently anticipated FDA review timing for Intibia, we now expect the launch of the product in the US at the beginning of 2027, 2028. With that, I will hand over to Anders, who will take you through our nine-month financial performance. Please turn to Slide 6.

Speaker #2: Our next-generation penile implant, Titan Prime, has received FDA approval in the US, and we expect to launch the product in the next couple of months.

Speaker #2: We are also seeing strong performance ahead of expectations in Euromedica, the company Coloplast acquired back in February. And finally, given the recently anticipated FDA review timing for Intibia, we now expect the launch of the product in the US at the beginning of 2027 or 2028.

Speaker #2: With that, I will hand over to Anders, who will take you through our nine-month financial performance. Please turn to slide six.

Speaker #1: Thank you, Gavin, and good morning, everyone. Reported revenue for the first nine months increased by DKK 568 million, or around 3%, compared to last year.

Anders Lonning-Skovgaard: Thank you, Gavin, and good morning, everyone. Reported revenue for the first nine months increased by DKK 568 million or around 3% compared to last year. Organic growth contributed DKK 1.2 billion or around 6% to reported revenue. Foreign exchange rates had a negative impact of DKK 595 million or around 3 percentage points on reported revenue, mainly related to the depreciation of the US dollar, the British pound, and a basket of emerging markets currencies against the Danish krone. Please turn to Slide 7. Gross profit for the first nine months amounted to DKK 14.4 billion, corresponding to a gross margin of 67%, compared to 68% last year.

Speaker #1: Organic growth contributed DKK 1.2 billion, or around 6%, to reported revenue. Exchange rates had a negative impact of DKK 595 million, or around 3 percentage points, on reported revenue.

Speaker #1: Mainly related to the depreciation of the US dollar, the British pound, and the basket of emerging market currencies against the Danish kroner. Please turn to slide seven.

Speaker #1: Gross profit for the first nine months amounted to DKK 14.4 billion, corresponding to a gross margin of 67%, compared to 68% last year.

Speaker #1: The gross margin was negatively impacted by currencies of around 90 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, and an appreciation of the Hungarian forint against the Danish kroner.

Anders Lonning-Skovgaard: The gross margin was negatively impacted by currencies of around 90 basis points, mostly related to the depreciation of the US dollar, the British pound, and a basket of emerging markets currencies against the Danish krone, and an appreciation of the Hungarian forint against the Danish krone. Ramp-up costs in Costa Rica and Portugal also impacted the gross margin negatively. The negative impact was partly offset by low inflation on freight compared to last year. We are still not seeing any material impact on the gross margin from the conflict in the Middle East in Q3. Operating expenses for the first nine months amounted to DKK 8.8 billion, a 3% increase from last year. The distribution to sales ratio for the first nine months was 33%, on par with last year.

Speaker #1: Ramp-up costs in Costa Rica and Portugal also impacted the gross margin negatively. The negative impact was partly offset by lower inflation on trade compared to last year.

Speaker #1: We are still not seeing any material impact on the gross margin from the conflict in the Middle East in Q3. Operating expenses for the first nine months amounted to DKK 8.8 billion, a 3% increase from last year.

Speaker #1: The distribution-to-sales ratio for the first nine months was 33%, on par with last year. Distribution costs grew 2% versus last year, reflecting Caris's one-off cost in Q1, partly offset by lower sales costs in China and lower logistics costs due to the one-off cost in the US last year.

Anders Lonning-Skovgaard: Distribution costs grew 2% versus last year, reflecting Kerecis' one-off costs in Q1, partly offset by lower sales costs in China and lower logistics costs due to the one-off cost in the US last year. The development in distribution costs were also positively impacted by the depreciation of the US dollar against the Danish krone. The admin to sales ratio for the first nine months was 4%, on par with last year, and the R&D to sales ratio for the first nine months was 4% of sales, compared to 3% last year. The increase was driven by higher activity levels in Chronic Care and Biologics. Overall, this resulted in operating profit before special items of DKK 5.6 billion in the first nine months, or a 2% decrease compared to last year.

Speaker #1: The development and distribution costs were also positively impacted by the depreciation of the US dollar against the Danish kroner. The admin-to-sales ratio for the first nine months was 4%, on par with last year.

Speaker #1: And the R&D to sales ratio for the first nine months was 4% of sales, compared to 3% last year. The increase was driven by higher activity levels in chronic care and biologics.

Speaker #1: Overall, this resulted in an operating profit before special items of DKK 5.6 billion in the first nine months, or a 2% decrease compared to last year.

Speaker #1: EBIT margin before special items in the period was 26%, compared to 27% last year, reflecting around a 90 basis points negative impact from currencies and around a 50 basis points negative impact from Caris's.

Anders Lonning-Skovgaard: EBIT margin before special items in the period was 26% compared to 27% last year, reflecting around 90 basis points negative impact from currencies and around 50 basis points negative impact from Kerecis. In constant currencies, EBIT grew 5% compared to last year. Coloplast incurred special items expenses of DKK 3.1 billion in the first nine months, of which DKK 3 billion relates to the Kerecis impairment loss. Financial items in the first nine months was a net expense of DKK 100 million compared to a net expense of DKK 875 million last year. The net expense included around DKK 500 million in interest expenses, most related to the financing of the Atos Medical acquisition. The interest expenses were largely offset by gains on exchange rate adjustments, mostly related to the US dollar, Hungarian forint, and the Costa Rican colón.

Speaker #1: In constant currencies, EBIT grew 5% compared to last year. Coloplast incurred special items expenses of DKK 3.1 billion in the first nine months, of which DKK 3 billion relates to the Caris impairment loss.

Speaker #1: Financial items in the first nine months was a net expense of DKK 100 million, compared to a net expense of DKK 875 million last year.

Speaker #1: The net expense included around DKK 500 million in interest expenses, most related to the financing of the AdsoS Medical acquisition. The interest expenses were largely offset by gains on exchange rate adjustments, mostly related to the US dollar, Hungarian forint, and the Costa Rican colón.

Speaker #1: The tax expense in the first nine months was DKK 533 million, compared to an ordinary tax expense of around DKK 1 billion last year.

Anders Lonning-Skovgaard: The tax expense in the first nine months was DKK 533 million compared to an ordinary tax expense of around DKK 1 billion last year. The tax rate was 22%, on par with the ordinary tax rate last year. Net profit before special items in the first nine months was DKK 4.3 billion or DKK 510 million increase from last year when adjusted for the non-recurring tax expenses last year. Adjusted diluted earnings per share before special items increased by 14%. Please turn to slide number 8. Operating cash flow for the first nine months was an inflow of DKK 5.4 billion compared to an inflow of DKK 4.4 billion last year. The positive development in cash flows from operating activities was mostly driven by favorable development in working capital, in particular due to improved trade receivables.

Speaker #1: The tax rate was 22%, on par with the ordinary tax rate last year. Net profit before special items in the first nine months was DKK 4.3 billion, or a DKK 510 million increase from last year, when adjusted for the non-recurring tax expenses last year.

Speaker #1: Adjusted diluted earnings per share before special items increased by 14%. Please turn to slide number eight. Operating cash flow for the first nine months was an inflow of DKK 5.4 billion, compared to an inflow of DKK 4.4 billion last year.

Speaker #1: The positive development in cash flows from operating activities was mostly driven by favorable developments in working capital, in particular due to improved trade receivables.

Speaker #1: Lower financial items also had a positive impact on cash flows, while higher income tax paid had a negative impact. Cash flow from investing activities was an outflow of DKK 1.3 billion, compared to an outflow of DKK 861 million last year.

Anders Lonning-Skovgaard: Lower financial items also had a positive impact on cash flows, while higher income tax paid had a negative impact. Cash flow from investing activities was an outflow of DKK 1.3 billion compared to an outflow of DKK 861 million last year. CapEx in the first nine months was 5% of sales, on par with last year and includes investments related to the new manufacturing site in Portugal, which is on track to be operational in Q4 2025/2026. As a result, the free cash flow for the first nine months was an inflow of DKK 4.1 billion compared to an inflow of DKK 3.5 billion last year, or a 16% increase.

Speaker #1: Capex in the first nine months was 5% of sales, on par with last year, and includes investments related to the new manufacturing site in Portugal.

Speaker #1: Which is on track to be operational here in Q4 2025–2026. As a result, the free cash flow for the first nine months was an inflow of DKK 4.1 billion, compared to an inflow of DKK 3.5 billion last year.

Speaker #1: Or a 16% increase. Excluding acquisition costs this year and the benefit from divestments last year, free cash flow increased 27% in the first nine months, with a free cash flow-to-sales ratio of 20%.

Anders Lonning-Skovgaard: Excluding acquisition costs this year and benefit from the divestments last year, the free cash flow increased 27% in the first nine months, with a free cash flow to sales ratio of 20% compared to 16% last year. The trailing 12 months cash conversion was 91%, and net working capital amounted to around 26% of sales. Now let's take a brief look at the financial guidance for the year. Please turn to slide number 9. Our guidance for full year 2025/2026 remains unchanged. We expect fully organic revenue growth of 5% to 6%, EBIT growth in constant currencies before special items of around 5%, and return on invested capital after tax before special items of around 15%. We continue to expect negative impact from currencies with around 2 to 3 percentage points impact on reported revenue growth and around 80 basis points negative impact on the reported EBIT margin.

Speaker #1: Compared to 16% last year. The trailing 12-month cash conversion was 91%, and net working capital amounted to around 26% of sales. Now, let's take a brief look at the financial guidance for the year.

Speaker #1: Please turn to slide number nine. Our guidance for full year 2025-2026 remains unchanged. We expect full-year organic revenue growth of 5–6%, EBIT growth in constant currencies before special items of around 5%, and return on invested capital after tax before special items of around 15%.

Speaker #1: We continue to expect a negative impact from currencies, with around 2 to 3 percentage points impact on reported revenue growth and around 80 basis points negative impact on the reported EBIT margin.

Speaker #1: We are especially seeing a negative impact from the Hungarian forint, which saw a notable appreciation against the Danish kroner following the Hungarian election back in April.

Anders Lonning-Skovgaard: We are especially seeing negative impact from the Hungarian forint, which saw a notable appreciation against the Danish kroner following the Hungarian election back in April. We continue to monitor the developments in the Middle East and the impact on the business, including implications for demand, supply, and cost inflation. With the knowledge we have today, we expect limited impact on sales, and we maintain our previously communicated assumptions around raw material cost inflation, where we expect around 1% raw material cost inflation in the H2 of this year and around 2% to 3% raw material inflation next year. We now expect net financial items of around DKK -300 million based on spot rates as of 14 August, down from around DKK -500 million previously. Finally, by the end of the fiscal year, we expect to reach a gearing ratio of around 2.3x EBITDA.

Speaker #1: We continue to monitor the developments in the Middle East and the impact on the business, including implications for demand, supply, and cost inflation. With the knowledge we have today, we expect a limited impact on sales, and we maintain our previously communicated assumptions around raw material cost inflation. We expect around 1% raw material cost inflation in the second half of this year and around 2–3% raw material inflation next year.

Speaker #1: We now expect net financial items of around minus DKK 300 million, based on spot rates as of August 14, down from around minus DKK 500 million previously.

Speaker #1: Finally, by the end of the fiscal year, we expect to reach a gearing ratio of around 2.3 times CPTA. Thank you very much. Operator, we are now ready to take questions.

Anders Lonning-Skovgaard: Thank you very much. Operator, we are now ready to take questions.

Moritz: Ladies and gentlemen, 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 have entered the queue. 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. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from Hassan Al-Wakeel from Barclays. Please go ahead.

Speaker #2: Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone.

Speaker #2: You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two (*2).

Speaker #2: Questioners on the phone are requested to disable the loudspeaker mode while asking a question. In the interest of time, please limit yourself to two questions.

Speaker #2: Anyone who has a question may press star and one at this time. One moment for the first question, please. And the first question comes from Hassan Al-Wakil from Barclays.

Speaker #2: Please go ahead.

Speaker #3: Good morning. Thank you for taking my questions—a couple, please. Firstly, Gavin, just on some of your reflections on chronic care and the next innovation cycle.

Hassan Al-Wakeel: Good morning. Thank you for taking my questions. A couple, please. Firstly, Gavin Wood, just on some of your reflections on Chronic Care and the next innovation cycle, do you see a need to increase R&D in a material way in order to sustain and extend that leadership? You also talk about the US being a key strategic priority. So could we see some compromise in the margin, to drive stronger innovation, commercial execution, and ultimately, a stronger top line? Secondly, appreciate China has been a drag for some years in Ostomy, but it does look to be worsening. So can you unpack the performance here and how much of the softer growth do you think is market share loss versus market weakness? Thank you.

Speaker #3: Do you see a need to increase R&D in a material way in order to sustain and extend that leadership? You also talk about the U.S. being a key strategic priority.

Speaker #3: So, could we see some compromise in the margin to drive stronger innovation, commercial execution, and ultimately a stronger top line? And then secondly, I appreciate that China has been a drag for some years in ostomy, but it does look to be worsening.

Speaker #3: So, can you unpack the performance here, and how much of the softer growth do you think is market share loss versus market weakness? Thank you.

Speaker #4: Okay. Thank you, Hassan, for the question. I think, look, it's really clear that we want to invest more in innovation, and as I shared, our group sales—75% of our business comes from Chronic—and we feel very, very strong about this platform.

Gavin Wood: Okay. Thank you, Hassan, for the question. I think, look, it is really clear that we want to invest more in innovation. As I shared, our group sales, 75% of our business comes from Chronic Care, and we feel very, very strong about this platform. So this is an area that we do want to invest more in. My answer would be, this is not about committing to an allocated specific percentage of sales to R&D investments. That is more of a mechanical exercise, where we do not feel the value is created. What we need to do is we need to ensure that we have the headroom and the flexibility to invest when great opportunities are identified. Then we need to ensure that we have a system and a structure that allows the best ideas to surface.

Speaker #4: So, this is an area that we do want to invest more in. My answer would be, this is not about committing to an allocated specific percentage of sales to R&D investments.

Speaker #4: That's more of a mechanical exercise, where we don't feel the value is created. What we need to do is ensure that we have the headroom and the flexibility to invest when great opportunities are identified.

Speaker #4: And then we need to ensure that we have a system and a structure that allows the best ideas to surface. So ultimately, going forward, we want to ensure that we have the best ideas and the most meaningful innovation that's getting adequate funding. And we need to be disciplined and likely stop some projects earlier when we don't yield the desired outcome.

Gavin Wood: Ultimately, going forward, we want to ensure that we have the best ideas and the most meaningful innovation that is getting adequate funding, and we need to be disciplined and likely stopping some projects earlier when we do not yield the desired outcome. We need to celebrate more calibrated risk-taking. Ultimately, this is what I would say, Hassan, is for the next generation of innovation. We feel really strongly in our current innovation and the Impact4. This is really about investment in innovation for smarter choices going forward in the next innovation cycle. Then I will ask Anders to address your question on China.

Speaker #4: And we need to celebrate more calibrated risk-taking. So ultimately, this is what I would say, Hassan, for the next generation of innovation: we feel really strongly in our current innovation, and the impact of this is really about investment in innovation for smarter choices going forward in the next innovation cycle.

Speaker #4: And then I'll ask Anders to address your question on China.

Speaker #3: Yeah. So, in regards to China, you're right, Hassan, that we have had challenges in China for some time. We have seen low single-digit growth, flattish growth, and this year the underlying expectations for our Chinese growth is low single-digit.

Anders Lonning-Skovgaard: Yeah. So in regards to China, you are right, Hassan, that we have had challenges in China for some time. We have seen low single digit growth, flattish growth. This year, the underlying expectations for our Chinese growth is a low single digit negative. On top of that, we have also now a new management in place. We have decided to review our go-to-market strategy, where we are really looking into the number of distributors we are having, et cetera. As a consequence of that work, we have decided to reduce our inventories in China as well. That is why we see quite a significant one-off here in Q3, and we will also see some one-off related to that in Q4. In Q3, it is a one-off of around DKK 45 million. So, yes, China is and has been a challenge.

Speaker #3: Negative. But on top of that, we also now have a new management team in place. We have decided to review our go-to-market strategy, where we are really looking into the number of distributors we have, etc.

Speaker #3: And as a consequence of that work, we have decided to reduce our inventories in China as well. And that's why we see quite a significant one-off in Q3.

Speaker #3: And we will also see some one-off related to that in Q4. In Q3, it's a one-off for around DKK 45 million. So yes, China is and has been a challenge, but we are optimistic with the new team in place.

Anders Lonning-Skovgaard: But we are optimistic with the new team in place, that we are now working on a new strategy for China, and then over time, we will start to see us improve the Chinese business. So, that is where we are.

Speaker #3: We are now working on a new strategy for China, and over time we will start to see improvement in our Chinese business.

Speaker #3: So that's where we are.

Speaker #4: Very helpful. If I could just follow up, Gavin—you highlight industry-leading profitability in your reflections in the release. I wonder if we should read into the importance of this industry-leading profitability going forward, given some of these investments that you've been talking about.

Hassan Al-Wakeel: Very helpful. If I can just follow up, Gavin Wood. You highlight industry-leading profitability in your reflections in the release. I wonder if we should read into the importance of this industry-leading profitability going forwards, given some of these investments that you've been talking about.

Speaker #4: I'm sorry. Could you repeat the question? Yeah, it was about the commentary around industry-leading profitability and your reflections in the release today.

Gavin Wood: I'm sorry, could you repeat the question?

Hassan Al-Wakeel: Yeah. It was about the commentary around industry-leading profitability in your reflections in the release today. I wonder if we should read into the importance of this industry-leading profitability going forwards in the future over the medium term, given some of these investments that you're flagging.

Speaker #4: And I wonder if we should read into the importance of this industry-leading profitability going forward into the future over the medium term, given some of these investments that you're flagging.

Speaker #4: Yeah. So listen, this is probably going to come down to a lot of reallocation. That's kind of the perspective that I have. But I think when you think of longer term, looking ahead, I've kind of used the first 100 days to identify choices that are going to help us make longer-term value creation opportunities.

Gavin Wood: Yeah. Listen, this is going to probably come down to a lot of reallocation. That's kind of the perspective that I have. I think when you think of longer term looking ahead, I've kind of used the first 100 days to kind of identify choices that were going to help us make longer-term value creation opportunities. Clearly at the full year 2025/2026, I'll be planned to probably give a broader update on the implications of how these kind of play into our strategic priorities, value drivers, and the execution within the Impact4 framework.

Speaker #4: And clearly, at the full year '25/'26, I'll be planning to probably give a broader update on the implications of how these kind of play into our strategic priorities, value drivers, and the execution within the Impact for Growth framework.

Speaker #3: Perfect. Thank you.

Hassan Al-Wakeel: Perfect. Thank you.

Speaker #2: The next question comes from Aisha Noir from Stanley. Please go ahead.

Moritz: The next question comes from Aisha Noor from Morgan Stanley. Please go ahead.

Speaker #5: Hi, Gavin and Anders, thanks for taking my question. My first one is on Carisis, particularly the inpatient business, where we're hearing market volumes haven't really benefited from a decline in the home care setting.

Aisha Noor: Hi, Gavin and Anders. Thanks for taking my question. My first one is on Kerecis, particularly the inpatient business, where we are hearing market volumes have not really benefited from a decline in the home care setting. Could you talk about this inpatient business? Did it grow double digit in the quarter, as you observed in the H1? What are you seeing competition-wise, and where are channel inventory levels today? My second question is on Intibia. I would love to hear the reasons for the delay of the launch, and whether the hurdle to success could now be higher since we have had one more tibial device launch from your USP in the last month. Thank you.

Speaker #5: Could you talk about this inpatient business? Did it grow double-digit in the quarter as you observed in the first half? What are you seeing competition-wise, and where are channel inventory levels today?

Speaker #5: And then, second question is on Intivia. Would love to hear the reasons for the delay of the launch, and whether the hurdle to success could now be higher since we've had one more tibial device launch from your USP in the last month.

Speaker #5: Thank you.

Speaker #4: Okay, thank you for both questions. I'll let Anders start with Intivia, and then I'll answer your first question.

Gavin Wood: Okay, thank you for both questions. Anders will start with Intibia, and then I will answer your first question.

Speaker #3: Yeah, so thanks for the question. In terms of Intivia, as we said here in our opening statement, we now expect the launch in '27-'28.

Anders Lonning-Skovgaard: Yeah. Thanks for the question. In terms of Intibia, as we said here in our opening statement, we now expect the launch into 2027 and 2028, and it is really driven by the FDA approval process. So we are working hard in order to get the FDA to approve our solution. We are still expecting that the Intibia launch will contribute to our growth within urology, but it is coming towards the end of the strategic period. But we still expect that the urology that is actually off to a better start than we had anticipated will continue with the high single-digit growth that we have seen also this year. But it is really driven by the FDA approval process, and that had a consequence on our launch time.

Speaker #3: And it's really driven by the FDA approval process. So we are working hard in order to get the FDA to approve our solution. We still expect that the Intivia launch will contribute to our growth within Urology, but it is coming towards the end of the strategic period.

Speaker #3: But we still expect that the Urology, which is actually off to a better start than we had anticipated, will continue with the high single-digit growth that we have seen also this year.

Speaker #3: But it's really driven by the FDA approval process, and that had a consequence on our launch timing.

Speaker #4: Okay. And I'll take your first question. So and thank you for the question. And this is this is one that we have addressed before.

Gavin Wood: Okay. I will take your first question. Thank you for the question, and this is one that we have addressed before. But clearly, there is a lot of reimbursement dynamics that have played out in the US biologics to skin substitute space. I will start with the outpatient and then move to the inpatient. So in outpatient, we see a continued transition rather than a full stabilization. The USD 127 centimeter square, that is the fixed payment rate that continues to pressure utilization, with providers becoming much more selective and cautious. We do see meaningful price competition while everyone is adapting to the new pricing level, and some use of traditional lower-cost wound care alternatives where clinically appropriate. However, at the same time, the market is gradually moving through the initial disruption with greater clarity around the new reimbursement environment and increasing adaptation by both providers and manufacturers.

Speaker #4: But clearly, there are a lot of reimbursement dynamics that have played out in the US biologics skin substitute space. I'll start with the outpatient segment and then move to the inpatient.

Speaker #4: So, in outpatient, we see a continued transition, rather than full stabilization. So the $127 per centimeter squared—that's the fixed payment rate—that continues.

Speaker #4: ...to pressure utilization, with providers becoming much more selective and cautious. We do see meaningful price competition while everyone is adapting to the new pricing level, and there is some use of traditional, lower-cost wound care alternatives where clinically appropriate.

Speaker #4: However, at the same time, the market is gradually moving through the initial disruption, with greater clarity around the new reimbursement environment and increasing adaptation by both providers and manufacturers.

Speaker #4: And this is where we see Carisis having a distinct advantage, because if you start to look at the inpatient, where most of the market has shifted towards, this is the area where Carisis has the majority of our sales today.

Gavin Wood: This is where we see Kerecis having a distinct advantage, because if you start to look at the inpatient, where most of the market has shifted towards, this is the area where Kerecis has the majority of our sales today and our market position. We have very strong product differentiation, very strong data on our products. So when you look at inpatient, in contrast to outpatient, the inpatient setting remains a much more stable environment with healthy underlying demand and where we have had double-digit growth to date. You did ask about the last quarter. The last quarter was high single digit, but we are still confident that we are going to close the year with double-digit growth in inpatient, and that remains our focus.

Speaker #4: And our market position. And we have very strong product differentiation, very strong data on our products. So, when you look at inpatient in contrast to outpatient, the inpatient setting remains a much more stable environment with healthy underlying demand.

Speaker #4: And where we've had double-digit growth to date. You did ask about the last quarter; the last quarter was high single-digit. But we're still confident that we're going to close the year with double-digit growth in inpatient, and that remains our focus.

Speaker #5: Perfect, thank you. If I could follow up also on Carisis, and this is in regards to the change in executive leadership that you've announced overnight.

Aisha Noor: Perfect. Thank you. If I could follow up also on Kerecis, and this is in regards to the change in executive leadership that you have announced overnight. What should we be reading from your interim kind of taking over as the interim head of wound? Are more serious discussions being had about the future of this business? I know Anders mentioned in an interview previous to this call that the outlook is now lower for Kerecis. Is there an outcome here where you are actually strategically reviewing this business for the future?

Speaker #5: What should we be reading into your interim period, taking over as the interim head of Wound? Are more serious discussions being had about the future of this business?

Speaker #5: And I know Anders mentioned in an interview prior to this call that the outlook is now lower for Carisis. Is there an outcome here where you're actually strategically reviewing this business for the future?

Speaker #4: No, I think this is more a natural evolution of a business. So, if you think of it, we acquired Carisis three years ago, in September.

Gavin Wood: No, I think this is more a natural evolution of a business. If you think of it, we acquired Kerecis three years ago in September. The leadership change is really also about strengthening our outlook going forward. If you think of it, Fertram had been with Coloplast for three years. He is now stepping into a technology assessment role. I have very high conviction in the category of biologics and technology going forward. Fertram is going to play in an area to his strengths where he is incredibly strong at assessing technology and external innovation and brings that innovative mindset that really helped develop Kerecis. With his capability focused there, I am kind of taking an assessment of the business of how do we professionalize and scale this business throughout the US and globally. I did come with a background where I worked previously in wound care.

Speaker #4: And so the leadership change is really also about strengthening our outlook going forward. So, if you think of it, the first term had been with Coloplast for three years.

Speaker #4: He's now stepping into a technology assessment role. I have very high conviction in the category of biologics and technology going forward. And first and foremost, it's going to play in an area to his strengths, where— I mean, he's incredibly strong at assessing technology and external innovation.

Speaker #4: And he brings that innovative mindset that really helped develop Carisis. So with his capability focus there, I'm kind of taking an assessment of the business—how do we professionalize and scale this business throughout the US and globally.

Speaker #4: And I did come with a background where I worked previously in wound care, so I felt that taking this on personally would give me an opportunity to really go in and assess the organization and the talent to develop what’s the right setup for the future.

Gavin Wood: I felt taking this on personally would give me an opportunity to really go in and assess the organization and the talent to develop what is the right setup for the future.

Speaker #5: Perfect. Thank you so much.

Aisha Noor: Perfect. Thank you so much.

Speaker #1: And the next question comes from Martin Parkoy from SEB. Please go ahead.

Moritz: The next question comes from Martin Parkhøi from SEB. Please go ahead.

Speaker #2: Yes, Martin Parkoy, SEB. I have a couple of questions, both for Anders and from Gavin. Let's start with Anders. Anders, can we of course talk about raw material inflation?

Martin Parkhøi: Yes, Martin Parkhøi, SEB. A couple of questions both for Anders and for Gavin. Let's start with Anders. Anders, we, of course, talk about raw material inflation. I understand you are not giving guidance for 2027, 2028, but can you just give general kind of sort numbers of how the impact you expect to see on raw material inflations going into next year, given what you know today? The second question for you is your dividend policy. You have not seen your dividend per share going down for decades. Is that a firm policy for you, also given that the investment you need now and your ambition to go down to a gearing level of 1.5? Do you still believe that you can keep the dividend intact or even go up over the Impact4 period? Then just Gavin, it is one question maybe in two.

Speaker #2: I don't understand. You're not giving guidance for '27, '28, but can you just give general, kind of short numbers of how the impact you expect to see on raw material inflations going into next year?

Speaker #2: Given what you know today, and the second question for you is about your dividend policy. We haven't seen your dividend per share go down for decades.

Speaker #2: Is that a firm policy for you also, given the investment you need now and your ambition to go down to a giving level of 1.5?

Speaker #2: Do you still believe that you can keep the dividend intact, or even go up, over the impacted period? And then, just Gavin, it's one question, maybe in two.

Speaker #2: Just to confirm again, with the change you're making in China, does that also impact the growth ambitions you have in China and the impact for the period? And related to that...?

Martin Parkhøi: Just to confirm again, China with the change you are making in China, does that impact also the growth ambitions you have in China in the Impact4 period? Related to that, can you just confirm that with the strategic priorities that you are doing and the broader review you are making, are you still comfortable with 7% to 8% top-line growth towards 2029 to 2030? Thank you.

Speaker #2: Can you just confirm that with the strategic priorities that you're following, and the broader review you're making, are you still comfortable with 7 to 8 percent top-line growth towards 2029 to 2030?

Speaker #2: Thank you.

Speaker #3: Thanks a lot, Martin, for your questions. Let me start with the first ones. So, in terms of the raw material, as I said in my opening statements, we are, this year—this financial year—expecting some impact to hit the P&L here in Q4.

Anders Lonning-Skovgaard: Thanks a lot, Martin, for your questions. Let me start with the first ones. In terms of the raw material, as I said in my opening statements, we are this financial year expecting some impact to the P&L here in Q4. When we move into next year, I am still expecting it will have the inflation related to the Middle East, the crisis will impact our raw material costs with around 2 to 3 percentage points. So that is my current assumptions moving into next financial year. In terms of your second question, the dividend policy. Last year, when we communicated our Impact4 strategy, we confirmed our dividend policy, also with the aim to get the payout ratio down to something between 60% and 80%.

Speaker #3: And when we move into next year, I'm still expecting that we will have inflation related to the Middle East. The crisis will impact our raw material costs by around 2 to 3 percentage points.

Speaker #3: So, those are my current assumptions moving into the next financial year. In terms of your second question, the dividend policy—last year, when we communicated our Impact for strategy, we confirmed our dividend policy.

Speaker #3: Also, with the aim to get the payout ratio down to something between 60 and 80 percent. And we have a lot of focus on improving our cash flow.

Anders Lonning-Skovgaard: We have a lot of focus on improving our cash flow, and we have a lot of focus and also to reduce our debt ratio from, I am expecting this year to hit around 2.3 times EBITDA and get it down below two over the period. So we have a lot of focus on maintaining the dividend policy, and that of course requires strong cash flow in the years to come. Gavin.

Speaker #3: And we have a lot of focus, also, on reducing our debt ratio. I'm expecting this year to hit around 2.3 times EBITDA and to get it down below 2 over the period.

Speaker #3: So, we have a strong focus on maintaining the dividend policy, and that, of course, requires strong cash flow in the years to come.

Speaker #2: Gavin.

Gavin Wood: Okay. Thanks, Martin. I will start with your question on China. The Impact4 assumption was kind of flattish growth over the period for China. That is an unchanged assumption. We do not plan that to be any different. Your question on strategic priorities, and I think you are alluding to impact on future guidance. To be very open, I am currently evaluating the Impact4 as part of my broader 100-day review. My focus in the last 100 days has been really on getting to know the business, as I shared earlier. I now have much stronger view on the priorities for the business looking ahead, which I have shared, and also some of the strategic choices that we believe we need to make. From here going forward, I will continue to progress my view on the overall business.

Speaker #4: Okay, thanks, Martin. So I'll start with your question on China. So the impact for assumption was kind of flattish growth over the period for China.

Speaker #4: So that's an unchanged assumption. We don't plan for that to be any different. Your question on strategic priorities—and I think you're alluding to the impact on future guidance.

Speaker #4: To be very open, I'm currently evaluating the impact as part of my broader 100-day review. So, my focus in the last 100 days has really been on getting to know the business, as I shared earlier.

Speaker #4: I now have a much stronger view on the priorities for the business looking ahead, which I've shared, and also some of the strategic choices that we believe we need to make.

Speaker #4: So from here, going forward, I will continue to progress my view on the overall business. And as we get to the full-year announcement, I expect to be able to share more about what implications I anticipate as a result of my 100-day review.

Gavin Wood: As we get to the full year announcement, I expect to be able to share more about what implications I anticipate as a result of my 100-day review.

Speaker #2: Thank you. Clear.

Anders Lonning-Skovgaard: Thank you. Clear.

Speaker #1: The next question comes from Anshal Verma from JP Morgan. Please go ahead.

Moritz: The next question comes from Aanchal Verma from JP Morgan. Please go ahead.

Aanchal Verma: Hi. Good morning, Anders and Gavin. A few questions for you. The first one would be, just to follow up on Aisha's question around the Intibia delay. Could you outline if the FDA has raised any concerns? Have they asked for more data or will you need to do further clinical trials? The second one is, just when you talk about being more focused on where you invest and making smarter investments, could you give us a bit of flavor on the type of investments you will be looking at? Are there any gaps you would like to fill? On the contrary, are there any businesses in the portfolio that are potentially disposal candidates? To that point, how do you feel about the balance sheet position right now, and what are your thoughts on financing further M&A?

Speaker #5: Hi, good morning. I'm listening, Gavin. I have a few questions for you. The first one would be just to follow up on Anshal's question around the NTIBIA delay.

Speaker #5: Could you outline if the FDA has raised any concerns? Have they asked for more data, or will you need to do further clinical trials?

Speaker #5: And then the second one is, just when you talk about being more focused on where you invest and making smarter investments, could you give us a bit of flavor on the type of investments you'll be looking at?

Speaker #5: Are there any gaps you'd like to fill, on the contrary? Are there any businesses in the portfolio that are potentially disposal candidates? And to that point, how do you feel about the balance sheet position right now, and what are your thoughts on financing further M&A?

Speaker #3: All right. Let me take those questions. The first question, in terms of NTIBIA, we cannot really speak more to the clinical outcome at this point in time.

Anders Lonning-Skovgaard: All right. Let me take those questions. The first question in terms of Intibia, we cannot really speak more to the clinical outcome at this point in time. We need to get through the FDA process. As I said earlier, we now expect that to be complete early 2027, 2028. To your second question in terms of M&A, as I understood your question, we are not planning any bigger M&As towards 2030. We are really focusing on executing on the businesses we have. It might be we will evaluate some smaller tuck-ins, in particular within urology. As you know, we did a smaller technology investment earlier this year. It is called Uromedica, and it is a very interesting technology that is really benefiting our Men's Health business in the US, and we are actually off to a good start with that acquisition.

Speaker #3: So, we need to get through the FDA process, and as I said earlier, we now expect that to be complete in early '27 or '28. To your second question, in terms of M&A—as I understood your question—we are not planning any bigger M&As towards 2030.

Speaker #3: We are really focusing on executing on the businesses we have. It might be that we will evaluate some smaller tuck-ins, in particular within urology. As you know, we did a smaller technology investment earlier this year.

Speaker #3: It's called Euromedica, and it's a very interesting technology that is really benefiting our Men's Health business in the US. And we've actually gotten off to a good start with that acquisition.

Speaker #3: But you should not expect us to do any bigger M&As towards 2030.

Anders Lonning-Skovgaard: But you should not expect us to do any bigger M&As towards 2030.

Aanchal Verma: Just a follow-up in terms of potential disposal candidates, are there any that you have identified thus far?

Speaker #5: And just to follow up, in terms of potential disposal candidates, are there any that you have identified thus far?

Speaker #3: I did not really understand the first part of your question.

Anders Lonning-Skovgaard: I did not really understand the first part of your question.

Speaker #5: And just trying to understand, when you're talking about reviewing the portfolio you have, if there were any areas you think could potentially be divested or disposed of.

Aanchal Verma: I am just trying to understand when you are talking about reviewing the portfolio you have, if there were any areas you think that could potentially be divested or disposed of.

Speaker #3: So, that is not the plan. So,

Anders Lonning-Skovgaard: That is not the plan.

Aanchal Verma: Perfect. Thank you.

Speaker #1: The next question comes from Jesper Ingelson from DNB Carnegie. Please go ahead.

Moritz: The next question comes from Jesper Ingildsen from DNB Carnegie. Please go ahead.

Speaker #3: Yeah. Thank you so much.

Jesper Ingildsen: Yeah. Thank you so much. I have a couple questions. You are currently growing 5% to 6% organically. It seems like Kerecis' inpatient is now below 10%, TBS being pushed to 2027, 2028. China, as we are clear, continues to decline. I appreciate you are going to come with a wide update in November in regards to the 7% to 8% organic growth you currently have for the Impact4 strategy. Is there anything you can point to in terms of what is going to accelerate growth in the coming years, assuming the renewed focus on the US will take some time to show in the numbers? My second question would be around your margins. Your priorities imply high investments in innovation, US commercial execution capabilities. In addition to this, you have headwinds from raw materials, as you just highlight as well, FX and wage inflation.

Speaker #4: I have a couple of questions. Currently, we're growing 5 to 6 percent organically. It seems like care in inpatient is now below 10 percent. TBS is being pushed to 27, 28.

Speaker #4: China orthopedic care continues to decline. I appreciate that you’re going to come with a wide update in November regarding the 7 to 8 percent organic growth you currently have and its impact on strategy.

Speaker #4: But is there anything you can point to in terms of what's going to accelerate growth in the coming years? Assuming the renewed focus on the US will take some time to show in the numbers.

Speaker #4: Then my second question would be around the margins. So, your properties imply high investments in innovation, U.S. commercial execution, and capabilities. In addition to this, you have headwinds from raw materials, as you just highlighted as well.

Speaker #4: Ethics too. And wage inflation. How do you fund all of that without further margin pressure? I mean, Coloplast already looks like a very lean organization.

Jesper Ingildsen: How do you fund all of that without further margin pressure? Coloplast already looks like a very lean organization. Where would you find any savings or potentially relocating from? Thanks.

Speaker #4: Where would you find any savings, or potentially, where would relocating come from? Thanks.

Anders Lonning-Skovgaard: Yeah. So Jesper, thanks for your question. Let me just start towards the 2030, as I understood your question. So actually, we are off to a good start within our Chronic Care business. If I exclude the China, we are off to a really good start at US Chronic Care, driven by innovation, driven by commercial execution, and we are really satisfied in terms of where that business is. We are also off to a really good start with our Interventional Urology business. Our Interventional Urology business is already now at high single digit growth. We actually anticipated that to come later in the period, but that business is also off to a better start than we had anticipated. It is clear that this year is really impacted by the Biologics situation. We have talked a lot about it, but it is really impacted by this reimbursement reform that came into play from 1 January.

Speaker #2: Yeah, so Jesper, thanks for your question. Let me just start towards the 2030. As I understood your question, actually, we are off to a good start within our Chronic business.

Speaker #2: If I exclude China, we're off to a really good start in US Chronic. Driven by innovation, driven by commercial execution, and we are really satisfied in terms of where that business is.

Speaker #2: And we're also off to a really good start with our urology business. Our urology business is already now at a high single-digit growth.

Speaker #2: We actually anticipated that to come later in the period. But that business is also off to a better start than we had anticipated. It's clear that this year is really impacted by the biologics situation—we have talked a lot about it.

Speaker #2: But it's really impacted by this reimbursement reform that came into play from January 1st. And then, in China this quarter, we have taken a decision to reduce our inventory levels.

Anders Lonning-Skovgaard: China, this quarter, we have taken a decision to reduce our inventory levels. There's actually quite a bit of our business that is either at or above the expectations we have towards 2030 in terms of question two, Gavin?

Speaker #2: But there is actually quite a bit of our business that is either at or above the expectations we have towards 2030. In terms of question two, Gavin?

Speaker #4: Thank you. So, I think that one of the big questions is how to fund the journey when we start to make some of these choices.

Gavin Wood: Thank you. I think that one of the big questions is how to fund the journey when we start to make some of these choices, and specifically, it's on innovation within Chronic Care. It's also looking at other fast-growing BUs, and it's also looking at geographies. I think overall, Coloplast, if you look, historically we've been very strong in driving continuous improvements, and we need to continue to leverage this strength. Meanwhile, we're also reviewing the growth and profit pools across our businesses, and we'll be assessing these against bigger value opportunities. To be more tangible, we see meaningful opportunities to free up capacity through organizational simplification, operational efficiencies, and tech-enabled productivity improvements. Some of these examples include assessing our overhead spend, especially in non-customer facing areas.

Speaker #4: And specifically, it's on innovation within Chronic. It's also looking at other fast-growing BUs, and it's also looking at geography. So I think, overall, Coloplast—if you look, historically, we've been very strong in driving continuous improvements.

Speaker #4: And we need to continue to leverage this strength. Meanwhile, we're also reviewing the growth and profit pools across our businesses, and we'll be assessing these against bigger value opportunities.

Speaker #4: To be more tangible, we see meaningful opportunities to free up capacity through organizational simplification, operational efficiencies, and tech-enabled productivity improvements. Some of these examples include assessing our overhead spend, especially in non-customer-facing areas.

Speaker #4: I mean, we're going to be really focused on investing in customer-facing roles, commercial productivity improvements and alignment, and looking at direct spend optimization. This means investing more behind innovation and growth while continuously improving productivity and reducing complexity.

Gavin Wood: I mean, we're going to be really focused on investing in customer-facing roles, commercial productivity improvements and alignment, looking at direct spend optimization. This means investing more behind innovation and growth while continuously improving productivity, reducing complexity where returns are diminishing. Ultimately I see meaningful opportunities to sharpen our focus on resource allocation and reallocation, capital deployment, and investment governance, and this will ensure that resources are directed towards the opportunities that have the greatest potential to drive growth and create value. Ultimately, we're trying to make smarter choices to drive growth long term.

Speaker #4: Our returns are diminishing. So, ultimately, I see meaningful opportunities to sharpen our focus on resource allocation and reallocation, capital deployment, and investment governance. This will ensure that resources are directed towards the opportunities that have the greatest potential to drive growth.

Speaker #4: And create value. Ultimately, we're trying to make smarter choices to drive long-term growth.

Speaker #1: All right. Thanks so much. The next question comes from Veronica Trubayova from Citi. Please go ahead.

Jesper Ingildsen: All right. Thanks so much.

Moritz: The next question comes from Veronika Dubajova from Citi. Please go ahead.

Speaker #5: Good morning. Gavin and Anderson, thank you for taking my questions. I have two pleas, and forgive the bluntness. My first one is just on the priorities, Gavin.

Veronika Dubajova: Good morning, Gavin and Anders, and thank you for taking my questions. I have two, please, and forgive the bluntness. My first one is just on the priorities, Gavin. If I look at what you are talking about, it sort of seems very much the same thing as what has been going on at Coloplast, and I think we can all objectively look at it from the outside and for a variety of reasons, there has been very limited earnings growth through the last period in the business. I am just curious, what are you actually going to do differently? Yes, I know there are opportunities in the US. Yes, I know there are opportunities in Wound. Chronic Care is a great business. But just looking at it does not sound to me like there is a huge amount of change.

Speaker #5: If I look at what you're talking about, it sort of seems very much the same thing as what's been going on at Coloplast. And I think we can all objectively look at it from the outside.

Speaker #5: And for a variety of reasons, there has been very limited earnings growth through the last period in the business. So, I'm just curious, what are you actually going to do differently?

Speaker #5: Yes, I know there are opportunities in the US. Yes, I know opportunities in chronic care represent a great business. But just looking at it, it doesn't sound to me like there is a huge amount of change.

Speaker #5: So, maybe you can outline what is going to be different under your leadership versus the predecessor. And then my second question is just on your comments around the review of the long-term guidance.

Veronika Dubajova: Maybe you can outline what is going to be different under your leadership versus your predecessor. My second question is just on Anders, on your comments around the review of the long-term guidance. Can I just get your perspectives at this point in time, whether the risks that you see are more to the sales guide or to the EBIT guide or to both? Thank you so much.

Speaker #5: Can I just get your perspectives at this point in time on whether the risks that you see are more related to the sales side, the EBIT guide, or to both?

Speaker #5: Thank you so much.

Speaker #4: Okay, thank you, Veronica, for the question. And I think, look, pragmatically, I'm 100 days in, and I'm putting out five areas that I think are important for our future.

Gavin Wood: Okay. Thank you, Veronika, for the question. I think, look pragmatically, I am 100 days in and I am putting out five areas that I think are important for our future. Maybe I will give you a little bit more context to it, but I think the real answer is going to come at full-year implications. But if you look at it from a practical standpoint, we want to continue to be strong in the US. So, as Anders said earlier, we are starting to see momentum pick up. We have put new leaders in place to lead a couple of our top businesses in the past year and a half, and that is leading our Chronic Care business and Interventional Urology. We are also making changes in some of our leadership that you heard today on Wound & Tissue Repair, and we are committing to putting more resources in the US.

Speaker #4: And maybe I'll give you a little bit more context to it. But I think the real answer is going to come with full-year implications.

Speaker #4: But if you look at it from a practical standpoint, we want to continue to be strong in the US. So, as Anders said earlier, we're starting to see momentum pick up.

Speaker #4: We've put new leaders in place to lead a couple of our top businesses in the past year and a half, and that's leading our Chronic business and Interventional Urology.

Speaker #4: We're also making changes in some of our leadership, as you heard today, on Wound and Tissue Repair. And we're committing to putting more resources in the US.

Speaker #4: If you look at it from a results perspective, we're starting to see double-digit growth just in the past quarter in the US, so we want to fuel that.

Gavin Wood: If you look at it from a result perspective, we are starting to see double-digit growth just in the past quarter in the US. We want to fuel that. That is going to be like a lean in that you are going to actually see us start to focus a lot more. I think that that is going to be different than the past. The other area is on Wound & Tissue Repair. I think we have been very open that there has been a lot of challenges in the outpatient market. We are actively shifting our resources from outpatient to inpatient, and we have just spent the last couple of months doing a strategic review on this business to make sure that we are much more laser-focused on specific accounts and specific specialties where we are going to start to align our resources to.

Speaker #4: So, that's going to be a lean-in that you're going to actually see us start to focus a lot more on, and I think that that's going to be different than in the past.

Speaker #4: The other area is on wound and tissue repair. I think we've been very open that there have been a lot of challenges in the outpatient market.

Speaker #4: We are actively shifting our resources from outpatient to inpatient, and we've just spent the last couple of months doing a strategic review on this business to make sure that we're much more laser-focused on specific accounts and specific specialties, where we're going to start to align our resources.

Speaker #4: And what we believe is that, in the coming quarters, this will start to drive more growth than we've seen in the past in the biologics area.

Gavin Wood: What we believe is that in the coming quarters, this will start to drive more growth than we have seen in the past in the biologics area. Those are two examples. What I would say is that, as I gain more insights over the next three months and I get to the full year, I will share a little bit more about how these come into play with more defined decisions and implications. I will pass over to Anders for the second question.

Speaker #4: So, those are two examples. What I would say is that as I gain more insights over the next three months, and as I get to the full year, I'll share a little bit more about how these come into play with more defined decisions and implications.

Speaker #4: And I'll pass over to Anders for the second question.

Speaker #2: Yeah, thanks, Gavin. So, the second question, Veronica, is basically that we are, as Gavin just mentioned, assessing a number of things currently in order to move forward.

Anders Lonning-Skovgaard: Yeah. Thanks, Gavin. The second question, Veronika, it is basically that we are, as Gavin just mentioned, assessing a number of things currently in order to move forward. That is back to this whole resource allocation as one of the key ones. In the next period of time, we will continue the assessment of the organization, and then we will conclude when we have the full year announcement in November.

Speaker #2: And that goes back to this whole resource allocation as one of the key factors. In the next period of time, we will continue the assessment of the organization, and then we will conclude when we have the full-year announcement in November.

Speaker #5: Okay, but I guess I appreciate that. But is the concern that you have more about the growth targets, or is it that you want to allocate more resources to the business and so maybe it's about the EBIT targets, or is it both?

Veronika Dubajova: Okay. I appreciate that, but I guess the concern that you have more about the growth targets or is it that you want to allocate more resources to the business and so maybe it is about the EBIT targets or is it both?

Speaker #5: I guess I'm just trying to understand. I know it's very preliminary, but I'm just trying to understand where you see the risks to the strategy that was outlined about a year ago.

Veronika Dubajova: I guess I am just trying to understand. I know it is very preliminary, but just trying to understand where you see the risks to the strategy that was outlined about a year ago.

Speaker #2: Yeah, so that's what we're currently assessing. Veronica, as Gavin has mentioned a couple of times now, we have shared Gavin's 100-days reflections, and now we move into the next phase where we will evaluate what are the things we will do in a different way.

Anders Lonning-Skovgaard: Yeah. So that is what we are currently assessing, Veronika, as Gavin Wood has mentioned a couple of times now. We have shared Gavin Wood's 100 days reflections, and now we move into the next phase, where we will evaluate what are the things we will do in a different way, and we will conclude on that when we announce our full year results.

Speaker #2: And we will conclude on that when we announce our full-year results.

Speaker #5: Okay, I had to try. Thanks, guys.

Veronika Dubajova: Okay. I had to try. Thanks, guys.

Speaker #4: Thank you.

Gavin Wood: Thank you.

Moritz: Then the next question comes from Julien Dormois from Jefferies. Please go ahead.

Speaker #1: The next question comes from Julian Dormeaux from Jefferies. Please go ahead.

Speaker #6: Hi. Good morning, Gavin. Good morning, Anders. Thanks for taking my questions. And I will give you a break on the midterm guidance. First question is a more short-term one.

Julien Dormois: Hi. Good morning, Gavin. Good morning, Anders. Thanks for taking my questions. I would give you a break on the midterm guidance. First question is a more short-term one, and it relates to Kerecis. I think you have indicated in the release that you expect to bring back profitable growth in that business. I was just curious as to how long it would take. Is it a matter of a few quarters, or are we more talking in years to bring that business back to a more decent profitability level? That would be question number one. The second question also relates to the five priorities that you have highlighted, Gavin, following your 100-day review.

Speaker #6: And it relates to Carisis. I think you have indicated in the release that you expect to bring back profitable growth in that business. So I was just curious as to how long that would take.

Speaker #6: Is it a matter of a few quarters, or are we talking about years to bring that business back to a more decent profitability level?

Speaker #6: So, that would be question number one. And the second question also relates to the five priorities that you have highlighted, Gavin. Following your 100-day review, you mentioned, obviously, great opportunities in the US focusing on chronic care and men's health.

Julien Dormois: You mentioned obviously great opportunities in the US focusing on Chronic Care, Men's Health, but I could not find any, let's say, commitments on the Wound & Tissue Repair, while I think previously we were talking about this business possibly being a priority because you are obviously punching way below your league in that business in the US, apart from Kerecis. Just curious whether that is more something that we should think more about the next strategic period and then maybe not for that one specifically. Thank you.

Speaker #6: But I could not find any commitments on the wound and tissue repair, while I think previously we were talking about this business possibly being a priority, because you are obviously punching way below your league in that business in the US, apart from Carisis.

Speaker #6: So, just curious whether that's something we should think more about for the next strategic period, and maybe not for this one specifically. Thank you.

Speaker #4: Okay, so I'll take your first question. And maybe let me give you just a little bit of background. So the answer is we believe that sometime around Q2 '26 or '27 is when we start to see some true recovery.

Gavin Wood: Okay. I will take your first question. Maybe let me give you just a little bit of background. The answer is we believe that sometime around Q2 2026/2027 is when we start to see some true recovery. Why that timeframe? Because if you look at the outpatient and when reimbursement was lost, we plan to see a kind of the bleed out where we are comparing apples to apples beginning in Q2. That is when we are going to be able to compare just our focus on inpatient versus our previous focus on inpatient the year before. I think that, if I give more context, our conviction, and this answers a little bit of your second question too, our conviction in the long-term Biologics opportunity remains intact.

Speaker #4: And why that timeframe? Because if you look at the outpatient, and when reimbursement was lost, we planned to see kind of the bleed-out, where we're comparing apples to apples beginning in Q2.

Speaker #4: And that's when we're going to be able to compare just our focus on inpatient versus our previous focus on inpatient the year before. But I think that if I give more context—our conviction, and this answers a little bit of your second question too—our conviction in the long-term biologics opportunity remains intact.

Speaker #4: So when I made a comment before about growth coming in Chronic right now, and seeing really good growth in Interventional Urology, it did not mean I don't believe in Biologics and Advanced Wound Care.

Gavin Wood: When I made a comment before about growth coming in Chronic right now and seeing really good growth in Interventional Urology, it did not mean I don't believe in Biologics and advanced wound care. They're just in different places of evolution right now. Why I believe that the long-term Biologics opportunity remains intact is primarily what we've seen in the US is a reset, which has been challenging, but this has also forced us to learn. We've been able to accelerate our learning curve and provide greater clarity on where customer segments, specialties, and care settings are best positioned to win. What we see ultimately is that the center of gravity in Biologics is going to shift towards hospitals and specialist care settings, and specifically that's going to shift into inpatient.

Speaker #4: They're just in different places of evolution right now. Why I believe that the long-term biologics opportunity remains intact is primarily because of what we've seen in the U.S. as a reset.

Speaker #4: Which has been challenging. But this has also forced us to learn, and we've been able to accelerate our learning curve and provide greater clarity on where customer segments, specialties, and care settings are best positioned to win.

Speaker #4: And so what we see ultimately is that the center of gravity in biologics is going to shift towards hospitals and specialist care settings, and specifically, that's going to shift into inpatient.

Speaker #4: So this is fortunate for us because this is a market where Carisis is particularly well-positioned. We're supported by strong clinical evidence, we have favorable healing outcomes, and clear product differentiation.

Gavin Wood: This is fortunate for us because this is a market where Kerecis is particularly well-positioned. We're supported by strong clinical evidence. We have favorable healing outcomes and clear product differentiation, and a majority of our business sits in this call point. Going forward, we're going to concentrate our resources on priority accounts and specialty-led growth and a clearer focus on deeper penetration by account. I think equally important will be restoring profitable growth in Biologics business through improved field productivity and scaling our clinical expertise. That kind of answers, I think, a little bit of your second question, because I do believe that we're going to see this return to growth.

Speaker #4: And a majority of our business sits in this call point. So, going forward, we're going to concentrate our resources on priority accounts and specialty-led growth, with a clearer focus on deeper penetration by account.

Speaker #4: And I think equally important will be restoring profitable growth in the biologics business through improved field productivity and scaling our clinical expertise. So that kind of answers, I think, a little bit of your second question, because I do believe that we're going to see this return to growth.

Speaker #4: And then we're doing, in parallel, a review on the advanced wound dressings to really determine how to win in the US, because that is an area that I agree we've been a little bit softer.

Gavin Wood: Then we're doing in parallel a review on the advanced wound dressings to really determine how to win in the US, because that is an area that I agree we've been a little bit softer. Now we're going to lean in and put the resources behind it to determine how to win in the US. I'll come back at full year and share more on that then.

Speaker #4: And now we're going to lean in and put the resources behind it to determine how to win in the US. I'll come back at full year and share more on that then.

Julien Dormois: Very helpful. Thank you.

Speaker #6: Helpful. Thank you.

Speaker #1: The next question comes from Anna Radcliffe from Bank of America. Please go ahead.

Moritz: Then the next question comes from Anna Ratcliffe from Bank of America. Please go ahead.

Speaker #5: Hi, thank you for taking the questions. I wanted to follow up on the wound questions. It seems like contract manufacturing drove a lot of the strength in the quarter.

Anna Ratcliffe: Hi. Thank you for taking the questions. I wanted to pile on on the wound questions. It seems like contract manufacturing drove a lot of the strength in the quarter. I saw you called out the phasing in Germany and the Middle East. Would you be able to give us any more detail there, how much of that was maybe catch up from Q2 disruption, and how do you see that playing out in Q4 and into the start of next year? Then maybe to follow up on Aisha and Aanchal's interview questions, that product has been a big part of driving Interventional Urology growth to high single digits from mid-single digits. So maybe with the approval push out, should we think about next year maybe as more of a mid-single digit year ahead of the approval?

Speaker #5: I saw you call out the phasing in Germany and the Middle East. Would you be able to give us any more detail there? How much of that was maybe catch-up from Q2 disruption?

Speaker #5: And how do you see that playing out in Q4 and into the start of next year? And then maybe to follow up on Aisha and Anjal's interview questions, that product had been a big part of driving interventional urology growth to high single digits from mid-single digits.

Speaker #5: So, maybe with the approval push-out, should we think about next year as more of a mid-single-digit year ahead of the approval? Or are there any other smaller catalysts or product launches that we should be thinking about that can support organic growth for next year in this division?

Anna Ratcliffe: Are there any other smaller catalysts or product launches that we should be thinking about that can support organic growth for next year in this division? Thank you again for taking the questions.

Speaker #5: Thank you again for taking the questions.

Speaker #2: Yeah, so thanks a lot, Anna. Let me start with the first one around our dressings growth in Q3. You're right, we saw very strong contribution from our contract manufacturing in the quarter.

Anders Lonning-Skovgaard: Yeah. So thanks a lot, and let me start with the first one around our dressings growth in Q3. You are right, we saw very strong contribution from our contract manufacturing in the quarter. And we actually expect that to some extent continue into Q4, but not at the same level. We also had the good growth contribution in Germany, but that is more Q3, Q4 facing. But then on the other hand, next quarter, we did a big recall last year in China of around DKK 60 million, as I recall. So we will also see a strong Q4 for our dressings business. But yes, there is quite a bit of underlying movements for our business. Good news, actually, so far this year is also our US. US dressings is actually contributing to our growth as well. Then question number two, in terms of the Urology.

Speaker #2: And we actually expect that to some extent to continue into Q4, but not at the same level. We also had good growth contribution in Germany, but that's more a Q3/Q4 phasing.

Speaker #2: But then, on the other hand, next quarter we will— we did a big recall last year in China, of around 60 million, as I recall.

Speaker #2: So, we will also see a strong Q4 for our dressings business. But yes, there is quite a bit of underlying movement in our business.

Speaker #2: Good news actually, so far this year our US dressings are also contributing to our growth as well. Then, question number two: In terms of urology, as we have said a couple of times throughout the call, our urology business this year is off to a better start than we thought when we announced our impact for our strategy last year.

Anders Lonning-Skovgaard: As we said a couple of times throughout the call, our Urology business this year is off to a better start than we thought when we announced our Impact4 strategy last year. We are already sitting with high single-digit growth, in particular driven by Men's Health. We expect this to continue basically due to the launch of our new penile implant, the Titan Prime. We expect to launch a new solution within the next couple of months. Next year we will also see contribution to organic growth from the acquisition we did back in February. The Uromedica acquisition will also contribute to growth. We are optimistic that our Urology franchise will continue to drive high single-digit growth, as we have also said in the Impact4 strategy. Okay.

Speaker #2: So, we are already seeing high single-digit growth, particularly driven by men's health. We expect this to continue, basically due to the launch of our new penile implant, the Titan Prime.

Speaker #2: And we expect to launch a new solution within the next couple of months. Then, next year, we will also see a contribution to organic growth from the acquisition we did back in February.

Speaker #2: So the Euromedica acquisition will also contribute to growth. So we are optimistic that our urology franchise will continue to drive high single-digit growth, as we have also said in the Impact for strategy.

Speaker #2: Okay.

Speaker #1: Good. Then we have one more question coming from Graham from UBS. Please go ahead.

Moritz: Good. Then we have one more question coming from Graham from UBS. Please go ahead.

Speaker #6: Morning, thanks, guys. Great. Just wanted to ask one, Gavin, on the timing of some of these changes in terms of priorities. So, in terms of investing in innovation, I'm presuming that's a fairly slow burn, right?

[Analyst] (UBS): Morning. Thanks, guys. Could I just ask one, Gavin, on the timing of some of these changes in terms of priorities. In terms of investing in innovation, presumably that's a fairly slow burn, right? You can't just double R&D spend or something overnight. Is that something you intend to do through the period over the midterm, or is it something you could ramp up relatively quickly? The offset to that is, in terms of the efficiencies, are those things that are relatively low-hanging fruit in your view, and something you can kind of harvest a little bit quicker as well? Just to get an understanding of those kind of puts and takes in terms of timing, please.

Speaker #6: You can't just double R&D spend or something overnight. So is that something you're intending to do through the period over the midterm, or is it something you could ramp up relatively quickly?

Speaker #6: And then the offset to that is, in terms of things that are relatively low-hanging fruit in your view, is there something you can kind of harvest a little bit quicker as well?

Speaker #6: Just to get an understanding, are those kinds of puts and takes in terms of timing, please?

Speaker #4: So, to answer your first question, it will be through the midterm. As I stated before, we recognize that there's an opportunity to invest more in R&D and in innovation.

Gavin Wood: To answer your first question, it will be through the midterm. As I stated before, we recognize that there's an opportunity to invest more in R&D and in innovation, and it needs to be meaningful innovation. But you are right, it takes time to do this. What we are committing to is when you look at the Impact4 timeline, we actually have very solid innovation up until 2029. We're looking like this commitment is now to start the reinvestment into innovation for that time period and beyond. That is where we're going to start to give you better line of sight as we go forward on what investment choices we're going to make on innovation. But it's really putting the stake in the ground to say that we're going to start to invest for the future. But you are right, it takes time.

Speaker #4: And it needs to be meaningful innovation. But you are right, it takes time to do this. What we are committing to is, when you look at the impact for the timeline, we actually have very solid innovation up until 2029.

Speaker #4: So, we're looking at this commitment now—to start the reinvestment into innovation for that time period and beyond. And that is where we're going to start to give you better line of sight, as we go forward, on what investment choices we're going to make on innovation.

Speaker #4: But it's really putting a stake in the ground to say that we're going to start investing for the future. But you are right.

Speaker #4: It takes time.

Speaker #6: And maybe just on the point around US expansion, in terms of prioritizing that and, to Veronica's point, obviously there has been investment in the past.

[Analyst] (UBS): And maybe just on the point around US expansion in terms of prioritizing that, and to Veronika Dubajova's point, obviously there has been investment in the past, but you have come in with a fresh look. What are the things that you see as standout opportunities to really move the dial in the near term there?

Speaker #6: But you've come in with a fresh look. What are the things that you see as standout opportunities to really move the dial in the near term there?

Speaker #4: I think that, short term, the biggest thing is commercial execution, always. It's really looking at your front line. So you come into a company and you're new, and you're starting to look around.

Gavin Wood: I think that short term, the biggest is commercial execution always. It is really looking at your front line. You come into a company, and you are new, and you start to look around, and you start to see pockets of growth. Really, I think, the best way to answer this is when you took a look earlier at the first slide, 25% of our business comes from the US, but it represents the largest market for opportunity in med tech globally. That is for every company. We are sitting in position number 3 in Ostomy Care between 15% and 20%. We still have a lot of runway in Continence Care, we are 5% to 10% in US Biologics.

Speaker #4: And when you start to see pockets of growth—and really, I think the best way to answer this is when you took a look earlier at the first slide.

Speaker #4: Twenty-five percent of our business comes from the US, but it represents the largest market for opportunity in med tech globally. That's true for every company. We're sitting in position number three in ostomy care, with a market share between 15% and 20%.

Speaker #4: And we still have a lot of runway in continence care. We're at 5 to 10 percent in U.S. biologics. So you look at that naturally, and you start to say, okay, let's start to invest more in our commercial execution, our commercial capabilities.

Gavin Wood: You look at that naturally and you start to say, "Okay, let us start to invest more in our commercial execution, our commercial capabilities, because the runway, if we start to make those investments, we believe with our superior products, we can win." That will be the short term.

Speaker #4: Because the runway, if we start to make those investments, we believe with our superior products we can win. And that will be the short term.

Speaker #6: Perfect. Thank you very much.

[Analyst] (UBS): Perfect. Thank you very much.

Speaker #4: Okay, thank you very much. Well, thanks, everyone. We appreciate you joining today. That's all the time we have for now, and we're grateful for your questions.

Gavin Wood: Okay. Thank you very much.

Moritz: Ladies and gentlemen.

Gavin Wood: Well, thanks everyone. We appreciate you joining today, and that's all the time we have for now, and we are grateful for your questions. Thank you.

Speaker #4: Thank you.

Moritz: Ladies and gentlemen, the conference is now over. Thank you for joining, and have a pleasant day. Goodbye.

Browse all earnings call transcripts