Operator: Welcome to Vimian Group Q3 Report 2026 presentation. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, CEO Alireza Tajbakhsh and CFO Carl-Johan Zetterberg Boudrie. Please go ahead.
Ali Tajbakhsh: Good morning, and welcome to Vimian's third quarter earnings call 2026. I am Ali Tajbakhsh, Group CEO, and will together with our CFO, Carl-Johan Zetterberg Boudrie, present our results for the third quarter. We continue to deliver strong performance with strong revenue and earnings growth in the quarter. Organic growth remains at double digits, which is well ahead of overall animal health market. Our cash flow improved significantly compared to the previous quarter, with operational cash conversion of 71%. We also see our M&A pipeline progressing in the right direction, and after the end of the quarter, we entered soft tissue surgery through the acquisition of Norfolk Medical Products in US. On the management side, we finalized the recruitment of our new Head of Specialty Pharma, Hans Skarplöth, bringing on board another highly experienced leader to the team, and promoted long-term team member Andrea Tidholm as Head of M&A.
Ali Tajbakhsh: Our business continues to outperform the overall animal health market, which reflects the strength of our strategy, which focus on attractive market niches, but also strong brand portfolio and disciplined execution. Looking at the numbers more specifically, we report 15% revenue growth and reached EUR 120.3 million in revenues in the third quarter. Organic growth was 11%, with strong momentum across all segments, 3% contribution positions, and 1% positive impact from currency movements. Adjusted EBITA grew 14% to EUR 29.2 million, with strong growth across all four segments. Margin was 24.3%. Moving on to Specialty Pharma. Specialty Pharma's underlying business momentum remains strong, with 7% organic growth driven by double-digit growth in the therapeutic areas allergy, dermatology, and specialty pharmaceuticals. As previously communicated, the therapeutic area specialized nutrition was impacted in the third quarter by a strong prior year comparison.
Ali Tajbakhsh: Adjusting for the impact from the sales campaign in Specialty Pharma, organic growth in Specialty Pharma was 11% in Q3. During the quarter, we launched an updated version of our allergy test platform, Pet Allergy Xplorer, or PAX, that covers an additional 25 allergens. PAX is the most advanced veterinary allergy test, and there are several third-party scientific studies reaffirming the test platform's ability to outperform other tests on the market. We continue to drive strong profitability in Specialty Pharma, and adjusted EBITA grew 12% to EUR 15.2 million, and the adjusted EBITA margin improved to 30.3%. Our MedTech business achieved another quarter of double-digit growth, reaching 15% in Q3. Both the dental and orthopedic business delivered double-digit growth in Q3.
Ali Tajbakhsh: In the dental business, growth was driven by strong commercial execution and deepened penetration of key customer accounts in the US, as well as strong growth in APAC. In the orthopedic business, growth was led by APAC and Europe, and our North American business delivered another quarter of growth in unchanged market conditions. We continue to drive education in the quarter and trained 1,300 veterinarians in the quarter across our dental and orthopedic businesses. Adjusted EBITA grew 20% to EUR 10.5 million, and the adjusted EBITA margin improved to 24.4%, driven by strong growth and improved gross margin in our dental business. I am pleased with the development of our MedTech business, and the new management team continues to review the business to address operational improvements. In our Veterinary Services business, the momentum remains strong with 10% organic growth and 12,400 member clinics at the end of the quarter.
Ali Tajbakhsh: During the quarter, we officially entered two new countries, which we talked about previously, Japan and Portugal, receiving positive feedback from the veterinary community. Adjusted EBITA grew 28% to EUR 5.9 million, and the adjusted EBITA margin improved to 30.5%, including positive effects in the quarter from mix and our strategic partner agreements. Our Diagnostics business delivered 13% organic growth in the quarter, driven by extraction and PCR test sales in the livestock business. Adjusted EBITA grew to EUR 0.5 million. The adjusted EBITA margin was 7.2%, including our investment to diversify companion animal Diagnostics. Looking at our M&A activities, we have completed five acquisitions year to date and continue to have an active pipeline covering both large new platform acquisition as well as smaller bolt-ons. Earlier this week, we signed the acquisition of Norfolk Medical Products, a leading niche provider with soft tissue surgery.
Ali Tajbakhsh: Norfolk is a US-based business that develops, manufactures, and sells specialized implants and consumables, including, for example, a well-renowned urinary bypass implant for cats and dogs. The acquisition adds annual revenues of around $6.9 million and expands our MedTech offering into a new fast-growing niche. Norfolk's portfolio is complementary to our existing surgical offering, and the operating model are well-aligned with focus on close relationships with the specialist community and education to unlock market growth. Profile of the customer base is also largely the same as ours. Many orthopedic clinics also do soft tissue surgery, and Norfolk has currently a very small sales force. So we see good opportunities to grow the business by leveraging our MedTech sales force across the globe. We continue to deliver our sustainability agenda focused on animals, people, and planet integrated into the core of our operations.
Ali Tajbakhsh: In the quarter, we completed our employee experience survey with continued high engagement scores. We also held our first global leader conference with 100 leaders from around the world to strengthen the cross-company culture and collaboration across the group. With that, I will hand over to Carl-Johan for deeper insights into the financials.
Carl-Johan Zetterberg Boudrie: Thank you very much, Ali, and good morning, everyone. As mentioned, I will give you a more detailed view on the financial development in Q3. Adjusted EBITDA in Q3 was €29.2 million, an increase of 14%, corresponding to an adjusted EBITDA margin of 24.3%. As we have previously stated, we foresee a more stable margin development for the full year 2026 versus 2025, driven by our investments to drive growth in the MedTech segment. The slightly lower margin in Q3, specifically compared to the same period last year, is primarily a result of higher central costs. Central costs amounted to -€3.0 million in the quarter, an increase from -€1.8 million last year. The increase is mainly a result of expenses related to our long-term incentive programs, in total €0.6 million in the quarter.
Carl-Johan Zetterberg Boudrie: These are non-cash IFRS expenses that will recur for the duration of the three-year programs. We report an operating profit of €20.5 million, a 17% increase from last year's result of €17.5 million. Items affecting comparability were similar to the same period last year and totaled -€2.1 million, mainly attributed to acquisition costs in MedTech and Veterinary Services. Net financial items amounted to -€6.9 million and consisted of three main parts. One, financing expenses of -€4.2 million, with an average interest rate of 4.0% during the quarter, partly offset by interest income of €0.8 million. Secondly, a quarterly discounting impact of -€0.9 million and negative impact of -€2.2 million from probability adjustments related to contingent considerations, mainly from new acquisitions. Lastly, a negative impact of -€0.5 million from exchange rate effects on the revaluation of debt.
Carl-Johan Zetterberg Boudrie: Income tax expense for the quarter was -€4.3 million at an effective tax rate of 31%. In the quarter, the tax expense as a percentage of pre-tax profit was negatively affected by probability adjustments related to contingent considerations and other non-deductible expenses. In total, this resulted in a profit for the period of €9.3 million, with an earnings per share of €0.02 for the quarter. Cash flow from operating activities reached €22.6 million, corresponding to cash conversion defined as operating cash flow in relation to EBITDA of 71% for Q3. Net working capital amounted to €116.4 million at the end of the quarter, equal to 25% of revenue, and an increase from €114.1 million at the end of Q2, which equaled 26% of revenue. Cash flow from investing activities amounted to -€21.0 million, primarily consisting of acquisition and earn-out payments.
Carl-Johan Zetterberg Boudrie: Capital expenditure amounted to EUR 4.1 million, which is 3% of total revenue, with EUR 2.9 million related to investments in internal R&D and software development, and investments in property, plant, and equipment amounted to EUR 1.2 million. Cash flow from financing activities totaled €2.4 million, mainly from proceeds from borrowings. At the end of the quarter, net debt amounted to EUR 262.4 million, which is down from EUR 273.7 million at the end of Q2. Cash and cash equivalents amounted to EUR 55.6 million, an increase compared to EUR 51.6 million at the end of June. External lending was EUR 263.1 million at the end of Q3. This resulted in a leverage at the end of the quarter equal to 2.0x, a decrease from 2.1x at the end of Q2. We continue to be well capitalized with an ability to execute on our strengthened acquisition pipeline.
Carl-Johan Zetterberg Boudrie: With this financial review, I hand the word back to Ali for concluding remarks.
Ali Tajbakhsh: Thank you very much, Carl-Johan. We delivered continued strong performance in Q3 with strong total revenue and earnings growth and double-digit organic growth. We closed five acquisitions year to date, and after the end of the quarter, we entered soft tissue surgery through the acquisition of Norfolk in the US. Overall, we have clear progress across our strategic initiatives and are well positioned to continue delivering sustainable and volume-led growth combined with value-creative M&A. on 24 November, we will host Vimian's first ever Capital Markets Day in Stockholm to provide a strategic deep dive and describe the roadmap to our 2030 financial targets. Thank you.
Operator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Adela Dashian from Jefferies. Please go ahead.
Adela Dashian: Good morning, gentlemen. First question on North American Orthopedics, another quarter of growth. Do you feel like that business has now completed its turnaround? What sort of growth rates should we expect going forward?
Ali Tajbakhsh: Good morning. Yes, we are happy with the development of our US orthopedic business with the second quarter of growth in unchanged market conditions. As a consequence of the unchanged market conditions, we believe the current growth rate is what we expect in short-term future. We are happy to see that the changes we implemented earlier this year have shown positive effect, and we are confident that the existing new management team will continue to drive operational improvements to maintain and improve our momentum.
Adela Dashian: That is nice to hear. Then on Diagnostics, especially the margins, second quarter in a row now single-digit margins. Is this the level that we should anticipate with the investments that you are making in the companion animal health?
Carl-Johan Zetterberg Boudrie: Good morning, Adela. Diagnostics is two parts of the business. One is livestock, which structurally has a lower margin than the overall margin for Vimian, and the second part is companion. To your point, we are investing in companion animal, but companion has a structurally better margin than our livestock business and more a margin that is in line with, you could say, the group overall margin. In the quarter, specifically, and also in the second quarter, we have had certain integration costs from the acquisition of I-Vet, which is part of our companion animal part of the business. Also some investments to drive strong growth in the companion animal part of our Diagnostics business. But we foresee in 2027 and onwards that margins will pick up in the Diagnostic segments as our companion animal business starts to scale.
Adela Dashian: Okay, that is interesting. So maybe even to levels that we have not seen in more modern times with the Diagnostics business, if we exclude the extraordinary levels during the pandemic.
Carl-Johan Zetterberg Boudrie: I would say you can expect, you could say, continuous improvement of the margins as the companion animal business starts to scale and becomes a larger part of our Diagnostics business.
Adela Dashian: Okay, I see. On Specialty Pharma, appreciate the commentary there of what growth was, including the campaign timing. I just want to confirm that that is now fully behind us and there is nothing additional in Q4.
Ali Tajbakhsh: The national sales campaign that we conducted this year, mainly in Q2, and that was mainly conducted in Q3 of last year, is something that is behind us for 2026. So there is no comparative disturbances, so to say, in Q4 relating to the national sales campaign.
Adela Dashian: Yeah. All right. Lastly, on leverage and M&A. It declined before the Norfolk acquisition. How do you view your M&A pipeline at this point, and how much additional capacity remains within your preferred leverage range?
Carl-Johan Zetterberg Boudrie: So, as you say, we have leverage of 2.0x. We are well below our long-term financial target. We have good and solid financing capabilities in place. From a leverage and financing perspective, we are confident that there is significant headroom for us to drive further M&A. In the pipeline, we see interesting opportunities both from a bolt-on perspective, but also from certain larger interesting M&A opportunities.
Adela Dashian: Okay, great. Thanks, Carl-Johan and Ali.
Ali Tajbakhsh: Thank you.
Operator: The next question comes from Adrian Elmlund from Nordea. Please go ahead.
Adrian Elmlund: Hi, guys. Good morning. A few questions from me, please. I will take them one by one. First off, the dental business in the MedTech vertical seems really strong. Could you give any more color on this? How much can we extrapolate, if you will?
Ali Tajbakhsh: No, we see continued strong momentum in our dental business, which comes from strong revenue growth, in combination with slightly better gross margin in general. I think the dental space, as we talked about before as well, is an interesting and growing field. I think we are well positioned to capture that growth, the strong team in place.
Adrian Elmlund: Right. Okay. Regarding the acquisition yesterday, could you tell us anything more about margins, multiples paid, how you think about that, and the growth profile?
Ali Tajbakhsh: Yeah. I think the Norfolk business currently has a slightly lower margin profile than the Vimian average. As I talked about the synergistic opportunities leveraging the Vimian network and the MedTech or orthopedic sales force, we believe that we can bring that business into higher margins over time.
Ali Tajbakhsh: The company has delivered strong growth. It is a highly attractive niche, and we expect that to continue as part of Vimian. Multiple-wise, I would say that it is in line with what we historically have paid for businesses. We expect that multiples to travel down as we realize synergies.
Adrian Elmlund: Right. Okay. Last question regarding Veterinary Services. The performance here in the US seems to be strong, right? Could you give us any color on why it is strong in the US now, and seemingly when the veterinary market in the US is reportedly rather soft?
Ali Tajbakhsh: I think Veterinary Services has shown for a long period of time that it is an attractive and consistent business that has delivered value for the independent vet community and our partners. US is a strong market for us, where we operate under two strong brands, being VerticalVet and VVM Grow.
Ali Tajbakhsh: I think the service offering, the team we have, and the support the clinic community in the US needs is right up our alley in terms of the services we are offering, and we see continued momentum across the entire world, but in particular US.
Adrian Elmlund: Okay. Thank you. That was all from me.
Operator: The next question comes from Arvid Necander from DNB Carnegie. Please go ahead.
Arvid Necander: Good morning, and thanks for taking my questions. First on Specialty Pharma and on the national sales campaigns we have seen over the past few years, how should we think about their future contribution? Are you targeting campaigns of a similar magnitude going forward, or is the ambition to further expand their scale? Secondly on Veterinary Services. Margins have obviously improved through the year. Directionally, how should we think about the margin trajectory going into Q4 and 2027? Thanks. I will start there.
Ali Tajbakhsh: Morning. If we start with Specialty Pharma and US specialized nutrition, and maybe take one step back. In that business, we have successfully grown that business over time with expanding our customer network or our customer base, and also expanding our product base. That is something that we will continue to drive in 2027 and onwards as well, and making sure that, as I said, expanding our customer base, expanding our product portfolio, taking further shelf space with our customers. The national sales program that we now ran for three consecutive years, it is a testament to our strong customer relationship with the large retailers in the US. That is, of course, something that we will focus on being able to be part of also for next year and going forward. Just on your second question that related to Veterinary Services on the right end margin.
Carl-Johan Zetterberg Boudrie: In Veterinary Services, and as Ollie mentioned, in Q3, we had positive effects in the quarter from a positive mix of high margin services, including partner agreements. Looking at Q4 for Veterinary Services, I would say it is fair to assume that the margins for Vet Services will be on the year-to-date average margin that we have seen for Veterinary Services. So around the 28.5% to 29% mark.
Arvid Necander: Perfect. That is very helpful. Just the last one, if I may. On Norfolk, how should we view this? Is this a platform that as you see it, that would enable you to do further acquisitions within soft tissue surgery similar to what we have seen in iM3, and do you have targets within this in your pipeline?
Ali Tajbakhsh: Yeah, I think Norfolk is one of the leading players when it comes to soft tissue surgery. It is a complementary business that strengthens our MedTech offering. We look at opportunities across the board. We see a lot of things across all four segments when it comes to M&A acquisitions. But I think soft tissue surgery and Norfolk in particular complements the business we have with a strong product portfolio that can leverage our sales team in orthopedic business to drive global growth.
Arvid Necander: Okay. I will jump back in queue. Thank you.
Operator: The next question comes from Kavya Deshpande from UBS. Please go ahead.
Kavya Deshpande: Morning. Thanks for taking my questions. My first one, sorry, just to come back on North America, also in particular. You previously said to continue to expect low single-digit growth for the remainder of the year. Just to clarify, that is still the expectation, right? If I could ask again, should we be thinking of an improvement in the trajectory next year, especially we can see the market might be starting to inflect there. My second question was just around Spec Pharma. Just to clarify again, so there was no contribution at all from the sales campaign in Q2 to Q3, just in terms of timing and any spillover effect that was fully contained to Q2. Thank you.
Ali Tajbakhsh: Good morning. On the MedTech questions, US Orthopedics was low single digit in unchanged market condition, and we do not expect the market condition to change in Q4. So we would expect that the business continue to show growth in that range. For the growth to accelerate to a high single digit, double digit mark in the US orthopedics specifically, the market would need to change in 2027 and onwards. But yes, to confirm, we expect similar growth in Q4. For Spec Pharma and the national sales campaign in the second of course, last year and Q3 this year. No, the majority of everything we delivered in the national sales program was done in Q2 this year. That is why we have seen, you could say, comparative impact in Q3.
Ali Tajbakhsh: I would say it is more reasonable to look at the year-to-date number for Specialty Pharma, where that timing effect is washed out and we see 11% organic growth for Specialty Pharma in the first three quarters of this year.
Kavya Deshpande: Got it. Thank you. If I could just ask a follow-up quickly on the MedTech business. Would you be able to give us a sense of where the Europe APAC also margins are? Because we know dental is dilutive and obviously there is very strong performance in MedTech this quarter. Just wondering the drivers for why perhaps that did not fully drop through to margins.
Ali Tajbakhsh: From a MedTech perspective, as we stated earlier this year, we have done investments into the organization to strengthen the team, and that from a, if you call it short term perspective, is impacting the margin. But over time, we believe that the margin, of course, will improve. But as we stated before, the investments we made to strengthen the commercial performance in orthopedics, we do foresee a slight margin decline for MedTech from a full year perspective.
Kavya Deshpande: Right. Thank you.
Operator: The next question comes from Jonathan Unwin from Barclays. Please go ahead.
Jonathon Unwin: Hi. Good morning. Thank you for taking my questions. I am sorry if I have missed this, but could you please just quantify or help us understand the contribution in Veterinary Services from strategic partnerships in the quarter?
Jonathon Unwin: Obviously, the margin was stronger, and I believe there is also some contribution to growth. So if you could help us to understand what the benefit of that was and how that compares to a typical quarter, that would be helpful. Thank you.
Ali Tajbakhsh: If you look at the contribution from, I would say it is a contribution mainly from a shift towards higher margin services. That is the main way you should think about it. We have seen some positive effects in the quarter in terms of the mix of high margin services. From a growth momentum, it is continued positive momentum. We see that Veterinary Services are in a double digit growth momentum as it has been for many, many quarters. From a margin perspective, as previously mentioned, think about Veterinary Services in Q4, maybe year to date perspective, or full year perspective as margin being around the year to date number that we see for Veterinary Services.
Jonathon Unwin: Thank you.
Operator: The next question comes from Sten Gustafsson from ABG Sundal Collier. Please go ahead.
Sten Gustafsson: Good morning, everyone. I have a follow-up question on the Vet Services. Looking at the organic growth rate, would it be possible to break it down into some sort of same store growth and also expansion growth? Meaning how much of the growth is driven by new members and what is the underlying run rate among the existing members? Would you be able to break that down for us?
Ali Tajbakhsh: Yeah. Normally the growth rate of existing members is fairly stable. If you look at the new members, it normally takes some time for them to be up to speed with the full service offering we have in the portfolio. If you look at the specific two markets we entered in Japan and Portugal, we went live end of the quarter. It has very limited effect on growth rates from the Veterinary Services business in the quarter specifically. I think normally the longer you have been a member in the Veterinary Services segment, the more services are being used as a consequence of knowing the impact of those and knowing us much better. I would say it is a very sticky and loyal customer base.
Sten Gustafsson: Okay. But of the 10% organic growth rate, would you say new members had, I do not know, 3%, 4% or less?
Carl-Johan Zetterberg Boudrie: On that then, we have not disclosed the specifics of how much different you could say services or customer groups are contributing to the growth. To Ali's point, if you look in a specific quarter, a very large share of the growth is attributed, you could say to historical members and the new members that we acquire are a great base for future growth as they become more purchasing members, and we add additional services to those new members.
Sten Gustafsson: Okay, thank you. Another way to look at it, I guess, would be also to see you have 12,400 members in, I guess, is it 10 markets or something like that? What the total number of potential members in the markets where you are today, some sort of penetration ratio of where you are. Is that something you would be willing to share?
Ali Tajbakhsh: I think if you look at the current member base, the penetration on the different markets, it is 14 markets. But if you look at the penetration in the market, it looks very different depending on how long we have been operating in the market. If you look at, for example, as you know, VetFamily started as a Nordic or a Northern European procurement organization. So in the Nordic or the Northern European markets, our penetration is much higher than more recent markets we have entered. I think there is still a wide space and growth opportunities in all 14 of the markets we are in. But how big that penetration is very different from market to market. On average, it would not be relevant to look at.
Carl-Johan Zetterberg Boudrie: Secondly, maybe to add to that, it is also our Veterinary Services team are very diligent on the type of members that they include. So if we take US specifically, where, of course, that market is huge in terms of the number of clinics, but the team is very diligent in making sure that we have the right clinics with high compliance that leverage the Veterinary Services, you could say partnership and framework in the right way. So just adding members is not the only focus. It is adding the right members that is a key focus.
Sten Gustafsson: Perfect. Thank you very much.
Operator: As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Adrian Elmlund from Nordea. Please go ahead.
Adrian Elmlund: Hi again. Just a quick follow-up question here regarding the multiples paid for the acquisition. I think you said that you pay in line with the historical average, right? Could you perhaps give us a range? What numbers are we talking about here?
Ali Tajbakhsh: Our historical multiple have been around the 9x.
Adrian Elmlund: For EBITDA?
Ali Tajbakhsh: Yeah.
Adrian Elmlund: Okay. Very good. Thank you.
Operator: There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Ali Tajbakhsh: Thank you for joining our Q3 earnings call and all the relevant questions. We are happy with the quarter where we delivered continued strong performance with strong total revenue and earnings growth on double-digit organic growth well ahead of the market. I think we are well-positioned in terms of product services and have a strong team in place to continue our growth journey ahead. Thank you very much.
Operator: The host has ended this call. Goodbye.
