Getinge AB (publ)

Thanks, and welcome, everyone. Thanks for joining the call today.

As mentioned in the intro here, it's me and our CFO, Agneta Palmer, with you today. And in today's conference, we'll go through performance and some of the highlights in the first quarter of 2026 before opening up for a Q&A.

So let's move directly to Page #2, please. And I'd like to start by looking at the development of some of our strategic KPIs.

And as you can see here, it's evident that we continue to clearly track in line with plan to increase the share of sales from recurring revenue and also accelerating the share of sales from higher-margin products like, for example, our ECLS offering, our consumables in Infection Control and our BetaBags within the Sterile Transfer product category. This is all supported, of course, by solid and effective quality processes.

And if we look at the specifics here, you can see that sales from recurring revenue continue to make up 2/3 and high-margin products closing in on about 70% right now. When it comes to quality, the number of field actions in relation to sales has decreased significantly, and we see this positive trend sequentially continue also into the beginning of 2026.

And these improvements, we always act with -- in line with thinking of responsible leverage and an attractive long-term return on invested capital. We can move to Page #3, please.

So if we then look at some of the key takeaways from the first quarter, we managed to beat last year's record quarter and grow top line organically. Net sales grew by 0.8% organically with positive development specifically in Life Science and in Surgical Workflows.

And on the order intake front, we saw an organic increase of 3.9%. When it comes to our adjusted gross and EBITA margins, they were down in the quarter, mainly due to the strong headwind from currency and from tariffs.

And adjusting for the SEK 226 million in currency and tariff headwinds in the quarter, the EBITA margin was about 50 basis points higher than last year's Q1. So the conclusion from that is that the underlying performance in business -- in our business continues to be strong, and it's developing according to the plans, the long-term plans that we have laid out.

We also have a strong cash flow and continue to have a solid financial position. So our financial leverage is at 1.5x and well below the 2.5x EBITDA that we have kind of as an internal threshold.

We can then move over to Page #4 and some of the key events during the quarter. And if we start with our product offering and our customers, I think one situation that is, of course, evolving on a daily basis is the situation in Middle East, and we continue to monitor this closely.

Our first priority is, of course, to tend to our employees in the region and continue to support our customers. And if you look at the region as such, it makes up about 2% of our sales and where Saudi Arabia is half.

And so far, the impact on top line and on cost has been very limited for us. To our Life Science customers, we launched a new steam sterilizer dedicated to larger items for use for labs and for research applications.

And when it comes to the sustainability and quality perspective, I'm very happy to see that we got the CE approval for Cardiohelp II in the quarter, and I'll talk more about that on the coming slide here. In addition to this, we have in our implants business received EU MDR certificate for the Intergard Synergy, which is a vascular graft with an antimicrobial coating, to minimize the risk of infections.

Furthermore, in the quarter, we released our annual report for 2025, including our sustainability statement and the annual report provides a lot of good information on Getinge. So I encourage you to have a look at this if you haven't done so already.

We can then move to Page #5, please. So just wanted to elaborate a moment on the positive news about the CE approval for Cardiohelp II.

And just to remind everybody, this is a market segment where we are already the global market leader within ECLS therapy, thanks to our strong existing portfolio. With the launch of Cardiohelp II now, we become even more relevant for our customers.

And some of the systems' key features are that it's even more lightweight and transportable, meaning that it can be used for both in-hospital and intra-hospital use. It also has an attachable gas blender as an option, which is something that is highly appreciated by our customers.

And from an interface standpoint, we have an interface now that is even easier for users to operate, and it includes also several smart monitoring functionalities for better decision support for our customers. We have initiated a limited market release now in the beginning of the second quarter to a handful of customers and very happy to see how positive the reception from our customers have been for this important product.

The plan now is to do a full CE market release at the beginning of the third quarter. And when it comes to the important U.S.

market, the plan is still to make the submission of the Cardiohelp II system, including our HLS Advanced consumables in the second half of this year. We can then move to Page #6 and talk about the top line for a moment.

So overall, we had a solid top line performance in Life Science and in Surgical Workflows. And when it comes to order intake for the group, we grew 3.9% organically.

The order intake for Acute Care Therapies decreased mainly due to the temporarily high comparative figures in ventilation, where one competitor last year drastically exited the market. So we're very successful in capturing some of that market share.

At the same time, we saw really good growth when it comes to ECLS consumables across the board. And this is, as you know, one of our key categories.

In Life Science, the organic order intake increased in the quarter, for example, because of an anticipated improvement from low levels that we've seen in bioprocessing for quite some time. And this is something that [indiscernible] and it's good to see some of the momentum here.

[ Surgical Workflows ] grew double digit in the quarter, mainly on the back of the strong development across all our product areas, which is also encouraging to see. Net sales there, we had growth of 0.8% organically for Acute Care Therapies.

Organic net sales decreased mainly on the back of last year's consolidation in the ventilation market, that I just mentioned. In Life Science, they had a really strong quarter in terms of deliveries, and they grew organic net sales in all product areas.

BetaBags and Sterile Transfer continues to show significant traction and momentum. In Surgical Workflows, the organic net sales increased primarily thanks to growth in Infection Control consumables within service and within our operating table category.

With that, we can move over to Page #7, and I hand over to you, Agneta for a moment.

Okay. Thank you, Mattias.

So overall, the headwind from tariffs and currency continued in the first quarter. Even so, we managed to hold up margins, thanks to continued pricing and productivity.

Starting with adjusted gross profit for the group, adjusted gross profit amounted to SEK 3.828 billion in the quarter, heavily impacted by currency and tariffs. Adjusted gross margin was down by 0.7 percentage points in total in spite of healthy contribution from price and mix.

If we then look at adjusted EBITA, cleared for currency, adjusted gross profit effect on the EBITA margin was plus 0.3 percentage points, while OpEx adjusted for currency had a negative impact on the margin by about minus 1 percentage points in the quarter. And FX impacted by minus 0.3 percentage points.

So all in all, this resulted in an adjusted EBITA of SEK 824 million and a margin of 11.1%. Let's then move to Page 8, please.

And here, we can clearly state that we remain in a solid financial position. Free cash flow amounted to SEK 842 million in the quarter.

Compared with last year, free cash flow was impacted by improved operating profit and changes in capital. Working capital days continued to be well below 100.

We are now at roughly 90 days. On operating return on invested capital, we are at 11.4% on a rolling 12-month basis, which is well above the cost of capital.

At the end of Q1, net debt decreased to SEK 9.3 billion. If we adjust for pension liabilities, we are now at SEK 7 billion.

This brings us to a leverage of 1.5x adjusted EBITDA, which is well below the 2.5x that we have set as an internal threshold. If we adjust for pension liabilities, leverage is at 1.1x adjusted EBITDA.

Cash amounted to approximately SEK 4 billion at the end of the quarter. So all in all, we can conclude that the financial position continues to be strong.

Let's now move to Page 9, please, and back to you, Mattias.

Okay. Great.

Thank you, Agneta. Just a moment then to focus on the impact from tariffs and FX in the quarter.

So this was, in total, a drag on adjusted EBITA in Q1 of more than SEK 200 million, so SEK 226 million altogether. Tariffs made up just over SEK 100 million of that.

And if we exclude the impact of tariffs and currency, our adjusted EBITA margin in Q1 would have been 12.6%. And there, as you can see, showing then an underlying improvement.

As tariffs were first implemented in Q2 of 2025, then we expect the year-on-year comparison to be a little bit cleaner from Q2 and onwards if tariff levels remain. And that's, of course, something we'll continue to update you on.

We can then move over to Page #10, please. So I want to talk a little bit more about the long term as well.

So zooming out and returning to what we said at the Capital Market update that we had in May of 2024. There, we talked about an adjusted EBITA margin of 16% to 19% by the end of 2028.

And I think we're on a steady path of reaching that despite the headwind factors that we have seen, that we were not aware of when we announced this target. The main drivers which will enable this are growth, mix and productivity.

From a growth perspective, from regulatory approvals and key strategic product launches such as Cardiohelp II in ECMO that we've talked about here and also launching our low-temp sterilization in the U.S., having the sales restrictions removed for Cardiosave in our Intra-Aortic Balloon Pump business. It's just to mention a few factors here.

Specifically, when it comes to Cardiosave, I'm happy to say that we, at the end of last week, got the release for sales in CEE countries in line with the plan for Q2. We also expect that the investment fatigue that we've seen in the pharma industry will improve and some of the decision anxiety that we've seen in the last year will go away here as well.

We will also, in addition to this, get our share of the announced U.S. investments and benefit from the recovery in bioprocessing.

And of course, we will also continue our diligent and successful work with realizing price increases annually. When it comes to mix, we have been successful in our strategic intent to steer our business towards a continued rotation to high-margin products and consumables.

And if possible, we prefer to have products made up of a competent hardware with captive consumables attached to it, similar to what we have in our ECLS offering with Cardiohelp and HLS and in the Sterile Transfer offering with Alpha Ports driving the consumption of BetaBag. Our strong R&D and innovation pipeline is, of course, set to support this.

When it comes to productivity, here, we've already done a lot in different parts of the business, and we are still excited that there remain quite a few opportunities across the business as well. One thing to mention, I think, is the heightened extraordinary quality costs connected to the product uplift of Cardiosave and Cardiohelp that is expected now to go down in the second half of 2026 and that we will be on a lower level in 2027 and '28.

Furthermore, we will, of course, continue with our production excellence effort, where we also have some very tangible measurable benefits and helping us further optimize our supply chain and remain with an overall tight cost control across the company. So this all supports our assessment that our target for 2028 is still within good reach.

Then we can move over to Page 11, please. So for the remainder of 2026, we confirm the financial outlook for 2026.

As we all know, there are some geopolitical uncertainties that we need to navigate. But based on the underlying demand and the dialogue that we have with our customers on a daily basis, our expectation remains for an organic net sales growth in the range of 3% to 5%, adjusted for the phaseout of the surgical perfusion product category.

Surgical Perfusion is still expected to have some net sales in 2026, but declining from about SEK 250 million last year to SEK 50 million this year. We can then move to Page 13, please.

So in terms of summarizing here, the key takeaways from the first quarter. We did achieve organic growth in our top line despite the record quarter last year.

Tariffs and FX continue to be a significant headwind, but our underlying performance is improving. Cash flow in the quarter was really strong in the quarter, and our financial position remains solid as well.

For 2026, we reiterate our guidance for organic net sales growth of 3% to 5% adjusted for the phaseout of the Surgical Perfusion. And when it comes to our priorities for 2026, you've heard them before, we are focused on addressing the remaining challenges when it comes to quality remediation in Acute Care Therapies.

We focus on sustainable productivity improvements and cost consciousness when it comes to navigating the geopolitical uncertainty and also addressing the impact from tariffs. And most importantly, we continue to focus on the work hand-in-hand with our customers, adding value for them and the patients that they serve.

With that said, I open up for questions.

A couple of questions. First of all, with regards to the ventilator headwinds you had here in Q1, if I remember correctly, you had pretty good sales development for ventilators also in Q2 last year.

So is it fair to assume that the headwind will continue into Q2? That would be my first question.

Maybe to some extent, it's not something -- it's not going to be a significant factor, I think, for Q2, but it certainly won't be a big help either.

Okay. Excellent.

My second question is regarding Cardiohelp II. And what kind of gross margin should we assume for that product compared to the existing Cardiohelp product?

Is it going to be accretive? Or is it fairly similar gross margins on those 2 products?

Yes. We don't guide on and disclose gross margin levels on any of our products and Cardiohelp II is no exception.

Generally, though, when we work with product development and new launches, we make sure that the products that form the next generation of any therapy or product category have a better gross margin than the generation that they replace, and Cardiohelp II should be no exception to this.

Okay. And one final, if I may.

You talk about these lower extraordinary quality costs going forward. Could you please sort of quantify those?

I mean we've heard SEK 800 million in the past. And where we are today?

How low those will be going forward?

Yes. Yes, I think you're right.

We said that they peaked at about SEK 800 million in 2024. We saw a small decrease in 2025.

We expect another small decrease this year and then a slightly bigger decrease from 2027 onwards. And the end game here is to at least halve those costs.

First, I want to get some more color on the composition of the ACT decline. I mean, obviously, you talked about ventilators, but you're also talking about Cardiac Assist, et cetera.

And I think last quarter, you said that the demand for Cardiac Assist was quite positive on the hardware side. So I wanted to ask if something has changed on that side.

And if you could, if possible, give some more color on how much the ACT Americas part declined by the different parts?

Yes. No, thanks for the question.

We don't dissect the business that much. What I can say on Cardiac Assist is that we had hoped to be able to resume deliveries in Q1 already of balloon pumps in CEE markets.

And that was not the case. We only got the final approval to start this last Friday.

So it will be a Q2 event. So that's been a little bit of a drag on sales.

And also, it has a direct impact on order intake as well because customers don't order new pumps unless they have received what they're expecting to be delivered.

Can you say anything on how much the ventilator decline did on that 8.5%?

No, we don't disclose subcategory financial parameters, unfortunately.

But can you say anything if it would have been, say, positive organic growth if it wasn't for ventilators?

No, I can't answer that either, unfortunately.

All right. Fair enough.

I got to try. Then on the guidance side, I view it as the wording is a bit softer, perhaps the visibility is worse now and maybe you're even seeing a bit more, say, negative outlook.

Can you just talk a bit about what you're seeing for the rest of '26 in terms of the, say, customer behavior and dialogues that you're referring to? Has it become slightly more negative?

Or is this just a wording change that I'm dwelling too much on?

Yes. No, that was not the intent of the wording change at all.

It was really just a way of recognizing that we do operate in a rather volatile environment, and we're mindful of that, but we feel confident reconfirming our guidance here even if the word, semantics, had changed a little bit.

Okay. Just a last question then.

Surgical Workflows, obviously quite strong in terms of order intake, especially for Americas and Digital Health. Is there some specific projects that this relates to that sort of makes it nonrecurring?

Or are you seeing a more upbeat environment in the U.S. specifically for Surgical Workflows?

It's a bit of both. If you look at DHS, it's always lumpy.

I mean they tend to be rather large projects, and we do have that, but there's also a little bit of an underlying better confidence, I think, generally in the market and also, I think in the way we operate in this business as well. We made some tweaks to how we organize ourselves, which hopefully also for the long term has a better, more positive impact.

But there's absolutely a bit of -- you cannot call them one-offs because they're not. It's just project business that is a little bit fluctuating by nature.

Okay. Can I ask one short one?

Will you tell us anything on the potential impact of the change in steel content tariffs? Or is that something you're going to not disclose?

What we can say there is that it's still under analysis, how it impacts us. It's fairly recent.

But the preliminary evaluation is that it's mainly if it hits us. It's components and spare parts, not complete products.

And the absolute majority of our exposure is on the complete products.

So the SEK 500 million for full year still holds, you think?

I don't think that we have guided on this, but that sounds like a fair assumption given the current levels, yes.

I have a couple. First one, given recent pricing hikes that we have seen on raw materials such as plastic, steel, aluminum, it seems like you do not see any material effect of this in Q1, and I assume contracts are negotiated a few quarters in advance.

But do you anticipate any higher input costs in the coming quarters? Or do you not expect any effect at all from this?

Yes. Thank you for that question.

If we dissect it a bit into parts. When it comes to freight, which is the more direct near-term impact, we have very limited impact in Q1.

But if it's prolonged, yes, there will be some impact in Q2 onwards. When it comes to plastics, et cetera, it's too early to say that we have any effects there.

Okay. And at the Q4 call, you indicated price increases of around 2% for 2026.

Did that materialize here in Q1, meaning the 0.8% organic growth was hampered by lower volumes? Or -- and do you -- are you able to accelerate price increases further there if you see increasing costs here in the coming quarters?

Yes. We still stand by that, roughly 2%.

It is a gradual rolling during the year. So it's slightly less than that in Q1, but we are progressing well towards that level.

Okay. But let's say, we see -- so if costs are increasing, you won't be able to translate that onwards to your customers, you still anticipate only a 2% price increase then?

This is always an ongoing discussion that we have with the -- all the commercial dynamics and the cost levels that we have. So of course, we will adapt our ways of working if we see that we get higher inflation, but it's not an automatic or sort of something that we can directly pass on.

Mattias mentioned it for tariffs and it's similar then for raw material. But we do have very active pricing.

I have a few short ones. I hope that's okay.

First of all, is it possible to quantify at all the positive effect you expect here from the new ECMO approval in Europe or whether that potential positive effect is more a factor of when and -- yes, when you get the U.S. approval, again?

And then could you just clarify a little bit about the Cardiosave status here in Europe and the U.S. filing?

And then finally, on tariffs, if it's fair to assume really neutral effect here year-over-year from the second quarter?

Yes. I think we can't quantify.

But of course, there is a positive effect from the launch of Cardiohelp. I mean this is an important part of our product range.

So definitely a net positive, but I can't give you a magnitude of that. When it comes to the Cardiosave status, we got approval to start shipping last Friday.

So the first pumps are being delivered in CEE markets this week. And the U.S.

filing, there is no change here. We still expect to do that before the half year mark.

And then when it comes to tariffs, it's dependent, obviously, on the tariff level, but also on the product mix of imports. But generally speaking, yes, it sounds like a fair assumption to assume that.

Maybe could you quantify the impact of foreign exchange hedges in Q1, how they roll off through the next 12 months or so? And then secondly, obviously, we're a quarter in now, still no margin guidance.

Just wondering if you're willing to give us an idea around how you're seeing margins for the year, whether up, down or sideways?

Yes. If we start with FX, we have not changed anything specifically regarding our hedging strategy, and we will not disclose that.

But just a reminder, I think we have talked about it on this call before, looking at the natural hedge, around 60% of what we sell in the U.S., we also produce in the U.S. And then the second thing maybe to mention regarding natural hedging and FX exposure is that we work very actively with our payment flows to compensate or offset as much as possible.

So those are the 2 things to highlight there, but no quantification of the hedging effects as such.

And on the margin guidance, I mean, there's still [Technical Difficulty] said in the presentation, we are confident about the long-term margin guidance of 16% to 19%.

Sorry, Mattias, you broke up again. I might have missed the first part of that.

Would you mind just repeating the margins for this year?

Yes. I just said that we -- there's a lot of uncertainty in the world, as you know.

So we are not going to do any margin guidance for 2026. We remain with the top line guidance only, and we remain with the long-term margin guidance of 16% to 19%.

Yes. I just have a follow-up on ACT.

So on ECLS consumables continued to grow despite being up against a rather tough comparison numbers. And I assume there was some flu-related headwinds here given the lower hospitalizations Q1 '26.

So I just wonder if there were any one-offs or stocking of consumables that you saw here in the quarter or if it's rather the underlying run rate?

You broke up for a second. Can you repeat the question on the ECLS consumables, please?

Yes. So it seems pretty strong considering the quite tough comparison.

So I just wonder if you saw any stocking or one-offs here in the quarter or if it rather reflects the underlying run rate?

Yes. No, there were no abnormal events in Q1.

I think your analysis of this seems correct. It's a good underlying demand.

Yes. Okay.

And can you just confirm that like the flu-related sales was lower this quarter versus Q1 '25?

[indiscernible] confirm that we see the same flu data as you when it comes to hospitalizations. How our customers use the product they buy, whether it's for treating flu or something else, we don't have perfect insight into it.

Okay. Thank you very much.

I think I already made the summary before the Q&A. So I just wanted to say thanks, everyone, for joining, and I wish you a good rest of the day.

Thank you very much.