Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vimian Group AB (VIMGF, Financial) reported a 10% organic revenue growth driven by specialty Pharma and veterinary services segments.
- The company achieved a 20% growth in adjusted EBITDA, reaching EUR21.9 million, with an EBITDA margin of 25%.
- The veterinary services segment showed exceptional growth with a 34% increase in EBITDA, adding 250 new clinics to its membership.
- The acquisition of iM3, a global leader in the veterinary dental space, is expected to add EUR7.7 million in EBITDA and enhance the MedTech segment.
- Cash flow from operating activities improved to EUR16.7 million, with a decrease in net debt to EUR140.3 million.
Negative Points
- The MedTech segment experienced slower organic growth of 4%, impacted by softness in the US surgical elective market.
- The diagnostics business, which constitutes 5% of total business, saw a decline of 5% due to challenges in the livestock-focused market.
- Items affecting comparability, including costs for the iM3 acquisition and US patent litigation, impacted operating profit.
- The net profit for the quarter was negative at EUR1.9 million, influenced by high items affecting comparability and FX impacts.
- The US market remains soft, particularly in high-cost surgical procedures, with no immediate signs of recovery.
Q & A Highlights
Q: Is it reasonable to assume a 10% organic growth for iM3 over the five-year earnout period?
A: Patrik Eriksson, CEO: We expect the EBITDA margin for iM3 to grow over time through operational improvements and acquisitions. We saw healthy growth in iM3 in Q3 and anticipate it will continue to grow at the average rate of the niche, which is expanding rapidly.
Q: Do you expect to generate meaningful excess free cash flow from iM3 to fund new acquisitions?
A: Carl-Johan Boudrie, CFO: We see solid cash generation opportunities from iM3. The earnout has two parts: a likely achievable hurdle and an optionality based on strong performance, which would indicate significant cash generation.
Q: What is the outlook for the US market, given recent data showing 7% growth year over year in September?
A: Patrik Eriksson, CEO: The data is volatile, and while September showed growth, it's too early to call it a turnaround. We need more consistent data over the coming months to confirm a positive trend.
Q: Can you provide an update on the companion animal diagnostics launch and its impact on margins?
A: Carl-Johan Boudrie, CFO: The companion animal launch is progressing, and while it has negatively impacted margins in 2024, we expect gradual improvement over time as sales and margins increase.
Q: Are you seeing any weakness in the US dental market, and what is the long-term outlook for cross-selling in specialty Pharma?
A: Patrik Eriksson, CEO: We don't see weakness in the dental market but do see it in high-end elective surgeries. The cross-selling initiative in specialty Pharma has a long runway, with potential for significant growth as we integrate acquisitions and expand product portfolios internationally.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
