VIMGF (VIMGF) Q3 2026 Earnings Report, Transcript and Summary

Welcome to Vimian Group Q3 2026 presentation. During the Q&A session, participants are able to ask questions by dialing 5 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.

Good morning, and welcome to Vimian's third quarter earnings call 26. I am Alireza 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 the U.S. On the management side, we finalized the recruitment of our new head of specialty pharma, Magnus Kjellberg, bringing on board another highly experienced leader to the team. And promoted long term team member Lotta Lundaas as Head of M&A. 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 had 15% revenue growth and reached 120 million in revenues in the third quarter. Organic growth was 11% with strong momentum across all segments. 3% contributions from acquisitions and 1% positive impact from currency movements. Adjusted EBITDA grew 14% to EUR 29.2 million, with strong growth across all 4 segments. The 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 of Specialized Nutrition was impacted in the third quarter by a strong prior year comparison. Adjusting for the impact from the sales campaign in Specialized Nutrition, organic growth in Special Pharma was 11% in the third quarter. During the quarter, we launched an updated version of our allergy test platform Pet Allergy Explorer 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 EBITDA grew 12% to EUR 15.2 million. And 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 the third quarter. In the dental business, growth was driven by strong commercial execution and deepened penetration of key customer accounts in The U. S. As well as strong growth in APAC. In the Orthopedic business, growth was led by APAC in Europe, and our North American business delivered another quarter of growth in unchanged market conditions. We continued to drive education in the quarter and trained 1.3 thousand in the quarter across our dental and orthopedic businesses. Adjusted EBITDA grew 20% to €10.5 million and adjusted EBITDA 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. We had 10% organic growth and 12.4 thousand member clinics at the end of the quarter. During the quarter, we officially entered 2 new countries, which we talked about previously, Japan and Portugal receiving positive feedback from the veterinary community. Adjusted EBITDA grew 28% to EUR 5.9 million and adjusted EBITDA margin improved to 30.5% including positive effects in the quarter from mix in our strategic partner agreements. Our diagnostic business delivered 13% organic growth in the quarter, driven by extraction and PCR test sales in the livestock business. Adjusted EBITDA grew to €500 thousand adjusted EBITA margin was 7.2%, including our investment to diversify companion animal diagnostic. Looking at our M&A activities, we have completed 5 acquisitions year to date and continue to have a 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. Norfolk is a U.S.-based company 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 is well aligned with a 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 on animals, people and planet integrated into the core of our operation. In the quarter, we completed our employee experience survey with continued high engagement scores. We also have held our first global leader conference with 100 leaders from around the world to strengthen the cross company culture and collaboration across the group. And with that, I will hand over to Carl-Johan for deeper insights into their financials.

Thank you very much, Oli, and good morning, everyone. As mentioned, I will give you a more detailed view on the financial development in the third quarter. Adjusted EBITA in the third quarter was EUR 29.2 million, an increase of 14% corresponding to an adjusted EBITDA margin of 24.3%. As we have previously stated, we foresee stable margin development for the full year 2026 versus 25, driven by our investments to drive growth in the MedTech segment. The slightly lower margin in the third quarter specifically compared to the same period last year is primarily a result of higher central costs. Central costs amounted to minus SEK 3.0 million in the quarter, an increase from minus SEK 1.8 million last year. The increase is mainly a result of expenses related to our long term incentive programs in total 600 thousand in the quarter. These are non-IFRS non-cash IFRS expenses, that will recur for the duration of the 3 year programs. We report an operating profit of EUR 20.5 million, a 17% increase from last year's result of EUR 17.5 million. Items affecting comparability were similar to the same period last year and totaled minus €2.1 million. Mainly attributed to acquisition costs in MedTech and veterinary services. Net financial items amounted to minus €6.9 million and consisted of 3 main parts. 1. Financing expenses of minus €4.6 million with an average interest rate of 4.0% during the quarter. Partly offset by interest income of €800 thousand And secondly, a quarterly discounting impact of minus €900 thousand negative impact of minus €2.2 million from probability adjustments related to contingent considerations mainly from new acquisitions. And lastly, a negative impact of €500 thousand from exchange rate effects on the revaluation of debt. Income tax expense for the quarter was minus €4.3 million, at an effective tax rate of 31%, In the quarter, the tax expense as a percentage of pretax 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 EUR 9.3 million, 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 the third quarter. Net working capital amounted to €123 million at the end of the quarter equal to 25% of revenue and an increase from €114.1 million at the end of the second quarter which equaled 26% of revenue. Cash flow from investing activities amounted to minus €13.1 million primarily consisting of acquisition and earn out payments. Capital expenditure amounted to €4.1 million which is 3% of total revenue, with €2.9 million related to investments in internal R&D and software development, And investments in property, plant and equipment amounted to €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 €262.4 million which is down from €273.7 million at the end of the second quarter. Cash and cash equivalents amounted to €55.6 million an increase compared to €51.6 million at the end of June. External lending was €263.1 million, at the end of the third quarter. This resulted in a leverage at the end of the quarter equal to 2.0x. A decrease from 2.1x at the end of the second quarter. We continue to be well capitalized with an ability to execute on our strengthened acquisition pipeline. With this financial review, I hand the word back to Alireza for concluding remarks.

Thank you very much, Carl-Johan. We delivered continued strong performance in the third quarter with strong total revenue and earnings growth and double digit organic growth. We have closed 5 acquisitions year to date. And after the end of the quarter, we entered soft tissue surgery through the acquisition of Norfolk in The U. S. Overall, we have a 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 November 24, 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.

If you wish to ask a question, please dial 5 on your telephone keypad to enter the queue. Next question comes from Adela Dashian from Jefferies. Please go ahead.

Good morning, gentlemen. First question on North American Orthopaedics. Another quarter of growth. Do you feel like that business has now turned around? And, what sort of growth rates should we expect going forward?

Good morning. Yes. We are happy with the development of our US orthopedic business with another 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 kind of short term future. We are happy to see that the changes we implemented earlier this year has 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.

that is nice to hear. And then on diagnostics, especially the margins, second quarter in a row now, single digit margins, is this sort of the level that we should anticipate with the investments that you are making in the companion animal health?

Good morning, Adela. So I think, as you know, diagnostics is 2 parts of the business. 1 is livestock, which structurally has a lower margin than the overall margin for Vimian and the second part is companion. And 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 can 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 IVET, which is part of our companion animal part of the business. And 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 Diagnostics segments as our companion animal business starts to scale. Okay.

that is interesting. So maybe a level step we have not seen in more modern times with the diagnostics business if we exclude the extraordinary levels during the pandemic.

I would say you can expect you can say continuous improvement of the margins as the companion animal business starts to scale and becomes a larger part of our diagnostics business. Okay.

I see. On specialty pharma, appreciate the commentary there. About growth was excluding the campaign timing. I just want to confirm that is now fully behind us, and there is nothing additional in Q4.

The national sales campaign that we conducted this year mainly in the second quarter and that was mainly conducted in the third quarter of last year is something that is, God willing, behind us for 2026. So there is no comparative disturbances, so to say, in the fourth quarter relating to the national sales campaign.

Yeah. Alright. And then last on leverage and M&A, it declined before the Norfolk acquisition. How much? Like, how do you view your M&A pipeline at this point, and how much additional capacity is there within your preferred leverage? Range?

So as you say, we have leverage of 2.0 x. We are sort of well below our long term financial target. And we have good and solid financing capabilities in place. So 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 sort of bolt on perspective, but also from certain larger interesting M&A opportunities.

Okay. Great. Thanks, Carl-Johan and Alireza. Thank you.

The next question comes from Adrian Elmlund from Nordea. Please go ahead.

Hi, guys. Good morning. A few questions for me, please. I will take them 1 by 1. So first off, the dental business in the MedTech business, the vertical seems really strong. Could you give any more color on this? How much can we sort of extrapolate, if you will?

Yes. We see continued strong momentum in our dental business. Which kind of comes from strong revenue growth in combination with kind of slightly better gross margin in general. I think the dental space, as we talked about before as well, is an interesting and growing field. So I think we are well positioned to capture that growth, the strong team in place.

Right. Okay. And regarding the acquisition yesterday, could you tell us anything more about, you know, margins, multiples paid, how you think about that and the growth profile?

Yeah. So I think, the Norfolk business currently has a slightly lower margin profile than the Vimian average. But as I talked about the synergistic opportunity, leveraging the VIMIAN network and the MedTech or Salesforce, we believe that we can bring that business to higher margins over time. 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 paid for businesses, and we expect those multiples to travel down as we realize synergies.

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 U. S. Now? Seemingly when the Vimian market in The U. S. Is reportedly rather soft?

I think veterinary service has shown for a long period of time it is an attractive and consistent business that is delivered value for the independent vet community and our partners. US is a strong market for us where we operate under 2 strong brands being Vet and Vimian Group. And 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.

Okay. Thank you. That was all for me.

The next question comes from Arvid Necander from DNB Carnegie. Please go ahead.

Good morning, and thanks for taking my questions. So first, on Specialty Pharma and the. 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 scale going forward, or is the ambition to further expand their scale? And beyond vet services, margins have obviously improved through the year. Directionally, how should we think about margin trajectory going into Q4 and 2027? Thanks.

I will start there. Morning. So if we start with specialty pharma and specialized. US specialized nutrition, And maybe sort of take 1 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. And that is something that we will continue to drive in 2027 and onwards as well, making sure that as 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 3 consecutive years it is a testament to our strong customer relationship with the large retailers in The U. S. And that is, of course, something that we will focus on being able to be part of also for another year and going forward.

Just on your second question, that is related to veterinary services. Regarding the margin, So in veterinary services, and as Oli mentioned, in the third quarter, we had positive effects in the quarter from a positive mix of high margin services including partner agreements. Looking at the fourth quarter 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 28.5%, 29% mark.

Perfect. that is very helpful. Just the last 1, if I may. On Norfolk, you know, 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 IMV. Do you have targets within this. In your pipeline?

Yeah. I think Norfolk is 1 of the leading, players when it comes to soft tissue surgery. So it is a complementary business that strengthens our med tech offering. We look at opportunities, you know, across the board. So we see a lot of things across all segments when it comes to M&A, but I think soft tissue surgery in Norfolk in particular complements the business we have with our strong product portfolio that can leverage our sales team and our in-clinic business to drive global growth.

Okay. I will jump back in queue. Thank you.

The next question comes from Kavya Deshpande from UBS. Please go ahead.

Morning thanks for taking my questions. My first 1 is sorry 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, And if I could ask again, do you be thinking of an improvement in the trajectory next year, especially if the market might be starting to inflect there. And then my second question is just around Specialty Pharma. Just to clarify again, so there was contribution at all from the sales campaign in Q2 to Q3, just in terms of, like, timing and any spillover effect, or was that fully contained to Q3? Thank you.

Good morning. So from a med tech. On the med tech questions, US Orthopaedics was low single digit in unchanged market condition, and we do not expect the market condition to change in the fourth quarter. 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 U. S. Orthopedics specifically, market would need to change in 2027 and onwards. But, yes, to confirm, we expect similar growth in Q4. And for Spec Pharma and the national sales campaign, in the second quarter of last year and third quarter this year. Now the majority of everything we delivered in the national sales program was done in the second quarter of this year. And that is why we have seen, you could say, a comparative impact in the third quarter And 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 3 quarters of this year.

And if I could just ask a follow-up quickly on the medtech business. Would it be able would you be able to give us a sense of where the Europe APAC margins are? Because we know dental is dilutive, and obviously, there is very strong performance at MedTech this quarter. Just wondering the drivers for why perhaps that did not fully drop through to margins?

So from a med tech perspective, as we stated earlier this year, we have done investments into the organization to strengthen the team, and that from a 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, before, the investments we made to strengthen the commercial performance and our orthopedics, can account for a slight margin decline from MedTech from a full year perspective. Right.

Thank you.

The next question comes from Jon Unwin from Barclays: Please go ahead.

Hi, good morning. Thank you. For taking my questions. I am sorry if I missed this, but could you please just quantify or help us understand the contribution in vet services from strategic partnership in the quarter. Obviously, the margin was stronger. And I believe that is also concentrated 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.

So if you look at the contribution from and I would say it is a contribution mainly from a shift towards higher margin services. And that is sort of the main sort of way you should think about it and where we have seen some positive effects in the quarter in terms of, call it, the mix of high margin services. And if you think about sort of and from a growth momentum, it is continued positive momentum, and we see that veterinary services are in a double digit sort of growth momentum as it is been for many, many quarters. And from a margin perspective, as previously mentioned, so to think about veterinary services in the Q4, maybe year to date, perspective from a full-year perspective as margin being around the year to date number that we see for veterinary services.

Thank you.

The next question comes from Sten Gustafsson from ABG Sundal Collier. Please go ahead.

Good morning, everyone. I have a kind of follow-up question on vet service. 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 sort of the underlying run rate among the existing members Would you be able to break that down for us?

Yeah. So, 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 offer we have in the portfolio. If you look at the specific 2 markets we entered in Japan and Portugal, we entered we went live end of the quarter. So it has very limited effect on the growth rates from the veterinary service business in the quarter specifically. But I think normally, the longer you have been a member in the veterinary service segment, the more services, are being used as a consequence of knowing the impact of those and knowing us much better. So it is a bit. I would say it is a very sticky and loyal customer base. Okay.

But of the 10% organic growth, rate, would you say new members had, I do not know, 3, 4%? Or less.

So 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 Alireza's point, if you look in a specific quarter, a large sort of very large share of the growth is attributed, you could say, to historical members And new members that we acquire are a great base for future growth as they become sort of more purchasing members and we add additional services to those new members. Okay.

Thank you. Another way to look at it, I guess, would be also to see. You have 12.4 thousand members, and I guess is it markets or something like that? Sort of the total number of potential members in the markets where you are today and some sort of penetration ratio of where you are is that something you would be willing to share?

Think if you look at the current member base, the penetration on the different markets. First of all, 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, that family started as a Nordic and Northern European procurement organizations 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 white space and growth opportunities in all 14 of the markets we are in. But, you know, how big that penetration is very different from market to market.

On average, it would not be relevant to look at. And 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 U. S. Specifically, where, of course, that market is huge in terms of the number of clinics, 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 the right way. So just adding members is not sort of the only focus, it is adding the right members, that is a key focus.

Perfect. Thank you very much.

As a reminder, if you wish to ask a question, please dial 5 on your telephone keypad. The next question comes from Adrian Elmlund from Nordea. Please go ahead.

Hi again. Just a quick follow-up questions here regarding the multiples paid for the acquisition. I think you said that you pay in line with the historical average. Right? Could you, you know, perhaps give us a range? What. Like, what numbers are we talking about here?

Our historical multiple has been around the 9x for EBITDA. Yes. Okay.

Very good. Thank you.

There are no more questions at this time. so I will hand the conference back to the speakers for any closing comments.

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 and 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.