Medtech

Companies in the Medtech business provides medical device products within the medtech market and assistive equipment within home healthcare.

For the quarter, Medtech’s net sales increased by 30 percent to SEK 1,246m (962), of which organic growth, excluding COVID-19 related sales, was unchanged and acquired growth was 25 percent. Net sales related to COVID-19 accounted for SEK 0m (10). Exchange rate fluctuations had a positive impact of 5 percent on net sales. EBITA increased by 87 percent to SEK 179m (95) and EBITA margin amounted to 14.3 percent (9.9). The reversal of the contingent consideration, linked to the acquisition of AddVision, has had a positive impact on operating profit of SEK 85 million. The additional purchase price was based on a high target that did not foresee the negative impact of COVID-19 on elective surgeries in 2022. Adjusted for this reversal, the EBITA margin is 7.5 percent. The investment in digital solutions for remote patient monitoring and healthcare solutions has had a negative impact on the result of SEK 12m.

For the interim period, Medtech’s net sales increased by 49 percent to SEK 3,843m (2,582), of which organic growth excluding COVID-19 related sales, amounted to 1 percent and acquired growth was 52 percent. Net sales related to COVID-19 accounted for SEK 0m (226). Exchange rate fluctuations had a positive impact of 5 percent on net sales. EBITA increased by 123 percent to SEK 452m (202) and EBITA margin amounted to 11.8 percent (7.8). The reversal of the contingent consideration has had a positive impact on operating profit of SEK 85 million. Adjusted for this reversal, the EBITA margin is 9.6 percent. The investment in digital solutions for self-monitoring and healthcare solutions has had a negative impact on the result of SEK 37m.

Acquisitions within Medtech delivered strong growth during the quarter, while organic sales were flat. During the holiday months of July and August, demand was slow within Medtech, but during the month of September a clear improvement was noted and order intake also developed in a positive way.

The weaker profitability in the quarter is partly due to fewer planned surgical procedures during the summer months, mainly in orthopaedics, as the healthcare systems gradually recovered after the pandemic.

In ophthalmology a small number of suppliers have suffered from supply disruptions and a few distribution agreements have expired, resulting in reduced sales and also a negative impact on profitability. Deliveries are expected to gradually resume and in some cases products will be phased out and gradually replaced by other products from existing and new suppliers. A focused improvement effort is ongoing in this area.

In advanced surgery, where the companies offer a very high level of service, a new product group in neurosurgery has been introduced. A significant instrument sale was completed during the quarter, which reduced average margins, but will generate higher margin service contract revenues going forward.

Profitability was also impacted by investments in the further development of the Homecare digital platforms, both of which are in an early commercial phase. We see great potential in these solutions and expect continued investments.