COMMENTS BY THE CEO
Good organic growth and strong earnings performance
Margin improvements continue
Margin improvements remain the highest priority, and during the quarter, profitability was clearly strengthened in both business areas. The margin improvements are mainly driven by ongoing efficiency initiatives, a continuous shift in the product portfolio towards more advanced products with higher margins, as well as active pricing efforts. The companies within AddLife are often established in niches with high margins and differentiate themselves with leading products and a strong service offering.
We have a few companies within AddLife where profitability does not meet our expectations, and active efforts are underway to improve margins and growth. These companies, primarily within homecare, ophthalmic surgery, and the Eastern European operations, have the potential to improve margins going forward.
Solid organic growth
Organic growth in the quarter was overall at a solid level, despite the fact that activity within healthcare and research is normally lower during the summer months and that there is some restraint regarding capital investments in certain markets. Growth was driven by positive developments in both business areas. Within Labtech, growth was particularly strong in areas such as gene sequencing, blood gas, and immunology. In Medtech, the strongest growth came from the larger companies in the Nordics, Ireland, and Spain.
Market position provides stability and development potential
Market developments remain steadily positive for the companies within AddLife. Many countries in Europe have high ambitions to improve healthcare and reduce patient waiting lists, but in most cases, these ambitions have not yet resulted in concrete actions or outcomes. Staff shortages are a key reason why long waiting lists have not been significantly reduced. However, the assessment is that improvement measures will gradually be implemented in the European markets, and that advanced products enabling healthcare providers to treat more patients with existing staff will play an important role. The companies within AddLife, which have a very high proportion of advanced products and a strong service offering, will be well positioned to benefit from this market potential.
AddLife’s companies are well positioned for long-term growth and profitability improvements, and with primarily European customers and suppliers, we have limited exposure to negative effects of geopolitical uncertainty and trade barriers. Suppliers in our industry are updating their market strategies, which for AddLife’s companies may result in the addition of new products to the portfolio as well as the phasing out of others.
In recent years, AddLife has made important acquisitions in Southern and Western Europe and now has an industry-leading presence throughout Europe. These acquisitions have developed well within AddLife, with strong growth, improved margins, and significantly improved cash flows. The acquired companies have contributed to the shift in the product portfolio towards more advanced products and also serve as platforms for new acquisitions.
Summary and outlook
The companies within AddLife are developing well, and in the prioritized areas of margin improvements, organic growth, and cash flow, the improvements have been clear. Our ambition to reduce net debt in relation to EBITDA to below 3.0 has been achieved. Reduced leverage, combined with lower interest expenses, has led to a significantly improved result. These improvements strengthen our ability to carry out further acquisitions in line with established strategies and criteria.
I would like to extend my sincere thanks to the employees in all our companies for your dedicated work during the quarter. Your partnership with our customers in healthcare, and research is strong and is an important part of our ambition to improve people’s lives—something that is highly motivating for all of us.
President and CEO