Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Grifols SA (GIFLF) achieved record revenues and adjusted EBITDA in 2024, with a 13.6% increase in Q4 revenues on a constant currency basis.
• The company significantly improved its balance sheet by reducing its leverage ratio from 6.8 times to 4.6 times within the year.
• Grifols SA (GIFLF) reported strong free cash flow generation, exceeding initial guidance with a year-end result of 267 million.
• The biopharma business, particularly the immunoglobulin franchise, showed robust growth, with IVIG sales growing by 15.6% in Q4.
• The company made substantial progress in its innovation pipeline, including advancements in fibrinogen and receiving a grant for Parkinson's research.

Negative Points

• The diagnostic segment saw a decline of 2% on a constant currency basis in Q4, indicating challenges in this area.
• Despite improvements, the adjusted EBITDA for the full year came in just shy of the initial guidance.
• The company faced a significant impact from foreign exchange fluctuations, affecting its net debt and leverage ratios.
• Gross margins were affected by changes in accounting for US fee-for-services and GPO fees, impacting revenue growth profiles.
• There was a notable tax impact due to exceptions related to a tax audit in Spain and taxes paid on the Shanghai Rask consideration.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with GIFLF.

Q: Can you comment on the strong growth in immunoglobulin and whether current plasma collection capacity and inventory levels can sustain this growth? Also, any updates on the trimodulin pipeline? A: (CEO, Nacho Chavia) We are well-prepared with both donor center and manufacturing capacities for the future. Significant CapEx for expansion won't be needed for the next 3-4 years. (President of BioPharma, Roland Badeer) For trimodulin, we are continuing with our phase 3 study, expecting interim analysis in the first half of 2026. We remain excited about its potential for SCAP and other infections.

Q: Could you elaborate on the revenue per liter trends and any new products that might improve this metric? A: (President of BioPharma, Roland Badeer) We aim to balance IG growth with albumin sales, which helps plasma economics. We've seen improvements in IG yield and strong momentum with our subcutaneous IG in the US, which is priced at a premium.

Q: Can you explain the gross margin dynamics, particularly the decline in Q4, and the impact of FX on net debt? A: (CFO, Rahul Irinabasan) Gross margin improved by 100 basis points versus 2023, driven by lower plasma costs and higher volumes. The FX impact from the strengthening US dollar created a headwind, affecting our leverage ratio, which would have been within guidance without this impact.

Q: How is the donor fee evolving, and what is the strategy for plasma collection growth? A: (CEO, Nacho Chavia) Donor fees are becoming more dynamic with smart compensation methodologies. We aim to increase plasma collection in existing centers without significant CapEx in the next three years. (President of BioPharma, Roland Badeer) Regarding CIDP, we see some use of FCRN blockers but no impact on our momentum. IVIG remains the first-line treatment.

Q: What drove the change in the treatment of fee for services, and how does it affect your financials? A: (CFO, Rahul Irinabasan) We reclassified fee for services and GPO fees from OPEX to a reduction of sales to align with industry standards. This change impacts growth rates but provides a more realistic view of our financials.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.