• Sales Growth: 11% increase, with 9% organic and currency-adjusted growth.
• EBITDA Growth: 24% increase, reaching a 12.3% EBITDA margin.
• Operating Cash Flow: Improved by almost 50%, reaching nearly $700 million in Q4.
• Net Debt Reduction: Debt reduced by $450 million in the quarter.
• Interest Cost: Decreased to 30 million from 77 million last year.
• Medtech Organic Growth: 11% increase.
• Labtech Organic Growth: 6% increase.
• Adjusted EBITDA Growth: 33% increase, with a 12.3% margin compared to 10.2% last year.
• Net Debt to Equity Ratio: Ended at 0.9%.
• Interest Rate: 5.3%, down from 5.7% last quarter.
• Interest Coverage Ratio: 5.5% in the quarter.
• Equity Ratio: 41% in the quarter.

• Warning! GuruFocus has detected 8 Warning Signs with FRA:1AD1.

Release Date: February 05, 2025

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

Positive Points

• AddLife AB (FRA:1AD1) reported a strong finish to 2024 with an 11% increase in sales, driven by healthy customer demand and improved business fundamentals.
• The company achieved a significant 24% increase in EBITDA, reaching a 12.3% EBITDA margin, marking a substantial improvement over the previous year.
• Operating cash flow improved significantly by almost 50%, reaching nearly $700 million in the fourth quarter, allowing for substantial debt reduction.
• The acquisition of Bonsai Lab contributed positively to growth, with strong margins and successful integration into the lab tech segment.
• AddLife AB (FRA:1AD1) is well-positioned to benefit from emerging technology trends such as next-generation sequencing, robotic surgery, and artificial intelligence, which are expected to drive future growth.

Negative Points

• The company faced a negative impact on financial net due to currency fluctuations, with a loss this year compared to a gain last year.
• There was a slight weakness in the academic research field, although it showed some improvement in the fourth quarter.
• Patient waiting lists did not decrease in the fourth quarter, which could delay potential positive impacts on surgical procedure demand.
• The company experienced a decrease in the number of employees, partly due to the winding down of certain operations, which may affect operational capacity.
• Despite improvements, the company's EBITDA growth of 14% was slightly below its financial target of 15%, indicating room for further improvement.

Q & A Highlights

Q: On the laboratory side, how is the demand for larger equipment evolving, given the reported weakness in Capex? A: Fredrik Dalborg, CEO: The sentiment for large investments is somewhat subdued, but our equipment is often not the largest in terms of size and price. We've seen some hesitancy in academic research, but it has eased slightly. Instrument sales were healthy in Q4, linked to new tenders and projects expected to finish by year-end.

Q: Can you highlight areas of strength within the Medtech division, given the broad-based growth? A: Fredrik Dalborg, CEO: Growth was broad-based, with strong performances in the UK, Ireland, Spain, Portugal, and Germany. Orthopedics and surgeries stood out, and our teams have done a tremendous job, especially in Germany, which is a challenging market.

Q: Regarding sequencing, is AddLife more involved in sample prep and consumables, or do you have relationships with sequencing companies? A: Fredrik Dalborg, CEO: We are involved in all aspects, including sample prep, reagents, and instruments. We have relationships with key instrument suppliers, including those in the NGS space.

Q: What is the outlook for organic growth in Medtech, considering the strong Q4 performance? A: Fredrik Dalborg, CEO: We are cautious about providing specific numbers, but the trends from 2024 persist. Waiting lists should be addressed in 2025, with investments likely due to government commitments to reduce them.

Q: How is AddLife adapting to the trend of manufacturers focusing less on direct sales and more on product development? A: Fredrik Dalborg, CEO: This trend offers us opportunities to take on new product lines with attractive margins and gain market share. We are forming good partnerships with leading suppliers and combining this with new technology from challenger companies.

Q: Can you comment on the performance of newly launched products in Labtech and the impact of new tenders? A: Fredrik Dalborg, CEO: Newly launched products have picked up, and newly awarded tenders significantly impacted our numbers. These long-term contracts will positively affect us going forward.

Q: How has the year started, and are there any changes in market trends? A: Fredrik Dalborg, CEO: We refrain from commenting on the start of the year, but there are no changes in the trends or trajectory we've been seeing.

Q: Are there any initiatives to trim down less profitable parts of the business to make room for higher-margin products? A: Fredrik Dalborg, CEO: This is an ongoing effort across all companies. We continuously analyze product lines to evolve portfolios towards higher margins. The more drastic changes seen in the past are not the norm, but incremental improvements continue.

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