Good afternoon. This is the conference operator. Welcome, and thank you for joining the Recordati First Quarter 2025 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Eugenia Litz, Vice President of Investor Relations of Recordati. Please go ahead, Madam.
Thank you, and good afternoon, everyone. I'm pleased to be here today with Rob Koremans, our CEO, and Luigi La Corte, our CFO. Together, they will present results for the first quarter of 2025. Also joining for the Q&A session will be Alberto Martinez, Executive Vice President of Specialty and Primary Care, Scott Pescatore, Executive Vice President of Rare Diseases, and Milan Zdravkovic, Executive Vice President of R&D. As always, the presentation is available in the Investor section of our website. It is now my pleasure to pass the call over to Rob. Please go ahead.
Thank you, Eugenia, and good afternoon. Welcome, everyone, to our call. We've had the pleasure last week of hosting our presentation and many of you in person to present our three-year outlook, an outlook that actually confirms a very positive outlook into the future, and today, we're very happy to once again share our really good quarter results for the first quarter of 2025, and clearly, we're on to a good start of the year. Beginning with the net revenue of EUR 680 million, which represents an increase of 11.9% compared to the previous year, or 7.2% on a like-for-like at constant exchange rate basis. This is on the back of a continued momentum for both our specialty and primary care business and our rare disease business.
Specialty primary care increased by 5% like-for-like at a constant exchange rate, and rare disease by 11.5% at a like-for-like at a constant exchange rate. Robust top-line performance and operating leverage, partly offset by our accelerated investments to support the label expansion that we achieved for Isturisa in the U.S. and geographic expansion, resulted in an EBITDA margin of 39.7%. Adjusted net income was $175.5 million, up 7.2% from the previous year, reflecting higher operating income, partially offset by increased finance expenses and a higher tax rate. And last week, we already shared some of our R&D updates. We were very pleased to be able to announce the timely FDA approval of the label extension for Isturisa into Cushing's syndrome in the U.S., and for a second time, we're in that way able to upgrade the peak year sales target, now EUR 550-EUR 650 million.
And also, we shared the Signifor LAR approval in China, which helps to really build our portfolio of products, complementing now Isturisa and Carbaglu, and allowing us to really enter China in that way as well. Thus, on the back of this really good momentum start of the year, and despite the increased forex headwinds, we confirm our full year 2025 financial targets, and we also expect the positive momentum to continue as reflected in our full year 2027 targets that we presented last week, with double-digit growth across all key financial metrics. And with this, I'd like to turn over the call to Luigi to review the quarter in more detail.
Thank you, Rob, and good morning, good afternoon, everyone. We'll be relatively quick today. As Rob said, many of you were with us just a few days ago, and we had already provided a view on sort of revenue. Starting with the top line, we knew coming into 2025 that Q1 would compare against a strong quarter of last year. With that in mind, I have to say we were all very pleased with the results in the first quarter, as Rob said, with like-for-like growth at CER for SPC of 5%, broad-based growth, I should add, and with continued overperformance of our key promoted product versus the markets. This was really underpinned by both our top two franchises, urology and cardiovascular, growing at solid mid- to high-single-digit rates, thanks to very broad parts of the portfolio, and our GI franchise growing double-digit.
These helped offset somewhat softer sales of Avodart Combodart, particularly in Spain, and particularly in the Andalucía region, and the softer cough and cold season across Russia and Turkey, which we do expect, however, to recover in the remainder of the year. I would call out the very strong performance of some of our key OTC products in the quarter. Mentioned in the slide is Procter & Gamble as part of our GI franchise. Even better, even stronger growth was posted by Magnesio Supremo, our leading food supplement in Italy, which we're starting to also introduce in other markets, with both products actually on target this year to equal in size Pidavastatin and potentially replace Pidavastatin in the list of our top products.
So really great to see once again how the breadth, diversification of SPC, and the strong equity of our brands help sustain solid mid-single-digit growth of that business. And shifting to rare disease on slide five, Rob said, double-digit growth, and really great to see it driven by all franchises in the first quarter, headline growth of 29%, obviously including Enjaymo, which itself grew nicely. Endocrinology growth being really driven by both Isturisa and Signifor, both of which also had positive news in terms of extended label approval and for Signifor approval in China.
In the hemo-oncology franchise, growth was driven by Sylvant, and Enjaymo itself, when looking in market, of course, we only consolidated since December of last year, but on a pro forma basis, Enjaymo growing by just over 16% in Q1 and on track, with the growth of Qarziba being subdued a little bit by just phasing of shipments, in particular to the MENA region, which, however, were positive, on the other hand, for Carbaglu, which together with Panhematin helped post close to double-digit growth also for the metabolic franchise.
So also for Rare Diseases, a really strong and encouraging start of the year with five key growth assets, both on track and, as we've said in previous occasions, with the potential to more than double revenue over the next years once getting to peak, and opportunities to go beyond that, thanks to some of the life cycle management and specifically new indication opportunities that we're working on. And obviously pleased that you've seen us recently deliver on some of those, particularly with the successes on Isturisa and Signifor approval in China. I won't dwell today on the revenue numbers by geographic region on slide six. Nice to see, obviously, positives all across the column.
We'll just point out, obviously, the very strong growth in the US and really driven by Isturisa, Signifor, Sylvant, Panhematin, and obviously the addition of Enjaymo, which contributed roughly EUR 17 million of revenue in the US. Growth rates of Russia, Turkey, France slightly subdued due to the weak cough and cold season, and international sales also reflecting the addition of Enjaymo with the double-digit growth there. Just as we knew that Q1 2024 was a tough comparable on revenue, we'd also said coming into the year that we would invest a little bit more to prepare for the expected approval of the new label for Isturisa in the US, and also as we prepare to launch Isturisa in China.
And we did that, but great to see that thanks to that revenue growth and the operating leverage that that provides, we were able to achieve double-digit EBITDA growth in the quarter with a margin very close to 40% and prior year levels, which is obviously very promising as we look towards the balance of the year, with adjusted net income growth of 7%, obviously reflecting also the higher interest expense following the acquisition of Enjaymo and the slightly higher tax rate. Our target for the year remains to see margin accretion versus 2024, although, of course, FX will create a little bit of a headwind, but still committed to deliver on that.
And on slide eight, of course, and nine, combined, as Rob already pointed, great to see continued strong free cash flow performance at almost exactly 90% of adjusted net income and ahead of prior year, which has helped take our leverage down to just below 2.2 times last 12-month EBITDA on a proforma basis, which sets us on track to close the year just below two times, of course, barring any new BD and M&A, which we may do in the remainder of the year. And finally, to close before opening it up for calls, as Rob has already said, we started the year well. We are happy and confident with the momentum of the business. On that basis, happy to confirm the guidance ranges that we provided at the start of the year for 2025.
And also, clearly, for those that missed it last week, very pleased with the targets that we felt able to commit to for 2027 on the back of both the organic momentum of the business and, of course, as customary for our group, assuming continued contribution from new BD and M&A to set out targets which call for really double-digit growth across all of those three metrics. And with that, I will close the call and open it up for questions.
Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Shan Hama of Jefferies.
Hi. Thank you so much for taking my questions. I have three, if that's okay. Firstly, could you give us any feedback on the initial uptake of Enjaymo since transition to Recordati, so perhaps anything from physicians or patients? And then on cough and cold, do you expect the recovery sort of gradually over the coming months, or will it be more 2H-weighted? And finally, on margins, rare disease was 44% and SPC was 37%, I believe, for the quarter. And how do you see that developing over the course of the year? Thank you so much.
Maybe Scott, you wish to comment on Enjaymo? Thank you, Shan, for the question.
Yeah. Shan, sorry, can you just clarify again the point on Enjaymo? Do you mind?
Yeah, of course. So just any feedback from the initial uptake, perhaps anything in terms of physician or patient feedback? Thank you.
No, absolutely. That's a good question. So far, it's been incredibly positive, the uptake this year so far. We don't have, obviously, too much patient feedback, but as far as the customer base goes, they're very pleased with the transition from Sanofi to Recordati. They're very happy with that it was seamless and that there were no real headaches or any issues across that. The team from Sanofi, as I had mentioned in sort of previous interactions, that they had joined us without too much disruption. So we're really pleased with the uptake so far. The team is out there, and they're really pushing for these patients to be put onto CAD, the CAD patients to be put on Enjaymo. We're very optimistic about the future, and it's not just about the US.
Japan has a similar positive story there as well, and we're actually seeing very strong momentum in Europe as well. So I would say overall, globally, Enjaymo is going very, very well in the early days.
Maybe Alberto, you want to comment on the cough and cold recovery?
Yes, with pleasure. I mean, in cough and cold, as it has been reflected, the season has been particularly low in Russia, which is one of the largest markets. Also in Turkey, it's not so big for us, but Russia represents almost a third of our cough and cold business, and the season was particularly low. We expect for the rest of the year to have a normal season, and just with that and the impact of pricing and the continued growth of the portfolio, we expect the growth to more normalize and come closer to a stable growth versus previous year. That's the expectation.
And maybe on the third one from my side on the margins, our Q1 is typically our strongest quarter. I don't think you should expect any sort of particular sort of swings across the two sectors. They tend to both start well. And so the Q1 is ahead of our full-year target. We'd said full-year target is around 37.5, and we're starting off, obviously, well, but that's pretty much in line with our historical trend. So I'd expect both to ease over the remainders of the year, and particularly Q4 tends to be our lower quarter. And I don't think you should expect any major difference across the two, if that makes sense.
Thank you so much.
The next question is from Charles Pitman-King of Barclays.
Hi, again. Thanks very much for taking my questions. I also have three. Maybe firstly on Isturisa, just wondering if you can give us an update on the competitive dynamics in this space, as well as the kind of ongoing unmet need that you think you're going to grow into, just kind of a bit more on how we can think about that market. Secondly, just on China, I know you kind of didn't want to spend too long on the individual regions, but just as a market, how are you progressing in this space? Are you seeing any disruption from kind of ongoing policy and trade dynamics?
And then just finally, also a margin question, but thinking more just long-term, given SPC is already looking like it's kind of topping out at these levels and a lot of the growth is coming from rare disease, I'm just wondering if you can give us a little bit more insight into what a potential peak margin from the rare disease franchise could look like, keeping in mind, obviously, M&A would lead to potential dilution?
Thanks, Charles. Let me take the last question first. So we don't really provide. I mean, you know that the rare disease margins are higher than what we have been traditionally and historically in SPC. We continue to increase our rare disease percentage of our business, and with the double-digit growth that we see, and you've seen what we present for 2027, we're very optimistic for our future, but I don't want to give any further guidance on margins in that sense, other than that what we see at the moment is well in line with our expectations, and we're very happy with the performance. Maybe also one word on China that is really super small at the moment, right? We only sell Carbaglu, which is EUR 2 million, and I don't really see any material impacts from any whatever tariff discussion going into China.
We're pleased to now have the Signifor LAR registration, which we will sell almost immediately, and Isturisa, we hope to get the national reimbursement by the end of the year, so at the moment, China is really more being prepared to do something, and any impact on that from tariffs is really going to be super minimal, and maybe it's nice if Scott comments a bit on how well we're doing with Isturisa.
Yeah. No, thanks, Rob. It's completely aligned on the comments on China. So it's really good news we were able to get three products approved there, but it's still early days in terms of the commercial deliverables there. With regards to Isturisa, I mean, we're having another very strong start to the year, and we're quite optimistic now with the positive label that we received. It's only been a few weeks now since we got the indication, and we're seeing already very positive uptake. And I know that from the customer perspective, they're quite pleased that we now have that extended opportunity. I think we also talked a little bit about it the other week. The market in Cushing's disease and Cushing's syndrome in the U.S. continues to be dynamic and very positive.
It's expanding, and we've seen some also similar comments from some of the other companies out there at the moment, particularly Corcept, who also had made comments around the change in the market and the optimism that they have in terms of finding and diagnosing more patients with hypercortisolism, so the future looks quite bright in terms of the opportunities that we have for Isturisa moving forward.
Thanks so much.
The next question is from Alistair Campbell of RBC.
Hi, there. Thanks very much for taking the question. It's actually a follow-up, really, from the 2027 plan from a few weeks ago, and I guess the question is, obviously, your focus on the near-term plan is very much in growing your current business, particularly the rare disease business, and then enhancing that growth through BD activity, but I just had a question whether, when you look across your portfolio, are there any parts of the business today that actually you think could become non-core and potentially open up to disposals, or actually do you think every part of the business has an important role to play? Thanks.
No, thanks, Alistair. And I think, especially in these current times where we see all of the volatility, I'm very, very happy with a growing SPC business that is contributing and has always contributed quite nicely. And within SPC, the prescription and non-prescription and every single market contributing. This helps us very much to weather a little bit of the unstable environment. And frankly, the last thing I have on my mind is disposing anything there. Rare disease is a double-digit growth and clearly a stronger growth, but for us, SPC and rare disease are equally important, and they help to mitigate any potential risks going forward. And frankly, we generate fantastic value out of both businesses. I believe Recordati is really a stronger company because of having both businesses, the diversification, the opportunities, and the underlying growth opportunities for both businesses, right?
Let's not forget also SPC on the back of an aging population, an increased prevalence incidence in our key therapeutic areas of cardiovascular, urology, and gastroenterology. We see really good growth, and I want to continue to benefit from that and make sure that also we serve our patients as best as we can and drive fantastic margins from that. So no, Alistair, no plan to divest anything near-term, but absolutely plans to do the opposite, to make acquisitions in both businesses to help and further grow and strengthen both SPC and rare disease.
Very clear. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Isacco Brambilla of Mediobanca.
Hi. Good afternoon, everybody. Three quick questions from my side. The first one is on Enjaymo. If you can recall, the expected contribution of revenues and EBITDA for this year, if I recall correctly, it was like EUR 150 million and an accretive profitability to rare disease margin. This was the indication given last year. Just wondering whether this is confirmed or what. Second question is for modeling purposes, net financial expenses are a bit above in terms of run rate compared to the indication given last February for the full year, so how should we think about that? The last question is on geographical markets. If I look at the top three European markets, France, Germany, and Italy, quite different dynamics in the first quarter, so if you can just elaborate a bit more on that.
Isacco, hi. So on Enjaymo, yes. What we said at the start of the year was a contribution on revenue from Enjaymo of around EUR 150 million, and with a margin ahead of the average of rare disease. Now, revenue, of course, is the part of the P&L where, and particularly with Enjaymo, having a significant part of the revenue in the U.S., there'll be a little bit of a headwind, but we've not changed the estimates there. I think we've started the year well, but that's in terms of the contribution that we are expecting for this year. In terms of the run rate on financial expenses, there were a little bit of FX losses and non-monetary losses as well in the numbers, which we don't typically forecast. I mean, those go up, down, quarter in, quarter out, depending on FX volatility.
Most of those are unrealized, actually, so could unwind. Also, of course, we do expect, as we generate cash, to deleverage over the course of the year. Interest rates are also trending downwards, at least so far, so that's why I think your question was around the current run rate in Q1 of financial expenses versus the full year. Happy to also have Alberto comment on the countries. I think you're pointing to some of the key European markets have a different growth rate, but I think I called out France is actually one of the ones where we've got the bigger cough and cold business, and those have been a little bit softer. Alberto, I don't know if you want to add anything on different growth rates of different markets.
Thank you, Luigi. No, I would only add that different markets provide different expectations in terms of growth. This was also part of our presentation during the long-range plan. With a mature portfolio like SPC, particularly in Northern Europe, in markets like Germany or France, we shouldn't be expecting high single-digit rates, and in the case of Italy, we're also growing on the back of a strong start of last year, and the expectation is to operate in those ranges.
I'll only add that in Germany, there's also the benefit of the addition of Enjaymo, which has a sort of solid base in that country.
Okay. Okay. Clear. Many thanks.
For any further questions, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one. Gentlemen, there are no more questions registered at this time.
So I think, in light of that we've been together last week, we all expected this to be a relatively short update. I thank you for your time and interest. Wish you a wonderful afternoon and look forward to interacting with you in the very near future. Thank you very much.
Ladies and gentlemen, thank you for joining the conference. It's now over. You may disconnect your telephones.