Welcome to today's presentation where we have the pleasure to present Embla Medical. To help us through today's presentation, we are joined by you, Sveinn Sölvason , CEO and President of Embla. Today's event covers the Q4 full year report and, of course, your outlook for 2025, and I guess, like every company, if you don't speak and/or have a question about tariffs, it would be very strange at this point of time, so maybe also touch a little bit upon that. As always, you're encouraged to ask questions in the box down below during the presentation, but we will take the main part of the questions in the end, but for now, I will hand the call over to you where you can take us through a short presentation of your Q4 and your expectations and your main achievements, and then we will jump into the questions. Sveinn.
Perfect. Thank you very much, Michael, and thanks for having me here this morning. I will go through some of the highlights for 2024 and go into a few details around our latest quarter and how we look at then also 2025. But 2024 was an eventful year for our organization. Now, two years ago, we set out our five-year plan, which we are executing on our Growth '27 strategy, which in essence is about continuing to transform our organization from historically being a focused, you could say, niche product business to now a company that is focusing on, you could say, chronic mobility in a broader context. And we took some meaningful steps here in 2024. We established Embla Medical as the parent organization to our many great brands that all play a different role in this overall mobility market. We acquired Fior & Gentz also in January.
Fior & Gentz is a company that has great solutions for individuals that have a neurological problem as a result of stroke that leads to, in many cases, a lifetime mobility challenge. We introduced ForMotion, which is the new brand for our patient care business, and are now gradually rolling out this new brand in all of our patient care or in all markets where we operate in patient care. We are also excited about the new innovation that we have brought to market in 2024, which will have a more meaningful impact, if you will, here for full year 2025.
And maybe sort of most noteworthy are the new bionic knees, NAVii and ICON, but also the Pro-Flex Terra, which you see here on one of the pictures, which is a great new foot where we again have demonstrated our ability to elevate the standard of care by introducing a great foot that provides amputees with very enhanced functional benefits. A major theme for us last year was also the expanded care in the U.S., where Medicare has now decided to also open up access for a part of the K2 population that has until now not had access to these high-end products. So this was a major change. And we believe the biggest change in our industry when it comes to reimbursement in decades. And then it's also important to remember to mention the Paralympics every fourth year.
We get to see athletes competing using our products, and we were super proud of their performance and obviously proud to see our products in action here at the Paralympics and in France, where many of the athletes that use our products won gold and set new records. So we're super proud of that. Diving into more details around the quarter, we delivered 5% organic growth, 8% local currency when we include the impact of acquisitions. Our EBITDA margin is up 3 percentage points compared to a comparable quarter last year. If you look at the year, also solid growth, 6% organic, 9% local currency, and EBITDA margin is up 2 percentage points compared to full year 2023, which means that we are delivering on our guidance.
We are delivering sort of in the middle of the range we set out in the beginning of last year on growth and are delivering on the upper end of the range on profitability. And highlights back to quarter four, I again refer to these product launches that we have been in limited launch with the new bionic products, but expect to be in full launch here in the latter half of quarter one. The integration of Fior & Gentz continues to go as planned. We are using our commercial infrastructure in all major healthcare markets to now present and bring these products to more individuals. And then, as I mentioned earlier, also the brand rollout on ForMotion is going as planned. And with regards to the U.S. Medicare coverage, we are starting to see K2 patients being processed and approved for bionic upgrades.
Our guidance for 2025 is that we expect to deliver sales growth within the range of 5%-8% organic. You could compare this with our midterm guidance that we set out at our capital markets day a couple of years ago, which was 5%-7%. We're guiding 5%-8% as a result of, yeah, well, both new product launches as well as these reimbursement changes in the U.S., and then on the EBITDA margin side, we are guiding for continued gradual increase in our operating margins, so we delivered 20% here for 2024 and are now guiding 20%-21%. What we also announced here this morning is that we will re-initiate share buybacks. We had paused share buybacks after the acquisition of Fior & Gentz 12 months ago as we were then temporarily above our net debt to EBITDA range.
So now we're comfortably back within or below the middle of the range where we expected to be here at the end of the year. And now, in line with our capital structure and dividend policy, we are reinstating the share buyback program. So this was the big picture. Maybe also worth another theme that we've discussed here this morning with the market is tariffs. That's a big topic for all international companies. We have not taken anything sort of into consideration when we set guidance. There's some uncertainty on how these tariffs will unfold, but I think the main thing to keep in mind here is that this is, yeah, again, something that I think all international companies need to adjust to.
And we're first and foremost focused on finding ways to meet the big unmet need there is for good mobility solutions and are ready to do whatever adjustments are needed in the short term if tariffs will be introduced. So, yeah, just overall optimistic around the future prospects and are excited to be now already into a new year. Maybe I'll pause here, Michael, to.
Yeah, shall we jump to some questions?
Yeah.
There's a question, and can you move your production if there's tariffs, or does it give any meaning to change in a supply chain that works and you can optimize and work with if you have? Sometimes we can discuss it, but if you have very high margin products, the risk of doing something to avoid something might not be worth it, so any thoughts about mitigating by moving any production or anything should it come?
I think the way I would answer that is I think it's fair to assume that we are now heading into an era where some tariffs will be a reality, at least more than what we've been used to over the last many, many decades, where this has not really been an issue. So I don't think this will trigger any short-term actions. I think companies with similar footprint and similar supply chain structures as we have will learn to operate within this new environment and will adjust their supply chains and will over time set their structures such that they are in as optimal as possible of a position to operate successfully within then a new reality, whatever that means. Moving production is obviously a major undertaking and not something that will be decided on in a short-term context.
These are all long-term decisions that are important decisions that can impact competitiveness and will be taken only with very careful consideration and, let's say, as much of a long-term view as possible.
And maybe just to dive in, and you don't need to give exact answers, but how much of your business could be affected? How much do you know maybe of your cost base or sales? And secondly, I guess you are in a kind of a duopoly in this, and the other one is a big German company. So is there any competitive, not advantage, but at least not a disadvantage from that now we are talking about the U.S. tariffs? So a little bit about how big a problem is it actually? We talk a lot about it, but how big a problem is it for you? And maybe a little bit on whether it would put you in a wrong footing competitive or the competitors have the same problem as you would have the same problem?
I mean, first and foremost, there's a lot of just uncertainty on how and whether and to which degree these tariffs will be implemented, but from what has been talked about today, if that will materialize, it will have an impact, but it won't fundamentally change our business. Yes, it will increase costs from one day to the other, but it won't fundamentally change our margin structure. It will have an impact, but not, let's say, turn everything upside down. I don't know whether that's a good answer, but it's going to be.
It's a very good answer. And I guess looking at your guidance, you guide from 2020 to 2021 potentially, that must be kind of an indication that that's a very firm target. And I know something can happen out in the world, but I guess that is an answer to everybody who asked this question, is that you are still comfortable guiding it being better even with this uncertainty. Should we understand it like that?
I mean, we haven't factored into our guidance that these, let's say, that some of these big changes will come into effect. If that is a reality, we will see whether we need to reevaluate guidance. I'm not saying we will, but we will obviously have to go back to our spreadsheets and see whether we need to do that. But there are a lot of, let's say, considerations that come into play here. In some markets, we will pass on or have to pass on some of these cost increases into pricing. We will also have to see what impact it might have on our cost base as some of our vendors will be impacted by this as well. But you've touched on a key point there with regards to competitiveness.
I think it's fair to say that if we look at our competitive landscape, many or most companies have supply chains that are largely similar in nature as us. I mean, we don't see a reason to believe that this will change the relative competitiveness in the market from one day to the other. So that's obviously a key factor here. But I understand that there's a question around this uncertainty, but let's not let it overwhelm us either.
Overshadow. Perfect. There's actually a question. Do we have any American competitors in your areas? Just to, or is it primarily your competitors are also from the European?
Yeah, I mean, we have some, let's say, U.S.-focused companies that do have manufacturing in the United States. Small, you could say, from a market share standpoint, somewhat smaller than you could say the larger players in the industry. So there are a few of those both on bracing and prosthetics, but.
Not in the high end. Is that correctly understood?
No, I think, let's say, none of the large-scale, let's say, vertically integrated complete providers are not U.S.-only based companies.
I promised, even if it comes, no more questions about that.
No worries.
There's also a question. Is there any risk to the new government of this reimbursement? And a question maybe more relevant because that's hard to answer. Has it ever happened before that you do a long process, you do calculation, you think this is valuable to do the reimbursement, and then some administration changes and something changes? And I am not asking you to remember 50 years back in your industry, but just can you come up with any time it has ever happened?
Not in, let's say, recent decades, there hasn't been any fundamental change in well-developed healthcare systems where access to prosthetics has been drastically minimized. That has not been the case. There have been changes around approval processes, documentation, requirements of better, let's say, outcome state, etc., which is all very positive development. If we look back across all major, you could say, mature well-funded healthcare systems where we conduct most of our business, the general trend has been gradually more access to high-quality mobility solutions. It's also worth keeping in mind that this is perhaps not the biggest spending area when it comes to most healthcare systems. It is a very, very clear correlation between access to good mobility devices and the cost burden for the respective system. All is equal, the more mobile are, the less costly it is for the respective system.
So we believe we have a very, very strong value proposition for payers. But I will never say that there's no risk around reimbursement, of course. But I always remind people that if there's a change in reimbursement, it will have a short-term impact. It will not have an impact on the demand side. The need is not going to go away. Those that depend on our products and services, they will need to upgrade, maintain, renew their mobility devices irrespective of how these things.
I think there's a short outage there. We will just wait until Sveinn gets back with the rest of the questions. They have a big snowstorm in Iceland, so I guess there could be problems. Can you hear me, Sveinn?
Yes, I can hear you now. Sorry.
Yeah, perfect. That was just a short outfall.
Oh, okay.
But I think you answered the question as good as possible. Then there's a question about any M&A that's also part of your long-term strategy. Have you identified any M&A targets and should we expect anything on that front in 2025? And I know, of course, you can't tell us precisely what you're thinking, but should we read anything into that you now start back your share buyback program, or is there more than enough room to do both?
There's room to do both. I mean, cash flow is strong. Cash flow was really good here in 2024, and we expect good cash flow here in 2025. So we do have an M&A pipeline. We are looking at opportunities both on the patient care side and looking at technology or product that fits into our infrastructure. So we still have an M&A pipeline. And I do expect us to make some investments here this year, but we can do both share buybacks and do some of these small, medium-sized acquisitions on top.
Perfect. Then there's Q4 looked a little bit soft. Was there any specific issue behind that?
What I would like to point out, I mean, our prosthetics and new orthotics did really well, 12% organic growth compared to 9% in same quarter last year. Bracing was slower, low single digit. However, patient care was we had a small decline in patient care. The big reason for that is that we had somewhat of an extraordinary impact, revenue recognition impact that boosted our growth in quarter four, 2023. So unfavorable comparison. But also maybe it's fair to say that patient care was a little bit slower than what we anticipated here in quarter four, but we don't see this as a trend of any kind. So we still expect decent growth here in patient care for 2025.
So a strong comparison base. Any movements in stocks, not the stock market, but in inventory or something like that, that can also sometimes shift something between quarters. Did you see anything of that?
No, nothing. I would more point towards this comparison issue. With the absence of that, we would have had growth in the patient care segment here. On a run rate basis, we are growing in patient care. That's perhaps the main point.
Can you put a little bit some words on how you expect Europe versus U.S. performance in 2025? You have the reimbursement, and you had Europe coming really, really strong outside this year. I guess there's a tough comparison base. When we see your growth composition, should we expect a little bit more out from the U.S. region?
Yeah, you should expect more balance here in 2025. 2024 was a little bit unusual in that respect. The Americas was soft. The way we've explained that is as we were up. 2023 was a year where we did see some release of pent-up demand from all the COVID disruptions that took longer time to unwind in the Americas than in many other European healthcare systems. So we were up against those comparisons in 2024. So I would expect more balance, you could say, between the regions here going into 2025.
And then maybe a little bit about your guidance, the 5% and the top end, the 8% above yours. Is it U.S. reimbursement, or is it also Fior & Gentz? I had the enjoyment to meet the management there, and they sounded pretty bullish about the future there and your potential to roll it out, so what is taking your top end of the guidance above your long range this year? Is it a combination, or how should we look at it that if you succeed there, then you're seeing the U.S. roll-out or maybe also the Fior & Gentz acquisition really performing? Because I guess you must have had around 3% on top of your organic growth, if I can calculate something like that, so they seem to have performed pretty strong, your latest acquisition.
Yeah, let's say you're right. I mean, if we are delivering in the upper end of our guidance, that needs to be, you could say, stable performance in our cross-business, across our segments, and stability and good contribution across all our major regions. But what can push us in the upper end is the reimbursement change in the U.S. It is new product launches and its continued solid execution on Fior & Gentz. So these will be the main factors. That's correct.
Perfect. Thank you, Sveinn. I think that was the last question. So, thank you for joining in and answering questions and presenting your result. So, thank you to everybody also for listening in. May everybody have a nice day.
Thanks a lot for having me here. Have a nice day.