Welcome to today's presentation, where we have the pleasure to present Embla Medical. To our pursuit of today's presentation and answer a question, we are joined here by Sveinn Sölvason. Q4 for your full year report, and of course, next year's guidance is in focus here. How did you end the year, and how are you looking into the new year? I think we will do that on a high level, and then let's take a lot of questions, getting through it. As always, you're very welcome to ask questions in the box down below. Very welcome to do it in Danish also. I will try and translate to the best of my ability. But I think I will leave the floor to you now, Sveinn.
Thank you very much, Michael, and thanks for having me here this morning. I will say a few words about the year, and our quarter, and then we can dive into the Q&A. I'll maybe start summarizing just a few points around the full year. This was an eventful year for Embla Medical. Once again, we grew our business both organically and through acquisitions, and we were grateful for some recognition around our efforts around our sustainability efforts. We launched new products, new innovation. So overall, an eventful year for our organization.
I will also say that this was one of those years where we saw big change in our environment, our operating environment with the introduction of tariffs and more geopolitical uncertainty. These changes have, in many ways, had fundamental change to the rules of how international companies need to think and operate. I think we've weathered that storm very effectively, and I think that underlines the resilience in our business, and I think that resilience is reflected in the numbers that we have generated for the full year. If we look at the highlights both for the quarter and the full year, starting with quarter, we delivered solid growth, 7% organic growth. In dollar terms, our business is growing 14%.
We do have some positive impact from, or just an impact from, a weaker dollar that translates into more dollar sales because we have sales in many other currencies that are now worth more in dollar terms. And we had also a 3%-point impact from the acquisition or the investment we did in Streifeneder here in the second half of the year. Our margins for the quarter are a little bit lower than in the comparable quarter. However, what it's important to keep in mind that there are a few things there that are impacting the margin that which are tariffs, about $2 million. It's also an FX impact in the quarter of almost a full percentage point when we compare to same quarter last year.
And then we are making investments in our patient care platform to set us up for growth and better operational performance here in 2026. And then again, if I zoom in on the year, reported growth of 9%, 6% organic growth, and an EBITDA margin of 20%, which is slightly higher than in 2024. So, I again look at this year as a year where we delivered solid growth and solid margins and very, very solid cash flows. We delivered free cash flow of $100 million, which is, in all, both absolute and relative terms, the strongest cash flow we've delivered in a full year. When it comes to some of our key initiatives, we've talked a lot about this year, our efforts around the patient care business. We are taking the next maturity step in our patient care business.
We have over the last decade acquired very good companies that provide services to the people that need our products and services in our most important markets. Over the last 18 months, we've taken a step to consolidate that business, roll out one brand, unify systems and processes, and set us up such that we can ultimately deliver great patient care, deliver an environment which is good for our clinical workforce that every day is seeing patients and enable them to see more patients and deliver great patient care. That's our goal in our ForMotion franchise. And we've made significant progress this year and expect to during 2026 set to deliver at least in line with market growth and see an uptake in our profitability also. Also proud of our progress when on the innovation front.
We have new products in the market during the year, new bionic products as well as very meaningful addition to our core business on the mechanical side. And this has always been the heart of our business, essentially, to make meaningful investments in innovation that translates into products and services that makes lives better of the people that depend on our products and services. Ultimately, we're signaling in our guidance that we expect to deliver another good year here in 2026, guidance of 5%-8% organic growth, and EBITDA margin of 20%-22%. And it's important to look at that in the context of our current strategy, our Growth 2027 strategy, where our ambition was to grow the business organically between 5% and 7% and then add 2%-3% from M&A.
That's what we've delivered consistently every year in 2023, 2024, and 2025. It was also our goal to deliver consistent increase in our underlying margins. That's also what we delivered in 2023, 2024, and 2025, and that's what we expect to deliver again here in 2026. With those words, Michael, I think I'll pause here and open up the floor for questions.
Yeah. It actually touched upon the dollar. I think everybody is looking at everybody saying it needs to go down. It raises your revenue because you report in dollar, but it hits your bottom line. Is that how have you taken that in? Is that correctly understood about the dollar? And secondly, how have you taken that into considerations in the 2026 guidance?
Yeah. So basically what we at current exchange rates expect the margin to be negatively impacted by about 30 basis points here in 2026 over 2025, assuming constant exchange rate. So we are very transparent about the currency mix in our income and cost. The big picture there is that the dollar is up around 40% in cost and income. Then on the euro side, there we have a little bit of mismatch. It's about 30% cost on 30% income, 20% cost.
Yeah.
And then the Icelandic króna is the third big variable here where we have 10% of cost but no income. So these are the crosses that we need to be mindful of. And then there's a long list of other currencies with the remaining 30% of income and cost. But if we have the euro and the Icelandic króna largely moving in tandem with the dollar, we should have a reasonably good natural hedge. But we also do hedge, or let's say hedge a big part of our Icelandic currency or Icelandic króna exposure just to minimize the impact of fluctuations there. So our natural hedge is decent, but we can expect some fluctuations in key currencies going forward.
And then look a little bit on your guidance. You are guiding 20, 10%-22%. It's a little bit wider than you normally do. Is that because of the dollar? Is it because of tariffs? You touched upon it that you are not 100% certain on that. I guess you're still guessing the levy, meaning that to enable people will stick. So let's not make any big fuss about it. That's a question. Are there other variables coming in here? Because I actually also got a question. What about we are seeing some expensive metals rising up in price, chips rising up in price. I know it's primarily memory. I guess you don't use that so much. So a little bit about why a wide range of guidance? And are you pressured from other sides than the dollar?
Is that tariffs you are not certain on? And maybe on your input cost side, is there something there that could pressure you?
Yeah. Always when we set guidance, we make some assumptions about how this business will develop for the year. And if I allow myself to take kind of a step back and look at where we were a year ago when we set the guidance for last year, 20%-21% EBITDA margin, we what we did not sort of know at that point were the tariffs and obviously how the FX environment would develop. These were kind of the perhaps the biggest changes to our estimates, or how we anticipated the year would unfold. These elements are still there going into 2026. We will, at current tariffs, our tariff cost will be a little bit higher in 2026 over 2025 because we'll have full year of tariffs.
Last year we had only the tariffs came in sort of gradually during the year, and didn't impact us fully. So there'll be a little bit more of tariff cost, and the FX environment is a little bit different. So these are definitely aspects that have an impact in terms of how we think about margins for the year. Then there's another key theme for us in 2026: the progress in our patient care business where we had a lot of investment last year, cost which we will not have to repeat here in 2026. For example, the brand change and some cost restructuring that we went through in 2025. These will not be repeated in 2026.
But what will our underlying performance in patient care be one of the determining factors of where we end up in that 20%-25%, 22% range. But our goal is still to increase margins, as we've done consistently here over the last couple of years. But the broader range, yes, it is a consequence of the external environment that we operate in at the moment. On the input side, we don't. Yes, there are. We're facing some increasing cost of some key materials, and are working hard to compensate for that with efficiency initiatives on the manufacturing side to help us increase efficiency and productivity and drive down our unit cost. And we were successful with that in 2024, and that's what we're working hard on here in 2026 again.
Yeah. Because one of your drivers for the last couple of years has been this, increased efficiency. So that, that's actually working for you, fine. It's the external environments that are going in and pressuring. Should we understand that correctly?
Yeah. There is, there is some movement around key input price, but that's always a reality. Every year we face pressure on our labor cost. We face higher input cost. We are; our business is a low-volume business, and our purchasing power as such when it comes to big commodities is marginal. So we will always need to run an operation where we can continuously find ways to improve our processes and improve our efficiency to counteract some of the cost pressure we have on our inputs.
Perfect. Then actually on the patient care, and I think you touched upon it, I guess that's a high fixed cost base. So if you get your growth back and you don't have to invest there, that will be a meaningful impact to the margins if that succeeds. Is that how we should understand it? And how has Q4 been on the patient care? Do you see some acceleration that gives you the optimism going in there? And secondly, what are you expecting next year for patient care? But I guess that's one of the drivers that will probably take you to the upside. I will come back to the question on the guidance.
Yeah. You're, you're spot on, Michael. The nature of our patient care business is this is, in many ways a retail healthcare business. We operate close to 200 clinics in 11 countries that are every day, every day are servicing an existing population that continuously need to maintain, upgrade, and renew their mobility devices. And our, our, our ability to deliver, financial, progress and financial success depends on our ability to deliver, great patient care, effectively. We have a, a clinical workforce that is, super motivated to do a good job, and it's our job to provide them with the best possible environment to see a patient because the need is there. The demand side is essentially there. The reimbursement is there.
These initiatives that we've done this year in terms of building one brand, where we will now start to be able to communicate more effectively of what that is about to both the patients that rely on our services as well as our clinical workforce and those that we want to attract to work for us in our ForMotion clinic. So yes, it is a productivity business, and we want to create the best possible environment for our clinical workforce to do the best possible job. So as we start to see more growth in that business, that will translate into we'll get more operating leverage on t he fixed cost we have in that part of our business. Yes, exactly.
And I think we talk a lot about the problem, Charles, and not that you're really performing in your big league. And talking about patient care, me looking out there and because I understand it's important for the margin, that's why we are touching upon it, technology. You know, I now see that, you know, we are starting to see technology because I guess there's a lot of administration, a lot of paperwork needing to be filled. You know, talking to the patient needs to fill out journals instead of just treating patients, right?
Yeah.
Are you implementing some technologies, you know, AI? It's always a buzzword, but actually that is what it can do, ease the administration and maybe, you know, take away your protocoling when you are talking to the patient and spending time with the patient. Are you seeing some investments there? Are you seeing some technologies that you actually expect maybe could lift your efficiency in the future there?
This is a good example of what it means for us to build a global patient care franchise. It means that, all is equal. Our ability to deploy technology at scale is enhanced. And pulling this lever that AI certainly is in the clinical environment will be one of our key initiatives going forward, because this is one of those clear use cases that can help us exactly with what you are pointing towards is some of the complexities around documentation, around reimbursement, because that's different in each and every country.
Yeah.
This is an area, yes, for sure, where AI will be a quality as well as productivity lever in the clinical setting. Yes.
And then, going back to the guidance, I think we touched upon the margin side, the top end of your guidance range. I'm looking at you. You had a lot of product launches. You, I think you now indicated that the reimbursement changes last year, they will be slow. They are big, but they are slow. Will actually give you an effect. You are more optimistic on patient care. What is that all that needs to succeed there and to the high end of the guidance, or do you need to also pick up some bracing, which is still a little bit of a laggard on your growth?
Yeah. I mean, for us to deliver in the upper end of our guidance, we need to continue to see the strong performance we see in our core product, chronic solutions, business, where we are essentially a product supplier to, again, a population that consistently needs to maintain and upgrade their solutions. And most of the products we ship out the door are used exactly for that, maintaining existing or upgrading existing solutions. So we've been growing in that part of our business close to double-digit. That's not easy, but that's what we will require from that part of our business. We'll also need to get back on track in patient care, and that means delivering around mid-single-digit organic growth rate. And then we need more from bracing than what we did see in 2025.
Now, the difference between 2025 and what we have here going into 2026 is that we have some important product launches on the bracing side, product launches in big product categories. But I will though still say that this is the part of our business where we have the most, let's say, the competitive environment and some structural headwinds. But, but with that still being said, the bracing part, which is 14% of our sales, we are well positioned in key markets where we are supplying products that are part of the standard of care in each and every healthcare system. These are post-operative braces. These are, these are braces for helping people with steel kit or osteoarthritis in the knee. And these are these are solid healthcare solutions.
But again, we're fighting price pressure and some reimbursement headwinds in pocket. So we need to do better than in 2025, to push to for bracing to contribute to pushing us in.
To contribute, getting you up, yeah, yeah, yeah. And there's actually a question here. What are you doing in bracing? You talked a little bit about product launches. Is there something to buy? Would size matter for you, you know, or is that too low tech that you would never or you wouldn't utilize some of your capital to buy into that area? So any thoughts about, is it only product launches, organic growth, or is there also something you could do to kind of give a push to that, on the M&A side?
Well, if again, going back to our overall portfolio, we have these three business areas. The chronic solutions, which is 50% of our business. We have the patient care franchise, which is 33, 40, 34% is. And then we have bracing, which is 14%-15%. So it's a smaller part of our business. That's the only thing we do, which is acute mobility, not chronic. We do have a very strong position in some of the biggest healthcare markets. And our goal is to continue to increase the quality of that bracing portfolio. We have, again, if I look back, we've taken steps to actually make our business or bracing portfolio smaller. We've stepped out of categories and markets with where which is further away from our, our you could say our core channel.
So I don't expect us to make any meaningful investments in bracing. We could acquire some product or technology that complements our portfolio, but unlikely that we would embark on any transformational acquisitions.
So the M&A, I should more support, like you have done there with Streifeneder and Fior & Gentz simply leveraging in a technology that is in one smart part of the world, a new leverage and up your technology knowledge and getting it out. That's where we should expect you more looking. Is that correctly understood?
That's correct.
Then there's yeah, there's a question here. You mentioned it's hard to know the tariff effects in 2026 in your guidance. You indicated you saw 2. I think I've heard you maybe on the call mentioning 6 just to get it into, let's, I guess, to take it a little bit down. It is an uncertainty. We acknowledge that, but it's not what wakes you up in the night, I guess, or how should we see that?
Well, no, not anymore. I would say that we've somehow adjusted, I would say, to this new reality. Yes, $2 million in last quarter, $6 million in 2025. And if tariffs are at current rates, we will have, yeah, close to $8 million for 2026. So as such, that no uncertainty, that's what it is. It can go up. It can go down, but we'll find ways to work around that. I think what people or what we focus our energy on and make sure we communicate to our internal organization is this doesn't change the fact. Tariffs don't change how many people need our products. The demand side is still there. And the reality really is still that the access and utilization of good mobility devices is very low.
That is a fact in mature healthcare systems and less mature healthcare systems. Our job is to get more people using better mobility solutions. That's how we create value for the individual and their families and also for healthcare systems. I always remind people that are looking at our business and trying to understand also the investment case, that that is essentially the core. We have, yes, expensive solutions. However, these solutions are effective from an economic standpoint for the payer because they lower the cost burden of having to support individuals with a chronic mobility challenge. Because if people are more mobile, all is equal, they're less likely to have other types of healthcare costs. And that is just a key theme in what we do and what type of company we are.
Final question before letting you off your hook. There has always been a lot of question in, you know, these big, American reimbursements changes. Do you need something in your product portfolio or something that more covers that segment perfectly? Are you expecting to launch anything? I know you have a pretty new program, but are you expecting to launch something in 2026 to kind of better target that? I guess I hear that, for some when I listen to analysts, asking you all the time, about that area. So I guess it is a focus area. So a little bit about, do you expect to launch something in that maybe better fits that segment, the better reimbursement in the US?
Well, first of all, the US is always going to be a big theme for us in terms because simply from a relative size standpoint, and that applies for most companies in healthcare. The reimbursement environment in the US is dynamic. And last year or over the last couple of years, we've seen great progress in terms of the system acknowledging the benefits of using good mobility devices. The example with the K2 expansion for the lower active part of the amputee population having access to bionics, and now also last year with the expanded reimbursement for neuroorthotics also. So the system is in many ways favorable, but the whole kind of fragmentation in the payer landscape can be difficult to navigate and as such. When it comes to pipeline, yes, we have an active pipeline.
Yes, we've talked about the need for us to have a microprocessor-controlled knee or a bionic knee that's specifically designed for the low active population. We're working on that. We will not launch that in 2026. But we do also have meaningful other launches in our business. I'm not going to,
Oh, no, I know you can't delay that.
We will have other launches in 2026, meaningful launches.
Meaningful launches in 2026 that will target that market. Yes. Perfect. I think that was the last question. Thank you, Sveinn, for taking us through your results and congrats with, I guess, it's an unrestful world, but, at least a little bit stability business, I think you are looking into. So, so thank you, Sveinn, and thank you for the audience listening in.
Thank you very much for having me here. Thanks for everyone listening in. Thank you very much.