Hello, and good morning, everyone. Welcome to Fagron's Q3 2026 trading statement webcast. I am joined today by our CEO, Rafael Padilla, and our CFO, Karin De Jong. We will start by discussing the company's performance and a closer look at regional developments, and afterwards, we will open the floor for questions. With that, I will hand over to Rafael.
Thanks, Ignacio, and good morning, all. We're pleased to report another quarter of growth. Revenue reached EUR 281.3 million, up 23.2%, or 19.5% at constant exchange rates. Organic growth at CER was 3.4%. Performance was led by EMEA and Latin America, together with Brands and Essentials in North America, which grew 26.1% organically. Our acquisitions also made a strong contribution. In North America, Compounding Services was impacted by the third-party industry-wide IV bag recall earlier in the year. Supply has now stabilized, and we expect volumes to recover progressively through the fourth quarter. During the quarter, we completed the acquisition of Injeplast in Brazil. This means all previously announced acquisitions are now closed and integration is on track. Finally, we're confirming our full-year outlook to revenue of EUR 1.125 billion - EUR 1.150 billion with an adjusted EBITDA margin of 19.5%-20%. Let's now look at the regions.
In EMEA, growth was broad-based across countries with organic growth of 6.5%. Compounding Services led the way with 13.3% organic growth, driven by important new customer wins and strong underlying demand. Brands grew 7.3%, supported by new product launches. Growth in Essentials came mainly from our recent acquisitions. In Latin America, organic growth was 9.7%. Essentials grew 11.9% organically at CER, supported by a successful Consulfarma fair. Our acquisitions in Brazil added further growth, and reported revenue also benefited from currency. In North America, Brands and Essentials had another strong quarter, with organic growth of 16.1% in Brands and 28.8% in Essentials. Compounding Services was impacted by the third-party industry-wide IV bag recall, now fully resolved, and this explains the organic decline of 2.8% for the region. We continue making progress across our expansion projects and expect to bring them online over the next two years.
Moving to our outlook, we now expect full-year revenue of EUR 1.125 billion - EUR 1.150 billion, and an adjusted EBITDA margin of 19.5%-20%. CapEx will remain at around 3.5% of revenue, excluding the one-off projects already announced. Looking ahead, we believe Compounding Services in North America has reached an inflection point, with IV bag supply stabilized. At the same time, our expansion projects remain on track. Together, we add more than $500 million of revenue capacity in the 2025/2028 period, including Tampa, Wichita, and Las Vegas. As said, all announced acquisitions now closed, and they will contribute for the full year in 2027. We're also happy to announce that we'll hold a Capital Markets Day at our Wichita facility in October 2027. We'll discuss our upcoming growth cycle, as well as visiting the current Wichita site, and at that time, the almost completed expansion.
To conclude, Fagron is the only global vertically integrated player in fast-growing, fragmented pharmaceutical compounding market, with a defensive, high cash generating business model. Our diverse geographical footprint makes this model resilient, and this quarter shows the strength of that diversification. Together with demographic trends and our focus on personalization, this is the basis for our success. Our quality focus and operational excellence initiatives continue to unlock global synergies, while disciplined M&A remains a key part of our growth. Sustainability is a strategic cornerstone for us, as together, we create the future of personalized medicine. With that, let's open the line for questions.
Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press pound key five on your telephone keypad. The first question comes from Stijn Demeester. Your line is open. Go ahead.
Yes. Good morning. Stijn Demeester, ING. Thanks for taking my question. I have a couple. The first one is on U.S. compounding. Can you take us through the quarterly performance there? Because despite the absence of GLP-1 comps, organic growth actually declined versus the first half. So what visibility do you have on resolution of the IV bag issue and the subsequent volume recovery in the fourth quarter? Can you help us understand what the underlying performance of the life cycle related to that AnazaoHealth was during the quarter? Second question is on the guidance. The upper and the lower end of the range suggests around EUR 25 million revenue delta for Q4. Is U.S. compounding here the main driver, or should we take into account other moving parts? Then on 2027, you mentioned there a strong outlook, the midterm objectives, if I'm recalling right.
An acceleration of organic growth actually is embedded as of 2027. Can you reassure that is still in the cards for next year? Thanks.
Good morning, Stijn, and thanks for your question. Very good question. The first one on the U.S. compounding business. When you look at the last five quarters, we have had, of course, two quarters last year with the normalization of the GLP-1s, which we already announced, and we have commented many times. Then the first quarter of this year having the same pattern as the other two quarters with the normalization of the GLP-1s. In Q2, we had this effect of the GLP-1 effect and the third-party industry-wide IV bag recall that we also commented. That impacted the last part of the quarter in Q1 and then full in Q2. Also as explained, we would have an impact during Q3 because of the revalidation of these IV bags, the prefilled IV bags. This is what we have seen during this third quarter.
When you compare with the first half is, of course, lower, and that's because during the second quarter, of course, the last weeks of the first quarter and the second quarter, we still had some batches from some plants of this vendor. This vendor has different plants, different factories, and we had different batches from these different factories. Not all these factories were affected, only some of them. Of course, we're holding these batches for our committed supply program, which we have discussed many times since we start with FSS. Remember, we have said we have always standing orders, daily standing orders, that CSP, committed supply program. Those are the loyal customers which reserve, and we reserve inventory for them. Therefore, we have good visibility on our sales. Of course, on top is the new customers that we're adding or new SKUs to those customers.
During Q3, we didn't have this inventory while we were revalidating. At the end of Q3, we had that one revalidated, so we can now again compound with those IV bags. At this moment, we are now in Q4, some days, eight days in October. We're gaining traction, and we are delivering, of course, first to the loyal customers and then the business on top. Of course, during Q4, it will not be one big step or big jump because we need to respect the sales cycle of the customers. That's quite clear to all of us. However, we see a nice pace of recouping these sales. We also need to say that when—
And—
Oops.
Sorry.
Go ahead, please.
Go ahead.
No, please. I just wanted to finish that saying that normalizing the GLP-1s would be at the year-to-date growth, 6%, Stijn. The last comment is that we see a strong underlying demand of the hospital outsourcing market and AnazaoHealth, which you also asked.
Yeah. When do you expect to be at the normal run rate? Is that somewhere along the first half or is that end of Q4?
Yes. We believe that will be during first quarter of next year. You said first half, that is correct. However, we see good pace, and we are having now almost the [Sorbon] back online completed. We are quite confident that during Q1, we should be the business back where we left it during Q1 this year.
Perfect.
Then maybe it is time to comment on AnazaoHealth, because you also asked a question on AnazaoHealth. How is AnazaoHealth performing? We see nice developments at our AnazaoHealth, mainly driven by our Tampa facility. Remember, Stijn, that our 503B facility in Vegas is at 90% capacity, therefore now we are expanding that site. The whole growth comes from the 503A facility in Tampa, the new one, and that is mainly driven by strong health and wellness driver longevity, and of course, the telehealth platforms, which in the U.S., as you have asked many times during the calls, it is huge, the telehealth platforms impact.
Yeah, maybe to comment on the guidance. Indeed, the range in the guidance, the EUR 25 million, is driven by Compounding Services in the U.S., and the pace of the sales increase in Q4. As Rafael mentioned, the industry-wide recall had an impact on our outputs that is stabilized now, and the volumes are increasing throughout Q4. We do have an impact of timing of sales cycles and also commitment of orders to other players in the market, and that determines the pace of growth in Q4 and therefore the range that we have given in our guidance. That is the main driver. Then at the last question on 2027, the operational elements are behind us, so we expect 2027 to be full on track. We have all the M&A integrations behind us. We have the capacity expansion coming online.
We invested in quality and in operations this year. So 2027 will be a very good year for us. Reminds that the demand in the market in the U.S. is very strong and that remains strong. So we keep on track for our long-term guidance.
Thank you.
Thank you, Stijn.
Thank you, Stijn.
Thank you.
The following question comes from Frank Claassen from Degroof Petercam. Please go ahead.
Yes. Good morning, all. I have got two questions. First of all, on EMEA, that was a strong organic growth, the strongest I can remember, 6.5%. Could you elaborate, what were the main drivers, and is this growth the new normal? Is this sustainable? That is my first question. Secondly, on the situation in the Middle East, it continues to be, let us say, volatile there. Is there a change in the impact of the situation in the Middle East? Do you see impact of higher oil prices, higher API prices, logistical costs? Could you elaborate on that one? Thank you.
Yes. Thanks, Frank. Good morning. Starting with the second question, we see now a stabilization of pricing of raw materials. Even some raw materials, we see now a decline, mainly on the pharmaceutical market. We see a decline, and that tells us that the situation has been stabilized. With transportation, we see slight increase. However, not the huge increases that we have seen in the past. Of course, that is always the question that you always ask about operational excellence. We are now bundling a lot our volumes. The Pharmavit acquisition, which has an 80% of product comparable with the rest of the assortment, is helping us with these volumes. The teams there have a lot of experience on procuring in Asia Pacific. That is good for us. On the EMEA side, the new normal, we would like to. That is a nice question, the new normal.
We do not believe that that is the new normal. It has been an exceptional and an amazing quarter for us. During this year, we have seen a really nice performance. Also during last year, since Kostas, the new area leader in EMEA, took over, we have seen a strong operational performance with product portfolios alignment throughout the countries, which was always our challenge. Different countries, different languages, different labels. This has been addressed by Kostas and the team. Of course, a strong operational strategy with our factories in the Czech Republic and in Poland as well. For sure, the procurement synergies that we have just spoken, discussed. Next to that, what we are seeing is that our Compounding Services business, and that is mainly the Netherlands, as you know, it is doing quite well, better than expected.
Next to the wholesalers, we see nice customer groups like GPOs, Dutch GPOs, which are now giving business to us. That is because the breadth of our assortment, we have the biggest assortment in the industry. This plays a very important role. Commercial excellence strategy that we have together with the teams in the Netherlands, and this is paying off. We believe that we will see nice developments in Europe. The new normal, we wish that would be.
To add, Frank, on the guidance for EMEA. We indeed had a very strong third quarter, and we guide for this year at a mid-single digit percentage of growth.
Okay. That is clear. Thank you very much.
Thanks, Frank.
Thank you, Frank.
The next question comes from Michael Heider from Berenberg. Please go ahead.
Yes. Good morning, Rafael, Karin, and Ignacio. I have a couple of questions. Some housekeeping here. Can you tell us when exactly is the Injeplast consolidation, and remind us on the cash out of the acquisition? How much expansion CapEx do you expect for full year 2026? Maybe a word on your M&A pipeline. We know you have been very active over the last 18 months, and you said you would slow activities down somewhat, and focus on integration, but maybe you can elaborate a bit on your pipeline. Last one, just on the IV bags. I am not sure that I got it right. You said the underlying growth would have been 6%, or can you repeat what you have been saying on the underlying growth you have been seeing? Thanks.
Yeah. Good morning, Michael. I will start with the first question on the Injeplast acquisition. We are happy that we could complete the Injeplast acquisition as of the 1st of September. If we look at the financials of the acquisition, the revenue is a low double-digit amount with margins that are in line with group average and a multiple that is paid between the average rate that we have, and that is 6x-9x EBITDA. Injeplast, maybe a short reminder, is a packaging company. We are adding product capabilities to that region, and it fits nicely with the Vepakum acquisition that we announced earlier in that region. That is one on the Injeplast. Then on the expansion CapEx, we have roughly EUR 70 million of expansion CapEx, two in the U.S. and one in the Netherlands.
We had roughly EUR 10 million of that spent in H1. The rest is spread in H2 and apart next year. The exact split is a bit difficult to give because of timing of ordering, invoices coming in, and payments. But the split is between H2 of this year and H1 of next year. Then your third question, the 6% was related to the growth if we normalize for the GLP-1s year to date. If we come back to the IV bag part in North America, what we see there is that Compounding Services in the third quarter showed a decrease of 12.9% organically against constant exchange rate. What we would have expected was a low double-digit percentage of growth. The delta between those two, that is the impact that we have of the IV bags. That is not the 6%.
I hope that clarifies it. Maybe on the M&A pipeline? Yes, as you know, we did a lot of acquisitions at the end of last year and early this year. Integration is on track. There was strong focus on the integration this year and in the first three quarters because we want to benefit from the synergies of those acquisitions. We have a pipeline, a pipeline that fits within the strategic rationality that we have on acquisition. That is geographical expansion, market consolidation, or new products or process capabilities like Injeplast, for instance. We have a full pipeline spread over the three regions and in the new one, and in Asia. We expect to do deals in the course of the next quarters. Timing is a bit more difficult to predict. As you know, it is family-owned, smaller companies that we acquire.
But we continue to have a disciplined approach on pricing. We expect to do a couple of deals and then accelerate again back next year with our inorganic growth strategy.
Great. Many thanks, very clear .
Thanks, Michael.
Thank you very much, Michael.
The following question comes from Eric Wilmer from Kempen. Please go ahead.
Good morning, everyone. I have a follow-up on the IV bags situation. It seems like warning has moderated somewhat over the past months or maybe weeks, where I believe that the previous and relatively recent expectation was that the IV bag situation would see its historical run rate in Q4. I believe that you now have that situation has stabilized with progressive recovery during Q4. Could you perhaps take us along what has the past few weeks or maybe months that this step-up is taking a bit longer than expected? Could this also risk push any recovery into maybe Q2? I think you highlighted Q1 next year. Kind of wondering if you can provide a bit more granularity there. Thank you.
Yeah, so if we look at the situation, indeed, we had a soft Q3 on the back of the IV bag issue. At the end of the quarter, so that is a bit later than we anticipated, the bags were back online. As you know, quality is key for us, Eric. If we have to push it a couple of weeks to be sure that quality and operations are at the best, we do that. We see a bit of delay there in timing, and therefore it runs more through Q4. As said, and as Rafael also mentioned, we have a timing of sales cycles from our customers that we have to deal with, and that's a bit difficult to estimate. It's not a linear process, so we need to see how that plays out in the fourth quarter.
However, as we already mentioned, we see a very strong demand. We have good sales teams with a lot of experience in the market historically, so we kept good contact with our customers. We are confident that during the course of Q4, we will pick up in sales again. We see a bit of delay early on because we do not jeopardize on quality.
Yep, understood. Thank you.
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Okay. Well, thank you very much for your participation today. I will remain at your disposal should you have further questions. Thank you all, and goodbye.