Good morning and a warm welcome to today's Conference Call of Ottobock SE & Co. KGaA. Following the publication of the financial figures for the first nine months 2025, the CEO Oliver Jakobi and the CFO Dr. Arne Kreitz will speak in a moment and will guide you through the presentation and the results. After the presentation, we will move on to the Q&A session, in which you will be allowed to place your question directly via the audio line to the management. We are looking forward to the presentation, and with this, I hand over to Oliver Jakobi.
Yes, good morning also from our side. We're here sitting in Duderstadt, in the headquarter, and I'm happy to present our first nine months update. Yeah, we are looking back to a very successful nine months in 2023, and with all our strategic core initiatives on track, product launches and several acquisitions took place and are kicking off. The strong core revenue growth continued in Q3 and led to a year-to-date growth of 13.6%, respectively 11.5% organic growth. This strong sales performance is reflected also in our profitability. We have a substantial improvement of three percentage points in the underlying core EBITDA. That means a margin expansion to 24.3%. This all leads to our guidance for 2023, which was narrowed to the upper half of 9-12%, a core underlying EBITDA margin of 25-26%, which is confirmed.
At a glance, our numbers: the core revenue is EUR 1.158 billion, the 13.6% growth, underlying EBITDA of EUR 281 million, and the EBITDA margin of 24.3%, and also a very positive free cash flow development growth of 55%. In 2025, we launched several new products. In the upper limb field, we launched a new platform with a new control system, MAYO Plus, and a terminal device platform, which allows all our upper limb products to be combineable with each other and switch. This is something we were looking forward to very much, and this was launched in the middle of the year, and we do see quite a good track on this new technology. In the lower limb prosthetic field, we launched the Taleo Adapt, which is a hydraulic ankle system specially designed for certain markets.
First of all, the U.S. market, where a certain reimbursement is in place. Also here, we have a lot of traction. Overall, we can see that, especially in the foot segment, we are growing over market. With a 20% year-to-date growth rate, meaning we are gaining market share there. In the neuro-orthotic field, we have the C-Brace Interim launched, which means we are coming closer to the rehabilitation phase. We are coming closer to hospitals. That also means it's a higher conversion rate from people suffering from incomplete spinal cord injuries or stroke patients, which normally during the rehabilitation phase very often put in a wheelchair. We have now the chance to mobilize them from day one, which gives us access to a much bigger patient pool. The new Exopulse Suit Generation 9.5 is just launched now.
We are now busy with sending out new fit kits. There is an improved operational function, so we can install it better, more individual to certain patient groups. Also here, we do see, we do expect access to a larger patient population. On the exoskeleton side, we came out with the first powered exoskeleton, which was very well accepted. We sold the first experience packages already to our key customers and had very positive feedback from the market side. Ongoing, of course, there are always product refinements. There are product updates. This is something that we are continuously doing and will continue also in the future. On the M&A side, we invested in two technologies. Remedis is a technology specially designed for markets where we do have a lot of skilled labor.
Very often either emerging markets or markets where an extraordinary volume has to be handled with existing infrastructure. It enables CPOs or clinicians relatively fast and easy with a guaranteed quality outcome to fit patients with lower limb prosthetics. Also, Access is a technology in France, which has a certain reimbursement code. Also here, it's a new technology for lower limb prosthetics, how they're fitted to the patient. On the B2C side, we managed to get two acquisitions completed, one in Belgium with Manon and one in Australia, Northern Prosthetics. Both were very good strategic fits regionally-wise, but also from the portfolio which we are serving. Our venture investments on Onward Medical, it was now in October, but already done. We increased our stake in Onward Medical. Then we have Musclemetrix and BionicSkins.
These are two spinoffs of MIT and Phantom Neuro, an Austin-based company. All these venture investments are in new technologies. We are working towards the human-machine interface and having here now several options in order to be here front-runner in new technologies. On the non-core portfolio, we divested already last year A4 Access, a DME business, Cascade Orthopedic Supply. It is a distribution business in the US and Active Life, a California-based patient care entity. Where we are still ongoing is our human mobility business or the wheelchair business. We are in negotiations, ongoing negotiations with certain candidates. Next year, we also will go further. It is a smaller part of our business, the Ottobock Orthopedic Service. It is a billing service in the US, which we also will divest. That is so far from the business highlights. I would now hand over to Arne Kreitz with the financial update.
Thank you, Oliver. Yeah, I would like to guide us now through a little bit more detail through the financials. Oliver already gave us an overview on the key financials. Just a quick recap. Very strong growth on the core revenue side with all in 13.5%, which is driven by 11.5% organic growth rate. Then we have 3% impact from M&A activities, negative 0.9% from FX impacts. That is the bridge from the 11.5% to the 13.6%. Underlying core EBITDA, we are looking into an increase of 3 percentage points in the profitability in absolute terms, EUR 64 million additional EBITDA compared to last year. Very strong improvement in performance. We are also seeing a very strong free cash flow performance. An absolute increase of EUR 61 million in relative terms, 55% of an increase.
That means strong performance on the EBITDA side is also translating into cash. I'll come to that in more detail on the next slides. Going deeper into the revenue side, breaking the revenue into our segments across the regions. On the EMEA side, we're looking at an organic growth rate of 9.7%, very consistent development also compared to last year. The drivers are, as already discussed for the half-year financials, it's the innovations penetrating into the markets. It's new reimbursements that we have achieved, like C-Brace reimbursement in France. We are seeing continued impact of spike events. For example, Ukraine volumes we see are picking up. That's why EMEA is our largest region. It's an absolute contribution of EUR 97 million in additional revenue. That's all reflected in the 9.7% organic growth rate. Americas, very strong pickup.
We are looking into a 16% Organic growth rate, driven by strong performance on the B2B side. Again, innovations getting into the market, new reimbursements achieved on the Kinevo side. We are seeing volumes doubling on that end. We are also seeing a strong catch-up on the patient care side in the U.S. As you might recall, we had a bit of a slower start at the beginning of the year and had been given the outlook that we are expecting a catch-up in the course of the year. We have been clearly seeing that in the third quarter with a growth rate, which is, I think, in the area of 25%. Very strong catch-up on the patient care side. That all in all leads to a 16% organic growth rate in the Americas. Same picture in APAC.
We were looking at 16.5% organic growth, driven by innovations getting into the developed markets like Australia and Japan. Also positive development on the reimbursement side in those two markets. We are also seeing catch-up and build-up really of markets in the re-emerging markets. India is continuing to have a strong performance. That all reflects into the 16.5%. Consistent, strong growth across the regions. It is not the one driver. It is not the one market. Very consistent across the markets. Looking into the revenue split across the B2B and B2C business, we are seeing strong performance on the B2B side with 17.1% organic growth. That is consistent throughout the year. I repeat myself, driven by innovations getting into the markets. X4 is penetrating really well, but also the new reimbursements, like K2 reimbursement in the U.S. market, C-Brace reimbursement in the U.S. market is continuing to be strong.
France, we see first impacts of C-Brace reimbursement. Japan also. Very, very strong growth on the B2B side. On the B2C side, we're looking into 4.7% of a growth. Here, I'd like to recap that at the middle of the year, we've been standing at 2.9% of our organic growth rate on the patient care side. You can see the Q3 has across patient care been very strong. It's also consistent to what we have been given as an explanation. Slower start to the year, but we're expecting positive momentum throughout the year. That's what we're seeing on the patient care side. Underlying core EBITDA in more detail. Here's the overview. We're looking into 24.3% of all profitability. What you can see across the regions is that we're seeing a nice catch-up of profitability across markets.
You can also see that the profitability has become much more consistent throughout the markets. We are looking into 24.4% in EMEA, 23.5% in America, 25.7% in APAC. Here, we had given you the outlook that we are expecting that profitabilities will normalize across markets, as America is really catching up on the B2B side, but also on the patient care side. That is reflected in this consistent picture across the regional profitabilities. Underlying drivers are also consistent throughout the year. We are looking into a strong gross profit development, which is driven by mix effects. As higher components are driving the sales, they are higher in the relative gross margin. That is why that is cutting through. We are seeing an underproportionate growth on the material cost side. It is also contributing to a better gross margin. We are seeing scale-up effects basically throughout the entire organization.
This high growth, specifically on the B2B side, leads to scale-up effects, which we're seeing on the personnel cost side, on the OpEx side. That is driving profitability. Last but not least, we're also continuing to see that the efficiency measures that we're driving are giving us benefits. Shared services in Bulgaria are continuing to ramp up. On the manufacturing side in Bulgaria, we're continuing to ramp up. That continuously is also benefiting on the profitability side. Just in net income, also very positive. You might have seen that on the underlying core EBITDA side, we are looking at an absolute increase of EUR 64 million. Those EUR 64 million are more or less translating into additional adjusted net income. Additional adjusted net income in absolute terms is EUR 53 million. That means the key driver is really the additional EBITDA that we're generating.
We are seeing benefits on the interest side. The lower net debt levels in combination with lowering interest rates are having positive benefits, while we are looking at slightly higher tax payments because of the better performance of the business. All in all, if I'm looking into how the EBITDA result is cutting through into the net income, we are looking into a very good translation. One word on the adjustments. Just as a recap, key adjustment items are really the cost of the IPO, which is a special item for this year, and the management participation program, which kind of runs until the IPO. That is an effect which is sizable. The second impact is the impairment of EUR 31 million on our human mobility business. You might recall we have been putting it as an asset held for sale mid-year 2025.
That had an implication of an impairment of EUR 31 million. It is not new. Those two effects are the key drivers of the difference between adjusted net income and final net income. Cash flow is very strong. We are looking into an operating cash flow improvement of EUR 72 million, even stronger than what we have been seeing on the EBITDA side. That is driven by the fact that in the EBITDA, there are some provisions included. The higher sales are leading to higher warranty provisions. We partly have higher bonus provisions because of the better performance of the business than planned in the budget. That is why higher bonus provisions are leading to an even higher operating cash flow than what we are seeing on the EBITDA side, which is then on the free cash flow side counterbalanced by CapEx investments.
They are also fully in line with what we have been communicating. Our early capitalization is at EUR 30.5 million for the first nine months, and that is in line with what we had been communicating previously. Finally, looking into the leverage development, we wanted to give you a bit of the longer-term trending. Also, you can see the very continuous improvement on the leverage side. Now, at the end of September, we are looking at 2.8 turns. We had been giving the guidance to 2.5 turns, so that is unchanged. Probably we will be ending slightly better, but the overall trend is driven by a reduction of the net debt level with the free cash flow that we are generating. We are now in the position that the net debt levels are starting to actively reduce, while at the same time, the EBITDA is continuing to go up.
That is the underlying driver of the strong reduction on the leverage side. Very healthy development. That leads me to the guidance update for 2025. Driven by the strong top-line performance that we have been seeing in the first nine months, we are narrowing our guidance to the upper half of the previously given guidance. That means for the all-in core revenue growth, we are expecting 11.5%-13%. For the organic core revenue growth, we are expecting 10.5%-12%. That means we are very confident that the strong revenue growth that we have been seeing will also continue in Q4. Although we have to say, Q4 last year has also been having a good performance. That is why we are narrowing the guidance to the upper end of our previously given guidance. Underlying core EBITDA margin is confirmed at 25%-26%.
That is it in summary w ith that, I'd like to open the round for questions.
Thank you so much for the presentation. We will now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask your question in person via the audio line. To do so, please click on the raise your hand button, or if you dialed in via phone, you're going to be unmuted. We're going to start with Richard Fulton. Richard, you should be able to speak now.
Hello. Can you hear me?
Yes.
Thank you. Hey. Very good. Thank you very much for taking my questions. I'll start with three peaks, please. The first one, I was wondering if you're able to quantify how much of the 13% organic growth in EMEA year to date has been driven by spike events. That's the first one.
Second one, one area of the business, Richard, was a little bit softer through H1, was the patient care business in North America. I was wondering if you could update us on how trends progressed through Q3. My third question, I was wondering if you could share any early thoughts on 2026, how we should think about key drivers for growth, main headwinds and tailwinds for margin expansion. I guess overall, is there any reason why 2026 should deviate from the midterm targets you outlined at the IPO? Thank you.
Okay. Maybe we start with the last one. Look, when new products or new reimbursements are in place, it does not mean that we are switching from day one all existing patients on the new technology, on new products. This is only either new fittings or patients when they are due to a refitting.
Therefore, the penetration of the new products, new reimbursement opportunities is taking place over several years. Therefore, we do see also for 2026 continuously growing expansion there. Why did we have a lower Year-over-Year growth for next year? Because we had a very strong year 2025. We are growing on a different level. The additional revenue growth will be probably not at the same level like 2025. The question, the first one was regarding spike events.
Yeah. It's in the area of 2.5%-3%. I think you referenced the EMEA region, right? So it's 2.5%-3% of the EMEA growth, which is driven by spike events. The second question was, I think, on patient care North America performance. I think I mentioned it already. We're seeing a strong catch-up on the North America patient care performance.
Within Q3, the growth has been above 25%. Organically, Q2 has already been strong. We are really seeing a nice catch-up and gain of market share now finalizing the integration. That means all in all, in the US, we are looking into a year-to-date patient care growth of more than 8%. As said, it is the combination of the normal market growth and the catch-up after the integration that we have been running through in the last two years.
Plus, we installed a new CRM system, and we are generating really a lot of leads. This is also something which is fueling the pipeline.
Great. Very clear. Thank you very much.
Thank you so much, Richard, for the questions. Also, thank you so much to the management for answering the question. We have another question or a couple more questions from the analyst Hugo Solvet. You should be able to speak now freely.
Hey, guys. I hope you can hear me. Thanks for taking the questions. You just narrowed the sales growth guide to the upper half of 10-13% for the full year. You're trading at 13.6% as of the nine months. If we assume the midpoint, so around 11.5%, that would suggest a slowdown to the high single digits in Q4. Could you maybe, given the strength of the business, share your thoughts on what would drive you in Q4 to deliver on the high single digit growth and aren't you more comfortable with the top end of the guidance range, not just the upper half? That would be my first question. Second follow-up on Richard's question.
Could you maybe repeat just what you said about 2026 and whether or not we should expect any deviation from the long-term guidance that you broke up when you answered the question? And lastly, can you update on the K2 penetration for Kenevo in the US? Thank you.
Maybe to the guidance. As we mentioned already during the management presentation, we are the new kids on the block. We have to earn your trust. That is why our guidance is normally conservative. Under-promising or delivering, we would like to stick with what we gave now. Yeah, hopefully, we can surprise you. This is something we would like to continue, at least in the beginning. Therefore, also for next year, we would like to confirm our guidance. That is for us important. Regarding the Kenevo penetration, that is a continuous process.
We are now 15 months in the process. As I mentioned before, it's not that we are switching everybody. The penetration will take until we have the full coverage, which will take three to four years. That is why we are still seeing a very positive and strong impact of the K2 reimbursement system in the U.S.
I think the last question has been on the guidance for this year. Why not more ambitious given the strong nine-month trading? As I said, we had a strong Q4 last year. In general, the seasonality is that Q4 is always the strongest quarter of the year. We have been running through our forecast planning, and that leads us to the upper half of the previous guidance. I fully agree. It is a strong momentum. Reflecting also strong performance in the last month of the last year, we are arriving at the upper half as just pre sented.
Thank you so much for the question, Hugo. Thank you so much for answering the questions. We received a couple more questions. Have you heard any more on the Nairobi protocol post the announcement of 232? The next question would be, how is the acquisition pipeline looking? The third question and the last question that we've received is, how do you view the Onward Medical stake?
Yeah. To the Nairobi protocol, no, we haven't heard anything. Our estimation that this will not change the current status quo is still there. The shutdown in the U.S., of course, is also having the impact there. I don't think that anybody in the last six weeks worked on the documents.
Therefore, according to our information from the U.S., the earliest reaction, which is expected, will be April, May next year. On the acquisition side, yes, we have our pipeline. We just yesterday had, again, our M&A meetings. We are in several negotiations. Again, it's always a balanced approach in technology and patient care, but also maybe new technologies, what we have seen from Onward. Therefore, yes, this is an ongoing process. Regarding Onward, maybe Anne can give some updates.
Yeah. As Oliver said, we are following, as a recap, three buckets in M&A. One is on patient care, one is on product, one is on technology, and Onward fits into the technology bucket. We believe that this is very complementary technology to what we're doing.
We are working on shared projects to see if we can expand the patient population that we are also reaching with our products, for example, C-Brace. We believe that ONWARD is now at a stage where the technologies are starting to come to market with ARC-X and is moving into the clinical phase with ARC-IM. Really interesting phase and good timing to connect how our two competencies are working together. That is why we have been participating in the refinancing round or in the additional series financing round that Onward has been running through. I have been slightly increasing our share that we have now to at around 12% Onward Medical.
Thank you so much for answering all the questions to the management board. There are no further questions. We therefore come to an end to today's conference call. Thank you for joining, listening, and your questions.
A big thank you, of course, to the management team for answering the questions. Should further questions arise at a later time, please feel free to contact investor relations. I wish you all a lovely remaining week. With this, I hand over to Oliver Jakobi for some final remarks.
Yeah. Also from our side, thanks a lot for joining and for the interest. Yeah. I mean, summing it up, we are very satisfied with the performance in 2025 and looking forward for the next update. As I mentioned before, our guidance is consisting. Still, it is an amazing trajectory we have and looking forward also a great opportunity. Thanks a lot. Yeah, talk to you soon.
Thank you.