Good afternoon, and welcome to Revenio Group Q1 earnings call. My name is Jouni Toijala, and I'm the Group CFO for Revenio. Today, we have a bit bigger set of team members here. In addition to the normal Robin Pulkkinen, our CFO, we also have Erkki Tala, Vice President Products, in a call as well. The reason for that one is that we are going to run today a bit longer earnings call. Of course, we are going to start with the Q1 financials and the business highlights. We go through the guidance part, which we actually don't have.
We have a pretty extensive part run by Erkki regarding to the Visionix transaction, especially related to the products and the product portfolio. Let's jump to the Q1. Reported net sales, EUR 27.3 million. Increase on the reported side is 4.8%. Currency-adjusted net sales growth 8.4%. I think it's a good number, especially if taking into account the extremely strong start in the U.S.A. In terms of the euros, of course, but especially in terms of the U.S. dollar, the organic growth in the U.S.A. was very strong. If you look the other countries, Europe was growing really strong as well, especially France, U.K., and Germany.
In terms of the sales, good performance in the U.S.A. and in European countries. We still had a pretty tough comparables in the APAC side. The APAC was slightly down. If you look now at the start for the Q2 in APAC, we start to be extremely well on track also on APAC side, what comes to the sales. Operating profit reported at EUR 2.4 million, significantly of course down. Of course, the main bucket there is roughly EUR 3.1 million, one-off costs related to the Visionix transactions. Robin is going to cover these ones in more detail.
In adjusted operating profit perspective, good numbers of 21.33% from the sales, of course, slightly down from the last year. Let's move to the financial part. Robin, over to you.
Thank you. This typical graph I think people are used to seeing. Jouni covered the top line part. Maybe also highlighting there that the comparable Q1, 25, FX-adjusted growth there was already close to 15%. We had a really tough comparing comparison period ahead of us in Q1. Considering 8.4% FX-adjusted growth, we feel it was a pretty good start and in line with our plans for the year. The profitability did come down on the re-reported level, there were EUR 3.4 million, so EUR 3.1 million of the transaction-related costs and then also some additional costs related to certain organizational changes we did still in the Q1 .
Overall, the profitability drop is largely driven also by the margin, which is a lot lower now than compared to last year. We know that the tariffs are impacting that, but also the product mix. We did now improve the gross margin from the last quarter of last year. We, like we discussed, the price increases didn't go in at the end of the year. We have been now implementing those at the beginning of the year, so not fully effective for the whole quarter, but starting February, basically, the price increases have been in the U.S. Adjusted operating profit, that's probably the better line to look at the profitability, 21.3%, and EUR 5.8 million of the revenue.
I'll come to the others in the coming slides. Looking at the quarterly trend line a bit on the sales, Jouni covered we did really well in the U.S. and Europe. The FX was really giving a lot of headwind on the dollar versus euro. The change comparing to the comparable period, the euro is 11% stronger. That is pretty much the impact that we have on the consolidated level then when converting them to the euro. The U.S. growth alone was actually very strong as well as the Europe.
APAC, like Jouni said, we still continue to have some headwinds, but there were also some larger transactions in the comparable period which are kind of impacting the growth what we were able to achieve there. Here are the profitability trend lines. Here also we, reflecting the one-off costs, and then the organizational impacts that we had. On the cost side, there also was actually probably a bit less than we expected on the FDA costs related to the DRSplus and ILLUME regulatory approvals in the U.S. Those costs didn't really incur yet in the Q1 , but we are now expecting them to start accumulating more in the Q2 .
We see that patients are now starting to come into the clinics where we are doing the studies. Balance sheet remains unlevered for now. Everybody knows and has heard about the Visionix transaction, so the equity ratio was still strong at the end of the Q1 . This is of course going to change as the transaction closes. Like we've discussed earlier, the net debt to adjusted EBITDA is expected to decrease below 2.5 after the equity raise that we're planning to do in the fall. Basically, the leverage rates are going to be a lot higher at the closing, starting from the closing and then getting more to normalized levels once we do the rights issue in the fall.
Basically, equity ratio probably is going to be around 50% or slightly below 50% by the end of the year. Now at the end of Q2, when we come out with our Q2 numbers, the balance sheet is going to be quite levered. Cash flow was not very strong in the Q1 . There are basically two drivers. At the end of the year, you can see our Q4 was really strong. We have like in Italy for our subcontracting or manufacturing, we have 90 days payment terms. We had quite big open invoices in accounts payable at the end of the year.
Those have been actually now paid into the Q1 and also the revenue for the Q1 , it was very much March weighted. Well over 40% of the whole quarter sales was actually taking place in March, which kind of resulted in the AR to be quite abnormally high for this time of the year. Also, some tax payments were slightly higher than the previous year. There're main shareholders. Not many changes here. The one that you can see is actually Danske, the number five, Danske Invest. They have appeared on the list now. As a Finnish fund, I assume, the result is that the Finnish ownership actually also increased by roughly 1.5% during the quarter.
For the guidance, we have now withdrawn the prior guidance. We are kind of looking to come out after the transaction closes with an adjusted outlook for the year. But for now, for the coming weeks at least, we don't have any official guidance for the investors. We have the AGM coming up. If you remember, we canceled the original AGM, which was planned to be held around mid-April. Now the new date is May 12th. There's 2 changes to the original invitation that we sent out. Basically in order to complete the transaction, we are asking the AGM to authorize the board of Revenio to decide on a directed share issue for the sellers, which is part of the transaction payment.
Asking for an authorization for the board to decide on the issuance of shares in a planned 80 million post-completion underwritten rights issue. Also, there are different from the original invitation, we have three new board members that are being proposed. The board is proposing for the election of Charles Wildgrain, Marc Abitbol, and Niklas Hansen to the board of directors of Revenio at the AGM on May 12th. Just to note here that we have transaction support from the largest shareholder, William Demant. They have irrevocably undertaken to kind of subscribe or vote, sorry, or vote in favor of the proposals to the AGM by the board or yeah, by the board. Good.
Hey, excellent. Before the Q&A, let's switch the gears to the transaction which was signed April 13th. A couple of recap slides from me and then we actually go, or Erkki is going to go through in more detail the products, product portfolio, and the overall logic why this deal very much is making sense for Revenio. If we start from here, as I said, the April 13th, we joined the forces with Visionix and why this is remarkable. We have been working in an addressable market which represents roughly a $1 billion in terms of the US dollars.
We have been working on fundus imaging, perimetry, microperimetry, and tonometry. By joining the forces with Visionix, we are going to get an extremely comprehensive product portfolio, and we are able to increase the addressable market now from $1 - $2.5 billion. Why this is crucial for us also in the long term is that now we have a full suite of products for optometry, optical retail, and then of course enhanced coverage on ophthalmology side as well. Erkki is going to come back to this one.
As a recap, EV EUR 2-290, our plan was really to finance the deal with the cash reserves, then issuing the Revenio shares to the current main shareholders of Visionix with the price EUR 22.4, so significantly higher amount which we are currently trading. Then we have a debt financing plus the vendor loan, and then of course the rights issue. Robin is going to come back to this one. In addition to this one, of course we are expecting to have significant synergies coming from the sales side and also from the cost side in the coming years.
A couple of words regarding to the Visionix. Roughly EUR 150 million of the sales. Team is a global team, even if it's here said that it's a French company, less than 200 people in France. If people are wondering that at Revenio there's 250 people, at Visionix there's a bit less than 600. I think here we have to remember that Visionix operates directly, sales direct in many countries. It means more sales force than us. It means more customer service installations, et cetera.
All of course also the assembly part of the business which Visionix is partly having in-house. This is also a really, really good deal in terms of the sales coverage. As everybody remembers, we have roughly 50% sales coming from the U.S.A., then a bit more than 30% from the Europe, Middle East, Africa, LATAM, Canada, and the remaining part from APAC. This deal is nicely going to balance now the regions. The U.S. sales comes proportionally down, then the EMEA increases, and then we are getting more muscle also to APAC. Maybe we move to actual products now and the logic why this makes very much sense.
Thank you, Jouni. Next, I will open the strategic rationale of the Visionix transaction from product and customer point of views. Combined with opportunities, this new combined portfolio opens for us in varying and actively evolving markets where really one size doesn't fit for all. I'll deepen the view of the impact of total addressable market and customer segments and how expansion of them will open new avenues for our future growth. All this will be combined with evolutionary state of each market in terms of professional allocation of diagnostic tasks between optical retail, optometry and ophthalmology. This is really at the heart of the acquisition rationale as it explains really the full market potential.
It's not only about having more products in more segments, but really having coherent portfolio of products as a turnkey solution for different customer needs in different markets. Really market conditions vary a lot based on regulatory or legal e-environment, professional education and role of different professional groups. At the same time, and I will get back to that in short while, many markets are going through significant evolution, especially in optical retail and clinical optometry, which means that as a result, many companies are increasingly adopting fundus imaging in optical retail, and now OCT technology is adopted very fast in optometry practices. Indeed really the value of getting OCT imaging into the portfolio will also be further open in this presentation part. Let's start from this total addressable market expansion.
As Jouni mentioned, our overall total addressable market expands from $1 - $2.5 billion a year. From product portfolio point of view, this means that we will cover the entire diagnostic path from pretest to refraction, ophthalmic diagnostics and disease monitoring. While this is already good news, it's also crucial to understand what those product categories are we will not play in even with a combined portfolio and why. Are we missing still out something critical? Actually, in fact, the remaining market is largely related to surgical cataract care pathways, where the largest product segments are operating room microscopes and optical biometers. These are very much used in surgical cataract ecosystems, which are typically relatively closed and would ideally require also proven intraocular lens portfolio.
This market has really relatively high entry barriers. We have made a clear strategic choice not to enter into these surgical settings but stay in diagnostics. This is a natural continuation for the strategic decision made already back in 2021 to focus fully on eye care and fully on ophthalmic diagnostics. That said, it's good to also have in mind that many general diagnostic modalities from refraction to OCT are also used with cataract patients too. This means that we will cover almost all the product segments in this target market excluding surgical cataract theater. If we then look at the customer segment expansion, that gives another important angle of view. Traditional customer segments for ophthalmic diagnostics companies are optical retail, optometry and ophthalmology.
I have to say that most companies typically just cover some of them, but we will going forward cover them all. Also having a leading position on top of that in microperimetry with our unique MAIA device servicing strongly growing pharma research field and going forward also growingly retina specialist segment. Additionally, we have also expanded to other healthcare like primary care and diabetes clinics with our screening solution. The solution that combines market's best screening fundus camera, iCare DRSplus, and very well-performing AI algorithm, iCare RETCAD. This combo, as we have seen in the market, has clear competitive advantage and has started to scale up well. All in all, we can say that our customer segment coverage is the widest in the market when we combine these two companies together. Let's move to a product portfolio then.
I started by covering the overall total addressable market expansion as well as the market leading coverage in customer segments. Why does this combination matter? Few reasons. First of all, every single optical store, optometric practice, ophthalmology practice or clinic need refraction equipment, including lensmeters, autorefractors, refraction units and autokeratometers. Secondly, in optical retail, ophthalmic diagnostics starts from tonometers and advances to fundus cameras. Many large optical retail markets are still in this transition phase, offering a great potential for future growth. I'll get back to this market evolution a bit more in details later. Thirdly, clinical optometry today demands ultra-widefield fundus imaging and increasingly OCT, and typically as a combo.
Now that we'll have these high quality assets in the portfolio, this is really crucial to meet the needs of this segment, which is at the center of our business. Finally, ophthalmology. Ophthalmology uses OCT as a diagnostic standard in many cases already. Typically, this is combined with a high-end fundus cameras. We will really have a broad portfolio of products meeting needs of different customer segments. We have called this as a turnkey solution for optical retail and optometry, and this is what it really is. A real turnkey solution can only be offered when the full clinical journey is covered by devices and solutions, starting from pretest phase or screening phase, as it shows here, to refraction and further to clinical diagnostics and disease management.
In our case, we will take the solution in optical retail until spectacle manufacturing by including finishing and dispensing devices in the portfolio. Beneath there, you can see connecting platform and clinical data management as an underpinning connector. A connecting software platform is really key to build efficiencies in clinical workflows and collect data from multiple data points, supporting clinical decision-making, often assisted nowadays by AI. When patients and professionals are not always in the same location, electronic data transfer and teleoptometry or teleophthalmology solutions are needed. Now these will be also included into our solution portfolio. We'll combine as a combined portfolio all this together in a joint product portfolio and create a real one-stop shop for many key customer segments.
As I mentioned earlier, optical retail and optometry landscape is really evolving fast. I want to take few example markets really kind of trying to explain this more deeply why different markets need really different recipe, different products to meet the customer needs. There are still many markets, also pretty large ones like Italy, what I've used here as an example, where optical retail is focusing on refractive examinations and spectacle sales. Now with the full refraction product portfolio, we can fully tap into these markets as well. There is at the same time clear trend that drives for larger adoption of clinical diagnostic tasks in optical retail and optometry, meaning that delegation of these tasks to better match increasing demand.
This is where Germany is used here as an example and is a good example of such a market. Such a market where optical retail is transforming towards early phase of clinical optometry services. This includes typically tonometry and fundus imaging. Really, this offers a great potential for us as our combined refraction and clinical diagnostic device portfolio is in use. We can see really a nice take-up on such kind of solution already today. As a third example here of different markets we operate in, I've got here U.S., U.K., and Australia. There could be many other markets where we have got highly educated clinical optometry acting as a primary care for ophthalmic conditions. In these markets, we offer a full end-to-end diagnostic solution, including advanced fundus imaging and OCT.
Hopefully, this clarifies the strategic importance of the full end-to-end product portfolio. This is really the only way to be relevant in all the markets and be able to tap into opportunities in the current evolution when they open. Then about the OCT. OCT has been probably the best recognized and mostly mentioned addition to Revenio's current portfolio via Visionix acquisition, and really it is an important part of it. As just explained, that's not the all of the story. With this transaction, we'll get expedited entry to the OCT segment, which is really in many ways future-proofing our portfolio. I'll now bring three different dimensions to the kind of importance of OCT.
Of course, it is an interesting and important standalone business segment representing $700 million annual sales potential, and now we will get access to several sub-segments in that business and in that market with this transaction. That's important. It's also equally, almost equally important to really have a kind of solid solution for OCT, as OCT is really becoming a diagnostic imperative in ophthalmic diagnostics in different ways, and I'll open that a bit on the next slide. Thirdly, OCT is not only a standalone business, so it also as a technology offers us new opportunities for our product development using the same technology across the different parts of the portfolio.
What does it mean that OCT is becoming a diagnostic imperative in ophthalmic diagnostics? A few words about the OCT itself, what it is. You can imagine OCT being almost like an MRI of the eye. Really it is a non-invasive micro-resolution cross-sectional study of the structures of the eye. That means that it really expands diagnostic capabilities of fundus images to beneath the surface of retina. It's not replacing fundus imaging, but it really increases the capabilities. As such, it's really increasingly important tool for diagnosis and disease management for the common retinal and corneal diseases like AMD, diabetic retinopathy, glaucoma, and anterior segment conditions. We also believe that there will be increased use for OCT technology going forward in retinal screening solutions as well.
The role of the OCT as a driver for R&D future R&D opportunities. How does it help to develop other products? Our confocal imaging technology has really proven to have superior image quality in fundus imaging. Now we can explore the options to combine this with the state-of-art OCT as the combo devices, fundus OCT combo devices are one of the fastest growing OCT segments in the market. For example, our MAIA micro perimeter, which is a gold standard in its segment, is an interesting area where OCT technology can be adopted too. OCT technology will allow significant improvement opportunities for perimetry and microperimetry as well. As an example, we have just released OCT-guided microperimetry software module for MAIA.
We are already acting in that space, and now we will have own in-house OCT portfolio and technology and expertise and knowledge to build on. To sum up, the product and portfolio is rational for this transaction, really three key areas there or key elements there. Massive increase in total addressable market from $1 - $2.5 billion US dollars and covering vast majority of the diagnostic equipment that we have decided to play in. On top of that, we will cover the market customer segments, all of them. Actually, all the core of them in the market have, as an outcome, have the widest customer segment coverage really.
Allowing us to tap into opportunities in different markets, which are in different evolutionary phase. Finally, of course, getting the OCT, important OCT addition into portfolio and get that in a way that we will get three products straight into three sub-segments in the OCT market. Having a great fast start really be able to adopt OCT technology into other product development as well going forward. Over to Robin.
Thank you. Just a reminder, we'll just cover again how the transaction is being financed. Like in the beginning, you heard the enterprise value EUR 290. Out of that equity value EUR 250, and EUR 40 million for net debt, net working capital and other adjustments. How it's being kind of allocated, the EUR 250 is that 22.3% of that is being paid with shares. That adds up to EUR 55.7 million. The important point here is that the directed share issue to the sellers is done at a price of EUR 22.40, which is a roughly 50% premium of where we are trading today. The remaining EUR 194.3 million is being paid with cash.
For financing it, we have the Nordea term loan facility, EUR 130 million, with very favorable terms from a shareholder point of view. We have the EUR 80 million bridge to equity facility with the maturity of six plus six months. We have of course cash in hand. We've agreed with Nordea on a revolving credit line if needed. We have agreed with the sellers on a EUR 17 million, roughly 10% of the cash portion, vendor loan interest free payable 12 months after closing. With that, together with the directed issue is kind of how the transaction is being financed.
The post-completion rights issue for kind of repaying the EUR 80 million bridge loan, what we've agreed with Nordea, is actually subject to decisions of the AGM scheduled to be held on the 12th of May, so in roughly two weeks. Nordea has been engaged to act as the global coordinator and underwriter for the rights issue. The rights issue will be taking place sometime mid to late H2 , so we need kind of to be able to close the Q2 first to have fresh numbers. We will be preparing a full prospectus for the issue.
William Demant and the sellers, together, have basically representing roughly 31% of the shares after post-completion, have irrevocably committed to subscribe pro rata for the shares in the planned rights issue, and the remaining 69% is basically underwritten by Nordea. The, the financing is fully committed as it stands. Basically, like I said, the proceeds from the rights issue is being used then to repay the bridge loan we have in the balance sheet. Good.
Hey, let's start recapping. Here you see the phased value creation journey. three major parts. First one is the quick wins mobilization, second one traction and build-up, then the third one is continued growth and sustained leadership on the product side. If you start from the first one, quick wins and mobilization. We have been working already months in order to be ready from the day one after the closing. We have a clear understanding regarding to the how the organization operative model should go. Really the plan right from the beginning is to have a clear target setting regarding to the top line synergies. Where are we going to get the top line increase during the 2026, 2027?
Where are we going to get the cost?
Side of the synergies. Extremely good clarity for those plans starts to be there already and ready for the day one. Regarding the long-term synergies, we are working and starting to work in detail regarding the portfolio product strategy, updating the combined company corporate strategy and heading towards the CMD, which we are going to keep towards the end of September, early October. As said earlier, we are targeting to have a EUR 20 million EBITDA uplift by the end of 2029, where the 70% is planned to come by the end of 2027. If we move to the traction and build-up part, of course we continually harness the synergy plan.
There's a big, big effort coming and, on the plans, already end of 2026, early 2027, how the combined product roadmaps are going to look. We see their great opportunities and of course all the time, during the 2026, 2027 and onwards, both companies are planning to continue to invest into the R&D. As a standalone Revenio in every segment where we are currently operating, we are going to have compelling products and software services coming out in the future and same of course applies for the Visionix. Here we have said that by the end of 2029, bit by bit, we are going to get also of course the profitability up into the levels where we currently operating.
Then beyond 2030, so we are having also the clear ideas in mind, of course needs still a work how we are able to sustain the innovation for the forthcoming products and what really compelling and totally new we would be able to bring to the customers in the long run. Also the plan is to start approaching from 25% EBITDA margin more towards the 30%. As said, April 13th, so really the clear plan and target is that we are aiming to go 3x faster than the market. I think this is just good for everybody to keep in mind. Before moving to the Q&A, I bet there's a quite many questions coming.
Before jumping to that one, I would like to say big thanks for Robin. We have had a joint path together now, almost daily basis for six years, you have been working for Revenio, 11 years on June, and you came in, there were lots of people, then there were 30, 35, 40, right?
30, 32 or something like that.
Yeah. Yeah. Yeah.
Right. Yeah.
Then, kind of divesting the portfolio, getting this interview in and now working on Visionix in order to open the next great path. On my behalf, big thanks, Robin, for it has been a pleasure to work with you and good luck for the forthcoming job as well. Then of course, the good news is that we have been onboarding with Robin, Juha Jaatinen already in. We have a continuation plan already in place and working well. Thank you, Robin.
Thank you.
You are not released yet for sure. We have a Q&A coming, and I bet there's many questions coming. Anything you would like to say or big thanks for.
No, no. I want to thank everybody in the company, the colleagues and coworkers, of course, the investors and all the partners involved. It's been, I think, a great 11 years in the company. The difficult decision, timing maybe not optimal. These are the M&A and changing jobs is a long process and kind of this time, maybe the timing wasn't ideal. I feel 11 years in the company, it may be time to have a look at what else there is around other than Revenio. I'm still joining another public company, so if you follow them, I might be that our roads come across again.
Hey, good. Thank you, Robin. Hey, let's move for the Q&A. I bet there's many questions coming. Let's address them all. Thank you.
The next question comes from Guglielmo Bruni from RBC Capital Markets. Please go ahead.
Hi. Thank you for taking my question. Just two from me. Could you update us on how the iCare ILLUME ramp is progressing? Last result, you reported strong momentum in live site. Has this momentum continued? That's my first question. My second question, you pointed to a very strong sales growth in the fundus device this quarter. Does this mean that we can expect a large increase in the ILLUME subscription through 2026 and next year as well? Thank you.
Regarding to the ILLUME momentum, that's continuing. We see increasing amounts of systems taken into a live. We see increasing amount of course, hardware sold, part of the ILLUME end-to-end package, we see increasing amount of scaling the AI report package up. As said quite many times, of course, now the maturity of the revenue is coming from the device part, i.e. the DRSplus. The overall take-up is good. Feedback is extremely good regarding to the full end-to-end solution. Regarding to the fundus imaging sales. We saw a strong growth in the U.S.A. on the fundus imaging side. EIDON selling really well, of course, the DRSplus.
More sales on Europe level regarding to the or the driven by the screening, whether is it the iCare ILLUME or just DRSplus is solely sold for screening. I think that hopefully, Guglielmo Bruni addresses your questions or anything else.
That's great. Thank you.
Thank you.
The next question comes from Nikko Ruokangas from SEB. Please go ahead.
Hello, this is Nikko Ruokangas from SEB. Thank you for the presentation. First of all, thank you, Robin, for the years, and good luck for the future.
Thank you.
I have a couple of questions. I'd like to start also on the fundus imaging side of Revenio business. Could you comment on have you seen kind of the markets there improving, or do you think that you are taking market share there given that some of your competitors seem to be struggling in the segment?
Regarding to the Q1, we haven't yet seen the competitor numbers. Coming most probably in one to three weeks' time . Hard to comment on that one, but I think if the normal market, when it's normal, on the fundus imaging side, grows roughly 3% or so forth. For sure we have had a higher growth. We know in couple of weeks' time when we know the competitors' numbers. For us, it has been, products have been moving out really well, and especially even if looking from the U.S. dollar perspective. Growth in the U.S. dollar perspective, which is then comparing apples to apples.
We have had a good growth during the Q1.
That's good to hear. Is it something or this kind of a sales mix for the old revenue, with higher now fundus imaging taking higher share? Is this something you expect to see also in the coming quarters?
For the, for the whole year, I think we've kind of planned a growth also for tonometers, but now imaging did take a very strong start for the year. We do have very promising deals on the imaging side, especially on the pipeline. There's a good chance that it does perform quite well this year. Difficult to say yet, but I think Q1 was a bit stronger than we expected a couple quarters ago.
Okay. Thank you. Moving on to Visionix, and I was wondering whether you could give us some comments on Visionix performance in Q1, as you probably know how they have been doing. Additionally, as you just talked about different product categories you are entering now through the acquisition, could you give us some further color on which product segments within Visionix have been growing and which have not during the past couple of years?
So, uh, do you wanna-
Go ahead.
Maybe I comment. We signed the deal April thirteenth. We haven't closed the deal, we don't have a possibility to comment on their behalf, their performance as such. Perhaps the general comment regarding the different segments, what they are having. From the market study perspective and overall industry, the trend perspective, it's fair to assume that OCT is from the ophthalmic diagnostic device market perspective. That's estimated to grow quite fast. 4.7% roughly as Erkki was mentioning. I think it's a fair assumption also from their side that's a growing segment. Of course, the multimodal devices which were really core of our strategy around.
If you go back the last CMD, we were highlighting the multimodal growth. That's really a growing segment where Visionix is having a unique product. On that perspective, I think they are good on that side as well. Of course, the Software solutions. Coming back to the telehealth, what Erkki mentioned. Telehealth is increasing in terms of the demand as well. But Nikko, sorry, not able to before the closing answer on their behalf.
Yeah, understand. That was good. Thank you. The last one from me at this point. You are targeting for the combined company three times market growth and EBITDA margin of 25% in 2028-2029. My question is, how tightly are these two targets, meaning growth and profitability targets connected? How high combined sales do you need to have in your estimates so that you would reach 25% EBITDA margin?
If you think the logic... We have been communicating to the market that the target is to grow 3x faster than the market. Throughout all these years, whether is it 2027, 2028, 2029, 2030. That's our aim, to grow 3x faster than the market. The second topic, which we envision to improve quarter by quarter, year by year is hitting the 25% EBITDA margin by the end of 2025. Sorry, sorry. Yeah, yeah.
Eight.
Yeah. That's in a planning book for us. In a way, gradually, bringing the profitability up and then, of course, keeping the sales growth up as well during the years and coming quarters.
Yeah. Growth. We need growth also to cover, of course, the cost base continues to grow with inflation, it is difficult without growth to achieve all these profitability targets, as I'm sure you understand.
Yes. Thank you. That's all from me as well. Thank you.
Thank you, Nikko.
The next question comes from Daniel Lepistö from Danske Bank. Please go ahead.
Hi, it's Daniel Lepistö from Danske Bank. Thanks for the comprehensive presentation. I also have a couple of questions. Maybe starting up with this gross margin, you know, which remains below 70%, which is not something that we're used to seeing for you guys for a prolonged period. How much was the FX impact here? You know, with this tariffs in place, do you think this is the new normal? Basically, can you do anything here if this current tariff regime remains in place? Can you do more price hikes, or are you, like, fighting towards the 70% level for now?
I think we're probably targeting to get closer to 70. The price increases weren't fully in for the whole quarter. We kind of expect to do a little bit better. Of course, the imaging sales proportion was quite high in Q1, which also has an impact on the gross margin as the tonometry gross margin is a little bit higher. It's not kind of. The price increase were not fully in yet for the whole quarter. The tariffs definitely have an impact. We're targeting to make as many euros as before, but kind of the tariffs are kind of price increase are just kind of covering the cost increase with zero margin.
The percentage kind of mathematically comes down, even though the euros are still kind of being covered by the price increases.
Comparable quarter Q1 2025, there were no tariff impact as well.
No. No.
That was a reason why gross margin was over 72.
Yeah.
Yeah, of course.
FX, of course, has an impact. For this amount of dollars last year, we would have gotten 11% more top line from the dollar. Basically, that of course, has an impact on the gross margin. We do have cost of sales, roughly 25%-30% priced in dollars. There's some buffer or some hedging there, but there's a big impact on the gross margin and EBIT level as well.
All right. Yeah. Thank you. Okay, maybe continuing still on this, you know, segment level growth that you discussed on this fundus imaging growing very strong as well. You know, along with how you typically, you know, guide verbally on these growth rates, how does this tally up with when it comes to tonometers, probes, and perimetry growing since, you know, with 8% growth, imaging devices growing very strongly, it seems that something is not growing or is barely growing, if you look at the, you know, full product segments. Can you comment on these other segments? How are they growing?
The biggest reason by far the poor growth was kind of the APAC poor growth. Basically, that drew down. I think Europe and U.S., we were doing extremely well.
On both sides.
Yeah. APAC was clearly down, but one driver there is that the comparable period, we had a pretty big one-time order that we didn't get this year.
Looking at Q2, we don't have that big order in the comparables in APAC, so it's expected to improve.
Okay. That's clear. Maybe final question, you know, on these larger deals in the pipeline that you have been talking about, I guess since Q3 last year. There seems to be a quite long lead time so, you know, how these have been noted to be as material as, you know, having potential impact on the guidance. These are still on the table or you haven't, you know, fully wrote off these quite yet?
No, no. They're still there. Still there. Still working on it. Not the fastest to close apparently.
All right. That's good. That's all from me. Thank you.
Thank you, Daniel.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Pia Rosqvist-Heinsalmi from DNB Carnegie. Please go ahead.
Hi, gentlemen. It's Pia from DNB Carnegie. Thank you for taking my questions. I'll start still by acknowledging that you have withdrawn your guidance, but can you give some kind of comments based on the performance you now saw in Q1? Are you kind of, you are tracking along the lower end of that guided range. I think you alluded to that, everything has proceeded, according to your plans, but maybe coming back to Daniel's comments. How are, how is, how comfortable are you that, your portfolio will continue to perform in the same way?
I think we Looking at last year's quarters, we had the toughest comparison quarter or the biggest growth quarter. Q1 grew last year almost 15%, so internally our plans also was expecting the Q1 to be the lower growth quarter out of the four. It's, in a way, it's fully in line what we've kind of been planning to do.
All right. Thanks. Regarding the clinical trial, I mean, you said you are now in the phase of recruiting, or the patients are entering the clinics. What kind of costs should we expect related to the clinical trials now for the remaining quarters of 2026 and 2027?
The pre-study expense estimation was like EUR 600,000-EUR 700,000. We did incur some of that already, but there is probably, I'd say maybe EUR 400,000-EUR 500,000 left. Or do you have a better estimate? Yeah. That's a ballpark, right? Yes. Yeah. Yeah.
Right. Okay. Thank you. Going to the Visionix deal, my first question is that, what kind of terms and conditions do you have? Is there a risk that the deal falls through now given that your share price has declined clearly since the announcement?
No. No. We're proceeding as planned. There's no kind of nothing, no kind of triggers related to the share price in any type.
All right. Good. Thanks. Regarding Visionix, you published sales and earnings numbers for 2024 and 2025, and yeah, we the market saw that the company hasn't been growing. Is there any kind of, can you shed some light regarding the, you know, organic growth of that business going back several years, like four or five years years? Would be really helpful to get an understanding of how their business has been able to grow.
If you go back, as a longer period, roughly, nine years, 10 years or so forth, they have had a CAGR growth, roughly 8% in a way. They have been able to grow. Now when looking the combined company, we are extremely sure that we are able to get the combined company and also their product portfolio growing, otherwise we wouldn't be of course closed the transaction. We are extremely sure that we are able to get the profitability up as well. We have clear plans for that, and they have clear plans already, and that has improved already in the background, even during the Q1.
Mm-hmm.
I think Mark said w here we released the transaction or had the analyst visit and the presentations related to the announcement. I think Mark said that like us, the COVID years were very strong for them. They're similar to us. They were growing very strongly in the beginning of the 2020s, just like we were.
All right. Thank you. Maybe still, regarding the expectations, I mean, looking forward for Visionix, they did not grow last year, but the profitability improved on EBITDA level, and the margin improved. Can you shed any light on your expectations for or Visionix' expectations for this year?
For this year, I can't really open what the outlook is. I think we're gonna come back to that then with the combined guidance and then I'm sure in the Capital Markets Day. For the rights issue, we need to do the full prospectus. That will be a lot of valuable information for the investors to look into.
Okay.
Unable to comment at this stage.
Okay
Yeah. All right. Thank you. Finally, when I, as an ophthalmic specialist, look at the portfolio of the combined company, the question I think appears that is this finishing and dispensing business, is it really core for you from a diagnostic perspective?
It's obviously not part of diagnostic pathway, but it's still part of the, let's say, customer journey, especially in optical retail, which is a kind of a strong segment for Visionix. They are serving a lot of those customers in that segment who are still also manufacturing spectacles inside optical retail stores. Not really part of clinical journey, but part of customer journey.
All right. That's all for me. Thank you so much, and thank you, Robin, for excellent cooperation during the past years.
Thank you.
Thank you, Pia.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Hey, thank you all. Have a good springtime. We come back with the co-combined company Q2 numbers. Now heading towards the closing of the transaction. Thank you for participating, and thank you for the really good questions. Bye.