Good morning, everybody. It seems like it's 10:00 AM on this rainy and really gray day in Stockholm, at least. We are happy to present our First Quarter Report for 2020. My name is Kristina Willgård, and I am the CEO of AddLife.
My name is Martin Almgren. I am CFO of AddLife. We have muted all visitors today, and we'll be open up for questions after the report in the end of the conference call.
Okay. I hear that lots of new incomers coming into the call. Nevertheless, let's start. If you look at the highlights for the first quarter, we have a top line that we say we have high demand and a strong profit growth. I would say that's really the report that I have today. We see that in March, we got a positive impact related to the COVID-19 pandemic. January, February were strong normal months, but in March, we saw an increased sharper demand on products related to COVID-19. Actually, some of our companies report that their best results ever in month of March. Sales were strong. It's the first time that we have more than SEK 1 billion in net sales. The sales increased with 25%. We grew EBITDA with 51% to SEK 206 million, and the EBITDA margin strengthened up to 10%.
In this quarter, we also completed acquisition of the Italian company, EuroClone, who was in cell and medical biology. I think all of us read, listen, and hear, and actually our lives have changed a lot during the last one and a half months or two at this time. It is really a different quarter. The COVID-19 came as a major and sudden change. I would say it's an extreme situation in the whole of the world. It has changed the society. We're locked down, and we have to realize that we have to do things in a very different way. For us at AddLife, this crisis meant that we, as a supplier, really could fulfill a lot of new demand in life, especially in the healthcare sector.
I would say we have had the first-hand experience of the effects of the crisis, and we are really trying to help hospitals and healthcare to do the outcome to make sure that they get the product that is so well needed to treat all the patients. As I said, high demand in March. It's for more or less all products. It's the crucial medical supplies. It's a lot of medic products. It's a lot of diagnostic tests and especially a lot of personal protective equipment. As you've probably seen, we have informed that we received a huge order of SEK 100 million in our subsidiary, Mediplast, and that was for personal protective equipment. This delivery should be made in the coming two quarters to the largest island of Sweden and two pieces in Norway, which is the main purchasing organization in Norway.
In the quarter, we must say that it has been really challenging to source products and to deliver transport products. At the same time, we have seen an increased demand all over the world for similar products simultaneously. Of course, that has pushed a lot to manufacturer and freight companies. We have been working very hard to ensure that all products that we get indeed meet the regulatory requirements and that the quality standards are according to the needs from medical staff. I would say this situation has also proven to the world that we have a high dependency on Asia and mainly China, and we all saw the problems when the Chinese society closed down for approximately two months.
I would say we thank all the lot of suppliers also that are coming from other parts of the world who have done incredible good work to help us to receive products in these difficult times. What we also see in our organization as well as in most organizations, our employees work from home. Very early, we asked employees to follow all regulations that came from the different governments in the different countries. Most employees work from home, except for people who work with logistics and warehousing, because we see that it's essential that this function has been up and running for the whole time. We have been able to strengthen our warehousing because people who normally work in sales sometimes have now start to work in warehouse just to make sure that we can find all the products that's needed.
The working from home has made us use digital tools, which is one way we do today. I would say in AddLife, we work with teams meeting more or less all day long. This also limits the meetings with customer, which makes it more difficult to maintain service and of course, difficult to work with long-term sales. Even if the picture is very bright for AddLife, we have different scenarios in our different companies, because we work in different niches. Now companies have an extremely hectic period, but for other companies, it's a little bit more quiet and depending on what niche, and especially for the companies working directly through academic research. I must say, I'm extremely proud and very humbled to see how our strong decentralized model in these times.
Our MDs and our employees in our subsidiaries have taken full responsibility and acted fantastic in this situation. We see a great commitment, high loyalty, and engagement from our colleagues to really help us with customers in these tough times. More figures. Net sales Q1, as I said, strong growth in both business area, totally 25%. The organic side ended up 12%. What has happened for the COVID-19 sales is that the sales to public customers has been done through direct procurements, and that is not a normal procedure in most countries. The reason for that is the need for receiving products as soon as possible. Normal processes for procurement has been done differently during these times. If you look at year-over-year, we see that the net sales growth is 35% and also 7% organic.
If you look at EBITDA, as I said, EBITDA grows 51%. We even strengthen the EBITDA during these times, and the margin improvement is a little bit due to increased gross margins, but mainly due high sales volume, and that our organization has been very cost efficient during these times. Of course, some parts relate to less traveling, it's still the normal cost efficiency work that we see in our organization has made this possible. If you look at year-over-year, EBITDA have been growing 33%, and the rolling margin 12 months is now a 9.2%. We are stepping upwards towards the margin level that we would like to achieve long term. Coming into Labtech. In this quarter, as well as last year, 60% of the Americas is included in the figures for LabTech.
In LabTech, we saw the organic growth of 5%, a bit slow in that group. It's actually double digits in the part of diagnostic, but it's weaker in the part where we have research. We see a big impact from COVID-19 for all segments in the month of March. As I said before, we completed the acquisition of EuroClone in January. Coming back to EuroClone, I would say that EuroClone has delivered according to expectation. Of course, we have all seen how the Italian market looks like and the problems they have in the society in Italy. EuroClone has achieved a really good work during this time. It's open, all employees are still working, but of course, it's a bit challenging and difficult to assess how will this move forward.
That is also difficult to say for many subsidiaries, especially who works in the research field. Summing up LabTech in Q1, we have a net sales of SEK 611 million. EBITDA ended up 72%, which was an increase of 39%, and the margin is now up to 11.8%. Some more details. As I said, strong organic growth in diagnostics. We see strong growth in all Nordic countries, actually exception for Sweden, that is more flat. Other countries it's strong, and also Poland and Austria have been really strong in this quarter. I would say the world is screaming for tests. That's what we hear, at least in the Nordic countries. It's not only the COVID-19 test, but all other tests of patients are used very frequently in the hospitals today. We see high demand for diagnostics right now.
Our major supply in diagnostics, Radiometer, which you probably recognize since we have had them for more than 70 years. They are a supplier of blood gas analysis. Blood gas is used for checking lung capacity. That is, of course, used a lot in ICUs and emergency departments during these tough times. If you look at the product mix, we have a high proportion of reagents right now. We of course continue with the sales of instruments, but right now it is reagents that is the main product in the mixture in diagnostics. Looking into the research, as I said, it was stable demand until the outbreak of COVID-19. Pharma companies are still robust, and the pharma companies that we mainly work with are the Danish ones. We also see that food testing is high still in most markets.
What we have seen is that several academic customers are closed down, and countries have decided to close down the universities right now. As you know, we have one subsidiary in the research field that sells their own advanced equipment worldwide. The lockdown of China has really lowered their sales, and China is 30% of the sales in this company. Coming back to that company, which is Biolin Scientific, I also want to present to you that we are very proud that for their own products that they have are really strong. We have during this quarter, got an award that is called the Red Dot Award and Best of the Best, which is an award for international design and innovation, I think it's a German award, actually.
We are proud that Biolin Scientific in this time got a fantastic award for their product development. Looking into MedTech, 40% of Humelle sales is included in Medtech, and we here see an organic growth of 22%. Here as well, big impact of COVID-19. As I said before, we got a huge order in the quarter, that has not been delivered and will be delivered during the coming two quarters. Net sales ended up to SEK 442 million, which is an increase of 30%. EBITA increased with 64%, ending up to SEK 37 million, and the margin increased to 8.2%. In Medtech, we have a really strong growth in the health services. We see strong demand for medical supplies and especially personal protective equipment due to the outbreak of COVID-19.
Normally, personal protective equipment is somewhat 10%-15% of the sales in the hospital area for us. In this quarter, we have now completed the integration also of the Wellspect product portfolio. We have made sure that they meet all the regulatory requirements, and it's CE marked. Up now foresee that we will be able to increase margins from the product portfolio that we acquired from Wellspect. What we also see in the health services that is not that positive is the weaker demand for products for non-emergency procedures. I think you all read that in the newspaper, that everything today in the hospital are focused to treat the COVID-19 area. The hospitals have more or less closed down some parts of the surgery area.
What we see is that they will probably have to open again somewhere in this quarter, May, June, because all the patients actually waiting for a procedure really need to do that during this year. That will come up again, we think, in the second quarter. Looking into Homecare has shown a high demand, which is really according to the trends we see in the market. The high demand and sales growth is for all assistive equipment. We are very happy that we have had a large installation in Sweden of products Path we made that origins from our Finnish subsidiary. I would say that really shows the sales synergies that we now get between the two companies. The high demand for assistive equipment has really proven, so that we now see that customers start to ask for earlier deliveries after the pandemic outbreak.
We will start delivering to the Oslo municipality already before the summer instead of after the summer. We have in the quarter also received several new contracts for welfare technology in Finland. Just to give you a short update on AddLife on the total, we have changed a lot the last year. One year ago, say the Nordic was approximately 90% of our sales, but now it's actually 70%. 30% of our sales goes to markets outside of the Nordics. Of course, that is of increased importance. With all trends that we discussed and see in the Nordic market, it's proven to be the same in the markets that we entered during 2019.
During the quarter, we have repurchased 125,000 own shares. The reason for this repurchase is to cover the ongoing incentive program that we have in AddLife, but also to make it possible to pay with own shares in future acquisitions. We have also signed new credit agreements with Handelsbanken and DNB. We have increased our credit limits with another SEK 200 million. The board has proposed to make a split of the AddLife share 4: 1. That was communicated in notice to the AGM. The board has also proposed to withdraw the payment of the dividend in the connection to the AGM. The board see a possibility to have an extra AGM later in 2020 to have a new decision. If you look at the acquisitions, as Kristina said, we have made one acquisition during the first quarter, and that is EuroClone in Italy.
EuroClone is a leading supplier of instruments and consumables in the field of cell and molecular biology in Italy. Today we have these kind of products in the Nordics, and we sell them through our BioNordika companies in the Nordics. It's a new geography for this kind of products, but a well-proven segment for us. If we continue to the income statement, as Kristina said, we have a good growth on net sales of 25%, and we have been able to keep the gross margins and even strengthen them a little bit. Also we have been really cost efficient during the quarter, and all this together has come down to an EBITDA of SEK 106 million and the EBITDA margin of 10.1%.
What is really good to see is that we are able to keep the profit growth all the way down to the profit for the period in this quarter, which increased with 53%. Looking at the balance sheet, we have in this quarter included EuroClone in the balance sheet, of course, and that's why the goodwill and intangible assets increased and also the interest in non-liabilities. During the quarter, as I said, we have repurchased own shares for SEK 31 million, and the share price was SEK 248 per share. The impact from IFRS 16 on the balance sheet is now SEK 235 million, and that is on the interest-bearing liabilities side. We continue to have a strong balance sheet, and the net debt to equity ratio is 2.7, and the equity ratio ended up at 42%.
Looking at the cash flow, the operative cash flow in the first quarter was SEK 80 million, which was a little bit lower than last year. The main reason for this decrease in operative cash flow was related to working capital changes, and it's mainly the accounts receivable that we see that have increased in working capital, and that's due to the higher sales in March. We also see that prepayments to suppliers has increased in the late part of March, and that is prepayments to suppliers in Asia to be able to deliver the products that we need, especially in the health supplier. Finally, some financial key ratios, and the profit growth on EBITDA was 43% for the rolling 12-month period, which is well above our financial goal of 15%.
Return on working capital ended up at 54%, which is also well above the financial goal of 45%. Finally, we are now 1,003 employees at AddLife end of March. We now open up for questions.
Please, everybody, if you have any questions, we are happy to answer them.
Hello, this is Charles Weston from RBC Capital Markets. Can you hear me okay?
Yes, we can hear you.
Hi there. Thank you for taking my questions. First of all, what is the proportion of your MedTech sales that are specifically related to elective non-urgent procedures?
Paul, I don't have the percentage, Charles, but actually, it's a smaller part of the medical segment, so it's not so huge. I don't have it now, but it's a little bit less than 30%, I would say.
Sorry, I'm struggling to hear you. The prepared remarks are much clearer.
Yeah. I don't have the exact percentage, but I would say less than 30%.
Okay. Obviously it's a very strong Q1. Could you just comment perhaps qualitatively on what you've seen in April so far, excluding the large PPE order? Are the trends the same? Are they more extreme?
We never do prognosis for future, but I think we all read in here a few news and know that the pandemic is not over yet. It's still a lot of people in ICU. It's still a lot of people in the business right now, and of course, the testing is continued in diagnostics and within all different medical supplies continues. What we also see is that probably some research companies will open up a little bit more now, coming out from this pandemic.
Sorry, I'll try one more question, but I'm struggling to hear your answers.
No, I can understand that because it's a lot of noise.
Could we mute while we hear the answers, and then we will unmute the other?
Sorry, I'm afraid I can't hear very well. Maybe I'll follow up. Thank you.
Thank you.
Hi, it's Roger Hedberg with CF. Can you hear me?
Hi. Yes, we can hear you.
Yes. On pricing, could you please comment on the pricing environment in general now, once the demand is extremely high and more specifically on Mediplast? They received orders of some SEK 100 million outside the ordinary agreement, you're right. I would assume maybe that you could receive better prices outside the agreement. Is that correct? If you could comment on the pricing, please.
We try to mute everybody so that you probably can hear us a little bit better. Yes, the pricing right now is extreme, I would say. The need in the world for the same suppliers increased a lot. The price increase we see from a lot of suppliers. Unfortunately, that also means that we have to raise the prices to our customers. We are very transparent in this discussion. All the customers, they actually know the normal price. Now when we see the price increase in the world, we have to inform them and say that for some easy products, I could say prices that before the COVID-19 was SEK 1 each, has now increased to somewhat SEK 8- SEK 10 each. It's 8-10 times normal prices on some categories. Unfortunately, that we have to take out from the customer.
We do not expect any extremely higher margins because we think these times the most important is that we actually help out hospitals et cetera. We try to be very transparent with our customers. They have to, of course, pay part of this higher price rise that we see. It's not only price on products that rises, it's also the price on the transportation that has come up tremendously during these times. Again, we are very open to discuss that with our customers. Yes, we take out higher prices because we have to, otherwise our margins will be totally disrupted right now.
Do we have any more questions?
Okay.
It seems like we don't have any questions, and I realize it's a bit difficult to hear. If you have any questions, do not hesitate to call me or Martin, and we will try to answer your questions as soon as possible. Send a mail or call us. We are here the whole day for you. Thank you for listening in, and have a good day.
Thank you.