Good afternoon, everyone, and welcome here to us at Investor, both of you all here in the room and also our friends on the web. It is great to see all of you here. My name is Magnus Dalhammar, and I am Head of Investor Relations here at Investor, and I have the pleasure of guiding you through this afternoon. We start with some safety rules. Safety always first, right. Let us hope not, but if we would have to evacuate this building, there is one emergency exit right next to the stage, and there is another one at the further back of this room. Those are the safety rules. We have an interesting agenda ahead of us, hopefully, and just let me go through it just briefly. We will start with some Investor strategy, moving on to a financial update.
Then we will go through our different business areas, starting with listed companies, investments in EQT, and then Patricia Industries. Then we will have a Q&A session where all of you will be able to ask questions, of course, and also everyone joining us on the web. If you like, please feel free to start logging your web questions already now. The second part of this afternoon, we will spend focusing on a number of the Patricia Industries subsidiaries. We have all our four U.S. subsidiaries here with us today. We will start out with Sarnova, BraunAbility, and Laborie, and then end with Nova Biomedical before moving closer to home again with Mölnlycke. Then we will wrap this session up, and afterwards, we will have an informal reception at the other room, just close to this one. I think that is all I am going to say right now.
We are all waiting for Christian to start talking about our strategy, so I will leave the word to you, Christian.
Thanks, Magnus. Hi, everyone. Warm, warm welcome. Great to see so many of you here and, of course, on the web as well. I, for one, look forward to this afternoon, and I really ask you and urge you to ask questions, take the opportunity to interact so we get it as fun and rewarding as possible. To kick us off, I thought I would say a few words about who we are, our strategy, and our priorities going forward. A quick recap of who we are. Our purpose is to create value for people and society by building strong and sustainable businesses. That is our North Star, and that guides us in everything we do. We are long-term engaged owners of high-quality companies. None of our companies are competing with each other, so we can and we should always focus on what is best for each individual company.
While we should always be long-term in our vision and our strategy, we must also be relentlessly impatient for results here and now, because at the end of the day, the long term will consist of several short runs. Finally, our model is based on working with great, trusted people here at Investor, in the boards, and in the companies. We have three business areas, each with its own leadership and its own distinct priorities, as you will hear more about during this afternoon. The companies here at the lower end of the slide is really the engine and the heart of what we are. We have a portfolio of companies with strong market positions in attractive markets with lots of opportunities for profitable growth.
These companies' constant strive to make things a little bit better for their customers is ultimately what drives value creation also for us at Investor. As our companies go, as goes Investor, as we often say. Our strategy is pretty straightforward. We have our ultimate target, which is, of course, to create total shareholder return for you, our shareholders. To achieve this, we strive to do three things: grow net asset value, pay a steady rising dividend, and operate efficiently and sustainably. Jenny will elaborate more on these objectives as such in a short while, so I'll now focus on our three Ps: Performance, Portfolio, and People. These three Ps are meant to capture what we believe we need to get right in order to continue delivering on our strategy even in the future. Let me start then with Performance.
Simply put, this is about performing here and now with profitable growth while making sure we reinvest appropriately so as to make sure that we future-proof our businesses. Profitable growth remains the number one value driver over time. Organically, of course, but we also see good potential from continued add-on acquisitions as a way to accelerate growth by adding new customers, new technologies, new products, and bring along new people and teams as well. Focus on operating efficiency is always crucial, of course, to stay competitive, and no less so in the current macro environment we're in. As long-term owners then, we must also invest appropriately, as mentioned, to ensure that we remain competitive over time. This is what we refer to as future-proofing, and I'll come back to that a little bit later in my presentation.
With a portfolio of 24 companies and many more businesses under these companies, there will be companies or parts of companies that are not performing to their full potential. As engaged owners, it's our responsibility, together with the boards and the management teams, of course, to decisively address these situations. We basically need to do three things. We need to agree what the problem is, we need to agree on a plan to fix it, and we have to ask ourselves honestly and transparently, like, do we have the right people around the table to fix this? Once we do that, we must go at it. Switching to Portfolio then.
Portfolio, in essence, is about ensuring that we are exposed to attractive industries in parts of the value chain where it is possible to make good money and grow profitably, and that we are in that niche or in that industry with companies that have a long-term right to win. A lot of this work is, of course, done in each of the portfolio companies as they move into new opportunities, but also out of things that are less fit to their strategy. In addition, we at Investor shall, of course, do the same thing. Here, our cash flow and our strong balance sheet gives us the opportunity to invest even more than we have done historically. This, of course, is a great opportunity and a lot of work and discipline required. Pruning of the portfolio is an important element over time.
While exit is never part of our strategy, we have a responsibility, of course, to act if or when a company or a part of a company would be better off in some other context. Again, a lot of this work happens in each of the respective companies, with, for example, ABB and Wärtsilä as two recent and good examples of how they focus their portfolio. Let me in this context. Finally, financial flexibility. This is key for us to be able to fully live our vision of being an engaged and supportive owner of our companies. In that context, I would like to just double-click on our capital allocation priorities. Our top priority has always been and must always be to invest and build the companies we have in the portfolio.
This includes, for example, supporting add-on acquisitions, strengthening balance sheets, buying more shares in listed companies, or whatnot. I want to emphasize and stress this point, because we always need to put our existing companies first. If we do not, there is no smart or good investment that can save us and compensate for not doing the best of what we have. Second, we are committed to paying a steadily rising dividend, as you know. Thirdly, and still a high priority, we have an ambition to add new companies and new platform companies over time. We have a solid framework and process for looking at new platform companies, and we remain appropriately picky. Importantly, you think about the three business areas, we remain open for investments across all three of them, just as we have done historically.
That means we do not earmark capital for one or the other business area, but really want all opportunities to surface and then try to pick the best ones. Now on to the third P, people. At the end of the day, none of what we aspire to do will be possible without great people who actually make it happen, at Investor, in the boards, and in the companies. We strongly believe in the power of empowered teams and individuals with a clear responsibility and a clear mandate. Simply put, it is about having the right people in the right place. We will look for competence and experience, of course, as we do this, but also, we must never compromise on values and integrity. Finally, we shall embrace new technologies to work more efficiently, to create better outcomes, of course. I see this in two ways.
It is key for us as individuals and as a team, but it is also a way to see and learn firsthand what can actually be done with new technology. That is briefly on the three Ps. I mentioned the importance of future-proofing of the companies a couple of times already. This ultimately means investing so as to ensure that if we stand here in five, 10, or 20 years' time, the outlook and the prospects for continued profitable growth are at least as bright as they are today. Otherwise, we have done our job poorly. This obviously means different things to different companies, but there are for sure a number of themes that we see running across the portfolio, and I would like to touch upon some of those today, namely innovation, AI, sustainability, China competition, and again, people.
What characterizes winning companies is often a healthy obsession with constantly trying to make things a little bit better for customers through innovation. Most of our companies have a leading market position today, and they have that thanks in part to superior products and solution. With a market-leading position also comes the responsibility, we think, to lead in future innovation. We expect and we support our companies to invest in R&D throughout the cycle, also in tough times. A lot of innovation can and should come, of course, from within, including from this R&D work. No matter how good we are at it and how much we invest, of course, a lot of relevant innovation will come from outside this group. Therefore, we must remain open for bringing on external innovation as well, be that through partnerships, JV, acquisitions, or whatnot.
AI is arguably the biggest technology shift we have seen since electrification. We see opportunities across the portfolio and across the whole value chain of almost each company, in R&D, in production, in go-to-market, and ultimately, of course, in leveraging AI to enhance the products and the solutions of our companies. As engaged owners, ensuring there is enough attention and enough ambition in this area may actually be one of the most critical things we need to get right in the coming years. Our role is to make sure the boards and the management teams have the right attention, the right ambition, again, and structure plan, and importantly, the right people in place to actually make it happen. Technology is not so much the bottleneck. In addition, with 24 non-competing companies, we want to make sure that there is enough learning and cross-pollination happening between the companies.
To that end, we regularly gather the companies to, let us say, push and to share. We had a CIO and CDO gathering earlier this week, as an example. We see some good progress. We see several companies moving from a kind of let all flowers bloom experimentation phase into betting and scaling a select number of initiatives and use cases where they see more potential. This is good, and our message continues to be more and faster. Used well, AI is for sure a productivity and a growth lever, but there is a caveat to this as well. If not levered appropriately, it will quickly turn into a threat instead. We need to get this right. Sustainability is an integrated part of our long-term strategy and value creation. It is not a separate agenda item.
This is clearly an area that has been a bit, let us say, debated more recently. For us, it is pretty simple. It is the right thing to do, and it is good business already today. There is really not a big trade-off to be made. You take Ericsson or Atlas Copco as an example. Every new generation of radio base stations or compressors will have better energy efficiency as one feature. That creates value and savings for the customer, and so there is something to be shared there. However, I should also say in this context that not all progress of this sort that I just mentioned will always be reflected in the measured Scope 3 as defined. Therefore, we need to track not just absolute levels, but also track and incentivize energy intensity, energy efficiency, and other relative measures as well in the companies.
As we all know, the world is highly competitive. This is a global phenomenon, of course, but one thing that stands out is that China has become increasingly competitive in recent years. In a growing number of industries and niches, we see Chinese company leading not only on cost efficiency, but also on innovations. Impressive speed of innovation, and actually, I must say, high quality in the products as well, compared only to a couple of years ago. Increasingly, therefore, China is where we, our companies, find their toughest competitors and their most demanding customers. Many of our companies have a deep, longstanding presence in China, and we believe that being on the ground with everything from R&D to sales to production will only become more important in the future. I now come back to people and the importance of having the right person in the right place.
To make this a bit more tangible, I would like to invite Jessica Häggström and Lovisa Cavalli Wallenberg to join me on stage. Jessica heads up human resources here at Investor and plays a key part in maintaining and building our network of people. Lovisa is representative of the sixth generation of Wallenberg. I would like to say in this context that Investor is blessed with having more than 760,000 shareholders and an anchor shareholder, committed, credible, and actually represented in flesh and blood as well. So, of course, for us, successful generational transition is important. Jessica, Lovisa, please, the floor is yours.
Performance, portfolio, and people are the cornerstones of Investor strategy that Christian has talked about. What is this people dimension all about? Well, to us, it is about engaging people fit for purpose. What does that mean? Well, it means to us ensuring the right leadership, it means sustaining high business integrity, and it means embracing new technology. That is vital. Our engaged ownership model is based on this principle of ensuring that we have the right people, and with that we mean the right competencies, skill sets, perspectives, mindset, both here at Investor, on the boards, and in the companies. People is, of course, also a vital part of value creation, so hence, it is a key element of the value creation plans that we have in place for each of the portfolio companies.
There we drive proactive initiatives like, of course, board composition, ensuring the right mix of people on the boards, perspectives, experiences, and future-oriented skills. It means the right leadership and the capabilities required to deliver results here and now, but of course, also build for the future. It means building strong succession pipelines for critical roles. How do we then work to try to turn this ambition and aspiration into action? It starts with our belief that we think our success in the past and going forward heavily depends on the people that we can attract and work with over time. That is why we spend a lot of focus, time, and structure into this work.
For instance, of course, we deepen the relationships we have with people that we work with, and at the same time, build and extend our networks and get to know new people with maybe new skills, new perspectives, and new ideas. One thing that we are very proud of that we think is unique to us is the breadth of people across our 24 portfolio companies, in the boards and, of course, in the companies. We try to leverage that in different ways as these companies do not compete with each other. One way that we try to leverage this is that we have built, over the years, we have built networks where people meet across the companies. Christian touched upon that as well. For instance, we have a network for the CHROs. Jenny leads a network for the CFOs.
There is a CTO network, et cetera, et cetera. With that, we can create a platform, an arena, a forum for them to get together, learn from each other, get inspiration, share both mistakes, but also very good practices, and we find this very useful. Then, of course, as an owner, a key focus for us is board composition. Ensuring we have the right chairs, the right board members who proactively set and drive the board agenda and ensure the right strategy for the company and the right CEO for the company. You know the way we exercise our engaged ownership is through board representation and, of course, also through representation on the nomination committees, where we typically have the chair role.
We strive to be very prepared and proactive in that nomination committee work, so there is a continuous process going on where we evaluate, assess, and put a lot of thought into what we believe is critical for each board in terms of competencies, experiences, and skills now, here and now, but also in the future. We bring that with us into the work of the nomination committees to try to build the best boards, together with the other shareholder representatives. Of course, each company have their own needs, but if we take a step back and look at it a little bit holistically, what is it that we are looking for? What kind of people are we looking for to govern and lead the portfolio companies in this highly competitive and complex world?
We all know that we live in a world of extreme competition, and we are in the middle of a huge technology shift. We look for leaders who understand this new world, who are visionary and passionate about driving change and build for the future. I think it sort of boils down to three core dimensions. One thing, of course, is we look for visionary leaders. We look for leaders with strategic and commercial mindset to sort of see where can value be captured in the future. Leaders need to be proactive and act on shifts in technology, shifts in customer behaviors, in geopolitics, sustainability challenges, and so on. Secondly, we look for courageous leaders with ability to perform and transform at the same time.
This means a strong focus on execution and results here and now, but of course, also always a view on the horizon and the courage to challenge existing ways of working, existing business models, existing organizational setups, and with an intense focus on innovation and building capabilities for the future. Then thirdly, of course, we look for people leaders. Isn't leaders fundamentally about people? Of course, high-integrity leaders with strong business ethics and values. Actually, leaders who are genuinely curious and interested in other people, who can attract people and develop talent and build those effective teams that can perform and transform at the same time.
These days, I think it goes for all of us that we have to be curious, we have to be open-minded, and we have to be very willing to learn, and this becomes increasingly vital in this heavily changing world. With that, I'd like to turn to you, Lovisa. You and I worked a lot together on these matters, and you represent the sixth generation. Can you share with us a little bit more on how you work with the sixth generation, how you're sort of being prepared to gradually take on more responsibility?
Well, thank you, Jessica. The succession work is more to be viewed as a long journey that we are on together with the fifth generation. Jacob, Marcus, and Peter Jr. are still very much leading, but we in the sixth generation are gradually becoming more involved and learning and taking on more responsibility. You can think of it as a bridge between generations. We meet in the middle, where we share different experiences from our generations. How have we prepared for this? Most importantly, we are pursuing our careers and developing in our own professional roles. That is key in this work. We are expected to find our own paths, build relevant experience, and develop the skills needed to contribute over time.
In parallel, we have spent much time understanding all the aspects of the ecosystem, how the foundations and how Investor and the companies fit together, and what long-term engaged ownership actually means in practice. We are gradually taking on more responsibilities. I work as HR Business Partner here at Wallenberg Investments, and I also work very close with Jessica on how to build and develop our network. I am also engaged as board member at Novare, where Wallenberg Investments has ownership. My cousin Fred serves on the board of Investor. My brother Jacob Jr. serves on the board of EQT. My cousin Stéphanie on the Knut and Alice Wallenberg board, Siri Sachs on the Wallenberg Investments board, and Marcus Wallenberg on the SEB board. We have all been suggested by the respective nomination committee and elected by the AGM.
The key here is that we need to have the relevant experience and background in combination with our family belonging to be accepted onto the boards. With that said, this is something that we take great pride in and feel a strong sense of responsibility for. We are learning a lot at the moment, and our hope is that this kind of ownership will continue for generations to come. If we can contribute to that journey and play a part in carrying that work forward, it would be a privilege.
Thank you.
Thanks a lot, Jessica and Lovisa, and hopefully this gave a little bit more of a tangible view to how we work with people and the process around the sixth generation as well. Thanks a lot.
Thank you.
To conclude then, we are quite confident in our platform. We have a clear strategy, a portfolio of high-quality companies, a well-vetted model for engaged ownership, strong cash flow, and a strong balance sheet, and not the least, great people here at Investor, on the boards, and in the companies. We think the starting point is good. But make no mistake, there is no room for complacency here. Just look around us. The world remains extremely competitive and quite complex. We just have to go at it day by day. With that, I conclude my part of the presentation, and we move on. Thank you.
Thank you, Christian. Thank you, Jessica and Lovisa. Now it is time for a financial update, so I would like to ask our CFO, Jenny Ashman Haquinius, to join me here on stage, please.
Thank you, Magnus, and good afternoon. As clearly outlined by Christian, we have a strong platform. We have a clear purpose and a focused strategy, and our ultimate target is to generate an attractive return to our shareholders. We do this by focusing on three return objectives. Growing net asset value, paying a steadily rising dividend, and operating efficiently and sustainably. Now, I will double-click on performance across all of these three return objectives. But first, starting with total shareholder return, and here we can see that we have had strong performance over all time periods, 20 years, 10 years, five years, and over the last year. It is good that we have outperformed the market, but more importantly, we have overachieved our own internal return requirement of 8%-9%. One of the key drivers for this is growth in net asset value.
And if we look over the last five years, net asset value has grown 16% per year on average. Our total net asset value is, of course, the sum of the net asset value for our three business areas. I would also like to take this opportunity and remind everyone on the valuation method for the estimated market values in Patricia Industries. We use a relative valuation method, and more specifically, a multiple-based valuation method. For each of the companies within Patricia Industries, we define a peer group. That peer group consists of similar companies that are publicly traded. We have quite broad peer groups in our valuation, and that's because we want to avoid dependency on single company events. Then we look at these peer groups, and specifically on the median EV/EBITDA multiple, and that's what we apply in the valuation.
For these multiples, we do not use the quarter-end spot price. We look at the average share price throughout the quarter, and that's because we want to avoid dependency on a single trading day. In terms of the earnings, we look at the last 12 months EBITDA. Our valuation method is not forward-looking. Then finally, also on earnings, we are restrictive when it comes to adjustments. We only adjust earnings for true non-recurring items. One example of that is transaction costs related to M&A. We do not adjust for costs that we deem as part of ongoing operations. A few examples of that could be costs related to a CEO transition, or costs related to restructuring, or perhaps costs related to consolidation of manufacturing footprint.
These multiples we receive from an external third party, and our estimated market values are reviewed by our auditors. Then a final point on this, we keep the methodology intact over time, and we've done so for many years. What we do, however, review is the composition of the peer groups, and that's to make sure that the peer groups are continuously relevant. We have made changes to the peer groups, and we likely will make changes to the peer groups. I can mention a couple of examples. It could be that one of the peer companies in a peer group has become less relevant because of a major transformation. It could be divesting a business area or maybe making a larger acquisition. We could also make changes on the back of transformation in our own subsidiaries.
If we have a company that has transformed, perhaps through bolt-on acquisitions, that could also spur a review of the peer group to make sure that it's continuously relevant. Okay, moving along to the other return objectives. In addition to growing net asset value, we also have a commitment to paying a steadily rising dividend. If we look over the last 10 years, we've grown our dividend paid with 8% on average per year. We do see one exception here. It was the pandemic, and we actually reduced the dividend paid. I think this really proves a strong point, because in the pandemic, we received less dividend from listed companies, and specifically SEB, due to regulatory restrictions. Here we can truly illustrate the flexibility that we have in terms of managing our liquidity.
We reduced the dividend for a year, then we resumed the trajectory. On to the final return objective, operating efficiently and sustainably. Cost control is extremely important, and it is a very integrated part of the culture at Investor. We are always focused on making sure that we spend cost where we see that that can create value. For us, one krona in added management cost is one krona less for investments, dividend, or servicing our debt. It is also important as owners to operate lean and efficient, because that is what we expect of our company, so we need to walk the talk. If we look at a longer time series of management cost, we can see that it has been relatively stable over the last few years.
If we look since 2016, we have seen an increase of 5%-6% on average per year. That is, of course, in part driven by inflation, but also deliberate strategic initiatives. One clear example here is building Patricia Industries, creating this new business area with a dedicated investment team in the Nordics and also in the U.S. Other explanations for the cost increases is increasing reporting requirements and increasing regulatory requirements. Of course, also digital and AI transformation. Cost consciousness is such an integrated part of our culture. If we look over the last 12 months, our management cost is 0.06% of net asset value. Equally important is operating sustainably. Sustainability is an integrated part of our strategy at Investor, and it is an integrated part of the strategies of our companies. At Investor, we have three focus areas.
Business ethics and governance, climate and circularity, and diversity and inclusion. We actually, throughout this year, sharpened and strengthened our targets, specifically in climate and circularity, and that is to make sure that we keep the speed and the pace and the focus at Investor and in our companies. We have seen good progress across all of the areas. The companies are, of course, on different parts of this journey, but what is true for all of them is that sustainability is key for long-term competitiveness and a true source for new and attractive business opportunities. Now, moving on to financial flexibility. Financial flexibility is extremely important for us as owners, because we need to have financial flexibility to be the best owners of our companies. We need to be able to build, support, and invest in our companies in good times, but also in tougher times.
Our leverage policy is a target range of 0%-10%. We can see that we are currently in the lower end of that range, and that is despite significant investments. We do not see any particular point within this range as more efficient, although, of course, if you were in an environment with strong equity market, you might be slightly more comfortable in the lower end. What is always true is that we need to have flexibility to continuously be able to capture attractive opportunities, again, in good times and in tougher times. We have strong ratings by S&P and Moody's, and we are proud that as part of the annual rating process with Moody's earlier this year, we were upgraded from Aa3 to Aa2.
This is really a testament to the strength and the quality of the portfolio companies, our performance track record, our solid financial flexibility, our strong platforms in terms of cash flow generation with our three business areas. Looking at the leverage in our subsidiaries, in Patricia Industries, the companies in Patricia Industries, they finance themselves on their own merits. Financing is ring-fenced. This is fully aligned with our decentralized governance model. We have a long-term target of net debt to EBITDA of 3x. This will, of course, fluctuate over time and across companies, often on the back of recent M&A activity. What is true for the majority of the companies in the Patricia portfolio is that they have very strong deleveraging capacity. Back to Investor.
You can see that our funding profile truly reflects our long-term investment horizon. We work very actively with debt management. We try to finance ourselves before we really, really have to, because that makes us have the ability to time the market in a better way. We have, as you can see, no major maturities until 2030. The average maturity of our debt portfolio is north of eight years. What also underpins our financial flexibility is our strong platforms in terms of cash flow generation. We have three business areas all contributing to cash flow. This is cash flow that after management cost and interest can be used to invest, pay as dividend, or service our debt.
I want to put some numbers on this, because this is, of course, extremely important to us as long-term owners, given that we do not have an exit horizon. If we look at the sources to the left, you can see that all of the three business areas has contributed significantly. This is 2015 to 2025, in total SEK 216 billion. Here I also want to highlight that investments in EQT, which is orange, is net cash flow. That means that for the funds, it is net of proceeds and drawdowns, and for EQT AB, it is net of dividend received and acquisition of EQT AB shares. On a net basis over this period, we see a very strong contribution from EQT. I think also worth highlighting is that Patricia, although a smaller part of total assets, is a very significant contributor to cash flow.
If we look at the right-hand side, you see the uses and the investments. We have used the proceeds and invested across all of the three business areas, in total SEK 90 billion in listed companies and Patricia Industries combined. In addition to that, paid a dividend of SEK 116 billion. Again, we have a very strong platform. We have a strong platform in terms of cash flow generation and a growing cash flow at that. This is what really underpins our ability to continue to accelerate investments aimed at future-proofing our businesses and expanding the Investor AB platform.
We are, as Christian said, coming from a very strong starting point to continue to deliver on our ultimate target to deliver an attractive return to our shareholders, but it will require significant work and focused work from us at Investor and our companies in the very fast-changing and competitive world. Thank you.
Thank you so much, Jenny, for that financial update. Now, we will dig a little bit deeper into our different business areas, and we will start with Daniel Nodhäll, Head of Listed Companies. Please, Daniel.
Thank you, Magnus. Good afternoon, everyone. I will kick off the business area section with an overview of how we work with the strategic pillars, the Triple P, in listed companies. Starting with the portfolio, as most of you know, listed companies consist of our minority shareholdings in 13 large global companies with strong market positions. Breaking it down a bit, the five largest companies, ABB, Atlas Copco, SEB, Saab, and AstraZeneca, represent around 75% of the portfolio. Sector-wise, industrial manufacturing is around 55%, with around 15% each in financial services and healthcare. Following Saab's strong performance over the last couple of years, defense now represents around 10% of the portfolio. Over the last 10 years, we invested around SEK 25 billion in the portfolio. This is primarily to strengthen ownership in the companies, but also to support companies with capital to fund growth opportunities or to strengthen balance sheets.
In total, we invested around SEK 6 billion in rights issues to fund growth and strengthen balance sheets in Electrolux, Saab, and Sobi. A large share of the total investment have been in Ericsson, around SEK 10 billion, and that has increased or strengthened our ownership from around 5% to 10% of the capital. We also invested around SEK 6 billion in ABB, which together with all the share buybacks by ABB, has increased our ownership from around 10% to closer to 15%. As you can see, we have been able to time the market fairly well with an IRR of about 20% on these investments. Going forward, our capital allocation priorities remain the same. Our focus is on building the existing portfolio. We will continue to support the companies when it comes to funding growth opportunities or to strengthen balance sheets.
We will continue to strengthen ownership in our existing portfolio companies at financially attractive valuations. But we are also open for business. We are evaluating and looking for new interesting opportunities, looking for Nordic companies with strong market positions, strong track record in attractive industries, where we have an opportunity to become the largest minority shareholder over time. Turning to performance. It is a strong portfolio that has generated an attractive return over time. Looking at the last 10 years, average annual shareholder return has been around 17% of the portfolio. Of course, an important contributor to growing net asset value over time. This is roughly 6 percentage points above the SIX Return Index. This has been driven by strong performance in most companies.
Out of 11 companies in the portfolio 10 years ago, eight have delivered a strong double-digit return, outperforming the SIX Return Index, of which five have delivered an annual return above 15%. Performance has been weak in Electrolux and Husqvarna. We are not satisfied with that. Here, we have a high focus on turning around the performance. Coming back to Christian's earlier comments in terms of how we address underperformance, here we have clearly identified the key reasons. We have a clear plan in place, agreed with the boards, with the management, and we do believe that we have the right people in place to execute on these plans. But there will be no quick fixes. Looking at the strong portfolio return, this has primarily been driven by very strong operational performance in the companies, a strong profit growth, and a strong cash flow generation.
During this period, sales growth for the portfolio companies have been around 5%-6% annually, with a significant margin expansion and a very strong cash flow generation. When it comes to operational performance, we believe it is critical to have an outside-in perspective on the performance. The companies need, of course, to stay close to customers, but they also need to track how they perform in the eye of the customers. Also important to benchmark the performance versus relevant peers to understand if the company is winning in the market or not. This is key to early identify potential underperformance and to ensure that they can take actions quickly. If you do this successfully, we believe that this over time should continue to generate a very attractive profit growth and cash flow generation in the companies. Turning to people.
I think people is the most important part of our model for engaged ownership. We have been talking about having great people at Investor, in the boards, and in the companies. As a minority shareholder in the publicly listed companies, we depend and work through the boards. We need to have a strong ownership position, both in terms of capital and votes, and we prefer to be the largest shareholder. In a Nordic governance context, this gives us the chairperson role in the nomination committees, which means that we work together with other shareholders, forming and attracting the right people to the boards.
For each and every company, we need to make sure we have the right chairperson in place, that we have a good team around him with the right competencies, the right backgrounds, the right experiences, really adapted to what we believe are the most strategic questions for the company going forward. For these global companies, we need to be able to attract and retain people from across the globe. We compete in an international talent market. We believe it is critical to make sure that all companies have a competitive board remuneration to be able to engage the right people in every company. We also need to have great people at Investor. We are a fairly small investment team in listed companies at Investor, with around 15 investment professionals. We really have deep knowledge of the industries, of competitors, of the companies we are invested in.
High focus on making sure that all companies perform here and now, but maybe even more important is to make sure that we fully understand the key trends that could shape these industries and create interesting business opportunities for our companies going forward. This is key to define our ownership agenda for every company, where we identify company-specific activities, which we believe will drive the most value going forward, but also including six future-proofing areas, which we believe are relevant for most companies. I think Christian has already covered a lot of these, but we believe that investments into innovation, into AI, sustainability integrated into the business, strong processes when it comes to talent management and succession planning, and active portfolio management, reallocating resources, capital, and people into the most promising areas, and a high attention to geopolitics are six areas that are critical for long-term value creation.
Maybe not for all, but for most of the companies. On AI, there is a high focus in the companies with many exciting initiatives. However, as we all know, the technology is developing rapidly at the moment, so it is a moving target, and all companies need to stay agile. We are encouraged to see that many companies are having clearly identified high-value business cases, both in operations and customer offerings. As you know, geopolitics is another hot topic. It has become a very important topic for the boards and companies over the last couple of years, be it due to tariffs, wars, et cetera. In many industries, we are seeing a tougher competition from Chinese company. It is key to understand the drivers behind this and to have a clear strategy to address it.
I think many of the strengths we are seeing in the Chinese ecosystem today, be it scale, low cost, or even more important, leading innovation and speed, can actually be turned to strengths and opportunities for many of our companies. With a continued high focus on these areas, we believe the companies are well-positioned to continue to deliver long-term attractive return. Thank you.
Thank you, Daniel. Now it is time for the next business area. This time it is investments in EQT. May I ask Edward to join me on the stage?
Thank you, Magnus. Good afternoon, everyone. Glad to be here. Very excited. We will discuss the smallest business area that we have, investments in EQT. We will discuss where we are today, what we have achieved over the last couple of years, as well as where we are going. This is the investment area, the business area. We have SEK 95 billion in assets. It is separated into two rather distinct buckets. The first one being fund investments. This is basically where we invest in EQT funds. Due to our longstanding relationship with EQT and the fact that we actually was part of the co-founders back in 1994, we have the right to invest in all EQT funds at favorable economical terms. This also provides an access to private markets that we otherwise lack in our portfolio with regards to infrastructure, some early-stage technologies, as well as buyout equities.
In this fund investment bucket, you will also find the co-investment that we did in Fortnox the other year. I will come back to that within a minute. The second part is the holding in EQT AB. This is very similar to what we do in the listed companies business area. We are the largest owner, we are a minority owner of EQT AB that is listed here in Stockholm. We drive very similar ownership agenda, trying to be a long-term engaged owner in the business. Performance has been strong in both the fund investment part as well as the listed shares of EQT. This has also translated into a solid cash flow generation. Over the period, the net fund cash flow, as well as dividend from EQT AB, average at SEK 2.6 billion a year.
As you can see, the fund net cash flow, it is a bit volatile. It differs due to the fact that we receive proceeds when exits are done in the funds. It should be noted that we also have a growing share of much more stable dividend from EQT AB. When we have received the second installment later now in December, we expect to have received SEK 950 million roughly, in dividend this year. We will dig a bit deeper into the fund investment part of the business. As I said, performance has been strong. We have a net IRR of 19%. That is nets of the fees we are paying from the time period, in 2019 until Q3 2026. This is, of course, driven by solid underlying fund performance. That is the key driver. Of course, it is also boosted by our favorable economics.
We have a right to invest 3% of EQT funds on a carry-free basis. Apart from favorable economics, the fund investments also bring a diversified portfolio of private assets. Our investments is primarily found within equity buyout as well as infrastructure, but it is also 10%-15% of mid-market and early-stage exposure assets. As expected, geographically, it is tilted toward Europe, but there is a fair share of North American exposure as well, and roughly 10% towards APAC. That is a figure that we expect to increase as soon as EQT start to deploy their most recent buyout equity fund towards Asia that we have committed capital to. In terms of industry, you see it is broad-based. It is a lot of technology that is from the buyout funds, digital, that is the infrastructure exposure, healthcare services, and you see a number of different industries.
All in all, it provides access to a diversified portfolio of assets across stage, across geographies, across sectors. The solid fund performance has also translated to a good cash flow from the fund investments. Over the period, we have a net positive cash flow of more than SEK 2 billion a year. It should be noted that every year, we are investing in EQT funds. For SEK 5 billion, we typically invest in new EQT funds, but we do also receive quite a lot of proceeds from earlier investments. Even during the last couple of years that many of you know they have been rather slow on the exit market, we actually have a positive net cash flow nevertheless.
It really shows the strength of the model that we have built, that we are able to invest constantly but still have a net positive cash flow. As you may see, in 2025, we made our first co-investment when we invested in Fortnox. Let me spend just a minute on that. We invested SEK 4.5 billion in EQT's takeout of Fortnox. For those of you who does not know Fortnox, it is a Swedish accounting software player. It is leading towards small and medium-sized enterprises. It is early on the investment, one and a half year approximately, but we can conclude that we at least are off to a good start. Growth has been accelerated with continued customer intake, as also growth across the full breadth of the platform. More importantly, we see that Fortnox has accelerated investments in technology and AI to really remain in the forefront.
Taking a step back then, Investor and our view on co-investments. For us, it is an extension of our traditional fund investments. Similarly, EQT is running the value creation, EQT is running governance, and the base case is that we enter and we exit together with EQT. It is a good and attractive way for us to get exposure towards industries and companies that we find particularly attractive. Moving on to EQT AB. The company was listed back in 2019, and since then, we have had very strong performance. We have an annual TSR of 25%. During the last one and a half year, we have invested roughly SEK 6 billion, strengthening our ownership at valuations that we deem attractive. Then come to capital allocation. We will continue to invest in EQT funds, similarly to what we have done very successfully over the last couple of years.
We will also continue to explore co-investments opportunities as they arise. These will continue to be a selective approach, and you should not expect us to do a large number of small co-investments. Then, similarly to listed companies, we believe it is important that we maintain the strong ownership in EQT to have a platform for our engaged ownership. With that, I will conclude, and I hope that I have shed some lights of the business area of EQT, and that the financial performance that we have been able to deliver over the last couple of years.
Thank you. So thank you very much, Edward. Now to our final business area, Patricia Industries. May I ask co-heads Thomas Kidane and Yuriy Prilutskiy to enter the stage, please? You get one clicker each.
Thank you. Thank you, Magnus.
Just go ahead.
Great to be with you today. Thank you so much for joining. Over the last 11 years, Patricia Industries has grown to become a substantial part of Investor. Yuriy and I will share highlights from the journey to date, examples of value creation activities, and why we believe we have a strong foundation for future growth. Investor established Patricia in 2015 with the ambition to create a fully controlled cash flow, to build a meaningful proprietary part of the Investor portfolio, to expand investment opportunities, and to sharpen the ownership model for wholly owned companies. We set a strategy that takes a starting point in the purpose that is shared with Investor of building strong and sustainable businesses.
Our vision is to be a great home for great companies, and by now, I hope you recognize the Triple P strategic priorities that are underpinned by specific operating priorities that we will share examples of here as we go. Our values guide our ways of working. To execute on this strategy, we have developed an ownership model that today is a clear playbook based on decentralized responsibilities and accountability for our board and management teams, a very close cooperation with Patricia, Investor, and our network, and the long-term approach coupled with short-term impatience.
Thanks, Thomas, and thank you all for being here today. We will start with portfolio, which to us means owning the right companies at the right time, allocating capital across those companies in a thoughtful way, and being active, engaged owners to optimize our portfolio along the way as necessary. Our investment priorities across our portfolio are two: investing in existing companies and adding new platform companies. Investing in our existing companies through add-ons has always been our top investment priority, and it remains such. We have deployed about 70% of our capital into add-on acquisitions over the past 11 years, and we complement that with new platform acquisitions, where we have deployed about 30% of our capital over the past 11 years. As you can see, we have been quite busy with our companies executing add-on investments over the past 11 years.
We believe that supporting our companies in this way is one of the best investments we can make. When we do this, we put capital into companies we know, into the hands of management teams we trust, and in doing so, we create strategic value and future-proof our companies by adding innovation, geographic expansion, scale, and entering new adjacencies. We have completed about 120 add-ons since inception, and these have ranged from large transformative acquisitions like Nova Biomedical last year, to very small investments in early-stage disruptive technologies like Optilume, which grow to become meaningful contributors to our companies over time. We have executed a wide range of transaction structures, take privates, carve-outs, minority to control, and majority to control over the years. We believe that our ability to be creative, to support our companies, and to contribute significant capital to their growth journeys are key competitive differentiators.
We expect to continue executing substantial add-on M&A in the coming years, and as our companies grow, so will the opportunities in front of them. We complement this with new platform investments, where we are continuously looking, and you can see an example of what we look for in our companies here. In short, we look to make investments in sectors we know, market-leading businesses based in North America and the Nordics, with strong financial profiles and the ability to grow for the long term with exceptional durability. Putting it all together, over the past 11 years, we have grown the number of companies from 6 to 10.
We have made six new platform acquisitions along the way, and in the process, we have made several divestments, which we believe is a good reflection of our active portfolio management approach, knowing when we are not the best owner for a company over the long term. We also recently announced our intent to split Mölnlycke into two distinct businesses to provide focus on each, which we will hear more about later, and that is another example of our active portfolio management approach. Putting some numbers around it, we have grown from six to 10, soon to be 11 companies. We have grown from 14 to 32 business units over the past 11 years. In 2015, our largest company contributed 72% of our wholly owned subsidiary net asset value, and it was the only company in the portfolio that delivered EBITA in excess of 1 or 2 billion SEK.
Today, that company represents 37% of our net asset value within Patricia, and we have seven companies that deliver over SEK 1 billion in EBITA, and four that deliver over 2 billion. From a geographic perspective, we have moved from a business where all of our subsidiaries were based in the Nordics to a 50/50 split between the Nordics and North America. As you can see, substantial diversification while growing net asset value and delivering strong returns over time.
Over to performance, and we think about performance in two horizons, delivering profitable growth in the short term so we can secure performance for the long term by investing in future-proofing areas of many you have heard of earlier today. The current market backdrop is volatile, as we have heard previously here, with multiple strong trends running at once. Our companies are doing a great job in navigating these, and what they experience is that speed and agility are critical levers to succeed in this environment. They have accelerated the work with efficiency efforts to free up capacity to invest in growth opportunities. Times like these also present opportunities to strengthen market positions, which many of our companies have done. We believe that also against this backdrop, it is critical to continue to invest in areas for future growth.
One of those is innovation, which has gotten our companies to the positions they have today and which will be critical to invest into for future success. We can see here over time that the companies have increased investments into R&D substantially, and within that also allocated more capital to transformational projects. Another area that will be critical for competitiveness that Christian covered is AI, and it is an area that is moving very fast and is very high on the agenda for us at Patricia Industries, Investor, and our companies to really work hard and invest to take the opportunities that this technology will offer. We are happy to see an increasing number of value-added cases across companies, and both across top-line growth initiatives as well as efficiency.
The direction of travel here is to scale these use cases and also, to an increasing extent, embed the technology in product and service. With the combination of delivering in the short term and investing for the long term, we have been able to scale the portfolio considerably across dimensions. The companies have built organizations, scaled up sales productively, accelerated investments into future-proofing areas, growing and increasing profitability while in parallel onboarding a significant amount of add-ons to complement organic initiatives. This has yielded a return over time of 13%, well above our return requirement, with the vast majority of companies performing above the hurdle. Today, we have a scaled earnings base and cash flow generating capability that can help support an increased amount of organic initiatives, add-ons, and also dividends.
As Christian and Jessica mentioned, none of this would be possible without great people around the table, on our company management teams, our boards, our internal team here at Patricia Industries and Investor, and of course, a strong network and talent base. It is no accident that the top four elements of our playbook all have to do with people. We are working continuously to ensure strong teams and boards at the companies, to ensure alignment between our chairs, our CEOs, and us as the owner, to be engaged owners and work closely with our companies' teams through our business teams here at Patricia Industries and the central functions at Investor, and of course, to leverage our broad, strong network and ecosystem.
To that point, investing in our companies' talent and network to share best practices and learn together is a key priority for us, and you can see several examples of that here. On the left, we have an overview of the Patricia Industries Executive Development Program, which takes some of the top talent from our companies and prepares them for bigger roles within the ecosystem. On the right, we have photos from many of the forums that Jessica referred to earlier, where we get together our CEOs, chairs, CFOs, general counsels, and the like, to learn together and build strong relationships. We are very lucky to have a strong board with a diverse wealth of experience to provide governance and guide us along the way, and hold us accountable for executing on the strategy.
And we are very thankful to have a strong team on both sides of the pond to make it happen together. To wrap up, we believe that if we keep focusing on the Triple P, execute on our operating priorities, and stay true to our values, we have the opportunity to continue delivering strong long-term value growth, as we have over the past 11 years. And we stand here today with a strong position, well-positioned platform, well-positioned to do so. We have got great companies generating strong performance and significant cash flow, and most importantly, with a great network of people around the table leading them, some of whom you will hear from later today. Thank you.
Thank you so much, Yuriy and Thomas. You will be right back on stage in a minute, because now it is Q&A time. So we will just reshuffle the stage a little bit, and I could ask all the Investor representatives who have already presented to join me again on stage, please. So while we are fixing the stage and having everybody come up here again, if you want to ask a question, please raise your hand and you will get a microphone, and please state your name and company. And I would like to remind all of you listening in from the web as well, please feel free to ask questions, and we will read them up here to answer them as well.
Please come up here. So, we will just fire away then. Who has the first question? I think Jacob had the first one.
Good afternoon, everyone. Jacob Hesslevik from SEB. Two questions from my side. The first one is on people and management cost. It seems to be flat year-over-year despite inflation. So how do you retain and motivate the people as you have taken a fair amount of attracting the right people to your ecosystem, but the right people tend to be highly sought after. So how do you make sure FD turnover stays low? And then second question is on Patricia. Will you increase the transparency and give us a list of peers for each Patricia holding going forward, or what competitive advantage do you risk losing out by being more transparent?
Yeah, maybe. Yeah.
Okay. Thank you, Jacob.
I mean, I can start with the question on remuneration. We have a pretty clear policy, and that is to be at market, not leading in the market. I am happy to say that there seems to be enough really good people that appreciate, of course, the monetary compensation, but also the broader context, being part of a group with portfolio companies that do good things, and then in a context, in an ecosystem where there is an overarching purpose, where a lot of our dividends actually go to grant research and education for the betterment of Sweden. We do think that is a real and competitive edge. But of course, we need to keep a close eye at what market compensation is.
I might just add to that, I completely agree. I think in terms of the remuneration, you also have to consider the longer-term remuneration that you also receive. You also have the ability to be an Investor yourself as part of the longer-term remuneration as well, which is not reflected in the management cost that you see here.
No. We have shifted quite a lot of short-term incentives to long-term incentives because we think that creates the best alignment with our shareholders, basically.
The other part of the question about peers?
The other part was the peer group.
Yes.
Oh, sorry, what was the question?
Could you please repeat that?
Yeah. I was just wondering if you would increase the transparency and give us a list of peers that you have in Patricia, or what competitive advantage do you see that you might lose by being more transparent and providing it for us?
Well, I do not think we see that we lose any competitive advantage. I mean, the reason for providing the estimated market values was to increase transparency. But then I think we also try and encourage everyone to also do their own view in terms of the valuation, because we are using a quite standardized approach. I think, as I also mentioned, it is actually not forward-looking, it is backward-looking. So it is more of an indication. I think it is more from our perspective, we do not see that we gain that much in terms of just showing the peer groups.
Thank you. Next question from Johan over here, please.
Thank you very much. Johan Sjöberg from Nordea. Three questions, actually one to each business area head. Starting off with you, Daniel. You talked about new investments also, you are exploring the possibilities to find new investment in the listed holdings in the Nordics. How is that ongoing? How intense is that process? Is it different today compared with previous years? I think the last new investment you made was in Wärtsilä, that was quite a few years ago. Maybe you could. Is it the same verticals that we should suspect, i.e., healthcare and also industrial?
Yeah. I think the intensity varies over time, also a little bit depending on what is moving out in the market. I think there is a number of high-quality companies in the Nordics that already have a strong minority shareholder. For us, it is important to, over time at least, be able to become that. What we look for is primarily in sectors we know well. Of course, industrial manufacturing, financial services, healthcare, as we talked about. We want companies with a strong track record, attractive market position in an attractive industry. Few opportunities, but there are a number of companies out there that we track and follow.
In terms of size, could you give some indication of what sort of size of the holdings you are looking for? Looking at the core investments, it varies a lot, you can say.
Yeah. No, but I think if we were to do a new investment, we would prefer it to be on the larger side. Making sure that it really makes an impact on the portfolio as a whole. With a SEK 950 billion invested today, that requires quite a sizable company.
Okay, great. Looking at EQT also, you mentioned 3% is the hurdle, or you can invest up to 3% without any carry. Are you still the largest owner or large investor into each new fund? I remember you were, at least. I do not know if you are still, but is that still the case?
I would say it probably differs between funds, but it's not necessarily that we are the largest in each fund.
Are you investing into each fund? Because that was also something you did in the past, at least.
Since the IPO, we have a right to invest. Before that, we actually needed to invest in all funds. But now we have a right. But we invest in most funds, I would say. There are certainly some funds we haven't invested in.
Okay, cool.
But most of them.
Yeah. Final question for Yuriy. I know that you, in the U.S. especially, you have been looking for a company with industrial technology. I think that has been on your radar screen for quite some time. Could you say something about how that process has been ongoing? Is that still sort of your target number one, or whatever you want to call it, for you to invest into going forward?
Thank you for the question. I would say in the U.S., we are actively looking across all of our sectors. Industrial technology, certainly, but also software, healthcare, and services. And we are quite balanced in our sourcing approach there. We have, to your point, over time, spent quite a bit of effort digging into industrial tech, and we feel quite well-positioned there, not least because of the strong network we have based here in the Nordics, with all the listed companies in particular. We have a very, very high bar, as Christian said earlier. Lots of things have to be right, and most importantly, the quality of the business and its durability has to be bulletproof in a very, very dynamic world. I would say that has been the standard that we set, and we are still looking for that asset.
Just a final question, if I may. I mean, you have a capital markets day Investor round about every four years. World Cup tends to be correlated with it. But in four years' time, looking at the Patricia holdings and especially the number of platform companies, do you dare to give some sort of indication where you see it today? In four years, rather.
Maybe I can start. I think it goes back a little bit to our overarching capital allocation priorities, where our number one priority must always be to build and develop the companies that we have, right? That is why that is so clearly our number one. Then, number three on our capital allocation priorities, still important, still actively worked on, as you elaborated on, is to find new platform companies. If or when we do, we will be very happy to bring that aboard. But we need to be adequately picky.
Thank you. We have Derek first.
Yes, thank you. Derek Laliberté here from ABG. I have two questions, one for Christian and one for Patricia Industries. For Christian, I note that Investor is currently trading at close to NAV, which is quite unusual from an historical perspective and also a testament to your strong performance. I was wondering how you think that the value of the Investor ownership model today compares to about 10 years ago, particularly given the increasing importance and track record of Patricia?
Thank you for the question. I must say that there are probably other folks, maybe in this audience, who are in a better position to explain and elaborate on exactly how the share price of Investor is set. I do think that what we have shown here is a relentless focus on building and supporting the companies. That has been, I mean, the earnings growth and the cash flow from the companies has been, in all business areas, by far the most important driver of TSR for us as well. That is where we focus our work going forward.
That is clear. Thank you. For Patricia, obviously, last year in Q3, a very impressive performance of, I think it was 7% organic growth and 26% adjusted EBITA growth. Really strong. I mean, looking beyond the individual quarters here, how do you assess the sustainable organic growth potential for the portfolio today? Has that improved structurally over the past few years, would you say?
Yeah, maybe if I start here. I would say that obviously it is a continuous work to really try to structurally increase that growth level, and that is both working with existing exposure we have and then also with the add-ons that we continuously do. I think we will refrain from giving specific outlook, but of course, that is at the core of what we do every day and try to strive for.
All right, thanks.
Oskar and then Linus, please.
Oskar Lindström from Danske Bank. First of all, thank you for very good presentations today. I thought it was a very impressive equity story. I have one question, really, and that you highlighted two changes going on, which weren't as apparent four years ago when you had a CMD, and that was, first of all, the competition from China has increased compared to then, although it was already existing at the time, certainly. The second one was the pace of technological change, and in particular, in the form of AI adoption. My question is, are these two things which are going to lead you to change your portfolio or how you allocate investments?
Do you foresee that you will make an analysis of your portfolio, and I'm talking both listed and unlisted companies, and perhaps also in EQT, whereby you say, "Well, we thought this was a great business, but because of either or both of these factors, that's no longer the case, and we need to review this ownership, or maybe we need to enter a new segment." Should we expect these two factors to generate a lot of structural change within Investor? Thank you.
Maybe I can start, and please jump in with examples as appropriate. I think that you're right in pointing out these two trends as something that we're emphasizing increasingly, for obvious reasons. The number one priority is to make sure that our companies really end up on the winning end of these trends. You take AI as an example. We really do think that our companies are in a good position, in a good starting position to become net beneficiaries of AI. As I said, across the value chain from efficiency, but also over time, increasingly by embedding AI in the product offering. As I mentioned, if we don't do that well, of course, there is an increased risk of disruption. But really, the vast majority of the focus is on making sure that we future-proof what we have.
Then I think on geographic exposure and China competition, I mean, same thing there. I would say a little bit to the slide that Edward showed, through EQT, we do get more exposure directly into APAC, not so much China in and by itself. That's obviously one piece. But I think that, again, the most important part is that we address this in the companies, and this is not true for all companies, but generally, it will mean being on the ground to an increasing extent. But please.
Yeah, maybe I can just add to that. It is a good question, and certainly two lenses through which we look and analyze our companies. To Christian's point there, I think primarily we look at it on a company-by-company basis. What does this mean for the company? Increase opportunities, maybe increase competition, and how do we address that? That is rather in focus rather than having a direct investment organization in China, for example.
Yeah, if I speak for the North American portfolio, I mean, the risks exist. There are also opportunities. I think they have been known for a few years, even if they are intensifying, and there is not a single company where we think it is no longer a good fit because of those two factors. I think the proof of that is our continued investment into the companies over the past several years, maybe even accelerating investment. Of course, it is two more additions to the long list of things we need to get right with every company long term.
Thank you. Next question was Linus.
Yes, thank you very much. Linus Sigurdson here with DNB Carnegie. I had two questions. Firstly, I mean, given when I look at the increasing cash flows, I guess also the debt capacity in the Patricia portfolio, I mean, is there a reason to believe that those companies will, to an increasing extent, fund their own M&A, and could that open up for, on an Investor level, for you to allocate more capital towards, I guess, both the listed companies, but also something like co-investments with EQT? Thank you.
I can take the first crack. I think if you look back, you compare to where we are today with how it looked 10 or even five years ago, the most significant change in terms of cash flow contribution has been the growth in Patricia. That is already today funding, I mean, a lot of the cash generation and a lot of the debt capacity is being redeployed by way of, for example, add-on acquisitions. When it comes to the future, I mean, as I said, we will continue to look at opportunities in all three business areas, and we do see that we will have most likely the capacity to do more in the coming, call it, five to 10 years than in the last, call it, five to 10 years.
Yeah, I can just add to that, maybe we do see it as one system, and that's already the case today. So, really, if you do a reinvestment in a Patricia, which is a fully owned subsidiary, it's actually a decision of not making a distribution. So, in itself, when we look at investment capacity, we include all of the three business areas and also kind of leverage capacity in Patricia.
All right. Yeah, thank you. Secondly, I mean, this, I guess, is a follow-up to Johan's question about the platform investments in Patricia. I mean, I haven't heard you talk that much before about software and business services, and I mean, given how the portfolio looks today, could you just elaborate a bit how you think about different sectors, for one thing, but also geography? I mean, 50/50 split, but not in, I guess, number of companies, for example.
Yeah. If I start with the services and software question, we have a services and software company in the portfolio. It's Sarnova. You'll hear from Brian shortly, and he'll talk about that business. So those are spaces we're in today. We like them quite a bit. Of course, as with all sectors, we're going to be selective and look across all four geographies. In terms of geographic or sector focus, I would say we're quite agnostic. We look for the best opportunities as they come up, wherever they're based and whatever the business model is. We're always looking for the next one quite actively.
Okay. Thank you.
I think we had another one from Jacob, right?
Thank you. It is not every day that we get to meet someone from the sixth generation. So, one question for you, Lovisa. You are now moving from being three front figures to being considered to be more, I think almost up to 14 people, if I have calculated it correctly. While being more usually means you have more knowledge and more experience, which you can share, it could also lead to paralysis by analysis if you do not agree on something. How do we make sure that you are able to come to a conclusion and take action and not get into the Swedish mindset of having 100 group discussions before everyone is on board?
Thank you for the question. Well, as you said, they are three at the moment, and hopefully there will be more of us engaged. There is a process on how people are getting on board. I mean, it takes time, and we have to learn together on how to work together. Leadership and teamwork is key in this. I think that we have to work more on that, and then time will tell.
Thank you. And question over here. Gentleman, please.
I have a question about capital allocation. Sorry. Gregory Landbrug from Janivo Asset Management in the Netherlands. I have a question about capital allocation, and we value Investor as a company that, in our opinion, has permanent capital which can invest or choose not to invest whenever they want or see fit. A fund, a private equity fund, for example, can be or could be limited to an investment period. How do you decide whether or not to invest in a private equity fund or in one of your companies? Do you see any difference in terms of horizon given the dynamic environment and the technological challenging environment that we are now navigating, given that you can decide however you see fit?
I can take the first crack. It is a good question, and I think that I would really start with financial flexibility as sort of a core pillar for our strategy of being an engaged and supporting owner over time. That means that we need to make sure we have the flexibility to support our companies also when times are tougher. That puts some kind of framing on it. Then, at least in our experience, investment work, really, in our view, is about building and developing the companies we have. That is not really a work, unfortunately, that can be sort of turned on and turned off like a tap, but it is a continuous effort. Therefore, we have taken the decision not to have sort of a clear macro-driven view on investment pace as such.
It is not that we say, "Okay, now valuations are high, we take a pause." Your point on EQT is well noted. I would say this. Where EQT differs from the other areas is, of course, that A, it is not permanent capital, so whatever we invest, we expect to get back in a number of years out. Also, of course, to the extent we feel we need to, we have the optionality, but not any requirement to invest in the EQT funds. That is a little bit of flexibility in there compared to the other areas. But please.
Maybe just adding one thing from the listed side, to your comment, I think a strength of the model in the public market is the fact that the stock market is volatile over time. Sometimes for good reasons, quite often for not. We have a clear view on what we believe is a fair value of a company, which means that we have the luxury not to invest at high valuations and can wait out when the market looks attractive. Of course, that's based on Christian's comment when it comes to having the financial flexibility to act in those times.
Thank you. We had a question over there.
Hello. Happy to be here. My name is Gianfranco Rosati, and I manage my own family's assets as a private investor. I mean, as a long-term Investor, I always think about barriers to entry and competitive moats. I think it will be very interesting to hear your opinion, both from the listed side, private business side, and also from the private equity, on where you see competitive advantage and barriers to entry switching towards, for instance, in the industrial technology business or in the healthcare technology business. What are you investing in at the subsidiary level to strengthen your moat? Where do you see competition coming from? You mentioned China. It would be very interesting to hear your view on this. Thank you so much.
Yeah. If I start with one theme that cuts across, I think, all of our companies, it's customer intimacy. AI can accelerate software development times. China can come up with better, lower-cost, higher-quality products. But our companies, thankfully, across the board, are in leading positions right now, with very strong customer relationships that impact how much they sell, but also impact their R&D pipeline. I think the more we invest in that, and the more we maintain and expand that, the better position we'll be. I would say across every company, that's been a really big focus.
Yeah. With so many trends of which you mentioned here, again, back to what we covered in the presentations, being really quick to act and having high speed has become sort of a super critical lever, be it in adjusting the cost base or investing in innovation. Innovation, we say, sort of again, that is what has taken many of our companies to the positions they are today. So really pushing that, increasing that, and trying to think even more transformation in that arena is also another topic that sort of cuts across many of the companies.
Thank you. I think we will have a question from Andrew.
Hi. Thanks for taking the question. Andrew Lowe from Citi. I wanted to probe a little bit more about your co-investments. Fortnox being the first co-investment that you have done, what really excited you about that asset that led you to go down that route? What are the other opportunities that you have seriously considered along the co-investments, and can you talk a little bit about maybe what led you not to sort of decide to do that, and the thresholds that you have, and how you are thinking about the co-investments? Then separately, would it be possible to just quantify the indirect exposure that you have in EdgeConneX through your investment in EQT, and how you are feeling about that asset?
Right. On the co-investment side, as I think we also said when we made the co-investments, we really saw an interesting, attractive company. It is also within an industry that we do not have that much experience of at the moment, but we really were eager to learn more. So this was also a way of gaining exposure to a very attractive company, but also bringing exposure to that type of investments, that type of thesis and value creation methodology. I would say that is two of the components that brought us down that road. I mean, in terms of the business, it is a very successful company in the Swedish market and ecosystem around small and medium-sized enterprises, and we believe they have a very solid position in really assisting small and medium-sized enterprises to grow, really the backbone of the Swedish economy, one could say.
In terms of opportunities we have not chosen to invest in, that is a bit difficult to, of course, talk about. I would say in terms of co-investments, we are looking at either industries and companies that we see that either we can bring in some value to the table, so we have a network, we have experience, and we can learn within those sectors, or there is actually an industry, company, sector that we would like to learn more about. I would say that is how we try to look at the co-investments opportunities that EQT brings to us. In terms of the EdgeConneX exposure, I do not want to quantify it exactly, but of course, we are aware that it is a large exposure that EQT has in their infrastructure fund. As I showed on the slide, infrastructure is just a part of the exposure that we have.
Within those funds, EdgeConneX is absolutely relatively large, but it is also due to the fact that it is growing in value all the time. Even though they are actually divesting regularly from their funds, it is also growing in value.
Thank you. I think we need to have a few questions from the web first.
Hey. We have received a couple of questions, some complementary ones from the ones already asked. Maybe starting with Husqvarna. Could you develop your long-term view of the company?
Yeah, thanks. Husqvarna is in a tough situation at the moment. On the positive side, it has strong brand, strong market position. It is suffering, low consumer demand in general, increasing Chinese competition, especially within consumer battery products and robotic lawnmowers. We do have a clear plan in place. The company's working on strategic portfolio management, addressing underperforming business units, wheeled products, power garden in Gardena. High focus on addressing the operational efficiency with the cost savings program launched last year. Also aiming to reduce the capital tied up in the business. I think there's a number of strengths in the company, but they also need to strengthen innovation and speed to market when it comes to robotics to keep up and keep the market-leading position in that area.
Great. Another question maybe to you, Daniel. Because we have spoken about active portfolio management, there was a question here from Tom Williams who asked what the logic was for divesting Accelleron and for exiting that position. It seems to have outperformed ABB. What were the lessons learned?
I think the question and the logic behind spinning out Accelleron is probably a question for ABB. It's a board decision in ABB. I think from ABB's perspective, it was a non-core business. Basically, fairly limited synergies with the rest of the portfolio. From our perspective, becoming the largest shareholder in a medium-cap Swiss company is not in line with the strategy. From our perspective, it was more based on that.
Great. Lastly, a question from Antonio de Azevedo. Are there any plans to list Investor AB in other markets like NASDAQ USA?
Not that I know of. We are very happy to be listed on the NASDAQ exchange here in Stockholm.
Perfect.
Thank you, Jamila. We have a final question from Philippe, and then we need to go to our break.
Yes, Magnus, many thanks. Philippe Rosens, Degroof Petercam in Brussels. Two questions if I actually may. The first one on the listed companies. You spoke about add-on investments in the listed portfolio companies. You spoke about your willingness to look at other opportunities, but you also spoke about pruning. If I look at the two companies that are not meeting your current performance targets, one of which is Electrolux, we know that the white goods space is a very competitive one, dominated by South Korean companies, increasingly Chinese companies. My question to you is, how core is Electrolux to your portfolio? At what point in time do you say, "Well, maybe we need to look for another owner"? Then my second question, China. You spoke about the need for innovation. I think that is clearly understood.
How do you deal with a competitor that is not always playing by the rules? I am talking about unfair state subsidies, not respecting IP. What role should the European government play into this? Because if we look at what is happening to the European car industry, it is really a shame. Thank you.
So, maybe I start with Electrolux. I think, to your description, it is a tough industry. I think we are seeing increasing competition from Chinese, especially. Having said that, right now, our focus is on turning around the performance. There has been a lot of activities in the company during the year, strengthening the balance sheet through the rights issue, announcing joint ventures with Midea in North America to strengthen competitiveness, simplifying the organization, optimizing the manufacturing footprint to really reduce cost and improve operational efficiency. So, we do believe in the plan. It will not be easy, but focus right here and now is to turn around the performance.
And so on the Chinese competition and what you are alluding to as sort of the unfair elements of that. I mean, obviously, from time to time and in certain situation, Europe, for example, but also the U.S., of course, needs to take action to level the playing field. But I almost wish I could say that the majority of their competitive edge comes from that kind of unfair competition. But in what we see, at least in the open sectors, if I call it that, of China, so excluding the super strategic sectors, they are simply very good at what they do. And so yes, there may be elements of unfair competition. They may have come to their position of strength through different ways. But if we look at where we are today, and I think that is the reality of it, then they are really, really good.
And we just have to, and I think Daniel’s mentioning of the JV with Midea is one example of how we try to sort of learn and adopt to the Chinese speed and competitiveness.
All right. Thank you for all the great questions and for the great answers. Now it is actually time for a break. We will have a 15-minute break, so you get to stretch your legs a bit, refill your coffee, have a conversation. Please feel free to do almost whatever you want to do, and we will reconvene in 15 minutes. Thank you.
Well, I lost a little something when I sold my heart. The kindness of the evening and the thrill of the dark. Everyone is lying just to keep me sharp. In 11 months, I traveled to the furthest coast. It was pouring on the highway and my shirt got soaked. I could celebrate the evening 'cause it's all I know. So I stumbled around. "Beginnings are stalling out. I will never be found, never be found, never be found. No, I will never be found, never be found, never be found." "And I wonder were you with me when I broke my bones? I was staring into nothing but a brilliant glow. If I'm calling and it's certain that I can't come home. Loving could be different like it was back then. Now it's poison every morning with my paper friends.
And everything I wanted and I ride them in. So I stumble around. New buildings are falling down. Beginnings are stalling out. I will never be found, never be found, never be found. No, I will never be found, never be found, never be found." "So I stumble around. New buildings are falling down.
I hope you had a good break. Good. There will be another one in a while, but in between there, we'll have some company presentations. I have the pleasure of introducing Sarnova, which was a company in the U.S. which we acquired back in 2018. A really great pleasure to introduce the CEO, Brian LaDuke, to talk about this exciting company.
All right.
Welcome, Brian.
Right. Thank you, Magnus. Well, look, it's absolutely great to be here with you guys today. You heard Magnus say we were acquired by Patricia Industries back in April of 2018, and it has been just an incredible journey under their ownership, and one that I've really enjoyed at a personal level as well. The one thing that you'll really see today in my presentation is just how much transformation we've gone through as a business. I'm going to tell our transformation story today really in four parts. I'll first walk you through who we are. Then I'm going to talk to you a little bit more about what we're building as a business, how we're shaping the company.
Then I'll give you a little bit of detail on why we believe we have the right to win in the markets that we serve. Then I'll conclude with some thoughts on where we're taking this business as we go forward. With that, let's jump in with who we are. All right. Well, Sarnova does come from a distribution background and platform, and it gives us a very broad portfolio. We have nearly 100,000 SKUs across our four divisions. Rather than trying to go in depth in our portfolio, I'm going to try to paint a picture of our business and really give you the shape of the business on the slide here. First of all, we're comprised of four distinct divisions. They each have their own brand and their own dedicated sales force.
We're going to work left to right on this slide, starting with our Cardiac Response division and Cardio Partners. When you think about Cardio Partners, think AEDs, CPR training, first aid. This is the equipment, the training, the ongoing management that keeps a community of bystanders ready to act in an emergency. The next division that you see here is our Emergency Preparedness division and Bound Tree. For this division, what I want you guys to think through in your mind is everything that goes in the back of an ambulance, the equipment, the supplies, even the pharmaceuticals, some related services. This is everything that a paramedic needs to save a life in an emergency. Our next business is our EMS revenue cycle management business and our Digitech business that sits within it.
EMS is really good at saving lives, but they do need support in collecting the revenue that funds them, and Digitech is the technology and the services behind that. Digitech bills more than 8 million transports a year. Then we come to our Acute business and our Tri-anim business. For this one, I want you to think of a critical care portfolio, respiratory, anesthesia products. We serve 5,400 acute customers a year in this business. Acute is certainly our largest market, and Tri-anim calls on every call point. Everything from the C-suite, think health systems, GPOs, IDNs, to value analysis committees, down to the clinician at the bedside. When you combine all four of these divisions together, our combined sales were $1.3 billion at a 17.5% EBITDA margin. Another thing, as you see these four divisions, there are some common themes.
One is that they each have dedicated focus and dedicated resources onto the niche markets that they serve. Niche market's something I'm going to be talking a lot about today. What that does is it gives us deep customer reach into these markets, expertise, and it also allows us to tailor our service to the unique requirements of each of these niche markets. That's why when you look at all four of these divisions, we have really high customer loyalty and customer satisfaction. Our net promoter score on an average for all divisions is a 55, which is quite high. I love this slide, especially if you're getting to learn Sarnova, because you can really see the customers that we serve. The first thing you'll notice is it's not one customer, it's actually a continuum of customers. It starts in the community.
This is your everyday bystander that feels confident, ready to act, can grab an AED, and help save a life. From there, it moves to your professional first responder, think firefighter, paramedic, and then it moves into the hospital setting, think doctor and clinician. Across all these markets, we serve more than a $10 billion market, and there's a couple key points here. This is going from pre-hospital through acute. The demand itself is clinical rather than discretionary, so you have that resilience built into the business. Another piece is these are niche markets that are highly fragmented. This gives us customer reach, expertise as we do this, and these markets are really hard to serve when you think about it. Because it's so fragmented, they buy very little from any one manufacturer on their products.
The portfolio's quite broad, but they don't use all that much of any one product. From a manufacturing standpoint, it's really difficult for them to scale and justify a scaled sales force to call on these niche markets. That's really what's kind of unique about Sarnova, is we have the portfolio breadth in being a specialty distributor to be able to afford the scale. We also have dedicated sales forces in each of these channels that bring the clinical acumen to meet with the customers and help them with their business. All right, let's talk a little bit about what we're building and how we're transforming this business. I want to start with our vision, because I really think it helps frame the rest of the discussion that I'm going to have with you today.
With Patricia Industries' support, we are really becoming more than a specialty distributor, and soon we are no longer going to be best described as one. The reason for that is more of what we sell is becoming our own products, our own portfolio, rather than just simply distributing another manufacturer's products. I do want to make a point here as we go through the rest of these slides, is that distribution does remain core to who we are. It is our foundation of the business. It gives us the breadth to call on these niche markets, which then allows us to have the scale that allows us to have a lot of high customer frequency interaction and really become experts in the market, and that is the ingredient to help fuel our own portfolio and what comes next in these markets.
You really have to do both in our strategy, is be a great distributor, but also build more of our own portfolio as we push forward, and you bring those together and we can make a greater impact on our customers. This slide, I think, does a really good job showing you the progress that we have made under Patricia Industries' ownership. When you look at it, we have grown since 2018 from two divisions to four. We have more than doubled our revenue from $597 million to $1.3 billion, and you can see our EBITA margin has grown from 12% to 17.5%. Certainly that is good financial performance, but what is behind that is actually increased durability. More divisions means less exposure to any single market.
More of our own company portfolio means that we control more of our own destiny, and certainly more margin is helping fuel and accelerate this transformation that is taking part in our business. This did not happen in one step. It has actually been happening in a really phased approach, and this is really a benefit of having Patricia Industries as our ownership and their long-term philosophy. We can really take a strategic approach in transforming this business into a healthcare growth platform. You can see this phased approach. Initially, it was infrastructure-focused, and now it is more portfolio-focused as we move into these later phases. You can see phase one started when we were acquired by Patricia, and it was all about installing our long-term infrastructure. With Patricia Industries' backing, we were able to invest more than $72 million into our infrastructure.
This includes things like rebuilding our distribution network into six modern DCs, where we were able to double our square footage and give ourselves room to grow for the next 10 years. But probably even more important than that is we have actually been integrating and upgrading our systems themselves. Really proud to say we have gone from six ERP systems to one, and that is really, really hard work. If anybody who has done an ERP system, that is really, really hard work. It is organizational capacity-consuming, but for us, it is a critical enabler for our future, and it is about solidifying this foundation so that we can be that growth platform going forward. For us now, we have one view of our data.
It's centralized, it's standardized, and I'll talk about it in a minute, but I really believe that it sets us up to be AI-ready as we go forward, and we certainly are accelerating our AI efforts now. in 2023, we started to really pivot to evolving our portfolio more towards Sarnova Brands. Sarnova Brands are those products that we control. It has our brand on it. It is our specification, and more and more, we're actually owning the intellectual property that sits within it. Today, nearly one-third of our revenue is Sarnova Brands. You may be aware, but in August, we acquired a company called Mercury Medical, and that added capability around engineering, light manufacturing, quality, and regulatory, which is going to continue to allow us to further start to shift our mix to more of our own brands.
Again, I want to make the point in this phase, though, we have to do two things well. It's not just about growing our brands. We still need to also be a great distributor, and our strategic vendor partners that give us that breadth, that give us that scale, we need to continue to grow them above market and help them also take market share in this approach. Really excited about this phase. As we start to own more of our portfolio, it's going to allow us to move to a future phase where our portfolio itself can be a platform for additional growth. As a distributor, you are really bound to where manufacturers allow you to sell your products.
As you own more of your portfolio, we're now able to have that control to go deeper into the customers we serve and move into some complementary markets and adjacent markets as well, with the portfolio being under our control. It's an exciting phase for us that we're looking forward to, but to be clear, right now, we're focused on our portfolio. Why do we win? I talked a lot so far about scale and niche markets, and what this slide really highlights is why that is really hard to replicate in these types of markets. We've been building scale since we actually were formed in 2008 in three critical areas. The first one is in our reach itself. We have over 250 commercial people that are focused on the markets that they serve. Again, these are niche markets. They're dedicated to those specific markets.
Our EMS reps, they call on EMS customers. Our acute reps, they call on acute customers. It's this really clear focus. What that allows us to do is really understand our portfolio and also develop the clinical acumen to support our customers in their work. The other area that we've been building scale in is our portfolio breadth. These are unique markets, and they do have their own criteria from a product standpoint. Since 2008, we've really been developing the strategic partners with our vendor base and also building some of our own portfolio so that our portfolio is broad enough to be relevant at every call point, but also clinical enough to support our customers. The third area is around service, and this is not a one-size-fits-all type of service model.
Each of our customers have unique requirements, things like selling in very small quantities in eaches or having custom kitting that is tailored to the protocols that they have in their business. These are the types of things that we have developed and honed in over the years to support our customer at really high levels. That is why we can manage all of this complexity. It is why we can serve 18,000 EMS customers and agencies. It is why we can serve 5,400 hospital customers. It is why we can deploy 85,000 AEDs a year and certainly bill 8 million transports. It is our ability to manage this level of complexity. You might ask yourself, who else can really do that? If you look off to the right of this slide, it is looking at the other channel participants that are in our market.
Manufacturers themselves, they certainly have the portfolio, but they do not have the breadth to really afford the reach to get into these niche markets. There are national distributors or broad-line distributors that are also in these spaces, but they really lack the focus on these niche markets and taking on the complexities that go along with them. They are more generalists in there, where we really are specialized in these specific markets. Then there are some regional players as well, and quite often the regional players will have the focus, but they lack the scale and the sophistication. When you sum it all up, Sarnova really has done a good job positioning itself to be able to do it all and differentiate itself that way.
Better yet, when you are this close to your customer and you really understand your customer, you could see where the portfolio gaps are, where there is opportunity to improve your business and support your customers better, and we have certainly been leveraging that attribute in our transformation. That takes us to Sarnova Brands. Again, this is the portfolio items where it has our brand or our spec, and in more and more case, where we are starting to actually own the IP of the product itself. Sarnova Brands really has three different categories of products. The first one is private label. This is where it is our brand, our specification, another company owns the IP and usually manages the manufacturing. Certainly, that has been a very fast-growing product and area for our business. The next section is where we own the product outright.
It is our brand, our specification, and we own the IP itself. If you look off to the left here, those are three products examples that would show where we actually owned the IP as well. Each of these came to us in a different way, and it really starts to speak to how we can scale more Sarnova Brands. The first is our CureView product. This was a product that was sitting in our private label bucket, and we understood the customer, we understood how strategic this product was, and we were able to acquire the product and move it to the owned category. The next one is our PrO2 Procedural Oxygen Mask.
This is where we saw a void in the market, a gap, and with 18 months of clinical input, we were able to develop a product and launch a product successfully into our market that meets a need, and it moves into an owned product, and it now means that it is in our channel for the future. Then the third is our Flow-Safe II product, which was through our Mercury acquisition. Again, another anchor product that we wanted to be sure would stay in our channel in the long term. So three different ways that we were able to grow our Sarnova Brands in that way. Then finally, our software and services. This is just a general principle, wrap services and technology around your customers, solving some of their biggest problems that they have.
Examples here are Ambulance Commander, which is the software and the technology behind Digitech, which helps our customers do their billing. Also, you will see Scout up there. This came through an acquisition as well, but it remotely monitors AEDs, a fleet of AEDs, so that they are always rescue-ready. These are some of the big challenges that they face, and our customers certainly reward us with their loyalty. Okay, AI and automation. From our perspective right now, there has never been a better time to transform a business. With efficiencies that can be gained, with the customer experience that we can improve, technology is really for us. You certainly can look at it as a risk, and I think that is appropriate at times. But for us, we look at it as an opportunity right now to see our transformation agenda through.
When you think about the journey that we have been on, I talked to you about our early phase work where we were putting in the infrastructure. The foundation is in place. We have one ERP, one standardized set of data. We have put in AI policy and governance. We have a dedicated AI team, and this is what we are thinking about all day, is how do you drive more efficiencies in your business? How do you provide a better customer experience? How do you make your teams more efficient and engaged? We are able to do that with this foundation. We now see AI agents working across our business, customer service, sales, treasury. They are using email automation, they are using voice AI, and it is something that continues to go more thoroughly through our entire business.
We see that our teams are having to answer fewer calls, they are answering them faster, and we see customer satisfaction actually going up while using this technology. So pretty exciting. We do see a bigger wave coming in front of us where we can even go further after some of the biggest areas where we think there are real efficiencies in our business. We certainly also want to target areas where we can further improve our customer experience, and ultimately, we do see that a journey here where AI starts to become some of our portfolio as well. 2026 has been a very busy year. We have deployed 18 AI initiatives in our business, and we have a pipeline of more than 30 more.
And that means in just 2026, we have been averaging every three weeks deploying an AI initiative, and that really speaks to the infrastructure work and on the hard foundation work that we put into our business. We certainly think this is an advantage for us, and one of the reasons we feel confident as we look at the future. You cannot really go too far without talking about culture. It is certainly one of the reasons we believe we have a right to win is the strength of our culture at Sarnova, the way we intentionally invest in it.
When you think about all the change that we are asking our teams to take on right now, two divisions to four, six ERPs to one, adding quality, regulatory, engineering, light manufacturing to the way we work, now asking our teams actually to use AI in the way we work, it is a lot of change for them to take on. We are doing this while saying we want our service levels with our customers to be great, customer satisfaction to continue to go up. It is a lot of change, and honestly, this is where sometimes transformations go wrong if you do not have the culture right. 83% of our employees say Sarnova is a great place to work, and that is versus a typical U.S. company, which would be 57%.
We have been recognized six years in a row as a great place to work company, and so we are really proud of that. This slide just shows one of the examples of how intentional we are investing in our culture, and it is our employee resource groups. We have eight employee resource groups across Sarnova, and it has over 365 members that are within it. These are employees in our team. Each of those employee resource groups has a senior leadership team member, people that are from my team that sponsor one of these groups as well. It is a great opportunity to enrich our culture, hear from our teams, and shape our business going forward.
This is something we will continue to do, intentional about investing in our teams, intentional about investing in our culture, because our transformation agenda is quite bold, and this is a key part of it. So where do we go from here? As we look at the near-term planning horizon from 2026 to 2030, we have really what I think is a very simple plan. It is easily understood. These three strategic pillars cascade all the way through the organization, every division and our shared services as well. It is really built on increasing Sarnova brands, bringing our strategic partners along with us, and also driving efficiencies that can fuel the transformation even further in our business.
From a scaling Sarnova brands perspective, we have a clear path here where we are executing our product roadmaps that are within each of the businesses, as well as continuing to build the capability to drive more of our own Sarnova brands. On strengthening our strategic partners, there is a series of initiatives at having a really strong demand generation engine, having programs that reward our partnerships, and there is a series of initiatives that cascade through the business there as well. Then certainly from funding our innovation, we just talked about AI automation and driving efficiencies. There has never been a better time to really fund a transformation, and we feel that this is a key strategic pillar for what we want to do in our business.
As I look further out, certainly not going to give a number here, but I will show you from a history perspective how we are performing. When you look off to the left, that goes all the way back to 2008 when we were founded, and you can see very strong, consistent performance. When I look at these three strategies and the competitor that we are in the marketplace, in these niche markets, I feel confident that what we are building will lead to deeper customer relationships as we optimize our portfolio, continue to improve on our customer experience. I do see us leveraging technology throughout our company, more agentic workforce where we can work faster, smarter, keep our teams engaged, and reward our customers with a great experience.
Beyond that, as we build this portfolio, I am really excited to use it as a platform to continue to fuel growth long into the future. With that, I will conclude. Hopefully, you guys can see we are really committed to being more than a specialty distributor right now, and that certainly excites our team, and I hope it does for you guys as well.
Thank you very much, Brian. I think you raised the knowledge level of Sarnova quite a bit in this room through your presentation. It is very appreciated. Let us see if we have any questions for Brian. One over there. Jacob, right?
Thank you very much. I saw earlier that it seems that you have the military as one of your customers. Is it only the U.S. military or is it any of the other NATO countries where you see the budgets now increasing and spending power following? Where do you see the most potential for growth going forward in which sectors?
Yeah, it really is just the U.S. military on that side. There is an interesting connection between battlefield medicine and EMS. A lot of the technology and innovation that ends up in EMS services actually comes out of battlefield medicine. It is strategic for us to be part of that because it does give us that insight. Our focus is really the U.S. military.
Thank you. We have a question from Derek.
Thank you, and hi, Brian. Derek Laliberté here from ABG. I was wondering if you could just shed some light on which of your end markets offer the strongest structural growth opportunities currently, and also how you assess Sarnova's ability to continue taking share, and whether there is any meaningful change in competition or customer purchasing behavior currently.
It is like asking me to pick between my children right now. Actually, I am really excited about all the markets that we are in, to be honest. I think they all. I mean, we have been working really hard to build a strong structural business. I think this focus on our own portfolio is really offering a lot of growth opportunities across the entire spectrum of each of our businesses. From that perspective, I feel good. I think the trends that you see, I feel that they will continue. I am not going to select one or the other at the moment, but I do feel really confident. Sorry, your second part of your question, I am trying to remember.
It was how you assess your ability to continue taking market share, and also whether there has been any change in competition or customer purchasing behavior.
Well, I still think things are always evolving. I mean, certainly technology is continuing to evolve. I think when we look at our markets, we are playing in a good-sized market. It is more than $10 billion. I think there is plenty of room to continue to grow. We need to go do the right things and execute our plan, but still believe that there is plenty of growth there to go after.
Great. Thanks.
Oskar.
Hi. Oskar Lindström from Danske Bank.
Oskar.
Read quite often about how sort of changes in U.S. federal funding or Medicaid rules impacts medtech. Is there sort of a risk or potential for such changes to impact emergency, your clients, and impact your business as well? I am just trying to get a feel for sort of where the risks are in this business.
Yeah. It is a great question. Certainly, we see policy and funding as something to always be aware of. If you specifically, like, I think you are speaking to EMS, funding in that marketplace is always underfunded. I mean, we are happy with the markets that we are in. They continue to be very durable. We have seen recessions, we have seen COVID, we see our markets continuing to grow and our business to be able to grow through them. But funding is something that we always do watch closely. But what is nice about this type of demand, to an extent, is that it is not discretionary, it is actually clinical. You do not get to decide if you want to go into an ambulance or not most times. You find yourself in one.
From that perspective, these are really critical products that are needed, and we have a good position within it.
All right. Thank you.
Johan.
Thank you. Johan Sjöberg, Nordea. Could you talk a little bit upon the underlying market growth for Sarnova, if you take all your I am here.
I'm trying to find something to light. Sorry. Could you say that again?
Yeah. If you could talk a bit about the underlying market growth for, if you take all your four business areas together and sort of give an estimate how much that is growing per year. My second question also in terms of M&A, add-on acquisitions, where do you see opportunities there, or are price tags sort of a little bit too high for you?
Yeah. Good question. From a market perspective, we have seen pretty consistent growth. It tends to be in the mid-single digits when you look at it in aggregate for our business. From a pipeline perspective, we certainly have a very active pipeline. We work very close with Patricia Industries. It's hard to really guess on what's going to happen next there. It's not fully in our control, but feel good with what the pipeline looks like today.
When you look at your pipeline, is that mainly within your four current businesses?
Correct.
Do you expect to add a fifth one?
Today, we are really focused on the opportunity that sits in the four current business divisions. You never know what the future can hold. We certainly have ideas on what could be possible, but our current focus is within the four divisions that we have.
A final question on your split between the different. You talk about private label also and the classic distribution. Where do you see M&A going forward? Is that adding new brands, pushing margins upwards for you? Is that how we should view it?
I would agree. I think a lot of our M&A is focused at adding the right portfolio to our mix, and I think there will be some within the product category families themselves and adding key products that we feel can be anchors that we can build around an even more expansive portfolio.
Cool. Thanks a lot.
Sure.
Thank you. Brian, do we have anything from the web? No, not at this point.
Okay.
Then we say thank you to you.
Thank you.
Thank you. Next up, we actually have the first, if I remember correctly, company that we acquired after Patricia Industries was formed. I am talking about BraunAbility, which we bought back in 2015. Please welcome CEO Scott Nelson up on stage.
Thanks, Magnus.
Here we are. Thank you. Of course.
Well, good afternoon. I will say the same that the previous presenters have said. This is a privilege to be in front of you and talk a little bit about, obviously, one of my favorite subjects. Hopefully by the end, we will give you a much deeper view of who BraunAbility is, our right to win, how big is the market, and what we are doing to innovate, to stay ahead. With that, where did we start? This now is a 54-year-old company. Up in the upper right is our founder, who is no longer with us, Ralph Braun, who started an industry in this little town of Winamac, Indiana, just because he said everybody has the opportunity to get out in society, whether it is to work, whether it is to go to the grocery store, et cetera.
Ralph Braun started this industry in Indiana, and his passion, his drive, his values stick with us today. When we talk about culture is everything. Ralph was the founder. Our vision is really to make life a moving experience for everybody. Regardless if you are in a wheelchair or you are mobile, we want to make sure that everybody is afforded the same opportunity. That is when we talk about customer intimacy, we are always thinking about the customer in the chair. Our brand is incredibly important. We spent 54 years building this brand. Our brand represents safety, it represents reliability, durability, peace of mind. Imagine putting your loved one in a vehicle. That person should be as safe as any other member in that particular vehicle. Brand reputation, we guard and we protect, and this is one of the areas that is really, really important.
It does not stop with the product. It also has to extend. I will talk about how we go to market. It extends all the way to how we support our product in the field. About a year ago, we were recognized as a top 100 company by Forbes for accessibility. It is really a testament to 54 years of commitment to being the safest, most reliable product in the market. Built to trust is really kind of our mantra. When we think about there are great stories, but time is limited, so I will not go through those today. How are we comprised? We have four different business units. If you start on the far left, that was the business that was started 54 years ago. You talk about Patricia Industries, which I will in a moment, the importance of being an end-to-end solution.
On the left, of course, what are our products? We have obviously our wheelchair accessible ramps. We also have lifts that that particular division designs, manufactures, and distributes through our channel. We go to market through commercial and consumer applications. Just think about personal use for your family or loved one, and then commercially, rideshare, think white bus, yellow bus, paratransit, transit, rideshare, which has become even more important for us. BAA is where we started. United Access is our retail operation. We have 43 stores across North America. There are 300 different retail locations, 43 of which we own directly. The importance of that for us is moving closer to the customer, understanding directly, not through an intermediary, how is our product being received, how is our product being supported.
We enjoy extremely high net promoter scores with our own directly owned channel called Branded United Access. Q'STRAINT Americas, I will talk a little bit about this in a moment, but this was an incredibly important acquisition under the Patricia banner, because this really extended the solution. When you think about the core product being a vehicle, securing a passenger safely, easily, with dignity, is really the mission of Q'STRAINT. Q'STRAINT has a number of products, good, better, best, but basically all the way from mechanical or manual, all the way to fairly automated.
This represents an opportunity for us in the future to be able to do. If you can imagine, while you wait for a wheelchair passenger to board a bus in the rain or what have you, and the dignity of that customer to be able to do that fast, quickly, it's incredibly important to us. That has been a terrific acquisition for our business. Then in Europe, QBAE is really a combination of acquisitions, Q'STRAINT, and then our existing BraunAbility business, where we have a series of components. So think seating. You may not be dedicated to a wheelchair, but you may have difficulty accessing a vehicle. So we have seating products, we have different restraints as well. We have flooring systems, we have hoists, a number of products.
There, with the QBAE, we actually sell to converters, where in North America, we're actually converting an OEM chassis, which is a very challenging endeavor. But, having said that, they go through converters. So, it's an important business to us, but a business we want to continue to grow. Okay. So here's the markets very quickly. It's a $3 billion total addressable market in North America and Europe. In the rest of the world, it's only $1 billion. So you can tell, just socially, wheelchair accessibility is not afforded the same accessibility around the world. About $2 billion of that is North America, just to kind of segment that for you.
We think the position that we've earned over those 54 years positions us really well to pull some of our other solutions through, and we continue to find, whether it's EV, or electric vehicles, autonomous vehicles, we want to be part of that solution as well. So, we think our technology and our positioning gives us the right to participate in that. On the bottom, why are we excited about this particular market? First of all, unfortunately, well, fortunately, we're all aging. Accessibility is actually growing. If you look at kind of wheelchair-accessible vehicles around the world, the underlying market grows about 5%-7%. It's driven a lot by aging. Obviously, a byproduct of war is accessibility, and that also has been a driver at different periods of time throughout the world.
Fleet replacement, again, having such a significant installed base, many of our commercial customers are replacing, and particularly in higher use, and we want to be positioned well. A good example of this is New York City taxi, where we roughly have half of the taxi business. So if you ever go to New York City, you'll see our vehicle running around the city, vehicles. Fleet preferences, obviously some of the interesting dynamics going on here, as you just heard from Brian about emergency vehicles, actually the non-emergency medical transportation market is growing very fast, and we're doing things in that segment too, to make sure that those customers are able to get to appointments and they're able to be transported safely. Then finally, we've been very intentional about entering the full-size van market too, which is interesting for us.
On the right, we are a picture of some of our brand influencers. Channel to market, I will just touch this lightly. Again, I said we had 43 company-owned stores. We have 300 in total in North America. Europe, we are selling to converters with our components, and then we also go very much direct through upfitters that are taking our product, for example, lifts or securement, and they are actually installing it in their own vehicles. Here is where we are around the globe. On the far left, you can see our U.S. footprint. United Access is our retail stores. If I had dots, you would see that across North America. Then you see BraunAbility Americas has three different manufacturing sites. Q'STRAINT is in Florida, and then we have got a global headquarters that was put in place, obviously, as a mechanism to help drive innovation.
The last five to seven years has been around EV and AV migration, and we wanted to make sure we were ready from a technology perspective and making sure that we are investing our R&D dollars across the businesses rather than just solely within our businesses. Then in Europe, we have got our legacy business in the U.K., which is taking our Q'STRAINT restraints, and pulling those into Europe. Then we have got a business in Stenkullen, Sweden, that is our components business. Innovation. I do not want to limit this to just product. I have shown product pictures here. I would say what we are really trying to do is look at the best solution for what our customers are looking for.
You remember when I talked about dignity, being able to do this faster, with more dignity, it is incredibly important that we make sure that our customer feels safe, first of all, can access a vehicle quickly, and then exit quickly. Then while they are in that particular securement, feel very safe. We are working with a half dozen different OEMs directly, which takes a certain expertise. You can imagine a GM or a Kia, it is their brand as well, and our product is in their brand. It is very important that we maintain as good, if not better, quality standards and reliability standards. We pick our partners very carefully, and they choose us very carefully as well. We also have our mind set on the EV/AV transition too. We will be ready as we are ready when that does happen in much greater magnitude.
Then, some products along the bottom as well. Chrysler NEMT, when you see this stretcher, we have actually launched a product now for non-emergency medical transportation that you can take a customer to their appointments or be in a certain situation where you are in a stretcher, that that will be also safe. The final thing, two final points on this slide that I would make is, number 1, the investment in engineers. We have 145 engineers. That is bigger than the entire industry, if you were to summarize all the rest of our competitors. There is no doubt we are committed to R&D. Then I would also talk about it from a non-product. AI, we are using AI right now to shorten our development cycles, product development cycles, so we can go to market 30% faster than what we did in the past.
There are a number of use cases. We talked about, Patricia had a slide earlier about supporting our troubleshooters in the field, our service technicians. We are also using an AI platform to be able to quickly diagnose when a product is down and address the customer's number one concern, which is downtime. A series of M&A from left to right, of course. As Magnus mentioned, we were the first acquisition in 2015. This is a series of acquisitions across to the right. I would say we have been a little empty in the last couple years, but we have done a really good job from an operational performance perspective to be ready when we do make the right acquisition. We are also being very selective, and we will be selective. It is still a very interesting business over the 10 years, given the magnitude of the acquisitions.
Certainly not Sarnova speed, but it has transformed our business as well. Very quickly, I will touch this as well. Q'STRAINT was an important acquisition to kind of complete the solution. Again, we do not want to just be the ramp or the lift to the vehicle that a customer enters and exits. We wanted to make the experience when they are in the vehicle better than anybody else. Q'STRAINT, you will notice, has its own separate brand. Q'STRAINT also sells to many of our competitors and also participates independently in the market as well, although Braun is a significant customer of Q'STRAINT's product. When you think about the end-to-end solution and how do we automate the experience for a customer, Q'STRAINT is a critical partner in us doing that.
Last 10 years, if you go to the far right, 11% growth on top line, and we have grown 17% on EBITDA, compounded annual growth rate over that period of time. It has been a terrific run. Patricia Industries has challenged us in the right ways. I would agree and concur and underscore the difference for us is our culture. We just concluded, I will give you one data point, we just concluded our employee engagement, team member engagement survey, and for production, we had over 95% participation from our production members, which is unheard of. Go to any manufacturing business and get more than 95%, which is really a testament to the engagement and the culture that we are trying to drive as well. With that, I believe. Sorry, Magnus. Couple of quick points. Where are we going to be in 10 years?
I want to press on a couple of key points. Number one, we have got very interesting, as you can see, organic and inorganic growth. We have got an underlying market growth of 5%-7%. We believe there is better ways to find solutions even within our product category, but we also want to make sure that our customer, not just in a vehicle, has the opportunity to experience the world the way each one of us do. We think our operating, or our production facilities and our footprint around the world give us scale advantage and give us the opportunity to really grow, whether it is through lean, automation, and all the investment. We are also using AI in our automation as well to drive efficiencies and better quality.
Innovation, I have mentioned that already in terms of product and the customer experience, but we are also using AI in virtually every functional area of our business. Then finally, culture. Culture, culture. I think this is why the acquisition was so good 10 years ago, because I think, or 11 years ago now, because the commitment to people has permeated, and it has been such a good fit. With that, I thank you for your time.
Thank you so much, Scott. Very interesting. Thank you.
You bet.
Let us see if we have any questions for Scott. We have Derek right away there.
Thank you, and hi, Scott. Derek from ABG. I mean, you have returned to pretty strong organic growth here in the last year after a more challenging period there for a few quarters. What is driving this recovery, particularly in the privately purchased vehicles area, and how sustainable do you think the current momentum is?
Yeah. A couple of things happened. Number one, new product development, new product launches this year were incredibly important. It is a significant number. It is the most that we have launched, and we are committed to doing that in the future. There is a lot of work around R&D and seeing that all the way through. We had some very critical launches this year in product development. One was in NEMT, another was in the SUV platform, the Chevy Traverse, and then our full-size van business, really changing the business model from a make-to-stock to a make-to-order, because it requires customization. We had to kind of pivot that business, but that is driving a lot of it, is the innovation and new product launches this year.
Great. Just one also on the demand side of things here. What would you say the demand is mainly driven by? Is it demographics and kind of structural accessibility needs, or is it more purchasing power and sort of product replacement cycles?
Yeah. I think number one, it is underlying market demand, because it is 5%-7%, just underlying demand. But finding kind of niche solutions in different segments has afforded us the ability to grow a little bit more than 5% to 7%. One of the challenges that we will continue to face is also on the affordability, just like anything in the automotive. We are doing more even on used-new, taking used product, converting it, selling it through our channel. So a lot of work around affordability. We are using finance now, retail financing more as an enabler to support affordability in the market, and that has certainly paid dividends as well.
Thank you.
Thank you.
Okay. Oskar, then Jacob, Johan, Andrew.
Hi. Oskar Lindström from Danske Bank. Two sets of questions from me. First off, are you looking at or have you made any expansions into adapting your products for public transport or airlines, or is that a very too different a market?
Very slowly. A lot of it just has to do with the standards in both of those. It has just been very difficult. Yes, we continue to look at it. The efforts are going, but they are slow, very slow. I think it is Delta is the first U.S. airline company that is actually starting to deploy something, but in a very small set. We are very interested in it, but it has been very slow because of the regulations and the standards.
Right. My second question is fairly similar to the one I asked Sarnova around financing, but I would like to expand it a little bit, both in terms of to what extent policy around public financing or federal grants or any of that impacts you or will impact you, and also whether higher interest rates-
Yeah.
-is something that really constrains your customers' ability to buy your product.
Yeah. No, great question. I think that is one of the unique advantages that we have. We have both a consumer business for personal, and then the commercial business is being able to take advantage of some trends that are occurring right now. On the personal use or consumer side, that is why retail financing is so important to be able to support that activity. On the commercial side is where we are seeing more of the policy, and we are trying to help shape that policy as well. But it is challenging, and it takes a while. We are active right now in doing this in Washington, D.C. I talked briefly about New York City and taxi market. We are trying to do some things with customer advocacy around how do we make sure that our customers are not left behind as it relates to ride sharing.
It is bigger than Uber and Lyft. It is also automated vehicles or autonomous vehicles as well. We want to make sure our customers are not left behind.
Wonderful. Thank you.
Thank you.
Johan.
Thank you. Is there a reason behind the lower M&A pace, or is it you just have not been able to find the suitable targets? Is that the-
B, yes.
Okay.
I think the ambition is certainly still there. We are very selective, and we want to be selective. It is not that we have not been active. We have not been active in terms of securing. But again, we are going to do this very selectively.
Second question, when you look at the subsidies from government, is it more on a state level or is it more on a governmental How does that end?
Yeah. Good question. I did not mention this before, but our veterans in the U.S., 20% of our business is VA funded. The rest is really not subsidized. It is 20% VA funded. About three years ago, they changed some of the requirements and the trade frequency, which did affect our business in the short term, but just because you were not allowed to trade your vehicle as often. But I would say, we continue to work with the VA to raise awareness so that that very important segment is not left behind.
Just a final question. Is your market growth impacted whatsoever, whether it is Republican or Democrat? A whole topic to understand.
Hot off the press, isn't it? I do not think so. I think the poli-- I mean, potentially, of course, but I do not want to speculate.
Thank you very much.
Jacob, final question.
Thank you. Investor owns BraunAbility and Permobil for over a decade now. Do you actually see any synergies with Permobil, either in customer access or technology innovation?
Yes.
If so, could you please explain a little bit on that?
Yeah. Great question. One of the things that we've started to do with Permobil was start to actually take their drawings, because camera systems and sensing systems, et cetera, and you think about the experience of entering and exiting a vehicle, how can we do that faster? How can we do that more seamlessly, et cetera, to improve dignity and so forth? Yes, we are working with them around that, because they have a fairly extensive range of product that will help us.
Good. Andrew, final question.
Hi, thanks. It's Andrew Lowe from Citi. I just wanted to touch on the distribution channels. You were saying that you're doing more direct distribution, so if you could just maybe expand on what are the margin implications when we think about forecasting your EBITA margins from that? The second point was, you mentioned that you were doing the vehicle conversions yourself in the U.S., but not in Europe. Is that simply a scale issue where you've got to go through third parties, and is that something that you might want to do over time as you scale in Europe?
Sure. I'll take the first question first. The retail, we actually divested of five stores two years ago, because similar with any, like a product portfolio, you want to make sure that you're optimizing performance. We're pretty comfortable at 43 stores out of 300. I wouldn't say it's a major growth story for us. It's a customer intimacy story for us. We're committed to that. We want to continue to improve the customer experience. That's the way I would respond to that. In terms of Europe, it's really about where we came from. When Ralph started this conversion business, through a series of acquisitions that preceded 2015, he purchased a number of these conversion companies. We built a manufacturing capability, which is very different than in Europe having a components business and doing it yourself. It's a completely different scale.
I would say there's no plans to do that at the moment. But, should that change in the future, maybe, but I don't want to speculate on that either. That wouldn't be our preference.
Thanks very much.
All right. Thank you for all the questions.
Thank you.
Thank you very much, Scott.
Thank you.
With that, I have the pleasure of introducing Chris Smith, CEO of Laborie. Please go ahead.
Appreciate it. Thanks. I was wondering which American was going to get the political question, so Scott, I am glad that you got it. It is really great to be with you today. Thank you for giving us the opportunity to share a little bit about Laborie. I think it has been in the portfolio since 2016, so you may be familiar with it, but we will walk you through the journey today, and then we will take some questions at the end. Look, when you think about our business, you have heard a lot about culture. Our culture really starts with the mission.
Just to give you an example, today we will have 24,000 patient encounters across the world with our products, and we are really fortunate that the people that we are able to attract to the company really come there not just to have a job, but to really to help change patients' lives. I show this slide, or we show this slide before every employee, teammate conversation, but in front of every customer and as well, I thought as investors, just really what drives us as a company. When you think about the business from a number perspective, it is very much a diverse business. I will walk you through it today. We really live in three separate business units, but we today have about 10,000 customers around the world. We do business in over 100 countries, and 17 of those are direct.
You may have heard in recent quarterly, we grew the business in the last quarter about 13%, but you can see just over the last trailing 12 months where the business has been from a revenue perspective at $585 million, and then also for the profit. Today, we are at about nine manufacturing distribution centers, really through a series of acquisitions. One of our good opportunities to try to drive continued leverage on the business is to look at consolidating some of those facilities. I am really blessed to work with a great leadership team. Bill Benger is in the back, our CFO. They would not let me travel without him to talk about numbers, but really it is fortunate to have a great leadership team that makes an impact every single day in leading our teammates as we move forward.
This is kind of the journey, and you have heard from the other businesses kind of the journey that we have been on, but if you really go back to 2016, I really compliment Patricia Industries for having the insight to acquire first a business in the urology market. I will talk a little bit about the three business units we are in in a little bit, but urology was a great place to start because it is the aging population in a growing market. Really about this, you heard earlier about finding niche markets where we can be a market leader, and we really were able to do that with that first acquisition in 2016. As that business continued to grow, we did some bolt-on acquisitions.
The next big change for the organization was in 2020 when the decision was made to again go into a large market, but in a niche, and really OB with the acquisition of Clinical Innovations, which was really a market leader in labor and delivery. From there, you can see in 2021, we made really our entrée into GI, which was our third business unit with the acquisition of GI Supply. As coming out of that into really 2021 into 2022, it really was the next acquisition, I think, where you have seen some of our recent growth around Optilume, in our acquisition first of the stricture product, and then buying the entire business in 2022.
Most recently, which the one you probably have read about, is the JADA acquisition, which was an additional acquisition to help strengthen our position in the labor and delivery, and again, a very niched area, postpartum hemorrhage, which was incredibly underserved. It was a great ability for us to continue on this journey as we grow the business. If you think about our business in the markets that we compete in, we compete in large and growing markets. This gives you a highlight of the markets where we compete, what the growth rates are. To give you an example, though, we live in certain niches, and so we are not in the entire markets of each one of these.
We look at where there are opportunities in some of these segments, and then be able to have our ability to look at how can we either acquire or innovate our way into the market. As I mentioned, we are in three business units. This kind of gives you an idea of where we are. We have a urology business, and as well as what we call an interventional urology business, which is Optilume that sits in the urology side of the business. We have maternal now and child health. We used to be called OB, but we changed that with the acquisition of JADA to maternal child health. Then we have a GI business as well.
I am going to walk you through each one of these in a little bit more detail, give you kind of some of the market dynamics, as well as what are some of the products. Urology, very, very large market. One of the things that we look for as we continue to grow our business is where are certain market dynamics driving growth? If you look at this, for example, 36% in the rising lower urinary tract symptoms. If you think about BPH, one of the big challenges today with BPH and the aging population in men is about 2.5 million men get a procedure each year, but that is only 2% of the ultimate population. At the bottom, just the cost of things like overactive bladder to society care. In all those worlds, we compete with products.
Initially, it was in the diagnostics world, but as we have now continued to grow the business, it is more and more in therapeutics, like things around Optilume, which is the balloons on the right. If you think about kind of our labor and delivery, our maternal child health business, this is a really exciting opportunity for growth. JADA has been a definite driver of our growth this year. When you think about postpartum hemorrhage, just to give you an example, it is 14 million women a year, and every 12 minutes, a woman dies from postpartum hemorrhage. It is an incredibly underserved market. For us being able to come in with our footprint and the size of our field organization, we have the ability to expand that not just in the U.S., where they were primarily, but across the world. A huge opportunity.
The other thing that when you think about maternal and child health is that while births may be going down in certain countries, high-risk pregnancies are actually on the increase. Older women are having babies, so the high-risk pregnancies. When you think about things like C-section rates and how those have continued to increase over the years, we have an opportunity with our portfolio to sell products into that market. Finally, when I talk about these at least one risk factors, how we kind of think about the maternal child health where our products are available, 38% of all women that have babies have at least one risk factor. Sets us up really well as we continue to grow. The last one is really around GI, and again, very niched in the GI.
We're not really in the scoping of colonoscopies, but we're in certain products that provide benefits in colonoscopy. If you look at our EverLift and our Spot Ex, it's about the ability to go into the screening of colonoscopies with one to four people that are today getting a colonoscopy, and being able to help the clinician be able to treat patients along that pathway. If you think about GERD or things like motility, those are very niche markets, but where we have the ability to come and help our physicians along the way. Again, great market dynamics in this GI space as well. When you think about the three business units we're in, it really is about how do we drive sustainable growth? It really comes down to three strategic priorities that we have to get right.
The first one is we have to drive innovation. Innovation's a turbocharger for growth. We'll launch about 15 products over the next four years. It's important that we keep that engine going because we're in such broad markets, the ability to either bring out a new product or a line extension becomes really important. I think it's also really important that we continue to focus on high-value therapeutics and not just diagnostics. We want to be in both, but the ability to do therapeutics as well usually brings higher reimbursement rates, which ultimately helps things around things like gross margin. M&A, which I'll talk about at the end, continues to be an accelerator on top of the organic growth as we look to new markets. The second real strategic priority for us is commercial excellence or commercial optimization.
I think in our business, if you're going to manufacture a product, you have to have the ability to commercially get the product to market. For us, it's really about capitalizing on those market opportunities. If you look back over the 2026, we expanded our field organization in urology, to really to continue to drive penetration with Optilume product, but we also expanded the field organization with JADA, with the acquisition of JADA and the MCH business. Once you get through the United States, it's really about how do we look at these key countries where we can expand. As we look at, for example, in Europe, where really JADA has very little penetration or BPH hasn't yet been approved, we want to expand into especially EMEA next year with our field organization. Continuing to do that's important.
It's about using digitization to modernize our sales force. What we want to have is our sales force be able to wake up every day, look at their iPhone and have the ability to understand where are the best opportunities for them to go on that day. What happened yesterday from a customer perspective? Where are hot leads? What kind of usage is going on? Being able to digitize and make them more efficient. If you think about a sales force, it's one of the biggest challenges you have is about driving efficiency with a sales force. Finally, it's how do we fund it? It's really around operational efficiencies, which the company's done a great job of driving leverage onto the business. We continue to optimize our manufacturing, our distribution. I talked about that earlier, moving from nine facilities.
I think it's also about scaling automation and bringing in things across the platform that allows us to drive higher gross margins. Here's a couple of the products that we're working on, just to give you a quick snapshot. You can see them across different areas. I talked a little bit about JADA. Again, one of the problems with JADA is emerging markets. It has very little presence, so the ability to make a low-cost product to be able to go into some of these markets. It also will have us the ability to improve clinical outcomes. PrimeSight's a really great product for us because while scopes are that market continues to grow, historically it's been very capital, but there's been the entrée of disposable scopes. What PrimeSight allows us to do is have the piece of capital, but the disposable sheath.
It drives down the cost of healthcare, but also makes it a reusable product by using the sheath. Optilume has been a great product for us. I think today we're in the process of two clinical trials around expanded indications, which will be really important for us, especially as we think about standard of care and how we treat patients. Then finally, it's really that very first acquisition going back to Laborie, the urodynamic system. How do we use AI to help decision support by being able to capture data and look at data lakes and be able to help physicians once you identify a diagnostic problem, helping them make decisions along the way. Look, M&A continues to be an important part.
One of the things I love about the Patricia partnership is that they work with our GBUs as we look at the market dynamics and where we think we can play. It really becomes about build or buy, and how do we find a way to do that. It's not one or the other, it's the ability to have the opportunity to do both. Because of our large footprint and our ability to have multiple manufacturing sites around the world, we've found very easy to be able to acquire these businesses and integrate them quickly into our business units. We'll continue to do M&A. Finally, it's really about our global footprint, and back to this, how do we go to market? This gives you a snapshot of where we're direct and where we're through distributors, and it really isn't one size fits all.
I think when you think about trying to go into a new market, things like registration and regulation with the regulators becomes important. Is the product paid for? Is it reimbursed? Give you a great example. We'll hopefully get the BPH for Optilume approved through a CE mark the first quarter of next year. Then it's not just about getting it approved, it's about getting it paid for in those countries. Things like market access and reimbursement become important as we think about expanding our footprint. This will give you a snapshot of how it's been financially since the first acquisition in 2016. The revenue has grown about 5x, and the profits have grown about 6.5x.
The company has really done a nice job not only continuing to grow that business, but finding ways to get leverage as we've continued to grow it and drop more down to the bottom line. Finally, it's about the building blocks of how do you keep sustainable growth going. It's not one single thing, it's multiple building blocks along the way. This gives you a snapshot on how we kind of think about the business day to day, about how do we capitalize on market growth, which is kind of that underlying thing that helps fuel it. Then it's about how do you move share and market share. It's about the whole thing around customer expansion and how do we sell more out of the bag. We talk a lot about that with our sales organization.
When we think about go-to-market strategies, we focus very much on the call point. Is it in the same call point where we can capitalize on that relationship? It's new markets and segments, as I mentioned. EMEA is a big focus for us as we go into 2027. We need to grow our international business at a faster rate than we do the U.S. to continue this rapid growth. It's around new innovations and solutions. Finally, as I mentioned, it's kind of around M&A opportunities. When you think about our business, just quick summary, we really are in three very large, very different, but very large and growing markets. We have strong margins and cash flow, which allows us to do things as we want to move forward from a business.
It really is about getting commercial optimization through our field and commercial organization, but also driving that innovation engine. Finally, it really does start with people and culture. You've heard that theme, and I think we all really feel that within the Patricia families, is how do we continue to make sure we're hiring the best talent, but also creating an environment where people can thrive. So we're really a fortunate business, and then glad that we had the opportunity to share it today, and continue to be part of the family. On that, let me turn it back over to you for questions.
Thank you so much, Chris, for spreading the light on Laborie. I'm sure we have questions. Here's one for Linus to start with.
Thank you very much. Hi. Linus here with DNB Carnegie. I had a two-part question on Optilume. I mean, the urethral stricture product has been such a success. I mean, what would you say have been the success factors behind that? I guess the natural second question would be, I mean, on the BPH product, are there any, say, principal differences in terms of how clinicians interact with it and how I mean, the market is bigger, but aside from that-
Right.
-what are the key differences between the two?
So maybe talk about a couple different ways cause it really is about the whole Optilume journey which is we'll be in four certain different segments with that product. The first two are the two that you brought up as far as stricture and BPH. Look, in stricture, it really was about changing the standard of care. I think the important thing around that product was you really had the ability to prevent potentially an open procedure and move to a minimally invasive with incredibly fantastic outcomes and a lot of durability. I would say that was a key component and very good clinical data. The company, I think, did a really nice job of quickly moving to get reimbursement, especially in the U.S. And that's where you've seen a lot of that growth. Give you a great example.
We don't today sell stricture at all in Japan. Huge opportunity. We've growing stricture in EMEA, but we really don't do much in Australia or other developed countries. So there still is a lot of runway. But I would come back to it really was creating that standard of care. When you think about BPH, a highly competitive market, eight companies, six with direct sales forces, everywhere from minimally invasive, where you leave something behind, to innovations for resection, or what's called a TURP. The great thing about our product, it kind of sits in the middle. It's a minimally invasive in the sense that it's outpatient surgery, but you get the outcomes of something like a resection. So, I think a big opportunity, but some of it is finding our niche and our right to win.
And one of the best things about our product is sexual function, which especially resections don't have. But that generally leads to a younger man than Medicare. So, while we have Medicare reimbursement, we now have to get all the third-party payer reimbursements. So again, we see really nice runway with that product. We continue to grow it, but it's not going to be something like stricture, where there was nothing on the market and you brought this innovation. I'm really excited also about getting a CE mark this year for BPH. So, if they kind of-
Yeah, no, that's very helpful. And then just on M&A, I mean, where do you see the largest opportunities in the-
Yeah, I'll give you an example. So, I'm relatively new, so I've been with the company about a year. I was on the board before I took the role. But, our three main trade shows all happen within a month period in the spring. And so, it was my first time to go to these trade shows. And, fortunately, the Patricia team goes as well. But I'll give you an idea. I bet we had 20 to 25 meetings at each of the three trade shows. It's amazing the innovation chasing these markets, because the markets are so large. And so for us, it's about finding that right opportunity where all the things line up with our ability to have the right to win, and some of that has to do with call point. But there's also adjacencies.
When you think about Optilume, that wasn't the world we lived in in urology. We were very much over in the clinic doing diagnostics, but it was the same customer, it was the same call point from a surgeon perspective, so it allowed us to do an adjacency that fit right in. So, look, there's lots of opportunities, but as you've heard Yuriy say multiple times, and we hear multiple times, it's about the discipline. I think that's what makes this whole organization of Investor AB so great, is the discipline of making sure that you buy the business right. So, lots of opportunities out there. We'll see where we go.
Thank you.
Yeah.
Johan, please go ahead.
Thank you, and congratulations on Optilume. I must say, it is quite impressive to see the growth here from your side. Could you talk a little bit about looking at your underlying markets? You mentioned the underlying growth, but then I look at your own organic growth, it has been double digit now-
Yeah.
-for two years.
Yeah.
How much is Optilume contributing to this sort of extra growth?
Look, Optilume has definitely been a growth driver for the last several years. That being said, look, our mantra inside the business is that we look at all the subset growth factors within one of these large markets, and we will use urology. Urology as a whole is growing 3%. We need to be growing significantly faster than market, but each one of the subsets are growing at different levels. It is hard to say, "Yes, we are in urology 3%." Some of the subsets grow faster. When you think about Optilume, remember, as I mentioned earlier, we were creating a market.
Yes.
We are the standard of care now, and so that was a big transition. But our kind of internal thing is to grow faster than markets.
Okay. Then if I may ask a little bit about the future here, on Optilume, you are talking about expanding the Optilume into new markets. Could you say something about where you are on that journey? How far have you come in sort of untapping this potential?
Yeah. Look, I think that the team has done a really nice job, especially in the U.S., driving kind of that standard of care. When you think about that market, it is about how early in a patient's disease state do we have that product pulled. So, a lot of times patients will go in and see a physician, and they may be getting treated two, three, four times before they would do any type of invasive procedure. We historically came in later initially with Optilume, and now it is about how do you push earlier into that process. So, look, we still see really nice growth in the U.S., but a lot of our growth has the ability to move into other countries where the product has not been introduced or is relatively new. Yeah.
Sounds great. Thank you.
Yeah. But as far as giving projections, we do not do that, but we still feel good about the growth of the business.
Nice.
Okay. Thank you.
Seems to be it for now, so thank you very much, Chris.
Appreciate it.
With that, it is actually time. I think we need a little break now, right? 10 minutes and then we will be back. Good.
All right, break's over. While you get seated and before the next company presentation, we will actually show a short movie describing the Wallenberg ecosystem.
The future doesn't wait. Innovation is transforming industry and society. Research is opening up possibilities we cannot yet see, and Sweden's position in the world must continually be earned. Can a guiding idea conceived several generations ago still help shape tomorrow?
I'm a proud member of the fifth generation of this family, with a huge respect of my ancestors that already in 1917 started to think about, "How can we be part of the development of Sweden?
Since 1856, the Wallenberg family has created an ecosystem of companies, long-term relationships, and support for basic research, with Sweden as its base and the world as its market. Our history provides stability, but our outlook is always forward. Through active ownership and board engagement, companies are supported in becoming global leaders in their industries, strengthening Sweden's competitiveness and prosperity.
We often talk about the Swedish word "landsgagneligt," or for the betterment of Sweden.
Betterment of Sweden relates to how we can work in a significant way to support the long-term development of Sweden as a nation.
The ownership activities are rooted in Investor and Wallenberg Investments. They span established industry, finance, and long-term real assets, as well as cutting-edge technology and research-driven growth companies. Different investment approaches and different tempos, but the same objective: to create long-term value and the capacity to act in a rapidly changing world.
We call that our ecosystem. The companies develop, money goes to the foundations, support the universities, and they develop society.
100% of all the dividends from that goes back to the foundations. 80% of that we give out for Swedish research and education. 20% we can reinvest.
When the companies grow stronger, research can receive greater support. When knowledge grows, it creates new ideas, new expertise, and new opportunities for Sweden. This is how the Wallenberg ecosystem grows and gains momentum.
The most important thing for the foundation is to find the excellent individual researchers that can help us to develop Sweden.
Through the foundation's grants, Sweden builds national expertise in fields such as artificial intelligence, sustainable materials, quantum technology, forest research, life sciences, social sciences, and the humanities. This strengthens Swedish higher education institutions and attracts new talent. It gives business and society a stronger foundation in a world where technology, security, and sustainability are rapidly changing the playing field.
I would say that innovation and research is a fundamental building block to stay innovative, to be competitive in a world that is moving faster and faster.
Today, the fifth generation of the Wallenberg family leads the work in close cooperation with the sixth.
To be able to work with the next generation, I must say, is very rewarding. It's something that I'm extremely happy to see happen.
The essence of the mission remains unchanged, to continue developing with judgment and courage in a way that strengthens Sweden for the future.
Looking into the future, thinking about green development, green transition, thinking about moving into AI and all of that's fundamental to be competitive today.
Through the next technological leap, the next product idea, and the next scientific breakthrough, the ecosystem and Sweden are strengthened for an uncertain but exciting future.
Now I have the pleasure of introducing today's last U.S. presenter. It's Mr. Byron Selman, CEO of Nova Biomedical. Welcome up on stage, Byron.
Great. Thank you.
Thank you.
Magnus, thank you. All right, we are in the home stretch here. Good afternoon, everyone. It is really great to be here and a real pleasure to present to you on Nova Biomedical. I should say, many of you probably remember us as Advanced Instruments. In 2025, we acquired Nova Biomedical, and we rebranded our company to Nova Biomedical. Advanced Instruments is still a really strong brand, and we still maintained it. In fact, our osmometer business is part of Nova. When you look at who we are today, we are two really good companies that came together to make a great company. I mean, we are over $700 million in revenue. We have got a much broader portfolio of products. We have significant more opportunities than we had as two companies standing alone. We are really excited about where we are and where we can take this company.
There has been a lot of positive changes over the last, roughly 14-16 months. I forget exactly. The thing that has not changed is the core DNA of our company. We are still a company that delivers decision-critical data for the healthcare industry, and we do that through innovative technologies, and we have done that throughout our history in the marketplace, and we will talk about that. Our vision is to improve the health of every patient through innovation and excellence, and we do that while adhering to our core values. Customer centricity, ingenuity, ownership and accountability, collaboration, and integrity are all critical to us, and we really hold those values dear as we deliver to our customers. We play in a broad spectrum across the healthcare industry.
When you think about vaccine and biologic development, manufacturing, look at hospital testing, both in the lab and the bedside. In fact, we're going to talk a little bit about it. Increasingly, the world is moving towards bedside testing, point-of-care testing, and we are incredibly well-positioned to help drive that trend forward. It's all about driving better patient decisions and ultimately leading to better patient care. We sell instruments, we sell disposables, we sell software, we sell service, but we're really a data company, because that's what we do. We provide data to the end users, data to the clinicians. Maybe it's obvious to say, better data yields better outcomes, but it is something that we absolutely focus on as we develop our products and expand our platforms as we move forward.
Our vision, our values, who we are, our DNA has led to this culture of continuous innovation, and it isn't something that just happened overnight. I mean, you're going to see in a few slides, this has been part of both companies, Nova Biomedical and Advanced Instruments, for many years. What that's enabled us to do is established over 500,000 placements globally. The top 10 biopharma companies, the top 10 healthcare institutions around the world are all our customers, and we're incredibly well-positioned to capitalize and sustain growth. We certainly have attractive markets. We'll dive into each of those a little bit with clinical and bio. We have a very strong innovation pipeline, which really kind of forms the backbone of who we are. We've launched 10 new products in the last three years, and we see that continuing as we go well into the future.
We maintain a strong market leadership. The Nova Biomedical name, the Advanced Instruments name is just really well-established and well-known within our industry. We do that not only through innovation, but also the service we provide and how we provide to the industry. We are a global company. 60% of our revenue is based in North America, 40% is OUS. Both regions are still very strong growth areas for us, and we look at them certainly equally. We have a very strong, durable, recurring revenue model that will continue, and we have a strong, proven management team. When you think about the acquisitions that we've made, not only have we brought strong technology, but we've brought strong talent into our company, and that's continued to expand as we move forward. I said the innovation didn't just happen overnight.
In fact, it was over a century combined of years of innovation in the marketplace. When you look at Nova Biomedical, formed in the 1970s, launched one of the first whole blood biosensor technologies, and certainly the gold standard technology, which remains today. In the 1970s, they went into the critical care business with their blood gas analyzers, and in 2014 is when they launched their glucometer, which is the patient bedside measurement tool. Point-of-care testing, as I mentioned, this is something that it's a trend that is a really important trend in healthcare, and we're just incredibly well-positioned to capitalize on. Advanced Instruments started in the 1950s, launched one of the first, it's called freezing point depression technology. It was gold standard then, it's the gold standard today. We've done a lot of enhancements to it, but the core technology remains the same.
The big pivot in our history was really the Patricia acquisition. That is when our company really started significant growth. It was not only organic, it was through the right inorganic acquisition, Solentim, right on the bio side, Artel, for the bio and clinical side. Then ultimately, maybe the second biggest pivot point was the acquisition of Nova back in 2025, and again, a rebranding of our company. Then our newest addition, which I am happy to speak about, is NanoCellect, which is an incredible technology that marries very, very well with our Solentim technology. All these pulled together create a very strong platform for growth, new technologies, new expertise in our company, and the ability now to just to serve our customers in a very, very different way. Let me dive into the markets a little bit.
I said we deal in two very attractive markets. You bring these two markets together, it is over $22 billion in total opportunity. Bio at $12 billion with 6% CAGR, clinical at $10 billion with 4% CAGR. What you see in both of these businesses is that we have the products and we deliver the value proposition that fit right into the market trends that are currently underway. You take bio as an example. What you are seeing more and more is incredibly complex therapies that are coming out. The magic to biologics and vaccines is finding that right cell that is going to be able to treat that patient and cure whatever disease they have, and our systems help them do that, and we are one of the leaders in doing that.
Shorter development time, speed is absolutely critical, and what you see with our systems is very rapid response, very rapid result generation, and very accurate results, which is absolutely critical in bio. Then the regulatory workflows. I think the regulatory agencies are trying to keep up with bio. The world is moving so fast, so it is really important for us to continue to align with the new regulations and to bring our customers those systems that will enable them to achieve their objectives. On the clinical side, I have been in the clinical markets over 30 years. Staffing, costs, capacity has always been front and center, and we at Nova continue to find systems that are going to enable to help the healthcare institutions to work with those resources, whether it is automated, semi-automated systems, et cetera.
The trend of closer to the patient is absolutely critical, and maybe to put that into context, I am sure everyone here has had a blood test. You take a sample of blood, send it out, maybe you get your results in a day, maybe two days. You are in a hospital, maybe you will get them in a few hours. But to get the result right at the point of test within a minute, two minutes, is just so critical. Our system, our glucometers, the StatStrip is an incredible platform that is going to enable us to continue to grow that. We see a really strong future in our pipeline as we continue to expand moving to the bedside. I want to just spend a moment now in each of these businesses, and I want to start with biopharma.
I have to say, it is really hard not to get overly excited about biopharma, I say that not only as a CEO of Nova, but just as a person in society. I mean, when you see what is incredible, what is happening. You look at 2026 alone, right? You have Moderna working with Merck, have announced the first vaccine that could potentially put melanoma in remission using our mRNA technology, which is something that really developed during the COVID times. You have biologics that are treating the causative agent of Alzheimer's, right? Before it was treating symptoms, now it is going after plaque buildup and treating the causative agents of Alzheimer's. Then ultimately, single treatments, stem cell treatments to treat diseases like lupus, where studies have shown now that we put patients in remission. So it is just a really exciting world, what is going on.
But it is a challenge, and some of these technologies require partnerships with companies like ours that have the systems that will enable them to, first off, pick the right cell, which is absolutely critical, and our systems do that. Working in larger batches, it is great you can do it on the benchtop, but how do you bring it into full-scale manufacturing, and how do you maintain the quality of your drug? That is where we play, and we are ubiquitous throughout that environment. So when you look at some of our products, whether it is cell selection with the Solentim and NanoCellect technologies, whether it is developing the manufacturing line or ramping up production with BioProfile, the Artel or OsmoTech systems, then ultimately assuring the consistent quality of the product is critical.
We play in all of those sectors and have some of the best technology in the world that helps the developers. So bio, really exciting area for us. Clinical, incredibly important area for us. It is a big market for us. It is where we started, both Nova and Advanced Instruments, and it is an area that has still significant opportunities for us. I said testing at the bedside is key, so rapid patient diagnostics. Differentiation matters. Hospitals are cost-constrained. They need to have those systems that have the level of sensitivity and precision that can really deliver, and they will pay. We have seen that with certainly our products. Connected workflows being essential. I said we are kind of a data company, and now what you see out in the marketplace is all these systems just spewing out data.
We need to harness that data, bring it together, get it connected, then ultimately using AI, drive algorithms to be able to inform on what to do with that data, and that is very much in the field we are in. So when you look at our clinical business, testing at the bedside, I mentioned the StatStrip glucometer. By the way, we measure ketone and hematocrit and hemoglobin and a variety of other things, and it is a platform that we see will continue to expand. Testing at the hospital labs, I mentioned certainly a key area for us, OsmoPRO MAX. Never going to go away in the hospital lab, but we are very present there. Testing outside the hospital, when you think about some of the underdeveloped worlds, underdeveloped countries, there are not all of these countries can have the level of healthcare institutions across the country.
They are very remote clinics, for example. Bringing some of our systems that are very easy to use, they can give rapid results, are key, and it is just a whole new growth area potential for us in the future. Ultimately, with our NovaNet systems to connect and inform treatment for the patient are key and critical. We play in strong markets. We have got a great legacy of innovation, which has helped to drive that, but it is looking forward into the future. We have made significant investments over the last few years in ramping up our innovation. I like to say we are innovating innovation because that is what we have to do. We have to be on the cutting edge. Planned obsolescence is a really critical term for us, and we throw it around a lot.
I tell my R&D team all the time, "All right, everyone, you just launched this product. That is your competition. Beat that." When you do that as a company, that is when you stay ahead of your competition. We continue to drive planned obsolescence and continue to go forward. It is driven not only by advanced technologies that we have brought in through acquisitions, but it is also more and more enabling artificial intelligence. It is not only in our product, it is how we develop our products. Certainly software, but it is the testing of the products and just more rapidly accelerating our timeline to get products out. When you look at some of our core technologies, we are experts in chemistry, microfluidics, optics, imaging, analytics, increasingly AI, and more.
When you look at our innovation roadmap, it is not only leveraging what we have done, but it is also harnessing these new technologies in ways that we were not able to before across platforms. Moving more into modularization kind of world, as you look at these technologies, driving efficiency in operations and manufacturing and higher levels of quality are critical. Those two can combine as we modularize our technology as we bring it forward. Ultimately, it is all about creating the next disruptive technology. We invest quite a bit in our existing pipeline, but we also invest in what we call blue sky innovations as we look forward into the future, and we just see that expanding. I want to spend a moment just to talk a little bit more about AI because, certainly, the obvious is use AI in our products and technology, which we do.
By the way, when I talk about cell selection, like Solentim and NanoCellect, heavily leaning on artificial intelligence and algorithms to be able to select those right cells. AI goes well beyond that. We have established now at Nova, it is a central Nova platform. Think about the cortex of your brain. It is where all of the data kind of emerge together with built-in algorithms that enables then a transferring of that data to all the functions within an organization. In my experience, the biggest failures in companies is just a lack of communication. It is the easiest thing to communicate, and it is the hardest thing to get done. When we have systems like this that will enable data communication seamlessly across functions, we can be very, very successful. That is already beginning to happen, and we are already seeing that.
Improving how our products perform using artificial intelligence, our customer experience, everybody wants that Amazon experience, and bringing them that kind of direct service is key and critical and can be done here. Also helping our employees be more effective in what they do, and looking at those day-to-day kind of mundane tasks and starting to automate them. We are very much embracing AI, not only on the technology side, but also just within our own organization as we move forward. What does this all mean? It means a track record of sustainable growth. It means significant growth acceleration that we've already seen, a lot of it through organic, but certainly, more recently, heavily inorganic with the Nova acquisition. We see they aren't mutually opposing, right? These are two efforts that absolutely feed on each other.
With the AI, I got to be careful, AI meaning Advanced Instruments, and the Nova team coming together and really accelerating, driving the momentum of our company, it's hard for us not to think we're just beginning in this journey, and we're really excited about where we're going. Last slide before I open up to questions. It's a passion of mine. Nova, I can tell you, it's a passion of my team. We feel we are just so well-positioned right now, not only after the merger, but as we develop our culture and drive our innovation pipeline and capitalize on AI, et cetera. We have two very large, attractive markets we're going after. We have a very durable business model that we're going to continue to drive forward.
We've invested significantly in our innovation pipeline and are really excited about where that brings us well into the future. Hopefully, you learned a little something about Nova today, and I'm happy to answer any questions.
Thank you, Byron. Questions? We have one from Oskar.
Hi. Oskar Lindström from Danske Bank. Two sets of questions for me. The first one is a little bit on the financials. Maybe you can, maybe you can't comment on them, but I think the baseline EBITA margin, you showed it there as well, was 30%. Since then, you've improved to almost 35% EBITA margin. At the same time, we've had comments in the quarterly reports about integration potential still ongoing. Is the improvement in margins driven by synergies and the integration of these two businesses? How much more potential is there?
Yeah. There are three drivers. Certainly the synergies, without a doubt. Yes, there are more. Second is just our innovation and new products and our being able to command higher pricing. The third is just general efficiency with our organizations as we bring AI and other elements into it. We see that we do expect it to continue. I can't give you a prediction of where we go, but certainly there are greater efficiencies. By the way, the commercial synergy and efficiency, which are going to drive more top line in a sense, but we haven't tapped down on our synergies, certainly.
Hmm. Let's hope not. Great performance. My second question is a little bit on understanding your competitors. I mean, who are they? Companies that are similar to you or very different to you? I'm not an expert in this market, so I think that would be helpful in just understanding what the general landscape that you operate in looks like.
Yeah. I mean, I don't want to go too much into our competition, but there's key players like Roche and others, and names that you would know. I would say that we have a number of different competitors across, depending on what market that we serve. I'll say this, I don't think we have one business that doesn't have state-of-the-art technology that can compete with any competitor as we go head-to-head. As I said, planned obsolescence is critical for us. For us, our competition is ourself right now, and we just need to continue to drive that innovation forward. There's always going to be competitors out there. It's a wide variety of different competitors, but we stay focused on just, let's keep driving our technology forward.
All right. Thank you. Great.
Got it.
Johan.
Thank you. Johan from Nordea. Could you talk a little bit about your story going forward here? Obviously, a huge acquisition, sort of integration, and I guess you are very occupied with that. How is the sort of your outlook for Is it mainly organic growth we should consider going forward, or is M&A, or when could you be ready for further M&A?
Well, we actually just acquired a company a few months ago, NanoCellect.
I apologize for not picking up.
I guess we're ready now. No, we're always ready. Let me say it differently. First off, I wouldn't pick one, just to be totally blunt. I don't think that way. I think of, and the way my group thinks is, what do we need to do to get to the next level? Then we can make a determination, all right, do we go out and get it? Do we do it in-house? Et cetera. There's always opportunities that emerge, and we work all the time with Patricia, and there's a long list, like the other companies that we go after. From my perspective, I can give you a couple of just things I think about in my mind. I keep saying we're a data company. It kills me that we give away all this data, right? That's what we do, right?
I think we can harness that a little bit, right? I think we can use that data and inform our customers what to do with that data. It's almost data overload right now. I think there's some really curious bedside testing platform, completely untapped. The complexity of what's going on in biopharma right now, we have to be there to support them. It feels great when you see those up there and what it develops, and you know that our products are being used. Moderna is a huge customer of ours. They're right down the road from us in Boston. Hope that answered your question.
Absolutely. I mean, just also, just coming a bit on sort of, if you look at Nova Biomedical, it could be viewed as sort of a platform also. I mean, you have platform companies within Patricia, but actually Nova Biomedical is also a platform company, you could say. You can add new business areas, and we talked about Laborie here, you adding new businesses, and same thing when it comes to Sarnova. How do you see that? Or is it, could you add further platforms in this, or is it mainly within your current sort of two?
No, never say never. I mean, we could absolutely expand into some new and exciting areas. I would say, though, that we are massively untapped still in the areas that we are in. When you think about sensing, right, and you think of the biologic space, right? So, sensing in bioreactors, sensing in different parts, sensing within manufacturing that has an automatic feedback loop in terms of changes that should be made. No one is doing these things, not to the extent that they should. So, these are opportunities for us within the analytic world, right? So, there is still a lot there. Outside of the analytic world, it is something to consider, but our focus more recently has certainly been that area.
Just a final question, if I may. I mean, this was Nova, when Nova was acquired, was Investor's largest acquisition ever. Could you say something about how the Nova part is doing today compared with your expectations when you bought it?
We are doing well. I will say that. I think what has been really exciting for me is how the Nova organization merged well with our culture, because that is always a challenge when you bring companies together. As I tell my team, we could be $700 million or $7 billion. We are going to be an entrepreneurial company that is going to be fast, and we are going to be innovative, and that is how we are going to think. Not every company is like that. When you bring a big company like Nova, what we found is there were so many folks embedded in the organization that were just wanting to break out and enjoying that. So, from a financial sense, we are doing well. From an internal sense, in terms of the teams coming together, that has actually exceeded my expectations.
Cool. Thanks a lot.
You got it.
Thank you. Don't see any more questions right now. Oh, here we have one. Derek, sorry.
Thank you. Hi, Byron. I am Derek from ABG.
Okay.
You showed the different expected, the market growth rates for biopharm and clinical before. But for you, could you elaborate a bit on where you see the biggest opportunity between these two segments, which you expect to be the main growth driver, and also whether there is any profitability differences between the two?
Yeah. It's like, again, like picking your favorite child, I guess. But certainly, it's hard not to get really excited about Bio, certainly. You see what's happening, and you realize kind of the untapped opportunity there. Certainly, I think from a percentage growth perspective, you probably expect to see Bio. You can see that in the market growth rate. But there is so much opportunity in Clinical for us right now. And it's not just in the products that we have today and the markets that we have today. It's expanding now to other parts of Asia, other parts of markets. A lot of areas were, by the way, were distribution. One of the key initiatives we've had, since I joined Advanced Instruments, but now we've even accelerated after joining Nova, is to go direct in many of these markets.
Products like our Clinical products or even our Bio products can really expand. I would look at them both. I get excited about both of them. But certainly, from a percentage, I would say Bio is the biggest.
All right. Thank you.
Thank you, Byron.
Thank you, Magnus.
Thank you.
Thank you, everyone.
That actually brings us to our last presenter of today. It is my great pleasure to ask Interim CEO of Mölnlycke, Guillaume Joucla, come up here. Welcome.
Thank you, Magnus.
There we go.
Thank you. It is a great honor to be there on stage representing Mölnlycke today with all of you there. I am the last before we invite Christian for the wrap-up and then the mingle, so I hope that you still have the energy needed to go through, but I am sure you have the curiosity at least to learn from Mölnlycke, so it is without doubt. You heard about 3P today, and maybe I try at least to cover a bit of the performance. That comes also from the portfolio, but there is a reason for that portfolio to be. Given what we announced yesterday, it may give me the opportunity also to introduce some few of the great people that are to shape the future of Mölnlycke. By that, we cover the 3Ps. Before I start, why I am proud to be there with you today.
First is about the great heritage that Mölnlycke represents, and we have been advancing healthcare and improving the day of the caregivers and the patient life since 177 years. 177 years. That is something. We have learned a lot across this journey, and what do we represent nowadays? We help more than 40 million wound care patients yearly. We also support healthcare professionals in the surgical settings with more than 40 million of them yearly as well through 8 million surgeries that we support with our procedure pack solutions. That single number, maybe you do not understand how much it is, but it is about 60 medical device that we place on the market per second. That is our print. This print we do with great people, 8,500 of them, covering more than 100 countries where we do operate.
You know our numbers, and it is also something that we are pretty proud of the track record. The reason that makes those numbers is what matters the most, because those are not coming by random reasons. A bit more than EUR 2.1 billion revenue, that turns to be north of 30% EBIT margin. We are basically having strong track record of financials, and that also helps to address the future growth ambition that we do have. Nonetheless, we also act with duty on the sustainability agenda, not only because it is a box to tick here. It is because it is a value sell for us. It is something that we see critical for us to be relevant in the future. If you address real pains and customer challenges of the long term, then you are relevant in your market.
By being relevant, by solving those pains, then you have a reliable business, sustainable business over time. For the one that basically read our annual report, that slide must be something that you know already, and this is a summary of our overall strategy. That strategy remains highly relevant for us. That applies to the four business areas that we are operating, and I will come back on each of them in a minute. Before I do so, we are having three strong pillars. We operate a wide market landscape, you understood that, and we need to defend this one and grow those ones, because there is still a lot of untapped opportunities into those where we currently operate, and that is one of the critical pillar. Another one is, the world is evolving, and you need also to adapt to that new environment.
What I mean by this is, our business is also enjoying a strong underlying demand, but that demand is also going through settings that are not always the one we currently operate. Addressing those settings that are of the one that are growing faster in the future are critical to be successful. If you want to beat competition, you need to be in those segments that goes faster than others. That is why that second pillar in our strategy. The third, you heard a lot about the drivers, but you need to drive performance. Do that greatly. You can't very much think that you will be relevant if yourself are not able to excel, and it is because we have the great people and the great systems that we manage also to be relevant for our customers and offer the best solutions for them.
We fund all those, and we basically build on those pillars out of three leverages. Our customer centricity is, for us, the first of everything. Understand your customer, understand your market, makes you relevant. I mean, if you don't target the pain that you are to solve, then you don't have a business. If you understand those pains, then you have a chance to address them, and by addressing them, you have a business. That customer centricity is something that help us, and I will double-click onto this one in a minute, to understand what are those big pains that we need to address today, and to be successful and relevant tomorrow. We discuss about the sustainability, and it is not only about the carbon footprint. It is about, specifically in the field we do operate with single-use devices, that it is more than a responsibility, it is a duty.
But again, you do not measure sustainability only with that single devices, but how much that device brings to the overall society and the value we create with all those. Digitalization is not something that is there for being there. We are not driving, for instance, AI for the purpose of AI. We see AI to be a transformative driver for the way we operate, the way we serve our customers, the way we provide solutions to them. That is also a critical agenda for us to be successful in the long run. Four business areas with a widespread in terms of geographies, in terms of portfolio, with various shares of sales and levels of profitability, but that is also anchoring the resilience of Mölnlycke globally. We operate vast market, we operate and we are relevant in all those geographies.
We have this direct connection to various settings. We have this deep understanding of what makes each specific market channels, settings different from each other, and that also help us to make better choice of the way we want to strategically position ourself. But those numbers and business areas are addressing, as I said, customer challenges, and I think that element is the core of what makes us today. We recently did a deep ethnographic study, and the purpose of it was to very much understand our customers, patient, healthcare settings, challenges. What matters for them? We have our portfolio, we solve many problems, but what is it of the big thing that matters for them? From those, we learned that we need to provide to the world solutions that helps wound to heal faster.
Not only that, but also to help the world to diagnose patient properly, because if you are wrongly diagnosed, you have a little chance to heal. We also learned that we need to ease that overall access. We also understood that healthcare practitioners are looking for our desperate need for efficacy in the operating room settings. They look for product and solutions that are of performance. If you take on the surgical glove business that we do have, they look for tactile performance, but they also look for safety net. Secure that they protect themself, the patient, be aware of those exposures. We also learned that prevention is potentially the best way to heal a wound. The wound that is the best to heal from is the one you do not have.
That goes not only for the wound healing, but that also goes for the acquired conditions in the surgical settings and the overall infection prevention. Whatever solution we provide, all those drivers are the ones that are driving the underlying demand. All those matters, all those dynamics, turns into those financials. That is because you address those pains that we manage to grow steadily, that we manage also to increase and maintain our high level of profitability. Please consider that the last bars in those graphs are the last 12 months rolling performance closing at the end of quarter three. We deliver strong financials, and a very same few that I want to highlight there is also that we are, at Mölnlycke, together with our owners, committed to the BBB- ratings that we have from Standard & Poor's.
And that is also possible given the track record and everything that we basically deliver out of generating profit, but also turning that profit into free cash. Our market benefits a strong underlying demand. You heard that from many today. We are having an aging population that helps to get more and more people exposed to wounds or to need for surgeries, and that helps us to get this kind of extra demand. By the mid-century, the population of the people being more than 80 will triple. That gives you an idea of, okay, we look at the specific market today, but that one is basically exposed to a strong underlying demand, and that is not only of the aging population. If you look at the population of the diabetics that are also driving a lot of prevalence out of hard-to-heal wounds, basically.
They are of the size of 600 million worldwide. This is somewhat the pool of demand that we are dealing with. On the other side, the healthcare systems are on pressure. They are in definite need for efficacy, and that is about improving their workflows. We have as part of the portfolio in our OR solution portfolio what we call a procedure pack. A procedure pack is where you place all those devices that are relevant to drive one single surgery. I have never, ever seen, and I am in this business since 25 years, a customer that goes for a procedure pack that pedals back and go to a single device to prepare their OR.
This is an obvious way to improve, to secure that we drive surgeries with better control in terms of infection, that we basically make good use of the asset at the hospital, make good use of the workforce, lower the stress for them to prepare the things, and secure that you drive safe surgery. I have my personal experience about those things and happy at least to share with some of you at the mingle a bit later. But that is also something that makes you feeling good about things will go right. Those are for us as many opportunities to provide further efficacy out of the workflow, safety net for the healthcare practitioners, and also good conditions for patients to be well treated. That does not come because of a nice speech. It comes with evidences, and the market is in deep need of clinical evidences.
And those also we carry, so that is also what makes us relevant. We can prove what we say. We can prove the value we bring to the market. And that is an easier sell. Once you have proven yourself that way, then the sales can go a more easy way. Again, I mentioned about the healthcare environment and the way it is shifting, and if you look at the U.S.-specific market nowadays, 60% of the energy and spend, whatever resource you think about, goes outside the acute segment. Meaning, the post-acute segment is very much the segment that is growing fast. If you want to grow fast, you need to be in this one. It does not mean that you give away the rest. We are relevant in all those sectors.
But again, depending on the channel you go, what makes you relevant in that channel is not always the same thing. You also need to complement your offer, your portfolio, to be relevant in each of those segments that you want to be relevant in. It is also one that we want very much to be relevant in. You understand that we are having different business areas with diverse market and customers. Many of you heard about us discussing about what is it that is critical for us to be successful in the future. Where is it that we see commonalities and different agendas? We see different levers for success for our wound care portfolio, as well as for our antiseptic portfolio, versus what we see for us to be successful in the glove business and the OR solution business.
Given that we need to innovate, we need to expand in the wound care settings and the antiseptic one. When I say expand geographically, expand the portfolio, expand the channel through which we sell. When it comes to gloves, when it comes to ORS, we also need to bring innovation to be relevant in the long term. We need to bring technology into the product and devices that we are offering. Those technologies are also existing there. Securing that we bring those technology into our offer throughout the channels of having access to market is a way for us to success. We have recently launched also in the glove business, the radiation gloves, that is new to the world in terms of solutions. You can just think about, why not before? Now it is life, and we launched this in the U.S. We expand, basically launch of those ones.
We bring those great solutions either from internal, but also from others, because we have this procedure pack channel that is an outstanding vehicle to get access to an operating room solution. What I mean by that is like, many great medical device providers in the world do not even have access to the operating room because you need to provide that single device with so many others. We are that dash in between them and the patient and the healthcare practitioners. By representing that opportunity, it also drives our behavior on the way we want to partner, on the way we want to expand. It is different drivers depending on what business you own.
That is also why we explain that we want to give a concrete autonomy and the freedom for those diverging businesses to allocate their resource and efforts, to make their own decision to basically be successful given those different settings. That is why we are looking at finding the best way to double down on leveraging those specificities in the wound care and antiseptic settings, but also securing that we give a fair chance to the glove business, to the OR solution business, to grow from what we are great at into those. You saw that from the beginning, but that wound care business is, of course, the one that is dominant in terms of sales and profit. That also shows that it does not mean that the rest is not good.
It's just a great offer, but you need to give a fair chance to those ones to shine, given what we can offer with all those. I can't accept that we leave this on the side, because there is so much value to create out of it for the customers, for the patients, and for the society overall. I promise you, I tried to go through the three Ps, but given what we announced yesterday, I found that it was a great opportunity for you to place faces on the people that we have appointed yesterday to lead of those specific business lines. I will please welcome on stage Anders Andersson and Fredrik Wallefors to introduce themselves in a second. Anders Andersson will be the CEO of Mölnlycke Health Care as of January 1. So, congratulations, sir.
Next year, it's Anders that you will see there instead of me. Fredrik Wallefors has been appointed as President of the surgical solutions, ORS, as well as the glove business forward. Please, Anders.
Well, thank you, Guillaume. I'm extremely proud to getting this opportunity and also very pleased by the trust our owners has placed in me. Mölnlycke is a fantastic company, and it has a fantastic culture, fantastic people. I've had the opportunity to work with Mölnlycke for 26 years. During all these years, I think I've been working on all areas in the supply chain. The last two and a half years, I've been heading up the business area of wound care. Before that, I did six year running the ORS business, the surgical business. So, really looking forward to the future, Guillaume, and what we can do together with all the people within Mölnlycke.
Thank you, Anders, and great to meet you all. I'm Fredrik Wallefors, and I've been heading up the OR solutions business for the last number of years. I've also been with Mölnlycke for a long time, different part of the business and R&D, commercial, et cetera. I think what Guillaume explained really on the ORS gloves business is really the phenomenal channel to the customer where we make those customized trays, so you really integrate to the operating room workflow. We have so much more to do in that space to use that unique channel, and that's why I think it's a great opportunity to get full focus on that business. Combining it with gloves, there are so many joint call points, so it will really strengthen us in terms of synergies and how we work together in that way. I'm truly looking forward to this.
Great opportunity, great access to customer with our channel. Thank you.
Thank you, gentlemen. I keep going with a double click on the wound care and antiseptic business. If I have to summarize this in two words, the agenda will be about innovation and expansion. Innovation is important to protect our profitability, to be relevant for our customers, and also to drive further growth globally. Expansion, I will just stay limited out of this one. It is not only the geographical expansion, it is also about the portfolio deepness. What is it that makes sense to add next to the dressings or advanced dressings that we do have, for instance? We are the advanced dressing market leader. We would like to remove the dressing element to that statement. That is what we aim to become, the leader of the advanced wound care.
That goes with more devices, more channels, more solutions, innovative ones, and that is also something that we will do ourself, we will do with the help of others, we will build from existing innovation hubs, that are very active, and we see those things. You heard a bit earlier today, China, about the competitive environment. I see China as being a great opportunity for sourcing ideas and innovation that we need to bring to our offers. That will go with a mix of what we do, of what we buy, how do we complement the offer that we do have. On the OR solution and glove side, we mentioned about the great market access that we represent. By being that market access, it also allows us to bring innovation to the patient, to the healthcare systems.
We also carry a lot of those ourself, and we have provided those innovation recently with the launch of the radiation gloves, and more to come out of the indicators, out of segments in surgeries where we see traction moving and also innovation coming through. We discuss about efficiency, and one element of this is, of course, about understanding the way you are, the one you are, having access to reliable data, and by that, being able to make good use of them. You hear a lot of people speaking about AI, and we at Mölnlycke are running a bit more than 200 AI self-built agent. Those are pretty much centered onto Mölnlycke efficacy at this stage, and they address narrow parts of processes. Why that?
Because in order to deploy an AI strategy, first you need to secure that you have the right infrastructure to make it, and that we landed. So, we have implemented a unified data platform that secures the completeness, security of the data that we are operating. So, we generate that data to make good use of it. Why it is important for us? Because we are convinced that by that we can do better informed decisions. If you do better informed decisions, first you take those decisions faster, and by that you create more value forward. On top of this, that will also enable to rethink the way we work, address those overall business processes, but you can't very much improve to the margin of processes that does exist with this. It's a too narrow thinking.
You need to rethink the way you operate, and that's very much the journey we are engaging. On top of this, which is pretty much centric on ourself, we look at the way we can interact with outside, interact with customers, and we recently launched a pilot out of three markets, that is connected to our GCX customer experience, the processing of orders. We launched it, and given this data consistency that we do have, out of this pilot, we reached a 97% match of those processing with those AI agents. And I'm pretty proud of it, because it means that we are not driving this just for the purpose of making use of AI, which is a fashion kind of element. We do this because there is a business purpose.
If I go beyond those interaction with others, that's also something that we need to think about, of the way it can help us to provide more solution or different solutions and innovative solutions for the customers. So, we work on those segments globally, and so far I've converted some few things that are also of the appropriate foundations to be relevant and make good use of the data we have. To summarize, we sit with a fantastic, attractive market. We are market leader in the advanced wound care dressings. We are of highly relevant in the glove solutions that we are providing to the world, and we represent the fantastic market access for many medical device providers also. We have a solid financial foundation. Our sales are growing. We are having a solid and improving EBITDA margin. And we maintain our ability to generate cash.
We are having intention to get more focus on the lines of businesses that we currently operate. And that for the better of taking the right decision, having the right resource allocation on successful businesses that are basically sitting with different remits. So those two distinct growth journey will be innovation and expansion-led for the wound care and antiseptic segment, and will be focused on operation excellence, efficiency that we provide to the world in terms of improving the workflow into the OR settings, and securing that by those offers, we also have lower acquired condition for the patient. As I said, potentially the best is not to be exposed to a wound or not be exposed to any infection while you're basically going through a surgery. Mölnlycke has a proud heritage of all those things, and I'm very much excited to basically drive those journey forward.
With this, I thank you for your patience, and Magnus, inviting you for the Q&A.
Thank you, Guillaume. We can take that for you. Any questions? A couple of quick ones from Linus.
Yeah, thank you very much. I want to start with ORS. I mean, it's gone from loss-making to making a decent profit, but then, I mean, now, I guess sales have been struggling a little bit. But in terms of profitability, I mean, are you happy where profitability sits now in ORS, or how should we think about that?
I think we have more to click onto this. Am I happy about where we are? I think we can be proud of the journey that we've gone through. You mentioned about one thing. It's also about conscious choices. We are not to take on sales that we don't see of being the right ones.
Thanks. If you could give an update on your strategy in China. You talked about it a little bit. Do you see it more as a higher growth market or as a source for innovation? I mean, given what you are doing now with JV and you have invested in capacity.
The simple answer will be both. You are pretty much aware of the JV that we formed with Zhende Medical over there. Zhende brings what into this? They bring a very well complementary assortment to what we currently offer. On top of that, they provide us a market access. We move from 80 pharmacies to 200,000 over the night. That is kind of partnership that makes sense to both develop your relevance in terms of offering as well as market access. Second, because you mentioned about, is it something that you see of being a hub for innovation? Deeply, yes. We see the speed at which that market is evolving, bringing innovation to the world. I am very humble in looking at China and all the competence, technical competence they have built during the past few years to become leaders in many segments.
That helps because then you have access to that pool of understanding that we can leverage from.
Okay. Thank you.
Derek.
Thank you, and hi, Derek from ABG. I was wondering if you could elaborate a bit on the competitive environment differences between Europe and the U.S., and whether the market growth rates differ meaningfully. Thanks.
If I understand, I take Europe, not potentially EMEA, because I see also in that region different dynamics. It is true that we have different movement depending on what we operate. Again, if you look at the U.S. market for us to start with, it is a market that is pretty much wound care and glove-related market. The surgical settings in OR solution does not operate that market. There are big players over there, and we still believe that we need to be close to our customers to be relevant for them. By that, it does also drive some few of those dynamics. If I double-click on the wound care segment to start, we see that we have the same pain in the underlying healthcare systems. It is not that U.S. or Europe makes exception. The answers given to them differs from time to time.
What we also see as part of the European segment is of the reimbursement agenda that many are driving, many countries are driving. The way we basically address those specific is by bringing new solutions. That is also why it is critical to be relevant in those innovative segments, to bring with evidence solutions that creates value for our final end customer. I see the U.S. market to be very dynamic nowadays, but not only the U.S. market. There is a neighbor to the U.S. that is for us also a market that is evolving quite fast. Should I only focus to this one? Of course, it is a big one. China is a big one. India is a big one. Canada, close to the U.S., is also potentially emerging, but relevant. There are many of those.
In Europe, there is also a matter of where do you place the fence and where do you place the money and how does it goes. I still believe that we operate a segment that remains of needed, and that somewhat protect us to some extent.
Great. Thanks for the flavor. Just quickly on wound care already operating at, you showed on the slide there, 41% EBITA margin. How do you see the potential for further margin expansion and also following the upcoming separation, if that could further boost margins?
Well, then there is kind of two questions into yours. First, we have this intention to give autonomy to those business. It's important to understand, like, what we want is to secure everyone decides of where they want to place resources and have the power to do so. That's very much what is of the critical element to reach, and what's the better way to make it. If and when we basically separate, then we'll see of those matters happening. But it's important to give that autonomy of lead and allocation of resources. That's what we drive to start with. What does it mean? It drives these synergies, right? That's, of course, it's a kind of mechanical element, very some rules that will duplicate. But there is so many efficiency also to carry that if I have to look at this, can I find a balance?
I think so, yes, in between those. Because by having the right focus, there is a lot of element that you will say no to, that today you don't say no to. That's also what I expect to unlock as the potential. What you get out of it is like you gain speed, because if you carry an agenda that is not of 10 element, but the top three, you execute each of them faster. That's the way you find somewhat like, you bring those element to life, whatever it is, faster, and by that you can double down on those elements. That's very much what I see of being the core driver. 41, yes, in wound care. If you take this with antiseptic, it's a 39 kind of. So it's a lot.
The only way to protect is to be relevant tomorrow, to bring new innovation onto the market. There might be some technologies that may not be on the same level of margin, but still there is a lot of untapped channel and patient that are not served today that will support this.
Thank you.
Thank you, Oskar.
Oskar Lindström with Danske Bank. You described China and your JV there as an opportunity to enter that large market or gain better access to that large market, and also as an innovation hub. Are you at all seeing any competition in your European or North American markets from Chinese products, I think specifically in the wound care segment, or is that a very low probability you feel due to requirements of clinical trials and all these things that create an effective moat? Yes.
Should I consider or not consider China as a competitor in those settings? I would be stupid. Yes, it is something we see. The question is, how do we address this, and how do we basically bring evidence to the market about the superiority of our offer? That is more the way we address those challenges, those realities. Will I see those coming? Yes. Do we see those coming, U.S., Europe? Yes, we see them. That is not for me a problem as long as you basically keep innovating faster and bring those technology that makes a difference for the patient and the healthcare settings.
Thank you. But just to be clear, you are already seeing those products entering the European and U.S. markets in advanced wound care?
We see some of them that are kind of, yeah, pale copies, I would say. But at least I do not see them being performing in terms of value add for our customers and patient.
All right. Thank you.
Jacob, I think that will be the final question.
Thank you. In addition to the expansion in Brunswick and China, you have also confirmed about EUR 40 million of investment in Finland and U.K. Is this build-up mainly about the demand or reducing tariff and supply chain risk?
Thanks for the question. Mölnlycke is operating on all geographies from the operation settings. We have been present in Brunswick, in U.S., for long. I mean, it's not because of a tariff that we drive an industrial strategy. That's not at all the driver. We believe that to be relevant for customers, to have also a resilient supply chain, you need to be close from your demand. That's also why we not only have factories in Europe, in U.S., or in Asia, but we also have in the Middle East a setup that we have created. Those are very much supporting that we can react, adapt better to circumstances. Then it's not about a matter of trade barriers, kind of, but more about, okay, supply chain disruption.
To be relevant in the healthcare segment, you must secure that you care of your customers in terms of they have the product they need to perform the surgeries, to perform the wound care that they have to. That is also something that I think Mölnlycke is great at. We have proven that resilience. We have also proven our ability to adapt to new circumstances. The COVID period has shown this also. It's long-lasting. It's not something that is new for us. So we, yes, continue to invest in our own settings because we see them to be like of the right to be competitive tomorrow.
Thank you very much, Guillaume.
Thank you.
Thank you. Thank you for the questions. With that, it is time for wrap-up. Christian, please.
Thank you. I am acutely aware that I am between you and drinks, so I will be quick. Hopefully, we have been able to shed some light on what our priorities are and how we go about executing on it from us, but also from five of our great portfolio companies. As said, we think the starting point is strong with lots of opportunities for profitable growth out there organically and also by way of M&A. There is no time to rest, for sure. I mean, it is a competitive world out there, and there is also lots of new technologies coming online. Again, primarily opportunities, but if we do not jump on it, they will turn into threat.
Yet, with the focused and hard work, here and in all of the portfolio companies, we will be able to continue building and developing these businesses, always with a focus on customers and innovation. If we do this well, we should be able to continue growing our net asset value over time. With that, I would really like to thank, well, thank Magnus and the organizers, really thank all the speakers, and of course, last but not least, thank you, the audience, for listening and for asking really relevant questions. So thank you very much, and enjoy the rest of your evening.
Thank you for that, Christian. That brings this program to a halt, I was going to say. Now we can move over to the room next to us, where we have an informal reception. Hopefully, you will be able to stay around for a bit, and you can ask more questions, talk to somebody you have not already talked to, and so on. Warmly welcome over to the next room. Thank you for being here today, all of you here and all of you on the web, of course, as well. Thanks.