Welcome to the Vimian Group Q2 Report 2023. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Fredrik Ullman, and CFO Carl-Johan Zetterberg Boudrie. Please go ahead.
Good morning, everyone, and welcome to Vimian second quarter earnings call. I'm Fredrik Ullman, CEO. With me today, our CFO, Carl-Johan Zetterberg. Today, we present another quarter with strong organic growth of 14% and positive momentum across all segments. Our EBIT margin, operating profit grew by 28%. We delivered EUR 81.3 million in revenue and grew adjusted EBITDA by 15%, reaching EUR 20.3 million. I'm especially proud to see how the team in diagnostics have navigated the past year's headwinds in COVID, and we delivered a double-digit growth thanks to strong sales execution on the ground and innovation. We strengthened our underlying cash flow from operations and continuously strive to improve performance with the aim to deliver margin expansion in H2 as we gain leverage from our investments, and we see some cost measures materialize.
Our positive growth momentum continues, and we see sustainable demand for animal health over the coming years. With that, I'd like to hand over to Carl-Johan.
Thank you very much, Fredrik, good morning, everyone. As Fredrik said, we continued our strong growth with 21% revenue growth, achieving EUR 81.3 million in revenue in the quarter. Organic growth was 14%, market performance in all segments. Acquisition contributed to the impact from currency movements of 2%. For the first six months, revenue increased to EUR 169.4 million, organic revenue growth was 13%, primarily driven by MedTech and Specialty Pharma. Acquisition to growth 13% in the first half, there was no impact from currency movements. By 15% to EUR 20.3 million at the margin of 25.0%. The lower margin compared to the same period last year reflects the mix effect from faster growth in U.S. specialized nutrition and investments to drive growth.
During this year, we have seen a positive market development in all segments over last year. Overall, we continue to see a stable or improving gross margin in a high inflation environment. Excluding impact from fast growth in U.S. specialized nutrition, gross margin increased by 1 percentage point in the quarter. We have five geographic footprint, with Europe and North America, each accounting for approximately 45% of revenue. With our successful growth in the annual order program, as well as the strong performance of specialized nutrition in the U.S., we have increased our share of revenue from North America this year. With the recent acquisition of BOVA Australia and Vettr, we have also strengthened our business in Australia and Specialty Pharma and veterinary services in the region.
The strong development recorded in the last couple of quarters continues, and as of the second quarter, our pro forma revenue was EUR 329 million. In 2020, we have more than tripled the business through organic growth and continued strategic, strategic acquisitions. Revenue growth has also supported a strong profit increase. We have grown our profit ahead of revenue, almost quadrupling adjusted EBITDA to EUR 86 million. We continue to actively drive several organic growth initiatives and synergies within and between our segments and acquired entities to support continued strong revenue and profit development. Back to you, Fredrik, for some further insights to the quarter and business update per segment.
Thank you, Carl-Johan. If we look at our segments, all four segments delivered above-market growth, as, as Carl-Johan said, and I will dive into the larger segment, Specialty Pharma. The Specialty Pharma organic growth accelerated to 18% in the second quarter, with strong growth across therapeutic areas and regions. We see exceptional performance in our U.S. specialized nutrition, driven by regional expansion within the U.S. and the launch of new products. We grew adjusted EBITDA with 18%, and the adjusted EBITDA margin is at the 26.4%, primarily reflects the mix effect from the strong growth in specialized nutrition. We continue to deliver on our strategic agenda, launching 20 new products during the quarter, taking the total for this year so far to 45.
We are progressing our innovation projects and are preparing to establish direct distribution in Spain during the second half of the year. We made a small CapEx investment in pharmaceutical manufacturing a facility in Australia to strengthen our production footprint and gain access to additional sterile and non-sterile production capacity for the segment. To summarize, positive momentum continues with a very exciting product development and innovation pipeline in Specialty Pharma. Moving on to our second-largest segment, MedTech. In MedTech, we delivered 8% organic growth in the second quarter, despite the pull-forward effect from the annual order program in Q1. Year to date, we delivered 17% organic growth, well ahead of the veterinary orthopedics market. We see solid growth across regions, with an acceleration in growth in this quarter in Europe and Asia Pacific.
The adjusted EBITDA grew with 13%, and we continue to expand our margins to 28.4%. The rolling 12 months margin to adjust for the effect of annual order program is solid at 31.6% from 30.2% at the end of 2022, as the segment successfully integrates acquired companies and streamline the organization. Operationally, we continue to optimize the supply chain and have centralized warehouses in U.S. and Europe during the quarter. We implemented a new organizational structure with the clarified responsibilities and reporting lines to enhance efficiency and employee satisfaction. The quarter marked high level of sales and marketing activities, and our strategy, sorry, our surgery trainings for veterinarians continued to be highly appreciated. We see solid demand for veterinary orthopedics across the globe and are excited about the development in MedTech. Moving on to veterinary services.
We delivered organic growth of 9% in the second quarter, with record level member recruitment, especially in our new markets, where we now have, now have over 600 clinics. In total, we have over 6,000 member clinics in 12 countries, cementing, cementing our position as a leading veterinary service platform in the world. The adjusted EBITDA margin is at 26%, and that is the third consecutive quarter with margin expansion up from 22% in Q3 last year. We have, in this quarter, onboarded the Vettr team in Australia, a GPO we acquired during the spring, and we're excited to now have a stronger platform in the region. We also continue to work on our digital platform, heiland.com, and have, during the quarter, strengthened the digital tech team. In summary, we see solid development in veterinary services as well.
Moving on to diagnostics. The team has successfully navigated the past year's headwinds from COVID, and we deliver 16% organic growth in this segment, well ahead of the market, driven by team strong sales execution and new product launches developed during the past years. We have solid growth across regions and product categories and are taking market. The improved adjusted EBITDA margin at 24.3% reflects operating leverage and progress on our cost optimization program initiated last year, which will also continue to improve during the second half of this year. In the first quarter, we launched our new AI innovation platform, Ovacyte, to detect and analyze parasites among animals. The platform is being well received among veterinarians, and we see good ramp-up in installations during the quarter. Going into Q3, positive momentum continues in diagnostics with healthy trading during the summer period.
Handing over to you, Carl-Johan, for more detail about our number- numbers.
Thank you, Fredrik, let's have a look at the second quarter financials to give you some more color on, on the numbers for the second quarter. The good revenue growth supported the adjusted EBITDA increase of 15% in the quarter to EUR 20.3 million, and the operating profit improved from EUR 7.9 million to EUR 10.2 million. An increase of 28% equals an operating profit margin of 12.5% in the quarter, which is 0.7% of points lost. The operating profit includes item affecting comparability, which decreased to EUR 4.3 million, primarily to lower acquisition-related costs, as well as PPA-related amortizations of EUR 5.8 million, increasing from the same period last year, with new acquisitions completing during the last 12 months.
Net financial items amounted to EUR -3.2 million, which consists of three main parts: financing costs of EUR 4.4 million in the quarter, with an average interest rate of 5.7%. A positive impact from adjusted contingent considerations, earnouts, including a discounting impact of EUR 5.5 million, which reflects a technical adjustment of the purchase price of one acquisition. This is offset by a negative exchange rate impact of EUR 4.3 million. Financial items in the second quarter of last year includes a probability adjustment of contingent considerations of EUR 6.6 million. The tax expense for the quarter amounts to EUR 3.7 million. The high tax expense reflects a taxable result higher than the net result.
due to tax losses without recognition of deferred tax assets and non-deductible expenses, which may currency impact recognizing a high financial item so continued by business. Profit for the quarter amount to EUR 0.2, with our adjusted for items affecting comparability, earnings per share amounted to EUR 0.2. Looking at cash flow, for cash, it's amounted to EUR 7 actively to improve cash flow, it is both in court. Last year, the reported cash flow from operating activities includes the litigation payment as per the set for. Up to EUR 75.6 million at the end of June, which is up from EUR 72.9 million at the end of March. The increase is driven by slightly higher inventory, high level of including partly offset by lower accounts receivables as the ordering program customers pay them.
Cash flow from investing activities, primarily related to earn out payments, decreased compared to last year to EUR 42.2 million in the quarter. Cash flow from financing activities of EUR 126.2, reflects the drawdown of the credit facility to finance the litigation payment and earn outs paid. Cash and cash equivalents amounted to EUR 50.8 million at the end of the period, up from EUR 45.9 million at the end of the previous quarter. During the rest of the year, we'll continue our efforts to improve cash flow and specifically networking capital. We start to see positive effects from our focus on supply chain in especially MedTech, with centralized warehouses in Europe and U.S.. We will continue our supply chain improvements, optimizing the product portfolio, distribution, and further digitalizing the supply chain. Looking at net debt and leverage.
At the end of the period, net debt amounted to EUR 296.1 million, versus EUR 292.8 million as of 31st of March this year. This results in a leverage net debt to last 12 months pro forma EBITDA of 3.1, which is in line with our long term financial targets. The reported net debt is not impacted by the settlement in the U.S. patent dispute, as we have a contractual indemnification protection through the purchase agreement from the acquisition of the VOI. Therefore, the amount of the receivable under the indemnification is deducted from the net debt. Some view on current trading. We have started the year strong, with good development in all segments.
The positive momentum in the business have continued in the summer, with mid to high single digit growth on the back of a very strong June. We continue to monitor demand very closely. Overall, we are positive about the development in our business, and we aim to deliver margin expansion during the second half of the year, both sequentially and year-over-year. Vimian hosted the annual general meeting on the 2nd of June, electing Robert Belkic as a new board member. Robert brings extensive experience from his role as CFO of Hexagon and will be an important addition to our board and to Vimian. The process to retrieve compensation on the indemnification protection in the U.S. patent dispute is ongoing, with filings to the court. We are naturally working hard to finalize this.
Back to you, Frederik.
Thank you Carl-Johan . Moving over to our ESG agenda. We continue to develop our ESG agenda, and in the second quarter, we completed our first group-wide employee survey with a positive outcome. We see very high levels of engagement and strong entrepreneurship across the group, with a good employee net promoter score of 32. I was also encouraged to see that there is a strong sense of belonging in our teams, which is a key driver for employee satisfaction. To conclude, Vimian delivers a good second quarter and first half of the year. We remain well-positioned, and the overall sector continues to show resilience despite the wider macroeconomic environment. Our focus remains the same, and we continue to build leading market positions in attractive niches of animal health, and we are committed to strengthen cash flow margins over the coming quarters.
As you know, I took a difficult decision in June to step down from my position as CEO. A recruitment process is now ongoing. Vimian has, over the past years, almost tripled in size. Now that all four segments are performing well under strong leadership teams and good systems in place, I found the time right to eventually hand over.
I do remain a committed investor and strong believer in the potential of Vimian. I look forward to following the company and the team's progress in the years to come. With that, I would like to open up for any questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Blanka Porkolab from Barclays. Please go ahead.
Good morning. Thank you for taking my questions. My first question is on Specialty Pharma and diagnostics. How should we think about the sustainability of the double-digit organic growth seen here? Is this reasonable for the remaining quarters, and what do you expect the key drivers to be? My second question is on margin expansion in the second half. Could you provide some color around the magnitude you expect here, and which businesses are likely to be the key contributors? Thank you.
We don't give any guidance. I mean, we don't give any guidance, but, can we expect to see good growth in those segments going forward? Yes. What is it, what are the drivers? Mainly innovation and geographical expansion. We are launching numerous new products in both of these segments, and that are so far well-received, and we're quite excited about those products. Your second question was about the margin expansion. We cannot give you a quantification of that, Blanka. We can say that it's mainly driven by the fact that we have, we expect to see returns from the investments in growth that we have put in place. On the central, we see expansion of margins in the underlying businesses.
We have put a central team in place that is now fit for, for purpose, that we don't expect to expand. With continuous organic growth, we expect to see operational leverage. We also have some cost containment programs, especially in diagnostics, where we are consolidating production. We will see the, the financial impact on, on save or savings from that in the second half of the year.
Great, thank you. I just have a follow-up question, around the July commentary you gave. How should we think about that mid to high single digit growth across the different businesses? Are there any that sit at the lower or higher end of that range? Thank you.
No, it's actually quite, quite even, I would say. There are no outliers there, but it's very early to tell. I mean, it's a slow, typically a slow month in July when people are on vacation. Yeah, it's very early to predict the quarter just based on July.
Great. Thank you so much.
The next question comes from Rickard Anderkrans from Handelsbanken. Please go ahead.
All right, good morning, and, and thank you for, for taking my questions. First one, on, on Specialty Pharma, I just wanted to, to check on the strong organic growth there, if there was any particular, you know, pull forward or stocking effects. It seems like, perhaps June was particularly strong. It would be interesting to hear if there's anything, you know, exceptional driving that growth, that we should be aware of.
It was exceptionally high growth. I mean, you cannot, we cannot expect that type of growth every quarter. It's not a pull forward. It's just that, you know, when we enter a new geography in the U.S., we, it's typically high volumes that we, we deliver. It's for every geographical expansion or account expansion, it drives high growth. But it's, but it is, we cannot guarantee that, that, that type of growth every quarter for sure.
All right, makes sense. Just to follow up on the margin improvement, question asked previously. How should we think about the cadence of, of margin improvement? Should we expect perhaps a bit slower, development in Q3 with the big pickup in Q4, or should it be more of a linear improvement? Just to get a sense of how you're thinking about the margin expansion trajectory.
I would see more a linear development. That would be my, my assumption. There's nothing, it's not like, there's just a one-time effect or something that will just hit in Q4.
All right, thank you. Just a question on, on leverage. Are, are you sort of committed to deleveraging the balance sheet? Do you have sort of a target leverage level for, for the end of the year? Just to get a sense of how we should think about the, the, the leverage development in the coming quarters.
Yeah, as I said, we are focusing on sort of continuously improving cash flow and especially improving net working capital. As we expect cash flow to improve during the year, that should also drive organic deleveraging. On sort of the exact extent, sort of [audio distortion], we don't give specific guidance on the specific number, but definitely, as I said focus on improving cash flow, which drives the natural deleveraging of the business. As to acquisitions, relating a little bit to your question, we continuously work on making sure we have an attractive acquisition pipeline. I think so we, we have a number of interesting opportunities, but our focus as it is right now, is making sure that we integrate and maximize the impact from the acquisitions we already made.
Thank you. Just to squeeze in a final one, any update on retrieving the compensation for, for the U.S. litigation process? What's your sort of thinking on timelines and and probability of success and sort of the status update would be super helpful. Thank you.
As I said, the process is ongoing, we're sort of, we're working, we're working intensely and, and hard to making sure that we finalize this as quickly as possible. In terms of timing, we don't want to speculate in any, any, an exact time. I said it's booked as a current receivable, which gives some indication on our view on, on timing. As we communicated before, we, we believe that we have sort of a strong position given the indemnification we have in the, in the agreement when we purchased VOI. We're working intensely to make sure this is finalized as soon as possible, but I don't want to give any specific guidance on, on sort of the exact timeline.
All right. Fair enough. Thank you for taking my questions.
Thank you. Thanks, Rickard.
The next question comes from Adela Dashian from Jefferies. Please go ahead.
Good morning. Let me maybe just start on congratulating you on this strong quarter, especially on the organic growth side. Going off of the questions that have already been asked, I do appreciate the comments surrounding July, what, what you're currently seeing there. You also mentioned that July typically is a seasonally weaker or, or lower volume month. Should we then expect a growth to amplify in, in August, September, or, you know, we've already seen the first few weeks of August already. Could you give us any more, not guidance, but just color on what the. If growth in Q3 has improved month by month or, or not?
Yeah, again, it's still too early to tell. You know, month to month can vary quite a bit because depending on timing of orders, so I really don't want to guess anything. What I would say is that I feel comfortable or confident in our business. The only risks I would see are macroeconomical ones that are, you know, common to every sector. I think that our sector is probably more resilient than most sectors even in turbulent macroeconomic environments. That's pretty much all I can say. I mean, to try to predict Q3, I cannot do that. I'm sorry, Adela.
Okay, no problem. That was actually going to be my second question. Is there any area within your business where you are seeing, you know, early signs of down trading due to the macroeconomic environment?
Not, not really, actually. I mean, right now, this quarter, we've seen really all segments, all regions growing strong. Yeah, I cannot pinpoint anything that I've. We're not seeing those type of signals yet.
Got it.
We monitor it, of course, we look at it very closely, and we have, you know, live data every day on pretty much every product in the company, so we can see it, but we're not seeing that as we speak.
That's good news. Then Specialty Pharma and the U.S. expansion there. You speak about, you know, going into a new geographic region. Who are your customers there? Is it the veterinary clinics? How should we perceive, you know, if this was a big, heavy volume-driven quarter within that specific area of Specialty Pharma, are they fully stocked now with the new products, or how should we perceive the, I guess, underlying demand there for that specific area that drove growth in Q2?
The customer base are the large retailers in the U.S., so it's a direct-to-consumer business. We've seen a good underlying growth or end demand for these products and good, we have very good brand equity in, in that space. Those retailers will choose to go- You know, they are, they are split up into different regions, you know, Northeast, Southeast, et cetera. They, they decide then to go into a specific region or subregion of the U.S.. That's something we've seen. That business has been growing very strong for, for a few years now, and we're not done yet. What we've also done is to improve the product portfolio since we acquired the company, roughly a year and a half ago.
They had a relatively limited product portfolio when we acquired the company, and we have now invested in the company, and we have developed a number of new products in that space, which is part of driving that growth.
Are we talking about both physical retailers and online retailers here, or is there a-
It's physical. It's mainly physical.
Yeah. It's the Costco, the, you know, Trader Joe's and, and such.
Yeah, yeah. Okay. Then lastly, on the margin expansion, I know you've already, commented on, on this a bit, throughout the call. aside from the mix effect in Specialty Pharma, you've also had, I guess, a ramp up in investments being made. You did mention quite briefly that you, you don't see further expansionary efforts to be made in the second half of the year. Is that how we should perceive it? Are you done with the heavy investments now? Okay.
Yeah. I mean, it's really minor, minor things like head cheaper people, but it's not gonna move the needle on the group level. We have, If you look at the underlying businesses, they are delivering margin expansion. The two areas where we have invested, as I mentioned, we have strengthened the central team to be able to operate on the public stock market over the last two years, and that team is now fit for fight, and we are able to deliver reports faster than before. The other thing is the tech team in, you know, our growth bet in heiland.com, within veterinary services, where we have strengthened that tech team to be able to launch that platform in more geographies, which we're getting ready to do.
That's, those are the two areas, but we're not expecting to continue to increase OpEx at this point. Focus is to, to drive operational leverage and, and drive profit expansion.
If anything, we're looking at a more efficient business going into the second half of the year, and that coupled with the ongoing high organic growth, you should be able to continue to deliver on this underlying momentum that you've had thus far into the year. Is that how we should view it?
That's right.
Thank you very much.
You're welcome. Thank you.
The next question comes from Kristofer Liljeberg from Carnegie Investment Bank. Please go ahead.
Thank you, good morning. I have three questions. First, on Nextmune, would it be possible to comment how much that business is growing if we exclude this exceptional performance for specialty nutrition? Second quarter growth in Medtech surprised me here, given that there should be a negative phasing effect from the annual order program boost in Q1. Could you maybe comment a little bit more about how you're able to grow 8% organically for Medtech this quarter despite that? Final question is related to the continued negative EU items that you have for more or less all business areas. Could you explain that a little bit? Is it still driven by M&A, or is it more your integration, restructuring of the business?
How should we think about that for the second half of the year? Thank you.
Maybe I can take the two questions, and I'll let Carl-Johan elaborate on the last one. On Nextmune business, excluding specialty nutrition, we are growing high single digit. We're seeing actually strong growth across therapeutic areas and geographies in that business. In MedTech, why are we growing strongly there? The pull forward, the AOP program is predominantly in North America, and actually in this quarter, strong growth is coming from EMEA and the Asia Pacific region, where we've seen very, very strong growth. And they, those two regions don't have an AOP program, so it's pure organic growth, essentially. I hope that answers your question, Kristofer.
Yeah.
Then.
Were you growing in, in the U.S. for MedTech in the second quarter as well, or?
We did, yeah. Yeah, yeah.
Okay
.W e grew organically also in the U.S.. But we're also, you know, we pushed, I mean, APAC and EMEA drove even more growth.
Thank you. Then, about the, the Non-recurring order, EU items.
Yeah, Exactly.
Yeah.
Yeah.
All right. On, on the Non-recurring Items for the quarter, they mainly consist of two parts. As you said, one of the elements is acquisitions, and the second element is related to the VOI dispute. Those are the two main elements of the Non-recurring Items in the quarter. Looking ahead, as you say, acquisition-wise, our focus is to make sure that we take care and sort of extract the value from the acquisitions made. The VOI dispute costs, as I said, our focus is making sure that this process is hopefully finalized as soon as possible. I would say that's the, some color on maybe the MRIs and, and looking at maybe what, what to expect going forward. Okay. Thank you very much
Kristofer, I think we, we grew 8%.
The next question comes from Patrik Ling from DNB Markets. Please go ahead.
Hi, guys. Just, just one short follow-up question on leverage. Maybe you can walk me through it a little bit, because when I look at your report on the footnote on page 13, I actually get a quite different number for your net debt. Maybe you can talk me through that, see where, where it's wrong.
You said, page 13 or.
Page 30, where you have the net debt.
If you just sum all these items up, you end up with a net debt of EUR 351, approximately. It actually adds up if you do it for the same quarter last year.
Oh, okay. You're saying, and that EUR 296?
Yeah. I get EUR 351 instead, when I just add those numbers up.
Yeah. I would say the, the difference, as said, in looking at that's the, the litigation and the, the receivable for the litigation.
What item would that end up in?
I think it's good. The litigation that's excluded in. It's a current receivable, where we, the, the litigation that we asset. The, the receivable from the sellers from the litigation process, and that's recorded as a current receivable and excluded from, from net debt. That should be excluded in order to reach the EUR 296.
Okay. And how much is that? Was that EUR 58 million or something, yeah? Yeah.
Yes, roughly.
Yeah. Okay.
We can follow up this, separately and walk you through.
Yeah. If, if I look at it like this, as long as there's some uncertainty whether you will get that money or not, it still is. I mean, your, your net debt at this point in time should be EUR 351 instead.
As I said, we think that we have or we have a strong position under the sort of agreement with the sellers and the indemnification protection under the agreement, and that's why sort of our position is confident in retrieving the funds, and as sort of as of such, that receivable is included in the net debt calculation.
I guess it's also fair to say that the auditors have seen that the same way.
Yeah.
Okay.
Yeah.
In sort of a table like that, maybe you should have that in as, as a positive item and not only include the cash and cash equivalents.
Yeah.
Because it looks kind of strange when it differs.
It's a good point.
Yeah, that's a good point.
Thank you, Patrick.
Okay. Okay, great. That's all I have. Thank you.
Thank you.
The next question comes from Peter Verdult from Citi. Please go ahead.
Yeah, thanks. Peter Verdult, Citi. Two questions. Freddie, firstly, just good luck with the next chapter when you, when you, when you depart. I suppose, just before you leave, when it comes to, you said yourself, the business, you've tripled the business, you've been very acquisitive. Could you just give us a sense how well or not you think the business is integrated going forward for the next person, whoever, whoever he or she may be? Just the level of integration you think has been achieved, are you satisfied with that going forward or, you know, an area of improvement? Then just more generally, just could you characterize your M&A? Inorganic growth is a big part of your strategy that you laid out at the IPO two years ago. Could you just characterize the current environment?
I realize you're not, you're not going to talk about specific assets, but could you just broadly characterize the current environment to do, to do stuff, valuation expectations, that you're comfortable or not to go above 3x leverage, and the willingness or not to use equity, going forward? Just a, just any sort of flavor you can give us would be helpful. Thank you.
Yeah, sure. On your first question, Peter, well, the reason I choose to, to step down now is that I think it is a good phase for the company. The company is in, in, in very good hands, very strong leadership teams, and a relatively high level of integration. Systems are in place, you know, central data warehouse is in place. We have full transparency on data, organization is set up, and, and the organization delivers. I thought, you know, it's better to, better to hand over in such a phase of the company than when you are in the midst of, you know, of, you know, one or numerous M&A transactions.
I'm actually not at all concerned, and I'm staying, you know, I'm very close to the team and, and to the board. Of course, you know, I'm not disappearing, going anywhere, so I'm, I'm also available to support the team. I chose to.
Okay.
I just want to have a little bit more time with my family than in the last, you know, seven years of running, running quickly and traveling a lot. So this is the reason. I have no concerns on that, on that front. The question on, on the, the M&A environment, you know, there's still if you look at this market, it's still a highly fragmented market, and there's still a lot of opportunities, when you start to look at the, the, the breadth of our business, and both in terms of product categories, therapeutic areas, and geographical footprint.
You know, many region, regions we are not in, but, you know, we just started to tap into Brazil with now 600 clinic members in VetFamily in Brazil, but we have hardly touched it yet. We've gone into Japan with, with MedTech. That's the world's second-largest market, but we have still, you know, we still have to go and explore that region. South Korea is another region that could be so super interesting. There's still a lot to do. On the, you know, valuations, you know, I don't, you know, it's, I would say that, you know, with cost of capital that has gone up, my impression is that the number of transactions have maybe gone down slightly.
As to our, as to our willingness to go above 3x , or pay with shares or whatever, you know, we're looking at. We continue to have an interesting pipeline. We're looking at these, and when the time is right, and we think that, you know, we have a highly strategic acquisition that would require more equity, you know, then we'll, then we'll speak to investors, but that's not on the radar at this point.
Very clear. Thank you. Enjoy the rest of the summer.
Thank you. You too.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Well, thank you everyone for participating in the call today, for also very good questions. Again, I think I'll just reiterate, I think we are in a, in a very strong position, a very strong organic growth, good teams in place, good systems in place, a very strong innovation pipeline, and, and a motivated crew to continue to build Vimian and take it to the next level. You know, the search for a new CEO is ongoing, and I will update you on that when we have more information to share. Very bullish about the future and the month and years to come. Thank you so much for today, and enjoy the rest of the summer.