Earnings Call: Q2 2021

Aug 25, 2021

Good morning, everyone. Welcome to Vemian's Second Quarter 2021 Financial Results Presentation, our first report as a listed company. My name is Fredrik Uhlmann, CEO of Vemian and with me here today on the call is our CFO, Henrik Halvorsen. Just in terms of structure of the presentation, I will give a very quick intro to Linjan and then give you a high level results. Then I will hand over to Henrik to give you a bit color around financials. Then we'll deep dive into the segments and M and A. And then we'll go into more detailed financials, and we will wrap up with a summary and a Q and A session. If we move to Slide 3, So for those who don't know us yet, I'll give you a quick intro before we dive into the Q2 results. So Vemian is an animal health company and we operate across 4 niche verticals in a relatively large animal health industry. Those are specialty pharma with focus on dermatology, allergy and specialty nutrition diagnostics with focus on molecular and immunology diagnostics Our veterinary service business, Vet Family, focuses on centralized purchasing, digital marketing, branding, essentially everything that a clinic needs, an independent clinic needs to improve its profitability. And in our medtech vertical called Momora, we focus on orthopedic implants. We currently serve around 15,000 customers in 70 countries. We employ 450 people. And we are exposed 85% to the companion animal side of Animal Health and 15% into livestock, mainly in the Diagnostic vertical. If we move to Slide 4, now we look at our world map. We are a global company with presence globally. 60% of our revenue is in Europe today and 30% in North America. The rest is split between Asia and Latin America and Oceania. We are continuously expanding our offering, both through organic investments into the different verticals, but also M and A being a big part of our strategy. Most recently, we entered Canada and Australia. I'd also like to mention that out of our 450 employees, about 100 are shareholders. And Vimian is really an entrepreneur driven company, meaning that the entrepreneurs that we have acquired companies from are continuing to lead the different business areas. That's a quick intro to Bemjan. So if we move to Slide 5, let's look at our Q2 results, very strong quarter that I'm excited to share with you today. Let's move to slide 6. So during the Q2, we delivered growth across all four verticals and geographies with a total revenue growth of 2 29 percent of which 25% was organic growth. Now 2 29% is, of course, a high number, but keep in mind that 2020 was a very transformative year for Vimyan with lots of large acquisitions, the consolidation of Neximmune and the creation of Vimyan as a group. Nevertheless, we are very happy with those results. Despite strategic investments in OpEx to drive future growth, we delivered an adjusted EBITDA margin of 110 basis points year on year. During the Q2, we completed 3 acquisitions in Sweden, Canada and France with combined annual revenue in excess of €8,000,000 And since the end of the second quarter, we have completed another 3 acquisitions with annual revenue in excess of €4,000,000 And we remain in negotiations with several additional targets. We did this whilst also completing the list of Vemya on NASDAQ First North, raising €50,000,000 in capital and welcoming 1,000 new shareholders to the team. So of course, now after the summer, we see also momentum picking up. Now I would like to give the words to Henrik to walk us through the financials. And we can move to Page 7. Thank you very much, Fredrik, and good morning, everyone. Before we jump Into the numbers on Page 7, I just want to elaborate a bit on what Fredrik mentioned before, which is good to keep in mind when you read the numbers of Vemian. 2020 really was a transformative year for Vemian, as Fredrik mentioned. We have several large acquisitions, mainly in the Medtech segment where we acquired Biometrics at the end of Q1 and BOI at the end of Q2. So if you look at the 1st 6 months of this year, biometrics is only included in [SPEAKER KARL HENRIK SUNDSTROM:] The Q2 and VOI is not included at all. And VOI is actually the largest entity within the medtech segment. Also as Fredrik mentioned, Nakhmian was not consolidated within Vemian in until December of last year. And the reason for that was that it was jointly owned with another company, fifty-fifty, and the other company consolidated NextNune within their financials. So from now, we own 100% of NextNune, And it's fully consolidated in premium, but not before December of 2020. Also want to Mention briefly how we define organic and acquired growth. I think that also helps to read into the numbers in this report. We define organic growth as when we have owned the company for 12 months, then that becomes organic growth. But before that, we account for it as Acquired growth. So for instance, VOI, which we acquired in end of Q2 2020 is accounted for as Acquired growth up until end of Q2 2021. With that said, I'd like to go into the numbers on Page 7. We had a very strong quarter. As Fredrik mentioned, we had €39,400,000 of revenue in the quarter, and that's up from EUR 12,000,000 in the Q2 last year. Total growth close to 2 30%. We have €12,200,000 of EBITA in the quarter. That gave us a margin of 30.8%, which was, as Fredrik mentioned, 110 basis Points up compared to the margin of the same period last year. If we look at the 1st 6 months of 2021, we had €83,200,000 of revenue. That's up from €22,500,000 for 6 months last year. €29,900,000 of adjusted EBITA with 35.9% Margin, and that's up 8 20 basis points compared to the 1st 6 months of last year. We have very strong operating cash flow In the quarter sorry, in the 1st 6 months of close to €12,000,000 And we had a 71% cash conversion for this period. We have a very conservative leverage. We'll go into this a bit more detail later on, but we have a conservative leverage of 1.1 times Adjusted EBITDA in the quarter. If we go to Page 8, just a quick breakdown on the growth in the quarter. Total growth, as we mentioned, was 229%, of which 25% was organic, And that was mainly driven by the medtech segment. We have 207% acquired growth in the quarter. That is mainly BOI, which, as I mentioned, is not accounted for as organic growth in this period. And also Nexium, Which was consolidated later on in 2020. If we look at Nexmium on a stand alone basis, we had solid underlying growth Actually above the group average, north of 30% in the quarter. So strong performance of in the Specialty Pharma segment. We also had a slightly negative impact on currencies of about 3%, and that was mainly due to U. S. Dollar exposure and mainly in the medtech segment. And with that, I'd like to hand over back to you, Fredrik, to cover the segment. Thank you, Henrik. So let's move to Slide 9. So Specialty Pharma, which is our largest segment, accounting for 41% of the group revenue, Nexmune delivered strong underlying growth in all product categories, particularly strong growth in the allergy diagnostics and treatment therapeutic area. On Wyndymion level, remember, We only consolidated Nexmune since Q4 2020. So all the growth is still accounted for within the acquired growth here. Strong adjusted EBITDA margin of 35%, which reflects a scalable business model and successful commercial initiatives. The team completed the acquisition of Vistapour in May and is in negotiation with several targets as we speak. Going into the second half, momentum remains positive. But the second half of twenty twenty was exceptionally strong, benefiting from delayed sales after impact from COVID in the first half of twenty twenty. And we will be cycling tough comparatives for the rest of the year. Moving on to Slide 10. Looking at the Diagnostic business, which is 14% of the group revenues, Indicel delivered 8% organic growth after the exceptional Q1 of 2021, which grew 102%. That was boosted by backorder filling and distributor restocking as we were on back order for parts of 2020. We did see a positive momentum across categories product categories with some slowdown in sample preparation as sales related to some outbreaks last year did not reoccur in Q2 this year. We expected an EBITDA as expected an EBITDA margin came in lower at 15.1%. This reflects strategic investments in key personnel and for future growth and a number of one off costs such as exceptional level scrapping related to launch of prefilled. So if you were to take out those onetime events, we were we would be at roughly 21%. We acquired Svanova in April. We signed agreements with Aerocollect and Check Point here in August and maintain a strong pipeline for M and A. The period Q2 2020 to Q1 2021 has seen exceptionally strong growth as Indicel benefited from competitors focusing on human diagnostics. The competitive environment has now started to normalize. We remain very positive about our growth prospects with a strong portfolio, strong team and R and D pipeline as well as M and A pipeline. But the next three quarters will likely see some more normalized level of growth against very tough comparatives. Moving on to Slide 11, looking at our Veterinary Service Business, Vetch Family. This is our smallest segment accounting for 9% of the group revenue. Pet Family delivered 14% organic revenue growth in Q2, led by the Netherlands, Germany and France. Momentum in member acquisition has started to pick up during the quarter, having been subdued during the pandemic. We see continued growth in number of pets on plan and number of vet plan clinics. As expected also here, adjusted EBITDA margin contracted in the quarter due to OpEx investment to roll out additional services in more countries. We added new team members in Denmark, Germany and France mainly. During the quarter, the team has completed of IBA, a purchasing support group with 121 clinics entering the Australian market for the first time. The team also took a majority co ownership stake in the Danish member clinic, an orthopedic specialist clinic. And with that, deepening the partnership and facilitating succession planning for that clinic, but also enabling us to drive more innovation being close so close to an orthopedic clinic. Moving on to Page 12 and looking at our MedTech vertical. In Medtech, our second this is our 2nd largest segment accounting for 36% of the group's revenues. Momora delivered 59 percent organic revenue growth in Q2 with some benefits from easy comps in Q2 2020, which was negatively impacted by lockdown measures. Growth in all regions and categories, particularly strong in the U. S. And in total hip replacement segment as more pet parents seek specialty care. The adjusted EBITDA margin improved by 270 basis points to 33.1 percent driven by high gross margin and a scalable business model. In May, Mavor acquired Advittis, building a local position in France in the French orthopedic market. And we see a continued strong momentum, a flag that the second half of twenty twenty also benefited from a catch up in sales after the COVID impact first half of the year, and we will cycle very tough comparatives in the second half of twenty twenty one. Moving on to our M and A portfolio that we've done this year on Page 13. So year to date, we have completed 7 acquisitions with combined annual revenue of close to €14,000,000 a 20% incremental to Wielmann Group on a reported 2020 basis. Acquisition multiples have been broadly in line with historical levels at 7.5 times EBITDA. All our 4 verticals have successfully delivered on their M and A targets with deals unlocking new geographies and new product segments. In the Q1 of 2021, we acquired DiaVet, strengthening our allergy business in Spain. In Q2, we acquired Svanova, adding to Indica's position in Livestock Diagnostics, best for strengthening our online direct to consumer offering in North America and our largest acquisition year to date, Advettis building a local presence in the important French orthopedic market, adding annualized revenue of €5,500,000 Since the close of the second quarter, Vetfamily has entered Australia with of IBA and acquired the majority co ownership in the clinic in Denmark. Lastly, earlier this week we acquired checkpoints taking our first step into food safety and antimicrobial resistance testing. On Slide 14, if we look into Advettis being the largest deal we've made this year, Advittus gives us a strong position in the important French and Belgian markets, where we have actually previously been underrepresented. The company provides veterinarians with implants for orthopedic and vice visceral surgery and equipment for internal medicine, emergency and intensive care, broadening our offering that we had so far. And we see opportunity to distribute a wider Momora portfolio through Abertis. And the addition of Abertis product range is complementary to Momora's with the same portfolio. Moving on to Page 15, looking at IBA. So in July, Vetfamily acquired Independent Bets of Australia provide our procurement and support services to more than 120 member clinics in Australia. On an annualized basis 2020, this will add €900,000 in revenue. The acquisition of NDA gives the whole Vimyam Group access to a new continent, where we have previously had very little presence. The Family's International Scale and Portfolio Services will provide additional benefits to IVA members. Moving on to Page 16 and the introduction of Aerocollect. This is a deal we introduced on Monday. And so Aerocollect provides technology for air sampling, which allows for easier, faster and more accurate detection of pathogens in livestock production. Using the handheld device, as you can see here on the slide, you can walk around in a poultry or kettle farm pressing the on button and the machine sucks in air and traps pathogens in a chamber. And then that chamber can be sent by post to the lab who and the lab person would then just flush that little chamber. And then you can test that sample with PCR technology, which Indikal provides. Long term, we see this as a potential technology to replace blood samples, litter or feces samples in poultry and swine herd supporting our ambition to improve animal health and also supporting our ESG agenda. And with that, I would like to hand over back to Henrik to walk through the more detailed financials on Page 17. Thanks, Fredrik. So if we move to Page 18, just [SPEAKER KARL HENRIK SUNDSTROM:] Quickly cover some of the financials. Looking at the income statement, we already covered revenue and EBITDA, so I will skip that. Looking at operating profit, we had an operating profit of €1,600,000 in the quarter. That's up from Negative EUR 1,600,000 of the same quarter last year. This is an unadjusted number, not taking into account items Affecting comparability. And just to put that in context, we also had around €5,800,000 of costs in Q2 2021 related to the IPO earlier this year. So underlying performance significantly Significant improvement. If we look at the profit for the period, we had negative profit of EUR 3,000,000, down from Negative €1,400,000 same quarter last year. This is to a large extent driven by a negative impact In financial items, which was caused by the refinancing on debt where we had capitalized arrangement fees for previous facilities which were written off when they were replaced In Q2 2021, this was a negative impact of around SEK 3.7 billion. So and this is not a cash impact. And I said it's more a P and L impact. On growth breakdown, we already covered Q2 2021. I'll just Quickly highlight the for the 1st 6 months, we had 38% organic growth, which is well above our financial target. If we move to Page number 19, look at the cash flow and cash position. So as I mentioned, we had a cash Conversion in the 1st 6 months of this year of 71%, and that's a 16 percentage points improvement versus last year. Very strong Increase in cash flow from operating activities, and this is mainly driven by growth and margin improvements. So Cash flow from operating activities in the quarter of €11,800,000 Cash flow from investing activities, Negative EUR 17,200,000 and this is mainly relating to acquisitions and to a smaller extent CapEx. Finally, cash flow from financing activities of around €73,000,000 This mainly reflects the refinancing and the primary that was part of the IPO this spring. All in all, we are at a strong cash position. We have at the end of Q2, we had roughly 90 €7,000,000 of cash on hand, so significant cash to utilize in investments in acquisitions and organic initiatives. If we look at net working capital on Page 20, quite stable compared to Q1 of 2021, we're at around €33,000,000 of net working capital. Inventory is up slightly. That's Mainly reflecting underlying growth. We have accrued expenses are up quite a lot in the quarter, and that is Mainly relating to the IPO costs where we have accrued a lot of the expenses, and they will be paid out later in this year. So The cash impact will come later after Q2. If we look at net debt and leverage on Page 21, We had a net debt position of €7,700,000 and this reflects the refinancing and also the primary that we did at the IPO. If you look at this on a leverage basis, we are at 1.1x leverage At the end of the quarter, and that's down from 4x leverage at the end of 2020. However, that was with all the financing Structure, so it's less of a relevant metric, I would say. And with that, I'll hand it back to you, Fred, to wrap up. Thank you very much, Henrik. So if we move on to Page 23. So if we compare Q2 to our financial targets, Q2 delivered 2 29% growth as reported and 25% organic growth compared to our targets of 30 percent 15%, respectively. We are, of course, very happy with those results. But as I mentioned before, you have to bear in mind that the M and A agenda or the M and A impact during the last 12 months has been transformative and that is also driving that very high gross number. Our profitability, we do reiterate our medium term target of 35% adjusted EBITDA margin, although near term margins will vary as we invest in strategic opportunities that arise. In Q2, we reported 30.8 percent EBITDA margin, a quarter with significant investments. And for the first half of the year, EBITDA margin is at 35.9%. On 2020 pro form a EBITDA margin was at 32.5%. We continue to build a company focusing on long term value creation, aiming to reach our SEK 200,000,000 EBITDA by 2025. Our capital structure is at 1.1 times EBITDA. So the debt is at 1.1 times EBITDA, well below our covenant at 3 times EBITDA leaving quite a bit of headroom for additional M and A. Moving on to Page 24. Finally looking at the progress of our strategic priorities, we are happy with our Q2 performance. We work hard every day to drive business in existing verticals, resulting in 25% organic revenue growth and strategic OpEx. We invest in strategic OpEx and R and D. And despite that, we see this nice development also on the bottom line. During the year, we have expanded into new geographies, entering Australia with BetFamilies and significantly strengthened our local presence in France with Vouvora. We have started cooperation across verticals with As an example, Nexmune starting to sell its offering through vetch family in Germany, France, Benelux. And Mabur and Indikal are working on the joint logistics projects in Europe. We have completed on our M and A priority. We have completed 7 acquisitions year to date with annualized revenue of €14,000,000 And of course, we are looking at new verticals to invest in. But I would say that the lion's share of our focus has really been on, of course, in the Q2, get the a successful IPO done and focus on all the opportunities we have in 4 current verticals, which have a lot of opportunities and we see more opportunities to invest in those 4 verticals. But we're also looking at a number of additional verticals to invest in the future. And with that, I would like to open for Questions from anyone? Thank you very much. And the first question comes from the line of Ulrik Trappner from Carnegie. Please go ahead. Your line is now open. Great. Thank you very much and good morning. And I have a few questions, if I may. If we can start off with the Diagnostics segment and you're calling it out to be more of a normalized situation with a few of the players in the market shifting back to focus from the human side to the veterinary side. I'm guessing you're referring to Thermo Fisher. Can you just talk about a little bit more on how we should view this in terms of both growth going forward over the next two quarters as well as Looking at the margin side, obviously, you had one that's related to parts scrapping. But what how should we view the margins Going from here for sort of the remainder of this year? That would be my first question. Thank you. So the situation is that it's not that necessarily Thermo Fisher has started to be more competitive. But last year, there was a global shortage of certain products in PCR diagnostics. So there was simply an under capacity and that capacity has been built up. And therefore, Last year, we could grow above our expectations because you could essentially anything you had on stock, you could sell. Now we have to go back into calling on customers and doing active marketing and sales. In terms of growth expectations, as I mentioned, the next three quarters will be challenging on the growth side simply because we had extremely we have extremely high comparables in the last in the quarters from the Q2 2020 all the way into the Q1 of 2021. So here I mid term, I'm bullish. The next three quarters, I would be a bit more cautious on growth expectations. And on the margin side, It's a healthy margin within Indigal. That said, we are investing in R and D, business development, marketing and sales to get into new geographies and develop new technologies. And that is, of course, seen on our OpEx. So I would probably if you want to make an assumption, I'll probably work with the profitability in Q2, but take out the one off items that I mentioned. So it's quite similar levels to your sort of comparable periods last year. Just a quick follow-up And then I'll have my last question. Just in regards to this normalized Are you seeing that you're losing market share on new sales, guessing that you have quite a resilience in the installed base? No, we see a resilience in the installed base. Remind us, this is a market growing at 8% to 9%. We grew quite a lot in excess of that. And we had 1 quarter that was kind of subdued by a very from Q1. So there was a quarter to quarter effect as well there. So we don't see us losing market share. It's just that the growth rate is was exceptional last year, and we cannot extrapolate that growth rate going forward. And we have a strong position and we're strengthening that position as well. So I'm not concerned about losing market share, not at all. Thank you. And last question just related to all the acquisitions you made thus far. Could you help us provide Can you help to provide us with some more information on what M and A multiples have been for the acquired companies During Q2 and Q3, just on an average basis? Yes. So as mentioned before, we've been in line with historical multiple, so between 7 8 times EBITDA. So the average is between 7.6 times EBITDA for those M and A deals. Now the Arrow Connect deal is a call option deal. So that's a real innovation play. So we won't consolidate that into our numbers until we would call the option to get 51% of AirClicked. Perfect. So that is not accounted for at 7.6, but the call option is at 8 times EBITDA. Yes. Great. Well, thank you very much. And I'll go back into the queue. Thank you. Thank you. The next question comes from Richard Anderkast from ABG. Please go ahead. Your line is now open. Good morning and thank you for taking my questions. So first one, on the group wide ambition to leverage synergies and cross Fertilizing across verticals. How are you feeling with the progress there of the recent acquisitions? And how should we think about The pace, if you will, of these initiatives and the impact of that. Very good question, Richard. So in general, the collaboration between the verticals is starting to intensify. When you look at the recent acquisitions, Typically, when you acquire a company, the first thing is you make sure that you can consolidate, that everything is stable that you have risk mitigation plans in place before you start to push synergies. Typically the companies we buy are growing nicely. So we want to make sure that we help them continue to grow. And I would say that synergies come as a second priority. Our first priority is to make sure we don't slow them down. So But what you see as a good example, Neximmune has now 11 or 12 companies and you see this increase in organic growth of the group and also you see an expansion in profitability. So it's very difficult to guide you on the exact pace of synergy creation, but it comes very naturally as everybody is moving from being shareholder of their own company to being shareholders of Aymion. And everybody benefits from the synergies we can create. But it's difficult to give you a very specific speed of synergy expansion. But what we also see is that when we do acquisitions, the acquisitions we made are not at the same EBITDA margin as the group. And that is because we start to expand their profitability as we let them we help them grow faster without having to add that much OpEx. So there's always that post deal expansion of EBITDA margin that happens naturally. All right. Makes sense. Thank you for that. And regarding the strategic investments here impacting OpEx, Just would be interesting to hear how we should think of those types of initiatives in the upcoming couple of quarters. So should we think of these investments continuing here? Or will there be some fluctuations No, I don't well, we are looking to, for instance, enter within the family, we're looking to enter new markets. Typically you have a sales cycle of 1 to 2 years before you see the positive cash flow from such an investment. They're not substantial at the group level. Most of these OpEx investments are within the smaller verticals within Indicall and Med family. They're not substantial at the group level, but you will see it an impact at the single vertical level because they're typically those two verticals are smaller. So any headcount you add will you will see it very quickly on the verticals P and L. But we don't we've done quite a bit of we've done quite a lot of investments already in the detail. I don't expect to that to ramp up massively going at least not in our plans right now. It could be that we find opportunity we want to invest in. We will, of course, then let you know that that's our intention to help you to help to guide you. But as we speak, we've done those investments And now we're looking to harvest the impact. In that family, we will invest in 2 new regions. But So that will increase a little bit, but nothing material on the flip. Great. Thank you. And on the agreement with Aerocollect, can you talk a bit more how we should think about the impact from that agreement? And how would you describe the current level of validation of that technology? I'm guessing the call option strategy It's a bit to be cautious on that deal for now? Or how should we think about it? Yes. So it's actually a technology. It's a company that has been very technology driven for quite a few years, but not been an animal health player. And combining our expertise from the Animal Health side, what we did before we signed that agreement was to actually validate it on the 2 most important pathogens that we could where we see most of the potential. So we've run trials, in farm trials, so real world trials. And what we have seen is that we can detect both of those pathogens a few days before you can detect it in the blood or in litter or feces from the animals. That was that is the data that we that made us confident in this investment. The structure is that we pay So Force Technologies that was the owner of the technology prior to creating Aeroclect as a standalone company, which we did as part of this deal, they put the IP and the technology in Aerocollect. And the call option that we are paying out is there to fuel their to support their OpEx for about a year. But we are expecting to launch this in the second half of this year. And then we can choose to call the call option in this partly in the 2nd year and the 3rd year at 8 times EBITDA. In terms of distribution, Indikal will do the distribution. So there is a distribution fee post the 2nd year. But to help them get to a positive cash flow as soon as possible, we are not charging them a distribution fee in the 1st year. Right. That's very helpful. Thank you. And just a brief one. So you won't see any revenue impact from it until we call the call option. But we are investing in some I mean some of our resources that are on our payroll are focusing on this as well. But overall, we think this is a very good structure and risk mitigated structure and a good deal for us. Great. And just a final quick one on the Checkpoints acquisition and the antimicrobial resistance business on the human side. Can you talk a bit about the potential no are there significant veterinary applications there as well? And it'd be interesting to hear a little bit more on the On that side of the business for Checkpoints? Yes. So in terms of structure, I don't know exactly how much detail I should share here. But essentially, we The antimicrobial the human side is part of the earn out structure. So we don't pay upfront for that. And it's that is a part it's a OEM deal. So Check Point produces this has developed the product and produces it for a large human diagnostic player. Are there applications of antimicrobial resistance testing in the veterinary space? Yes, there are. Veterinarians start to have to do antimicrobial resistance testing before they can prescribe antibiotics. This is in certain European countries by enforced by law. And we think that this could have more and more potential in the future. Now there are different technologies to do that. So we're not betting necessarily on that technology yet. So we'll come back to that once we have worked on that strategy with ChipMans. Fantastic. Thank you for taking my questions. Sure. But just the interesting part of our checkpoint is that they do subtyping of salmonella. So that is very complementary to what we're doing with Aerocollect, but also our overall monitoring strategy for early detection of diseases, because you have some strains of salmonella that can be highly contagious and some that are less. And you actually want to know if you have Salmonella, you want to know what it is and where it comes from. And this is what they can do with their technology. Yes. Yes. That makes sense. All right. Thank you very much. Thank you. The next question comes from Peter Wedel from Citi. Please go ahead. Your line is now open. Yes, morning. Peter Wedel from Citi. Fred And Henrik, you're both well and trust you had a good summer post the successful IPO. Just a couple of questions. I know if one of you want to take it, but just on execution and delivery, just how comfortable are you with consensus for this year as it implies Yes, H2 performance being at least maintained or a little stronger than H1. So I realize you're going to have some benefits from the acquisitions, But you're also calling out tougher comps for both Indicao and Morvora plus just generally increased investments. So just that's the first question, just your comfort And whether you think consensus is realistic? So we are looking at so when we look at the consensus on the group level, it's I would say it's a high expectation, but I think we can on a reported basis, we think it's achievable. But it is an ambitious consensus, I would say. On the individual vertical levels, there might be too high of a consensus on the diagnostic side. So I think the consensus is projecting 60% revenue after a 70% growth in 60% growth in revenue after a year of 70% growth in 2020. So I think that one is too high. But I do think that at the group level, we can deliver on the consensus. Clear. And then just two clarifications, Fred, on I think pre IPO, the message Very much with all divisions are generating EBITDA margins above 30%. Am I right in the discussion that we've had with the rest of the analysts this morning The Indi Cal steady state is more going to be in the 2020. And then again, as it relates to the CapEx and investments in the business, I think the message pre IPO was this is a CapEx light business 2% to 3% investments. The message now is that you're increasing the opportunity to invest in the business. Can you maybe Fred just or Henrik give us a sense what level of investment or CapEx you're expecting For this year? Thank you. Yes. So on your first question on Indical, on the Diagnostic business, I would say short term, you are right, meaning next 12 months or so. It's more in the 20s. Mid- to long term, I see the potential to get to our overall group target there as well. But bear in mind that Imperial is a group we have actually grown organically. 95% has been organic growth. And that's why we've continuously invested in that group and it has paid off in terms of growth. And now we have strengthened the management team. I've moved out to take the role of Vemjan and we have strengthened the management team at Indicall to also be able to do more M and A. So that has kind of this short term impact on the EBITDA. On the CapEx, I would like to hand over to Henrik to answer that question. Yes. I think just to clarify one thing here, Peter. I hope you're well as well and have a nice summer, by the way. I think when Frederic mentioned that we have invested in the business Mainly on the OpEx side. It's not so much on the CapEx side. I mean we do have CapEx as well, of course. You may remember from our earlier meetings that we have mentioned that we invested in expanding capacity in Mevora or the MedTech segment. And those investments have also continued a bit into Q2 of this year. But the main investments that Fredrik mentioned are on the OpEx side relating to strengthening organization, especially in diagnostics, to kind of future proof that segment For further growth. When it comes to CapEx specifically, we don't want to change what We don't see that there are any big differences. Thank you. The next question comes from Hassan Waqil from Barclays. Please go ahead. Your line is now open. Hi, there. Thank you for taking my questions. I have 3, please. Firstly, if I can follow-up on your commentary around numbers. Pre IPO, you talked about group margins Slightly exceeding 35% this year. I wonder if this still stands given your comments around the Diagnostics business. Secondly, it'd be interesting if you could talk to us please about the pipeline within Neximmune And the potential for incremental in licensing deals here. And then finally, if you could talk a bit about the current pipeline as it relates To M and A by segment and potential size of asset and whether you are more open to any transformational deals. And earlier, you mentioned exploring other verticals, which could you potentially explore? Thank you. Sorry, I'm just making a note here. Yes. So on the margin expectation, on the 35% margin expectations, what we said was that, that is our midterm ambition. So when we look at midterm, we're talking about EUR 200,000,000 EBITDA in 2025. Short term, our focus is really to grow this group and invest in make investments we think make sense, both organically and in M and A and build a really, really strong group. Now the EBITDA expectation for this year in terms of margin, I would need to get back to you on that guidance if that has changed because we need to take into account also the acquisitions. But we are in we haven't changed any assumptions as to our full year expectation from when we spoke pre IPO. Remember, Q1 was extremely strong at Indikal with, I think, more than 40% EBITDA margin. So overall, we have a strong year also in that segment. Q2 is kind of correcting for a very, very strong Q1. But I have no reason to change our expectations for the full year compared to pre IPO at this point. On the Neximmune pipeline, We will get back to you on that a bit later, but as soon as we are ready to speak about that in the second sorry, in the Q3. But there are opportunities clearly to both in license technologies and develop our own product. And we have a couple of exciting projects in that pipeline, but we'll get back to you on more details around those 2 projects a bit later this year. We asked about the M and A pipeline by vertical. So we have numerous deals in the pipeline at different stages of maturity across all four verticals. And we have I think that since we created Bemian really, the attention has increased and The filling of the pipeline has also accelerated, especially in Q2 or Q1 and Q2 of this year. We are all quite focused on getting a successful IPO done. And now since we got back from summer break, the momentum has also increased. So I'm very happy about the current M and A pipeline, both in terms of number of targets, but also some that have a more significant size. So it's interesting. On the new verticals, that is a bit early to speak about at this point first. So while I don't necessarily want to guide our competitors as to how we're thinking and what we're looking at. So if you don't mind me getting back to you when that is a little bit further down the line. I would rather answer that question a bit later, if you don't mind, simply because of competitive reasons. But there are a number of I mean, it's a 45,000,000,000 market growing to 67 7 and 5 years. So there are a lot of different areas that we could invest in and that would make a lot of sense for us. That's very helpful. Thank you very much. You're welcome. Thank you. Our next question comes from Per Jorgensen from INT Asset Management. Please go ahead. Your line is now open. Yes. Thank you and congratulations with a very good start. Impressive, I must say. Two questions from my side. A bit about everybody knows that 2020 2021 are special years. Has it done anything to the visibility In your industry, that's my first question. My second question, has this difficult or strange years made you do some thoughts about doing even more strategic investments in your verticals And also on the acquisition side. Thank you. Thank you very much. So has the visibility so when you ask about the visibility, are you thinking about the focus on this market or the focus on Vemian? No. As you see your market because, Eunice, as you mentioned yourself, there are tough comps in second half. We see a lot of organic growth in different quarters. Has that changed your long term view on the industry and also from your point of view? That's My question. No, not really. I think that the underlying I mean, the visibility has probably increased. People are writing a bit more about animal health and there's clearly eagerness for many to enter this market to invest in this market or get exposed to this market. Has anything changed in terms of underlying growth drivers? Not really. I think this is I think when we look at this in 5 years from now, we will see a bump. But it's not going to be I don't think that it's there is something materially changing. There is nothing at least changing in our assumptions as to underlying drivers and market drivers. Your second question relates to any strategic decisions we have made internally strengthened organically or inorganically? Well, yes, there are part of the dynamic we saw in the Diagnostics business last year was this incredible demand increase for certain products. And we saw that there was a risk in the supply chain. So supplier, we had to look we had to take a stronger look at our supplier base and make sure that we were safe in a if a new pandemic was to break out and such a shortage would happen again, we have invested in in source or in securing the production or actually producing ourselves some of the most critical components, which is also part of the investment in Indigial OpEx. So things we were actually buying before we started to produce ourselves. And I think that with the visibility and the interest in the market, but also the amount of innovation in the market and the number of companies coming into this market, it also increases the number of opportunities for us to invest in M and A. So we are boosting our M and A efforts and we will continue to invest and more and more in building out the our M and A capabilities as needed. But as the pipeline increases, we will simply and as number of deals increases, we will invest more and more in that. Great. Excellent. Good to hear. Thank you. Thank you. Thank you. The next question comes from Svante Krogvos from Nordea. Please go ahead. Your line is now open. Yes. Good morning, Frederik and Henrik Swadte from Nordea. Hope you can hear me. Yes. We can hear you. Good morning. Great. Yes, a couple of questions left. Perhaps first on the M and A pipeline. Could you elaborate a bit on has The change, I mean, you had talked about 200 shortlisted targets and 15 dialogues. Has that changed Significantly. And has the competitive environment in the M and A side changed? And have you seen impact from the fact that you are listed now either positive or negative on the M and A side? So the list of Well, some of the companies that were on that list of shortlisted or active discussions have been now executed on. So it's a continuous list that is moving all the time. But I would say that it's the list is tendentially increasing. Now we've also turned down deals. I wouldn't put too much attention to the size of the list, but it's typically increasing the fact that we have become a group listed group has brought a bit more visibility. And I think that the group we are as Vemian is a very attractive proposition to many of the companies that we talk to. The fact that we are entrepreneur driven, that 100 of our employees or shareholders, that the entrepreneurs are still running their companies within the company. That is something that is appealing. The cultural aspect of how we operate is something that many of the targets we have started to talk to post IPO are saying, wow, this is cool and you are doing what we always dreamt of doing. So I think the if anything, the IPO has only brought a positive note to the momentum. Okay. Thanks. And then a question regarding Movora. You mentioned there that especially in THR, there's been significant Growth, could you elaborate a bit on that the reasons and the magnitude of acceleration? So the reasons for it is, as we said in the pre IPO process. I mean nothing has changed. It's accelerating awareness around the possibility to do those type of surgeries. It's the availability of the products and it's the availability of more surgeons knowing how to do the procedure. And it's growing especially in the Western world and the North America, but also in Europe. The specific I don't think we will report on that level of specificity because in the overall group At the overall group level, it's not a huge part of the overall business. I think the takeaway from Avior is that it's a significant 36% of our revenue and it's growing really across all categories, be it in TPLO plates, be it in screws or total hip replacement, but that to total label placement has been is still a very nascent segment, but it's growing and we see the momentum in that in those type of highly normative profits. Okay. Thanks. And then the final one on Indikal. And you mentioned exceptional scrapping. Could you elaborate A bit on that and was there a significant financial impact on adjusted EBITDA from that? Yes. So we so as I said, we'll be back integrating the plastic production to start to have a secured supply chain for the prefilled DNA and RNA extraction cartridges. And when you do those type of ejection molds, it's extreme precise engineering. And in the first early production batches or EBITDA versions, we had a plastic quality issue with leakage. And so when we realized that before it actually went out to customers, we decided not to launch that and we had to scrap it in Q2. That is one driver of one time or one off costs. There were a few others that were related to me moving into Linean, hiring, headhunter costs, etcetera. So all in all, that one time impact was between €400,000 500,000 which well, of which EUR 100,000,000 is more of an allocation thing between Damian and Indigal. EUR 400,000,000 is a onetime impact on the group level. And I sorry, something to clarify one thing here, Henrik here. The amount that Fredrik mentioned now here are not included in what we define as items affecting comparability. So that has impacted the adjusted EBITDA. Okay. So €400,000 to €500,000 roughly? Yes. Yes. If you want to really look at the if you want to take it out, you would increase the EBITDA by €400,000 to €500,000, yes. Okay. That's very clear. Thank you. That's all from me. Sure. Thank you. Thank you. And as there appear to be no further questions, I will turn the conference to the speakers for any closing remarks. Well, thank you, everyone, for attending the session today. Thank you for all the good questions. And of course, we look forward to interacting with you going forward and we'll go back to business now. Thank you so much and have a great day.