Good day, and welcome to the Vitrolife AB Interim Report Q2 2022 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Thomas Axelsson. Please go ahead, sir.
Thank you very much, and welcome all to the interim report Q2 for Vitrolife, the fifteenth of July. The speakers of today will be Patrik Tolf, the CFO of Vitrolife, and myself, Thomas Axelsson. Please go to the next page, and we will start the presentation. To summarize our achievements in Q2, I would like to show some financial numbers regarding what we have achieved as a group. Everything today what I will say will be in Swedish currency, so just a reminder about that. Sales second quarter, SEK 829 million, and it was a growth of 117%. The organic growth was 18% in local currencies. Pro forma, when we look on the complete growth, sale growth was 14%. Gross margin, we achieved 56.8%.
EBITDA margin of 32.9%, and in absolute numbers, it was SEK 273 million. Earnings per share for this quarter, SEK 0.96 . It's a growth of 22%. I would like to say that it is pleasing to see the underlying growth in these numbers. To explain those more in detail, Patrik and I will then go through numbers and some presentations then. I will then start on page number three doing that. Please change page. On this page, it is sales and growth per market region, and I will comment more about the markets and later on regarding the business areas. The total growth in local currencies was 99%. As I said before, you know, the organic growth was 18% and pro forma 14%.
Really good numbers, and those are excluding COVID-19 testing. Let's start from the left and look into the different regions that we have. It is a pleasure to say that our ambition and our strategic intention, what we have achieved is to have a good balance between the two largest regions, the region Americas and the region EMEA. Sales in Americas was SEK 296 million, and, as I said, it is the largest region. We had good growth in, let's say the northern part of Americas and the Latin America. Really pleasant to see that the Latin America is coming back in all matters, in number of cycles and in number of performance within the genetic testing. The region overall, we can see that it's been growing.
I think that we are in line with the market growth. The climate on this market is difficult to judge going forward, you know, with the different clinic change, what will happen. What's important for this market is to do combined offers. Part of the organic growth is through our ambition to enter into discussions and talk to the customers, you know, with our complete offering. The next region, EMEA, the organic growth didn't exist. It was flat. Going back to what I just said regarding the customers, we had a good growth in some product areas. What has happened in this region during the quarter is that two things. One is that compared to the last year, the largest customers within genetic services is not any longer using the services from Vitrolife.
That business was already on the way out when we did the acquisition. Another thing is comparison with last year's. Last year, the time-lapse business, the technology business, had really strong year last year. When you compare that, you know, it's always like time-lapse is going back and forth depending upon larger orders. Market in EMEA, we are coming from an exhibition last week, ESHRE, the largest one globally, and the projections going forward from this region is that some customers are a little bit less optimistic than before. But I don't have any clear directions or can do any judgments regarding if the business will continue to grow in EMEA or if it will stabilize a little bit on the current cycle numbers. Next region, Asia. Yes, organic growth 41%.
It is so difficult to judge this region. Our biggest market is China. In China, IVF cycle growth are not growing, but we are growing extremely well. That's due to our service level and the support that we have done to the customers when they have had supply problems from other companies. Good growth in China. It's also picking up a little bit in Southeast Asia and India, but I wouldn't say that has any major impact. EMEA growing good. Last region on this page is Japan Pacific. There are changes going on within the market. We know that during this quarter, the reimbursement system in Japan has started to do.
You know, when a new reimbursement system is coming into place, initially, there are some uncertainty regarding what it means for the clinic and what it means for the patients. What's good so far is that we have good growth there. We can see that we are having products that are within the reimbursement system, so really good growth for those products. However, we also have a product that earlier was paid out of the pocket and currently are not involved in the reimbursement system. If they use that product, they will not be able to have to, let's say, get the benefit from the reimbursement system, and that is the PGT-A testing in Japan from genetic testing. Overall, extremely good growth within all regions. Please go to next page, and we will see what the consumable did.
Consumables, 15% in local currencies. Good growth. What I would like to emphasize regarding the consumables business is the fantastic work that our colleagues has done within the supply chain. It has been a struggling time for you know more or less two years in where the global sourcing and that we've been able to keep up the service level has been a good reason for our growth in local currencies. If you are looking down to page four, at the right corner, you can see good growth in Asia. That's what I said before regarding China and our service level, and good growth in Japan Pacific due to the insurance system, due to our good support there with products that's been introduced the last couple of years in many respects then.
EMEA and Americas, 2-3% growth, and that is a little bit down what I would expect, but that is mainly due to less sales of kits within the consumable business for genetic testing. Please go to the next page and look on technology business. Technology business goes up and down. This quarter, extremely good quarter. It is a growth of 29% in local currencies, and the increase in sales is coming from the hardware situation. Why are we growing there?
I mean, it can go up and down between the quarters, but we can see, you know, that we had for the last two quarters, 140 million- 141 million SEK in sales is mainly due to two things. Ease of use, the support for embryo selection and then embryo decision, let's say, by iDAScore or our software. The growth in America and the growth in Asia-Pacific is also coming from a large extent of the standardization, the workflow, the importance, especially in the U.S., to deal with the inflation, let's say, the challenges with getting competent labor and getting efficiency. It looks really good. Another thing for technology business in this quarter is that we have an MDR certificate, and that is already done. You know, it demands some incredible work.
I'm very proud to say that for the future, the customers can continue to buy, and they know that they will have the support and a long-term commitment from our side by an MDR certificate. Change page, please. Genetic services business area. Differences between the region, I think is still good growth, 7% in local currencies. In Americas, we have had, you know, 10% growth, which is really good. Why I'm saying really good is that there is a mix right now in Americas for genetic services, especially U.S., where there's a price pressure on PGT-A. Having a growth in that territory and also being able to close a couple of new deals looks promising for our ambition to have scalability within the U.S. organization.
EMEA, mentioned that before about the EMEA situation, then, it is that the 2% growth is due to drop of one customer. If we take away that customer, underlying very good growth within the EMEA region. Asia, good. Asia-Pacific, changes of the product portfolio, where we are having less PGT-A, but more of the other product, the ERA product, those that are for the judgments of the timing for doing the transfer of an embryo regarding the endometrium. Very good growth in all three business areas. By that, I would like to come into the next page, and it is Together for Successful Growth. You know, in a situation where we acquire the company, we have looked into the different kind of business areas.
When we bought Igenomix and what we have been, you know, judging and what we are doing is that our focus is on the fertility journey. All of our organization and what our focus will be on the future is for fertility and reproduction. It is in that customer segment that we can do a positive change, and it is that segment also that we can provide better clinical outcome. Going forward, we will need all the resources and all our ambition and competence to continue the product development and to work together with our customers in this field. You know that we will need to do product development for our key product areas so we can continue to be a leader in this field. It is for embryo selection, evaluation, or diagnostics, depending upon what product it is.
It is also for easiness of use everywhere, let's say typically for the culturing or the vitrification. It is also for the standardization. By knowing what the customers want and have a customer focus, we know that it is easy for us to come up with cost-effective ways for the customers. Of course, also our continuous development to be the leader within the field of genetic services. To do that, you know, it is all about the customer offering, where we have the synergies and what we can do for them. We already started in many different ways, and we have implemented joint organization structure for Japan, the group, you know, in Japan, Pacific, and part of Asia. We merged the organization, especially, you know, to strengthen our ability to meet the customers in that region.
Why we've started that, to do that is that it's so good in time together with the situation when the regulatory environment and the payment systems has changed in Japan. All of that is to try to listen to them, have a focus on the customer offering in that side. Due to that, you know, if you're focusing on something, you're defocusing on something else. As a consequence of this focus strategy and customer offering, that is our core market strategy, we will not continue with the business line GPDx and Oncology. I've talked about that we have looked into the area, and our conclusion is that we are not the right company to have success in that field because we are not big enough, and we don't have the focus on that area.
We will, however, keep some of the GPDx product line that are related to the reproduction field within selected market and customers. We have a strong offering in some markets, and everything about this is the customer and what we can do for the customer. As a consequence, all other resources, product development, and activities in the GPDx and Oncology line will be downsized in the coming quarters. The changes that we have done, you know, to the organization already started then in downsizing is that adjust the organization where we will not do any COVID testing. It is also a situation where we have listened to customers and see what the demand and then what kind of maturity the market has for genetic testing. Restructuring of the operations has been done and will be done in Argentina, Korea, Vietnam, and also China.
Important to say that all other laboratory structures, development, and competence, and everything regarding the fertility reproduction area will be kept and also grown with focused resources. I will not continue saying more about the growth and the situation then for getting our business in line for future growth within the fertility journey. I will then hand over instead to Patrik. Please, next page, and Patrik will start.
Thank you, Thomas. Now we are on page eight then, focusing on the highlights on the financial highlights for the second quarter. Our sales increased then to SEK 829 million, which was then an increase in local currencies of 99%, and that also then includes the acquired revenue of SEK 341 million. When we look on the performance, the relevant number is 14%, where we also then exclude COVID testing and also based on the pro forma. That's where we grew 14% in local currencies, excluding COVID testing. You can also see that we have increased both gross income to SEK 470 million and also then the EBITDA to SEK 273 million.
The relevant comparison number there is the pro forma numbers, and you can see that we have increased the gross margin with 1.6 percentage points to 56.8%, and a slight increase in EBITDA margin then to 32.9%. Next page. Going into the net sales and taking off then from the pro forma net sales of the second quarter last year of SEK 696 million. You can also see now that we have then a decline in the COVID-19 sales. We can also see that we continue then to grow. The SEK 91 million is the continued sales growth.
We have a currency impact for the second quarter on sales of SEK 70 million leading up then to SEK 829 million in total sales for the second quarter. Moving to the next page, EBITDA, and here we take off from the legacy Vitrolife during the first quarter last year of SEK 134 million. Then our increase in sales and the gross profit had a positive impact. Whilst the gross income comparison with the gross income for the second quarter last year compared to the gross income margin for this year, meaning that we have a slight decline in the contribution from gross margin, for the new group.
OpEx now for the consolidated group is SEK 169 million, and then we add back the depreciation and amortization ending up then with the EBITDA of SEK 273 million, corresponding then to a margin of 32.9%. Also see that the EBITDA per share continued to grow. For the second quarter, it was SEK 2.201 per share, which corresponds to a growth of 63%. Next page. Our OpEx you can see that the OpEx then on pro forma basis have increased with SEK 46 million or an increase of 18%. That is due to, as we say here, normalized business activities.
We are doing more customer interactions, so selling expenses have increased with SEK 19 million compared to last year. Also as Thomas mentioned here, when we talk about non-core operations, that has also led to an increase of both administrative and selling expenses. In total, an increase of 18% in the operating expenses. Moving to the next page. To summarize the financials is that we continue to grow. You see that, of course, in the sales numbers. You see that in the numbers for EBIT and EBITDA. We are above or slightly above in all numbers if you compare to the second quarter pro forma numbers on that side.
Also then on back on the increased cash flow, and also then the improved EBITDA, the net debt to EBITDA goes down to 2.4, and that was 2.9 during the first quarter here as well. Next page. If I then summarize for the second quarter, as we said, we have strong growth, particularly then on the business areas, consumables, technologies, but also then a growth, slightly lower compared to these two business areas in genetic services. All in all, strong growth on that side. IVF consolidation impact, as Thomas mentioned, we are phasing out some clinic chains, or one clinic chain in EMEA.
On the other hand, we have just recently also then signed another contract or a new contract with another big clinic chain in America that we will phase in going forward on that side as well. Impact then from the IVF consolidation. You can also see that we are now a more balanced group. America is now our largest market region in right position then versus EMEA, which all in all means that we have a more balanced sales distribution globally. The proof of quality and our quality efforts is the MDR, which gives us a good position going forward. As Thomas mentioned, going forward our focus will be on the fertility business. Moving to the next slide.
The last slide is that we continue to keep the statements that we have done in the past as well for the long-term outlook. Meaning that we will continue then to broadening our product and service offering, and the market growth is according to our view, continuously 5%-10% in monetary terms, and we will continue to expand our sales. With those words, I leave it back to the operator for Q&A session.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Voice prompt on the phone line will indicate when your line is open. Please state your name and company name before posing your question. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question. Your line is open. Please go ahead.
Yes, good morning, everyone. This is Patrik Ling at DNB. I have a couple of short questions. First, when it comes to, you know, downscaling of GPDx and the oncology operation, could you just remind us how large that operation is as of now, and whether that one is profitable as of now, and what we could expect going forward from changing or shifting out that operation?
Okay, Patrik. It's Thomas here then. Okay, Patrik, please go ahead, Patrik. The operations that we will do is, I mean, the downscaling and the activities that we will do, will definitely then support the journey that we have when it comes to the EBITDA margin of 25%. That's one of the reasons why we take this action so that we can continue then to focus on the profitable growth for the genetic services business.
Patrik, I can fill in a little bit. Don't go through all the numbers, you know, but to help you a little bit is that it is a lost business, you know. That's the reason, you know, it has been a development business. Oncology has not yet started. It has been a very good development for some of the tests within that field, but it takes time to get it into commercial shape. GPDx, we have a good business in a few regions, but in expansion then into other regions and with more resources and development, has been a negative side.
That's the reason why we have been looking into it, because as I said, you know, there's been some advantages for the customer segment that are doing reproduction, but outside that, it has not been any favors for, let's say, our customers, only expenses. It's a good team, so it's been a very difficult decision.
Just so I understand it, if you just close down the operation, will this free up capacity in the laboratories? Or is this something that you could potentially divest from the operation?
We are trying. We are having discussions, but the situation is that it is partly embedded. When we are, you know, then downsizing the structure from the embedded side, that will free up some resources, you know, within the laboratories. Of course, you know, but it will also free up some resources that has a mixed situation within sales and marketing. Unfortunately, you know, we will reduce the number of employees, and by that, you know, some of the capacity will get out of the system. What we will focus on, I mean, more focus on bioinformatics, more focus on the development from our team. That will free up resources for our focus activities.
Okay, great. I also had another question regarding China. You said that the cycle growth in China was flat approximately in the quarter, but you were taking significant market share, and you were growing 41%. Could you elaborate a little bit what is exactly driving this growth, and why are you so successful in a market that is pretty much flattish?
It is a difficult question. I mean, we have asked ourselves. The situation is that what we have done, and we were having a negative side from this 2021 in Q4 and the beginning of 2022 and the beginning of 2023, when we were doing specific China products for the media side. Then and back then, trying to give a good estimate on what inventory level, what should they buy, was a challenge, and we had some scraps.
We said that, "Okay, let's take that scrap because it is a profitable business, and it's better to keep the customer happy." With the situation of the clinics, you know, closing and opening in China, we have been able to have an inventory in China with only products for the Chinese market. When competition has had some challenges in getting products in due to, you know, what's happening, you know, with the harbors and the flights and everything, we have had that inventory. An increase of our service level has made that. In some cases, I do believe that they have bought from us because they can't have the products from their old suppliers. Some also is coming from that due to the challenges they had, they will go for us going forward.
I'm trying to be humble here. It is very difficult to judge the Chinese market today. Very difficult.
Okay, great to understand that. Thank you, Thomas, and thank you, Patrik. I'll jump back into the queue now. Thank you.
Thank you, Patrik.
Thank you.
We will take our next question. Your line is open. Please go ahead.
Good morning, Thomas and Patrik. Ulrik Trattner from Carnegie here. I have quite a few questions, and I think I actually can start off where Patrik left off, and that is on the super strong consumable sales and taking market share. What's your take on the CooperSurgical and Cook Medical merger and the FTC potential antitrust concerns, regarding it being positive on your end on the consumable side? Are you taking market share broadly, or is this especially located for the Asian markets?
Hi, Ulrik. It combined three questions as I see. The Asian market, it has been growing market for us. We can see that, you know, in the consumer business. It is a mix then, of course, you know, Asia, Japan, Pacific, because we are growing there. It is a difficult explanation. China, I said to Patrik, you know, it's difficult to judge the market if it's going to be a long-lasting situation, but at least it feels good that the customers are appreciating our service level. The next question was regarding FTC, you know, regarding the consumable business, and the situation between Cooper and Cook. We don't know what's going on. We only know that it is an acquisition situation going on from Cooper side and that they will finalize this, what they said during the year.
We are just waiting to see what the outcome are, and we don't have any more information than the public information, Ulrik.
Okay, great. Just on the underlying growth in both the Americas and EMEA, 2% and 3% respectively, it sounds like it's on the low side. What's your estimates on how the market is growing in terms of cycles?
Yes. First quarter, I saw growth. It was not any difficulty to say that it was a growth. April. I'm coming from the ESHRE, Ulrik, and we have been watching this and it's difficult to say what's going to happen. Talking to some clinics, clinic chains in Europe, the management there, they have seen a decline in number of customers that are waiting in line. In some places, there is not any queue at all. Asking them why, they can of course give us a clear answer, but with the changes within the macroeconomy, that can give them some. Let's say the couples that wanna do it, maybe they will wait and see what's going to happen with their interest rates and loans.
I mean, we all know about the macroeconomy. That could be a sign of slowdown. I had a discussion with customers in the Pacific area. They have seen the same. They have experienced, you know, quite a long queue in 2021. Currently, it is a balance between the inflow of new customers and what they can perform. So that's that. U.S., a difficult mix right now. We see a little bit similar trend there, where the expectation on this 10-15% cycle growth constantly that's been from, let's say, 2020 Q4 and forward is not within the market. It seems to be slowing down. That's the only, you know, qualified guess that I have right now.
Okay, great. Onto genetic services. Growth of 7% adjusted for COVID. It sounds a little bit low, but then once again, you're talking about this one large IVF genetic contract being phased out and then securing a new large contract for the coming year in the U.S. Should we assume that these are sort of balancing each other out, or is this net positive?
I think it is net positive. You know, there are things within genetic services if we, you know, look into this. Americas, it is the. If you take the U.S., it is the market with most cycles being done by genetic testing. It is a market where PGT-A is under price pressure. If we see about the number of testing that we will do and the prices, with the prices going down, you know, that could be flat even if we are increasing the number of tests. What we are doing here, and this is regarding the focusing, is to work with scalability. Because, you know, when prices go down within the mature area, it is to get scalability. That partly is changing the laboratories.
It is also doing product development to have a more efficient kit and process. By that, we can come back to a better situation with profitable growth within the Americas. Within the EMEA, I can't really predict what's going to happen because, as I said, IVF chains are being built. They will go for in-house or they will go for outsourcing. You know, with bigger customers, you know, if you gain them, it's really good. If you don't gain them, you know, then you have a loss. Overall, the situation of Vitrolife being able to work with those and adapt to their demand. If they would like to do in-house, then we can supply and have that from the consumables side.
If they would like to have all the services in-house, then we have genetic services as hopefully their first choice. I'm positive regarding the EMEA development. As I said, the EMEA region overall is growing with good double-digit. You know, we lost our biggest customers, so that's impacting it. Japan Pacific, good growth in a highly profitable area within the endometrium side. PGT-A business will go down due to that they have to pay out-of-pocket the complete cycle.
However, the customers, we can see that already in Japan, what I'm talking about is that when they have reached an age of 41-42, and they would like to have better clinical outcome, PGT-A is a good help, and then they prefer to pay the complete cycle out of the pocket and include a PGT-A testing. Long term, no, I'm not so worried about this business, definitely not. I see that it's a great potential.
Great to hear. Just to stay on the genetic service, you have ongoing commercial and operational excellence program in place, right? I noted that you stated that you reduced staff in Igenomix by around 7% compared to Q1. Have we seen the effects of this in the Q2 numbers, and is this something that is ongoing in this commercial and operational excellence program, or should we consider that to be concluded?
Thanks, Ulrik. The actions that we have taken here is not in the Q2 numbers. The reduction then of personnel that we have been doing will have an impact from Q3 and onwards. Also those are actions that we have taken so far, but there will be needed an additional activities here as we talked about them when it comes to focusing on our fertility journey, meaning that we do not then focus on the GPDx and oncology. There will be more actions, and those numbers are not in the Q2.
Some actions are already then taken that we see then a lower run rate when it comes to cost from the third quarter, and then there will be additional measures taken here throughout the rest of this year.
Great. I'm very pleased to see that you're now focusing on the GPDx. Just one quick question here. Will there incur any extra cost related to closing down or sort of scaling down the oncology part of it? My impression is that it's mainly OpEx. Should there be any sort of extraordinary cost in the following quarters related to this?
You're right that it's mainly OpEx at this stage, but depending a bit on how we will close this one, it may also lead to some additional cost for closing that down as well. That we are digesting, and we'll get back to you on that side itself and everybody, of course, on that side.
Great. One last question on my end. SEK 28 million in sales related to COVID testing. Could you give us some hint on the margin of these tests? Have these been margin dilutive or accretive for Igenomix in the quarter?
Margin dilutive on that side.
Perfect. Thank you very much, and congratulations on the good quarter.
Thank you.
We will take our next question. Your line is open. Please go ahead.
Thank you. Johan Nilsson, Redeye. Some follow-up questions. Good questions, by the way. Can you give us some more color on what we can expect in terms of potential savings then during Q3, Q4 for these measurements once they are in place, so to speak?
What we say is that the actions that we will take here during and some of them we have already done here but then will have an impact then from the third quarter and onwards are activities that we will take or have taken that will support the journey to the EBITDA margin of 25% for the genetic services business on that side. That's where we think that we shall be in the short run with genetic services. Continuously, we will work more when it comes to operational excellence and so forth because we think that the genetic services business has the potential to reach 30% when it comes to EBITDA margin in the long run.
Thank you. What about the 25%? Is this sort of within reach on the run rate already early 2023?
Yes. I mean, we are focusing then on these activities to be achieved here in the coming quarters, on that side.
Okay. Another clarification is, regarding these larger contracts. Can we expect some additional negative impact in Europe? What about timing for the support on the American side?
Situation is that we are focusing more and more on these large customers, and they are focusing more and more also on getting partnerships. The situation with the consolidation is that we can see that they're starting to have more in-depth negotiations, partnerships, and it's not only about money. It is about what we can provide, the services or integration of IT support systems, clinical portals, et cetera. Right now, we are not under any renegotiations right now with the old clinics in Europe. In U.S., as we said, we have gained one.
You know, the situation here is that talking about what clinic chain it is or what clinic chain that we have lost is not what we do, partly due to that's something that those customers do not want to have disclosed. I look positive on the changes overall. I do.
Thank you. That's useful. Can we say anything about the dynamic, likely dynamic going forward? Will these sort of large contracts and partnerships be more important or and are you in a good-
Yes, they are.
Position to.
Yes, they are.
To benefit from that?
I mean, yeah. We should be also very objective because, you know, when changes is happening within customers, you know that the marketing sales-oriented organization maybe perceives it more than what the real impact is. In Europe, there are a lot of changes. You know, the situation then in Asia and in Japan Pacific.
are not the same. In U.S., it has not reached the situation where so much is being currently under an exit process or a divestiture process between those. I do believe that it is in Europe we will see the biggest impact from the clinic chain. However, you know, there are a lot of business that do not wanna belong to clinic chain. There are public centers in Europe too, so there is a mix between those things. Most importantly is that they will ask for a situation where they can gain something out of it, you know, like efficiency, standardizations, maybe involved in research that can benefit their clinics quite early because they are in this and they wanna have a partner so they can get an advantage compared to their own competitors.
It is a situation if you choose that one, you can't choose the other one. It's going to be a balance between also the bigger players that are supporting those. If A gets it, B will not, and vice versa. It's going to be as it usually is in the business, it gets mature, fewer larger players.
Interesting. Just finally, can we say something regarding the currency impact on earnings, I guess in reported terms? I mean, you.
Mm-hmm.
Very transparent on sales, but I
Mm.
See much regarding earnings is entirely neutral.
You can see that one in the report and the impact then on EBITDA is SEK 28 million, positive, on that side. I mean, you saw the sales impact was SEK 70 million, and the EBITDA is then SEK 28 million, currency impact on that one as well. That is of course reflected on the overall currency exposure that we have, where we are long in all currencies except for Swedish krona. Also the localization, when it comes to the cost structures, throughout the world with the localization of production facilities and laboratories.
Excellent. Thank you.
Mm.
We will take our next question. Your line is open. Please go ahead.
Hi, this is Jakob Lembke at ABG. I have a few questions, and my first question is on the technology side, and you mentioned increased interest following your software offering. I'm just wondering sort of the status of the iDAScore and how much of the technology sales that are recurring currently.
Okay, I was.
Sure.
Yeah. The iDAScore, no changes there. It is improved. It is approved and regulatory approved. We can use it within Europe. We are not regulatory approved in the U.S. We are continuing the route together with FDA, and that's the challenge. I can't, you know, give any good directions or guess when we will have it approved there. The growth within the hardware side that we have seen in Europe the last one year, little more than that, are related to large extent to the situation where you see that they can get more efficiency savings in time with an accurate support system like iDAScore.
In Japan also, there are usage of it and, for instance, ESHRE, there were publications and discussions regarding how that could also be used for day three. It is a continuous development of it. U.S. technology business, you see in America's growth of 174%. I do think nothing is coming from the software side on that. Recurring business then, yeah, it is recurring business on maintenance, software and the consumables. As if you combine all of those today and you see a lifespan of around 5-6 years on the hardware, over life periods, half hardware, half recurring business. That's, you know, if you look at overall investment period from the clinic side.
Okay. Understood. My next question is a follow-up on the consumables growth in Europe and Americas. I mean, also considering what you said about some caution from customers in EMEA, how should we think about sort of the growth here in the fall and into next year, given the sort of macro situation we're seeing?
Good question. You know, I tried to answer that before. We are not changing the situation that is an underlying good demand. You know, everything is talking for a continuous growth. If you look into history, and I think you know this well, you know, it's been very few times in the macro economy that the macro economy has impacted in a longer period on the IVF side. 'Cause it was some, you know, at the financial crisis, 2008 in U.S., there was some, you know, when they changed the reimbursement system in Germany in 2004 or something. Otherwise, it's been small waves on the top, you know, on the cycle. I don't believe it's going to be any changes compared to what we have seen as long-term growth and cycles.
I do, however, believe that unusual expansion of cycles that we have seen in 2001, you know, with a growth of 15-20% in some areas. I don't believe in those. I believe that the market will come down to a normal cycle growth, you know, between 3%-7% or something like that. Depends upon the market. I'm talking about the global numbers. Then, monetary growth, as Patrik said, a little bit higher due to that they are changing towards more technology, more genetic services, and, you know, it is in that field that we have, let's say a competitive edge.
Okay, understood. My final question is on the phasing out of the large genetic services contract in Europe. I guess this is an effect of the sort of consolidation we're seeing among your customers. Just wondering a bit on how you see the net effect of the consolidations in losses and gains of customers.
Right now we can't say, you know, what's going to happen and see, you know, plus or minus. What I believe is that with size, the IVF clinic chain will go for in-house services of basic tests, GPDx, PGT-A. However, they will maybe do that, which I believe, and then they will have more advanced test, you know, that they can't, you know, get normally from someone else. You have a few players like ERA Testing, so they will send those out to external. In that case, you know, we have an ability to work with them for the products that they use from the consumables, but you know, not from the genetic services.
However, the clinics, and we can see that in discussion with the U.S. clinics right now, what is it that they would like to focus on? They would like to focus on their customer. I mean, they wanna focus on the patient journey, to do the best for the patient. To do the best for the patient, it is that they are spending their resources focused on everything that is around the patient journey. Doing a genetic testing as only, let's say, a supplier of genetic testing, it is not going to be their core business. That can be our core business. I think it's going to be back and forth a little bit initially.
At the end, it's going to be that they have to be full provider or they're going to go full with the outside sourcing due to their focus. A long explanation, I think we're going to see the divided business in the largest clinic change. You need quite a large structure to actually invest and do this by yourself, and genetic counseling, and every services is that is around it. It's a bit naive to believe that you can only set up a test center and then perform the testing. There's so much around it with the quality system, the counseling, and the development of these products.
Okay. I understand. That was all of my questions. Thanks for answering those and congrats on a good quarter.
Once again, if you would like to ask a question, please press star one. It appears there are no further questions at this time. Mr. Thomas Axelsson, I'd like to turn the conference back to you for any additional or closing remarks.
Okay. Thank you very much for being operator for this call, and thank you very much for those listening in. Those that are in Northern Europe, I wish you a good vacation. Those that are not in Northern Europe, I hope that you will have a good day, and goodbye.
This concludes today's call. Thank you for your participation. You may now disconnect.