It seems that everybody is seated. Good morning to everyone here in the room, but also to our dear listeners in the hybrid session on the Zoom on the other end of the line. I'd like to welcome you to the 2024 full-year results presentation of the Medartis Group. We appreciate your taking the time in a busy period. As usual, we will use the presentation slide deck as a reference for the conference. Please also have a look at the media release. I'm sure the analysts in the room have already carefully read it, but also our annual report, which is today published, and it's 198 pages long with a full comprehensive sustainability report as well. Everything was published at 7:00 A.M. this morning on our website.
Now I'm delighted that our new CEO, Matthias Schupp, joins us for the first time for this full-year results conference, along, of course, with Dirk Kirsten, who most of you know already. Matthias joined us in November from the Straumann Group, where he spent the last 17 years successfully managing first the Western European business and then the Latin American business, including the value brand Neodent out of its home office or home center, Curitiba. More to that later on. Before we move on, I would like to make one legal and one housekeeping remark. You see on slide three the agenda of today, and on slide two, the disclaimer on the forward-looking statements. We also have, and most of you recognized this this morning, a completely new website. There were some people struggling to find our annual report and the presentation.
Just as a side note, if you open up the news tab, which you see now in the browser, there is a drop-down menu that is required by the stock exchange where you show the ad hoc news, but also our reports and presentation. We will optimize that because also customer centricity is important. You are our customers. We will make that more user-friendly in a few days from now on. Good. With that, I would like to hand over to Matthias Schupp for his opening remarks and the highlights of 2024.
Yeah, thank you very much, Fabian. Good morning to everybody. I'm very pleased that so many people joined our invitation here in Basel. I personally prefer face-to-face meetings, but also a very warm welcome to everybody listening on the conference call. Who is here in the room had already the chance to hear a little bit to the Latin American-Brazilian rhythms, the music. We will come later to this. I started four and a half years ago as Fabian, four and a half months ago, as Fabian mentioned, actually on the 4th of November with Medartis. After 17 years with Straumann, and out of these 17 years, I did 12 years in Brazil in Curitiba as the CEO of Neodent and responsible for the Latin American business of the Straumann Group.
I think I can give you from the bottom of my heart some insights what means the value segment, not only for dental, but also for orthopedics in the future. What was my first focus? I spent only a few days in Basel when I started in November and immediately visited our U.S. organization for two reasons. First of all, of course, I was advised and informed about the challenges in the U.S. I wanted to see what's about Warsaw, what's about the team we have in Warsaw, what is this nice production facility we have in Warsaw, how is the vibe, feeling the people, but also meeting customers. The second reason was, which was very important for me, to feel the culture in Warsaw because I already had initiated in August the search for our new U.S. President.
I wanted to make sure that he fits culturally in this organization and has a strong commercial background. I spent November most on the road, really listening, listening, listening, learning, learning, learning. I have seen surgeries. I was surprised that this is not worse than what you see in dental surgery. It was very good and eye-opening. I also tackled immediately in the U.S. during my first visit the setup in the U.S. in our U.S. organization, where we had 50% of our distributors. We have currently 57 distributors. I will come back to this later, where 50% work not exclusively with our products, especially in upper extremities. I knew immediately we need to tackle this. We should not lose time. I initiated this already before the new U.S. President started.
Coming back, my next trip was to Geneva, stopping on the Hand Surgeon Congress in Lugano, meeting a lot of surgeons, which was eye-opening, fantastic, especially Swiss and German surgeons. I visited KeriMedical because I needed to understand this business and to get my hands around what does it mean, what are the opportunities. I visited also surgeries for KeriMedical and getting really bounded with the owners and founders of KeriMedical. This was a little bit my first two months until December. Now we are coming to the key figures. What we reported today is a core revenue growth of 11.7%, which brings us to CHF 224.8 million sales for 2024 with a very well-managed, Dirk, congratulations, EBITDA margin of 19%. I would like to point out that for me in the future, and Dirk knows it, growth has to come with profitability.
I think this is very important for Medartis going forward. Yeah, then we announced, and I will come back to this later, our acquisition of 51% of NeoOrtho, a Brazilian value player, which is a lot of history coming back, and I will explain to you later this. Yeah, located in Curitiba, Paraná, Brazil. I can confirm that the growth story will continue for Medartis also in 2025. As said, I started the search of the new U.S. President in August, even before I joined officially Medartis as the new CEO. We found with David Thoni a person who is really a leader. He is a fantastic human being. He has proven this in several industries. Do not take it only because he worked a time in dental. It's not all bad what's coming from dental.
I think it's also good sometimes that we have a fresh mindset and taking it from a neutral point of view. He is exactly the person the U.S. organization with our 140 direct employees needs, a leader. You can imagine one year without a leader in the U.S., it was quite difficult. I was surprised how motivated still this team is and committed this team is in the U.S. After two months already, because David is now two months on the job, you see the first results. He's in the market. He's with the surgeons. He has a strong connection with hospitals and ambulant surgery centers. He is on top of our distributors and driving what I have initiated already with the team in November, this transition into exclusive distribution, at least for upper extremities, which is key.
Because imagine if a distributor in our core business of upper extremities is coming to the surgeon or to the hospital and has various systems. It is like you can select what you want to use. This is for me and for my team a no-go. Please go to the next chart. I call it one team because I truly believe that we only as a team can move Medartis to the next level. What has brought us to here will not bring us to the next level. Therefore, I am very happy that I have not only highly committed and motivated and engaged, but also professionally a fantastic EMB. I will not go through all the names, but what is the main difference now is that the U.S. is part of my EMB and David Thoni joins this. Yes, we have two other regions, APAC and LATAM.
When they reach the critical size, it is foreseen that they are also part of the EMB because as a team, we have to steer this company and there the regions have quite an important function. EMEA was our key growth contributor, as you see on the reconciliation of our core sales. We are declining on the custom manufacturing, also on the third-party manufacturing in the U.S. This was clear, and I think this was announced throughout the last year. This was the former NSI production, which is now becoming more and more a Medartis production. We will finish the last production for one of our third-party companies throughout this year. My congratulations, and I'm very happy with a fantastic EMEA team. I had Mareike sitting there. I had a chance to meet the entire team during our January kickoff sales convention. Fantastic.
I can learn a lot from this team. They rocked it again, and they will rock it again in 2025 because we have huge opportunities also in EMEA. You will ask me maybe in the Q&A session, is 17.3% enough? Maybe not, but it is what it is for last year. I have to give credit to this U.S. team because in very difficult circumstances, they managed this, as I said, without a leader. We had our APAC region. We can also move to the next chart already, where we have the figures here. Our APAC region, which has suffered a little bit, especially in Australia, because Australia is too certain of the business in APAC. Our regional management is also sitting in Brisbane from price cuts over the last years.
I think you know this. This was also announced. There were price cuts, first 5%, then 10%, then another 5%. This we still feel the impact in the first half of this year, but we do not foresee any further price cuts for 2025. This means that APAC also will come back to growth. Latin America, totally disappointing, but also here. I know the Brazilian business very well. I know what happened here. There was a change in the insurance companies in Brazil, especially for the premium companies. You know that premium, this is more for private hospitals. This is more for patients with different insurance companies. In São Paulo, for example, the biggest region in Brazil, in the first six months of 2024, they nearly did no business. There was no chance for Medartis with a premium brand to go into these hospitals.
I will come back to this later. This is one of the reasons with the value strategy, with an ample opportunity not only in Brazil, but also in Latin America. With the performance of Mexico, I'm happy. I think Mexico is in line what we could expect, but the biggest impact was coming from Brazil and here from the premium segment. With this short overview, I would like to hand over to my dear CFO, Dirk, with the financial review. Dirk, please, the stage is yours.
Thank you, Matthias. Good morning, everybody here. It's the first time we all meet in Basel. I am very glad to welcome you also here in Basel and I hope I got a stressor.
I am happy to lead you through the figures, through the technical figures, through the financial figures over the last couple of minutes, over the next couple of minutes. Page 12, I think Matthias has already explained shortly sales, which was 11.7%, is slightly below the expectations, also our own expectations, which we said in the first half of the year. On the good side, we have a stable or slightly improving gross margin, which was at 82.8% for what we call the core business. I explain that in a couple of minutes, but also for the reported business, it was almost 80%. We have, especially in the time of the CEO change and the transformation phase, and also before the background that we did not know how the top line comes in. We were cautious on spending. We were very prudently managing also our costs, especially in headquarters.
The result out of that is that we are announcing a 19% EBITDA margin for the core business or even slightly more for the as reported business. I will lead you through this. The EBIT margin was almost 10% with 9.5% for core, also strongly improving versus the prior year. Most important thing for us is also we've always said that we want to finance our growth internally as much as possible, that we improved our cash flow. Cash flow has increased for CHF 20 million. As of the end of last year, we had CHF 140 million, almost CHF 140 million sitting on the balance sheet and with that one also being prepared for the acquisitions to come. Maybe to go on page 13, which gives you an overview about the gross margin.
I'm not going to go through all of the figures, but the two black bars and then maybe the middle in between is important in general, I would say. We had a very high price discipline. We had the special impacts, which were from Brazil. Matthias will talk about that, but also Australia, where Matthias has already explained that we had additional price cuts, another 5%, which was planned, but then also up to 30% on selected products, which happened without any warning and without any announcement before at the beginning of last year. They also led to lower than expected sales for Australia and with that one also to the need to correct the Asia region. In general, I would say that the pricing discipline has been very good.
We even increased prices also in line with innovation, with new products, and we were able to hold the price, the overall price impact for the gross margin. What you see here is a negative -0.5% for Keri, which is a pure technical number. Currently, keep in mind, we are a distributor of Keri. Our margins are around 70-75%. As we are only a distributor, once we take over Keri, and we'll talk about that in a minute, the margins will go up. This negative, this dilutive effect will disappear again, and we will show you margins which are even slightly higher than what we have. The core margin of Keri is above 80%. Once we swap to the other model, then with owning, fully owning Keri, this will disappear again.
Most importantly, very proud that our operations team led by Mario Del la Casa, who is also in the room here, they have gained further efficiency. That was in Basel, also with insourcing some work and some products also, but also with reaching higher capacities, using the or utilization of the capacities, and then also making some first improvements in Warsaw, which we acquired within the NSI transaction two years ago. There we have a positive impact, and the sum of all the things then increased our gross margin slightly to 82.8%. We'll not talk about the non-core elements, but give you an overview about all non-core things in a couple of minutes.
If we go to page 14, there you see the EBITDA development, which increased almost three percentage points, led by the gross margin improvement, which I just explained, and then also by the cost savings. Now, the cost savings I should comment on have happened, especially in headquarter. We were very cautious when we saw that the second half of the year is coming in softer than what we expected. We have continued to invest into the regions. We've spent a lot of money for Japan, by the way, where we decided to go direct from an indirect business model. We kept our commitment also to Australia, where we continue to spend also because we believe that the market is there, and once it recovers, also after the price cuts, we will see the growth again.
Actually, we grew a high single digit or even low double digit on a volume basis in Australia. In the U.S., we gained some first profitability improvements after the NSI acquisitions, but still we are committed to spend continued money into the U.S. for the sales force development, then also for Keri when it comes for the preparation of KeriTouch. Matthias will talk about that. We have been cautious in spending on Latin, as we saw that the Latin market comes down and now have a different approach also to go forward. With that one, cost management has been very balanced. Europe has also received additional money, also additional sets, and we try not to kill growth, but be a little bit more conservative on our headquarter and on the function side. With that one, maybe going into the next page.
Yes, there has been feedback in the half year that we should show you a more consistent and more transparent picture about all the what we call the one-off factors or the adjustment factors. What we did and what we're introducing right now is a fully fledged APM, Return of Performance Measures system, which shows you how does the IFRS accounting look like and what's the reconciliation towards what we call core. I'm not going into all of the details, but let me just lead you through the three main columns here. We reviewed the NSI transaction, the potential sales, especially also from LapiPrep, and we concluded that we should make an adjustment. This adjustment now leads to an impairment on intangible assets, which is about CHF 18 million.
On the other side, on the other hand, we had a milestone which was related to sales, which goes along also with a contingent liability, which you have to build under IFRS accounting. This contingent liability was released that leads to an income of CHF 6.9 million. The result of that, or the combination of both effects, is then the CHF 11.9 million, which we adjust for because it's a one-off factor. Also, we are taking off everything, the entire P&L, which is related to the non-core business, the third-party manufacturing business, which we acquired with NSI. It's a business which is fading out for third parties. We just use our capacities, which we have in the factory, and all of the costs you see here, even including a write-off of old inventory, which we can't use anymore, which goes under the gross margin.
On the other hand, on the right side, you see the combination of all of the other factors. On the positive side, I should mention CHF 4.8 million, which we received from an insurance to cover the IT hack, which some of you may remember in 2023, the cyber attack. On the other hand, we had some extra—sorry for that. We had some extra costs which are related to the CEO change, but then also to the change which we had in Japan towards a direct sales model. These are summarized here under the CHF 2.7 million. If you go from the left side to the right side, you get into the 19%, and that compares against approximately 17% from the previous year.
If we go to the next page, which is then 16, shows our net result, which if you take out the non-core items, which I just mentioned, is now CHF 11.4 million, strongly improved versus the year before. It also includes a—I would call it even a positive impact from the finance result. We did not have any negative impact from ethics, which is the first year after the last few years, and also managed tax very prudently so that we even have a tax income. That leads now to a 5.2% net margin, which of course we are committed to increase and to create in the future, but it was already a strong improvement versus the year before. Maybe on the next page, on 17, the cash flow, where all the things come together, the operational margin, which has become better.
We have improved our accounts with serial management, especially towards the end of the year. We're very tight in our management here. We have continued to invest into sets, especially for the new products for MODUS 2 on CMF. We've spent a lot of sets also for Japan to build that up, continue to spend sets for the U.S., and with that one, also build the basis also for future growth. We have been cautious on the CapEx side. All that together leads to a margin of about 6% free cash flow margin, and that one should also over the next couple of years continuously and gradually go up. At the end of last year, we had CHF 140 million, almost CHF 140 million cash on our balance sheet.
That prepares us now to finance the acquisitions to come, both KeriMedical, which Matthias will allude to, and then also NeoOrtho, which we announced this morning. I get back later to the NeoOrtho structure in a couple of minutes. Thank you.
Yeah, thank you very much, Dirk. Yeah, now we might come to the part you most probably are waiting for. I've heard this since my first day. Everybody is expecting your strategic direction, let's go to the next chart. I truly believe in a strong culture, that the culture is a foundation of everything what we do. Therefore, I started already in February with my EMB and my extended EMB, which I call EMG, EMG, my direct reports, and high performance team workshop, where we put the customer in the middle of everything we do.
This is maybe one of the main differences if you compare to the past. We have only a right to win and a right to survive. If we do what our customers, and our customers are different ones. We have insurance companies, we have surgeons, we have hospitals, we have ambulance centers, but we have many areas in the company. They have internal customers. We need to do what they expect us to do. This is around this it, y, and e, the business, the I, the person itself, the we, the team. I truly believe when we speak about the team, that agility with empowerment, bringing back the fun and passion in Medartis. This fun, this passion, wherever you are working for Medartis around the world, you are coming to the job and you know you are doing good things for the patients.
You're bringing back quality of life. You're bringing back mobility, or like we said it in our workshop, Fabian, re-enjoy life. This sounds simple, but this is not simple because this is a process. This is a lot of workshops with a team. I'm so happy that after four and a half months, I already feel, I call this this vibe. If we have this commitment, we can focus on our main goals with this innovation, coming up with meaningful innovation. Meaningful innovation is not only the next screw in the new plate. Meaningful innovation, and I'm mentioning it here, is also our entry into the digitalization, into the service for our surgeons and for our hospitals. It is also the way how we communicate with our partners and customers, starting this transformation, this digital transformation. This goes to digital planning in the future.
This goes into patient-specific products, which I come back. In the middle of everything is the education. I truly believe that the education in our industry is a foundation. We see it now with the preparation of the KeriTouch launch in the U.S., that education is key to become successful in the future. This brings me also to a point that we are revamping our partnership with IBRA. We have with IBRA, the International Bone Research Association, a partner on clinical scientific-based, which we could use much better in our future education activities. If I should take three points out of these dots, I would say it is agility, it is empowerment, and it is passion. Our focus in the future will be literally from head to toe.
This will not mean that we will change our product categories or that we will step out of one of the categories. What I show here is that CMF, the head, is our legacy of Medartis. Medartis was born with CMF. Medartis grew up with CMF. We have so much know-how in this company. It is amazing. People, 15, 20 years working with Medartis, and they know all about CMF. Here also we have a right to win. Of course, in our upper extremities, where we have the chance, and I explain it to you, to become a global leader. Of course, the lower extremities with foot and ankle, especially as our growth accelerator. I'm asked many times, Matthias, but focus on the fastest growing segment. I have to tell you, this is irrelevant.
Because if you see an 8 billion opportunity in an addressable market worldwide, we have a green field of opportunities to grow. Yes, it is true that lower extremities and foot and ankle, especially, are a little bit faster growing than the upper extremities. For us, this is irrelevant because we have chances in all areas, in CMF, in upper, and in lower extremities. On the left side, you see how our CHF 225 million are distributed last year in the different segments. Already today, hand and wrist, which is the segment of Medartis. This is the complete portfolio Medartis has, and it will become much more attractive in the future, is counting for more than 50%. What you also see in this chart is how important already become KeriMedical for Medartis.
I am speaking only KeriMedical in the three countries where we are distributors of KeriMedical, which is Germany, Austria, and the U.K. Speaking about CMF, I call it refocus on our foundation. It is not only our legacy. It also shows a clear trend to personalized solution, especially for tumor patients, for cancer patients. We have a fantastic, we call it CMX team already here in Basel, which is a digital team designing patient-specific reconstructions, not only for CMF, but also for upper extremities. I truly believe that this is our spearhead into the digital transformation and the digital transformation for the whole company, where we have to embrace all our employees to get on the train.
If I compare it a little bit with other industries, not only with dental, but with other industries, I would say that the orthopedic industry is still in a slow phase of digitalization. We have the chance to do it right now. We are not by no means late into this. We have to leverage our knowledge. We have extensive knowledge in-house for CMF. In the U.S., we are currently preparing the FDA registration. I expect this by end of this year, but it doesn't matter because we would not launch at the end of this year because we have to fully focus first on the KeriMedical launch in the U.S., and we have really to choose where to focus. CMF in the U.S. will come in 2026. CMF is also a market where you have only a few of those big players playing.
I call them the elephants. It is nice to play with the elephants because we should be by definition more agile. I truly believe this is one of our chances for the future, and we have already a very nice CMF business in EMEA. By the way, a very good CMF business in Japan, for example, also with patient-specific designs. Next chart. As I said, hand and wrist, not only distal radius, but we have the most comprehensive portfolio in the industry. This is at least what I figured out speaking with surgeons, speaking with hospitals, but also getting information from competitors. This hand and wrist portfolio with KeriMedical coming will be extended with this new opportunity to solve this risk at rose for older patients. When I speak about older patients, it starts with 50.
I truly believe that with 50, we are not yet too old. One good thing is that starting 50, you can get it. Up to 80-85 years of age, people today like more and more to have mobility. This is good, and this is the opportunity for the future. We launched already. We are in the preparation of the launch for our new hand system two, we call it. After 20 years in the market, the Hand 1 will be renewed. This is an innovation. We have, as I said, the digitalization already in hand and wrist as well, where we design patient-specific elements when needed in very difficult fractures or in very difficult patient situations. KeriMedical is not only active in Europe.
We already launched KeriMedical in Australia, and we are expected the final clearance from FDA by end of June, July. You never know this exactly, but I can tell you that with a strong relation we have with the KeriMedical team already in Geneva, we have insights into the documentation. We are on good track. June, July should come. We are already preparing the setup for the U.S. I will come back to this later. This opened us new doors. In parallel, once we have finished the FDA clearance, we are starting the registration of KeriTouch in other markets, for example, in Latin America, in Brazil. Speaking about KeriMedical, this is an education-based approach. It is key that you train the surgeons before they do the first surgery. KeriTouch is a patient elective procedure.
It is not, and this is a big difference to trauma. It is not when the patient had an accident, skiing or whatever, that he's in the hospital. Normally he's not in a condition to say, "But doctor, please, could you put me a Medartis plate?" He takes whatever the surgeon puts. Here with KeriMedical, we drive patients to the doctors. As I said, patients are becoming older. They are not so shocked with the surgery itself. It is done already in ambulance centers. It takes around 30-40 minutes, and the patient is walking home after the surgery.
I have spoken with patients, but I have also seen videos that patients after eight weeks after surgery, they are playing in a band the guitar, or the most severe case for the patient in Germany, she is a member of the German Olympic team of judo. She, after eight weeks, had a judo competition. This is, with all other procedures in the market, the suspension plasty procedures, impossible, where the patients need six months to one year to recover, and then they still have problems to move the thumb. You see, I'm becoming a fan of KeriTouch because I really understood that the thumb is the main mobility for the force in your hand. I can imagine that patients, and especially in the U.S., in Nevada, California, in Florida, playing golf, or even doing simple things like opening a bottle of water, are suffering.
We have patients in Switzerland. They came back to do the second thumb. Big hopes if we do it right with the education approach for KeriMedical. As Dirk mentioned, we are only reflecting at the moment before the acquisition, the sales of the three countries where we have it in Germany, in the U.K., in Austria. What is the fastest running country in Europe for KeriTouch is currently France. Fantastic. Dominating the market in France. Next chart, please. This brings me to our strategic priorities. As I said before, all towards the customers. The customers are in the center of what we do. The base of everything is a high-performance culture with a high-performance team. We have six strategic priorities, and this is not the priorities how they are listed.
Accelerate the U.S., KeriMedical, our newly valued strategy, regional share gains, because I truly believe that in all regions, even in a region fast growing like EMEA, we have ample opportunity to increase our market shares. Innovation and digitalization is one of our key priorities in the future. Dirk will continue, like he has done in the past, to maintain our profitability and improve our cash flow. Now coming to the acceleration of the U.S. As I said, we have 140 people working at Medartis in the U.S. Most of them are sitting in Warsaw, Indiana. This is not the middle of the world. I do not know who of you here in the room were already visiting Warsaw. It is a very nice city. I was surprised. It is not easy to get there. It is a two and a half hours drive from Chicago.
It is a place where you get the most qualified people also for the production. I was told, and I have seen it, it is a Mecca of orthopedic industry. Therefore, we have a lot of people also located in other states of the U.S., and not everything is in Warsaw. Our production unit is Warsaw. Our back office is in Warsaw. We have 57 distributors, which counts for around 280 people on the field. We have also some direct sales force, but mainly the distributors. As I said, we started already in November to have, especially in the upper extremities and here in hand and wrist, distributors exclusively working with Medartis. Only with Medartis.
Now you can say, "But Matthias, why this was not done in the past?" Because in the past, they were afraid that this will have an immediate impact in the business when you exchange distributors. We started to do it in November, step by step. We are 50% through the exchange, and we will end up this by June. The impact was limited. I see very good results in the U.S. Yes, it is a logistic effort. We have to change surgical cassettes. We have to train the sales rep. It's a kind of investment, but also a logistic effort. It makes totally sense. The upper extremities, as I said, will also be in the U.S. now a clear focus. Dirk already explained a little bit what happened with the acquired NSI products. I'm not looking back.
I have to realize that we have to focus our work, our spendings, and our efforts on the things which make sense. Not only business-wise, but also in the regions where we can be more successful. We by no means, with 280 people in the field and 140 people in the organization, we can play everywhere in the U.S. This brings me back to our KeriMedical launch in the future, where we really have to focus first on the key areas where the majority of the patients is sitting. Next chart, please. Our value strategy. The LATAM orthopedic market, and now let's focus first on LATAM . It's around CHF 600 million. We know, and we did our homework, that already today, 75% of this market is value. 75% of this market is not addressable for a premium player. I mentioned it at the beginning.
This was one of the hurdles last year, where we as Medartis with a premium product had problems to get into the private hospitals due to this insurance change. This value segment offers us new opportunities, which we never had in Latin America. First in Brazil, then in Colombia, then in Mexico, in Chile, and later in Argentina. Do not be shocked. Argentina is a quite interesting market, and it is coming back. I experienced this when I was criticized that I am bringing good money from Switzerland to a bad economy in Argentina, but it paid off over the last 10 years. It is a gold mine, and it is the second largest market after Brazil. This comes at a later stage. We have also a local production footprint, a state-of-the-art production. I will show it later.
Now with the acquisition of NeoOrtho, which has much easier access into Latin America, you bring produced products, Latin American products under the Mercosur umbrella into the markets of Latin America with much lower or non-taxes. We have shortened ANVISA clinical pathway as a local manufacturer in Brazil. ANVISA is the registration, and ANVISA is cooperating pretty, pretty close with the FDA more and more. We have seen it already over the last two years that then it facilitates to get the FDA registration if you are well registered with ANVISA. We have a super technical team. We have a very qualified team, which we get from NeoOrtho on board. Next chart, please. This is the new state-of-the-art production facility. You might see in the logo that we are bringing back the purple from NeoOrtho. NeoOrtho, as Medartis, there are a lot of parallels.
NeoOrtho was founded within Neodent. As Medartis was founded within Straumann, with a small difference that NeoOrtho only was separated from Neodent in 2012 because this was before the company was sold to Straumann. The company is specialized in trauma, CMF, and spine. Yes, spine. They need the spine business in Brazil for the public tenders. This is just a portfolio extension. We do not intend to launch now spine for Medartis or to bring the spine business forward in other countries to NeoOrtho. For Brazil, it is quite impressive. It is quite important. Still, most of the business is done in trauma and CMF, and as I said before, NeoOrtho coming out of Neodent, they are highly specialized in CMF. We will have a dual brand strategy. We will not mix it up.
We will have a commercial team selling premium, and we will have a commercial team selling value. This is what I have experienced over the last 12 years, which works. No cannibalization until today. We have, of course, opportunities on the back office side, on the finance, HR, administration functions, logistics, supply chain out of Curitiba, and we will use those opportunities. We are acquiring a state-of-the-art production facility, which is under full construction now. They are still in the old facility. The move is planned for October, November this year. We are getting 198 new colleagues. About 80 of them are working in production, and about 30 of them are in operations and logistics. We have now the opportunity to implement a multi-price strategy.
Normally, we could say, and this is again from my experience, that in the implant, a value implant in the dental business, a value implant is 50% cheaper than a premium implant. Today, in orthopedics, what we see, the price difference is 35%, but it might come to 50%. Therefore, you have no chance. As a premium player, just to drop your prices is not a value strategy. This is very dangerous and should not be done. Yeah, we have with this acquisition the opportunity to go outside LATAM in the future as well. This comes in a second part, not before 2028. I think we have a lot to do, first of this. We will acquire an initial stake of 51%. Would you like to explain it, Dirk?
Yeah. Can you hear me? 51%, that's the initial stake.
There's a plan to acquire the rest within the next four years, so until 2028-2029. We consolidate the business, most probably as of 1st of May. That means the closing is expected to be by the end of April. From then, we will get the entire sales into the P&L, of course, also the cost and everything. There's a clear path, as I said, also towards 2028-2029, where we will get the rest of the shares, the remaining 49%. I should say that if you look at the 2024 figures, NeoOrtho is accretive compared to Medartis, so it will not have any dilution effect, which is going through our P&L. I should mention that the transaction is already pre-funded. We have money sitting on our bank accounts. We have additional bank lines.
We can do the first step, which is not the biggest acquisition per se, and execute or hope to execute that then by the end of April, early May.
Super. Thank you very much. Here's the final picture. These are the 198 new colleagues. I will be with them next week on Monday. We will start the project. The project name is called Fusion. I will have a project leader doing this. It would not be myself. I did it once. Now I give it to a project leader. I am very forward-looking that NeoOrtho, with no doubt, will be a great, a great, a great partner for Medartis and will drive together with us our future, not only in Brazil, not only in LATAM. APAC. I mentioned already the reimbursement price cards. You see here our new general manager for Japan.
I think it makes sense in Japan. You might agree with me to have a Japanese country manager who speaks Japanese. This was one of the first things we did. Can you now start it on the 17th of February? Really early. He has quite some things to do because we are moving from distribution to direct business. This is a process which already continued throughout the last year. We had some leadership issues in Japan. Now with Kenyu, we have also the right persons here and also the right communication within the organization. I expect that this transition will get speed. I'm not worried at all. Still, two-thirds of the APAC region is Australia, where also our regional headquarter is sitting.
We are in parallel expanding the product offering, sterile and non-sterile options to be really flexible for what the customer in Japan needs, the surgeon and the hospital in Japan. We cannot just believe that they have to work with what we have and what we have to offer. No, we have to adapt what really the hospitals in the different countries and regions need. As I told you in the beginning, I'm very happy with the performance of our CMF business, which is driven through a distributor in Japan, a dedicated, again, when you have a dedicated distributor, it is okay. If you have a distributor who is like a wholesaler, then it's not working out. Therefore, the CMF business in Japan is really something we can build on also in the future. With this, I'm coming now to the Outlook 2025. Upper extremities, a clear focus.
When we go to the elbow, we have with the Aventure system now, especially for the U.S., an opportunity in very severe fractures for the surgeons. Decide on the spot when the patient is already on the table if they use plates or if they use the Aventure Radial Head System. Why is this so important? Because the surgeon, when a patient from an accident comes in, he doesn't know how it looks like when he opens the elbow. Then normally they decide for the safe procedure. They take a system where all the opportunities are on the table. Now we have all the opportunities, and this gives us a good step into the elbow surgery in the U.S.
The other new elbow fixation is our dorsal olecranon, which is, yeah, as typical for Medartis, this is the new plate with a fantastic anatomical design, an option which the surgeons were waiting for. They wished it. It's coming as an innovation from us with extended exchange with our surgeons for trauma surgeons especially. It's now in the launch phase. We have our new hand generation, Hand 2 , which I mentioned to you, which replaces our Hand 1 generation after 20 years. I would say our Hand 1 generation is still fantastic. I mean, I'm not a surgeon, but when I see the two systems, I say, wow, wow, after 20 years, we still have a super system.
We are coming now with a Hand 2 system, which is with good results in the current limited market release, especially in the European region, in EMEA and the U.S. Last but not least, CMX, the portfolio includes now patient-specific treatment options across all segments, not only CMF, but also upper and lower extremities. I truly believe that this is coming more and more in the future, that for severe cases or for surgeries, for example, these cancer surgeries, the hospital or the surgeon is planning in advance, that he is planning for a patient-specific solution. We are quite fast with those patient-specific solutions. They get it within a few days, so it does not take weeks.
I truly believe also, speaking with our team, they are all, they are digital masterminds sitting here in Basel, that we can expand this also to our other regions in the future. Our outlook bearing any unforeseen circumstances, an organic growth of 13-15% core sales and core EBITDA margin in the high teens range, continuing our operating leverage and the cost discipline, which was perfectly managed also last year not only by Dirk, but I would say by all together, my EMB. Fabian, this was it from my side. Was I too long?
It was okay. Matthias is not just bringing back me personally. He is also bringing Purple and the passion back to the company. I can tell you, you can also feel the vibes in the room. That is very contagious. Now moving seamlessly to the Q&A session.
I'm sure there was a lot of stuff presented by Matthias and Dirk, and there will be questions. We will, as always, tackle the questions in the room first and then move on to the Zoom line. Anne-Catherine has the microphone, so probably the people here in the front have the most questions, but I invite everybody to ask their questions. Just a technical point. If you on the Zoom line want to ask a question, in the emoji section, there is, because we talked a lot about the hands, there's also a nice hand. Click on it, and we see that you would like to be, like, ask a question. We call your name, and then please open up your microphone and your camera to go ahead. Thank you very much. The first question comes from Sandra Künzle from Bank Octavian.
Thank you.
I have first a question on your sales guidance, so the guidance of 13-15%. Could you provide a bit more color on the building blocks behind that guidance, and what would it take to reach the upper end or potentially even exceed that guidance? Is that all dependent on the acceleration in the U.S. or, yeah, just your thinking behind that range? Also on the U.S., you have a clear focus to accelerate the growth in the U.S., and you explained that it is on one hand the focus on the upper extremities and then the change in the distributor channels. Are these the two main things you have to tackle to accelerate the growth in the U.S., or are there other things like access to hospitals, etc., where you have still some challenges to really accelerate the growth?
Maybe if I may, accelerate means already this year, we can expect a higher growth in the U.S. than the 17.3% you have achieved in 2024, or is that more a midterm outlook? Thank you.
I would not have expected from you a different question, Sandra. Yeah, no, bear in mind that I'm four and a half months, not years, months with the company. I truly understand your question. I feel totally comfortable with the guidance we give today because we have currently the distributor change in the U.S. still 50% running. Yes, it went smooth with the first 50%, but I have to see together with David how this runs for the second 50% of distributor change. I believe that the other regions like APAC and LATAM are slowly coming back. I would feel very comfortable, and I'm used to deliver.
I'm shying away from over-promising and then not delivering. I think this is the worst what can happen. Therefore, let me come back when we see each other again in August with the half-year results. I have a good feeling also how the distributor change in the U.S. worked, how our KeriMedical further expansion in Europe works. You can ask me the question again. For the U.S., it's not only the upper. Yes, we are focusing on the upper extremities. We are planning the introduction of CMF in 2026. We have a huge upside next year with the commercialization with KeriMedical, which will be only education this year, but we are preparing then the sales of KeriMedical next year. We are not only changing distributors, Sandra, we are also focusing on regions in the U.S., as I said.
The U.S. is so huge that with the people on hand we have currently in the market, you cannot attend everything, and you get lost. We really need to get the hands around on the big centers. We know, for example, that hand surgery, Northern Florida, Orlando, and Tampa, I was there. Those are the big, big centers, and we were not present. We have to get in. This is personal contact. This is what David, for example, knows by heart. This is now what he is transmitting to our regional sales managers. We need to be very close to the customers, opening doors because everybody in the U.S. knows Medartis. Guess what? They have a very good opinion about Medartis, Swiss quality, innovative, fantastic screws. Everybody loves the screws, and they hate our customer service. I have to use this word.
This we have to change. This is not rocket science, but it takes time.
Great. Thank you very much.
The next question comes from Daniel Jelovcan from ZKB, that stands for Zürcher Kantonalbank.
Thank you so much, Fabian. Just three questions for the beginning. The Hand 2, I mean, in general, the Hand 1, I guess, is quite a meaningful franchise within your hand and wrist portfolio. Is that a correct assumption? Does the Hand 2, I guess, an old surgeon will not change to the Hand 2 when he used the Hand 1 for 20 years? Or, yeah, is it also a certain cannibalization, or do you get new customers? Maybe I just take this first.
I would not say this is a cannibalization, but I would say that we have new plates in the Hand 2. We have plates with a hook.
Now, again, I'm not a product specialist yet, but they explained it to me how it works. Also, older surgeons, Daniel, I don't know how you define older, but let's say the more experienced surgeons, they love this new blade with a hook because it facilitates them the surgery and how they put the plates on. Yes, I would say that definitely this Hand 2 is a quite good door opener also for the U.S. For EMEA, our hand and wrist portfolio is already strong. We have quite some good market shares in Europe, and this will, I would say, on top, push our presence in the ORs, in the operation rooms.
Maybe, Daniel,
The second question.
Daniel, before you move on, because we also have the luxury of having our CTO in the room, I will hand over the microphone to him so he can give you more technical details.
Thank you.
I am not going to spend a lot of time on it, but I think it is a fair question. The idea really is to build on what we have. It is not a complete changeover. We are removing some of the plates that are used very seldomly, even some are not used at all. We are adding plates that were requested that we learned throughout the experience. There is a conversion. It is more an upgrade for existing customers.
There are many aspects that are not so spectacular in a discussion like this one, but just the fact that, for example, as a hospital, you can configure the plates you want in your system. It is a huge differentiator for the hospital. It is an advantage for us as well in our supply chain. Adding instruments. We often talk about implants, but the instruments are even more important because they help you put the implants in. It is really keeping it fresh and building on what worked in the past.
Thanks so much.
Thank you.
Second question, Australia, I mean, the price cuts, they are there for, I even remember from my synthesis times, they are there since a very long time. How does it progress in the future? I know you have no crystal ball, but maybe you know it better than us.
For this year, we expect nothing, but Dirk, you can explain since when it started.
Two years ago, it started with 10%, and it was always starting in July. Then we had another 5%, which was last year, and then another 5%. Altogether, you've seen the market coming down, the price cuts on an accumulated basis, which is more than 20-25%. What has come on top of that was that selected products, beginning of last year, it was announced and it was executed 1st July last year, were reclassified, and as a consequence of that, there were additional price cuts of up to 30%, between 10% and 30%. Is this finished? We expect it to finish by July this year. Also, the comparison basis gets better, and the volume impact shows also, or the volume growth will tend towards value growth again.
Hopefully, it's finished by then, 1 July.
In the future, did the government indicate something?
We're not aware of any, and we should hope that it's finished by now, yes.
Daniel, because
I should also say we're coming from a very, very high level. It has adjusted a little bit towards other countries, but we're starting at a very, very high level with margins on a gross margin basis, which is much above 90%.
Maybe if I can add just to what Dirk said, you know, the government realized that there's a big, quite a significant gap in pricing between the public and the private market, and they wanted to bring these price points together. That's why they implemented free enforce so that the industry has time to adapt to it, you know, in three steps. That was communicated well in the beginning.
Now we're at that moment that we do not expect any further price cut.
Last question. I mean, how do you convince a U.S. distributor to go exclusive with you? I mean, if I would be a very good distributor with a broad product portfolio, I would say, yeah, sorry, but I would lose 80% of my business. How does that work in daily life?
First of all, the distributors know and anticipate that Keri will come. This is for them quite interesting for the future in hand and wrist and upper extremities. This is one thing. The other thing is that they understand that we have the most comprehensive portfolio in this area. Young distributors, this is also an advantage what I have seen.
Sometimes smaller distributors, which are not working with 100 sales reps, which are more dedicated, and the market is becoming quite competitive. If a distributor, because there are two different surgeon types, lower extremities and upper, if a distributor goes to upper and sees opportunities, then he sometimes is also stepping out of the lower extremities, which is even becoming more complex with the latest acquisitions in the U.S. market. There are quite some distributors interested in our portfolio.
Good. We move on to Sibylle Bischofberger from Bank Vont obel.
Thank you very much. I have a question also on the outlook 2025 with a core EBITDA margin of high teens. First, what is high teens? Is it 17-19%? I would like to understand the building blocks of the development of the margin.
With 19% EBITDA margin in 2024, this means it could be a decreasing EBITDA margin. Does it have to do with the less investment due to the management changes, or what are the reasons behind?
Thank you, Sibylle. Okay, thank you very much for the question. Yes, we would assume 17-19%. I think that's a fair assumption. High teens. I'm looking at this more from a strategic perspective. I must say very honestly, we came out slightly higher than expected with 19%. It could have been also 18%. We were cautious when we had the half-year figures, and we took back some of the investments, which are now moving into the next year. That's right. It's delayed investments. The other thing is whether it's 18 or 19, for me, honestly, is not so important. We need to do the right things. We need to invest into the countries.
If then that compromises the margin in one year for a percentage point, I'm not really concerned. We will continue what we've done, which means fuel the U.S. We will put additional sets into the U.S. We will build up the sales force, the channels, as Matthias has said. We will spend money for the Keri launch, which comes now new, especially the preparation also for KeriTouch. That will cost some costs. Last year, you didn't have a general manager. Also, we had some other effects, which were slightly positive. Start with the 19%, which is the ambition for 2025. If it's then 18% or 20%, it's just the volatility around the number. We remain cautious, but we will not compromise the business, and we put money into especially where it drives growth.
Thank you.
The second question is about NeoOrtho and the acquisition. Could you give us any hint about the size of the acquisition? You said it's not dilutive. Does it mean dilutive on the gross margin or EBIT margin? Just to understand a little bit more
The size. We will inform you in six months' time when we also do the PPA. There's a purchase price allocation with all of the details. What I can tell you, it's been already mentioned, I think by Fabian earlier today, somewhere between CHF 10 million-CHF 15 million, CHF 10 million and CHF 15 million, not CHF 50 million. That's approximately the size. The company grows faster than we grow, given the underlying market development, especially in the value segment. Profitability was meant, or the accretion element was meant on the EBITDA level. If you look at the gross margin, they're starting with a completely different price.
They have gross margins which are somewhere between around 60%. I just want to give you an example, you know, how pricing comes together. If you take a distal radius in Brazil and you look at our pricing in the market, it's somewhere between $1,200-$1,400 as a starting point. You have the value segment, which is about $600. It's half of it. You have a lot of players which are left on this, and we would even call them cheap or eco or whatever, and it starts somewhere with $400, $300, $200. It's endless. It could be also $50 for a distal radius, something like this. Take the $600 as a midpoint, and if you calculate the margins, they're calculating very efficiently. You will have a margin which is not comparable to our margin, which would be about 80-90%.
What we will have going forward is efficiency improvements. Mario Dell a Casa has already been twice in Curitiba, also working together with the team in Curitiba on the new manufacturing plant, also coming up with ideas how we can drive the efficiency. I guess that we will drive up the margin, especially when we get to higher volumes and when we can expand also into other Latin American markets.
Just to add to this, I think it's very important also in the value segment, you need to have quality products. Therefore, yes, in markets like Brazil or in Colombia or Mexico, there are local manufacturers sometimes producing in a garage without even registration. This is not what we call competitors or market players.
You need to be really on the quality side, and you need to come from time to time innovating your system as well. Therefore, I think, yeah, makes sense. Still, we have a lot of leverage in the production facility to grow and to make the production also more cost-efficient.
Maybe a quick reminder for the people on the Zoom call. There are a lot of people there, but I have not seen any raised hands. There is a little heart symbol at the bottom. Click on it and then raise your hand so we know you'd like to ask a question. Now I'd like to hand over to Ed Hall from Stifel.
Perfect. Thank you. Just a couple of questions first on the U.S. and the CONMED acquisition.
From where I look, it looks like a further push to maybe elective procedures and with the touch coming in. Is this a broader strategy thing we could envisage in the next couple of years, maybe more predictable in terms of free cash? Maybe turning towards the sales force and looking at the large sort of hybrid composition of this sales force, how do we envisage this change as we go forward in the next couple of years? What is the sort of critical massive number of people in the field you envisage in the next couple of years? Those will be my first two questions, and I'll come up to the third afterwards.
Okay, Ed, thank you very much. Yes, definitely. I think KeriMedical is now our first entrance into this joint replacement. There are other options. Maybe this is important information for you.
If the acquisition, when the acquisition happens, we will maintain KeriMedical separate also to maintain their culture and their innovation, which is very important. There are some innovations already thought about. Yes, this is a very attractive market, as I explained, because it is patient elective and you do patient marketing. I think it is the first time in orthopedics that you start to do patient marketing. Again, a little bit parallel to what we have started in the dental five, six years ago with patient marketing, driving patients in. This works if you give the patients easy-to-understand information and you take away the fear of the surgery. From the sales force, it is not sales force itself. We call them field experts. The field expert, he has an education obligation. The field expert is not the person who is selling.
This can be done through, as I said, the distributor or sales agent. The field expert is there when the surgeon needs a quick call to check something. Is there when the surgeon does his second surgery and would like to have somebody standing. The field expert is not putting hands on the patient, but is there to help. We are building up now a small team in the U.S. We are starting with nine people. As I said, we are focusing mainly on the hotspots of Keri, which is California, Nevada, and Florida, especially in Florida with a lot of international patients as well. Together with ambulance centers, this is also another thing. KeriMedical is not a typical product in the U.S. for big hospitals because the patient is not staying. The patient goes to an ambulance center and goes home.
There we need to go. This is new for us. We are building up this team now really based on experts. The final number, Ed, I do not know. We really go and see what is needed, and then we go also with the expansion. At a certain point, this expansion is internally financed with the sales growth we achieve.
Can I build on this one? Hello? Can I build on this one? Just that there is no misunderstanding. There is no strategy change towards we focus on elective procedures only. If you look at hand and wrist, 60% of hand and wrist is trauma. The flagship product which we have is a distal radius. We will, of course, leverage that, especially in the U.S. where we have a lot of upside potential.
Also, when you go back, for example, into corona times, in corona, everything which was elective was hit heavily, whereas the trauma business, even on a lower business, continued. From a risk perspective, it makes sense to have both. We will, of course, continue also to work hard on the trauma business. Just that there's no misunderstanding.
Yeah, yeah, thanks. I only spoke about Keri. Yeah, yeah.
Perfect. That's very clear. Maybe one final question on tariffs. I appreciate this is a topic which yo-yos back and forth every day. The capacity in Warsaw, how much capacity do you have there? Can you produce in U.S. for U.S.? Any light there would be appreciated.
Honestly, I feel relaxed. Whatever the new administration is doing, we don't know.
I personally believe they will be a little bit careful when it comes to med tech products because it serves their own population. On the other hand, we are working on transfer prices. This deal can explain later. The impact, even if you would export everything from Basel, is not so big. Yes, we have a quite sized manufacturing plant in Warsaw. As I said in the beginning, and Mario is sitting here, we already installed the first two machines. The third machine is coming. We are producing already plates and screws. We are ramping this up also to have a second site beside Basel for the U.S. Although Swiss production is still very important, for the U.S., for the huge U.S. market, it makes sense to have utilized our very nice, it is not a huge, but our very nice capacity. We can ramp this up.
Yeah, we could do everything out of Warsaw for the U.S. without exporting anything from Basel. Maybe something on the tariff deal.
Add two data points here, two figures. A, we currently use less than 20% of the capacity which we have in Warsaw. There is huge potential. Warsaw could be only production for the U.S. only, or it could be production for, sounds a little bit strange, for the rest of the world. That is possible. Also, being present in Warsaw, we are also perceived as being an American player, not only as somebody who imports goods into. That is number one. Number two, if you look at the margins in the U.S., they are around 90%. The reason is because pricing in the U. S. is so much higher. Now take 10% COGS.
Even if somebody decides that you have 30% tariffs on top of that, it would be 13%. It would hit the margin three percentage points only for the U.S. part. That means that the impact in Europe and that is probably marginable.
Okay. Good.
There is a follow-up question by Sandra Künzle.
Thank you. I have another question on KeriTouch in Australia, where you mentioned that you have strong demand from both existing and new surgeons. Existing, does that mean that you are converting surgeons that are currently using the MAÏA prosthesis, or is this just existing customers of Medartis? In general, I mean, it is a market where you have a competitive product, which is not the case in other markets in Europe. What is the feedback there?
MAÏA, I do not know.
I think they are not everywhere registered yet, but it is our already existing Medartis customers who show interest. Then we get additional new customers everywhere through KeriTouch. Yeah.
Okay.
Sandra, we are, MAÏA is not in Australia already in there in the market. We are the first and we have a competitive advantage.
Oh, okay.
Also in terms of the entire reimbursement process and everything, we are ahead of MAÏA, with all modesty to mention that here.
Perfect. Thanks for the clarification. On the studies that are planned in the U.S. to support KeriTouch, can you elaborate on what kind of studies you are planning after the approval? Is the study design already clear and you will start day after FDA approval, site select? What kind of studies? What is coming there?
In general terms, whatever you need are studies also for our products.
I think we need to be science and clinical based. Now for Keri, this is very important as this is a new procedure in the U.S. The study is already in preparation by Keri. They are responsible for this. We will have a clinical responsible person who is taking care about this study, who is also or she working with other surgeons on data. We need data. This will facilitate the entrance in the future into the market for U.S. surgeons. We have a lot of data from Europe, but we need data from the U.S. This is in process. It will start by the end of this year. We already have trained a quite large group of U.S. Surgeons with Keri in Europe. They assisted surgeries. They did cadaver labs. This was also good to feel a little bit the first response, the sense.
Out of this group, Keri, this is Keri doing. Keri is now defining who are the responsibles for the study. We need this for all our products, not only for Keri. I think the studies in the future are becoming more and more important.
Thank you.
Follow-up question by Daniel.
Thank you. Just on Brazil, to understand the situation a bit better, I still struggle to understand why an insurance consolidation puts too much pressure on the reimbursement. I cannot imagine if in Switzerland two insurance companies merged that it triggers pressure because it is national reimbursement. Is it so different in Brazil?
Unimed in Brazil, it is a huge, it became a huge monopoly. They just went, they just avoided the expensive procedures. Their strong foothold is in the São Paulo area. We are nearly out.
This is the insurance company for private insurance, which is quite expensive. We are only speaking a very low percentage of population which could even afford this. This is our addressable market. Whereas in other hospitals in the northern part of Brazil, or in the southern part of Brazil, we still had business where Unimed was not so strong. In São Paulo and to some part in Rio de Janeiro, it was, yeah, we were nearly out. Now coming slowly back because the surgeons are pushing the insurance company as well. It's also a surgeon's decision. Daniel, this took some time over the last year. I also could not believe it, but I was there. I really, I informed myself a little bit in the market here.
When did that start so that we can imagine when it is washed out, so to say, roughly? Was that a year ago, I think, no?
That was about one year ago, yes. Back to your question, also the insurances requested that we should directly negotiate with each hospital, with a counterparty. That was a major change. So far we had one contract which was on the insurance level with the supplier, with us in that case. The request was now you need to negotiate on a bilateral basis with every hospital. It affected the elective business. That is coming back to the elective questions because now the hospital could also trade and could also delay and postpone some of the procedures. They use this as a pricing power also to drive down the price.
About a year ago, it was a process of two, three months. It hit us heavily in Q2 and then also Q3. That is why we are confident now that also for 2025 that we recover and we will see some of the growth plus the additional products which we have.
Thanks.
Perfect. I look around. We have no further questions. There is one question here in the front row.
Yeah, thank you. I would have first a question to funding. I mean, you mentioned enough funding for NeoOrtho and I guess also for Aventure. How would it look like then for the next tranche of KeriMedical? Is there no further funding necessary, external?
No, you may remember last April we did this convertible, which was about CHF 115 million. That was pre-funded for KeriMedical and it exceeds what we need for KeriMedical.
Aventure was a small project which is below CHF 1 million. The expected first tranche for NeoOrtho will be somewhere around CHF 10-15 million maximum. If we put that all together, I said earlier also we have bank lines, we have general cash flow generation which comes out of the business. This should be sufficient to fund it.
Okay.
The second tranche of KeriMedical, I said, is expected to be somewhere around June, July, or the now coming tranche. There will be also milestone payments which will come later. Everything will be paid upfront. Also, NeoOrtho in the way how it's structured is just a part now. The second part would be in 2028, 2029.
Thank you. The second one would be concerning the KeriTouch approval.
I know that you're very confident that this is almost a fact that it will be approved. I think at one point of time there was the hope it could be early in the year. What is perhaps going on there? Is it a black box for you or is it in a discussion that you see something with the FDA?
Good question, Samuel. No, it's not a black box. Although if Elon Musk will not kick out all the FDA staff in the U.S., then there is no further risk. No. We are really far advanced. I am in detail with the registration process. Last questions are answered. This is totally normal. During the whole process, nothing was abnormal. With my experience with the FDA, you never know in which track or who is the official owner of the process within the FDA.
If the person is agile, it goes smooth. If not, and it was a little bit delayed. Now, honestly, starting May, it can happen every day. I'm quite comfortable with June-July.
Thank you.
With no further questions in the room, we're going to close this out. Just one or two additional slides. Our integrated annual report is available. All the pictures you see here are people that work within Medartis or work for Medartis. In the case of Marco Gadola himself, which I'm sure you recognize on the picture. On the next slide, you see our completely revamped website, which might be at the beginning a bit tricky to get familiar with, but it has 3D animation of all our main products. I'm pretty sure, and that's also the feedback we got, communication to customers is also very important.
They can visualize the bone, the fracture types here, the red lines, and see how the implants stick to that given bone in a given situation is an added value for them as well. Yes, with that, the last point to mention at this stage, all the people, visitors here in the room are kindly invited to a factory tour if they wish. Otherwise, there is coffee and/or coffee. Of course, for those who were not able to attend in person today, we hope to see you at one of our upcoming roadshow activities. Tomorrow we are going to be in Zürich and the day after in London, U.K. Of course, there is also an AGM upcoming here in Basel. We are going to hold this in this room by the 25th of April.
The first point when Matthias will show how the growth story begins to kick in is on the 19th of August. With that, I thank you very much for your attendance, your excellent questions, your engagement, and your interest in Medartis. With that, have an excellent day.