Good afternoon. This is the Chorus Call Conference Operator. Welcome, thank you for joining the Medacta Group Full Year 2022 Preliminary and Audited Top Line Figures Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO. Please go ahead, sir.
Thank you. Good morning, good afternoon to everybody. I'm here today with our team, Corrado Farsetta, and happy to comment our full year 2022 top line figures. That's our disclaimer. I will focus on the highlights of the year. We have posted a very good growth with 15% constant currency and 20.4% reported growth on our top line, reaching EUR 437.1 million. On the top line, we have seen significant contribution from customer acquisition and carryovers, so partial recovery in certain areas, while other geographies, in particularly we will see later, Australia and in H1, the U.S., we're still facing some headwind due to pandemic restrictions and especially in the U.S., staffing issues.
I'm very proud we did not have so far any supply chain issue despite this very strong growth. We did invest strategically in our supply chain by increasing our finished product, raw material, and instrument stocks at the beginning of the pandemic, and we kept a high level of stock to feed our growth, and this was a very good decision so far. We managed to expand our sales force all over the world. In 2022, we hired close to 200 new employees, and we passed the mark of 1,500 employees at group level. We have continued to focus on our medical education. We really have seen a fully normalized level of activity with the only exception of Australia in 2022.
We kept our focus on accelerating our top line while we maintain a very good level of profitability that we will report later in the year. On the next slide, you can see the geographic contribution of the different areas where we split our revenues. Europe did exceptionally well. We have seen close to 18% growth, 17.6, on our European segment across all the business line. We definitely we're benefiting from a partial recovery at the beginning of the year, but overall, we really had an acceleration of new customer acquisition across multiple business lines.
North America, we did recover pretty well in the second half of the year, while in the first month of H1, we were really facing some issues and headwinds associated with COVID and staffing in particular. Asia Pacific is mainly driven by two markets, Japan and Australia, with a very different dynamic. In Japan, we did perform extremely well across all our business line, while in Australia, the pandemic restrictions did really impact a lot our business for several months. Only in the last few months of the year, we managed to start to recovery on the top line. This in this market, in particular, we are very strong on the hip side, and we will see this is visible, if you want, on the business line. Rest of the world did perform extremely well.
It's still a relatively small overall contribution around 4% of our revenues, but significant growth in 2022. In terms of product line, the hip, despite Australia, did perform extremely well, 9.2% of top line revenues. Our Anterior Minimally Invasive Surgery, our focus on ASC in the U.S. market, where those solution are particularly relevant, remain a very, very focused strategy of Medacta. The knee side did really explode in terms of growth over 18%. It is driven by our focus on kinematic alignment, single-use instrumentation, a knee implant, the GMK Sphere, which is particularly suitable for this patient-specific kinematic alignment approach.
We started to have some contribution as well in the second half of the year coming from another element of the MySolution platform, which is the NextAR. Extremities did perform very well as well, close to 39%, 38.8%. Very good growth across all the geographies. It's both a combination of a very strong implant platform, very complete, very modular, supported by different type of technologies, including the MyShoulder, part of the MySolution, and the NextAR platform with its shoulder application. This contributed in particular in the second half of the year. We started to expand as well in our sports medicine line, which will hopefully continue to grow and contribute in the months and years to come. The spine side was above 19% growth.
It was, let's say, somehow impacted as well by hospital staffing shortages in several geographies, in U.S. in particular. Then we started to accelerate our growth by focusing on our, let's say, specialty products, the MIS platform, the MySpine, and in the last portion of the year, our NextAR application for the spine. I wanted to touch a little bit on our philosophy behind our approach to innovation. In the last 15 years, we have really been focusing on products that could, at the same time, deliver value to the patients and remain very sustainable under an healthcare system point of view.
We realized very often that the more we try to disrupt the market with those new techniques and new technology, the more relevant medical education is in order to launch those products safely and have a high adoption rate in the market. Some example of innovation areas are Minimally Invasive Solution and personalized solutions. If we go to the next slide, I wanted to give a little bit of an overview of what is the MySolution ecosystem because it is growing, and it is becoming more and more complete. We start from personalized 3D planning. This is something Medacta has been developing in-house with web-based solution, cloud solution for the last 10, 12 years. Surgeons from all over the world can upload our, their 3D planning. We work with them on personalized for each patient, the planning.
We have different technologies to deliver those planning in a very sustainable way. It can be PSI, which Medacta has been developing in-house for since many, many years. It can be through augmented reality with the NextAR platform, mainly today on the knee, shoulder and spine, or it can be with some software tools today available on the hip side. Once we have delivered those accurate planning execution, we then focus on data collection and patient engagement through different software application, once again, that we developed in-house that include apps with wearable solution and data collection tools that we share with our customers. This provides the ability for us to monitor the results and adjust the personalized planning in order to optimize this loop constantly.
All the solution share the value that we believe is very, very important in many, many markets, more recently, even more in the U.S. market, where the ASCs are becoming more and more focused on economical aspect and sustainability under an healthcare system point of view. Portable solution, low capital investment, low cost per case, efficient. Those are all elements that are shared across the different aspect of the MySolution ecosystem. This is definitely one of the areas where we are gaining traction across the different business line in many, many different markets. In terms of growth, I think it is important to remind everybody that Medacta has been growing for the last three years, or let's say two years, 2021 and 2022.
If we compare to our pre-pandemic level, I promise this will be the last time I refer to pre-pandemic level, our constant currency growth has been close to 37% and above 40% reported, which represents a CAGR since 2019 of 11% in constant currency. We are really gaining significant market share. We don't have yet data on market share gain, but we estimate to be around three times the market only this year in terms of growth. Those exceptional results are linked to our employees on a global scale, and committed during those challenging years and helped us performing in this outstanding way. Of course, I would like to thank them all.
Very important as well, all our customers, old and new, that continue to appreciate our solution, and our suppliers that worked with us in those difficult environment that really helped us not having issues on the market in terms of supply chain. Thank you all for the support. With this slide, I reached the end of the presentation today, and more than happy to address any question you might have.
This is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Christoph Gretler of Credit Suisse. Please go ahead.
Yes. Thank you, operator. Good afternoon, good morning, Francesco Corrado. I have three questions. First, you know, just on the geographical mix, you know. I think you commented on Australia maybe slightly behind your, you know, initial plan. Is this true, or could you maybe comment on the geographical mix relative to your expectation for the second half, in terms of sales performance? That would be my first question.
Yeah. Australia, as we discussed throughout the year, was heavily impacted by severe restrictions. The severe restriction ended basically at the end of August, end of September, depending on the states in Australia. Differently from the previous year, it took them a little bit longer to organize the so-called public-to-private programs, where they typically shift the waiting list of patients from the public hospitals that are typically taking care of the COVID patients into the private, where surgeons are and clinics are able and willing to take care of those extra load of patients. Therefore, we have seen some recovery only in November and December. As you know, Australia is on the other side of the hemisphere, so it's their slower period of the year.
Their January is our August, if you want, and.
Mm-hmm.
December is our July. We are seeing an acceleration, very strong, but let's say a couple of months later than what we were expecting. This is important under the geographic mix point of view, and we will report later this year on our profitability. As Australia is a high price and high margin market, this will have definitely an impact in terms of profitability. Nothing major, but definitely a headwind on this side.
Mm-hmm. Okay. Clear. Then the second question is just on Europe, you know. It's an amazingly strong, you know, performance you delivered there. Is there maybe something more you can add, also in terms of, you know, performance by individual countries also to explain that?
I would say thank God no, because all the countries did perform extremely well. They did perform extremely well basically across all the business line. I think we are collecting the hard work we did in remaining active in the previous months and years, especially in medical education and hiring. Another important element that we still see as a positive effect is that many, I would say more, almost all our competitors, both the big companies and the small companies, have been facing or are facing significant supply chain issues. In many accounts where we were maybe a second supplier or a partial supplier or in early discussion, we had a extreme acceleration in customer conversion because of supply chain issues of our competitors.
I'm quite confident that, with maybe few exceptions, those will remain customers moving forward.
Okay. Thanks for that. The last question is just on, you know, the 200, you know, additional headcount. Would you maybe be able to split that into, you know, sales and marketing or manufacturing and admin people as a rough idea?
Yeah. I would give you maybe some basic information on those. It's 50% in the headquarters, 50% are in the branches. As you know, in the branches, we basically have a sales and marketing organization with very limited logistic and operations. In the headquarter is mainly manufacturing with a little bit of overhead. I would say, rough number is 50-50.
50/50. great. Thank you. Have a great day, and thanks again.
Thank you very much, Chris.
The next question is from Sandra Dietschy of Octavian. Please go ahead.
Yes, good afternoon, Francesco Corrado, and also thank you for taking my question. My first one would be on the Spine performance, which was certainly solid but a bit behind my expectation. You mentioned the hospital staffing issues primarily in the U.S. I was wondering how the pricing environment looks like in this segment. Some competitors of yours have also mentioned increased price pressure in Spine. My second question, also related to pricing, can you help us to understand a little bit the impact from volume growth versus pricing pressure on your top line? Is it fair to assume that out of the 15% growth, maybe some 17%-18% is volume growth then offset by 2%-3% lower prices? Thank you.
Thank you, Sandra. just to make it clear, our expectation are always higher across all the lines. I share your view on the Spine, but it's always across all the business line where we always push for more. Yes, the Spine was slightly more impacted, for example, in Japan, where we did see as well some price erosion. Japan is one of those markets where the prices are fixed by the government. we had a little bit of headwind, as we were saying, in the U.S. across the business line, including Spine.
Your assumption is maybe a little bit aggressive on the volume versus pricing, simply because each market typically has a price erosion of 2%-3%. Typically on the geographic mix, we compensate a little bit this price erosion. This year, we did not see that. It might be that this year you are pretty close to what we have seen, but don't use it as a general rule because typically we grow faster in high price market. We see at group level a lower effect of price erosion. This year in particular, you're probably very close.
Perfect. Thank you.
Thank you.
The next question is from Daniel Jelovcan of Stifel. Please go ahead.
Yeah, good afternoon as well from my side. Just to North America, which is still flying a bit below the European level, and you explained the hospital shortage, but were there other reasons as well for that? I mean, we did some service in the U.S. for the spine rep movers, and I mean, the big guys, chronic change, even if they lost quite a lot of sales reps, and they all joined the smaller players. Is that also the case for you or is it still difficult to recruit good spine reps? That's the first question.
No, I would say if you take the U.S., our spine contribution in the U.S. is relatively small. Because of that, we are probably one of the small companies taking some of those reps from the larger companies and not the other way around. I would say spine in the U.S. is a very competitive market with more than 100 players, including smaller companies, which can be extremely aggressive on the commission side. I'm pretty sure the big guys are feeling those loss of salespeople. We, we don't because we have a limited exposure there, and we are on the aggressive side of hiring. This is definitely. The spine contribution is not one of the reason why North America is lower than Europe.
I would say Europe is particularly strong and North America has been slightly impacted on Q1. When you start slowing the year you have first to recover and then to grow. That is basically the explanation we have seen. In terms of, let's say, organic growth, new customer growth, sales force expansion in the U.S., we have seen, especially in the last months of the year, a good acceleration. That is what we are expecting moving forward. Not associated with Spine at all.
Okay. Yeah. Thanks. The second question for Japan, I mean, I'm not sure, but I think you all, you work primarily like everybody with distributors. I guess, so the price decrease government reduced as always in Japan in the middle of 2022, I guess that was quite the big destocking and then of course also restocking. If so, I guess that was quickly done, the restocking, so there is not much pent-up demand from that side. Is that the correct assessment?
No. It's, we are fully direct in Japan, so we have a direct organization. We don't have any stocking distributor. The only element which is common across the healthcare market in Japan is that if you wanted the last mile, every hospital has its own little distributor, but it is a commission-based distributor, which basically takes care of the logistic. Some of the price decrees that we have seen have been actually shared with our with our hospital distributors, so that the overall impact on our own price is slightly lower than what you could see at full price list level, if you want. We are fully direct in Japan, both in joint and in spine, with the exception of the last mile when you enter the hospital, which is, let's say, standard across all the industry in Japan.
Okay. That this price stuff is already digested, I guess.
Yeah. Yeah, absolutely.
Is it on top of my head from the old times, I think this is every two or three years, right? Is that still-?
Exactly.
Okay.
Yeah. It's not across the entire product range. Sometimes, let's say if you take a hip contract, they might decrease the price on the stem and two years later on the cap, and on the screw side on one year and then on the cage. It's very rare that it is across the portfolio.
Okay. That's great. Thanks.
You're welcome.
The next question is from Markus Kaufmann of ZKB. Please go ahead.
Hello. Just a quick one on the EBITDA margin. Are you sticking to the goal of 27.5% for this year, or are you telling later this year where it goes from here on?
Corrado, you wanna take this?
Sure. Thank you, Francesco, good afternoon. Basically, of course, we are not giving any guidance for next year, still not, let's say, ready to issue the guidance. Basically what we can say is that we should see. We don't see any specific reasons why the current situation should either dramatically improve or worsen. Basically, we expect to have some negative effect on our profitability coming mainly by price pressure on raw materials and services. We expect to have positive effect from additional revenue, which means leverage on existing costs. We had a very high level of inventory and finished products which could help us in softening the effect of the increase in our purchasing price. We'll see what will be the effect.
Basically, we can reasonably say that the picture of this year should not, let's say, being affected heavily in the next year. We expect to be roughly stable around the numbers of this year.
Thank you.
Welcome.
For any further questions, please press star and one on your telephone. Mr. Siccardi, there are no more questions registered at this time. Back to you for any closing remarks you may have.
Yeah. Thank you. Thank you very much. Thank you all for participating into this call and for your interest. I look forward to the next call in March, where we will gonna discuss our P&L performance and provide full guidance for 2023. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect.