Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Medacta F irst Half 2026 Preliminary and Unaudited Revenue. 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 zero on their telephone. At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta. Please go ahead, sir.
Thank you very much. Good morning or good afternoon to everybody. Welcome to Medacta H1 2026 Preliminary Unaudited Revenue conference call. The slides of today's presentation can be found on the Medacta Investor Relations website, along with the media release. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risk and uncertainties. Listener and readers are therefore encouraged to refer to the disclaimer on slide number two of today's presentation. After the housekeeping remarks, I will now turn to slide number four and start with the highlights of today's presentation. Medacta did continue to outperform the market in H1 2026 with a constant currency growth rate of almost 10%, 9.7% in constant currency, reaching EUR 368 million. We did announce as well two major expansion projects, which are the following.
The first one is the completion of our expansion shell or manufacturing unit shell in Ticino, in Rancate. While the second news is about a land that we purchased two days ago, to be precise, in Tennessee, and that's where we're going to develop our new manufacturing capacity in the U.S. The performance of H1 allows us to confirm the outlook for the full year 2026, which has a target revenue growth in the range of 10%-14% in constant currency, and an expansion of our adjusted EBITDA margin of around 50 basis points versus prior year. All, of course, are subject to unforeseen events.
The same applies to our midterm outlook, which is confirmed as well, with a revenue CAGR between 2024, 2027 in constant currency is expected to range between 12%-15%, with gradual improvement of the adjusted EBITDA margin versus 2025, again, in constant currency and subject to unforeseen events. We move to slide number five, our pillars for our above-market growth remain intact. Those are the strong differentiation across all our portfolio in terms of new products that can improve patient outcome and health sustainability. Those products are introduced in the market with a strong focus on medical education. The third very important pillar is a constant expansion of our sales team across all our business line and across all the geographies. We go on slide number six, talking about geographies, we can see the different performances across Europe, North America, Asia Pacific, and Latin America.
Let's start with Europe, that developed pretty well despite quite a lot of headwind in the region, namely some strikes which are ongoing in Spain, and there were some other in other countries, including France. Despite this, Europe grew 10%. North America did develop well as well, 6.6% top-line growth. We did have some headwinds specifically in this region, namely the sales channel transition in spine. We have seen as well some softening on the joints. I'm pretty sure we will have some Q&A on this segment, so I will leave it for later. Asia Pacific did develop very well with another 13.1% growth. Latin America, 16.4%. One aspect which is very important, all those performances are compared to a performance of last year in the same period, which was extremely strong.
Just as a reminder, in North America, in H1 last year, we were growing 21%, including the Parcus acquisition. Very strong comp. Moving forward, if we look at our product line and business lines, we had our hips growing at 8.1%, the knees almost 11%, extremities almost 16%, and spine 4.5%. I would say the product performance is mainly driven by the geographic performance. In general, we stayed focused under a product point of view, to our main strategy. Again, anterior minimal invasive surgery on the hip continued to drive our growth, we have started to introduce even more technology on the hip side with the first cases of the NextAR Hip, starting in the U.S. and in Australia. We did experience a very good growth both in Asia Pacific and in Latin America.
Still, a growth of around 2x the market growth forecasted by some of our forecasting model, which I believe is potentially something we need to discuss later as well. On the knee side, almost 11% growth. Again, GMK SpheriKA and single-use efficiency continue to drive a lot of adoption with surgeons. Strong double-digit growth in Asia Pacific and in EMEA, and more than 2x market growth for our knee line as well. Spine is the weakest, if you want, of our business line. Good performance in EMEA, followed by Latin America and APAC, while the negative growth rate in the U.S., coming from our transition of our sales force to more focused distributors and more of a hybrid direct model is facing some of strong headwind, let's say.
Despite this growth is probably around 1.5 market growth year-over-year, and we expect this to further accelerate quite a bit significantly in H2. Extremities is a very robust growth, around 16% year-over-year. We did, again, introduce new technology in the segment with our NextAR Shoulder revision application. This is based on a very important new development, which is a new AI-based MyShoulderPlanner, which allows surgeon to do their planning locally, in real time, and this is actually a very strong feature both when used in combination with the NextAR Shoulder and with our PSI. Sports med as well, very good growth. Launch of our SecureFix all-inside the meniscal repair system, which is reinforcing our meniscal repair solution across our knee sports medicine portfolio.
We are experiencing a very good market traction in the U.S. in the last few months with onboarding of very significant academic centers that will help us to drive our sports medicine effort moving forward. Again, more than 2x above market growth for this business line. This performance allows us to confirm our outlook for the short-term. As I mentioned, 10%-14% in constant currency and an expansion of the adjusted EBITDA in the range of 50 basis points. We are aware that this requires a strong second half, an acceleration in H2. It does compare to a weaker growth last year. We are very confident in some of the pipeline acceleration we have seen over the last few months. June was very strong. July looks stronger as well.
I spent a couple of weeks in the U.S. in July to check first-hand the pipeline. I have to say I'm very pleased. That's why the midterm outlook is confirmed as well, with our compound annual growth rate 2024-2027 in constant currency expected to range between 12% and 15% with a gradual improvement of the adjusted EBITDA margin versus 2025, all in constant currency and subject to unforeseen events. Just a quick reminder, Medacta remains not impacted by the U.S. tariffs. We will continue to monitor the development of the situation. The key messages remain similar to our narrative. We can continue to deliver an above-market growth as a result of constant development of differentiating innovative products that can improve patient outcome and overall sustainability. We can deliver this innovation and sustain the introduction with a very strong medical education program.
This attracts the combination of new products and good medical education continue to be very strong, attractive model to sales reps across the globe and across all our product lines. Our goal remains to continue to outgrow the market, and our guidelines confirm that we are convinced that we can do so for years to come. I would like, once again, to thank all our employees for a very good performance in H1. Especially continue to thank them for the H2 performance we are called to deliver in order to further accelerate our global presence. Thank you very much, and I would like maybe to go back to you to manage the Q&A.
This is the Chorus Call conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question, press star and one on the touch-tone 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, press star and one at this time. The first question is from Michelle Büchler from ZKB. Please go ahead, sir.
Hello. Thank you for taking my question. My name is Michelle from ZKB. The first question is on the U.S. softening. You mentioned it's due to the market softening in general, lower demand and U.S. spine channel. Maybe you could give some more color on that, as Stryker reported last night, for instance, their Q2 looked pretty solid with EBITDA growth of 8.4%. Was it just the second quarter that looked better? Maybe you can give some more color on that, please.
Thank you, Michelle. I would say definitely yes. Q1 was particularly soft in the U.S. We heard about the storms that impacted Q1. Probably a portion of this was recovered in Q2. That's why you see an overall acceleration in Q2. If you take a Q1 and Q2, H1, overall in the U.S., I think we should expect, or at least that's our view at the moment, that the U.S. market is simply going back to pre-COVID growth rate. If you look at the pre-COVID growth rate in orthopedics, in hip and knees, in particular, it was around 3%, 3.5%, 2.8%, depending on the pre-COVID years you're picking. While we were used to probably a 5% growth rate in the post-COVID years, 2021, 2022, 2023, 2024, and 2025 as well.
I don't see, frankly, no reason why post-COVID, we should remain two, three points higher than the pre-COVID level. I would say we are probably going back to a normalized growth rate in orthopedics. Nothing more than that on the joint side. While on the spine side is more Medacta specific execution situation. We are growing pretty well in APAC, in EMEA, in spine. In the U.S., we are actually growing through the new channels that we are building. We are experiencing some more attrition from the older channel, which it's fine. I think in the long term, we will be happy. We are a little bit in a painful moment at this time, I think is the right thing to do for the long term.
It's useless to do a turnover without margin attached to it, which was the situation, it is the situation of many spine surgeon, sorry, spine companies in the U.S., that's not a business model that we want to follow. We are rebuilding, in a more solid way, our U.S. spine channel. We are actually reinforcing the team with good talents coming on board, which are offsetting the headwind we are facing, that's what it is. I think in the next couple of months, we should hit the valley because the process started in September last year, we will start to recover and grow faster on a more solid basis.
Okay. Thank you. May I ask another question?
Of course.
Smith+Nephew announced that they are going to launch a kinematically aligned knee. I looked at their slides, I think it was the beginning of June. I am not as much of an expert as you are, to me, it did not really look truly kinematically aligned. Maybe you could say something about competitive landscape and how far ahead you still are with your kinematically aligned knee.
Let's say, I will try to be as kind as possible. If you look at the new knee of Smith+Nephew, it is extremely similar to the JOURNEY II knee of Smith+Nephew. Exactly the same obliquity of the joint line, standardized at three degrees. If you understand kinematic alignment, you know that we are not talking about an average alignment of X degrees. We are talking about matching the alignment of each individual patient. I think they are renewing, let's say, an older knee portfolio with actually nothing really major in this knee design. We will see the market, how they will react. I do not see this as a threat at all. It is very similar to their JOURNEY I, JOURNEY II knees, which was exactly designed in the same way.
Okay, thank you. That's what I thought. Maybe one last question. What product launches should we expect in the second half of 2026? You mentioned in the last call that you're working on something, will you announce it once you have something?
Let's say we have really accelerated. We exited our limited market release on our new triple wedge hip in the U.S., and in the U.S. only at the moment, which is called Mfinity. That is a very important stem design in the same category of Z1 for Zimmer or ACTIS for J&J. This is definitely something which is important for the U.S. hip category. We are introducing, on the hip side, as I mentioned, our NextAR Hip technology, which is important to, again, counter some hip technology competition. We are going to introduce a dedicated NextAR KA module in the second half of the year, which is important in U.S., Australia, and Japan in particular.
We are introducing a new shoulder in the U.S., which is pretty much matching the new trends in the U.S. shoulder market, this is something we are accelerating in the second half of 2026. We are expanding our NextAR Spine offering with a strong focus on endoscopic spine navigation, which is a very interesting trend and very keen to develop. Sports medicine as well. Quite a strong product range expansion in the shoulder sports medicine with a very interesting disruptive technology that should be in the anchor space, which should be released in the second half of this year. Across the portfolio, we see quite a lot of strong pipeline. As I said, I spent a bit of time, two weeks straight in the U.S., traveling and meeting a lot of prospects, both under surgeon point of view and especially under new distributors' point of view.
I've seen a very solid pipeline, I'm very excited about the second half of this year. We're going to have a lot of work.
Thank you.
Thank you.
The next question is from Beatrice Fairbairn from Berenberg. Please go ahead.
Hi, thank you for taking my question. Beatrice Fairbairn, Berenberg. I just had one question on the 2026 outlook. You noted that you're aware that you need an H2 acceleration, I suppose could you give some more color on which parts of the business you expect to accelerate and what visibility you have on this? Thank you.
I would say there are several areas that are going to accelerate. The vast majority of the products I just mentioned will hit first the U.S. market, the U.S. market is the market that needs to accelerate. Maybe a little bit of color on what's happening in the U.S. I think it's important. When we describe our growth, we very often talk about our base contribution coming from existing customers that we acquired, let's say, in 2024. We have the so-called carryover business, which are new customers acquired in 2025 and will contribute full year in 2026. New customers acquired in 2026. In H1 2026, the contribution of new business and carryover was basically identical to the performance we did in 2025, which, as you remember, was a 21% growth rate.
The missing elements is on the base, where we have seen some retraction on the spine, as we mentioned, some softening on the hip and knee side, on the ASC space. We have seen quite a lot of customers focusing more on the ASC only and dropping some of their hospital-based volume. Why? Because they are creating very interesting new business opportunities. For example, concierge model, where they can basically make more money per patient, they're less keen in continue to do maybe Medicare patients in a hospital environment, they are more keen in moving in that direction. We think this is a trend that will continue, probably with a smaller effect in H2. Plus we see, as I said, a very strong acceleration in terms of pipeline of both customers and sales force expansion in the U.S.
Definitely the U.S. will be an area where we need and we expect to accelerate significantly. Another area which is expected to finally start in H2, which was zero in H1, is India. We have prepared quite a lot of stock and CapEx to start in India. Actually, the first shipment should start next week. We are still waiting the last documents for clearance. This has delayed our expected start by approximately three months. That's a regulatory hiccup. There's nothing we can do other than just continue to push. We have no other documents to give to the authorities. India is another source of growth. In Europe, we experienced quite a lot of strikes. In Spain, in particular, the market is flat because of this situation. Medacta experienced still very high double-digit growth in Spain, this was definitely a negative, of course, effect.
France as well. If we normalize H1 and we see H2, we should see an acceleration in Europe as well, simply because the market is normalizing. Those are more or less the expectations. New products, normalization, additional territories in India, expansion of sales force in the U.S., new products introduction in the U.S., more or less. Quite a lot of verticals on which we can map. With 14, 15% growth in the second half, which I remind everybody has a relatively lower comp, should be absolutely possible, we will definitely be in the middle of our guidance. A little bit higher, a little bit lower, we will see.
Great. Thank you.
The next question is from Ed Hall from Stifel. Please go ahead, sir.
Thank you. Thank you for taking my questions. Just one would be on the knee growth. I think if we think about the new wins that you're seeing, could you potentially quantify what's coming from GMK SpheriKA and what's potentially coming from single use? I assume GMK is driving the majority of it, but how much can single use play a role?
No, I would say you have to see SpheriKA as the primary driver. Single use is driven by the sales of SpheriKA. Sometimes it's a door opener to sell SpheriKA. In terms of top-line contribution, SpheriKA is clearly the key driver. The big advantage of expanding our single use on the knee side is a potential reduction that we are seeing in instruments or in CapEx deployment associated with knee growth. In terms of top-line contribution, is minimal. Let's say is around 10% of the contribution of the SpheriKA only.
Okay, perfect. I guess, in the U.S., coming back to the U.S. In terms of the different channels you're selling into currently, is there a certain channel we should think of having, let's say, higher attrition for you, or is it more normalized throughout the whole market?
If you're talking about channels, are you talking about ASC versus hospital?
Exactly.
That's what I thought. I would say we should, and we expect to see a normalization of the overall market to a more pre-COVID level. Again, we don't have yet numbers, but H1 reports from us and from our peers so far are going in that direction. We will see. I would be very happy to be proven wrong. We don't see a major stop in the shift from hospital to ASC. This continues. What we are seeing is that the ASC surgeons are becoming smarter, as I was saying, and they really try not only to bring volume to their ASC, but to maximize the return on each case they do. This is especially true if you think that the Medicare reimbursement has been cut, the reimbursement per case on the surgeon side and on the facility side is reducing.
Hospital and ASC, we see ASC as more reactive as a space. They are focusing, and they are developing additional interesting model like concierge model, where they can offer additional services to patients. They can charge directly those patients. This is actually an opportunity we are evaluating. It's a new space where we have some pilot programs ongoing. I think it's a very interesting space. As usual, when there is a change, there is an opportunity. We are looking into this as we speak.
Perfect. Thank you very much.
Thank you.
The next question is from Graham Doyle of UBS. Please go ahead.
Afternoon, guys. Thanks for taking my questions. Just a couple, please, Francesco. On the U.S. market, so you sort of talking about this reversion to 3%. For your business, presumably that's just not a big difference when you think long term about the growth, given pretty much all of your growth is share gain. Is it reasonable to assume that this has no impact at all on your midterm sort of outlook? Just on the margins, just be helpful to get a little bit of a shape when we think of H1 versus H2. Should it be a little bit more H2 loaded, just given the better growth we're expecting in H2 as well? Thank you.
Yes, I agree 100% with you. If those are the changes, of course, it's nice to have a little bit of a tailwind. With those kind of high tailwind, we were growing at, let's say, unexpectedly high rates for quite a lot of years. Frankly, when we did our IPO, if they would have told me that we could have been growing at 17%, 18%, 20% for four or five years in a row, I would have said that's impossible. That's what happened. Overall, I think definitely our midterm guidance is not impacted. I agree with you, if it's 5% or 3%, it doesn't change. We were expecting, if you remember, every year we were slowing down our full-year guidance in H1 because I was expecting a normalization of the market, which did not materialize.
It not materialized. Then we upgraded our guidance. This year is probably finally there. We will see. In terms of profitability, of course, we will dive into this more in September when we report our full year. Sorry, our mid-year P&L. In general, we should expect slightly more profitability coming from H2 compared to H1, which is pretty much in line with historical numbers. As we expect a little bit more sales coming from the U.S., which we know they carry a little bit more of a marginality, we should see a slight more expansion compared to H1. I'm pretty sure we will dive into more details in the September call.
Okay. That's really helpful. Just when you look at the ASC channel, it's obviously still really strong. Some of the proposals in other segments in the U.S., in terms of reimbursement, are talking about this sort of site neutrality, effectively incentivizing greater growth in channels like ASCs. Presumably, is it still reasonable to think that you guys are outgrowing the market in ASCs, and that still remains kind of the corporate growth driver in the U.S.?
Yes, absolutely. I'm very happy to repeat what I mentioned on the sports medicine, which is actually true across all our portfolio. Our key focus remains expansion in the ASC space, which is growing. As you said, there are additional, let's say, reimbursement changes that are coming in 2027. We will talk about it as well. Some of the cuts that are even accelerating potentially the channel. At the same time, Medacta is really partnering more and more with some of the best academic center in the U.S., and big hospital with a very strong reputation, the Mayo Clinic, the HSS, the NYU, Columbia, MGH, Northwestern in Chicago, University of Miami, et cetera, which is extremely important for our future, midterm, long-term, because that's where the next generation of surgeons, both hospital and ASC surgeons, are formed, are trained.
We all know that if surgeons are exposed to a company's products during their early days, there is a very high chance that they will continue to appreciate those products and potentially use those products, if they're happy with it. This was absolutely something we were missing in the U.S., and we were definitely investing more in creating some brand awareness, and this is definitely something that will elevate our profile in the U.S., which is very important. Yes, ASC space is going to continue to be our focus, but I think we will be able to count on more strategic partnership with some of the best academic centers in the U.S.
Awesome. Thank you very much. Appreciate it.
Thank you, Graham.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Mr. Siccardi, there are no more questions registered at this time.
Thank you very much. I would like, once again, to thank all our employees, clients and suppliers, and partners worldwide that help us to continue to grow Medacta and look forward to speak to the market soon in September. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.