Traditionally, the conference will be broken down into two parts. We will go through the slides and the presentation, and then we will invite you to participate in a 15-minute Q&A session. You can ask your questions in writing via our chat. The floor is over to Jakub Śwadźba, CEO.
Good morning. Welcome, everyone, to the next conference call of the Diagnostyka Group, and we'll be able to present very solid results yet again. Before we move on, I would like to tell you about certain organizational changes in our finance department and introduce our new speaker, Bartosz Cieślicki. As you all know Mr.
Paweł Hitwa, very well, who joined our team a long time ago, two years ago, and assumed the position of the CFO to make sure that our going public and listing at the Warsaw Stock Exchange proceeds smoothly. The period of going public and stabilizing our situation has reached its end. The employees and the workforce are very reliable, solid and efficient. The situation of the company in general is very stable. As we had agreed, prior to Paweł's employment, Paweł decided to join another international company and tap into those international opportunities, and he will leave our company at the end of the year. As I said, Diagnostyka is a very stable company. Bartosz Cieślicki has been with us since at the very beginning, actually.
He's been working with us for 18 years, and then since the very beginning, he was deputy of our former CFO, and he assumed the position of the Deputy Chief Financial Officer. He took part in our going public. He has been working recently as Deputy Chief Financial Officer for Paweł Hitwa. I can tell you that this is a person who can handle very efficiently all our financial affairs for the entire Diagnostyka Group. He will be the next speaker during our upcoming conference next quarter. I invited Paweł Hitwa for him to say goodbye to all of you and say a couple of words and introduce Bartosz Cieślicki as well.
The floor is over to Paweł Hitwa first and then to Bartosz Cieślicki, and then we will discuss the company's operations in the third quarter.
Thank you, Jakub, for this introduction. Welcome, everybody. As you all know, yes, it is true, I resigned from the position of the CFO of the company and the Vice President of the company, effective as of the end of the year. I wanted to take up new professional challenges that are ahead of me. It is not at all related to Diagnostyka as a company. I believe that Diagnostyka has a very stable situation and has many years of successes and stable liquidity, stable operations ahead.
I am leaving Diagnostyka as a very well-organized company with a very, very robust financial situation and financial footing. This will be confirmed by the results that we are just about to present to all of you. I will give over the financial management of the company to Bartosz Cieślicki, and I believe that this is a very good decision and well-grounded decision. Bartosz, the floor is over to you.
As Mr. Śwadźba has mentioned, since 2007, I've been involved with Diagnostyka and working with Diagnostyka as a member of the management board and CFO, Deputy CFO. I know all about our strategic operations.
I took part in these operations and these developments, and thanks to these experiences, I believe that I understand Diagnostyka's business very well and the specificity of our operations across the board, and all the specialist operations, be it financial or non-financial, that allows us to function efficiently and develop and grow. I will continue. I will follow the footsteps of Paweł in a very stable environment, business environment. Let us now move on to our financial and operational results. Over to Jakub.
It is my pleasure to start with the highlights, the facts and figures for the third quarter of 2025. In a nutshell, because this discussion will be developed more by Paweł later on. Year-on-year changes in terms of tests volume going up 10% year-on-year.
The group's revenue went up by over 26% year-on-year. As you can see, based on the percentage increases, the prices went up due to the inflation and test prices, but the product mix has changed as well because we are adding imaging diagnostic imaging tests, which are much more expensive than laboratory, medical laboratory tests. In terms of profit, this change is even more considerable, going up by more than 50% year-on-year, and recurring EBITDA went up by over 22% year-on-year. The specific amount, which is a key amount, key figure for our market cap and the valuation of our stock for the third quarter of the year, we reported over PLN 150 million in recurring EBITDA.
Due to the size of the operations of the company, our shares were upgraded to mWIG40 index. In the Forbes index, we were listed as the 18th biggest privately owned company in Poland. In the meantime, we opened a brand-new state-of-the-art laboratory in Rzeszów. As you all know, we are growing consistently both in terms of blood collection points. I did not even list this figure because it's more than or around 1,200 already. We are adding brand-new state-of-the-art laboratory basically every month, be it a larger or smaller laboratory. These are new locations or those projects can include the upgrade of the existing locations according to the current trends, including automation. The Moje Zdrowie program, which was met a little bit skeptically. The previous program was quite successful.
This program included medical laboratory tests. This program involved doctors, especially family physicians, but this program is actually faring very well as well as we have increased not only in B2B figures, but also the volume of tests. In terms of the cervical cancer prevention program, this program was a dream project actually for us. Diagnostyka is the key element of the medical chain here on the medical services chain. We have signed contracts with the National Health Fund already 16 contracts. Our competitors signed maybe three or four contracts at the very maximum. We are a leader here, and we will cover about 25% of the market for National Health Fund and over 54 private clients.
We will increase our share of the market quite considerably for this very important program. Also considering the social outreach of this program based on molecular diagnostics as well. In addition to the organic growth, we also had acquisitions in Q3 . Five acquisitions in Q3. As I said before, these acquisitions were not very sizable, but we had three acquisitions in laboratory diagnostics and two acquisitions in diagnostic imaging. As I said, those companies were relatively smaller. In terms of IT developments, which are very important to us, we have advanced the progress on the implementation of the ERP program and also the HR program. We have started the first month for the implementation of the logistics software program. We also had something very important, introduction of a super modern application.
It actually will be presented in the fourth quarter after the close of the year because it was the turn of October and November. This slide does not present this particular development. This was, in a nutshell, our situation and our facts and figures. The floor is over to Paweł Hitwa to discuss our finance.
Diagnostyka has been continuing the growth path, which was first presented in the IPO process, but it turns out that we reached our targets quicker than we thought. During the IPO, we forecasted our progress, but after nine months of this year, we see 24% in terms of revenue growth, including over 18% in laboratory diagnostics. A strong growth of B2B, 20% in MLT.
Last year, we did not have diagnostic imaging, so the diagnostic imaging has contributed to this quarter, which because it was consolidated at beginning of the year. The higher growth in B2B is related obviously to our great results in the Profilaktyka 40 PLUS program. Not only that, because we can see that the subscription model has been growing rapidly. Our private clients, institutional clients, have been contributing a lot to our revenue. These are the main drivers of this stronger growth for B2B compared to B2C. Since B2B has been working faster, as you can see in the pie charts. In the B2B group, we see more than 60% already. Last year, we saw 59%. The drivers are both volumes and prices, 50/50, so to speak, 9%, 19.9%.
In terms of average prices growth, diagnostic imaging has contributed a lot here, and the average contribution is 14%, and the growth is 13% year-on-year. In terms of the volumes, we can see that MLT represents this growth because we know that volumes are low in diagnostic imaging. The diagnostic imaging area is high prices. It's not really high volumes. So we are talking about 9.4% versus around 7% for B2C. After nine months, we see that operational expenses are growing faster than revenue. This is visible especially in the third quarter of the year because as of July, practically, we have started paying more to certain specialists and this obviously was reflected in higher sales prices.
The dynamics of operating expenses after nine months is larger or faster than revenue growth. The largest group of our cost, that is employee benefits expense, including the payments to doctors, nurses and so on. You can see in the table what the dynamic for its growth is. Also the costs of external services or services in general are also growing very highly. We're talking especially the costs of services such as diagnostic imaging services because of the consolidation of this particular area. In terms of this growth, recurring EBITDA went down a little bit. We're talking about 24.9%, so the margin went down to 24.9%.
However, we are still keeping 26% after nine months which is comparable to 2024. We are expecting that this level, maybe a little bit lower, will be maintained this year as well. As we said before, recurring EBITDA margin will be comparable to 2024, more or less. Moving on to our net profit. A lot of interesting developments in the third quarter. After nine months, the net profit dynamics is even higher than the dynamic for both EBIT and EBITDA because it is driven by certain costs items below EBITDA, that is depreciation and amortization, and it is also due to the consolidation of diagnostic images, imaging because of fixed assets such as property, plant and equipment are important in this area.
Last year we had a positive impact of the valuation of remeasurement of derivative instruments. This year we do not have that particular item recognized because interest rates have gone down. We had a positive impact of the sale of our subsidiary in Ukraine. These were one-off events, therefore we do not recognize them in this quarter. Our costs went up. Our finance cost went up, however, our laboratory diagnostic costs did not go up considerably. In terms of taxes, income tax especially, we see a downward trend in income tax expense after nine months by PLN 4 billion despite the uptrends in EBITDA, for instance.
We had an R&D tax relief for last year, so we recognized this in Q3 , that is over PLN 13 million for the period 2019-2023. We have recognized that R&D tax relief because we have many R&D projects. We are developing our own new system. R&D covers these items as well. It will be launched next year. Also, we launched a brand new mobile application, which Kuba has already discussed. These are very expensive projects, and therefore we can tap into or use R&D tax relief. It's over PLN 17 million for the nine months of the year and PLN 13 million for this quarter only. This is an amount that is much larger than for the entire year of 2024.
Cash flow was very strong and very robust, as you can see on this slide. Free cash flow conversion to EBITDA was very high after nine months, over 90%, which is more than in 2024, after nine months of 2024, especially due to the fact that we are recognizing the income tax based on a lump sum recognition, not month after month. Looking at Q3 alone, we see that free cash flow to EBITDA conversion is a little bit lower year-on-year because in Q4 and Q3 2024, we had a higher figure, which was due to the fact that we saw a major increase in our accounts payable. However, this year, situation has reversed. These are one-off events, seasonal developments, I would say. They do not.
They are not signaling any trend, so to speak. Free cash flow to EBITDA conversion is still very strong. Moving on, our working capital. In terms of our profitability of working capital, we are keeping it under control, at 25, 24 year-on-year. Cash conversion cycle is very robust as well, going down to 47, mainly due to trade receivables. Our payables are going up due to our scale of our business. But all in all, free cash flow to EBITDA is also reflected here. In terms of our net debt, when net debt went down a little bit, we're talking about 1.7 in terms of leverage. Our finance debt went down a little bit. Part of our debt is an overdraft.
A major part of our debt is overdraft, so we're not drawing any new debts. This very strong cash flows allows us to finance our acquisitions and we do not need to take out any new debt, any new borrowings. However, let me go back to our cash flow bridge. Even though we have a very strong cash flow after nine months to finance our M&A and the payment of dividend at PLN 170 million, based on leases as well. Even though we finance it as major outflows and recognize this as major outflows, still our credit limits are very, very high, over PLN 300 million. Now, this is the safety margin that we have and will allow us to continue our negotiations with potential acquisition targets, acquirees.
This will be a capital that we will spend on further acquisitions and further growth of the company. A couple of words on our outlook until the end of the year. We have increased our forecasts versus Q2 . Revenue in terms of year-on-year growth, I believe that the growth will be low- to mid-20s%, so the dynamics that we have seen after nine months of the year. This is, as I said, built on the average price, which is low- to mid-teens percentage. After nine months, we recognized a growth at around 14%. I believe that the 14% will be the growth we're talking about.
In terms of diagnostic tests volume, I believe that the high single digit will be our target, or the EBITDA margin, which we have already discussed will be close to 2024, around 26%. In terms of CapEx, excluding M&As, we have paid an advance payment for the new building, which will house our new laboratory in Gdańsk, but we still have to pay the second part of this amount. We also opened the laboratory in Rzeszów, so CapEx will, without M&As, will be increasing, and I believe it will range around PLN 130 million-PLN 170 million, comparable to last year's. We expected 150, so we are expecting that the figure actually will be a little bit more than PLN 150 million.
In terms of M&A CapEx, I believe that we will keep the forecast of between PLN 80 million and PLN 100 million . In terms of net debt to EBITDA, it should be between 1.5 and 2, so it's still under control. We are a very secured company in terms of our finances, and we intend to stay that way. At the end of the presentation, I would like to extend my gratitude to all of you, all the analysts, all the investors and the representatives of the investors for the fantastic successful IPO process and the period following IPO. Thank you for this very positive dialogue and for your cooperation. I believe that Diagnostyka is a fantastic company, and I would like to thank you very much for our cooperation.
This is my last presentation of Diagnostyka's financial results, and I believe, as I said before, I am leaving this company in very capable hands. Thank you very much, and I believe that we can now move on to a Q&A session.
First question concerns the cervical cancer prevention program. Specifically, which revenues are you expecting both this and next year? Can you quantify it?
We currently have recognized PLN 5 million under this program. The program was launched in July. As far as I remember, during the last presentation, we talked about PLN 7 million in revenue this year. I believe this will be the level, in the end, seven to eight or let's say between 5 and 10 for the entire year to be more general.
I believe that this program, I do hope that this program will keep developing. I know that the budget for the entire year of the program is PLN 60 million. That is the public data from the Ministry of Health, but I do hope that it will be growing in the year to come as well. The next question concerns the effective CIT tax rate in the coming periods. Well, we have a single corporate income tax rate at about 20%, so we drove it down because as far as I remember, it was more than 22% for 2024. Thanks to the optimization projects and also the R&D tax relief, we managed to drive it down, so reduce it.
We also had certain other optimized approaches to appreciation of the amortization, obviously in accordance with the regulations. We changed our approach to amortization and depreciation. I would actually expect that the effective CIT tax rate will be even lower in the year to come.
The next question concerns DI segment. What could be the impact of the proposed changes in terms of the valuation in DI on your profits and your profitability, and do you take any actions in order to improve the profitability of the DI segment?
Yes, the changes in prices, which are pretty likely, pretty probable as proposed by the agency which is responsible for the assessment of medical technologies. We believe that we can talk about something between 6% and 10%.
On average, we see a downward trend at about 8% in terms of price reduction. We have just acquired this company. We have not recognized any synergy effects in these companies. I believe that for most of those DI acquisitions, we believe we can increase profitability. We have smaller companies in hospitals, and the downward trend in terms of profitability will be seen, but it will not be considerable against our entire operations. We are optimistic in terms of the growth in diagnostic imaging, and our target margins will be similar to MLT segment margins.
The next question: Are budgetary problems for the national health funds any risk to you? And do you see any problems with increasing the prices for B2B clients financed by the National Health Fund?
As you know, we do not have any direct contacts with B2B customers financed by the National Health Fund. I believe that segment anyway is not a large segment. We see no trends in terms of the bankruptcy of those clients or the failure to provide services to any of those clients. We see some higher risks for next year that the debt of hospitals will increase, but it will not have a direct effect on our prices. Excluding diagnostic imaging and the direct contract with the National Health Fund for services such as, for instance, CT scans.
What are the trends in the fourth quarter in terms of volumes and prices, and what are your expectations for volumes and prices for the next year? In terms of revenue as well.
I know that this has been discussed by Mr. Hitwa, but if you could quantify it or recapitulate it. The scale of growth for especially revenue, which caught us a little bit by surprise, will flatten out this year. We will see increases, we will see growth figures, but it will be much lower than this year. In terms of the volumes, we still forecast an increase in volumes, but not as considerable as this year.
Next question. Could you specify your current priorities in terms of capital allocation, the balance between the reduction of debt and the payment of the dividend?
We would like to continue the policy which we announced during the IPO. Despite higher profit recognized by the company, we would not like to increase the percentage of dividend payout.
We want to keep the recommendation until the annual general shareholders meeting at around 50% for the dividend payouts. I believe this is the last question.
This was the last question. A question on acquisition policy or strategy. Will you be looking for any foreign companies or equities, or are there still only Polish companies we're looking for?
Yes. We are looking at Polish company only. This is the safest policy. We do not plan any foreign acquisitions. In terms of the acquisitions in Poland, we already presented you the numbers. They are similar, maybe a little bit higher for next year. We are planning the acquisitions and the increase in acquisitions in diagnostic imaging mainly. But as I said, this is a stable strategy. No fireworks here.
I see no other questions in the chat, so I believe this has brought us to an end of this conference call.
Thank you very much for your attention. If you have any further questions, please contact our Investor Relations department. Thank you and goodbye.