Hello, everyone, and thank you for joining us today for Grifols' Q4 2026 Earnings Call. My name is Dani Segarra, and I serve as the Head of Investor Relations and Sustainability. Today, I'm joined by Grifols' Chief Executive Officer, Nacho Abia, President of Biopharma, Roland Wandeler, and Chief Financial Officer, Rahul Srinivasan. As is our usual practice, today's call will last about one hour, including the Q&A session. Please note that this call is being recorded. You can find additional materials, including today's presentation, in the Investor Relations section of the Grifols website at grifols.com. A transcript and replay of the webcast will also be available on the Investor Relations website within 24 hours. Turning to slide two, I would like to remind everyone that forward-looking statements may be made during this call.
This may include, among other things, comments regarding the company's future operating and financial performance, statements about our future expectation, clinical developments, regulatory timelines, and the potential success of our product candidates. These statements are based on current expectations and available information as of the date of this call and are subject to certain risks and uncertainties that may cause actual results to differ materially from those discussed today. Grifols financial statements are prepared in accordance with EU IFRS and other applicable reporting provisions, including Alternative Performance Measures or APMs, as defined by the European Securities and Markets Authority. Grifols' management uses APMs to evaluate financial performance as the basis for operational and strategic decision-making. These APMs are prepared for all the time periods presented in this document.
As announced on May 24, the board of directors decided to initiate a process to evaluate a potential IPO in the U.S. of a portion of the shares of its subsidiary and parent of its U.S. Biopharma business. Any such transaction remains subject to, among other things, regulatory and legal requirements, internal approvals, and market conditions. In keeping with the legal and regulatory advice received, we will not be able to address any questions regarding this transaction at this stage. We will provide updates as and when necessary, remaining in full compliance with applicable laws and regulations. Moving to today's agenda, I will turn the call to Nacho to kick it off. Nacho?
Thank you, Dani, and thank you all for joining us today. In the first quarter of 2026, we delivered a solid start to the year, maintaining our focus on our core priorities as outlined in the annual guidance provided in our previous call. The results of the Q1 were in line with our expectations and forecast. We are on track to achieve our guidance for the full year 2026 as we continue to build momentum over the course of the year. Today, we will focus on three key areas. First, we will talk about our commercial strategies across regions, with a clear focus on capturing growth opportunities in core markets.
Second, we will further clarify the strategic importance of Egypt following EMA approval, a milestone that strengthens our global plasma diversification strategy, expands our sourcing capabilities, improve access to treatment in Egypt, the region, and Europe, and structurally and meaningfully reduces cost per liter, thereby supporting our margin expansion. Third, we will address the continued strengthening of our balance sheet through disciplined refinancing and sustained free cash flow generation. Finally, we will review some key progress within Diagnostic as we near an important milestone, the launch of a new platform that expands market opportunities in blood typing, as we committed at our last Capital Markets Day. This advancement reflect our ongoing commitment to innovation and to supporting long-term growth in this division as well. Turning to slide five.
Revenue for the quarter reached EUR 1.7 billion, representing an increase of 3.3% at constant currency. Adjusted EBITDA increased to EUR 404 million at constant currency, EUR 381 million on a reported basis, with margin broadly stable year-on-year. Free cash flow improved by EUR 30 million, with leverage stood at 4.3x , which is broadly stable versus year-end and consistent with the seasonality we typically see in the first quarter. Biopharma led this performance with growth of nearly 7% at constant currency. Once again, underscoring the strength of our IG franchise, which delivered double-digit growth, particularly in core markets.
Our focus remains on executing our key priorities for 2026, driving adjusted EBITDA margins to at least 25% while deleveraging, delivering 5%-9% adjusted EBITDA growth at cost and currency, improving free cash flow towards our EUR 500 million-EUR 575 million target, and maintaining strict financial discipline. We are actively pulling strategic levers across the organization to deliver on those objectives, which I will detail in the following slide. We also note the recent exception of plasma-derived therapies from U.S. tariffs under Section 232, which underscores the strategic importance of plasma in today's global environment. Finally, as announced in March, we are evaluating a potential IPO of our U.S. Biopharma business.
While it is still early in the process and we will not be able to provide additional information in today's call, it reflects our continued focus on maximizing shareholder value. We will update you with necessary details in due course and stay compliant with applicable laws and regulations. Let me turn to our focus in 2026 in order to achieve our annual goals. Moving to slide six, I want to detail the strategic drivers that support our confidence in achieving our 2026 guidance. Our focus is centered on five key pillars of execution. First, we are optimizing our Biopharma product mix. While our IG franchise continue its momentum, we are balancing this with a continued focus to drive growth across our broader portfolio of proteins. Second, the ramp-up of our Egypt platform is a transformative milestone. As I mentioned, this is a structural shift in our sourcing capabilities.
We are in a clear trajectory to collect 1 million liters of plasma in Egypt this year, scaling rapidly to 3 million litres by 2029. Third, this Egyptian expansion allows us to accelerate the optimization of our global plasma sourcing. By integrating this lower cost per liter supply, we can more aggressively optimize our U.S. plasma network, improving overall margin efficiency without compromising our supply needs. This also ensures flexibility and optionality to expand our plasma needs. Fourth, we are focused on the operational and financial turnaround of Biotest. A key catalyst here is the commercial progress of both Biotest new generation of immunoglobulins, Yimmugo, as well as fibrinogen products, Prufibry and FESILTY, which are starting to contribute to the top line as we integrate these assets more deeply into our global commercial portfolio. Finally, our commitment to financial discipline remains absolute.
We're maintaining rigorous cost control and maximizing operational leverage across the entire group. These five drivers are not mere targets. They represent active strategic levers. Their successful execution is what will allow us to grow strategically, expand EBITDA margins, and deliver the improved free cash flow we have committed for the full year 2026 and beyond. Before moving to a more detailed Biopharma update that Roland will provide, I would like to briefly comment on the performance of our Diagnostic business on slide seven. It is important note that the reported revenue decline does not reflect the underlying fundamentals of the business, but rather the temporary impact from the dissolution of the QuidelOrtho joint business. On a like-for-like basis, our Diagnostic revenue grew in the low single digits year-over-year.
As part of the joint business dissolution, we agreed to a $65 million compensation payment to Grifols, which will be distributed over the next three years. While the termination of the joint business created a short-term headwind, the decision was ultimately a strategic one. Ending it unlocks full autonomy to offer a broader range of donor screening and clinical diagnostic solutions and better positions us to capture the full value of our new IDS platform rollout. These new immunoassay platforms enable us to directly target the serology market, which is valued at approximately EUR 1 billion. Additionally, it provides an opportunity to eventually expand into a much larger total addressable market of the clinical immunoassay sector. This is a segment where our ability to operate independently enable us to fully participate, control the value chain, and maximize returns.
As such, IDS platform represents a key pillar in diversifying our Diagnostic revenue base and expanding into adjacent high-value segments. Other than this significant step in our serology business, within blood typing solutions, the Barcelona next-generation platform is our most significant upcoming catalyst. This platform delivers significantly improved performance in a smaller modular design with a simplified workflow and reduced footprint for customers. We remain on track for its launch in Q2 2026 at the leading flagship industry trade fair, and we expect this platform to be a key driver in sustaining our leadership in this market beginning 2027. In NAT, our Mundaka platform remaining on track for launch in 2030, reinforcing our leadership position within NAT through higher throughput and sensitivity and advanced design.
As we look beyond 2026, and specifically 2027, we expect our Diagnostic business to continue to grow in the low single digits as we continue to grow our blood typing business while MDS, we consolidate our strong donor screening market position and grow in the plasma screening segment. We expect the good performance of the BTS and MDS businesses to be partially offset by our IDS business as the supply agreement with Abbott ends. We gear the manufacturing towards ISAT. I want to reiterate here that our Diagnostic business remains a vital complementary pillar to our Biopharma franchise, providing significant contributions to our overall margin profile and cash conversion. Before moving to Roland, I would like to emphasize that the progress of the company in the first quarter reflects disciplined execution across our strategy, operations, and finance.
We are building on strong fundamentals, advancing our margin initiatives, strengthening our global plasma flat platform, and reinforcing our balance sheet. This execution supports our confidence in delivering consistent progress throughout the year as we work towards our full-year guidance and unlocking the full value of our competitive advantage. With that, I will now turn it over to Roland. Thank you.
Thank you, Nacho. Moving to slide nine, the Biopharma business overall delivered a solid start to the year with 6.8% growth at constant currency in the first quarter. I am proud of the dedication, passion, and commitment our team shows every day to deliver for patients and drive forward towards the goals we set out. Q1 growth was driven by continued strong momentum in IG, partially offset by albumin in China, as well as lower sales in other proteins. Let me briefly walk through each segment. Immunoglobulins were the clear growth engine. Our IG portfolio delivered 15.3% year-over-year growth at constant currency, driven by sustained traction of Gamunex in the U.S. and core European markets, fully aligned with our strategic focus.
Performance was further supported by the successful U.S. launch of Biotest Yimmugo, which is building on the strong underlying momentum of our existing brands. XEMBIFY, our subcutaneous IG, continues to see strong double-digit in-market demand growth in the U.S. Reported ex-factory sales this quarter, though, were partially impacted by year-on-year inventory phasing, with Q1 2025 benefiting from a wholesaler inventory build and Q1 2026 reflecting some inventory normalization. Importantly, the underlying demand trend remains very strong, and for the full year, we continue to expect strong double-digit growth for XEMBIFY. Turning to albumin, Q1 sales declined 6.1% year-over-year at constant currency, reflecting the expected continuation of market and pricing dynamics in China that we discussed at year-end. Following several years of strong growth, demand flattened in 2025, and we adjusted pricing mid-year. Over the past quarters, pricing in hospital has stabilized, which is encouraging.
However, the first half of 2026 continues to compare against the higher pricing base in 2025, and we therefore expect albumin sales to be lower year-over-year in H1 before stabilizing into the second half. Despite these near-term dynamics, our longer-term outlook for albumin remains constructive, supported by our strategic partnership with Shanghai RAAS. With elevated in-country inventories in the market, our focus is firmly on driving demand with disciplined pricing and aided by an expanded joint commercial footprint and a more targeted marketing and contracting approach. These actions are aimed at increasing hospital access, including deeper penetration into lower-tier hospitals, while also expanding our presence in retail pharmacies. In parallel, our medical teams continue to invest in education and evidence generation around long-term albumin use in liver cirrhosis and an important and still unmet need in China.
As conditions stabilize, we remain confident that these actions position us well to get back to growth in this key market. At the same time, we are actively pursuing opportunities outside China with a clear emphasis on expanding our albumin presence in the U.S. and other markets. This, together with increasing yields and the use of excess IG from EMA-approved Egyptian plasma, will enable us to balance our IG and albumin growth over time. On Alpha-1 and specialty proteins, sales came in 7.4% lower year-over-year, reflecting a prior year comparison that benefited from inventory buy-in for both Alpha-1 and Fibrin Sealant at the time. Within Alpha-1, which represents roughly half of the category, we were encouraged by growth in new patient referrals during the quarter, highlighting the continued unmet need and the significant number of undiagnosed patients.
While underlying dynamics are strong for Alpha One, HCPs and patients continue to navigate access hurdles, especially in the first part of the year. We heard from physicians and patient associations that the reauthorization period in the U.S. was a difficult one and that a number of patients had to go through multiple appeals to finally receive approval for their therapy this year. We will continue to do our part to appropriately support healthcare professionals in their work of securing access for their patients. This is where we are looking forward to sharing our SPARTA Outcomes trial results, with top-line results expected later this year. Successful trial outcomes will help to further drive awareness to reach patients yet to be diagnosed, but also provide additional evidence that may bolster access for both new and existing Alpha-1 patients in the U.S. and abroad.
In the remainder of the category, sales of Fibrin Sealant, Factor VIII, and contract manufacturing were lower year-over-year. Following strong inventory build by Ethicon in 2025 to support global launches of Fibrin Sealant, Q1 reflected some inventory drawdown. This was partially offset by continued solid demand for HyperRAB. While seasonally lower in absolute terms, we are encouraged by the momentum as we move towards the summer peak season for this important product. Overall, we remain confident in the underlying fundamentals of Alpha-1 and expect the Alpha-1 and other proteins franchise to return to growth over the full year 2026. Moving to slide 10, what I'd like to highlight is how intentionally differentiated our approach is across both geographies and proteins. Starting with immunoglobulins, our growth engine.
In the U.S., our priority is clear: grow with the market on a higher base following our market share recovery in 2024 and 2025. We expect continued mid to high single-digit growth for Gamunex as our leading IVIG and strong double-digit growth for XEMBIFY and SCIG. Outside the U.S., we are taking a more selective value-driven approach. In Europe, we are focusing growth on higher-margin strategic markets while actively optimizing our footprint in low-return markets. At the same time, we are advancing self-sufficiency in Canada and leveraging platforms such as Egypt as a plasma source to support IG supply into Europe. Turning to albumin, where the focus is balance and value optimization. In the U.S., we are benefiting from increasing demand for albumin in bags as one of only two players with this differentiated offering and where we are working to expand supply going into 2027.
At the same time, we are effectively competing with our portfolio of albumin in vials with a disciplined approach to contracting. Outside the U.S., we have a two-pronged approach. In China, our focus is on driving demand and access, leveraging our strategic partnership with Shanghai RAAS, expanding into tier two hospitals, and increasing our reach in retail pharmacies. In other markets, we see good progress and room to further grow our albumin sales. Overall, the objective is to stabilize performance in China and selectively expand beyond China, including the U.S., with a differentiated offering of albumin bags. Finally, Alpha-1 and specialty proteins, where our ambition is to lead and expand the category globally. In the U.S., the priority is to expand Alpha-1 diagnosis and treatment of appropriate patients in a market where 85% of patients are not yet diagnosed.
We believe that our outcome study SPARTA, which for the first time may show better-maintained lung function versus placebo, will play a key role to raise awareness, broaden the share of physicians that consistently test their COPD patients, and facilitate access to therapy. Our team is preparing for top-line results expected by year-end and is planning a deliberate, coordinated approach to communicate SPARTA outcomes to support growth. We are encouraged by our momentum with HyperRAB and excited about our upcoming Fibrinogen launch later this quarter. Outside the U.S., we continue to drive Alpha-1 growth in reimbursed markets and prepare to leverage SPARTA to unlock broader reimbursement, increase awareness, and expand access in those markets that so far have limited treatment for Alpha-1 patients.
In addition, we will continue to drive our launch uptake with Fibrinogen in Germany and Austria as the two leading markets for the targeted treatment of acquired fibrinogen deficiency. Stepping back, what you see is a disciplined and differentiated portfolio strategy to drive value. Growing IG, where we have leadership and value, balancing and optimizing albumin across markets, and positioning Alpha-1 and specialty proteins for continued growth. Value creation is not just about where we compete. It is also about how we source and produce our therapies, which is where plasma becomes a critical enabler of our model. Turning to slide 11. What we are doing in plasma sourcing is not incremental. It is a structural shift both for Grifols and for the industry and a core pillar of our margin expansion. Historically, the industry has operated with a structural imbalance.
The U.S. has been the primary source of plasma for the world, and a significant portion of that volume has been used to supply markets outside the U.S. Given that the U.S. is a high-cost source of plasma, exporting that cost base into markets with more constrained pricing creates a mismatch between cost and revenues. At the same time, the high reliance on U.S. plasma adds structural risk, particularly in geopolitical environment that is increasingly favoring local self-sufficiency. What we are doing now is fundamentally changing that equation. Over the last years, we already increased ex-U.S. collections with growth in our European centers and our self-sufficiency partnership in Canada. Following the EMA approval of Egypt-sourced plasma in December 2025 as part of our self-sufficiency partnership in Egypt, we are now adding a third scalable ex-U.S. plasma sourcing platform.
We are on track to collect around 1 million liters in Egypt this year, scaling to about 3 million liters by 2029. Together, this allows us to meaningfully rebalance our sourcing footprint. Where today roughly 25% of U.S. plasma is needed to support demand outside the U.S., by 2029, we expect plasma volume sourced ex-U.S. to increase roughly 2.5-fold, sufficient to supply our European and rest of world demand. This allows us to significantly reduce the need to use high-cost U.S. plasma for lower-priced markets over time. Instead, we move towards a two-system model. U.S. plasma will be primarily serving the U.S. market, where demand and value are highest and where focus will unlock further opportunities to optimize our CPL and operations.
Ex-U.S. plasma will be sufficient to supply ex-U.S. markets aligned with local economics and benefiting from excess IG in context of our self-sufficiency partnership with Egypt. This unique, geographically differentiated, and vertically integrated approach unlocks two major benefits. First, cost and margin optimization. By aligning our sourcing with market pricing, we structurally improve profitability. Second, resilience and supply security, reducing dependence on a single geography with the potential to mitigate policy, tariff, and regulatory risks. To be very clear, this is not just about expanding plasma collection. We are fundamentally redesigning how plasma is sourced and allocated globally, creating a more efficient, more resilient, and structurally more profitable model. Let me close on slide 12 with how to think about our U.S. Biopharma business, where Grifols has, over the last decades, with foresight, built a unique, fully vertically integrated local-for-local value chain.
Starting with the market, the U.S. is the largest and most attractive IG market globally, exceeding $20 billion, with continued strong demand for our therapies and a system that values plasma-derived medicines. This provides a strong foundation for continued growth, supported by increasing diagnosis and still high unmet need across our therapeutic areas. Looking at our model, as we have discussed in our previous call, our unique approach in the U.S. offers resilience and focus. Grifols is the only scaled company with an established, fully integrated end-to-end presence in this key market, spanning everything from plasma collection to manufacturing and commercialization in the U.S. for the U.S. In the current political environment, this closed-loop system is increasingly recognized as a strategic asset, providing supply security and operational resilience.
At the same time, it gives us greater control and visibility across the value chain, allowing us to better align plasma collection, capacity utilization, and commercial execution as our global sourcing model evolves. Lastly, looking at productivity, our local-for-local approach increases focus and allows us to drive efficiencies across our operations in the U.S. On the collection side, we are increasing plasma collections per donor site, which allows us to optimize our footprint. The recent closure of 29 underperforming donor centers with partial consolidation into higher-performing locations reflects a disciplined approach to optimizing our cost base and network quality, all while still enabling an increase in our annual plasma collections in the U.S. On the industrial side, our facilities in California and North Carolina represent the largest fractionation and purification capacity in the U.S. and are well-positioned to support local demand growth.
Importantly, following prior investments, we are now able to capture this growth largely within our existing capacity without significant incremental capital. Lastly, looking at our supply chain, our local-for-local approach allows us to further optimize our working capital cycle across markets. Bringing these elements together, market, vertical integration, and productivity, allows us to drive value for Biopharma. With that, I will hand it over to Rahul to walk us through the financials.
Thank you, Roland. On slide 14, we summarize the financial highlights for Q1 2026. As Nacho and Roland highlighted, our Q1 performance is entirely in line with our plans and expectations for the full year, notwithstanding the complex geopolitical and macroeconomic backdrop. Before I go into the financial performance, I'd like to highlight a couple of points. Firstly, it's great to see the strong execution across the board by the entire team, and in particular, the resilience in Biopharma driven by the continued strength in our immunoglobulin franchise. Second, please keep in mind that Q1 2026 relative performance compares to a Q1 2025 that was our best Q1 in history, a record performance that also benefited at the time from some phasing and a stronger U.S. dollar. Finally, we have considerably de-risked our balance sheet since our last update, and I will elaborate on that later in the presentation.
Moving on to the financial highlights in Q1 2026. We achieved reported revenues of EUR 1.7 billion, representing a 3.3% growth at constant currency, with our Biopharma division growing considerably faster than that, and I will touch on the performance of the other segments on the following page. With regards to the reported gross margin, consistent with our assurances during the full year call at the end of February, our gross margin has improved by 180 basis points compared to the gross margin in Q4 2025, taking into account the pricing concession offered in Q3 and Q4 2025 to support our joint efforts with our strategic partner Shanghai RAAS to navigate the albumin market in China, as well as the gross to net adjustments for full year 2025 being applied entirely in Q4 2025.
In this regard, the gross margin comparison to Q1 2025 is therefore less relevant. Other aspects impacting comparability to Q1 2025 include the dissolution of the joint business with QuidelOrtho, Biotest strong sales growth in Q1 2026 as operational enhancement progresses during the course of the year, and general phasing across the Grifols group in 2026, where we expect Q3 and Q4 to be our strongest quarters, partially aided by the ramping up of our plasma collections in Egypt during the course of the year. As per my guidance at the time of our full year call, the full year reported gross margin for 2025 of 38% is the right benchmark for 2026, and a portion of the adjusted EBITDA margin improvement being targeted in 2026 is expected to also flow through gross margin.
Adjusted EBITDA stood at EUR 381 million, up 0.8% at constant currency, maintaining a margin of 22.4%, in line with our record Q1 2025 performance last year and supported by continued OpEx discipline. From an FX perspective, the depreciating U.S. dollar had a translation impact during the quarter, with euro-dollar moving from an average of 1.04 in Q1 2025 to 1.18 in Q1 2026. Consistent with our prior guidance, a weaker U.S. dollar has the greatest impact on revenues, and the impact diminishes as we go down the P&L with EBITDA less impacted than sales and impact on group profit being broadly neutral. In this regard, it is great to see the 22% growth in our bottom line group profit for the quarter to EUR 73 million.
Free cash flow for the quarter was -EUR 8 million, reflecting the usual free cash flow seasonality of the business and a EUR 30 million improvement in free cash flow compared to Q1 2025. There are some aspects that I will clarify further in the free cash flow slide later. Turning to leverage and liquidity, our balance sheet is in a significantly improved position. We continue to make steady progress on de-leveraging, with total net leverage improving to 4.3x , a reduction of 0.2x year-on-year. Liquidity remains very strong. More on that a bit later. Slide 15. As you will see on this slide, the Biopharma business continues its strong top-line momentum with a 6.8% growth in constant currency terms.
As Roland highlighted, this was driven by continued momentum in our immunoglobulin franchise, which remains the core driver of growth. In Diagnostics, if we were to isolate the termination of the joint business with QuidelOrtho, Diagnostics revenues in fact grew at a low single-digit rate on a like-for-like basis in the quarter, consistent with prior years. Reported performance reflects the impact of the dissolution of the joint business, as previously discussed. The dissolution agreement includes a $65 million compensation to Grifols for, amongst other things, cost absorption at Grifols to be received in three payments across 2026, 2027, and 2028. Critically and very positively, the dissolution paves the way for Grifols to pursue its strategic aspirations in the immunoassay donor screening and clinical diagnostics markets over time with the development of the ASOT platform.
Within Biosupplies and others, lower revenues in the quarter reflect phasing effects of a segment impacted by timing of individual contracts and dispatching of sales, all products. We expect a catch-up during the course of the year, particularly in Q3 and Q4 this year. Looking ahead, we remain focused on executing the various building blocks of our plan for 2026 as outlined by Nacho, which I will elaborate on in the following slide. Slide 16. As I said earlier, when we consider the relative Q1 2026 adjusted EBITDA performance to Q1 2025, please remember that Q1 2025 represented our best Q1 adjusted EBITDA performance in history that benefited at the time from some phasing-related momentum.
For us to be able to emulate that performance in Q1 2026 on a constant currency basis demonstrates the resilience of the business, led by a continued adjusted EBITDA momentum in Biopharma. This momentum in Biopharma EBITDA is despite the full-year impact of the China albumin pricing concession in H2 last year. Yes, U.S. dollar weakening continues to impact the absolute EBITDA levels, broadly consistent with the sensitivity analysis we discussed last year. Some of that Biopharma momentum has been offset due to very specific and mostly temporary reasons in other segments. In Diagnostic, for example, the dissolution of the joint business with QuidelOrtho is a temporary headwind from a revenues perspective. However, it completely frees us to pursue our strategic aspirations in the immunoassay donor screening and clinical Diagnostic markets, and the compensation payments over the next three years will mitigate EBITDA impact.
As we look at the drivers of adjusted EBITDA growth and margin improvement in 2026, as Nacho said at the start of the presentation, it will be driven by each of the following. Number one, Biopharma product mix. Whilst the full-year impact of H2 2025 China albumin pricing concession will weigh on H1 2026 comparison to H1 2025, the combination of, A, the strong and continuing momentum in IVIG. B, you heard Roland's confidence about strong double-digit growth in SCIG from a growing and higher base. Finally, C, the expectations for Alpha-1 and other proteins growth in 2026 will support EBITDA growth and margin improvement. In addition, for example, the Diagnostic segment, the compensation payment in respect of the dissolution of the joint business will also help.
Number two, the game-changing impact of the EMA approval for Egyptian-sourced plasma will support balanced last-liter EBITDA growth, as well as contributing to margin improvement. It will also help to unlock point three, the global plasma sourcing footprint optimization opportunity that resulted in the closure of our weakest-performing centers in the U.S. that will drive cost efficiencies and lower CPL. Number four, the team is making progress with providing Biotest essential support to help with its operational and financial turnaround. Finally, Number five, our focus on OpEx discipline is delivering results with operating expenses reduced by 7.7% at constant currency versus Q1 last year. We will continue to stay vigilant and cost-conscious across the entire organization. We look forward to updating the market with our progress in the coming quarters. Slide 17 on free cash flow.
In the first quarter of 2026, free cash flow pre-M&A was - EUR 8 million. Adjusted EBITDA is negatively impacted by a depreciating U.S. dollar, the impact on free cash flow pre-M&A remains broadly neutral. You will notice a considerable investment in inventories in this quarter to support the continuing strong demand for our medicines. We have balanced that investment in inventories by continuing to manage our working capital diligently. The reduction in CapEx is consistent with our year-end financial disclosure and our discussions with our auditors, where the final payment in Q1 2026 in respect of ImmunoTek that was made to JPMorgan was classified as a repayment of financial liability and hence flows through financing activities. Notably, our cash interest in Q1 2026 compares favorably to Q1 2025. I will elaborate further on this in the next slide.
Finally, the increase in others was primarily due to the timing of our first 2025 IRA payment that was made in April 25. In conclusion, our free cash flow trajectory is progressing as planned in 2026, aligned with the typical seasonal patterns of the business, and we remain confident about delivering on our full-year guidance. Finally, turning to slide 18. I want to highlight the significant strides we have made in strengthening our capital structure and enhancing our financial flexibility. We have materially reshaped our debt maturity profile through the successful and proactive refinancing earlier this year of all our 2027 maturities whilst effectively navigating highly dynamic capital markets currently due to events in the Middle East. Now, our next set of maturities are not until Q4 2028, effectively eliminating any near-term refinancing risk.
The refinancing was upsized significantly in market, demonstrating once again the strong institutional support Grifols benefits from in the credit markets. The strong investor demand from global institutional investors and banks enabled us to deliver key structural improvements despite the challenged market backdrop. We more than doubled our revolving credit facility from approximately EUR 940 million to over EUR 2 billion while extending its maturity to six and a half years. The revolver now benefits from three margin ratchet step-downs that are leverage-based. Both tranches of the institutional TLB were upsized significantly in market, both tranches also benefiting from leverage-based margin ratchet step-downs. You may have noticed that we have made a number of changes with regards to the approach we take with our capital structure.
By right-sizing our revolver, we now benefit from very robust liquidity levels, allowing us to use surplus cash to reduce gross indebtedness with the EUR 500 million partial redemption of the 7.5% bonds. We have also considerably reduced our factoring activity levels all year round. Both these actions help us to be more efficient with our cash interest levels. Despite refinancing our cheapest debt in our capital structure this year, something analysts and investors were very focused on, we are now still targeting cash interest levels in 2026 to be at or below 2025 cash interest levels. It is great to see these actions being recognized positively by all three rating agencies with a substantial re-rating of our credit profile in a short period of time, with two out of three agencies upgrading us back into the BB space.
Long story short, our capital structure is in a considerably better place. Of course, we will continue to focus on deleveraging. Finally, following the reinstatement of our dividend policy in 2025, the upcoming AGM will consider the approval of the final 2025 cash dividend. The considerably improved capital structure position, whilst continuing on our deleveraging path, also supports some capital allocation optionality, including the potential use of share buybacks as part of our capital allocation toolkit can be considered in due course to drive shareholder value as and when best determined by the board. With that, let me hand it back to Nacho to conclude the presentation.
Thank you, Rahul. I would like to conclude today's presentations with a few final remarks. Our first quarter performance confirms that we are on track to deliver our 2026 objectives, with Biopharma continuing to lead our growth, driven by the strength of our immunoglobulin franchise and consistent and disciplined execution across key markets. At the same time, we are advancing a key strategic priority, the optimization of our global plasma footprint. The progress we're making in Egypt is essentially important, as it drives a structural improvement in cost per liter while further strengthening the resilience and security of our plasma supply. Additionally, increased plasma supply from Egypt to Europe will progressively reduce U.S. plasma exports, supporting margin expansion over time.
In parallel, we've taken decisive steps to strengthen our financial position, including the successful refinancing of our 2027 maturities, which enhances liquidity and reduce our cash financial expenses. This reinforces a clear and disciplined path towards deleverage. Collectively, these actions are building a stronger, more efficient, more disciplined, and increasingly cash-generative business, positioning us well for the remainder of the year and beyond. As we move forward, our focus remains clear: delivering on our commitments, further strengthening our financial profile, and unlocking the full value of Grifols. Thank you again for your continued support. We look forward to updating you on our progress in the quarters ahead. With that, Dani, please back to you.
Thank you, Nacho. Now let's turn to the Q&A session. Please remember to press star five to ask a question. We need to place a limit of two questions per analyst, but if you have follow-ups, please dial star five again to get back on the list. Today, our first question is coming from Charles Pitman from Barclays. Charles, please.
Hi, guys. Thanks very much for taking my questions. Two from me, please. Just firstly on this, the Alpha-1 specialty decline in 1Q. Just noting that last year you reported a 1% organic growth and then 2.3% on the like-to-like basis that you introduced. I'm wondering if you can quantify the size of this phasing benefit that you're referring that really drove this reported 7% decline. I wonder if you can commit to low- or mid-single digit growth for the division. Just secondly, hoping you can provide a bit more insight into the current U.S. IG market share dynamics, given a competitor yesterday flagged challenging commercial backdrop and a spike in raw material plasma, a finished product creating an aggressive pricing environment.
Just noting that your target is to grow in line with market and not drive further price erosion. I'm just wondering what you're seeing on this and how your launch of Yimmugo have been shifting your market share. Thank you.
Yeah, Charles, thank you for these questions. On Alpha-1 and specialty, yes, we can confirm that we expect a low- to mid-single digit growth for the full year. You know, in terms of the different components that add to the phasing, we don't provide that granularity. You know, as we tried to explain in the remarks today, this category is made up of different parts: Alpha-1 , Fibrin Sealant, contract manufacturing, Factor VIII. What we saw this quarter is basically a comparison year-over-year in each one of them that added up and led to this result. We're very encouraged by the underlying drivers in Alpha-1 , the growth that we saw in new patient referrals.
Yes, we had to work through some headwinds in terms of reauth period early in the year, but we saw patients come through in February and March and obviously continue to work on that. As said, we confirm that we are looking at growing that category year-over-year. On the U.S. IG part, you know, we are very encouraged by the underlying demand that we continue to see for Gamunex and for XEMBIFY in this market, which reflects the reception of the product. We have a high share of branded scripts, as well as the ability of our team and the focus of our team in the U.S. The market in itself, there's not a material change from our part. It's a competitive market, that's true, but it's a market that has very strong fundamentals.
We see demand and patients treated continuing to grow. We see it's a rational market largely. It's one where in some segments we're able to adjust price, and we're very disciplined in our own approach to competing in this market. From our side, this remains our key focus market, and we expect to grow with the market throughout the year. As you saw, we had Q1 growth above the market if you want. Expect this to normalize throughout the year and get more in line with market growth. At the same time, the strong momentum that we see allows us to be selective on where we can titrate back in lower margin accounts or lower margin countries. We believe that we start from a strength base when it comes to IG.
Okay. Thank you so much, Roland. Thank you, Charles, for your question. We would like to get questions from Santander, from Jaime Escribano. Jaime, please. It's your turn.
Hi, good morning.
Jaime, thank you.
Yes, a couple of questions from my side. The first one would be regarding the announcement of the potential spin-off or, well, IPO of the U.S. plasma business. If you can tell us a little bit the rationale, potential timing, what's your, what you're thinking about the some of the portions you only did the release, and this is the first time that you have the opportunity to maybe speak to the market. It will be great to have your views. The second one is Haema and BPC, in the Capital Markets Day, you said 2026, 2027 as potential years to buying these two. What are the next steps, or what do you have in mind on this regard? Thank you very much.
Gracias, Jaime. Thank you, Jaime. As I mentioned at the beginning of my presentation, at this stage, we are in the initial phases of the consideration of the potential IPO and, therefore, there is no further information we can comment on at this time. We will provide updates as when necessary, remaining in full compliance with applicable laws and regulations. Please, at this point, we cannot answer any question regarding that topic. As per Haema BPC, Rahul?
Yeah. Haema BPC, Jaime, no change. We continue to look at the 2026-2027 timeframe. You will recall we had talked about funding those buybacks through free cash flow generation. As you will have seen, we recently announced the redemption of our EUR 500 million of 7.5% bonds using surplus cash. All of that is tracking as normal. In terms of timing, it still remains in the 2026-2027 timeframe, Jaime. No change.
Thank you so much. Let's move to the next question from Morgan Stanley. Thibault, please.
Yeah. Thank you very much. My first question is just on albumin in China, if you could help us understand better the shape for this year. You talked about the price impact that started in the middle of 2025, so presumably not a washing out in mid 2026. Is there any other elements to help us understand what's happening on that market in terms of volume, in terms of competition? Basically what to expect from the second half of this year. Can this market go back to growth in China, or should we expect the market to remain challenged, you know, a bit longer than mid-2026? Just a one question on the OpEx this quarter, I mean, definitely lower.
Can you give us more color on where you're finding the savings? You know, where you manage to sort of lower the cost and and sort of, you know, how much can you drive these initiatives going forward? Thank you.
Okay. The first question is gonna be Roland. Roland and probably Nacho, and then also Rahul will tackle the OpEx question. Roland, please.
Yeah, Thibault, on China, if we take a step back, what we see happening in China is, on the one hand, continued underlying demand from patients and physicians that want to get albumin, meeting overlay of government pressures. What this resulted in last year is a stagnation of the market, a flattening of the market, and pricing pressures. As mentioned before, as you stated, we adjusted our prices mid-year. We are, you know, in this market where we also see inventories across the market will be relatively high. Our main focus is on throughput through pull-through on demand and customer demand. What we see there is that the Q1 this year is trending higher than last year, which is a positive. We also see that pricing in hospital is stabilizing, which is a positive.
We're cautiously optimistic that from here we can build. Having said that, there's more work to be done. At the same time, the market fundamentals, the aging pyramid in China all point towards continued demand for albumin, and we believe that with Shanghai RAAS, we're well-positioned to compete in this market as it will return to grow over the next years. Having said that, I wanna leave clear that, you know, China is not our only card that we have here. We see room to grow in other markets outside of China, and we're pleased to see the momentum there. We also see that we have in the U.S. a differentiated offering with Arabax, where we're adding capacity in 2027.
On top of that, as we explained in the last call, with our plasma sourcing in Egypt, where there's a strong local demand for albumin and there's an excess IG that can be used in Europe. We believe that we have the pieces in place that will enable us to balance IG and albumin growth over time.
On OpEx, Thibault, it's mainly just better and more efficiently and more diligently run across SG&A. R&D is broadly, you know, flat, so we, you know, continue to prioritize our R&D spend. It is just being more efficient on the SG&A front across the board. We'll continue to look at that. Clearly, we've made a lot of progress over the last year or two. You know, I think from our standpoint, we still see further opportunities to do better, and it'll just be a case of head down and diligent execution. We'll see.
Okay. Thank you so much, Rahul. Thank you so much, Thibault. I mean, we will take a question from Charlie Haywood from Bank of America.
Hi. Charlie Heywood, Bank of America. Thanks for taking the questions. I have two, please. The first is just on the planned U.S. IPO or potential planned U.S. IPO. From your CMD, I think 13 months before the IPO announcement, I think you outlined a fairly clear sort of five- and 10-year view of Grifols that obviously didn't include a potential IPO. Could you just help us understand what's changed in the last 13 months to prompt the decision to act on this? Is there any different view on, you know, leverage, financial structure, anything along those lines that prompted that decision? The second one is just sort of quite certainly, I guess, the IPO adds potential complexity to your structure. You know, you've obviously got Haema and BPC, which you have a plan on, your A versus B shares.
You previously outlined potential diagnostics exit. How do you balance all of these, sort of increasing complexity for Grifols, versus, like, the option to add the IPO as another layer on top? Like, any update on the A versus B collapse, alongside potential IPO or other routes to simplification? Thank you.
Yeah. Look, I think, on US IPO again, we're somewhat constrained as we talk about the topic going forward. Your question is much more around, is there a capital structure issue or is there a balance sheet issue? No, absolutely not. You've seen the progress that we've made on the balance sheet front. There is absolutely no issues there. We will continue on our de-leveraging path. You know, as you think about the status quo, at the end of the day, this is really about trying to see if there are aspects that we can consider to accelerate or maximize shareholder value. That's something that we will continue to consider and update as and when there is an update to provide.
On Haema and BPC, you know, I think you talked about complexity. Absolutely right. The focus is to simplify. Haema and BPC, we do intend, as I mentioned to Jaime's question earlier, we do intend to exercise the option during 2026 or 2027. We're keeping very much to the same parameters that we set out at the time of our Capital Markets Day around it being funded through free cash flow generation, not adding to gross debt to the extent that we're able to do that. We're sticking diligently to the plan that we set out. No real change, and there's nothing hidden from a balance sheet perspective.
This is all about trying to, ensure that we, you know, optimize, maximize shareholder value, if we see an opportunity to do that. I'll leave it at that, Charlie.
Thank you so much, Rahul. Thank you so much, Charlie. Now is the turn of Guilherme from CaixaBank. Guilherme, please.
Yes. Good afternoon. Thank you for taking my questions. The first one regarding margins. Would you be able to quantify the potential saving expectations from the U.S. donor center optimization? On top of this, any indication on the contribution of the plasma sourcing redesign to the 50 basis points margin improvement target by 2029? The second question is regarding Diagnostic. If you've communicated at the Capital Markets Day an expectation to deliver a 5% annual growth until 2029. You mentioned at that time that it was going to be back-end loaded, you're now mentioning a low single-digit expansion, if I understood correctly, until 2027. We have also the Barcelona platform launch later this year.
Are you still confident with this 5% growth until 2029? Thank you.
Let me take the one on Diagnostic first, and Rahul will comment on the margins. On Diagnostics, yes, we are still confident with our plan. I think that what is most promising within that business is the fact that the development of the three platforms, which is quite unique and important. I mean, the serology, the blood typing, and the molecular platforms are progressing very well and really under our expectations. The first launch is going to be Barcelona this year, and that is going to start building on additional revenues already in 2027, and certainly more to come as we progress. We are very optimistic about our Diagnostic business.
It's true that this dis solution of the joint business is going to present some headwinds this year, but certainly more focus on the revenue or EBITDA, while cash flow-wise, we'll continue delivering a very high profile. Most important, as I say, our developments on the R&D side are moving along very well and as expected, and we expect to generate very significant revenues from it as the capital markets they plan for the next five years will advance.
On the margins, Rahul, do you wanna comment?
Yeah. Closure of centers, Guilherme, you're absolutely right that it will contribute to margin improvement. What we haven't done is separate the margin improvement between each of our drivers, whether it's Biopharma product mix, segmental mix, the, you know, the impact of Egypt sourcing, the footprint optimization, Biotest. There are a whole bunch of drivers. No question that as you think about the scale of what we've talked about, we see a considerable opportunity to optimize our CPL, and it will contribute to margin improvement. We're just not separating out what that impact would be, you know, factor by factor.
I would add that, from an operational, I mean, efficiency perspective, I think this is certainly one of the big contributors as well to our OpEx management in the last years, which has been clearly shown inefficiencies in many places. The plasma donor centers are a key part of that. It's a significant cost and it goes to the cost per liter, and we are continuously working to make generating efficiency in that area. The closing of these centers that obviously were the less performing centers, obviously, it certainly will help to continue decreasing the cost per liter in the U.S.
As I explained by Roland as part of the presentation, I mean, step by step, we will transfer the needs of the European plasma sources from the U.S. to other sources, and all that will benefit on optimizing cost per liter all over the world. I think that, while we don't disclose the specific details, I think that our margin expansion is composed to many, many levers, and all of them are contributing to that.
Okay. Thank you so much, Nacho. Let's move to the next question. It is coming from Justin Smith from Bernstein.
thanks very much. Just one for Rahul, if possible. Just on the buybacks, if we get to that point, do you want us to think about that more as a perspective of increasing more tax-efficient returns to certain shareholders, or is it more about sort of a ROIC versus WACC equation, or is it a combination of both?
Yeah, look, I think at the end of the day, it's just a comparison of or judgment on intrinsic value, balance sheet capacity, and timing. You know, at the end of the day, we, you know, this is a judgment that will be made by the board as and when is right. We talked about this as part of our toolkit, even when we spoke about our capital market state plan 15 months ago. All I'm saying is, with the balance sheet in a considerably better place, this is capital allocation optionality that may be considered by the board as and when it deems fit. That's the only point for the moment, Justin.
Thank you so much, Rahul. We are close to the hour, but we have a second set of question from Charles Pitman from Barclays. Charles, please.
Hi, guys. Thanks very much. Just very briefly wondering if you could give us a quick update on the progress for the 2Q 20 26 facility launch in fibrinogen and whether you or not you have an updated timeline for the acquired form of the disease. If there's any time to comment, just your thoughts on the CIDP market following anti-FcRns remaining confident they can move into early lines. Thank you.
Looking at the facility of Prufibry launch, you know, outside of the U.S. and Germany, we launched last year. We're very pleased with the early feedback we receive in Germany and in Austria, where physicians highly appreciate the room temperature storage and the ease and speed of reconstitution as well as the speed of infusion. Pleased with the progress there ex-U.S. In the U.S., we're ramping up, have the team in place for a launch later this quarter, and we're excited about that. At the moment, focusing on congenital fibrinogen deficiency, as you know. You know, in parallel advancing our trial for AFD. We will share timelines as we have this more in place.
Just recall that as we look at the U.S., that market today has a size of about EUR 50 million. The potential is to EUR 800 million. We believe that this AFD trial will be with our design, helping to make that change of standard of care happen that is required in this market. We believe that we're in a position to effectively launch now. We look forward to it, and we'll then over time build in this market and believe that we can, you know, capture a significant share of the potential over time. In terms of CIDP, you know, we continue to see growth in CIDP at this moment in time. As you know, we now have a bit more than 1.5 years of the FcRNs in the market.
It showed that IVIG and IVIG in general is very well-suited for this multilateral disease. As we look at new competitors possibly entering, we know that we have a treatment in place that treats different parts of the disease mechanism in CIDP and therefore remain confident. That's what we hear back from physicians at this moment. At this moment, we continue to see growth.
Okay. Thank you so much, Roland. We are gonna squeeze Jaime from Santander. Jaime, the very last one, please.
Yeah. Hi. A super quick question. We never talk about Biopharma, but because it was particularly weak this quarter, just if you can provide a little bit of outlook for the following quarters. Thanks.
Yeah. I mean, we normally don't provide much details on Bio Supplies. Bio supplies is a business which is characterized for one spot deals and it might have a very significant variance to the year. I think it's in a way is a business that without existing, probably we would miss those opportunities in the markets. We know as well that it's very difficult to plan and forecast that as I say, because of these spot deals that are generating through the year. We are confident and when we are working on a number of those deals that we hope that will materialize through the year, it will be difficult to anticipate at this point how many of them will be in 2026 versus 2027.
I think we will provide updates as things will happen. Thank you, Jaime.
Thank you so much, Nacho. That was the last question for today. Thank you so much for having us and for your support. Thank you.