• Revenue: Over 16% growth in constant currency, surpassing EUR590 million.
• EBITDA Margin: 28% in constant currency, EUR160 million, a 19% increase year-over-year.
• Net Profit: Increased by 54% to approximately EUR73 million.
• Dividend: Proposed CHF0.69 per share, a 25% increase year-over-year.
• Gross Profit: EUR399 million, a 15% increase, with a margin of 57.6%.
• CapEx: EUR99 million, with significant investments in growth and production facilities.
• Cash Flow: Operating cash flow of EUR107 million, a 40% increase, with a positive free cash flow of EUR8.3 million.
• Leverage: Very low at 0.99 times EBITDA.
• Product Line Growth: Knees grew more than 3 times the market; Spine grew above 17%; Extremities had a CAGR of 36.5%.

• Warning! GuruFocus has detected 5 Warning Signs with XSWX:MOVE.

Release Date: March 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Medacta Group SA (XSWX:MOVE) reported a strong revenue growth of over 16% in constant currency, surpassing EUR590 million.
• The company achieved an excellent profitability with a 28% EBITDA margin in constant currency, marking a 19.4% increase over 2023.
• Net profit increased by almost 54% to approximately EUR73 million.
• A proposed dividend of CHF0.69 per share represents an increase of over 25% year-over-year.
• The company has maintained a strong focus on sustainability, sourcing 100% of electricity from renewable sources and achieving a 44% reduction in greenhouse gas emissions.

Negative Points

• The market growth is expected to slow down in 2025, which could impact Medacta's growth projections.
• There is a potential for price erosion, with approximately a 1% decrease built into the company's model.
• The integration of the Parcus acquisition may lead to some dilution in margins and incur integration costs.
• The company's guidance for 2025 includes a slightly lower adjusted EBITDA margin of around 27%, partly due to the Parcus acquisition.
• Despite strong growth, the company faces increased competition in the anterior hip market from established players.

Q & A Highlights

Q: If we take Parcus out of the guidance, does it imply around 4% base ortho growth? Does this also mean the backlog is fully out? A: Parcus alone contributes around 2% to 2.5% of the 2025 guidance. The market growth in 2024 was stronger than expected, around 5% to 5.5%. We expect the market to slow down a bit, but we will benefit if it stays strong. Without Parcus, you remove 2% from our guidance for the core pre-Parcus acquisition growth rate.

Q: Can you provide insights on instrument CapEx growth and its implications for market opportunities? A: Instrumentation is a good proxy for expected growth, especially in H1 2025. The CapEx growth aligns with historical patterns, indicating opportunities in the market. The investment in instruments supports revenue growth in early 2025.

Q: Is there a hedging impact on financial income, and how does it affect results? A: Financial results benefited from the positive evolution of the US dollar versus Swiss francs. We reduced exposure to intercompany debt, leading to limited fluctuations and a positive effect due to favorable FX evolution. This resulted in a low financial result of roughly EUR4 million compared to EUR15 million last year.

Q: What is the status of GMK SpheriKA's regulatory approval in Japan and Australia? A: GMK SpheriKA is approved in Japan but not yet in Australia. Both countries are adopting cinematic alignment with Sphere, and we expect further acceleration in Japan with the approval.

Q: What is the pricing growth for 2024, and what is embedded in the 2025 guidance? A: We have a 1% price erosion built into our model, consistent with historical trends. The 2025 guidance incorporates a slower market growth than 2024, reflecting a more normal growth rate.

Q: Can you update us on the GMK SpheriKA launch and its traction? A: GMK SpheriKA is rolling out well, with strong demand. It is expected to become our number one brand by the end of 2025. The ASC portion remains stable, with a bigger share within ASCs than outside, supported by our minimally invasive procedures and single-use instruments.

Q: How does the Parcus acquisition integrate with existing offerings, and what are the expected synergies? A: Parcus accelerates our sports medicine portfolio, particularly in shoulder-related products. It allows us to invest in dedicated sales force and expand commercial penetration, especially in Europe. The acquisition provides vertical integration opportunities and synergies with existing lines.

Q: Are there any strategic opportunities in enabling technologies beyond the THINK Surgical collaboration? A: The THINK Surgical partnership offers a robotic platform for customers interested in Medacta products. We remain interested in enabling technologies and are working on projects to enhance our NextAR offering, including new software and hardware developments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.