Vitrolife Q2 2025 slides: Currency headwinds mask 3% organic growth

Introduction & Market Context

Vitrolife AB (STO:VITR) shares tumbled 11.04% on Thursday after the reproductive health specialist presented its second-quarter 2025 results, with investors focusing on declining profitability despite pockets of growth in key segments. The stock closed at 151.3 SEK, down 16.7 SEK from the previous session, and is now trading near its 52-week low of 133.3 SEK.

The Swedish company reported sales of 871 MSEK for Q2, representing a 7% year-over-year decline, though management emphasized that currency effects accounted for 8 percentage points of this decrease. The results continue a challenging trend for Vitrolife, which also disappointed investors with its Q1 performance earlier this year.

Quarterly Performance Highlights

Vitrolife’s second quarter showed mixed results across its business segments. The company highlighted that consumables grew by 9% organically in local currencies (excluding discontinued business), while overall organic growth reached 3% when excluding discontinued business.

As shown in the following summary of financial performance:

However, headline figures painted a more challenging picture. Sales declined 7% to 871 MSEK (vs. 941 MSEK in Q2 2024), gross margin contracted to 58.0% from 59.9%, and EBITDA fell to 243 MSEK with a margin of 27.8%, significantly below the 34.7% recorded in the same period last year.

Earnings per share declined to 0.74 SEK from 1.06 SEK in the comparable quarter, while operating cash flow decreased to 151 MSEK from 236 MSEK.

Detailed Financial Analysis

Currency fluctuations played a major role in Vitrolife’s Q2 performance, with the company noting that translation and transaction exposures negatively impacted results. The presentation illustrated how currency effects reduced sales by 73 MSEK (-8%) in Q2 and 77 MSEK (-4%) year-to-date.

The company’s financial metrics show a clear pattern of margin compression across key indicators:

Operating expenses increased by 6%, which the company attributed to planned investments in sales and marketing in the United States, increased administrative expenses, and foreign exchange impacts. This spending increase, combined with revenue challenges, contributed to the significant drop in profitability metrics.

The following chart illustrates the financial performance comparison:

Regional Performance

Vitrolife’s geographical performance revealed notable disparities across its three main regions. Both Americas and EMEA achieved 5% organic growth in local currencies, while APAC remained flat with 0% growth.

The regional breakdown shows EMEA as the largest contributor to sales at 37% of total revenue, followed by Americas at 34% and APAC at 29%:

In the Americas, Vitrolife noted a "significant drop in cycles following the US IVF Executive Order signed in February," yet still managed to achieve growth through market share gains in Genetics, which grew 6% despite the cycle reduction. The region faced challenging comparisons in Technologies due to a large clinic chain purchase in the prior year.

EMEA saw strong performance in Consumables, which grew 17% in local currencies, though Technologies faced tough comparisons and Genetics was negatively impacted by the ongoing situation in the Middle East.

APAC continued to struggle with Chinese IVF cycles not returning to pre-dragon levels, though Southeast Asia showed strong growth. The company noted that Consumables performed well due to market share gains rather than cycle growth, while Technologies saw negative growth as clinics delayed capital purchases.

Strategic Initiatives

Looking ahead, Vitrolife outlined four key focus areas for 2025: Growth, Innovation, Operational Excellence, and navigating the Macroeconomic Environment. The company emphasized its strategy to drive market share gains, accelerate penetration of its solutions, and prioritize R&D programs.

The presentation highlighted Vitrolife’s position as lead investor in AutoIVF, suggesting continued commitment to innovation and technology development in the reproductive health space. The company also mentioned ongoing investments in digitalization and maintaining quality standards.

Forward-Looking Statements

Vitrolife management indicated they are closely monitoring the evolving situation with tariffs and the US IVF Executive Order, which has already impacted cycle volumes in the Americas region. The company did not provide specific guidance for the remainder of 2025 but emphasized its focus on driving organic growth through market share gains.

The continued currency headwinds remain a significant concern, with the company noting that a 10% change in the SEK exchange rate against Vitrolife Group’s top currencies would affect income before tax by approximately 141 MSEK based on 2024 figures.

Despite the challenging quarter, Vitrolife maintains a relatively strong balance sheet with a Net Debt/EBITDA ratio of 0.8, improved from 1.0 in the same period last year, potentially providing flexibility for strategic investments or acquisitions as the company navigates through current market challenges.

Full presentation:

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