Earnings call transcript: Asker Healthcare Q2 2025 sees strong growth

Asker Healthcare Group AB, a prominent player in the Healthcare Equipment & Supplies industry with a market capitalization of $3.4 billion, reported robust financial results for the second quarter of 2025, reflecting solid growth in sales and profitability. The company achieved a 9% year-over-year increase in net sales, reaching SEK 4 billion. Despite economic uncertainties, Asker Healthcare’s stock price declined by 2.05% in the latest trading session, closing at SEK 84.74. According to InvestingPro analysis, the stock appears fairly valued, with analysts maintaining a positive outlook and a consensus Buy rating of 1.8.

Key Takeaways

• Net sales rose 9% year-over-year, reaching SEK 4 billion.
• Adjusted EBITDA grew by 12%, with a margin of 9.5%.
• The company completed five acquisitions in Q2, enhancing its market position.
• Stock price fell by 2.05% to SEK 84.74 amid broader market fluctuations.

Company Performance

Asker Healthcare demonstrated strong performance in Q2 2025, driven by both organic growth and strategic acquisitions. The company’s net sales increased by 9% compared to the same period last year, while adjusted EBITDA saw a 12% rise to $152.32 million. This growth was supported by a 7% organic growth rate and an 8% contribution from acquisitions. InvestingPro data reveals the company maintains a healthy financial position with a GOOD overall score of 2.75, operating with moderate debt levels and a current ratio of 1.44. Asker Healthcare’s expansion efforts included acquiring distribution rights for orthopedic implant products in the Baltic region and developing a new distribution center in Gothenburg.

Financial Highlights

• Revenue: SEK 4 billion, up 9% year-over-year
• Adjusted EBITDA: 12% growth
• EBITDA Margin: 9.5%, approaching the 10% midterm target
• Organic Growth: 7%
• Acquisition Growth: 8%

Outlook & Guidance

Looking ahead, Asker Healthcare remains committed to achieving a 10% EBITDA margin in the midterm. The company’s strategy includes acquiring 10 to 20 new companies annually and focusing on twin-engine growth through organic expansion and acquisitions. InvestingPro subscribers can access 8 additional key insights about Asker Healthcare’s growth potential and financial health, along with comprehensive Pro Research Reports that transform complex Wall Street data into actionable intelligence. The medium-term potential in the defense and preparedness market is a key area of confidence for Asker Healthcare.

Executive Commentary

CEO Johan Falk emphasized the company’s strategic position, stating, "Medical supplies, device and equipment are needed and we are providing that across Europe." Highlighting the company’s selective acquisition strategy, he added, "We see we are now in the fantastic situation that we can pick and choose the best ones."

Risks and Challenges

• Supply Chain Issues: Potential disruptions could impact the timely delivery of products.
• Market Saturation: Increased competition may pressure margins in certain regions.
• Macroeconomic Pressures: Economic uncertainty could affect healthcare spending.
• Defense Volume Challenges: Reduced defense volumes are estimated to impact sales by SEK 200 million.

Overall, Asker Healthcare Group AB’s Q2 2025 earnings call highlighted the company’s strong financial performance and strategic initiatives. Despite a slight decline in stock price, the company remains focused on growth and expansion in the healthcare supply market.

Full transcript - Asker Healthcare Group AB (ASKER) Q2 2025:

Conference Moderator: Welcome to Asker Healthcare Group AB Q2 Earnings Call 2025. For the first part of the conference call, the participants will be in listen only mode. During the question and answer session, participants are able to ask questions by dialing KEY5 on their telephone keypad. Now I will hand the conference over to CEO Johan Falk and CFO Thomas Moss. Please go ahead.

Johan Falk, CEO, Asker Healthcare Group AB: Thank you very much and welcome to the Q2 report from Asker Healthcare Group AB. This is our second report in the listed environment. For me it’s 13th year, so it’s more of the same and no drama and a steady performance is first of year. Makes me proud of what we do. If we have a look at the second quarter isolated, we see a solid performance from the 50 plus companies across 17 markets. However, we had a little bit of a headwind from translation effects of FX so they’re actually growing. Adjusted EBITDA with 15% but with a 3% of FX effect makes it down to 12%. Good solid performance. However, north had a little bit of a drawback from project-based sales. We’re going to come back to that later on. They were meeting very strong quarters last year, but underlying business are in good shape.

All in all good adjusted EBITDA which is our most important KPI increased 12% after the 3% effect impact. Good to see that organically we were growing 7% and acquisitions added another 8%. Net sales were up 9% to SEK 4 billion. Also impacted with negative 4% from FX. Our EBITDA margin we’re up to 9.5%. We see it steadily is growing towards our targets of 10% in the midterm. This quarter has been, I can say back to normal or we see an increasing inflow of potential targets in acquisitions. In my 13 years here, we’ve never seen such a good acquisition pipeline and I think it partly being a listed company where the market leader in Europe and companies and entrepreneurs are turning to us to be part of the Asker story and improve the healthcare system.

To me this is the most important message that we have a fantastic market to act on regardless of the financial climate and uncertainty. Medical supplies, device and equipment are needed and we are providing that across Europe, which is a fantastic feeling to see our entrepreneurs help the healthcare sector. I think that is also the reason why companies come to us and want to be part of the group, which is also from creating shareholder value. The most important aspect that we can be a larger group and improve healthcare and also at the same time create value. It feels really, really good. We have a net debt/EBITDA ratio that is continue to be low. It gives us firepower to continue to buy companies. We describe our business model as, you know, as the twin engine organic growth priority number one.

Adding new companies to the group is as important. Both of these engines are performing well during this time. Looking at this business, of course it can go 3% up or down each quarter, but over time, both backwards and forwards, we see the performance that we are here to deliver. 20% adjusted EBITDA growth for the past 12 months, we’re keeping our overarch EBITDA over net working capital at 65%, which is very good to see. Capital-light business and see improvement in earnings helping us to keep that level, our margins slowly going up towards the 10% in the midterm future. Last 12 months, 9.2%, a little bit stronger in this quarter, which is usually a stronger quarter as well, but it’s going the right direction, which is good, and the low leverage giving us a good firepower for the future.

Looking at acquisition then, I mean, as you all can imagine, the.

Thomas Moss, CFO, Asker Healthcare Group AB: Process.

Johan Falk, CEO, Asker Healthcare Group AB: Going from private environment to listed environment takes some energy from me and my fantastic team and also the managers out there. Now we are being back on track and as I mentioned, the best pipeline so far in my 13 years here. We see we are now in the fantastic situation that we can pick and choose the best ones. We usually buy 50% of the companies we evaluate, but now I think we’re down to lower. Our limitation is now the financial targets that we have set up and picking the best companies that perform the best and welcome them to the group. During this quarter we bought four companies and actually added one more up until today after the quarter period has ended.

Five companies and six in total the first half year give me confidence for the coming month and years to come that we will add new company to the group. We’re not possible to go through all the companies in every meeting, but we’ll highlight one or two of them every quarter. This time we have chosen to highlight Scan Module, a company that is based in the Netherlands, but acts in 10 different markets across Europe. They have a long history of being expert in making sure that you store the medical supplies, the vital equipment in the best possible way in different hospitals and healthcare units. This is to me a little bit of the last mile of giving access to these important critical products and services.

Scan Module have a long history of customer relationship and knowledge about how to make sure that the products are at the right point at the right time and storing them and keeping track of dates and all of these possible things that you imagine you need to perform good healthcare. This is what we call it’s not a platform as such, but it’s a little bit of a new type of company that could give us continuous growth going forward. We have, as you know, a strategy to buy 10 to 20 new companies a year using our free cash flow to buy companies. Once in a while we tend to buy a little bit larger companies, which is Scan Module, is a little bit larger and a little bit of a strategic acquisition for us. It’s very good to see and hopefully can create good growth going forward.

With that I’ll leave the word to Tom.

Thomas Moss, CFO, Asker Healthcare Group AB: Great, thank you Johan. We can dive a little bit more into some of the financials. If I start with the group overview here on page six, what you see is very much in line with what Johan described. Solid revenue and EBITDA growth and a slightly stronger margin coming through in Q2. The net sales for the group in Q2 was up by 9% with that FX headwind included that Johan mentioned, the growth driven by strong performances in West and Central and a slightly slower performance in Region North. I’m going to come back to the regions individually in a second just to put a little bit more color around that, but net net delivering an EBITDA growth up 12% in the quarter again with the FX headwind pushing us back a little bit by 3%.

Within that, the EBITDA margin up marginally in the quarter as well, which is good to see. Lots of activities going on around the group in terms of mix improvement, the new MAS coming in, enriching the margin and ongoing operational and synergy efforts within the existing operations. Worth noting though that also Q2 tends to be a seasonally strong quarter for margin. If I look over to the right hand side of this picture, just to quickly summarize, H1 as a whole we see organic growth up 6%. On EBITDA we see acquired growth delivering 10%, that FX headwind that we’ve mentioned, but a total adjusted EBITDA growth for H1 of 14%, very much a good solid start to the year.

If I dive a little bit now into the regions to try and give you a bit more detail, starting with business area North, I think the first and most important thing to say is that the underlying core operations in North, that day to day activity servicing the regions, the municipalities, all of those healthcare settings, performing extremely solidly, extremely well across all of the companies and all of the countries in Region North. We do though see an EBITDA decline in the quarter and that’s due to the irregular project-based sales activities that we talked a little bit about in Q1 and is continuing to challenge the figures a bit in Q2, particularly in that defense and preparedness area where we had very strong performance in the same period last year.

We also have made good progress with the development of our larger new distribution center in Gothenburg that has had its first large CapEx expenditures which come into the cash flow, which I’ll talk a little bit more about a bit later. Overall, if you look at H1 as a whole on the right-hand side here, adjusted EBITDA growth is actually down 7%. Net sales down 2% in the first half of the year for those years, and those reasons that I talked about related to the irregular project-based activities. If I turn to Region West, we see a very nice development, strong organic growth, and improved margins in Region West. A large part of that organic growth is driven by increased patient numbers.

We also mentioned this earlier on in the year as a result of some larger customer databases that we took over during the second half of 2024, and those increased patient numbers are still flowing through nicely into the figures. We also get good uplift from the acquisitions that we’ve done in the region. The large Hospital Services Limited acquisition we did in February this year also coming nicely into the numbers and performing well in line with expectations. The EBITDA margin is also strengthened a little in the region, again a mix of different activities contributing to that. Both the organic synergy benefits we see from increased cooperation between our companies, especially within the home care hub that we’re seeing developing very nicely in Region West, but also activities across the group with looking at product mix and how we enrich that across our companies.

H1 as a whole, 31% adjusted EBITDA growth, sales growth of 17% in the same period, and then the third of our regions, Business Area Central. Also some good growth figures to present here, primarily driven by the high pace of acquisition activity that we see in Central. Sales up 25% in the quarter, EBITDA up 61% in the quarter, and as I say, M&A a big part of that driver. We also see improved EBITDA margins moving up towards the margins that we see in the other regions, and that comes again from a variety of activities.

The new M&As coming in, enriching the mix, but we’ve also had quite a focus on our organic business and the margin within our organic business in the Central region as well, and that’s meant that we have been prepared to sacrifice a little bit of revenue growth to get margins up in the region. Overall, H1 EBITDA growth, adjusted EBITDA growth of 68%, net sales growth of 31%. If I turn briefly now here on page 10 to the R over RK, this is, as we’ve talked a lot about in the past, our key internal performance metric, really making sure that we’re focusing on efficient working capital utilization. We are pleased to see that remains well above our Asker target of 15%.

It is also, of course, an area that we continue to put a lot of effort into with our new companies, our M&As coming into the group. A word or two on the cash flow as well. We see slightly lower operating cash flow versus the high levels that we saw in Q2 2024. In 2024, the comparable period, we did have relatively low levels of working capital and very high levels of cash inflow, again relating in large part to these project-based sales in North that I’ve talked about before. We got paid for a lot of the activity that we’d done all the way through H1. A lot of that money came in during Q2 2024. The slightly lower level that you see in Q2 2025 is more about the comparables than anything to do with Q2 2025 on a standalone basis.

CapEx at just over SEK 200 million I mentioned earlier. We have had the first of the larger investments in the Gothenburg distribution center. We also paid to take over some distribution rights, some interesting new products coming into the portfolio within the Baltic region that we look forward to delivering strongly in the future. That is also booked as CapEx in the quarter acquisitions. The SEK -160 million that you see there, the acquisition of MS Labor was completed in the period, so that was the paid acquisition. The other large chunk of that minus SEK 160 million comes from the earn-outs, the contingent considerations that we’ve paid for previous acquisitions that we’ve done. You see the financing is a large positive SEK 730 million that you see there.

That is actually us drawing down cash from our revolving credit facility to pay for the acquisitions that came in early July, primarily Scan Module. That money has already been spent in the early weeks of July to complete the acquisition of Scan Module. A final page from me before I hand it back to Johan, the leverage levels remaining at a relatively low level, 1.8x. What you see since the comparable period is obviously the net debt has risen a little. We have done more M&As through that period. We brought in capital through the equity issue at the time of the IPO. At the same time, the group has grown strongly and the EBITDA has risen through that period. The net effect of those two is that the net debt to EBITDA ratio is at 1.8 as of the end of June.

As Johan mentioned earlier, the attractive pipeline is good because we have a little bit of headroom now within the leverage to take advantage of that attractive pipeline. I think I’ll leave it there, Johanna, and pass it back to you.

Johan Falk, CEO, Asker Healthcare Group AB: Thank you, Tom. Okay, to summarize this before we go into Q and A. We see this as a steady performance in the quarter with some headwinds from translations and FX. Our operational performance is where it should be, and we’re picking up speed in the M&A second engine of ours. That is, it’s been a good quarter for us. As I see it, we are well on track on the acquisition in total, but even from that position we’re picking up speed. Looking back to the last 12 months, we’ve done 16 acquisitions even during this IPO period. We have added SEK 2.5 billion. That to me is where we should be, maybe a little bit better. Overall, a strong balance sheet gives us good confidence that we’ll continue to run these twin engines in a good way going forward.

I think we’ll leave it there and open up the floor for questions.

Conference Moderator: If you wish to ask a question, please dial on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. Next question comes from Carl Ragnarstam from Nordea. Please go ahead.

Good morning, it’s Carl from Nordia. A few questions if I may. First, coming back to North, you obviously talked about the challenging comparisons from the defense volumes last year. Could you try to quantify what impact it had in the quarter and also help us a bit what the like-for-like would look like without it in the comparisons.

Thomas Moss, CFO, Asker Healthcare Group AB: Just.

We understand you. You mentioned obviously that it’s underlying developing quite nicely, but it would be nice to get some numbers on it if possible. On that note as well, obviously, I mean we have seen, I guess not, maybe not, the wording is not a shortfall, but we have seen a lack of defense volumes lately. Why do you think it’s the case and when do you think it might return? A couple of questions on that, sorry.

Yep. I can maybe start on the numbers side of it, Karl. Yeah, it’s difficult to put an absolutely precise exact number on it because obviously there are a number of different contracts and different call offs going on. If I was to give you a rough figure, I would talk about probably a couple of hundred million SEK of sales that we are missing on a kind of year-on-year comparison basis within the quarter. I think in terms of your question about when it will come and what we can expect, as we’ve said, we said it at Q1, we said again in the report today, you know, this is clearly an area that’s very interesting going forward. There is a lot, a lot of activity. There’s a lot of noise. You know, we all read the newspapers. We see what’s potentially coming.

To predict exactly when it will hit is much more difficult for us. I think if we’re honest ourselves, we are a little bit surprised by how slow it has been in the first half of the year. That doesn’t mean that our sort of medium-term confidence is any less than it has been. We believe that the area is interesting and it will come and we are well positioned. We have done a good job with our customers so far. There’s no reason not to be confident over the medium term. Yes, a little bit difficult to predict at the moment.

Do you have exclusivity on those volumes, or have you seen them being delivered by someone else, or how does it work?

No, we definitely haven’t seen them being delivered by anyone else. That’s not to say that we have exclusivity either. I think it is your share, I guess. Yeah, it seems to be relatively slow moving in the ordering process essentially.

Sure. Okay, that’s very clear. Could you also talk a bit about the distribution rights you took over in the Baltics? What product subsegments is it related to? Could you do some kind of Asker magic as you did in the client list in West as well, or how does it work with this one?

Yeah, they are orthopedic products. Nothing sort of super complicated, but yeah, orthopedic implant products. Highly valued, highly regarded, highly respected within the Baltic region. Profitable products, products that fit nicely into our existing mix. We feel very optimistic and happy about the portfolio expansion and the mix expansion that they give us within our Baltic business.

Is it possible to give any financials regarding the size?

I think that’s perhaps getting a little bit too specific. You can read from the CapEx that we’ve spent approximately SEK 100 million to acquire them. You can perhaps draw some own conclusions from that in terms of margins or revenues, but I don’t want to go too specifically into that.

That’s very clear. Looking at the gross margin, it continues to strengthen, reaching close to 41%. Would you say that the 160 basis point delta is mainly a function of M&A, or is it any mixed effects to consider? Also, are you comfortable at the current level to maintain it or even expand a bit further from here? The dynamics would be good to hear more.

Yeah, I think there are a number of different things going on there, but broadly speaking, yes, the M&As that we buy tend to come in at slightly higher gross margins than the existing sort of core of the Asker Healthcare Group AB companies. They do also tend to come in with slightly higher operating expenses as well, slightly lower down the P&L. Net net they are still a positive contributor at an EBITDA margin level as well. Gross margins, yes, I think we can expect some further progress depending on the M&As that we do and how they come in. I don’t think we should expect sort of radical upwards steps from there. I think the sort of business we are, the activities that we’re involved with, the way we work, those gross margins, you know, at or slightly above 40% are quite healthy.

Sure, that’s very good. That’s all for me, thank you.

Thanks.

Johan Falk, CEO, Asker Healthcare Group AB: Thanks.

Conference Moderator: As a reminder, if you wish to ask a question, please dial key 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Johan Falk, CEO, Asker Healthcare Group AB: All right, I’m happy to hear that people want to go back to the beach and have a good time. Thanks for calling in and listening, and I look forward to meet you next quarter. Thank you.

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