Earnings call transcript: Vitrolife Q2 2025 misses EPS forecast, stock dips

Vitrolife AB reported its second-quarter 2025 earnings, revealing a notable miss on earnings per share (EPS) compared to market expectations. The company posted an EPS of SEK 0.74, falling short of the forecasted SEK 1.11, marking a 33.33% negative surprise. Revenue also missed projections, coming in at SEK 871 million against an expected SEK 889.4 million. Following the earnings announcement, Vitrolife’s stock price dropped by 6.68%, reflecting investor concerns over the earnings miss and broader market conditions. According to InvestingPro analysis, the company maintains a GREAT financial health score of 3.13, despite trading near its 52-week low. The stock currently appears undervalued based on InvestingPro’s Fair Value calculations.

Key Takeaways

• Vitrolife’s Q2 2025 EPS fell short of expectations by 33.33%.
• Revenue decreased by 7% year-over-year, reaching SEK 871 million.
• The stock price declined by 6.68% in pre-market trading.
• The U.S. IVF market faces challenges due to regulatory impacts.
• The company remains optimistic about its performance in EMEA and Americas.

Company Performance

Vitrolife’s overall performance in Q2 2025 was impacted by several factors, including a decrease in sales and challenges in the U.S. IVF market. Despite these hurdles, the company achieved 3% organic growth in local currencies when excluding discontinued operations. The gross margin slightly decreased to 58% from 59.9% a year earlier. The company continues to focus on product innovation and market expansion, particularly in the U.S., where it is enhancing its market access capabilities.

Financial Highlights

• Revenue: SEK 871 million, a 7% decrease year-over-year.
• Earnings per share: SEK 0.74, down from forecasts.
• Gross margin: 58%, down from 59.9% the previous year.
• EBITDA: SEK 243 million, representing a 27.8% margin.

Earnings vs. Forecast

The actual EPS of SEK 0.74 was significantly below the forecasted SEK 1.11, resulting in a negative surprise of 33.33%. Revenue also missed expectations by 2.07%, coming in at SEK 871 million compared to the forecast of SEK 889.4 million. This performance indicates a challenging quarter for Vitrolife, diverging from its historical trend of meeting or exceeding market expectations.

Market Reaction

Following the earnings announcement, Vitrolife’s stock price experienced a 6.68% decline in pre-market trading. This drop reflects investor concerns over the earnings miss and the potential impact of regulatory challenges in the U.S. IVF market. With a beta of 1.79, the stock shows higher volatility than the broader market. The stock’s performance is currently closer to its 52-week low of SEK 133.3, highlighting the market’s cautious sentiment. For comprehensive analysis of Vitrolife’s market position and future potential, check out the detailed Pro Research Report available exclusively on InvestingPro, part of their coverage of over 1,400 stocks.

Outlook & Guidance

Vitrolife expressed cautious optimism about its prospects in the EMEA and Americas regions, while maintaining a conservative outlook for the APAC market. The company is monitoring potential government interventions that could support the IVF market, particularly in the U.S., where financial assistance could drive growth.

Executive Commentary

Bronwyn Brophy O’Connor, CEO, highlighted the resilience of the U.S. IVF market, stating, "Cycles are down in the U.S., but patients are postponing, not canceling." The CEO also emphasized the importance of government support, noting, "Governments will have no choice but to step in" regarding declining birth rates.

Risks and Challenges

• Regulatory impacts in the U.S. affecting IVF cycles.
• Mixed recovery in APAC markets, with China lagging.
• Potential supply chain disruptions.
• Macroeconomic pressures influencing consumer spending.
• Legal costs related to ongoing litigation.

Q&A

During the earnings call, analysts inquired about the impact of the U.S. executive order on IVF cycles and the company’s strategy to mitigate these challenges. Executives addressed concerns about one-off costs and discussed potential government reimbursement opportunities in APAC markets.

Full transcript - Vitrolife AB (VITR) Q2 2025:

Conference Moderator: Welcome to VitroLife Q2 twenty twenty five Earnings Call. For the first part of the presentation, participants will be in listen only mode. During the questions and answers session, participants are able to ask questions by dialing 5 on their telephone keypad. Start by asking one question followed by a follow-up question. It’s then fine to queue up again for more questions.

Now I will hand the conference over to CEO Bronwyn Brophy and CFO Helena Wennerstrom. Please go ahead.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Good morning, everyone. I would like to welcome welcome you to the VitroLife Group q two twenty twenty five earnings report. As mentioned, my name is Bronwyn Brophy O’Connor. I’m the CEO of the VitroLife Group, and I’m joined by Helena Wennarstrom, our acting CFO. I would like to now move you to the slide entitled q two twenty twenty five highlights.

I would like to start by highlighting three key achievements during the quarter. The first highlight was the performance of our consumables business, delivering 9% organic growth in local currencies, excluding discontinued business. This growth rate is significantly above current market growth rates in the quarter, and there is no doubt that we are taking share from the competition across the portfolio. The second point I would like to highlight is the performance of our Americas region, delivering 5% organic growth in local currency. This is despite the fact that market conditions were very challenging in the quarter due to a significant drop in cycle numbers in The US following the signing of the IVF executive order on the February 18.

And the final highlight I would like to share is that we became the lead investor in auto IVF, another key milestone as we advance our strategy of creating an end to end IVF platform for clinics. We will now move to the next slide, please. In addition to navigating an accelerating currency headwind in the quarter and the evolving tariff situation, this was a challenging quarter for the reproductive health industry as a whole. Following the signing of the IVF executive order in The United States, we witnessed a significant drop in cycles versus quarter one and versus the same quarter last year as patients postponed their IVF treatment in anticipation of greater financial support. To date, we have no further details on what this support will entail.

In Asia, we saw some small signs of recovery in China, but cycles have not returned to pre Dragon levels. We see stronger recovery in Southeast Asia. EMEA is performing well despite the impact of the situation in The Middle East. So taking you through the numbers. Sales in the quarter were SEK $871,000,000, minus 7% in SEK impacted by minus 8% due to currency.

Our CFO, Helena, will take you through the currency impact on the financials of our company in the next slide. We delivered an organic growth in local currencies, excluding discontinued business of plus 3%, despite the wider macro and industry specific challenges that I have just mentioned. Gross margin decreased to 58% also impacted by currency. EBITDA decreased to 243,000,000, resulting in an EBITDA margin of 27.8%. The margin was heavily impacted by currency and also the increased investment in sales and marketing in The US played a role.

Operating cash flow, $1.05 1,000,000 and earnings per share, point seven four. If we then take a look at the first half year of 2025, sales were SEK 1,700,000,000.0, that’s minus SEK 4 in SEK impacted by minus 4% due to currency. Organic growth plus 3% in local currencies, excluding discontinued business year to date. EBITDA, as you can see there on the slide, 500,000,000 SEK, and operating cash flow, 220,000,000 SEK. I’m now going to hand you over

Helena Wennerstrom, Acting CFO, VitroLife Group: to Helena, who will take you through the specifics of the currency impact on the VitraLife Group. Over to you, Helena. Thank you, Bronwyn. We are now on page number five, where we provide a more detailed analysis of the currency situation in the 2025 as developments accelerated significantly in twin q two twenty twenty five. First, some words about what is reflected in translation and in transaction effects.

Translation effects arises from the net investment in foreign subsidiaries. Revelation impacts the equity. Assets and liabilities translated at the closing day rate. Revelation impacts other operating items. Transaction effects attributable to income and expenses converted at the average rate for the period.

However, transactions in foreign currency are measured in functional currency at exchange rate that applies on the transaction date. Now over to impact that is has been observed in this result for the period. In q one, if I could draw your attention to the arrow on the right hand side, we can clearly see a significant strength in Swedish crown versus other currencies by the end of the quarter one, which impacted the result with translation effect of minus 13,000,000 SEK, but no major transaction effects in the period. In q two, Swedish crown currency has been less volatile, and we can see less impact of translation effect in the operating expenses amounted to minus 5,000,000 SEK for the quarter, but significant transaction effects in the result. Going to the currency effects in sales q two twenty twenty five, it’s amounted to 73,000,000 SEK corresponding to minus 8% for the quarter.

And currency effects on the sales year to date 2025, totaled to minus 77,000,000 SEK, representing approximately minus 4% for the period. Notably, only minus 4,000,000 SEK of this impact relates to the transaction effects from q one twenty twenty five. A large part of the transaction effect was visibly already in the gross result, but when it comes to operating cost, there is a counteract effect of foreign cost and their currency impact, but still we have a large part of the operating cost in Swedish krona. As a reference, in 2024, change in the Swedish krona exchange rate against Vitrolag Group all top currencies of plus minus 10% would have an effect on income before tax of plus minus 141,000,000 SEK for the full year. We are short in Danish crowns and in Swedish crowns, long in all other currencies as shown in the annual and sustainability report for 2024 in o two.

And by that, I will hand over to you, Bronwyn, again.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Thank you, Helena. We can now move to the next slide titled sales and growth for geographical segment. Sales in The Americas region increased by plus 5% despite the very challenging IVF climate in The United States, post the IVF executive order that I have previously mentioned. The growth that we delivered was primarily driven by share gains in genetic services in North America. The comparables in technologies were exceptionally challenging as we grew 174 in technologies in q two twenty twenty four due to closing a large embryoscope deal with the clinic chain.

Even with these very high comps, technologies America were only minus 1% behind the previous year. A strong performance in our largest region, EMEA, driven by what has to be said, an exceptional performance in our consumables business across the region, delivering 17% growth in local currencies, excluding discontinued business. We most definitely took share from competitors in several categories. This region also had substantial comparable challenges in technologies as we grew plus 50% in q two in 2024. Sales in APAC were flat with continued market weakness in China, although we saw a more robust recovery in Southeast Asia.

The overall cost of raising a child in APAC appears to be impacting cycle numbers in the wider region. And if I can draw your attention then to the share of total sales, you can see that EMEA continues to be our largest region with 33% share of total sales, followed by Americas with 34%. Okay. I’ll now move on, and we’ll take a deeper look at market region EMEA. So as I said, a strong performance by our largest region driven by Europe, a Vitralife Group stronghold, it has to be said, where we continue to expand our market leadership position in several key markets and parts of the portfolio.

In the region, our total growth was minus 8%, impacted by minus 5% in currency and minus 8% in discontinued business in the quarter. To repeat, our organic growth in local currency excluding discontinued business was plus 5%. Sales in consumables were plus 17% in local currencies excluding discontinued business, And I want to thank the team for the fantastic job that they did taking share across the portfolio in all markets. Sales in genetics in this region were impacted by the situation in The Middle East, But we did see steady growth across the portfolio in other markets, which was encouraging to see. And then a tough quarter here for technologies in the region, as I previously mentioned.

However, what is very encouraging to see here is that the revenue per installed embryoscope is increasing steadily. Okay. We will now move to market region Americas. So tough market conditions, as I mentioned, in parts of the America region, and this is as a result of the IVF executive order, which started to impact cycle levels as we moved into q two. In the VitroLife group, we conducted a patient survey across the high volume IVF states in America, and it confirmed that couples were delaying their IVF treatment while awaiting clarity on financial support.

The statement from the White House, just for those of you who haven’t had a chance to read it, the statement from the White House, and I will quote was to aggressively reduce out of pocket costs for IVF. Clearly, when this materializes, this will be good for patients, but we are still in a holding pattern awaiting further news from the US administration. Total growth of minus 6% impacted by minus 11% currency factor here. So an organic growth in local currencies of plus 5%. As I mentioned before, an exceptionally strong comparable quarter last year for technologies due to a large purchase from one of the one of the biggest clinic chains, cross border clinic chain, in fact.

But what I would say, despite the drop in cycles and the very strong comps in technologies, we still managed to deliver growth. And this is due to share gains in our genetic services business, which is performing very strongly this year across the, across the entire portfolio. So some good strong share gains and momentum in genetic services. Okay. I’d now like to move on and take a deeper look at market region APAC.

Market conditions in APAC are quite mixed from one market to another. Cycles have not returned to pre Dragon levels in China, and Australasia is flat and even negative in certain parts, but Southeast Asia is showing good signs of recovery. What we are seeing across the region is the delaying of capital purchases as chains and individual clinics, in fact, manage their cash. Total growth of minus 8% impacted by minus 7% due to currency fluctuations, so a flat organic growth in local currencies. Negative growth in technologies despite a healthy sales funnel of embryoscopes because we are impacted by these delayed capital purchases, especially in the larger markets.

The shining light here is again our consumables business, which is performing well due to share gains from competitors as opposed to cycle growth. And in fact, consumables performed well in all markets, even those impacted by lower cycle, growth rates. So with that, I will hand you back over to Helena who will take us through the geographical segments.

Helena Wennerstrom, Acting CFO, VitroLife Group: Thank you, Bronwyn. We are now on page number 10, where I’ll provide a more detailed analysis of the geographical segments, Americas, EMEA, and APAC. Starting on the right hand side, as Paul mentioned earlier, Tutus sales amounted to 871,000,000 SEK with a gross margin of 58%. In comparison with the previous year, sales were 941,000,000 SEK with a gross margin of 59.9%. The market contribution was 302,000,000 SEK with a contribution margin of 34.7%.

In the same quarter last year, it was 369,000,000 SEK with a contribution margin of 39.2, a decrease of 4.5 percentage points primarily driven by currency fluctuation changes and slightly increased supply chain cost. Let us now take a closer look at the geographic segments. On the left hand side, in The Americas, sales totaled 295,000,000 SEK, reflecting a 5% organic growth in local currencies, but the decline of 6% in sec, negatively impacted by currency of minus 11%. As Bromin mentioned earlier, we had a solid growth despite a significant drop in cycles following the US IVF executive order. Gross income totaled 160,000,000 SEK with a gross margin of 54.2%.

This compares to last year’s gross income of 181,000,000 SEK and a margin of 57.3%. A decline were primarily driven by currency fluctuations. However, an improvement by 0.5 percentage points compared to previous quarter. Select expenses for the quarter rose from 63,000,000 SEK to 75,000,000 SEK, reflecting ongoing investments in sales and marketing in The US as previously announced. The market contribution margin for the quarter was 29%, representing an improvement of 3.7 percentage points compared to previous quarter.

Sales in EMEA declined by 3% in local currencies and by 8% in SEK, totaling 326,000,000 SEK. The sales were negatively impacted by currency of minus 5%. Excluding discontinued business, sales increased by 5% in local currencies. Gross income was 195,000,000 SEK with a gross margin of 59.9% compared to 250,000,000 SEK and a margin of 60.5% last year. The decrease was mainly due to currency effects and product mix.

Selling expenses decreased from 90,000,000 SEK to 81,000,000 SEK. The market contribution margin for the quarter was 35%, slightly down from 31.5%, affected by currency fluctuation, product mix, and lower selling expenses. In APAC, amount the sales amounted to 250,000,000 SEK, reflecting a flat organic growth in local currencies, but an 8% decrease in SEK, primarily due to minus 7% currency impact. Gross income was 150,000,000 SEK with a gross margin of 59.8%, which is lower than previous year’s gross income of 169,000,000 SEK and a gross margin of 61.6%. However, there was an improvement of 1.5 percentage points compared to the previous quarter.

Selling expenses increased from 42,000,000 SEK to 47,000,000 SEK, and the market contribution margin for the quarter was 41%, down from 46.7% last year. Let’s move on to slide number 11. On this slide, I will comment on q two financial highlights. As earlier mentioned, the sales amounted to 871,000,000 SEK compared to previous year with the sales of SEK 941,000,000 corresponding to a flat growth in local currencies, a 7% decrease in SEK and 3% in local currencies excluding discontinued business. As part of our ongoing risk assessment procedure and to ensure we continue to comply with all applicable international sanctions, we decided to discontinue activities in certain markets in EMEA as we announced in the q four twenty twenty four report, representing less than 3% of our annual revenue effect from January 1.

The gross income amounted to 505,000,000 SEK compared to 564,000,000 SEK previous year, corresponding to a gross margin of 58%, down from 59.9% previous year, negatively impacted by currency fluctuations and slightly increased supply chain. In the second quarter, operating expenses increased primarily attributable to the previously communicated investment in expanding sales and marketing capabilities in The US as well as increased administrative expenses driven by ongoing activities within the company, and part of it is to be considered to as one off costs. Operating expenses were also impacted by minus 5,000,000 SEK when regulating assets and liability at the closing rate by the end of the quarter. All in all, this gives us an EBITDA of SEK $243,000,000 compared to SEK $327,000,000 previous year, which consequently gives an EBITDA margin of 70 27.8% compared to 34.7% last year. The decrease in margin is heavily impacted by transaction and translation effects driven by a strengthened SEK against other currencies.

Furthermore, the margin was also affected by increased selling expenses, mainly in US, combined with the impact of product and market mix. Let’s move on to slide number 12. Some comments about our operating expenses. As previously communicated, we continue to invest in sales and marketing capabilities in key markets, resulting in an increase in selling expenses from SEK 196,000,000 to SEK $2.00 3,000,000. R and D expenses have risen slightly year over year by 2,000,000 SEK.

Administrative expenses are higher and related to ongoing activities within the company and part of it to be considered as one off costs. Other operating expenses, $236,000,000 SEK, remaining flat compared to same quarter last year. However, the operating expenses are mainly affected by translation effects of minus 5,000,000 SEK in the quarter versus minus SEK 3,000,000 in the comparable quarter related to revaluation of assets and liabilities at the closing rate. Let’s move on to Slide number 13. Let us now look at some key financials.

Here, I will focus on the year to date numbers. And sales for the first half year amounted to SEK 1,700,000,000.0, corresponding to a flat growth in local currencies, a decrease of 4% in SEK, and a 3% decrease in local currencies, excluding discontinued business. The gross margins decreased from 58.6% to 57.7%. And the EBITDA amounted to 500,000,000 SEK compared to 600,000,000 SEK, corresponding to an EBITDA margin of 29.2% versus 33.6% this year. The decrease in margin is heavily impacted by transaction and translation of currency effects driven by strengthened SEK against other currencies, but the margin was also affected by increased selling expenses mainly in US and the product and market mix.

The financial net amounted to minus 15,000,000 SEK compared to minus 48,000,000 SEK previous year, primarily positively impacted by foreign exchange gain by 8,000,000 SEK compared to minus 4,000,000 SEK previous year. Interest expense amounted to 31,000,000 SEK compared to 48,000,000 SEK previous year. Net income amounted to 180 98,000,000 SEK compared to 258,000,000 SEK previous year, heavily impacted by currency fluctuations, which gives earnings per share of 0.74 Swedish krona compared to $1.00 6 Swedish crown previous year. Taxes amounted to minus 73,000,000 SEK compared to minus 77,000,000 SEK previous year, and the effective tax rate was 26.9% for the first half year compared to 23% same period previous year. The increase this year is driven by restructuring activities, withholding taxes, geographical market mix, main part effective in q one twenty twenty five.

Historically, the normalized average tax rate amounted to approximately 23 to 25% depending on the geographical market mix. Operating cash flow amounted to 220,000,000 SEK for the for the first half year compared to SEK 434,000,000 previous year. Changes in the working capital had a negative effect of SEK 134,000,000 this year compared to SEK 62,000,000 previous year, affecting all working capital items. The tax paid with a year over year increase of SEK81 million is a timing matter. And we have a strong balance sheet with an equity ratio of 78.8% and a net debt to EBITDA on 4.8 compared to one point zero previous year by the end of the quarter.

And additionally, in the July, we also have signed a €300,000,000 loan agreement consisting of the term loan to refinance the existing debt and revolving a facility for general corporate purposes. And I will now hand over to you again, Briony.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Thank you, Helena. So the focus for the rest of the year. Well, growth. Number one is to continue to drive share gain in key markets, leveraging the full breadth of the portfolio. I think particularly on the consumable side, we’ve been doing this really well for several quarters now.

Second imperative is to accelerate penetration of our combined embryoscope and lab controlled solutions. At the recent ESHRA congress, we showcased new additional features on our lab control and also the integration of embryoscope and our eWitness, which was very well received by our customers. And then very important to deliver best in class quality and customer service, both of which are synonymous with our company and help to differentiate us from our competitors. In relation to innovation, we have prioritized those programs that deliver solutions to help clinics automate scale and improve outcomes. So essentially, what we’re doing is prioritizing the platform related r and d programs.

And we’ve also strengthened our market access capabilities, particularly to help us with some of the, US approvals. In relation to operational excellence, I guess the key point I would like to highlight here is automating our manufacturing to increase capacity of key growth drivers. This has been really critical to meet the demand forecast in our consumables business, in particular, where we have been gaining share for several quarters across the portfolio. And then in relation to the macroeconomic environment, well, it’s clearly quite volatile. Additionally, we need to stay very close to the evolving situation with tariffs in the US IVF executive order in The US.

We can clearly see that a majority of patients have postponed, not canceled, have postponed their IVF treatments in The US. There’s only so long that you can do this for because the window for successful IVF is very small. So I guess we will see as the months progress. Well, first of all, how soon we can get an update from the US administration and then for how much longer are patients going to postpone. And then I think very importantly as well for our EMEA region, our largest region, which is performing very well, is to be ready to rescale activities in The Middle East in the event that certain markets reopen there.

So with that, I’d like to thank you for your attention, and we’ll now hand over to the moderator to open up for q and a.

Conference Moderator: Q The next question comes from Ulrich Trotter from DNB Carnegie. Please go ahead.

Ulrich Trotter, Analyst, DNB Carnegie: Thank you very much. My question would be on the on your impression on the underlying growth for respective markets in Q2, both mainly for EMEA and Americas and the potential specifically for The U. S. And what is driving your market share gains in EMEA consumables as well as in Americas genetics?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So thank you for the question, Ulrik. I think part one is what do we what do I think the underlying growth is in in EMEA and Americas. Correct?

Ulrich Trotter, Analyst, DNB Carnegie: Yes. Yes. That’s correct.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So, cycles are down. Cycles are down in The US, but, of course, for us, Americas is US, Canada, and South America. But cycles specifically in The US are down versus the previous quarter. So q one, they were tracking healthily, I would say, and they are down versus versus q one and down versus versus last year.

It’s not canceling of cycles per se, it’s postponement. I mean, obviously, that statement came out from the White House on the February 18. It was a very strong statement. IVF is expensive in The US, so you can completely understand why patients would would pause. So cycles are down, which to me highlights that our consumables performance and our genetics performance more specifically in North America is very strong.

That’s down to share gains. We’ve been taking share in genetic services, not genomics so much, but in genetic services in North America, for several quarters now, and that really drove the growth in in The Americas region. EMEA, cycles are positive. So cycles are growing, but they’re not growing to the level of our of our consumables gains. And really where we’re taking share is it’s across the consumables portfolio, Ulrik.

As you know, we have been taking share on on the media side for for quite a while, but we’re now taking share in in other parts of the consumables portfolio. So disposable devices, pipettes, needles, basically everywhere. I mean, to to have the growth of of 17% excluding discontinued business is significantly double digit, above above what the cycle growths are in the region. So, hopefully, I’ve answered your question the way you intended us.

Ulrich Trotter, Analyst, DNB Carnegie: Yes. Absolutely. And just a follow-up question on on generics in in The US. What specific tests are are driving growth? And I also note that you submitted sort of dismissal of the class action suit, the PGPA class and slash class action suit during June.

So so first question then would be follow-up would be which tests are are driving growth? Secondly, have you seen any material impact from this on on PGT A sales for for The US isolated?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So I can answer the second part first because it makes the first part easier. There’s there’s no impact because the PGTA family of tests is what’s driving the growth. It’s it it that’s that’s it’s it’s the largest part of the revenue, and it’s it’s it’s driving the growth. It’s so it’s significant.

And and that’s I mean, if you if you if we look at our twelve month rolling by test, obviously, we don’t divulge this information. I’m sure we have plenty of competitors listening in this morning, so we don’t divulge that by test. But, it is the largest part of the revenue in North America, and it’s it’s performing it’s performing well. And it has not been impacted in any shape or form by the by the class actions.

Jakob Lemke, Analyst, SEB: Great. Thank you, Bromwyn, and I’ll get back into the queue.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Sure. Farsha good. Thank you, Ulrik.

Conference Moderator: The next question comes from Sten Gustafsson from ABG Sundal Collier. Please go ahead.

Sten Gustafsson, Analyst, ABG Sundal Collier: Yes, good morning. A question on the cycle growth in The U. S. During the quarter. Can you comment anything about if there were any differences sort of in the start of the quarter compared to the end of the quarter, if the growth rate picked up by the end of the quarter or if it’s similar growth month over month?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So excellent questions, Stan. Thank you. Cycles got slightly better as the quarter advanced. So the biggest drop was at the biggest drop was at the start of the quarter.

It was a little bit less in April, you know sorry. April, May, June. Essentially, April was bad. May, a little bit less bad, and then slightly better in June. So it would appear, I I I never like guessing when it comes to executive order, to be honest, but it would appear based on our data that patients had waited the the ninety days.

Then when they saw that nothing was coming out, the big beautiful bill was going through the house, and that was the focus of the administration. But I think as patients saw that there was no update coming on the IVF executive order, they slowly started to, return to the clinics. Yeah.

Sten Gustafsson, Analyst, ABG Sundal Collier: Excellent. Thank you.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: So the phasing was yeah. You’re welcome. And

Sten Gustafsson, Analyst, ABG Sundal Collier: then if I may squeeze in, some sort of a follow-up there, but but the sort of on the on the broader, growth, for for the for the company, It’s been relatively muted now for the first half. And what do you see near term for the coming two quarters in terms of do you expect growth to improve? Or do you give any can you give any guidance on the outlook for the second half? That would be helpful.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So so, typically, we don’t guide, but I’ll I’ll try to give you my my based on what we see, it it’s quite region specific, Stan. So, EMEA is looking looking very solid, actually. So that’s looking looking good. Europe across the board is is looking pretty good.

And for us as a company, I don’t know what it’s like for our competitors, but for us as a company, we’re performing well in in all markets. The exception of The Middle East, which we all know the reasons why that has been has been impacted. Asia is very much a mixed bag. So so, cycles have not recovered in in China. They’re not they’re better than the levels that they were at in quarter one, but they have not returned to pre Dragon levels.

So so China’s looking looking soft. Southeast Asia’s looking, you know, a a lot better. So a little bit of a a little bit of a mixed bag in in APAC. And then, you know, the the biggest the biggest question is obviously The Americas because North America is the largest part of that market by by quite a distance. Cycles had been trending very nicely.

It’s the largest IVF market in the world, and it also had for for in the context of being a large market, it also had prior to the executive order being signed, one of the healthiest growth rates globally. So the postponement or, I guess, the delay in providing clarity to couples on what that additional financial support will mean that, you know, that’s making it very difficult to make a call on on North American growth. What we do know for sure is that this pent up demand because, you know, speaking to to our clinics and to the, you know, clinic chains, but also to some of the smaller clinics, they’re not seeing patients canceling cycles. They’re seeing them postpone them, which is completely understandable. I mean, IVF is very expensive in in The United States, and any financial assist going to go a long way.

So, you know, in in in many ways in relation to The US, if we could just get clarity either way, it would be good for growth. Either financial assistance is coming, that’s fantastic, or financial assistance is not coming, and we can get back to the healthy growth rates that we we we’ve had in the market for several years. So it really depends by by regions then. The sooner we get clarity in The United States, the faster we can, the sooner we can get the growth up.

Sten Gustafsson, Analyst, ABG Sundal Collier: Excellent. Thank you very much for your comments.

Conference Moderator: Next question comes from Jakob Lemke from SEB.

Jakob Lemke, Analyst, SEB: Hi, and good morning. A question on Technologies. So in Q2 here, you talked about a bit of a weaker quarter in APAC. Americas seems to be more of a stronger quarter. So just in general, what is your outlook and sort of how is the pipeline for technologies here in the the coming quarters across the regions?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So, thank you for your question, Jacob. So the pipeline is good. I mean, even in APAC, the pipeline is is pretty good for for embryoscopes. But we are seeing again, I’m gonna take you through the three regions because the dynamics are quite different by region.

So so in APAC, good funnel, very good funnel even in the markets where cycles are you know, haven’t recovered to historic levels, but we’re seeing continued delays in capital purchases. So, again, it’s not like the embryoscope orders are being canceled. It’s it’s delaying as clinic chains and individual clinics, you know, I guess, hold on to their hold on to their cash in in volatile times. EMEA is our most penetrated region for for embryoscope, but embryoscope has has been performing well there. And I guess the other thing you need to we we need to think about here, Jacob, is the consumable revenue per embryoscope.

We don’t we don’t divulge exactly what that is, but it’s it’s becoming a a healthier proportion, and that’s trending very nicely in in EMEA. And then in Americas, we’ve really been focusing on on embryoscope. We’ve been getting some very nice traction there. The funnel has been building. But again, there, we have a little bit of a holding pattern less than APAC, it has to be said.

We have a little bit of a little bit of a holding pattern on technologies just with the whole executive order, I guess, sort of impacting confidence a little bit. But the funnel overall for Enbroscope is healthy. It’s the timing of when of when the systems come in, and we do see the time to order, which we which we measure. The time to order is is taking longer. It’s increasing.

But consumables revenue per embryoscope across the globe is is increasing nicely. So, hopefully, that gives you a a bit of a flavor, Jacob.

Jakob Lemke, Analyst, SEB: Yeah. And and just on on on APAC then, when do you think the this sort of caution, from the clinics will will move away and they can start to execute their their orders?

Helena Wennerstrom, Acting CFO, VitroLife Group: Yeah. It depends on

Bronwyn Brophy O’Connor, CEO, VitroLife Group: the markets in in APAC. So, I mean, you know, if if we if we just take China as an example, as I mentioned, cycles haven’t returned to sort of historic or pre or pre Dragon levels. And and I guess the clinics in general would like to see there are some green we have seen some green shoots, nothing to get too excited about. But I guess the clinics are are waiting for a little bit more confidence on on the cycle side. I mean, reimbursement has been improved.

It hasn’t had an impact yet. You know, our government’s going to become more aggressive on the reimbursement side. We look what what’s happened in in South Korea. The government’s gone very aggressive on on financial support, and it has helped, you know, the Chinas and Japans of this world are likely going to have to do the same if they really want want to move the needle. So all of that sort of helps confidence in in investing in in an embryoscope.

And then, Jacob, was there a second part to your second question that I missed, or have I clarified?

Jakob Lemke, Analyst, SEB: No. You you clarified. Maybe if I can just shoot in a more general question before getting back in line. So so I guess 2025 has been a a sort of tougher year for for many of your key markets. But when you now look into 2026, what are you seeing there?

And and also, do you think it’s possible to to get back to your sort of growth target of of 10% in in in next year?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So, again, it comes back to the three part story. We think we think, EMEA is is is good and steady, particularly, Europe. Europe is better than good and steady. That’s for the VitroLife Group.

We’re doing very well in in EMEA. If financial support comes in The US, then we will see an uptick in in cycles. That would be expected. It won’t it won’t be explosive because the capacity is not in the system right now. It would take time for that to filter through.

But, you know, any financial support in US will help the The Americas region. I guess where I would be more cautious is on is on APAC because we do have several large markets there. When I say large, I mean large in in absolute numbers of IVF cycles, and we see that, you know, despite improved reimbursements, the cycles quarter over quarter, you can have snakes, dragons, and all these sorts of things. But if you if you look at the rolling twelve, twenty four month cycles, it’s it’s it’s not very exciting. So APAC seems to have more endemic challenges, one of which is the cost of raising, the overall cost of raising a child.

And I think that’s why you’re starting to see some of the government step in. So I think, you know, again, EMEA steady, more optimistic for for Americas, but more conservative outlook for APAC.

Jakob Lemke, Analyst, SEB: Okay. Thanks. I’ll get back in line.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: You’re welcome. Thank you, Jacob.

Conference Moderator: The next question comes from Johan Unnuris from Redeye. Please go ahead.

Johan Unnuris, Analyst, Redeye: Great. Thanks for taking our questions. The first one on the second follow-up then. On The U. S.

Side, clearly, consumers or the clients are hesitant and postponing. Is there an element of that the administration budget of RCT also affects the clinic in terms of activity and perhaps encouraging patients to go further?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: I’m sorry, Johan. I’m I’m I’m struggling to hear you a little bit. So I think your question incorrect. Maybe could you repeat the question? Yeah.

Johan Unnuris, Analyst, Redeye: Yeah. Yeah. No. I think Let’s see. I can change, perhaps, go directly.

Maybe my iPhone was great. Yeah. Is that better?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: That’s okay. Great. That’s much better. Thank

Johan Unnuris, Analyst, Redeye: I am just so sorry for the confusion. Now it’s sealed, so it doesn’t pop over automatically. Yeah. No. Your message regarding US in terms of patient behavior is pretty clear.

It seems be that a lot of patients are postponing and not canceling. But what in terms of there is, of course, the changes, of course, in budgets and administration. Is that having an impact perhaps in in how the centers are incentivizing their patient to go further. There could be an element of that as well, I I suspect.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. We’re we’re not we’re not the the industry, not VitraLife Group. So so reproductive health as a whole isn’t so impacted by by some of the central government cuts or cuts to things like NIH funding. I mean, we’re not completely immune to it, but but, you know, I mean, most of the clinics in The United States are part of a chain, 60%, and most of those chains are privately are privately owned. There are some for sure.

There are some clinics that are linked to academic centers, you know, the the Columbia’s and Cornell’s of of this world. But so far, the sort of funding on that reproductive health side hasn’t been impacted. I mean, the the administration has been pretty clear, not just president Trump, but just the wider administration has been very clear that they want Americans having more babies. And and they’re very pro providing support for couples to do that or for individuals to do that. So so we haven’t re you know, to date, I I couldn’t say we’ve been impacted by that in any material way.

Yeah.

Johan Unnuris, Analyst, Redeye: Great. And a similar question relate to Yeah. There are

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Go ahead, Johan. Sorry. No. I was

Susannah Kwikbwerner, Analyst, SHB: Thanks.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Was gonna say healthcare, which would be significantly impacted, but not not really our space. Yeah.

Johan Unnuris, Analyst, Redeye: Yeah. And in the APAC region, the sort of more regional approach doesn’t seem to work very well, or at least it’s causing friction, to put it mildly. At the same time, the reimbursement seems to improve. What should we expect here? Should we expect more reimbursement to try to kick start the market from a central perspective?

Or should we expect the regional approach to be start to be backtracked to some extent?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. Difficult to predict, but I think, I think the green shoots that we’re seeing in countries like Korea, where the decline has halted and from a very low base, it has to be said. But but I think I think that’s going to become a proxy for how aggressive governments are going to go. And what I would say is what what we’re hearing much more of in APAC is not just IVF reimbursement and coverage, but improved support for the cost of raising the child. So things like tax breaks or payments for for having children.

So I think where we’re going to see more more support is on the sort of additional cost of raising a child as well as, reimbursement costs for IVF. You know, are they going to do this or are they not? I don’t think they’re gonna have any choice if you look at the declining birth rates. I mean, this is this is only going in one direction. So the the biggest factor here is people are having less children.

They’re delaying having the children that they do have, which means they inevitably or a lot of them are going to need IVF support, and and population decline is is very stark now globally. There was a a recent UN report, published in April. So governments will have no choice but to step in. I don’t see them standing by and watching their populations fall off fall off a cliff. So APAC in general, Asia in general, is going to have to get more aggressive on helping on helping couples in the case of APAC to, to have a child and and child raising costs.

Yeah.

Johan Unnuris, Analyst, Redeye: That, of course, sounds very realistic and likeable likely, but, indirect incentives and support may, of course, take some time to get traction and go through parliament and the likes.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. Exactly. No. It it I I think you’re I think you’re right. I think in the shorter term, that’s going to take time for sure.

Yeah.

Johan Unnuris, Analyst, Redeye: Okay. Thank you.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: You’re welcome, Joanne.

Conference Moderator: The next question comes from Ludwig Lundgren from Nordea. So

Ludwig Lundgren, Analyst, Nordea: two questions from me on costs. So OpEx to sales was 42% here in Q2, the highest level in quite a while for Victrolife. And I wonder if there was any sort of one off costs in the quarter and how we should think about OpEx to sales moving into H2.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. Elena?

Helena Wennerstrom, Acting CFO, VitroLife Group: Yeah. As we said earlier, there are ongoing activities within the company that has actually increased the cost for this quarter. And part of it is to be considered to be one off cost of it. Some of it will continue, but but part of it will be one off for this quarter.

Ludwig Lundgren, Analyst, Nordea: Okay. Thank you. And then on the FX side, I suppose that has also affected margins quite a bit here in q two. So I wonder if you could share the organic OpEx growth for the group in Q2.

Helena Wennerstrom, Acting CFO, VitroLife Group: As I said also earlier, it has been offsetting a little bit of the costs in it, but the major part is on the gross income part. So it we have still quite a major part in in Swedish crown in in our OpEx.

Ludwig Lundgren, Analyst, Nordea: Okay. Thank you.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Thank you, Ludwig. Thank you.

Conference Moderator: The next question comes from Susannah Kwikbwerner from SHB. Please go ahead.

Susannah Kwikbwerner, Analyst, SHB: Hello and thank you for taking my questions. I just wanted to follow-up on the next question. So regarding the margin declines that we saw in the Q2 report, should we think of that as a one off? Or is it fair to continue assuming the financial targets in terms of the EBITDA? And then as a follow-up question, I wanted to just sort of get a better grasp of Japan because historically, contribution in APAC and specifically the benefits that you’ve seen in sales as a consequence of reimbursement.

So maybe you can give us a little bit of granularity on that. Thank you.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yes. So I’ll I’ll I’ll hand over to Helena to take your first question, and and I’ll take your Japan one if that’s the case, Susanna. Thank you

Helena Wennerstrom, Acting CFO, VitroLife Group: for your questions. Thank you, Susanna. As well and the the margin then, it is part of it is coming from the currency as we have already mentioned. But, also, some of it now service coming into play. It’s not major cost, but it is coming in in in our cost, for supply chain here in during q two.

So, and as you know, that is, still on the on the page going forward as well. And then we have also some minor effects from from product mix and and one offs also in the margin.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: K. Yeah. Japan, Susana, that an interesting one. And it’s nice to get a question about Japan. So Japan, very large IVF market, really good or comparatively good reimbursement system, and the reimbursement system has been gradually improving and including things like wider wider genetic testing.

So so what what we see in Japan is, we see some signs of of of pickup on the consumable side of the portfolio, which is good. What what I can’t give you is a breakdown of how much of that is coming from cycle growth and how much of it is coming from share gain. But we we estimate internally that our Japan consumable growth is coming from, mainly coming from share gain. But but it’s good to see it. What I would say is Japan is also impacted by the delaying on the capital on the capital purchases.

So that’s not just it’s across it’s across APAC even in the markets that are showing some some green shoots like South Korea and Japan. But it you you know, you’re correct. It’s it’s it’s a sizable market. It has good reimbursement. I think in fairness to to the Ministry of Health in Japan, they are increasingly trying to find ways to support couples on on the reimbursement and on the financial side, and maybe some of those green shoots are starting to come through.

Yep. So, hopefully, that answers your question, Susanna.

Susannah Kwikbwerner, Analyst, SHB: Yes. Thank you.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Welcome.

Conference Moderator: Next question comes from Ulrich Trotter from DNB Carnegie. Please go ahead.

Ulrich Trotter, Analyst, DNB Carnegie: Thank you very much for taking some additional questions. And also on the OPEC side, I understand the rationale behind you. You’re increasing your selling expenses, especially in Americas. However, admin expense is up more than 10% year over year, and you referred to ongoing activities. What are these ongoing activities?

And I think, Elena, you mentioned that there there would be some one off in these. If you can explain what these one offs are, that would be very helpful.

Helena Wennerstrom, Acting CFO, VitroLife Group: Kind of one off is more that we have working with with the legal support here in in relating to the class actions lawsuit in in US as well as we have some cost as well in in relation to insurances connected to this as well in in US.

Ulrich Trotter, Analyst, DNB Carnegie: Great. And what is ongoing activities then that would sort of make up rest of this?

Helena Wennerstrom, Acting CFO, VitroLife Group: Yes. I would say that it is the major part of it is really one offs in the in the quarter, but but some of it will continue. That is part of the plan. Okay.

Ulrich Trotter, Analyst, DNB Carnegie: But but, like, we we should see it as these ongoing tinnitus and one offs being mostly related to the class action lawsuits in The US on different, like, different cost posts.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. What I would say, Ulrik, is sorry, Helena, to jump in in in your turf. But but we’ve been very tightly controlling everything from headcount, t and e, cost, and, obviously, that that’s the responsible thing to do. So it it it’s not a sort of a blow up in in any areas than, you know, a couple of small items. I think Helene is correct.

It’s not the majority, but a significant proportion of it in this quarter, comes from defense costs for the PGTA legal action, which you can see is starting to advance slowly, and then insurance costs related to the to the PGTA So that that’s, maybe not the majority of it, but a significant proportion of that. Some of that is is one off. Not all of it, but some of it is is is one off cost. So for example, the on a specific legal defense, that’s gonna be one off.

On insurance, that tends to be a little bit longer term. So, hopefully, that’s a little bit more clarity for you on on that one.

Ulrich Trotter, Analyst, DNB Carnegie: Yeah. Absolutely.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. But not like we have any particular line that’s sort of blowing up. We we’ve

Helena Wennerstrom, Acting CFO, VitroLife Group: in tight On top of it?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. We’ve been very much very much on top on on top of the cost. So yeah.

Ulrich Trotter, Analyst, DNB Carnegie: Although, that’s great. Thanks for the for the granularity. And and some like, an additional question here on my end, and I’ll get back. It’s on the discontinued markets. If there’s any do you estimate any sort of dramatically changes in in h two versus h one in terms of those markets contribution to to both top line and bottom line, or it’s just kind of the same?

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. So so the biggest impact from the discontinued business was in this quarter. That this that this was the this was the biggest one, actually, in in EMEA. Then we get back more back into the range that Helena talked about, which was 3.2%. So it it it doesn’t it doesn’t get it doesn’t get lumpier, Ulrik, as as the quarters have found.

Yeah. This this is the biggest one. This this was the strongest quarter in that market, in in 2024. So it it it gave an it gave a remainder additional headwinds this quarter. Yeah.

Ulrich Trotter, Analyst, DNB Carnegie: Perfect. That’s helpful. Thank you very much.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: May maybe your backup question because I know how you think. Well, I know partially how you think. Do, you know, do we see additional activity in countries close to that discontinued market? No. We don’t.

We don’t see that. So yeah.

Ulrich Trotter, Analyst, DNB Carnegie: And that’s great. And the same on on profitability as well, not on the top line, I guess. Sorry. Did did you catch my my last follow-up there?

Helena Wennerstrom, Acting CFO, VitroLife Group: No. I think we was disconnected. So so please

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Did you have another question?

Ulrich Trotter, Analyst, DNB Carnegie: Or Okay. I just thought I thought

Johan Unnuris, Analyst, Redeye: Sorry. No.

Ulrich Trotter, Analyst, DNB Carnegie: It was just a clarification that it was it was not Yeah.

Jakob Lemke, Analyst, SEB: Yeah. Yeah. Sorry. No.

Ulrich Trotter, Analyst, DNB Carnegie: It was just clarification that it was not only on the strongest on on top line, but also on bottom line Yeah. In the discontinuing markets.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. Exactly. So so so this quarter was strongest on top and bottom. And and it gets to more

Ulrich Trotter, Analyst, DNB Carnegie: Great.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. And it gets to more normalized discontinued levels in q three and four. This this this was the quarter where it had the greatest negative impact, I guess, is the simplest way to put it. Yeah.

Ulrich Trotter, Analyst, DNB Carnegie: Perfect. Thank you very much.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: Yeah. You’re welcome.

Helena Wennerstrom, Acting CFO, VitroLife Group: Okay?

Conference Moderator: There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Bronwyn Brophy O’Connor, CEO, VitroLife Group: So I would just like to thank you all for your time this morning. Thank you for your questions, and I wish you all a very nice summer vacation on behalf of myself and Helena.

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