Medartis Holding AG (XSWX:MED) (Q2 2025) Earnings Call Highlights: Strong Revenue Growth and ...

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This article first appeared on GuruFocus.
Organic Revenue Growth: 15.3% in the first half of the year.
Total Sales: CHF 123 million for the first half, including NeoOrtho consolidation from May.
Core Gross Margin: Approximately 81%.
Core EBITDA Margin: 17.8%.
Core EBIT Margin: 8.5%.
Cash Position: CHF 121 million at the end of June.
EMEA Growth: 16% growth in the region.
US Growth: 16.2% growth, with significant distributor changes.
APAC Growth: 14.9%, driven by Japan and Australia.
Latin America Performance: Improved but not meeting expectations; double-digit growth including NeoOrtho.
Upper Extremities Growth: Driven by TOUCH and other product launches.
CMF Growth: 10.3%, impacted by strong prior year performance.
FX Impact: Over 300 basis points on top line, 50 basis points on gross margin.
US Tariffs Impact: Estimated high single-digit million impact for 2026.
Net Income: Slightly negative due to CHF 5.2 million unrealized FX losses.
Guidance for Second Half: Raised to 14% to 16% growth, maintaining high teens core EBITDA margin.
Warning! GuruFocus has detected 6 Warning Signs with XSWX:MED.
Release Date: August 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Medartis Holding AG (XSWX:MED) reported an impressive organic revenue growth of 15.3% for the first half of the year, exceeding expectations.
The integration of NeoOrtho is on track, with structural changes planned to consolidate teams and facilities in Brazil.
The company has successfully completed the acquisition of KeriMedical, with plans to launch in the US market, supported by FDA readiness.
Medartis has raised its guidance for the second half of the year to a 14% to 16% growth, reflecting a positive trend in sales.
The company maintains a strong cash position with CHF121 million, ensuring financial flexibility for future investments and acquisitions.
Negative Points
The US tariffs of 39% are expected to have a significant impact, with a high single-digit million impact anticipated for 2026.
The gross margin slightly decreased due to FX impacts and the inclusion of KeriMedical as a distributor, which initially diluted margins.
The Latin America region, excluding NeoOrtho, showed underperformance, with growth not meeting expectations.
The company faces challenges in the Japanese market, particularly in the upper extremity business, which requires attention.
The impact of FX resulted in more than CHF5.2 million in unrealized non-cash losses, affecting the net income.
Q & A Highlights
Q: What impact do you expect from the optimization of the distributor networks on the US growth rate in the second half and in 2026? A: Matthias Schupp, CEO: The target of US growth above 20% is more for starting in 2026. For the second half, we expect growth above 16%, continuing faster than the first half. The changes in Florida, our biggest region, were unexpected but necessary for exclusivity, and we are confident in our raised guidance due to strong performance in July and August.
Q: Could you clarify the expected gross margin of KeriMedical and how it affects the consolidated gross margin once fully integrated? A: Dirk Kirsten, CFO: KeriMedical's gross margin is accretive to our business. While NeoOrtho has a lower gross margin due to its value strategy, its EBITDA margin is accretive. We expect the overall impact on our consolidated gross margin to be positive.
Q: Can you provide more details on the earn-out structure for the KeriMedical acquisition and the revenue potential for Keri TOUCH in the US during the initial years? A: Matthias Schupp, CEO: The earn-out is based on sales performance in the US for 2026 and 2027, and the reimbursement study is progressing well. We expect to capture at least 10% of the 150,000 procedures in the US by 2030, with a focus on education and careful market entry.
Q: How did the Asia Pacific region achieve a 15% organic growth despite challenges in Australia and Japan? A: Matthias Schupp, CEO: Japan saw strong growth in CMF, doubling the business in the first half, and lower extremities also performed well. Australia exceeded expectations despite price cuts, and other APAC countries contributed through distribution channels.
Q: What is the market penetration of Keri TOUCH in France, and what does this indicate for future growth? A: Matthias Schupp, CEO: In France, Keri TOUCH holds an 85% market share and continues to grow in the high teens. This success in France, the most mature market, indicates strong potential for growth in other regions as the product becomes the standard of care.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.