GETI-B.STGETI-B.STSTO
Loading
Operator: Welcome to the Getinge Q4 Report 2025 presentation. [Operator Instructions]. Now I will hand the conference over to the speakers, CEO, Mattias Perjos; and CFO, Agneta Palmer. Please go ahead.
Mattias Perjos: Thank you very much, and welcome, everyone, to today's earnings call. With me, I have our CFO, Agneta Palmer. We will start the conference today with our performance in the fourth quarter and then reflect a bit on the full year and our expectations for 2026 and onwards before ending with a Q&A. So we can move directly to Page #2, please. So let's first look at the development of our longer-term strategic KPIs. You can see that we continue to clearly track in line with our plans to increase the share of sales from recurring revenue, accelerating the share of sales from high-margin products like our Paragonix offering, our ECLS portfolio, the consumables with infection controls and also data bags inside our Cell Transfer segment in Life Science. This is all supported by solid and effective quality processes as well, which is extremely important in our industry. So sales from recurring revenue now makes up about 2/3 and high-margin products a little bit more of total revenue. When it comes to quality, the number of field actions in relation to sales has decreased significantly, and we see this positive trend also sequentially continuing in the fourth quarter. This improvement should, of course, be achieved through responsible leverage and an attractive long-term return on invested capital. If you move to Page #3. If we then zoom in on the fourth quarter of last year and some of the key takeaways from the quarter, we managed to beat last year's record quarter and grow top line organically, which I think is really good. Net sales grew by 1.2% organically with positive developments in most BAs and regions, and our order intake increased 2.3% organically. If we then look at adjusted gross and EBITDA margins, they were down in the quarter, mainly due to the strong headwind from currency and tariffs. And adjusting for the over SEK 1 billion in currency and tariff headwind in 2025, the EBITA margin for the full year was considerably higher than 2024, signaling that the underlying performance of the business is strong and developing according to plan. We have solid cash flow, and we remain in a very strong financial position with our financial leverage well below 2.5x EBITDA. And the Board has -- the Board of Directors have proposed a dividend of SEK 4.75 per share. We can then move to Page #4, please. So if we then look at some of the key activities and events in the quarter and start with our -- what we offer our customers, we -- it's usually our strongest quarter than last year's significant amount of shipments that went out in the last week of the quarter -- last week of the year. So really good collaboration with our customers overall, and that this is the reason we managed to reach record high organic sales in the quarter as well. I'm also very happy to see that our intense product development efforts have resulted in several important product launches during the quarter. In Life Science, we have announced the integration of Siemens open and flexible user interface in the new generation of washers and sterilizers, and this will support streamer operations, efficient data management and secure data integrity for our customers. And also in Surgical Workflows, we launched the utility-efficient Aquadis 44 washer-disinfector, which helps hospitals reduce cost and meet environmental -- their environmental targets. And within Surgical Workflows, we also launched Automatiq, which is a new family of next-generation automated solutions, which combines smart robotics, intelligent conveyor systems and advanced software to achieve both safer, more consistent and less labor-intensive sterile reprocessing. If we then look at the sustainability and quality aspect of this, we continue to make good regulatory progress in the quarter. In our Implants business, we received premarket approval for the iCast covered stent in large diameter lanes. So this will help us become more competitive in the U.S. market. Our PLS set which is used in extracorporeal circulation for cardiac and pulmonary support received CE certificate under the EUR MDR. And also happy to see that PiCCO, our minimally invasive hemodynamic monitoring system is now included in the European Society of Intensive Care Medicine's guideline on circulatory shock. I also want to highlight again that our quality KPIs such as audit finance per audit for quality systems and also field actions in relation to sales continue to trend positively. So those are the main activities and events for the fourth quarter, and we can then move to Page #5. So looking at then our top line performance, we can see that we had solid progress in Acute Care Therapies and in Surgical Workflows. Order intake grew 2.3% organically. And in Acute Care Therapies, this increase was mainly attributable to good performance in ECLS Consumables, in Transplant Care, and we also saw growth in endoscopic vessel harvesting and in product [indiscernible]. Life Science organic order intake declined in the quarter due to softer development in WIS, which is our washers, isolators and sterilizer business and also within Bio-Processing. The organic order intake for Surgical Workflows grew strongly in the quarter, mainly on the back of strong development in infection control consumables and also operating room equipment generally within Surgical Workflows. From a sales perspective, we had a 1.2% organic increase in sales, and we have both Acute Care Therapies and also Surgical Workflows showing low single-digit growth in organic sales. Acute Care Therapies, the growth came mostly from good performance when it comes to ventilators globally. We saw Transplant Care with good momentum and also ECLS therapy. In Surgical Workflows, organic net sales increased primarily, thanks to growth in operating tables and in infection control consumables. And when we look at Life Science, we had an organic net sales decrease mainly due to lower sales in Bio-Processing and in the WIS business that I mentioned also on order intake. Growth in sterile transfer, which is our most important subcategory in Life Science continued strong. We can then move over to Page #6, and I'll hand over to Agneta.
Agneta Palmer: Thank you, Mattias. It's positive to see that our activities come through a strong underlying performance. Despite negative impact from tariffs and FX in the quarter, we managed comparatively well with decent margins. On adjusted gross profit for the group, adjusted gross profit amounted to SEK 5.037 billion in the quarter, primarily on the back of currency and tariffs. Adjusted gross margin was down by 1.1 percentage points in total despite a healthy contribution from price and mix. On adjusted EBITDA, adjusted gross profit effect on the EBITDA margin was minus 0.5 percentage points due to what I just mentioned. Adjusted for currency, OpEx had a slight impact on the margin in the quarter. FX impacted severely by minus 1.2 percentage points in the quarter. And all in all, this resulted in an adjusted EBITDA of SEK 1.809 billion and a margin of 17.8%. Let's move to Page 7, please. We remain in a solid financial position. Free cash flow amounted to SEK 1.2 billion in the quarter. Compared with last year, free cash flow was impacted by changes in working capital. At the end of Q4, net debt was SEK 9.8 billion. If we adjust for pension liabilities, we are at SEK 7.5 billion. This brings us to a leverage of 1.5x adjusted EBITDA, which is well below the 2.5x, which we have set as an internal threshold. If we adjust for pension liabilities, leverage is at 1.1x adjusted EBITDA. Cash amounted to approximately SEK 3.4 billion by the end of the quarter. So all in all, we can conclude that the financial position continues to be strong. Let's move to Page 8, please, and back to you, Mattias.
Mattias Perjos: Thank you, Agneta. Before looking at the full year and ahead, I'd just like to take the opportunity to quickly shift from financial KPIs to some other impactful figures. So at Getinge, my colleagues and I have a lot to be proud of, I think. If you look at our products and services in the hands of clinicians and pharmaceutical staff, they really make a true life-saving impact globally every minute. So this slide just lists a few figures describing some of that impact. And it really explains some of the reasons for the strong customer loyalty that we see year in and year out. So for example, if you look at our Operating Table business, every fourth operating table globally is from Getinge. These are used in million major surgeries annually. Look at our new washer in Life Science, it uses 32% less water, 25% less energy, so reducing cost and the climate footprint for our customers. And furthermore, if you look at our unique NAVA ventilation technology, this can cut hospital stays by roughly 1/3 for adult ICU patients. So this is a significant win-win, both for patients for their health and for hospital finance. With that, we can move to Page #9, please. So we take a step back and look at 2025. Overall, it was certainly an interesting year in many, many aspects here. If I sum up the year, it will be in 4 main themes. So first, we have the geopolitical friction such as tariffs and the strong currency headwind that we have seen throughout the year. So this has been a wet blanket not only for Getinge, but for most companies globally. And this is something we expect to continue also to have to deal with in 2026. Secondly, more specific to Getinge, we've seen really good progress in our important quality remediation work. And thirdly, I'm happy to note that our organic innovation focus has resulted in several product launches throughout the year, which will help us further strengthen our competitive position and the support from our customers. All in all, we continue to show strong underlying performance, thanks to our industry-leading products and our team's enduring efforts together with our customers navigate through ongoing political turmoil. We can then move over to Page #10, please. I just wanted to take a moment to zoom in on the headwind from tariffs and FX as well since this was a significant drag on adjusted EBITDA in Q4 and almost -- it was almost SEK 500 million and also, of course, a drag on full year adjusted EBITDA by over SEK 1 billion. So tariffs made up almost SEK 150 million in the quarter and about SEK 370 million for the full year, which for last year was Q2 to Q4. If we exclude the impact of tariffs and currency, our adjusted EBITA margin in Q4 would have been 20.3% and 16% for the full year. So this is right at the beginning of our longer-term guidance plan of 16% to 19% set for the end of 2028. So this really shows that the underlying improvement work is really having good momentum here, and that's something we look forward to continue working with and implementing in the coming years. We can then move over to Page 11. Thank you. Just a few comments on the regulatory uplift plan as well with some of the major milestones coming up during the year. So at the end of 2024, if we take a step back, we reached the important milestone of clearing the quality record backlog. During 2025, several other regulatory milestones have been reached. I mentioned some examples from Q4 at the beginning of this presentation. We've also made progress in the important regulatory product uplift of our market-leading devices, CardioSave, which is our intra-aortic balloon pump in cardiac assist and Cardiohelp, the hardware for ECMO therapy within our Cardiopulmonary business segment. When it comes to CardioSave, in CE markets, the CE approval is reinstated with conditions since last fall. We hope to initiate sales by the end of last year, but due to some delay in shipment of critical components, we have pushed of deliveries now to the second quarter of 2026. In the U.S., we're currently only selling replacement pumps to existing customers. And due to the delay with critical components that I just mentioned, we've also pushed the 510(k) submission to Q2 2026. We had strong order growth for pumps in the quarter, which confirms the leading position in this segment and the trust that our customers have in us, and this is why the submission and the start of deliveries is really a key priority for us. If we then move to Cardiohelp, there are no sales restrictions in key markets for the existing Cardiohelp. We and our customers are very excited about the next-generation device here, the Cardiohelp II . For this one, we sent in the submission for CE-mark approval in Q4 of 2025, so last year, and we expect to be able to initiate the first shipment in Europe during the beginning of this year. In the U.S., we're only selling to existing customers or customers confirming that they don't have any other viable alternative. The work with the 510(k) submission for the complete Cardiohelp II system is going according to plan and is set for the second half of this year. We can then move to Page #12. At the Capital Markets Day in our Capital Markets update in May 2024, we guided for an adjusted EBITA margin of 16% to 19% by the end of 2028. And I think we're on a steady path of reaching that, and that's despite the very different norm that we have today compared to 18 months ago. The main drivers which will enable this is related to growth, it's related to product mix and it's related to productivity. So if you look at the growth angle of this to begin with. So from the perspective of regulatory approvals and key strategic product launches, we have mentioned some of them here. We have the next-generation ECMO therapy with Cardiohelp II having no sales restriction for CardioSave intra-aortic balloon pump and also our low temp sterilization is something that will materialize during this guidance period. We also expect to get our share of the announced U.S. pharma investments and a recovery in Bio-Processing. And we will, of course, continue our diligent and successful work with realizing price increases every year. From a mix perspective, it is our strategic intent to steer our business towards a continued rotation to high-margin products and consumables. And if possible, we prefer to have products that are made up of a competent hardware and with captive consumables attached to this. Our strong R&D and innovation pipeline is set to contribute to this development. And then from a productivity perspective, we've already done a lot in several parts of the business with remaining opportunities in other parts of the company. The heightened extraordinary quality costs connected to the product uplift in CardioSave and Cardiohelp is expected to go down from the second half of 2026 and then be significantly lower in 2027 and '28. So this will also support the margin expansion. Furthermore, we will continue with our production excellence efforts, helping us to further optimize our supply chain and remain with a tight cost control across the company. So all in all, this supports our assessment that our target for 2028 is well within reach. We can then move over to Page 13, please. So what does this mean for 2026 then? And here, we see primarily 3 themes. First, unfortunately, we expect the geopolitical friction and the FX headwind to continue in 2026. And so of course, will our mitigating efforts. Secondly, a key this year will be to hit the critical quality remediation milestones to enable the product launches that we have in the pipe as soon as possible. And thirdly, we do expect the solid underlying performance to continue, and we have good momentum across large parts of our business when it comes to this. So in many aspects, a year quite similar to 2025 and setting us up for an acceleration in 2027 and '28. Can I move to Page 14. This takes us to our financial outlook for 2026. As we all know, there are some geopolitical uncertainties that we will need to navigate in the coming years. But based on the underlying demand that we see, our expectation is for an organic net sales growth to be in the range of 3% to 5%, adjusted for the phaseout of our Perfusion product category. Surgical Perfusion is expected to have a net sales in 2026 declining from about SEK 250 million to SEK 50 million. We move then to Page 16, please. So summarizing the quarter, we had organic growth in top line, resulting in record high sales for the quarter. Tariffs and FX continue to be a significant headwind, but we still managed to have margins in line with the 2024 level, really confirming that the underlying performance is developing according to our plans. Our financial position remains solid. We had a good end from a cash flow perspective for 2024 -- sorry, '25. For 2026, we guide for organic net sales growth of 3% to 5% adjusted for the phaseout of Surgical Perfusion. And our priorities remain the same for 2026. So key here is addressing the remaining challenges that we have in our Acute Care Therapies business area. We continue to focus on sustainable productivity improvement and cost consciousness when navigating the geopolitical uncertainty and addressing the impact from tariffs. And key focus, of course, as always, is to continue creating added value for our customers and really help them serve patients better. With that said, I open up for questions.
Operator: [Operator Instructions] The next question comes from Oliver Reinberg from Kepler Cheuvreux.
Oliver Reinberg: Three, if I may. I'll probably take them one by one. Mattias, can you just say a word on 2026? I mean, you alluded to the fact that there's obviously still the kind of headwinds from currencies and I guess also tariffs maybe a certain annualization effect. Can you just help us to get a kind of feeling for the magnitude of these headwinds? And I think the Street is currently expecting 60 basis points of margin expansion. Is that something you feel comfortable with? That would be the first question, please.
Mattias Perjos: As usual, we never comment on expectations from the capital markets here. But the -- from the tariff situation, assuming that they remain the way they are now, I think the math that we have from 2025 will apply in 2026. So we will have a slightly higher level of tariffs up to a couple of hundred million. So that's something we will need to mitigate. And so we are fingers crossed for some tariff stability at least. The best thing will be if they went away, but we expect to have to live with tariffs now for 2026. So they will continue to be around SEK 0.5 billion headwind at least. On the currency side, we do expect the dollar to continue to depreciate, but we're really in no position to make any estimates forward-looking on this. So that's an additional headwind that we will need to find ways of mitigating.
Oliver Reinberg: Okay. But would it be fair that you still feel that you can mitigate both and there will be net margin expansion at the end?
Mattias Perjos: Yes, that's our ambition.
Oliver Reinberg: Okay. Perfect. And then just secondly, on this kind of midterm guidance, which you also already gave within the last call. I mean, can you just give any kind of flavor is the upper end as likely as the low end, so the full range of the whole guidance still applies?
Mattias Perjos: I'm not really in a position to dissect the guidance spend now and narrow it down. But I think it's really encouraging to see that without the negative effect from the geopolitical consequences of tariffs and headwinds, we would already be within our guidance range. So the momentum underlying in our business is good. We do feel okay about investment climates among our customers as well. I think treatment needs will continue to grow slowly, but that support our business growth. And like I mentioned in the presentation page, our productivity measures across the business is also really showing good momentum. So overall, we feel good about the traction towards the margin, but I'm not prepared to make any more detailed analysis or break this down with the probabilities right now.
Oliver Reinberg: Okay. Fair enough. And the last question, just because we're full, it's always probably a kind of good opportunity to discuss capital allocation. I mean, you brought the leverage down quite significantly. Can you just talk about priorities? I mean, in the past, you were more leaning towards M&A. Can you just provide some kind of color how open you would be to any kind of share buybacks at this kind of point? And I think there was some time ago also you did this kind of discussion to what extent Life Sciences is a kind of long-term fit given that the industry is going to normalize. I mean, do you feel that there's a lot of people knocking on your door for any kind of potential offer? Any kind of flavor here would be great.
Mattias Perjos: Yes. I think we definitely have continued inbound interest regarding the Life Science business, but it's not something that we have on the divest list here. We feel like good owners. We like the exposure to this end market, and we continue to invest in this part of the business as well. When it comes to capital allocation in general, M&A remains one area, but we have a mandate to do share buybacks as well. It's a discussion that is continually going on in the Board. Given the uncertainty that still remains, I think we've seen some examples of this already in this year with tariffs coming in or the threats of tariffs coming in and so on. So I think it's good to be a little bit prudent with how we allocate capital.
Operator: The next question comes from Mattias Vadsten from SEB.
Mattias Vadsten: I have 3. I'll take them one by one as well. First one, if you could talk a bit about the sort of phasing for the year, for example, assuming perhaps Q1 is one of your tougher comps during 2026 from the perspective of a couple of things? And also quality cost, it sounds like it should come down foremost towards the second half. So maybe if you could give your view there. That's the first one.
Mattias Perjos: Yes. No, we're not prepared to make any kind of quarterly guidance here, but the dynamics that you described, we agree with, it's maybe the best way of putting this. But we've guided for 3% to 5% growth in 2026. Our ambition is to continue to expand the margin, but I can't really break it down by quarter.
Mattias Vadsten: Okay. Then it appears ventilators has been very strong, of course, and strength continued also into Q4, perhaps driven more by outside U.S. markets. But could you give us your overall sort of thinking for the business in 2026, perhaps without going into too much of a detail, but more how you think about it going forward? Are accounts sort of tougher? Or is the momentum strong enough to make it continue to grow strongly also in '26?
Mattias Perjos: Yes. I think I'll describe it the way we've done it during 2025. We've had over a year of good momentum now in this business. I think definitely compared to our market share pre this shift, we've been net beneficiary when it comes to market share grab. So very thankful for the support from our customers and the great work by our teams to make this happen. I think that there is a mix of replacement cycle, normal replacement cycle going on in this business, and there is the continued withdrawal of some of the remaining incumbents in this business as well. But needless to say, the tailwind will be much, much milder than it was during end of '24 and the whole of 2025.
Mattias Vadsten: Okay. And then on the situation -- on the supply side in IABP, what is your sort of level of confidence to have that sorted in Q2? And also, is it fair to say that sort of CardioSave in the U.S. will be sold without restrictions towards the end of 2026? Or how do you view that?
Mattias Perjos: I don't think we will be able to sell towards the end of 2026. This is now first about submitting the updated 510(k) that we said now is in the second quarter. It still hinges on making sure that we have the critical components fully available that we can do the validation and testing needed and we prepare for this. So there is still some uncertainty related to this, but we feel obviously more confident about Q2. Otherwise, we would have said something different. So there's some remaining work, but also steady progress towards this.
Operator: The next question comes from Kristofer Liljeberg from Carnegie.
Kristofer Liljeberg-Svensson: I will also take my questions one by one. First, are you able to comment on Paragonix sales level here for 2025, maybe how much it's growing right now and margins?
Agneta Palmer: I don't think we will disclose the exact growth figures of Paragonix, but we are very happy about this development. And as is visible in our report, we will end up with a bit of a higher earn-out also based on this. And margin-wise, it is also developing according to our expectations or a bit better.
Kristofer Liljeberg-Svensson: But would you say it's still dilutive on margin?
Agneta Palmer: It's slightly dilutive on margin overall on the...
Kristofer Liljeberg-Svensson: Okay. For the group or for ACT?
Agneta Palmer: For the group.
Kristofer Liljeberg-Svensson: Okay. Then my second question, Mattias asked before about phasing effects. Just wondering about Q1 and the flu season. I think that was quite a good benefit for you last year and it seems the number of cases is dropping quite fast in the U.S. Could you maybe give a little bit of flavor how much a good or a strong or weak flu season impacting sales in a given quarter?
Mattias Perjos: No, the short answer is no. It is difficult to break it down. I mean there's been a couple of years after the pandemic where we had no flu season effect and now we saw last year that there was some and this year, if you look at 2025, '26, hospitalizations increased a little bit earlier than they did before. So there was maybe a bit more of a December effect, but it's impossible for us to speculate about the impact of this in...
Kristofer Liljeberg-Svensson: Okay. And finally, when it comes to the quality cost, is it possible to say approximately how much lower they were in 2025 versus '24 or if they were still at this SEK 800-plus level?
Agneta Palmer: No, I think we will stick to the information that we have provided before. We had sort of a peak level that is -- we are remaining on high levels, and it will slightly then come down, but we will not give any exact amount.
Kristofer Liljeberg-Svensson: But you can confirm it was less than SEK 800 million in 2025?
Agneta Palmer: Yes, that we can confirm.
Operator: The next question comes from Ludwig Germunder from Handelsbanken.
Ludwig Germunder: Ludwig Germunder from Handelsbanken. I would like to start with touching upon ventilators again, like we've been talking about a bit before already. But would you be willing to give some flavor around the ventilator sales? We knew that comps were tough going into this quarter and yet the sales come out strong now. What does the strong mean? What are the main drivers? And how should we think about this going into Q1, where dynamics are very similar?
Mattias Perjos: I think the strength comes on the back of some continued competitive conversion, possibly some of the normal replacement cycle kicking in and also some fee effect positively. But we can't break this down even if we wanted to unfortunately.
Ludwig Germunder: Did it surprise you? Or was this in line with what you saw coming?
Mattias Perjos: I wouldn't say surprise, mild surprise, maybe it was a mild positive compared to expectations.
Ludwig Germunder: Okay. And then a quick one on Paragonix as well. It seems like it's doing well there, another quarter of strong growth. What are the main drivers you're seeing in Paragonix? And what are you expecting for this in 2026?
Mattias Perjos: The drivers have not changed. I mean there is this conversion from ICE, it's still one of the ongoing things. And then, of course, we had a good launch of the KidneyVault during 2025 as well. So I'd say these are the main contributors.
Ludwig Germunder: Okay. And then just final one on the outlook given the updated definition. If my math are correct, you're adjusting for an estimated headwind of around 57 basis points. How should we think about this in relation to the other? Has anything changed given the, let's say, the estimated rest of the business? Or is it the same as before?
Agneta Palmer: The same as before, we have not guided before on 2026. Would you care to elaborate the question?
Ludwig Germunder: No. Yes, sorry. I'm thinking the development, for example, when you guided to 3% to 5% in 2025, you did that on the base of something. Do you see the same market development excluding the Surgical division?
Agneta Palmer: There are a number of dynamics in the market development, of course. If you look at our market presence, it is the same trajectory as in 2025 and strong in our key position. Then we have different dynamics such, for example, as the one described by Mattias when it comes to ventilators and the conversion effect that is a tough comparison now moving into 2026.
Operator: The next question comes from Philip Omnou from JPMorgan.
Philip Omnou: Firstly, on Section 232, I would love to get your thoughts on that program and the implications of that and what you anticipated in terms of its outcome for 2026?
Agneta Palmer: Yes. So I have hopes, but I will not speculate on the outcome. What we can say about Section 232 is that we have submitted our opinion along with our industry colleagues, and we are expecting clarity on this in Q1, this is what has been said before. So let's hope for some clarity. And as Mattias mentioned before, the very least stability on tariffs. That's all we can say on this one.
Philip Omnou: Okay. Perfect. And then maybe can you remind us of your tariff mitigation actions that you've gone through and what sort of impact do you expect they can have in 2026?
Agneta Palmer: We can just reiterate what we have mentioned before. So we work with it -- we always work very actively with pricing, but we intensify these efforts to mitigate for tariffs. We also intensify our productivity agenda that has been very strong also, but we have accelerated some areas of that to compensate for the increased cost of tariffs. And then the third bucket is that we review our structure, both in terms of our business partners, so to speak, with suppliers, et cetera, and in some cases, also our own footprint.
Philip Omnou: Right. Okay. And then just the last one from me, please. I'm not sure if someone has really asked this because my line cut out. But we saw the corporate warning from Teleflex a few weeks ago, and they were talking about weakness in demand for intra-aortic balloon pumps and catheters in the U.S. and Asia. So just wondering if you had any thoughts on that and if you were seeing anything in your existing customers? Or does it change anything with planning for CardioSave?
Mattias Perjos: Yes. I think we've seen that as well. We can only comment on our reality. And I think our view is a bit muddled by the fact that we have supply restrictions here, but the order intake and the optimism from our customers in terms of getting shipments of balloon pumps started in [indiscernible] is positive, I'd say. So we have a somewhat positive picture of the demand situation and the desire from our customers to have access to this therapy.
Operator: The next question comes from Sten Gustafsson from ABG Sundal Collier.
Sten Gustafsson: I have a question regarding the margin outlook for the year. You expect to compensate the tariffs and FX and expand margins. I think I understood you correctly. It would be good to hear what assumptions you made on tariffs and also on what type of FX headwinds you expect on EBIT for the year? Have you -- on the tariff side, have you assumed the tariffs to remain unchanged? Or coming back to the Section 232, which I think at least partly assumes higher tariffs, so if you could provide some clarity on what you have included in your sort of internal thinking for the year, that would be helpful.
Mattias Perjos: Yes. When it comes to the tariffs, we have assumed the same level as we ended in 2025. We have made no predictions on the outcome of any 232 investigation here. So it's the same tariff that we left 2025 with that we have assumed for this year.
Sten Gustafsson: And in terms of FX headwinds, I think it was 1.2 percentage points in Q4 on EBIT?
Agneta Palmer: Yes. So we -- again, we don't speculate in the FX development, and we will not give any specific guidance on this. But overall, as you know, a weakening dollar is negative for us, and we will do everything that we can to mitigate and compensate for that in the case that, that continues, which has been the trend in the start of this year.
Sten Gustafsson: Okay. But you're not -- do you think it will be higher than 1.2 for '26? Or is that sort of a proxy or what you have assumed the impact will continue to be during the year?
Agneta Palmer: Again, we will not speculate on the development of the U.S. dollar. So we work with a number of scenarios and mitigation activities, and we adjust accordingly.
Sten Gustafsson: Sure. And finally, on price, you were successful last year raising prices. I think you talked about previously 2 to 3 percentage points. Do you think you can do the same thing this year, raise prices by 2% to 3%?
Mattias Perjos: The ambition is more closer to 2% than 3%, I'd say, is realistic. But the price work continues actively as it has done since 2018 for us. So we will continue this work. And I think you already know the dynamics with long contracts in our industry and so on and the limited ability to maneuver in the beginning of this phase. But hopefully, there'll be some opportunities there. But yes, ambition is still to continue to improve prices in 2026.
Operator: The next question comes from Erik Cassel from Danske Bank.
Erik Cassel: First, I want to sort of touch upon the guidance as well. I mean, as you alluded to, Mattias, excluding headwinds from FX and tariffs, you've sort of already reached the low end of the targets you set. Would you say that you've sort of managed to achieve all the improvements you set out to do earlier than planned, sort of meaning that there's not much left to do? Or would you rather say that you sort of underestimated the level of margin improvement you could achieve over time?
Mattias Perjos: We have definitely not run out of improvement initiatives. There's plenty to do still. I don't want to reply that we had underestimated the potential either. We know that there's a lot of potential in the business. And we've made some good progress now as you've seen in 2025, but there's a lot still to do there.
Erik Cassel: Okay. I guess that sounds good that you're not done. Then I sort of want to ask what's happening with the Perfusion business in terms of drag on margins. I mean, do you sort of keep the organization there to support customers in '26 and sort of see it become loss-making? Or have we already moved a lot of the people over to ECMO so that there is not much of an effect for ACT as a whole?
Agneta Palmer: We do expect a slight marginal improvement effect coming from the gradual Surgical Perfusion in 2026.
Mattias Perjos: We have moved out people already from this business, both to grow the [indiscernible] business, but also there is a reduction of people related to this that we implemented in 2025.
Erik Cassel: Okay. Great. And then lastly, on ECMO, it seems to be doing pretty well. How much would you attribute that to just the underlying market doing well, perhaps the effect of influenza season coming early? Or is there some sort of aspect of you maybe gaining back some market share that is driving the maybe above-market growth?
Mattias Perjos: It's not possible for us to dissect this. It's very difficult to monitor competitor performance in detail, I think. So we've definitely benefited from good overall market momentum, a little bit of a flu effect in there as well. I think it kind of confirms our competitive products and that they do really life-saving work every day. That's something that's appreciated by the clinicians who are our customers. So this is the main reason why we continue to see growth. But what the market growth was exactly in Q4 it is not possible to say right now.
Erik Cassel: Okay. Just lastly, do you have any comments or thoughts on the sort of long-term prospects of ECMO now? I recall you saying that there's still a risk that you're going to lose out on customers from them switching. Have you seen any more evidence of that to sort of provide support that you're really going to lose market share going forward or sort of maintain or even improve? Do you have a different view now?
Mattias Perjos: No, I think nothing has changed in our view. I think we believe still in a longer-term market growth of mid- to high single digits for this segment. And looking at the competitive dynamics right now, it doesn't appear that we are losing anything to competitors. So we remain strong with us in this segment. And all the work now that goes into both launching Cardiohelp II in CE markets and also getting the 510(k) submission into the U.S. is really key milestones now to continue to grow this business.
Operator: The next question comes from Filip Wetterqvist from SB1 Markets.
Filip Wetterqvist: I just have one question on Life Science and then a follow-up. Would you say that the weak quarter in Life Science is an effect of like a big pharma production ramp-up last year ahead of tariffs leading to some cooler demand this year? Or is it just lumpiness of the business?
Mattias Perjos: I think it is partly natural lumpiness of the business, we have seen also throughout 2025 that there's been a lot of delayed decision-making when it comes to projects. So a lot of companies now have announced expansion plans, but they've not really started to implement projects. So we can see that we have a similar win ratio like we've had before, but there's been less fewer big opportunities in 2025 due to customer hesitation on the back of geopolitical uncertainty.
Filip Wetterqvist: All right. And then do you have like any idea how much the government shutdown affected Life Science in the quarter as no NIH funding was paid out during the period?
Mattias Perjos: No, we cannot quantify that, unfortunately.
Operator: The next question comes from Delphine Le Louet from Bernstein.
Delphine Le Louet: I go again one by one. Just a clarification on the Paragonix and just willing to know how big Paragonix is now into the ACT business, how much does that represent? I know you don't want to disclose that, but probably you can give us sort of a sense and the range of how big it is? Second question to deal with Paragonix because I didn't catch. You mentioned it was not dilutive at the group level. And so if I'm hearing well, I just -- I need a confirmation. And so my question here would be, what is missing or when can you achieve sort of the ACT margin for that specific range of products? And then I will continue.
Mattias Perjos: I think from a volume perspective, we don't have enough details for subsegment, but it's well over $100 million now the Paragonix business. And what Agneta said earlier is that it's slightly dilutive to group margins and consequently also dilutive to ACT margins. We don't guide for when it's going to be accretive to margins, and this is more about how we pace the expansion of the business with it. So we're happy with the performance right now, both from a growth perspective, and we can see that there is operating leverage in the business, but we're also continuing to invest quite a lot both in the U.S., in the old U.S. expansion and in the future R&D pipeline.
Delphine Le Louet: All right. Moving on probably to what's going on in China and any feedback you may give us regarding the grounds that you have in China on the hospital activity, on the evolution of the commercial interaction over the course of '25, have you anything specific to tell us about that?
Mattias Perjos: I think it's a year or more of the same. I think the hurdles continue to be the same ones that we have battled for a number of years now. We have some really strong positions in China. And I think one of the bright spots is that we actually did grow in China also in 2025. That's not something we take for granted in our industry anymore. So that's really positive and confirms the strong positions that we have. 0Going forward, I think, again, I think the geopolitical friction and impact here will continue to be somewhat of a hurdle. And of course, there are barriers when it comes to having local presence and so on. And there's also, of course, an evolving competitive landscape in China. So basically, we stand by the comments that we've made before that we have a long-term positive view on China. But it has changed quite a lot from 5 years ago when we had good double-digit growth in that market.
Delphine Le Louet: Okay. Moving on to the Life Science. Obviously, we hear from the competition and on the biomanufacturing side, speaking about that, back to a very nice normalization and back to high single-digit, low double-digit growth. So I was wondering on your side, if you are feeling about any traction from the clients, if you confirm because you're probably a bit more late stage that the normalization has happened and that you're hearing probably more positive coming out from the U.S. versus Europe or any comment here either on a product or on a region would be interesting?
Mattias Perjos: I think bioprocessing, we highlighted was a weak spot for us in Q4. It has been a weak spot throughout 2025. And we have relative to many of our peers in the market, a higher exposure to China, which is a more difficult market, both from an investment and competitive standpoint. But we do see on a broader basis, the comeback in other markets in China like the U.S., for example. So that market dynamic, we do see as well, but we have a slightly different exposure than our peers.
Delphine Le Louet: Yes. Okay. And just probably to be back into the tariff and into a mitigation measure that you are currently implementing. Can we get your first feedback, clients reaction about the price increase? And can you probably more specify over the course of the '26, how you're going to mitigate exactly the tariff? And what would be the ideal target by the end of the year for '26 when it comes to the mitigation of the tariff? Would that be 50%, 70% and then thinking about '27 and '28?
Mattias Perjos: I think we've continued -- worked actively with pricing since 2018 when we were able to reverse a downward trend through price improvement, and we've been able to do that ever since. So it's really not something new for us. So there's no new -- we can't talk about new customer reactions to this. Customers understand our perspective when it comes to the impact of tariffs, but they also have, of course, a reality with their challenges. So it's a dialogue with customer by customers and very different reactions and understanding of this. But we feel that we can continue to work with pricing the way that we have done in the last 2 years successfully. So that's really the main way. And we take a couple of percentage points price increases, we can calculate the mitigation effect of that when it comes to tariffs and of course, currency.
Operator: The next question comes from Ludvig Lundgren from Nordea.
Ludvig Lundgren: So I have 2, and I'll take them one by one. First on Life Science. So yes, weaker order intake here in Q4. So I just wonder what the lead times typically are for these products? And how much one should look at this Q4 order intake number when predicting sales for H1?
Mattias Perjos: I think on average, the lead time in Life Science is 9 to 12 months. Having said that, I think in cell transfer, it's much, much quicker given the data bags, for example. And -- but when it comes to the weak business, it's obviously often over a year in lead time. So the average is 9 to 12 months.
Ludvig Lundgren: Okay. Great. And then second one on this critical component delay, which made you push the 510(k) submission and CE mark get launch for CardioSave, I just wonder if you can elaborate a bit on your confidence in this new time and if there's any uncertainty in this?
Mattias Perjos: There is some uncertainty still in this. So we still need to make sure that we have the adequate supply of the critical components and that we are able to do the remaining test validations and that is required. So it's our best estimate right now, the second quarter for submission.
Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Mattias Perjos: Thank you very much. I think we already made a summary before the Q&A. So nothing in addition to say from me. I just thank you for your attention today, and wish you a good rest of the day. Thank you.