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At this time, I would like to welcome everyone to this Embla Medical Q2 2026 Conference Call. Today's call is being recorded. If you have any objections, please disconnect at this time.

[Operator Instructions]

I would like to introduce President and CEO, Sveinn Solvason and CFO, Arna Sveinsdottir. Sveinn, over to you.

Thank you very much. Good morning, and welcome to Embla Medical's conference call to review our second quarter 2026 results. I'm Sveinn Solvason, President and CEO of Embla Medical. Joining me today are our Chief Financial Officer, Arna Sveinsdottir; and our Head of Investor Relations, Klaus Sindahl. Presentation will take approximately 15 minutes, followed by a Q&A session.

If you please turn to the next slide. The first half of 2026 was strong. We delivered good organic growth and increased profitability and solid free cash flow. Sales in the second quarter were $259 million, corresponding to 11% reported growth and 6% organic growth. Prosthetics and neuro orthotics continued to do very well with double-digit growth in the quarter. This was driven by strong execution, good volume growth in mainly EMEA and APAC and contributions from recently launched products. Bracing and Supports grew at a more modest pace and patient care declined, but we're seeing very encouraging progress.

EBITDA margin was strong at 22% for the quarter. This was supported by the good performance in prosthetics and neurotics continued cost discipline and a net U.S. tariff refund of around $3 million. Net profit was strong increasing by 39%, and this was mainly due to, yes, strong operating results and favorable movements in net financial expenses. During the second quarter, we completed the ForMotion brand rollout in patient care. All patient care facilities have now moved to the ForMotion brand. This is an important milestone in our patient care transformation as it brings our global clinic network together under 1 patient-centered brand.

And in patient care, as mentioned earlier, we continue to see progress. However, quarter 2 sales were below our expectations, especially in EMEA, and I'll come back to patient care in more detail later in the presentation. I also wanted to highlight the good progress we made in R&D during the quarter where we launched 6 new products. Furthermore, we're also progressing as planned with our first dedicated microprocessor knee for less mobile users generally referred to as K2 users. We have now assembled a fully integrated system prototype, which will be used for upcoming verification and validation work, and we remain on track for launch in late 2027.

Lastly, we completed our $10 million share buyback program last week. And yesterday, we started a new program of a similar size.

Could you please turn to the next slide. Over the past 5 years, we've invested close to $200 million in R&D and innovation. As the business grows, we expect to invest more while keeping a clear focus on attractive returns. On this slide, you can see some of our key product launches from recent years. They show the strength of our innovation capabilities and our consistent launch track record. We always track the impact of innovation through a metric we call R&D impact. It measures the share of annual sales generated by product launches through R&D over the last 5 years. In recent years, R&D impact has increased from around 15% to more than 25%.

We want to increase this further by focusing our portfolio on the greatest unmet needs for the patients that we strive to serve as best we possibly can.

Go to the next slide, please. EMEA and APAC were the main drivers of sales growth in the quarter, supported by strong prosthetics and neuro orthotics performance in both established as well as new markets, including Ukraine. In the Americas, overall growth was more modest, but we are beginning to see prosthetics and neuro orthotics gain momentum.

We'll now go through each segment in more detail. If you turn to the next slide, please. Prosthetics and neuro orthotics grew 12% organically in the quarter. In EMEA, we continued to see very strong momentum. This was driven by mainly prosthetics in key European markets as well as newer markets and again, including Ukraine. Growth was supported by strong volumes and broad demand across key product categories, including Bionics. And the recently acquired Streifeneder business also made a solid contribution.

In the U.S., prosthetics growth has also started to pick up. This was supported by our core portfolio and continued momentum in bionics. Neuro orthotics performed well in EMEA and continued -- and we continue to build momentum in the U.S. with strong growth, but from a very low base. And we expect more meaningful contribution over time as the rollout of our first bionic knee joint expands. Lastly, APAC delivered another strong quarter with 9% growth. In Australia -- led the region with we have broad strength across product categories and solid growth in the rest of Asia.

If you turn to the next slide, please. Sales in Bracing and supports grew 1% in the second quarter. EMEA declined mainly due to tough competition and changing market dynamics. We had a successful launch of the new OA Move brace and the Formfit Walker boot but they were not enough to offset the decline in the region. In the Americas, sales growth in bracing was solid, driven by higher volumes and broad demand across core products. APAC also performed well, especially Australia and New Zealand.

If you go to the next slide, please. Sales in Patient Care declined 2% in the second quarter. Over the last 18 months, we've been focused on building and integrating a global patient care business. Our strategic priorities are centered around enabling our clinical workforce to provide excellent patient care as well as standardization in ways of working, ultimately building scalable systems and processes. We see consistent progress towards normalization of our top line growth. Americas region has now shown quarter-over-quarter increase in operating results for the last 3 consecutive quarters. APAC remained stable while the shortfall in top line led to 2 markets in Europe, Sweden and France.

In Sweden, we are seeing the effects of a challenging market situation. While in France, we are working through integration-related topics in an overall healthy market. We remain committed to our strategic priorities in patient care and expect sales performance to get better over the coming periods and gradually return to growth broadly in line with the O&P industry.

That concludes my overview of the quarter, and I will now hand over to Arna to take us through the financials in more detail. Arna, please. And go to the next slide, please, also.

Yes. Now we go to the next slide for the overall financials. In the second quarter, gross profit margin was 63% compared to 62% in quarter 2 2025. The margin benefited from strong sales in prosthetic and neuro orthotics and net U.S. tariff refunds of $3 million. For the first half, the gross profit margin was on par with the same period last year. OpEx were $243 million or 47% of sales compared to 48% of sales in quarter 2 2025. Organic OpEx growth was 5% and reflecting our continued focus on cost control. As a result, EBITDA margin was 22% for the quarter, 1 percentage point above last year. This was supported by strong performance in prosthetics and neuro orthotics and the tariff refunds.

For the first half, the EBITDA margin is 10% or on par with the same period last year. I'm pleased with our net profit performance in the quarter, which increased by 39%. This was driven by higher operating results and favorable changes in net financial expenses mainly due to lower net exchange differences compared to last year.

If you please turn to the next slide for a status on our cash flow and leverage. In the second quarter, CapEx was $6 million or around 2% of sales, and this was below our guided range of 3% to 4% of sales. Compared to quarter 2 2025, CapEx was lower, mainly due to timing of investments. For the rest of the year, we still expect CapEx to be at a normal level of 3% to 4% of sales. Free cash flow was strong at $31 million in the quarter compared to $12 million in the same period last year. Free cash flow benefited from strong operating results, lower net working capital than in the comparable quarter as well as modest CapEx.

That concludes the financial overview, and I will now hand back to Sveinn for closing remarks and guidance.

Thank you, Arna. Please turn to the next slide. Based on our first half performance and our expectation for stronger growth in the second half, we are narrowing our full year organic sales growth guidance to 5% to 7%. Previously, the range was 5% to 8%. And we reiterate our EBITDA margin guidance of 20% to 22%.

This concludes our presentation. We would now like to open the call for questions. Operator, please move to the next slide, and the Q&A can begin.

[Operator Instructions]

Our first question comes from the line of Jesper Ingildsen from DNB Carnegie.

I have a few questions. Maybe just starting out on the profitability. $3 million benefit from tariffs here in Q2. Just trying to understand if that's all you expect for this financial year or we could see more coming in H2? And also just trying to understand like the building blocks for the uptick in the market in the second half that's implied by your maintained guidance for the EBITDA margin at least. Just how much of that is contingent on further tariff refunds.

Then secondly, in Patient Care, as you pointed out, it has now been 18 months with the restructuring here, which has been, to some extent, a drag to growth. It does seem like both in Q1 and also now in Q2 is more related to Europe, and you actually are starting to see some improvements, particularly in the Americas, which although has been the key drag. Just if you could give any sort of indication to how strong Patient Care is in Americas at this point in time. Just to understand if when the headwinds in Europe goes away, what this would mean to the underlying growth momentum here?

Jesper, thanks for your questions. First, on the margin regarding the tariffs, the net impact here in the first half of the year is $3 million. We might get another $1 million, but that's on we're -- yes, there's some uncertainty around that. So it's not going to be a material factor when we look at margin in the second half of the year. When it comes to our guidance, it's important to keep in mind that seasonally the second half of the year is stronger for our business, and we get more operating leverage in both our product business, but especially in our Patient Care business. That is kind of the main driver, if you will, for why we expect, yes, margin to be higher here in the second half.

I mean, there are also minor kind of cost topics like we're still spending a little bit of money on the brand rollout here in the first half of the year, things like that, which we don't expect here in the second half. But the big picture is kind of the -- yes, higher operating leverage due to the seasonality in the underlying business. But overall, we're quite pleased with the margin development and our ability to maintain the cost line in an inflationary environment like we are currently experiencing.

On the Patient Care side, this is a big topic for us here in quarter 2. It is clear that we are disappointed with our patient-care results here in Q2. Just if we take a step back, we have, as I mentioned earlier, been taking measured steps here over the last 18 months to really build a global integrated patient care business on the back of several acquisitions made in most of our key markets here over the last decade. We have around 200 clinics. The operating results in each and every one of these clinics will be dependent on their ability to drive patient volumes, utilize their capacity effectively and maintain the right level of fixed costs.

If you look across our portfolio, we've seen very healthy progress in the right direction for always an increasing number of our clinics. And as you mentioned, the big progress here is that we -- the Americas has been our -- perhaps our biggest challenge because this is where we have has -- or have sort of made multiple acquisitions and have had a fragmented platform, and we are now seeing quarter-over-quarter sort of improvement in results for 3 quarters in a row.

In -- EMEA has been where we've not performed as we expected in the beginning of the year. And this is mainly related to 2 markets. In Sweden, it's more a market related topic. Sweden is the only market where we have tenders, you win some, you lose some. We are currently in a period where we are kind of phasing out of some tenders while we have on others, which will kick in later. So there's a little bit of impact of that. And then in France, it is yes, taking simply more time than we had expected to see the results of the initiatives we are focused on to normalize that business.

So we are behind, but working really hard to get back to consistent growth in line with the overall O&P industry. Hope that answers your question, Jesper.

Next up is Martin Brenoe from Nordea.

Sorry, I was muted. Can you hear me?

Yes.

Sorry about that. Sveinn and Arna, thank you for this presentation that you gave. Maybe just starting point. I think it's super interesting that you show a bit more color on the R&D side. Can you elaborate a bit on what happened from '24 to '25 in terms of a steep acceleration in terms of the new product sort of contribution in your prosthetics business? And why all of a sudden has increased so much, whether it's old products sort of that was 4 years old. That turned out to be 5 years or the year after or if it's a new product that has been having a steep uptake, that's the first question. Then I'll take the second one afterwards.

Yes. Thank you, Martin. On the -- It's always been a core focus for our company to make investments in innovation with the ultimate objective of improving the lives of people with chronic mobility challenges. And making the right choices in R&D is not always -- it's always a trade-off. And what we see here over the last years is where we have positive impact is always when we have big new product launches on the Bionic side. The -- we had the NAVii knee, we have the Icon knee, we have -- from College Park, we also have very solid introductions in the carbon fiber foot range, the Pro-Flex Terra in particular, where we once again have demonstrated our ability to provide differentiation in the feet market and demonstrate our strength in the feet market.

So Martin, ultimately, it's a result of the choices that we have made and that has resulted in, again, high-quality products and our ability to generate healthy demand for these products. And going forward, it's ultimately our goal to continue to invest and to grow our R&D investment over time, at least in line with our sales growth. And then for some periods at a higher rate than our organic sales growth. So we still have plenty to do on the R&D front and remain committed to our innovation efforts.

And just a quick follow-up because I think that we have discussed organic R&D versus acquired R&D? And in the end, you get the same net result from this graph that we show here on Slide 3. But just to understand, if we were to split this out on acquired innovation versus your own innovation, how would that look like?

The vast majority is our own innovation. I mean sort of there's obviously some impact from Fior & Gentz and College Park. If that's what you're referring to. But the vast majority of our generated sales are in our legacy lower limb prosthetics business that is providing the balance on these metrics.

Okay. And then just my second question would be on Americas and U.S. Can you elaborate a little bit on when you think that you will be back on sort of a more market growth track in the U.S.? Is it sort of already here in H2. Can you maybe provide a little bit of data points on what's going on in terms of any regional differences or any product differences or any sort of segment differences that makes you come out a little bit soft on the Americas side, still after having done a lot of work in the U.S.

Yes. That's a good question. I mean, it is -- I mean, looking here into the second half of the year, We -- our expectation is for a stronger second half across all 3 business areas. And in our core prosthetics business, supported by our ongoing efforts to kind of refocus our commercial efforts. In addition to more impact from neuro orthotics. It's encouraging to see our sales beginning to gain some traction on the neuro orthotic side and growing from a low base in the U.S. So that's a little bit on the prosthetics. And neuro also, we see good progress on our bracing business. here towards the latter half of quarter 2 and expect that to continue into the second half of the year. And then as I mentioned earlier, our Americas patient care business has continue to show sort of gradual quarter-over-quarter movement in the right direction, and we continue to expect that here in the second half of the year also.

So yes, across our 3 business areas, we remain optimistic here going into the second half of the year.

Okay. But is it fair to say that before we should expect you to take market shares from, let's say, Hanger and maybe especially Ottobock you would need to have the K2 products ready, which will only be in late 2027 because until then, you'll miss out on a significant part of the market growth. Would that be a fair assumption? Or is that a bit too harsh?

Yes. Well, Martin, I think as what we've talked about sort of -- we have a super solid bionic range. We have the NAVii, we have the RHEO, we have the Icon. These products are eligible for reimbursement under the expanded reimbursement code in the U.S. and we'll have the vast majority of these K2 patients. But there is a patient cohort where we would benefit from having a dedicated low active product. And we are encouraged with the progress we are seeing on the development front for a low active knee. But whether we are -- I don't believe we're losing market share in the U.S., but we would certainly benefit from having that particular product to strengthen our range.

Okay. Maybe just one final question and then I'll jump back in the queue. Just we had a presentation here in the house recently, which were from a humanoid distributor in Europe and that you will call out as potential long-term winner of this humanoid segment as you are probably one of the most advanced companies within robotics and especially with the hands have a special unique knowledge. And I was just wondering if you can put a few words on the long-term prospects of humanoids and whether that is something that you could see more partnerships as we see this segment is potentially a fast-growing segment over the next 5, 10 years.

Yes. Thanks, Martin. That's an interesting theme in itself, and I can provide kind of some high level [indiscernible]. I mean, first and foremost, we are one of the companies globally that has the most kind of intellectual property or build up knowledge around how to apply devices to the human body to enhance mobility levels. We have lots of engineering knowledge, lots of robotic knowledge, lots of knowledge around the whole software side. So this is a super interesting theme. And yes, potentially, there are opportunities for collaborations and then this can theoretically be a growth theme of some sort for our organization.

But for now, I wouldn't kind of want to be more specific around that. But this is certainly something that we are following extremely closely.

Our next question will be from the line of Tobias Nissen from Danske Bank.

Just have a few questions. Let's start out with Patient Care. With the promotion rollout now being complete. Like what are actually -- if you can say a little bit more what act going on beneath the line, also in terms of like productivity and profitability. Mainly seeing improvements here. And then the revenue, what you can say, the volumes are a bit lagging or how should we actually see this that there will come with the say, sort of delay perhaps a bit more on at what changes here in the second half of the year. I know you pointed to in the second half is usually the strongest for you. But kind of patient care actually moved back to like market-like growth at the end of the second half of the year? Or is this mostly like a '27 story. That will be my first question.

Tobias. thanks for the -- thanks for the question. And again, going back to patient care. I risk kind of maybe repeating some of my earlier comments. But at the end of the day, our goal in patient care is to deliver great care for the patients that rely on our services. When it comes to the financial performance, we have 200 clinics. Each and every one of those clinics, the net financial results will be a result of their ability to drive patient intake, productivity as in patient visits per CPO, which is kind of the general industry benchmark for productivity and then ultimately, the fixed cost line.

We have been driving very focused initiatives to address this at a high level, these key levers, if you will, any retail health care franchise. And if I approach the situation from, again, the geographic standpoint, we see our efforts yielding positive results in the Americas market, where we have -- which is the region where we have made kind of a lot of, you could say, small- or medium-sized acquisitions. And this was also the region which -- where we were especially challenged here throughout 2025. So it's very encouraging to see that our efforts are moving our results in the right direction.

Same for APAC, but where our results differ from what we had expected is mainly Europe where we have been stable historically. However, it's our kind of challenge is related to 2 specific markets. In Sweden, it is more kind of a market issue. It's the only country where we have tenders. You win some, you lose some now. We are kind of going through areas where we have lost some tenders, but -- and have also won some, but those we won't kick in until at the very end of the year. So that's a little bit of a specific situation.

While in France, we are -- our main effort has been on the patient intake side. and productivity side, and we are simply not seeing as fast of a progress as what we had anticipated. We have a great business in France, a super strong team with that a lot. This was kind of the last big entity where we integrated where we implemented the brand and have been simplifying that business. But we have to acknowledge that the impact of our initiatives is slower than what we had anticipated.

So Overall, we still believe that we are focusing on the main initiatives. We have a great patient care franchise with lots of opportunity to grow and to increase productivity and to ultimately just provide great care because that's our goal. So -- but at the same time, I'm not going to tiptoe around it. We are disappointed with not seeing more traction on the top line, but we'll get there.

Okay. And perhaps just to touch on the narrowing of the top line guidance, the 5% to 7% and 8% at the top. What's actually driving this? Is this the soft you can say, patient care here in the first half of the year? Or is there something else related to this and market product need to happen in the second half of the year to reach that 7%.

Yes. So again, big picture on growth and how we think about growth. So we guide 5% to 8%, which is a little bit of a broad range. We have our prosthetics and Neuro orthotics business area, which is driven by very structurally strong growth drivers, where we have a strong position and lots of super solid points here in quarter 2 results and growing again double digit here in this part of our business. Bracing is where we have a little bit more headwinds. We expect that business to grow 2% to 3%, but we're below that here in the first half of the year, but we expect a stronger second half, mainly supported by these new product launches that came into the picture late quarter 2.

But -- so -- but overall, here, if I look at the first 6 months of the year, we're slightly better on the prosthetics and neuro side, but we are slightly behind on the patient care side. Looking at the second half of the year, we still expect good performance in our prosthetics and neuro orthotics. These, as I mentioned earlier, a stronger second half in bracing. But on the patient side, we do expect second half to be stronger than first half, but it's clear that we are not where we would have wanted to be here for the first 6 months in patient care. That's clear.

Next up is Yiwei Zhou from SEB.

Also a couple of questions from my side. Firstly, Sveinn, could you give an update on 1 of the topic we have not talked about for a long time. I remember a few years back, you comment on this Össur leg solution or we call it Embla leg now and also a shared digital platform, how does that progress currently?

Yiwei, thanks for your question. That's a good topic. And -- our -- and it kind of goes back to the bigger picture strategic picture in our industry. Our ability to win market share and stay competitive in the prosthetics product market is dependent on our ability to bring the right products to market to serve our customers well. And also support our B2B customers with their efforts around fabrication. Fabrication of the customized piece of a mobility solution still remains one of the key strategic topics in our industry.

There's a lot of cost in the industry around fabrication around often -- how should I put it, often -- yes, processes which are not very productive when it comes to the fabrication piece. So we -- in our key markets, we offer our core customers the ability to also do the customized piece using different technologies, using scanning technologies, but we also have our direct socket technology. So Overall, we've seen good progress around these topics. And this is also where it provides us with strength to also be a patient care provider because in our patient care business, we are also doing lots of fabrication and are working hard on simplifying some of those processes using technology like scanning, 3D printing, et cetera.

And that -- our goal is to utilize those capabilities and offer these services to also our independent customers. So sorry for a little bit long answer because it's a very strategic theme for us. But overall, we see good progress with these complete solutions and on both the U.S. side and the euro.

So if you compare the mix, which are using your solution, if you compare it to 1 year ago and 3 years ago, could you quantify a bit of the percentage of the clinics, they will be increasing or more flattish development?

Well, I don't have a specific KPI for you there, but -- and what we see some regional differences. But another key theme in all of this is not necessarily the central fabrication strategy that we talked about a couple of years ago in relation to the complete leg, but also our efforts to introduce more kind of digital workflows in our own patient care operation where we are using scanning and 3D printing to build some of the custom components. While in other markets, it is -- you could say the traditional central fabrication value proposition is perhaps a little bit stronger for various reasons.

So there's a range of solutions here that are all ultimately addressing the same topic, which is fabrication. There is a shortage of CPOs out there. Patient volumes are there. Patient volumes are strong. Reimbursement is stable. So a lot of our independent clinical customers see this as a value-add service some of these different tracks, if you will, around how to solve for the customized piece that is needed for each and every mobility solution.

And is it fair to understand that the -- this has been a margin driver for your own clinics, own patient care business. You talked about the profitability in your PC business have improved last quarter also this quarter.

This is and will be one of the main kind of productivity drivers for our patient care business going forward. Yes, that's correct.

Great. And next question here on the Patient Care business, we have talked about for a long time. But have you lost any patients doing the restructuring in a rebranding process, if you can comment on this?

Well, if we look at that question kind of on a region-by-region -- I think that has not been a major theme, no. Have we lost some? Probably yes. But -- but no, if you're asking whether the whole brand change has caused confusion or anything like that. No, that's not our -- that's not our view. -- has, however, all of this change, both with regards to brand system and process changes as that led to loss of capacity utilization, yes, because all of this change means less time seeing patients. That is one of the main drivers that -- or issues that we've been working through. But I don't want to refer back to my earlier answer, can we see good progress across our portfolio. But our issues are mainly concentrated on what are 2 big European markets, and we're working super hard on working through those challenges at the moment.

Great. Very helpful question. And then my last question, just one follow up on the tariff refund. I've got some numbers this morning from you that the second half, it will still be a small refund benefit. And is it a $1 million net of expense per quarter or so in total in the second half? If you can elaborate a bit.

Yes. We -- we do expect from what we submitted, we already received the payments, but we still expect that we would get in total $1 million additional payment for tariffs in the second half. Timing is unknown. It is a...

Okay. It is total $1 million. Not per quarter.

No $1 million. But I guess it still uncertain about timing that is still being validated further?

[Operator Instructions]

Next up is Beatrice Fairbairn from Berenberg.

In Patient Care in Sweden, that you expect some tenders to kick in. Could you give some color around when you expect those to kick in. And then you also -- in your release, you noted that you expect to return to growth broadly in line with the O&P industry. Could you provide some color on when you kind of expect to get up to this kind of growth? And then secondly, you noted growth from new markets such as Ukraine in patient -- in prosthetics and neuro orthotics. Could you give some color here and perhaps quantify the impact on sales growth from these markets?

Beatrice, thank you. First, on the Patient Care side, yes, the Sweden market is the only market where we operate where there are tenders and there's a long list of tenders and the nature of the business is that you win some, you lose some. And currently, we are seeing some impact of tenders last. We have also won some, but those that we've won will not kick in until very late this year. So I don't want to quantify specifically the impact, but it has Yes, that is what we refer to when we say a challenging market situation in Sweden, it's kind of we're working through this timing difference there is between tenders lost and tenders won. So -- but I can't kind of quantify that more specifically.

But it has a meaningful impact. That's a bit the patient care story, yes. And going back and the other part of that question was when do we expect to get back to kind of normalized industry growth. First and foremost, we expect second half to be stronger than the first half. Our aim is to kind of on a run rate basis, climb back to industry average growth here towards the latter half of the year. That's our aim. But the biggest job here is to achieve consistent, at least mid-single-digit growth, which is in line with kind of the overall growth in this part of the value chain. And we will we'll get there. And are working as hard as we possibly can to normalize our performance in patient care.

On your other question with regards to Ukraine, that is certainly impacting our numbers in Europe. There is -- as we've talked about in the past, the Ukraine will be a big market for prosthetics. We are doing everything we can to build a presence there and be of service with regard to the -- that overall situation. So -- but with that said, our growth in Europe is still very strong across our traditional markets in both North and South Europe, but the demand and the growth that we're seeing for our products in Ukraine is still having a positive impact on the big picture, but I can't quantify that in any more detail.

Our next question will be from the line of Tom Rosenfeld.

It's another one on the Americas. In a slide to some positive impact from the U.S. Medicaid coverage expansion. Could you give us some more detail on the size of tailwind and the timing?

So yes, if we look at the Americas region, as we reported, it's a result of growth in our 3 business areas. Our Prosthetics and Neuro business, our Patient Care business and Bracing. If we zoom in on the prosthetics and neuro business, we are seeing positive impact from our launch of the NEURO HiTRONIC, the knee joint, Fior & Gentz knee joint, which is tapping into a reimbursement relatively new reimbursement code for that particular technology. And on the prosthetics side, this goes back to the overall coverage expansion for lower active patients where we do have a strong range.

Again, Icon, NAVii, RHEO knee, but we would still benefit from having this focused low active product, which we have commented on that earlier, which we expect to launch late next year. So we continue to expect yes, tailwind from the structural changes. And yes, for all our 3 business segments, we do expect a stronger second half than what we see here in the first half.

And then one more question, if that's okay. CapEx is at 2% of I know you've said that it's going to return to sort of 3% to 4%, and it's mostly due to investment timing. Is there any scope for it to be lower going forward given that the patient care clinical integration is largely over now?

We -- yes, like you said, we do expect that the CapEx will go back to normalized level. We are seeing some time now at the beginning of the year, we are seeing basically slow CapEx investments across all our categories, including -- these sort of improvements, which is one of the biggest investments we do in patient care. But it is just a normal way of our business. One more thing in our business. We need to do changes and additional improvement in patient care on a regular basis. So we expect that we'll go to a normalized level within the year.

As no one else is lined up for questions. I'll now hand it back to Sveinn for any closing remarks.

Thank you very much, operator. Thanks, everyone, for calling in and participating here this morning. If you have any follow-ups, please reach out to our Investor Relations team. Otherwise, I wish you all a continued good summer. Thank you very much.

Welcome to Embla Medical Q1 2026 Conference Call. Today's call is being recorded. If you have any objections to this, please disconnect your line. [Operator Instructions]

I would like to introduce President and CEO, Sveinn Sölvason; and CFO, Arna Sveinsdottir. Sveinn, please begin.

Thank you very much. Good morning, and welcome to the Embla Medical conference call, where we will review the first quarter results for 2026. I'm Sveinn Sölvason, President and CEO of Embla Medical. And joining me on today's call is our Chief Financial Officer, Arna Sveinsdottir; and Embla Medical's Head of Investor Relations, Klaus Sindahl. The presentation should take approximately 15 minutes, after which there will be an opportunity to ask questions during a Q&A session.

Now if you would please go to the next slide. We are seeing good progress at the beginning of 2026. Sales in the first quarter amounted to $232 million, representing reported growth of 15% and organic growth of 4%. We delivered strong performance in Prosthetics & Neuro Orthotics, driven by continued momentum and solid volume growth across regions and categories. Growth in Bracing & Supports was moderate. And Patient Care experienced a soft quarter, largely driven by timing effects in Europe.

Our EBITDA margin for the quarter came in at 17% and is down 1 percentage point from the comparable quarter last year, largely due to external factors such as FX and tariffs.

We delivered strong net profit growth, driven by growing operating results and favorable changes in net financial expenses.

During the first quarter, we continued the rollout of our ForMotion brand in Patient Care. And the global rebranding rollout is now more than 90% complete and expected to conclude during the second quarter. In Patient Care, we are seeing the -- or starting to see the benefits from the change initiatives that we implemented in the second half of last year to enhance long-term growth and profitability in our Patient Care business. And I will cover the performance in Patient Care better later in the presentation.

I also wanted to highlight progress in our R&D in the first quarter with the launch of the AeroFit Vent, a liner that minimizes sweat accumulation in the socket.

Lastly, we are reiterating our full year guidance of 5% to 8% organic sales growth and 20% to 22% EBITDA margin.

If you please go to the next slide. In APAC, sales growth was strong in the first quarter with 14% organic growth, driven by strong performance across all 3 segments. EMEA and Americas also posted good growth for the quarter, driven by Prosthetics & Neuro Orthotics, which, however, was partly offset by softer growth in the other business segments. And we'll cover the specifics and dynamics in each of our segments on the following slide.

And if you please go to the next slide. Prosthetics & Neuro Orthotics delivered 9% organic growth. In EMEA, we continued to see strong regional momentum with a broad-based contribution from Bionics, our Feet products and other key categories. In addition, our Neuro Orthotics business continues to progress well across several European markets, reflecting our strategy to expand the Fior & Gentz portfolio internationally.

Growth in Americas was also strong, driven by recently launched innovation in Bionics as well as our Feet solutions across both our Össur and College Park brands. Neuro Orthotics have begun to ramp up in the U.S. with a more meaningful contribution expected during 2026 as we broaden the launch of our first Bionic knee joint, which received a reimbursement code last summer in this important market. Lastly, we saw a very strong quarter in APAC across key markets and all product categories.

If you turn to the next slide, please. Sales in Bracing & Supports grew 1% in the first quarter. In Americas, sales growth was flat, and the market continues to be affected by shifting dynamics and competitive pressure, including increased price sensitivity. In EMEA, sales were soft, consistent with trends seen in Americas. Lastly, our Bracing & Supports business in APAC delivered strong growth in quarter 1 across the region with strong growth contribution in Asia and -- as well as Australia and New Zealand.

If you turn to the next slide, please. Sales in Patient Care declined 1%. In Europe, we saw sales underperform here in the first quarter, largely due to timing effects as we are both following a strong fourth quarter from '25 and Easter holidays partly overlap into March. We expect the Patient Care business in Europe to return to more consistent sales performance in line with market during '26. Sales in Americas recovered in the first quarter, in line with the internal change initiatives implemented during the second half of '25. In APAC, sales performance in Patient Care remained solid in Australia.

We remain confident that the Patient Care business in both Americas and Europe will deliver in line with the structural growth of the O&P industry as the year progresses as well as gradually contribute to increasing margins as we see profitability moving in the right direction here in quarter 1.

With this overview of our performance for the first quarter, I would like to hand it over to Arna to go through the financials in more detail. Arna, please.

Thank you, Sveinn. Please turn to the next slide for an overview of our financials. In the first quarter, the gross profit margin was 62% compared to 63% in quarter 1 2025. The gross profit margin was positively impacted by strong sales in the Prosthetics & Neuro Orthotics, but offset by all items such as FX and tariffs in the U.S.

OpEx was 52% of sales in quarter 1, which is the same ratio of sales in the comparable period. OpEx grew 3% organic, in line with our continued focus on cost control. Consequently, we delivered an EBITDA margin of 17%, which is 1 percentage point below the comparable quarter, mainly due to FX headwinds and tariffs.

The negative effect on our EBITDA margin comes from changes in currencies amounting to roughly 50 basis points net of hedging in quarter 1 when compared to the same period in 2025.

Finally, I'm very pleased to see that we delivered strong net profit in the quarter as our net profit grew 21%. The increase is driven by growing operating results and favorable changes in net financial expenses.

If you please turn to the next slide for the status on our cash flow and leverage. During the first quarter, CapEx was $5 million or 2% of sales, which is below our normalized level of 3% to 4% of sales due to timing of investments. Our free cash flow generation was lower than comparable period last year, mainly driven by negative effects related to timing of our net -- in our net working capital. In addition, it's worth highlighting that cash flow generation is seasonally low in the first quarter.

Net interest-bearing debt to EBITDA amounted to 2.4x at the end of the quarter, which is in line with our target range of 2 to 3x. We, therefore, continue with our share buyback program. And during the quarter 1, we bought back $2.6 million worth of shares.

And this is an overview on our financials. I'll hand over to Sveinn for his closing remarks and comments around guidance.

Thank you, Arna. Please turn to the next slide. Despite the variability in performance across regions and segments, we're off to a reasonably good start in '26 in an environment with higher uncertainty on the global economic outlook. Our guidance for '26 remains unchanged, where we expect organic sales growth to be in the range of 5% to 8% and EBITDA margin to be in the range of 20% to 22%.

With this overview, our presentation is now concluded, and we would like to open the call for questions. Operator, please move to the next slide, and the Q&A can begin.

[Operator Instructions] The first question is from the line of Yiwei Zhou from SEB.

It's Yiwei from SEB. I have 3 questions, and I'll do one at a time. Firstly, just looking at Bracing & Supports, I recall that historically, this segment carry a lower margin. And then, after the tariff payments now, I understand it's $2 million in the quarter. And if we analyze that, can you confirm that in that segment, you still have a healthy profitability going forward? And is there a sort of possibility to increase sales price? And if you can comment on this first.

Yiwei, I appreciate your question. Yes, the tariffs are mainly impacting our Bracing business. You're correct. We manufacture most of our -- or a big part of our Bracing products in Southeast Asia, China and or with third-party vendors in China and Taiwan.

And when it comes to margin in the Bracing business, it is -- the Bracing business is a profitable business, and it contributes positively to the overall margin of the company. With that said, there's, obviously, an impact from the tariffs, and we've had very little pass-through to our customers. At the end of the day, the Bracing business is a competitive marketplace with many companies that compete in especially the U.S. marketplace. And with reimbursement being fixed, it has provided very limited opportunity for pass-through of these tariffs.

Okay. And can you confirm that you still have a healthy margin after the tariff payments?

Yes, absolutely. Absolutely.

Okay. Okay. Fair enough. And my second question regarding the Upper-X portfolio in the Prosthetics. I realized that there recently had been a change in the U.S. reimbursement. Can you comment on this? What would be the net effect on your business?

Okay. Yes, there was a reimbursement -- Yiwei, is it possible to mute the line? Well, there's some background noise between -- sorry about that. Yes. So there was a reimbursement ruling here on the Upper-X product line here in the beginning of the year, which was unfavorable, which means that there are certain aspects that impact our business negatively, while there are other aspects which are more neutral to positive. And we are still working through the exact impact of this, but this is not something that will have sort of a meaningful impact on our overall growth trajectory. We see lots of opportunity in the Upper-X business, especially also on the mechanical [ finger ] range with very little -- which is a category with extremely low penetration. So a slight -- on balance, a slightly negative ruling on reimbursement, but not something that will change our overall outlook for the year.

Is it possible to remind us what is the growth trajectory in that portfolio?

Our Upper-X business has been showing sort of strong high-single-digit organic growth rates historically.

Okay. Last question on the EBITDA margin guidance. You've got -- I mean, if you look at the 20%, 22% compared to last year, the high end is 1 percentage point higher than your guidance last year. But if you're looking at Q1, it's lower because of tariff payments and also FX headwind. I mean what is your assumption for you to reach the 22%?

Yes, that's a good question, Yiwei. So remember, quarter 1 now is sort of the last quarter where we're comparing to a period from last year where we're not paying tariffs. So let's keep that in mind.

The other sort of -- or the main consideration with regards to our EBITDA margin guidance range goes back to our Patient Care business. We talked a lot about our efforts in building a global Patient Care business, rolling out one ERP system, rolling out one brand, bringing more consistency into our ways of working for our Patient Care platform. That is probably the single biggest topic, which will determine where we'll end up in -- ultimately in the range.

What we see here in quarter 1 is that despite our top line being 1% down in Patient Care, we still see more margin contribution from our Patient Care business, which tells us that we are doing the right -- we're moving the business in the right direction. So as we will see more top line contribution from Patient Care in the latter part of the year, that will also impact our margin. So that is the single biggest topic to look out for when it comes to where we'll end up in the range.

And can you confirm that the rebranding and the restructuring initiatives now have been completed during Q1?

Yes. So we mentioned in our material here that we're 90% through the rebranding exercise, and we'll finish here in quarter 2. So there were 2 sort of big launches for us here in quarter 1, one in France and the other one in the last region in the U.S. So there is some, you could say, impact of that here in quarter 1, but we are -- yes, we're almost across the line in this -- on the branding rollout.

The next question is from Ms. Beatrice from Berenberg.

Just on the Prosthetics & Neuro Orthotics segment, could you elaborate a little bit more on how demand has been across the Össur and College Park brands, particularly on the NAVii and Icon products? And you noted that the segment growth was largely volume-driven. Could you potentially discuss a little bit how much you've seen from price and mix and whether or not you're seeing any impact from that kind of Medicare reimbursement change and how that's progressing?

Beatrice, thanks for your question. There was some background noise there in the beginning. I'm not sure I caught the whole question. But on sort of going back to Bionics, Bionics is a big part of our growth story here in quarter 1. And when we look at the Americas business, that's both our Icon and NAVii, which are doing very well. And that is, we believe, partly due to the reimbursement expansion in the U.S. We don't have full transparency when it comes to what type of patients are being fitted in our third-party -- with our third-party clinical customers, but we certainly believe that, that's part of the reason for, let's say, the good trend lines we see in our Bionics business in the United States.

But generally, across all major markets, we see we see good progress in our Bionic range on a volume side. So when you look at the high-single-digit growth rates we are posting in our new Prosthetics & Neuro Orthotics business, that is then ultimately partly mix because our Bionics range is growing faster than our mechanical range due to that.

The next question is from the line of Tom Rosenfeld.

This is Tom calling from Intron Health Research here. Just building on the Medicare K2 expansion question, how are you currently sizing the K2 patient population in the U.S.? Which -- what proportion do you realistically expect to capture? And what is the reimbursement rate kind of K2 is getting versus your existing K3 and K4 ASPs?

Tom, thanks for the question. I mean if we look at the Medicare data that is publicly available, the lower active population is approximately -- or similar in size as the higher active population. And when it comes to pricing, the reimbursement code for Bionics for lower active patients is the same as it is for higher active patients in the United States. And remember, this is -- this change that was implemented -- or when Medicare opened up for reimbursement for lower active patients, this will take some time to take effect fully. There's limited clinical capacity in the system.

You will have many K2 patients that have recently been -- or recently, before the reimbursement change, had received an upgrade or a new knee and will not be eligible for replacement until 3, 4 years down the line. So this is a change that will impact the industry for many years to come, and we are well positioned to take part in that expansion. We have our NAVii. We have our Icon. We have the RHEO KNEE. And we are also in the process of developing a knee that is specifically designed for the least active patients. So that is -- this is overall, yes, a positive change for the industry.

[Operator Instructions] And next up, we have Martin Brenoe from Nordea.

I just have 2 questions as a starting point. Maybe just to understand a little bit how we should bridge the margin guidance versus the performance that you did here in Q1. Just to deliver on the midpoint of your guidance, you need to deliver 22% EBITDA margin consecutively for the next 3 quarters. Can you maybe explain how you bridge that and how likely you think that is or whether we should start to realize that we are probably going to be in the lower end of the guidance range?

Martin, thanks for your question. I'm going back to Patient Care because if we -- yes, bridging from where we were last year to how we've guided for '26, we closed '25 with a 20% EBITDA margin. We've guided 20% to 22%. We noted also when we set guidance that there is some, let's say, impact around tariffs and some impact around FX. But if we look aside from that, there is -- the main topic is the Patient Care business. We continue to expect high single-digit organic growth rates for our Prosthetics & Neuro business, which drives positive mix impact. We expect low single-digit organic growth rate for the Bracing business.

For the Patient Care business, we expect during the year to gradually deliver at-market growth rate. And when that happens, we will get much more operating leverage on our baseline cost. So going back to the initiatives, we've been doing on the Patient Care side. We have taken some measures to reduce our overall cost base. We have taken measures to -- also on the procurement side and measures to increase the productivity of -- or enable our CPOs to see more patients. And we see very clearly that these initiatives are paying off here in the U.S. The U.S. has been the biggest integration effort for us over the last years. This is where we've had most fragmentation when it comes to multiple acquisitions in one single region, and it's been a very -- lots of heavy lifting in integrating that business. And now, we see here, in quarter 1, nice growth rates and a very sort of positive contribution on the margin side.

However, that is neutralized by the impact in Europe. But Europe, there's no structural change in Europe. The Europe Patient Care business has been contributing nicely over the last couple of years. We see some slowness here in quarter 1, which we attribute mainly to sort of timing effect, a big quarter 4 as well as some Easter impact leading to some loss of capacity utilization. So it is a lot about watching or believing in sort of the continued momentum we see in our Patient Care business because when that business starts to deliver more top line, we would see a big impact on the margin side. So that is the single biggest topic in terms of bridging the guidance range.

And it's almost like you have read my questions prior to me asking them because my second question was exactly to actually the Patient Care because as an outsider, it's very hard to see the improvements you have been doing in Patient Care in this quarter. But it sounds like we are at the verge of the inflection point here in Patient Care. So based on what you're saying, should we already start to see this as of now in Patient Care globally? Or do you see some headwinds in Europe sort of in the very short term that we should pencil in for the next couple of quarters?

I mean what we've said is that we, during '26, will return to market growth in Patient Care. And again, the Patient Care business is -- as a global business, it's a very healthy business. We have seen impact in our Patient Care business because of all the integration effort both in terms of implementing systems, rolling out new brands. And if we look at the last 18 months, our biggest headwinds in Patient Care has been in the U.S. We've had stable contribution from our APAC Patient Care business as well as our Europe business. However, here in quarter 1, we see the turnaround in the U.S., which is super encouraging. However, Europe was slow. But there -- again, we don't have any structural issues in the European Patient Care business and expect that to get back on track. So, that is -- this is the main topic, Martin, to watch out for when it comes to our ability to deliver on our EBITDA margin guidance.

We have a follow-up from Tom Rosenfeld.

Tom from Intron again. I just wanted to ask one final question on the Streifeneder integration so far. In particular, have you seen any revenue synergies from your other business segments?

Yes. Tom, thanks for the question. Yes, the logic for buying or acquiring Streifeneder was to strengthen our position in certain markets and enhancing our -- especially our ability to serve clients in more price-sensitive private pay markets. And we are starting to see those synergies, yes, and we're also starting to see progress on our integration case when it comes to margin. Streifeneder is dilutive here in the first quarter. But as we move into the latter half of this year, beginning of next year, we'll see less dilution from this important acquisition.

We have another follow-up from Ms. Beatrice.

Beatrice from Berenberg. I just had one follow-up question. Are you seeing any impact from cost inflation at the moment? And if so, would you be able to give some color on what's getting impacted and how you just sort of mitigate that?

Sorry, I didn't hear. So impact from what, sorry?

Cost inflation, if any at all.

Well, there are -- some vendors have flagged that they expect to raise prices because of oil spiking. We -- at the moment, we don't see this materially impacting our cost picture for the year. But with that said, we -- I think it's fair to say that we are more cautious, taking some measures to increase our ability to weather some changes here in the second half of the year. But as all companies, we are watching this very closely.

As there are no further questions from the telephone, I'll hand it back to the speakers.

Thanks, everyone, for participating this morning. I encourage you all to reach out to our Investor Relations team if you have any follow-up questions. Enjoy the rest of your day.

At this time, I would like to welcome everyone to this Embla Medical Q4 and Annual Report for 2025 Conference Call. Today's call is being recorded. [Operator Instructions]

I'll now turn the call over to your speakers. You may now begin.

Thank you very much, operator. Good morning, and welcome to the Embla Medical conference call where we will review the fourth quarter and full year results for 2025. I'm Sveinn Solvason, President and CEO of Embla Medical. Today, also joining me here is our Chief Financial Officer, Arna Sveinsdottir; and Embla Medical's Head of Investor Relations, Klaus Sindahl.

The presentation should take approximately 20 minutes, after which there will be an opportunity to ask questions during a Q&A session. If you can please go to the next slide. 2025 was a year of meaningful progress for Embla Medical with several milestones as we continue to take steps on our journey to build a company that is focused on delivering products and services for individuals with a chronic as well as acute mobility need. The need for our solutions remains as strong as ever. And once again, our team delivered with focus and purpose. I want to take the opportunity to recap some of the key highlights on this slide.

In September, we completed the majority investment in Streifeneder. The investment marks a key milestone for Embla Medical positioning us as a full range provider in the prosthetics market while strengthening our presence in key markets, especially private pay markets with less developed health care systems. In addition, Streifeneder will help us expand our reach and ultimately enable us to reach more patients that need our products.

Innovation remains at the heart of our progress. In 2025, we introduced new impactful solutions, including 2 new bionic knees, Navii and Icon as well as the Odyssey iQ bionic support. We're also pleased to see that Fior & Gentz was awarded its first reimbursement code in the United States last summer for their microprocessor-controlled knee joint. Another meaningful milestone I also wanted to highlight is the opening of our first clinic in Ukraine. Establishing a presence in Ukraine during a very difficult time underscores our commitment to ensuring access to high-quality mobility care.

In conjunction with the opening of our Kyiv clinic, we also announced a landmark partnership with the government of Iceland to launch the Iceland Support Mobility in Ukraine initiative. This initiative is a 3-year program designed to deliver high-quality prosthetic care and rehabilitation to Ukrainian entities. Lastly, I'm also proud that Embla Medical earned a place among the world's top 500 companies pairing strong growth with environmental responsibility. This was the second consecutive year Embla Medical was highlighted as one of the world's best companies in sustainable growth.

If you please turn to the next slide for an overview of the key highlights for the fourth quarter and full year. In '25, we delivered solid organic sales growth with increasing underlying profitability as well as strong cash flow. For the full year, organic sales growth was 6%, driven by strong performance in prosthetics and neuro orthotics. Reported growth was 9% and growth in local currency was 7% for 2025, including contribution from the majority investment in Streifeneder, which was completed, as earlier mentioned, in September.

Sales in the fourth quarter amounted to $257 million, representing 7% organic growth. Our reported growth was 14% for the quarter, including 5 percentage points contribution from FX and 3 points from M&A. Growth in the fourth quarter was solid, driven again by the Prosthetics and Neuro Orthotics segment as well as also now Patient Care, where sales picked up in quarter 4 with a strong finish to the year. The EBITDA margin came in at 20% for the full year, on par with '24. For the fourth quarter, the EBITDA margin was 19% compared to 21% in quarter 4 of '24, and Arna will elaborate on that later.

We delivered strong cash flow in the quarter and full year as well, benefiting from solid operating results and lower CapEx compared to the same period in '24. During the fourth quarter, we continued the rollout of our ForMotion brand at several patient care facilities in the U.S. and Australia and we expect our global rebranding to complete in the first quarter this year. In Patient Care, we have implemented several initiatives during last year to enhance long-term growth and profitability in our Patient Care business, and I'll add a little bit more color on that also later.

I also want to highlight progress in our R&D in the fourth quarter with 2 important product launches during the quarter, Pro-Flex LP Junior by Ossur is a new prosthetic ankle and foot designed for active young users, delivering enhanced durability and waterproof performance. In our power portfolio, we have updates for our Power Knee with functional improvements, enhancing both mobility and adoption of power solutions. Lastly, we have issued new guidance for 2026 of 5% to 8% organic sales growth and an EBITDA margin of 20% to 22%. And in line with our capital structure and capital allocation policy, a new share buyback program was initiated here in the beginning of January.

Please turn to the next slide. In both EMEA and APAC regions, we had strong sales growth in the fourth quarter. Sales were very strong in the EMEA region with 12% growth, while APAC delivered 9%. Americas ended, however, flat following a good third quarter. And we'll cover the dynamics in each of our reporting segments on the following slide. If you turn to the next slide, please.

Starting with Prosthetics and Neuro Orthotics, we delivered 9% organic sales growth for the quarter and 10% for the full year. In EMEA, we continued to see strong momentum in the quarter with good sales growth across all major markets driven by, yes, solid contribution from recently launched innovations. In addition, we see very encouraging and strong organic contribution in the quarter from the newly acquired Streifeneder. Growth in the Americas was moderate after a strong quarter 3 and somewhat below our expectations.

The weaker performance in the fourth quarter is partly explained by a strong comparison with the same period in '24. Meanwhile, we remain encouraged with the progress as we saw strong sales growth, especially in our College Park portfolio driven by the Icon knee and the new Odyssey iQ. Lastly, solid growth in APAC, driven by Australia, while partly offset by more moderate growth in the rest of Asia. In Neuro Orthotics, the business continues to track in line with expectations following the expansion into new international markets in the last 12 to 18 months. Sales growth in the fourth quarter was, yes, very solid, driven by continued growth momentum in our existing German business and supported by good uptake in new markets such as Australia and France.

If you turn to the next slide, please, on Bracing. Sales in Bracing and Supports were soft in the fourth quarter and for the full year with some regional variances. Sales performance in '25 continues to be impacted by shift in market dynamics and price sensitivity causing partial loss of business in addition to an overall increasing and a very competitive environment. Embla Medical has a very good position in the key bracing markets in both the U.S. and Europe, and we expect to grow in line with market here in '26, supported by focused initiatives as well as new product launches.

If we go to the next slide, please. Sales in Patient Care picked up in quarter 4 with a strong finish to the year. In EMEA, we saw strong growth return across our key markets. Meanwhile, Americas ended down in the quarter due to partly a very strong comparable quarter in '24. Despite the declining sales in Americas, we see very encouraging signs and results of the work we're doing to get our Patient Care business back on track. Lastly, we saw a strong finish to the year in APAC, driven by very solid performance in Australia.

As communicated in the third quarter of 2025, our Patient Care business has, over the last few quarters, experienced lower-than-expected growth, mainly in our biggest regions, both EMEA and Americas. The performance can partly be ascribed to some softness and timing or fluctuations in patient volumes, especially in the first quarters of the year, but also these internal change initiatives, including the brand change, systems integrations and other change initiatives that have had some disruption in -- or caused some disruption in our business temporarily.

We have several initiatives that are being implemented in our Patient Care business with a heavy focus on performance management to strengthen the long-term growth and profitability of this important segment. It's our clear ambition to get the Patient Care business back on track and deliver in line with the structural growth we see elsewhere in the O&P industry.

With this overview of our performance for the quarter and year, I would like to now hand it over to you, Arna, to go through the financials in more detail. Arna, please.

Yes. Thank you, Sveinn. If you can please turn to the next slide for an overview of our financials. In quarter 4, the gross profit margin was 62% compared to 63% in the comparable period 2024. The gross profit margin was positively impacted by strong sales in Prosthetics and Neuro Orthotics and efficiency gains in manufacturing, but offset by FX, tariffs and initiatives in Patient Care. For the full year, the gross profit margin was 62%, largely explained by the same items as for the quarter. OpEx grew organically 7% in the fourth quarter but excluding the initiatives in Patient Care, OpEx grew organic below sales growth, in line with continued focus on cost management on the SG&A side.

Our EBITDA margin was 19% for the quarter compared to 21% in quarter 4 2024, while the margin was 20% in the full year and on par with 2024. While the EBITDA margin was positively impacted by strong sales growth and efficiency in manufacturing, it was negatively impacted by FX, tariffs and initiatives in Patient Care. The initiatives in Patient Care impacted both COGS and OpEx by approximately $2 million in the quarter and around $6 million in the full year.

If you sum up the impact of the Patient Care initiatives, FX and tariffs, the total impact on EBITDA margin was around 3 percentage points in the quarter and 1.5 percentage points in the full year. I'm very pleased to see that we delivered strong net profit in the quarter, which grew 33% compared to the same period in '24. And our net profit for the full year grew 21% compared to '24.

If you please turn to the next slide for the status on our cash flow and leverage. During the first quarter, CapEx was $8 million or 3% relative to sales. CapEx in 2025 returned to a normalized level around 3% to 4% following closure of facility expansion program carried out in '24 to support growth. Our free cash flow was strong during the quarter as we generated $42 million compared to $33 million for the same period last year. The strong cash flow benefited from solid operating results, positive effect from net working capital and normalized CapEx levels.

For the full year '25, free cash flow amounted to $100 million or 11% of sales compared to $77 million or 9% of sales in 2024. On the balance sheet, our net interest-bearing debt to EBITDA corresponded to 2.4x at year-end and within the range of 2 to 3x. As we are within our target range, we continue with our share buyback program.

And with this overview on our finances, I will hand over to Sveinn again for his closing remarks and comment around our guidance.

Thank you, Arna. If you please turn to the next slide. We delivered solid organic growth in 2025, in line with our guidance as well as our Growth27 financial ambition. This is a testament to our ability to execute on our targets and priorities despite an increasingly more uncertain geopolitical environment. For 2026, we are issuing new guidance. We expect organic sales growth to be in the range of 5% to 8%. In Prosthetics and Neuro Orthotics, we anticipate continued momentum across regions, supported by solid contributions from our Bionic portfolio and recently launched innovations in addition to upcoming launches in 2026.

Some positive impact from the U.S. Medicare coverage expansion is also expected to contribute to sales supported by our existing portfolio of microprocessor controlled knee solutions. These solutions will, in the future, be complemented by a more dedicated K2 solution to better serve the less mobile users in the low active K2 patient population. In Neuro Orthotics, we expect to see contributions from the ongoing rollout of our Neuro Orthotics offering into new markets, leveraging our global commercial infrastructure and our promotion footprint.

In Patient Care, we expect growth to gradually improve during '26 with the aim of eventually returning to consistent sales performance in line with the market. Growth in '26 is expected to be driven by volume growth and increased efficiency or productivity, supported by the initiatives implemented across our Patient Care business in the second half of 2025. Focus will be on enhancing our long-term growth profile and profitability of the business while benefiting from the structural growth in the OP industry that we serve in recent periods.

Lastly, Bracing and Supports is expected to grow approximately in line with market growth. We expect solid growth in selected key regions supported by launches of new products, but also with continued competitive pressure in selected markets. For '26, our EBITDA margin is expected to be in the range of 20% to 22%. The EBITDA margin is expected to be positively impacted by solid sales performance, a favorable product mix from increased sales of our high-end solutions, continued efficiency gains in manufacturing and increasing profitability in Patient Care and also continued cost control in our SG&A structure. At current foreign exchange rates, keeping all other factors constant, the EBITDA margin is expected to be negatively impacted by about 30 basis points in '26 when compared to '25.

With this overview, our presentation is now concluded, and we would like to open the call for questions. Operator, please move to the next slide and the Q&A can begin.

[Operator Instructions]

And our first question will be from Tobias Nissen from Danske Bank.

I have a few. Let's just start out with EMEA, very strong here with 12% organic growth for the quarter and quite the acceleration from the last few quarters. So can you talk more to what's actually the driver here for this growth acceleration and any standout countries or products? And can you say if there's any, you can say, one-offs that contribute to this solid growth here? That's my first question.

Tobias, thanks for your question. Yes, we've had consistent solid performance in our EMEA region across -- here in the quarter, across all business areas with the exception of bracing, which was flattish. This is a result of, yes, solid contribution, I would say, across all our major markets in the prosthetics and neuro side, where we have essentially our base business, our mechanical business across our prosthetic portfolio, both on the premium side as well as the, as you could say, the more value side with Streifeneder doing well. And we have also good development on our high-end bionic side, which drives that extra benefit on the mix side. Then there is -- we have been building our presence in -- also in Ukraine and selling more products there. If you remember, we stopped selling products to Russia a couple of years ago and Ukraine is starting to become a meaningful market for us.

And then finally, on the Patient Care side, this was a quarter where we had good progress across all our European markets and are starting to see some impact of the initiatives we are doing to build a global patient care franchise. So I think that these are the highlights, Tobias.

Okay. That makes sense. Is the Ukraine you also opened the clinic you mentioned this is perhaps a little bit early, but how do you see momentum here? Is there any one-offs related to Ukraine in the quarter?

No one-offs, no as such. And this is not contributing yet. It's only cost at the moment as such, but we are starting to build the infrastructure to be able to serve what is an important market for us. We want to make sure we are there to deliver to a need for what we do well. But this is not -- there are no one-offs -- meaningful one-offs just maybe on the cost side, but nothing material. But I would say this is more something that will have meaningful impact, we believe, medium, long term.

That makes sense. And then just on Americas, it was a bit soft here with 0% organic growth. I know you mentioned some tough comps. But with Europe benefiting from these new innovations, why do we not see this in the numbers for Americas? I know Patient Care is a bit -- also a bit soft. But what is the market growth actually in Americas? And actually what is required to get Americas back to growing again?

The market in the Americas is healthy. And if we look at our reported growth in the Americas, that's a net result of our bracing business, Patient Care business and our prosthetics and neuro business. Well, starting with the bracing business, the environment in bracing in the U.S. has been tough, very competitive and some price erosion in some key categories. So we see a decline here in the fourth quarter. But going into '26, we have some -- especially some new products that will help us fight the erosion we see in some selected pockets. On the Patient Care side, that has been the main reason for our softness in the U.S. And there, we've talked about our initiative to build one business on the back of a portfolio of acquisitions, introducing a new brand, introducing new systems and processes to make sure we benefit from being a large integrated company in patient care, and that has caused some disruption.

On the product side in Prosthetics and Neuro Orthotics, we are generating actually decent growth. However, a little bit below our expectation, but we're working hard on positioning us well here for 2026. So these are -- that's a little bit the big picture here. So the main kind of reason for the sluggish quarter 4 is the Patient Care side of the business.

Okay. That makes sense. You mentioned you are finished or expect to be finished with the promotion, you can say, rebranding in Q1 in Americas. Do we have to get on the other side of this before you see Patient Care starting to return to market growth? Or it is possible to get there before this?

What we are communicating is that we -- during the year, we will get back to at least market growth in Patient Care. Exact timing, I'm not going to comment on that, but we are gradually expect to be, let's say, in the mid-single-digit growth area. And it's -- maybe I'll use the opportunity to kind of refresh the context around Patient Care. I mean last 18 months have been a period where we have been taking the next step in our maturity journey as a patient care business or in our Patient Care business moving from a, you could say, a portfolio of acquired businesses with some limited integration into really building a global business.

That includes the brand systems and processes such that we can gain benefit from being a real global player in patient care, and that has caused some disruption in our business, all these change initiatives. But as we get that behind us, we will grow in line -- at least in line with the market, and we're working hard on achieving that milestone.

Just a final one for me on tariffs. What was the impact here in Q4? And what are your assumptions going into '26 here in terms of headwind?

So I mean, the tariff impact here in the quarter was around $2 million and around sort of $5 million to $6 million in full year '25. And remember, sort of we didn't have a lot of tariffs in the beginning of '25. So the run -- so let's say, the full year impact for '26, keeping everything constant will be a little bit higher.

The next question will be from the line of Sam England from Berenberg.

Just a couple from me. So on the margin side, amongst other things, you had some impact from the Streifeneder acquisition in Q4. Can you comment on how the integration there is progressing and how the acquisition will impact margins as you head into 2026? And then the second one, on the U.S. rollout of NEURO HiTRONIC, can you provide some comments on how that's progressing after you got the new reimbursement code last quarter? And then more broadly, what your expectations are for the Neuro Orthotics business as we head into 2026?

Yes. Thanks, Sam. I appreciate your questions. On the Streifeneder piece, yes, it's slightly dilutive for our margins this business. But as we progress with the integration, we expect the dilution to be marginal in '26, only 10 plus -- 10 to 20 basis points in '26-ish. But the integration is going well. We are pleased with this investment, good performance here in quarter 4, and we're sort of continuing to advance and mature our approach to how we position the overall business to be a supplier across the whole spectrum, essentially both premium and value when it comes to prosthetic components.

With regard to Neuro Orthotics, great milestone in '26 that we are eligible for the code, Medicare code. And we've done a lot of groundwork here in the latter half of '25 to prepare the business for growth here in '26. So we -- this will be part of our growth story here in '26. We have not provided any specific communication with regards to the impact, but we will start to see some traction here in the first half of 2026.

The next question will be from Dominic Rose from Intron Health.

I've got 2. My first question is about the guidance. The top end of your guidance is slightly above the trend growth in the market. What would you have to see to hit that top end? And just making sure whether there's any M&A impact included within that? Question two, when could the Ukrainian market become a material growth driver? And can you help to contextualize the potential size of that market?

Dominic, thanks for your questions. Yes, we've guided 5% to 8% organic growth, which is largely in line with kind of the our overall kind of growth ambition for the 5-year strategy we're executing on now. So what -- as always, when we start a new year, we built our guidance based on a set of assumptions, how we read the current trends in the business and what our plans are to drive sales growth. And what needs to happen for us to deliver in the upper end, we need another solid year in our Prosthetics and Neuro Orthotics business, similar to what we've done this year.

We need to get Patient Care business delivering at least in line with market. And the earlier we get there, the better chance we have of delivering in the upper end of the range. And then we need to deliver in market in line with market growth in bracing. And this will position us in the upper end of the range. And sort of then -- yes, I hope that kind of gives a little bit of color. I mean where we do have the strongest structural growth drivers, that is in our neuro -- or our prosthetics and neuro business, where ultimately, it's about defending and growing our share in our mechanical range and driving the mix or driving more adoption of these high-end solutions. And that is what you need to follow the -- where you need to follow the progress on our ability to do that. That will determine largely where we'll end up in the range.

Then on Ukraine, I'll be cautious here in terms of communicating. I think everybody knows the facts around the size of the amputee population in Ukraine. How the market will develop will depend on a lot of factors, how the development will be in the country itself and when the war will stop and how a system will develop around supporting amputees. These are all factors that will sort of that will ultimately impact how the market will develop. But I think just looking at the need there, it's a big need, and this will be a -- there's a lot of work for our industry to do as well as we can to support the amputee population with good solutions. But I'm cautious to provide any estimates to how the market will develop in terms of size.

The next question will be from Jesper Ingildsen from Carnegie.

A couple of questions from my side. Just going back to the strong EMEA growth that you saw here in Q4, the 12% organic growth. As I understand, that's also helped by the way you treat acquisitions. Could you just maybe highlight how much the Streifeneder acquisition has contributed towards that growth? And then maybe just broadly in terms of '26, is anything to call out here in terms of basing, both in terms of top line growth, but also from a margin perspective. So I mean, obviously, you're calling out gradual improvement in Patient Care, but also bracing and support getting back on track to market growth. Like what is the timing there? And also from a cost perspective, anything to call out that could impact the margin?

Yes. Thanks, Jesper. I mean on the organic growth, yes, the way we include acquisitions in organic growth is basically we will just compare to the previous year, what Streifeneder did in quarter 4 last year and because that is essentially the -- ultimately the organic growth in the business in the portfolio that we own for the quarter. So this had a -- yes, I would say, a slight positive impact on the EMEA growth, but it's not a deciding factor. What the main theme there is, again, just solid performance across our core portfolio in Prosthetics and Neuro Orthotics as well as just our Patient Care business delivering a solid quarter.

On your question with regards to bracing, yes, we -- our goal is to deliver bracing growth in line with market here -- here in the year. And like -- I mean, the macro picture in bracing is unchanged. There is pricing pressure, especially in the U.S. market, partly reimbursement related. But it's important to keep in mind that still these products that -- which account for the vast majority of our portfolio in bracing are fundamental products and standard of care in each and every major health care system.

What will be different for us here in '26 versus '25 is that we have some important product launches in big categories that we expect to contribute and help us fight, let's say, the erosion we see still in some selected pockets. So that is -- that is where we are in bracing. It's a competitive marketplace, but our position is strong in the key markets we operate in bracing, and it's our goal to deliver at least in line with market.

[Operator Instructions]

The next question will be from Martin Brenoe from -- he just jumped up. So our next question will be from Yiwei Zhou from SEB.

It's Yiwei from SEB. And also a couple of questions from my side. Firstly, maybe a question to Arna. You mentioned here the restructuring initiatives for Patient Care. And what -- when do you expect this to be complete during 2026?

So restructuring initiatives in Patient Care have more or less been done. We are now starting to focus on the performance management and the initiatives we are implementing and make them -- make sure that we deliver in 2026. As we said, it will gradually impact the year, but we do not expect any material initiatives in 2026 affecting our margins from Patient Care.

Okay. Very clear. And then also a question on the EBITDA margin guidance. The range is a bit wider than usual for '26. And apart from the continued external headwinds, is there any internal variables you're seeing sort of uncertainties?

No. Well, I think it's fair to say that external environment is part of the overall picture, especially the tariff. Sorry, could you please mute your lines.

Yes. Okay.

Yes, I think that is -- I think it's mainly because of just the external environment that we're operating in that we go in with a little bit broader range. I think it's important to keep in mind the big picture in margin. I mean we guided in the beginning of '25, we guided for 20% to 21% EBITDA margin. And kind of the main -- then always things change as we get into the year. Some things are better than what we anticipated, some things are not as good as we anticipated. Some -- I mean, we did anticipate that we would take a lot of costs through our P&L because of the work we're doing in Patient Care. That did not surprise us, even though it's maybe been a little bit higher than what we anticipated.

But what we did not anticipate in the beginning of the year where there's the FX impact and also the tariffs. These are meaningful topics. And I think it's important to also understand that despite these, you could say, the tariffs that I mentioned earlier, which is probably $5 million to $6 million on a full year basis, the FX impact and the cost we pushed through in relation to the brand and system changes in patient care, we're growing or increasing our margins year-over-year.

And I think that is a key message. And that also goes back to, again, our overall hypothesis in terms of what our financial ambitions are within that Growth '27 framework is to grow our top line faster than we did pre-COVID. And we've delivered consistently on that here in the first 3 years of this 5-year strategy period as well as also delivering on the margin piece. So yes, we're going into 2026 with a little bit broader range. And you could say perhaps the volatility on the tariff side and on the FX side is a big part of that going in a little bit broader. But our intention still remains the same to continue to grow our margin.

Okay. But I just want to understand what needs to happen to get to the 22% EBITDA margin. I mean there's no sign that the FX headwind will be reversed and then the tariff is still there. Could you maybe comment also.

Yes. That will ultimately depends on our ability to grow the business and our ability to move forward, specifically our Patient Care plans to benefit from running a global platform around how we deliver mobility solutions, how we source the materials we use in our fabrication processes and how we're able to create an environment that is better for our clinical workforce that is every day doing an incredible job in seeing and serving patients. So all of the our efforts in Patient Care are essentially aimed at enabling more productivity such that we're able to see more patients and deliver more solutions. So this is the -- probably the biggest single topic with regards to our margin story this year, our ability to make progress on our Patient Care plans.

Great. Very clear. And then the last question, maybe challenge a bit on the long-term growth target. I mean, initially, you provided was 5% to 7% organic growth at the latest Capital Market Day. And you recently sort of indicate you see the upside 5% to 8%, which is also what you are guiding for '26. I mean looking back '24 and '25, both you delivered only 6%, close to lower end of this range. I mean what -- I mean what make you confident to accelerate the growth in the coming years? I just want to get a feeling, I mean, how realistic is this 8% at the high end of the guidance range?

Yes. That's a fair question, Yiwei. And if you look at the -- going back to this Growth '27 period that we're now in, we delivered 9% in '23, which was though partly impacted by an inflationary environment that is different to what we see now, of course, 6% in '24 and then now again 6% in '25. And I think ultimately, our organic growth will be a result of our performance in -- or the weighted average of the growth in the 3 segments. What we've delivered here, especially in our legacy product business, Prosthetics and Neuro Orthotics is that we've delivered a very clear step-up in growth compared to historic. And that is again driven by just solid performance in our breadth and across the mechanical business and good execution on the Bionics side that drives that mix growth.

Regarding our ability to deliver in the upper end of this 5% to 8% range, again, it will require still solid execution in Prosthetics and Neuro Orthotics and our ability to deliver more in line with the market on the patient care side. These are the biggest topics. Yes, bracing will have to be there as well, but that is a smaller part of our portfolio, around 14% of our overall sales, but still also to push into the upper end of the range, we need to do better than what we did in '25 in bracing.

Our next question will be from the line of Martin Brenoe from Nordea.

Just have 3 quite simple questions. First of all, you mentioned Australia had quite decent growth, strong growth there. Just wondering whether there is any special ordering or any phasing we should be aware of? And to broaden that a little bit, is there any phasing we should be aware of when we are doing our model for Q1 in terms of any growth that could have happened in Q1 that was pulled a bit forward to Q4 2025? That's the first question.

Yes, Martin, thanks for your question. No, not as such. I mean we just had a we have a high-quality business in a favorable market in Australia, and we did exceptionally well across both our product and Patient Care business here in '25, and we are also in a position to have a good year in '26 in Australia. So no one-offs or anything like that here in the quarter.

That sounds very promising. And then my second question is on Fior & Gentz. Maybe just a quick status on -- if you look at that compared to your overall prosthetics business, how much does that account for? And how much in terms of the group growth do you expect it to contribute with? If you can provide just some color on Fior & Gentz contribution would be very helpful.

Martin, what I'll say there is I'll just point back to the announcement we did when we acquired the business in terms of its relative size. It is at that point in time, the business was roughly yes, $25-ish million and growing and the historical growth was around 14% organic growth. And what we've communicated since then is that we continue to deliver growth around that range. Now when it comes to contribution to overall growth, we -- we are, for example, starting from a low base in the U.S. And that will -- as we are able to gain some traction on especially the new reimbursement code for the knee brace, the Bionic knee brace that can and will impact our growth. So I hope this gives you a little bit of color. We don't report specifically on Fior & Gentz, but it's by all means delivering in line with our plans and also as we roll out to new markets and leverage our commercial infrastructure in other regions where there is good reimbursement for these types of solutions.

That's very clear. Sveinn, just a final question for me, and then I'll jump back in the line. It says in the report that you have in the future will launch a dedicated K2 MPK solution. Just wondering if you can specify in the future a little bit more to an analyst like me.

Thanks, Martin. I think there's no secret that we are working hard on complementing our strong Bionic grades with a product that is, you could say, specifically designed for low-active amputees. We do have a strong range. We have obviously the Navii, the Rheo and also the Icon from College Park. So we have a strong range that fits under the new reimbursement scheme also in the United States, and we believe that we are capturing our fair share of the uptake in the U.S. But we are working hard on a new low-active knee. It will not come to the market this year. But we will -- as we get closer, we will provide more guidance on time line.

[Operator Instructions]

As there appears to be no more questions in the queue, I'll hand it back to the speakers for any closing remarks.

Thank you very much, operator. Thank you, everyone, for dialing in today and listening and participating in our conference call. I encourage you to reach out to our Investor Relations team if you have any further questions. And with that, I'll close the call and wish you all a great day. Thank you very much.

At this time, I would like to welcome everyone to this Q3 2025 conference call. Today's call is being recorded. If you have any objections, please disconnect at this time. [Operator Instructions] I would now like to introduce President and CEO, Sveinn Solvason; and CFO, Arna Sveinsdottir. I will now turn the call over to your speakers. You may now begin your presentation.

Thank you, operator, and good morning, and welcome to the Embla Medical conference call, where we will review the third quarter of 2025. I am Sveinn Solvason, President and CEO of Embla Medical. And joining me on today's call from Copenhagen is our Chief Financial Officer, Arna Sveinsdottir; and Embla Medical's Head of Investor Relations, Klaus Sindahl.

The presentation should take approximately 15 minutes, after which there will be an opportunity to ask questions during a Q&A session. And if you please go to the next slide. Sales in the third quarter amounted to $237 million, representing 7% organic growth, and our reported growth was 11% for the quarter, including 3 percentage point impact from FX and 1 percentage point from M&A.

As expected and as we had communicated, our growth picked up here in the third quarter, driven principally by double-digit growth in Prosthetics & Neuro Orthotics, while sales growth in Patient Care remained modest and sales in our Bracing and Support segment came in flat for the quarter.

EBITDA margin was strong at 22% here in the quarter and on par with third quarter last year, while our margin increased by a full percentage point to 21% for the first 9 months compared to the same period last year. The margin increase was driven by robust sales in our Prosthetics & Neuro Orthotics business area, solid efficiency gains in manufacturing and continued cost discipline in SG&A. In line with our performance recorded here in the first 9 months of 2025, our guidance for the full year has been or is reiterated.

On our strategic initiatives, we are pleased with the progress we are making. Late August, we announced the closing of the majority investment in Streifeneder ortho.production. We are very excited about this investment, which is a strong strategic fit with our Growth'27 strategy and will enable Embla Medical to reach more patients as a full range provider in the broader O&P space.

We're also pleased here in the quarter to announce the successful launch of Odyssey iQ, which is a new hydraulic microprocessor foot solution by College Park. The Odyssey iQ is a lightweight and low-profile foot solution suitable for various environments and activity levels offering long-lasting battery and fast response time.

We have seen good reception of this product in the Americas market since the introduction during the summer. In Neuro Orthotics, we are tracking in line with expectations. Since last year, our focus and strategy has been to expand into new international markets while maintaining the growth momentum in our existing German business. Fior & Gentz was recently also awarded a new reimbursement code in the United States for their microprocessor controlled knee joint, which is a significant milestone for the introduction of Neuro Orthotics in the important U.S. market.

We continue to monitor the external environment closely as dynamics remain volatile, whether it relates to tariffs or other trade restrictions potentially impacting our business. In the third quarter, we experienced some impact from tariffs in the U.S. and continue to assume some absorption in our guidance. And we are as well taking short-term mitigation initiatives, including initiatives on the cost side to mitigate the impact of these tariffs.

Lastly, the U.S. Department of Commerce published a notice for public consultation on a possible Section 232 investigation concerning medical consumables and medical equipment, including prosthetics and orthopedic appliances with the objective to determine the effects on the U.S. national supply security.

We are currently assessing the scope and potential implications and the potential trade restrictions that might result from this investigation. However, several factors remain uncertain at this stage, we still deem it too premature to discuss potential impact until more clarity has been released.

If you turn to the next slide, please. We had solid growth across all our regions in the third quarter, mainly again driven by Prosthetics & Neuro Orthotics. Our sales growth was especially strong in the APAC region with 18% growth, while our EMEA region and Americas delivered 7% and 5% growth, respectively.

If we turn to the next slide, please. If we look at our Prosthetics & Neuro Orthotics segment, organic growth was 13% in the third quarter. The strong momentum in EMEA continues across markets and growth was driven by strong -- both volume growth and solid uptake across all our key product categories, especially in categories such as bionics and feet solutions, where we saw strong growth supported by our innovation, namely Navii and the Pro-Flex Terra.

We're also encouraged by the strong sales growth or sales growth recovery in Americas following a soft start to the year. The growth in Americas was led by key product categories in both upper and lower limb prosthetics and supported by our recently launched innovation. Also, our College Park portfolio showed very good sales growth in this quarter following the launch of our new Bionic foot solution, Odyssey iQ, among others.

Lastly, our performance in APAC was very strong with growth across markets driven here in quarter 3 by China, Japan and very good performance in Australia. In Neuro Orthotics, the business is moving ahead according to plan. And during quarter 3, we saw a good ramp-up in select new markets, albeit from a low base.

If you turn to the next slide, please. Sales in Bracing & Supports were flat in the third quarter. In EMEA, sales ended soft despite good performance in some markets. In Americas, sales were flat, continued headwinds in the U.S. market, but we see solid growth in our Canada bracing business. Lastly, APAC demonstrated some scattered performance with solid growth in Australia and New Zealand, but partly offset by softer performance in most other markets.

If you turn to the next slide, please. Sales in Patient Care grew modestly at 1% for the quarter. We saw mixed performance by key regions in both EMEA and Americas, while our APAC region demonstrated very strong performance across our clinics in Australia. And as a reminder, Australia is the only market in APAC where we operate in Patient Care. If we go back to the big picture in Patient Care, the market is estimated to grow in the range of 3% to 5%, with also healthy operating margins.

Our Patient Care business has, over the last few quarters, experienced lower-than-expected growth, mainly in EMEA and Americas regions. This performance can partly be ascribed to softness and timing in patient volumes, particularly in the first half of the year. However, our Patient Care business has also been delivering below market growth in this period. This recent weakness can be ascribed to internal change initiatives, including the promotion rebrand rollout, platform-wide integration of new ERP and operating systems and other change management initiatives impacting ways of operating.

It's a top priority for management to get back on track in Patient Care, and we have extensive focus on performance management and other key initiatives that will strengthen our execution in this part of our business. Now this concludes our performance overview for the quarter. I would like to hand it over to Arna go through the financials in more detail. Arna, please.

Thank you, Sveinn. Please turn to the next slide for an overview of our financials. In the third quarter, the gross profit margin was 63% on par with Q3 2024. The gross profit margin was positively impacted by the strong performance in Prosthetics & Neuro Orthotics, coupled with manufacturing efficiency. The margin was, however, negatively impacted by modest sales growth in Patient Care and Bracing & Supports in addition to some impact from U.S. tariffs.

For the first 9 months in 2025, our gross profit was 63% versus 62% in the same period last year and on par when excluding special items. OpEx growth was 5% organic in the third quarter or 2 percentage points below our organic sales growth and in line with continued focus on cost management on the SG&A side. Consequently, we delivered an EBITDA margin of 22% for the quarter on par with quarter 3 '24. And the third quarter EBITDA margin was negatively affected by around 30 basis points from FX.

In line with our plans to expand EBITDA margin, the EBITDA margin for the first 9 months was 21% compared to 19% reported for the same period last year or 20% before special items. Net profit grew 17% in both quarter 3 and for the first 9 months. Growth in net profit was driven by strong operating results. Please turn to the next slide for a status on our cash flow and leverage. During the third quarter, CapEx was $8 million or 3% of sales and within the guided range of 3% to 4% of sales.

CapEx decreased slightly in comparison to Q2 and the comparable quarter last year, partly due to the timing of investments and CapEx returning to normalized levels. Our free cash flow was strong for the quarter as we generated $38 million in the quarter compared to $33 million for the same period last year. Our free cash flow benefited from strong operating results as well as positive impact from net working capital and normalized CapEx levels.

It should be noted that the second half of each year is seasonally higher than the first 6 months in terms of cash flow generation. Net interest-bearing debt to EBITDA corresponded to 2.5x at the end of the quarter and within the range of 2x to 3x. That is the target range.

Lastly, we issued around 2.8 million new shares in early September in support of the maturity investment in Streifeneder ortho.production. We also bought back roughly 525,000 shares in the third quarter as part of our ongoing share buyback program at a market value of $2.7 million. With this overview on financials, I will hand over to Sveinn for his closing remarks and comments around our guidance.

Thank you, Arna. Please turn to the next slide. In the third quarter, growth picked up as expected, driven by double-digit growth in Prosthetics & Neuro Orthotics, with a solid momentum in EMEA continuing and growth in Americas picking up following a soft start to the year. In line with our performance to date, our full year guidance is reiterated with 5% to 6% organic growth and 20% to 21% EBITDA margin. As previously communicated, the guidance assumes some absorption of tariffs, although uncertainty around the exact impact remains. With this overview, our presentation is now concluded, and we would like to open the call for questions.

Operator, please move to the last slide and the Q&A can begin.

[Operator Instructions] Our first question comes from the line of Jesper Ingildsen from Carnegie.

Congrats on a strong quarter. I have a couple of questions. Maybe firstly, we can start out on the strong performance within Prosthetics & Neuro Orthotics. Could you share a bit of thoughts around sort of like what we should anticipate going into Q4 and beyond? Like is there anything we should consider in terms of timing or anything similar? And also I guess you have somewhat tougher comps in Q4?

And then maybe moving on to your Patient Care business. As you're alluding to, it's an area where you have been underperforming the market, which I think is clear in the light of one of your competitors recently going public. Could you talk a bit to what initiatives you are doing here to improve the growth and how soon we can expect the growth to improve?

Yes. Jesper, thanks for the questions. On Prosthetics & Neuro Orthotics, this was one of those quarters where we had tailwind across all our major regions, and we saw solid performance across all our major product categories. And it's also fair to remember that we are also comparing to a fairly strong comparable quarter last year where we generated 9% organic growth in Q3 '24. I would not like to comment or give very specific guidance by segment here for the next quarter. But how should I put it? We've been consistent in our performance in Prosthetics & Neuro Orthotics over the last many, many quarters.

And we -- there's no reason for us to expect that, that shouldn't continue. But obviously, also mentioned that we can see quarterly fluctuations. With regard to your question on Patient Care, I would like to sort of take the opportunity to take a step back and back to the big picture in Patient Care. We have, over the last decade, built up a very strong platform in Patient Care.

We've made acquisitions in key markets of high-quality companies, but have operated these entities with limited integration, maintaining separate brands, et cetera. Over the last 12 months, we have taken significant steps in order to move to the next maturity stage in Patient Care to operate a global business, a truly global business, benefit from scale. And in order to do that, we have rolled out a new brand here over the last 12 months and will complete mostly on that here during '25.

We also made significant investments in processes and systems alignment, rolling out a new clinical management system, for example, in our whole U.S. platform here over the last 18 months and making -- moving -- most of the platform now is operating on the same ERP backbone system. And this has caused some disruption in the business we have to acknowledge and has impacted our performance here over the last -- yes, especially here in the last 4 quarters.

And -- but the big picture is that the patient care market is very healthy, growing mid-single digit with solid operating margins. And we have full urgency on getting back on track in Patient Care, and we will. So that's a little bit where we are today.

The next question will be from the line of Tobias Nissen from Danske Bank.

Congrats on the quarter. Just to build on Jesper's question on the Patient Care platform. You had some headwinds, also external headwinds with lower patient volumes. And now you're taking the step to focus more on improving this segment. When should we expect like some meaningful improvement in this? Is it like second half of next year? What are your expectations here?

And then just in terms of M&A and buying some more clinics, does this mean that you're taking more of a pause now to do this and more focus on driving this incremental performance improvement for the clinic network? Let's just start with that. I have another question afterwards.

Yes, Tobias. On the Patient Care side, I mean we -- if I start with the M&A questions, I mean, we are still building a pipeline in Patient Care. And -- but our first and top priority is to make sure we are growing at least in line with market. And our top priority is to make sure we execute on these changes such that we run a healthy Patient Care business. And we do see lots of opportunities both for organic as well as external growth going forward.

Now with respect to timing, I would not like to comment too detail on that. We will provide more detail as we report our quarter 4 numbers and provide guidance for 2026. But I will still expect that during '26, we will be operating in line with market growth rates, at least.

Okay. Perfect. That's perfectly clear. And then just this quarter, you had the 7% organic growth, quite strong. I was just looking at your guidance of the 5% to 6%. Should we expect you to reach the higher end of this range given this better performance than what was expected in Q3? And what are like the downside risk to this and you're achieving this also because you normally have a pretty strong Q4, especially for the Patient Care segment, if I remember correctly.

I would like to just go back to a previous communication in terms of that we have been consistent here in around both quarter 2 and quarter 3 reporting that we expect the second half to be stronger than the first half and are now just reiterating this 5% to 6% guidance. And we do expect the average growth to be higher here for the second half than first half. So I wouldn't want to be more specific than that.

And our next question will be from the line of Martin Brenoe from Nordea.

I got a few questions, but I can maybe start with 3, and then I'll jump back in the queue. Maybe just first of all, completely appreciate that you cannot quantify the tariff impact on a longer horizon with all of the moving parts that we're seeing. But can you maybe just quantify the impact that you had in this quarter and whether or not you expect the impact from tariffs to increase or decrease going forward, at least just at face value? And maybe a bit wording around what you do in terms of mitigations also in terms of potential price increases? I'll start with that question and then jump to the next 2 questions.

Yes. Martin, thanks for your question. I mean I can say that we -- the tariffs that we are absorbing here in quarter 3 are close to $2 million. And that -- from what we know today, we would expect something similar in quarter 4, perhaps a little bit higher. That is what we -- based on what we know today, but there is, as you all know, some uncertainty around these tariffs.

Our ability to mitigate depends on our ability to pass on some price increases to our customers. We have not done that to date. We can work with our suppliers and are also actively evaluating the different scenarios that we have in terms of, let's say, once there is more clarity in terms of long-term situation, we will take action. But we have decided to hold off on major changes in our supply chain until we have more visibility in terms of what assumptions we're working with. But this is a topic that has higher urgency and consumes time and energy to monitor the situation and also plan for different scenarios, and that is just where we are.

Very clear. Maybe just as a follow-up to that. Are you having any considerations on moving production at least partly to the U.S.?

I think we will, as all companies just need to evaluate the feasibility of having a larger footprint in the U.S. I mean we do have some operations in the U.S. We do have a manufacturing -- small manufacturing platform with our College Park business in the United States. We also have our central fabrication service in Orlando.

And this will just be one of the scenarios that companies in our position would need to evaluate once there is more clarity in terms of what the medium, long-term landscape looks like when it comes to trade restrictions and tariffs.

Very clear. That makes sense. Then just -- and we already talked about Patient Care, but I was actually just wondering a little bit whether you could put some color on the patient care mix because Prosthetics is clearly growing very fast, but there are other products that are not growing as fast.

And just wondering if the Patient Care is mirroring the mix that you have in terms of Prosthetics versus low-margin products or whether you have a bigger component in the Patient Care business that is Bracing & Support and that type of products, just to understand a little bit better what's driving the patient care.

Yes, that's a good question, Martin. And if we look at the business mix in Patient Care, that does vary by geography. And the reason it varies is that the different health care systems have taken different choices in terms of how they deliver some of these mobility devices. All else equal, you can say that, for example, our U.S. Patient Care business is very focused on Prosthetics & Neuro Orthotics or other custom orthotics.

That is the main business for Patient Care in the United States with a little bit of off-the-shelf Bracing, but very limited. However, if you look at a typical patient care provider in Continental Europe or in Europe, there, you would typically see a broader range of services, both Prosthetics, Neuro Orthotics and a fairly broad range of other mobility type of solutions.

So it is -- yes, it is different. However, I can tell you that our recent weakness in Patient Care is not because we are seeing some erosion of some sort in categories outside of our core product categories. That is not what is the reason behind the short-term weakness we are seeing in our Patient Care business. All else equal, we see healthy development across the vast majority of these product categories that we are focused on in our Patient Care franchise.

Makes sense. And then just a final follow-up question to that is that your Prosthetics business is obviously growing very fast. It's not really reflected in your retail. So I'm just wondering which channels are you selling your Prosthetics & Neuro Orthotics products through them? Is there anything to point out in terms of a changing distribution landscape or any specific channels that you are growing much faster compared to earlier?

Well, there are 2, let's say, 2 points I'd like to make in relation to this question. First of all, it's important to remember that our geographic footprint is not the same in our Patient Care business and our product business. So all else equal, you can't -- you're not -- we should not always expect the performance to correlate.

The other point I'd like to make is that our -- the health of the industry is reflected in our -- the underlying performance in our core product business, which again underlines the fact that we are -- the reason for our underperformance in Patient Care is principally related to the substantial change initiatives that we are executing on.

So -- and also maybe the third point is that only a small part or a very small part of our product business goes through our promotion clinics and all of that is very transparent in our reporting. And our main channel has always been and will continue to be the O&P market or the Patient Care or our independent clinical customers. That is -- remains our core channel for where we focus and how we grow our core product business.

[Operator Instructions] Our next question will be from the line of Yiwei Zhou from SEB.

I have 2. Firstly, in the U.S. and do you expect any disruptions from the U.S. government shutdown in Q4?

No. we have not recorded any major disruption, but we are monitoring the situation, but we've not received any concrete feedback on that.

Okay. And secondly, you have well explained the short-term disruption on the growth and also the margin and the Patient Care business. I was just wondering if you are looking at a bit longer term, all those operational initiatives you have done on your business, the patient care business, do you expect to improve the long-term profitability? And if you can elaborate?

Yes, I can say -- maybe comment high level on that. It is -- the reasons we are doing these changes is because we believe in the benefit of operating a truly global patient care business, where we build a business, where we have scalability around certain systems and processes that we are better able to benefit from technology in terms of how we fabricate, in terms of how we operate with our patients.

So that is the core, I guess, assumption behind our actions in Patient Care. What is also a fact is that this is a business where we have -- it's a capacity-driven business and our profitability will be dependent on our ability to serve patients and utilize our capacity costs. So in a year like now, we will go to the fourth quarter where we are flat on top line, and that means that it has a negative impact on profitability because the vast majority of fixed costs.

So yes, we are -- our profitability in Patient Care has taken a temporary step back while we go through these changes. But we firmly believe and have a strong plan for how we will get back on track. And I think that should also be looked at in light of our performance on the profitability side that is still despite going through these changes and absorbing costs in relation to, for example, the brand change that we are absorbing. This is all cost we're taking through the P&L here, but still we are protecting and increasing our baseline margins.

So if you're hoping for some more detailed forward-looking guidance, I will disappoint you, Yiwei, but this at least gives you some color.

No. It was good. It was good. In this context, I was wondering if you can give an update on your -- the CRM and also the -- used to call, Össur Leg but I guess it's Embla Leg solution. I remember a few years back, you highlighted as sort of a new marketing tool and trying to convince the clinics to push the leg solution. And could you give an update on this? You have seen any progress?

Yes. That's a good question, Wei. It goes back to how we think about our competitive position and our value proposition towards our independent clinical customers. Generally, independent clinics are struggling to sometimes find CPOs and some are struggling with maintaining adequate capacity in terms of fabrication. So we have -- our success with it going forward will depend on our ability to, one, bring the right product to the right patients, but also help our independent customers around aspects such as fabrication.

And that is what the complete leg concept was all about that we offer our independent customers an ability to outsource fabrication to us. And this is a service we offer both in the U.S. and in Europe. And this is also one of the areas where we gain some scale and some efficiencies in operating both as a patient care provider as well as a traditional product business where we can build more scale around some of these activities like fabrication. So that remains part of our core strategy to do that.

And I recall that it used to be one of the main regions that was -- the clinics was very sort of giving some pushback and slow adoption. And have you seen that have been improving over the recent quarters?

We've seen gradual increase in adoption, and we're also using this as a sample fabrication for our own clinics. So this is a core part of our business for sure.

And next up is Martin with a follow-up.

Just 2 follow-up questions. It's already been touched a bit upon, but I would just want to be sure whether there on Prosthetics & Neuro Orthotics is anything to flag in terms of any sort of one-off items in any way on revenue or anything to flag in terms of big contracts or big orders, anything that is disturbing the picture a little bit just to be sure.

No, there is no -- nothing like that. It is -- like I mentioned in the beginning, it is one of those quarters where we just do have tailwind across all our regions and markets. And you also have just to name one example as we have high growth in the APAC region this quarter, where we are growing again in China after 5 quarters of decline.

So there is no big off quarters or anything like that in these numbers. It's -- yes, simply strong execution across the board. And we're obviously also getting benefit from having recently launched products that are well received in the market like the Navii, like also in the Odyssey IQ during the quarter, the Pro-Flex Terra and the Icon by College Park. So these are all strong products that are being well received by our customers.

Very clear. And maybe that's a good lead to the next question because the thing that I would like to understand a bit better is maybe -- and maybe you already said that by the wording you used, what is the key delta here in this quarter? Is it the product launches that you have and the broader portfolio that is sort of expanding your total addressable market and now you are firing on more cylinders than you used to. Is there any customer types that you have increased your sort of exposure to? Or is there any regional sales that is just doing better than you expected?

Actually, I attribute a lot of this growth. And I think it's fair to say that this is above what we would expect. I mean, we do expect the Prosthetics and Neuro Orthotics to deliver strong organic growth rates. But what we see here in quarter 3 is above what we expect on a normalized basis. And I do attribute that mainly to the new product launches that are giving us this tailwind.

What has been different than what we had, for example, on the Navii launch has been a good one. It has not cannibalized our RHEO sales as we expected. That's one aspect that I think is relevant to mention. But otherwise, I would go back to my previous comment in terms of just like the nature of this quarter being a quarter where we just have tailwinds across all regions.

And again, pointing towards APAC, where our Australia business is also benefiting from the reimbursement slowness we had in '24, so getting some extraordinary benefit here in '25. So there's a lot of these things that come together that push our growth rate above what we would consider a normalized growth for this part of our business. But still reminding everyone that we do expect, all else equal, this part of our business to generate good growth rates as the structural growth drivers are there.

Very clear. And just final question for me. Just I think, if I Again it serves a question. Just wondering what -- if you can specify a bit more what the growth is? I know it's in line with the expectations, but I just want to be sure that I know what the expectation was.

Yes. I mean I think we -- if I go back to our early communication around Fior & Gentz, we expect -- we said the business has grown organically around 13%, 14%. And we expect at least those type of growth rates, and that's what we are delivering on. And Fior & Gentz is a top priority for our company to make sure we take the right trade-offs in terms of prioritizing building this business as it is a very strategic for us in terms of building products and services towards a patient population that is vastly underserved when it comes to access to good mobility devices and where you see the exact same health economics that provides a strong rationale for health care systems to fund good Prosthetics.

The exact same dynamic is on the Neuro Orthotics side and it's a market that is less mature than Prosthetics in terms of reimbursement and access and awareness. And that's our goal to really focus on this and be disciplined in terms of where we focus our efforts because this is -- yes, this is a top priority for our organization.

Completely agree. And just on Fior & Gentz in the U.S., you got the health codes, which is great. I guess that it's not really starting to contribute yet. Can you put a few words on when you expect to hit the ground running in the U.S.?

We will be more specific around that when we set guidance for 2026. There's lots of work going on to support our U.S. execution, and this is a big milestone for us, this recognition that we can operate and build this specific code. So we will be more specific around our estimates for the U.S. and Europe products when we set guidance for '26.

So what I'm hearing you saying is that it's going to be big enough to impact the group guidance for next year. That sounds great. Happy to hear that.

Well, it's -- we're obviously starting from a very low base in the U.S. So all growth moves the needle. So we'll be more specific around this at year-end, Martin. Thank you.

Next up is Tobias Nissen, Danske Bank.

Just on Bracing & Support, it like remains flat year-over-year. I'm just wondering what's the strategy here also since it continues to like grow below your estimated market growth? And what are you seeing like underlying, are you seeing any improvement here in Q3? And how do you also balance this with the tariff impact, et cetera? Are you putting products from the market to them being unprofitable? I'm just wondering what should we expect from bracing and support going forward?

Our goal is to grow the Bracing business at least in line with market. This has been a tough year in our Bracing business, mainly in the U.S., which is a market which again has been impacted by these tariffs, and that's also a market where we have -- where the channel structure is different.

We also see more, let's say, some movement between channels, Bracing business moving to fewer bigger customers. But we still maintain our goal to grow at least in line with market and our ability to achieve that will depend on some moderate expansion of our product portfolio, tapping into a few opportunities where we can use our existing channel access to bring a broader set of product services to our customers.

It will also depend on our ability to execute on volume opportunities and thirdly, to continue to have or to, let's say, be a good partner for our customers in terms of ease of doing business because we do offer a broad complete portfolio in Bracing of high-quality products. And these products all remain fundamental to each and every health care system. These are products that we all know and all use if need to.

So we are working hard to take the right choices that we are able to generate that market growth in Bracing. But it's been a tough year, especially with these -- all the turbulence that these tariffs have created in our biggest Bracing market, which is the U.S.

Okay. Okay. That's clear. Do you have any time line for when you expect to expand this portfolio? I know you have a lot of receipt to do with the Patient Care and driving the performance back there, but any comments would be appreciated.

I can -- I would like to push further details on that out to our quarter 4 and guidance discussion, which we'll be having in 3 months.

The next question will be from the line of Peter from Berenberg.

Just looking at the PA and NO segment, could you possibly give some more color on the regional demand for the Navii and Icon product launches and possibly give some kind of commentary on whether there's been much adoption of these solutions by kind of K2. I know you noted that there has cannibalization in the RHEO knee bot, but you could give some more color there, that would be fantastic. And I've got a follow-up question as well.

Thanks a lot for your question. On the -- when we look at the Navii, we've seen good adoption across all our major markets, both in the U.S. and in Europe. The Icon has principally been -- we've principally been focused on the Icon in the U.S. market. And I think it's also fair to say that our growth in the U.S., we do see some impact from the coverage expansion.

We obviously don't have full transparency on the ultimate, let's say, profile of the patients that are receiving these bionic devices with our independent customers in the U.S. However, it is -- we have those strong indication that this coverage expansion is part of the growth story in the U.S. And yes, so that's a bit where we are on that. And what I mentioned also earlier, we've still seen our RHEO business, which has historically been our kind of flagship bionic product continue to do well in selected markets.

So now if we look at Bionics, we have a much stronger portfolio that addresses a bigger part of the underlying patient population. We have the Navii, obviously, we have the RHEO, we have the Icon and we also have the high-end power knee as well. So a much stronger Bionic portfolio. I hope that gives you a little color.

Yes, that's fantastic. And just on Patient Care, apologies if I missed it earlier. But I think I read that you're more than halfway through kind of rebranding. I suppose my question is just about when is this expected to complete?

So we expect to be through most of the rebranding this year and have taken also some costs in relation to this initiative. So we'll be mostly through it already this year. And we are also through a big part of the systems piece as well, which is key to our operating model going forward.

So lots of work here over the last 18 months on building the foundation for our Patient Care business, which we are confident will deliver at least in line with market going forward.

As no one else has lined up for questions in this call, I will now hand it back to speakers for any closing remarks.

Thank you, operator, and thank you, everyone, for calling in this morning. Please, if you have any follow-up questions, don't hesitate to reach out to our Investor Relations function, and I wish you all a pleasant day. Thank you very much.