Fagron SA Stock

Hello, and good morning, everyone. Welcome to Fagron's H1 2026 Results Webcast. I'm joined today by our CEO, Rafael Padilla; and our CFO, Karin de Jong. Rafael will start by discussing the company's performance and a closer look at regional developments. Karin will then walk you through the financial results. We will open the floor for questions at the end of the session.

With that, I will hand over to Rafael.

Thank you, Ignacio, and good morning all.

We're pleased to report a strong performance with revenues reaching EUR 552 million. This reflects 3.1% organic growth at CER, 7% when normalizing the GLP-1 effect. Growth was driven by brands, Latin America, B&E North America and EMEA. Profitability grew by 12.7% to EUR 107 million. The margin of 19.4% reflects an improvement in both EMEA and Latin America and temporary effects in North America Pacific compounding services.

On M&A, we closed the acquisition of Amber in Singapore and Malaysia, completing 5 acquisitions across all regions in 2026. We also entered into a collaboration agreement with NutraConnect in Asia, which will complement our nutraceutical platform. Integration of earlier announced acquisition remains on track. We have also appointed Amy Jones to lead the North American Pacific region. Finally, we're also reiterating our full year guidance of mid- to high single-digit growth at CER and an adjusted EBITDA margin of around 20%.

Moving on to the regions. In EMEA, performance was led by Brands on the back of continuous strategic focus, while Essentials remained balanced. We saw again strength in compounding services through high demand for key therapies and our focus on operational excellence translated into better availability and procurement savings, supporting both top line and margin expansion.

During the period, we completed the acquisitions of Pharmavit, Magilab and Amber and are working on integrating them into the group. Pharmavit and Magilab will strengthen our European platform and enhance our market positioning, while Amber will help us further expand our footprint in Asia. Finally, we continue making progress in our capacity expansion project in the Netherlands.

In Latin America, strong organic performance was led by the successful execution of our commercial strategy. In brands, our global R&D center in Brazil continues to be the engine of our global innovation. During the period, we completed the acquisition of Purifarma and Vepakum. Like in EMEA, synergies and efficiencies during the integration process supported the region's profitability.

In North America Pacific, performance was led by Brands & Essentials, together with contributions from CareFirst and UCP. Revenue growth in B&E was driven by new customer wins, improved product availability, strong essential sales and continued operational improvements. Compounding services was affected by the normalization of GLP-1 related revenues and an industry-wide IV bag recall. Health & Wellness continued to deliver solid growth driven by high demand for personalized therapies and new product launches.

On M&A, over the last 18 months, we have done 17 deals across all regions. So far, all previously announced acquisitions have been completed except for Injeplast. During the first half of this year, we have focused our efforts on integrating this successfully. Our teams have achieved significant synergies during the integration process, as shown in EMEA's and Latin America's margin performance. We will continue to benefit from further synergies during the integration process, which usually last 18 to 24 months.

In H1 2026, M&A contributed around EUR 69 million to the overall group revenues, with all acquisitions performing as expected or better. And as Karin will comment, our balance sheet continues strong, and we remain open to exploring more opportunities across our regions and categories, while maintaining a disciplined approach.

On our expansion projects, as announced during our CMD in April last year, we plan to add EUR 500 million extra capacity by 2028. In the Netherlands, the sterile facility with a [ EUR 15 million ] CapEx investment has a revenue potential of [ EUR 50 million ]. In North America Pacific, our new 503A Tampa facility is already online with extra revenue potential of $100 million, while Wichita and Las Vegas, both 503Bs are ongoing with a combined CapEx of around $68 million and revenue potential of $350 million. All expansion projects are currently progressing as planned. The additional capacity positions us to successfully capture future growth opportunities.

Moving on to the health and wellness activities. We have received a lot of questions regarding peptides, especially after the hearing that took place last week where the PCAC recommended the FDA 6 peptides for inclusion in the 503A Bulks list. Given our existing infrastructure and our proven track record, inclusion in the 503A Bulks list will be an overall tailwind. The time to market is variable and can range from 6 to 18 months post inclusion, depending on various factors such as qualifying the right API suppliers and performing validations.

And finally, on our North America Pacific leadership team, Amy Jones has been appointed Area Leader after being instrumental in transforming our B&E business. She brings 15 years experience in pharmaceutical compounding and will help scale this region to the next phase of growth.

Additionally, building on our existing quality infrastructure, we are happy to announce the appointment of Kenneth Bonnell as the Global Head of Quality. Ken brings over 30 years of experience working in the industry across quality systems, quality assurance, regulation and compliance.

With this, we hand over to Karin.

Thank you, Rafael. Good morning, everyone. Thank you for joining this call, and let me walk you through the first half of the 2026 financial results and provide more color for the full year 2026.

In H1 2026, revenues increased by 16% on a reported basis to EUR 552.5 million, driven by acquisitions and organic growth in the regions. Gross margin decreased by 218 basis points year-on-year, driven by acquisitions and change in North America Pacific product mix. Our operating expenses increased by 10% year-on-year, owing to our recent acquisitions, though as a percentage of revenue, they decreased by 230 basis points.

At a group level, our profitability margin decreased by 60 basis points year-on-year to 19.4%, mainly due to lower production volumes in compounding services in North America Pacific. We maintain our strong cash-generating capabilities as operating cash flow improved by 10.8% year-on-year to EUR 58.1 million for the first half of the year. And lastly, our net debt-to-EBITDA ratio increased to 2.1x, largely because of payments for acquisitions. However, it remains below our internal threshold of 2.8x.

Moving on to the next slide. The bridge illustrates our revenue development for the first half of 2026. EMEA reported a solid 4.1% organic growth at constant exchange rates, while Latin America posted an 8% organic revenue growth at CER, supported by strong performance of brands in Brazil. North America Pacific revenue was largely flat, growing at 0.2% organic at CER, where a strong performance in the Brands & Essentials was offset by soft compounding services.

Our recent acquisitions contributed EUR 68.7 million to the revenue. And FX during the period was a headwind, mainly in the U.S. due to the weakening of the U.S. dollar. On the right side, our P&L shows a 16% revenue increase together with our adjusted EBITDA growing 12.7%. Depreciation and amortization increased by 27.6% year-on-year due to the recognition of acquired intangible assets on a larger asset base, reflecting both the acquisitions and continued investments in capacity and R&D.

Our financial costs increased versus last year, driven by increased debt because of funding of the acquisitions and higher interest rates on our debt. As a result, earnings per share grew by 1.6% to EUR 0.63 for the first half of the year.

Turning to the next slide, EMEA. Revenue growth reflected a solid organic demand across all categories and countries, alongside the contribution from acquisitions. Geographical diversification, along with a mix of price and volume increase drove organic revenue growth. And looking at the region's profitability, adjusted EBITDA margin expanded by 30 basis points versus H1 2025, supported by operational excellence initiatives, sales mix and integration benefits. And as Rafa mentioned earlier, we closed the acquisitions of Pharmavit, Magilab and Amber during H1 2026.

Moving on to Latin America. Sales increased by 38.7% to EUR 120.5 million, reflecting strong organic growth in brands and contributions from recently acquired companies, aided by a strengthening of the Brazilian real. Organic growth at CER was 8%, and it was largely led by a strong volume growth and recent product launches in Brands in Brazil. We achieved a 120 basis points adjusted EBITDA margin expansion to 18.6%, supported by operational improvement and strong performance of the acquisitions, especially Vepakum.

Moving on to the next slide. Revenues in North America Pacific grew by 0.4% to EUR 213.2 million as strong traction in Brands & Essentials was offset the short-term headwinds in compounding services. Reported growth was also affected by currency movements. B&E continues to grow at a fast pace, mainly supported by operational improvements in product availability, leading to volume growth.

Compounding services performance was impacted by the reduction of GLP-1 production at our 503B facility and limited availability of the IV bags. Adjusting for the GLP-1 impact, the organic growth for the region will be around 10%. Our operating costs in the region increased slightly year-on-year due to acquisitions and ongoing investments. Overall, this resulted in an adjusted EBITDA margin of 17% in H1 2026.

Turning now to our cash flow. Our business model has several strengths and one of them being the strong cash conversion. Our operating working capital increased by 310 basis points to 16.9% due to the recent acquisitions and higher inventories to support product availabilities in Brands & Essentials.

Operating cash flow increased by 10.8% to EUR 58.1 million and maintenance CapEx ended at 2.6% of revenue when excluding the one-off projects. Our free cash flow conversion was 40.9% when adjusting for one-off CapEx, slightly below our guidance. However, we've seen during full year 2025, we expect it to correct towards the end of the year as working capital normalizes.

Moving to our net debt evolution. The bridge shows an increase of EUR 222.1 million in our net debt, growing from EUR 283.3 million at the end of full year 2025 to EUR 505.4 million as of H1 2026. The increase is mainly related to acquisition and working capital movements. As a result, our net debt-to-EBITDA increased to 2.1x, however, still below our internal threshold of 2.8x, giving us ample room to pursue opportunities.

So before I hand it back to Rafa, let me go through our full year 2026 outlook. For the group, we are expecting revenues to be in the mid- to high single-digit organic growth at CER with different dynamics depending on the region and a profitability margin of circa 20%. We expect maintenance CapEx to be at 3.5% of revenues for 2026, excluding the already announced one-off projects and investments.

I would now like to hand it back to Rafa for his closing remarks.

Thanks, Karin. To conclude, Fagron is a unique global vertically integrated company operating in the fast-growing, highly fragmented market of pharmaceutical compounding with a defensive business model, predictable revenues and strong cash conversion. We have highlighted over the years the resilience of our business model and how it is reinforced by our diverse global footprint.

This was clearly visible in H1 2026 when excellent growth in EMEA and Latin America more than offset the challenges in North America Pacific. These factors, coupled with demographic trends and our emphasis on personalization are the basis of our success. Our quality focus, together with our ongoing operational excellence initiatives will optimize our business through global synergies. While a disciplined M&A strategy remains a key part of our growth, sustainability is a paramount priority and a strategic cornerstone for us, as together, we create the future of personalizing medicine.

Let's open the floor for questions. Thank you.

[Operator Instructions] The first question comes from Frank Claassen from Degroof Petercam.

I've got 2 questions. First of all, on the issue with the IV bag, the supplier, could you elaborate how much did that impact your Q2 or first half results? And when do you expect it to be solved? So that's the first question.

And then secondly, on the situation in the Middle East, the turmoil, could you elaborate how is that impacting your business model? Do you already see inflation on raw materials, APIs or logistical costs? Could you elaborate on that situation?

Yes, so starting with your first question on the issue with the IV bag. So if we look at North America compounding services for the first 6 months, we see minus 8%. If we take the GLP-1 impact out of that, which, as you all know, normalized will be around 4% roughly. So this is below the guidance of high single digit, low double digit before any capacity expansion for that segment.

So this gap was driven by the availability of the IV bags at our compounding services facility. And so that gap really is driven by, on the one side, the missed sales, you see that impacting Q1 and Q2, but also a CAPA that was initiated by the supplier and triggering a revalidation of us. So we expect to be back in the course of Q3 with the IV bags.

Yes. Frank, on the Middle East one, so far, we have not seen any disruption in supply. So we have -- as we have discussed before, and you always ask the operational question. So thanks for that.

Our profitability is high. It's good. What we have seen on the raw materials derivating from oil an increase there, which, of course, we have the ability, as we also saw with COVID and the previous years that we have the ability to pass the price increase through.

It's also true that at the beginning of the year, we took a strategic move, and we also discussed that during Q1 to increase our inventories for key items, mainly for the A items, also again, coming from this oil source.

The following question comes from Stijn Demeester from ING.

I have a couple. Maybe first on peptides. The PCAC hearing showed that support for these peptides is not unanimous given these drugs often lack some medical evidence and burner to self-medication. Nevertheless, the drive from the industry to grow this segment seems very strong. Can you address any concerns that there will be unfavorable evolutions down the line such as adverse results from using these drugs? That's the first question.

And secondly, on the profitability outlook of circa 20%, can you decompose that a bit for the different regions?

And then lastly, on the 503A to B development, to what extent are you currently benefiting from this regulatory change that was implemented a while ago? Could you maybe give some examples on where this is boosting your business.

Yes. Thanks a lot for the questions, Stijn. On the peptides, you have said it really well. So there are 6 peptides that were voted for inclusion in the 503A Bulks list. What's currently happening now is a grave market, an important market from Asia of finished goods and people are self-medicating. So with this initiative, of course, if the FDA votes for because the last word is on the FDA, then this market will be regulated, will be produced compound in 503A facilities across the country and not adverse effects. Of course, we cannot comment on this one as we are not technically capable to do that.

We believe that we are well positioned to capture this growth opportunity as we have a nice network of 503A. We have one in Tampa, as we said briefly today with a capacity of $100 million. We have CareFirst in the Northeast part of the country. And of course, UCP, our last acquisition in the U.S., in the West Coast, in San Diego. So we are well prepared to capture this growth. And of course, we have a good track record on that.

And on your question on guidance for profitability. So the first half of the year profitability was supported by strong performance in EMEA and LatAm, driven by solid underlying business momentum and also the positive contribution from recent acquisitions and early realization of integration synergies.

So for H2, EMEA is expected to maintain its strong performance with further integration benefits still to be captured. It is important to note that while a portion of the readily achievable synergies already being realized, our integration programs typically deliver the majority of benefits over an 18- to 24-month period, providing continued albeit more gradual potential for margin improvement.

For LatAm, we expect to deliver further margin expansion in H2, supported by favorable seasonal trends as we always see, and the additional synergy realization of the acquisitions, mainly Purifarma.

And now moving to North America. The profitability was temporarily impacted by product availability constraints within compounding services. And as we said, we expect a gradual improvement during the second half as the production capacity is restored again and we recover our volumes, so we expect to step up also in North America. So overall, we reiterate our guidance of circa 20% adjusted EBITDA margin for the full year.

And on the last question, Stijn, on the B to A developments. Next, the fact that the underlying market is increasing rapidly, driven by telehealth. There are 2 drivers, 2 positive tailwinds. One is outsourcing that we always comment. And the other one is the B to A phenomenon, and this can increase substantially our revenues in the U.S. in the upcoming years. Therefore, we took the strategic decision of investing in new capacity.

We have explained that on the 503B side of the business, we're bringing $350 million extra capacity in 2028 in both Wichita and Las Vegas. We have identified already 20 items that we want to produce. Of course, we need to go through all the validation steps that you are very much aware of. And at this moment in time, we have already 1 item being sold. And we have 5 more in the pipeline ready to be launched during the second semester. So of course, when we get those 20 items that we expect to get during next year with extra capacity, this will be a nice tailwind for us.

The following question comes from Usama Tariq from ABN AMRO ODDO BHF.

I just have two general questions. Number one, with respect to, for instance, yesterday's press release by Medios, they are expecting some trouble with regards to their pricing and margins, especially in the medical cannabis market. I just wanted to indicate -- I just wanted to ask, is there a trend that you are seeing in EMEA? Or is it something that is only related to the peer?

And my second question would be with regards to the peptide market. I mean, I apologize for my ignorance, but if something really concludes for Fagron, if it's an opportunity going forward, when would be the earliest that you see some of it flowing into your sales? Would it be more like a 2027 opportunity or 2028? Some clarity there would be really great.

Yes. Thanks a lot, Usama. On your first one on cannabis, as you know, we -- for the last 20-plus years, we work together with BMC. That's part of the Dutch Ministry of Health distributing European scale cannabis. We also repacked that one in one of our facilities in the Netherlands. And so far, we have not seen any price erosion from that part of the business.

And then on your second question on the peptides, after inclusion, that time between now and inclusion, there's uncertainty as we were discussing with Stijn, it's an FDA call, of course. So after inclusion, it will take for us a period between 6 and 18 months and depends on two things. First is the sourcing of API supplier or a peptide supplier, of course, FDA registered. And the second one is all the validation process that we always go through in our compounding facilities.

The following question comes from Michael Heider from Berenberg.

Most of them have been answered, but maybe you can shed a little bit more light on the margin in LatAm. I was positively surprised, to be honest, to see the progress already in the first half. You already explained that you had early synergies, but maybe you can give a little bit more detail here. How much of the synergies are already -- have already been seen in the first half? How much more do you expect to come? And how did you manage to realize them so quickly?

Thank you, Michael. Yes. So indeed, what we see in LatAm, what we saw a similar pattern in EMEA that when we exclude the contribution from acquisitions is that the underlying business is performing very strong. So the profitability compared to last year for both regions improved despite the dilutive impact of the acquisition. So you see that mainly for LatAm, our strategy on increasing and accelerating our brand strategy, but also operational excellence initiatives that we have taken in that region regarding, for instance, product availability, strengthen our position in that market. And you see that in the underlying performance of that region. And historically, we guided that it would go towards 19% to 20%, and we are well on track of that.

If we then look at the 2 acquisitions specifically for the LatAm region, we have Purifarma, which is dilutive, as you know. We -- according to our M&A playbook, we've lined out the synergy benefits over a period of time, in this case, 18 months. And of course, on the back of that playbook, we have some early wins on procurement and some cost savings. That's what you see translated.

And second, Vepakum also performed very nicely in their running business. So overall, positive for the region. And as I said, we expect a continuation of that in H2 on the back of seasonality that we have in that region, but also a further improvement of the performance, specifically for Purifarma.

Okay. So Purifarma by itself would still be dilutive, of course, but you're still working on that, right?

Yes, yes, yes, of course. So we have -- usually for our acquisitions an 18- to 24-month period where we work on our initiatives for synergies, and so we expect a continuation. So it's not at the level yet.

The next question comes from Mathijs Geerts Danau from KBCS.

Congrats on the results. First of all, I had a small question on North American performance because, yes, the organic growth was down compared to last year. And I was wondering about what you see in the underlying demand for compounding services there?

Thanks a lot, Mathijs. And as we were discussing before, the underlying demand is -- remains strong. We see clear tailwinds. Telehealth is one of the tailwinds. This is also related to the prevention and lifestyle market. It's clear that not only in the U.S., also in the rest of the regions, countries, we see that people want to live longer and better, and that's what prevention and lifestyle is about, and personalization plays an important role there.

And outsourcing is also a clear tailwind. You see regulation, quality requirements increasing. And of course, as you know really well, Mathijs, one of our strategic enablers is quality focus. We want to outperform the market from a quality perspective. And therefore, you see us well positioned to capture this market growth.

Okay. And you still see the capacity to fill all of the capacity that you're building now because yes, it's quite a lot. So a lot of growth will be needed to fill that.

Yes, that's correct. That's a very good question, Mathijs. So next to our current capacity. So what we're explaining, 503A, we have 3 sites, Tampa, brand new EUR 100 million revenue. CareFirst Northeast was an acquisition. Also new Sunny and the rest of the team, they built up a nice facility. We're around 40% there. And then UCP as well, we see a nice facility in the West Coast in California.

So we have capacity on our 503A facilities. And then when you go to the East, we have integrated them as we're discussing many quarters ago. And you have Las Vegas, which is at 85%, 90% capacity, the current Wichita one, as we said, during this year, we would reach at 80%, 90% capacity, and that's when we start filling the factory. And then we, of course, we need to wait for a new capacity.

And then, of course, we have those 2 facilities that we were discussing before, the new one in Las Vegas and the new one in Wichita, $350 million extra capacity that will be online during 2028.

And the growth that will come next year will be coming from our Boston facility, which is at around 40% now. So we have a lot of room for growth there. It's a new facility coming from Fresenius Kabi. So we are well placed to capture this growth. And we have good visibility on the market on how the market is developing. So we are quite confident that we will fill this capacity in the upcoming years.

The following question comes from Eric Wilmer from Kempen.

I also had a question on your EMEA profitability, which I believe came in ahead of expectations. Perhaps this margin was helped a bit by M&A, particularly the margin profile of some of your more recent deals may have fueled it.

But yes, I would expect it -- I would expect the usual time it takes to pass on inflationary costs to more than outweigh this, especially given from where you source the majority of your APIs and also basically from the lessons we've learned, I would say, past-COVID. And I guess a lot comes down to operational savings from potentially previous deals. So I'm just very keen to understand where specifically you managed to further optimize your operational footprint and squeeze out the sequential improvement for EMEA?

Yes. If we look at the EMEA region, they had a strong improvement in profitability if we take out the acquisitions. And if we take out the biggest one that we announced Pharmavit, it has a dilutive impact on the overall margin of EMEA, we see that if we exclude that, that EMEA had strong performance.

And that was driven by a couple of elements. First, we have operational excellence initiatives, which are paying off. And that's what you see in product availability increase having a direct impact on top line. We see procurement savings having an impact on margins. And then we have solid pricing power of our strong position that we currently have in certain markets. So the combination of that, we see translated into our EBITDA improvement of the underlying business.

On top of that, we indeed have some early synergy benefits from the acquisitions. And as I earlier mentioned, we expect a continuation of that, maybe a bit more gradual over the period, but we do expect to see improvement.

As said, of course, we are well positioned when we have price increases on our raw materials to pass them through to our customers. There can be a lagging impact there in the sense that can take a bit more time. But in general, we have the experience that we are able to do that. So from -- on the back of that, we believe that there's still upside potential for the EMEA margins to increase. We will, of course, be at a lower part than, for instance, North America.

The next question comes from Stijn Demeester from ING.

Two additional ones from my end. First one, maybe Pharmavit. This has been a somewhat larger acquisition at a below group margin in a relatively new product category, which may also be a little more competitive product category. Can you comment on the integration of this acquisition, where you are in terms of margin and also uptake of these nutraceuticals with clients?

Second question is on the guidance. Maybe the share price reaction is today driven a bit by the fact that you need some growth acceleration in the second half, whereby the IV bag issue expected to persist in Q3. So what gives you the confidence in this growth acceleration and what phasing you expect over Q3 and Q4 in terms of organic growth?

Yes. Thanks a lot, Stijn. And the Pharmavit question, which we like a lot because we believe that the nutraceutical products that Pharmavit carries have a -- well, we believe we are certain that it has a huge match with our portfolio across the globe, especially in LatAm. When you look at compounding in Latin America, in Brazil, there is a lot of compounding in the nutraceutical segment. So when you make a Fit-Gap analysis with the Pharmavit portfolio, you see an overlap of more than 85%, mainly the same manufacturers specification.

So the first part of our M&A playbook that we explain in each one of our integrations is -- let's first integrated operations. That's mainly the procurement and the manufacturing being, of course, the quality control labs and the repackaging. So this is now ongoing. It's going above expectations.

The collaboration with the Pharmavit team is great. Entrepreneurial family -- family state, really easy to work to collaborate. We execute fast, good decision-making, and this is very important in this first operational part of the M&A integration playbook as we are capturing there the synergies. So we announced when we acquired Pharmavit that the EBITDA margin was around 14%. And as Karin was explaining in the previous question, we have seen an early improvement there. So that's a positive.

Second part of the integration, well, of course, there is always an integration phase 0, which is finance, IT, all the admin part, which, of course, we integrate rapidly. Then you go into the second part of the integration, our integration playbook, which is the commercial part. We already started with that. So we are introducing our branded items into the Pharmavit platform. And this will bring, for sure, nice revenues and margin development because the conversations with the customers will be not only on the essentials and the raw materials, which, of course, there's a quality part involved. And as you said before, there's the competitive price involvement. We will also have a more scientific discussion with them, and this is a copy paste of the Brazilian model, which we have seen giving excellent results. So then we have the brands on top.

And then third part of our integration playbook, which is the regional expansion. We have -- as we speak, we are planning now a plan together with Amy and Jeroen, Pharmavit's business leader, previous owner and Ronald and Kim, of course. We are now developing a plan to enter the U.S. market, which is the biggest one by far in the Nutraceutical segment. And this complements our compounding offering, which, again, there is an overlap of 85%. So thanks a lot for your very nice question, Stijn.

Yes. And then on the second question, Stijn, on the sales guidance, if we look at the different regions, we expect EMEA to maintain its strong momentum, delivering mid-single-digit percentage of growth for the full year. LatAm is on track for high single-digit growth with potential upside driven by the continued strong execution. And then North America, as you know, was impacted in the first half by discontinuation of the GLP-1 production and the limited IV bag availability.

Comparison will become more favorable, of course, in the second half as the impact from GLP-1 lapses. We expect compounding service activity to recover gradually with a more meaningful acceleration towards the fourth quarter. As Rafa mentioned, underlying demand remains healthy and our other businesses are performing very nicely, supporting a stronger second half outlook for North America.

So overall, we reiterate our guidance for the full year revenue growth in the mid- to high single-digit range, albeit towards the lower end of that range. Maybe also good to add our inorganic contribution for the full year is expected to be around mid-teens with 14.4% reported in the first half of the year.

If I can squeeze in one more. I saw some approvals for GLP-1 in Brazil, including from Sandoz. Is that a threat to your weight loss category in that region?

Yes, that's a really, really good one. We have continuous conversations with the teams. So what we're doing now and if you go to Instagram, you can follow us in the channel GLP-1 Support and it's more generic account. So we are offering to our prescribers a combination of adjacent products or formulas, compounded formulas, personalized or muscle recovery. So we launched a nice brand PeptiStrong 2 years ago, which works perfectly to regain -- regain muscle mass and of course, other nutritional branded items that we have in our portfolio, supporting the GLP-1, GLP-2 and GIP receptors and acceptance of these new concepts that we have launched to support these therapies as you have just already asked, Stijn, it's quite positive, and we see that translated in our results.

[Operator Instructions]

Well, thank you very much for your participation today. I will remain at your disposal should you have further questions. We wish you all a great summer. Thank you, and goodbye.

Thank you.

Thank you.

Bye. Bye-bye.

Hello. Good morning, everyone. Welcome to Fagron's First Quarter 2026 Trading Update. I'm joined today by our CEO, Rafael Padilla; and our CFO, Karin de Jong. We will open the floor for questions at the end of the session.

With that, I will hand over to Rafael.

Thank you, Ignacio, and good morning all. We're pleased to report a solid quarter with revenues of EUR 263 million, representing 10.3% growth. Results were driven by outstanding performance in LatAm and strong contributions from our M&A.

Brands continue to perform well across the board, supported by our innovation capabilities and commercial strategy. Operational excellence initiatives also continue to deliver benefits. During the quarter, we completed the acquisition of Pharmavit in the Netherlands and strengthening our position in the nutraceutical ingredients market. Also worth mentioning that Pharmavit integration, together with all previously announced acquisitions are progressing as planned.

On guidance, we are maintaining our top line outlook of mid- to high single-digit organic growth at CER. On profitability, we expect a margin of circa 20% for the year, reflecting the Pharmavit acquisition. We also expect H2 to be stronger than H1. Moving on to the regional dynamics. EMEA reported a steady performance with all segments contributing. B&E performance was driven by innovative product launches and the continued rollout of our global brands strategy.

Compounding Services benefited from strong demand and new customer wins across the region. Turning to LatAm. We've seen an outstanding growth this quarter, mainly driven by brands in Brazil, together with contributions from Purifarma and Vepakum. Brands continue to deliver strong momentum, driven by our innovation power and targeted commercial strategy. In North America Pacific, organic growth was positive despite the absence of GLP-1-related revenues.

B&E delivered strong growth, supported by new product launches, higher product availability and improved operational performance. In Compounding Services, the underlying business remains strong and continues to benefit from portfolio expansion and new customer wins. And as already explained, the GLP-1 comparatives will normalize throughout the year.

Finally, our investments in Las Vegas and Wichita facilities are progressing as planned. Moving on to our outlook. We are maintaining our revenue guidance of mid- to high single-digit organic growth at CER. We expect profitability margin of circa 20%, reflecting the PharmavVit acquisition. PharmavVit brings EUR 62 million in annual revenues with an EBITDA margin of around 14%.

And in line with our integration plan, we are confident in bringing the margins towards group's level within 18 to 24 months. Our CapEx will remain at around 3.5% of revenues, excluding the previously announced one-off projects. To conclude, the start of the year shows the resilience of our business model, consisting of predictable growth and continued progress on quality and operational excellence.

We also continued with our disciplined M&A strategy and are now heavily focused on integration and value creation. This performance builds on a long-term track record. We also remain confident in the underlying drivers of our end markets and our ability to deliver the midterm targets. With that, let us open the line for questions.

[Operator Instructions] Our first question comes from Michael Heider from Berenberg Bank.

I have 4 questions, if I may. The first one is on the U.S. market. Can you describe the underlying market momentum at the moment? Were there any other effects influencing your organic growth besides the GLP-1 recall or impact?

Second question is on -- can you please give an update on the integration activities, especially Purifarma and Pharmavit? Third question, just a quick reminder, are there any acquisitions that are not closed yet?

And then last one, congratulations on the very strong results in Latin America. Can you give us an example of the innovative products and the commercial initiatives that you have taken in Latin America to support the growth there?

Yes. Thanks a lot, Michael. Thank you for your nice questions. On the U.S. market dynamics, we see that after the whole GLP-1 momentum that we had last year, I mean, the market in general, the compounding industry was strengthened by that fact. So this means that there is more resource to invest in the underlying market by the compounding industry.

Remember, there are around 4,000 compounding pharmacies. It's the biggest market in the world in terms of value, volume is Brazil. As you know, this, together with the fact that in the hospital market, you see that quality and regulation is improving as we have been discussing during the conference last time some weeks ago, remember, we said that the FDA is increasing the quality and regulation standards.

So this means that hospitals need to push the more outsourcing also for some small players. So you see that this is a clear tailwind for us. So when you take this one together with the fact we were saying at the beginning that there are more resources for those customers of us to increase their market exposure, visit to doctors, also investing a lot in platforms, telehealth platforms. So you see that the underlying market is increasing.

So we see now a good momentum there, and we are, of course, benefiting for that -- from that. And also remember as well that we are challengers in the segments that we operate. We have clear 3 segments where we operate. The first one is the B&E, so the raw materials and our branded products. And we are here a clear challenger behind Medisca.

Then we have, of course, the health and wellness, so prevention and lifestyle. And here, of course, we are #2 as well. So we also have an opportunity to gain market share in those 2 segments. And the third one, the hospital outsourcing, we also have a possibility to grow there because we are clear #2. So next to the fact that the underlying market is growing, we also have a chance to grab market share.

Yes. Michael, so on the second question on the integration status of Purifarma and Vepakum. So let's start with the Brazilian one. Purifarma is a big one. So approximately BRL 200 million of sales with 10% EBITDA margin, so well below the group average. There's a clear synergy case for that, and it has to do with the centralization of logistics, but also manufacturing, back-office activities.

And we're well on track with the integration of Purifarma, and we expect to realize some synergies initially H1, but most of them will be realized in H2. We are on track with the plan. If we look at the Dutch one Pharmavit, we just recently acquired them. So at the end of Feb, early March. So we have an integration plan there, and we're working also there to realize synergies. Also, that will be mostly embedded in H2 and next year.

So overall, also, if you look at the guidance and the profitability guidance, one of the elements that plays in there is the synergies effects that we expect to contribute as of H2. And therefore, we also expect H2 to be better than H1. So that's on the second question. The third question, not closed acquisitions.

There are 2, there's one in Asia Pacific, Amber Pharmacy, and there's one in Brazil, Injeplast and Injeplast is a packaging company. So there are some licenses that we need to obtain. So it's a bit outside of control, outside our control, but we're working on that, and we anticipate closing them this year, Amber probably in H1. And Injeplast, we have to wait a bit on the regulatory aspect of that, but we're also positive that we can close that.

Yes. On your last question, Michael, example of one of our brands, and we really like these questions because then we can talk about our products. Remember, the molecule that you can find in wine, that's Resveratrol. They say that only one glass, of course, only one glass of red wine brings Resveratrol.

So Resveratrol, as an example, we launched plenty items, but we're going to talk about this item as an example, is a molecule that is widely used in the compounding industry in the prevention and lifestyle segment for chronic inflammation. And the difficulty of this molecule, as an example, the Resveratrol is that it's not getting well absorbed in the body. So everything that you take in, it gets out of the body.

So together with a partner in the Far East, we have there some strategic partnerships with some product developers. We have developed one adjustment in the molecule that is able to let this molecule stay -- the resveratrol stay in the body. We call it ResviTech. So you can imagine that then almost the whole market turns into our molecule, of course, with studies, with viability studies, with [ pharmacotechnical ] studies.

So meaning that then the whole market sees us as an innovative player. They also see when the doctors prescribe and the patients take it that there is an immediate effect. There is an improvement in their life conditions. So you see how the whole market turns into our product.

And this is one example. Again, we launched around 20 items on a yearly basis in Brazil. And remember, during the first week of July, there is a big fair called Consulfarma, where we launched all our innovations for the year.

The next question comes from Frank Claassen from Degroof Petercam.

Two questions, please. First of all, on the rising oil price, yes, how are you dealing with it? And what kind of impact do you see? Do you already see API prices rising and higher logistic costs? And how are you dealing with that? That's my first question.

And then secondly, you're talking about improved product availability. Does that mean that you have higher inventories? Or yes, could you elaborate on your working capital situation?

Yes. Thanks a lot, Frank. A very important question nowadays. And indeed, we see an increase of all base raw materials, the market, that's what the market is showing us. Also transportation costs, both in and outbounds. What does it mean for us? Luckily, we're lucky because our replenishment moment throughout the year starts in Jan, Feb, so we plan the year.

And we have quite a decent inventory position with all prices. And next is, when the conflict started, we decided to take strategic moves to take some of these items to get still good conditions. Of course, as you know very well, we take our global volumes to negotiate better conditions as well.

So we are also pushing back when we see some increases in our replenishment moments. We have inventory for 4.5 to 4 months, so that's also something that we need to take into account. And last but not least, remember also during the last years with the pandemic and then other macroeconomic developments, we have been able to have a nice pricing pass-through exercise. So we have shown our ability to do that.

Yes. And maybe to add on the working capital and improved availability. So the last couple of years, there's a lot of focus on operational excellence initiatives. And that sets on procurement, for instance, but it's also related to demand planning, forecasting and to have a better sight into what is happening in the different markets.

And we're seeing that we're benefiting from that. If we look at product availability. We also had some initiatives to leverage our global footprint, for instance, producing some excipients in Brazil for the American market. And you also see that we're benefiting there from an increase in product availability. You saw that in the performance on the Brands and Essential in the first quarter in North America. So those initiatives help.

I also have to state that indeed, we anticipated a bit of additional inventory in the first quarter of this year, which helps in the current macroeconomic environment. But we don't expect overall the year that working capital will be higher than the guidance that we have, and that's 12.5% to 13.5% of sales. So overall, we don't expect for full year an increase in working capital.

I just have like 2 basic questions. One is more financial related. One is more in general. So could you just provide a recall per split in terms of what margin buildup do you expect for 2026? So I understand that the 20% guidance is largely because of Pharmavit. So all the dilution would be expected in EMEA region. Is that correct?

And my second question is a little bit more general. So there has been a lot of changes in the Medicare payment in the health insurance space in the U.S. I do understand that you're insulated from it. But is it something that is going to affect your future plans going forward in terms of expansion into U.S.? Or do you really think that it's just -- Fagron is totally not affected or impacted by it?

Usama, so to start with the first question on the guidance for profitability. Indeed, while the acquisitions are expected to have a modest dilutive impact in 2026 as synergies are realized, we initially anticipated a slight improvement in profitability versus 2025. And 2025, as you know, is at 20.3%.

But after the acquisition of Pharmavit at the end of Feb, we expect a slight decrease due to that dilutive impact in the first year. And the impact of Pharmavit is roughly 30 bps. So that results then in an EBITDA margin of circa 20%, so that's what you will see indeed in the EMEA region. LatAm, we also expect a small dilutive impact due to the acquisition of Purifarma, but this will be partly offset by Vepakum, which has an EBITDA margin that's above group average.

And so for the LatAm, as I said earlier, we expect H2 onwards, we expect the synergies to start contributing to the margin improvement. And North America, we expect that they continue to benefit from the operational leverage and operational excellence initiatives, and we do expect a slight margin improvement in 2026 for that region. So overall, we guide for an EBITDA margin of circa 20%.

Yes. And Usama on your second question, you answered it perfectly while you were questioning the question. So we are not affected. And this is because when we look at each one of the 3 segments in the U.S. We have on the B&E side, raw materials on the brand, it's a 100% transactional cash-based business.

The same goes for prevention and lifestyle that's Anazao, CareFirst and UCP now that we are bringing them together. And then on the outsourcing part, that's being paid out the hospital budgets. And remember, Sama, that it's an important medication, acute medication for emergency rooms. So we are not affected about these Medicare plans.

Very great, and if I may just squeeze a very small question on M&A going forward. So last year, we had more than 12, 13, 14 different acquisitions being now fully integrated or in the process being approved or integrated. What is the appetite for the remaining part of 2026 and 2027 is a little bit far. Would you still be open for smaller acquisitions?

Or do you have internally said, okay, this year, we're going to just integrate them all and maybe look for options in 2027 or something? I just want to check what -- I mean how much appetite do you still have?

Yes, to answer that one. So we do have appetite for acquisitions. So there is a pipeline. And if we feel that there's a deal to be made with a disciplined approach, we will consider doing that. So there are a couple of ones in the pipelines in the different regions aligned with the acquisition strategy that we have.

So we anticipate to do some deals in 2026. However, as you can imagine, the integration part that has our first priority now. So we don't expect to do the same number of deals that we did last year, but we do expect to do some deals this year.

The following question comes from Stijn Demeester from ING.

Three, if I may. The first one is on U.S. compounding, excluding the impact of GLP-1 and potentially some other one-offs in the first quarter. How should we look at growth momentum in that segment in U.S. compounding in the periods to come? And more specifically, how would you say growth in FSS compares to the more health and wellness-driven business at Anazo?

Secondly, related, is it fair to say that growth at Anazao is a bit more tied to discretionary spending given the lifestyle or the health and wellness-related part of the business? And what percentage of Anazao would you say is tied to this wellness segment?

And then the last one is a clarification. Karin, did you mention 7% margin at Purifarma? Or did I misunderstand? Because my impression was always that it was about 10% margin business, but maybe that has shifted. These are my questions.

Yes. Okay. Maybe to start with the last one, Stijin. So, it's 10%. So I said -- but it's absolutely 10%. Yes. So then to go back to the first one. If we look at the performance of FSS in the first quarter, as you know, the performance reflects indeed the phasing out of the GLP-1s.

There was EUR 11 million in the first quarter, and there will be EUR 9 million in the second quarter. So that has a severe impact on the U.S. performance. On top of that, we saw in Jan some slowdown due to the weather conditions. As you know, it was -- at the last weeks of Jan, it was very cold, so it was difficult to ship some products. So we had some impact of that.

And then we had a nationwide recall of Fresenius Kabi IV bags, which impacted the output in Q1, and we also expect to have some impact in early Q2 of that. But of course, as you know, most of it is the phasing out of the GLP-1s. The underlying market remains strong, and we have good expectations for the rest of the year.

As you also know, North America is currently producing in the 503B facilities to ship to their 503A facilities. That's an opportunity that opened up for us on the back of the guidance of the FDA. And it means that if we provide a split, it does not always contribute to a fair understanding of the performances of the businesses.

And therefore, we decided not to report the numbers and we report them as combined. If we take out the impact of the GLP-1 for North America, we are at low double digits, which is in line with our long-term guidance, and we are very positive about the prospects of that part of the business continuing. And maybe Rafa, on the lifestyle part for Anazao.

Yes, for sure. And as we were saying we were seeing previously, we see a clear tailwind in the preventional lifestyle market, not only in the U.S., but also in the rest of the world, even in Europe. as we have commented many times. One thing in the U.S. that is quite remarkable are the telehealth platforms that they contribute massively to the underlying growth in the market.

And of course, you know that very well. The new Tampa facility is helping us a lot. So we are setting records week on week in terms of new scripts that are coming. Just to refresh, we invested in a new facility in Tampa 503A that's patient-specific with an ability to produce daily 15,000 scripts, and we can ship nationwide. So that's helping.

Then we have CareFirst that we acquired last year, and now we have acquired UCP. So that means that we have presence almost in all parts of the U.S. So -- and we are now integrating those 3 facilities. We're also building, as you know, in the 503B side in Las Vegas and in Wichita with the current Wichita plant and the Boston plant. So as you see, we are now having a strategy from an operational perspective to bring all these facilities together.

So we're opening up the company, if you will. So we bring those things together, and then we have one dedicated sales force going into our customers. So we are cross shipping, if you will, the items. Therefore, we bring compounding services as one segment.

That's very helpful. And I appreciate it's difficult to split the 2 businesses. But would you say that the health and wellness part grows faster than the sterile business? Does it grow in line? Or does it grow -- or do you expect it to grow at a rate below sterile? Is that possible to indicate?

Sure. 100%, Stijn. That's a very good question. And when you look from a macro strategic perspective, the underlying market in the health and wellness grows faster than the hospital market in terms of product usage. So the number of units being used daily in the U.S. grows higher in the prevention and lifestyle than in the hospital market.

What happens here is what we have commented for the last 5, 7, 8 years is that quality and regulation increases. So this means that hospitals are outsourcing more. We have now a rate of almost 60% to 70% of hospital outsourcing. So meaning that, that market is now getting to a mature part. Also think that we are challenger, so we can gain market share.

And one element that is also happening that you see with smaller 503Bs is that sometimes there is -- there are recalls or some product or production lines are being stopped and then we clearly benefit as we believe that we invest and we evolve on quality and regulation.

The following question comes from Eric Wilmer from Van Lanschot Kempen.

I had a couple of questions. I wanted to press a bit more on the implications from the current Middle East situation on your business. I can imagine that you have to push through product price increases and transportation cost increases. Could you give us a rough sketch of the cost inflation you now need to pass on? And are your customers willing to accept this pricing given that it might be temporary?

I believe that in the Netherlands, remembering the COVID pandemic, it may take some time to pass it on given contractual agreements. So I was wondering if this is still the case? And then second question, could there -- this is moving over to the U.S. could there be a risk that customers may switch away from the Fresenius Kabi IV bags now that they perhaps have gotten used to alternatives in March and part of April.

And then finally, also on the U.S., there has been quite some recent talks about RFK wanting to legalize injectable peptides in the U.S. Could you give us a flavor of how this may support your U.S. business and how perhaps -- or perhaps some wording regarding your readiness, if at all, should this indeed happen?

Yes. Thank you, Eric. So maybe to start indeed with the prices, yes, what we see is that transportation prices are indeed increasing. So what we're able to do is we have outbound transportation, so towards our customers. We are able to increase that, whether that's with a surcharge or embedded in the price. customers understand, of course.

So we are well positioned to do that. Inbound, it depends a bit whether it's air freight or whether it's overseas. So air freight is way more expensive than overseas. So there, you see a mix in the regions of transportation. And we're also there increasing prices if needed. As said, you know our business very well. The B&E is more transactional business.

So we are able there to increase prices a bit more quicker than the contracts that we're having, but it depends a bit on the type of contract whether we're able to increase, yes or no. So in Europe, there are some contracts where we are able to increase. And in some, there's maybe a bit of lagging but we're on top of that. So in case we are able to increase, we will increase immediately.

Of course, it helps that we have, as Rafa mentioned earlier, a stock position of a couple of months. So that will also offset the impact partly. But as you know, it's a very situation that's fluid. So we'll monitor on a daily basis to see what we are going to do with prices. But we do believe that we are well positioned to offset any price increases that we face with increasing prices with customers.

Yes. Eric, on your second question relating to nationwide recall, we believe that customers won't switch because FK has been very professional. They act quite diligently to replace those batches in the marketplace.

So the situation will last a few weeks. end of Q1, as Karin said, beginning of Q2. And then on peptides, when this happens, because we believe that this will happen, it will be a clear tailwind for the compounding industry when those peptides, of course, are green listed at the FDA.

And maybe on the last one, maybe just something on readiness. Is there anything you can say there? Like I understand this is competitive sensitive, but anything on just a flavor or a sense on if you would be ready.

Sorry, Eric, I think the line was a bit distorted, if you can repeat, sorry for that.

Yes, sorry. Now, of course. Can you hear me now? Can you hear me?

Yes. Now better, yes.

Yes. Just regarding readiness. -- on the latter point, the last readiness regarding peptides, anything you can say there?

Yes, for sure, for sure. Sorry about before. Yes, 100%. So we believe that we can act quite quickly, quite agile, first of all, because of our global network in the sourcing market. So remember, we have also people working in the Far East. We are mapping all producers.

Of course, we know what would be the demand from -- of course, from our end customers. So that's one. And then secondly, as we saw at that time with GLP-1s, we introduced them quite quickly because what we are doing in the current clean rooms is to bring the product in, compound and then shipping the product.

And that's the flexibility that this industry has, of course, with the highest quality standards. So we believe that we'll be quite agile.

[Operator Instructions] The next question comes from Marteen Verbeek from The Idea.

It's Marteen Verbeek of The Idea. A question regarding to your REBITDA margin this year, it will have a bit of a negative impact with respect to acquisitions made.

You also stated that you will continue making acquisitions. for 2027, you have stated you target a REBITDA margin of 21%. So it looks like a bit of a balancing act. How do you cope with these 2 elements?

Yes. It's a very good question. So our long-term guidance remains unchanged. So we see our M&A strategy typically has an initial dilutive impact. The consolidation and the execution of the identified synergy initiatives are expected to support a step-up in performance over a reasonable time frame.

So usually 12 to 24 months, of course, subject to the acquisition and the pace of the integration. So based on the plans we currently have, we anticipate to be broadly aligned with our 2027 guidance.

Thank you. And with this, we got to the end of the Q&A. Thank you very much for your participation today. I will remain at your disposal should you have any further questions. Thank you, and goodbye.

Hello, and good morning, everyone. Welcome to Fagron's Full Year 2025 Results Webcast. I'm joined today by our CEO, Rafael Padilla; and our CFO, Karin de Jong. We will open the floor for questions at the end of the session. And with that, I will hand over to Rafael.

Thanks, Ignacio, and good morning all. We are very pleased to report another outstanding set of results with full year revenues reaching EUR 952 million. This translates into a 9.1% organic revenue growth at constant exchange rates, driven by all regions and segments. Profitability increased 10.9% to EUR 193 million, which represents a margin of 20.3%, 30 basis points higher than in 2024. Main contributors were our operational excellence initiatives and a positive sales mix.

As you already know, during the year, we also accelerated our M&A efforts and announced 12 transactions across our regions and segments, always maintaining a disciplined approach. Additionally, we have proposed a dividend of EUR 0.40 per share, reflecting a 14.3% increase compared to last year. Looking ahead, in 2026, assuming no major changes in current market conditions, we expect mid- to high single-digit organic sales growth at CER and a slight improvement in profitability year-on-year. Going on to the regions.

In EMEA, we had a solid performance. Brands and Essentials benefited from underlying demand, improved availability and our diversified footprint, while compounding services was supported by demand in both sterile and non-sterile compounding as well as new customer wins. In LATAM, we benefited from strong execution in Brazil. Innovation and targeted commercial actions supported growth. We have also received clearance from the Competition Authority, CADE for the acquisition of Vepakum.

Finally, in North America Pacific, we continue to see strong underlying demand. Brands and Essentials improved on the back of operational improvements and availability, while Compounding Services continued to benefit from demand trends in both health and wellness and hospital outsourcing. Also, very happy to share that our expansion projects in Wichita and Las Vegas are progressing as planned.

Turning to M&A. Our strategy remains consistent. We acquired businesses we know well, often partners where we can strengthen local positions, enter new markets or expand product capabilities. During 2025 and year-to-date, we announced 12 acquisitions across all regions and segments as well as completing 2 further deals we had announced previously in '24. As you would have noted, most of the deals we announced in '25 have already been completed with Injeplast, Amber and Vepakum pending completion.

We all remain disciplined and have a clear integration playbook to capitalize synergies in an 18 to 24 month period, being the key levers, procurement, portfolio breadth, operational and commercial synergies. And with that, Karin, for the financial review.

Thank you, Rafa. Good morning, everyone. And let me walk you through our full year 2025 results and share more details about our 2026 outlook. In 2025, revenue increased 9.2% on a reported basis to EUR 952.2 million. In organic terms at constant exchange rates, the group grew 9.1%. Gross margin increased by 30 basis points to 62.6%, supported by sales mix and procurement and manufacturing savings. Operating expenses increased to support volume growth. At group level, our profitability expanded 30 basis points year-on-year to 20.3%, demonstrating our improved operational capabilities and synergies from acquisitions.

Moving on to the next slide. The bridge shows our revenue development for the full year. EMEA delivered 4.2% organic growth at CER, supported by broad-based demand and contributions across segments. Latin America delivered 14.1% organic growth at CER, driven mainly by strong performance in Brazil. North America Pacific delivered 10.8% organic growth at CER, supported by compounding services and continued progress in Essentials.

M&A contributed to reported growth, while FX was a headwind. On the right side in the table, you can see the nonrecurring items. They were limited at EUR 0.3 million, mainly acquisition-related costs, partly offset by an earn-out release. Depreciation and amortization increased, mainly reflecting purchase price allocations from acquisitions. And the financial result was a cost of EUR 28.6 million higher than last year. This was mainly driven by an increase in currency differences of EUR 1 million due to volatility of the U.S. dollar throughout the year.

The remaining is spread of the different categories such as interest on leasing and other financial costs. The effective tax rate was stable at 22.2% versus 22.3% last year. And as a result, net profit increased to EUR 91.5 million and earnings per share increased to EUR 1.25, a 13.6% increase on the prior year.

Moving to EMEA. So revenue increased to EUR 355.1 million with 4.2% organic growth at CER, supported by underlying demand and the contribution from acquisitions. REBITDA increased to EUR 77.9 million and the margin improved to 21.9%. The margin improvement reflects operational excellent benefits and sales mix. And as highlighted by Rafa, we also strengthened the region through acquisitions.

Turning to LATAM. Revenue increased to EUR 183 million with 14.1% organic growth at CER, partly offset by FX. Performance was supported by strong underlying demand and new product launches, particularly in brands. Brands revenues this year represent 38.1% of LATAM's total revenue, an increase of 360 basis points.

REBITDA increased to EUR 33.6 million with a margin slightly higher at 18.3%. The margin in the second half of 2025 was 19.2%, reflecting the seasonality effect in this region. We also made progress on M&A execution, firstly, with the completion of Purifarma, and we also received CADE clearance for Vepakum and expect that to complete soon. Injeplast is still to be completed.

Moving to North America Pacific. Revenue increased to EUR 414.1 million with 10.8% organic growth at CER. Brands and Essential performance remained strong and was mainly supported by improvements in product availability and supply chain. Compounding Services remains strong despite the absence of GLP-1 shortages during the second half of the year.

The higher operating expense is mainly related to the need to accommodate the growing volumes coming from high market demand, while REBITDA margin expanded by 20 basis points to 19.7% as we continue to improve our operational excellence activities. We also expanded the business through the acquisitions of CareFirst and UCP and also including entry into Australia through Bella Corp.

Looking at our cash flow now. A high level of cash conversion remains as one of the main strength of our business model. Operating working capital increased by 10 basis points to 12.1% as a percentage of annualized revenue. Operating cash flow increased by 41.3% to EUR 155.3 million. Normalized CapEx adjusted for one-offs ended at 3.1% of revenue, in line with our guidance. And lastly, free cash flow conversion reached 65.3%, reflecting continued discipline on CapEx and working capital.

Our net debt evolution for the year shows a modest increase to EUR 283.3 million, reflecting acquisition and investments during the year. Despite this, leverage improved with net debt to EBITDA at 1.2x, and we remain well below our internal threshold of 2.8x. This keeps sufficient headroom to pursue opportunities while maintaining a prudent balance sheet.

Finally, our outlook. For 2026, assuming no significant changes in market conditions, we expect a mid- to high single-digit organic growth at CER. We also expect a slight year-on-year increase in profitability with the second half expected to be stronger than the first half. CapEx is expected to remain at around 3.5% of revenue, excluding one-off projects, and our midterm guidance remains unchanged. And with that, I will hand back to Rafa for the conclusion.

Thanks, Karin. 2025 shows again the resilience of our business model consisting of predictable growth, strong cash generation and continued progress on quality and operational excellence. We also accelerated M&A in a disciplined way and are now heavily focused on integration and value creation. This performance builds on a long-term track record with EPS growing at around 9% CAGR since 2017. We remain confident in the underlying drivers of our end markets and in our ability to deliver the midterm targets. With that, let us open the line for questions.

[Operator Instructions] The first question comes from Michael Heider from Berenberg Bank.

Congrats on the strong execution. I have 4 questions, please. First of all, your growth accelerated in the fourth quarter in North America, so in the U.S. market, despite a stronger headwind from the GLP-1 revenues. Can you give us a little bit more light on what were the main drivers here, please?

Yes, sure. Michael, thanks for confirming the results. We're also very happy. Regarding the U.S. growth, you see that has been across all the segments. Of course, we're starting with Anazao where we have the headwind. The core business also grew. So that shows the resilience of the business, of course, and the trend we have spoken also in your last conference of the prevention and lifestyle products. B&E was also -- we also saw good results ahead of our own expectations as well. We have been improving our operations and supply chain.

As you also know, we also discussed this one. And then regarding FSS or the hospital outsourcing, we also explained during our Q3 trading update call that at that time, we're adding the EUR 25 million extra capacity that door-to-door, right? Therefore, in Q3, we had the lesser growth at FSS, hospital outsourcing. And with the visibility we have, we would see a strong Q4. Thanks a lot for the question, Michael.

And then secondly, on the capacity expansions, can you elaborate what -- where the focus is in 2026? And how much CapEx can we expect on that?

Yes, sure. That's a very important question for this year and also for 2027 because here, we have announced -- last year, we announced the expansion across the street. That's the new capacity that we're getting will be online during 2027. What we explained in Q3 was an extra capacity added wall to wall, so upgrading the current facility to support growth. And for 2026, as we also have explained many times, there is this new opportunity for us as the B2A where a 503B can compound for a 503A, that would be the same as we have here in the Netherlands with the [indiscernible], where a compounding center can compound for other compounders.

And of course, as we can understand, the sterile products are the most important because of the difficulty made and all the quality requirements needed and investments. Of course, therefore, we see a good opportunity for us, of course, at the B facility in Vegas, but also at the B facility in Wichita because now we started bringing the portfolios together, having R&D cost, quality control cost, streamlining also the operational part on our [ 503s ].

Yes. And maybe to add on that on the financials for the expansion project. So we had 3 projects, the Las Vegas expansion, the Wichita expansion and the Netherlands. In total, roughly EUR 73 million expansion CapEx. In 2025, the amount spent was limited to a couple of million. And then for 2026, we expect to spend approximately 75% of that amount and the rest in 2027. The timing, however, is depending on ordering and billing. So it could deviate a bit. However, it does not indicate any delay in timing. So we remain on track to complete the investment in 2027, which was in line with the original plan.

All right. Then on the -- on your tax rate, it was stable in '25 versus '24. Now looking at your acquisitions, do you think there will be an impact going forward? So maybe with more exposure to the Brazilian market that we have to expect a slightly higher tax rate going forward?

Yes. So we were around 22% this year and last year. We are funding part of the Brazilian acquisitions in the U.S. to mitigate a bit this risk. So we expect a slight step up, but not a major one going forward.

Okay. And then last one, just generally, I mean, you had a fantastic run on acquisitions with 12 acquisitions announced. Do you see any limits to that on your capacity to integrate so many acquisitions?

Yes. Indeed, we did a number of deals in 2025. They were all spread across the different continents. So we have a global coordinator. So we have an M&A lead, and we have the regional teams that are responsible for the integration, and they are supported by the global back office and roles such as finance, tax, treasury, IT. The plan -- so the integration plan is already prepared during the acquisition process and discussed with the area leaders and executive leadership team to accelerate the integration as of day 1. So important levers, as Rafa mentioned, for the synergies are the procurement and the product breadth, and we have an experienced team to execute on this. So we are very confident that we are well prepared to integrate the acquisitions.

The next question comes from Stijn Demeester.

Ignacio congrats on the results from my end. I have 3. In your outlook, you guide for a slight profitability improvement. I think we are all banking on somewhat lower margins because of the dilution of Purifarma. Does it mean that you see cost synergies in Brazil more positive versus earlier? Or has it to do with an offset from higher-margin acquisitions such as Vepakum and maybe a bit of light here. Then the second question, given the strong underlying growth in the U.S. Compounding segment, will there be a point in the next quarters where you will be pushing against the limits of your capacity in Wichita before the new capacity provides additional headroom in 2027?

And then, related to the previous question, it was indeed a very busy year for your M&A team. Could you imagine that at one point, there is a change in your capital allocation policy, whereby you would, for example, for a buyback over M&A considering your sufficient free cash flow and your underlying valuation at this point? These are my questions.

Yes. Thank you, Stijn. Maybe to start with the guidance on profitability. So yes, in profitability, we indeed saw a nice step-up in 2025 with 30 basis points, which was driven by operational excellence, the operational benefits and innovation. While acquisitions are expected to have a modest dilutive impact in 2026, as synergies are realized, we anticipate a slight improvement in profitability versus 2025.

We also expect a stronger second half compared to the first half, reflecting the phasing out of the GLP-1 headwinds, as you all know, and the integration of newly acquired businesses. And maybe to break it down per region, LATAM. LATAM will have a small dilutive impact due to the acquisition of Purifarma. This will be partly offset by Fagron. So from H2 onwards, we expect synergies to start contributing to margin improvement at Purifarma. If we look at North America, North America will be slightly impacted by the UCP acquisition, though the overall effect on the margin development is expected to be limited, and North America will continue to benefit from operational leverage and operational excellence initiatives.

And therefore, we expect a margin improvement in 2026. And EMEA, I said, delivered a very strong performance in 2025, and we anticipate to be broadly in line with that or slightly improve compared to 2025 in 2026. So that's basically on your first question.

Sure. On the second one, as well. You are totally right. And this is also what we explained during the Capital Markets Day last year that Wichita is coming to its max capacity. Therefore, we are at least EUR 25 million extra capacity for '26 and the first semester of '27. And then during 2027, we will see the new capacity going online. As we said, we are totally on track for timing and also on budget. So that's good to remark. And of course, we have the Boston facility. And this one is giving us the possibility to capture the underlying trend that we see in the hospital outsourcing.

And that, as you know very well, is because of the high-quality standards that are being asked in the industry and also the B2A opportunity that we see now, that's when I repeat myself of the first question, when a 503B can compound for [ 503A ] mainly on sterile products.

Last question on the capital allocation. So our capital allocation is focused on growth. organic growth and inorganic growth. And indeed, we had a very good year on M&A in 2025. We have a solid pipeline to continue that M&A strategy. We see opportunities in the different regions, in the different markets, and we want to be able to act on those. So for now, our capital allocation strategy will not change, and we are focused on that growth. We did have a small dividend and a small dividend increase also, and that's reflecting of the strong performance we had on our cash flow and our earnings.

The next question comes from Thibault Leneeuw from KBC Securities.

The results. First question is with respect to EMEA and the compounding services. You reported 1.9% organic growth at CER. You talked about volume growth in sterile and non-sterile business. So does that mean that there was some pricing pressure? That's the first question.

Yes. Thanks, Thibault. And what we have explained, if you recall years ago that -- how normally -- and it's, of course, that situation, the Netherlands is accounting for more than 90% of this performance. So how does it work? There is a product portfolio in compounding. We have the product portfolio, the biggest one in the whole industry after so many years, of course. And some of the bigger compounds are getting registered, so then we cannot sell.

This we explained, if you remember in 2021 at that year. And then this means also that we introduced new compounds, and we also registered some of them. So it's a dynamic portfolio. So all in all, you see that the almost 2% demand comes from this dynamic portfolio, some products coming in, some products coming out. And also, as we explained, I believe it was last year also, there was one question regarding this topic is that prices in this market are somehow flattish. So therefore, you see that all the growth that you see from compounding services in this region comes from volume.

Very clear. And maybe as a small follow-up, maybe it has been explained in the past, but would be gentle to remind me is for North America, the Compounding Services there, when you look at the growth outlook, has there some price increases been included in the long-term outlook of like the low to mid-double-digit revenue growth? Is there some price increases included in that? Or do you basically assume stable prices in that outlook?

Yes. So we -- historically, where growth in the U.S. and maybe in Compounding Services is driven by volume. So we are capturing market share, and that was historically the case. Currently, we see that it's more volume than price, but price is a very small part of that growth level, and that's also embedded in our growth numbers going forward.

The next question comes from Usama Tariq from ABN AMRO ODDO BHF.

Congratulations on the strong results. I have just 2 questions initially. The first being, could you clarify on the cash outflow expected, especially with regards to M&A in 2026. So you've already indicated the CapEx. Does that include it, but that's I think that is only with regards to the expansion CapEx. So any pointer on the amount of cash you expect with regards to M&A next year?

And secondly, do you see any impact with regards to the Trump health care plan? I do understand that Fagron is outside the insurance policy-based mechanism, so 80%, 90% cash settled. Do you still see some positive or negative impact in the short to medium term because of policy changes?

Starting with your first question, indeed, the answer that I gave on the previous question was related to the expansion CapEx. So if we now break it down with regards to the acquisition, so at the end of 2025, there's EUR 14 million at the balance sheet to be paid. And on top of that, as you know, we announced a number of deals in 2026, which also resulted in a cash out. And the cash out in 2026 is around EUR 80 million for those 3 acquisitions.

So there are 3 additional acquisitions pending closing. That's for Vepakum, Amber and Injeplast, and that's roughly around EUR 70 million. So if we combine those amounts, then it's the EUR 150 million and the EUR 14 million that was still open.

So that's EUR 164 million that has to be paid. And if we annualize the EBITDA of the acquisitions and look at pro forma net debt to EBITDA, including those, we would still be between the 2 to 2.5x net debt to EBITDA. So within our sweet spot and below our internal max of 2.8x. So we have sufficient room there, but also on the liquidity side, as you know, we have a new facility at the end of 2025, the U.S. notes for USD 125 million. So on the liquidity side, we're also good to continue our M&A strategy.

And for the second one, Usama, you are totally right. So there is no action on the policy because our business is out of pocket. So totally right.

The next question comes from Frank Claassen from Degroof Petercam.

Okay. We'll try to add Frank. Let's continue with the Q&A.

The next question comes from Eric Wilmer from Kempen Research.

I wanted to press a bit on the profitability guide, which indeed screens a bit confident perhaps. I believe your largest 2 acquisitions last year, which should add 5% of sales had a margin profile below the group, which you will now need to implement. And I hear what you say with regards to the H1 profitability commentary this year. But at the same time, I always had the impression that your Dutch compounding business is margin accretive which I believe saw a bit of a tougher Q4.

So are you actually anticipating a change regarding the latter? And do you also see further room with regards to further operational efficiencies? Maybe some color on the latter as well to help understand the qualitative margin bridge from '25 to '26.

Maybe indeed to start. So the acquisitions overall have a modest dilutive impact. We added the Brazilian Vepakum because we have CADE approval, so competition clearance for that acquisition. So that's added. That acquisition is above group average EBITDA levels. So that compensates partly for the dilutive impact for Purifarma. And then overall, the acquisitions, some are below, others are above.

So in general, if you sum it all up, it's below group average. However, we do anticipate synergies coming in as of H2 on the back of the plans that we're having. So that's one on the acquisitions. If we look organically, we do expect to see benefits from the strategy that we initiated on operational excellence initiatives. So we already see that translated into procurement savings, so better gross margins. We see operational leverage coming through, especially in the U.S. where we continue our growth path. So on the back of that, we also expect the business, excluding acquisitions to make good progress in 2026.

Well, let's end the session. Thank you very much for your participation today. I will remain at your disposal should you have any further questions. Thank you very much, and goodbye.

Thank you.

Thank you.

Bye-bye.

Hello, and good morning, everyone. Welcome to Fagron's Third Quarter 2025 Trading Statement Webcast. I'm joined today by our CEO, Rafael Padilla; and our CFO, Karin de Jong. We will open the floor for questions at the end of the session. And with that, I will hand over to Rafael.

Thank you, Ignacio, and good morning, all. We're pleased to report a solid quarter where we achieved normalized organic growth of 8.5% and a 5.7% organic growth at CER when including the phaseout of GLP-1s. This quarter, our Wichita facility underwent a routine inspection by the FDA wherein the agency verified the corrective and preventive actions we set in place and received no repeat observations, which validates our remediation actions. Additionally, the FDA also validated the previously announced capacity expansion that is expected to generate $25 million in revenue. We also continue to execute on our M&A strategy as we announced the acquisition of UCP in the U.S., while at the same time, we have received competition clearance for Purifarma and Injeplast in Brazil.

In 2025, we have already welcomed eight companies showing our M&A disciplined serial acquired profile. And to finalize, we confirm our full year guidance of EUR 930 million to EUR 950 million revenue and a slight increase in profitability year-on-year. Let us now look at the regional dynamics. In EMEA, revenue growth was driven by all segments and contributions from our recent acquisitions. B&E saw an impressive quarter as we reap the benefits of our refined commercial strategy, improved operational excellence and diversified footprint. In Compounding Services, we benefited from robust demand combined with new customer wins. In Latin America, growth remains solid with all segments contributing positively. Brands' impressive growth trend remains, reflecting the successful execution of our commercial strategy, coupled with our innovation power. Essentials continues to benefit from our market leadership position and an improvement in underlying demand.

Turning to North America. B&E organic revenue growth was driven by improvements in operational excellence and new product launches benefiting on the B2A opportunity. Compounding Services demand remains strong in both health and wellness and hospital outsourcing. This was offset by the absence of GLP-1 sales and the [ IPA ] from lower output at the Wichita facility during validation of additional capacity that will generate revenues of $25 million.

Finally, the Anazao facility investment in Las Vegas as well as the integration of CareFirst and BellaCorp remains on track. And in Tampa, we await California license to be able to complete the transition to the new facility. Let's now say a few words about quality. This quarter, our Wichita facility underwent an FDA routine inspection, concluding in no repeat observations, which validates our remediation actions. This year's inspection also validated the previously announced capacity expansion that will generate an additional $25 million revenue.

During the routine inspection, the FDA also issued a Form 483 with 6 observations. Additionally, our Anazao's facility in Las Vegas was also inspected by the FDA, resulting in a Form 483 with 4 observations. As we repeat quarter-on-quarter, quality remains a key differentiator in our industry. With over 35 facilities to audit globally, we are constantly inspected by regulatory bodies across the world to uphold the highest quality standards. Moving on our growth strategy. We're happy to announce one more addition to the group, UCP in California, totalizing 8 so far this year. With this acquisition, we are setting up a nationwide platform to better position ourselves to capture the rapidly growing health and wellness market.

UCP enhances Anazao's portfolio and footprint and has a strategic relevance as California is a market with hard to obtain licenses. We also received exciting news regarding Purifarma and Injeplast. The Brazilian Competition Authority, CADE, has granted clearance for these acquisitions. This represents an important step forward in executing our disciplined M&A strategy and will enhance our product portfolio and local capabilities in Brazil. The acquisitions are subject to closing conditions and completion of certain local corporate and contractual formalities. The important bit is that with regulatory clearance, we have certainty of closing both deals.

Again, so far this year, we have made eight acquisitions following a serial disciplined acquired M&A approach focused on market consolidation, enhancing our product capabilities and geographical expansion around the globe. This showcases our strong momentum. Moving to our full year guidance. We are confirming our revenue guidance to a range of EUR 930 million to EUR 950 million, while confirming a slight improvement in profitability year-on-year. CapEx will remain around 3.5% of revenues, excluding one-off projects already announced.

To conclude, Fagron is the only global vertically integrated niche defensive, high cash generating company operating in the pharmaceutical compounding fragmented market. Our resilient business model is fortified by a diverse geographical footprint. These factors, coupled with demographic trends and our emphasis on personalization are the basis of our success. Our quality focus, together with our ongoing operational excellence initiatives will optimize our business through global synergies while a disciplined serial acquired M&A strategy remains a key part of our growth. Sustainability is a paramount priority and a strategic cornerstone for us, as together, we create the future of personalizing medicine. Let's open the floor now for questions. Thank you.

I will -- our first question comes from Stijn Demeester from ING.

Two questions, if I may. First one is on the U.S. Compounding business. It seems that the broader market in North America is still focused on GLP-1s, even though the FDA has removed semaglutide from the list from the shortage list. Even a listed company like Hims & Hers seems to continue to offer GLP-1-like formulations. Question here is, how do you explain the situation? How long do you believe it can last as it does seem to impact your business adversely?

And second question on Purifarma. In the press release of earlier this week, you mentioned that the scale up of the Brazilian operation is expected to generate procurement benefits, not only across Latin America, but also in the entire global footprint. Can you maybe elaborate on this in the light of the FDA approval for your Sao Paulo facility, which apparently opens up an export route into North America? Yes, it could be helpful to get an idea to what extent this can benefit your group operations.

Thanks a lot. Great questions. On the first one, on GLP-1, of course, we can't comment on our own activities. And as you know, very well, on May 22, the GLP-1 or semaglutide was out of the shortage list. So we stopped compounding. In the current framework, what we see is that on the 503A with a clinical difference statement. So it's in each script, a statement on each script a script could be compounded. Of course, as you can understand, this is not so much convenient for doctors to fill in a form. So this is our current view on it.

And when it was commented on the impact, when we see the underlying trend of the health and wellness market in this case, so that's especially for us Anazao, we see that even without the GLP-1s, we have set a nice quarter year-to-date as well. And also as we move to the new Tampa facility, we have been operating onto. So we expect the California license for the Tampa facility to have a completion of the move. Then on the second one, Purifarma, indeed, Purifarma, as we have commented previously, has a strong portfolio in essentials, so 300 items with huge volumes. If you remember, Stijn, we explained that the Purifarma facility, it's 500 meters, so 10 minutes walking out from ours in Anápolis, that's close to Brasilia in the center of the country. And of course, that was part of our plan that we explained some months ago, 9 months ago. We explained that we're going to integrate Purifarma activities into Fagron Services Brazil activities.

Remember that the Fagron Services factory was built in 2022 with the idea with the vision at that time to have a huge facility to cover the whole Brazilian market. And therefore, we're going to absorb without any single problem, all those volumes. Of course, as you said, we're going to leverage volumes of those essentials throughout our global network. So as you know, we have now a robust procurement network, Vera explained that very well during our Capital Markets Day. So we'll see impact on the savings. We have a 3% target till 2027, as Vera explained during April 10. And next to that, this will give, of course, units to have a better cost price in the units we make. So we are going to have better cost pricing also for the goods that go into the U.S. Thanks a lot, Stijn.

Our next question comes from Frank Claassen from Degroof Petercam.

Yes, Frank Claassen from Degroof Petercam. Two questions. First of all, on EMEA, there was quite a strong growth acceleration in the quarter. Could you elaborate what drove that acceleration? And also, is this growth rate -- new growth rate sustainable going forward? So that is the first question. And the second question on Wichita. You had a lower output due to productivity improvement program or at least the capacity expansion. Could you indicate how much revenues impact that had in Q3? And will it be gone in Q4? And when will the EUR 25 million revenue capacity kick in? Will that already be as of Q4? Some explanation on that, please.

Thanks a lot, Frank. On EMEA, indeed, we have seen a strong quarter. As we commented previously, we see a pickup in the underlying market demand. There are clear tailwinds as aging population, prevention and lifestyle. We see that kicking in also in the European landscape, which benefits us a lot. And this together, when you remember, Frank, we explained some years ago that we had a clear strategy for Europe with two pillars. One was the diversification of the Benelux. We were heavy lifted at that time in the Benelux. Now of course, Netherlands and Belgium is important, which they perform very good. We have also started activities in other countries. So this helps. And the second pillar is, of course, our operational excellence programs with our Polish facility. Of course, availability goes up, were explained during our Capital Markets Day, our product availability at 95%. In Europe, we're already at 93%. So this has been a major step, and this helps on the development.

Frank, and to come back on your question on the growth rate of EMEA. So indeed, they had a very strong quarter with 7.8% growth. We don't expect that level in the fourth quarter. However, we are very positive about that EMEA region. So for the full year, we expect a low single-digit to mid-single-digit percentage of top line growth, and that is also in line with our midterm targets. Then on the second question on the Wichita facility, at FSS, we had a growth in the third quarter of 6%, which was indeed driven by a temporary lower production output due to the validation of the new production room.

The impact is difficult to quantify as we have some spillover in the fourth quarter and some losses. We have relatively good visibility on the fourth quarter, and we expect a good quarter. So year-to-date, we're at 15.9%. And for the year, we expect North America to have a high single-digit to low double-digit percentage of growth. Market drivers are strong, and we are well positioned. So we are very positive about the midterm perspectives of this overall market.

Okay. And the EUR 25 million revenue capacity, when will that be operational?

Yes. So the site is operational, so we can use that site for our production. So we can benefit from that capacity expansion. Currently, we're already benefiting from that.

Yes. And adding here, Frank. Yes. And adding -- quickly adding here, Frank, on this capacity expansion that Karin explained very well. This helps us to bridge for the next year. And remember that in 2027, the E2 project that was explained also during our CMD is coming online. So this new capacity that you were referring will help us for 2026.

Our next question comes from Michael Heider from Berenberg.

I have only a few more general questions left because on the quarter, your answers have already been given. But could you maybe elaborate a bit on your acquisitions going forward? I mean, do you have more in the pipeline for '25 or certainly probably '26? And then maybe can you remind me of the additional CapEx because you said your target is 3.5% of revenues. Excluding additional CapEx, so what is the target for '25 and '26? And then last question is on your net debt-to-EBITDA ratio. What do you expect here for 2025 and in the midterm?

Yes, Michael, maybe starting with your M&A question. So we have a disciplined approach to M&A, and we have a full pipeline of targets, which means that we have targets in all regions. We executed well this year. We've done eight, as you've read in the press release. So we're well on the track, but we see opportunities -- more opportunities in the different regions. So that is EMEA as well as North America, but also Latin America. We're also looking at APAC, as we announced during our Capital Markets Day. So we are very positive about our M&A momentum currently, but of course, with a disciplined approach. On timing on deals, that's very difficult to estimate. We do midsized deals, usually family-owned companies. So from that perspective, it's difficult to give any guidance on our M&A, but we are progressing well, and we anticipate doing more deals this year and next year.

So maybe on your second question on CapEx. So indeed, maintenance CapEx is 3.5% of sales. That's our estimation also for the midterm. If we look at expansion CapEx related to our new projects, we announced a couple. I think the big one is the expansion we have in Wichita. So that is a big one that we announced, and that's EUR 35 million -- EUR 39 million, sorry, which will be in the next coming years. So part of this, this year, most of that will be spent next year and we go live in 2027. And then we have an expansion in Vegas, which we also announced, which is EUR 29 million, which will mostly be next year when we spend that money. And then for the EMEA region, we also announced an expansion for a sterile facility in the Netherlands, which is EUR 15 million. So those are on top of the 3.5%.

On our net debt -- maybe the last question on our net debt to EBITDA. So we are -- at the end of last year, we were at 1.4x. We have strong cash generation, as you know, depends a bit on the timing of certain payments and also the closing of the acquisition we have announced. So we expects to move a bit more towards the 2, but it stays well bit below our boundaries and our internal threshold of 2.8x. So we have sufficient room to do additional acquisitions this year, but also the coming years. Thank you very much for your questions, Michael.

Our next question comes from Usama Tariq from ABN AMRO - ODDO BHF.

I just had one question because others were already answered. Could you just comment on the market share per region, specifically in North America? So has there been any market share loss because of production halt or anything like that?

Yes. Thank you, Usama. On the market share in the U.S., if you remember, we have 3 segments in the U.S. That's the Brands and Essentials around 30%. We are now #2 behind Medisca, which is a market leader there. Think about 15%, 18% of the total market on B&E, its accounts to us. Then when we go to the Compounding Services, we have 2 verticals. We have the health and wellness, that's Anazao with the Tampa facility, the new one, of course, we have Vegas, 503B that we're expanding. We have CareFirst in the Northeast, and now we have UCP. So as we were explaining, we have a nationwide platform now for this segment is a rapidly growing segment. And here, we're also #2 behind Belmar. It's a great company. And we could say it's around 10% to 12% of the market.

And then going to the hospital outsourcing, that's FSS, where we have Wichita, of course, the current one and the new one that we are building across the street, that's E2. And then we have, of course, Boston. And here, we are as well #2 behind QuVa. Here, revenues would account as well for 15% of the total market. And when you refer to the Q3, the slowdown in the production that was due to as Karin explained it very well, validation of the new capacity that we have added that was wall-to-wall. We have not lost any single market share. The opposite. As you have seen, we have been growing also during the quarter, 6%, and that's a combination, of course, of current customers and new customers. We onboard new customers year-on-year.

We also have completed nice deals with some GPOs as well. And you can see them back in the -- at our LinkedIn accounts. And of course, we need to understand that when we have this capacity added wall-to-wall, there is no production on hold, not at all. It is in a slowdown because you do it in phases. You need to validate this new production area. So this meaning that there is output, however, at a lower pace. And again, I repeat myself, we have had a nice growth of 6%, totalizing 15.9% year-to-date, and the beauty is that, of course, FSS, the hospital outsourcing, we have contracts. So we have visibility and Q4 will be strong, and we'll have, again, a record year. So thanks a lot to Usama for your question. And if you want us to comment on the market share on the other 2 regions, LATAM and EMEA, also super happy to do so.

No, I think that will be sufficient. It was more with regards to North America.

Thanks a lot, Usama.

It appears that was our last question. I will now hand the word back over to Ignacio Artola for any closing remarks.

Well, thank you very much for your participation today. I will remain at your disposal should you have any further questions. Thank you very much, and goodbye.