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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Medacta First Half 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta. Please go ahead, sir.

Thank you very much, and good afternoon or good morning. Welcome to Medacta H1 2026 Results Conference Call. So the slides of today's presentation can be found on the Medacta Investor Relations website along with the media release. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on Slide 2 of today's presentation. And after those housekeeping remarks, I will now turn to Slide #4 and start with the highlights of today's publication.

As already reported, Medacta grew almost 10% in constant currency in H1, reaching EUR 368 million in terms of revenues. We managed to report an adjusted EBITDA margin of 27.8% in constant currency or 26.5% reported equivalent to adjusted EBITDA of EUR 97 million. The net profit for the period reached EUR 42 million or 11.4% of revenue, and we are confirming both our 2026 outlook and our midterm outlook.

If we turn to the same page, this is just to remind everybody how Medacta has been able to continue to deliver significantly above market growth. Our success relies on differentiating innovation that are really improving patient outcome. And at the same time, they are sustainable under an health care system point of view. Those innovations are introduced in the market with a very strong focus on medical education. So training of surgeons all over the world that are able to acquire the knowledge necessary to use these new techniques, new technologies, new products through our medical education. And then, of course, we needed to constantly expand our sales force globally across all our business lines in order to reach as many customers as possible on a global scale.

If we go to the Slide #6, we have already reported our geo mix sales. We have been able to grow double digit across 3 out of 4 regions, in EMEA at 10%, in APAC at 13.1% and Latin America, 16.4%, while North America differently from the other periods grew around 7%. This changed a bit our geo mix. And as you will see, this will have an impact on some of our margins. Extremities, almost 16% and Spine, 4.5%. The product mix as well did change a little bit. And as we will hear later, this has an impact as well, mainly on the gross profit.

If we go a little bit into the details, our performance in Hip continues to be significantly above market, probably around 2x. We continue to focus on our minimally invasive solutions. And we have introduced in the first half of the year, our enabling technology, NextAR Hip in the U.S. and Australia, which is in limited market release, while we are in a full market release for our new triple taper stem Mfinity, which is starting to gain momentum in the U.S. and more recently in Japan.

On Slide #9, we can follow our consistent expansion on the Knee portfolio, almost 11% in H1 2026. This is driven by our focus on kinematic alignment and the unique implant we have in the market, specifically designed for kinematic alignment, the GMK SpheriKA, which is clearly driving our growth and becoming our most important Knee product in a relatively short period of time. Here as well, we are more than 2x faster than the market in this segment.

In Spine, we did grow single digit, 4.5%. We have redesigned a bit our strategy mainly in the U.S. market, focusing much more on enabling technology, which is now representing around 50% of our Spine revenues in the U.S., meaning 50% of our Spine products are implanted with the support of enabling technology, and we are going more direct and more in -- with exclusive agents in that segment. We continue to have a very strong performance in EMEA as well in Spine, followed by both Latin America and Asia Pacific, and this remains well above market growth in the first half of 2026.

If we now move to the Extremities segment, almost 16% year-over-year growth for H1. We have introduced here as well additional technology elements together with our NextAR Shoulder application, we have introduced the revision shoulder arthroplasty first in the U.S. and now is going to expand outside of the U.S. And this technology is supported by a new AI-based MyShoulder Planner, which helps surgeons to carefully plan their products, their procedures and hopefully deliver a better care for their patients.

On the Sportsmed side, which is the other element together with the shoulder arthroplasty part of the Extremity segment of Medacta, we launched SecureFix, which is an all-inside meniscal repair system for Knee Sports Medicine, which is very well appreciated by our customers and is a clear driver for our Knee Sportsmed portfolio. Here as well, we have a growth rate which is more than 2x the market year-over-year. I would now like to ask our CFO, Corrado Farsetta, to go over line by line of our P&L and comments on the marginalities.

Thank you, Francesco, and good afternoon, everyone. Let me now walk you through our financial performance in the first semester, and let's start with the gross profit slide. In H1, the gross profit was EUR 240 million, increasing from EUR 233 million of the previous year. On sales, the GP margin in the first semester was 65.2% compared to 68.3% of the previous year, representing a reduction of about 3%. This reduction is attributable to 3 main factors. The first one is an adverse FX impact of 1.3%. The second one is a price erosion of about 0.5%. Those 2, let's say, coming from the market totaling 1.8% of this 3% reduction are, as I said, taken [indiscernible].

There is a third element, which is strictly related to the top line performance in terms of geographic mix and product mix, as just discussed by Francesco, which is affecting our GP of another 1.3%. And this is primarily attributable, as we have seen to lower sales in the U.S. market to a higher top line coming from our new business Sports Medicine, and also given a lower-than-expected top line also to a higher D&A ratio of coming primarily from our instruments that are in the market. This is important because those 2, the 2 elements coming from the market are taken. The second one are strictly related to our, say, top line performance.

Moving to the EBITDA margin slide. What you see here is, as always, there are 2 lines. The yellow line is representing the evolution of our EBITDA margin in reported currency. And the red line is showing the EBITDA margin at constant currency. So you see that net from the 1.3% FX effect, there is a 0.9% reduction on the previous semester, which is primarily coming from the GP erosion that we have just discussed, only partially offset by a limited operating leverage due to volumes and also the ability of the company to keep our costs under control.

Moving to the net profit slide. The net profit in the first semester amounted to about EUR 42 million compared to EUR 60 million of the previous year. In order to comment comparable numbers, we should read last year net profit at EUR 46 million net from the one-off positive purchase gain coming from the acquisition of the company last year, so EUR 46 million comparing to EUR 49 million, which is coming from EUR 42 million reported plus about EUR 7 million of negative FX effect. So the net adjusted and comparable is EUR 49 million versus EUR 46 million.

Moving to the slide of the operating cash flow. The number -- the operating cash flow in the semester was about EUR 56 million, down from EUR 73 million of the previous year, and this is representing, of course, the performance just discussed of our EBITDA, but also a higher net working capital needs that were basically needed to replenish the implant safety inventory after the super strong performance of last year and the preparation of the necessary, let's say, inventory level to enter the Indian market in the second half of the year. We will discuss very soon in the next slide, the investing activities, EUR 74 million, and this resulted into a negative free cash flow of EUR 18.6 million.

Moving to the Slide 21 -- sorry, CapEx, Slide 17, yes. This is the usual pie of our CapEx. As always, Instruments for EUR 42 million represented the biggest chunk of our investment, but it's important to notice that our Tangible now are EUR 22 million, and this is a number which is reflecting the embed the big amount of investments that we have to do in order to expand our production capacity to produce our office and facilities to accommodate, let's say, the future production machines and employees that we have in our pipeline. The rest are more or less in line with the previous year, Research & Development, EUR 8 million, and Other, EUR 2 million, for a total of EUR 74 million.

Moving to the CapEx for growth, instruments plus other intangibles. This chart summarizes the evolution of CapEx on sales over the last 3 semesters. 3 lines, the yellow line is representing CapEx for Other tangible that are primarily land, buildings and production capacity. The light yellow line is representing Instruments on sales. And the blue line is on top is the total of the 2. As you see, the percentage on sales of our Instruments is pretty stable, around 10.5% to 11.9%. This fluctuation is basically driven by 2 main factors. The first one is the acceleration of top line. And the second one is also the planning and delivery phase in our business, which basically means to place orders ahead of time in the order of 9 to 12 months. So it is feasible to adjust, but it's not necessarily possible to do it in the first semester or in the same year. So this explains these fluctuations.

The other one is, as we said, representing the expansion in our land and buildings and the expansion of production capacity. So 17.5% is without -- just to be clear, without the R&D investments that we have seen in the previous slide. Moving to the last slide of my presentation. The leverage, net debt on adjusted EBITDA was 1.2x, very low, compared to 0.9x of the full year last year. I think that, that concludes my part of the presentation, and I'll now hand over to Francesco, who will take you through the outlook session and some final remarks. Thank you.

Thank you, Corrado. Yes. So we mentioned at the beginning, Medacta is confirming its outlook for 2026 with revenue growth in the range of 10% to 14% and an expansion of the adjusted EBITDA margin of around 50 basis points versus prior year in constant currency. At the same time, we confirm our midterm outlook, which brings our revenue compound annual growth rate in constant currency between 12% and 15% with a gradual improvement of the adjusted EBITDA compared versus 2025, again, in constant currency and subject to unforeseen events. And Medacta remains not impacted by the U.S. tariffs, and we'll continue to monitor this development.

Which are the key messages. The key messages is that Medacta is able to continue to develop and to grow at an above-market rate for H1 2026. This is the result of our differentiating innovation, medical education and constant expansion of our sales reps and teams. We have been able to continue to deliver a high adjusted EBITDA margin of approximately 28% in constant currency. And accelerating U.S. development and expansion as we have announced the acquisition of the first large piece of land in Tennessee, where we are going to develop our new U.S. headquarters and manufacturing activity for the U.S. market. And our aim continues to be to outgrow the market in a significant way for the years to come. Thank you very much for your attention. And once again, thanks to all our employees, clients, suppliers and partners worldwide for the excellent period. Thank you very much.

[Operator Instructions] The first question is from Sam England with Berenberg.

Can you just give us a bit of a sense of what you've seen in the U.S. joint market so far in Q3? I think one of your competitors commented at a conference yesterday that the markets remained quite soft this quarter. So I wondered if that's what you're seeing as well. And to what extent you think you can offset any market weakness with innovation and share gains in the second half? And then secondly, your EBITDA margin now implies a bit of a step-up in margins in the second half of this year. So can you just walk through the drivers that you see to get you to hit that level in the second half? And do you expect any of the gross margin pressures that you called out to ease as we move into the second half so you can hit that guidance?

Yes. Thank you, Sam. So in the U.S., we have seen, of course, H1 market. Now everybody reported the numbers, which is quite a bit lower than the previous years in terms of market growth. we have seen probably a 3% U.S. market growth versus an expected 5%, 5.5%. Q3, we have started to see, at least on our end, some of the Medacta-specific factors to be reduced, especially the Spine dilution in the U.S. Spine segment, which is heading in the right direction. We have seen a good reacceleration on the Hip side, but this was very much linked to our introduction of this triple taper stem. So we remain very confident on our ability to accelerate quite a bit in the U.S. specifically as well, which was the biggest gap we had and the biggest surprise we had in H1.

It's fair to remind maybe everybody that last year, Medacta USA did an exceptionally strong H1. So we have a different comparable in H2, both in the U.S. and at company level. So definitely, we see a better chance to accelerate in the second half, including in the U.S., and that's true outside of the U.S. as well. On the EBITDA margin, I think it's pretty much linked as well to what we just discussed. So we were aiming in terms of growth a bit higher. We did generate cost in the first half of the year in order to achieve a higher growth rate in terms of people structure, et cetera. This did not fully materialize in certain region, in particular, we mentioned the U.S. growing single digit, which is a very big surprise for us.

And of course, we have quite a bit of leverages to adjust our cost increase. So we did reduce our cost increase to the level of revenues we are seeing at the moment. So we are confident that if revenues develop in the way we now see and expect to continue, we are going to be able to basically hit the targets we have in mind. We had a little bit, again, of external factors, headwinds, in particular, some fuel surcharge, so hitting our variable transportation cost that this is something we cannot control. And I think the fuel this morning is again at some record highs. So this will not help. But let's say, outside of external factors, basically the contribution coming from a strong top line acceleration, which is what we expect should help us to increase leverage on our cost and therefore, expand our marginality.

The next question comes from Michelle Büchler with ZKB.

You noted a notable softening within Medacta existing customers in the U.S. and the general market slowdown. Could you maybe comment on that a bit more, like how much was coming from existing customers and how much is coming from new customers?

Yes. So this is -- it was quite an interesting dynamic because we have seen a very successful and continued pickup of new customers. In terms of number of customers, we are almost as strong as the previous year, where as we discussed before, we had a record year, which means our offering, our products, our ability to attract new customers and to hire new salespeople remains pretty much intact.

While we have seen for different reasons, mainly base attrition to existing customers, either doing less than the previous year, moving more business from hospital to ambulatory surgery centers. And this is a more profitable business for them. And so therefore, they are happy with potentially a lower volume. And maybe we are present working with them in an ASC and not in a hospital. What else we have seen, we've seen some, of course, reduction on the Spine side, which was again more Medacta-specific thing linked to our decision to refocus on more profitable Spine business and not growing at any cost and refocusing mainly on our specialty products, as we said, technologies and sales through technology that is specific for the Spine.

Okay. And if I may, a follow-up question. You mentioned in the first half strikes in Europe. Do you still see that for the second half? Or is that over?

Yes. So unfortunately, it's not over. And we're talking now specifically about Spain, which is one of our fastest-growing markets in Europe, which is still growing despite the fact that the Spanish market in the first half is almost down 20% due to those strikes in the public market. So they have announced that those strikes will potentially continue, but it's really unknown. There are some regions which are not taking part of those strikes anymore.

And as you know, Spain is a federal state. So the regions are very, very autonomous. And we will have to see. It is very challenging for us to forecast Spain. I just actually had a meeting this morning with our Spain General Manager, and that's a little bit an unknown situation. Medacta is doing very, very well despite this very strong headwind and would have been a record year in Spain for us without. But still, Spain is affected by those strikes, while we did not see any other strike outside of Spain, which was the case in H1 with France, for example. So outside of Spain is more normal.

Perfect. And maybe last question from my side. Do you have the approval for the first product in India already?

We did actually a few weeks ago, we just got approval for our Knees, which is the most strategic product and most important in terms of market potential in India. We would start to ship finally those goods that have been sitting on our shelf because every week could have been the week of green light, and we should start to see some action already in September.

The next question comes from Graham Doyle with UBS.

Just 2, please, one for Francesco and one for Corrado. Francesco, on the top line, so when I look at the midpoint of the guidance, I think it's something like 14% growth in the second half, which is about 4 percentage points more than H1. But just when I look at my math, so in H2, you've got an extra trading day. It seems like U.S. demand probably gets a little bit better as sort of insurance normalizes and you get through deductibles. Presumably, there's some pent-up European demand from strikes. And then you've got the improving Spine piece as well. So I mean is it still reasonable to think of like the midpoint or better is actually still possible for the full year, i.e., because of these tailwinds, you could do something like a 14% in the second half?

And then Corrado, just a quick one on depreciation. There's nothing happening. You're not accelerating depreciation on instruments or anything. It's just a case of there's a greater share of instruments out there. Just to double check how that calculation is.

Thank you, Graham. So concerning the top line, there are all the elements you mentioned, plus, of course, India, Q4 is only Q4, and that's 100% growth. There are a few other elements. You mentioned Spine. There are some price cuts that came into force, for example, in France, which is our most important market in September last year. So by September, this price deduction would be not there anymore. It was around 3% in certain products. So it's quite significant. Then there are still, of course, some variables like we mentioned Spain and the strike, the Spine reaccelerating in the U.S. So is it easy to do -- to achieve the mid portion of the guidance?

I would say, is not, but is it possible? I would say it is possible. But probably is more likely to be slightly below the midline given the fact that we have 4 months to go. But we remain positive. I mean we're always very ambitious at Medacta. I think to grow even 10% to 12% in the current environment is phenomenal and would probably be close to 3% above 3x the market, which is remarkable. But we always target very, very high numbers. And I always prefer to be slightly disappointed on a very good performance than being happy because we did 6%. So that is a little bit on the sales. I hope I addressed your question. Otherwise, just let me know. I ask Corrado to address the other one.

Yes. Graham, so yes, I confirm we didn't change any accounting treatment of our CapEx. What we have seen in the first semester is a pure arithmetical result coming from lower-than-expected top line and the same amount of instruments and D&A that are still in the market regardless of the level of top line reached in a certain semester. So just a pure arithmetical calculation, nothing else.

But if I can comment on that, Graham, of course, very often in business, revenues fix a lot of problems. So as we can control our new instrument sets that we put in the market, we did put in the market a higher number of instruments based on higher expectation. We can pull back on some incremental instruments in the second half of the year so that we can potentially improve the ratio of CapEx to sales. And therefore, you would see a GP improvement in potentially second half provided, of course, the revenues reach the levels we expect, which is quite likely.

But those are all effects linked to an unexpected softening. So you put resources, net working capital, instruments, people, then you're slightly behind. You see this phenomenon in H1. You try to adjust it immediately. In H2, most of it, you can manage it. Some of it you can't and then you have a little deterioration. But H1 was probably our worst semester in the last 5 years after COVID. So -- and we were comparing it with the best semester of Medacta history, which was probably H1 2025.

That's super clear. Maybe a cheeky follow-up, which is if you look at some of your big peers like J&J, whether it's their Spine or Smith & Nephew kind of reevaluation of ortho, there's clearly a lot of disruption, which you have thought would be quite good for you guys in terms of market share gains and being able to invest and kind of work closer with surgeons. But is there any logic in -- if an interesting product or facility was to come up as part of that disruption in terms of M&A kind of bolt-on size, does that make sense? Or is organic still the best way of thinking about product development or filling in gaps for you guys?

I would say that every time I look at price points paid for M&A, for technology, for products, the return on invested capital when we do it internally is incredibly better. I mean, you have seen probably Enovis just announced the acquisition of eCential Spine for EUR 150-plus million. We developed in-house our own technology. We are going to introduce our own robotic pretty soon, and we spent a fraction of that. I mean, you see it in our R&D, it didn't explode. So that is, I think, always better. Then if there are opportunities, as you have seen with the Sports Medicine, with the smaller lines, we always look at it. And there are, as you said, from time to time, opportunities, but we tend to develop in-house our own innovative products rather than buy them. That has always been the case and most likely will continue to be the vast majority of our growth strategy.

The next question comes from Ed Hall with Stifel.

The first one would be back on the U.S. and the acceleration that you guys have talked about. So we've seen the last 3 semesters of sort of relatively flat reported numbers, and I appreciate that you've outlined the headwinds over the last 12 months. So if we think about sort of we're looking at H2 and you talked about Spine getting better and the Hip reacceleration from the taper stem. What else should we expect from the U.S. market? Is there -- is it too far to say that we would see a lower attrition rate on the base surgeons in H2? Am I jumping to conclusions there? I mean that would be my first question. And then just second question for Corrado, I guess, on the inventory and the rebuild that we've seen there. How much of this would be for India versus sort of repairing, let's say, safety stocks from the exceptional growth you guys saw in 2025?

So let me try to address the U.S. So we mentioned a good reacceleration on the Hip side. The Knee was already growing pretty well, I would say. We have introduced our new Shoulder as well, which we see a good acceleration. It's called the Monoblock Medacta Stem, which address an important segment of the market, which is mainly represented by the market leader, which is Stryker Shoulder or the former Tornier. That is going to help us a lot. And then you mentioned correctly the Spine, which should reduce the dilution on the overall growth rate of Medacta USA.

Then is the base attrition going to reduce in a significant way? We believe so. We have analyzed really customer by customer what's going on. And we believe that this phenomenon should significantly reduce. And at the same time, we have seen, as we said, a good pipeline of new customers picking up, and that's where the confidence in the second half acceleration of the U.S. market is coming from. And the first 2 months, smaller months because those are the summer months are confirming those trends. So we are -- we remain cautious because those are things out of our hands, but we are quite confident on a good recovery in second half of the U.S. Corrado, I'll let you comment on the net working capital.

Let's say, net working capital, I would say that the biggest chunk of our change in inventory is driven by the growth of the top line. Today, we have to serve new customers and the biggest chunk of this change in inventory in the first semester is for those new customers in the market. Then there is a portion of this change in inventory, which is, as we say, needed to cover some tensions of our inventory that are -- we have observed after the super strong growth of the last year. And then the smallest portion of this change in inventory, [ EUR 2.7 million ], the smallest portion of it is, let's say, related to the new market of India. Of course, we will keep this new inventory proportionate to the top line in this semester. So I would say that this is a very small part of this change in inventory.

And just an additional comment on that. You are comparing, if you want, a rebuilding of net working capital with a net working capital or stock level of last year, which was really aggressively deployed because of the very high demand. I think the first semester last year, if I remember well, Anja, was above 20% -- around 20% in growth. And this was quite above our plans. So the stock level you see at the end of H1 2025 was not a physiological level, was already impacted by an above -- higher-than-expected growth. And this was the case as well at the end of the year, which is where we were starting to rebuild our stock levels in 2026.

Very clear. And maybe just a follow up on India. I appreciate this, I think at the full year call at the start of the year, you mentioned pricing was comparable to Europe with roughly 100 million patients. Is this the sort of market size we should think of? And how should we get to sort of a realistic number for a midterm?

So what is very interesting about India is not only the current market of 100 million, but its growth rate. And I believe reports talk about 15-plus percent growth rate of the Indian market able to absorb those kind of procedures. So every year, we should talk about this 100 million because when you have those growth rates in 3, 4 years, you are close to 200 million and so on and so forth. And that is what is appealing about India. They are absorbing quite a lot of innovative products. They are very keen in technologies as well. So it's -- the pricing, as you said, it's in a range that we feel comfortable to play with is a European price, is a low European price, but it's a European price.

The next question comes from Sandra Dietschy with Octavian.

I have one on the Spine margin. The growth in that segment has, as you mentioned, been somewhat soft due to the transition to direct sales force, but you also indicated that profitability has been protected. Now did also the dilution to the group margin continue to decrease? Or where is the Spine profitability today relative to the rest of your business? Maybe also more importantly, what do you need to achieve in Spine so that Spine is no longer dilutive to the group margin? Is that anytime soon? Or what should we expect there?

Yes. So, first of all, it's too long we didn't see each other. It's -- so Spine is -- it's quite an interesting piece. First of all, under a GP point of view, it is actually higher than Joint. So if we talk about the margin starting from the top, the gross profit margin of Spine is better than most of our product lines. Then you go down at EBITDA level. And today, it is improving. It's not yet at the level of the core business of Medacta, Hip and Knee. And this was mainly driven by very, very high commission paid in the U.S., which was driving our profitability of that line in the U.S. to negative numbers.

Overall, Spine is already quite a bit positive. So it's positively contributing to the overall profitability of Medacta, but it's well below the Hip and Knee EBITDA, mainly driven by volume, I would say, is almost one order of magnitude smaller than our Hip and Knee portfolio. What needs to happen? We need to change our business model in the U.S. in order for scale to bring marginality, and this is what we have been doing. And then in general, overall, continue to scale it up in order for this business to leverage some of the fixed cost and increase marginality.

So I would say it's around 1/3 of the marginality we have on the core Joint business at the moment. We are already quite happy because only a few years ago, it was barely at breakeven. And if you go 2 years back, it was -- we were losing money. And this is trending in the right direction. The next business line we needed to turn around in terms of profitability is Sports Medicine, which is starting, of course, from a negative. We are investing highly, sales force expansion, et cetera. And those are the 2 areas we need to grow in order to reduce the dilution at EBITDA level. But that's as well why we believe in our midterm guidance of potentially further expanding our EBITDA over time.

Great. That was super helpful. And maybe if I may, a quick follow-up on the profitability. The U.S. impact, as you mentioned that the lower contribution has kind of a negative impact on the gross margin. Can you confirm that on EBITDA level, there is no meaningful difference between the U.S. and the rest of your portfolio? And did I understand it correctly, you would expect that the regional mix will come more supportive in the second half?

Yes, that's correct. So the U.S. pricing is higher than the European pricing. So a geo mix change will impact the GP. It has a much lower impact at EBITDA level because the U.S. market carries quite a lot of additional cost from distribution costs, marketing costs, insurance costs and so on and so forth. So EBITDA-wise, the profitability of the U.S. market and some of the European markets are similar, very comparable.

[Operator Instructions] Gentlemen, there are no more questions registered at this time. Excuse me, there is one quick last question from Graham Doyle with UBS.

I figured we had a bit more time. One of the comments you made, Francesco, is just that H1 was obviously a bit more challenging on the top line than you had anticipated. And obviously, you talked about the U.S. Do you have any idea what's actually happening in the U.S. as to why that market is a little bit slower?

I would say there are 2 factors. Number one is it's simply happening what I was expecting since a few years that the market is going back to a normal growth rate, a pre-COVID growth rate. And if you look at the MedTech reports pre-COVID, I think the joint replacement market was in the range of 2.5%, 3%, while we were used now after COVID '21, '22, '23 at rates of around 5%, 5.5%, which were quite a bit higher. And that was abnormal. And if you want, still a recovery of the big gap generated by COVID and then you remember the shortages of nurses, et cetera. So it took quite a bit longer than expected to recover all the patients missing during 2020, 2021. But then, of course, it would normalize. There's no reason why it shouldn't go back to pre-COVID level, and that is one factor. But this is general, I would say.

The second one is more Medacta specific. We have, as you know, quite a lot of customers in the ASC segment. And I always mention that the surgeons that are working in an ASC are working as well in a hospital. Very often, we work with them, first of all, in an ASC. And then we have to fight with them to go through the hospital purchasing department, and it takes quite a bit of time. It did happen in the first half of the year that quite a bit -- quite a significant number of surgeons that was working in an ASC and in a hospital, and we were only serving them in an ASC and only partially in a hospital, they basically dropped their hospital volume. The surgeons picking up those hospital volumes were not Medacta customers. So we have seen some attrition. This is one of the phenomenon we studied in order to understand why our customer base volume was going down.

But this has nothing to do with the general market slowdown. And once this phenomenon is finished, that's a temporary situation. But we were helping the transition of many customers from hospital to ASC. And when they drop their hospital volume, we lose volume. And that is something we have seen unexpectedly in H1. And they can drop their hospital volume because they make significantly more money in an ASC setting. So even by doing 80% of the volume they were doing before, they probably make more than what they were doing before in working in a hospital, significantly more. So that is -- that was an interesting phenomenon we focused on and we did understand.

This was the last question. Back to you for any closing remarks you may have.

No. I would like to thank as well, as always, everybody for participating into this call. And once again, thank to all our employees, clients, suppliers and partners worldwide that help us to deliver those performances. So thank you very much, and speak to you all soon.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Medacta First Half 2026 Preliminary Unaudited Revenue. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta. Please go ahead, sir.

Thank you very much, and good morning or good afternoon to everybody. Welcome to Medacta H1 2026 Preliminary Unaudited Revenue Conference Call. The slides of today's presentation can be found on the Medacta Investor Relations website along with the media release.

And I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on Slide #2 of today's presentation. And after the housekeeping remarks, I will now turn to Slide #4 and start with the highlights of today's presentation.

So Medacta did continue to outperform the market in H1 2026 with a constant currency growth rate of almost 10%, 9.7% in constant currency, reaching EUR 368 million. We did announce as well 2 major expansion projects, which are the following. The first one is the completion of our expansion shell or manufacturing unit shell in Ticino in Rankata, while the second news is about a land that we purchased 2 days ago to be precise, in Tennessee, and that's where we're going to develop our new manufacturing capacity in the U.S.

The performance of H1 allows us to confirm the outlook for the full year 2026, which has a target revenue growth in the range of 10% to 14% in constant currency and an expansion of our adjusted EBITDA margin of around 50 basis points versus prior year, all, of course, subject to unforeseen events. The same applies to our midterm outlook, which is confirmed as well with a revenue CAGR between 2024 and 2027 in constant currency is expected to range between 12% and 15% with a gradual improvement of the adjusted EBITDA margin versus 2025, again, in constant currency and subject to unforeseen events.

If we move to Slide #5, our pillars for our above-market growth remain intact. And those are the strong differentiation across all our portfolio in terms of new products that can improve patient outcome and health and sustainability. Those products are introduced in the market with a strong focus on medical education. And the third very important pillar is a constant expansion of our sales team across all our business lines and across all the geographies.

If we go on Slide #6, talking about geographies, we can see the different performances across Europe, North America, Asia Pacific and Latin America. Let's start with Europe that developed pretty well despite quite a lot of headwind in the region, namely some strikes, which are ongoing in Spain and there were some other -- in other countries, including France. Despite this, Europe grew 10%. North America did develop well as well, 6.6% top line growth. We did have some headwinds in -- specifically in this region, namely the sales channel transition in spine. And we have seen as well some softening on the joints. I'm pretty sure we will have some Q&A in this segment, so I will leave it for later.

While Asia Pacific did develop very, very well with another 13.1% growth. Latin America, 16.4%. One aspect, which is very, very important, all those performances are compared to a performance of last year in the same period, which was extremely strong. Just as a reminder, in North America in H1 last year, we were growing 21%, including the Paros acquisition. So very, very strong comp.

Moving forward, if we look at our product line and business lines, we had our Hips growing at 8.1%, the Knee almost 11%; Extremities, almost 16% and Spine, 4.5%. I would say the product performance is mainly driven by the geographic performance. In general, we stayed focused under a product point of view to our main strategy. Again, anterior minimally invasive surgery on the Hip continue to drive our growth. And we have started to introduce even more technology on the Hip side with the first cases of the NextAR Hip starting in the U.S. and in Australia. And we did experience a very, very good growth both in Asia Pacific and in Latin America. So still a growth of around 2x the market growth forecasted by some of our forecasting model, which I believe is potentially something we need to discuss later as well.

On the Knee side, almost 11% growth. Again, GMK SpheriKA and single-use deficiency continue to drive a lot of adoption with surgeons. Strong double-digit growth in Asia Pacific and in EMEA and more than 2x market growth for our Knee line as well. Spine is the weakest, if you want, of our business line. Good performance in EMEA, followed by Latin America and APAC, while the negative growth rate in the U.S. coming from our transition of our sales force to more focused distributors and more of a hybrid direct model is facing some strong headwinds, let's say. Despite this, this growth is probably around 1.5% market growth year-over-year, and we expect this to further accelerate quite a bit significantly in H2.

Extremities is a very robust growth, around 16% year-over-year. We did, again, introduce new technology in the segment with our NextAR shoulder revision application. And this is based on a very important new development, which is the new AI-based MyShoulder Planner which allows surgeons to do their planning locally in real time, and this is actually a very strong feature, both when used in combination with the NextAR shoulder and with our PSI. Sportsmed as well, very good growth, launch of our SecureFix All-Inside Meniscal Repair System, which is reinforcing our meniscal repair solution across our knee sports medicine portfolio. We are experiencing a very good market traction in the U.S. in the last few months with onboarding of very significant academic centers that will help us to drive our sports medicine effort moving forward. Again, more than 2x above market growth for this business line.

This performance allows us to confirm our outlook for the short term. As I mentioned, 10% to 14% in constant currency and an expansion of the adjusted EBITDA in the range of 50 basis points. We are aware that this requires a stronger second half and acceleration in H2. It does compare to a weaker growth last year, and we are very confident in some of the pipeline acceleration we have seen over the last few months. June was very strong. July looks stronger as well. I spent a couple of weeks in the U.S. in July to check firsthand the pipeline, and I have to say I'm very pleased. That's why the midterm outlook is confirmed as well with our compound annual growth rate 2024, 2027 in constant currency expected to range between 12% and 15% with a gradual improvement of the adjusted EBITDA margin versus 2025, all in constant currency and subject to unforeseen events. And just a quick reminder, Medacta remains not impacted by the U.S. tariffs, and we will continue to monitor the development of the situation.

The key messages remain similar to our narrative. We can continue to deliver an above-market growth as a result of constant development of differentiating innovative products that can improve patient outcome and sustainability. We can deliver this innovation and sustain the introduction with a very strong medical education program. And this attracts the combination of new products and good medical education continue to be a very strong attractive model to sales reps across the globe and across all our product lines. And our goal remains to continue to outgrow the market and our guidelines confirm that we are convinced that we can do so for years to come.

I would like once again to thank all our employees for a very good performance in H1 and especially continue to thank them for the H2 performance we are called to deliver in order to further accelerate our global presence. Thank you very much, and I would like maybe to go back to you to manage the Q&A.

[Operator Instructions] The first question is from Michelle Büchler from ZKB.

So the first question is on the U.S. softening. You mentioned it's due to the market softening in general, lower demand and U.S. spine channel. Maybe you could give some more color on that. As Stryker reported last night, for instance, our Q2 looked pretty solid with a Knee growth of 8.4%. Was it just the second quarter that looked better? Maybe you can give some more color on that, please?

Yes. Thank you, Michelle. So I would say definitely, yes. So Q1 was particularly soft in the U.S. We heard about the storms that impacted Q1. Probably a portion of this was recovered in Q2. That's why you see an overall acceleration in Q2. But if you take Q1 and Q2, so H1 overall in the U.S., I think we should expect or at least that's our view at the moment that the U.S. market is simply going back to pre-COVID growth rate. And if you look at the pre-COVID growth rate in orthopedics, in hip and knees, in particular, it was around 3%, 3.5%, 2.8%, depending on the pre-COVID years you're peaking, while we were used to probably a 5% growth rate in the post-COVID years, '21, '22, '23, '24 and '25 as well.

And I don't see, frankly, no reason why post-COVID, we should remain 2, 3 points higher than the pre-COVID level. And I would say we are probably going back to a normalized growth rate in Orthopedics, nothing more than that on the joint side. While on the spine side is more Medacta-specific execution situation. We are growing pretty well in Asia Pacific, in EMEA in Spine. In the U.S., we are actually growing through the new channels that we are building, but we are experiencing some more attrition from the older channel, which it's fine. I think in the long-term, we will be happy. We are a little bit in a painful moment at this time, but I think is the right thing to do for the long term. It's useless to do turnover without margin attached to it, which was the situation, and it is the situation of many spine surgeons -- sorry, spine companies in the U.S., and that's not a business model that we want to follow.

So we are rebuilding in a more solid way our U.S. spine channel. We are actually reinforcing the team with good talent coming on board, which are offsetting the headwind we are facing, and that's what it is. I think in the next couple of months, we should hit the valley because the process started in September last year, and then we will start to recover and grow faster on a more solid basis.

May I ask another question?

Of course.

So Smith & Nephew announced that they are going to launch a kinematically aligned knee, and I looked at their slides, I think it was the beginning of June. I'm not as much as an expert as you are, but to me didn't really look truly kinematically aligned. Maybe you could say something about competitive landscape and how far ahead you still are with your kinematically aligned knee?

Let's say, I will try to be as kind as possible. So if you look at the new Knee of Smith & Nephew, is extremely similar to the JRNY II Knee of Smith & Nephew. Exactly the same obliquity of the joint line, a standardized 3 degrees. And if you understand thematic alignment, you know that we are not talking about an average alignment of X degrees. We are talking about matching the alignment of each individual patient. So I think they are renewing, let's say, an old knee portfolio with actually nothing really major in this knee design. And we will see the market how they will react. But I don't see this as a threat at all. It's very, very similar to their JRNY 1, JRNY II knees, which was exactly designed in the same way.

That's what I thought. And maybe one last question. What product launches should we expect in the second half of 2026? You mentioned in the last call that you're working on something? And will we announce it once you have something?

I'd say we have really accelerated. So we exited our limited market release on our new triple wedge hip in the U.S., and in the U.S. only at the moment, which is called Infinity. That is a very important stem design in the same category of Z1 for Zimmer or AI for J&J. So this is definitely something which is important for the U.S. hip category. We are introducing on the hip side, as I mentioned, our NextAR hip technology, which is important to, again, counter some hip technology competition. We are going to introduce a dedicated NextAR KA module in the second half of the year, which is important in U.S., Australia and Japan, in particular. We are introducing a new shoulder in the U.S., which is pretty much matching the new trends in the U.S. shoulder market. And this is something we are accelerating in the second half of 2026.

We are expanding our NextAR spine offering with a strong focus on endoscopic spine navigation, which is a very, very interesting trend and very keen to develop. So -- and sports medicine as well, quite a strong product range expansion in the shoulder sports medicine with a very interesting disruptive technology that should be in the anchor space, which should be released in second half of this year. So across the portfolio, we see quite a lot of strong pipeline. And as I said, I spent a bit of time, 2 weeks straight in the U.S. traveling and meeting a lot of prospects, both under a surgeon point of view and especially under new distributors' point of view. And I've seen a very, very solid pipeline and we're very excited about the second half of this year. We're going to have a lot of work.

The next question is from Beatrice Survey from Berenberg.

I just had one question on the 2026 outlook. You noted that you're aware that you need an H2 acceleration, but I suppose could you give us some more color on what parts of the business you expect to accelerate and what visibility you have on this?

Yes. I would say there are several areas that are going to accelerate. The vast majority of the products I just mentioned will hit first the U.S. market. And the U.S. market is the market that needs to accelerate. Maybe a little bit of color on what's happening in the U.S. I think it's important. When we describe our growth, we very often talk about our base contribution coming from existing customers that we acquired, let's say, in 2024. And then we have the so-called carryover business, which are new customers acquired in 2025 and will contribute full year in 2026. And then new customers acquired in 2026.

So in H1 2026, the contribution of new business and carryover was basically identical to the performance we did in 2025, which, as you remember, was a 21% growth rate. The missing element is on the base, where we have seen some retraction on the spine, as we mentioned, some softening on the hip and knee side, on the ASC space. We have seen quite a lot of customers focusing more on the ASC only and dropping some of their hospital-based volume. Why? Because they are creating a very interesting new business opportunities for example, concierge model where they can basically make more money per patient. And so they are less keen in continue to do maybe Medicare patients in a hospital environment, and they are more keen in moving in that direction.

So we think this is a trend that will continue, probably with a smaller effect in H2, plus we see, as I said, a very strong acceleration in terms of pipeline of both customers and sales force expansion in the U.S. So definitely, the U.S. will be an area where we need and we expect to accelerate significantly.

Another area which is expected to finally start in H2, which was 0 in H1 is India. We have prepared quite a lot of stock and CapEx to start in India. Actually, the first shipment should start next week. And -- but we are still waiting the last documents for clearance. This has delayed our expected start by approximately 3 months. That's a regulatory hiccup. There's nothing we can do other than just continue to push, but we have no other documents to give to the authorities, but India is another source of growth. In Europe, we experienced quite a lot of strikes. In Spain, in particular, the market is flat because of this situation. Medacta experienced still very high double-digit growth in Spain, but this was definitely a negative, of course, effect, France as well. So if we normalize H1 and we see H2, we should see an acceleration in Europe as well simply because the market is normalized.

Those are more or less the expectations. So new products, normalization, additional territories in India, expansion of sales force in the U.S. and new products introduction in the U.S., more or less. So quite a lot of verticals in which we can. And with a 14%, 15% growth in the second half, which I remind everybody as a relatively lower comp should be absolutely possible. And then we will definitely be in the middle of our guidance, a little bit higher, a little bit lower, we will see.

The next question is from Ed Hall from Stifel.

Just one would be on the, let's say, the knee growth. And I think if we think about the new wins that you're seeing, could you potentially quantify what's coming from GMK SpheriKA and what's potentially coming from single-use? Like I assume GMK is driving the majority of it, but how much can single-use play a role?

No, I would say you have to see SpheriKA as the primary driver. Single-use is driven by the sales of SpheriKA. Sometimes it's a door opener to sell SpheriKA. But in terms of top line contribution, SpheriKA is clearly the key driver. The big advantage of expanding our single-use on the knee side is the potential reduction that we are seeing in instruments, so in CapEx deployment associated with knee growth. But in terms of top line contribution is minimal. Let's say, it's around 10% of the contribution of Serica only.

And then I guess, sort of in the U.S., coming back to the U.S. in terms of the different channels you're selling into currently, is there a certain channel we should think of having, let's say, higher attrition for you? Or is it more normalized throughout the whole market?

If you're talking about channels, are you talking about ASC versus hospital -- or you're talking about direct -- that's what I saw. So I would say we should and we expect to see a normalization of the overall market to a more pre-COVID level. Again, we don't have yet numbers, but H1 reports from us and from our peers so far are going in that direction. We will see. I would be very happy to be proven wrong. We don't see a major stop in the shift from hospital to ASCs. This continues. What we are seeing is that the ASC surgeons are becoming smarter, as I was saying, and they really try not only to bring volume to their ASC, but to maximize the return on each case they do.

And this is especially true if you think that the Medicare reimbursement has been cut. And so the reimbursement per case on the surgeon side and on the facility side is reducing. And so hospital and ASCs and we see ASC as more reactive as a space, they are focusing and they are developing additional interesting model like concierge model where they can offer additional services to patients. They can charge directly those patients. And this is actually an opportunity we are evaluating. It's a new space where we have some pilot programs ongoing. And I think it's a very interesting space. As usual, when there is a change, there is an opportunity. And so we are looking into this as we speak.

The next question is from Graham Doyle of UBS.

Just a couple, please, Francesco. So on the U.S. market, so you sort of talking about this reversion to 3%. For your business, presumably that's just not a big difference when you think long term about the growth given all of your growth is share gain. So is it reasonable to assume that this has no impact at all on your midterm sort of outlook? And then just on the margins, just be helpful to get a little bit of a shape when we think of H1 versus H2. So should it be a little bit more H2 loaded just given the better growth we're expecting in H2 as well?

Yes, I agree 100% with you. If those are the changes, of course, it's nice to have a little bit of a tailwind. But with that, those kind of high tailwind, we were growing at let's say, unexpectedly high rate for quite a lot of years. So frankly, when we did our IPO, if they would have told me that we could have been growing at 17%, 18%, 20% for 4, 5 years in a row, I would have said that's impossible. And that's what happened. So overall, I think definitely, our midterm guidance is not impacted. And I agree with you, if it's 5% or 3% it doesn't change. And we were expecting, if you remember, every year, we were slowing down our full year guidance in H1 because I was expecting a normalization of the market, which did not materialize -- did not materialize, and then we upgraded our guidance. And this year is probably finally there. We will see.

In terms of profitability, of course, we will dive into this more in September when we report our full year -- sorry, our midyear P&L. But in general, we should expect slightly more profitability coming from H2 compared to H1 which is pretty much in line with historical numbers. And as we expect a little bit more sales coming from the U.S., which they carry a little bit more of a marginality, we should see a slight more expansion compared to H1. But I'm pretty sure we will dive into more details in the September call.

And then just when you look at the ASC channel, so it's obviously still really strong, but some of the proposals in other segments in the U.S. in terms of reimbursement are talking about this sort of site neutrality, so effectively incentivizing greater growth in channels like ASCs. And presumably, is it still reasonable to think that you guys are outgrowing the market in ASCs and that still remains kind of the corporate growth driver in the U.S.

Yes, absolutely. But I'm very happy to repeat what I mentioned on the sports medicine, which is actually true across all our portfolio. Our key focus remains expansion in the ASC space, which is growing. And as you said, there are additional, let's say, reimbursement changes that are coming in 2027, and we will talk about it as well and some of the cuts that are even accelerating potentially the channel. At the same time, Medacta is really partnering more and more with some of the best academic center in the U.S. and big hospital with a very strong reputation. The Mayo Clinic, the HSS, the NYU, Columbia and MGH Northwestern in Chicago, Miami University, et cetera, which is extremely important for our future, midterm, long term because that's where the next generation of surgeons, both hospital and ASC surgeons are formed, are trained.

And we all know that if surgeons are exposed to company's products during their early days, there is a very high chance that they will continue to appreciate those products and potentially use those products if they're happy with it. And this was absolutely something we were missing in the U.S., and we were definitely investing more in creating some brand awareness, and this is definitely something that will elevate our profile in the U.S., which is very important. So yes, ASC space is going to continue to be our focus, but I think we will be able to count on more strategic partnership with some of the best academic centers in the U.S.

[Operator Instructions] Mr. Siccardi, there are no more questions registered at this time.

Thank you very much then. I would like once again to thank all our employees, clients and suppliers and partners worldwide that help us to continue to grow Medacta and look forward to speak to the market soon in September. Thank you very much.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Medacta Full Year 2025 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta. Please go ahead, sir.

Thank you. Thank you very much, and good afternoon, or good morning. Welcome to Medacta Full Year 2025 Results Conference Call. The slides of today's presentation can be found on the Medacta Investor Relations website, along with the media release. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on Slide 2 of today's presentation.

So after those remarks, I will now turn to Slide #4 of the presentation with the highlights of today's publication. We did report already our revenues, EUR 684 million with 18.5% growth in constant currency. The EBITDA margin in constant currency hit 29% and 27.9% in euro with an increase of 19.1% year-over-year. Medacta's net profit increased as well 31% year-over-year to EUR 95.5 million. And the Board of Directors is proposing a dividend per share of CHF 1.1 with an increase of almost 60% year-over-year.

We did comment already on the top line revenues. So I will fly through the next slides relatively quickly. As we said, 18.5% in constant currency in 2025. Now bringing our CAGR for the last 4 years, 2021 to 2025 period at 17.4%, a very, very strong performance, significantly outgrowing the market more than 4x.

If we move to Slide #6, we just reiterate again, which are the key pillars of our above-market growth. We clearly focus on differentiating innovation with the aim of really impacting and improving patient outcomes in a health care sustainable way. We support the introduction of this innovation in the market with a strong focus on medical education and training for surgeons worldwide. And as we need to expand our sales force in different geographies, the constant hire of new talents across all the different business lines and the different geographies.

If we move to Slide #7, we can repeat again the growth rate we experienced in the different geographies. We did grow 15.2% in the EMEA region, 19% in North America, 23% in Asia Pacific and 42% in Latin America.

We move then to the business line growth contribution on Slide #8. Our Hip grew almost 12%, Knee slightly above 20%, Extremities at 46% and Spine at 12%, all those growth rates are in constant currencies. To be noted that the Knee business line surpassed the Hip business line for the first time in 2025, Knee representing 42% of our revenues, Hip 40%; Extremities 10%; and Spine 8%.

Digging a little bit into the different business line. The hip definitely benefit from our focus on minimally invasive procedures, in particular, Anterior Minimal Invasive Surgery, which has been our flag products for many years now and is now reinforced by additional platforms introduced into the market.

And on the next slide, #10. We can see the very strong performance of our Knee, growing at almost 21%, clearly benefiting from Medacta focus and the introduction of the concept of kinematic alignment, Medacta has definitely been the first company to push this concept in the market, and we are today still the only company with a dedicated and specifically design Knee, the GMK SpheriKA, which is clearly pushing our sales in a very significant way.

If we move on Slide 11, we can see our performance in Spine, slightly above 12%. And here as well, we focus on innovative products, mainly associated with our MySolution platform. And the focus is clearly on personalized medicine with techniques and technologies like the NextAR Spine or the Rod Optimizer.

Last but not least, our Extremities business line on Page 12 with a very good 46.2% growth year-over-year. We did benefit as well from last year acquisition in the Sports Medicine sector with the Parcus move and the constant expansion of our Shoulder Arthroplasty platform associated with our NextAR technology as well.

I would now ask Corrado Farsetta to go into the margins and into the P&L. Thank you.

Thank you, Francesco. Moving to Slide 14. Yes. Let me now review the financial figures of 2025. And the gross profit increased by almost 15% to EUR 459 million, reflecting the strong growth in revenues. Operationally, we continue to deliver efficiency improvement, supporting the resilience of our margins, which remained solid at more than 67% despite a negative FX impact of more than 1%.

Moving to Slide 15. Here, you can see 3 lines. As usual, the gray line shows the long-term trend of our profitability, excluding translational effects since 2019. The yellow line represents our reported EBITDA margin, and the red line shows the EBITDA margin in constant currency for the year, which is then comparable with 2024 performance. As shown by the red line, in 2025, the adjusted EBITDA margin reached 29% in constant currency with an expansion of about 2% versus prior year, confirming the continued improvements in profitability and the strong operating leverage of this year and in general of the company over the years.

Despite the negative FX impact of around 1.1%, the reported EBITDA margin was about 28%, expanding by 0.8% versus prior year. More broadly, looking at the long-term trend based on 2019 FX rate, which is the gray line, our adjusted EBITDA margin highlights the structural and significant margin expansion achieved in recent years.

Moving to Slide 16. Here, we see the net profit for the period reached EUR 95.5 million compared to EUR 73 million last year, which is an increase of more than 30% year-on-year. And this includes also the one-off effect related to the acquisition completed at the beginning of 2025.

Moving to Slide 17. The strong growth of the company has required and continues to require additional instruments, facilities and production capacity. And this is where our investments are focused. Total CapEx amounted to EUR 137 million last year, mainly related to instruments, as always, EUR 78 million, land, buildings and production capacity, EUR 35 million and research and development for EUR 15 million. Investments in facilities and production capacity reported under other tangibles include the expansion of our production site here in Rancate and new fully automated warehouse and logistics hub in Italy.

Moving to Slide 18. You can see here our robust cash flow generation. In 2025, the cash flow from operating activities reached EUR 153 million, reflecting the strong profitability and the solid cash generation of the business, thanks to focus on the effective usage of all our assets. This allowed us to largely self-finance our investment program for EUR 137 million, as just discussed. And as a result, the free cash flow increased to EUR 16 million in 2025.

Moving to Slide 19. Our balance sheet, as you see, remains very solid with the leverage in 2025 down to 0.88x the EBITDA of the company. Over the past 5 years, you see the red line is the average ratio, which was around 0.94, confirming our disciplined financial profile and the strong capacity to support our growth.

The last slide from my side is the dividend per share as Francesco said, the Board is going to propose a dividend of CHF 1.1 per share, representing an increase of about 60% compared to the prior year.

And with this, I will now hand over to Francesco for the outlook, 2026 and midterm and some final remarks.

Thank you, Corrado. The outlook is reported on Page 22 of our presentation. For 2026, Medacta is targeting a revenue growth in the range of 10% to 14% in constant currency and an expansion of the adjusted EBITDA margin of around 50 basis points versus prior year, which we closed at 27.9% in constant currency, subject to unforeseen events. We did expand our midterm outlook as well. And the revenue compound annual growth rate for the period 2024-2027 in constant currency is expected to range now between 12% and 15%, with a gradual improvement in constant currency and subject to unforeseen events. We just reiterate as well, the situation in terms of tariffs. Medacta remains not impacted by the U.S. tariffs, and we continue, of course, to monitor the development of this situation together with the rest of the global world.

Last point on Slide 23. My key messages is to highlight once again the excellent and continued above-market growth of 18.5% in constant currency year-over-year. This results from our strong focus on differentiating innovations that really have an impact and improve patient outcomes and health care sustainability. This innovation is sustained by medical education and personalized training for surgeons, which allows us as well to expand our sales reps and team across the different geographies and across the different business lines.

The effect of this expansion and careful execution is that we can maintain very strong financials. We have seen a very strong soar of our profitability, operating cash flow and dividend. The expansion of the adjusted EBITDA while growing at this pace is really extraordinary. The record net profit of EUR 95.5 million, which represent now 14% of revenue. An increase of our operating cash flow by more than 42% to more than EUR 150 million. And as we said before, a proposed dividend increase of almost 60% to CHF 1.1 per share. And our goal, which is reflected in our short and midterm guidance is to continue to outgrow the market for the foreseeable future.

I would like to thank for this excellent performance, once again, all our employees worldwide, of course, all our customers that continue to believe in our products, all of our suppliers and partners worldwide. Thank you. Thank you, really, to all of you for the support.

I think it's now may be time for Q&A.

[Operator Instructions] The first question comes from Sam England of Berenberg.

And the first one, can you just provide some color on what's changed over the past few months to support the increase in the midterm revenue guide? I suppose in particular, which segments or geographies are now expected to perform better than your previous expectations to support the raise?

And then also around the midterm guide, you're now guiding to a gradual improvement in margins. So can you talk about the shift in messaging there and why you're expecting margins to expand? I think previously, when you talked about it, you said you'd rather reinvest in the business to drive growth as opposed to letting margins expand. So is there a shift in focus implied there? So a little bit of color around that would be good as well.

Thank you, Sam. So we have -- I will take the second question on the marginality expansion. We have seen that under an operational point of view, we can really achieve what we want to achieve in terms of growth with, at the same time, the ability to slightly expand margins. We were maybe a little bit cautious when we provided the previous guidance, and we wanted to have a little bit of space to operate, but we believe we can achieve our midterm top line guidance, while at the same time, expanding margins.

This means that we did identify, for example, some important synergies, stronger synergies between Shoulder and Sports Medicine and Joint and Sports Medicine, both in terms of medical education, in terms of sales force, in terms of marketing. And those are not only positive under a practical point of view, but they do actually have an impact under a P&L point of view.

I would maybe like to ask Corrado to take on the midterm CAGR because it's probably more mathematical than anything else given our past performance.

Yes, sure. So basically, the revision of the guidance, the CAGR is the result of the super strong performance in 2025. The guidance that we gave for 2016 -- 2017, sorry -- 2026, sorry again. And for 2027, it's just the -- okay, we believe that the picture, the framework is not going to change. So basically, based on our 3-year plan, the result of the top line expansion in 2027 will be then based on this CAGR -- 3-year CAGR between 12% and 15%. So it's just an arithmetical calculation, taking into account that 2025 was already achieved. The guidance for 2026 was given. So the result based on what we see in the future, it should be between 12% and 15%. This is what we think is just an arithmetical update.

The next question is from Ed Hall of Stifel.

A couple from me. Just firstly, on the profitability, and I appreciate you don't break it out in terms of subsegments, but is it still fair to assume that the smaller units, Extremities and Spine are operating at negative margin? And if that is the case, when do you expect these to turn positive? That would be my first question, and then I'll follow up afterwards.

Yes, I can take this, of course, under a qualitative point of view, Spine is not a negative contributor. It is dilutive versus the core business, if you consider Hip and Knees, but it's not negative and actually is improving year-over-year. So that is maybe another element I should have mentioned before talking about margin expansions.

The Extremities is -- we basically have two product lines within extremities. It is one, which is the Shoulder Arthroplasty, which is extremely positive in terms of contribution margin. And then we have a Sports Medicine, which is in an earlier stage, and it does require probably more dedicated sales force. And I mentioned that there are some synergies, but it's definitely still negative, and it will remain negative, although reducing the negative profitability year-over-year while we scale this business.

So it is still fair to say that the smaller business line are dilutive, but Spine is not negative. And within Extremities, only Sports Medicine is still negative, but it is very small.

Perfect. That's really clear. And then just another question on sort of CapEx expectations for this year, given a lot of the expansion that you've done in your facilities in Switzerland is coming to an end. I'm curious as what that would look like as things stand today.

Yes. I don't think -- and frankly, actually, I hope it will not come to an end because it will mean that we are significantly slowing down. As you know, the CapEx we are referring to, both manufacturing capacity and instruments are growth-related CapEx. So we have quite ambitious plans ahead of us for the next 5 to 7 years. We definitely need to continue to finish at least our expansion plans here in Europe. We will continue to feed the market with instruments associated with new customers generation. We do have new products launching expected in the second half, end of the year.

So we don't expect at all a decrease in our required CapEx. We might have a little bit more color in the future, in the next maybe early call at the end of H1 to share with the market a little bit more details of what we expect to do in the upcoming years in terms of CapEx needs and opportunities. We see a lot of opportunities, and we are very happy actually to invest in our growth. We have a very good, in our opinion, return on invested capital, and we are not afraid to invest in our future.

The next question comes from Sandra Dietschy of Octavian.

Yes. I have also a few, maybe I'll take them one by one. Sorry to follow up again on the margin topic. But given what you just mentioned, is it fair to say that kind of the majority of the improvement is coming from scaling up the currently dilutive segment like the Spine and Sports Medicine? Or do you also expect margins in the core Hip and Knee business to improve from the current levels?

So thank you, Sandra, for the question. We actually see both effects. We definitely have still margin improvements on the core business of Medacta, the Hip and Knee. We do see as well as I was mentioning, a less dilutive effect from Spine. Shoulder is definitely continued to expand as well. It's a marginality. And from those core business, we can now finance fully our Sports Med.

So it's both the effect of decreasing dilution of the smaller lines and still significant expansion on the core Hip and Knee side, both under a manufacturing and operational point of view, vertical integration point of view in manufacturing still and some leverages because we still have some markets like U.K., Spain, Italy, Germany, where we are growing very, very fast, and therefore, we can see some leverage on the fixed cost and improve marginality at country level.

Okay. Super. Then one on your U.S. business. Now excluding the impact from Parcus, I estimate that organic growth in the U.S. was in the mid-teens range last year and that was certainly supported by your strong exposure also to the ambulatory surgical centers. Now you previously indicated that this ASC segment could grow around 25% annually that you have some 40% of your U.S. business is already generated through this channel. Now just from this tailwind from the ASC segment alone, that should make it relatively straightforward to sustain a mid-teens growth in the U.S. Is that the correct way to look at it? Or are there any factors that could make it more challenging to have such a growth level going forward?

Yes. Unfortunately, it's a little bit more challenging than just automatically following the market trend simply because of sales force expansion. So without sales force, you cannot capture this transition from hospital to ASCs. We have been actually further expanding our percentage of revenues in ASC versus hospital in the U.S. We are around now 45% compared to previous year, and we expect this to continue to be the case.

But you really need to think about sales force expansion as a key necessary driver for our growth in the U.S. We are covering between 2% and 3% market share in the U.S. We need boots on the ground to really spread Medacta message and cover surgeons that are transitioning from hospital to ASCs. But as well, we are starting, for example, to work with prominent academic centers, large hospitals.

So it's all about distribution. I think we have very good products across the different business lines that prove their ability to improve patient outcome, but we need salespeople and sales force. And that's the constant game for us across the different geographies and in particular, in the U.S., hiring and hiring and hiring good talent salespeople, which are happy to jump on board and sell our product ranges.

Perfect. Appreciate the details. And then I have a very quick one for Corrado on the tax rate. As it was just last year, a little bit higher than what I had expected. Can you help us what's a good tax rate level to assume going forward for Medacta Group?

Yes, sure. Sandra. So let's say, the increase in 2025 is attributable to some, let's say, transfer price optimization policy that we have implemented at group level, which means that basically some of our tax assets that we accrued in the past have been now released in 2025. And given the higher tax rate in the other countries, this has generated an increase in the average group tax rate in 2025. This can be considered as a, let's say, a one-off effect because it's not that we are going to review again significantly our policy, but this was what has happened in 2025. For 2026 and 2027, I think that we should go down to 16% more or less, we should be confirmed for the next 3 years.

The other change that we are still not able to judge in terms of let's say, impact on our tax rate is the application of Pillar 2 from 2028. It is not feasible because today it's not still 100% clear how this will be implemented in Switzerland. We don't think it's going to significantly change the tax rate from 2028 onward. But I would say that definitely 2026 and 2027, we should go back to 16% more or less.

The next question comes from Michelle Büchler of Zürcher Kantonalbank.

I have a question on geographic expansion. Could you give us some more color on the efficiency gains we can expect from the Italy facility? And also, I saw you mentioned a new subsidiary in India. Do you have plans on expanding to India?

Yes, I can take this question on the -- I guess you are referring to our new operation facility, the distribution center in the southern part of Europe. This distribution center would potentially have a decrease in some of our shipping costs for southern part of Europe and a decrease as well in net working capital in stock that is currently distributed across different warehouses in the southern part of Europe, Italy, Spain, Switzerland, Austria, et cetera.

We will be able to concentrate most of the stock in one location, reducing net working capital requirements and at the same time, as I said, potentially reducing our shipping cost. So we will probably see an impact more in '27 than in '26, but it's definitely something that will help us to improve and constantly increase our margins. So that's a good thing.

Regarding India, if I address your first point, India will be, of course, a new venture. We are starting from scratch. Our products are not yet cleared under a regulatory point of view. It might happen every -- any day now, any week, any -- but you never know with the regulatory, you can wait another quarter or maybe it's tomorrow.

In any case, we are ready. We have prepared the market. We have hired some key people. We lined up distributors. We started already to train surgeons on cadaver labs, and we can expect a good start. We have seen a very good appetite for our products in the Indian market, which is a rapidly growing market, probably around 10% to 12% per year growth. Prices are okay in line with some of the European markets. So we can definitely start to compete, and we are ready to roll off.

The next question is from Graham Doyle of UBS.

And just one for Francesco and then a couple of quick ones for Corrado. Francesco, just on Knee, it's been incredibly strong. And we are seeing some launches from some of the bigger competitors over the course of this year. Do you think that there are more kind of catch-up launches and you're still ahead? And is there anything in the pipeline on Knee that makes you quite excited in terms of your own development?

And then just quickly, Corrado, on the guidance. So the midterm guidance around EBITDA, nice to see that sequential improvement. But would you expect EBIT margins to improve, so after accounting for D&A? And then is it fair when I look at the top line guidance, when we just work out the math that we should expect something like 10% growth in 2027, if you hit the midpoint.

And thank you, Graham, for the question. Just to make sure I address your first question on the Knee correctly, which are the launches you would like me to comment about and to position our Knee versus our competitors? Just to make sure we have seen the same thing.

So there's a couple of things from Stryker here, and we're seeing a new platform from Smith & Nephew. So as with the landmark piece, is one that's a little interesting. It's not -- it doesn't look to be quite the same as what you guys have. It looks slightly different and maybe not as much functionality. But just to get a sense of how far you think the gap is between what you guys currently offer and where the competition is? And also generally, what are you working on next because you have led the way.

Yes. So if we talk about Stryker, they have been presenting the last academy a couple of weeks ago, an expansion of their portfolio, which brings them in par with what Zimmer and DePuy, and Smith & Nephew already did 3, 4 years ago with their medial congruent insert. That is what they are about to launch and frankly, it was about time, because they were the last, let's say, to join the club of the medial constrained liners, which are still quite a bit different compared to our first-generation Ball-in-Socket design, which was Sphere and still a generation behind compared to SpheriKA which has been further adapted in its shape of the patellofemoral joint. So some elements of the components of the design, which have been clearly adapted to kinematic alignment.

So at the moment, we know they are starting to work on -- and they understand that they need to redesign their knees. And I believe this will give us at least another 3 to 4 years, especially in Europe even longer of a window where we think we can definitely show how our different design is superior.

So talking about the future, we are working on our future generation of products as well across Knee portfolio, technology portfolio, Hip portfolio, and we definitely look forward to come out with the next improvement, hopefully, when our competitors will try to catch up in 3, 4 years. But as we all know, innovation is a very dynamic definition. If you stop to innovate, you become a commodity and an older product relatively soon. So we cannot stay still and we are already very, very active in developing the next generation.

I hope I addressed your question, and I would then leave the floor to Corrado.

Yes. Yes, sure. So let's speak a bit about the midterm guidance. So we wanted to update both top line, of course, and the EBITDA margin. I will start from the top line again. As you know, we have done 18.5% in 2025, which means that we have also guided for 2026, 10%, 14%. So let's say, the following scenarios. If we say that we perform 10% in 2026 and 10% in 2027, then the midterm would result into something in the region of 12% in the 3-year plan, in the 3 period.

If we perform 14% in 2027 and 14%, high end of the guidance in 2027, then you will finish to 15% more or less. So that's why we updated the range in the way we have said before. So basically, I believe that something in the region between, say, 12% and 15% is what we really expect based on the results and the guidance on 2026.

Speaking about the EBITDA margin expansion. If you remember, we guided in 2024 to be stable at 2024 EBITDA margin. Then last year, we updated the guidance. We increased this to 28%, which was already an expansion. Now based on this year, very good performance, we decided to update and guide again to further expansion in the coming years because there is, let's say, more or less 0.5 point coming in 2026 and something similar in the region of 0.5 point again in 2027.

So what we could see is an expansion of this size between 2026 and 2027. We didn't want to give a precise number because we believe that in this case, the constant currency is difficult to apply because we are basing our calculations on 2024 currency rates, which we understand is difficult for you to follow. That's why we guided as a gradual expansion in 2026 and '27.

Just -- it was very clear on the revenue, so that's super helpful. Just on the margin, what I meant was more -- it totally makes sense that EBITDA margins expand, but EBIT, so after you account for the cost of depreciation and amortization, would you expect EBIT margins to expand as well?

I would keep something similar in terms of expansion. So more or less, the same expansion of the EBITDA margin, you could use the some expansion for the EBIT margin. More or less, we believe that the D&A should stay more or less in line with this year over the next years. So that's why I believe that the EBIT expansion should be aligned with the EBITDA margin expansion.

[Operator Instructions] The next question is a follow-up from Ed Hall of Stifel.

It was just a question on this year's guidance of 10% to 14% in constant currency. If I do the math on last year's absolute revenue that you added on a constant currency level, it was around EUR 100 million to EUR 110 million. Now if we look at this guidance for this year, the absolute number added, is a bit of a step change down. So I was curious as to what are the reasons for that? Is there a layer of conservatism in there? Is there product launches from competitors that you're taking into account? Or is there something that I am missing on that analysis? Any clarity there would be amazing.

I think that to give for granted that every year, you can add EUR 100 million just because you did it the previous year. It's a little bit simplistic. So as I said, we do have really to find and to feed sales force expansion, and that's a constant effort. So it's always a challenge to find those people at the speed we want. We think that 10% to 14% remains very challenging. We do not expect, frankly, the market to continue to be that strong. We have seen some markets as well with some price reduction that has been announced in France, in Belgium, in Japan. So you have to consider that as well. So there are some elements that call for a little bit of cautious. And I think 10%, 14% remains a very substantial growth rate, especially again, compared to the market and to our peers.

Can we do better? I think it's very challenging to do better, but we have been positively surprised ourselves in the last 5 years. But I'm happy to be surprised by our performance every year, frankly. But this is a number that we think is solid. It's challenging. It's difficult. It's a battle every day to go and take market share. And we are ready to fight this battle, of course, but we don't give it for granted. So the past year performance is not predictive of the future year performance, as you well know.

Sorry, Ed, just another point. There was an acquisition as well last year. So let's consider that as well when you look at the absolute numbers.

That was the last question. Gentlemen, back to you for any closing remarks you may have.

No, I would like, once again, to really thank our team across the globe, our customers, suppliers and partners because it's always tough to grow at this pace, and we try to do it in a very diligent way, which is even tougher. So congratulations to all our team members worldwide and a big thank you for all our customers and suppliers. Thanks a lot. Thank you for your attention and speak to you soon.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Medacta Full Year 2025 Preliminary Unaudited Revenue Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta. Please go ahead, sir.

Thank you very much, and good afternoon or good morning. Welcome to Medacta Full Year 2025 Preliminary unaudited Revenue Conference Call and live webcast. The slides of today's presentation can be found on the Medacta Investor Relations website along with the media release. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties.

Listeners and readers are therefore encouraged to refer to the disclaimer on Slide 2 of today's presentation. So after the housekeeping remarks, I will now turn to Slide 4 and start with the highlights of today's publication. We are very, very pleased with our continued outstanding growth performance across all geographic markets and business lines against a strong prior year comparable.

The growth of Medacta surpassed 18.5% in constant currency and slightly above EUR 683 million reported. The key drivers of our growth remain the same, very strong focus on differentiating innovative products, pushed into the market and sustained by very personalized and effective medical education and constantly expanding our team, both in the market and in our headquarter.

Last year, we hired 258 new employees. If we move to Slide 5, we could see how the performance of 2025 has been even stronger than the group revenue CAGR, which was 17.4% between '21 and 2025. This performance represents a very good growth, basically 4.3x the market growth. So very, very pleased with this overall performance.

As I mentioned, the key pillars are extremely relevant for our forward-looking performance, and we continue to focus on differentiating innovation, education and personalized training of surgeons and team expansion, and this is true across all our portfolio.

On Slide 7, you can see the geographical mix growth. The European market, EMEA grew above 15%; North America, around 19%, 23% in Asia Pacific and over 42% in Latin America. All those growth rates are in constant currency. The geographic mix remains pretty much stable. 48% of our revenues are generated in EMEA, 30% in North America, 20% in Asia Pacific and 2% in Latin America.

If we now look at the business line performance, once again, we have -- we're very pleased with the overall performance across the business line, almost 12% growth in constant currency for our hip portfolio, over 20% for our knee, over 46% for our extremities and over 12% for spine. 2025 has been the very first year where Medacta knee sales surpassed hip sales.

So in terms of mix, we have 42% of our revenues associated with knees, 40% with hips, 10% with extremities and 8% with spine. On Slide #9, we can see a little bit more in detail the strategy behind our hip growth. It remains anchored in our AMIS experience. It is anterior minimal invasive surgery. It is definitely a procedure that continues to drive growth in the market. And we have seen especially an outstanding growth in Asia Pacific and North America with almost 3x market growth in 2025.

On Slide #10, we can see the same analysis on the knee, over 20% year-over-year growth, and this is linked to our strong focus on kinematic alignment, and the introduction of the GMK SpheriKA, the first and only KA-optimized implant so far. We have seen a very, very strong performance in North America and in EMEA, closely followed by Asia Pacific. And this growth represents 4.6x the market. So very, very good performance on the knee side as well.

In spine, we did grow at over 12% year-over-year. We have been focusing our strategy on technologies. So selling our hardware, our screws, our cages really by using technology as a key driver for our market penetration. NextAR, NextAR Rod Optimizer, MySpine, all those are key elements behind our growth in spine. And this growth, again, represents 3.5x the market growth. So it's, again, a very, very good performance.

Last segment of our business is Extremities. We had a very strong acceleration compared to the CAGR of last year. This has been impacted as well by the acquisition of Parcus, which has been closed this year, and it does contribute only in this subcategory. 46% year-over-year growth.

Medacta Shoulder System is definitely a key element of this segment and the combination of our implants with our technology, NextAR, again and MyShoulder are a key pillar of our strategy. The Sports Medicine portfolio strengthened a lot with the acquisition of Parcus and both segments recorded sales more than 3x the market growth in 2025.

The outlook, we put it here just to remind for those that are not familiar with the 2025 outlook, we had a 16% to 18% in constant currency. We are very happy to end up the year slightly above our outlook. And as usual, we will communicate future outlook in March together with the full year results of 2025.

The key messages for this call are very clear, and we've been able to continue to grow above market for 2025 with a revenue growth of 18.5% in constant currency. And this result, again, is driven by the 3 main pillar of our growth, differentiating products that improve patient outcomes and health care sustainability.

Those products are supported by medical education and personalized training of surgeons. And we continue to penetrate the market by further expanding our sales rep and the team. Our aim continues to be the same, so to continue to outgrow the market for the years to come.

And before opening the floor to Q&A, I would like always to thank our employees, our customers, our suppliers and partners worldwide that sustain this outstanding performance and tremendous growth. Thank you very much. Thanks.

[Operator Instructions] Our first question is from Sam England, Berenberg.

Can you talk a bit about the ex U.S. rollout of GMK SpheriKA and how traction is looking with surgeons there? I suppose interested to know if interest in kinematic alignment of the technique is the same as it has been in the U.S. and whether the surgeons funnel is evolving in a similar way to the U.S.

And then the second one is just around the hip business. Can you talk a bit about the drivers of the continued elevated growth there, why you think growth continues to be above the market and whether we should expect similar dynamics in 2026? And then also on hip, if there's anything in the innovation pipeline there that you think can sustain that above-market growth beyond 2026 as well?

Yes. Thank you, Sam, for the question. Concerning SpheriKA and KA, which are very much linked, we do see tremendous interest on a global scale in the U.S., of course, but actually was even stronger in Europe. So despite the fact that KA has been invented by a U.S. surgeon, it did really gain more traction first in Europe, then it's coming back to the U.S.

Australia and Japan are extremely focused on that technique and that philosophy. So I would really consider KA and SpheriKA a global trend, and we are starting to see some of our emerging markets showing a lot of interest, India, for example, where we are starting -- we are about to start. We see a lot of potential there.

On the hip side, there are several effects. I would say, number one, there is a pull-through effect that the knee does to the hip. We experienced exactly the same effect back in the years when we were leading with the anterior approach and AMIS, many customers, then they were following on the knee side.

Now our sales force, which is the same sales force and very often the same customer for hip and knee, they are leading with kinematic alignment and SpheriKA. The hip portfolio is very robust. There is quite a lot of innovation, the triple taper stem, NextAR Hip, which has been just approved in the U.S. and Australia.

So the pipeline is robust, is rich, and there is a very nice pull-through effect driven by the sales force and by the surgeons accepting our products in one or the other portfolio. Anterior approach remains a key driver. There are still markets where anterior approach is definitely underpenetrated.

And I think Medacta is very well known to be a very, very strong player when it comes to anterior approach with medical education with a package of implants and instruments and services, very well trained and focused sales force. Medical education is second to none.

So those are the key drivers behind our hip sustained growth as well.

Next question is from Edward Hall, Stifel.

I have a couple here. Actually, back on the large joint and hip and knee. I was wondering if you could sort of drill into the drivers of growth when we're talking about the surgeons, if we're thinking about the incremental surgeons being recruited versus continued support from your -- let's say, your current base that are already adopted. That would be my first question.

And then just on U.S. and penetration into the ASCs versus the broader market. I'd be curious to hear your thoughts here and how your P&L is positioned and then what you see the outlook of the ASC versus the rest of the market in the midterm.

Yes. Thank you, Edward. So there is -- when we come -- when we talk about growth, new surgeons versus existing surgeons growing, we always create or divide our growth, our budgets into 2 buckets, the new surgeons and the surgeons that have started the previous year and they're ramping up.

In 2025, of course, we had both those effects, but the new surgeons are contributing more, if you want, to the following year and the carryover is what contributes the most to the 2025 year. This is the case as well probably for 2026. So in 2025, we have seen a very, very strong adoption and ramp-up of new surgeons, but the largest contribution is always coming by the one that has started in 2024.

But this is a cycle, and we are very keen in keeping our buckets of new surgeons full. The pipeline is very, very full. And we're very pleased with the interest that we see in the market when it comes to hip and knees and knees in particular.

If we talk about the U.S. ASC versus hospital-based business. Our products are particularly well suited for the ASC market because we have developed those products basically starting from Europe, where the health care system is definitely more under pressure when it comes to efficiency, to pricing, et cetera. And we naturally see a lot of success in the ASC. But I would say that the reason why our ASC penetration is faster and higher than hospital is basically access.

So the surgeons that are convinced to use our products, they very often work both in an ASC and in a hospital. In an ASC, they decided to try our products and the process to enter the ASC is significantly shorter than the process to enter into a hospital, which is mainly driven by maybe contract negotiation, reduced vendors numbers, making trials and the bureaucracy is much stronger.

But we see a good penetration in hospital as well, both with our efficient solution, with our technologies. I mean our offering is working extremely well on both ends. And we think we can continue to enter into both segments of the market in the future.

Clear. And maybe just one follow-up would just be on the -- you talk about expansion of sales reps and teams. I mean what would that look like in terms of headcount or SG&A growth?

Yes. We always say that if you take the number of new employees that we share with the market, let's say, a rough calculation is 50% is in the country and 50% is in the headquarter. And this gives you a rough idea, although, as you probably know, in the U.S., we do have a hybrid sales force. So there are both direct and agents.

And so a portion of our market penetration is not visible in the headcount expansion because it's simply achieved through new agents. So that's an important additional information that you should consider.

Next question is from Sandra Dietschy, Octavian.

I also have two. The first is on the single-use instruments in knee, which appear to be a clear differentiator. And I assume they're also an important growth driver for the Knee segment. Now could you share your perspective on the current adoption levels of these single-use instruments and also how significant you expect them to be in driving the knee growth going forward? And then my second question is on the spine business.

My understanding is that the spine business is currently transitioning in the U.S. from an agent-based model to a direct sales force. To what extent did this transition contribute to the deceleration we have seen in growth in the second half of last year? And how is the transition progressing these days?

And then, of course, I would be keen to hear what the level of profitability uplift we should expect once the transition is complete.

Thank you, Sandra. So I will start with the single-use instruments. It is a very unique offering in the market despite the fact we've been developing this product almost 10 years ago. We have been refining it quite a lot.

The knee is growing fast. The share of single-use is following quite a bit around 25% of our knees are today implanted with efficiency, which means it's growing at a high pace as well.

And our goal is to further increase the utilization of single-use because we see quite a lot of value for customers, for the ASCs, for the company as well. We gain flexibility in delivering instruments to the market, which are not always forecasted.

So we -- under a supply chain point of view, it's a very nice tool to have. And as I said before, it's very unique. It works extremely well even when coupled with technology because only a few instruments are then required.

So the surgeons, they see even more value there. So we're very pleased, and we continue to expect further expansion and utilization, and we are constantly fine-tuning and improving those instruments because there are really a lot and a lot of surgeons using it.

On the spine side, what you have mentioned about going from agent to direct, I think we need to give a little bit of additional color here. So this is happening in the U.S. and in the U.S. only because in the other markets, we are already only direct. It is a transition that we experienced as well on the joint side. When we started, we were 100% through agents. And now we have this hybrid configuration.

The spine was exactly the same. We were 100% through agents. And now by refocusing on the technology, we are not abandoning our indirect channels, especially the good agents that we are working with, and we want to continue to collaborate with. But we are focusing our expansion more using technology, which has to be well supported by the company. And if we do so, we want to go direct in those accounts. And by doing that, we have more control. We can probably better focus our -- or increase our revenue per case, which is very important in spine because often agents, they have more than one company in spine, while if it is a Medacta employee, we can try to focus as much as possible on Medacta products only.

And then if we drive technologies, we can really differentiate ourselves. And last but not least, we can definitely decrease the cost of sales, which in spine, they can be as high as 40% of commissions, which is something many of the small and midsized companies, they pay in order to make sure they get attention and priority for their products.

And this is something you have to do when you don't have differentiated products. While if you focus on technology, you can definitely drive better cost of sales. So this is the reason. I know there are companies that have more than EUR 200 million in revenues in spine in the U.S., and they don't even break even.

As you know, we don't like this philosophy. We want to grow in a profitable way, and this strategy is going into this direction. It might slow down a little bit for a while, but we are confident because we have seen it on the joint that the long term will pay back.

[Operator Instructions] Next question is from Michelle Büchler, ZKB.

Could you provide more details on the expected FX impact for 2026? And are you implementing on hedging some of that? And also, you mentioned some new automated warehouse in Italy. Could you see a meaningful impact on the margins anytime soon?

And then my last question would be, could you give some more color on the rollout of the GMK in Japan, Canada and the U.K.? And what is your strategy for ramping up these markets?

Yes. If you don't mind, I will start with the last question, the GMK SpheriKA you're referring to has been rolled out in Japan and the U.K. this year. It's really behind the growth we have seen in those markets as well. Japan, in particular, is a market where if you actually think about Japanese population and their leg alignment, they are very often in the varus.

So this kind of alignment that benefits the most from kinematic alignment, and we see a very, very big traction there. U.K., the same. Canada is a small market. SpheriKA specifically is -- I'm not even sure if it is introduced already, but it's definitely not something that is going to impact heavily our P&L.

Concerning margins expansion, FX effect, hedging, we will go definitely more in details in our next conference call in March, where we will analyze in detail the FX effect on 2025. There are some actions which have been already implemented in 2025 and some in terms of hedging, but in terms as well of operational activities that will increase the natural hedging to the dollar.

And the last qualitative aspect you touched upon is the new automatic warehouse in Italy, which is not yet up and running, but we do expect and we do see the potential to definitely go in the right direction of decreasing distribution costs in the southern part of Europe at least.

And again, I would defer additional comments on the marginality and operations to our March call.

Next question is a follow-up from Edward Hall, Stifel.

Just a couple of follow-ups from me. I think one is more qualitative, but just given, obviously, the outstanding growth you've seen this year and just contextualizing it with your midterm guidance, is there anything to dictate that we would see a slower rate of growth for this year?

Or should we see an updated midterm guide? And then just finally on pricing in APAC. I know Australia has been weak in quite recent years. Has this been impactful or sympathetic to growth in 2025?

Yes. I mean if I -- and we have seen the Australian dollar, Japanese yen weakening over time. Of course, when you talk about reported numbers, you do see a negative impact. There's a little bit we can do in terms of hedging there as well, but not so much. Overall, those are markets where we still see a lot of room for growth, a lot of interest for our products and then the effects we have to deal with it.

In terms of midterm guidance, we are going to talk about 2026 and the midterm guidance in March. So as you have seen, we have been performing extremely well, and we had to upgrade our guidance for the last 2 years in midterm, midyear, and we will come back to you with updates on the midterm guidance and 2026 guidance in a few weeks. So give us a little bit of time, and we will answer 100% to your question.

Next question is a follow-up from Sandra Dietschy, Octavian.

I also have a quick follow-up on LatAm, where you had a very strong performance of more than 40%. I appreciate that this is coming off from a relatively low base, but could you elaborate on between this drivers behind the performance, in particular, to what extent was the growth driven by geographic expansion within that region?

No, I would say it's primarily driven by further market penetration in the key markets where we are already present. We did add a few smaller markets, but the key markets in Latin America are Brazil and Mexico. And then, of course, you have Argentina, Chile, all the smaller markets, but we are actually mainly, I would say, expanding into those large markets with a marginal contribution from expansion into new geographies.

What we are doing as well is introducing new product lines, which were not available into those markets. I'm thinking about the shoulder and thinking about the spine. And very often in those regions, the regulatory path is quite demanding.

ANVISA, which is the regulatory body in Brazil is one of the toughest. And once you go through, you have really a good market to penetrate. And we use the same strategy, the same products that we are using in North America and Europe and Asia Pacific. So those are very well-performing products with strong strategy, and we are probably entering into segments where other companies are maybe less focused on, and they tend to sell maybe slightly more less innovative products.

We don't do that. And maybe that's the part of our success in those markets. But as you pointed out, we start from a small base. So it's slightly easier to have those stellar growth rate. So next year, we will see what we can do. But a small base, high percentages, I always tell my guys that they don't have to get overexcited not because the base is small.

[Operator Instructions] Mr. Siccardi, there are no more questions registered at this time.

Then I would like to simply thank everybody for your time today. And once again, I would like to thank our employees for the really fantastic performance of 2025, our clients and customers for their support and suppliers and partners worldwide that supported our growth. So thank you very much, everybody.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Medacta First Half 2025 Results Conference Call. [Operator Instructions].

At this time, I would like to turn the conference over to Mr. Francesco Siccardi, CEO of Medacta. Please go ahead, sir.

Thank you very much, and good afternoon or good morning. Everybody, welcome to Medacta 2025 Half Year Results Conference Call and Live Webcast. The slides of today's presentation can be found on the Medacta Investor Relations website, along with the media release.

I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. And listeners and readers are therefore encouraged to refer to the disclaimer on Slide 2 of today's presentation.

And after those housekeeping remarks, I will now turn to Slide 4 and start with the highlights of today's publication. We have already presented our top line H1 revenues EUR 344.1 million, corresponding to an increase in constant currency of 19.8%. Our adjusted EBITDA margin for H1 in constant currency, reached 29.6%, which corresponds to a rise of 27.5% over last year period. The net profit for the period amounted to EUR 60 million, a significant increase of 58% over H1 2024. And we confirm our outlook both for 2025 and our midterm outlook.

If we go on Slide 5, we can appreciate even more the considerable above-market revenue growth that Medacta has been able to deliver over the last 5 years. This growth represents more than 4.5x the market. So Medacta is consistently delivering above-market revenue growth.

On the next slide, Slide #6, we can see why we are delivering those remarkable results. And clearly, the most important one is our ability to constantly innovate in a way that really impacts and improve patient outcome. And at the same time, we are able to sustain the healthcare system in terms of providing solutions, which are adaptable and sustainable. This innovation is sustained by education -- medical education, fully personalized to our customers, the surgeons, so that they are able to adopt this innovation in a safe and attractive way for the patient.

And the combination of great products with great service allows us to attract a lot of good and experienced salespeople, and this is the third pillar of our above-market growth story, and those are exactly the success factor behind our H1 results.

If we move to Slide #4, we can see again the split of our sales across our geographies. And I will not spend too much time as we presented those results already in July, but we can see a very, very good growth rate across all our geographies, Europe, U.S., Asia Pacific and Latin America. If we then look at the split of our product mix, you can see again a very good performance across all our business lines;

our more mature and core product lines like Hip grew around 11.5%, Knees almost 24%, Extremities, which includes shoulder and sports medicine, 44% and Spine almost 19%. So we can see a very, very good performance across all our business lines.

Quickly an overview of how this performance compares with the market growth. On the Hip side, with a strong focus on interior minimal invasive surgery, the growth corresponds to more -- almost 3x market growth. If we look at the Knees on the next Slide #10, we can see growth focusing on kinematic alignment, and the unique and first KA optimized implant, the GMK SpheriKA that allowed us to generate a growth which correspond to more than 5x the market growth for the first semester.

Spine, again, a big focus on personalized technology, both through our NextAR and MySpine allowed us to grow 5x faster than the market in a market that we know is very competitive and therefore, a remarkable performance here as well. And then the Extremities. Extremities, as I said before, they include shoulder arthroplasty and our sports medicine business line with a remarkable 44% year-over-year growth and again, significantly above market growth.

I would like now to introduce Corrado Farsetta, our CFO, to go over our P&L details. Please, Corrado.

Thank you, Francesco. Let's have now a look at our key financials, and I will start with this first slide where we see the gross profit that in the first semester this year reached EUR 235 million (sic) [ EUR 235.1 million ] compared to previous period of EUR 190 million (sic) [ EUR 197.7 million ], representing an increase of 19%. The gross profit margin was 68.3%, pretty much in line with the previous year where it was 68.5%.

Moving to the next one. Here, you see the adjusted EBITDA margin represented by the red line, you see that this year, the adjusted EBITDA margin at constant currency reached 29.6% compared to 26.9% of the first semester 2024. And this represents an increase of 2.7% versus previously. In euro, the EBITDA adjusted increased to EUR 98.8 million, representing an increase of more than 27% year-over-year.

As we say, the acquisition of Parcus was a good achievement also from an accounting perspective, and this is reflected into our an adjusted reported EBITDA that was equal to EUR 110.5 million, including a positive net one-off of EUR 12 million coming from the badwill resulting from the acquisition of the Parcus Company.

Moving to the next slide. Here, we see the net profit -- before tax, the net profit was equal to EUR 68.6 million compared to EUR 44.7 million of previous year. Thanks to this EUR 12 million of positive from the acquisition, the effective tax rate was lower than the previous period. We registered 12.5% of this semester compared to 15% roughly of the previous period in 2024. So as a result, the net profit for the period was EUR 60 million or 17.4% representing an increase of around 60% versus the previous period.

Moving to the next one. Here, we see the CapEx. As we said several times in this business, growth means primarily new instruments and expansion of production capacity. And if you look at our case, we see the usual big slice in that view, represented by instruments EUR 36.2 million, represented by far, the biggest chunk of our CapEx.

The second big chunk of CapEx is represented by other tangible, where you can see there primarily the expansion of our buildings, production facilities, offices and the logistics hub in Italy. And both instruments and other tangibles are, let's say, driven -- CapEx driven by growth, representing more than 80% of our total CapEx.

Research and development capitalized was equal to EUR 5 million, more or less in line with the previous period. And the -- today, this year, we have roughly EUR 5.3 million of CapEx in financial. CapEx including the price base for the acquisition of the company of Parcus Medical.

Moving to the next one. You see the operating cash flow. So the cash flow generated by operating activities remains robust and sufficient to finance our investments. In particular, this semester, we reduced EUR 73 million compared to EUR 42 million of the previous period, explained basically by the expansion of our EBITDA and some improvements in -- let's say lower requirements of working capital. So this EUR 73 million of cash flow generated was more than enough to finance all our CapEx that we just discussed and to generate a small positive free cash flow of EUR 8 million this semester.

Moving to the last slide. You see here that, thanks to the ability of the company to set finance the growth, the leverage remains very low in the first semester of this year, it was 0.9x the EBITDA compared to roughly 1x of full year 2024, and I would say, pretty much in line with the average over the last 5 years, where the value for the last 5 years, the average is 0.95x the EBITDA.

I believe this is my last slide. So now I'll hand it over to Francesco for our final remarks.

Thank you, Corrado. I would like just to go over our outlook and that as we said before, has been confirmed. So for the 2025 outlook Medacta is targeting revenue growth in the range of 16% to 18% in constant currency, and an adjusted EBITDA margin of around 28% before any currency effect. And this includes the recent Parcus acquisition, and it's subject to unforeseen events.

In terms of midterm outlook, the revenue compounded annual growth rate in the CAGR for the period 2024, 2027 in constant currency is expected to be in the range of 10% to 14% and an adjusted EBITDA margin targeted to be around 28% before any currency effect. The last comment is on the tariffs. Medacta remains not impacted by the U.S. tariffs, but we will continue to monitor the development of the situation as it can be quite volatile.

In conclusion, the key messages for this H1 call is to underline the significantly above market growth of Medacta 19.8% in constant currency, which is the direct result of our strategy, big focus on innovation, innovation that can deliver both in terms of improving patient outcome and make the healthcare system more sustainable. This innovation is well supported by medical education and personalized training of our customers, surgeons and a further expansion of sales reps and team all around the world.

The expansion of EBITDA margin was quite remarkable in H1, reaching in constant currency, 29.6%. And our aim continues to grow above the market for the foreseeable future as our midterm guidance underlined. As usual, I would like to thank, in particular, all our employees for those fantastic results, but as well our clients, our suppliers and our partners worldwide.

Thank you very much for your attention. I think we can now open the Q&A and both of us were available to address your questions.

[Operator Instructions] First question is from Sam England, Berenberg.

The first one, could you just give us a bit of a sense for the impact of geographic mix on margins in the first half? I think historically, markets like the U.S. and Australia have been higher margins. So just wondering, if you saw a benefit there given the stronger growth in Europe? And then looking ahead, do you think mix will be a tailwind on margins given the growth given the pace driving for you, particularly in the U.S.?

And then the second one on Hip. Just wondering if the momentum you saw in H1 has continued so far in H2, you are well above market in the first half, but comps obviously tough a bit as we move into H2. So I just wanted to get a sense for how you're thinking about growth there for the rest of the year?

Yes, I can maybe start with the second question. As you said, H2 last year was very, very strong. So we definitely have a tougher comp in H2, but at the same time, we still see a good momentum in terms of top line. And so we -- that's the reason why we increased our guidance for the year. In terms of geo mix, I think Corrado can give you a little bit more color.

Yes, sure. Let's say, normally, we expect depending on the level of the P&L, you can have positive or negative effect because when we speak about gross profit, average selling price minus industrial costs, of course, we said several times Australia by far is the most profitable market and then U.S. and then the other countries.

And when we move down to the EBITDA margin, this could change, and we have seen and we know that there are big balances in terms of EBITDA margin between countries. In general, things I would say that this period in this semester, given the, I would say, well balanced growth of our regions, we have registered a very small, I would say, negligible effect from the geographic mix growth. So I think it is not worth to mention it.

Next question is from [ Michael Bähler ], ZKB.

So my question is the gross margin declined by around 20 basis points from last year. Was this mainly due to FX effect?

Yes, sure. Basically, that is the FX that we have registered in this semester.

I would say this is the net effect of the FX. The FX was actually a little bit higher than that, but was compensated by a good economy of scale as previously mentioned.

Next question is from Sandra Dietschy, Octavian.

I also have 1 on the margin. In H1, your adjusted EBITDA margin was very strong with 29.6% in constant currency, yet for the full year, you guide for around 28%, which implies quite a drop in the second half. You mentioned relatively low sales and marketing costs in H1, but maybe beyond higher Congress activity, where else should we expect increased investments in the second half that drives such a margin decline?

And then I also have a question on the U.S. manufacturing. Back in April before we were aware of the Nairobi Protocol, you mentioned as one way to deal with the tariffs would be to expand the U.S. production and maybe also to increase the utilization of the Parcus facility in Florida or even broadening your manufacturing footprint.

Now that you benefit from the tariff exemption, how do you view your U.S. manufacturing strategy now? Are you still considering expanding local production perhaps for reasons beyond the tariffs or yes. And thoughts on that would be very much appreciated.

Okay. Sandra, let me take first your question about margins, and then Francesco will respond to your question on the U.S. manufacturing. So the first semester, we said 29.6%. This was the EBITDA margin of H1 2025, and we are now targeting a full year 28%. So the first semester, there are several factors that we should take into account in order to understand the evolution of our EBITDA margin.

The first one is the acquisition of Parcus. The first semester was only partially including this event because the acquisition was completed, say, in April. So in second semester, you will see a full-year effect of the dilution, which is bigger in the second semester than the first semester because of timing, full effect versus a partial effect.

A second effect that we normalize, it is not -- it has nothing to do with, let's say, productivity or fixed cost, but it's just an effect of seasonality of certain costs that we didn't receive in the first semester that we expect to receive in the second semester. So we have booked them, and this is also a negative component in the second semester that we don't have in the first one. And then you always have, as we said several times, the third effect, which is the full effect in the second semester of the hirings that we had in the first semester. We hired people during the first 6 months that have a full cost effect in the second semester.

So without being too much detailed, but if you take all these effects, let's call it, time effect out from the first semester, you go back to roughly 28%, which is our guidance for the full year, and which is more or less in line with the second semester profitability that we expect to reach.

Okay. Can you give us a hint on what's the dilutive impact of Parcus on the full-year margin?

No, let's say, we don't disclose this, but let's say it is not that big. It's not a very big number. You can see that we are guiding anyway, 28%, including this negative. So the number, the effect is not that big.

And Sandra, I will take on the second question about the U.S. plant. So you are correct. We do have a manufacturing plant currently focused 100% in sports medicine coming from the Parcus acquisition in Florida. This is a good asset to have in this moment because the situation remains uncertain.

And even before, we were talking about tariffs, we were starting the possibility midterm to further expand our manufacturing in the U.S. for various reasons, the U.S. represents 50% of the joint global market in value. It is almost 60% of the global market for sports medicine and spine.

So if -- as we are reaching our saturation capacity in Switzerland, and this saturation should basically hit in 28% to 29%, depending on our growth rate, we were already planning where to go next in the U.S. with our natural answer to that. And this is still our decision and this is something that we are starting to actively focus on because in order to, let's say, be ready in 2028, 2029, you start to plan and view in the next couple of years at the latest. So you need to have a good plan, construction permits, et cetera. So the U.S. manufacturing remains definitely part of our future growth plan.

[Operator Instructions] Mr. Siccardi, gentlemen there are no more questions registered at this time.

Thank you very much then, everybody, for your participation. I would like once again to thank as well all our employees, customers, partners and suppliers for their support, and I look forward to speaking with everybody soon for our full year results in June month. Thank you very much.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.