Good day, thank you for standing by. Welcome to the Össur Q3 2023 results call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, you can please press star one and one again. Alternatively, you may also submit your questions via the webcast at any time. If you wish to ask a question on the webcast, please use the question box to type your question and click submit. Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Sveinn Sölvason, President and CEO. Please go ahead, sir. Thank you very much. I would like to welcome you to the Össur investor conference call, where we will cover the results for the third quarter. My name is Sveinn Sölvason, and I'm the President and CEO, and with me here today is Gudny Arna, our CFO. We'll begin by going to the highlights of the quarter and end with our guidance for 2023. A Q&A session will then follow. If we start by going through some of the key takeaways here in quarter three, I'm very pleased to report the continued strong sales performance. The growth was largely driven by volume growth in prosthetics and our patient care business as well as a favorable solution mix where we are selling and fitting more high-end solutions. Additionally, we're seeing some impact from the implementation of price increases in prosthetics and bracing supports. EBITDA margin was 19%, compared to 20% in the comparable quarter. We see gross profit margin slightly impacted this quarter due to higher unit cost and investments we are making in our Össur Select concept, although partly offset by lower freight cost and positive product mix. Cash generation and free cash flow was strong in the quarter. As we had previously communicated, our leverage ratio is now back within our target range, although still in the upper end, and we are therefore still pausing our share buyback program. Other parameters around our financial guidance are unchanged. Go to the next slide, please. Here, we have an overview of growth across our regions and business segments for the quarter. Total sales amounted to $193 million, and organic growth was 7%, driven by, again, strong contribution from Prosthetics and the Patient Care segments and the Americas and EMEA regions. In line with our strong sales performance in the first nine months of the year, we are firmly on track with regards to our recently introduced Growth'27 strategy. And I will cover the segments in more details on the following slides. If you go to the next slide, here, we have an overview of sales and EBITDA development for the last five quarters. As we can see, organic growth steadily rose during the first half of the year, but as we had already expected and communicated, we're up against stronger comparable quarters here in the second half of the year. If you go to the next slide, please. Here, we have the highlights on prosthetics. Organic growth amounted to 12% in the quarter, and we had strong performance in the Americas and EMEA, which can largely be attributed to, again, strong volume growth and positive product mix. Reported organic growth was impacted in APAC, mainly due to extraordinary strong comparable quarter. Basically, our China business was largely closed in quarter two last year, and there was a lot of pent-up demand that was released in quarter three, so we're comparing against that. That is mainly resulting in lower reported organic growth rate for this segment as a whole. Our high-end solutions, especially our Bionic portfolio, performed very well, very well in the quarter, with a strong contribution from basically the whole product line, the Rheo Knee, Power Knee, and the recently launched upgraded Proprio Foot. I'm also very pleased to report that Bionic accounted for 25% of prosthetic sales in the quarter, same ratio as in quarter two and among the highest relative levels we've seen historically. If you go to the next slide, please. Moving on to bracing and supports. Growth in the quarter is, as in previous quarters, somewhat attributed to price increases, but also volume growth. Growth was very strong in EMEA, driven by the sales of high-end bracing solutions, such as the Unloader One. Growth in APAC, also strong. Sales in the Americas were, however, soft, softer than what we had expected, and it's mainly related to some changes we've done to our e-commerce channel in this region, which is albeit a small part of our business. In the first nine months of the year, growth was good across all our regions in bracing and support. We continue to focus our efforts on executing in line with our Bracing Simplified strategy, which is aimed at providing our customers and partners with an increasingly simplified and stronger portfolio of bracing solutions. Go to the next slide, please. Here we have an overview of sales performance in our Patient Care segment. Growth in Patient Care was strong and driven by volume growth and also positive solution mix across our global Patient Care business. However, price increases are decided by public and private payers, and this varies significantly across our markets. In some markets, we see modest price increases, but in markets where we have substantial operations, for example, in some markets in EMEA, there have been little or limited increases to reimbursement rates, which has had some impact on organic growth and margin development in those markets. Regarding regional performances, growth in Americas was very strong. Again, similar drivers, it's healthy volume growth and healthy solution mix. Growth in EMEA was more modest, again, relating back to some of these delays, we believe, in reimbursement increases and reimbursement approvals impacting revenue a little bit. Underlying operations remain healthy, and patient visits continue to grow. Sales in APAC were somewhat soft on the patient care side, but work in progress is healthy and outlook remains strong. This concludes the overview of top-line performance, and if I can hand it over to you, Arna, to go through the financials in more detail, please. Thank you, Sveinn. Recorded growth was 9%, where we now have a positive currency impact on our net sales. We also have a positive contribution to our sales after acquiring Naked Prosthetics in the fall of 2022. The gross profit margin was 62% compared to 63% last quarter when excluding special items. During the quarter, we had higher unit costs. We are time-lagging reimbursement in patient care and cost associated with investment in our Össur Legs manufacturing site, impacting the gross profit margin, although partly offset by lower freight costs. Even though we had higher cost, higher total unit cost during the quarter, we are seeing our unit cost improving in our key manufacturing sites during the year. EBITDA amounted to $36 million on 90% of sales, and despite currency headwinds and inflation-related OpEx growth, we are seeing increase in our EBITDA. In line with inflation, OpEx grew mainly due to higher labor costs and other cost increases. But this was partly offset by the cost savings initiatives we announced last fall, part of which we have, however, already invested in emerging markets and digital investments. The effective tax rate was 23%, in line with our guidance, and I am pleased to see that we grew our net profit by over 100% in the quarter, although I should note that the comparable period is impacted by expense on special items. If we can go to the next slide, next slide, please. So now I would like to turn our attention to the cash flow and leverage. Cash flow was strong. However, we remain over-invested in inventory, mainly to secure bionics production in line with strong sales performance in bionics, but also due to buildup of bracing and support products in the last two years due to the global supply chain challenges. We have begun to lower our bracing and supports safety stock, and inventory levels are expected to gradually normalize. Capital expenditures are unusually high in the quarter due to investments in scaling our Össur Legs concept and expansion of key location, impacting our free cash flow generation. Net interest-bearing debt amounted to $387 million at quarter end, and the net interest-bearing debt to EBITDA was 2.9 times, or within the range of 2-3 times EBITDA. All else equal, we expect the leverage ratio to stay within the range, but while the ratio in the upper end of the range, we will continue to pause our share buyback program. Then over to you again, Sveinn. Thank you, Arna. Just a few words on our guidance. Organic growth has been strong in the first nine months of the year, but we are now comparing to stronger comparable quarters in quarter three and quarter four of this year. Therefore, our guidance remains unchanged at 7-8% organic growth. EBITDA margin in the first nine months of the year was 18%, same as in the comparable period in 2022. EBITDA margin has been positively impacted by strong organic growth, positive solution mix, operating leverage, and lower freight costs. Although on the other side of the coin, impacted by higher unit costs, which is still above normalized levels, inflationary costs, reimbursement dynamics in some of our patient care markets and a little bit currency headwinds. The net result is that our guidance for EBITDA margin before special items is unchanged for the year, 17-20%, but all else equal, given the current outlook, the expectation is to be around the middle of the range. Other guidance parameters are unchanged. That concludes the review of the quarter, and let's go to the Q&A session, please. Thank you, Sveinn. As a reminder to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, if you're connected on the phone line, to register for question, please press star one and one on your telephone and wait for your name to be announced. If you wish to ask a question via the webcast, please type them in the question box and click submit. Thank you. We are now going to proceed with our first question. The questions come from the line of Christian Ryom from Danske Bank. Please ask your question. Your line is open. Yes, good morning. Thank you for taking my questions. I have three, please, and I'll take them one at a time. First is on the composition of growth here in the third quarter. I think in the previous two quarters, you've commented that price contributed roughly 3-4 percentage points to group organic growth for the quarter. Can you confirm that that was around the same level in Q3, or whether there were any changes in either up or down direction to that number? That's the question. Hi, hi, Christian. Thanks for stepping in. I can confirm that what we've said is that 3-4% price increases on the product side of the business were prosthetics and bracing support. While we've had, let's say, when it comes to the patient care business, we have price increases or reimbursement increases in the U.S., largely in line with inflation, while lower in some of the European markets. So, I would say that our... The pricing component is consistent with what it's been in previous quarters. Okay, great. Thank you. And then next question is, so, on the reimbursement development in patient care. So you mentioned a couple of times, both in the report and on the call here, that you have some temporary reimbursement delays in patient care, particularly impacting the EMEA region, as far as I understand. And you also speak about a time lag in reimbursement. Can you elaborate a bit on the dynamics here, and whether what you're suggesting is that we should expect an increase in reimbursement a few quarters out, or how to think about this? Yes, thanks for clarifying this. What we see in some of our patient care markets is that reimbursement rates have not been adjusted to the underlying inflation. What that means is that short term, that will put some pressure on profitability, because we have labor cost increases in line with inflation in the relative, or let's say in these respective markets, same with all our input costs. However, we do expect reimbursement rates in those markets that have not caught up to gradually take these inflationary development over the last eight, 12-18 months into consideration. So that has had an impact, well, a little bit of growth impact, but also some margin impact here during the year. There's also, in some markets, where we've seen some delays from government payers, basically in approving project that we have already delivered on and not recognized revenue on. That's maybe $2 million in sales, which but within margin. Okay, great. Thank you. And just to be sure that I understand this outlook for reimbursement correctly- Yeah. How much of these reimbursement improvements do you have visibility on already? So how much are there healthcare systems where you know already that you'll see an increase from, say, January first, for instance? There's nothing confirmed on that, but I will, though, say that we expect to continue to deliver good volume growth and positive, let's say, solution mix, as we have seen this year. So in the absence of high, let's say, inflationary cost increases, which we don't expect going into the new year, we will see, let's say, normal margin development in this part of our business. So I think that is the fundamental part. So still in the absence of price increases from reimbursement or from payers, we will still see a more positive margin development for our Patient Care business as a whole. Great. Great, the final question is somewhat related to that. And it's a question on where margins are in patient care and in external product sales now relative to a pre-COVID level. So whether you can comment on whether there is a larger gap on the patient care side than on the... than on the external product side. And how close essentially you are to pre-COVID levels on those two businesses, because the business mix has, of course, changed since pre-COVID. Yes. Well, what we did see during COVID is that because of lower activity levels within Patient Care, because of patient absence, and more volatile demand side, profit was impacted because of the fixed cost nature of that business. What we do see here in 2022 - or 2023, sorry - is that volumes are back. Patient volumes are healthy across our whole Patient Care business, as such. So, but, you're right, during the COVID period, we did see proportionately more impact on our Patient Care margins than on the product side of the business, if that answers your question. Yes, it does to some extent. So the question was really relative to, say, 2019 levels, where the margin discrepancy relative to 2019 levels is larger on the patient care side, on the external product care side, external product sales side at the moment? Yeah, so it's good to clarify a little bit compared, because compared to 2019, which was our last, let's say, year before going into the COVID period, there's a few things that have changed and which is important to mention. One thing is obviously the Russia business, which was 7-$8 million of sales, and then having a reasonably high impact on profit and the DOD business, without which are both things that have changed and are now obviously outside of the comparison figures, but have had a quite big profit impact as such. But I will say that for our patient care business, we are largely back to pre-COVID levels on profitability. Okay, great. Thank you very much. Thank you. Once again, as a reminder to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, it's star one and one on your telephone and wait for your name to be announced. If you wish to ask your questions on the webcast, please type them in the question box and click submit. Thank you. We are now going to proceed with our next question. The question comes from the line of Martin Parkhøi from Nordea. Please ask your question. Hi, thank you very much, operator. I think it's just star one and not star one and one, just to be clear, at least that worked for me. So I have three questions, if I may, and I'll also just take them one by one. First of all, maybe just starting on the organic growth guidance. You write in the report, and you also say that you expect to land in the middle of your organic growth guidance. And when I look at the implicit Q4 guidance, it looks like you have something in between 2-5% organic growth implicitly in Q4. Even if I take into account the tough comps that you have in Q4, you are expecting a sequential slowdown in Q4. Can you maybe elaborate a little bit, what's the composition here in terms of products versus the patient care? And from a geographical point of view, is this a China thing, or is this a global slowdown that you are seeing? I'll start with that question, please. Hi, Martin. Just to clarify, we have on our guidance, we have maintained our sales guide 7-8% organic growth rates. However, we have also said that, let's say, the trends that we see in our business from a top-line standpoint, we expect them to be consistent going into quarter four. As such, we don't see any material change in our environment and in the development in our business. But of course, we need to take into consideration stronger comparable quarters. What we have, though, said on the EBITDA margin side is that we-- That's where we have communicated that now, sort of with what we see, we expect to be in the middle of the EBITDA guidance range. That is our best estimate. The EBITDA implicit guidance is something like 15-25%, but that's a quite broad range if you expect to land in the middle. Why, why not narrow it a little bit down to, let's say, 18-19% with, with just three months left here? Well, what we've done different things in the past. We've often kept our guidance just fixed, but guide sort of indicated where we are within the range. So that's what we've done here. We've just kept the range consistent, and been very specific in terms of where we expect to land within the range. Okay. That's very clear. Makes sense. Then the second question that would be for the e-commerce changes in the Americas business. Can you maybe elaborate a little bit of what that means and when you expect the impact to be normalized, or maybe even if you see expect to see an improvement on the other side of these changes, please? Yes. e-commerce is a very, well, is a relatively small part of our U.S. bracing business, and we did not expect the changes that we've done with regards to our e-commerce vendor to have the impact that we did see here in quarter three. We don't expect any material impact of this going forward and expect decent growth in bracing support here going forward. It's a couple of million dollars that was an unforeseen impact. We don't expect any material—maybe a little bit in quarter four, but nothing material going forward. Okay. Makes sense, very clear. And just the last question for now, and then I'll jump back in the queue. That the net financials were quite higher compared to what consensus were looking for, and also a step up from Q2- Q3. You're having a lower leverage and you're slowly eating up of debt. So what's the driver behind the financials, and how should we expect it to move from here, please? We have in our loan portfolio basically approximately 50% or a bit over that, ...on floating rates in Euro dollars and Euro and dollars. That is basically affecting our interest rates in the quarter. The other part of our loan book is basically or is in favorable fixed rates. That is part of it. That's basically explaining this change, and we expect that just to change with interest rates in the market. Martin, just to add one additional comment on that. I mean, let's say on a net financial sense, I would say that our interest rate, as such, is consistent from prior quarters. What sometimes can be volatile on that line is our exchange rate adjustments, which is both through the financial lines, which is related to some intercompany positions. And it's a little bit of a technical item, but you see very detailed reporting on it in our release. Okay, thank you very much. I'll jump back in the queue. Thank you. Thanks a lot. Once again, ladies and gentlemen, to register for any question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type them in the question box and click submit. We are now going to proceed with our next question. The question comes from the line of Niels Granholm-Leth from Carnegie. Please ask your question. Your line is open. Thank you. A couple of questions here, from me as well. Could you talk about how we should look at the organic growth in the bracing and support division in quarter four? It seems like you're up against easy comparatives to last year, or but you're also referring to a continued slight negative effect from e-commerce business. Secondly, for the prosthetics division, are you still expecting to launch the new version of the Rheo Knee in quarter four? And should we expect any revenue impact from this launch? I'll stop there and get back with a few more questions. Hi, Niels. Thanks for your questions. On the bracing business, we expect a little bit of impact from this e-commerce topic in quarter four. But yes, the comps are good, and we should see growth in bracing support in quarter four. That's our best estimate. On the prosthetic side, we are launching our new version of the Rheo Knee, a limited launch here in the beginning of quarter one next year. So we should not expect anything here in quarter four. Great. Thank you. And then turning to internal sales, which has shown pretty high growth in the past few quarters, 29% growth in quarter three. Is that a reflection of your push to basically increase the internal supply rate to your existing clinics? And should we expect this to continue for several more quarters at this pace? And then secondly, on acquisitions, so there was no effect from acquisitions in your Patient Care business in quarter three. Would that also be the case in quarter four? And what are your plans in terms of M&A? Thank you. Yeah. Hi, Niels. Yes, there's you see more, let's say, internal sales on the prosthetic side. That is driven by, amongst other things, the Power Knee and bionics that we've had a special push around that. And nothing else in particular as such. And we are largely, if we look at our patient care platform, where it's normal for us to be in terms of share of wallet, I would say. On M&A side, we have some impact from pro forma impact from the acquisition of Naked Prosthetics, which continues to deliver in line with our expectations here in quarter three. We do have an M&A pipeline, both in terms of product and patient care. As usual, we don't comment on timing as such, but we do have an active pipeline of potential targets. But would you expect a return to an M&A contribution of, I guess you have a target of 2-3% in the long term, and it was very minor in quarter three. Should it return to 2%-3% in quarter four? No, not in quarter four, but let's say we expect overall a slightly longer period that the 2-3% average will hold. That is still our goal. Given the phasing in of Naked, it would be then 0% contribution in quarter four? Yes. Luckily, yeah. Okay. Thank you. Thank you. We are now going to proceed with our next question. The question comes from the line of Martin Parkhøi from Nordea. Please ask your question. Hi again, guys. Just one question that is actually not related to your actual report, but I guess that you also followed the latest development with the Novo Nordisk GLP-1 studies with the SELECT and everything. We also know that there's a trial running probably reading out in Q1 2024 studying how semaglutide works in people suffering from obesity and knee osteoarthritis. Sorry, I don't know how to pronounce that correctly. I'm just curious how you see the impact of GLP-1, and if this study turns out to be positive, if that could have any impact long term on your part of the business. It would be quite interesting to hear your thoughts on that. Yes. Hi, hi, Martin, again, and thanks for the question. I mean, first of all, it's great news that around GLP-1 as such, but it's early days how it will impact the healthcare systems, I would say, in a very broad context. And if we look back in our business, there's been consistent improvement in diabetic care, always leading to fewer, let's say, dysvascular amputees as such. But unfortunately, dysvascular amputees have very low fitting rates of prosthetic solutions, even in very well-developed healthcare systems. To say only, unfortunately, a small part of, let's say, diabetic-related amputations are ultimately receiving proper prosthetic solutions, is something we've been working on for years to change. Most of the patient population that is served by our customers and in our own patient care systems are entities, are amputees that have suffered limb loss as a result of other problems than this vascular complication. Yes, it will most likely have an impact in some shape or form, but we expect still the main, when it comes to how we grow the business, it will still be around getting more amputees using better mobility solutions. That remains our, will remain our agenda. On the osteoarthritis side, most of, or a very big part of the patient population that uses our osteoarthritis bracing, are individuals that have suffered ligament injuries at an early stage in their lives. Therefore, the OA brace as an alternative to knee replacement surgeries is a particularly valuable option as it pushes replacement or a knee replacement surgeries further out. So without having perfect statistics on it, I would or our estimates are that a very big portion of those individuals that use osteoarthritis or OA bracing are not necessarily that group that will be mostly impacted by the GLP-1 initiative. But again, I'll caveat all my comments with that it is early stage, and this is just our perspective at the moment. Okay. That's, that's very interesting. Thank you very much. Thank you. We are now going to proceed with our next question. The question come from the line of Yiwei Zhou from SEB. Please ask your question. Hi, good morning. Can you hear me? Yes, loud and clear. How are you? Perfect. Yeah, hi. Hi, I have two questions here, Sveinn. Firstly, on the Prosthetics volume growth. And I noticed you have mentioned sort of strong, indicated strong volume growth for several quarters. Then, if you compare it to the historic growth was flat or moderate single digit growth. I was just wondering if you could comment on the, on the -- what is, what is the driver here? Is it still driven by the pent-up demand or you are gaining market share with the launch or with the solution? Any comment would be appreciated. Yeah, hi, Wei. Thanks for the question. It is a combination of both. We believe that we're taking some market share, but at the same time, the market is also strong. It's been a few years where demand has been impacted by COVID-19, all sorts of disruption in relation to lack of staffing throughout the whole channel. So our feeling is that, or what from our customers and observing the industry as such, that volume growth is just strong in the market. And there is, there's definitely some, let's say, patients that are being served that should have been served in the prior years. So there's some element of pent-up demand, but how much is, it's hard to say exactly. Okay. So yeah, but it's actually, you just answered my next question. Is so you have no idea how long the market trends will continue? No, it's, I'm not gonna try and be too scientific around that. I mean, if you look at our organic growth rate in prosthetics, strong double-digit growth, where it is, obviously there's a bigger pricing component compared to usual. Bionics are doing exceptionally well. We have the addition of the Power Knee, which we did have, of course, last year, but not in the years prior. So we have a lot of things moving with us, and at the same time, let's say, loosening up of the market. We don't have some of these things that have held back the demand side, as we've had in the last couple of years due to the COVID-19 complications. Okay. Is it possible to give us an indication on the current volume growth? About the volume growth? Yeah. No, we don't break that up as such. I mean, if you look at it, is the pricing component, we've communicated that to be 3-4%, and it's the remainder is mix and, and volume. Okay, fair enough. My next question is regarding this Össur manufacturing site. You mentioned that it had an impact on the gross margin in Q3. How long should we expect it will continue to impact here? And if possible, could you also quantify a bit on the margin impact? Yes. Just as a reminder, the Össur Select concept is an offering towards our customers, basically, to offer an option for them to outsource certain parts of the fabrication process to us. And we have had good traction with this concept, and mainly in the U.S. market where we started, and we have moved into a bigger facility, which can absorb future growth. And we are still not at full capacity utilization in that facility, which means that compared to the same period last year, we have a little bit higher cost, which is one of those things that puts it, it's a marginal pressure on the gross profit margin, just when we compare year-over-year. But we'll, as we move into next year, this impact will be minimized. Okay, just want to clarify. The margin impact currently, that's due to the underutilized capacity, production capacity, and not the upfront investment? Yes, underutilized. Yes, capacity. Absolutely. Okay. Okay, great. Clear. Thanks a lot. I'll jump back to the queue. Thanks, Yiwei. We have no further questions at this time. I will now hand back to Mr. Sveinn Sölvason for closing remarks. Yes. Thank you. Thank you very much for your participation and for your questions. Please reach out to our investor relations team if you would like to have a meeting with us, or if you have any questions after this call. Yeah, thanks a lot, and I wish you all a great day. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you.