Arjo AB (publ) (ARJOB) Earnings Call Transcript & Summary

Good morning and welcome to Arjo Capital Markets Day 2020. My name is Nick Gabery Adams, and I'll be hosting and moderating today's event. Thank you very much for joining us today. It's an event we've been looking forward to for a number of months. We'd hoped, of course, to have this event back in May, but due to COVID-19, we had to postpone until today's date, November 2. We'd also hope to have you in our offices headquartered in Malmö here. But due to new COVID restrictions, we are now broadcasting live to you from this TV studio, very close to our offices here in Malmö. Now as we go through the presentations today, as it is an online event, there will be plenty of opportunity to ask questions. Wherever you're watching from, on your screen, you'll see both the presenter speaking and the presentation. But in the right-hand corner of your screen, you'll see a Q icon. And in that Q icon, you can press and ask any question to enter into the live chat. I'll receive those questions here in the studio, and I'll be able to field them to any of the presenters as we go through. I'm going to build then plenty of Q&A sessions after each presentation. Also because it's a live event and you don't have the opportunity to meet physically, like we would have liked to, Joacim Lindoff, our CEO, who's also made himself available for one-to-one calls in the coming days. So if you would like to book a meeting following up, do please contact Maria Nilsson in Investor Relations to make sure you can book a one-to-one with him, if you have any follow-up questions you'd like to go through with. To answer one of the first questions, all material will, of course, be available on our Investor Relations website shortly following today's event. Now we'll be looking forward to this day for a number of different reasons. Firstly, 2020 marks the end of our first milestone as an independent company, our first 3 years with the Arjo 2020 strategy. That means that today, we'll also be announcing our 2021 plans for the future and beyond. Now with me today, I will have our CEO, Joacim Lindoff; our Chief Strategy Officer, Christian Stentoft; and our Chief Financial Officer, Daniel Fäldt. And again, as we go through the different presentations that we'll have, there will be a Q&A session after most of these presentations. And we've developed a dynamic agenda for the day with a few short breaks in between. There is no lunch break as such. We're going to try and keep it tight and keep it moving quickly through. So shortly in a minute, Joacim will take us through a business update with some of the highlights from our Q3 report. And after a brief Q&A session, if there are any questions coming in after that first presentation, we'll move over into a presentation about our foundation for future growth. Following a short break, a 10-minute leg stretcher, so to say, Christian Stentoft will join us to take us through some key trends and market insights. We'll then have a Q&A session with Christian before a second break around about lunchtime, a very short quick one there to grab a quick cup of coffee or tea. After that break, Joacim and Christian will take us through our updated strategy beyond 2020 and how we're going to be improving clinical and financial outcomes for the future. And lastly, after the last break, Joacim and Daniel will join us to present our new financial targets for the coming 3 years, including our current financial position. We will then have a large Q&A at the end, where we'll have the opportunity to ask any questions that come up throughout the day that we have no chance to field or anything that's come out of the last session, before Joacim summarizes. And we hope to wrap up by 2:30 today. We're doing our best to try and keep us on schedule and on time, but we will keep as best as we can to this agenda as we go forward. So without much further ado, I'd like to invite Joacim up, with all the practicalities and agenda sorted, and handover to you, Joacim. Thank you.

Thank you very much, Nick. Very good. And also from my side, a very warm welcome to this online Capital Markets Day. I, for one, would have liked to welcome you all to our Malmö office to have some direct interaction. But I hope this presentation that we will give throughout today will give you a very good view on where we're heading as a company. What you will be presented with today is very much what we have managed to do over the last 3 years as a part of our Arjo 2020 plan, where we have built a significantly stronger company than what we were -- where we were 3 years ago. And we would like to run you through a number of the highlights during that plan. One of them is obviously that we have 11 quarters of consecutive growth in the company, and we have been able to develop a much more stable foundation to go forward with. We're also announcing our long-term plan to take us beyond 2021 and move us into becoming a mobility outcome partner and providing global health care with really good outcomes, both financially and clinical. That part of the strategy will be very supported by our continued internal efficiency journey, where we are going to work continuously with the projects and processes that we have put in place during the Arjo 2020 plan to continue to make sure that we, with that part, develop both net sales and profitable net sales to that. We will also show how digitalization, our people and, obviously, also our very firm sustainability agenda will support the new strategy and how we will work with that in the years to come. As a conclusion of that, we are going to present you with our new financial targets that, in a realistic way, describes the journey forward in financial terms, where you will be looking at an organic net sales target of 3% to 5% CAGR. We are lifting our EBITDA target to around 23% by the end of 2023. We're looking at a cash conversion increase to 80% on a yearly basis. And we have, as a firm goal, to be able to give dividend to our shareholders, hopefully a little bit more than what we have done up until now, increasing the interval 30% to 60%. Running you through a few of the highlights that we have during Q3, just to create the base for our further discussions. We put another strong quarter to the record. We are growing the company in the quarter with 5.8% organically, which is, under the current circumstances, a very strong result, in my opinion. We see good development in our medical bed side. We see good development in our therapeutic mattresses side and very good development, especially in our U.S. rental business, to a large extent, driven by COVID effects but also good incremental work done by the entire organization. We do see continued restrictive access to mainly long-term care facilities during the quarter, which has obviously affected in a slight negative way our patient handling, our hygiene and also our service business, where the postponements of elective surgery throughout the world has also made it difficult for us to uphold pre-COVID levels in our DVT business. We are exiting the quarter with a significant increase in profitability. We have a gross margin that has rose to 45.4% in the quarter. We see an EBIT result that is growing almost 70% for the full quarter. And all in all, a very solid performance throughout the organization, throughout the cost side of the entire value chain. We exit the quarter with a solid financial position, good operating cash flow. And a very good cash conversion of 117% has really been one of the highlights, especially good to see our accounts receivable going down in the pace that they are. So all in all, we are closing a very solid quarter. And directly after the quarter close, we also concluded on our equity investment into Bruin Biometrics that we did in the second or third week of October, which will, as you will see throughout the presentations during the day, further enhance our mobility outcome strategy and give us what we think a key lever to get us up and above the targets that we have today. To give you some more flavor around how COVID-19 is affecting us as a company, just to set that one straight from the beginning, is that we see a number of product categories that are heavily affected by the more difficult access to health care facilities across the globe. It's both when it comes to presales, it's about how we install and how we interact with our customers around product categories that is not 110% vital for COVID here and now. In our case, this has to do with patient handling, especially ceiling lifts. It has to do with hygiene and especially the part of hygiene, which is bathing. We have our disinfection range that requires a lot of installation and access to health care facilities. We have service where access into the health care facilities is of utmost importance to be able to drive a good service business. And obviously, our DVT business, as I mentioned before, where the postponement of elective surgery has pushed down volumes in that area quite significantly. But we also have a number of products that range in the more neutral space. If we look at rental and especially then rental in our European business, our European rental business has not seen the uptick that we, for example, have seen in the U.S. It actually saw a slight decline in Q2, rebounding somewhat in Q3, but in -- per our definition, being fairly neutral versus the current COVID outbreak. But we do have patient handling -- other patient handling equipment like our different type of floor lifts, where we see also a natural or neutral development because that type of product is not requiring that much installation and is needed when we have a much stronger inflow of patients because of COVID. We can also see that consumables in different areas are keeping up a fairly neutral approach versus COVID, and we managed to sell those products also during these difficult times. We also then have a number of positives that you have been following over Q2 and Q3, and the really 3 main positive things are our medical beds side, where we had a large surge of demand in Q2 and also throughout when it comes to net sales in Q3. Our therapeutic mattresses has followed the same path as the medical beds side, also with very high interest in terms of capital sales in Q2 and Q3. And probably the biggest driver so far is our U.S. rental business, where we -- from really the start of Q2, has seen a very strong drive in demand, both when it comes to our core rental but also when it comes to our critical care side of our rental, which is helping a lot of the very sick patients in the U.S. The way we've been looking upon this one, and this is where, I would say, the everyday life we have and where we are navigating very well so far, is to understand when the positives start seeing a decline and when the negative starts seeing a good rebound back to normal, and most probably also up and above where they were before, given the higher demand on health care. This is something that we are following on an everyday basis, trying to understand how we should navigate with our customers, how we can support them, taking better care of our patients, but also making sure that we're supporting our internal organization to make sure that we continue to drive a profitable net sales agenda within the company, also during these unprecedented times. We believe that this is a situation that will continue for a number of months more. I mean it's just about opening today's paper and you will get pictures that we have a surge in infection rates throughout Europe and throughout the U.S., and where a number of experts believe that this will continue for some time more. We see restrictions in long-term care still being there. We see that the access to acute care is on the same level as we saw it in Q3. And health care, in general, has probably learned quite a lot around how to handle the pandemic and also the people that are being admitted into hospitals. But we will continue to see continued restrictions on smaller scale, probably as we go along and as we look into the next couple of quarters, but we need to stay very flexible and we need to continue to navigate in this space, in a good way, to continue to support our customers and their patients, but obviously to continue to make sure that we are producing good organic net sales growth and profitable organic net sales growth. So with that as a very quick summary, long-term potential remains very solid for the company, also with the short-term uncertainties that the COVID-19 pandemic is putting in place. We are seeing a big strain on health care staff and health care, in general, and there is an increased cost of care. And this is really where we -- over the next couple of hours, we'll present to you how we're going to play a role here short-term and, obviously, also long term. Clinical and financial outcomes continue to be very important. And as you will hear again throughout the presentations today, this is even more important today than it was actually when the pandemic struck the first time. There is uncertainty out on the market. We navigate well through this uncertainty, and we're following it as we have done during Q2 and Q3 on a day-by-day basis. Our long-term goals and our long-term possibilities are there. Our plans remain solid. And as I said, the strategy, as we're presenting today, stands stronger today than it did before the outbreak of the pandemic. And very importantly, what we can see today, based on our own assumptions, we will see a Q4 where we will grow within the interval 2% to 4%, which is very well aligned with the targets that we put out after the Q2 report. And we have every intention on delivering upon that. So with that, thank you very much, and let's open up for some Q&As, if there are any.

We do, actually, and there's a few people starting to send in questions already. Some of them may be related to the press release that went out earlier this morning, and I know we're going to cover that a little bit later today. So we may reserve some of those questions until we have time to elaborate a bit further. But a few questions coming in about COVID-19. This one had, "Do we expect the rapid increase of COVID cases and hospitalization to have a positive or negative impact on Q4, H1? What's your outlook on COVID?"

Well, as I tried to explain on the earlier slides, this is something that we navigate on an everyday business. We know that continued high spread of COVID, for example, in the U.S., will continue to drive our rental business. But it will also put constraints on our accessibility to health care facilities that will then have effects on our patient handling, will have effects on hygiene. What we do see is that we are starting to get a better view how the curves are coming together. And we are starting to see, for example, our DVT business in the U.S. starting to get closer to the pre-COVID levels. So we believe that we will continue to manage both the Q4 with continued spread and also quarter 1 or quarter 2 in 2021 with a continued prevalence of COVID-19 in a good way. So it's an everyday navigation. We have done it very well so far, and we have every intention of continuing, doing so.

As a follow-up question here, "Is that only related to the U.S. or what about the rest of the world?"

Well, I think that what we have been experiencing up until now is a spread throughout the world. And we are navigating the markets in Rest of the World in a good way. As I talked about after the Q3 report, we had very good traction in our Rest of the World business. It's a smaller part of our business, but still good traction. Our European business is showing a slight increase in organic net sales, very much based on the restricted access to health care facilities, something that we are continuing to navigate during Q3 -- Q4. What we can say is that the lockdowns, as we saw after Q2 and coming a little bit into Q3, are not as severe as they were in Q2, which obviously helps us a little bit to make that curve of the negatives come up. But on the other hand, we then have a slight lesser demand of, for example, medical beds during this one. So -- and as I said, the U.S., with the driver of the rental business, where the infection rates is kind of very tightly correlated, at least over time, to how our rental business is going and especially then the critical care side of things.

There's another question here. And do feel free to send in any more questions. I will receive them directly here. But this one starts with maybe a little bit mean. "But considering the organic growth is already 5.8% in Q3, isn't the growth target too conservative?"

I think that the growth targets that we have for Q4, and I assume the question is related to -- we have the same question around the long-term financial targets. But looking at Q4, we believe that a 2% to 4% organic growth level is realistic, given that we will start seeing the curve of the positives go down. We will, however, see the curve of the negatives starting to go up. It's very much dependent really on our -- on how our U.S. rental business is developing. If we see the same peak as we saw in end of Q2 coming into the early stages of Q3 in our rental business in the U.S., we are -- have even better possibilities of reaching that target of 2% to 4.

The follow-up question to that is, "Do you think the goals are challenging enough?" That's what they're asking.

Yes. If we are looking at the long-term financial side of things, I would probably wait and comment with that one. As we have done and as we'll go in, in my next presentation, I mean, we have managed to put or rather perform on or above our target so far. And for me, it's always better to miss on that side than to miss on the downside.

Okay. But -- I mean, there's no further questions coming in right now. There's a couple that I would save for later. I think we're probably saving them for the big -- the bigger Q&A session we'll have at the end or maybe after the financial targets presentation.

But I think ladies and gentlemen, we'll switch into the second presentation for today, which is Joacim again presenting A Strong Foundation for Future Growth. We started this journey 3 years ago at Arjo to become a stand-alone company. And it's now time for Joacim to give you some of the highlights so far over these 3 years. So over to you.

Thank you very much, Nick. Then switching quickly over to presenting you with really what we have managed to do over the last 3 years as a part of our Arjo 2020 plan, the plan that we put in place when we started the spin-off from Getinge and that we have followed since. The Arjo company or the Arjo organization in total is a much more stable organization than where we were in the end of 2017 when we spun off from Getinge. We got the responsibility and the accountability from the Board of Directors to create more or less an entirely new company. And we put a strategic intent in place, we put an action plan in place to take us to the position where we are right now, which is where we have created a more stable Arjo, a company that works in a better way with the processes and the procedures that we have put in place. We have also managed to introduce significantly higher and increased operational agility throughout the organization, where through the processes and -- process that we have put in place and worked with, we can see that we, as an organization, work a lot tighter together. And through the investments that we have been driving over the last 3 years, both in acute care, but also in long-term care and in other areas, we can also see that we have significantly strengthened our commercial focus. Remember that what we have done over the last 3 years is not -- and the growth that we have seen is not because of newly launched products or new ideas that we put to the market. We have sold what we had. We have made sure that we gave the right tools to our sales organization to sell what we have, and we've done the very utmost of what we had at that time. And I believe that ticking the boxes on our financial targets for the Arjo 2020 journey is a really good achievement by the organization and also shows significant strength going into the future. And the future is developing Arjo towards becoming a mobility outcome partner. As I said, continue to support with a continued internal efficiency journey, making sure that we're creating value for health care as a mobility outcome partner, where we truly can speak about driving clinical and financial outcomes in a clear and detailed way. If we start with the upper part of the P&L and what we have achieved so far, we had a number of problem areas that we identified in the beginning of 2017 when we worked the plan and started to implement the Arjo 2020 plan. U.S. was one of these areas where Arjo, over the last decade, had seen decline in both organic growth and profitability. And we put a very detailed turnaround plan in place in the U.S. with a new management that has started to drive that plan in a very good way. We have an average growth of almost 6% in the U.S. over the last 3 years, and it's also a very profitable growth that we have been seeing. So a very, very nice green tick in that box around our U.S. business. We also set out to strengthen our footprint in Rest of the World, making sure that we were building infrastructure and building own sales companies where we saw that fit. But also reigniting and rebuilding a distributor network that we didn't necessarily inherit when we left Getinge as we had to build new. And when we start with the own infrastructure, we have some very good examples where we have, since 2018, started to work with our own entity in Japan, Japan being the third largest health care market. And we are growing that market now with very nice double-digit figures, and that is absolutely an area where we have continued pretty large potential going forward now, and we also have products registered and we have a sales force in place to sell those products. The distributor markets has also seen significant growth over the last couple of years, especially going into the end of 2019 and also into 2020. And for me, that is just the start of the journey when it comes to our distributor business. Our distributor network that we have been building up over the last couple of months will provide us with significant possibilities to sell products to the markets where we don't have our own infrastructure. We're working with a very sustainable approach in the distributor side. And we have distributors that we look forward to work with for a very long time and building the Arjo brand also in markets where we're not present ourselves. We have, as you know, not only been developing our acute care side, continue to navigate very well in the acute care part of our business, but we've also made some significant investments, especially in the U.S. in the long-term care side. Long-term care compared to acute care is continuing to grow, double the pace of what we're seeing in acute care. And we will continue that journey in investing and making sure that we become a company that both have acute care and long-term care as very strong legs to stand on. What I can say around the long-term care investments is that we have yet to see the full power of that investment. Both of that, it took a little bit longer for us to get traction and gain traction, but also the fact that when COVID struck, obviously, the restricted access to long-term care facilities has made that even more difficult. So that is absolutely an area where we haven't seen the best yet within our quest to grow our organic net sales. We also had service, very much as one of the focus areas going into the Arjo 2020 plan. And service has grown well during this. I would still say that we have pretty significant potential, both when it comes to net sales and also when it comes to profitability in service. And that is a journey that we will continue to fuel and invest in, in the years to come. If we look at the profitability side, obviously, the increased organic growth has led to operational leverage, but we've also seen a number of very good projects being run within our supply chain and operations to get our cost down throughout the value chain, making sure that we are spending money where it drives profitable growth. We have also put a number of projects in place, especially in the end of 29 -- or rather in 2019 to lift our profitability around rental to make sure that we get the fixed cost structure down in rental, and that we give ourselves the best possible opportunities throughout, not only in the U.S. but throughout Europe, to start a profitability improvement journey also in rental. We are starting to see the first signs in Q4 of 2019, coming into January, February. COVID has obviously been throwing that around a little bit, but the fact that we have lowered our fixed cost base in rental, obviously, gives us a very good base to grow this business in a profitable way going forward. We've continued to manage our OpEx well. We said from the beginning that we wanted to see OpEx declining as a percentage of net sales. That is something that we have done throughout the Arjo 2020 plan and -- where we are pretty convinced that there is a lot more left to be done there. And we foresee that OpEx, also in the years to come, will continue to decline as a percentage of net sales. We have done a number of inorganic activities during the Arjo 2020 plan. And one should know that when we started this journey in 2018, we did not have the stability in the organization to take on and fully drive an inorganic agenda as a good support to our organic plans. We had a number of projects that needed to be done internally, a number of projects around our organic net sales agenda that first needed to be put in place before we, as an organization, could take on the journey and drive the inorganic agenda in a more aggressive way. But we have managed a number of acquisitions and also corporations. We have acquired ReNu Medical. We have acquired an equity stake in Atlas Lift Tech. We started the cooperation with Next Step Dynamics. We've just recently started a cooperation with a Swedish company called BrainLit. And very importantly, we, in October, made an equity stake or took an equity stake in Bruin Biometrics which, in my view, is a game changer for the company that will take us to a different level when it comes to pressure injury prevention. Looking ahead and with the stability that we have taken and that we have achieved in Arjo, I believe that you will see a more aggressive Arjo in the inorganic side. You will see us, however, not hunting net sales for the sake of net sales. That's the saying that I've had since we started this journey. You will see Arjo hunting opportunities that are very good complements to our current strategy and to our current portfolios. And you will be seeing us looking for targets where we believe that we can generate good and positive sales synergies directly from the beginning, putting good products, for example, into the hands of our sales force with global reach. So in summary, when it comes to the inorganic side, we are in a totally different position today, both from an organization perspective, but also financially when it comes to possibilities for M&As. And you will see us continue to drive that in an aggressive way going forward. So a very short summary to what I just said is that we will continue to build a very strong foundation also in the years to come. We will use the learnings that we have had from the Arjo 2020 plan, and we will continue to drive and fine-tune those processes that we have put in place to make sure that we're spending money in the right places and that we drive profitable net sales. But we will also starting -- start the journey, and that has already started, to build a sustainable competitive advantage around becoming a mobility outcome partner. And that is what we're going to discuss more with you over the next couple of hours. So with that, I will then open up for questions again.

Yes. And do please keep sending in any questions from out there. There's a few coming in here. First one here from Peter Ösling from Pareto. "Are there any other distributor markets where you want to establish your own presence?"

There are certainly a number of interesting markets that we could be looking at. For now, I think we've done the right choice of focusing on the markets where we believe that we can get traction and get traction pretty soon. We have been -- if you take the African continent as an example, we are open for sales into most of the African nations, but what we have done there is that we have put a plan in place where we have said that we have a number of markets where we're focusing first, getting traction then and then spreading the word into other countries. The same thing applies to Southeast Asia, the same thing applies also into our Latin American business. And I do think that currently, investment versus gain has put us in this direction. And I think that we are on a very good track here to -- and we have a huge potential already with the significant amount of markets that we are working with right now to get net sales going in this part of the world.

So as a follow-up question from Kristofer Liljeberg, Carnegie. Regarding distributor markets, how much growth in Rest of World in Q3 came from -- I don't know if you have this number, came from distributor markets?

It was actually a -- I mean as you know, our Rest of the World business is a little bit -- it's twofold. You have a number of markets like Australia, like Singapore, like Hong Kong, which is more like normal European markets, if I can put it like that, and then you have the distributor markets. But -- and in Q3, you saw Australia actually growing with 5.5% organically. So they contributed. But the growth of the Rest of the World of more than 12%, it was very much generated by our distributor markets. And that is a basis that we will continue to grow from. And I have really good hopes that, that will continue also in the years to come.

Right. Well, let's change from distributor markets and the Rest of the World. I mean the U.S., massive turnaround over the last 3 years. How do you see the potential there?

Without -- I shouldn't overexaggerate -- but U.S. is going to be the profitable growth engine also going forward. The potential that we are seeing -- we've just tapped on smaller parts of our potential in the U.S. U.S., as Christian will be talking about later on, is probably the market -- and I will be talking about it as well, the market where we will see that the mobility outcome approach will have the, I would say, the greatest possibilities short term. I believe that we also have the infrastructure and the knowledge in the U.S. organization, but also in the market, looking at outcomes in a different way than what we can do, for example, in Europe, short term. So I, myself, without putting too much pressure on the U.S. organization, I have really great hopes that we will continue to see a very favorable organic net sales growth and a profitable one, given that we do generate more profit out of our U.S. business than what we do from other parts of our business.

Yes. You must be incredibly proud of everything that's happened over there.

Yes. The work done by our President over there, Anne Sigouin, and her team is nothing else than very impressive, not only from a P&L perspective but also the journey that they have taken from a balance sheet perspective, especially around the accounts receivables side, has been really good.

Exactly. Okay. So we got a question here from Sten Gustafsson from Nordea. "What investments have you made, examples, please, in long-term care? When will we see the outcome and what is the potential of the investments made?"

The biggest investments into long-term care is in our sales force, remembering that we are selling the same products into both long-term care and acute care. As an example, our Canadian business, which has 70% of their sales into long-term care and only 30% into acute care, is selling exactly the same products as we're doing in a country where we have 70% acute care and only 30% long-term care, and doing so in a very profitable way. So it's very much around investing into our sales force, making sure that we get the feet on the ground and that we get the clinical support that we need for long-term care customers. U.S. is an example that we've been speaking about quite a lot over the last couple of years, and that was one of the things that we initiated directly. 25 people around-ish has been entering into the U.S. organization only focusing on long-term care, where the -- replacing 2 or 3 positions before we did that investment. I would be the first one to say that we are delayed in that investment. We have not yet seen the full capacity or full potential of our long-term care investments. Unfortunately, over the last 6, 7 months, driven negatively by the COVID situation. But we are convinced that just the fact that the focus on long-term care has increased over the last 18 to 24 months, especially during the COVID-19 crisis, we feel very comfortable in our approach that we will continue to invest in long-term care and that very large part of our growth, come 2021, 2022 when we are in a more normal situation, will come from our long-term care investments.

There's a follow-up question there, but I'll come back to that because there's some interesting questions coming in about our M&A agenda. Kristofer again from Carnegie. "So far, it's been mainly distribution agreements with small equity stake. Any -- is that what we'll continue to do? Or will there be any larger acquisitions?"

Well, we are not making the equity investments because, yes, we believe it's a bad idea. We believe that this is -- for example, the equity investment that we did in Bruin Biometrics, from our point of view, will generate far better shareholder value than to acquire the company full, as it sits. We will obviously have very good discussions with Bruin as we go along, but this is the best for Arjo right now And. It obviously secures also a very long-term global exclusive sales rights for the SEM scanner, something that will allow us very good leeway to make sure that we're building the right structures within our company and making sure that, that really becomes a game changer. But we will obviously not hesitate and not shy away from acquiring full companies as well. I mean we are in a completely different position today than where we were in the end of 2017, and we have every possibility of integrating and -- integrating new companies into our own structure. But it is important to remember that we will stick to the saying we are not going to acquire net sales for the sake of net sales. We're going to look for companies that is complementing our current product portfolios in a good way. And we will make sure that we, from -- more or less, from day 1, can generate good sales synergies and drive those products through our global sales force that we have.

Of course, becoming a mobility outcome partner, I mean, it's very interesting in terms of the kind of acquisitions Arjo is going to look into in the future. Someone also is -- Peter Ösling from Pareto asking, "Any specific geography that could be a focus for M&A activity?"

We are currently scanning and -- very broadly, both small and big. And if it wasn't for COVID-19, we would be wining and dining quite a lot when it comes to different M&A -- M&A targets, as we speak, a lot of these discussions has to go online, as this Capital Markets Day. But there is -- continues to be a high activity. But we are pretty picky in this perspective, trying to stay very true to where we want to end up with our strategy. And again, finding targets that is a good complement to our current product portfolio and that generates positives. And if that is in Japan or if it's in Australia or if it's in the U.S., it doesn't really matter as long it's a good business for Arjo.

Super. Taking another, and that's Annette Lykke's question from Handelsbanken, returning to the emerging markets, "What trends do you see in emerging markets, short and long term?"

The trends is obviously that there is a very high need for basic health care. And that is also -- and I'll be talking about that a little bit later on in the presentation around how we see the rollout of our own strategy. I think we would not be that well off, we would say, being an outcome partner, and we would start accelerating that work in a number of our Rest of the World's distributing -- distributor markets. They are probably better off, given how the systems are working in those countries, to continue to sell very good products that will help caregivers to take better care of their patients also in the next 5 years. That's where I do see a possibility in other countries to step in with the mobility outcome side even further. But if we look at our potential around the rest of the world, and especially the distributor markets, our potential is still very big when it comes -- I mean, we're speaking about the distributor network that we've just reestablished, a distributor network where -- in many countries where we haven't been present for quite some time. And for us to do this in a step-by-step approach through sustainable, right distributors where we have very good communication with them is something that I think will ensure that we will see really good growth through our distributor network in the years to come.

Super. And then I have one last question. I think it's a nice wrap up question as well as it kind of cuts a few of the things we've been discussing in this Q&A. Returning to the investment we made in the U.S. for the long-term care facilities, opportunities long term. And then COVID-19, is that going to force us to hold back on investments? Or is it going to mean we need to have more feet on the ground? Kind of 2 -- double questions there. So you can take the first one first about...

The long-term possibilities for long-term care is absolutely -- the market and its effect is growing double the pace that we see in acute care. We will continue to invest not only in the U.S. but also in other markets to make sure that we're sustaining that possibility within our own organization, making sure that we can -- or they regain market shares that we, as a company, actually had 12 or 14 years ago when Arjo was a very long-term care-focused company. We have the knowledge and we know what it takes. And for us, the investments that we have done has taken longer to get leverage on, longer than what we expected. And that's also why I said that I believe that the best is yet to come when it comes to long-term care. COVID has put a strain on the very short term, given that we don't have access. So -- I mean we -- in the last 7, 8 months in the U.S. or in Europe, our sales reps focusing on long-term care has not gained access in the same way that they normally do, and thereby, obviously, halting the development that we hoped to have seen during 2020. But the focus and the interest and the political focus on long-term care has increased over the last 7, 8 months. And I would say I'm even more convinced today than I was when we started this investment that long-term care is a place for us to be. With that said, acute care is going to be very, very important for us also in the future, but we will continue to drive -- once COVID is over, we will continue to drive the right investments into long-term care.

An incredibly difficult time to -- I mean predictability during COVID-19, of course, has been incredibly difficult. And -- I mean I think it's really been encouraging to see how well Arjo has been very resilient through this...

The organization has navigated very, very well during this, and I can't be nothing else than very impressed with what they have done so far.

Super. That's the end of the questions that I have on here. And we're actually running about 10 minutes ahead of schedule. So what I'm going to propose is that we cut for a 15-minute break, which means we'll be returning at 11:30. Thank you very much, and see you in 15 minutes.

Thank you. [Break]

Good morning, everybody, and welcome back to Arjo's Capital Markets Day 2020. Hope you've been enjoying the sessions so far. It's been excellent to receive all your questions. Do please keep sending them in as we go through the sessions. We're now going to shift to a session to get a deeper understanding of the market drivers and the challenges and the costs faced by health care systems. This will be led by our Chief Strategy Officer, Christian Stentoft. Christian, please, over to you.

Thank you very much, Nick, and good morning to you all. So as Nick said, I would like to take a look at the market we're active in and share some of our views on the trends in the market that have informed our decisions in our path going forward. So if we look at it at a very high level, obviously, being part of the health care market, that is a market that is generally supported by extremely strong fundamentals. You hear a lot of talk about, obviously, the demographics. That's one of the aspects of forecasting that is the easiest. Demographics would tell you that the relative -- the percentage of people at an age above 65 will be increasing steadily over the next 30, 40 years. That, in itself, obviously, very supportive after the market that Arjo is active in. We also see, in combination with that, an increase in lifestyle diseases, chronic diseases, that in themselves require more care. Combined, this means a significant pressure on health care as we know today. We see that there will be a shift in terms of care provided in hospital to long-term care. You will have patients with a higher level of acuity present in a long-term care facility in the future, much to what Joacim just mentioned in terms of how these 2 segments are growing relative to each other. But overall, a very healthy market to be part of, driven by some extremely strong fundamentals. Now if we look at the market as defined by the product categories that Arjo has been active in since our listing, we see that, that is a market of roughly SEK 70 billion as of last year that will be growing at an overall CAGR of around 3% towards 2024. Now there are some significant differences in this growth between geographies. As you see here in the slide, you will have that -- the Western Europe will be growing just 1% to 3%; North America, 2% to 4%; and then our Rest of the World at 4% to 6%. Now in addition, and as Joacim also mentioned earlier, we know that within these markets, acute care for Western Europe and for North America will be growing at roughly half the pace of long-term care. That is not the case in Rest of the World, where the access to, should we say, basic hospital care is the main driver. As a sum of this and -- that will tell you that Arjo, having a greater exposure to Western Europe and to the U.S., alongside with -- we continue to be slightly skewed towards acute care. We are exposed to a growth that is roughly 2%, 2.5%. So in this context, we are confident that we are currently actually gaining market share given our exposure. Now to inform decisions about the future, it is helpful to zoom out a bit and take a global macro view on health care. World health care spend is growing faster than our market and in fact, faster than world GDP. And as I said, this is one of the few things that is relatively easy to forecast quite far into the future. I guess one key assumption is that everyone would like to have access to the same or better quality of care than what is currently the standard. And as you can see from this, you can say a simplistic illustration. This is a troublesome situation. We simply cannot afford health care as we know it today if things does not change. To us, this has both some, you can say, a competitive positioning perspective, but also very much from a sustainability perspective been considered closely. And we find that one must decide that either all market participants within health care must define themselves in terms of whether they are part of the problem causing this trend or they can -- or how they can be part of the solution. And that is very much, you can say, the backdrop for our strategic thinking around our markets. Now again, at another high level, we stay at that high level, we can break this global health care spend down into a number of simplistic buckets. The total spend is around SEK 80 trillion as of 2020 and is estimated to grow at 5% to 7% over the next decade. In a simplistic view, this total spend can be broken down into equipment, where Arjo is active. Our market that we just discussed in the previous slide roughly -- is less than 1% of this equipment fraction of world health care expenditure. Total equipment spending is roughly 1/6. And then you have another 1/6 for utilities and infrastructure. And then you have roughly 50% for cost associated with labor, salaries, pensions and whatnot. And then finally, you have a miscellaneous category of around 20% that holds financial obligations, litigation costs and whatnot. It is noteworthy that this total spend is growing at twice the pace as our market in terms of value and volume. We believe that those growth numbers are roughly equal, but this just goes to show that our continuous efficiency improvements has and will need to continue to keep up with an ongoing price erosion in the market. As was established, there is a significant and growing pressure to keep cost in check. But when considering care providers and health care systems' possibilities to reduce spend across these categories, it is understandable that equipment, although just 1/6 of the total spend, is a prime target for chasing expenditure reductions. Utilities and infrastructure, that is a very large and difficult spend bucket for a health care facility, where you don't have substantial bargaining power to reduce those cost. Labor-related costs, salaries, we're talking about unionized labor. We're talking about a topic that is highly politicized. And overall, what we see as a significant trend, the overall demand for health care personnel is far greater than the supply today and will continue to be that way in the future. And for the miscellaneous items such as financing and litigation, this is really a, you can say, a systemic and -- systemic or a result of how operations work and very difficult cost bucket to address as a health care facility. Now this might sound like quite a dire picture that I'm painting here, but it isn't necessarily. This is just a call for a different approach to health care, as was stated in the previous slide on whether you choose to be part of a problem or part of a solution. Now the increasing health care expenditure, as one would expect, is obviously a function of delivering more care to more individuals. But unfortunately, that isn't the full story. For health care, a number of avoidable problems associated with reduced mobility or management thereof are driving enormous unintended spend. And here, we have just 3 examples. There is a much longer list, but these are some of the examples that we ought to be spending time on a little bit earlier today. You have caregiver injuries. That is a SEK 75 billion problem. Predominantly, this would sit in the salaries bucket of the previous slide, and then there's also a litigation component. This is an area that Arjo is already addressing with our Patient Handling and Hygiene portfolio and our expertise, knowledge about how optimized workflows can be implemented. An even larger problem is pressure injuries, which we'll also be spending more time on here today. That's SEK 0.5 trillion in global spend on this problem alone, and this problem drives a considerable amount of salary-related cost. General litigation -- this is one of the most litigated, you can say, hospital-acquired conditions out there. And the sheer effort a hospital or long-term care facility needs to put into managing pressure injuries is just tremendous. Then we have a problem that -- a problem of venous leg ulcers. Also a very sizable problem of, we believe, more than SEK 300 billion. Again, a problem where the equipment component is a very minor part. This is a problem where it's outpatient care. The nursing time that goes into dealing with this condition is very, very substantial. And again, a product -- a problem that Arjo now has an ability to address. So with these significant issues that have a majority of their cost component outside of the equipment bucket that Arjo is currently defining as its markets, where -- and especially, the big items here will be in labor cost as adverse outcomes result in conditions requiring even more care. But also, as mentioned, the litigation component here is significant. By considering the mobility-related challenges and associated cost as our market, that market expands vastly, and conventional equipment manufacturers' competition becomes much less relevant. This approach implies partnering with customers in a different way around achieving these outcomes and taking a much greater responsibility for these mobility challenges to ensure that overall costs are brought down and as a result, the imminent health care crisis of health care expenditure growing faster than GDP is avoided. Now onto -- Joacim gave you the, you can say, we're here now and observations around COVID and how that affects our business. How that affects this story, I just told you, how we look at the market is very much -- if you look at the left side here, going into this crisis -- or going into COVID-19, we already had an issue in terms of world health care expenditure growing faster than world GDP. What has happened is that world GDP has taken a dip, and world health care expenditure has increased quite dramatically. And no matter if you are a publicly funded and publicly delivered health care system like most of Europe or if you're a privately funded delivery system like the U.S., the investments that have -- needed to be made, you can say, the depth taken upon nations and health care system is -- are staggering amounts. And the outcome of all this is that the need for -- the need to transition to a different type of health care, a more outcome-focused health care is now greater than ever. So with that...

Yes. Thank you, Christian. A couple of questions have come again, and we'll just give time for a few more to flow in. So do please use the Q icon, and you can send any questions for Christian after this last session. A couple of the first ones coming up. Wonderful -- I mean, exciting. I mean a new corporate strategy coming up. Arjo now being part of the solution. Very exciting and a lot of opportunity. But are there any risks associated with where we're going?

Yes. I guess you can say there is a risk in terms of -- and we will get back to that a little bit later in terms of how really different parts -- or how to what extent the market realizes the trouble that we are in. And some markets will be acknowledging this and will be ready to adopt some of the outcome-focused offerings from Arjo. And for some, it will take more time. But this is really already built into our plan, and we will get back to how we see a phasing of this approach. It certainly won't be a one size fits all, and it certainly won't be a 3-year job. That's also why I think why we -- when positioning this work, we've said this is a 10-year journey. This -- that's quite a long time for a corporate strategy.

Yes. And that was actually one of the questions we received earlier, that people thought this is just a 3-year strategy. Well, look, no, it's a 10-year strategy we're, of course, looking at.

It's a -- the entire journey, we believe, will take 10 years. But then, obviously, in order to make it tangible, we do have a couple of guiding points along that journey. And some of those -- and the number 2025 and some of the things we believe are realistic by then, we'll be talking on a little bit later on today.

And of course, launching this in the middle of COVID-19 in a year which has been like no other is a challenge in itself. A question here from Sten Gustafsson from Nordea. Do you expect to see a change in price pressure over the coming years?

Yes. I would say, certainly, if you can't deliver more value than you do today, you would be susceptible to price pressure. Health care across the world -- nations across the world have spent far more than they could afford. And somehow, that needs to be balanced. And that's also one of the reasons why you can look at this equipment spend bucket. Within that bucket, as a provider, you have the option of simply saying, well, we will do a good enough medical bed for this segment. We will do a good enough lift for this segment. So unless you can prove that your solution does something that enables them to take cost out of somewhere else, I think it will be a different -- a difficult path going forward.

Maybe just a follow-up to that in terms of price pressure, but also competitors as well. Are competitors looking into providing outcomes when it comes to being a mobility outcome partner?

Not really in our -- in, you can say, the areas that we are active in. We're actually a quite unique mix of competent portfolio. To a large extent, besides Stryker and Hill-Rom, who only overlap with our offering in certain areas, we predominantly compete against much smaller companies who don't -- who wouldn't have the, I'd say -- I'd be a little bit rude and say the capabilities to put something of that sort together. So they will continue to be and might be driving actually the price pressure.

Okay. There's a question actually here directly related to one of our category areas, which is deep vein thrombosis, DVT or VTE. Wound care and also venous leg ulcers are fairly fragmented and competitive markets. How do we expect to get our share of voice and what investments are needed for the future?

For which one of them did you want a comment? On DVT or Wound Express?

DVT, specifically, or the category area of venous thromboembolism.

Okay. Well, I don't know if I would say that VTE is a very fragmented business. You have one very large player in Cardinal Health, and then you have a handful of players that are lesser size than Arjo. We certainly consider ourselves #2. DVT is a relatively -- it's a very mature technology. It's a very mature market. I guess what might change in that is to what extent will that therapy be used outside of the U.S. And to us, that is really the biggest opportunity that is to, you could say, open up more markets to that therapy. As we know, it's far superior to the alternative in terms of using drugs if your end goal is to have fewer patient death. But that's a marketing effort on our side.

Absolutely. And of course, share of voice now, as we begin to communicate even stronger our strategy, as of today onwards, of course, it's going to get the share of voice even for Arjo itself as a brand out there as well. Maybe just one last question to follow up on that. We spoke about -- we've spoken about VTE. We've spoken -- you spoke about Patient Handling, Pressure Injury Prevention. What about the other category areas in terms of what are the trends and the insights you see across categories?

In -- if -- and we can start with medical beds. So medical beds, I would say, is a very fragmented category. Hundreds of players. Globally, I guess, a handful of truly multinationals active in that. I think there seems to be 3 plays. Either as Hill-Rom and Stryker are doing, you're trying to implement as much connectivity and [indiscernible] as you can into a bed and have it be part of a larger system that could be -- that includes patient monitoring. Or you take the route of realizing that there will be a good enough alternative. You try to make something that is relatively simple, it's high quality and to a large extent, serves the needs there. Or you have a look at what clinical therapies or what combinations of problems that are existing in hospitals can be -- can the medical bed be considered a part of. And that's what Arjo -- that is the view we are taking. For other categories, Nick, we...

Hygiene, disinfection...

Well, hygiene -- the hygiene category, I guess, is a relatively stable -- the dynamics within that is to what extent can health care still afford to provide decent, decent care. We know that an in-bed wipe-down is a much cheaper option for health care, but also has a lot lower, you could say, care quality associated with it. Then there are questions then between do you actually bring people into a shower? Or do you give them a bathing experience which have -- that have other, especially for dementia patients, positive effects? So it's really a question -- I think we'll see a more fragmented market in terms of what demands are.

Well, thank you. There seems to be no further questions coming again from the audience at the moment. So I think that's the end of your Q&A session. But we're going to be inviting you back after the break to give a more in-depth interview on how we're going to improve clinical and financial outcomes together with Joacim. But at this point, I think, ladies and gentlemen, we'll take a 5-minute break, and we'll return -- well, maybe an 8-minute break, return at 12:00 on the top of the hour. Thank you.

Thank you. [Break][Presentation]

Good afternoon, everyone, and welcome back to Arjo Capital Markets Day 2020. We hope you enjoyed the video we just showed of Peter Genyn, Paralympic gold athlete. Of course, the Olympics were postponed this year, and we'll be supporting him next year in 2020. But also a man that suffered terribly from pressure injuries and something that Arjo's solutions have helped throughout the years. Now we hope you're enjoying the presentations. Do hope -- do please send in your questions as we go along. We're now going to have a session to go into our update strategy beyond 2020. So we're going to have a deep dive into it with Joacim, and then Christian is going to join and give an import on how we aim to improve clinical and financial outcomes. So for starters, I'd like to introduce Joacim again up to the stage to update our updated strategy beyond 2020. Thank you.

Thank you very much, Nick. And I'll have the pleasure of taking you through the first parts of this, and then invite Christian up on the stage to go through the second part of this presentation, and I will then sum up. But let's start with where we are today. And as you've heard from myself and as you've heard from Christian, we are ready to take the next step as an organization. We have built a strong foundation that we can continue to build our company on, and we know in which direction that we want to go. We see a significant market opportunity. Christian described parts of that market and also how we intend to redefine the market and what parts of that market that we are going to address. We see that there is major costs involved in treatment of reduced mobility -- or cost associated to reduced mobility, something that we will be addressing through our new corporate strategy. The outcome-based health care is more important than ever. It was important before COVID. It's even more important now, and we believe that this will also spearhead our new strategy for the future. We are well positioned, and we are well positioned to take leadership in this area, something that we have every intention of doing when becoming a mobility outcome partner. If we look at our customers, they are facing multiple different challenges when it comes to optimizing care for people or for patients with reduced mobility. It's anything from pressure injuries, patient fall, venous thromboembolism, venous leg ulcers, and you also have the very increasing part of managing patients with dementia. And on top of that, you also have, obviously, the very important factor of the caregivers, making sure that they can provide safe care for their patients. Safe for the patients, but also very much safe for themselves. And what we want to do in this one is to bring value to our customers, bring value to health care by providing very clear outcomes, clinical and financial, to our customers. And by doing that, as I said, create value not only to the health care itself, but for the patients and for the caregivers within that. We are, as I said, well positioned in many areas to start this journey and make sure that we have a good traction on that journey. We are already now, as Christian was mentioning, a leading player in most of our categories. We are there with leading products. And I'll lead you a little bit into the portfolio development that we've been looking into as well to further underline that matter. We have, through our history, gained a very good understanding about the problems that our customers are facing. And with the help of new products and with the help of new processes, we believe that we have every opportunity in making sure that we can help them along that road. We have a strong global reach. We have sales reps and people selling our products in more than 100 countries, where 35 of these countries are with own sales forces. And we believe that, that gives us a very good opportunity to spread the word and make sure that we get good traction on this one and tap in to the big potential that we are seeing when it comes to becoming a mobility outcome partner and speak about true value creation in health care. We're, therefore, looking into implementing -- or we have already started implementing a 2-tier strategy, which in -- on one side, we'll be focusing very much on doing what we've already done. There is a lot of things left to be done when it comes to the operational efficiency journey. We have a number of things left to be done when it comes to updating our processes. We have a number of things left to be done when it comes to internal work. And we have a number of areas where we can improve in how we are approaching our customers and how we are supporting our customers in the most efficient way. We have a number of areas here that we will continue to work with. It's around the operational leverage. It's around making sure that we're using our cost throughout the value chain in the best possible way. We have a journey to be done around our core rental development. We have procurement efficiencies that we can work, both when it comes to direct purchasing but also indirect purchasing. And we obviously want to make sure that we have OpEx continuing to decline as a percentage of net sales. But we want to move the company towards creating a sustainable competitive advantage becoming a mobility outcome player. We want to do so by continuing, obviously, to grow people and business together, and we really want to continue to create a very sustainable journey forward, sustainable internally but also externally, and we want to create that through having a very winning culture. When it comes to building a sustainable competitive advantage, there are a number of areas that will take us there. And as I spoke about earlier on, it is about reaching the competitive advantages by becoming a mobility outcome player, making sure that we're developing outcome programs, that we are investing in those programs aligned with our own product development, making sure that all wheels are turning in the same direction and at the same speed. Adding step-by-step also digitalization, but adding digitalization in a way that it can be used by caregivers in a good way. Not just adding digitalization for the sake of digitalization, but using it so that -- or implementing it so that caregivers can actually take good advantage of it when providing care for patients with reduced mobility. A very big part of this journey is also around developing skills and competencies within our own organization. And as Christian was talking about earlier on, this is a journey. We will also, in 10 years, need to be professionals in selling a bed or one patient lift. But we need to, together with the entire organization, start the journey in developing skills and competencies to be able to truly provide mobility outcomes for our patients and -- or rather for our customers and their patients. The rest of the presentation will focus -- or this part of the presentation will focus on the right part of this page, around creating a sustainable position and sustainable competitive advantage around being a mobility outcome partner. We will obviously come back to the left part around continued improved internal efficiencies when we speak about the financial targets a little bit later on. When we look about the solutions and the solutions that we will be targeting over the next 10 years, it's very much solutions around issues that is related to reduced mobility and how we can get people up into mobility and speak about early mobilization. It's about preserving mobility. And in our case, that has to do with being able to predict risk of fall and also, thereby, preventing them. We want to then also move into the area of a safe, dignified and efficient care for people with reduced mobility, making sure that we can take very good care of patients and residents when they are in that stage. And we want to make sure that we're preventing the negative effects of mobility. When you're -- don't have the mobility you should have, making sure that we prevent things from happening. And Christian was touching on areas like pressure injury prevention, where we believe that we can play a very big part. And again, it's around preventing and making sure that we minimize the risk for patient falls, pressure injuries, dementia care, helping our caregivers to take as good care of the increasing numbers of people with different types of dementia, et cetera. And obviously, the very interesting and new area around venous leg ulcers that we will be talking about a little bit more in the next 5 minutes. The third part around the solutions that we are going to look into and already looking into, that is around regaining mobility. We all know what it means for a person to go from immobility up into mobility and the positives that, that has for your own life and obviously, also when it comes to health care and the cost related to having a person immobilized. So we need to work on solutions where we help people to regain mobility and thereby, also helping health care to lower their costs, for example, through lower days in an ICU. Today, as we stand here, becoming a mobility outcome partner is very much a strategic -- rich strategic intent from our side. But on this journey, moving Arjo towards becoming a true mobility outcome partner, we have every intention of putting the mobility outcome and being a mobility outcome partner in the center of what we're doing. Remember that this is a journey. We do not foresee that we will flip a coin or turn everything 180 degrees based on a number of factors that we need to take into consideration. But the journey is there, and we have every intention of moving this from a strategic intent to something that is very core for all of you while maintaining, obviously, a good short-term focus and making sure that we're delivering upon the commitments that we have given. To be able to be truly successful in the mobility outcome area, we need to master, in our view, 3 -- or 4 different areas. Firstly, we need to fully understand what the problems that our customers are having and how are products and different solution can help them solve these different situations. That is where I believe that Arjo has already from the past, but gaining even further traction now through our global reach, where we get in contact with a number of people across the world, both from KOLs, down to users, and where we can assess and paint the picture in a fairly detailed way. Based on that, we obviously need to have first-class products. We need to make sure that these products are helping and are very much related and directed towards the problems that we have identified and making sure that we have a constant flow of new updated good products that would help our caregivers to solve the problems with their patients. We also need to use our experience that we have across the global markets and what we have internally also on more global functions to make sure that we are, step-by-step, helping the markets to understand the efficiencies that could be gained by looking at outcome, by looking by value-add in health care in contradiction to just buying a product or just buying a product and use it in a very isolated way. And we have a responsibility, and we have the knowledge to step-by-step turn markets into this direction, a direction that will be very beneficial for health care systems and something that we believe will also drive our ability to drive good, profitable net sales in the future. But what we need to be able to do is the fourth one as well. And that is when we are starting that journey with the different system, we also need to be very precise on what we mean with outcomes. We need to have enough data, and we need to have good data collection, and we need to be able to use that data to be able to prove the claims that we have. And that we can, in the long run, make sure that we're also taking on a pretty direct risk-sharing approach with our customers, where we are that certain about the outcomes of our solutions that we're providing to customers, that we obviously are also there to take a fair share of the risk and help them understand the advantages with those solutions. But as I said, I believe that we are well-positioned in those 4 categories. And we have already started to build a number of steps in this, and we will obviously continue to do so. In the upper part of this model, this is where we do consider ourselves to be the leaders today. And the lower section is where we are the pioneering leader, where we have started the work with, as Christian was saying, probably areas where we are pretty alone right now in the area where we are playing. And we believe that we can, through the advances that we've already done, gain a sustainable competitive advantage towards customers in this area by continuing to drive this. But if we start with our products, and I'll come in a little bit in the next slide to the different product categories when it comes to product development. But what we have done over the last 3 years, we have evaluated our different portfolio opportunities in a good way. We have assessed well where we need to drive, not only to drive the short-term agenda, but also making sure that we already now take a good stab at what is needed as a mobility outcome partner. We have done a very ambitious portfolio road map that is ranging really starting in 2019, and in our case, going as far as 2023, 2024, where we already know -- now know how we're going to address the capacities that we have in-house, and what type of focus we need to have in our own portfolio development to be able to, in a very good way, support the mobility outcome approach that we're having. That will also mean additional gross spend into our R&D or to our product development over the next couple of years, an acceleration that you have seen and will see during 2020, you will continue to see it also during 2021 and onwards. And I'm very excited when I look at the different portfolios and how they connect with the different outcome programs that we are developing because that is a very important part as well. And moving down to the lower parts of this slide is that we need to make sure that the development of our outcome product is extremely well aligned with the portfolio development. It's not only to look at a portfolio plan in isolation, we need to see it very well in connection with how our mobility outcome programs are developed, also from an outcome perspective. What we have done as well to truly reposition ourselves and reposition our brand is that we have today, if you would walk into our international website, you will see that we have repositioned our brand through the launch of the new brand essence, empowering movement, something that I, in my view, in a good way, explains how we want to drive and move this company going forward. We have established an outcome center in the U.S., already starting in the beginning of this year, where we, as both myself and Christian said earlier on, believe that the U.S. is going to be the spearhead of this rollout and where we already today have the biggest understanding on the need to move towards mobility outcomes. And we have addressed that with investments into the U.S. organization learnings that we will obviously use for the global. And we have also invested in a digital assessment tool that we will be using and that we will be rolling out throughout the world over the years to come to make sure that we're supporting well the outcome-driven approach that we want to have. As a little bit of a side note, just to give you a little bit of flavor of what we are doing within the current portfolios. And I've been talking myself quite a lot about the situation that we had in 2017 and when we spun off from Getinge. We were quite heavily underinvested in our product portfolios. Good products still but very old products. And we saw very early a great need to start investing more into our product development, but not only investing more, but doing it in a more structured way, aligning it with the strategy that we had. So during the years '18 and '19, we have done a good job to formalize product portfolios, aligning them with the product development capacity that we have within the organization, seeing where we need to add more competence and more capacity to be able to drive the portfolios in the way that we want. And if we look at the bigger categories that we have within Arjo, in Patient Handling, as a vast refurbishing of the product portfolio with new passive lifts coming with a new lateral transfer range coming in 2021 and where we have the clear goal of, in the beginning of 2023, to launch new ceiling lifts, a new ceiling lift solution, which would then be a further good complement to our outcome-based discussion in Patient Handling. When it comes to Pressure Injury Prevention, and that will be linked very clearly into Christian's presentation in just a few minutes, that is around updating our -- more or less our entire portfolio starting in the end of 2021 going into 2022 and 2023, which will be a very good complement to the SEM scanner that Christian will be speaking more about later on. But a lot of investments going into our Pressure Injury Prevention category and where we will see continuous launches over the years to come. VTE prevention, smaller updates. And it's around compliance monitoring. It's about making sure that we can produce the garments as efficiently as possible. In hygiene and wellness, which many of you know, we are introducing, in the end of 2021, a complete new portfolio around bathing, both including the actual bath tubs and equipment surrounding that. But also when it comes to mobility showering, which we will see in the back end of 2021. Around the medical beds, which is actually probably, especially in the high-end specification side of things, the area where we today have the youngest product portfolio with our Citadels and Citadel Plus. We're already now looking into how that product portfolio will look in the future and how we can continue to develop on the good base that we already have. And we will also be launching, as a good positive to our advances into long-term care, we're going to launch a new bed for long-term care during 2021. These launches will drive, obviously, net sales growth. Remember what I said when we said that we had managed to turn the ship around and grow this company within the interval of 2% to 4% already in '18, '19 and '20 with products that were pretty old. Good products but pretty old. We believe that by launching these products, we're obviously putting a little bit of bells and whistles into the hands of our sales reps and further strengthening the motivation for them to go out there and sell the products, isolated but also as a part of a solution. But probably the biggest part when it comes to these launches, if you look upon them isolated, comes from a supply-chain efficiency perspective. We have a very scattered product portfolio today. We are running, for example, our direct purchasing in a firefighting mode, given the age of the portfolios and the number of suppliers that we have. And here, we have a great opportunity to -- with the new models, once we have phased out the old ones, to gain good traction, mainly in direct purchasing, which we believe will be very beneficial to our profitability journey going forward. But we're also seeing a pretty clear for everyone possibility around portfolio pruning. There is a possibility for us, obviously, to cut on product categories, given that we are working in a much more modular perspective, much more modular way in the future categories that we are launching. We are looking forward to see how we can prune our portfolio pretty significantly starting really in 2022 and onwards. Our new strategy will obviously be supported by a number of key pillars, where our people and our organization is probably the most important one. We have managed, as an organization, to stabilize what we have, making sure that we -- all of us, all the 6,200 employees of Arjo understand in which direction we want to go from a more strategic perspective. But we've also gathered around our guiding principles, which is really describing how we want to act and how we should behave within Arjo as an employee of Arjo. And they will be the foundation for our future strategy. We've also created a number of leadership behaviors that we want our leaders to act according to, and we're obviously making sure that we are training our leaders, which is very important in this change journey that we're on. And as I said before, we need to continue to develop skills and competencies to match with the journey that we have in front of us when it comes to be a mobility outcome partner. Digitalization is continuously very important for the development, and I believe everybody involved understands that there are great possibilities with new types of digitalization coming. We need to be in the forefront here. We need to understand how we collect and how we assess data, and we also need to understand what type of digital solutions that truly means a difference to our caregivers. Just introducing and saying we have something digital will not help health care. We need to be very clear on what type of value it will bring to our customers, and how that fits in with our mobility outcome approach. We are also going to work, as before, actively with sustainability. And we have just agreed between ourselves and also with the Board of Directors on our sustainability framework 2030. We are already now a very green company. We are contributing heavily to a sustainable health care, which in my book, is still very big and important parameters, but we obviously have continued step to be taken, both when it comes to our offering when it comes to how we're acting as a company and how we make sure that we're an attractive workplace for our employees. With that, I would like to hand over to Christian for some further insights around clinical and financial outcomes. Christian?

Thank you, Joacim. And so for this section, I'll provide a couple of deep dives into some very exciting areas with significant upside potential that comprises, you could say, the first real tangible steps on our way into this future that we've been talking about. It really exemplifies the transition of becoming a mobility outcome partner. So as Joacim went through with you, we have a very solid foundation for moving onwards. This is what we call the Arjo 2020 Base Camp. And as Joacim also mentioned, 2 growth driving elements will continue from that base. He had talked about the continued efficiency journey, making sure that all of our processes are optimized and activities are well-aligned. And as Joacim also mentioned, the continued expansion into Rest of the World to get exposure to that higher -- that higher growth rate that, that allows. Then we are adding 2 new elements to this framework, and then those are really what constitutes the mobility outcome partner. They are adding new technologies and it's venturing into new business models. As these are new and thus not exactly as predictable as what we have been working with for the past 3 or 4 years, we have indicated them as this is where there is significant upside potential to what you will hear in terms of our financial targets. The common denominator of these 2 areas that are often linked is the creation of superior value by generating better outcomes. Rarely, but on occasion, in our context can an outcome be significantly impacted by a technology alone. And more often, considering the challenges that Arjo are addressing, mobility outcomes, does -- it is their need for some beyond device services to generate that outcome. And hence, a need to venture into new business models, where there is a pallet of services around the product to ensure that these outcomes are actually generated. I will, as Joacim mentioned, be increasing our gross versus, say, technology R&D spend by SEK 50 million over the next couple of years with a target to spend that on technology that, in itself, like what we will get into in a minute with Wound Express, can directly improve an outcome. But also very much in technologies that will enable Arjo's broader portfolio to be as effective as it possibly can. Simultaneously, we will be detailing what we call Programs. And these are consisting of a, you say, a digital assessment tool, a way for us to understand the problem we are trying to solve. We are developing training and protocol guidelines that goes along with the product and ensures it gets used in the best possible way. And then also, say, the capabilities and the infrastructure to track and follow-up on outcomes. These programs and the implied shift in business model will really take Arjo on a path of becoming a mobility outcome partner. And for this session, I will talk you through two examples: the introduction of new technologies that is the Wound Express; and then for the introduction of an outcome program to address pressure injuries that has a new technology component. That is what I will venture into Pressure Injury Prevention with SEM technology as the enabler there. This outcome program that we will deep dive into here will obviously be followed by other such programs, say, targeting management of management of fall risk, where you, again, have a program that has Arjo's current portfolio. You need have the addition of, for instance, our partnership with Next Step Dynamics. So connected smart devices that will allow Arjo and our customers to know more certainly about the risk of patients and provide within more individualized care. Such solution can also include technology from BrainLit, who has BioCentric Lighting. We know the therapeutic effects of resident patients having a better exposure to lighting, and we believe that if we are going to take responsibility and also share risk on an outcome, we will then have a much greater -- it's a pallet of tools in order to impact those outcomes. But now also going into -- looking at the first problem here and Wound Express and the issue of challenge that, that is addressing is that what we call a venous leg ulcers. A venous leg ulcer is a condition that happens if a patient is diagnosed with venous insufficiency. Put simply, the pump and the plumbing does not supply enough blood flow through the extremities in order for the -- in order to remove toxics and provide oxygen to the skin. And for that reason, the skin deteriorates and also appears. This is a very common condition, roughly 1% of an entire population will, at some point, get a venous leg ulcer. And a lot of that 1% will, not only get one, they will get one, they will heal, and then they will they will get another one. And that is because there is an underlying condition called venous insufficiency that is a chronic condition that is incurable. And as stated also earlier, the cost associated with managing venous leg ulcers are just staggering amount. So we estimate SEK 300 billion globally. And for the U.K. market, which we, for good reason, have been looking more into, this cost, that is SEK 25 billion. So what we're introducing is a technology called Wound Express, which is shown to reduce these venous leg ulcers much quicker than any existing therapy out there today. Average reduction over a period of 16 weeks for patients who have had leg ulcers for a staggering 4 years was 60%. It significantly reduces pain levels, and it provides -- and it does so because the therapy is not provided on the wound side itself, but on the thigh. And then very importantly, as we're not just talking about clinical outcomes, but talking about financial outcomes, this therapy can be used at the comfort of the patient or resident's home. No need for having the nurses involved, which we know for this problem, in particular, is driving 80% of the cost side of the problem. Now as I mentioned, we've been working with bringing this technology to the market for a couple of years now. And it's roughly 1 year ago when we went out and made it public that we had a new technology coming to market. And at that time, we had some evaluations ongoing. We've continued those evaluations. And where we stand now is that we have a, as I said, an average reduction of 60% for the patient part of this evaluation study. These studies have been done across 10 clinics, 9 of which have been in the U.K. and one actually just is at 80 kilometers north of here in Helsingborg have simply shown incredible results. So 35% of these also is completely healed and the average reduction in size is 60%. Right now, as we speak, a lot of publicity is created around this. Many of these sites are clinics who were part of the valuation. Some have already and some -- in the process of publishing papers on these findings. Now when we talk about the opportunity for -- to address and issue our cost base or expenditure for venous leg ulcer, it's important to understand that, that's not -- that there are more opportunity for Wound Express. But when we talk about that, that is the opportunity for the cost base to address for Wound Express as an adjunct therapy and as a stand-alone therapy for venous leg ulcers. Then there are a number of other leg ulcers, there are arterial and mixed leg ulcers and there are diabetic foot ulcers, where we also are in the process of doing evaluations to prove the clinical efficacy of Wound Express on those type of ulcers. And then finally, as I mentioned, venous mixed or arterial leg ulcers is a disease that is a symptom of an underlying condition. And we believe that it is possible to actually move this therapy more into prevention. So instead of healing the ulcers, we will be able to have a device that, in a prophylactic fashion, can prevent them from occurring in the first place. But for today, what we are talking about this cost base to address are the other 2 buckets on your left here. So the replacement therapy for managing or healing venous leg ulcers. Our plan of how we're going to bring this to market. And first of all, we've obviously considered different, you can say, overall approaches. Is this something that Arjo should bring to market? Should we license the technology? Should we sell the technology? And when doing that, so we came to the conclusion that our value capture, the value for our shareholders would be the greatest if we take this to market. And we do have -- we're a global company. We have an infrastructure. We have a lot of expertise around rooms in general. So we have clinicians that would be able to do local pilots, help customers get up to speed with the product. What we do need is a dedicated sales force, and that is something that we are building in association with the plan you see here. The status of -- we launched Wound Express in the start of 2020, quite a bad time to be launching in the U.K. as a consequence of COVID-19. The U.K. shutdown, all outpatient wound clinics and patients were really asked to just manage their -- the leg ulcers as well as they could at their homes and static compression and dressings were sent to them and they had to apply them themselves. So it's very difficult to engage in the market. Despite that, the interest has been extremely high, and we actually now have a waiting list of clinics that are wanting to be part of evaluating the product. And we also have -- we have received the first orders and the product is in the market. That, of course, will continue, and we've also had Sweden on here. So as we did an evaluation in Helsingborg, we've cleared the product for being sold in Sweden, we are going to be taking it to market and focusing more on that during 2021. Then obviously the largest health care market in the world and certainly also the largest market for venous leg ulcers, the U.S. will be the next market that we will engage with. We are planning on having an FDA clearance sometime in Q2. Plan is early Q2, but with COVID, we are anticipating there might be slight delays there. And therefore, what we are considering is a Q3 launch with a dedicated sales force and the support from our, let's say, clinical community and our U.S.-based infrastructure. Then in the next quarter, we'll do the same thing in the -- in Europe, in our larger markets namely, Germany, France, Italy, where that infrastructure also exists. And then after that, we will look at Rest of the World markets, distribution opportunities for Wound Express. Now all of this together makes '21 a very, very important year for Wound Express. And as I said, this is one of the areas where we believe there is a significant upside, but it's a little bit early to say how much of that can be realized within the next couple of years. What we believe is, or what we know is, that we're currently doing an RCT. That was delayed because of a shutdown caused by COVID. We are very confident about the outcome of that RCT, and that will now start in December, and will take roughly 1 year. We also are very confident we will get a FDA 510(k) approval during Q2 of next year, and we will start commercializing in the U.S. We will have to see how that commercial traction gets on. And then we also know that we have this other dimension of applying the technology to other problems or the cost bases or new markets to venture into. So we really do have a great product that already is having some impact in the market, but there are a number of major, you could say, key discoveries that we will get all in 2021, that really will let us know exactly how high is the bar here. What we believe is that there could be as high as a SEK 400 million net sales upside by 2025. Then moving on and moving into -- is a less a technology offering. There is a technology component. That would be the SEM scanner. But really looking at where technology isn't enough to create an outcome, where something else has to come with the device in our business. It's very much referred to as the beyond device value-add, and this is really the Arjo approach now to prevent pressure injuries beyond device offering. Joacim mentioned the 4 areas to master in order to be successful with this new direction, this new corporate strategy. And there's a very great importance of those elements and how they relate to what type of relationship you end up having with your customer. So most companies in our business, including Arjo, as mostly including Arjo as of today, traditionally, we are companies selling a box. And what we need is one of the elements in that framework. We need to have great products. And then they can be compared from a [ spec ] perspective and obviously then divide it with whatever price point they sit at and the customer makes a decision. That's a very transactional relationship you have with your customer. As soon as you build other elements of value onto that offering, you can start taking steps up this ladder. Your value contribution increases, the complexity of your offering increases with that. And really the end state of that, and I guess the best example would be would be a company like Fresenius starting out doing dialysis machines, ending up actually running the dialysis ward. This is the journey that Arjo is on. And we are not starting from scratch, we are not solely a box selling company today. We have already started this. And what we -- as Joacim again mentioned here, in the U.S., where the market dynamics allow for this, we have a program called Arjo Safe Patient Handling program. That is a program that includes our Patient Handling portfolio. It includes our, you can say, globally collected advice on how to manage immobile patient. It includes training of staff and includes a way of following up on how you perform on managing immobile patients in a safe manner for your caregivers. And this offering comes with a guarantee from Arjo where we -- if you do not achieve a reduction of x million in terms of workers' compensation, claims and litigation, you don't have to pay for this offering. And that's actually relatively advanced. And the only [ difference ] step between what Fresenius does in delivering care is to have a, say, more of a partnership and a longer-term arrangement where there's no -- well, there is essentially a guarantee, but the invoice that Arjo will the sending to the customer will be relative to the outcome achieved. And this is where we aim for. And I think for different parts of our business for different problems to solve, we aim at lending somewhere between an integrated outcome offering where there's a guarantee at risk or a partnership where the risk is shared or the outcome is shared between us. So we've done this for Safe Patient Handling in a small scale, and that will be exported to other geographies as they are ready. And then what we're going to do is to create more programs like this. And the first one is around Pressure Injury Prevention. And as I mentioned, we -- earlier in the insight section, this is a huge cost burden for health care, SEK 0.5 trillion. And it's not getting better. I think that's one of the, let's say, unique and a little bit frightening facts about pressure injuries. Most other, what they call HACs, or hospital-acquired conditions, that have been in focus for the past at least 10 years. Generally, there has been an improvement. We are better at -- we're doing better in terms of caregiver injuries, we're doing better in [ fall or ] accidents but for pressure injuries, that is a problem that is continuing to -- that is where the situation is deteriorating. If we look at how this SEK 0.5 trillion is spent, a minority of that is spent in terms of preventing pressure injuries from happening. And that happens in terms of what time do you allocate to assess a patient's skin visually. Do you spend a little bit of, if and doubt, move them on a pressure-relieving mattress, et cetera. The vast majority of this spend goes into either toward treating an existing pressure injury or you could say, collateral cost associated with all that treatment, and that can be litigation. It is the -- generally, the -- obviously, the length of stay for that patient increases significantly. There's a lot of overhead around that. But then you may ask, why? I mean, they surely know this, why haven't they focused more on the prevention? And really, to this point, there hasn't been anything that would allow you to improve your practice as we shall see now. And this is because the real issue around press injuries lies in the fact that today's practice really leads to treatment because it is flawed. It starts with detection, which is done subjectively. This is, again, the visual inspection. And that is extremely hard to visually inspect if someone is about to develop a pressure ulcer. And for that reason, that process, you can say, has an overall accuracy of 50%. 50% false positive, 50% false negative. It is, in other words, impossible to judge who is at risk of getting a pressure ulcer before it's -- before there is a pressure ulcer. And therefore, you end up spending so much on the treatment. What Arjo now with BBI is able to do is to, you can say, enrich or perfect this first detection. You, with the BBI SEM scanner, be able to quickly get a, you say, objective, value of the subepidermal moisture as a bio-indicator for a pressure injury forming, and you will be able to, say, diagnose, address patients on average 5 days earlier, which mean 5 days is a lifetime in terms of what can be achieved in terms of putting a patient on an Arjo mattress. If you are on Arjo mattress for those 5 days, you will not get a pressure ulcer. And this is the proposition that we are now putting together. As I said, the -- with device here with a disposable head that is mounted on the scanner. And then you simply just scan a patient at the 3 anatomical sites where pressure ulcers are most prevalent, at the heels and at the sacrum, and you do that according to a protocol where you would have a -- some kind of a view of what wards do you, in general, have patients that are at risk. And what we see is that typically, you would need to scan actually 40% of your entire population at admission. If they have a SEM delta value of more than 60%, they are at risk. You initiate some form of intervention, and you continue to do daily scans to see how that intervention is affecting the SEM values. And obviously, you increase the acuity of the intervention until the point where the SEM value starts to drop. The technology is registered in -- has an EU CE mark and is MDR-compliant. In 2019, received the FDA de novo approval, which is basically setting a precedent for an entire new category of devices as this is the first ever a medical device to introduce subepidermal moisture as a biomarker. It's also covered by a significant patent portfolio and it is, in essence, very, very unique. But this is not the only area where Arjo is investing in terms of putting together that combination of products and services that will, in essence, impact outcomes the most. As Joacim mentioned, we are more or less renewing our entire mattress offering, all the way from hybrid masses, to low air loss, to alternating pressure mattresses will be renewed over the next in the next 3 years, we'll have a tiny range. We have also invested in, you can say, the intersection between Pressure Injury Prevention as defined by mattress and Patient Handling as the -- one of the very important interventions if a patient is at risk, that patient needs to be mobilized. Obviously, at the same time, safe for the caregiver, but mobilization is offloading that pressure causing the pressure ulcer. So these 2 portfolios really, really have a strong interlinkage here when you're talking about this. And then also, as Joacim mentioned, what we're also investing in here is to build those other components, those more service-related components. The training programs, the protocols that we know will lead to better outcomes, the digital tools to assess and to track and to follow-up performance. And when we talk about sort of the efficacy in the markets, you say, understanding and acceptance of both in isolation, SEM technology and then the combination. If we start with the SEM technology, what we've seen in 2019 and then, unfortunately, a little bit, it took a backseat in 2020 because of COVID. But what we've seen is basically all of the large international, national guidelines shift to recommend that SEM technology is the optimum way to assess risk for pressure injuries. And we expect that to be well received coming out of COVID. There will be reviews of how you could say facility guidelines need now to reflect how these international national guidelines look. What we've then also done in this period of multiple years where we've had -- we said where we investigated or considered what part the SEM scanner could be part of our portfolio, we've actually combined the SEM scanner with our mattress portfolio, our protocol advice and that whole program package that I talked about. And we've done 2 evaluations. And on both occasions, we've seen dramatic reduction. And this is even for -- if you noted on the first page on the problem, the average global prevalence rate is 14%. So we chose to do this at hospitals who clearly knew what they were doing. One with a prevalence rate of 2.4, one with a prevalence rate of 3.6. So relatively knowledgeable around managing pressure injuries. And despite that, we managed to, in one case, completely eliminate pressure injuries. And in the other case, reduce it by roughly 2/3. And really, this has been part of our evaluation of why we need this in a portfolio to be successful. Really, the issue today is the lack of dependable risk assessment that will allow for early intervention. And this is what we now have in the portfolio. Our plan is to do a -- start the rollout of both the SEM technology in itself and these programs due in 2021. In Q1, we will launch our first wave countries, which besides the U.S. and U.K., are our larger Rental businesses. So with these in 9 markets, we will cover 79% of our Rental businesses, where -- which is a critical element as that is where there is a very strong sales synergy. If you look at how that business or how the potential or how the business model plays into this, well, we don't expect to be generating a lot of revenue from selling the actual scanner, selling or renting them. This will predominantly be a disposable revenue for the sensor head that will be driving that. And then also very much, this will be, in essence, differentiating our offering in our Rental business, and we foresee a quite substantial synergy coming from that differentiation in our rental business. So that really constitutes, you could say, our base projection that is part of the financial targets. But then there is an unquantified and very, very large upside in terms of the effect when you put this technology into a program, and you achieve the results that you just saw on the previous page. The value that can be extracted from that when you don't even charge for disposable head or an item or rental matters, you charge in terms of a percentage of the cost savings by eliminating, in one of the instances, pressure injuries altogether from a hospital. That value capture will be significantly higher than you would ever be able to achieve by selling a device [ capital ] or renting it. But this is really a very, very -- we're just standing in front of this. We are just going to be launching these programs, and we know the opportunity is great, but we just it's very difficult to put a certainly a 2, 3-year view on it. We can put a longer-term view, which is what we've done here. So we are very, very confident that the market will embrace a, finally, you could say, an outcome-based solution to one of the only problems that they know they haven't been able to improve their practice on. So in essence, we believe that this could be as much as SEK 600 million net sales upside by 2025. But just very difficult to predict the adoption pace of something like this, requiring you could say guideline changes, implementation of these programs does include, we're changing large bits of protocol in a hospital as the patient journey goes through there. So that was all for these 2 very exciting deep dives that are to be seen as upside to what you'll be hearing next.

Thank you very much, Christian. And I'm just going to finish off with a few slides on the transformation roadmap on the short-term focus that we have on the implementation of this new strategy before we are joined by Nick and Christian again for some Q&As. If we look at the implementation of the new strategy, as I've been mentioning on a number of occasions, this is a gradual transformation. This is a journey that we are embarking on. We will continue to support the mobility outcome approach with a very distinct continued internal efficiency agenda that will help not only to drive profitable net sales, but also make sure that we have the factor of profitability in there through additional activities, for example, within our supply chain and also when it comes to our product portfolios. But you will see us move step-by-step more and more into becoming a mobility outcome partner, putting the mobility outcome partner as core in everything that Arjo is doing. We will roll this out a little bit geography by geography. Because of the factors that Christian was mentioning, we believe that we will get a higher adaptation rate earlier on in the U.S. and North American market because of how that market is structured. And also given the fact that we have, over the last couple of years, been successful in, for example, the Safe Patient Handling programs that we have been driving. But we also see a good possibility to enter in, especially within the Pressure Injury Prevention side, into the West European market where we, step-by-step over the next 1 to 3 years and even earlier when it comes to the SEM scanner and the approach around pressuring group prevention, we'll start taking steps in introducing mobility outcome programs, making sure that we develop skills and competencies throughout our sales organization to be able to, as I said earlier on, help the market to transform into that direction. Our Rest of the World business is -- given the structure of that market, we have a number of countries that are pretty alike the Western Europe countries. And there, we will see the same kind of rollout and traction that we spoke about in Western Europe. Whereas other markets, like a distributed market, probably need to be very focused on continuing to sell products as we're doing right now. And making sure that we are, as a company, benefiting from that -- from an organic net sales perspective and obviously, also from a profitability perspective. So this is a little bit the continuation of the Arjo 2020 journey. We have a solid foundation. We have already started with a successful outcome focus in the U.S., where approximately 5% of our global turnover is now coming from outcome programs. Our 2021 to 2023 agenda, with the upsides that Christian was talking about, is around operational efficiencies, our continued geographic expansion, the new product launches that we have, a strongly increased focus around our outcome programs, moving it to the core of Arjo and making sure that we also use a more aggressive inorganic agenda to support both portfolios, but also the outcome approach that we're having. And this all to make it possible for us to reach the decided position that we have for 2030 to be perceived as the trusted partner for driving healthier outcomes for people with and facing mobility challenges. And we believe by 2030 that around 50% of our sales should be coming from our mobility outcome programs, still being a professional in selling products here and now. With that, I believe we should move over to some Q&As. Nick?

Thank you, Joacim and Christian. Fantastic to hear your insights and get a deep dive into a couple of really interesting products. Really nice to see some products actually in studio. All of our products are in this room, but it's nice to see that coming through. Lots of interesting questions coming through in actual facts. And I think I'd like to take one of the big picture ones first, that comes from Annette Lykke from Handelsbanken, and she says, "Would you claim Arjo transferring or transforming from a low to a more high-tech med tech company now? And what are the 3 things potentially could keep you awake at night about this transformation?"

Well, the very clear answer on the first one is yes. I believe that we and hopefully, we have been clear enough over these last couple of hours to explain that this is a journey that we are moving Arjo from just being a product company into a solution and outcome provider for health care globally. So this is a journey, and that's also why we're speaking about a 10-year horizon of this strategy. But yes, it's a significant move for the company. What keeps me up at night is actually not so much our own implementation. As I said, we are well prepared for it. We have created a very strong base internally, where we need to be very -- well, where we need to navigate is obviously how quickly we can move different health care systems in this direction. We know that it is very static. We know that it's pretty conservative when it comes to changing the way they're doing business. That's also why we're using the U.S. as a spearhead in this one. So it's not probably one. It's many small issues that we -- or things that we need to maneuver and that we need to navigate to make sure that we get good traction on this business. And obviously, what keeps me up in a positive way is a wish that we get adoption rates on, for example, the 2 new technologies that Christian has been presenting here to the levels where we actually want them to be pretty quickly. If we do that, again, back to the game changer discussion, is something that could significantly change what we're presenting today in terms of financials.

Absolutely. I mean, there's a few questions. Let's get a bit into the numbers because there's a few questions here. Question from Victor Forssell, ABG. Given that last year's growth rates come from your current product portfolio, what should we expect from the legacy business compared to the newly launched acquired products?

Yes. It's -- hopefully, Christian managed to present that in a good way, which I think he did. Obviously, we have no intention of -- or thinking that our core product portfolios will grow anything less than what we have produced so far. There is -- given the -- it would look strange. I mean, given the slide that I showed around the product launches that we have, what we intend to do with all those categories, we were moving them from old good products, but from rather old products into something completely new. It's obvious that we have good hopes that our, so to say, organic growth from the already existing categories will continue to drive in the same pace that it's done up until now. On top of that is a -- then the different initiatives around the new technologies. And here, it is more tricky to say exactly when adoption rate -- we feel very comfortable about what we are about to launch to the market, but it is an adoption rate question. And by quicker adoption, I believe that, that numbers will look different, and we have taken a very realistic view to how quick adoption can happen in 2021 to 2023.

As a lovely follow-up question to that actually from Victor as well. Obviously, we have U.S. as a key target, as a forerunner, so to say, but what will be needed in Europe to better adapt to outcome-based solutions compared to the U.S.?"

It is a little bit of change in system that needs to be there. Today, if you walk into a tender around medical beds in, for example, Sweden, where you need to fill out and tick some boxes when it comes to technical specification, then it's all down to price. It's obviously too late to come in and start speaking about mobility outcomes. What we need to do here is clearly, as we mentioned with Christian and myself earlier on, to make sure that we can truly prove and that we can stand by our promise in terms of the outcome discussion and then bring that to customers. And in Europe, probably to customers first that has that in their DNA when it comes to purchases, which is probably more into the private sector business and probably a little bit more also into the long-term care side of things. And then hopefully, with that traction, making sure that also more normally-driven health care systems adapt to that possibility and see the benefits of it and jumping on the train. So yes, that's probably how we should increase [indiscernible].

Yes, if I may add, that I think one of the -- and it relates to what you said, Joacim, but one of the things that are very important to health care systems is how they are incentivized. And what we are seeing and one of the reasons why we dare take this step now, and we still think that the U.S. will be certainly [ in front for us ], but why we dare consider European to be maybe not so late followers is that you are starting to see incentive change at a political level, where you're actually starting to penalize some of the behaviors that, until this point, you would get the same reimbursement if you had a pressure injury. And therefore, you'd actually get revenue for doing a poor job of taking care of a patient. And that is starting. It's not on a massive scale, but the rhetoric around that topic has changed, and markets like Netherlands, like U.K. have tightened this up and -- but it's not to say that, that will happen at the same pace as in Europe. But us seeing that gave us confidence that -- and also maybe just looking at the problem, I mean, unless something is done to the current situation, it's not possible to afford the health care.

There is an elaboration on this and I think probably one of those million-dollar questions literally. But what's the profitability angle on becoming a mobility outcome partner? Has that increased amount of sales within the model? How does that translate into profitability? Of course, so the analysts are wondering that. Should this be viewed on top of our 23% main target?

I think we need to look upon outcomes in this way, is that we -- I've been talking quite a lot about bringing out -- Arjo out of the commodity swamp, bringing Arjo out of the discussions, okay, one bed versus another bed. Here, we have a clear route to something different, something where we are speaking about outcomes for our patients, where we can clearly point out how much money they will save by using our product or not spend, by using our products where then the actual price for the product will not be as important as the actual outcome that they will be looking at. And again, we need to be very, very clear on what we mean here and being able to provide clear guidance on what they can expect by using them. So for me, the outcome discussion is something that will bring further profitability to Arjo. We will not be, so to say, stuck in a price war. We'll be speaking about the outcomes and the savings, less spend that they can be doing. But when it then comes to, I would say, if this is a part of our financial target, I think that there -- if we look at Christian's -- not Christian's, but the 2 products Christian -- would like to have them himself, I think, but the 2 products that Christian was presenting, they are -- given the nature of them, if you look at Wound Express or if you look at the pressure injury prevention, given how much money that they actually -- the spend they are saving in health care and much cost they save for health care, they are above, and they're expected to be above or well above current Arjo average. Have we fully included that into full financial targets? I would give that the same answer as I give on the actual potential for net sales. If net sales comes, profitability will come as well. So it's kind of a -- it's very welding together.

Of course. Let's get into Wound Express. There's a lot of questions actually about Wound Express, a lot of interest in that product, I think. We mentioned a kind of change in sales technique or change in sales to go to market with Wound Express is slightly different to. So the question here is I assume some cross-selling with current sales force. But how many people do you need to add in the U.S. and EU for Wound Express?

Yes. Yes, actually very little cross-selling with existing sales force for pressure injury prevention. However, what we have noted is there is, at a higher level, a synergy actually between Wound Express and the pressure injury prevention program as more and more and more hospitals, at this day and time, have a risk management officer and managing -- like you do in a financial institution, managing your exposure is important to health care facilities, and this individual is extremely interested across those 2. And when implementing new technologies initially, you must enter at a relatively high or executive level to get a compliance with the technology. Obviously, you must also -- and this is where the synergy is actually greater, is not with this on the sales front but on kind of the clinical support front where our vast organization of wound care experts that, on a day-to-day basis, assist our rental customers applying our products directly, are able to -- they understand [ things ] also. Most of them have a clinical background. They will be able to support this. But we believe that for the U.S. to target at this relatively executive level alongside some corporate accounts, we might be talking about 10 or 15 total sales force for the U.S.

So it's not huge investments from an OpEx perspective given the traction that we believe that also the clinical finance will give.

There's one of your slides, and it's really good to see people are picking out some of the details. But it said, you had a statement of clinics waiting in line to test Wound Express. When can they start? Do they need training? Is there a bottleneck there? That's from Kristofer at Carnegie.

Yes. Well, we -- more and more of them are starting. I guess we had a -- initially, it's very important for us when launching this new technology that we continuously built on our evidence base. Obviously, the large RCT that was delayed but now start -- going to be started in December is very critical for us. What we have continued to do is that, when you have interested parties that -- and many, even though they can read the posters and see great results from otherwhere want to do some kind of a trial or test or pilot or whatever they call it, we would like to -- and the reason why we include them in evaluation is: one, for us to build to our evidence base; and then two, for us to make sure that they apply the therapy correctly that they use a similar protocol as we know have been yielding results elsewhere. So therefore, there is a very minor bottleneck, actually mostly caused, however, by COVID. But we are now signing up more and more clinics, and we are getting more orders. We've not had one of the individual or the initial clinics stop using it. So even though they finished their, you could say, evaluation batch for customers, they've continued having [ all that some more ] and some more and are now selling garments to them. Interestingly, actually, what we find is that the individuals who've had the treatment many times just state that I want to have one on my own and which also say, was part of this consideration of so once you've had a venous leg ulcer, it's healed, we know that 50% of them, given the underlying venous insufficiency might go back and have another one. There is a need. There is a market here for a type of care that is prophylactic in order for these people to not go into another 4 years of their life where they can't be mobile.

There is actually a follow-up question, too, is actually that and what kind of reimbursement do we expect for Wound Express. And is there a code? Or do we need to establish a code for reimbursement? And then I think the interesting question, which you just got into is, is it something that could be prescribed by a physician to take home for the patient. We know it helps them immensely. But is there something that could be a prescription-based model as well?

It typically is actually and the route for the patient, but it varies from market to market. U.S., the biggest market, you typically need to go through a GP, who would diagnose you with a venous' insufficiency and your symptom would be having a venous leg ulcer. That GP will then assign you to a wound care clinic and outpatient organization that then, on a monthly basis, get you in for an inspection, measurement of the wound. They will then come and see you at your home, change your static compression, change your dressings. We believe that what needs to happen in order to avoid all of that wasteful time with nurses traveling and looking and rebandaging, this is that you go to the GP. You get your diagnosis. You're then given a Wound Express with you home. And -- to the other question of that was is it reimbursable. It is -- there is a code that could be used for this. Right now, what we are considering is to what extent are we able to capture the value we actually generate by using that code. It might be worthwhile to establish another code. That takes more time but gives you more value capture. And -- but one does not exclude the other. So you might start out here and then shift and then your value capture to the question to Joacim in terms of your margins, they can also expand over time. But first, you need an acceptance that this is working, and that's what's most important for us right now.

Yes. Well, let's jump a little to the SEM scanner. There's also a fair few questions about it in here. Sales model, basically, will it be offered to a more normal capital sales model with a [ razor blade ] component with a consumable scanner? Or -- and if so, what about the average number of SEM scanners per normal-sized hospital?

So we will -- again, here is a question of what you want to do. Do you want to get as many scanners out in the market as soon as possible? Or do you want to maximize the longer-term value capture? And we've obviously thought quite long and hard about that and arrive at the conclusion that we wouldn't like to offer it for sale capital. It will either be a consignment or rental base as part of our rental offering. We need this. This is part of the differentiating element, and we also know the product doesn't make sense on its own. It doesn't do anything or it tells you the risk, but you need a world-class portfolio of mattresses to achieve prevention. So for that reason, it will be rental or consignment, I guess, for the disposable head version. Some market -- or some regions of some markets have legislation not allowing there to be either of those models. We will sell it capital, but it will be predominantly to generate the disposable head component. And as also said during my previous session, this is not about the scanner itself. It's about the outcome. And really, the long-term unlocked value is when you sell the program and when you charge for the savings reductions achieved. And there was another part in terms of how many do you have for a hospital.

Yes, very interesting.

Obviously, it really depends on hospital size. But if we say, well, for what we call wards in scope, there will be wards where you can have -- obviously, that you wouldn't need one of these in a pediatric ward but wards where you would have individuals that might be at risk. And if that's roughly 40% of a hospital's beds, that is the case, and you need 1 of these for between 12 and 15 residents. You can do your own calculation based on the total hospital size, what that is.

So maybe just a couple of the more number-related questions for you, Joacim, before we wrap up this Q&A session. We will save a lot of these questions and put them into the end Q&A when we have at the end of the event as well. But just to cover the ones, how much of the SEK 600 million sales potential for SEM have you included an organic sales target? That's one. And similar question...

If I start with that then...

There's a question for Wound Express coming as well.

As Christian was explaining that, that is on top potential to what we have been presenting. And the reason for putting it as on top potential is that we are just launching, and we're looking into the adoption rates that we see possible. So it's on top of what we have communicated.

Super. Okay. But I think that answers the questions for now. Otherwise, what we're going to do, we're going to save these questions for the end Q&A session. What we'll do now is -- just gone 20 minutes past 1. We'll have a 10-minute break and return at 1:30. Look forward to seeing you all soon. Thank you. [Break]

Welcome back to Arjo Capital Markets Day 2020. Now for the last sessions of the day, we'll be going into the financial targets for the coming 3 years and looking at the financial position of Arjo. So I'll be, in a moment, welcoming our President and CEO, Joacim Lindoff; and our Chief Financial Officer, Daniel Fäldt up. But before that, I think we'll start with Joacim. Over to you.

Thank you, again, Nick. And let's then move into the financial targets, 2021 to 2023, including a presentation by Daniel around our financial position and what we intend to do there. Moving directly into the targets, and this should then be seen as the effects of what you just heard over the last few hours, what we have been telling you about both our organic growth but also the potential that we see in the new technologies that we have been introducing you to today. We have the same setup of financial targets as we've had before. We have an organic sales growth target and adjusted EBITDA margin target and an annual cash conversion to give you good transparency around where we're heading with the company and what targets that we do have in a realistic way and also giving you a sense of how we're looking upon our possibilities of giving dividend to shareholders going forward, where we hope to be slightly more aggressive than what we have been so far. If we start off with the organic sales growth target, which is, as I said, an organic sales growth target, the discussion I had earlier on around our inorganic agenda comes very much on top of this target. This is an organic sales target that is fueled by the continued efficiency journey that we're on around the underlying portfolio development that we've been talking about around the additional possibilities that we see in our service and also the slightly delayed payoff of our long-term care investments that we have done and that we will continue to do but also around the development that we see and the potential that we see in Rest of the World. Now all this is, I would say, a prolongation of what we're already doing, and that would be driving quite a substantial organic growth also as a standalone. The things that will come on top, that as both Christian and myself said earlier on, is slightly more difficult to put direct number on for this 3-year period is the new technologies, for example, around Wound Express, around our corporation and our global exclusive rights to the SEM scanner and obviously, other technologies that we have under current development that will fuel further growth in the years to come. And it also doesn't fully reflect the launches of our outcome product programs given the fact that also, here, it is a question how quickly we can get markets to adapt to both the technologies and also the outcome programs and therefore, driving on organic net sales growth to a higher speed than what you see in these targets. When we look at the margin targets that we have put up, we have decided to go with an adjusted EBITDA target, and the adjusted EBITDA target is to be at around 23% for 2023. We believe that a lot of this will be fueled by the operational leverage that we have and that we will continue to see through the organic growth that we'll be having but also through a number of activities that we have within the supply chain. We also have our continued focus on profitability within our rental business, especially the European one, but we believe that there is still a lot of things to be done right. We do think that our product updates and portfolio pruning that we were discussing early on will also generate good add-ons to our profitability journey. And we also believe that areas like procurement, the direct and indirect procurement but also areas like logistics will play a positive role into how we develop EBITDA within the organization. OpEx will continue to decline as a percentage of net sales, something that will also contribute to a higher EBITDA. On top of that, you would also see then the add-ons of the new technologies and the new business model around the outcome programs as we discussed during the Q&A earlier on, which will come with higher-than-average margins for Arjo and also getting us out of the commodity swamp that I spoke about earlier on. So we feel comfortable around the around 23% adjusted EBITDA by 2023. When it comes to our cash conversion and also our financial position, I would invite our CFO, Daniel Fäldt, to lead you through those slides. Daniel?

Thank you very much, Joacim. And so I'll go through the cash conversion update, the target that we've set today and also the financial position of the company and where we intend to take Arjo in those areas in the coming years. So as a consequence of the plan that Joacim and the team now have presented and also a consistent performance that we've had recently, we found it also logical to increase the ambition level in terms of the cash conversion from the earlier target of 70%, increased by 10 percentage points to 80%. Increased profitability, we're building on the improvements that we have been able to accomplish in terms of up until now mainly receivables management, but we also see potential -- further potential in terms of inventory optimization and payables improvement. Now the strong financial position that we have been alluding to earlier during today, we have identified additional opportunities to improve the already strong financial position we're enjoying now. As you can see on the slide, we've already achieved quite a significant working days reduction with a lot of focus spent on working capital reduction. And mainly even in this challenging environment that we've seen, where, for example, inventory optimization has been more challenging for the supply chain and the business in general in terms of a changing product mix, we have still been able to manage that under control, and we've seen significant improvement in terms of receivables management, as we've said. We also see another area where we will increase our focus going forward, which is in terms of the credit terms that we have with suppliers. So we also see a potential in the payables levels going forward. Operating cash flow, I think, has been one of the strongest aspects of our performance lately. We've just come off 2 consecutive quarters with very, very strong cash generation, and even the second quarter this year was the -- was a record cash flow generating quarter in the history of the company. And that also ties very nicely into the fact that we can see also consistently high cash conversion levels this year. As a consequence as well, of course, we are -- keep -- we keep delivering solid improvement in terms of leverage, and we expect that development to continue. Consistent balance sheet improvement over time. We have a stable debt level decline over time that we expect to continue and a very solid capital base to support the strategic plan that we've outlined in the past couple of hours. In terms of leverage levels, we also continue those. We continue to expect a decline here. And over an operating -- over the planned operating performance and also what we've been able to show approximately, we should be able to decrease the leverage by 0.5 over 12-month period. So as a result of this, we feel confident that we have ample in maneuvering room to support also the inorganic agenda that Joacim spoke about earlier. And with that, I think I'll hand over the word to Nick for Q&A session.

Great. And thank you very much, Daniel and Joacim. We're now going to go into the final Q&A session of the day. So I have the pleasure of having all 3 gentlemen here with me, so we can really get into some of those questions we didn't get a chance to in the last session but a few of the other ones that have been popping up as you presented some of the targets there. Let's start with this one first, Joacim. Why is your updated strategy only covering 3 years? And why did you remove the [ EBITA ] growth target?

Well, we believe that the EBITDA profitability target was a better one to reach and to give a sense of where we believe that we have a realistic chance of getting Arjo to. Again, as we were discussing, if all stars are aligned, we could potentially perform better than that. But we believe that a 23% adjusted EBITDA level is a good level to be at, where we could also then continue to generate significant amount of money that we can invest into our own business and continuing to drive that strategic journey for the years to come. Why we only did up until 2023? Well, as we described, it is a journey that will start now, has started in 2020. We'll continue with a number of very detailed goals along the journey, but it is something that we believe will transform the company over the next 10 years. So it should be seeing financial targets that we are setting out for 2021 to 2023. If we see better traction on a number of these initiatives during that period, we will be the first ones to come back and say that we believe that things can go slightly better or a lot better. But it should be seen as a journey where we are not only changing our company, but we're also in the process of discussing with our customers, making sure that they understand the positives with mobility outcome.

That question was actually from Peter Östling at Pareto. He had a follow-up question. So what is feasible? And what's possible in the long term? He suggests over 25%. I won't put words into it.

I think that with -- again, back to all stars aligned discussions. I mean, if we look at all the -- and that's probably the reflection you do when you do a financial target, is that you put a number of initiatives side by side and you add 1 plus 1 plus 1 plus 1. You get to a fairly high number. And that goes for both net sales and it goes for profitability. And we then need to reflect upon is that feasible to do everything at the same time, how do we need to sequence the development of the company. And I believe that what we are describing with the financial targets is a most realistic way forward for us with potential of doing better both on the net sales side but also on the profitability side. I wouldn't be able to sit here and say that 25% is the next level or 27% is the next level, but I don't think that 23% would be the last level. Let's put it like that.

Very good. I'm going to return to the question we had earlier this morning, which was -- which started with maybe a little bit mean, and obviously, we didn't answer all the questions, which were baked within this question. But I think the main question on the line is from [ Magnus Brännström ], [ Direct News ] is would you say the new goals are challenging enough. Are they too conservative?

From the underlying business, they are -- as we usually put it, stretched but realistic. When it comes to the new technologies, if I would have a little bit more detailed glass bowl around how this would work, I would then probably say that they're a little bit on the lower side. We have a potential if all stars are aligned. And if we get adoption rate up and we start working with this one on the market we want -- obvious to drive adoption rates and thereby also drive profitable net sales to a higher level than what we're discussing today.

A little bit more into kind of the business strategy and some of the things that could -- some stars perhaps aligning in the future as well. What could be or would be on our wish list in respect to buying external product portfolios?

Well, I wouldn't be able to mention a company or a specific product. But if you look at companies and products that are very well aligned with what Christian presented around, I would say, our focus areas going forward, that is where you will see Arjo shopping around. You will see Arjo looking for possibilities when it comes to adding to our mobility outcome. We did one very interesting equity -- well, acquisition when we went into Atlas Lift Care, which is -- or Atlas Lift Tech, which is giving us numerous new avenues of evaluating how our different safe patient handling programs are working and how we can develop them for the future. So it's both in terms of products that is supporting our strategy. It's around companies that are, in some areas, actually giving us market channels, especially within service. I mean service business for us is very interesting. Service is one of my -- one of the areas that is very close to my heart that I want to drive but also when we look at pure products that are complementing the strategy in a good way. So you will see us, well, scanning over a number of areas, but it is going to be very well aligned with our strategy. So yes, we have a pretty detailed plan, and as I said, we are in a much more stable position today as a company. So we will not be afraid of taking on bigger acquisitions if they would come our way and they would be interesting to us.

Super. That was really nice. That question was from Annette Lykke from Handelsbanken. She had a follow-up, which I think is rather interesting. Is COVID-19 and MDR, are they creating any new target possibilities?

As we've been discussing with MDR, MDR is for sure doing that. MDR is -- now MDR is 1 year delayed, but we already saw before that was delayed that, that was starting to generate a higher interest around smaller companies to have discussions with bigger companies like us around especially their possibility to go to market. I think that COVID-19, not that we have seen it right now, but for obvious reasons, in the areas where I explained, we have the negatives. We have the neutral, and we have the positives. If you're in a situation where you have only negative, your current situation is not that good. You don't have access to health care. You can't sell your products. There will be openings coming our way. Whether we're interested or not, that's a different subject. But the targets will come our way and that there would be interesting things to look into, absolutely.

Absolutely. Super exciting what the future will bring, but the future also still contains COVID-19. And so there is another question here. So should we be more careful looking into 2021?

Well, what I tried to explain in my first presentation was around the fluctuations that we will probably see. I mean there are countries that have taken on different types of strategies, how quickly they're opening up their societies. We have been very good so far in navigating these both during Q2 and during Q3, and we have every intention of continuing to navigate well during Q4 and into Q1 and Q2 of 2021. We believe, for example, that long-term care will be having restrictions longer than acute care. And long-term care, in some countries, we will probably see limited restrictions in Q1 and also in Q2. But we do also believe that we will continue to be able to maneuver with the spread that we currently have. I mean we have a number of positives in our product portfolios, and the way that we sell this still generates significant upside for us. And as long as you have a spread of the flu that is on the levels where it is right now, where there will be a lot of more people taking into hospitals, those positives will continue to be positives. The neutrals will continue to be neutral. And for our -- from our perspective, the negatives will continue to be negative. Maybe then with a small caveat that DVT, very connected to elective surgeries, given the importance of getting elective surgeries going again, we believe that, for example, DVT will start coming back to pre-COVID levels but quicker than the other product categories, with then still the positives on a little bit higher level. So it's difficult to give a number, but we feel comfortable that we can maneuver during Q4, Q1 and Q2, especially from a profitability perspective.

Obviously, it's a very dynamic market at the moment. A lot of changes happening. There's an interesting question here, Kristofer Liljeberg, Carnegie. He says he's heard Arjo or I assume, Arjo [ Huntleigh ] talking about outcome programs or at least guaranteed savings from outcome programs for more than 10 years now, and sales for that is still limited in the U.S. How confident are we in this is going to take off?

Yes. I think that the big difference to what we have been presenting before and over the last 10 years, and that goes internally and it goes also external, is around the efforts and the money that we put behind this. It's one thing to show something on a PowerPoint and say that we will be the outcome partner. But especially, the internal people working within Arjo sees the amount of investments that we're already driving when we speak about the outcome center in the U.S.; how we are spearheading around the digital assessment platform; how we are, as a very good example, continuing to invest in to our -- into Wound Express; and how we're taking, for me, the most visible step and that is the investment into the equity stake of Bruin Biometrics and the exclusive right of the SEM scanner, which is us putting a fair share of skin in the game to make sure that we get the best possible tool to raise that entire offering. And that has put a lot of speed into the organization, where they actually see money flowing in behind the strategy. So that is the big difference in my view. I wasn't a part of Arjo at that time, but that is at least if I compare to what I hear from the discussions and what we're actually doing right now, and that is also something that will be shown in the numbers that you see going forward.

And certainly, I know one of our guiding principles is move from PowerPoint to actual, which is exactly what is behind, I think, this as well. It's moving from those PowerPoint slides to making it happen. But of course, the kind of big question on top of that, is the ratios for revenues coming from outcome programs, is also we'll be happy to communicate in the future so the market can track our development.

We can absolutely think about that. I think it would be strange to communicate it maybe on a quarterly basis, but to have some kind of update when it comes to a yearly performance on where we are is absolutely something we can do given that we have now also detailed what is outcomes for us and how can we measure it. So it should be possible for us to give good insights on how we're developing after 2021 and 2022 and 2023.

Few questions that we didn't get a chance to get into around Wound Express, probably, Christian, mainly for you. The 510(k), the FDA approvals for Wound Express, is that standard application? Or there's another one? And if it's standard, do we have a reference product we've been using? And how -- I guess the question -- underlying question is how confident are we in terms of getting that through FDA.

It will be a 510(k), so there is a different product. This is -- the Wound Express technology is built on IPC, and there are several reference devices that can be used. So it's a 510(k), relatively simple process. I guess the only factor that's a little bit unknown is how FDA, at this time in COVID, will be prioritizing between different types of application. But we -- with the shown time line, we have allowed for Italy there. So -- but it should be relatively straightforward.

Super. As a follow-up question, I think we answered in the last Q&A, but I mean it's -- but just maybe just emphasize again, is what assumptions have we made for Wound Express in our sales targets of SEK 400 million by 2025? And what are the risks for not getting there, so the challenges? The follow-up question to that is I think we answered that. How many sales reps do need to hire in order to launch the product and get to that level? I think we talked about 15 or so in U.S., but probably this is more globally as well. So yes, the first question really about how -- what assumptions have we made into...

In terms of the upside and the overall levels of that boundary, well, main assumptions is obviously around what adoption, so what percentage of outpatient wound care clinics will shift therapy away from or in addition to static compression and dressings to using Wound Express. And this is -- and I guess that is really the only assumption that matters, and that is what is very difficult to sit here until anyone half a year before you put it into large market. I guess what we believe is in those SEK 400 million, the U.S. as a market with how it's structured, it's very nicely structured for a product of this type, that, that will be the vast majority coming from the U.S. We haven't launched it there. We don't -- there are many elements that we need to understand better in terms of fine tuning that. And for that reason, this is -- this portrayed as the upside.

Maybe -- and when we have put together the financial targets and looking at Wound Express and also looking at the SEM scanner, we looked upon, I would say, where are the realistic markets where we will be launching this full out, and we brought that one into our financial targets. And the upside that Christian was showing in the diagram is something that is not included in our financial targets but would come as an upside on the targets if we get the adoption rates that we want.

There's just a couple more questions coming in. Ladies and gents, do please send in any questions. They are coming directly into me, into the studio, so just let me know if there is anything else. Annette Lykke from Handelsbanken. And again, what kind of ASP should we expect for Wound Express? How long time will patients use it? And what kind of penetration rates will be optimistic, pessimistic or realistic?

Well, we haven't settled on one global ASP level. What the intention in terms of business model is, is to have the pump, the Wound Express pump being a rental piece with a weekly rental. We don't actually expect to ever get the devices back. They will probably be with a -- associated with an outpatient clinic and then placed at different individual's homes and brought into that clinic for cleaning. And then we will sell garments to the actual patients. And I don't know if we will -- what we have at this point, we've had introductory pricing in the U.K. market with gross margins that are extremely high for Arjo. And we don't think that we've -- we should be not able to charge enough for a garment in -- the value is so much greater than what we can charge. So there's a certain cap to that but very high margin on the dressing side.

Super. Annette asks again, what would it take to end in each of the 3% to 5% sales growth targets.

Could you please repeat the question?

What would it take to end in each of the 3% to 5% sales growth targets that you've set?

To end in.

Yes, to reach, I imagine.

Sorry. As I said before, I mean, the 3% to 5%, if you look at our current target or what has been our targets during the Arjo 2020, it has been 2% to 4% organic growth with the product ranges that we've been talking about, with the status of those product ranges. Now we are not only driving the same type of agenda. We continue with the internal efficiency agenda. We're updating our categories, as I explained during my presentation. So to believe that the lower part of the 2% to 4% would not be fulfilled with our organic or, say, with the normal type of business we have, that will probably be too negative. I think that is where we will see the basis of our growth at least in the initial parts of this journey. And then we will see the new technologies and the outcome programs add on to that growth. So -- but what we have been discussing is whether we were going to display an upside potential for 2023 because there is where we believe, based on the different business cases, that we will start to see traction mainly on -- with -- that was a visible traction around the -- for example, the SEM scanner, whether we should open that or not. But we decided to stay with one interval for this period and then rather revert back to revising targets or coming back to see if we can uplift the organic net sales targets when we come into 2022, 2023, depending on adoption.

So there's just maybe a couple of questions we could do to wrap up the new corporate strategy such as the mobility outcome partner. One of the things that was mentioned was the ability to change culture. And it's maybe not clear. Are we talking about the internal culture within Arjo or we're talking the external culture within our customers?

I think it's both to some extent. I mean, if we start with the external, which is probably the most obvious one, is that we need to get the culture around understanding that it's not just about selling or buying a product and then ticking a box, but truly to understand the problem that Christian was elaborating on that health care has and making sure that we then get them to understand through true and precise evidence that we can actually generate that saving. That is the cultural shift that I believe needs to come, especially in the European markets over time. So that is something where we believe that we, through our knowledge and what we can actually present already now, has the potential of changing that culture among our customers. When it comes to the internal culture, I think we have started a very, very good journey around the Arjo culture. I believe, for example, Daniel has come in. He was hopefully impressed with what he has seen in terms of how we have moved this into a decentralized setup, how we expect everybody to take their responsibility, how we are clear around accountability and the responsibility that we are giving people and that we are moving decisions out but also the understanding that we need to work together as one team. We're investing in the outcome -- mobility outcome programs in 1 place, so we don't need to do that in 10 different places, and then use that with great confidence when we are approaching our market in the way that we see best. So I think from a cultural perspective, it's both external and it's internal. We have a long journey to -- especially, in Europe, on the external side, and we have done some really good steps forward when it comes to the internal cultural journey.

Super. But I have no further questions from the market out there. Nobody else is sending anything else in. So unless I'm seeing anything else arrive on my iPad here, I think it's probably time to begin wrapping up. So to all the people out there, like to say thank you for your questions throughout the day. We hope we've been able to answer most of them. As I mentioned at the top of the day, Joacim is available over the coming days for one to ones. If you would like to book a separate follow-up call with Joacim, please do contact Maria Nilsson in our Investor Relations team. She will make sure that happens and help book a time. But it really leads just for me to say, leave a final word over to Joacim for a final summary.

Thank you very much, Nick. And I will not take up too much of your time, just some key takeaways from today. Arjo has, over the last 3 years, built a very solid foundation for future growth, and we now are ready to take the next step as a company, something that we hope that we have made very clear to you on how we intend to do that over the years to come. We are well positioned and I mean well positioned to take a leadership position in the outcome-based mobility solutions area, being a mobility outcome partner to health care globally. We will, to support that, continue our efficiency journey that we have started as a part of the Arjo 2020 plan, and we will continue to drive our current portfolios. We will drive that into new geographies, and we will also make sure that we're on top of that, add our new technologies and our new programs that we will be supporting customers worldwide with. We are very committed to the new financial targets for 2021 to 2023. We have detailed plans in place, and as we have hopefully described, there is also potential of doing some more on top of those financial targets. We have a very clear view that clinical and financial outcomes are more important to health care than ever. It was important before COVID-19, and it's even more important for health care today also during the COVID-19 and after. And we continue as a company to navigate and navigate well through the COVID-19 situation, and we will continue to do so in Q4 and in the quarters and years to come. With that, I would like to thank everyone that has been presenting today, everyone for having listening -- being listening in. And as Nick was saying, I look forward to detailed discussions around our strategy when you find the time to do so. Thank you very much.

Thank you. And so it just remains for me to say thank you, everybody, for joining us for Arjo Capital Markets Day 2020. It's been a pleasure to host you. All material will be available on our Investor Relations site, on our website shortly, within a matter of minutes. Please do reach out if you have any questions or would like to set an interview with Joacim. Otherwise, thank you very much. Stay safe. Goodbye.

Thank you.