Medacta Group SA (MOVE) Earnings Call Transcript & Summary

Good afternoon, and welcome, everybody, to the first Capital Markets Day. I think you all have a seat, we can start, and we'll open asking Antonio Di Brino to give you some introduction and remarks.

Thank you. All right. Welcome, everybody, and good afternoon. Today, we're going to talk about the H1 financial results followed by our Medacta's first Capital Market Day. Before we get started though, I would like -- and we have a pretty busy agenda, as you can see. But before we get there, I'd like to give you -- I would like to draw your attention to our disclaimer, which can be found in our press release and in our half-year report that have been published earlier this morning on our website. In essence, during both presentations, we may provide forward-looking statements, which are based on current expectations and assumptions and are subject to risks and uncertainties. Now for a special welcome, it's my pleasure to introduce our Founder, Chairman and President, Alberto Siccardi.

Again, welcome, everybody. It is my difficult task to explain my role in the company, but I will try. This is a family company, then there is a family behind it since its regeneration. When I was 75, I left the company because I was sure that my children, we are not children any more, it was better not to disturb them because they were good enough to grow and manage the company, together with managers I have hired with them in the past, and we made them grow with us in what we call company culture, which is the development of a family culture. Then when I was 75, I left, but I'm still there as a President to participate into the guidelines to move ahead the company. Which guidelines? Not which country open again. We're selling in 67 countries, by the way, and we have not such a problem. But important was to us, to me, to give the guidelines to integrate correctly the 100 new employees we hire every year. Because the integration of 150 now, they are this year, new people in a company is like to buy a small company and integrate it. This was one of the main concern. The other ones are the usual ones, which are the task of a President, financial overview. And as a father, the correct balance amongst my children, I call them again children, and the managers because we know that companies can be ruined if this balance is broken. Together with Francesco, Maria Luisa and Alessandro, and all the others, all the managers we have hired together, we try to be able to go ahead in a correct way, 15% increase of sales every year is not a joke. Then I feel that the control of the company must remain in our hands because we believe in this company. We don't want to lose no power and no economical advantage in the years, and then I can guarantee you that my children are good enough. My children, my daughter, you know probably, you will talk about what you do, fine, fine; schooling, management of the family office, et cetera. She takes away a big part of our concern. Alessandro is supply chain, purchasing, production and distribution in 67 countries. And then last but not least, Francesco, the CEO, I give you the floor, they say. Thank you.

Thank you, and welcome from my side as well. It is a pleasure to host you finally in our first Capital Markets Day. I think it was long due, but now it's the time. So let's proceed. I think we're going to start with the H1 results, which have been just published this morning. The highlights are here, a very good performance in terms of revenues. We reported those already. So there's not any news, if you want, but still a very, very robust number we are very proud of, well above the market, well above all of our competitors. In terms of geographic segmentation, Europe is still growing faster than the other areas, around 16%; APAC, North America had a very healthy growth, 12% and 11%, respectively. Product wise, and this is something I will stress maybe later as well, more in detail, we see really a huge opportunity in knees where we are experiencing a very good growth around 19% in H1 at constant currency. Shoulder, almost 40% growth rate, of course, starting from a smaller base compared to knees, but it is a product line where we expect to continue to grow, maybe not at this pace every year, but definitely continue to grow for many years to come. And then the Hip and the Spine, which are still delivering very high growth rate, most of the time in line or higher than our competitors. When we talk about new products. We talk about how we introduce products in the market. The stress is always on the medical education and how we introduce products in the market through medical education is something very peculiar at Medacta and something that Medacta is respected for and it's probably part of our success. This first semester, we have celebrated more than once around the world, our 25th anniversary in Lugano, in Sydney, in U.S., in different locations. And so you will see as well some additional celebration in the second half, but we definitely had a concentration of marketing efforts in H1. Supply chain did a very good job. We did not face any issue in terms of supplying this very good growth. And this is thanks as well to our investments, both in net working capital, in supply chain expansion, something that you have seen firsthand today here with us. Marginality was pretty much in line with last year at constant currency, despite, as I said, the fact that we have an H1 which was heavier than what we expect in the full year, and this is pretty much in line with our plans. We expanded our sales force and production by roughly 100 employees, roughly 50-50, and this is just in H1. So most likely, every year, we are adding close to 200 employees or at least, this has been the pace in the last 3 years. We did post a very significant jump in EAT at EUR 38 million, an increase of almost 30%, we will go through the details. And once again, we were able to post an overall growth well above the market. Some key financial figures that recap those aspects. For me, what is interesting is especially the consistent trend we have been able to deliver in the last 5 years. And today, during the Capital Markets Day, we will highlight as well what have been delivered to Medacta since the IPO, but this gives you a little bit some visibility on some selected financial figures. In terms of growth, orthopedic is very well known for being very capital intensive. This is not Medacta, it is orthopedics and it is more specific to Medacta simply because we grow faster. When we grow faster, it means we can attract new customers. When there is a new customer, basically, what we needed to give them is this. So CapEx, new instruments here and net working capital sets of implants. That is physically just one kit for one knee. If a big customer is starting, it needs probably 2, 3, 4 of those. The value of this, we know we share the ratio with you, and we will repeat it over and over, $1 of growth is roughly $1 of CapEx and $0.50 of net working capital. If you grow faster, you absorb more cash. The rest of the CapEx is still related to growth, which is something you have seen as well today, new plants, buildings, new machines, which are fed in according to the supply chain request and of course, our sales forecast. And then we have the R&D and the other tangibles. But basically, if you look at the EUR 54 million we invested in the first semester, probably EUR 34 million plus EUR 11 million are growth-related CapEx. If you slow down this, this becomes cash. I don't want to slow down. We commented already about the geographic areas. I will not go too much in detail. If there are questions about it, I will be more than happy to answer and the same applies to the product range where we see the different performance according to the different product lines. Maybe just a reminder, which is useful. Hip and Knee share the same sales force. So whenever you have a very successful product in your bag, you tend to lead with the most successful one. It has been the Hip for 15 years and the Knee was following. Now we see the other way around, and that's a little bit of the scenario. Extremities is mainly Shoulder, which is growing extremely well, and Spine, which is still at a healthy 10%, which is roughly probably 2x the market or a little bit more. That's the revenues in terms of product line split for H1. Once again, just to share the trend by product line in the last 5 years, you really see a very good constant growth rate across all the product lines throughout the year despite the fact that, of course, especially 2020-2021, we all know what happened. And so I would say we fully recovered, most likely better than most of our competitors immediately after COVID. This was my last introduction on the top line, and I would like to ask Corrado Farsetta, our CFO, who will take the floor and continue with the presentation. Thank you very much.

Thank you. Thank you, Francesco. Good afternoon, everybody. So I would like now to show some numbers, the first semester 2024 results. Here, you see our usual P&L. I wouldn't say anything else. On the top line, the growth was 14.6%. The gross profit result for this period was 68.5% compared to 68.9%. It is, I would say, a very good result, which shows, say, the ability of the company to defend marginality. The reduction you see there is almost entirely attributable to the FX effect that we experienced in this semester. So moving down to the fixed cost, we have to call them fixed cost, but actually in a company growing like Medacta, the biggest part of those costs are variable costs. Because if you look at, for example, the sales and marketing costs are as a percentage of revenue growing and this is also reflecting the unusual concentration of cost related to the 25th anniversary that we had in this first semester, just mentioned by Francesco. The other costs are more or less in line with the previous year, 3.6%. The research and development costs, 3.5% this year. Sales and marketing already discussed. In G&A, there was a bit of leverage in this line, which is the area where you can have a positive effect coming from the growth on the organization, the logistics and also on the finance area. D&A are pretty much in line with the previous year. What you see here is the biggest part is coming from the depreciation of our instruments, which represent the biggest chunk of our investments. So they are -- as a percentage of revenue, they are stable at roughly 11%. And the adjusted EBITDA in the semester was EUR 77.5 million, growing from EUR 71.9 million. Those are reported numbers. In terms of adjusted EBITDA as a percentage of revenue, it was 26.9% compared to 28.2%. The reduction you see here is also including 1.2% of negative FX effect coming from translation into euro, our reporting currency. You will see a bit more how this is working in our numbers later. The adjusted EBIT was EUR 45.5 million, growing from EUR 43.8 million, again including 1.2% of negative effects coming from translation, which basically brings this adjusted EBITDA 17% in line with the previous year. Now having a look at the financial results. Here, you see an effect, which is the opposite of what we have observed last year. Last year, we had a negative effect coming from gain exchange -- sorry, losses on the financial asset that we have in the company assets. This year, we had the opposite. And this is the result of the evolution of the currencies, in particular, U.S. dollar versus Swiss francs. So we had a positive line in financial results position, which brings the profit before taxes to EUR 44.7 million compared to EUR 36 million of last year. Income taxes were EUR 6.7 million, less than the previous year. The average group tax rate in the first semester was roughly 15%, which is what we think will be the long-term tax rate for the company. And this is the result of the final approval of the -- and entry into force of the Swiss tax reform. So now this is 15% -- 15%, 16% is the average tax rate of the group, which is basically explaining another -- sorry, another part of this very, very good result. The profit for the period was EUR 38 million with a jump of 30% compared to EUR 29 million of the previous period. Moving to the free cash flow. In this period, the first semester, the operating activities generated a robust flow of cash, EUR 42 million compared to EUR 37 million last year. This EUR 42 million were able to fund the investing activities, instruments, as we said, but also land and buildings, research and development, acquisition of production capacity. So we ended the period with EUR 12 million negative, which is the result of the cash flow generation from the operating activities and the investment needed to sustain the growth of the coming years. This is the net financial debt. You see end of June, EUR 164 million with a very low leverage, 1.2x the EBITDA, which is comparing to the previous period, 1x the EBITDA or EUR 135 million. So the net debt remains very low and is normally higher than what we see as a final number in the year-end results. So we expect this to go down to 1x the EBITDA. This is a normal trend. So we say the 2024 outlook is confirmed, 13% to 15% top line growth at constant currency and 0.5% of improvements on a constant currency basis compared to the full year 2023 EBITDA margin. Now we are going to discuss also the midterm outlook. I can already tell you that the compound annual growth rate that we expect is in the region of low double digit. I will tell you a bit more what does this mean for us? And the adjusted EBITDA that we target for the next 3 years, '25, '26 and '27, is to stay around the 2024 results. And again, I will tell you a bit more of what this means for us. I will hand over to Antonio for some instructions on the Q&A session, and then happy to answer.

[Operator Instructions]

Thank you very much for the insights today and showing us your factory for the first time. [indiscernible]. So my first question would be regarding the guidance regarding EBITDA. Could you maybe give us some clarification here why you're referring to absolute number instead of the margin? And then as a second question regarding CapEx, could you give us a bit of color regarding the cadence from comparing H1 versus H2? Can we expect a similar number for H2 and then the full year?

Sure. So the reason why we give guidance, we gave the guidance in qualitative, let's say, word rather than precise numbers is you will see later because there are some say, trends and reasons behind the evolution of our profitability that you will understand, I hope, later when I will tell you a bit more about our guidance. So basically, there are some drivers that could explain a higher growth, and other drivers that we could explain a lower growth. So that's why we wanted to stay in this -- to guide it this way, but I will try to be more precise in the second part of the presentation to make sure that number is also associated.

Just to make sure when we talk about EBITDA, we are talking about EBITDA margin, not absolute numbers. It would be quite sad if we stick to the current EBITDA.

Yes, absolutely.

This was maybe poorly worded, but we were talking about EBITDA margin.

And back to the CapEx question, we say very often that the ratio between growth and CapEx is more or less EUR 1 : EUR 1. So if you do the math, if you take the top line growth at 14% or 15%, you get the additional revenue for this year, and that should be more or less the total CapEx number for 2024, more or less. And then if you set that for the first semester, you get the second one.

It's Aisyah Noor from Morgan Stanley. My first question is also on the midterm guidance, but on the divisional growth drivers. Would it be fair to assume that majority of your growth will come more from Knees, Spine and Sports Med as compared to Hips and could Hips be something of a drag over the midterm for growth? The second question is around cost of customer acquisition or capital outlay. How does the customer acquisition costs compare versus Hips and Knees -- sorry for Spine and Shoulder versus Hips and Knees as a function of marketing costs, CapEx outlay, single-use instrumentation or assistive hardware as such? And then my third question is just on the Think Surgical partnership. Could you discuss the rationale for this? Are you now acknowledging that robotics is a more significant portion of the kind of enabling technology that should help you drive more volume growth?

Yes. So I would say on the divisional aspect, yes, for sure, the growth rate we have seen will drive the product mix a little bit in a different direction. I would expect Knees to become our first line in the near future. So surpassing Hips, probably getting very close already at the end of this year, given the trend. In terms of marginality between Hip and Knees, they are similar. And we have to be careful as well when we talk about marginality to define which margins we're talking about. Because if we're talking about gross margin, typically Shoulder has a slightly higher gross margin; Spine as well, higher gross margin. But then you have maybe higher distribution costs in Spine, higher commissions or simply a less mature organization, which is not as effective as Hip and Knees. So just to be careful when we talk about marginality, gross profit, yes, they're not identical. They're similar. But when it comes down to EBITDA, there are leverages existing in certain segments that are not there yet in Spine, for example; or sports medicine, even less. Second question was about, again, the customer acquisition cost, depending on the business line, I would say it's very similar, especially in terms of medical education, it doesn't matter if you spend one day to be trained on Hip, Knee, Shoulder and Spine. There are some products like anterior approach, which have been historically more demanding because the learning curve was steeper. And therefore, maybe the repetition of certain steps in the medical education were done more than once. And this is probably not the case, for example, for kinematic alignment, where maybe one visit or one cadaver lab is sufficient. So it could be one of the reasons why we see this acceleration and it's a faster adoption, let's say, which somehow brings customer acquisition costs lower. Spine and Shoulder, I would say, more or less the same like Knees. So compared to Hip, the other 3 lines, most likely will have a slightly less customer acquisition cost. Last question was about Think Medical. Think Medical for those which are not familiar, is an open platform, robotic company, that basically has a business model that they sell the robot to hospitals and different vendors are present in their platform. So they have been asking us to be present in their platform, and we agreed because there's no disadvantage in being present into a third-party platform. So we have one additional option today in the U.S. only because the Think Surgical robotic platform that we have partnered with is only available in the U.S. and we might discuss if they go elsewhere to be present as well. And this is just one additional technology together with MyKnee, MyHip, The Guide Solution, NextAR and now Think Surgical that is part of our technology offering.

Two questions as well. In APAC, you grew in the first half, 12.6%. Could you kindly share with us sort of the difference between Australia and Japan, I think, sort of in terms of growth rates? I think these are 2 major markets. And the second question, also relating to APAC. I mean, Medacta wisely has deliberately not chosen to enter the Chinese market, I think, which pay you off with respect to the VBP program. Is that still something that you will continue to do sort of still avoiding China? Or is there an option maybe to enter China at some point? And would there be any kind of time frame when you would pursue that?

Yes. So we don't provide details about Australia and Japan. I would say they have been performing extremely well. The Japanese are more Japanese. So they tell you what they do, they do it. The Australians are a little bit more creative sometimes. But in general, they've been both performing extremely well in H1 similar. So I wouldn't say that one was contributing significantly more than the other. Different product mix in the different countries, but overall, very much according to plans in both areas. China was a decision we took almost 10 years ago. We did register our products in China. We still maintain our registration in China. Today is definitely not a priority mainly because of pricing and the market condition. And of course, when I talk about market condition and talking about the fact that the Chinese government is clearly pushing for local producers, 100%. So the made in China effort is there. So we have many more options out there where we can focus with a higher level of fair competition, higher prices, more technology-driven or product and innovation-driven possibility to win. And as we will see it later, that's, in my opinion, something very important to understand about Medacta, we have surpassed $0.5 billion, but there are $38 billion out there to be addressed as a total addressable market. So China is there. We keep it as an option. The same is true for India. So those are 2 markets that we monitor. We check from time to time, but it's definitely not included in our midterm guidance.

It's Sam England from Berenberg. First question was just around the midterm margin guidance. I was just wondering if you're still expecting to see sort of gradual gross margin erosion over time. And then that being offset by efficiency gains and operating leverage on the other side? Or does the midterm guidance sort of assume a different mix between the different cost buckets? And then a follow-up on the geographic side, I just wondered what sort of assumptions you've made around growth rates in the different geography within the midterm guidance? And how you think sort of geographic mix might develop on a sort of 5-year view?

Yes. So the geographic mix is going to be more or less similar to, let's call it, the average of the last 3, 4 years. Clearly, the U.S. represent a very significant portion of underpenetrated market. But Europe, for example, surprised us the way we could pick up market share in the last 3, 4 years, especially. So this is not something that we're going to disclose, but you should not expect a significant difference compared to the historical geo-mix, I would say, especially if you take the last 3 years, maybe a little bit less from Europe and maybe a little bit more from the U.S. The second question I would like, if you don't mind, to wait for the next presentation because it is about the midterm outlook because I think we can further clarify and give some color about those aspects more in details.

This is Dylan from Stifel. So just a question on that growth algorithm, and just feel free to skip this question if we get to it later. So what's kind of embedded in that? Is there sort of a thinking about negative pricing kind of resuming because pricing has been quite positive lately? What about market share gains? Are they going to be on par with historicals? I think the message has been things are pretty much business as usual. And then maybe one thing that isn't kind of as usual, sort of the ASC shift, right? So that's going to saturate probably around 2026. Is there sort of any thinking about what Medacta is going to be like after that? And how are you guys thinking about that? Is there sort of anything specific that's changed, let's say, in that algorithm?

First of all, I don't think ASC will saturate in 2026 at all. They will continue much longer in the U.S. We expect at least -- you will see some numbers based on the current available data. And what we see as well is that there's still a huge amount of market that is in in-hospital, and it will take time simply because we need thousand of ASCs that needs to be built or transformed into orthopedic ASC. So I wouldn't expect 2026 to be saturation. Business as usual, when you grow 20%, it's not business as usual at least here. It was exceptional 3 years. But I would say that in general, we think we could go back to the pre-pandemic growth rate, this double-digit growth, and of course, we included in our model some price erosion, we included in our model some cost optimization on the industrial side, you've seen a lot of automation expansion. With scale, you can bring cost down, et cetera. So it's a cautious view on the next 3 years given especially the fact that as we were discussing before, if we grow on the high end of the top line, we will probably sacrifice a little bit more on margin expansion. If we stay on the lower end of our top line, we might be able to expand a little bit faster, and that is the trade-off between the two. So it's very difficult to do what we are probably doing this year to do both expansion and margin -- top line expansion and margin expansion at the same time. But the inflation has been reduced quite a bit, a little bit more than what we expected. So we are doing pretty well. But we try to be balanced and especially to be cautious in making promises to you guys.

And just on market share, obviously, you don't want to talk about your peers, but you guys have taken what is it, 20 basis points, 30 basis points annually?

Yes. I mean if you take the market, the market is growing maybe on average back to 3% or 4%, if you take 3 or 4 years, slightly faster. Because of the post-pandemic recap, we grew 2x to 3x the market. So by definition, we take market share. If there are no other questions, maybe we can dig a little bit into the financial performance since IPO and maybe a little bit more into the midterm outlook, which I believe is going to be an interesting discussion and we're going to have a Q&A immediately after. Corrado?

Thank you. Okay. Let's start immediately with a nice curve. This is the top line evolution of the company since the beginning. We reached last year EUR 0.5 billion revenue; 80% is made by roughly Hip and Knee and 20% is made through our more recent business lines. Medacta is the fastest-growing company in Hip and Knee and is one of the fastest organic-growing company among the 10 largest player in this market. We do EUR 0.5 billion, they do billions. So it's -- we run very fast, but it's still a long way to go. So this is the important point. So I wanted to focus a bit on the performance, as we said, since the IPO. The dark blue line shows the top line that we delivered. And the dotted line is what we guided at the IPO. Basically, we say low to mid-teens, anticipating a slight reduction in the growth rate. Actually, we did the opposite. Apart from the COVID inflection that you see here, we accelerated over the last 4 years. And in numbers, what does it mean? Basically, the growth since 2019 was 13%, while the market was growing at 2.6%, which basically means that we were able to grow 4x or 5x the average growth of the market and this is an extraordinary performance. But if we focus our attentions from 2020 onwards, which is after the COVID, the growth rate of the company over the last 4 years was even stronger. It was 19% as a CAGR at a constant currency. And this is a very, very exceptional result because it shows how the company was able to deliver. And this is exactly what I want also to stress, the guidance at the IPO time was a slight reduction. This is important, and you will see why when we speak about acquisition cost associated with the growth. We say that we are the fastest growing company for Hip and Knee. And here, you see what I wanted to say. Basically, Medacta growth in Hip and Knee CAGR over the last 5 years was roughly 12%. The market on average was growing 2%, which is basically 6x the market growth. And those are the players -- the biggest players in the market -- sorry, the biggest player, the best performer was doing 7%, and the second best was 4.5%. So this is the gap that there is between Medacta and the other big players in this field. And again, this is all organic growth. This is the guidance for the next 3 years, 2025, 2026 and 2027. We expect the growth to stay in a range that we identified as low double digit in constant currency. What does low double digit means for us. We think that we will see the growth of the company stay within, say, 10%, 13%, 14% on average year-over-year on the next 3 years. What are the drivers of this growth, which is a very strong performance compared to the market, which is expected to grow at 3%? Core market expansion, we expect to continue the expansion in the existing markets where we already are, but we will increase the market share in this market. We expect to see the Knee and the Shoulder progressive contributing on the growth of the company for the next 3 years. And we expect to have also increased volumes in Spine and Hip. Sportsmed is the last in our family. And we should see an improving and increasing contribution also from this business line. Profitability. This line here shows the EBITDA margin at constant currency since the IPO. At the IPO timing, it was 29.5%. Last year, we closed at 30.1%, with an increase of 0.6%. This is an extraordinary performance if it is associated to the extraordinary growth rate that we delivered because as Francesco mentioned, the costs associated to the increase of the top line sales force, which is not generating fully, say, the potential of revenue in that year marketing cost, education costs. All those costs are -- the faster you grow, the bigger they are in your P&L. But we were able to deliver an increase, thanks also to some very effective cost management and a bit of leverage on fixed costs. So overall, the lower than guided because that was the guided. We guided low to mid-30s. The missing expansion of the marginality is entirely attributable to the faster growth than guided, that I discussed before over the last 4 years. Before introducing the guidance for the midterm in terms of marginality, it's important to understand another aspect that it is recurring in our -- in all the Swiss companies that are selling also abroad. So the FX effect. I don't know how familiar you are with this translation because we are talking about translation effect. Translation is very simply, if the cost of production of an implant is CHF 100 this year, and this, again, CHF 100 next year. But if you translate this number into euro, this year can be EUR 100; next year, you will see maybe EUR 120. So this is not a real increase coming from increase of production costs. It is just a different way of seeing the same number expressed in a different currency. So speaking about translation, this is what we have had since the beginning. Basically, less than 4% point of EBITDA margin reduction due to the translation effect. So the 26.3% of 2023 is the baseline for the 2024 guidance, which is expected to go -- let's say, the EBITDA margin to go up to 26.8% at constant currency 2023. This 26.8%, the reported 2024 result, will be the baseline for the EBITDA margin of the 2025, 2026 and 2027 coming years. And what do we see here in terms of marginality. We say we expect to stay around the 2024 result. What does it mean? There are some drivers that can modify the profitability of the company. The most important is, as we say, the growth rate. The faster we grow, the lower will be the improvement of our marginality. The lower is the growth rate, the bigger can be the improvement. If we grow, let's say, at 10%, you will see a higher marginality. If you grow in the high end of the guidance, 13% or 14%, you will see a lower margin expansion. And this is the most important aspect that will affect our marginality. Then leverage -- the ability to leverage on the existing fixed cost, primarily, let's say G&A, a bit of R&D, but not that much, but we say that sales and marketing costs are almost variable cost. Some positive contribution from the new business lines, Spine and Sportsmed, we say they are dilutive in terms of EBITDA margin. Sportsmed actually, it's a cost, it's a lost day, and improvements on operations efficiency, logistics and productions area, automation and so on. So this is the guidance that we see as a midterm target. I wanted to discuss a bit more the cash flow because it is another recurring asset and it's important to understand. This is the representation of the additional revenue every year over the last 5 years since the IPO. So for example, in 2029 (sic) [ 2019 ], we generated a growth of EUR 38 million. This is the COVID period, EUR 8 million reduction, and then those are the increase in revenue in terms of million added. If you compare this with the operating cash flow generating every year, you see that there is, of course, a direct correlation, but you can see in 2019, where the growth was negative, how big was the jump in cash flow generating from operating activities. And what do we do with all this cash that we generate? I say, reinvest. More or less, you see for every euro of revenue generated, apart from this year, you see there is a strong correlation between revenue generated and CapEx. Of course, you can see this CapEx like a way to absorb the cash or you can see the opposite way. It can be a cash generator because this will generate the future increase of growth. So I would prefer you to see this as a cash generator rather than an observation of cash. But why? We already said, why we need all this CapEx and working capital to grow. Because for revenue surge, and Francesco explained very well, so I wouldn't add so much. Instruments and implant stock for every new surgeons. So for every -- if you want to get EUR 1 of additional revenue, you need to invest EUR 1 in instrument and EUR 0.5 in net working capital. What does it mean in terms of absolute numbers in our last 5-year results. We invest -- let's say, we grew -- we said EUR 240 million since the IPO, basically, we doubled the revenue. We invested EUR 270 million. So roughly let's say, 1:1 ratio with revenue. And we also invested EUR 145 million in additional inventory. Of course, this is a very, very, say, gross average because there is a variance which is driven by the decision of making extraordinary stock inventory for strategic reasons, opportunity reasons. So this is an average that you can take to model the numbers to define the cash flow as, let's say, an average in your models. So roughly 80% of the CapEx are composed by instruments and production machinery, which is what we say, we call short-term CapEx growth. And the other is 20% on average is related to expansion when the buildings and research and development that we call long-term CapEx growth. This is the effect on our P&L in terms of debt. You see that the debt -- the total net debt of the company was and remain very low, with a very, very low leverage, that is 1.15 at the beginning of the 5 years ago and now is roughly was last year, 1x the EBITDA. So it means that we have room to leverage the company if we see an opportunity to do even if our priority are maintain a solid balance sheet to support the future growth, focus on organic growth rather than opportunities or M&A and to keep a stable dividend payout ratio. Of course, with the so low leverage, there is room to take into consideration any type of even extraordinary action. This is my last slide. So as we say, the company -- the framework is not expected to change. So we will continue to deliver a very strong and organic growth well above the market rate. We will keep our robust profitability. We will preserve the marginality, and we will continue to self-sustain the growth through a robust cash flow generation, which will keep the debt of the company at the level -- very low level that we already have today. I believe this was my last slide. I hope to be able to clarify some of that, but now willing to answer your questions.

Sure. Yes, just one from one of the earlier slides. You called out the dilution to margins from Spine and Sportsmed. Can you just give us a sense for how much those businesses will need to scale from where they are today to stop being a significant drag on profitability? And how long you think that might take based on current assumptions.

Yes. Let's say, we don't disclose, of course, this type of number. So we have -- I can speak only in qualitative ways, but just to give you a flavor. Today, we know that if you take the average EBITDA -- the EBITDA of the company, on average, the Hip and Knee business is -- and the Shoulder as well, is making much more than that in terms of EBITDA margin, which means that we are now financing Spine and Sportsmed. The Sportsmed is already positive, but still dilutive. And -- the Spine, sorry, the Sportsmed is still making losses. So how long this ramp up will take to go out and start, let's say, at least be similar to the other profitability. It really depends on how fast you want to grow and the cost you see and the opportunity you want to grab in the market. So Francesco is more qualified than me to explain that. But basically, we think that in the midterm, we should see -- we should start seeing a positive effect coming from that, even if we cannot quantify because we do not report in that -- with that detail.

Okay. Just one question for me as well. Maybe also for Francesco. On the NextAR Rod Optimizer technology that you just got approval for -- or got an award for this week, I think your team -- operations team did a good job of explaining to us how differentiated it is. But I think what they were refraining from -- or I think what you can give us some contribution to sales or how that sales projection can ramp in the next 2 to 3 years? And then just explain a little bit what the barriers to entry are like for that technology? Or how quickly can your competitors develop a competing solution?

Yes. I think NextAR to begin with in Spine, allowed Medacta Spine to reposition ourselves into one of the companies with surgical guidance, which immediately puts you in the top, let's say, 15 out of the 200 plus. That was already very, very important and was already contributing to some acceleration in certain key markets. Japan is a very good example; Europe; and now in the U.S. as well. The Rod Optimizer, which is something we're going to touch base in my technology presentation as well. I think it's going to be another very significant booster to our revenues, especially in the U.S., but as well in Japan, where it is already cleared. It's not yet cleared in Europe. It will take probably another semester, I think, or slightly more. We never know with the medical device regulation, but it's definitely going to be a key pillar of Medacta Spine growth in the years to come. And for once, this is a product as well where we do have some strong IP, which is a combination of both method IP and product IP, and it is, in my opinion, going to be quite relevant for quite some time because of that. What is important as well is that when you have those very unique products for, let's say, a portion of the spine, you enter into a customer with something special and unique, and so you can then expand into this customer with, let's say, the bread and butter products more easily. Without those specialty products, you struggle much more.

Just on the CapEx dynamics, you mentioned the rule of thumb, $1 CapEx equals to $1 sales. Why isn't that getting more dynamic over time? I mean, when a surgeon has the set, he makes maybe 50 surgeries in the beginning and then 70, 100 after 3 years. So it should theoretically result in...

It would be nice. It would be nice, but typically when this happens, you have another set to be put. So is the productivity of one set is limited to a certain amount of cases. If it's growing, you put another one?

And why? Why is that?

Because you need it. I mean you have a patient on the bed, you do a surgery, you use the instruments. The instruments they go in the washing and sterilization. If he wants to do a second case, you need another instrument set because it's not washed and cleaned fast enough. So this is typical of orthopedics. It's not a Medacta situation. This is the reason why you need more than one orthopedic table. You need more than one operating room. You flip rooms most of the time. But even on the regulation side, because of infection, because of resistance to antibiotics, et cetera, the rules on cleaning and sterilization and therefore, utilization of instruments are becoming more and more complex for hospitals. Therefore, it is important to have more than one instrument, but this is standard. The only solution to that is what we have there in this little box, which is single use. Single-use instruments is one of the ways we are exploring to change this capital intensity. And in needs, for example, we have a little bit over 1/3 of our needs, which are implanted using single use. So in this case, you reduced the CapEx because you have instruments single-use. You sell some instruments with very little margin. So you sacrifice maybe a little bit of gross profit. But under a financial point of view, you changed the picture quite a bit.

But the sterilization is different from country to country. I think in the U.K., you're allowed. And in Germany, you are not allowed or the other way around. So...

I would say rule of thumb is the same everywhere. It's very strict. It's -- I would say, probably correctly so because the biggest problem you should fear whenever you might need an orthopedic procedure is infection. So they do really whatever they can to stay away from infection.

I mean disposable -- that's different from country to country, I guess.

Yes. But just because there is a different appetite for cost, there is a very different profile in terms of volume per center. So in Germany, for example, where they have, let's say, a small center is doing 1,000 joint. They have a very efficient cleaning and sterilization. They have 12, 15, 20 sets of instruments. So they rotate those things. They don't justify a single use. But an ambulatory surgery center, public hospital, less efficient. That's a very good solution.

So just another one for me on Spine. So just thinking about the comments you guys just gave us on the product side. I know that you guys had, let's say, more indirect mix into Spine and there's an ambition to go more direct, let's say, more high-tech, have your own products, be in control. Would it, therefore, be fair to kind of say that Spine might be sort of an investment phase where you might see your gross profit get better because you see the commissions going to fall off, but maybe you're EBITDA margin will kind of lag for a bit, maybe go down 4x, but growth accelerates? Is that how we should be thinking about that business?

So this is true only in the U.S. because in all the other markets, we are already direct. So given the size of the U.S. Spine business and the fact that we are not shutting down the distributor channel, but we are favoring or at least putting in parallel, which is something we have been doing for the joint as well in the past. We're putting in parallel a direct channel, especially linked to technology. I think it will provide, frankly, more control and potentially slightly lower cost, but it will still be a variable cost with a highly commission-based incentive on our own salespeople. So this is just a step in this direction. We have started at the beginning of this year. We see some results coming in the second half of this year already and it's not a new experience for us. The new experience was the opposite, not to be direct; completely indirect in the U.S. in Spine. So it is dilutive only if you hire fixed, let's say, direct people with a fixed salary, which is not the case or not as much.

And you guys are happy with the access to the reps. Is there a sufficient in the market for you guys?

If you have the right products, the good people, they tend to come. It's always a key. If you're a good salesperson, if you have a great product, you come. I think this is a critical aspect. If you have me-too products, commodities, much more challenging, and then you have to play on higher commissions just to -- and their margin is gone.

Any other questions? Excellent. Then if there are no other questions, I might move to the next portion, which is, hopefully, interesting. So our growth story and as well why we believe our growth story should continue based on what we've been doing in the past and what we are doing today. And I would start, maybe just by reminding everybody what's really unique about Medacta is that it's probably the only company founded at least in orthopedics, but most likely in medical devices by a patient. And this is important for us for various reasons, but the most important is that whenever you tend to do the right thing for the patient, you win because you're doing the right thing for everybody. And this aligns the interest of the patient, the surgeon, the payer and the company. And this is, in my opinion, very important, and it does translate in very, very practical aspect we do at Medacta, starting from the way we want to do innovation to the way we put innovation in the market through medical education, and we will dig into this quite a bit. But as my father started this session, I would like to share with you the fact that this is not the first time we are doing this approach within our family. It's actually the third generation. We started with my grandfather in the IV solution back in the '50s, then my father with Medacta early 2000. And as he explained 5 years ago, I took over the responsibility to continue this tradition. Being founded by a patient and having the President, he said he left the company. As you could tell, he moved slowly but steadily from the back to the front -- is not really absent, right? So it's there. It is important. It is a very useful guidance for all of us to remember that behind what we do, there are patients. And many of those patients now are as well, our colleagues, our friends, our parents, our grandparents. So that's something we remember always and all the time. Today, Medacta has expanded a lot since the last 25 years, if you want. We started in Hip and Knees. We are now active in Shoulder. We are active in Spine. We are active in Sports Medicine. But when we talk about where we are active? We are active in the orthopedic market. Orthopedic market is a very big market, around $60 billion market last year with a market growth depending on the segment, 3% to 4%. This is probably a little bit higher in the last 3 years, just due to the recovery of the backlog of COVID. And it is a market that has a very attractive long-term drivers in terms of aging population, the expected quality of life that patients in the western countries and in some of the new economies are expecting to get, is definitely driving this market growth. Technologies and performance of those products. Back in the days, 25 years ago, you could not get a hip replaced when you were too young because the materials would not have lasted 20 years, 30 years. Now it's very easy to get a implant done with 45, 50 years old. And the performance of those materials are improving over and over. And then, of course, access. Access means the possibility for patients to get surgery immediately in hospital or even in ASCs. So the market is growing, let's say, around 3% in the last 5 years, faster post-pandemic with the recovery. But Medacta has been growing 2x, 3x, 4x the market in the same period. So we have been able to capture much more market share, thanks to our approach. And this is the overall market, $59 billion. But if we look at the different segments of the market, you see that all the segments where Medacta is playing are very large segment, $8 billion for the Hip, $10 billion for the Knee, $3 billion for Extremities, which is -- the vast majority is Shoulder, more than half, and then Hand and Foot and Ankle for the rest. Spine alone is another $10 billion, and Sports Medicine is another $7 billion. So today, Medacta has a total addressable market of around $38 billion. And as you know, we are just scratching the surface with $0.5 billion revenues last year. With this market share, let's look at the competition, quite a lot of concentration. 7 companies, they represent 66% of the market. You see them above a $1 billion company, and they are -- all of them significantly above $1 billion company. So there is a very big gap between the very large companies and the second tier, which is between $400 million and $1 billion that's where Medacta is spread. Out of those company in 2023, probably Enovis, after their acquisition will jump into the left column, leaving Medacta as one of the largest challenger, let's call it, in this segment. But the message is very clear. We have been able to grow this company. We have done the heavy lifting in creating a solid baseline in the most attractive market, and we think we can continue to outgrow the market in the near future and taking more market share. How do we do that? This is, for me, the most important slide, if you want, today because in one slide, you see exactly what we do, why we do it and how we do it. So we talk about innovation. Innovation is something that every company has to do. And so it's absolutely critical to define how you do it and what do you target. When we talk about innovation, we have 2 goals. One is to make sure that our new products do have an impact on improving patient outcome. We really try not to do me-too products just to compete in a market if we don't -- if we cannot deliver some improved patient outcome. At the same time, we try as much as possible to deliver value to the health care system. Because if you can improve the outcome without increasing the cost or potentially even decreasing the overall cost, you create value. And if you create value, then you are rewarded because not only you help the patient, but you save the economy or the health care system quite a lot of resources. The problem of this is that it is difficult. Most of the time, innovation requires more money. We can think about many examples of this. So it's a big challenge. In our history, we have been able to do that by focusing on 2 areas: one was minimal invasive solutions, so transforming open surgery into MIS; and the second one is through personalization. Those areas are typically delivering better value for the patient, better value for the healthcare system. Critical is the fact that very often those are true innovation. And therefore, the surgeons are absolutely not trained, not used, and you needed to invest a lot in the medical education. That is our innovation diamond, we call it at Medacta. But this has, if you want, all the secret sauce that we try to implement over and over across the different business line, across the different opportunities that we constantly look for. And you will see that more than once, we have been able really to completely change the market. And when you do that, you have a very long way in front of you with success and growth. How can we make sure that this approach stays within the company? How do we make sure that what we have today in terms of innovation doesn't become obsolete because we sit on it. And after 10 years, of course, everything is old and copied. I think it is a foundational success for us to have a strong leadership within the organization really from top down that understand orthopedics and has been growing this company focusing on innovation. This is starting from my family 3 generation. But then we really focused on making sure that all the people in Medacta are pushed in this direction. What's the advantage for the patient? What's the advantage for the hospital? Every time we have an R&D meeting, we talk about products. Those are the 2 items that we want all the project managers to come up with. Marketing, the same. So that is, for us, a must. And the fact that we have senior leadership in the company that has been in orthopedics or in Medacta for 10, 15, 20 years, make sure that this kind of approach is embedded in our organization. And not only we wanted from the leadership, of course, but we really try our best to make sure that every new employees that we hire when we are talking about hundreds and hundreds every year, goes through the same process. And of course, everyone has his own duties and responsibilities. But if we talk about innovation and if you are in production, it means maybe you can come up with a good idea to bring down your production cost. You can bring down industrial costs, you can do things and processes better and faster. So this portion of values are absolutely critical for us. And we start from the recruitment, onboarding and rewarding with a performance review every year to make sure that this sticks in the heads of everybody. And in order to continue to do that, we really defined what Medacta culture means for us. It was something that we were not used to say and explain when we were small. We were just talking with our employees. And naturally, this was somehow absorbed and shared, but now at this speed, we really had to put in place a lot of processes to try to make sure that those values are understood and shared. And those values, you find them here. Of course, we start from what we -- I consider the basics, so the trust and integrity. But then we go into something that is already, in my opinion, not always the case when I look at other company, so efficient execution. You can do things in many ways. We always want to do it in the most efficient way. So this is something that we judge and rejudge and rejudge every single time. The patient and customer focus is a must. And again, the fact that we have a very unique history of a founder and a patient helps a lot to remind everybody. You met during the company tour a lot of employees that I know they are patient as well. And they share their story with our employees. They are part of the onboarding to make sure they understand that whenever they make a mistake in production, the patient is at risk, and this is very, very critical. And then we talk about innovation. Innovation must be sustainable. And I'm not talking about the environmental sustainability only. I'm talking about the economical sustainability. The health care sustainability. And I'm not talking about products only. I'm talking about processes. I'm talking about any type of innovation that can help the company to grow. And of course, the team work. But I think in a family culture company, the teamwork is really important and is [indiscernible]. Bottom-up approach is something as well that we've been using for many, many years. It means we tend to hire young employees, and they grow within the organization. I would say 80%, 90% of the time, that's the strategy, and this helps a lot to preserve the culture and reduce the potential dilution of the Be Medacta while we grow so fast. I'm very happy and very pleased to present you as well the extended leadership team. You met myself and Corrado many, many times. But you see, in blue, the number of years in Medacta and a number of years in orthopedics. So you see that many of those people have been many, many years in orthopedics, all of them. So it will be very unlikely for you to meet somebody that was selling shampoos few months ago, and I'm not referring to any particular company. But this is very important because orthopedic is a very special segment. Long-term view is absolutely necessary just to develop a product, launch it and see some money back, it's a 5- to 6-year process. If you expect this to be shorter, you are very, very wrong. Relationship in the sales people is very, very important. So we are -- we know what it works and we know what we should not do and this is very important. And of course, we are very pleased and lucky to have strong Board of Directors despite the fact that, as you know, we have a strong majority. We prefer to have a majority in the Board of Independent Directors as well. So with this type of culture, with this type of strategy, Medacta has been able to really create a profile, which is unique. Because Medacta is probably one of the only company, at least in orthopedic that is not only able to deliver very good growth, probably one of the highest depending on the segment, definitely one of the highest organic, if not the highest. But at the same time, we always have protected profitability. If you look at the peers, this is not the case. And this is what we want to continue to do and what we believe we can continue to do, especially after having done what I call always the heavy lifting because my opinion has been very, very challenging. To go from EUR 0 million to EUR 500 million is going to be challenging, but definitely less to go from EUR 500 million to the next mark, which will be EUR 1 billion. So this growth rate, together with this level of profitability, we can discuss about the 50 basis points when you want, but this is quite unique and quite remarkable. Not only with this culture, we have, in our opinion, a very good performance in the business, we think we have a very good performance when it comes to sustainability and ESG. And I think it is relevant for us to stress that we do ESG in areas that we feel are relevant. So the green washing, the looking good is really not our style. For those that have been here with us today, you have seen, for example, what we've been building since 2011, long before ESG was even, frankly, a fact, with our school, with our foundation, what we do for our people, which is, of course, linked to the efforts we do within our foundation. And I would say on the environmental side, we are not a very polluting company to begin with. We do what we can to further reduce our CO2 emission. And you have seen as well how much of waste in production is recycled systematically, and this is just done because it's good and it's good for the economy, it's good for the planet, and it makes sense. Last aspect on the foundation for those that were not with us today. There are basically 3 areas where Medacta for Life is active. One is the My School Ticino, which is something that started as a nursery for our employees, immediately was open to the community and now it's a school with more than 200 kids, including the elementary school, around 80 employees basically attached to our historical headquarter in Castel San Pietro. The other 2 aspects of the foundation are My Mission and My Giving. My Mission is associated with orthopedic activities in underserved areas. This is something we typically do in collaboration with other foundation or surgeons organization that requires instrument implants, logistics support, people know-how and we do it on a regular basis. There's a lot of details in our Medacta for Life Foundation. And then My Giving is more in the area of the charitable activities, mainly focused on the needs in Ticino, which you will be surprised to see they're quite high, especially when it comes to youth related problems and immigration. This resulted as well in good rates within the different rating companies. And this is something we do again, because we believe is right and this is going to be very unlikely that we do things in order to look good. We do things because we want to be good. Thank you very much. Any specific question on this slide? Otherwise, I will continue on techniques, products and technologies. So at the end, we're selling products, right? So we can be very, very good people, but do we do good products. We mentioned this is the most important for us. What did we generate by doing this approach in the past? What are we generating today in terms of products, in terms of technologies. We mentioned 2 areas. So minimal invasive solution and personalized solutions. Those are the 2 aspects. How relevant those are for Medacta? A couple of examples. Hips, 80% of our Hips are implanted through anterior minimal invasive surgery. Personalized solution, 40% of all our implants are going through the MySolution Ecosystem worldwide. There are some markets like Australia where this is probably 80%. So very much technology-driven. And it's not to talk about technologies that are not then utilized. This is relevant. This is driving our growth. This is driving our growth across all the business lines and most of the markets. So this is very, very important. So we are talking about things which are directly impacting our top line growth and our ability to gain market share at the rate we are growing. Without innovation, without meaningful innovation, you cannot grow at this rate. We have very good competitors, very solid, very large with deep pockets. So you needed to have special products. This is what the MySolution Ecosystem looks like in a nutshell. So thousands and thousands of patients every month send us their CT scans or MRI or x-ray. We collect it here. We do a personalized planning for their spine, for their shoulder, for their knee, for their hip. In order to optimize, outside of the surgery, what will be done for them in the surgery. 40% of our implants are done with this technique. Then this planning -- personalized planning needs to be executed on patients. How it can be translated? Cuts have been done according to the plan that you have done on 3D. There are different technologies. You can use NextAR. For those that have been playing with the glasses, you see the planning, you do the cuts, you put a screw in a certain direction. You are guided during the surgery in order to achieve this personalized planning. You can do it with NextAR. You can do it with some special software on the hip using some x-ray machines as well that help the surgeon to understand where he is compared to where he wants to be. You can use those 3D printed guides. Some of them you have seen -- some of you have seen those guides in production in Castel San Pietro. So you basically have some guides that fit the bone of the patient, have some slots where you can cut the bone according to your preoperative planning. Is this a good way to execute the planning? Absolutely, super efficient, very cost-effective. And it is one of the reasons why we have such a good success and growth rate in the market. What else have we been developing? So anterior approach. Anterior approach is something that put Medacta on the map 20 years ago. Before anterior approach, Medacta was basically trying to understand what needed to be done in orthopedic in order to survive. We were not even $20 million company. The anterior approach, we basically identified a methodology where you could implant a hip stem without cutting muscles. Were we the first? No. We were actually the last. But we were the first to put together a package, an ecosystem that allowed surgeons to get from one provider, Medacta, everything we needed, the right implant, the right instruments, the right leg positioner, the medical education, the support. This ecosystem is still driving our sales today. Many markets are still demanding learning center in cadaver labs is systematic. Of course, we now go into a younger surgeon population. Universities in certain markets like the U.K. is just starting now. And of course, when we talk about minimal invasive, all the trends toward ambulatory surgery center require those kind of solutions. So there is a boost for minimal invasive solution. And this is the reason why recently on top of the 20 years experience with Medacta on anterior approach, we have increased to other minimal invasive hip approach our offering. Because after 20 years, the market crystallized quite a bit between those that have tried anterior approach, maybe with competitors, maybe they were not well supported, they didn't like it and they stick to something else. So we have just launched, 6 months ago, different approach solution, different instrumentation, different implant combination to address some of the segment of the market that decided not to move to anterior approach. This is very important because we're going to be able to attack systematically basically the rest of the hip market that we almost neglected for the last 20 years. Another aspect which is important is the revision aspect of the Hip. This was a segment where Medacta started to invest 4 or 5 years ago. Now we really have a complete product portfolio. For those which followed us during the IPO, hip revision was starting at that time. Now it's really complete. We really start to have traction and we can compete head-to-head, which means we can become the partner on the Hip. In the past, Medacta was mainly a primary, so anterior approach, the easy cages or, let's say, the primary cages. And then the hospital had to work maybe with Zimmer, with Stryker, with Johnson in order to cover the revision. Now we can be a sole vendor solution, and this changed the profile and credibility as well of the company together with the fact that the revision, despite the fact it carries some investment, it does carry some significant margins as well. So it is much less under pressure than the primary. That's on the Hip side. What we are doing, we can maybe further touch on some of the technology aspects on the Hip side as well later. But that is basically what we are going to focus on moving forward on top of the anterior approach. The Knee. The Knee, you have seen really an explosion. And I'm very, very happy and very proud of what we are doing, especially because this was somehow, especially during the IPO, criticized, that maybe Medacta will sell some Knees because they are successful in Hips. Today, we have a solution that once again address the most important aspect and the most important aspect is patient satisfaction in Knees. I think if you talk with anybody it's okay to have a Hip replaced. The trust is good. It's fast. It's good recovery. And maybe then you know somebody that did a Knee and he is okay. Maybe it doesn't have pain anymore, but it stops to play any sport. Walking is a little bit average. So there was clearly an unmet clinical need in Knees. And this is known to the surgeons that Knee patients are never as happy as Hip patients. This is known. There's no discussion. You can talk about, is it 10%, 20%, 30%? You can discuss it. But there is a clear gap between knee patient satisfaction and Hip patient satisfaction until today. But let's understand why there were many problems. Number 1 problem, in my opinion, was how the Knees were approached. So we know there are different anatomies. You have people with straight leg. You have people with round legs like the soccer player, you have other people with Knees rubbing there together. Those are all physiological ways. I mean you were born like this, you're happy like this unless you have a pathology which is very rare, that's the way you are. Which means your ligaments around your knees are like this, your balance in the pelvis is like this, that's totally normal. In the past, 100% of the patient population would go out from surgery with a straight leg, which means you completely change your balance, you completely change your ligaments around your Knee, you completely change the perception of your leg, which brings to dissatisfaction. So what we have been doing is to completely change the approach and introduce this kinematic alignment, which basically has the goal very simple definition to bring your Knee back to the healthy condition when you were 30, okay? So that is as simple as I can give you the explanation of kinematic alignment. So if you were like this, you stay like this. If you were with slightly valgus Knees, which are touching together, you stay like this. And we respect your physiology. Now how you do it? Because you have maybe a deformity, you are in pain. So how you can establish how you were 20 years ago or 30 years ago? And that is the methodology of kinematic alignment. Let's wait for a second, maybe on the methodology of kinematic alignment. Basically, what we did come up with surgeons is a methodology that estimates the wear rate of cartilage. There are a lot of papers, a lot of literature. And then basically, instead of doing a cut, which is straight leg, you respect the obliquity of the joint line of every single patient, which means every single patient will have a different cut depending on how he was 20 years ago, 30 years ago. That's the kinematic alignment. What matters is that now we start to have more and more studies showing that the patient satisfaction changes a lot, okay? This is at the end what we care about. If we do it, it looks good, but the patients, they do the same, it doesn't really matter. And so what did we do? We did develop again, an ecosystem because when you have something disruptive, you can create around this new technology and new techniques and ecosystem, which starts from a technique, special instruments, special technologies, special education and most important, Medacta being the first doing that, a very specific implant, which is called GMK SpheriKA, which is something we have been developing for the last 6 years, implanting for more than 3. And it's basically a modification of another implant we have been selling very successfully for many years, which was called Sphere. So we fine-tuned an implant, a technique technology in order to really help the surgeon that -- as they're not familiar with this technique to embrace this technique and move forward with it in a very safe and effective way when it comes to patient satisfaction. Is it new? No. Everything moves very slowly in orthopedics. We started in 2015. We started by doing CT scans, studying the planning for these specific patients, doing the cuts. Those were the very first cases. Then we released a dedicated platform in '17 because we could see some advantages. Then we developed a special technique in 2018. This was all kept somehow in a very close group of surgeons because once again, before you change the market, you really want to make sure that you're doing a step forward and not 3-step backward. 2021, we introduced kinematic Alignment to the market. 2023, we launched GMK SpheriKA. So this gives you an idea of the progression of steps. What do we have today as a result is that more than half of our Knees in the first semester have been implanted using kinematic alignment, and this is, I would say, 95% of our growth. So we are cannibalizing our own customers by moving them to the -- to this new technique, but the vast majority are new customers jumping on board because the story is compelling, it makes sense and they see it. What is different compared to anterior approach? And what is different, in my opinion, in terms of effect on the market is that we started with one single surgeon with a disruptive idea, UC Davis, California. This surgeon started to work with Stryker 20 years ago. They didn't believe him, dropped them. Then he moved to Zimmer Biomet. He was doing more than 600 joints per year. So they were saying, hey, you're great come, use our implants and then they [ were stopping ]. Then he moved to Johnson & Johnson. So once again, were we the first? No, we were actually the last. We were probably the last hope for him as well. He was very happy now. And we did our homework with him. And then we did identify some early adopters around the world, in the U.S., in Europe. And what changed completely compared to interior approach is that relatively early, we had the chance to have onboard some very high-profile academic members. And this changes the picture completely. Because if they say, yes, it's actually not so crazy. It's actually good. I see it in my patient, it makes sense. They do studies. They do independent studies. They validate what this guy has been publishing for 20 years, Professor Howell, then you really create a big wave. And this is what we are writing today because especially the young surgeons, for them, it makes so much more sense to do what we are doing that is abnormal for them not to do it because it's weird why everybody should be straight and change the ligaments and of course, they're not happy. This is very, very important. That -- the same happened for the AMIS, for the Hip. We have been the last ones, but before us, many other multinational companies were contacted by the people, by the French surgeon who invented AMIS. [ Lower, now ] but before him there was another one. The one who invented the technique -- Judet, and all the multinational companies didn't follow, and we did. It's the same route. Yes. But you will see that this pattern of betting on things that are more risky. I think you can do it if you have a better understanding of the market potential rather than the market size. And this is, of course, by definition, if you are a manager not from the space, you are much more reluctant into going in certain directions. I would say that the biggest bet I've seen outside of Medacta, which paid out, was Lobo's bet on MAKO. That's quite unique, for example. So this is more or less similar, spaces that exist be neglected, and then we jump in, we expanded and now everything tried to say that, yes, it doesn't look crazy anymore. But what matters the most is that we truly see a change in patient satisfaction. And so today, the combination of this technique with our technology and especially with our implants, really brings to patient satisfaction, which are extremely high, so high that they are incredible. I mean to jump on those things that 84-year-old is very, very unique. This is a guy maybe you have seen it downstairs with the red jacket with Medacta. This is a patient with a total knee that climbed an 8,000-meter in Malaya mountain. Climbing is not very difficult with the total knee. Descending is a disaster. So remember this because descending means you need to have a stable knee and stability is one of the key of the success of this procedure, and this is very important. Dr. Klaassen is another fantastic example. I think it has been one of the most loyal Biomet customer for 40 years, is very close to Warsaw Indiana. But when it did come time for his knee, you got the Medacta Knee kinematic alignment, and now is, of course, a happy patient, but as well a happy customer as well. Let's go back to data. So this is not yet published. It's been submitted to the next Hip and Knee Society meeting in the U.S. For the first time, we have a study showing that Knee patient satisfaction at 1 year and 2 years is similar to Hip patient satisfaction anterior approach. So not only Hip is anterior approach Hip. This is going to be one of those pivotal studies that will change forever the fact that you cannot say anymore that Hip and Knees have a gap. It depends what you do with these. And this is, in my opinion, very, very critical. Let me try to share a little bit with you what it means stability. Can we play those videos? Can I -- do I have to do it? I can do it? Click. Fantastic. So that's a natural knee. You see the patella. Basically, the Knee doesn't move forward when you flex it. It's a stable Knee. That's how it is when you have the crucial ligaments when you have a healthy Knee. Then you put an implant. When you put an implant, you have to cut the crucial ligament, the anterior crucial ligament and most of the time, the standard implants, especially those from competition, they have this behavior. Look, you see how much movement you have anterior and posterior which means that your patella, which is here, the kneecap, is absorbing all the shock, which, of course, by definition, you have a swollen knee and you have pain, as simple as this. And this is what happens when you put a SpheriKA Knee, with this special design in combination with a technique that provides the right ligament elongation because those are your physiological ligament. This is basically an explanation, and I hope I managed to give you an idea of what does it mean a stable versus an unstable knee. And why this translates into patient dissatisfaction. You basically don't feel stable. You need to hold the rail. You need a stick, especially when you descend. And if you don't do it, you have to put a big brace when you have an ACL rupture is the same -- on then you have a swollen knee. So these are all the complications after total knees that are addressed completely by a combination of new implant and technique. Did we do just some videos with fake bones? No, we did quite a lot of good studies. This is an example of how the Knee moves in a healthy, young patient. This is a moving fluoroscopy machine that takes x-rays of patients walking in different scenarios. This is a study we have done at the ETH in Zurich, we have done another one in the U.S. and another one in Australia, just to have correlation. And then you see in vivo, what I was explaining to you. So you see that the -- there is some slack on this prosthesis. When you walk and move, the femur moves forward, which is in natural and lows the patella. And then on the other side, you have a stable need. And this translates directly into patient satisfaction. Those are the arguments and the data that we are providing over and over and are becoming compelling stories that makes our product really unique and standing out, which explains hopefully why we do have such an explosion in Knees. That's a very good story with good data with good opinion leaders behind now convinced. And in our opinion, there is a wave coming. Competition will wake up for sure. But until they will not change their implant, we will have a window of opportunity in front of us. They will change their implant. It will take several years for sure. Shoulder is another very, very success -- a big success story for Medacta. It is a platform that basically started 5, 6 years ago from scratch. We were very late into the market with the Shoulder. This, of course, created some disadvantages, but as well some opportunities. So when you are late, what do you do, you study what is the best out there. So we picked some of the best design of different solutions of different shoulders, different platform from our competitors and we put them into one platform, very modular. We can cover all the possible needs of a surgeon. Instrumentation is optimized, compact, and on top of that, we provided for those that are -- I've been visiting our 3D printing, some custom solution as well. So we can cover from the beginning everything in the shoulder from simple to super complex procedures. Once again, we started with a very strong support from key opinion leaders worldwide. And now in very few years, we managed to reach a very significant market share in Switzerland, and #1 in Switzerland in less than 5 years. We are #2 in Belgium, #1 in Austria. So just to show how good and competitive is the product. And on top of the implant per se, which is very, very relevant, what we added was, of course, the NextAR portion of the of the mix, if you want. With NextAR, Medacta has been uniquely positioned to provide, I would say, 1 of the 2 surgical guidance available in the market. None of the big ones used to have it. Now the only one that is coming out with some surgical guidance, I would say, still technically inferior to what we are providing in Stryker with the new blueprint augmented reality as well, by the way. They're still lagging in terms of some functionalities and some aspects, I don't know. But this is another aspect why Medacta has been able to take market share and will most likely continue to take market share moving forward in this segment. We can take a leading position in certain market, product-wise, we have second to none and then the rest is just distribution. NextAR. NextAR, what is important for you, we talk about it is Knees, we talked about it a little bit on the Shoulder, on the Spine. It is a platform technology. It is a platform that is completely different from what is out there. We talked about it 5 years ago during the IPO. Where is it today? I think it's definitely a success factor for our growth in Shoulder for sure. I would say probably is the single most important element of our Shoulder offering. Definitely a very important key driver for our Spine, significant for sure in Knees, although with our technology, kinematic alignment is not 100% required. So it is definitely something we are very happy to have, and we continue to invest in. As a platform technology, there are some additional applications that are coming in on the Hip side, on the Unicompartmental side, depending on the regions, depending on the regulatory aspect, those products will be available in -- basically next year. But when you have a platform technology that helps you to attack the technology segment, you can answer to needs of surgeons that do have a technology, a marketing technology need in a very, very efficient way because if you compare the capital investment that is required for NextAR to a robotic solution or the workflow and the complexity associated with it and the fact that you can do all of this with a single-use solution back to the CapEx and back to the -- what's going on in the market, you have a completely different offering. When we come -- when we go and we see a surgeon, that's basically what we bring. So that's our NextAR. So it gives immediately an impression of how different it is. You -- sunglasses -- you have your tracking system, all single use, and you have a screen. That's basically what NextAR is. So in terms of footprint, can you imagine if you go into an ASC. If you serve the Japanese market, which is almost 100% shipping back and forth, you cannot serve it with big, large capital equipment. So you have a significant edge there, which is something we are really appreciating and it is really part of our success. And again, when we talk about footprint, that's what we compete with at the moment. And I would say we are very happy with what we can do and what we are achieving. Does this mean we will never ever have a robot? We started Think Surgical as a partnership. There will be other opportunities. I would say, yes, if we can find a good solution that limits the imbalance between patient outcome and cost, which is today not fully justified [indiscernible]. So we want to stick with this solution. We have new applications coming. We mentioned Spine. Spine is a very, very important aspect where surgical navigation is critical. For those not familiar, you have a spine like this, it's called scoliosis, you have to fix it and straighten it. In order to do it, you put screws all around vertebras. In order to put those screws in a good way, it's good if you have some surgical guidance, so you make sure you are in the bone and not somewhere else. And then you have to basically select a rod, a metal rod, that allows the surgeon to straighten the spine in this plan and still keep a curvature of the back, which is called lordosis and kyphosis. So this is what we do with NextAR in Spine. Now we announced it, I think, today. We just won the Spine Technology Award 2024 with a new module of NextAR, which is called NextAR Rod Optimizer, which is something very unique, patented, as I mentioned to you before. And in my opinion, very smart because it does provide personalization basically without adding the complexity of custom solution. The only solution out there, which is providing something similar to that is Medtronic with fully custom solution is called Unity, which is very high cost, very high waiting time, very little intraoperative flexibility. With the Rod Optimizer, and this is something you can play with later, you can basically touch the head of those screws in the spine and the software will help you to identify out of a limited number of rods that we have prepared, which is the rod that best fit your need for that specific patient, you cut it and you put it in, which means you can save one very important aspect of a Spine procedure, which is very long and very dangerous as well, risky, is bending the rod by hand. The surgeons today's standard of care is they bend those metal rods in order to fit the curvature of patients by hand, and this translates into risk of breakages, risk of pulling on screws on the bone, risk of not achieving the correction you want. This is a very unique product. This alone in my opinion, could lead the way in Spine in the U.S., for example, for a good amount of time. And we have just introduced it a few months ago. But this is once again a unique product. And what I would like to share with you is that over the years, we have been constantly able to develop products techniques, implants, technologies that have been completely different from competition. Then of course, competition is always there. So you always have to continue to develop those new products, otherwise you cannot compete anymore. But what, in my opinion, you should see in Medacta is a company has been able to innovate in the past and continue to be able to innovate moving forward. Thank you very much. Please. There will be no coffee, its only a bit long.

Maybe just one question just on what we haven't discussed. So which is the Sports Med side. Maybe without sort of lifting too much of your thinking, where do you think the big opportunities are in arthroscopic or other Sports Med approaches?

Arthroscopic Technology anchors there are unmet clinical needs that we think we can tackle shortly. That's definitely an area where we are very keen to come up with some very, very good disruptive solutions, both Shoulder and Knee, Foot and Ankle. I mean, in the soft tissue refixation.

Maybe you can also share some thoughts on the latest trends in education events. Have you mainly invested in events in the Knee segment or also accelerated in the Hip segment? And then also, again, on innovation, Corrado highlighted the healthy balance sheet you also have, but you have many exciting products in the pipeline, but do you also consider some inorganic innovations to be added to the product portfolio? Or is that out of discussion at this point?

So we will have a session on education, but the short answer is, we did maybe focus a little bit more on the knee, but we still have a very significant education effort across all the lines. We will have a session after the break. Concerning the second question, which was, again, sorry?

Innovation and potential for inorganic innovation.

Inorganic innovation is always there as well. You don't see it because those are small acquisitions, maybe patent acquisition or license acquisition, but we do it very often. Yes. It doesn't mean we acquired a big company because they have one product.

So looking at all of the innovation across the business, your R&D spend as a percentage of sales isn't that high relative to other businesses in the Medtech space? I suppose, what do you think the sort of 2 or 3 key factors in controlling the R&D spend have been historically? I know you have attempted to use balance sheet to ramp up the R&D spend to try and go sort of faster and launch more products at the same time?

Yes. So we have around 5% between cost, R&D expensed and capitalized. I think what is critical in the R&D is what you do with the money. So with Max, who will speak with you later today. We've been doing this for 25 years. So when we define that this is important and needs to be done, we do it. We do it in a very efficient way. We maybe stop other things, and that's what we run and we run it super efficiently. We are all engineers here. So this maybe helps as well to identify what we want to do. But it's not unusual, I would say, if you take all the major companies, if you look where the innovation is coming from, it's typically acquired by companies which are much smaller than Medacta. Mako is a good example. I mean it was not a $1 billion company, Mako. And that's the most complex technology you could develop.

Just one question from me. Today of your NextAR installed base or users, what is the most common the mix of applications between, around Knee and Shoulder? And where do you see this mix trending over the next 3 or -- i.e., which of your segments is going to be most influenced by the adoption of the NextAR?

Shoulder, I would say, as a percentage of cases done with NextAR is probably Shoulder. Then Spine and Knee is more or less similar. But we do have both in Knees and in Spine with an NextAR Rod Optimizer, some very significant expectation to accelerate.

A quick question on robotics. I think you've made very clear that given the successful outcomes of Hip and Knees, really, you don't need robotics. But the surgeons very often want technology in the operating theaters. With the [ glasses ] you're offering them some technology, what would it take to add a low-cost robotics to the offering? Is that something you have to acquire? And are there techniques out there that would help improve outcome or give the surgeon something that would substitute for the expensive options that they now have? In other words, do you need to be in robotics? Or can you get away from not being there just with the glasses?

I think we can get away without being robotic, but it's not something we are not contemplating, and we think we can do better than what is out there at least in terms of economics. The problem is that the current technologies if it comes to NextAR, especially Knees, did not really change the results. So whatever you add in terms of cost is not justified. But the marketing side is needed. So I think today, it's probably easier for us to have a robot down the road. That's why I think surgical partnership is very welcome than not have it. Then if the surgeon wants to use it, we will use it. But it's not -- so just for those which are not familiar, Medacta had a robot in 2006, internally developed. We were a $30 million company. So to develop a robot, actually, this guy developed it. So we still have the guy. So it can be done. It's not something we don't want to do. We are exploring different solutions. We can do it. We can do it internally. It's not an acquisition. We can do it in partnership. It's definitely something we continue to explore.

The uptake of GMK SpheriKA is that regionally very different. I mean, I guess, Australia, you mentioned very technology-driven market? Or I mean, you see difference in your big markets?

Yes, It's geographically different because of regulatory aspect. For example, in Australia, it's not approved. So we are still in a clinical study phase in Australia. It will be approved and will be released. But we gave some priority to the U.S. because that's where they had first clearance than Europe and probably Australia, Japan will be next and then Australia probably.

But the American surgeons are probably more risky and tried out versus, let's say, the Germans or is that -- it doesn't matter if there is a clinical...

I would say we are not risk takers. So we took -- we kept this implant for over 3 years in a very limited a number of centers. So when we go out, we go out with data. We could have launched it 3 years ago, but we never did that.

I met the surgeons because I know it from other medical indications that Germans typically wait until the whole world adapts whilst the Americans are probably...

Yes, I would say there is a certain level of culture. But there is always the usual product introduction phase. So you have the pioneers, the early adopters. And given the fact that our market share is so limited, you always find enough of those surgeons in the early phase. Now I think the early phase has passed, as I showed to you 2015, that's when we started. So the implant per se is an adaptation of something else they that has 15 years of clinical data and so the risk associated with change of that implant is low -- very low.

Last question on the -- you mentioned the Hip and Knees sales force is combined. Would it make sense to separate it?

It is the same customer most of the time?

Is it the same surgeon?

Most of the time, the surgeon that does a Hip and Knees. He does Hip, Knees, Hip, Knees, Hip, Knees, in order to optimize the instruments usage.

Even in the big centers?

In the vast majority of the centers, yes. So it's more the exception that the Hip guy is doing everything around Hips. So if you separate, you will have a problem in the service, for example. It is very typical. I don't know any company that has Hip sales force and Knee sales force.

May I -- sorry, about the risk of the product. You probably know that Johnson & Johnson is paying billions for the claims of the patients who have been operated in metal-on-metal, they didn't do it enough to see the result of the operation. You see -- and the risk should be a little bit covered by waiting, waiting, waiting.

It's a patient approach. I'm not joking. I mean, yes, of course, it plays well on the company side because if you make a mistake, it's an expensive one.

I mean everybody sort of all -- not everybody but most people talk about robotics and the thing about it is brought more precision -- preciseness in procedures and mitigating risks. I mean the other aspect, of course, is the cost. So robotic, I would assume is quite costly. So compared to with your NextAR is probably much more efficient in terms of cost. Can you share with us sort of how you see it, the risk benefit or the view of the market costs versus more precision and using robotics sort of what are the developments sort of going forward?

Yes. The problem is that precision has not been linked to patient satisfaction or reduced revision rates. That is the biggest program. So yes, you can be more precise. But first of all, as you noticed, we didn't know what was good in terms of positioning. So you were precisely positioning the implant in the wrong spot. That was what everybody was doing, okay? So if you don't know what is ideal for you, you can be very precise, but then you don't see any advantage patient-wise. So after 10 years and billions of dollars spent in technologies, including NextAR, there is not a single paper showing significant advantages in terms of revision rates or clinical benefits, very, very limited. So you have to create some studies or some scores in order to measure some differences, which are sort of probably because the problems we were seeing in Knees associated with instability, associated with technique, with implement design, we're so much bigger than one degree of precision would not change. So that is the biggest problem why I struggle to justify a significant expense in robots. Why they do it? Because the marketing side of it is fantastic. So Stryker has done a fantastic job in selling robots to the hospitals, to attract patients so that the surgeon would have an increased volume. So it works extremely well. But under an economical point of view, under a clinical point of view, it's much more challenging. I think if you speak with a robotic expert, he will tell you, but at the end, did you see a difference in patient outcome? No. And this is how we lead our discussion when we go in with our offering. Yes, it's fantastic. But do you see clinical improvement? We do see it. That's how. And then they switch, we switched quite a bit of robotic users as well because the clinical -- so that -- it would be fantastic if you can have an efficient execution. You've seen how many robots, right? We love robots in production. They bring costs down, they're efficient, they're reproducible. And I think we should come up with a similar solution in orthopedics.

So you would rank it basically patient outcome, mitigating risks, more preciseness and then costs? Would that be sort of the right ranking?

Yes, I would say so. At least if you increase the cost, you should increase or decrease the risk significantly, which is not there. Coffee? Coffee break? [Break]

Okay. I think we are ready. The rain rang the bell for me. So here we are opening for -- ready for the second session. We will try to recover some delay we got.

Yes. So -- the next session, we will go over innovation with our Chief Innovation Officer, Ms. Massimiliano Bernardoni, who will then cover Education with Gianluca Olgiati, Head of Marketing. We're going to then move -- I'm going to then move to the Commercial Operations with Niccolò Galli, Chief Commercial Officer, and we -- and we conclude with my brother Alessandro, Head of Supply Chain. So the floor is yours, Max.

Thank you. I was also hugged before, you just didn't see it, but I was considered as well.

Working? Yes. So thank you. So I'm Massimiliano Bernardoni, I'm the Chief Innovation Officer of Medacta. I will speak about innovation. So Medacta is a strong engineering company, and on top of the R&D, of course, the CEO and the marketing, salespeople are very often engineers with a long career in Medacta. And maybe -- this is the reason why innovation for us is our shining diamond. And since the origin of the company, it has been one of the key factors of our success. As Francesco was saying, the 2 main pillars of our responsible innovation are patient well-being and health care sustainability. And for this reason, through our innovation, we have been pioneer in offering with a very efficient execution and supported very well by our medical education, new minimally invasive surgery approaches and personalized solution for the patient. For us, the final goal was and remain the same: improve the patient recovery; reduce the rehabilitation time; and finally improve the clinical outcome in a way that remain sustainable for the health care system. In one word, we want to create some value. And this is something that been in the company since 24 years, it happened to us more than once. Our innovation is driven by a very close relationship with surgeon. It is important. It's fundamental to understand the patient needs and to be able to design solutions that can really address the unmet clinical challenges. To deliver, we can count on R&D -- on how our R&D expertise. Medacta, as we said, is an R&D company, and we have always invested time and resources in internal training our young engineer. And today, we can say that our R&D team is an expression really of our culture and our value. And for me, it represents a real differentiator able to bring innovation to the market in a quick, effective and responsible way. The adoption of cutting-edge technology such as material technology. Probably you have seen this morning the laser 3D printing, for example, augmented reality, artificial intelligence, help us, of course, constantly improve our product and our offer. But the real differentiator that we have is that we are developing internally all our product, and this fact contribute to the expansion of our own know-how. So we are really in control of our know-how. And very often, we are faster and more proactive than our competitors in developing solutions and find the right solution and the right things to do because we have a direct and full control of our internal development activities. Just to give you some numbers from the project opening, so from when we have an idea, to when we start the limited market release phase, so we are giving the product to a selected number of surgeon we usually take from 2 to 4 years. And this is quite fast if you compare to the competitors. And what is also extraordinary, I think, is the percentage of project that we can close having a product in our hand that is around 95% of the time. And this is an average that we had in the last 24 years. Of course, to be innovative and impactful, we have to find a selected surgeon with a disruptive innovation ideas and work with them. We have to work with them in collaboration with a wider community of key opinion leader, part of our more network to build essential input of our design work. But what we have to be really good is in selecting the surgeon with disruptive innovation ideas. And so far, we have been quite successful in selecting the surgeon many times, at least 3 times as Francesco was saying, Dr. Laude with interior approach on the Hip, Professor Freeman that brings us the idea of having a Knee that was a bowling socket for stability and Professor Howell, that was the inventor of the kinematic alignment, that we coupled together with Sphere Knee becoming the SpheriKA. Two other important aspects of the improvement of our product are linked to, of course, strategic collaboration with university. We cannot do basic research by our own. So when we have a need, we have good relationship with many university. And last but not least, one of the most important source of information that we have today is the MyBody database. And this is the database that we create internally in the company, collecting all the CT scan and MRI of the patient that we operate to a personalized medicinal solution. And this database is constantly growing with 50,000 new clinical case every year. And this database, you are not an engineer, but you can imagine that with this database, we can do a lot of investigation, a lot of measurement, and this was the basis of our anthropometric study that, for example, helped us in designing this SpheriKA Knee. We were speaking about robotics. So we are saying Medacta has no robotic because we don't believe in robotics. Actually, one of the last development that we have done is the AMIS robotic Leg Positioner. So it's a robot. And I would like to say that it is one of the last example of a very profitable collaboration with a leading surgeon in France and the surgeon is always the same. It's Frédéric Laude, the genius that bring us the anterior approach. And the idea, the disruptive idea that we had when we were discussing about this opportunity was to try to reduce the number of assistants needed in the operating theater during a total hip arthroplasty. Of course, we need to have the surgeon always in full control of the position of the leg of the patient, but the idea was to try to reduce the personnel during the surgery. And this is a very good example of efficiency where the footprint of a robotic solution has been well balanced with the reduction in cost for the personnel attending the surgery. So we are not against robotics. We just have to select when robotics makes sense. And I don't know if you have seen it, but today in the morning, we have this robot in the entrance of Medacta. We were saying that personalized medicine is, of course, an important and predominant aspect of our offer. But to be able to deliver personalized offer for almost 50,000 clinical cases in a year, we have been obliged to create what we call the MySolutions Personalized Ecosystem that is a very captive offer for our client. And usually, when we serve our surgeon with this offer, they are so used to get this service that really they stay and they like to continue the collaboration with Medacta. And how it works. It works, starting with a very comprehensive and advanced implant portfolio. We can use our own tool that we develop internally to provide, as Francesco was saying already, a 3D planning for the patient. So the surgeon has not to think too much. We provide this service for him. He has to check the planning. He is the surgeon. We are the engineers. He can modify the planning very easily and then he can validate the planning. But once the planning is validated, we can share with him the essential information to secure and optimize the surgery. And then it's just a question of translating this planning into the surgery to execute the surgery. And of course, we have different solutions that we have finalized with time. And to execute, for example, they can use the NextAR platform or they can use the MySolutions cutting block. Postoperative data collection are very, very important. So once you have done and execute the surgery, we have the possibility to collect the data. And we have 2 options. We have the [ MyClinical ] data and POP hub, that is the patient optimized pathway hub that are essential to verify the quality of the clinical outcome. And furthermore, all this data, so the big data collection and stratification of data are the base foundation for the development of [ AE ] based predictive solution that we have already in pipeline. So AI, of course, will be part of our future, and this data will help us to try to predict the clinical outcome of an execution surgery. So we will be able probably to develop the third generation of 3D planning, where we will have some prediction of the clinical outcome through the planning. Just to conclude, I would say that innovation is not only about what we are doing now, but it's more about what we will do next. This is clear. Innovation is a constant process aim of improving the future, and we believe in it. And it will be constantly linked to our success. So until today, Medacta has been successful because of our innovation. We will continue to do innovation because we want to continue to be successful on the market. Thank you.

Thank you, Max. Good afternoon, everyone. My name is Gianluca Olgiati. I've been with Medacta for 20 years. I started my career with Max in the Research and Development Department. And then I had the privilege to work with Niccolò as [ Director ] for the European market. And today, I'm serving as a Group Vice President for Marketing. Within my responsibility, one of my key focus is the development of our educational platform, both in terms of strategy and execution. Today, I would like to share with you how education is a key success factor for Medacta since the beginning and will continue to be a key success factor with many other. Innovation requires education, has been our mantra for many years, since the beginning, as you have seen in the presentation, in the previous section. The constant process of innovation presented by Max in the previous presentation requires a solid and, most important, scalable education infrastructure to serve the expansion, the growth, the new market, the new product introduction. And that's why medical education has been a key differentiating factor for 20 years. And the surgeon is never alone is our motto and reflects our value of patient and customer focus. This is something we have expanded a lot today about our focus on patients and patient well-being. Education is key pillar of our basic strategy, but is also the most effective way to support the new adopter worldwide. We founded the M.O.R.E. Institute in 2004 and still developing the platform. M.O.R.E. Institute is a unique global education platform that is tailored to meet surgeon needs. Education is personalized also in this case, all the services are personalized on surgeon needs. It's built on a unique strong scientific community that help to develop educational opportunities, build events, build scientific program, everything on a structured [ method ]. The structured [ method ] that have proven to be successful has a backbone of 5 simple steps. The first one is based on the availability of our expert surgeons that are working at reference centers. That can be hospital, university, academic centers, and they are available to us, new surgeons, new adopters that wanted to further understand about our product and about our technique. And they have the possibility to evaluate the technique and to explore the Medacta problem, just looking at what our experts are doing. If they are persuaded that the solutions they are seeing could bring benefit for their patients, that is the next step for them that is attend a learning center. A learning center is workshop, is a cadaver workshop organized on real human specimen where the surgeon -- the new surgeon can practice the technique and test the new product in a very safe environment. And then he also the opportunity to have a scientific conversation with the expert to deepen the knowledge, to go through the rationale behind our product, to get more insight about the clinical evidence that support our innovation. And this 1 very important step. The third one is the key one. The proctoring. The proctoring is the key differentiator factor for Medacta. So I'm a new surgeon. I've visited an expert. I've been on a course, and then I'm ready to start. I'm ready to take off, but how I wanted to take off? With confidence. So the surgeon that maybe is the 1 I've met in the previous step is available to come to visit my hospital, stay in the operating room on my side and discuss, sharing opinion, helping me to start with confidence. I can ask him, what would you do in this case, how to help? And he gives also the opportunity to continue to evolve, to continue to learn and practice the technique in a safe -- in a very safe environment. Just to create a comparison. It's like learning to drive a car. First, you see someone driving and then someone bring you on a park space or in a very safe area when you start practicing with the clutch, with whatever. And then you start your lessons with someone on your right. I hope this has been the same for all of us. I mean, at least that's been the same for me. But this gives you an idea about how important it is to have someone on your side while you are learning to keep you on the safe spot. Especially if you are driving a car in the parking, it's something, in operating room there is a patient. And then from the third step on, everything is about advancing, evolving, learning and creating the experience on maybe specific complex cases, unique pathologies and becoming a master of the techniques, having the opportunity to interact with our network of experts. Talking about expert, actually, we have close to 600 reference centers. And in 2023, we have been able to educate or to have in our educational activities close to 3,000 surgeons only in 2023, and we did organize more than 130 learning centers. The educational offer can be further enriched, tailored with additional elements. But everything is based on surgeon availability, surgeon needs, surgeon preferences. We have many options. But then it happens that surgeons, especially key opinion leaders, are very busy and maybe they cannot attend 1 of our events due to the schedule. So if they cannot attend our event, we can bring the event to them. A very nice example, upon needs, we can activate mobile labs to give quick access to anyone interested in our product. This is very effective in the United States. It's very easy to maneuver a truck. And inside, you have a fully equipped lab where you can run a cadaver workshop without any limitation. The only one is parking. That's an example. There are many other things that we can build upon needs also activating one-to-one cadaver workshop on different facilities where we have quick access worldwide. One example on every other is Australia, where this is very common. M.O.R.E. Institute also organizes international symposia, where our experts can share the results of the clinical outcomes they are recording and registering. And in 2024, the M.O.R.E. Institute also has been celebrating our 25th anniversary through education. So we did organize an initiative that we called the 25th Anniversary World Tour. The focus was the results and the sustainability of personalized medicine that has been, let's say, the core of our innovation in the last year. And we did organize 4 different symposia in different parts of the world. The last 1 will be next month in Japan. And due to the [ ag ] demand, also to answer your previous question, we are replicating another date in United States, mainly focusing on the need due to the [ ag ] demand on education around Kinematic Alignment SpheriKA and this very compelling topic. Talking about the Lugano event the Swiss one, that has been, say, at home. We have been able to guest the 1,200 participants from worldwide and 160 experts presented on stage for 5 days in a row of symposium. This has been very -- a very big event. This has not been -- it has not been only about the scientific presentation. All the attendees have been able also to touch first standard the new product coming. And we also had the opportunity to organize satellite events, leveraging the opportunity to have surgeons from overseas here and satellite events like learning centers, specifically organize it for them. Reference Center visit, education Board meeting, 120 meetings done by the R&D in 5 days. And we have also the opportunity to guest here in the quarter, 150 surgeons. As a satellite event, we touch more than 500 participants coming from worldwide. Another activity we support them are fellowships and the clinical research project in collaboration with the leading university, technology hubs and center of excellence worldwide. But in practice, what is a fellowship? A fellowship is a specialized training program offered to young surgeons through an educational grant, giving them the opportunity to enhance their skill and knowledge with a short-term visit now in 1 of our academic centers. That's the best way to support the promising surgeons candidate to become a key opinion leader of tomorrow. And since now, now we have organized more than 100 clinic -- 100 fellowships and clinical research projects worldwide. Before, we were talking about our ability to listen to the need of surgeons. Something we learn over the years is that education is important for surgeon as it is important for patients. There is a very positive correlation between patient education, engagement in the care pathway and satisfaction. So patient education plays a significant role in improving the clinical outcomes and increasing patient satisfaction. That's why we did create a specific program, called, [ MyPractice ], that offer to surgeons a unique package of educational material to support them in preparing their patient to be successfully part of the journey. And also in this case, we are offering personalized solutions. And we can build the, I would say, education strategy upon the surgeon needs based on his preference. Also, in this case, the material can be really customized. I've mentioned before that 1 of the promises of the M.O.R.E. Institute is the surgeon is never alone. And this implies a daily 360-degree support. And the surgeon is never alone means also being on his side on daily activity with highly qualified, well-trained and continuously updated team. That's why we did create another internal department that is called Medacta Academy that it's addressed to internal personnel. And only in 2023, we delivered close to 45,000 of education, on training and certifying personnel around the world. There are people also in today, downstair, doing their 3 days training. And we hope that at the end of the training, they will fly back home with a full certification on product and technology. The vision I presented, the unique approach that has been built around patient focus is supporting the Medacta growth, the expansion and the success since the beginning. Very short, might take a message, start from the initial message. Innovation requires education. Innovation, which is important. Relevant innovation is the answer to surgeon needs for improving patient outcomes in a sustainable way. And the same education is the answer to surgeon needed to adopt innovation safely, quickly and again, sustainable. Education cannot be effective if innovation is not relevant. I can have the best education platform, but if I have nothing to teach, I'm quite useless. And -- but that is the opposite. I can have the best innovation, but if I don't have a loudspeaker to spread what surgeons can achieve, it's not effective. The M.O.R.E. Institute is trusted worldwide as a solid brand that delivers top-level tailored education. And the proved method as presented together with the global network of experts allow for efficient scalability. That's another important point. With a M.O.R.E. Institute, the surgeon is never alone. And the combination, innovation and education are supporting the growth of the expansion of Medacta since the beginning. But on this topic, Niccolò will expand and elaborate in a while. So in the meantime, thank you for your attention, and I'm happy to answer any questions you may have.

So look, I don't know if I missed it or could you kindly disclose -- I mean, you need surgeons who will train new surgeons and who will be present. So how many surgeons do you contract or have you contracted to do these training sessions with other ones? That would be the first question I would have.

In terms of number, the current number of surgeons that are supporting Medacta's expert surgeons is close to 600 people worldwide.

And I mean, of course, they won't do that for free because the time they spend with you, they can't do surgeries and we'll be losing money, "losing money." Can you kindly share with us -- I mean, I assume that all these expenses are booked under sales and marketing. How much sort of would that whole concept of education training, academy, et cetera, sort of does it make up from the S&A expenses?

I cannot disclose the details on this. But just to give you an idea, all the contracts are managed, let's say, with the compliance officer that is a fair market value for each surgeon. The total account for education and marketing activities is in the range of 5%, 10% of the top line yearly, low 5.

Five, but this includes all the medical education. So the consultancy, the cadaver labs, the travel and accommodation specific for those, the events. Of course, maybe mention then because this year with the 25th anniversary. We had a little bit of a spike, not 10. But the average in normal years is around 5%, which is something we communicated back as well in the IPO, it stays more or less in the same range.

Thank you, Francesco for the point. Other question? Okay. Nico? Thank you. Again.

Thank you, Gianluca. So good afternoon again. I will give you a brief overview on our commercial operations and strategies, and I will try to be as fast and efficient as possible. So first of all, you see here our geographical footprint. We are currently working in more than 60 countries all around the world. And these areas represent basically 90% of the total global orthopedic market in value. We are active in 4 product lines, Hip and Knees, which represent more than 80% of our revenue, followed by Spine and Extremities. Our business model, we are working with direct operations in 12 countries, key strategic countries. Elsewhere, we are collaborating with stocking distributors. And in fact, it all depends on the distribution channel. Currently, 90% of our turnover is generated through our direct sales. We directly sell through our branches to public and private hospitals and we have the ability to establish strong relationships with surgeons through our solid innovation and high quality level of service. How the conversion process works? We divide each country in smaller territories. We set up a capillary network of direct sales in each territory. And then we select our target in each territory. We prioritize them and then we start the conversion through the adoption of innovation, as Gianluca said, supported by our education platform. Sales process literally start by installing at customer location, all the instruments and implants that we need, as we have seen earlier this afternoon. The surgeon buys constantly as the implants are used. And by transition to Medacta, they become loyal customers thanks to, again, our focus on innovation and medical education. This process takes a little bit of time, but you end up with loyal customers. Again, about the commercial model, what drives the decision? Basically, it makes sense to have direct operations, which requires you to make an initial investment to start in the countries where you have the higher level of prices. Again, elsewhere, we prefer to collaborate with stocking distributors who are going to buy instruments and implants. They become our customers, and they obviously are going to take over the initial investment. That's the reason why Medacta is strategically positioned with direct operations in the largest market with favorable price levels. Particularly, we have been focusing on the Western European countries with relatively high level of prices. We developed a hybrid model in terms of the local sales network, mainly direct sales force and only in a few countries, some commission agents. The price setting depends on the country, depends on the system. We have procurements. We have public tenders. We have prices set by government. We have to deal with purchasing groups. In Asia Pacific, our focus is on the Japanese and the Australian market. The level of price is 1 of the highest, and we developed their direct sales force. In those countries, the prices are set by the government. There is a fixed reimbursement price on the medical devices. And then obviously, the U.S.A. market, which is the largest orthopedic market with high level of prices. We developed here, again, a hybrid model in terms of sales network which is mainly based on commissioned agents, but we are constantly and in parallel, developing network of direct sales in the country as well. The price setting depends typically from procurement by hospitals and since a few years, by the ASCs. We have been talking about the ambulatory surgical centers today. And I would like just to give you a short highlight on the ASCs in the U.S. According to recent studies and our estimation, while the U.S. ortho market is growing -- is expected to grow 4.6% in the next years, we are seeing and we expect a trend for the ASCs' procedure to grow much faster and to be able to achieve a quota of 50% of -- more than 50% of the joint surgeries by 2030. Why are the ASCs so successful? First of all, because they are cost effective for the payers with about 40% lower cost compared to traditional inpatient treatment. There are financial incentives for surgeons to work and develop their practice there. There are some benefits, obviously, for patients as well, like potential lower risk of infection. And also to a company like us, it is easier and faster to get into the approval and start working in an ASC, then going through the approval process of hospitals, which means that it's easier to and faster to start collaborating with surgeons in ASCs and then moving later on together with them in hospitals. But it's more than that. Medacta's ASC advantages, our digital solutions, which can make surgical procedure smoother and eventually faster. The disposable sets of instruments offering savings in terms of washing, sterilization, time. The minimally invasive techniques, which helps in supporting faster recovery, shortening the time. And in the end, the fact that we have in the U.S. a team which is fully focused on the ASCs. This to say that if we look at our own internal data, while currently, the ASCs joint surgeries is estimated at around between 15% and 20%, as Medacta, we are running in the U.S., 40% of our joint surgeries in the ASCs centers or as outpatients at hospital location. So we are, in a way, ahead of these key market trends we expect in the next few years. So we hit EUR 0.5 billion turnover, which basically means that we have a global market share, which is in between 1% and 2% of the EUR 38 billion total addressable market. Our focus, as I said, is in Asia Pacific, Australian and Japanese market with their appetite for new technologies. We have a good presence in EMEA, particularly in Western Europe. And especially there, we have been able to achieve up to 25% market share in some selected markets or with some business lines. And finally, strategically, the U.S. market, as I said, the largest ortho market globally, where we keep expanding our sales force network and are strategically focusing on the ASC centers. To summarize, which are our strategic priorities in the next time. Continue our expansion. Increasing our market penetration, focusing and reinforcing our direct sales force, growing both geographically and by business lines when this is needed. I'm thinking about sport medicine in the next years. And obviously, we will keep exploring new areas because we will, in any case, consider any new opportunity. Build scale, leveraging our existing portfolio to increase our penetration in the market, continue to support our education platform and high-quality level of service, which is 1 of the key to succeed and to make loyal customers and continue to focus on all the different business lines, especially the newest one like Sports Medicine. And finally, to keep driving innovation, as Max presented to us. Keeping the expansion of our established portfolio, reinforcing our collaboration with surgeons and leveraging our unique product portfolio and the personalized patient solutions. I just want to leave you with the last message. On one hand, we demonstrated the ability in some markets or with some business lines to become market leader and to be able to achieve up to 25% market share. On the other hand, we have just 1% to 2% of the global market share of this total addressable market. So the combination of these 2 elements -- let me say that means we have a significant potential to keep growing across most of the markets and business lines for the years to come. Thank you.

Maybe we can just do the last presentation. And if there are Q&A at the end, so everybody is able to listen to the all the presentations. I know some of you need to leave at 5 sharp. So maybe we can do that, if you don't mind.

And I'll leave the floor to Alessandro.

Yes. Thank you, Nico. Good afternoon, everybody. So I'll try and keep it short and sweet. My name is Alessandro Siccardi. I am the Supply Chain Director for the company. I've been working in Medacta since 13 years. And I inherited my father's job, but not the crown. But I'm good with it, joking. So my job is mainly focused on 4 pillars, I would say. Of course, delivering implants to our countries according to their needs is the first one. Delivering those implants in the highest quality standards is the second. Making sure that we always have capacity -- production capacity available to sustain our growth plans is the third. And all the while, last but not least, try to always reduce the cost of goods by vertically integrating new technologies into our production. We have told you already this morning that our facilities both run 100% on renewable electricity. Since 2019, we have been able to reduce the greenhouse gas emissions by 25% across these 2 sites. And we are able to recycle our waste on the 90%. And this is quite impressive, quite -- something to be proud of. We are here today in Rancate. We have been this morning to Castel San Pietro. You have seen that both sites, welcome offices and production capacities. Here, in Rancate, we focus on Spine and Sports Med. We are building here, as you see -- as you are seeing, more around 9,500 square meters, which will also welcome future production for joint. In the meantime, our warehouse is here. For the people who still have time, be happy to show you also the warehouse. In Castel San Pietro as well, offices and manufacturing joints. There is a new building, which was the building where you took the bus after the production facility. That is a new building, which is ready, I would say, almost ready, and it would be -- sorry, it will welcome 5,300 square meters. So to give you an idea, in 2023, we were able to produce 1.4 million implants. It's a good number, I would say, and something that is quite impressive. And across the supply chains in all the countries, we have around 870 people. You see here are the expansions in Castel San Pietro and in Rancate. The idea, as I said before in the beginning is to always be equipped in order to sustain the future growth and to be able, whenever it's possible, to integrate new technologies in these expansions also to reduce the cost of goods. About warehouses and logistics, we opened -- just opened a new distribution facility in Memphis to serve the U.S. market and to also be a backup for the rest of the world. And we have a new project in the pipeline to establish a second distribution center in Italy to serve Europe, Asia Pacific, Latin America, and also be another backup, but in order also to optimize net working capital and reduce shipping costs. We have full control over the Medacta supply chain. This is also key. And this is very shortly to show you how we do it. We have multiple sources, supplier strategy. This is something that my father taught me a long time ago now, always have at least 2 options. And we manage these suppliers, our suppliers with long-term contracts, especially for raw materials and semifinished components. Then once we get these components, most of our implants are fully manufactured in-house here in Switzerland, as you have seen, with a highly automated production, again, vertically integrated. Distribution and warehouses. As I said, we have a central warehouse today here in Rancate, a backup distribution center in Memphis, which today serves the U.S. market. And local warehouses in all our direct markets. Again, new project in pipeline is to open another warehouse in the European territory. You have seen walking through our production in Castel San Pietro that we have a lot of robotic processes put in place. Obviously, the goal is to reduce our operational costs, increase control over the processes, free up resources in order for the people to do other things while the machines are running and increase the quality and shorten the production lead time. 3D printings, you've seen it also. It's a technology that is easily accessible. It's cost effective and brings a better quality, gives you infinity options of shapes and geometry, which I always thank the R&D to give us these nice tools to play with and reduces the risk of errors. All of this is the value creation passes through direct control of our key production processes. This is also very important. We always want to have our own eyes checking our own production. Quality. Quality is key. Quality is something that our father also made us aware since the very beginning. We cannot make any mistake. And if we do, we have to react immediately. So we are committed to delivering service and product solutions that exceed all standard and regulation. You have seen today during the presentations, for example, on the SpheriKA that even though we got our CEE marks or our FDA marks, we kept that specific product under strict surveillance for 3 years. This is somehow related to a good practice or to a best practice in order not to run any risk even though we got the certifications. This is something extra that we do. We want to be extra careful. I think you got the message now. 20 quality assurance people and almost 60 people are working into the quality control. Quality control, which are done in processes in the production upon receiving the goods, before delivering the goods. But the goal here is simply to say that Medacta embraces and will always embrace and will strive to improve on the highest quality standards possible. So I think I've been short and sweet. Thank you very much for your attention. If you have any questions. If not, I leave the floor to my brother for his closing. Thank you very much.

Maybe I can quickly run the closing remarks, and then we can have a last Q&A for everybody before leaving. I think -- I hope at least we managed to give you a little bit of an idea of who we are, where we are coming from and where we want to go. The key messages are here. I think we have proven to be able to be a good competitor in orthopedics. We have established critical mass in a market that remains gigantic and where we have only scratched the 1% to 2% market share, even less, if you consider that certain business lines have just started. So there is a huge, huge potential. You couple that with the fact that our presence in the key market is already established. So the baseline is there. In the U.S., our #1 market. Of course, in Europe, and Japan and Australia. Those 4 areas represent around 85% of the total addressable market. And then we have all the other distributors. So a lot to build up on a solid base. Commercially, the strategy will not change. We will just go deeper into those markets, especially expanding our sales force in the business line where we have less market share, which means basically everywhere with a few exceptions in Europe. That's definitely the most important aspect, together with, of course, product expansion in the newer areas in Spine in the Sports Med. A little bit less, of course, in the Hip and Knees, where our product range is already very solid. What is not going to stop is our ability to constantly innovate our existing portfolio in order to maintain our ability to compete through innovation. This is, in my opinion, the most important aspect of Medacta. We always come with the best next product to cannibalize eventually our own. We don't want to stop just because we are good enough. If there is an opportunity, we do it, and then we continue to grow. We mentioned this -- where we should go with this strategy in terms of midterm growth. Our expectation is to continue to grow in the low double-digit region with an adjusted EBITDA which will be in the worst-case scenario in line with 2024. And the variations in terms of expansion will depend mainly on top line growth, provided, of course, there are not special conditions happening in the market. This was our last slide. So if there are questions to any of us, please feel free.

A question to Alessandro. You mentioned in 1 of your slides that you currently produce around 1.4 million implants per year. Now we've seen the new building in San Pietro. You are expanding here. So if everything is set up, sort of what is the sort of estimated number of implants that you can produce when everything is sort of ready?

Thank you for your question. I said that last year, we produced 1.4 million, not every year, first of all, just to clarify. There is not a number. The number is -- comes from a sales prediction. We have to be ready to produce what is needed according to the sales forecast, sales long-term plan. I don't think we can disclose those numbers.

Basically doubling our square meters.

Let's talk square meters, okay?

So that is the plan, the production capacity in terms of shelves will allow us to double volume-wise our current volume. And of course, then the sales will depend on the [ general mix ] and the products. But roughly, we have created capacity in terms of walls that will allow us to double.

And just to clarify once more on the outlook, it was the adjusted EBITDA margin, not the absolute rate. Okay? The margin. Okay.

Yes.

I have a question for Niccolò. If you have to rank the key reason why you are so successful in ASCs. Is the product portfolio? Is the cost? And how you can expand that in the future?

I truly believe it's a combination of factors. I believe it's, first of all, about the products. And when I say products, I'm referring to the implants to the techniques, to the instruments to the different solutions that we can provide, which seems to be tailor-made for ASCs like disposable instruments, like techniques that allow for faster recovery. So it's a combination of this, mainly.

I'll go first. Just on -- U.S. market is really competitive and you have grown well there. But you're already in ASC market, which is growing really fast. What will get you to grow even faster in the U.S.? Is it products? Is it more direct sales force? Is it better like golf holidays for the surgeons? What's keeping you back there?

I would say, especially in the U.S., success brings success. So building a brand from 0 has been very, very tough. Having now successful products utilized by center of excellence, which are well known in the U.S. helps a lot more than what used to be 10 years ago. Having key opinion leaders, champions using new products early on, this will accelerate, especially the fact that salespeople will come to us and they will bring their customers. This is what we see more and more happening, which was never the case in the past. So quality salespeople is, in my opinion, the key to continue to grow faster in the U.S., and it is something we are seeing.

And just following up...

They come because of the products, because of the success that this drives the ASC focus, et cetera.

You expect to grow in the U.S. faster over the next 3, 4, 5 years versus the rest of the markets? Because we haven't seen that?

No, I don't expect this to grow faster because my impression is that the U.S. market is -- that's the CEO of Zimmer checking out of the event. Now I think the U.S. market is definitely much more controlled by the U.S. companies. I have the impression they have a little bit less of a hold outside of the U.S. They have been doing very aggressive cuts, which helps, and that's probably 1 of the explanation that created some dissatisfaction, especially in Europe, supply chain issues. They protected the U.S. from supply chain issue, for example, completely. They did a disservice to the market, but they limited as much as they could the U.S. because they protect their own market. So it's tougher for sure. It's more competitive. There are non-competes, for example, which are massive. So it's challenging. So I think we're doing a good job. We could accelerate a bit. But again, the U.S. to go much faster than Europe, it's unlikely. Sorry?

What -- in this midterm plan, what cash generation do you expect? And operating free cash flow, net debt?

I don't think we're guiding on the cash flow. I don't know if you want to give any qualitative flavor. But if you want, if you slow down the growth rate, and as we mentioned, the big CapEx effort on the building side should cover quite a bit, then the rest is a reduced CapEx. So the cash flow is directly linked to the growth. If we are in the fast -- high end of the growth, we are going to have a limited free cash flow. If we are on the lower end, you are going to have more free cash flow.

But on the double-digit growth -- on the growth you're guiding, you don't expect negative free cash flow on the time period?

Zero, I would be already -- we try to generate some free cash flow unless -- on the other side, if I see the possibility to accelerate, I'm pretty sure I will.

What is the cost advantage of single-use instruments versus multiuse instruments?

Cost advantage for the hospital? It's a completely different impact on the P&L. Instruments will depreciate, so it's actually below EBITDA. On the instruments, single use, their cost of goods sold. But the financial impact is very different, of course, because CapEx drops, you have a little bit of cost in the gross profit margin. You lose a little bit of profitability, but you save a lot in terms of financial costs.

Still in the U.S., can you disclose the number of reference centers that you could have? I think you have 600 globally. And then a second question would be, are there any pockets or territories in the U.S. where you are completely absent, either direct or indirect? That would be helpful just because I think you've mentioned that you're covering territories and then selectively prioritizing ASCs or bigger hospitals and you still have less than 1% market share. So that would be helpful.

Yes. So let's start with the last one. The U.S. is still a virgin market, if you want. We are everywhere, but we are nowhere. If you have 1 salesperson in New York, you can have 20 more. So we have a presence, which is in the typical croissant-type of approach. You have the West Coast, the southern aspect, Texas, et cetera, and then you come up on the East Coast with a big presence, good presence in the Midwest. But can we double and double again exactly in those territories? For sure. And are there many states where we are still not present? Maybe not as a state, but in all of those states, there are plenty of big and midsized cities where we have no presence or very limited plans. It reflects the market share. On the reference center, if you take the big number, we use the reference centers in order to generate revenue. So if you use the proportion of revenues, you have an idea. It's a function of the need. We don't -- you don't create a reference center if you don't need it. You create a frustrated surgeon, you tell, you're going to be a reference center and then nobody shows up. Any other question? So if there are no questions, I would like, first of all, to thank you all for coming here with us today. I hope it did provide some insight on who we are and what we do and where we're going. Before leaving you, I would like to thank all the team that presented today with me, but especially as well, all the team that helped us to manage the logistics, the product fair, the company tools, and I wish you a safe travel back. Thank you very much. Sorry, just -- if you want to visit the Rancate factory, feel free to let me know, and we'll welcome you downstairs at the reception.