Getinge AB (publ) (GETIB) Earnings Call Transcript & Summary

Welcome to the Getinge Capital Markets Update 2024. [Operator Instructions] Now I will hand the conference over to the speakers. CEO, Mattias Perjos; and CFO, Agneta Palmer.

Hi, everyone, and welcome to this Capital Markets update. The purpose of the call today is to provide a bit more color on the recent letter from FDA. I hope we plan to do about it. We will also discuss our new financial target and finish off with a Q&A session. So with that, we can move directly to Slide #2, please. So a week ago on May 8, FDA sent a letter to U.S. health care providers concerning our cardiovascular products, Cardiohelp, Cardiosave and HLS. There were no new findings or feed actions referred to in this letter, and we're getting also do not have any new field safety corrective actions to report at this stage. Even so, FDA recommends a transition to alternative products when possible and in cases where that is not possible, health care providers are asked to stay with Getinge's products to make sure that patients do get treated. We can then switch to Slide #3, please. So I just wanted to highlight what we do about this and the actions that we've taken. And we, of course, take this recommendation from FDA very seriously, and we have initiated the immediate actions related to this. So in the short term and in alignment with FDA, we will in the U.S., suspend all promotional activities for Cardiohelp and Cardiosave, sales will only be done to customers who don't have available alternatives for these products. All customers will also be informed about the regulatory requirements regarding the indications for use of Cardiohelp. And for the installed base, we will continue to supply consumables, and we will continue to service the hardware. Outside of the U.S., we will continue to sell both consumables and hardware for Cardiosave and Cardiohelp in all markets where these products are approved. Due to the importance of the U.S. market, we will, of course, have some negative financial impact from this and it's too early to say, though, how much that is something that we will need to monitor in the coming months when it comes to customer behaviors and so on. So it depends on both internal and external factors so we're finalizing the implementation of ongoing improvements, for example, it's something that's completely in our hands, whereas customers behavior, competitors, [indiscernible] activities and receiving regulatory approval are external factors that can only have a limited impact on. We then move to Slide #4, please. In the long term, our plans have not changed. The FDA has not asked us to do anything that we were not already doing. So we are progressing accordingly and in line with what we have previously communicated. So where we are now is that we have worked down 90% of the quality record backlog, and there are no new material findings from this work. So the focus now is strongly on product upgrades to remediate the concerns that we are already well aware of. Furthermore, in the first quarter, we filed for approval of the new packaging solutions for HLS-sets for the CE-market. As you probably remember, this has been one of the key areas of improvement that we've been working on the last year. In parallel, the development of the next generation of Cardiosave and Cardiohelp is ongoing. So for Cardiohelp too, we aim for a submission to somewhere in the end of the first half of 2025 and then followed by an update and submission for clearance of HLS-sets as well. For Cardiosave Plus, the submission for FDA is expected during the second half of 2025. So the product will be developed and ready by mid next year and the submission will be in the second half. We then move to Page #5, please. I wanted to take the opportunity to take a bit of a broader perspective on quality in Acute Care Therapies. And from Getinge's perspective overall, you are hopefully aware that we do not have any particular challenges when it comes to Surgical Workflows and Life Science, so two of our -- the two other business areas and also within Acute Care Therapies, the challenges are related to Cardiopulmonary and cardiac disease. So we've highlighted here a number of achievements and good progress that we see when it comes to regulatory in the both the U.S., in EU and in China. So we have -- for example, here, our Hemopro 3 that we received the 510k clearance for in February of this year. We have approvals for our Graft systems. We have the PMA for a Covered Stent system as well. We have the Servo-Air Lite clearance in the middle of last year. And we recently had our Talis EMR with the also advanced clinical guidance cleared 510k on 1st of April this year. And in Europe, we made good progress with transitioning to TÜV SÜD. There's one notified body. We received EU MDR approval for our HLS Set Advanced on the 16th of February this year. You can also see that we're making good products when it comes to uplift in the portfolio and the different sites to the MDR regulations. And in China, we had our EVH Systems approved as well and very recently, our Rotaflow II new registration also approved. So again, the quality challenges that we have are confined to Cardiopulmonary and Cardiac Assist. We then move to the next slide, please. Key for us, and I think one of the key strengths of Getinge as a company is the global reach that we have and the long-standing relationship that we have 120 years of serving our customers in a good way. And in spite of the challenges in recent years, we have tried to keep this customer-centric approach. And with good outcome, we had an updated customer survey a couple of weeks ago, and we can see that we're comparing with the already good score that we had in 2021, we had a 5 percentage point increase now in 2023. So customer satisfaction remains a key core priority for us, and we continue to be focusing on furthering improving this in the coming years. We then move to Page #7, please, and start dissecting the growth prospects of Getinge in the coming years. So overall, we expect a 3% to 6% organic growth in net sales between now and 2028. There are some key factors baked into this projection. One of the assumptions is that we want -- that there will be this negative impact financially from Cardiopulmonary and Cardiac Assist that we were not aware of a week ago. However, we can also see that there's a normalization in mix towards higher-margin products in both Life Science and also in Surgical Workflows and when it comes to China, which has been one of the key uncertainties the last couple of years here, we are expected to get back on the growth track, but we think the new normal here will be high single digits rather than mid-teens like we've seen before. And in all of this as well, productivity will continue to be a very high importance in the coming years to mitigate the inflationary pressure that we've seen, and we will continue with a lot of the measures that we have done well for many years, like quality value engineering, our portfolio pruning, consolidation of our supplier base and so on. We also do expect some additional growth from acquisitions. We continue to actively look in selective areas. And we believe that we have despite the acquisition that we did in the fourth quarter of last year. We have some room to maneuver still and our aims to be able to do this without reaching the 2.5x leverage. Then move to Page #8, please. So I wanted to take you through the three different business areas as well. So a bit more of a granular perspective on this. So we start with Acute Care Therapies. And this is the business area that stands for about 50% of Getinge's sales and half of that is in the Americas. So margin-wise, in this business area, we are now back at pre-pandemic levels. So the improvement journey will need to restart from this level. And when it comes to the growth for 2024 through 2028, Acute Care Therapies is expected to grow 3% to 5%. In addition to the impact from the product challenges in Cardiac Assist and Cardiopulmonary, the projection here assumes that we will benefit from the ongoing consolidation in the ventilated market. And when it comes to the geographic perspective, we do continue to see U.S. and China as our two largest markets. We also expect to have a number of successful product launches here coming from the innovation and therapy expansion initiatives that we have already kicked off. And I also want to point out the growth projection here assumes that current quality challenges are solved and that the no new major issues evolved from the ongoing remediation and the major mentioned launches of Cardiac Assist and Cardiopulmonary hardware. We can then move to Slide #9, please. So we're moving on to Life Science. And this is a business area that stands for about 15% of Getinge's net sales and Americas is 35%, 40% in EMEA close to half. Margins have been a challenge in the past years here, and it's now below pre-pandemic levels. There's been a rather suppressed the investment climate in bioprocessing, has been a lot of destocking in this industry as well, that we're hopefully seeing the end of that now. So for 2024 through 2028, Life Science is expected to grow 6% to 10%, and this assumes that the normalization in biopharma takes place and that we return to low to mid-teens growth in this subsegment. We assume also that capital goods will benefit from the growing GLP-1 industry. This is a trend that we are on right now. And we also expect the recovery in China even if the timing of this is still a bit uncertain, especially when it comes to the biopharma side of Life Science. We also expect to continue to partner with key biopharma companies and to be part of their growth will be crucial for us on this journey. Within acquisitions, our focus is primarily on the bioprocessing space and geographically, mainly the U.S. So we can move to Slide 10 and look at Surgical Workflows. So Surgical Workflows is about 35% of Getinge's net sales, and we have close to half of that in EMEA, about 35% in Americas. Sorry, 30% in Americas. Margins here are now well above pre-pandemic levels. So -- and for 2024 through 2028, Surgical Workflows is expected to grow 4% to 6%. The dynamic behind this projection is that we assume that there will be low single-digit growth in capital equipment and in service. We expect double-digit growth in digital solutions in infection control consumables and also some of the new segments that we're addressing here, and that's mainly low temperature sterilization and endoscopy reprocessing. U.S. is expected to grow for Surgical Workflows, whereas China is expected to be a bit more challenging. And when it comes to acquisitions, the focus is primarily on tuck-in acquisitions in consumables and in digital. So this overview then boils down to the group financial targets for the coming years. So we can move to Slide 11, and I will hand over to you, Agneta.

Thank you, Mattias. As mentioned already, the situation with Cardiosave, Cardiohelp and the HLS products in the U.S. impacts our financial projections and targets. Midterm, however, for the period 2024 to '28, we feel confident in our financial target of adjusted EPS growth above 12% on average throughout this period. We also remain with the same dividend policy as previously of 30% to 50% of net profit. Go to Slide 12, please. In addition to our financial targets, we also update our sustainability target. So these are now structured in line with the ESRS standard for social environment and governance. Compared to our previous targets, I want to highlight two important things. Firstly, our quality-related target is changed to less than 1.5 audit findings per inspection. This is for increased usability and measurability. And secondly, our environmental targets are from now on linked to the science-based target initiative. Next slide, please. As Mattias mentioned earlier, enhanced productivity will continue to be key for us in the years ahead. We have addressed and we are continuing to address several measures here. As an example, and only then in relation to our successful EU MDR uplift program, we have reduced the number of product groups in our portfolio by more than 30%. Through quality value engineering, we aim to get even better at developing the right products at the right cost, both from a competitive and a margin perspective. In addition to these continuous process improvements, we will potentially make structural cost adjustments depending on the progress within the Cardiac Assist and Cardiopulmonary businesses. Next slide, please. [ Assuming ] in then what this means for the structurally motivated EBITDA margin. The margin has been quite volatile in the past years, positive contribution from mix operational leverage and cost absorption during the pandemic resulted in a 19.3% margin at the peak in 2020. The situation was reversed in the past years with high inflationary cost pressure, coupled with weakened demand for some of our high-margin products as well as in China, resulting in a level of approximately 12%. The recent decision related to the Intra-aortic Balloon pump, Cardiohelp and HLS in the U.S. changed the conditions of the structurally motivated margin, and we expect a delay before the margin picks back up again. Through normalization and our internal efforts, we project to close the gap to the line of 3% to 6% structurally motivated organic net sales growth. And this, in turn, means that the adjusted EBITDA margin is expected to be in the range of 16% to 19% at the end of this period in 2028. ACT is expected to be low to mid-20s, Life Science, mid-10s and Surgical Workflows in the low-10s. Go to Slide 15, please, and back to you, Mattias.

All right. Thank you, Agneta. I just want to sum up the key takeaways from today's call. So we have decided to suspend promotional activities for Cardiohelp and Cardiosave in the U.S. until safety concerns are addressed and improvements receive approval. Furthermore, we will inform more customers about indications for use of Cardiohelp, and we will continue to supply the installed base with Intra-aortic Balloon and HLS consumables as well as continuing to service the hardware that's out there. We have reiterated and updated our financial targets. So we've increased the target for adjusted EPS growth to above 12% CAGR during the 2024 to 2028 time frame, and we keep the same dividend policy of 30% to 50% for the net profit. We do realize that this is a fairly wide span, and it's just in the wake of the events last week here with the update from FDA that we've had to widen the spend and reduce it a bit from what maybe would have been the situation in the weeks before that. But we are where we are, and we need to start from here. And thank you for listening now, and be happy to move to the Q&A part of this session. Thank you very much.

[Operator Instructions] The next question comes from Oliver Reinberg from Kepler Cheuvreux.

The first one would be on quality. So it sounds like these are not any kind of big issues and no new big findings, but obviously, both the European and also the U.S. regulator communicated their kind of unhappiness with the kind of progress being made. So just can you share your perspective on this kind of development. I mean, I think earlier you talked about your issues with suppliers, but is it just it? And also, how do you feel about potential additional quality actions? So do you have to invest more into quality? And how do you think about the kind of balance of business expertise and quality expertise on the top management board? That would be the first question. And then just secondly, I mean, obviously, both [indiscernible] and Cardiopulmonary are very critical devices for the U.S. market. So what kind of risk do you see that the FDA is keen to push the kind of new supply into this market like Abbott or so?

Yes. Thanks, Oliver. When it comes to the quality bit, yes, I can definitely confirm when I stated with the quality overview that first of all, the challenges that we're working through, they are confined to Cardiopulmonary and to Cardiac Assist. I do think that we have a good team in place right now with the changes that we've made recently. We have a new Head of Quality, Joanna Engelke, since a little bit less than 2 years on board. We've also reinforced the organization in different parts of acute care therapies and in the core quality organization itself. So I do feel that we have the right resources and competencies in place right now to work this through. And you're absolutely right that there were no new field actions required here from the work that we've been going through. So we've had a heightened level here in the wake of the -- of going through the quality backlog, the quality record backlog, but there's nothing new here in the last weeks or months. The work will continue. We have, as I pointed out in the presentation, about 10% of this work to go still. So we're a few weeks or months to go still here and so far, we would not find anything else that we need to act on. So it is related to working through the challenges on the balloon pump itself. There are some technical engineering challenges here that we need to work through. Making good progress, but it is a rather complex work that is required. And on the HLS part, as I mentioned, we have already submitted for [indiscernible]. We believe that we have a packaging solution in place for this product. So there's no change to that either. Hope that answers the quality part of the question. When it comes to FDA pushing new suppliers. Yes. I think this has been known for a while that they are not happy that we have the large market share that we have in the U.S., I think the bit too vulnerable twist. So they mentioned in the letter to health care providers as well that they are working actively with other suppliers to be able to fill the capacity that the market needs. So it's also something that we are aware of.

And just to follow up. So you expect no additional general quality costs for the organization. And just on this HLS, I mean, it sounds a bit surprising you just filed for approval in Europe. But now the filing in the U.S. is just scheduled post the launch of the new device. And what's the background here, please?

Yes. I think the background here is that there are very different regulatory frameworks in Europe and the U.S. here. So it will be a much more lengthy process in the U.S. we expect there. So it's really just different ways of working with regulatory.

And no additional quality cost?

No, we don't expect that now. We have nothing on the radar. We said we've added the resources that we believe that we need, I think we have good capacity and good competence to work through the challenges right now. And of course, we can't exclude additional quality cost if something comes up, while we're working through this remaining 10% of the quality record backlog, or if something unexpected pops up when it comes to resolving the remediation work that we've already identified, but we don't see anything of that right now.

The next question comes from Rickard Anderkrans from Handelsbanken.

Right. I have two, if I could. Could you perhaps help us understand the phasing of the margin improvements in EPS growth, should we then expect flat or negative development up until '25, '26 time frame and then expect a very sharp improvement in '26 and beyond? Or help us interpret the messaging here?

Yes. So we have included this. It's still a lot of uncertainty in this and how our customers will react the coming months, we'll give more clarity on that. But we have -- as you can see in the span here, work with several scenarios and included the likely scenario of this. What we do expect is flattish and then picking up as mentioned. The exact timing of that depends on our own time plans to bring these new products to the market, we are confident in those plans, but then we have the regulatory approval process that impact as well. But it's a fair assumption that you make that the next -- this year, next year would be more impacted and then it will start to pick up.

Okay. Just a super quick follow-up then. So is it fair to assume 2026 as a time line for market approval and launch them for the upgraded hardware solutions?

Yes, they are two different products, and they have one is mid-2025 and then we have the regulatory approval process following on that, the other one later in the year or early in 2026 and thereafter following the approval process.

Okay, clear. And final question. I was curious to understand why you are looking to file the HLS in the U.S. after filing the new hardware and not doing it faster since you already have new filing in place for CE Mark. Is there something that is to be done something additional for the U.S. filing? Just trying to understand the sequence and time line there.

Yes, it's in line with what Oliver asked as well earlier, but it is a very different process, there's additional usability studies that we need to do. There's different demands when it comes to biocomp for example. So it's just a lot more work to prepare for the filing in the U.S. So absolutely right. The product is actually ready. We don't expect to do any new development when it comes to the HLS Advanced kit, but there's a lot of testing and documentation required for this and slightly different studies in the U.S.

The next question comes from Mattias Vadsten from SEB.

First one is on ACT, where you are looking at 3% to 5% growth if you could provide just some flavor in terms of growth for the different categories, maybe going to rental and some of the other products because it sounds a bit high, perhaps given the outlook for ECMO, coming years, so to speak. So that's the first one.

Okay. We don't disclose the different product categories and how we expect them to grow. But bear in mind that we do have a Cardiopulmonary offering a rather large one outside of the U.S. as well. And there we see a different trend. We do expect to be able to capture some of these changes that are happening in the ventilator market as well.

And the next one is just a quick follow-up to Rickard and Oliver's questions here. So in terms of the HLS set, when can it be approved in the U.S.? because that follows the pathway for the hardware there as I understand it. And also, if you could just give a background on the regulatory situation for ECMO in China, I mean how are authorities looking at ECMO over there? That's the next one.

Yes. I think we can't give an exact time line on the approval of HLS in the U.S. As I said, the product, the HLS Advanced is developed and had received the [indiscernible]. But the complexity when it comes to this additional work that needs to be done before the filing in U.S., we can only say that it will be after we have done submission for Cardiohelp. So I can't be more specific than that right now. And it's really just that it's different regulatory framework, different requirements in the U.S. for this product. When it comes to China, I think there is generally a favorable view on the ECMO market there. The authority -- the government and the authorities have pointed this out as a key feed for the future. We do see continued good demand for ECMO in China as well. So overall positive.

Okay. And I will limit myself to one more question. If we look on the gross margin a bit, I mean, in 2023, 2 percentage points margin impact from quality costs, as I understand it from COGS impact. You have a bad mix. You grew fast in capital goods, Life Science and Surgical Workflows, but if we look on the inflation of raw materials, et cetera, versus the lack of price increases, could you give us an understanding of how much of an impact that has been and the visibility of recovering that impact, let's say, coming 2 years? That's my last one.

Yes. So I will try to give some flavor on the phasing of the different cost versus pricing development. So we do see comparatively good pricing traction if we compare ourselves to our peers in our industry. However, from a margin perspective, up until recently, it has there has been a gap which has gradually been closed then. We have a lag in the timing where we can implement price increases. So now we are moving towards margin neutral from material and pricing.

And when do you expect to move to margin positive trajectory from that, sort of price versus cost of raw material?

So these recent events do influence our ability, obviously, for pricing in the U.S. for this products, Cardiohelp, Cardiosave and HLS. That aside and that is included in the scenario that we present here today. But that aside, we expect in the other product categories in ACT as well as in Life Science and Surgical Workflows towards the end of this year that we will move it to margin positive.

The next question comes from Erik Cassel from Danske Bank.

So first question, just some anchors on the FDA and the sort of tone now. It seems a bit more serious. And that they think that you're not really making a proper corrections. I understand that they can't really make any sort of product removal as it stands now with your market share, you think down the line that there's a risk of maybe a fine related to how you handle this? Or that the FDA would try to make some sort of product removals? That's my first question.

Yes. Thanks. We can't speculate on that. As I said, when I went through the slides here, the FDA has not asked us to do anything different than we're already doing. There's no new tasks given to us by FDA. The letter is to health care providers not to Getinge as well. I think it's important to be aware. So there is nothing I can speculate in whether it would be fined or anything. It's really just the work that needs to be implemented here in the fastest way possible. And there's no disagreement with FDA in that regard.

Okay. And then you set targets far out 2028. And I think the wording that you using structural targets implies to me that there's a potential risk, the quality issues or maybe even constant decrease but could continue for longer than you previously talked about. I mean is that what you're intending to say or am I misinterpreting that?

I don't think that was the intention. I think it is important to have a long-term view that given that we are in a consent decree. And the way this works is that we need to finalize the remediation. So we've gone through quality management system. That's where this remediation journey started. We now have a compliant quality management system implemented. We've been through a lot of the other remediation work related to our different facilities, processes, documentation and also several products. And we are now down to two remaining product categories, which is Cardiac Assist and Cardiopulmonary. So we need to get this work done first. And you've seen some of the time lines for new products and finalizing the remediation of this. And it's only when we have done that we can move towards an observation period in a compliant state. And this observation period is really completely up to FDA to decide. So that's why I think it's important to have a long-term perspective on this, and that's the main reason we've gone with a 5-year horizon here.

Okay. And then just the last question. I mean you're saying that you don't really know the magnitude of costs relating to accelerating development of Cardiohelp and Cardiosave and basically the impacts of the next year when it comes to getting these products approved in the U.S. and all that. I mean, I'm just wondering why aren't you able to give any sort of ballpark figure, how much this will cost to at least say if it will have any sort of significant impact or not?

I hope we didn't say that we don't know the cost of it because we do. I mean we know very well the development cost for everything that's in our remediation program. So that is baked into both our current running costs and also the projections that we've just given.

Okay. I guess my questions are then why you haven't really decided to communicate how much of the impact is going to be of accelerated development, et cetera?

Yes. I mean -- yes, it's not something that we had planned to communicate. It's partly because of the reason why we haven't dissected some of the historic quality cost either because you end up with some things that are clearly related -- clearly related to one-off initiatives and actions, but you also end up with something that which is maybe partly related to development and improvement, but partly also structural. So it becomes a very tricky exercise to dissect this in a fair way, I think.

We can say that this is part of our ordinary normal product development cost, but you do see already, if you look at the Q1 report, for example, that we have some accelerated some elevated R&D costs, which are then partly related to this and that we continue to see in the coming quarters until we reach these time lines that we talked about.

The next question comes from David J. Adlington from JPMorgan.

I'm going to start off with a bit of an anecdote that will turn into a question. So your quality issues first emerged whilst I was on baby moving ahead of the first of my third child. I remember it well because I spent a day on the conference call as much of the annoyance of my wife. That baby was born a couple of months later and Daisy will celebrate her tenth birthday this summer. So we're a decade later, and we still have you operating under consent decree, and we still have new emerging quality issues. So first question is why do you think you're still having these issues so much later on after a long time? And what are you doing to change the quality culture? And then second question is you reiterated your revenue guidance for this year despite the suspension of Cardiohelp and Cardiosave and you cited a potential negative impact from that, and it's too early to have a view or magnitude. Is that therefore a risk that you will have to downgrade your full year guidance later on this year?

Yes. Thanks, David, and thanks for committing to be with us rather than your family. It's -- I just want to highlight that there's no new issues. Again, I think it's a common misunderstanding. We get to hear there's a lot that there's new issues popping up, but these are not new issues. They are all sometimes 5-, 10-year-old issues and even longer than that. So yes, we've been in a consent decree since 2015. It is a very long drawn out time. We started the work with remediating the quality management system. That was the main finding at the time, and we put a compliance system in place. Then you go through everything else related to this, and we are now product remediation stage of this and say, isolated now to two product categories, Cardiopulmonary and Cardiac Assist and the issues that we are addressing in those two categories now they are old issues. They're not issues. They've become known now because we've gone through a long history of quality record backlogs, really, but they are not new issues. They've been there for many, many years. When it comes to quality culture, that's something that we worked actively with for -- since the last strategy review that we did in 2017. And not only quality culture, it's also a culture when it comes to continuous improvement when it comes to having a long-term view on what we do to not making shortcuts in any work that we undertake. And that's something I think we've made a lot of good progress on it. It's quite a different situation to 5, 10 years ago. So that maybe covers the quality part of the question. When it comes to your question about revenue guidance for this year, it's -- we've remained with the guidance that we have issued now 2% to 5% for this year, for 2024. We will monitor though the development now in the coming months here and see what the behavior of customers and competitors and so on and so on or I can't exclude a downgrade here, but we don't see that right now.

The next question comes from Robert Davies from Morgan Stanley.

My first one was just on -- just to be clear on the language that was used in the press release, I think that you put out yesterday evening around the structurally justified organic sales growth over the period in margins. Is that essentially just the targets that you would have sort of set in place had these issues not come ahead. So that's my first question. Is that 3% to 6% and 16% to 19% margin guidance? What you would essentially would have had in place if this issue hadn't come ahead? And that's why you've got the 12%-plus EPS guide? And then, I guess, just one specific question on Life Sciences. Just in terms of the I guess, medium-term outlook there. What are you looking for in terms of sort of early indications of getting back towards more kind of normalized level of profitability in that business?

Yes. Thanks, Robert. The first question -- the answer is that the structurally motivated growth and the EBITDA margin includes the bad news from last week. So that's now part of the structure, if you like. So if we hadn't had that, it would have been probably slightly higher and less wide span as well. When it comes to the Life Science bit, we're monitoring both leading indicators like the volume of investments going into bioprocessing in general. And then, of course, looking at our own businesses when it comes to request for proposals and so on and conversion rates to see that we can get a pickup in this part of the business. Very strongly linked to the bioreactor part of our business, which has been the hardest hit the last 1, 2 years, but also closely monitoring the development when it comes to the sterile transfer part of what we do. So -- that's another key area where we have our tentacles out. When it comes to the capital more, capital heavy part of Life Science, I think we already have pretty good visibility, and it's a very good dynamic in general partially related to GLP-1, but also more broad-based in that we have all the big pharma names as customers in this part of the business.

Maybe just one follow-up, just on clear in my own mind. Just around the time line that you're sort of internally following here to sort of map out these earnings and growth targets. What are the key kind of dates or time lines? I think you mentioned earlier on the call something coming in mid-2025 and then early 2026 in terms of solutions. Is that the kind of key time line you're looking at? I guess I'm just trying to get a feel of where the risks are to this mid- to long-term guidance and what we should be looking out for in terms of sort of sign posts on the way that we are on track, ahead of schedule or behind schedule?

Yes, that's -- it's a correct interpretation. So we have the ongoing development of Cardiosave that will be finalized middle of next year and then submitted for approval in the second half of next year. And then Cardiohelp 2 is to follow on the HLS kits based on this. So this is now U.S.-focused, and it means that we need to go for a complete new 510k. So in that sense it's different to Europe, where, for example, with Cardiosave, we've been able to implement step-wise improvements to make sure that the products are as patients safe as they can be. In the U.S., it's a different approach. So FDA doesn't allow. We have this kind of step by step base. We need to do the whole package. So therefore, it's a bit more drawn out in time there. That's also why it's a different perspective when it comes to what we can promote and sell in the U.S. compared to outside of the U.S.

The next question comes from Sten Gustafsson from ABG Sundal Collier.

A question regarding the consumables related to Cardiosave and the Cardiohelp in the U.S., what have you assumed in terms of growth rates for those products in the U.S. and do you see risk that it will be negatively impacted as well, in particular, if hospitals start to buy hardware products from your competitors? But it would be interesting to hear your view on -- or what you have assumed in terms of growth for those products?

Yes. We don't disclose growth rates of the individual parts of the product ranges here. So -- all in all, if you take all the Cardiopulmonary all Cardiac Assist business that we have. It's about 7% that is in the U.S. And an important part of that is, of course, the HLS kits. The HLS kits are captive to Cardiohelp 2. So customers need to change hardware as well before they can change to other consumables. So we don't disclose the individual numbers here by subproduct category.

Okay. But if a hospital decides to change hardware. Can they still buy your consumables? Or how does that work?

It depends on what hardware they change to. Some are more generic, you can use different consumables. So I can't give you a black and white answer on this.

Secondly, could you tell us the sales exposure for Cardiosave and Cardiohelp in the U.S. in terms of hardware?

No, not -- I said the combined business, hardware and consumables is about 7% of our revenue in the U.S. The important part of this is, of course, the consumable business. So the hardware is less. But we don't break that down any further.

The next question comes from Rickard Anderkrans from Handelsbanken.

Just a quick follow-up, so I understand it. So will you pause all the promotional activities until you have approval for new products in place? Or when do you expect to be able to actively market products, again, just trying to understand a little bit on that side?

Yes. It is difficult to put a time on this. What we need to do is to implement the work that is already agreed with FDA since a long time ago. and receive approval for those upgrades as well. So it's somewhat out of our hands, how long this will take. So that's why we can't be more specific for sure.

Okay. But is it reasonable that you may be able to resume promotional activities when you have cleared 100% of the quality record backlog?

No, it's not -- no, it's more important the actual implementation of the improvement. So the improvement is related to the hardware platform, so the balloon pump itself the packaging and the uplift of the HLS Advanced kit as well to the standards that are applicable in the U.S. When it comes to Cardiohelp, there's no particular work that to go into this product. It is an existing product without any field safety actions in place right now. Cardiohelp 2 is also in the final stages of being developed. But the submission work for this is quite extensive.

Okay. Clear. And did I understand it correctly that about 7% of the combined franchise of U.S. sales and not group sales?

No, it's -- if you take Cardiopulmonary, Cardiac Assist sales in the U.S., that makes up about 7% of group sales. Very clear.

And that's a rolling 12-month basis?

It was the end, yes.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Yes. Thank you very much. Thanks for attending the call today. We have already gone through the summary here. So nothing to add from our perspective. I thank you for the attendance, and wish you a good rest of the day. Thank you.