medmix AG (MEDX) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Medmix Half Year Results 2026 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to José Cascón, Chief of Staff to the CEO and Head of M&A. Please go ahead, sir.

Good morning, everyone. My name is José Cascón, Chief of Staff and Head of M&A at Medmix. I'm joined today by Rene Willi, our CEO; and Sven Luginbuehl, our CFO. In the interest of time, we will assume that you have read the disclaimer on this slide regarding forward-looking statements. With that, let me hand over to Rene to begin today's presentation.

Thank you, José. Also from my side, good morning, everyone. I'm very pleased to present the half year 2026 results to you today. Sven will guide you through our financial performance. I will update you on our business review and on our strategy as well as our near and midterm outlook. On Slide 4, you can see the highlights for the half year 2026. Despite a challenging market environment and revenues declining by 1.6% organically, we continued to improve profitability and we remain firmly on track to return to profitable growth. Adjusted EBITDA margin increased by 40 basis points year-on-year to 20.3%, within our guidance range of around 20%. This marks the fifth consecutive half year of adjusted EBITDA margin improvement, underlining the consistent execution of our operational excellence and portfolio transformation initiatives. Gross profit margin also improved by 120 basis points to 37.8%, driven by operational improvements, a stronger revenue mix and disciplined cost management. Our strategy pivot towards Healthcare remains a key pillar of our transformation. Healthcare grew organically by 0.8%, driven by very strong growth in the Surgery business unit as well as a solid growth in Dental, partially offset by Drug Delivery. We continue to strengthen our U.S. health care footprint through the expansion of our Atlanta facility, increasing output significantly while improving customer proximity and responsiveness. Superior customer experience is one of our imperatives. Our continued investments in innovation, co-developments with leading health care OEMs and industrialization of our Drug Delivery platforms reinforce our position in attractive high-growth, high-margin health care markets and supports our long-term profitable growth ambitions. In industry, we continue to focus on the operational improvements, portfolio optimization, customer co-development and creation of a local-for-local hub in Atlanta. Growth was driven by our cartridges and mixer categories, while in dispensers, we focus on the most differentiating solution, optimizing our portfolio. As a result, the business continued to deliver profitable growth and confirms the successful turnaround of the business unit. Innovation remains at the heart of our growth strategy. By working closely with customers, we continue to transform evolving market needs into differentiated solutions. Recent examples include FleXa in dental and the new 400-milliliter 5:1 cartridge for key automotive applications in industry, reinforcing our focus on customer-centric innovations and value creation. Overall, the first half of 2026 confirms that our strategic initiatives are delivering results. We are strengthening our profitability, advancing our portfolio transformation and continuing to build a stronger foundation for sustainable profitable growth. On Slide 5, you can see the revenue development and key growth drivers across our business units in the first half of 2026. In our Healthcare segment, dental revenues increased by 1.5%, continuing the growth above market rates despite the demanding comparison base. As a reminder, in the first half of 2025, dental benefited from customer-driven acceleration of orders in anticipation of tariffs and a project milestone payment. Now growth was supported by sustained demand for our cementation and restorative solutions, which more than offset the ongoing structural decline in impression products. Drug Delivery generated revenues of CHF 16.5 million, a decrease of 13.8% compared to the previous year. As anticipated, performance reflected the impact of a customer second source strategy. At the same time, we continue to strengthen our project pipeline, securing new opportunities and confirming strong market interest, particularly for high viscosity applications. I will discuss these developments in more detail later in the strategy part of the presentation. Our Surgery business delivered a very strong growth of 31.6% in the first half, supported by continued customer demand, the ramp-up of our Atlanta facility and further progress in the insourcing activities. We also strengthened our position with both existing and new customers, leveraging our differentiated delivery and mixing solutions. In our Consumer and Industrial segment, Industry revenues increased by 3.6% driven by strong growth in cartridges and mixers. We continue to execute our portfolio optimization program while advancing automation, product flow optimization and insourcing activities, further strengthening operational performance and profitability. Revenue in Beauty declined by 9.2%, primarily due to lower volumes at GEKA, while Qiaoyi continued to grow. Encouragly, order intake at GEKA improved during the period, supporting our expectations for a stronger second half. In parallel, we initiated restructuring and cost reduction measures to enhance competitiveness, streamline operations and support future profitable growth. Overall, our Healthcare business continued to build momentum, while the operational improvements implemented across consumer and industrial segments are contributing to stronger profitable growth and reinforcing the foundation for sustainable profitable growth. With this, I will hand over to Sven, who will take you deeper into the financials.

Thanks, Rene, and welcome also from my side. Let me now take you through our key financial metrics on Slide 7. Despite lower volumes, we delivered further margin expansion in the first half of 2026. Group revenues declined by 1.6% organically, reflecting softer underlying demand, particularly in the Beauty business unit. Including a negative foreign exchange impact of 3.3%, reported revenues decreased by 4.9% year-on-year to CHF 214.4 million. Gross profit reached CHF 81.8 million, reflecting a modest decrease in absolute terms compared to the prior year. At the same time, gross profit margin increased by 120 basis points to 37.8%, driven by operational improvements, disciplined execution of our growth and efficiency initiatives and CHF 9 million in the prior year period, reflecting the impact of lower volumes. Despite this, adjusted EBITDA margin improved by 40 basis points to 20.3%, on track to deliver full year guidance. Reported EBITDA decreased to CHF 38.0 million compared to CHF 41.9 million in the prior year, primarily reflecting restructuring costs related to the Industry Dispenser and Beauty businesses. EBIT declined to CHF 10.6 million and was additionally impacted by related impairment charges. Operating net cash flow improved by CHF 4.1 million to CHF 19.4 million due to lower capital expenditure. As a result, free cash flow increased to CHF 12 million. Our net debt to adjusted EBITDA ratio improved to 2.36x compared to 2.41x in the prior year period, driven by lower net debt. On Slide 8, you can see the half year 2025 to 2026 revenue bridge. As already mentioned by Rene, within the Healthcare segment, strong performance in Surgery and solid growth in Dental was partially offset by a decrease in Drug Delivery. The C&I segment remained impacted by lower demand in Beauty, while Industry continued to build on its turnaround. Foreign exchange effects, mainly the weakening dollar and euro to Swiss franc negatively impacted growth year-on-year, reaching a 4.9% decline on a reported basis. On the right, you see the percentage revenue contributed by our segments and business units. The contribution of our Healthcare segment has increased 1 percentage point to 41% compared to the previous year, while the Consumer and Industrial segment contributed 59%. Slide 9 shows our half year Healthcare and C&I gross profit as well as gross profit margin year-on-year. Total gross profit decreased by CHF 1.4 million to CHF 81.1 million due to lower group revenues. Despite the decrease in revenues, we delivered a strong gross profit margin of 37.8%, a year-on-year increase of 120 basis points. Healthcare gross profit increased by CHF 0.3 million and 140 basis points year-on-year to CHF 47.1 million, resulting in a gross profit margin of 54.6%. Dental and Surgery gross profit margin growth was partly offset by the Drug Delivery business unit as it continues to be impacted by the dual sourcing shift. Consumer & Industrial gross profit decreased by CHF 2.2 million to CHF 33.9 million, primarily reflecting lower Beauty volumes. Despite this decline, the segment gross profit margin improved by 20 basis points year-on-year to 26.5% Industry witnessed a significant increase in gross profit margin year-on-year, driven by operational efficiencies from our growth and efficiency program and an improvement in volumes. Slide 10 shows the walk from our half year adjusted EBITDA in 2025 to 2026. The decline year-on-year in absolute adjusted EBITDA is primarily -- the decline is driven primarily by the decline in revenues in Beauty and Drug Delivery, partially offset by pricing effects. The upside from margin and mix reflects the impact of efficiency improvements as well as the impact of more dental revenue at higher margins, offset partly by underutilization in our Beauty business unit. The higher operating expenses include restructuring and impairment costs related to the Industry Dispenser and Beauty businesses. Net of these impacts, OpEx was lower by CHF 1.4 million year-on-year, reflecting growth and efficiency savings. Adjusted EBITDA as a percentage of revenue has now grown sequentially for 5 consecutive half years, demonstrating the continued results of our operational excellence and portfolio transformation initiatives. Let's move to Slide 11. EBIT decreased year-on-year by CHF 5.1 million to CHF 10.6 million. EBIT as a percentage of revenue stands at 4.9%, a 210 basis points decrease year-on-year. The EBIT metrics clearly show the impact of restructuring and impairment measures of CHF 6.4 million in the first half of 2026 related to the Industry Dispenser and Beauty businesses. On Slide 12, you can see the walk from our half year operating net cash flow 2025 to 2026. Operating net cash flow increased to CHF 19.4 million in the first half of 2026 compared to CHF 15.3 million of the previous year. This increase is due to lower CapEx level compared to the same period last year, partially offset by lower EBIT in half year 2026 and higher changes in net working capital compared to the same period last year. Our growth and efficiency program, which we launched in 2024 continues to deliver strong results and remains on track against our CHF 33 million saving target. Building on the significant progress achieved in 2024 and 2025, we have already exceeded our original CHF 30 million objective by CHF 1.0 million with CHF 6.8 million savings already realized and CHF 1.6 million savings secured during the first half of 2026. These savings have been mainly driven by footprint optimization and operational efficiency initiatives across the group and only to a minor extent by restructuring measures in our Industry Dispenser and Beauty businesses, where we will see first tangible results in the second half of the year. The growth and efficiency program has successfully established a culture of continuous improvement and cost discipline, which is now embedded in our day-to-day operations and forms an integral part of our DNA. At the same time, we also continue to invest in our sales organization and R&D capabilities to support long-term growth and innovations. With that, I hand over to Rene to discuss our strategy and outlook.

Thank you, Sven. We continue to execute on the strategic priorities I presented earlier this year. Our strategic imperatives across all businesses and the entire organization remain strengthening customer proximity, accelerating innovation and further enhancing accountability across the organization. We have elevated the customer experience, making customer centricity the foundation of all our business unit strategies. It has become a key growth driver across our company and a catalyst for innovation. Recent examples include FleXa in dental and the new 400-millimeter 5:1 cartridge for key automotive applications in industry. Both developed in close collaboration with customers to address evolving market needs. I will come back to these innovations later in the presentation. As already mentioned, an essential pillar of our strategy continues to be the transformation of Medmix into a high-performing organization. We are building an organization centered on accountability, entrepreneurial thinking and speed while empowering our business units and simplifying our organizational structure. These actions are enabling faster decision-making, improving execution and positioning Medmix for sustainable long-term success. To support Medmix transformation into a high-performing organization, we further enhanced our leadership team with the appointment of [ Andreas Friis-Hansen ] as our new Chief Operating Officer. Bringing more than 20 years of international leadership experience in operations, manufacturing, supply chain, procurement and business transformation, he adds valuable expertise that will help drive operational excellence, accelerate execution of our strategic priorities and support Medmix on its path to profitable growth. In Dental, we continue to grow above market with our existing portfolio, supported by strong demand for our cementation and restorative solutions. Increasing exposure to faster-growing product categories as a strategic -- is a strategic imperative for us to offset the structural decline in impression driven by the adoption of digital workflows. At the same time, we remain on track with our innovation pipeline. We just launched our next-generation syringe platform, FleXa, providing an important catalyst for future growth. Turning to this slide, you see FleXa. One of our -- of the needs we increasingly heard from dental material manufacturer was the desire to further differentiate their products and strengthen their brands, while at the same time, improving the user experience for dentists. Working closely with our customers, we developed FleXa, a customizable syringe platform that combines branding flexibility, enhanced usability and manufacturing efficiency. Medmix clinical partner in dental medicine gave very positive feedback, highlighting FleXa's intuitive handling. FleXa enables our customers to strengthen their market position while delivering a better experience for dental professionals. Let's now move to the next slide. In Surgery, we are one of the few players with a proprietary and comprehensive off-the-shelf portfolio, which is very attractive for start-ups, smaller emerging companies and tissue banks. On the other side, we have a development team and technology competence driving innovation with our global OEM customers. We continue to benefit from strong customer demand, the successful ramp-up of our Atlanta facility and further progress in insourcing activities. We are strengthening our position with both existing and new customers and continue to broaden our offering through value-added services and innovative product solutions. All these initiatives have improved customer experience and position the business well to sustain its positive growth momentum. For our Drug Delivery business unit, our primary strategic focus remains the commercialization and scaling of our next-generation platforms. During the first half of the year, we continued to build a solid project pipeline and secured a new PiccoJect project, reflecting the strong market interest in the platform, particularly for high viscosity applications. PiccoJect advanced further in the clinical phase across customer programs, marking another important milestones towards future commercialization, as I will show you in the next slide. We remain focused on expanding customer programs while continuing to invest in industrialization and manufacturing. On Slide 20, you can see the Drug Delivery pipeline. Our pipeline remains well diversified and substantially derisked, supported by a strong mix of generic, biosimilars, life cycle management and originator programs. During the first half, one project was hibernated while a new one was added to the pipeline, maintaining a healthy portfolio of future opportunities. As already mentioned, PiccoJect continued to advance through the clinical phase across customer programs, marking another important step towards future commercialization. With key projects progressing according to plan and a solid opportunity pipeline extending beyond 2028, we remain excited by the long-term potential of our Drug Delivery business being a key element of our pivot to health care strategy. Let's now go to Slide 21. In Beauty, our primary strategic objective remains to return to profitable growth. In the first half of the year, we made encouraging progress. We started selling Qiaoyi products through GEKA channels. And we also secured the first win for a combined product in the Middle East. Market conditions remain challenging, but order intake at GEKA improved, supported by recently won major project for which we will start shipping products in the next month. These developments give us the confidence in a stronger second half of the year. We have launched decisive restructuring, cost reduction and commercial excellence initiatives to enhance competitiveness, improve profitability and customer experience. We are also optimizing our processes to better serve upcoming so-called indie brands. At the same time, we are accelerating innovation and leveraging the complementary strength of the GEKA and Qiaoyi portfolios to unlock future growth opportunities. As we assess the situation in Beauty, it became clear that restoring profitable growth required actions on several fronts with short- and long-term positive impact. Starting from last year, we launched 3 complementary initiatives that are now firmly in execution mode. The first one, Return-to-Growth commercial program focuses on regaining growth. The program is built around 3 priorities: first, protecting our existing business; second, accelerating growth; and third, strengthening our customer focus. We expect these actions to support the stabilization of revenue in the near term and create the foundation for sustainable growth over the coming years. The program is already delivering tangible progress. We have positioned us more competitively, which resulted in several large project wins. At the same time, we have increased our ability to serve smaller and more agile beauty brands, the so-called indie brands by adapting production capabilities and order requirements. Additionally, we are expanding into selected growth markets and unlocking new opportunities to cross-selling across the GEKA and Qiaoyi customer base. Together, these actions are expanding our commercial reach and strengthening our pipeline. Second, the cost containment program is delivering near-term savings and helping us to protect profitability. The focus has been on immediate cost measures, organizational rightsizing and structural cost reductions. We have already delivered savings in the first half and expect additional benefits to come through the second half of the year. Lastly, the turnaround program is addressing the broader transformation agenda supported by external consultants. These initiatives take a comprehensive view of the business and combines 2 integrated work stream. commercial acceleration, including go-to-market, sales effectiveness and innovation and operational excellence with a focus on manufacturing competitiveness and further cost reductions. Taken together, these initiatives address both performance improvements in the short term and the structural changes needed to return Beauty business to sustainable profitable growth over the long term. In Industry, we continue to execute our strategy on profitable growth despite ongoing geopolitical uncertainty and challenging market conditions. Growth in our core cartridge and mixer product categories, combined with operational improvements and continued gross margin expansion demonstrates the strength of our business model. We are also making very good progress with the optimization and streamlining of our dispenser portfolio while further advancing automation initiatives and the insourcing of manufacturing activities in our Atlanta facility. At the same time, we continue to demonstrate our ability to translate customer needs into innovative solutions. One recent example highlights this well in the next slide. In this case, a customer supporting a leading European automotive OEM faced an urgent application challenge in e-mobility battery pack repair. They required a 400-millimeter cartridge with a nonstandard 5:1 ratio, compatible with existing Medmix dispensing systems and with an exceptionally compressed timeline. Working closely with this customer, our teams rapidly evaluated solutions. Through close collaboration and fast execution, we were able to design, validate and industrialize the new cartridge in record time. From commercial agreements to customer product release, the entire process was completed in less than 4 months. Historically, these kinds of development projects have taken more than 1 year. This demonstrates Medmix's ability to combine application expertise, engineering capabilities and customer-centric execution to deliver innovative solutions at speed. As part of our ongoing strategic review, we continue to assess our portfolio and capital allocation with a clear focus on maximizing long-term shareholder value. Our objective remains to focus on core segments where we have sustainable competitive advantage. At the same time, we launched a comprehensive turnaround program in our Beauty business. These actions reflect our commitment to actively manage our portfolio and enhancing the competitiveness of our businesses. With this, let's go to our outlook. Looking ahead, the external environment remains dynamic, shaped by macroeconomic uncertainty, geopolitical developments and evolving global trade patterns. Against this backdrop, we remain focused on disciplined execution, customer centricity and innovation to support sustainable profitable growth. For 2026, we expect flat to low single-digit organic revenue growth and an adjusted EBITDA margin of around 20%. Our midterm guidance remains unchanged with revenue CAGR of above 4% and adjusted EBITDA margins above 21%. For 2026, we are on track to deliver in line with our guidance, and we expect to return to growth in the second half of the year. With this, let's move on to key takeaways. To conclude, we continue to advance our health care-focused portfolio transformation, strengthen our position in attractive markets and creating the foundation for sustainable profitable growth. At the same time, our focus on operational excellence and cost discipline is translating into improved profitability despite a softer demand environment. We are fostering a high-performance culture built on accountability, empowerment and faster decision-making, enabling us to execute with greater focus and agility. With these priorities in place, we remain well positioned to deliver on our strategic objectives and create long-term value for all stakeholders. With this, I will hand over to the operator for our Q&A session. Thank you.

[Operator Instructions] Our first question comes from Alessandro Foletti from Octavian.

Just a couple, if possible. On Drug Delivery, you mentioned in the press release that the large majority of the decline related to the shift to the second supplier takes place in H1. So I was wondering if you can indicate how much of that decline is left, first part of the question. Second part of the question is what then will be the growth, say, starting in H1 '27? I know that it's lower than '28, but maybe there is already some growth.

Let me take this question. Thank you, Alessandro. Good to hear you. So -- we had -- I think the majority is really now the transition from -- has made in H1. We have still had some in Q3, but this is more in line with the normal fluctuation you see anyhow in the demand. So this will not change significantly. And so the majority is done really in the H1 and only a little bit in Q3. When it comes to 2027, we believe that that's our planning right now that we are stable, that we will be quite flat. We don't expect that the first sales of PiccoJect commercial sales at the end of '27 will impact significantly the growth for the drug delivery. So there, we are plan from my perspective, also on the safe side. We see then really an increased growth momentum in 2028.

And maybe to add on that, if I may, and I guess that's where your question is pointing to as well is how will the second half for drug delivery look like. And what we currently see is that it will be on a similar level than in the previous year.

Okay. So H2 '26 compared to H2 '25?

Correct.

Okay. I have 3 small sort of further questions here. One is on the adjustments, right? We had again CHF 6.7 million (sic) [ CHF 6. 4 million ] One-offs. And I wonder what is the outlook for the delta between adjusted EBITDA and reported EBITDA or I don't know, an adjusted EBIT and reported EBIT, so to close so that these 2 lines become more equal to each other.

Thank you, Alessandro. I think that's a very important question. And it's our clear and that we discussed in the past is that we keep that difference smaller and that we really make it very close. But because of the restructuring, I think, which we have now accelerated also in this year, it has increased, but this is only something temporary. And I will hand over to Sven that can provide -- that he can provide you more details.

Thank you, Rene. So what happened in H1 was that we posted restructuring provisions as well as impairments in the amount of CHF 6.4 million. That's obviously -- or at least the restructuring part is impacting the adjusted EBITDA gap compared to EBITDA. We expect now in H2 further bookings since we are not yet at the end of our initiatives. What you can assume is that starting 2027, the gap will become much closer between adjusted EBITDA. And EBITDA since our clear goal is now to get over that situation, do the restructurings and then start '27 with clean books.

All right. Can I ask you 2 smaller questions. Maybe on the CapEx, it was a little bit lower. What's the outlook short term and midterm on that one?

I've not understood the first one. What -- which business you were a little bit lower?

On the -- on the CapEx, group investments, capital...

Okay. CapEx. Good. Thank you. I will hand over also Sven to provide you details about that.

As you have seen in the H1 report, CapEx was significantly lower by CHF 8 million or CHF 9 million, depending on whether you're looking at the cash flow statement or additions to assets. We expect a normalization now in the second half of the year also compared to the second half in 2025.

And maybe to add something from a strategic long-term perspective. When we look at CapEx, we look at drug delivery in a separate way than to the other businesses. And with the other businesses, which are more mature and ongoing, that's something we are really want to go also to the industry benchmarks. On the drug delivery, that's something we have to look really separately. That's actually the more successful we are, the higher the CapEx will be. So that's something we have to be aware that this will require also some investment in the future. But for the other businesses, we made good progress. This will, of course, get more to the industry benchmark. We were higher historically. That was because we had to build up Atlanta and also Valencia.

Okay. My last question is maybe on the savings. You mentioned that you are basically on track, slightly ahead. How much of this savings is then reinvested in the business? Or I don't know, maybe put differently, how much remains inside the company is really a net gain?

Yes. I think we have to distinguish there between what Sven said already about the fit to the operational excellence program we have initiated earlier, I think already 1.5 year or 2 years ago and the new one, which is really targeted on the beauty. And on the earlier one, which was there, actually, we have invested significantly in also some of the faster-growing businesses. And I think Sven, you can provide details on this.

Yes. So what we have seen is that 2/3 of the savings are within COGS and 1/3 is in OpEx. Obviously, as you rightfully said, there are also some investments required to deliver the savings outcome. Where you can see the impact pretty tangible is actually on Slide 10, where you see that on a year-on-year basis, OpEx, net of restructuring and impairments and non-ops is CHF 1.4 million lower. And so you see that 1/3 of the savings impact is in OpEx there.

The next question comes from Edward Hall from Stifel.

I guess the first one would just be sort of going back on to Drug Delivery. It was encouraging to see the result this morning. I was just curious, if we were to strip out the -- obviously, the dual source effect, could you talk about the performance of the rest of the business? What type of drug is performing or what type of platform is performing? And that would be my first question.