Revenio Group Oyj ($REG1V)

Good afternoon, and welcome to Revenio Group Q1 Earnings Call. My name is Jouni Toijala, and I'm the Group CFO for Revenio. And today, we have a bit more bigger set of team members here. So in addition to the normal Robin Pulkkinen, our CFO, we also have Erkki Tala, Vice President, Products in a call as well. And the reason for that one is that we are going to run today a bit more longer earnings call. So of course, we are going to start with the Q1 financials and the business highlights. Then we go through the guidance part, which we actually don't have. But then we have a pretty extensive part run by Erkki regarding to the Visionix transaction, especially related to the products and the product portfolio. But let's jump to the Q1. So reported net sales, EUR 27.3 million increase on the reported side is 4.8%. Currency adjusted net sales growth, 8.4%. So I think it's a good number, especially if taking into account the extremely strong start in the U.S.A. So in terms of the euros, of course, but especially in terms of the U.S. dollar, the organic growth in the U.S.A was very, very strong. Then if you look at the other countries, so Europe was growing really strong as well. So especially France, U.K. and Germany. So in terms of the sales, good performance in the U.S.A. and in European countries. And then we still had a pretty tough comparables in the APAC side. So the APAC was slightly down. And if we look now at the start for the Q2 in APAC, so we start to be extremely well on track also on APAC side what comes to the sales. Then operating profit reported EUR 2.4 million, so significantly, of course, down. And of course, the main bucket there is roughly EUR 3.1 million one-off costs related to the Visionix transactions. But Robin is going to cover these ones in more detail. So in adjusted operating profit perspective, good numbers of 21.3% from the sales, of course, slightly down from the last year. But let's move to the financial part. So Robin, over to you.

Thank you. So the typical graph I think people are used to seeing. Jouni covered the top line part. Maybe also highlighting there that the comparable Q1 '25. FX-adjusted growth there was already close to 15%. So we had a really tough comparison period ahead of us in Q1. So considering 8.4% FX-adjusted growth, we feel it was a pretty good start and in line with our plans for the year. The profitability did come down on the reported level, but there were EUR 3.4 million. So the EUR 3.1 million of the transaction-related costs and then also some additional costs related to certain organizational changes we did still in the first quarter. Overall, the profitability drop is largely driven also by the margin, which is a lot lower now compared to last year. We know that the tariffs are impacting that, but also the product mix. But we did now improve the gross margin from the last quarter of last year. So we -- like we discussed, the price increases didn't go in at the end of the year. We have been now implementing those at the beginning of the year. So not fully effective for the whole quarter, but starting February, basically, the price increases have been in the U.S. Adjusted operating profit, so that's probably the better line to look at the profitability. So 21.3% and EUR 5.8 million of revenue. I'll come to the others in the coming slides. Basically, looking at the quarterly trend line a bit on the sales. So Jouni covered, we did really well in the U.S. and Europe. Basically, the FX was really giving a lot of headwind on the dollar versus the euro. So basically, the change comparing to the comparable period, the euro is 11% stronger. So basically, that is pretty much the impact that we have on the consolidated level then when converting them to the euro. So the U.S. growth alone was actually very strong as well as Europe. APAC, like Jouni said, we still continue to have some headwinds, but there were also some larger transactions in the comparable period, which are kind of impacting the growth, but we were able to achieve there. So here, the profitability trend lines. So here also reflecting the one-off costs and then the organizational impacts that we had. On the cost side, there also was actually probably a bit less than we expected on the FDA costs related to the DRSplus and ILLUME regulatory approvals in the U.S. So those costs didn't really incur yet in the first quarter, but we are now expecting them to start accumulating more in the second quarter, and we see that patients are now starting to come into the clinics where we are doing the studies. Balance sheet remains unlevered for now. Everybody knows and has heard about the Visionix transaction. So the equity ratio was still strong at the end of the first quarter. This is, of course, going to change as the transaction closes. So like we've discussed earlier, the net-debt-to-adjusted EBITDA is expected to decrease below 2.5 after the equity raise that we are planning to do in the fall. So basically, the leverage rates are going to be a lot higher at the closing, starting from the closing and then getting more to normalized levels once we do the rights issue in the fall. So basically, equity ratio probably is going to be around 50% or slightly below 50% by the end of the year. But now at the end of Q2, when we come out with our Q2 numbers, the balance sheet is going to be quite levered. Cash flow was not very strong in the first quarter. There are basically a couple of drivers. At the end of the year, you can see our Q4 was really strong. We did that quite -- we have like in Italy for our subcontracting or manufacturing, we have 90 days payment terms. We had quite big open invoices in accounts payable at the end of the year. Those have been actually not paid in the first quarter and also the revenue for the first quarter was very much March weighted. So well over 40% of the whole quarter sales was actually taking place in March, which kind of resulted in the AR to be quite abnormally high for this time of the year. Also, some tax payments were slightly higher than the previous year. And then the main shareholders, not many changes here. The one that you can see is actually Danske, the # 5, Danske Invest. They have appeared on the list now. As a Finnish fund, I assume the result is that the Finnish ownership actually also increased by roughly 1.5% during the quarter. For the guidance, we have now withdrawn the prior guidance. We are kind of looking to come out after the transaction closes with an adjusted outlook for the year. But for now, for the coming weeks, at least, we don't have any official guidance for the investors. And then we have the AGM coming up. So if you remember, we canceled the original AGM, which was planned to be held around mid-April. Now the new date is May 12. There's a couple of changes to the original invitation that we sent out. So basically, in order to complete the transaction, we are asking the AGM to authorize the Board of Revenue to decide on a directed share issue for the sellers, which is part of the transaction payment and also asking for an authorization for the Board to decide on an issuance of shares in a planned EUR 80 million post-completion underwritten rights issue. Also, they are different from the original invitation. We have new -- 3 new Board members that are being proposed. So the Board is proposing for the election of Charles Vilgrain, Marc Abitbol and Nicklas Hansen to the Board of Directors of Revenue at the AGM on May 12. And then also just to note here that we have transaction support from the largest shareholder, William Demant. So they have irrevocably undertaken to kind of subscribe -- or sorry, vote in favor of the proposals to the AGM by the Board or yes, by the Board.

Good. Excellent. So before the Q&A, so let's switch the gears to the transaction, which was signed April 13. So a couple of recap slides from me, and then we actually go -- Erkki is going to go through in more detail the product portfolio and the overall logic why this deal so very much is making a sense for revenue. But if we start from here, so as I said, so the April 13, we joined the forces with Visionix and why this is remarkable? So we have been working in an addressable market, which represents roughly a $1 billion in terms of the U.S. dollar. So we have been working on Fundus Imaging Perimetry, Microperimetry and Tonometry. And by joining the forces with Visionix, we are going to get an extremely comprehensive product portfolio, and we are able to increase the addressable market now from USD 1 billion to USD 2.5 billion. And why this is crucial for us also in the long-term is that now we have a full suite of products for optometry, optical retail and then, of course, enhanced coverage on ophthalmology side as well. But Erkki is going to come back to this one. And as a recap, so EV EUR 290 million plan was really to finance the deal with the cash reserves when issuing the revenue shares to current main shareholders of Visionix with the price EUR 22.40, so significantly higher amount, which we are currently trading. And then we have a debt financing plus the vendor loan. And then, of course, the [ rights to ] Robin is going to come back to this one. And in addition to this one, of course, we are expecting to have significant synergies coming from the sales side and also from the cost side in the coming years. And a couple of words regarding to the Visionix. So roughly [ EUR 150 million ] of the sales team is a global team. So even if it's here said that it's a French company. So less than 200 people in France. And then if people are wondering that at Revenio, there's 250 people at Visionix there's a bit less than 600. So I think here, we have to remember that Visionix operates directly, so sales directly in many countries. So it means more sales force than us. It means more customer service installations, et cetera. And of course, also the assembly part of the business, which Visionix is partly having in-house. This is also a really, really good deal in terms of the sales coverage. So as everybody remembers, so we have roughly 50% sales coming from the U.S.A., then a bit more than 30% from the Europe, Middle-East, Africa, LatAm, Canada and then the remaining part from APAC. So this deal is nicely going to balance now the regions. So the U.S. sales comes proportionally down then the EMEA increases and then we are getting more muscle also to APAC. But maybe we move to actual products now and the logic why this makes very much sense.

Thank you, Jouni. Next, I will open the strategic rationale of the Visionix transaction from product and customer point of views. Combined with opportunities, this new combined portfolio opens for us in varying and actively evolving markets where really one size doesn't fit for all. I'll deepen the view of the impact of total addressable market and customer segments and how expansion of them will open new avenues for our future growth. And all this will be combined with the evolutionary state of each market in terms of professional allocation of diagnostic tasks between optical retail, optometry and ophthalmology. And this is really at the heart of the acquisition rationale as it explains really the full market potential. So it's not only about having more products in more segments, but really having a coherent portfolio of products as a turnkey solution for different customer needs in different markets. And really market conditions vary a lot based on regulatory or legal environment, professional education and role of different professional groups. At the same time, and I will go back -- get back to that in a short while, many markets are going through a significant evolution, especially in optical retail and clinical optometry, which means that as a result, many companies are increasingly adopting fundus imaging in optical retail. And now OCT technology is adopted very fast in optometry practices. And indeed, really the value of getting OCT imaging into the portfolio will also be further open in this presentation. part. So let's start from this total addressable market expansion. As Jouni mentioned, our overall total addressable market expands from USD 1 billion to USD 2.5 billion a year. But from a product portfolio point of view, this means that we will cover the entire diagnostic path from pretest to refraction, ophthalmic diagnostics and disease monitoring. And while this is already a good news, it's also crucial to understand what are those product categories we will not play in even with a combined portfolio and why? So are we missing still out something critical? Actually, in fact, the remaining market is largely related to surgical cataract care pathways where the largest product segments are operating room microscopes and optical biometers. And these are very much used in surgical cataract ecosystems, which are typically relatively closed and would ideally require also proven intraocular lens portfolio. And this market has really relatively high entry barriers. So we have made a clear strategic choice not to enter into the surgical settings, but stay in diagnostics. And this is a natural continuation for the strategic decision made already back in 2021 to focus fully on eye care and fully on ophthalmic diagnostics. That said, it's good to also have in mind that many general diagnostic modalities from refraction to OCT are also used with cataract patients, too. So this means that we will cover almost all the product segments in this target market, excluding surgical cataract theater. If we then look at the customer segment expansion, that gives another important angle of view. Traditional customer segments for ophthalmic diagnostics companies are optical retail, optometry and ophthalmology. And I have to say that most companies typically just cover some of them, but we will, going forward, cover them all. And also having a leading position on top of that in microperimetry with our unique MAIA device, servicing strongly growing pharma research field and going forward, also growing a retina specialist segment. And additionally, we have also expanded to other health care like primary care and diabetes clinics with our screening solution, the solution that combines market's best screening fundus camera iCare DRSplus and very well-performing AI algorithm iCare RETCAD This combo, as we have seen in the market, has clear competitive advantage and has started to scale up well. So all-in-all, we can say that our customer segment coverage is the widest in the market when we combine these 2 companies together. Okay. Let's move to a product portfolio then. So I started by covering the overall total addressable market expansion as well as the market-leading coverage in customer segments. So why does this combination matter? A few reasons. First of all, every single optical store, optometric practice, ophthalmology practice or clinic need refraction equipment, including lens meters, autorefractors, refraction units and [ autorefractors ]. Secondly, in optical retail, ophthalmic diagnostics starts from tonometers and advances to fundus cameras. Many large optical retail markets are still in this transition phase, offering a great potential for future growth. And I'll get back to this market evolution a bit more in details later. Thirdly, clinical optometry today demands ultra-widefield fundus imaging and increasingly OCT and typically as a combo. Now that we have -- we will have these high-quality assets in the portfolio, this is really crucial to meet the needs of this segment, which is at the center of our business. And finally, ophthalmology. Ophthalmology uses OCT as a diagnostic standard in many cases already. And typically, this is combined with a high-end fundus cameras. So we will really have a broad portfolio of products meeting needs of different customer segments. So we have called this as a turnkey solution for optical retail and optometry, and this is what it really is. So real turnkey solution can only be offered when the full clinical journey is covered by devices and solutions starting from pretest phase or screening phase as it shows here to refraction and further to clinical diagnostics and disease management. And in our case, we will take the solution in optical retail until spectacle manufacturing by including finishing and dispensing devices in the portfolio. And beneath there, you can see connecting platform and clinical data management as an underpinning connector. So connecting software platform is really key to build efficiencies in clinical workflows to collect data from multiple data points, supporting clinical decision-making, often assisted nowadays by AI. So when patients and professionals are not always in the same location, electronic data transfer and teleoptometry or teleophthalmology solutions are needed. And now these will be also included into our solution portfolio. So we will combine as a combined portfolio, all this together in a joint product portfolio and create a real one-stop shop for many key customer segments. As I mentioned earlier, optical retail and optometry landscape is really evolving fast. And I want to take a few example markets really kind of trying to explain this more deeply why different markets need really different recipe, different products to be -- to meet the customer needs. So there are still many markets, also pretty large ones like Italy, what I've used here as an example, where optical retail is focusing on refractive examinations and spectacle sales. Now with the full refraction product portfolio, we can fully tap into these markets as well. But there is, at the same time, clear trend that drives for larger adoption for clinical diagnostic tasks in optical retail and optometry, meaning that delegation of these tasks to better match increasing demand. And this is where Germany is used here as an example and is a good example of such a market. Such a market where optical retail is transforming towards early phase of clinical optometry services. This includes typically tonometry and fundus imaging. And really, this offers a great potential for us as our combined refraction and clinical diagnostic device portfolio is in use. And we can see really a nice take-up on such kind of solution already today. Then as a third example here of different markets we operate in, I've got here U.S., U.K. and Australia, and there could be many other markets where we have got highly educated clinical optometry, acting as a primary care for ophthalmic conditions. And in these markets, we offer full end-to-end diagnostic solution, including advanced fundus imaging and OCT. So hopefully, this clarifies the strategic importance of the full end-to-end product portfolio. This is really the only way to be relevant in all the markets and be able to tap into opportunities in the current evolution when they open. And then about the OCT. So OCT has been probably the best recognized and mostly mentioned addition to Revenio's current portfolio via this acquisition. And really, it is an important part of it. But as I just explained, that's not all of the story. So with this transaction, we will get expedited entry to the OCT segment, which is really, in many ways, future-proofing our portfolio. And I'll now bring 3 different dimensions to the kind of importance of OCT. Of course, it is an interesting and important stand-alone business segment representing USD 700 million annual sales potential. And now we will get access to several subsegments in that business and in that market with this transaction. So that's important. It's also equally -- almost equally important to really have a kind of solid solution for OCT as OCT is really becoming a diagnostic imperative in ophthalmic diagnostics in different ways, and I'll open that a bit on the next slide. And thirdly, OCT is not only a stand-alone business. So it also as a technology offers us new opportunities for our product development using the same technology across the different parts of the portfolio. So what does it mean that OCT is becoming a diagnostic imperative in ophthalmic diagnostics. So a few words about the OCT itself, what it is. So you can imagine OCT being almost like an MRI of the eye. So really, it is a noninvasive micron resolution cross-sectional study of the structures of the eye. And that means that it really expands the diagnostic capabilities of fundus images to beneath the surface of retina. It's not replacing fundus imaging, but it really increases the capabilities. And as such, it's really increasingly important tool for diagnosis and disease management for the common retinal and corneal diseases like AMD, diabetic retinopathy, glaucoma and anterior segment conditions. And we also believe that there will be increased use for OCT technology going forward in retinal screening solutions as well. Then the role of the OCT as a driver for R&D -- future R&D opportunities. So how does it help to develop other products? Our confocal imaging technology has really proven to have superior image quality in fundus imaging. And now we can explore the options to combine this with a state-of-the-art OCT as the combo devices, fundus OCT combo devices are one of the fastest-growing OCT segment in the market. Besides that, for example, our MAIA microperimeter, which is a gold standard in its segment, is an interesting area where OCT technology can be adopted to. So OCT technology will allow significant improvement opportunities for perimetry and microperimetry as well. So as an example, we have just released OCT-guided microperimetry software module for MAIA. So we are already acting in that space, and now we will have own in-house OCT portfolio and technology and expertise and knowledge to build on. So to sum up the product and portfolio rationale for this transaction, really 3 key areas there or key elements there. So massive increase in total addressable market from USD 1 billion to USD 2.5 billion and covering vast majority of the diagnostic equipment we have decided to play in. And on top of that, we will cover the market customer segments, all of them, actually, all core of them in the market have, as an outcome, have the widest customer segment coverage really, then allowing us to tap into opportunities in different markets, which are in different evolutionary phase. And finally, of course, getting the OCT -- important OCT addition into portfolio and get that in a way that we will get 3 products straight into 3 subsegments in the OCT market. So having a great fast start and then really be able to adopt OCT technology into other product development as well going forward. So then over to Robin.

So just a reminder, we'll just cover again how the transaction is being financed. So like in the beginning, you heard the enterprise value, EUR 290 million. Out of that equity value, EUR 250 million and EUR 40 million for net debt, net working capital and other adjustments. How it's being kind of allocated then the EUR 250 million is that 22.3% of that is being paid with shares. That adds up to EUR 55.7 million. And the important point here is that the direct share issue to the sellers is done at a price of EUR 22.40, which is a roughly 50% premium of where we are trading today. And the remaining EUR 194.3 million is being paid with cash. For financing it, we have the Nordea term loan facility, EUR 130 million with very favorable terms from a shareholder point of view. We have the EUR 80 million bridge to equity facility with a maturity of 6 plus 6 months. We have, of course, cash in hand, and we've agreed with Nordea on a revolving credit line, if needed. We have agreed with the sellers on EUR 17 million, roughly 10% of the cash portion vendor loan interest-free payable 12 months after closing. And with that, together with the directed issue is kind of how the transaction is being financed. The post-completion rights issue for kind of repaying the EUR 80 million bridge loan that we've agreed with Nordea is actually subject to decisions of the AGM scheduled to be held on the 12th of May, so in roughly a couple of weeks. So Nordea has been engaged to act as the global coordinator and underwriter for the rights issue. The rights issue will be taking place sometime mid- to late second half. So we need kind of to be able to close the Q2 first to have fresh numbers. We will be preparing a full prospectus for the issue. William Demant and the sellers together have basically representing roughly 31% of the shares after post completion have irrevocably committed to subscribe pro rata for the shares in the planned rights issue and the remaining 69% is basically underwritten by Nordea. So the financing is fully committed as it stands. Basically, so like I said, the proceeds from the rights issue is being used then to repay the bridge loan we have in the balance sheet.

Let's start recapping. So here you see the phased value creation journey. So 3 major parts. So first one is the quick wins mobilization. Second one, traction and buildup. And then the third one is continued growth and sustained leadership on the product side. And if you start from the first one, so quick wins and mobilization. So we have been working already months in order to be ready from the day 1 after the closing. So we have a clear understanding regarding to the -- how the organization operative model should go. And really the plan right from the beginning is to have a clear target setting regarding to the top line synergies. So where are we going to get the top line increase during '26, '27, where we are going to get the cost side of the synergies. So extremely good clarity for those plans starts to be there already and ready for the day 1. And then regarding the long-term synergies, so we are working and starting to work in detail regarding the portfolio product strategy, updating the combined company corporate strategy and heading towards the CMD, which we are going to keep towards the end of September, early October. And as said earlier, so we are targeting to have a EUR 20 million EBITDA uplift by the end of '29, where the 70% is planned to come by the end of '27. Then if we move to the traction and buildup part, so of course, we continue to harness the synergy plan. But then there's a big effort coming and on the plans already end of '26, early '27 how the combined product road maps are going to look. So we see there great opportunities. And of course, all the time during the '26, '27 and onwards, the both companies are planning to continue to invest into the R&D. So as a stand-alone revenue in every segment where we are currently operating, we are going to have compelling products and software services coming out in the future and same, of course, applies for the Visionix. And here, we have said that by the end of '29 bit by bit, we are going to get also, of course, the profitability up into the levels where we're currently operating. And then beyond 2030, so we are having also the clear ideas in mind, of course, needs still a work, how we are able to sustain the innovation for the forthcoming products and what really compelling and totally new we would be able to bring to the customers in the long run. And also the plan is to start approaching from 25% EBITDA margin more towards the 30%. And as said, April 13, so really the clear plan and target is that we are aiming to go 3x faster than the market. So I think this is just good for everybody to keep in mind. But before moving to the Q&A, I bet there's quite many questions coming. So before jumping to that one, I would like to say a big thanks for Robin. So we have had a joint path together now almost daily basis for 6 years, you have been working for Revenio. 11 years on June and you came in, there were lots of people, then there were 35, 40, right?

30, 32.

And then we were divesting the portfolio, getting this interview in and now working on the Visionix in order to open the next great path. So on my behalf, big thanks, Robin, for -- it has been a pleasure to work with you and good luck for the forthcoming job as well. So -- and then, of course, the good news is that we have been onboarding with Robin, Juha Jaatinen already and so we have a continuation plan already in place and working well. But thank you, Robin. And not released yet for sure. So we have a Q&A coming, and I bet there's many, many questions coming. But anything you would like to say?

No, I want to thank everybody in the company, the colleagues and coworkers, of course, the investors and all the partners involved. It's been, I think, a great 11 years in the company. The difficult decision, timing maybe not optimal. These are the M&A and changing jobs is a long process and kind of this time maybe the timing wasn't ideal. But I feel 11 years in the company, it may be time to have a look at what else there is around other than revenue, but I'm still joining another public company. So if you follow, then I might be that our roads come across again.

Very good. Thank you, Robin. Let's move for the Q&A. I bet there's many questions coming. So let's address them all. Thank you.

[Operator Instructions] The next question comes from [ Guillermo Brinirocha ] from RBCCM.

Just 2 from me. Could you update us on how the iCare ILLUME ramp is progressing? So last result, you reported strong momentum in Life side. So has this momentum continued? That's my first question. And my second question, you pointed to a very strong sales growth in the Fundus device this quarter. So does this mean that we can expect a large increase in the ILLUME subscription through 2026 and next year as well?

So regarding to the ILLUME momentum, so that's continuing. So we see increasing amounts of systems taken into [ life ]. We see increasing amount of course, hardware sold part of the ILLUME end-to-end package. We see increasing amount of scaling the AI report package up. And as said quite many times, of course, now the majority of the revenue is coming from the device part, i.e., the DRSplus. But the overall take-up is good. Feedback is extremely good regarding to the full end-to-end solution. Then regarding to the fundus imaging sales. So we see -- we saw a strong growth in the U.S.A. on the fundus imaging side, EIDON selling really well. Of course, the DRSplus, then more sales on Europe level regarding to the -- or driven by the screening whether it ILLUME or just DRS plus sold for screening. So I think that, hopefully, [ Juliame ] addresses your questions or anything else.

The next question comes from Nikko Ruokangas from SEB.

This is Nikko Ruokangas from SEB. And first of all, thank you, Robin, for the years and good luck for the future. I have a couple of questions, and I'd like to start also on the fundus imaging side of old Revenio business. Could you comment on -- have you seen kind of the market there improving or do you think that you are taking market share there given that some of your competitors seem to be struggling in the segment?

Regarding to the Q1, I think we haven't yet seen the competitor numbers. So I think coming most probably in 1, 2, 3 weeks' time. So hard to comment on that one. But I think it's the normal market when it's normal on the fundus imaging side growth roughly 3% or so forth. So for sure, we have had a higher growth. But I think we know in a couple of weeks' time when we know the competitors numbers. But for us, it has been -- products have been moving out really, really well and especially even if looking from the U.S. dollar perspective, so growth in the U.S. dollar perspective, which is then comparing apples-to-apples. So we have had a good growth during the Q1.

That's good to hear. And is it something or this kind of a sales mix for the old revenue with higher now fundus imaging taking higher shares or is this something you expect to see also in the coming quarters?

For the whole year, I think we've kind of planned the growth also for tonometers. But now imaging did take a very strong start for the year. We do have very promising deals on the imaging side, especially on the pipeline. So there's a good chance that does perform quite well this year. Difficult to say yet. But I think Q1 was a bit stronger than we expected a couple of quarters ago.

Okay. Then moving on to Visionix. And I was wondering whether you could give us some comments on Visionix performance in Q1 as you probably know how they have been doing. And then maybe additionally, as you just talked about different product categories you are entering now through the acquisition. So could you give us some further color on which product segments within Visionix have been growing and which have not during the past couple of years?

So do you want to comment? So maybe I comment. So we signed the deal April 13. We haven't closed the deal. So we don't have a possibility to comment on their behalf their performance as such. Perhaps the general comment regarding to the different segments, what they are having. So from the market study perspective and overall industry trend perspective, it's fair to assume that OCT is from the ophthalmic diagnostic device market perspective. So that's estimated to grow quite fast. So 4.7% roughly, as Erkki was mentioning. So I think it's a fair assumption also from their side that that's a growing segment. And then, of course, the multimodal devices, which were really core of our strategy around. So if you go back the last CMD, so we were highlighting the multimodal growth. So that's really a growing segment where Visionix is having a unique product. So on that perspective, I think they are good on that side as well. And of course, the software solutions. So coming back to the telehealth, what Erkki mentioned. So telehealth is increasing in terms of the demand as well. So -- but Nikko, sorry, not able to, before the closing answer on their behalf.

Yes. I understand. But that was good. Then the last one from me at this point. You are targeting for the combined company 3x market growth and EBITDA margin of 25% in '28 to '29. So my question is how tightly are these 2 targets, meaning growth and profitability targets connected? So how high combined sales do you need to have in your estimates so that you would reach 25% EBITDA margin?

So if you think the logic, so we have been communicating to the market that we are -- the target is to grow 3x faster than the market. So throughout all these years, whether is it '27, '28, '29, '30. So that's our aim to go 3x faster than the market. And then the second topic is which we envision to improve quarter-by-quarter, year-by-year is hitting the 25% EBITDA margin by the end of '25. So sorry yes, '28. Yes. So that's in a planning book for us. So in a way, gradually bringing the profitability up and then, of course, keeping the sales growth up as well during the years and coming quarters.

Yes. We need growth also to cover, of course, the cost base continues to grow with inflation. So difficult without growth to achieve all these profitability targets, as I'm sure you understand.

The next question comes from Daniel Lepisto from Danske Bank.

It's Daniel Lepisto from Danske Bank. I also have a couple of questions. Maybe starting up with this gross margin, which remains below 70%, which is not something that we're used to seeing for you guys for a prolonged period. So how much was the FX impact here? And with this tariffs in place, do you think this is the new normal? So basically, can you do anything here if this current tariff regime remains in place? Can you do more price hikes or are you like fighting towards the 70% level for now?

I think we're probably targeting to get closer to 70%. So the price increases weren't fully in for the whole quarter. So we kind of expect to do a little bit better. Then, of course, the imaging sales proportion was quite high in Q1, which also has an impact on the gross margin as the tonometry gross margin is a little bit higher. But it's not kind of -- the price increase were not fully in yet for the whole quarter. So the tariffs definitely have an impact. So we're targeting to make as many euros as before, but kind of the tariffs are kind of -- price increases are just kind of covering the cost increase with 0 margin. So the percentage kind of mathematically comes down even though the euros are still kind of being covered by the price increases.

And comparable quarter Q1 2025, so there were no tariff impact as well, and that was the reason why gross margin was over 72%. FX has an impact because we got -- for this amount of dollars last year, we would have gotten 11% more top line from the dollar. So basically, that, of course, has an impact on the gross margin. We do have cost of sales roughly 25% to 30% priced in dollars. So it's not kind of there's some buffer or some hedging there, but there's a big impact on the gross margin and EBIT level as well.

All right. Okay. Maybe continuing on this -- still on this segment level growth that you discussed on this fundus imaging growing very strongly. So along with how you typically guide verbally on these growth rates, how does this tally up with what comes with tonometers, probes and perimetry growing since with 8% growth, imaging devices growing very strong, it seems that something is not growing or is barely growing if we look at the product segments. So can you comment on these other segments? How are they growing?

The biggest reason by far the poor growth was kind of the APAC poor growth. So basically, that drew down. I think Europe and U.S., we were doing extremely well, but then - yes. But APAC was clearly down, but one driver there is that the comparable period, we had a pretty big onetime order that we didn't get this year. So kind of looking at Q2, we don't have that big order in the comparables in APAC. So it's expected to improve.

Okay. That's clear. Maybe final question on these larger deals in the pipeline that you have been talking about, I guess, since Q3 last year. So there seems to be a quite long lead time. So these have been noted to be as material as having potential impact on the guidance. So these are still on the table or you haven't fully wrote off these quite yet?

No, no, no, they're still there. Still there, still working on it, not the fastest to close apparently.

[Operator Instructions] The next question comes from Pia Rosqvist-Heinsalmi from DNB Carnegie.

It's Pia from DNB Carnegie. I'll start still by acknowledging that you have withdrawn your guidance, but can you give some kind of comments based on the performance you now saw in Q1? Are you kind of -- you are tracking along the lower end of that guided range? So I think you alluded to that everything has proceeded according to your plans, but maybe coming back to Daniel's comments. So how are -- how is -- how comfortable are you that your portfolio will continue to perform in the same way?

I think we -- looking at last year's quarters, we had the toughest comparison quarter or the biggest growth quarter. Q1 grew last year almost 15%. So internally, our plans also was expecting the Q1 to be the lower growth quarter out of the 4. So in a way, it's fully in line what we've kind of been planning to do.

All right. Then regarding the clinical trial, I mean, you said you are now in the phase of recruiting or the patients are entering the clinics. What kind of costs should we expect related to the clinical trials now for the remaining quarters of 2026?

Pre-study expense estimation was like EUR 600,000, EUR 700,000. We did incur some of that already, but there is probably, I'd say, maybe EUR 400,000 to EUR 500,000 left or do you have a better estimate?

That's a ballpark, right?

Right. Okay. Then going to the Visionix deal. My first question is that what kind of terms and conditions do you have? Is there a risk that the deal falls through now given that your share price has declined clearly since the announcement?

No, no. We are proceeding as planned. There's no kind of -- nothing -- no kind of triggers related to the share price in any type.

All right. Good. And then regarding Visionix, you published sales and earnings numbers for '24 and '25. And yes, we the market saw that the company hasn't been growing. So is there any kind of -- can you give -- shed some light regarding the organic growth of that business going back several years like 4, 5 years would be really helpful to get an understanding of how their business has been able to grow.

So if you go back as a longer period roughly, I mean, 9 years, 10 years or so forth. So they have had the CAGR growth roughly 8% in a way. So they have been able to grow. And now when looking at the combined company, so we are extremely sure that we are able to get the combined company and also their product portfolio growing. Otherwise, we wouldn't be, of course, closed the transaction. And we are extremely sure that we are able to get the profitability up as well. So we have a clear plan for that, and they have a clear plans already, and that has improved already in the background even during the Q1.

I think Marc said in the kind of the -- where we released the transaction or had the analyst visit in the presentations related to the announcement. I think Marc said that like us, the COVID years were very strong for them. So they're similar to us, they were growing very strongly in the beginning of the 2020s, just like we were.

All right. And maybe still regarding the expectations, I mean, looking forward for Visionix, they did not grow last year, but the profitability improved on EBITDA level and the margin improved. So can you shed any light on your expectations for or Visionix's expectations for this year?

For this year, I can't really open what the outlook is. I think we're going to come back to that then with the combined guidance and then I'm sure in the Capital Markets Day. And then for the Rights Issue, we need to do the full prospectus. So that will be a lot of valuable information for the investors to look into, but unable to comment at this stage.

Yes. All right. And then finally, when I as an outsider and not an ophthalmic specialist look at the portfolio of the combined company, the question, I think, appears that is this finishing and dispensing business, is it really core for you from a diagnostic perspective?

It's obviously not part of diagnostic pathway, but it's still part of the, let's say, customer journey, especially in optical retail, which is a kind of a strong segment for Visionix. So they are serving a lot of those customers in that segment who are still also manufacturing spectacles inside optical retail stores. So not really part of clinical journey, but part of customer journey.

Thank you, Robin, for excellent cooperation during the past years.

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

Hey, thank you all. Have a good spring time, and we come back with the combined company Q2 numbers and now heading towards the closing of the transaction. And thank you for participating, and thank you for the really good questions. Bye.