Xvivo Perfusion AB (publ) (XVIVO) Earnings Call Transcript & Summary

Welcome to XVIVO Q2 Report for 2026. [Operator Instructions] Now I will hand the conference over to CEO, Christoffer Rosenblad; and CFO, Kristoffer Nordstrom. Please go ahead.

Good afternoon, everyone, and welcome to XVIVO's earnings call for the second quarter of 2026. To get started, we go to Slide 2 and today's presenters are me, Christoffer Rosenblad, CEO, calling in from Gothenburg, Sweden; and Kristoffer Nordstrom, CFO calling in from Denver in Colorado. And with that, we can go over to Slide 3, which is the Q2 financials at the glance, the Q2 shows the sales amount in line with the previous quarter Q1 and with a 36% organic top line growth compared to the same quarter last year. EBITDA was kept at a healthy level, resulting in a good operating cash flow. For the third consecutive quarter, the total cash flow was neutral and hence, the cash position stable. Kristoffer Nordstrom, our CFO, will get into the details on sales, gross margin, cash flow and EBITDA later in this presentation. If we look into the segments, both the track and abdominal segments are growing rapidly in both regions, North America and Europe. The lung market trend from Q4 last year continued into 2026 with a good long market growth. I'm also very pleased with the strong kidney sales in the quarter, fueled by a larger sales spread in Europe and growing sales force and most importantly, the growing interest from clinicians in the United States. We will come back later in the presentation on the progress for the Service segment. The action has taken and how we will execute to become the preferred partner in the transplant process. With that, we can go over to next slide, which is Slide #4, which is the same picture but for the first 6 months of the year. And it shows a similar picture as the quarter. Good, stable overall growth come from strong track growth and healthy abdominal growth. During this year, we have continued to invest mainly in sales force, scalable production structures as well as regulatory approval. Sales came in at SEK 480 million with a 29% organic growth. If we look into the segments, we can see that for part, the main hurdle is regulatory approval. Once the heart assist is used, the feedback is overwhelmingly positive. We continue to build evidence and more than 600 patients now have been successfully translated with artists. The best testament to success is Australia, where the heart penetration in year 1 was approximately 30%. Year 2, it increased to 40% of DBD art in 2025. This year, we already see an increase to approximately 50% penetration of all transplanted heart in Australia. I also want to mention that our projects are progressing according to plan. regulatory time lines are hard to predict. But clinical trial submission file and the development progress are progressing according to time lines we have previously agreed internally. The full-scale production of disposables for heart, liver and kidney would be extremely important to capture future growth potential for all three products. With that project coming to an end, we will now focus on reducing cost per disposable, setting up dual production where deem necessary as well as improving our machine production setup. This project will also include our lung portfolio. Lastly and most important to mention is that this quarter again shows that the business model is scalable. So with increased sales, we see that turning to an improved EBITDA and an improved underlying cash flow. So with that, we can go over to Slide 5, and we will come back later to the financial numbers in that section, and we can go into the Q2 highlights on Slide 5. And those we will see on the Slide 6 and 7. So we can go straight to #6. One key is that we definitely start to see that with a larger sales force, we meet more customers, and we see an increased adoption of our technologies across the line. Number two, we mentioned before that the lung market is back, and we very importantly are running an OPO EVLP hub pilot that is successfully now up and running, and that explains partly the increased lung sales during the quarter. So far, the progress is in line with plan, and we have identified four to five OPOs in the rollout pipeline, whereof the third OPO was onboarded last week. We are continuously investing in more feet on the ground in the U.S. to enable closer customer relations with a growing number of EVLP partners. If we look three, look into heart, as I just stated, in Australia, we saw a fast pickup of usage early on, and it increases year by year. Now we see a similar interest in Europe, and it translated into usage under derogation or compassionate use. It's interesting. We hear more and more testimony from customers who say that XVIVO heart exchange, not only the ability to translate more patients with higher patient survival rate, but also reduced stress level in the transplant team. and increase the confidence in hard transportation. In the U.S., the interest in our XVIVO heart technology is equally high, and we have recently submitted the extension of the cap or continuous access protocol to FDA. I mentioned in the last quarterly call that I would mention again at the spending time at the ISHLT 2026 in Toronto, it's clear that XVIVO is by far the innovation leader in the field of both lung and heart transplantation. If we look into #4, we saw increased sales from the kidney [indiscernible] transport, and we also see an increased interest and momentum from customers using the kidney [indiscernible] transport. This is based on more and more clinical evidence being available to the clinicians that support the use of kidneys [indiscernible] transport, as well as a larger commercial footprint in both regions, Europe and the U.S. In parallel, we are working hard to develop the product to meet U.S. OPO needs as well as lowering the cost per disposable to increase margins over time. And with that, we continue on highlights and Slide #7. Point five, what is very encouraging is to see that when we put commercial capabilities and increase our sales force, we grow typically between 30% and 60%. And with future approvals expected and coming in as well as our product improvement, we will continue to see this leverage of commercial sales force turning into increased sales at a good return on investment. Even though I wish to have point six, even though I wish to have had great news. We have seen great progress in all our regulatory processes as well as -- as we have stated, we worked hard on the derogation and compassionate use here in Europe. We see tick it up in Australia. And now we see that we have what I deem as good progress in the regulatory processes. I will shed more light on where we are on each approval in the next section of the call, the regulatory and clinical update. But I just want to conclude here that we are pleased with what we have seen so far. If we look at point seven, very important point. To start with, we are very pleased with the growth and the cash flow we saw during the first half of the year. And we but we invest heavily in future growth. The majority of the investment, of course, go into regulatory application for heart globally and liver in the U.S. But besides that, we continue to invest heavily in building commercial capability and the production scale-up to enable higher volume than we have today. We are also investing in quality capabilities to support the growth we will see that we believes will be 10% in volume versus what we see today. And Lastly, number that capture, I think, the first half year is that we have a scalable business model. We do invest to capture that opportunity, and we see increased sales turn into EBITDA, that turn into an improved operating cash flow that we then can invest into regulatory approvals of our future sales drivers, which is heart globally and liver in the United States. And with that nice segue, we can go into the regulatory update, Slide #8, but we can actually quickly go to Slide #9 to going to the regulatory processes we have. And this is the usual overview that we show every quarter on Slide 9. We now see more and more evidence for the heart disease globally. In Europe, we ran the first randomized controlled trial with superior endpoint that was performing the field of heart transplantation. The clinical outcome was great with an additional six live save per approximately 100 patients. It is also the first clinical trial to establish a link between preservation method, severe PDD reduction and reduced 1-year mortality. In the analysis of the trial at it was noted that XVIVO group had the reduction of severe PDD by 76%, which is a lot. In comparable number, the severe PDD was 20% in the control growth, which is expected, but only 5% in ex vivo group. It was further noted that the mortality of the severe PDD was approximately 40% in both groups, leading to an increase survival 6 percentage points in the XVIVO group versus the control group. The U.S. hard drivers will include in a record time. So the same picture. The severe PDD rate there was only 7.9%, and we are now financing the submission for the FDA for their review. So the team is working very hard. We are expected to hand in the submission filed to the during this quarter after there are -- we are waiting for some validation and product aging data before we can finally submit it. In Europe, the market process for Europe is ongoing and at the late stage. Now is my best judgment. I stated earlier, the hard box and disposable part of the product is already marketed solution has passed EMA consultation we're now waiting for consultation at the South America Agency for the one part of the product. During Q2, we received a few questions of clarification nature, which we turned around in less than a week. We are now waiting for feedback on that additional information where we unfortunately don't have an exact time line, but we expect feedback during this quarter, Q3. As we stated earlier, the uptake of heart disease is good in Europe under derogation and compassionate use, and we are ready to launch when the product is fully approved. Hence the launch plan is ready. We have staff recruited and they are meeting customers today under derogation to support them with everything they need, and the interest from clinics is very high in Europe as it is in the rest of the world. I still want to mention that even though the use under derogation compassionate use is increasing and appreciated by our customer, we need to mention that European heart clinics are suffering badly from lack of alternatives to the XVIVO heart assist. In both United States and Canada, the regulatory approval will be pending the CE Mark in Europe we are waiting for that one for until we will seek for approval in those two regions. The last point liver in the United States. I will come back with an update on the next slide, Slide 10. And leases regulatory status in the United States. So we have previously reported that the Liver Assist has been granted breakthrough device designation by the FDA with an approved IDE and CMS funding improved. We could have started a trial already last year, this point pretty much 1 year ago. We did decide to temper the post activities for the liver premade process to investigate alternative regulatory routes possible. And we are preparing for the FDA Q-Sub meeting where the possible regulatory route will be decided by the FDA. We have recently opted to focus the majority of the results we have on the heart U.S. submission. That being said, we have very high interest for us clinics that are supporting the U.S. liver submission. And we are in good dialogue with clinics to prepare ourselves for the Q-Sub meeting with the FDA. We will inform all investors of the next steps in the U.S. liver regulatory investigation latest in the Q3 report, if we don't feel the need to do it before that. And with that, I conclude the first section of the Q2 presentation, and I will hand over to our CFO, Kristoffer Nordstrom, who will present the financial performance.

Yes. Thank you, Kristoffer. Turning to the financial performance for the second quarter then. So this was another strong quarter for XVIVO, the strong momentum we saw in the first quarter continue into Q2, as you have seen, and we delivered net sales of SEK 239 million, which corresponds to an organic growth of 36% in local currencies. Importantly, growth was broad-based across our portfolio and driven by continued adoption of our technologies in all major organ areas. Pleased to see that. At the same time, we continue to invest in commercial capabilities, regulatory activities and operational scale-up initiatives while maintaining a solid profitability. EBITDA amounted to SEK 45 million, and that's around 19% in an EBITDA margin. And we believe that this demonstrates both the strength and the scalability of our business model. I will get back to that. Gross margin was 71% Domestic margins remained strong, while gross margins in abdominal and services continue to impact the overall mix, and I will come back to that as well in a moment here. Going over to the next slide, which is the largest business area today for XVIVO, Thoracic. So Thoracic delivered a positive quarter with net sales SEK 58 million and an organic growth of 53%. Adjusted for part trial revenue, we're still at 52% organic growth, so very good. The momentum in lung continue to strengthen disposable sales grew 69% in the quarter, and we continue to see expansion beyond our largest customer accounts. Activity remains strong, both among leading transfer centers, but also within our growing OPO strategy. And during the quarter, as an example, two additional express systems were installed at OPOs in the United States and are expected to become operational in the second half of the year. Heart, Christoffer touched upon it, we're very pleased, very proud to see that we delivered a particularly strong quarter in half, generating sales of SEK 24 million and primarily from Europe and Australia. We continue to see increasing use under compassionate use and irrigation and wait for our regulatory approvals. With the approximately 600 has transplants with our technology, we continue to build both clinical experience and commercial momentum ahead of our future approvals, which will be very important. Gross margin on Thoracic 83%, remaining at a very attractive level despite the increase in contribution from hard sales that you should remember, is still at prelaunch pricing. Moving over to Abdominal. Abdominal delivered another strong quarter and reported net sales of SEK 65 million, corresponding to 26% organic growth. Liver sales grew 11% in local currencies, while kidney contributed and was the primary growth driver with a growth of 72%. We are particularly encouraged by the continued adoption of kidney's transport both in Europe and North America as more centers can experience with the early adoption of this technology. Gross margin was 57%, so an improvement from Q1, but less than 68% last year. The decrease was primarily driven by product mix with Kidney representing a lot share of sales as well as pricing conditions in certain markets. While this impacts margins in the short term, we remain very confident in the long-term margin opportunity within Abdominal as adoption increases in the U.S. where pricing levels are structurally higher. And as we continue implementing manufacturing and sourcing improvements, we expect margins to improve over time. So overall, we remain satisfied with the growth trajectory in abdominal and the increasing adoption of both our liver and kidney technologies. Turning to services. Our third business area. Net sales were SEK 15 million, corresponding to a negative growth of 25%. The development continues to be explained mainly by lower organ recovery volumes, while Flowhawk delivers another strong quarter. Flowhawk grew 48% organically, continues to gain traction among [indiscernible] programs across the United States. And we remain convinced that our digital workflow solutions will become an increasingly important part of transplant infrastructure and customer integration for XVIVO over time. Within order recovery, volumes remained below our expectations yet in our quarter. However, following the investments we have made into the organization, the talent that we have attracted, we feel that we are getting closer to growing our customer base, and that's our -- we have a firm focus on returning to growth here in the second half of the year. And I think we should still see some results, especially in the back end of the year. Gross margin was 10%, and that's purely reflecting the lower recovery volumes combined with our investments in capacity, as volumes to recover, the margins should naturally improve. So switching gears from sales and going into EBITDA and profitability. So despite continued investments, as we talk a lot about in commercial expansion, regulatory activities and scaling the organization for future growth. remains strong at 19% in the quarter and 20% year-to-date. And on a rolling 12-month basis, we -- EBITDA has now improved to 21%. Many companies can deliver high growth, and many companies can deliver profitability, and we're thinking that delivering 29% organic growth during the first half year of the year while sustaining around 20% EBITDA margins and generating positive cash flow demonstrates the quality of our business model and this already at the very early phase of our growth journey. So we're very proud of that. As we have said previously, XVIVO's business model is highly scalable. We will continue to invest where we see clear long-term commercial opportunities, particularly in North America. But we will also maintain disciplined cost control across the organization. My final slide, cash flow. One of the most encouraging aspects of the quarter, we think, was the continued improvement in cash generation. The operating cash flow amounted to SEK 63 million in the quarter and SEK 129 million year-to-date. And this should be compared with a negative operating cash flow during the first half of the year last year. So this reflects both the stronger commercial performance and the continued focus on working capital management. Cash flow from investments amounted to minus SEK 68 million in the quarter and relates primarily to regulatory and product development activities, especially within heart. And what we think is particularly important is that over the past 3 quarters, we have demonstrated our ability to largely self-fund both our operating investments, but also our growth investments or CapEx. So despite continued investments into future growth, total cash flow for the first half of the year was essentially breakeven, and we ended the cash -- ended the quarter with a strong cash position of SEK 305 million. So with those comments, I will hand over to you again, Christoffer. Thank you.

Thank you, Nordstrom. We will round off this presentation with the outlook for the rest of the year and then a little bit longer-term outlook. We start with Slide 19 in and the outlook for 2026 and our focus areas. So we will continue to build sales force and build new partnerships in the U.S. to enable OPO and other clinics to recover more lungs by EVLP adoption, through a combination of service models and staying very close to customers. In parallel, we increased our service offering to better tailor customer needs, especially offering Flowhawk and [ NRP ] from hopefully increased footprint, we have an increased surgical footprint. We should also have an increased contract footprint. We will continue to work closely with our competent authorities in Europe to -- with the aim of obtaining the CE Mark of Heart, of course. We are aiming to submit the regulatory heart filed to the FDA for their review during this quarter as well as deciding the regulatory pathway for Liver Assist in the United States with aim of given U.S. surge of the same opportunity we now see here in Europe using the Liver Assist where European clinical team saves hundreds of lives every quarter, thanks to Liver Assist. And if we turn from this year outlook to a little bit longer term, which is, I think, is important to keep in mind what we have is that the demand for transient is still 10x higher than the supply of organs. We should also remember that the sales value for machine perfusion is approximately 10x higher versus what is used today to a large extent, study cold storage or a beer cooler box type with ice. Machine perfusion and our service model have proven to increase the number of orders to be used for transportation, especially in the fast-growing DCD organ pool, where the main growth drivers are superior clinical results from machine perfusion and the fact that we can reduce complexity and add time for the [ Trampa ] clinic in order to reduce stress. So in conclusion, we know the machine perfusion and good service models are normal and DCD graph will drive growth in the near and the long-term future. Lastly, want to change the paradigm for transplantation by innovation. We are convinced and committed to increase increasing patient lives of transplantation, making sure that no one dies waiting for an organ and making sure that we have rested transplant performance surgery at a lower cost than what we see today in the transplant chain. And we hope that you, dear listener, in the future when you fly, you might be seated near to an XVIVO heart box with the heart being transported to a patient who likely is about to change soon. And if you see that ever device in flight, you should know that it's not just a heart traveling. It's a hope for a new and a better life for the patient and his her family. And I want to thank you for supporting us on this journey to change the transplant system forever through superior innovation. And with those last words, I also want to thank you for listening today. And with that, we will open up the lines for questions.

[Operator Instructions] The next question comes from Simon Larsson from Danske Bank.

A few questions from me, and I would like to start on the strong Heart print that you mentioned. Would it be fair to assume that sales in this quarter was maybe a bit boosted by a lot of new placement of the boxes or were revenues mainly stemming from existing clients already sort of using consumables and yes, some sort of a basic run rate for the business? Or I mean, just how we should think about the dynamics of the business model here in the beginning of the launch, if you will. And if we should extrapolate anything in the second half?

Thank you, Simon. It's a great question. I mean we are scaling up in Europe. There were limited heat box sales, both in Q1 and Q2. So the main sales from disposables. But we should remember that once you get started, you have a few kits as safety stock. So that has affected half year 1 to some extent. But we see definitely increasing uptake in Europe from [indiscernible] Heart.

Great. Great. And the second question was on EVLP. So I believe you have three OPOs signed now on online as well. it sounds like more also in the pipeline, hopefully, for the remainder of this year. So if you could help us understand the potential of these OPOs when it comes to revenue. I mean, I guess, you have data on your current volumes and growth rates, et cetera. So I'm just trying to understand what free to find OPOs can do for you in the same next fiscal year? What type of -- was the name you'll be talking about?

We are in pilot face. So we do need to come back in probably 6 months to answer that question properly and with more exact data. But what we do see is that the opportunity to evaluate in lungs on the OPO side is vastly at #1 on the clinical side due to their access to extended criteria lines that is there. and also the fact that it simplified the whole process. So we have seen in one note, we saw a fairly fast uptake. We need to replicate that 3 to 4x more to come back with exact numbers coming into next year. But so far, it looks good. And according to our own plans, it's according to those at least.

Okay. Okay. Makes sense. And the final one was on sort of further recovering investments in sales force when we're approaching a Heart launch, both in Europe and in the U.S., right, into next year? So could you give us any like help or ballpark estimate on like how many more salesperson, support persons do you need to really cater and to meet the demand and to make it a successful launch here for the heat product. So what's the magnitude of investments basically that we should expect here in next year maybe?

Yes. In Europe, we have invested. There will be add-on investments when the more customers come on, the more field force, we need, so to say, ranging from customer support to technical support to clinical support to sales reps. So that is more of a scaling exercise. In the U.S., we will start to do in next year scale up. We -- depending on a little bit on the timing, but we do believe that we need an approximately 10 to 13 extra commercial head count ranging from sales reps again to customer support, technical support and increased clinical training/support.

The next question comes from Jakob Lembke from SEB. .

Yes. My first question is on the OPO customer channel. So I'm wondering the first deal that you won here earlier in the year, if you can elaborate on how that has sort of developed and ramped up here in the first half of 2026.

I can go on that, yes. So you might -- you got -- we acquired that opioid at the back end of last year, they became active very early this year. And I would say they have a strong ambition at bill and a mutual mission on par with volume-wise for EVLP on par with, let's say, the top 5 centers in the U.S. So you talk about fairly larger volumes. And then there is -- this is a new method, and we are -- the parties that needs to collaborate. So it's [indiscernible] and it's [ PSI ], our confusions partner and OPOs. So there are learnings in the making. But we believe that we have a proof of concept just provide some more color. I think they are now close to, let's say, 20 EVLP for the first half year and now their addition is higher than that when they are fully up and running, but we consider that a very strong start and now we want to replicate that on the other OPOs as well. I think you will see a variety of slightly lower volumes than this one, but also perhaps higher for press [indiscernible]. It's a good start.

Okay. And this, let's say, 20 million in the first half, is that a reasonable assumption for the second to year 1 now into for H2 2026.

Yes. So I think you will see, I think the ramp-up time could compare a little bit on these two bills? One is smaller and one is bigger. It's a little bit too early to see to say, I think a lesson is that it takes at least a quarter I think, Q2 to come to speed [indiscernible].

That's [indiscernible]. Then I have a question on the heart sales in Europe here in Q2. If you can elaborate on what countries are contributing to that.

As Christoffer said, we're very, very happy now with the we have in Europe. Naturally -- there is some background noise here. I'm not sure if you could [indiscernible]. Naturally, these are sites that has participated in the European clinical trial. But we talk about France, as we set up the press release this year about the derivation of mayor contributors. You have the Benelux countries, Germany, Sweden and Denmark, if I remember correctly. So we think that's a very good starting point here. Thank you.

Okay. And then on the process for Heart in Europe, I mean, I understand that it's very tough for you and it's hard for you to make predictions, but it sounds based on your commentary that we're unlikely to get it within the sort of 1 year or from the press release you sent out, yes, August last year. .

Yes. Yes, that's our best guesstimate at this moment. Based on where we are in, let's say, level of clarification. That being said, it's hard to predict regulatory time lines, especially during the summer. But yes, that's our best guess to on that.

But it's still I mean reasonable to expect it in 2026, perhaps?

Yes, I certainly hope so.

Okay. It's tough. I get it. Then a question on liver, which had a bit slower growth here for the second quarter in a row. And I'm wondering if there is something that has changed there or any sort of abnormal fluctuations.

I think that we had a fairly strong Liver quarter last year to start with. So we have fairly strong comparables. We do have a good Liver pipeline still in Europe. We believe that the majority of market penetration from hereafter will come from both increased sales in, let's say, newer European countries where we have, for example, really high penetration in Benelux we can see an increased penetration in other countries, so [indiscernible]. But we believe that a large part of the two, besides new countries will also come from improved service models here in Europe as well. So we are -- if we look at the pipeline, it looks possible for liver as well.

Okay. And on liver. I know there is one competitor that is talking about expanding more into Europe and there's another competitor that I know is growing a lot. You're not seeing any sort of increased competition from those, in short term?

We do see increased competition to -- in Europe to absolutely. But we believe we have a strong track record, very strong clinical proof, good customer relations, so to say. So we so far haven't seen that strong competition coming in. I believe that most of the -- let's say, the -- how successful we are is like in our hands and how successful we are to implement good service models. When I talk to customers in Liver, that applies to aisle, especially, they are looking for supporting reimbursement, but especially in service model due to shortage of staff. So if we can support them with that, I'm sure that we will become the preferred partner to a lot of clinics in Europe over time.

The next question comes from Filip Wiberg from Pareto Securities.

I've got a couple of questions, but I'll take them one by one, I think. So the first one is around the largest customer that you have in line. So you had another strong quarter here. So I'm wondering what your expectations are now for the coming quarters and what kind of visibility that you have there? And like also if your projections have changed at all following their own approval.

Thank you. In general, we stay close to all our customers and especially the large ones. We are part of their approval, and we will continue to see increasing quantities. We're convinced of that. The sales value will, of course, be smaller compared to today. We have visibility approximately 6 months, good visibility and for the 6 months, it looks good for. After that, we have less visibility to say so, and we are in a good dialogue to have a better understanding of how the future will be shaped together. So we need to come back on a more deep [indiscernible] of that question.

Okay. Okay. But so I think in connection with the last report in Q1, you mentioned it was fair to assume that, that was a new baseline for the LP number. So -- and this seems to have been true in Q2. So it sounds like you still have confidence around that statement now looking forward as well.

Yes. We are confident for the next months, so to say. We are also very confident that we together will increase the number of the LP so we can make sure that nobody dies waiting for lung at one point and that we will do together. So we are convinced and committed to increase the volume and the number of bps going forward. Exactly how that will shape in to U.S. dollar, it's something we need to come back with if we look into '27, '28, '29.