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Good morning, everyone, and welcome to the AddLife first quarter presentation. This morning, we will take you through the slide presentation and then open up for questions afterwards. And as always, if we don't have time for every question, don't hesitate to reach out to us for follow-up questions after the call.I'm very happy to announce the fact that AddLife is starting the year in a very strong way. For a long time now, AddLifeHas been positioning the company for an expected recovery in the health care system after the pandemic. During the first quarter, we have seen this expected development happen in a significant way. Surgical procedures have been increasing all across Europe. And with that, we can see a strong organic growth of 13% in the Medtech business area and 10% in Labtech. On top of that, we see the margin development in a positive trend, supported by significant volumes, but also product mix and an efficient price management.Looking at COVID-19, this may be the last time we actually present this slide. As many of you know, the COVID-19 testing has decreased significantly and is now a part of a broader respiratory test panel, so therefore, not meaningful for us to report separately going forward. Nevertheless, in Q1 last year, Q1 2022, we had a significant COVID sales of around SEK500 million. So that does impact the comparative numbers for the current quarter. So -- but now the market has really normalized. We see elective surgery is growing again. We see customer access is restored. And with that, our ability to interact with customers and drive commercial activities.Looking at some of the numbers, we saw that the net sales as a total declined by 5%. And this is, of course, driven by the reduction in COVID-related sales that came from around SEK500 million to 0 in the current quarter. At the same time, we see organic growth is compensating for that in a very nice way, also supported by acquired growth and some beneficial currency effects. EBITA margin is holding up nicely, but it's important to note that we have also reversed some contingent considerations. So excluding this, the EBITA margin for the group as a whole is 11.5%. We continue to invest in digital solutions in the home care area and that investment has increased compared to the corresponding quarter last year.As I mentioned earlier, we are happy to see that the EBITA margin is indeed in a positive trend and has been now for the third quarter in a row. In Labtech, we can see that the -- of course, the COVID-19 sales that has contributed to the profit margin has now ceased. But on the other hand, we see a solid underlying volume growth and effective price management in a good way countering that effect. We also see a very strong revenue development in Medtech combined with the product mix. The companies are doing a fantastic job in handling the prices in a time of inflation and increases in costs from our suppliers. Worth noting, of course, as we look at the complete group EBITA margin is that we do have a growth in the eye surgery business, but the profitability is still lower than it was in Q1 2022.So looking at the graph in the bottom, you can see that the Labtech profitability is, of course, coming down because of the COVID-related revenues that are gradually being phased out, but it's holding up still and then it's -- we maintain a level of profitability that's higher than it was before the pandemic. And in the Medtech business area, we see a positive trend in the margin as well. So if you take a little bit more look at the Labtech business area. As I mentioned earlier, we have a 10% organic growth. We are successfully defending the EBITA margin in spite of the reduced or discontinued COVID-19 sales. We are very actively working on developing the portfolio and introducing new products.Looking at the subsegments of Labtech, the business unit Diagnostics. There we see testing volumes. It's really stabilizing now after the pandemic, a very healthy underlying growth in the business, paired with active price management has given a strong development to the business as well as the profitability. We do see an increased interest in service and efficiency improvement solutions due to the staffing shortage that's evident also in the diagnostics field. This staffing shortage can also, in some cases, delay tenders and the initiation of new product implementation.In the biomedical research area, we see some concerns regarding new project initiation in tax-funded research, but I would say that, that is more than countered by very strong activity in the drug discovery and biomedical field. We see also a very positive trend and huge customer interest in emerging technologies such as gene sequencing, bioprocessing cancer immunology. And also in the Biomedical & Research business unit, we're doing a great job in active price management. Also very happy to announce the fact that one of our companies within the group Biolin has launched a very innovative new product line in surface science that has been very well received in the market.Moving forward to Medtech. As I mentioned earlier, the health care markets are clearly recovering something we see across the board all over Europe. And this has resulted in a positive organic growth for us at 13%. We also see a positive margin improvement, again, supported by volume, product mix and active price management. We are also increasing our activities in terms of adding new products, also sometimes in collaboration between the different companies where we are becoming a stronger partner to our suppliers.If we take a look at the business units within the Medtech business area, we can see in the health care -- health services and hospital business, that the trend is really clear. Elective surgical procedures are increasing all across Europe. And we see, based on this, an increased demand, particularly in orthopedic surgery, anesthesia, laparoscopy and general surgery, which are all areas that we, over the past few years have invested a lot to position ourselves within. As I mentioned earlier, the organic growth confirms this trend, and we are happy to report a 13% growth. The team is defending the margin through good price management. Sometimes, of course, we see challenges still based on foreign exchange exposure, freight costs and so on, but the team is doing an excellent job in managing that.In the eye surgery business, we're happy to see that revenues are indeed growing. And the margins are in a positive trend compared to mid last year. But in comparison to the first quarter 2022, it is a lower level of profitability, mainly due to unfavorable product mix. On the home care side, we see a very healthy revenue development in all our businesses. And of course, the home care portfolio really does address the need that's really growing in society where we want to allow for people to live at home for longer and also have a better quality of life and care at home.In relation to this, we're very happy to see that, that our recently launched digital solutions for home safety and security systems is growing really well. We are adding users at a good pace. We continue to invest in these digital services and for this quarter at the level of SEK15 million, which is -- should be compared to SEK7 million previous year. And of course, that impacts the results in the quarter. So a little bit of an observation around market trends and implications for AddLife. We are clearly now in a post-pandemic environment and elective surgery is recovering at a rapid pace. We think that this will have to be an increased level of activity for a long period of time to handle the waiting lists and backlog in the health care system across Europe.At the same time, the health care systems are challenged by staffing shortages, and this is true across the region. And these things, of course, means that the hospitals will have to focus quite a bit on improving efficiency and outcome. And that opens up an opportunity for us. Of course, with increased costs for staffing, the hospitals will also have to be more selective and outcome focused in how they choose their technologies. And they will rely to a larger extent on services and efficiency enhancing products, which we are well positioned to provide. If you take a look at the competitive situation, we do see that the trend that's been there for quite some time in terms of distributor consolidation is continuing. There is a strong logic for the smaller local regional distributors to join forces. And that's, of course, part of the AddLife strategy, but we are seeing other companies also doing the same thing.Interesting, we are also seeing that the global suppliers or global manufacturing companies are changing their business model quite a bit right now. We see that there's a lot of spinoffs. There's a focus on the core businesses. And we also see that some people are struggling with profitability and laying off people in multiple countries. All of these changes, of course, opens up opportunities for us, the opportunity to perhaps take on more product portfolios that are not viewed as core anymore. And also a change in staff will also likely effect the focus of the teams so that we remain a strong partner to our customers and be unaffected by those changes that our competitors are going through.So all in all, a pretty good situation for AddLife and the position that we have chosen. So of course, when we look at the business outlook, we need to think about what's going to happen in the health care system going forward. And if we take a look at the AddLife current footprint, we can see that we have changed the profile of the business from previously being a majority in the Labtech area to nowadays, the majority of the business is indeed within Medtech with over 60% of the revenues coming from that business area. Within Medtech, home care is a smaller business, but with a good growth prospects. And the hospital business area, very large and now benefiting in a strong way from the recovery in elective surgeries.And as you can see on the map, we are quite geographically diverse nowadays exposed to almost all countries in Europe in a very balanced way. So that, of course, gives a further level of stability. Looking at an updated picture of all the segments that we're in is a quite impressive picture. As you can see, we are present in many, many segments, and these segments are all selectively chosen because of their growth and profitability characteristics and the fact that we can play a leading role within all these segments.The broad segment exposure in carefully selected areas, of course, also provides a good stability in our business going forward. It's interesting to take a look at health care spending and how that has historically developed over time. And as you can see here on the slide, health care spending grows in a very, very stable way, irrespective of GDP growth. And as you can see on the graph, sometimes there are dips in the GDP, but the share of money spent on health care is stable and growing. And of course, that can be reflected as well in the AddLife performance. In this case, dating back to 2014, where we have a very stable revenue development as well as EBITA margin development. Of course, a bump in the numbers during 2020 to 2022 with the impact of COVID, but the underlying trend is quite stable and positive.So wrapping up the overview of the -- how the business is performing. Of course, you all know the targets we have set for ourselves and those remain in place. We shoot for a 15% annual profit growth through a combination of organic and acquired growth. And of course, focusing on profitability. And in our case, we define it as profit over working capital is key. That helps us to finance growth through our own cash flow generation. During the quarter, the EBITA declined, of course, compared to probably the final quarter of significant COVID revenues. So that explains the decline. We hope to see a change in that direction soon. And on the profit of our working capital, we are still way above our target of 45%.So with that, I hand over to Christina to take us through some of the financials.
Yes. Thank you, Fredrik. So looking at the financials. We had a solid 12% organic growth in the quarter, which was great. And zooming out, you can see that Labtech has been quite stable over the quarters with a pickup during this quarter, specifically. And as Fredrik said, sample volumes, et cetera, are normalizing, so that is good looking forward. With Medtech, we have seen a clear recovery starting last quarter and definitely continue into this quarter. And the increase in surgeries has also been supported by introduction of new suppliers and new products supporting the organic growth. The revenue growth during the last 2, 3 years has been supported by organic growth, COVID sales and acquired growth.This is the last quarter where we have tough COVID sales in the comps. The last quarter's revenue growth is supported by recurring revenue and recovery in the market. Looking forward, for 2023, we will continue to focus on organic growth and also introduction of new products and new suppliers. The gross margin this quarter is slightly lower compared to Q1 2022, but it has been a positive development over the last quarters, and our companies have done a great job making sure that the strengthening of the gross margins continues. That has been done through product mix and also active price management where they have been able to pass on price increases to the customers.The COVID sales was handled within the current organization, meaning that the EBITA margin increased during this period of time. But it also shows the ability for us to handle more products within the organization and also add on more products. The increased EBITA margin during the last quarters, if we reverse the continued consideration, like Fredrik talked about and showed earlier, has been achieved via a recovery in the Medtech, mainly via the newly acquired companies, the ability to defend the gross margin and also cost control. Cost has though increased slightly in this quarter, mainly driven by increased sales activities, marketing and salary increases.If we look at the cash flow, it's been just about SEK100 million operating cash flow in the quarter. We've seen also in this quarter increased inventory. We have had historically problems with the supply chain services that has definitely improved. So it's not as such a big problem, but we still have some component shortages, this [ dot lined ] picture. Also, we have introduced new suppliers, a new product, which is great, but it often ties inventory in the beginning. The newly acquired companies, which are strong within surgery, have a slightly different business model compared to what we have seen in the Labtech companies historically.They do carry more inventory because they need to have the [ mass ] for quick deliveries. And also that often comes with high margins. Cash flow is a constant focus, and to deleverage is definitely something that we will focus on going forward continuously. We have been working with [ awareness ] in the companies and also introduce processes, et cetera. This is a strategy work that will take some time though. Looking at the debt. The loan towards the banks has been unchanged between the 2 quarters, and it is normal bank loans that we are carrying. But the EBITDA rolling 12 months has gone down as a consequence of Q1 last year being the last COVID boosted quarter.So that is the reason why the leverage has increased from 3.5 to 3.7. Focusing on cash flow and reducing the leverage via self-generated cash flow is a continuous focus going forward.
In February this year, we announced an update to the organization, and I'm very happy to share with you all that, that organization is off to a great start already. Within the Labtech business area, we're retaining the business unit structure with strong and experienced business unit leaders. On the Medtech side, we're strengthening the team because of the strong growth historically and in the future that we're planning for. And we have added 2 new leaders to the team, Luca and Tara, who both have very long operational CEO background within the company and also certainly bring an international perspective to the extended management team.Peter, who was previously the Head of the Labtech business area has accepted to take on the role as Chief Commercial Officer. He has a long history within the company, both within AddLife and before that Addtech. So with this new organization, we're securing continuity, we're making sure that we can take good care of the growing business that we have and, of course, setting ourselves up for future growth as well. And in addition, we are ensuring an international perspective, strong operational experience and the continuation of culture and our well-tested and successful business processes.So if we sum up the quarter, we can say that we have indeed, as a company positioned the business to handle the post-pandemic market. And now we're seeing that change happening and the significant increase in elective surgery all across Europe, and we're finding that, that positioning and that approach is indeed working. So in orthopedic surgery, anesthesia, laparoscopy and general surgery, the demand is significantly growing, and these are areas where we have become increasingly strong over the past few years. So this market change is indeed resulting in a strong organic growth for both Labtech and Medtech, and we are really happy to see a positive margin trend driven by volume, product mix and active price management.We are active in a market with strong stability in spite of business cycle and also thanks to the fact that we are represented all across Europe and in many carefully selected segments. We have a stability in revenues, profit and cash flow, irrespective of the market conditions. We have strengthened our commercial team to continue the successful business model and the successful business development going forward. And our priorities remain, first, to protect and improve the profit to drive organic growth to make sure we are efficient in our capital management and generate a healthy cash flow and start preparing again for acquisitions.So with that, we sum up the quarter, and thank you for your attention. And now we can open up for questions. Thank you very much.
All right. Then I think we are ready to take questions. We see that some of you have raised your hands to ask a question. So maybe we start with Karl.
So I have a couple of questions. Maybe we can start on the margin side in the Labtech business. I think that looks quite strong. And the underlying margin looks to be in line with Q4 levels. And when I look at the historical figures, it's always been down by around more than 200 basis points almost. So can you give me any more color on the margin development there sequentially? And if there were any, let's say, COVID volumes in the quarter? Because I guess that is the question. You don't report it anymore, but I would expect that there were some covered volumes maybe. So that will be my first question, please.
Thanks, Karl. Good question. So I think we're happy about the strong margins in Labtech. I think the team has done a fantastic job. As you know, around SEK0.5 billion in COVID sales is indeed disappearing, and it's impressive that we are defending the margins in such a strong way. The margins are higher than they were before COVID on average. So strong development there. There is nothing significant in terms of a one-off or anything like that. And I would say that COVID volumes are negligible. There's nothing really there. So what -- how come we are protecting the margin in such a strong way.I think obviously, the team is doing an excellent job in protecting margins. We have gone through a period of price increases from suppliers. So they have done a good and proactive job in countering that with price increases to the customers. We see good volume growth and a good product mix for us. We're always trying to drive new products with higher margins and so on. So that's, I think, is what we're seeing. But there's nothing -- there's no one-off effect or anything like that in the Labtech numbers.Is there anything to add to that?
No, I think that's -- that sounds [indiscernible] good way.
And then if we then move on to the margin to the Medtech side. I think they were flattish year-over-year. So I just wonder, Q1 is always a strong quarter now with [ Healthcare 21 ] in the figures. So what should we expect going forward? Because I guess AddVision, as you said, was still down margin year-over-year. Should we expect the margin to increase year-over-year in Q2 as well? Or what do you think?
Well, great question. I think there are some factors here to keep in mind. A very strong quarter for Healthcare 21, which is usually the case as they are dealing with customers with a fiscal year that ends in Q1. So expected strong development there, but I think they did an amazing job. We see the similar pattern in other companies as well in particularly the ones that are heavily impacted by different types of elective surgeries, such as MBA and so on. So very strong margin in the quarter. But there, there is no season effect like that. It's the only Healthcare 21 that has a beneficial Q1 seasonal effect.AddVision is evolving in terms of sales, but the margin is still very low, unfortunately, significantly lower than the previous year. And of course, we're seeing a positive trend there, but I think we shouldn't expect dramatic changes in the short term. So we don't want to give an outlook on the margin, but those are some of the dynamics that are ongoing. I do think that the recovery in surgical procedure seems to be a solid trend. So we do think that, that will continue. But I don't want to give any guidance on the margin more than that.
Okay. That's great. And then just a question on the cash flow. I mean it was a bit soft maybe in the quarter here. And I mean, also when I look at the rolling 12-month basis, I think free cash flow is around 40% of adjusted EBITA. So I'm just curious, what is the main reason behind the weaker cash flow because, of course, some is interest payments. But then, I mean, CapEx has also gone up quite a lot. So I'm just curious on the cash generation, what is needed for that to improve going forward basically?
Yes. No, it's a good point. Maybe I'll start and you can fill in Christina. I think it's -- we are certainly have an ambition to improve the cash flow. And so this is something that the companies are always working with, with some good programs in place. We are also increasing the activity in that area, finding ways to improve it going forward. There is, of course, some factors to keep in mind here. Some of our recently acquired businesses, they are very trusted suppliers to their customers. And in this surgery arena, you are expected to be able to deliver very quickly for upcoming surgical procedures.So with that comes a commitment of keeping stock of various components and sizes and product lines and so on. So we have to do that in order to be a trusted supplier. And that fortunately though, that the relationship of a trusted supplier also comes with quite healthy margins. So there's a little bit of a trade-off going on there that differs a little bit from some of the more traditional AddLife companies. And then on top of that, we are taking on a number of new suppliers, which is really good. So that is something that bodes well for the future.In the short term, though, it often means that we say that we're going to start selling these products. We start by taking on inventory of that product line. So there will be an inventory effect before there is a sales and margin effect. So there is that factor as well that we need to keep in mind. So maybe you can continue and add something to that, maybe.
And maybe we should add as well. We have been talking about the supply chain, the services for a number of quarters, and that has definitely improved, but we do still actually see a few hiccups, especially on the component side, where there might be shortages, et cetera. You also asked about the CapEx, and that has also increased during the year, also mainly actually related to the newly acquired companies since they are having higher CapEx, meaning that more fixed assets in relation to rental and things like that. And also, we have intangibles in that one as well. And since we are driving a few development projects in a few of the companies that adds up as well then.
Okay. That's great. And then just one last one from my side here on -- I think you touched on this before, but on the covenant side, you have said that you need to have an interest coverage ratio, I think, of more than 4. Is that correct, the covenants?
Yes.
So I just wonder what that is based upon because I think you said before that it's hard to calculate. But I mean, is it some kind of EBITA or...
EBITDA. Okay. EBITDA. Yes. And that's adjusted EBITDA, I guess. And then it's an adjusted one as well. Yes.
Thank you, Karl. Good question. So we continue here. I think we have Gustav you raised your hand as well for some questions, right?
Yes. It's Gustav here from Nordea. Just in regards here to build on the cash flow. In regards to the net working capital, you have talked in Q4, I think it was that you expect the release for the full year. Is that something you still expect or...
Yes, certainly, we want to drive that. I think we've seen the impact that we just mentioned here, they're certainly real. But we will certainly be driving initiatives on top of what's already ongoing to get an improvement in cash flow during this year.
And in regards to the inventory buildup here, would you say that you're sort of satisfied levels? Or are you expecting to tie up even more here?
Good question. I think we're not -- I think -- we think it's a bit high right now. I think that's not an overstatement. So we'll certainly dive into that a little bit, and we will try and improve the efficiency there. However, we will be careful not to damage some of those strong customer relationships and that very good business and good margins that comes with it.
Okay. Perfect. And then also on AddVision. We have previously talked about the margins sort of troughing out mid-single digits. Can you provide some sort of ballpark where the margin is today? Or have we seen an increase from Q4 to Q1 at least or...
Well, I think Q1 was not so bad quarter last year. But after that, it has been kind of in a bit of a downhill trend. And -- but recently, it's improving. The Q3, we hope was kind of the rock bottom. And after that, it has indeed improved, not dramatically, but since Q3 of last year, it is in a positive trend, but it's still very low, very low. Yes.
Okay. Okay. I see. And then also in regards to the positive commentary you provided about elective surgery here. Are there any regions in particular that sticks out as more positive, would you say?
I think we see the same thing across the board. All the companies we talk to are giving us a very consistent message that this is indeed happening. The elective surgeries are coming back in a significant way. We were, of course, expecting that, but the pace of it is always tricky to figure out. And then, of course, how staffing shortages will impact and so on. But it's pretty clear the message from all our companies that the elective surgeries are developing in a strong way. So we're happy about that. But also, of course, when we look at our industry peers, we see a similar pattern. A lot of companies are reporting elective surgery growth and strong growth. So I think it's a very consistent theme, I think.
Yes. Okay. Perfect. And then just the last one here from my side. In terms of larger capital items, you commented at least in Q4 that you're seeing an increased hesitance from customers and sort of hospital systems. Are you seeing an improvement now in Q1 or...
I think that is still there, possibly due to budget -- longer-term budget question marks, if you will. And then I think a big driver is also the fact that if you are short on staff and you have a lot of patients to take care of, you may hesitate before taking on the implementation of a major new technology or something that changes the processes and that also requires a lot of training for the staff and so on. This is the thing that you probably will not want to do. And the same can go in sometimes with tenders. So we see that sometimes driving a tender process is a very intense type of activity.And usually, the health care staff are not that keen to change technologies and so on. So we are seeing some tenders being pushed out in time. Sometimes that's bad because we may want to get into a new segment. But actually, more often than not, it's good news because we then retain our current setup for a longer period of time. So I think it's a bit of a mixed effect on us, but I think primarily positive.Good questions. And so we have Mattias, right?
Mattias Haggblom, Handelsbanken. So first one is coming back to the interest ratio coverage. I know the topic was up for discussion during last call and also previous question today touched upon this. I still want a bit more since the discussion took place in conjunction with your year-end report, you've now published your annual report. And in the report there's a table with historical ratios, including interest coverage ratio and the table is blank for 2022. And interest ratio coverage, which I think at least for me, looks somewhat confusing. So I guess the question goes, is there anything additional you can say to help us understand how you do your calculation.And secondly, tied to this, what would the updated number be? I know you said in conjunction with the year-end report roughly 40x, so well above your covenants of 4x. So any additional color would be helpful, and then I have a few follow-ups.
Okay. We need to double check in the annual report what has happened because last time I checked, it was actually there. But I think that what we say in the annual report is [ 16 ] end of the year. Then when we do reporting towards the bank, as I think we have said previously, we do some adjustments. So that's why it's not straight up what we see in the figures. And if you do the calculation for this quarter based on the EBITDA and then towards the interest cost then it will be [ 10 ]. And the covenant calculation then will be just above [ 10 ].
Good. That's helpful. So staying on the balance sheet, in terms of interest expense, they were down sequentially from Q4 and even below Q3 levels. So help me think of this cost item going forward, not least in light of an environment with rising interest rates.
Right. And then did you look at the financial net, maybe because if you look at the financial, the expenses for the interest, they actually went up. So interest cost only on interest expenses was SEK55 million in this quarter compared to SEK46 million, I think, Q4. So what we also had was actually in financial net, you, of course, have done the expenses for interest, but also you have a recalculation of exchange rates, et cetera, and we actually had a gain for this quarter. So that's why you end up at SEK52 million. But the interest as such, has increased, and that has increased and depending on the interest being connected to SIBOR or EURIBOR.
Okay. But maybe less dramatic change than people would anticipate? Or anything you can add in terms of your maturity. I know there are some details in the annual report, current and noncurrent liabilities. But anything you can add to help us think about this item given the leverage of the company.
It hasn't actually changed. So like we have said previously, half is current and half is long term. But the margins or the interest rate is built up by the margin, which hasn't changed. And then it is the EURIBOR, SIBOR that is then making the change increasingly then right now.
Good. That's clear. So last question for me. In terms of margins for Labtech, they held up surprisingly well with 12.7% as previously discussed here on the call. In the report, you still remind us that the COVID pandemic levels were 10% to 12%. So given that there were no COVID-related revenues in the quarter, why should we not think of this as the new margin profile? Is that because the mix was, in particular, beneficial in the quarter? And as a consequence, we shouldn't get too carried away? Or is this just a temporary expectation and more of a conservative statement?
So that's a great question. I think we think that the Labtech team has done a fantastic job delivering these types of margins here. So that's fantastic. It is a little bit above what was the case before the pandemic. So I think that's a good sign because nothing drastically has changed within the Labtech business. Of course, in Medtech, we have done a number of very large acquisitions. So the profile of Medtech business has certainly changed during the COVID years. In Labtech, it has changed only to a limited extent. We have made a few acquisitions. That are, of course, they're doing well. They have good margins. So that is a factor.But it shouldn't be a dramatic change from what was the case before COVID. Now of course, the work internally is a lot focused on price management, getting new volumes on board, as we have stated before, we have been able to handle all this extra COVID volume within the current organization and no extra people were hired. So that is good because we don't have to work on layoffs or anything like that. And on top of it, we also have proven to ourselves that we can indeed handle bigger volumes. So there is a big effort to drive volumes. And the only conclusion you can draw here clearly is that it has worked well in this first quarter. So that's pretty good.And then, of course, we're launching new products that normally have a good margin profile as well. And that is, of course, helped by the fact that we have now full access to customers and so on. So, it is really hard to say exactly what the reasonable margin should be post-COVID. We have indicated that it should be more towards the traditional levels of 10% to 12%. Now we're slightly above that, and that's fantastic. I don't want to give more specific guidance than that actually. And then I think we have another question from Karl, right?
Yes. Just a question on the price increases. You mentioned that you helped a bit by price here. And I guess you have maybe some annual clauses in these clauses that kicks in, in the start of Q1. So would it be interesting to hear how much of the organic growth you expect is or your [ estimate ] is driven by price? I know it's hard when you have a lot of different subsidiaries. But just the estimate would be very helpful, I think.
Of course, of course. You are correct. It is extremely challenging to give an exact number based on that because it's product mix plays into this quite heavily as well. So -- but I think it's reasonable to understand or assume that a part of the growth is, of course, related to price increases. But I don't want to give a specific number to that. There'll be a few percentage points, I would imagine. But I cannot give anything more detail than that. But I do -- I am -- the companies are doing really well. This has been a topic for many months for us now, how to handle those price increases that we face even in conditions where there are fixed prices in the contracts and where their customers are under some pressure themselves and whatnot. But this is an area where the team has done a really, really good job. So that's impressive.
Yes. And then just a follow-up on Mattias' question there on the interest cost. I mean, they increased sequentially from, I think, SEK46 million to SEK55 million, if I remember correctly. And now if you look on what's going on in the interest rate market, it looks like [ Sebree ] et cetera is continuing up. So I guess we should expect interest costs to go up in the upcoming quarters as well.
Yes.
Yes, that's great. And then I have just one final one on net working capital. I mean more of a longer-term question because as you said, you have to invest -- or you have both companies with higher margins, but maybe also higher inventories to be able to supply. And so I'm just curious, net working capital was before maybe 15%, 16% of net sales rolling 12 months before pandemic, I think. Now it's closer to 25%. How -- what is a sustainable level? And also what is kind of needed for you to reach or sustain the profit divided by working capital of 55%?
Yes. I think that's a great question. It's something that we will be working on going forward. It's important to note here that just like you stated that some of the new businesses are indeed more heavy on the working capital and primarily inventory. They're doing a good job it seems on DSO and DPOs. But I think it's also important to note that the structure of our business as it stands today, it's that Labtech is much lighter when it comes to the working capital compared to Medtech. So that's also a factor to keep in mind.I don't want to give kind of an estimate of what it should look like going forward. But of course, as the companies that we have acquired are now completely rolled into the total, so to speak, that effect is behind us. The effect of -- that we see when we take on new products, new supply agreements, that may come and go a little bit from time to time. And now we're -- now the teams are doing an excellent job in adding new and substantial agreements -- distribution agreements that we're really happy with big product lines that will be very beneficial for growth and profits going forward.So that is happening. So we are a bit mixed about it. We're happy about those new agreements that are coming in place, but we are and will increasingly going forward, keep an eye on how much capital we tie in the business. So I think that much as we can say. Would you say something more to that, Christina?
It goes with profitable working capital, and we are working towards those, of course, and we [ still those ].
Yes. We'll have a meeting with all the MDs from all the portfolio companies here in early May. So this will be a topic that we will be discussing.
Sounds good. And then I got the question from an investor actually that I think is maybe the million-dollar question in AddLife. That is at what level of net debt-to-EBITDA are you looking to acquire businesses again? Because now it's 4.2x if you adjust, I think for the positive one-offs. So just what kind of level are you comfortable with I guess?
Well, I think we all agree, and I think we communicated as well that we think that the debt levels are a bit high now. So our ambition is to reduce it. We do think that we can make smaller acquisitions even before we are maybe at this optimal level. I think we've communicated that we think being between [ 2.5 and 3 ] that type of range would be good. Smaller types of acquisitions, more of the type that has been the traditional strength of AddLife and even Addtech in those days, the smaller type of acquisitions with -- that normally come with a very different and much lower type of valuation, much lower multiples.I think we can safely do a few of those before we have reached, so to speak, our ideal leverage. So that's -- so we're not waiting for a certain number, and then we start moving. We are moving. We are having active dialogue with potential acquisition targets. And -- but it will be the smaller type, small- to medium-sized traditional type acquisitions.Great questions. So do we have any more questions from the audience? All right. Well, thank you. Thanks so much for calling in, and thanks for a good discussion and good questions that you raised, and we'll talk more going forward. Thanks, and have a good day.
Thank you.