Vimian Group AB

STO:VIMIAN

Q2-2025 Earnings Call

[Operator]

Welcome to the Vimian Group Q2 report 2025 presentation. [Operator Instructions]

Now, I will hand the conference over to the speakers, CFO and Interim CEO, Carl-Johan Zetterberg Boudrie; and Chairman of the Board, Magnus Welander. Please go ahead.

[Magnus Welander, executive]

Thank you very much, and good morning, everybody. It's not ordinary that the Chairman takes the start of the meeting. But as I'm sure you are aware, we had a press release last night where we announced that there has been a decision by the Board to make some changes to the leadership of the Vimian Group.

So Patrik Eriksson, who has served for the last 1.5 years as CEO, is leaving his role. And as you heard in the announcement, we have announced that Carl-Johan Zetterberg will take over as Interim CEO.

So I wanted to introduce this and set the scene for -- before I hand over to Carl-Johan to more go through the actual numbers of our performance in the second quarter. When it -- what it comes down to is not anything wrong specifically or one thing that has done. Patrik has not done anything incorrect or there is nothing strange going on. But as you are all aware, the most important task for a Board is to ensure that it has the right leadership in place and have the confidence in the CEO to be the right person to drive the strategic movement of the company for the coming years.

And in an overarching total picture, we have decided that this was the right thing to do for the company. Every CEO has a combination of factors and competencies, and Patrik came in and did a lot of good things in terms of professionalizing the company in follow-up and various key performance indicators, et cetera, and have implemented a number of positive things.

So first and foremost, I really want to thank him for his contribution during this period. Patrik is also a very likable person and has been appreciated by his colleagues in the team and by us and the Board. And we personally wish him all the best going forward.

That being said, we were convinced that we needed a leadership that could balance the strong cultural entrepreneurial and purpose-driven animal health-focused entities we have within the Vimian Group with the more structured professionalization of the back end and the synergies you can create in a greater group that has a long-standing ambitions to grow both organically within the 4 segments we have today and add strong M&A-driven growth into the company.

We are convinced in the Board that the strategy is the right strategy. And we are also convinced that we have a very strong interim solution in place for the changes going on. We also announced last night that Guy Sporri, who has done an excellent job in driving the first few years of Movora's business as part of the Health MedTech segment. So, our orthopedics part of MedTech has been driven by Guy Sporri for the last 6 years. He has informed the company that he is intending to leave by the end of the year.

In order to best manage the whole MedTech, which now also encompasses our dental subsegment, we are happy to announce that we have chosen Alireza Tajbakhsh, who is our current Head of Segment Veterinary Services to also lead at interim the MedTech segment. Ali has done an excellent job in creating a strong leadership team within the Veterinary Services. And that team will step up and, of course, support him, ensuring that we continue to drive the strong momentum we still have and will continue to have in Veterinary Services. And it will allow also Ali then to work together with the team in MedTech to drive improvements that we want to see, especially within our orthopedics area.

As I said, the strategy is the right strategy. It is a combination of profitable organic growth and a strong acquisition-driven path of entering those niches where we see the market for animal health have unmet needs and opportunity to grow. We're also confident as a Board about the company's ability to both deliver on this year's plan and the 2030 financial targets.

With that being said, I think it's time to hand over to Carl-Johan to go through a bit more about what has happened in Q2, and then I will return for the closing part.

[Carl Johan Boudrie, executive]

Thank you very much, Magnus, and good morning, everyone. And as Magnus said, let us jump straight into the interim report for the second quarter, and then that will be followed by some concluding remarks in the Q&A session.

In the second quarter, we saw continued positive momentum in our largest segment, Specialty Pharma as well as in Veterinary Services and Diagnostics. Our MedTech segment came in below our expectations, driven by underperformance in our Orthopedics business. Although, the market conditions for U.S. Orthopedics have continued to be challenging, we are not satisfied with the performance. And as Magnus stated, Alireza Tajbakhsh will, in addition to his current role as Head of Veterinary Services, assume interim operational responsibility for Vimian's MedTech segment.

In June, we also announced the acquisition of AllAccem to strengthen and expand our dental offering. Despite the headwinds in Orthopedics, we remain confident in our ability to deliver on our plans for 2025 and beyond. Our overall Q2 performance was impacted by the challenges in MedTech and specifically then in our Orthopedics therapeutical area of our MedTech segment.

In total, we delivered 15% total revenue growth in the second quarter, which led us to revenues of EUR 104.3 million. Organic growth was 5%, negatively impacted by a 4% decline in MedTech, driven by the weak performance in our Orthopedics business.

Acquisitions contributed with 12% to growth, and we had a 3% negative impact from currency movements in the quarter. Adjusted EBITA in the quarter grew 3% year-over-year to EUR 25.4 million, where the slower adjusted EBITA growth is impacted by the weakness in MedTech Orthopedics.

Margin was 24.3% and as I said, impacted by lower sales in MedTech Orthopedics, but also the consolidation of the Dental business, iM3, that has a different financial profile with a lower EBITA margin than the group average. The other 3 segments of Specialty Pharma, Veterinary Services and Diagnostics all delivered a margin improvement compared to the same period last year.

So let us go into the specific performance per segment in the quarter. and starting with Specialty Pharma. In Specialty Pharma, we delivered all-time high revenues and adjusted EBITA for an individual quarter, achieving EUR 45.3 million and EUR 13.6 million, respectively. Momentum remains positive with 6% organic growth in the quarter with growth across all 4 therapeutic areas.

FX impacted reported growth negatively with 2% in the quarter. The strongest growth contribution in the quarter came from the therapeutic areas of Dermatology and Allergy, while growth was somewhat held back by the Specialty Pharmaceuticals business that faced tough comparatives as they grew 24% organically in the second quarter of last year.

The segment's cross-sales initiatives and product launches continue to proceed as planned, and they played an important role for the segment's growth also in this quarter. In the quarter, a total of 18 new products were launched.

Adjusted EBITA grew by 5% as the adjusted EBITDA of last year was positively impacted by the strong growth in our high-margin Specialty Pharmaceuticals business. The adjusted EBITA margin increased from 29.7% to 30.0%, which is supported by operating leverage.

Our working capital turns and sort of focus on cash flow improvement in the quarter, we have maintained a similar level around 6.5x in working capital turns in the quarter for our Specialty Pharma segments, where we have some impact from inventory buildup as a consequence of the tariff situation that we're -- making sure that we ride through in a very good way.

Our MedTech segment, overall, we delivered 32% total revenue growth, but a 4% organic decline in a continued weak U.S. surgery market, where our customers are working through existing inventories for the high-cost elective procedures and applying tighter budgets. As I mentioned also, as Magnus stated, we are not satisfied with the performance in our MedTech Orthopedics, and we have appointed Ali as Interim Head of MedTech in addition to his position as Head of Veterinary Services.

We have also decided to strengthen the commercial focus in our U.S. Orthopedics business and recruited a new Head of North America for MedTech Orthopedics, who will join us towards the mid and end of August. We have a clear focus on implementing the actions necessary to return to growth in MedTech Orthopedics. The business maintained high customer satisfaction and low churn, and we continue to invest in veterinary education to capture white space and unlock market growth.

Our dental business continued to develop well in the quarter with double-digit growth and 2 acquisitions to further strengthen our offering in this area. For the dental area, I would also like to highlight the fact that despite the strong growth, efforts in reducing working capital have yielded very good results, and they have approximately reduced working capital with 15% since the beginning of the year, and improving working capital turns with 0.5 turns.

As I mentioned, we did 2 tuck-in acquisitions in the quarter for dental. One of them being a little bit larger is a fantastic company called named AllAccem, which we, on the 13th of June was completed an important bolt-on acquisition for the California-based AllAccem.

AllAccem is a leading provider of scientifically proven and well-known dental sealants that sold to veterinary clinics across the U.S. The company has revenues of around USD 9 million, and grows double digits at a very high margin profile. The acquisition builds on our strategy to increase the share of high-margin consumables in our dental portfolio, and continue to build on our sort of leading dental position in the animal health market.

Over time, as we scale production capacity, we can leverage iM3's global distribution platform to further accelerate sales outside the U.S. for AllAccem. We are very pleased to welcome this business to AllAccem and convinced it will play an important role in building a strong global position in veterinary dentistry.

Veterinary Services continued to perform well with 12% organic growth, driven by new member growth and increased penetration of services across the member base. The total number of member clinics reached 9,700 at the end of the quarter. And adjusted EBITA for the second quarter grew 16% and the margin improved from 27.6% to 28.7%, driven by the continued good revenue growth and positive geographical mix.

In our Diagnostics segment, we delivered another strong quarter with organic growth of 18%, driven by the livestock Diagnostics offering. If we look ahead a little bit for the Diagnostics segment, the underlying momentum is solid, and the third quarter of continued double-digit organic growth, but Q3 is seasonally a slightly slower quarter with less disease outbreaks, if we look from a historical and sort of seasonal pattern.

With that segment review, let me give you a walk-through of the financials for the second quarter. Adjusted EBITA in the quarter was EUR 25.4 million, which is an increase of 3%. This represents a margin of 24.3%. The lower margin compared to the same period last year is a consequence of the lower sales in MedTech Orthopedics, and the consolidation of iM3 from 1st of October last year, with a lower margin profile.

We reported an operating profit of EUR 14.5 million, an increase of 9% from last year's result of EUR 30.2 million. Items affecting comparability totaled EUR 5.3 million. The majority relates to MedTech with a total of EUR 3.2 million, of which EUR 2.1 million is legal costs related to the U.S. litigation, where we expect the judgment in the coming months and EUR 0.6 million of acquisition-related costs, primarily then to the acquisition of AllAccem.

In group functions, we also took a provision of EUR 1.8 million for compensating key employees that experienced a financial loss for the LTI 2022 program. This compensation will be paid out in the second quarter of 2026, if certain conditions are met.

Net financial items of minus EUR 1.6 million consists of 3 main components. Finance expense of minus EUR 2.3 million with an average interest rate of 4.6% during the quarter, offset by EUR 0.5 million interest income. The quarterly discounting impact of minus EUR 1.2 million and an impact of minus EUR 0.2 million from probability adjustments on our contingent considerations. And lastly, a positive impact of EUR 1.6 million from exchange rate effects on revaluation of debt.

The income tax expense for the quarter amounted to EUR 4.2 million. And in total, this results in a profit for the period of EUR 8.6 million, with an earnings per share of EUR 0.02 for the quarter.

The Q2 cash flow where cash flow from operating activities reached EUR 22.2 million in the second quarter, an improved cash generation compared to the same period last year with a cash conversion of 95%, and that is defined as operating cash flow in relation to EBITA.

Net working capital amounted to EUR 99.5 million at the end of the quarter, equal to 25% of revenue, which is a slight increase from EUR 94.3 million at the end of March, which equaled 23% of revenue. The majority of the increased working capital in the quarter is mainly a consequence of lower trade payables.

Cash flow from investing activities of minus EUR 77.6 million, primarily reflects the acquisition of AllAccem and earn-out payments of EUR 22.7 million. Cash flow from financing activities totaled EUR 65.4 million in the quarter.

During the quarter, we have also completed our refinancing and successfully issued a bond of EUR 150 million. So we continue to be well capitalized with a healthy financial position to pursue our strategy and our financial targets. At the end of the period, net debt amounted to EUR 260.6 million, which is up from EUR 212.2 million at the end of the first quarter as a result of the AllAccem acquisition.

This also increased external lending with roughly EUR 70 million to EUR 277.3 million, also a result mainly of the AllAccem acquisition and as mentioned, the earn-out payments of EUR 22.7 million in the quarter.

In total, this resulted in a leverage in the quarter equaling 2.1x compared to 1.8x at the end of the previous quarter. That will conclude the review of the second quarter where we delivered a solid performance in 3 out of 4 segments, completed a strategic relevant bolt-on acquisition in the dental space and delivered a good cash generation.

Looking ahead, our #1 priority for the coming months is to turn around our MedTech Orthopedics business. While this specific pocket of the U.S. market with high-cost elective procedures is weak, we see that the overall companion animal health sector remains resilient, where the increase in pet ownership, the humanization of pets and an aging pet population continue to drive demand for more and better health care across the globe. And we are confident in our ability to deliver on our plans for 2025 and beyond.

So with that second quarter review, I will hand over to Magnus for some concluding remarks before we move into Q&A.

[Magnus Welander, executive]

Thank you, Carl-Johan. And as you heard, also the Board are happy with the solid performance in the second quarter in line with what our targets are. Also, very happy with how the team is continuing to build on the platform acquisition within Dental with very strong bolt-on acquisitions, creating a strong new segment within the group inside the MedTech operations.

The leadership changes we have announced are right for the company and are aligned in meeting those strategic goals that we're setting. I want to thank Patrik for his contribution while he's been the CEO. And although, Guy will be around for a few more months, ensuring that the MedTech Orthopedics is getting all the support and help it can and to support Ali in his, at interim task, I also want to take the opportunity to thank him for all his strong efforts in driving the MedTech Orthopedics Movora business for more than 6 years.

We have the right strategy. We have a team in the executive team that will drive the work to reach the ambitious goals that we have, and we are confident as a Board that we will be delivering to our long-term targets.

And with that, I open up for Q&A.

[Operator]

[Operator Instructions] The next question comes from Adela Dashian from Jefferies.

[Julius Wright, analyst]

This is Julius Wright dialing in on behalf of Adela Dashian. I have 3 questions, and I'd like to take them in order, if that's all right. First question, could you provide more context around the timing and rationale for the CEO transition? Was it part of a long-term succession plan or a more reactive decision? And while we have you on the line, Magnus, given your history, what's your view on the M&A pipeline or appetite?

[Magnus Welander, executive]

So if we take the first question first, the timing is always in a CEO selection or CEO discussion. The Board needs to have confidence that the CEO is right for the long term. And when that Board isn't having that confidence anymore, you should not wait with the decision. At the same time, we're doing some other changes as well in that Guy had informed us that he was leaving. And we thought, as you should do, that it is better to act when that decision is clear in the mind for a Board.

So as you're realizing since we're having at interim, it wasn't a planned succession, but it was the conclusion of the Board that this was in the best interest for all the stakeholders in Vimian to make this decision now.

And then your second question, if you could repeat it, just to be sure.

[Julius Wright, analyst]

Yes. Magnus, given your history, just wondering what's your view on the M&A pipeline and appetite going forward?

[Magnus Welander, executive]

The M&A pipeline is very strong because we are working within Animal Health with a very broad opportunity to still find exciting niches to enter and a lot of exciting entrepreneurial-driven companies. I think the team is showing also, as I mentioned, with the bolt-on acquisitions that are being done after the platform acquisition within dental that there is a very solid work going on. And I'm confident that we have a number of exciting M&As in the coming time.

As always, with M&A, you're not 100% in control of the time line. So you can never say exactly when things will happen. But the strength of the pipeline is definitely there. The opportunity is there, and we have both the financial funds and the teams to make them happen.

[Julius Wright, analyst]

Great. And then secondly, could you please elaborate on how the MedTech segment progressed throughout the quarter and what your expectations are for the second half?

[Carl Johan Boudrie, executive]

Yes, absolutely. Now in the MedTech segment, and I guess your question is more focusing on the Orthopedics business because as I said, in our dental part of the MedTech segment, we developed well throughout the quarter with another quarter of double-digit growth in our dental therapeutical area.

In our Orthopedics business, as I said, we're not satisfied with the development, and we also saw slightly tougher May and June than we expected in the second quarter. And we are seeing that customers then predominantly in the U.S. and predominantly in the high-cost elective procedures are working through their inventories and both corporate and private clinics are sort of having tight budgets during these times where the underlying market growth is a little bit softer than what we're experiencing in the past.

As said, we're not happy with the performance. We are making sure that we're taking all the necessary actions, and we're also positive and confident with Ali stepping in, in the interim role and the recruitment of a new Head of North America, we have the team in place and that we're putting the actions in place to ensure that we are returning to growth in MedTech Orthopedics.

With that said, our perspective of the market is that the market is still soft. We don't foresee any immediate sort of market improvements. Why? I think from a market perspective, it's not that the market would help us to enjoy strong growth in that segment. But as I said, we're applying the actions to make sure that we return to growth within MedTech Orthopaedics.

[Julius Wright, analyst]

Understood. And then just lastly, how do you view the rest of the year shaping up in terms of organic growth overall? And what levers are you focusing on to protect margins?

[Carl Johan Boudrie, executive]

So we have good development in our business throughout the first half year and also looking at the second quarter. We grew double digit in Veterinary Services and Diagnostics in Specialty Pharma, sort of healthy mid-single-digit organic growth in the quarter with tough comparables compared to the second quarter of last year. So we enjoyed high single-digit organic growth of 8%, if we look at the first half year for Specialty Pharma.

And as I said, in our MedTech business, the dental area of the MedTech business continues to perform well and enjoy good growth. So we are confident that we have a good momentum in the business, and that momentum will continue throughout the second half of the year to have sort of a good 2025 in line with our sort of ambitions.

And again, as I said, making sure that we get back to growth and return to where we want to be in MedTech Orthopedics. From a margin perspective, as I said, we will continue or we will accelerate our ambitions and our efforts to make sure that we see like-for-like margin improvement in the business that we're capturing the opportunities being a large group between the different segments.

And as I said, if we look at the quarter, a lot of the decline was driven by lower sales in our MedTech Orthopedics business as we delivered higher margins in the other 3 segments in the second quarter of this year.

[Operator]

The next question comes from Kavya Deshpande from UBS.

[Kavya Deshpande, analyst]

I have 2, please. The first one is it's obviously been a difficult quarter in some respects. You've made a lot of changes. Presumably, there is going to be some period of change in consolidation over the rest of 2025. Your long-term guidance implies over 20% annual growth in group adjusted EBITA from 2024 to 2030. Do you feel like this level is doable in 2025?

And my second question is that I see that you have adjusted out the cost of long-term incentive plans. That seems somewhat unusual to us compared to what we see other companies in the space do with adjustments. Could you provide us the justification for that, please, given some could view that as an ongoing cost of doing business? Some color on that would be helpful.

[Carl Johan Boudrie, executive]

Absolutely. And just so to be clear, I understand your second question specifically, and that's relating to the LTI 2022 program.

[Kavya Deshpande, analyst]

Exactly, yes.

[Carl Johan Boudrie, executive]

Okay. Good. No. So if we take our sort of 2025 and looking beyond, and as I said, we are confident that we will have a solid year in 2025, and we remain confident in our long-term financial target and reaching that target. And as I said, that we will do by delivering double-digit organic growth with more than half of the growth coming from organic means. There will, of course, be certain variations between the different years. But as I said, we're confident in a solid 2025, and we remain confident in achieving our long-term financial targets of EUR 300 million in adjusted EBITDA by 2030.

And then on your second question regarding the long-term incentive program for 2022. So as the name implies, that was a long-term incentive program that was set in 2022, where a number of key employees of the company have invested their own private and tax money into that program. Unfortunately, and also a little bit maybe of the consequence of the turbulence in the world, the participants experienced a financial loss of their investment in the LTI 2022. And from that perspective, and Magnus is on the call if you want to comment, but...

[Magnus Welander, executive]

I think I can step in here. So, what the Board has evaluated was that the LTI 2022 was set at the time with certain expectations. There has been a very turbulent world that made that program to be missed out at a very, very narrow end. And in order to drive the momentum also introducing people the opportunity for the same key managers to join an LTI 2025 with own tax money as well, so to speak, in efforts of going into a long term, we created a 1-year opportunity for meeting certain targets and making that invested money up again.

So getting the same amount that they invested, if they hit certain targets by next year. The amount that, therefore, has been put in is subject to the team meeting those targets. This is the costs associated with that.

[Operator]

The next question comes from Mattias Haggblom from Handelsbanken.

[Mattias Häggblom, analyst]

I have 2, please. So firstly, again, coming back to the CEO change for Magnus. You laid out some of the background behind the decision. But could you just confirm that there was no disagreement on the strategic direction between the Board and the CEO? And also linked to this, could you perhaps expand on the profile that you will be looking for? You touched upon that in your opening remarks, but perhaps help us understand even better what you're looking for here at the Board?

And then secondly, for Carl-Johan, I'm wondering if you could quantify the magnitude of the weakness in Orthopedics given that dental is doing fine, growing double digit. And perhaps remind me the portion of MedTech that is Orthopedics. You called out the acquisition. So just making sure I understand the magnitude here between Dental and Orthopedics. That would be helpful.

[Magnus Welander, executive]

Yes. Thank you. I'll take the first question then. Absolutely, the same view on the strategy, both the executive management team as a whole and Patrik as a CEO and the Board, a very strong agreement on what the strategic direction of Vimian is. So it's not about that. We are convinced that the strategy of combining organic growth within the segments we have with bolt-on acquisitions and the opportunity of additional M&A to potentially enter into new platforms, and offering great services to the animal health market is the right strategy. So that, that was not any reason for the choice of making the decision to recruit a new CEO.

In terms of the profile, therefore, it is always, as I said, the combination of a strong operational competence in driving a relatively complex organization with different segments. We do have very strong segment leaders and very strong functional leaders at the Head Office, but you need a CEO that can take that whole breadth and understand that operational aspect with a business-driven attitude.

But then also, this is a company with a very entrepreneurial approach and a very purpose-driven organization with a lot of people that do their work here, not only because they love to work with Vimian, but also because they actually truly want to save animals' lives and make animal lives better. In a purpose-driven organization, you also need to have a CEO that can create a team spirit of winning that culture and wanting to become part of something greater and bigger. So the role is the same. The profile is trying to find that difficult balance between a very organized operationally driven so that, that person can support and challenge the strong segment leads, but also somebody who can create that as an feeling of a greater company to be created where people want to join in. So that's what we're looking for.

[Carl Johan Boudrie, executive]

Good. And then on your second question on MedTech and Orthopedics specifically, I'll cover that. So first off, the Orthopedics therapeutical area within our MedTech segment accounts for roughly 70% in the second quarter to get sort of a feeling on the magnitude of the Orthopedics area within the MedTech segment.

As said, the challenges are sort of mainly related to the U.S. Orthopedics business. And as I said, we had a nice overall growth in the MedTech segment. But as you could see or as discussed in the call, the organic growth for MedTech, which is only the orthopedics part as the dental part of the business only came into Vimian from 1st of October, experienced a 4% organic decline.

So that gives you probably a sort of sense of the magnitude for the Orthopedics business and how that performed from an organic standpoint in the second quarter. And as stated and just to sort of make that very clear, that is not the performance that we are satisfied with. The market continues to be soft.

And as I said, it's especially within the elective high-cost procedures where we see our customers are working through their inventories and both corporate clinics and private clinics are applying tight budgets. There is not any sort of conclusive market data, but we are quite certain that this is mainly driven by the softness we see in the market as we have continued to enjoy high customer satisfaction and low churn throughout this year.

And as I said again, looking ahead, we don't think the market will give us any great support as the indicator -- the market will continue to be softer -- or to be soft rather than softer, but continue to be soft. But we are confident that we are applying the actions to ensure that we are returning to growth in our MedTech Orthopedics business as well.

[Mattias Häggblom, analyst]

And just a quick follow-up, just to help us have fair expectations. You talked about the interim new leadership for the MedTech division as well as a new commercial Head in the U.S. in August. So it doesn't sound like a quick fix, in particular in light of the market being soft. So any improvement from the implemented actions here is more likely towards the fourth quarter then? Is that fair? Or how should we think about the timing here of seeing the improvements that you're implementing now?

[Carl Johan Boudrie, executive]

No. So I said, we'll make sure that we implement the changes necessary to sort of improve and get back to growth in the MedTech Orthopedic space. This will be a number of different things where it will be a continuous work to improve this over time. We're confident that, that will happen, and we will return to growth. But I think to your point, I think it's not to expect that, there will be a sort of a clear step change in performance from one quarter to another.

[Operator]

The next question comes from Jon Unwin from Barclays.

[Jonathon Unwin, analyst]

Jon Unwin from Barclays here. Just on the U.S. MedTech market. I think historically, it seems like the narrative has been it's been driven by weakness in the market. But obviously, with the departure of Patrik, you've spoken about execution issues. And I just wondered, if you could maybe elaborate on exactly what those execution issues are and what would need to happen to fix those?

And as a follow-up to that, you've previously communicated that this year, you would expect to grow above the market by 200 to 600 basis points in the U.S. ortho business. Given the execution issues, do you still see that as possible?

[Carl Johan Boudrie, executive]

Thank you. And again, I think, and I said in the previous question, what we see and the weakness that we see in our Orthopedics business, we believe, is predominantly market related. And as I said, we're not -- we're still not satisfied with the minus 4% negative organic growth in the quarter. And we're confident that we can accelerate a few of the actions that we are focusing on to turn the MedTech business around.

And also, as mentioned, we have recruited a new Head of North America for MedTech Orthopedics with a very strong commercial background and strong commercial focus, which we think is one of the elements that will help us to return to growth. So the short answer would be, we'll ensure that we'll get more commercial focus in that business to help us return to growth.

[Jonathon Unwin, analyst]

And then just on the second question on your view on whether you think you can outgrow the market still this year in the U.S. by 200 to 600 basis points.

[Carl Johan Boudrie, executive]

Yes, sorry. And -- no, sorry, and good that you reminded me. No, we believe -- and again, as I said, we think the market will continue to be soft. But also we're confident and we're very focused on making sure that we get back to growth in that segment, or in that part of the MedTech segment.

So of course, that will mean that, yes, we believe that we will get back to over time, continue to deliver above market. But also as we discussed in sort of the previous question, this is something where we don't see a clear step change from one quarter to another. We'll continue to execute on the actions that we have identified and that we're implementing. And we've strengthened the team with Ali stepping in as Guy decided to leave towards the end of the year, a strong commercial leader in the U.S., and that will sort of steadily make sure that we improve the situation, and we'll get back to growth and sort of outperforming the market in the Orthopedic business.

[Operator]

The next question comes from Adrian Elmlund from Nordea.

[Adrian Elmlund, analyst]

I just want to ask here. The share is down about 20% as we speak. I don't know if the market really understands the reason behind the departure. Is it correct to say that, it has to do a bit more of the soft values when it comes to the culture and et cetera? And a second question, I also recall that Patrik guided for high single-digit organic growth in 2025. Is this still on the table? And if not, what can we do to restore confidence in the share?

[Magnus Welander, executive]

So maybe I'll take the first question since it's about the CEO departure. If you look at it, there is always a total valuation that a Board needs to do in the confidence of having the right person for the long term. And here, there is a combination, as I mentioned, of a strong operational skill, which definitely Patrik has and has proven also within Vimian, and a driving of making sure that the right strategic steps are happening for the longer term, where there are the softer cultural values, as you mentioned.

In that total picture, we, as a Board, are confident that we have a greater opportunity to find the full potential with a leadership change. I fully understand that, that is difficult to see from the outside, et cetera. But we are confident that this is the right choice to make for the company to deliver on our long-term strategic plans.

[Carl Johan Boudrie, executive]

And then on the second question, as I said, looking at 2025 in total, we have good momentum in, you say, all aspects of the business besides we see a tougher time in our MedTech Orthopedics. And we continue to be confident about the momentum and the positive development in our sort of business, and we've discussed the orthopedics part, why we are positive for a continued solid 2025.

[Magnus Welander, executive]

And on your last point, I think it's also in order what can be done to gain the confidence of the stock market over time, I think the stock market always gains confidence with delivery to plans. So we, of course, as a company, need to show that we truly deliver on those plans we have on a continuous basis. By doing that, I am confident that we will win back that confidence also from the investors.

[Adrian Elmlund, analyst]

Okay. Perfect. 2 short questions, if I may. Do you expect the new CEO to live in Sweden or in the U.S.? Does that matter?

[Magnus Welander, executive]

The most important factor always with somebody is the right person. Then it is, of course, significantly easier if you want to create a winning culture and a winning spirit if you're close to as many people as possible. Vimian being very globally spread and having North America is the biggest market, you could argue for logics of that, but there is also a head office in Sweden. So you could definitely argue for the logic of a close to 2 of the segment leads and the functional positions. The key is the right person, but the start and focus will be for Sweden-based CEO.

[Adrian Elmlund, analyst]

Okay. And lastly here, if I may, when it comes to MedTech, apart from the market being challenging, like where has the company underperformed versus the market, if you will?

[Magnus Welander, executive]

I can maybe answer that because I tried -- I think Carl-Johan is right, I will also make a point. On a commercial business acumen point of view of how do you drive your sales, we are not happy with what the commercial team has been performing. So that's why we're bringing in a new Head of Sales, Head of Movora in the region of the Orthopedics MedTech. We simply need better deployment of our sales focus.

[Operator]

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

[Sten Gustafsson, analyst]

Firstly, going back to the MedTech business. And excuse me, if you already covered it, but could you comment on the growth outside of the U.S.? And looking at the U.S. business, I think you said that, May and June came in lower than you had expected. But can you comment on the sort of exit rate in sales development compared to how you entered the quarter, meaning if you have seen improvements at all during Q2, that would be helpful. And finally, on the new sort of commercial situation in the U.S. What exactly -- what actions will you take in order to improve the commercial execution for the MedTech business?

[Carl Johan Boudrie, executive]

Okay. Thank you, and let's take them one by one. We start with MedTech and we start to focus in a little bit outside of North America and U.S. So -- and again, if we take the Orthopedics business, sales outside of North America, so Europe and Rest of the World were in line with the same quarter last year, looking Q2 this year. This is predominantly related to, one, there was tough comparables in certain markets, especially in the rest of the world for last year.

And secondly, looking at Europe, we do see -- and I think we covered that briefly in previous calls, we do see a little bit tougher market in the U.K. as well, given high concentration of corporates and with a little bit changes in the market going on in the U.K. with corporates that, that market is a little bit tougher as the corporates are applying very tight budgets and sort of riding through the market toughness in U.K. So that's the rest of -- you can say, the business outside of the U.S.

Then May and June, as I said, was a little bit softer than we expected in U.S. We see that the market continues to be soft as it's been roughly the last year. Overall, then we don't see that the market in the U.S. -- or sorry, the market is soft in the U.S., and we believe that we'll sort of deliver in line with the market for the rest of the year in the U.S. But as I said, from a commercial standpoint, and as Magnus mentioned as well, will make sure that we start to focus more on the commercial elements in terms of how to drive, how to deploy sales.

And the second factor in the commercial focus is ensuring that we accelerate the pace of new product launches and new product development into the market. I think it's important to say -- and sorry, now I go back to the sort of sales outside of U.S. And if you look at the first half of the year, we have seen growth in both Europe and rest of the world throughout the first half year of the quarter. And as I said, we do have some tough comparables, especially in rest of the world, just looking from a year-over-year perspective on the second quarter.

[Sten Gustafsson, analyst]

Okay. So it sounds like you were not growing in the rest of the world either in the second -- Q2 then? In MedTech, that is.

[Carl Johan Boudrie, executive]

In MedTech Orthopedics, revenues was at the same level as last year in the second quarter. But in the first half year we grew.

[Operator]

The next question comes from Arvid Necander from DNB Carnegie.

[Arvid Necander, analyst]

2 questions on Spec Pharma. So this was the first quarter with single-digit organic growth in 9 quarters. You said that, this was largely down to Specialized Nutrition. Other industry players have reported some weakness in the U.S. market for Specialized Nutrition with pet owners being more cautious and buying less and smaller package sizes. Are you seeing any of the same patterns for your products? I'll start there.

[Carl Johan Boudrie, executive]

So as I said, Specialty Pharma, 6% organic growth, predominantly with a very strong comparable in specialized pharmaceuticals of last year where they grew with more than 20%. In the U.S. market for -- for Specialty Pharma, we have seen growth in the first half year in the U.S. market for Specialty Pharma, and we've also seen growth -- organic growth in our Specialized Nutrition business in the U.S. as well.

[Arvid Necander, analyst]

Okay. And then as for the Board's perspective, Magnus, has the company been active enough when it comes to M&A, specifically in this segment?

[Magnus Welander, executive]

I think, in general, active is one thing, closing the right acquisitions is, of course, another one. So we have been active, but of course, we're hoping to find the right acquisitions at the right price to close within Specialty Pharma. And I know that Magnus Kjellberg, who runs that segment and the M&A team are very focused on finding those right, but also coming all the way to closing. So I am confident that we will be finding the right candidates within also Specialty Pharma.

[Arvid Necander, analyst]

Okay. Maybe just a quick follow-up on sort of that and the near-term potential for profit growth from M&A. The most recent acquisition is expected to only have a modest impact on profits for this year. How likely is it that the next acquisition will be meaningfully profit accretive from day 1 based on your sort of most advanced pipeline candidates?

[Magnus Welander, executive]

I think what you're talking about is, of course, there's a difference between a new platform where we create significant bolt-on acquisitions opportunities. Those are big and those we will only be able to tell about when we've done them. So generally, the combination of finding the right platforms and the right bolt-ons, I think, if you look at what we did with the iM3 acquisitions and now then very rapidly a number of bolt-ons. The bolt-ons might not seem to be adding that much within the totality of the scheme with the platform, they do add a lot. So I'm confident that you will be seeing a number of strong M&A contributions in our communication in the coming periods.

[Operator]

Next question comes from Kavya Deshpande from UBS.

[Kavya Deshpande, analyst]

The first one is just on MedTech again. Just after the color you gave on the rest of the world performance in Q2, it sounds like if one backs out U.S. ortho for MedTech was therefore down about 6% in Q2, sequentially lower than Q1, obviously. Is that performance in Q2 entirely in line with your estimate of the U.S. ortho market growth in Q2?

And then the second question was just a follow-up on the previous one on GlobalOne. It seems like GlobalOne may have declined slightly in Q1. Could you confirm that growth in Q2 was sequentially better than Q1?

[Carl Johan Boudrie, executive]

Thank you. So starting with MedTech. And yes, we believe that our sort of decline in U.S. Orthopedics is driven by the softness in the market. As I said, there is no clear market data available, but we see that we continue to enjoy high customer satisfaction and low churn and our assessment is that the decline is market driven.

Secondly, on the U.S. Specialized Nutrition, if we look at from a sort of constant currency perspective, of course, as they're selling in the U.S. and then we report in euro, we've seen growth in the year for U.S. Specialized Nutrition as well. They had a very strong growth in last year, so tough comparables, but they've continued to grow both in the first quarter and the second quarter of this year.

[Operator]

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

[Magnus Welander, executive]

Thank you very much. I want to thank you all for taking time to be on this call. I want to reiterate that we feel from a Board perspective, very confident in Carl-Johan, Ali and the rest of the management team, ensuring that we deliver to the plans of Vimian going forward.

And we look forward to talking to you throughout the quarter, but then, of course, follow up on our quarter 3. And we wish you all a nice summer. Thank you.