Q3 underpins positive momentum into 2025

Embla Medical (Buy, TP: DKK39.00) - Momentum remains strong

Q3 organic revenue growth of c7% YOY was largely in line with expectations and at the high end of the long-term guidance of 5–7% despite end-market headwinds. We believe growth could strengthen further in 2025 and beyond, helped by the recent US Medicare expanded coverage. The Q3 report also showed the EBITDA margin continuing to improve faster than we expected. We reiterate our BUY and DKK39 target price.

Q3 hits the right spots

All eyes on US in Q3

Tailwinds and low guidance bode well for H2

6% organic growth despite headwinds in major markets. Strong margins highlight low guidance into H2. EPS +3-6%, FVR hiked to DKK 27-40 (25-38).

Embla Medical (Buy, TP: DKK39.00) - Momentum looks to be building

Embla Medical’s Q2 top line was mixed, but overall largely in line at c6% organic growth YOY. What really stood out was the stronger-than-expected EBITDA margin thanks to cost-reduction initiatives implemented during Q1, leading the company to narrow its FY guidance to the top end. Combined with recent product launches and the upcoming positive reimbursement changes in the US, we expect momentum to build into H2 and 2025. We reiterate our BUY and DKK39 target price.

Strong Q2 despite US sluggishness

Positive Medicare coverage expansion

Embla Medical (Buy, TP: DKK39.00) - Awaiting Medicare update

We expect Q2 organic growth to be largely in line with Q1’s, and as H1 headwinds should have improved by H2 and given the timing of new product launches, we believe Embla Medical is on track to meet or exceed the high end of its 2024 guidance. By the time of the Q2 results, we may also have had an update from Medicare on the proposed reimbursement for prosthetics, which would provide a significant tailwind for Embla Medical for years to come. We reiterate our BUY and DKK39 target price.

Medicare news may be close

Q2 report due Tuesday, 23 July – many moving parts. Key factor looks to be possibility of imminent Medicare news Updated fair value range DKK 26-38 (25-37).

Underlying Q1 growth intriguingly good

Solid 7% organic growth in Q1, underlying was even better. Another $3m in restructuring costs reveals margin pressure. Maintain FV 25-37 after smaller EPS changes.

Embla Medical (Buy, TP: DKK39.00) - Solid start to 2024

Embla Medical’s (formerly Össur’s) organic growth print in Q1 was solid, 7% above consensus of 5.6%. Reported margins were somewhat soft on unexpected one-offs related to cost saving initiatives, but underlying margins were in line with consensus, and the commentary from management about the gross-margin trajectory for the remainder of 2024 was supportive. On limited estimate changes, we reiterate our BUY and DKK39 target price.

Embla Medical (Buy, TP: DKK39.00) - Q1 set to build momentum

We expect Embla Medical (formerly Ossur) to report another solid organic growth quarter, despite tough comparables and Easter effects. We forecast the bionics portfolio to continue to drive prosthetics growth, with more muted growth in Bracing and Support and Patient Care. While we expect the EBIT margin to expand YOY in Q1, and continue to build throughout 2024, we estimate previously taken cost savings to have less effect in the quarter. We reiterate our BUY and DKK39 target price.

Ossur (Buy, TP: DKK39.00) - Mixed Q4, supportive 2024 guidance

The Q4 results were mixed, with a comfortable beat on organic growth but below-consensus margins. The 2024 guidance was above consensus for organic growth and the EBITDA margin. We still like Ossur, and reiterate our BUY and DKK39 target price.

Ossur (Buy, TP: DKK39.00) - Q4e another solid quarter

In line with consensus, we expect Q4 to mark a solid end to 2023, driven by strong prosthetics growth and more muted growth for the rest of the business. We expect a strong Q4 EBITDA margin, finishing the year at a high of c20%. We expect more clarity on the proposed Medicare reimbursement changes with the Q4 results (due at 08:00 CET on 30 January) and estimate that the changes could more than double the US bionic knee market over time. We reiterate our BUY and DKK39 target price.

Ossur (Buy, TP: DKK39.00) - Robust Q3 top line

Össur reported another strong top-line quarter, in line with our estimates and consensus, driven by still-strong bionic demand. The EBITDA margin was stronger than we expected despite still-high unit costs, supported by cost savings. Based on the results and the maintained 2023 guidance, we see the case as unchanged. We reiterate our BUY and DKK39 target price.

Ossur (Buy, TP: DKK39.00) - Q3e top line to keep marching on

We expect another strong top-line quarter with c8% organic growth YOY, slightly below recent quarters (c11% in Q2) on tougher comparables, Margins are, however, likely to remain under pressure from still-high costs. Based on strong growth momentum, we believe Ossur could raise its 2023 growth guidance and narrow its EBITDA margin guidance to the middle on still-high costs. We reiterate our BUY and DKK39 target price.

Northern Lights

Ossur (Buy, TP: DKK39.00) - Sales momentum accelerates

Ossur’s strong top-line momentum surprised yet again in Q2, with accelerating organic growth driven by strong bionics demand, while the EBITDA margin just missed expectations, albeit improving, and seems set for more, in our view. Despite tougher comparables ahead, we believe the new top-line guidance looks conservative. We reiterate our BUY and DKK39 target price.

Northern Lights