Vitrolife - Strenghtened market position

Q4: flat organic growth but record EBITDA Larger revisions: EBIT up by 7-8% for ’21e-‘22e Recent performance points towards a strong 2021 Strong Q4’20 results Vitrolife’s Q4 results were strong, especially in the light of the IVF cycles, which remain at c. 90% to their 2019 baselines. Sales came in at SEK 382m, and were flat organically y-o-y. While we had anticipated a continuing recovery for the Consumable sales, Technology sales surprised us, delivering -10% organic growth against a tough comp, representing a clear improvement from the declines of -40-50% in Q2-Q3.

With a favourable product mix and lower amortisation of acquisition-related intangible assets, the gross margin came in at 65. 9%, +4. 2pp y-o-y.

Traveling and marketing expenses remain low, and coupled with a reversal of bad debt, this led to a record EBITDA of SEK 164m in Q4. The Board has proposed a dividend of SEK 0. 80.

Strengthening its position in many regions While Q4’20 was solid, management states that the company remains affected by the pandemic in Q1’21, highlighting installation and training capabilities within Technology as tough spots. Even so, Vitrolife has arguably gained market share during the fourth quarter. Its positive trajectory from Q3’20 persisted in China, where Vitrolife continues to gain shares.

Also, management commented that the firm continues to advance its position in key European markets. Overall, we think these details point to Vitrolife having strengthened its global market position during the pandemic, supporting an optimistic view for the coming years. Eventful 2021 ahead: EBIT up by 7-8% for ‘21e-‘22e Vitrolife intends to launch its AI-based software and new PGT-A test during 2021.

Also, we could expect to see it become more active on inorganic opportunities to further strengthen its offering. We update our model after Q4, lifting our sales expectations by 4% and EBIT by 7-8%. This is primarily driven by higher sales for Technology, coupled with a c.

1pp h.