Arjo AB (publ) (ARJOB) Earnings Call Transcript

Good morning, everyone, and welcome to Arjo's Capital Markets today. It's great to see so many of you here today, both here at Epicenter in Stockholm and online. Thank you for taking the time to join us. My name is Maria Nilsson, and I lead communications at Arjo, and I will be moderating our session here today. We have been looking forward to sharing an update on where we stand today. presenting our new strategy, the plan to deliver it and the priorities moving forward. We also want to go into how we will create value for patients, caregivers, customers and shareholders over the coming years. And we want to give you a clear understanding of the priorities, the strategic choices we've made so far. And why we believe that Arjo has significantly greater potential than what we've demonstrated in recent years. The plan we will present today has been developed through a broad and collaborative process involving leaders from across the company. It is a plan we are confident in not only because of the opportunities we see. But because it's been shaped together by the people who know our customers, our markets and our business best. So we have an interesting morning ahead of us. You will first hear from our CEO, Andreas Elgaard, who will present his view on where Arjo stands today. The new strategy we set in place and the priorities that will guide us forward. We will then take a closer look at 2 of the markets where we see significant potential for further growth and value creation. This session will be led by 2 highly experienced commercial leaders. First, Jessica chatter from the U.S. will share her perspective on our largest markets and how we see that we can further strengthen our positions there. Then we'll hear from Canada and Jim Findlater, who will share insights into a very interesting market for Arjo and how we can continue to further grow profitably in this market. Following the presentations, we will conclude with a Q&A session, where you have the opportunity to ask questions. And with that, I'm handing over to our CEO, Andreas Elgaard.

Really nice to be here. My name is Andreas Elgaard. I'm the -- I've had the privilege to be the President and CEO since almost 9 months now. So I am as excited as you are to be able to talk about what we've been up to during these months. And it's been -- for me, personally, it's been a true privilege to discover Arjo, all the people, all the good things that we do. And I think there is more good to be done, and that's what we will start to share today and in the coming periods. So let's see if we get the slides up. Yes. So we just sent out a press release. So for those of you that start to see that, I will not I will come into that a little bit later, but we make a commitment today that within the next 30 to 36 months, we will do a clear profitability improvement of SEK 350 million, and the majority of that, the vast majority will happen within the next 24 months. So -- but first, I would like to begin by talking a little bit about who we are before we talk about the reality for health care and what Arjo needs to do in order to address that in a better way going forward. So I will begin by -- with our starting point. And you can say that our core and our purpose is very well aligned. We really help patients when they need it the most, and we'll come into that. So the starting point is really to be experts in across different care settings and help people with their mobility in and out of bed, coming from a chair, into the bathroom, taking care of personal needs and to do that with respect and dignity. So that's what we do. And we are a company that has grown both organically and inorganically. And we were founded and the name comes from on Johan back in 1957, when the company was first started. And then it has, of course, grown and added more capabilities to the company. We had, in last year, SEK 11 billion in turnover. We're almost 7,000 coworkers around the world. We have sales in more than 100 markets, and we're truly a diverse company. I must say that, both from a from our market perspective and the employee perspective and, of course, customer perspectives and what we offer. And we produce, assemble manufacturer offering 5 different facilities, but we also work with several partners that help us to fulfill our offer. So -- and our -- I mentioned that we really have a diverse markets and diverse customer base before. So -- and that is something that is truly good. We both have segments that are diverse. We have customers that are diverse and then we have then the different markets, which means that we become quite a stable company when it comes to finding our revenue. And you can see that the segments that we're in, it's, of course, patient handling that is very much closely connected to mobility is the biggest area. And medical beds and Injury pressure prevention is also very important. And all these help patients to stay mobile and prevent the dangers of being static in the care setting. You can see that when we have our different quarterly reports or discussions with different members of the finance market there are a lot of questions about North America. So today, we will have Jim and Jessica that will help us toget a deeper look into that. So North America is almost 40% of our sales. We have activities as far away as Australia. We are in South America. We are our -- I think last year, our 10th largest market was India. And it's amazing in the business that has been built up there. So we're truly a diverse company, I would say. And it's a mix between capital goods, recurring revenue through services and rental. And of course, then we have disposables as part of this also, that helps to create the stickiness in how we do our business. So we believe that we have a really solid foundation in our core to base our growth on when we move forward. So everything from the customer base to our teams, our know-how, our competence to really an underlying business that gives us the foundation to be able to move into future and to also know that we have something to build that upon. Circularity is something that is really important. I mean more and more markets and more and more tenders and more and more kind of public I would say, expectations on us. Circularity is kind of a hygiene requirement. And almost 45% of our business has really circular qualities, both in the rental business and in our service business, and we try to build this into our capital goods business as well. And I think this is probably what's most important, most writing. And when I was new to Arjo. This is what I felt the strongest. It is that we have a true purpose. We do it for people when they need it the most. When they need their dignity and integrity kept we're there to help them. And that is something that is really -- it's -- there's many companies that have a purpose. But when you really feel it across the organization, then it becomes really something to build upon. And it's really something I felt when I have traveled and met all of these people is that this is something they come back to thing we do, and that is what is being brought back into everybody that works more centrally in the group. So in many aspects, Arjo is really, really great. Great people, great leaders, great solutions but as you know, sometimes, that's not enough. And we are not good enough. We know that in recent years, we have not lived up to the expectations that we put on ourselves. We have not delivered up to the expectations that the market put on us. And I will just show a little bit on kind of a retro respect before we look forward in what we need to do then. So as I said, recent years' performance have kind of left us a bit unsatisfied both, I think this is something that all shareholders share, and it's definitely something that everybody within Arjo is also sharing. And you can see that when Arjo stood alone as a company on the stock exchange the first time in 2018 after the spin-off from Getinge, there was a couple of years with, I would say, entrepreneurial spirits, pioneering, being free, building up everything that you need to have as a freestanding organization. And that was also some good years, I would say. The market was predictable. We were moving forward. And then we came into the COVID period. And I would say, for Argo, that was really good in some aspects. But when you look deeper, there were some problems already back then that we maybe did not see because we were busy satisfying the -- tailwinds that we had, and we did not really see that parts of the business actually was facing headwinds. And after COVID, I would say that reality became super clear because when some of the kind of free, I would say, more easy sales that we got disappeared. The reality came back, and you can see that our performance then after that has not been satisfactory. What is good to say is that we have managed to keep the top line growing throughout this period. So the CAGR has been there. And I think that has also helped us to keep up profitability, but still this is not what we expect from ourselves. We need to do much more and much better. And part of this is also that the strategy that was launched in this period did not really work. So the outcome-based ambitions that we had, they never really materialized. And I would say, since 2022, that became a really harsh reality for many. And that's Arjo have been a little bit in a waiting mode in some aspects. And the other aspects, I would say, all the markets, everybody is taking care of customers, the underlying business, it has continued to focus. But we got a little bit derailed and we lost a little bit of our focus during those years. And of course, then, when you look at the financial targets, we've had a hard time to live up to those. We have met the growth targets, but we have had a hard time to generate true cash flow we've had a problem to reach our desired EBITDA margin. And this is -- I think we have continued to have dividends, but it is time now. I think when these goals were set, they were said to last until 2025. And right now, we are in the process of figuring out which goals we need to have for the future because we need new financial targets, that is reflecting the new strategy and the new reality that we live in. So we'll come back to that in Q1. We wanted to today that the focus should be on strategy and not on the financial targets. And what you can expect out of the strategy is really what the message is today. So before I come into the strategy, I just want to pause a little bit because health care is not standing still. It is evolving. And I would say that, that's also why Arjo needs to evolve. We cannot provide yesterday solutions to tomorrow's problems. So we really need to speed up the change in our company because the reality out there is really clear. So there's a number of mega trends. You all know this, when you cover other similar companies to Arjo, other Medtech, but also other industries because many of these things are shared. So if you look at the aging population, it just means that we need more -- we need care during a longer period of our life. It puts a lot of pressure not only on the pension system, but on the health care system because that we live longer is something is fantastic, but it also puts a lot of pressure on the health care system. At the same time, young people don't see the same appetite to go into and work in health care, which means that health care is kind of squeezed and they need solutions that help them to be more efficient. They need solutions that helps to protect the health and well-being of the caregivers, but they also need the solution that helps to provide the care that they are -- that they need to do. So this is something that, of course, have implications for Arjo that are positive that the solutions that we provide and the content that we have is needed even more in the future. Of course, increasing global welfare people -- more and more people come out of poverty and into the middle class. That also comes with expectations. They expect more they're not satisfied maybe with the type of care that they saw their parents get. They want something more. They are more aware of their rights. This is putting also increased pressure on our on our health care facilities and institutions and the public funding or the private funding of this. Then, of course, digitalization and AI, demonetization of information, we kind of single out them both because 1 is more driven by being able to leverage data and automate and drive efficiency. And the other 1 is really about what people expect. People expect to have access to information. They expect to be able to keep up with what's going on with their loved ones and also people that are in that need care and require care. They want to know what is happening, and we can see that more and more that they expect more expect information. They expect to be updated. They expect to be able to follow. This is increasingly putting pressure on systems that historically are quite late to change and that are big and that requires a lot of kind of trust before they try to change. And those of you who are from Sweden in the room today, you know how the regions across Sweden are struggling when they need to update their IT systems when they need to drive their efficiency because they're not always the best order they don't always are experiencing driving these types of things. So being a partner to health care providers is also a big part of what we need to be better at. The good news is that we are in markets and in care settings that are growing because of the trends, the need for care is just growing and our health care settings are struggling to keep up, both with funding and the ability to provide that care. And as a result, you said that acute care, it's not -- it is still growing, but the number of nights that you are in acute care is going down. It's almost in hours. And of course, that puts more pressure on long-term care to keep up. And we know that the number of years that you are in the long-term care facility today has also gone down dratically, and more and more care happens in the home. And that care that happens both I would say, in long-term care has become more advanced, more clinically advanced and also at home, it becomes more and more clinically advanced. So the needs are being pushed down in order to be able to cope with the bigger reality of what patients require. But of course, we operate in this. This is our market so that the market is growing, that the need is there, that we can make a difference that is something really, really positive. And we just wanted to share a little bit that, of course, acute care is the biggest market. Long-term care is also really, really interesting and adjacent care with home care, that's where the growth is biggest. And you can see that our position today in some of our categories is quite strong. Patient handling, VTE, prevention -- pressure injury prevention, hygiene. We are all in top 3 positions, and that is something really, really strong. And then medical beds, we're in a top 10 position. And the beds are -- if you look at it from a gross profit point of view, maybe it's a little bit lower, but it's also something that creates a stickiness in the relationship and it's something that gives you a need to come back because we have the mattresses that goes on the beds. We we help the patients to get in and out of the beds, and it's really a part -- a really, really big part. It's the center of each care setting. So it provides us both with, I would say, the know-how and the market position that is required. So that's a little bit of what's ongoing in the market about our position. But -- so -- and we're not happy with our performance the last year. So now we need to focus, and we need to build on our strengths. And we need to kind of remove some of the clutter that maybe got us unfocused in recent years and to really focus on our core business. And build us platform that is more scalable, both for growth and for expansion into new markets, new care settings. And if we want to accelerate M&A in the future, we need to do that also from a scalable base. So by that, I go into our strategy. And for Arjo, it's all about making the move and to do that together. And that we emphasize that together part is because I am new in this industry. I come from another type of industry. My profile is that I'm a people person, I'm a leader person. I'm a transformational type of leader. It's all about people, getting people to develop and grow and pull in the same direction, then you get Arjo to also develop and grow. And if we start to pull in the same direction, that's where the focus comes in, and that's where you can expect a positive output. So this strategy has been made by gathering people from all around Arjo. It's not a top-down initiative. It's really a well-founded strategy with all our professionals and with all the diversity and all the experience that we have. But maybe that has been kept in pockets and that has been a little bit unknown to parts of our own organization. And I would like to begin with this in the strategy work, we decided to kind of put our foot down and try to describe how we want our customers to believe us. So we formulated this that we call the wish position, and that is to be the partner health care providers look to when shaping better care, trusted for understanding their needs, being easy to work with and delivering value through purposeful [Audio Gap] hard to keep that consistently that perception. And to live up to that promise that we make to ourselves because that's really who we want to be seen as and it's who we are striving to also become when we are not meeting up to it. And this is something that is constantly evolving. This is not a static place that you can reach and then you're there. This is something that's always moving ahead of us that the expectations and the needs and what is purposeful will always change. So now I will go into and talk a little bit more, so what is it that we're going to do? What is behind the plan that will put Arjo back on track. So we have clustered this a little bit in 3 buckets. The first 1 we call win where we have the right to play. This is all about us having confidence. We have the competence, we have the solutions, we have the position in the market. We have the trust from our customers. So we know that we have a right to play here. We know that we have the offer. We know that we have the know-how. This is super important because it means that we can act with competence. What we have not done is that we have not always used that. So we sit with this fantastic situation, but we don't execute it consistently across Arjo. So that's what we -- what this is all about. It's really about owning and expanding leadership in long-term care, strengthen our position and the scale up in acute care and then selectively expand into new care settings. This could be home care. It could also be transitions between different care settings and the word selectively is important here because we've had -- in the past, we have made promises about stuff that is small today, but that will be big in the future. Here, we want to prove. We want to be sure before any commitments that we open into new types of care settings where we are more pioneering. We will come into this -- I will spend the majority of the time explaining a little bit more about this. So you get a feeling on that. Then I will also come into the area that we call Simplified Amplify and the partner is working better together. So if we start here in the first one. These 3 priorities are very, very important. It's all about our core [Audio Gap] To unlock that. When you have a colleague or 2 or 3 or 100 that have done this versus if you need to do a project where somebody comes in from the outside and tells you how to win. Here, we already know how to win. And just to make a kind of point out that Canada today, 65% of the sales in Canada are in long-term care. And we all know that U.S. being our biggest market, there is so much we can do. We already cover the country. There is so much more we can do from that base, and that's the plan going forward. So you can see that here are potentials. Acute care is our most important sector. We see that long-term care maybe has the biggest growth with profitability position and opportunity, but acute care is most important in terms of scale for us. And we also have most of our know-how and most of our, I would say, relevant here. Again, the strong position gives us the confidence that we know that we have the offer, we have the competence, we have the position, we have the trust, we have the examples. We have such good relationships with our customers that they are willing to also help and share that with others that are willing to try and test Argo in acute care. And we see that there's substantial room to scale this up. And in our plans, we think that -- we should not promise too much, but we see that there is really, really good opportunities for us here across all our markets to do better. Maybe in U.S., it's hard to keep on penetrating, but there, we have the opportunity of long-term care. So just to see how the internal situation looks like, and you can imagine what will be up to the next few years. It will require investments. But I think that will be really worthwhile because we -- they will be less risky than some of the investments that we have done in the past. And then the third and last one. And this is just to point out on the bottom here, you can see that in Great Britain today, 12% of our sales is actually in Home Care. And we have not really maybe had a shout out on that. And we mentioned a couple of other markets. So if we can start to move the needle here, if we can start to become a little bit more relevant in some of these care settings because today, we enter home care with solutions that have been developed for professional care settings. Since the care need is becoming more and more professionalized across care settings, that's a good trend. But probably we will need to be more relevant also just for the home care setting. We have a foothold. So also here, we have competence, but we are not as confident. So that's why we say that we need to be selective. So let's pick some -- if we do something in U.S. or Canada, let's pick a part of the country. If we do something in Europe, let's pick a market where we think is good for us to move forward with. And when we have a proof, we can be more bold in our commitments to you and to all our shareholders. So yes, the Simplify to Amplify part, that is all -- if the first one to win where we have the right to play, that's all about what we do, how we leverage our market position and our commercial know-how and our value proposition. This is more about us getting our act together. Over the years, we have grown, I would say, organically in our offer in our value proposition. So we have a need to prune our portfolio. We have a need to make sure that we are efficient across our value chain. Today, we have not done that job in a good way. This is something that I am really passionate about. I have seen how much value that can be unlocked when you do that. And it's something that we have seen also when we've made the strategy that there is appetite for this in Arjo. So that will be very, very important. And commercial excellence since we are such a diverse company, since we have so much empowerment, we have so many examples that are great. And you can -- as you know, you can figure out that we also have examples that are not as great. So we have a lot to do here to be more diligent in our commercial excellence and execution. I will not go into this too much on how we become a digital an AI-enabled care partner. But for us, this is mainly about driving internal efficiency. Most of our products are not connected. We do know that the need to be connected is something that is growing. We have a couple of pockets of excellence, visited one of those just last week, together with our Board of Directors in France where we keep track of all equipment in a long-term care facility, not just the Arjo equipment, but also all of our competitors' equipment. And we have know-how, but we have been a little bit careful in scaling that. We have not built the organization to scale it. So that's something that we need to do in the future. So -- but I will not come into that today. I will just kind of show this to you. So this is actually -- it looks like it's just illustrative, but these are actually real data behind. So we have a super long tail. And those of you that are worked more operationally, when it looks like this in an organization, you have a lot of capacity. You carry a lot in inventory, you need to have all your documentation in order for everything but not removing. And that just adds on to the complexity. And complexity in our value chain is cost. And that is something that we need to address. But we cannot do that just by optimizing from a procurement point of view or from a manufacturing point of view, we need to make sure that we have our markets and our customers with us in that journey. So this is really an end-to-end initiative that we need to do. but there is significant potential to be unlocked here in making Arjo more straightforward, more simple and also help us to release the space to come with new innovation. I just showed, this is also coming from real data. This just shows how our pricing is varying depending on where we are in -- across different products and our margins in different markets in different settings. There is always a normal variation, but you can see we have quite big variations here. So we believe that there's a lot we can do in terms and conditions, pricing, service charges and so on that can help us to move the needle here. And then the last cluster of strategic parties is working better together. So that is about how we get all the know-how, all the diversity that we have in Arjo to start to pull in the same direction. Because when you have so much diversity, but you don't make use of it, it becomes complexity. It becomes noise, it becomes clutter. So we need to pull together. That's also why we made the strategy together. And I think that we have engaged around 80 of the most senior leaders around our strategy that have about half of the [Audio Gap] then we're part eating it. The other half is now onboarded, and we are rolling it out step by step across Arjo. So this -- if we get the people to develop and grow, then Arjo will develop and grow. That's really one of my mantras. One part of that is to work on our operating model. So I'll come back to that. But this is probably most important to build a performance driven culture where our purpose is always at the center. And that purpose is really to help patients really need it the most. And that's for real. But we need to -- that is not enough. We also need to have a performance culture built into that. So making profit, being successful helps you to invest in yourself, in your people and your competence, it helps you to invest in R&D. So we need to make sure that we have that culture end-to-end across Arjo when we move forward. And that starts with investing in our leaders and empowering our people. That is super important and to make sure that we are then striving towards the same goals. That's why strategy, it's not about what you are -- what put on the slides, it's about making sure that you have the motivation in your organization to start to pull in the same direction. And the only thing that counts is what you execute. What we have up here is only what we execute that will count. And then you need to make sure that everybody understands that. It's not Andreas, who will do the execution. Now we made the strategy together, then somebody else will execute. Now it's us that need to execute. And then I would say, working better together is very closely connected to how we deliver our care how we help caregivers, how we then become more efficient in that. But it's also -- so it kind of relates to our purpose. And that purpose more and more becomes also about when we do things that are good, it also needs to be sustainable. And so much of our business already today have circular qualities, but we need to make sure that, that is something that we build into how we design new products, how we design our packaging, how we design our value chain. And with my own background, what I have experienced the more you work with that, the more you work with efficiency because it's all about removing clutter, removing noise, doing things smarter, doing things straighter. But I will talk a little bit about our operating model now. We have communicated just before summer that we are organizing ourselves in 5 regions. These are not 5 segments. It's 5 regions in how we cover our customers. So U.S. and Canada, and I would say for obvious reasons, we don't bulk in North America together. It's also 2 very different health care systems. They are funded very differently. We have different cultures. And then we know we also have this beef going on now that I think is not healthy for anyone. But there is -- U.S. is our biggest market and Canada is one of our most profitable markets. So it's naturally so that U.S. and Canada deserves a seat at the table. South and West Europe, so that is France, U.K., to our biggest markets, but also Italy, Spain, Belgium, that we keep that part of Europe, the Southwest cluster together. North and Central Europe is really the Nordic countries, Netherlands, the DACH region and parts of, yes, Poland and Czech, I would say. And then we have the rest, 88% of the population but not 88% of our sales, but it's still a major part. So that's where we have Africa. It's where we have LatAm. It's where we have our different activities across Asia, but also then in Australia. And in that cluster, Australia is our biggest market. with India being the second. And then the reason why we want to do this is because we want to raise I mean this sounds -- I almost feel bad saying it, but we need to increase the proximity to our customers. We need to make sure that the voice of the customer is present in every decision that we make as an organization in how we prioritize our investments, in how we prioritize our portfolios of development, how we assess if a product will be commercially viable or not. We need to make sure that we do that in a much more commercially relevant way than what we have done before. and that we do that early in the processes and not towards the end of a process. That is really how you speed up time to market, how you increase quality and most important maybe is how you can then drive profitability by being relevant to your customers. To support that, we also put in a new function that we call group sales. Group sales is not kind of leading the regions. The regions leave themselves, and they report to me, but group sales has the job to help with the commercial best practice and with commercial excellence and to coach the regions and help them to collaborate. Arjo doesn't have a strong collaboration culture today. So that is something that we need to drive and enable. And group sales has that role in that dimension. Group portfolio is a new function that we have created where we bring R&D and group marketing and our portfolio leaders together into one group, and they will have the responsibility that with our own resources and with our external partners drive the development of our portfolio, but also drive the portfolio pruning that we need to make in order to become more efficient. Group operations is, of course, our procurement, our assembly, our manufacturing, but also this will now include the responsibility for our OEM partners. That has not been the case in the past. So we are kind of we are taking end-to-end responsibility for operations, just like we're doing that for portfolio. In the past, we've had let some of our countries do their own thing without support from group functions and that has left the markets very vulnerable. And that's something that we need to help them to straight out. And then, of course, we have all the other good stuff that you need to have in the company, finance, quality, HR, legal communication and whatnot, of course, IT, but most important here is that also we are going to be really, really focused on execution. So the strategy that we present will be executed. That's kind of how I function, I would not make a promise if I didn't know that we were going to execute it. So we're going to execute this and deliver what we have said. And by that, I think it's time for you to have the opportunity to stop listening to me. And instead, I would like to welcome Jessica up on stage.

Good morning, everyone. I'm so happy to be here with you today. My name is Jessica Shatzer, I'm the Vice President of Marketing in the U.S., and I've been working in U.S. health care for the past 16 years. [indiscernible] Arjo and the last 5 leading the U.S. marketing organization. And I'm thrilled to be here today to talk a little bit about the U.S. market overall, the U.S. Arjo organization. And then we'll go into a little bit more detail on a couple of the strategies that Andreas has already laid out that are most relevant for the U.S. So let's dive in. Starting with market characteristics, many of the kind of high-level market characteristics are similar to what Andreas described in some of the trends. So I won't go into detail on those, but I did want to highlight a couple that are most relevant for the U.S. The first one, I need to call out the bariatric trends in the U.S. because of the prevalence of GLP-1s. We've had a lot of questions on whether we see a decline there. What we have seen is a slow in the trends around obesity, but we have not seen massive reductions like some people may have anticipated. We've actually got 42% of U.S. adults as clinically obese. So there is still a massive need for bariatric solutions that we offer. Next, if we look at financial and operational, I feel like I've been here so long, so I've seen this kind of history of financial issues with customers kind of what happened pre-COVID, during COVID, post COVID, now in an exceptionally post-COVID world, I would say that there are 3 different tiers of customers. And actually, our credit rating agencies have called trifurcation within customers. Some are doing really exceptionally well. Some are doing quite poorly. And a good chunk of them are right in the middle. So the average operating margin today for a U.S. hospital is about 1.3%, which has risen over the last number of years. Interestingly, though, 2 areas where they are investing. One is around capitalization. We've seen more capitalization over the last 1.5 years than we have in many years. meaning instead of renting products, maybe they want to make a purchase of medical beds or surfaces or other equipment in their facilities. And the other area is new health care construction. And that could be a new facility that could be a renovation of an existing facility or a new tower. And we've seen that increase 11.2% year-over-year in the market as a whole. Next, the increasing focus on preventable events. This has been a focus for a long time in the U.S. And it's mainly been a focus in acute care. What we're seeing now from the U.S. government is a lot of those regulations pushing down to the long-term care world. So think of things like patient falls or pressure injuries where there will be a financial impact for not meeting certain standards. On the right there with customer dynamics, health care mergers and acquisitions are accelerating. A lot of the things that I'm mentioning, the new construction, the health care M&A, these are all in efforts for them to increase their profitability, also diversify. Another area that they're doing that is moving some patient volumes into ambulatory surgery centers. So more and more surgeries are moving from traditional inpatient to an outpatient situation where they're leaving maybe same day. And then lastly, something that we'll talk about today in more detailed is sustainability. Sustainability has been a strategic initiative for maybe a smaller subset of hospitals and health systems within the last years. I would say it's becoming more mainstream and more important for them. And we've been able to position ourselves as a good partner within that space. So I hope the key takeaway here is that the underlying demand for our products and solutions at Arjo is strong based on the U.S. trends. So at a high level, Andreas already shared where we get the bulk of our revenue and sales from and that is an acute care. We also have about 10% that comes from long-term care, a smaller 2% from home care and then an even smaller -- or excuse me, 3% in Home Care and a smaller 2%, which is other things like prisons or schools, things like that. In the middle, you can see the categories that drive most of our revenue. market-leading positions in categories such as patient handling, rental, VTE prevention and those really drive the bulk of our revenue. We also have a very strong service offering. So that is very important to what we do as well. How we deploy? We're deployed across the United States. We have around 850 employees and 63 service centers that's really important for the rental and service component of what we do. And we deploy through a direct sales and service model, which is very important because that customer intimacy that Andreas talked about, is highly related to this and the relationships that we could drive. One way that we truly differentiate is through our clinical expertise and our clinical support that we provide. That's something that we highly value and our customers highly value. And then we are home to the flagship renew reprocessing facility. So Arjo acquired ReNu Medical back in 2018. That facility is in the United States and that has remained a large component of our strategy. So as you can see, we have a very strong position in the U.S., and that's really built upon our U.S. -- excuse me, our acute care leadership position. We've had 7 quarters consecutively of profitable growth. You can see that we have a greater than 7% CAGR in our capital categories that actually jumps up to low double digits when we're talking about patient handling on its own and we have a 7% CAGR in what we call core rental. So many of you who've been following us for many years, know that there is a product that is within critical care that it's been highly volatile. It's 1 specific product that drives or has historically driven a large amount of revenue. Because it's so volatile, we'll tend to take that out at all that or even to you can see that the base of the business and the underlying business is quite strong. On the right, some of the key drivers for us. We have a large, what we call, installed base. We've been in the market for many years. We've been in the U.S. since 1979. There's a lot of products out there that are Arjo products. Because of those deep relationships, because of the quality that we offer because of some of the new products that we've offered, customers opt to choose Arjo again when they go to replace those products. That's very important. Next, we have strong traction in project sales. On the previous slide, I mentioned the trends within new construction. We've been able to leverage that not only from a product portfolio standpoint but with the relationships with architects and new construction planners and things like that, where it's a full solution not just a product solution. And then lastly, expanding partnerships with key hospital networks, what we call integrated delivery networks, -- so some of these big consolidations that are happening across the U.S., we have the relationships at the highest levels with some of these facilities and great partnerships that really drive not only 1 product category, but we try to drive the full breadth of Arjo solutions within that. I'll just give a quick example here. We had a customer recently, the opportunity actually started from a replacement opportunity. They had some equipment that needed replaced we were able to go in, have a more consultative conversation, realize there were some problems with pressure injuries and falls and mobility. We were able to elevate that conversation and then it would even further away from patient handling and into DVT prevention or VTE prevention and rental. So again, just a small example about how we were able to drive the full breadth of Arjo solutions. So, obviously, things have gone well from an acute care standpoint, but there's a lot to lean on from an opportunity side. So let's go into a couple of those being long-term care and reprocessing. I don't think I can just tell you on the value of long-term care. You saw how much revenue Canada does. A lot of our other markets are very strong in long-term care as well. We have the product portfolio here. We have the solutions to really deliver but we haven't tapped into this market. There are 16,000 nursing homes and skilled nursing facilities in the U.S. Today, we access only about 3,000 of them with our existing footprint and sales force. Within those 3,000, mainly we're only selling patient handling equipment. So obviously, there is a huge opportunity here to work with our existing customers and partners and pull through the rest of that Arjo portfolio. We also have an opportunity to sharpen our value proposition. We don't want to be seen as just a product provider for our partners. We want to be seen as a full solution provider who is able to be consultative. We can help with patient outcomes and resident outcomes. And in doing that, we really need to lean on that clinical expertise that I mentioned earlier. And lastly, in order to fully penetrate and address this market, there does need to be investment in the direct sales force and also distribution partnerships that already have access and partnerships in some of the areas that we'd like to go to. So next, advancing sustainability. This is that reprocessing that I talked about. And for anyone who's not familiar -- most of the products that are sold into the U.S. market are disposable single-use products. So they're used with 1 patient and they're thrown away. You can imagine the waste and cost that, that drives into the health care landscape. And so customers have a desire to reprocess or reuse those items again. the main method that they do that through or U.S. for processors do that through is with ethylene oxide, which is the toxic gas, we call it, ETO. So Argo ReNu offers a solution that is cleaner and greener and does not use ethylene oxide whatsoever. It uses the hot water method. I only say that just to kind of set the foundation for why this is so important. There are massive amounts of equipment and devices going into landfills that we will now be able to divert and use again for customers. not only helping their sustainability conversation, but also helping reduce cost savings. Within the reprocessing world, it's much more cost effective to reprocess a single-use device than it is to manufacture a new one. So there is a good amount of profitability in this category for us. So what do we need to do here? The first thing is expand our reach. We work with some of the nation's top and foremost thought leaders here from a health system standpoint. And we need to leverage some of those relationships to bring on new Arjo customers. We also are working on deploying new business models. Today, we only reprocess noninvasive medical devices. And we're working on a program that allows us to capture some invasive -- excuse me, invasive devices and reprocess those through partnerships. And then lastly, broaden our capabilities. One thing that's really important with reprocessing is that you're continuing to look for new types of products that we process. So that is something that is consistently part of our strategy to try to drive new business within existing customers as well as new customers. So what I hope that you've taken away from the short presentation is that the U.S. remains an attractive market. We are going to continue penetrating the acute care market and doing everything we can do to grow that. We're going to be leaning on some of our counterparts like Canada to help us really dive deeper into long-term care and get good penetration there as well as continue on the path with reprocessing and we'll do everything we can to execute on the strategy that Andreas has laid out for us today. So with that, I will hand it over to Jim Findlater, our Vice President of Sales and Marketing for Canada.

Thank you, Jessica. Thank you, Andreas. Really great to be with you all today. My name is Jim Findlater, I lead our sales and marketing team in Canada. I've been in the health care industry for about 17 years, 15 of which have had the privilege to work for Arjo and support our customers across the country. I've had the ability to do that in many different capacities within Arjo, leading sales teams, marketing teams. I've had a unique ability to interact with stakeholders externally from frontline staff to C-suite, which provides a lot of really interesting insight that I can share with you today. So I start with what's going on in Canada, and Andreas talked about this as a trend at the beginning of his presentation. But in Canada, we have the average age of the patient and the resident increasing on an annual basis. and they're staying at home longer and then coming into institutional care with much higher acuity needs and less mobility. And then they're coming into institutions that are overburdened right now and have significantly less resources than they've had historically. So essentially, what we're saying is our customers are being asked to do a lot more with a lot less, and we are uniquely positioned to be able to support them there. The Canadian health care system, in general, looks something like this. Just under $400 billion were spent on health care in Canada, which is about 12.7% of the GDP. What's unique about our situation is that you might look at it and see 1 country. But in fact, what we have is 13 separate markets across the country who operate very differently. You take that [ 71% ] of public funding and how it's disseminated in each market in each province in each territory is different. So we're working with different health authorities, regional health authorities, provincial health authorities, municipalities, but what I will say is that there does seem to be shared priorities across the chain. So we're looking at expanding access to primary care, supporting health care workers and reducing the backlog there and supporting access to home care and safe long-term care. And what our customers are craving for in Canada right now with the long-term care homes and the acute care homes are craving is creating efficiencies. Once again, we're uniquely positioned to be able to provide that to them. The takeaway here is it's a vast geography that we're supporting with 13 buyers and 1 problem set, but it seems to be aligned. This is Canada in brief. This is where we sit. Andreas talked about the long-term care penetration that we have in Canada and market leaders. The 65% of our revenue today comes from the long-term care sector, 27% in acute care. So there is a presence there for sure. You'll hear in a little bit. We're just looking to grow that more significantly. What is presented as home care is our representation in the community, which we largely use a network of dealers to help penetrate. And then there's a 2% other which is distribution of small portfolio of products. But more importantly, if I bring your attention to the middle here, we see the breakdown by product category. So if Arjo Canada was a house, what you can see here is that the pillars of that house are patient handling, hygiene, rental and service, right? So that's what keeps the house up. We have market leadership positions in patient handling, market leadership positions in hygiene market leadership position in rental solutions, which are almost exclusively distributed through acute care. And then we have our strong service offering to support all of those products. We also sell medical beds and surfaces across the country, predominantly in acute care, DVT and disinfection. When we look at the footprint of Canada, we see 240 employees across the country, Central Warehouse just outside of Toronto and Mississauga, Ontario. We have, like the U.S. almost exclusively direct sales, service and clinical offerings, which, again, to mirror the U.S. creates a more intimate experience for the customer. We have 11 service centers that we utilize to execute our rental operations throughout the country and a production facility in Mago, Quebec, which is a global manufacturing facility. Very vast, big geography, 8,000 kilometers almost from coast to coast and pockets of population, not dissimilar, I think, I had a conversation I said earlier to Sweden and just create some opportunities for us to -- when we talk about being direct with our customers, some of the pockets where the population isn't as dense, we have large territories to cover. So we'll take a look here and transition to how we've been doing recently. So I say 5-plus years of growth. But really, this goes back to Arjo becoming a stand-alone 2018. We see consistent results. So we have a plus 9% revenue CAGR from 2021 to 2025, 22 consecutive quarters of growth going back to Q4 of 2020 and consistent year-over-year development and profit improvement. That's the what we've accomplished recently. The how is even more exciting. So the introduction of a dedicated consistent sales management process, accompanied by a really targeted commercial excellence program, where we've intentionally pursued defining who are we talking to and what are we talking about with our customers. When I take a look at the corporate groups that we've been able to enhance our relationships with, we've like the U.S. really focused on progressing towards solution selling from products, so being less of a vendor and more of a problem solver, which has had a big impact on our relationships with our corporate groups and has allowed us to expand that business by bringing on competitive corporate groups. We've been able to do that because the rental business is so stable for us in what we've been able to accomplish with our rental business since the acquisition of it in 2012. And then lastly, and Andreas also spoke about this a little bit, this has never been more important to us that we have a direct global manufacturing facility in Canada, and we utilize that. We utilize that to create efficiencies in our supply chain by direct shipping from that global manufacturing site as well in recent months and years, it's been really impactful for us to claim Maiden Canada. And we've been able to utilize that to penetrate customer base. And we've been able to really navigate the geopolitical impact of the supply chain for patient handling specifically. So that growth that we've experienced recently has come from a very disciplined execution in the segments that we know best. And the question is, where do we go from here and how do we press that advantage? Today where 1 of those strategic imperatives was when where we have the right to play? And that's exactly what we intend to do in Canada. A deeper penetration into long-term care. A stronger penetration into acute care and the exploration of home care a little bit more intimately. And I'll talk about each of those just very briefly here one at a time. Strengthen and scale and acute care. So we have an opportunity to leverage the footprint beyond our rental business. There's approximately 94,000 beds that are in target for us in Canada. And the opportunity there is to expand to the full Arjo portfolio. Despite the beef between the 2 countries, Arjo Canada and Arjo U.S. worked very closely together. And there's a lot of learnings, key learnings that we are looking to grow on from the U.S.'s penetration into acute care. Our commercial strategy here has been to introduce a direct acute care sales team in the most populous areas of the country. We find that -- we believe that, that dedicated effort will allow us to be able to create stronger relationships and penetrate further with the full order portfolio. And at the same time, the need to defend and expand on our rental solutions, right, which is 1 of the core areas of our business. And we supplement that by growing via the solutions in patient handling and wellness. In long-term care, we are viewed and we are market leaders and yet it still remains an attractive area for us to expand. There are approximately 200,000 long-term care beds in Canada and that number is growing because there has been recent announcements of funding for new beds in Canada for long-term care beds. Knowing the impact of the aging population, of course. And yet, we feel like we are underpenetrated with one of the key product portfolios that we have, which is therapeutic surfaces and to a lesser extent, medical beds. But the commercial strategy here is to utilize that brand reputation that we have in acute care of having solutions that treat and prevent pressure injuries and bring those solutions into long-term care, establish partnerships with long-term care homes who are struggling a little bit with resources to have outcomes-based programs that target pressure injury prevention and minimize transfers between long-term care and acute care. And lastly, aggressively pursue winning these new build projects, which we have been securing over the past several years. But as they're ramping up to make sure that we're well positioned to work with architects and builders and some of our big contract -- big customers to make sure that we're winning these new build projects. Lastly, we look at selectively exploring our enhanced presence in home care. We know that provincial governments are actively investing in keeping people at home for as long as they can. We know that people want to stay at home as long as they can. We also know that there are not enough institutional beds. So this creates an opportunity for being able to have a bigger presence into home care. So we're also investing in a dedicated team here, a more dedicated team, I should say, here. With a stronger strategy and set up for commercial execution. We want to utilize, again, therapeutic services to promote prevention in home care. And we look at stakeholders that we don't have a strong relationship with today that we'd like to build a stronger relationship with tomorrow in the occupational therapists and physiotherapists in the community. And lastly, introduction of more flexible models to be able to effectively navigate through the home care sector in Canada. So in summary, Canada remains an attractive market for continued success. What we have to do going forward is build on our commercial momentum that we've built up over the past few years, the significant momentum we've built out, pursue key targeted opportunities across all sectors or win where we have the right to play. And lastly, I'll leave you with this. I mean, we're positioned to deliver consistent, sustainable results and that's what we strive to do. And with that, I'm going to welcome Andreas back to stage.

Thanks, Jim. Great. So I think it gives a deeper perspective, especially considering that I'm up here, we need somebody that actually is a professional as well. So jokes aside. So -- I hope so far that you have seen that we are kind of ambitious about the future, but we're also honest about where we have maybe not done so good in the past and where we have also room to improve. I mean that is so clear that every person I meet in Arjo, every topic we discuss, it's like there's a potential there. There is a potential to grow and develop. There's a potential to do better. And that's really what we kind of then -- when we combine and what to expect for the coming years, that's what I will go into now and that we can be confident in what we say. So we've been looking across all parts of Arjo. And what we then commit to today is this SEK 350 million EBIT improvement compared to 2025, we need to have a base when we kind of make these promises. We don't know about the future. And we have a clear line of sight of the things that will deliver towards this. And also, we have potential that goes beyond. So we are mainly focused on efficiency coming out of clarity and responsibilities, enabling the organization to work better together to empower our regions and markets to do what they do best, and that is to lead and take care of our customers and make sure that patients get the health care that they need. But also by doing that, also harmonize the best practices that we have the most efficient way of delivering a rental solutions, the most efficient ways of driving a service organization and so on. So there is a lot of that. But it really starts with empowerment and collaboration. And that we need to be humble that as individual leaders or individual teams, we don't know everything. We are not the best. Even if we are great, there's always somebody else that has something that we can learn from. And that's really a big part of this. And the operating model will come with some cost restructuring because we have grown over the past years, our staff has grown more than what the company has grown. So there is some efficiency there. But a lot of that comes from clarity in roads and responsibilities. What will happen in individual markets, what will happen on a regional level and what does that mean for our group functions. Then we have seen significant opportunity on procurement. And I have led these types of initiatives in different organizations in the past. I also have many years in an organization that was super focused on procurement efficiency. And I can see in Arjo that we have a lot of potential. And this is something that we spent large parts of the first half of the year validating, and we have started the execution of that. So we're off to a good start. So it's all about leveraging and being professionalizing our procurement and also challenging our current ways of working. So really significant potential there. And then we have spent the day today to talk about commercial opportunities. But we have not built in any growth. So this SEK 350 million figure is not fueled by growth over those years. So it's really about things we can do with our own hands, stuff we have control over that will deliver the total sum of EBIT improvement then. And we talk about mid-2029. But the vast majority of this will happen earlier than mid-2029. But then what's also important is then because this is maybe a little bit back to basic, focusing on the core the core business, our core strengths, spreading the good gospel of best practice and making sure that we are more consistent in our execution. So that's all good. But what about the future? What about new markets, new customer segments, new product segments. So what about M&A? Today, we don't focus on that. We focus on what we can control. and that has significant value. But of course, we have locked into what will this mean when we also then start to drive growth. What will product portfolio optimization mean in terms of efficiency and across the value chain. This will impact our capital efficiency a lot. That is another initiative that we will look deeper into in the coming period. Supply chain optimization, I think there is some things to do, not as big potential maybe as we have in the other ones. And then, of course, we need to drive our growth. We need to use we need to maybe build capability or enhance our competence. And one way to do that is also to leverage M&A in a more clear and a more strategic way than what we have done in the past. So that will also be part of the portfolio. But it's important for me to communicate today that this that we talk about comes from these 3 and that there is more value creation to be delivered beyond this. And I put together an indicative slide in when to expect this to happen. So the vast majority will happen within the coming 2 years, but we say that mid-'29 is when the full effect is in place. This also comes with a onetime investment in restructuring in order to free this up. And I would say that we have been conservative here when we make this promise because we know that we have to deliver. Arjo have promised things in the past, and we have not delivered. This time we're going to deliver. So we've been a little bit conservative here. We have not been as conservative here. because we also don't want to say, okay, we set this number, but now we have exceeded. So we're trying to be prudent in the promises that we make. And you can see that this ramps up progressively over the period. But it's not something that you need to wait a long time before it's something that we have in the coming short period. And I think this is super important. And as I said in the beginning, so right now and today, we're focusing on how we will make the move together. And that is really about unlocking the potential of our core business, building on our strengths that we have, controlling and becoming more efficient in how we spend our money, where we invest and how we collaborate and work across the value chain. -- clarifying a lot of things, making sure that we become more scalable and more efficient before we kind of take the next step and put more on our plate or maybe then use M&A as a tool. And I don't want to say that, that's our M&A is off the plate, and that is something that only happens in the future. Now that is something that you need to work with long term. And sometimes the lines happen sooner than what you expect. So it is something that is part of our parallel world. But we need to build a stronger core, a more efficient core because the way that we grow today, when we grow our costs follow. And that is not an efficient way of growing. We need to be able to grow in our way where profitability grows more than the top line. So this is really what to expect from us in the coming years. And in the short period that we just have ahead of us. Of course, we have an interim report coming up soon. So we still have some -- yes, we still have some days to get the Q3 in place, and then we'll present that to you guys in October. We have a year-end report coming end of January, and then we'll present new financial targets and what to expect from Arjo also from that aspect, and that will be presented during Q1. And by that, I will just kind of highlight again the opening slide ahead, that this is the commitment we are making. It's all about unlocking the potential of being Arjo, and it is a plan that we know we can deliver on. And I can say that because it's not my plan. It is our plan. It is these people that have made that plan. So it is all the professionals like just again, Jim, that you have met today that have put this plan together. So it's really the result of a co-creation. And I told maybe a bad joke. But I told my -- I told the teams when I was new that we're going to do this, and we're going to co-create it. And I told them that you're going to develop Stockholm syndrome, and that's kind of that you become part of a journey and you will realize through that journey that you are actually being kidnapped. And you will start to sympathize with the kid napper because that's really what's going on. When you invite people to co-create, to participate and to contribute it's no longer your baby. It becomes our baby. And then the trickiest and the trap is that guests who is going to execute. It's the same team that have developed the plan. It's now their plan. Now they also get the privilege to execute. And that is something that has been really well received. It's what these leaders want they are really good executioners in their everyday life, but now they have a shared plan, and it's been understood. And they may be -- as you know, when you bring a group of people together, they don't always think the same thing. So they have really challenged each other, but they're also part in the selecting where do we put our one, where do we put our time, where do we put our focus and how can we deliver that to our purpose in the best possible way. So this is why I'm confident that this is a plan that we can deliver. And by that, I say thank you from my side, and we open up the floor for Q&A. And I welcome Maria, Jessica and Jim to the stage to join me. And let's see if we can -- if we get some good questions, tricky questions or how we move forward.

Okay. [Operator Instructions] Who wants to start? Over here?

Kristofer Liljeberg from DNB Carnegie. Two questions. Just to make sure the base you assumed for the SEK 350 million improvement, that's adjusted EBIT for 2025, I assume.

You can do that. This is the improvement. So you can take that as you wish. This will be a net improvement.

And it seems you see this as a saving more than actual EBIT improvement because you don't include any sales growth here.

We don't include sales growth in this number, but it is an element of efficiency in how we work together. It is procurement, but it's also on the commercial excellence side. So it's all of these things.

Okay. So the actual EBIT improvement, if you grow the business, continue to grow 3% to 5%, the actual EBIT improvement will be more than SEK 350 million in this period.

If the assumption is that we will be more efficient as we grow. Yes.

Sten Gustafsson ABG Sundal Collier. I have a question for Jessica. When you talk about the opportunities in the U.S. in a long-term care segment, what I guess, that opportunity has been there for quite some time. So I was wondering if there are any structural reasons why you haven't focused on that before and what sort of the competition looks like for you?

Yes, that's a great question. Starting in 2022, many of you know, we separated North America into U.S. and Canada. And post COVID, we had been struggling from a revenue and financial standpoint. And we kind of made a decision at that time. We had to work to turn around the acute care and the government business that we had and we've successfully done that. And that's why today, we feel like we can really take on this element of the strategy. From a competitive standpoint, the market is highly fragmented in long-term care. And that's why I think from our position, we're able to capitalize on some of that consolidation of the chains. So smaller regional chains are getting bought up into bigger and bigger chains. And they want consistency across their homes that they have. So Arjo is positioned in a really nice way to do that with the scope that we have.

But you do have the products in place today?

Mainly, we have a couple of product launches that are due, 1 of them in Q1 and another later next year that will help significantly.

Mattias Vadsten from SEB. First 1 would be if you could a little bit more about the initiatives taken to be able to charge better for the value add you provide your customers. And if you could talk also a bit about where this is working today for Arjo and where we sort of need a material improvement.

Yes. So we did not share, I mean, individual countries there, but we have several good examples where we have a great, I would say, diligence, and we're being meticulous in our terms and conditions in our commercial execution. And I don't want to maybe point out individual countries that is not doing it as well. But we see that, that is clearly within our own reach. And I would say that in many markets, we are a bit unaware. And to understand why will we succeed in doing something that we could have been able to do in the past is that we have not fostered this, I would say, cross-border collaboration. We have not had the forums. We have not had the mechanism. So Arjo have largely managed country by country. We have not had the mechanisms to -- for the countries to interact with each other. So that's also a background between. So when Canada U.S. were separated in a couple of years ago, there are very few networking opportunities or best practice sharing in the pattern. So those are some of the capabilities that we're putting in place.

And in terms of elements of sort of price pressure you see today and what segments is this more accented and not?

I mean maybe I shouldn't look at Jessica, but of course, you know that our DVT or VTE or we -- sometimes we call it IPC. We like our abbreviations. I mean, we know that in U.S., that's a huge business, but we have seen new very, very tough completion. And so the average price level has dropped significantly, and that's have been followed up in every quarter. I don't see in my crystal ball that, that is going to return. That's the new reality of competition, and we need to face that and adjust our business models because I think that we've had business models where we knew we would catch up if we just got the customer. But now we need to make sure that we're profitable from the get-go.

And 1 last, if I may. In terms of the new operating model, you talked about commercial execution and so forth. So I would expect to hear a bit more on growth perhaps. But would you say this is what we can look forward to as of the Q4 report then? .

I would say that -- as you know, we don't give guidance. But today, we have given a guidance. So this is something that we will follow in every quarterly report. And we will then follow how we, I would say, how our execution materializes in the P&L, so that can be separated. And until we have reached our promises and then we can go into more business as usual. But I think that you will expect to see effects of this coming in during 2027 and 2028, and that we'll be able to talk about that. I would say. Then you can -- when we have new financial targets, of course, that will be a more wide set of focus, and it will not just be about what we presented from the strategy. We know that we have an underlying business I just said that this is a subset of the things that we're working on, but they are so material and they are so concrete that we want to share them today.

Ludwig Germunder from Handelsbanken. I want to start with a follow-up on Mattias' question about the price pressure that you've seen. You said, Andreas that you do not expect it to return, but how should we think about that going forward will be stable in your view? Or do you think there will be more price pressure.

I mean if you talk about the VTE category, specifically, I think that we are probably flattening out in terms of price pressure. It's been a steep journey downwards. And I don't know, Jessica, if you want to add something. .

Yes, I would say that's accurate. I feel like we're very close to the bottom at this point. And so now we're really looking to capture additional customers, keep the existing customers that we have and then whenever we can try to increase price in other categories.

And to build on that, it also means that if this is the reality of the market, the way that we deliver our solutions has to also improve, where we manufacture, how we manufacture, how we drive supply chain operations, how we package the goods, so it's easy and efficient and also how we build stickiness in our customer relationships because this is a segment that is with high level of consumables. And it's really -- once you're in there with a customer, it's a really recurring revenue type of business. So we do want to keep being there. But then -- but generally, price pressure across all categories, I would say I don't see that, that is something that will be I think that the pressure on Arjo and the whole market given the pressure that the health care systems are under I don't think that we will have an easy sailing in the future. So we need to work on our own efficiency. We need to work on our own relevance. And that's also linking back to, I think, both Jessica and Jim were talking about that we need to show how we deliver our value being more of a solution provider than just a product provider. We need to show how this solution delivers reduced costs and release pressure from staff and so on.

If I could add to that just briefly. It also connects to the sustainability and the reprocessing that we mentioned today. that's a big element where if you combine the offering that we have with reprocessing, you can provide additional value. There's cost savings on our side. So it's really a win-win for customer and our job.