Expansion on new markets

Ever since AddLife was listed three years ago, our aim has been to build a strong position in the Nordic countries in our selected segments in Labtech and Medtech. We have focused on developing our business through organic growth and by expanding through acquisitions. In 2018 AddLife took an important step toward expansion and growth. Through our largest acquisition to date, Austrian Biomedica, we opened the door to Europe. The four other acquisitions completed during the year further strengthened the company within the prioritized niche areas. Together, the five acquisitions for the year are expected to add annual sales of about SEK 750 million.

Acquisitions created growth during the year

AddLife continually develops its business by growing both organically and through acquisitions. Sales in 2018 increased by 6 percent as a result of the acquisitions carried out during the year. However, the Group's organic growth during the year did not materialize because a couple of our current companies did not quite meet expectations. Profit growth (EBITA) increased during the year by 5 percent to SEK 245 million, corresponding to an EBITA margin on a par with the previous year.

Our long-term objective is to generate EBITA growth of 15 percent per year. The average during our three first years on the stock exchange is 24 percent. We continue to report good profitability with a return on working capital, measured as P/WC, of 62 percent, substantially higher than our goal of 45 percent.

Expansion in Europe through our largest acquisition to date

The Biomedica acquisition creates favourable conditions for long term profitable growth in completely new geographic markets.

Kristina Willgård, CEO AddLife

In late December, AddLife completed the acquisition of Biomedica, which is our largest to date and an important entry point for us into the European market. Biomedica delivers products and services within laboratory technology and medical technology primarily to publicly funded healthcare services. The company has a similar business model as AddLife, where the market offering and organisation create synergies that open opportunities to jointly develop the business. We gain access to markets in Central and Eastern Europe with a population that is more than four times the size of the Nordic region. The Biomedica acquisition creates favourable conditions for long term profitable growth in completely new geographic markets.

Continued focus on profitable niches

AddLife continually searches for companies that complement our existing businesses and over the course of the year we completed four additional acquisitions within attractive and profitable niches. The Finnish company Väinö Korpinen, which develops accessible bathroom solutions primarily intended for medical facilities and nursing homes, was acquired and added to the Medtech business area. Three smaller acquisitions were also completed, all of which were integrated into current operations in both Medtech and Labtech: Food Diagnostics, Ossano Scandinavia and Laboren. In December we also signed an agreement with Wellspect HealthCare to acquire its business in the surgery and respiratory medicine product areas, with annual sales of about SEK 170 million. The deal will increase our share of proprietary products in Medtech and will be integrated into the subsidiaries Mediplast and Biomedica. The acquisition is expected to be completed in April 2019.

To date, we have completed acquisitions using both in-house generated cash flow and loan financing. In February 2019 we raised about SEK 500 million through a new share issue to strengthen the balance sheet and to facilitate future transactions. The issuance was oversubscribed by 68 percent, indicating investor confidence in our long-term strategy.

Healthcare sector in constant change

Global, national and regional health challenges place large demands on health services today. With medical advances, people with chronic diseases, for example, can live longer. At the same time, we see a growing and aging population that needs increased healthcare and home care. In order for society to meet its future obligations, health services must work more efficiently, preventively and in greater collaboration with both the business community and academia. AddLife can make a difference and contribute to both patient and social benefit by offering new treatment options, proactive diagnostics, technical aids and digital solutions for both institutional care and care at home.
Already today, various initiatives are underway in the Nordic region to move care and therapy from hospitals to homes. All of the Nordic countries are also focusing on Life Science in various ways to strengthen the competitiveness of their respective countries in Life Science research.

Successful business model

AddLife is an attractive and responsible owner of niche companies. In our decentralised and entrepreneur-driven model, each subsidiary is responsible for its own business activities within the context of the requirements for growth, profitability and sustainable development set by the Group. The model creates leverage by enabling us to benefit from AddLife's combined resources, networks and industrial expertise, along with the flexibility, commitment and business acumen of a small company. Our business school AddLife Academy plays a key role in our efforts to promote our corporate culture and to inspire people to grow within the Group. Since its inception three years ago, more than 1,100 employees have participated in various training programs.

Our employees are the key to long-term sustainable business practices

For us, sustainability is integral to our daily work. Within AddLife, sustainability efforts are a priority – not because we are forced to do so, but because we feel a responsibility to our customers, employees and society at large. Being a supplier of services and products to health services and financed by public funds carries obligations. It places demands on our organisation and our corporate culture, where our Code of Conduct guides us in our daily work.
In order to continue to succeed, we need talented, dedicated employees with drive and the right attitude. And that is just what we have today, and I would like to thank all of you for doing your best, every single day!