Surgical Science (SUS) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were SEK 212.5 million, down 2% year-over-year; Educational Products declined 13% while Industry/OEM grew 15%, with momentum improving late in the quarter, especially in Asia and Eastern Europe.

• License revenues declined 11% in Q2 due to slower uptake from new entrants and no revenue from the da Vinci 5 rollout, but future opportunities remain.

• CEO transition is underway, with Tom Englund set to take over in October 2024.

• Organizational headcount increased to 265, with coverage in 60+ markets.

Financial highlights

• Q2 2024 operating profit was SEK 33.4 million (margin 16%), down from SEK 47.5 million in Q2 2023; adjusted EBIT margin was 19% (down from 25%).

• Net result for Q2 was SEK 28.6 million.

• Gross margin for Q2 was 68%, stable year-over-year.

• Cash and cash equivalents at June 30, 2024 were SEK 667.1 million, up from SEK 574.4 million a year earlier.

• Cash flow from operating activities in H1 2024 was SEK 58.5 million, with a negative SEK 17 million impact from working capital due to increased inventory.

Outlook and guidance

• Educational Products growth for 2024 is uncertain but achievable, depending on timing and closure of large tenders; pipeline visibility is strong.

• Industry/OEM segment expected to continue growth, especially in robotic surgery, with confidence in license revenue recovery despite recent volatility.

• License revenue from da Vinci 5 expected to materialize in 2025 as simulation is integrated in the broader rollout.

• Company targets SEK 1.5 billion in sales and 40% adjusted EBIT margin by 2026.