• Solid 7% organic growth in Q1, underlying was even better
• Another $3m in restructuring costs reveals margin pressure
• We maintain our FV range of DKK 25-37 after smaller EPS changes

GM below expectations

7% Group organic growth (Prosthetics +10%, B&S +1%) drove Group sales to USD 200m. The GM came in at 150-170bp below expectations, but was inline when adjusting for an additional $3m in restructuring costs. EBITDA pre-items came in at $33m, -8% vs ABGSCe and +3% vs company collected consensus.

Underlying growth likely much more appealing than 7%

Embla delivered 7% organic growth in Q1, but undershot the true growth. Bionics was "only" 21% of Prosthetics sales vs 24% in Q4'23. We expect 2024 product launches to drive growth in Bionics back up. If Bionics achieved 24% growth it would have added ~150bp to group growth alone. The APAC region (0% organic growth in Q1) was hampered by a delay to Australian reimbursement approvals. If APAC had been on a more normalised growth trajectory, at around 10% organic, this could have added ~75bp to group growth. Finally, we notice the difficult-to-assess impact from a cyberattack at Change Healthcare, which may have impacted by another 100bp of delayed sales in Q1. Without these "one-off negative" growth drags, Embla may have achieved closer to 10pp of org. growth in Q1, which would have underpinned management's recently hiked growth ambitions.

Structural story appears unchanged

We implement the $3m higher restructuring costs in 2024, which leaves us lowering EPS by ~6% for 2024. We also tweak down 2025 EBIT margin despite management's ambitions of delivering cost savings of $5-6m on a full-year basis from these cost cuts. Embla has struggled to cope with cost inflation, difficult supply chains and production overcapacity, and while we applaud management's actions to hike margins, this is necessary as Embla's margin profile is uninspiring within a broader medical device sector perspective. We maintain a FV range of DKK 25-37, derived f