Grifols, S.A. Q1 FY2025 earnings call

• Strong start to 2025 with increases in revenue, EBITDA, and free cash flow. - Immunoglobulin franchise driving growth, including significant U.S. and international growth, and subcutaneous immunoglobulin gaining traction. - Rabies and albumin performance improving as phasing in Q1 won't carry into subsequent quarters. - Alpha-1 franchise showing positive momentum with a new specialty pharmacy partnership in the U.S. - Focus on cost per liter initiatives and yield improvement to lower cost of goods. - Global strategy with vertical integration and local partnerships providing resilience to market uncertainties. - Continued deleveraging of the balance sheet as a priority.

Revenue in Q1 was EUR1.786 billion, a 7.4% increase on a constant currency basis. On a like-for-like basis, revenue increased by 10%. Adjusted EBITDA for the quarter reached EUR400 million, an improvement of 14.2% at constant currency, with like-for-like growth of close to 22%. The Diagnostics business achieved a 5.2% increase in revenue on a constant currency basis. The biopharma segment, particularly the immunoglobulin franchise, was a key growth driver with 17.5% revenue growth at constant currency and like-for-like. Albumin sales were temporarily affected by a manufacturing license renewal process in China but are expected to improve. Alpha-1 and specialty proteins revenue growth improved by 2.3% at constant currency and like-for-like.

• Forecast sustained revenue growth throughout 2025 driven by immunoglobulin franchise, including U.S. and international growth, and subcutaneous immunoglobulin contributing to product mix. - Expect improved performance of rabies and albumin as Q1 phasing won't carry over. - Alpha-1 franchise to continue momentum with specialty pharmacy partnership. - Revenue projections supported by lower cost of goods from cost per liter initiatives and yield improvement. - Fibrinogen expected to launch in Q4 2025 in Europe and first half of 2026 in the U.S. after FDA approval.

• Macroeconomic and policy developments posing uncertainties. - Potential impact of U.S. drug pricing policy on plasma-derived therapies. - Tariff risks due to global market dynamics, but Grifols believes its vertical integration mitigates disruption. - Temporary phasing in albumin sales due to manufacturing license renewal in China as a past risk now resolved but still monitoring related uncertainties.

Q: Could you give more transparency on Grifols' exposure to Medicare Part B, D and Medicaid and the split across these programs, and on the strength of the albumin market excluding disruption?

A: Nacho Abia stated it's too early to conclude on Medicare/Medicaid exposure, and albumin's underlying growth is expected to improve as the license renewal disruption is resolved.

Q: When do you expect revenues from Canada and details on fibrinogen production?

A: Nacho Abia said revenues from Canada are increasing with donor centers and manufacturing in progress, and fibrinogen production will start in Germany's Biotest facility and move to the U.S. Clayton facility.

Q: Ballpark number for alpha-1 revenues and potential risk from INBRX-101?

A: Roland Wandeler said Grifols doesn't disclose alpha-1 revenues, but the long-range plan accounts for potential INBRX-101 impact, with mitigation efforts through SPARTA trial and others.

Q: Clarification on U.S. dollar impact and EUR28 million IRA accrual?

A: Rahul Srinivasan said U.S. dollar impact is broadly neutral to positive due to embedded hedging, and the EUR125 million IRA impact midpoint remains a prudent estimate based on current expectations.

Q: Executive order exposure and SG&A step-up?

A: Roland Wandeler reaffirmed no negative business impact from executive orders on plasma-derived therapies, and Rahul Srinivasan said SG&A step-up relates to Q4 2024 reclassification and fibrinogen launch preparations.

Q: Pricing differential, IVIG growth outpacing market, and rabies phasing?

A: Roland Wandeler said plasma-derived therapy price points are closer globally, IVIG growth reflects disease underdiagnosis/undertreatment and brand strength, and rabies phasing is seasonal with Q2/Q3 being higher volume periods.

Q: Why IG growth outpaces market and why guidance isn't raised?

A: Roland Wandeler attributed IG growth to brand strength, focus in the field, and supply ability, while Rahul Srinivasan said maintaining guidance is prudent due to ongoing macroeconomic and tariff uncertainties