Getinge AB
STO:GETI B
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
Abbvie Inc
NYSE:ABBV
|
Biotechnology
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Realty Income Corp
NYSE:O
|
Real Estate
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
175.7
239.5
|
| Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
Abbvie Inc
NYSE:ABBV
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Realty Income Corp
NYSE:O
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Getinge AB
You don't have any saved screeners yet
Hello, and welcome to the Getinge AB Audiocast with Teleconference Third Quarter 2021. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I'm pleased to present Mattias Perjos, CEO; and Lars Sandstrom, CFO. Please go ahead with your meeting.
Thank you very much, and welcome, everyone, to today's conference. As she said, here, I have Lars Sandstrom, our CFO, with me as well, and he will present the financials a little bit later during the call. But we can get started and move directly over to Page #2, please. So I just want to begin by covering the key takeaways for the quarter in terms of performance. And as expected, the net sales declined year-on-year as we had record-breaking deliveries of ICU ventilators in Q3 of 2020. However, in the third quarter, organic order intake increased by more than 20%, thanks to strong development in all our business areas and all our regions. Organic order growth is strong, both compared to Q3 2019 and Q3 2020. The adjusted EBITA margin amounted to 18.4%. And adjusted for COVID-19 effect, the EBITA margin continues to improve, thanks to structural mix shift and also increased productivity for most parts of the company. Free cash flow remains strong as well. So strengthening our already very solid financial position. And with that, we can move over to Page #3, please. So let's take a step back and then look at some of our other key events in the quarter. We had a number of launches and other activities. One example is that we introduced the Rotaflow II, a new product for advanced life support. The technology here enables up to 14 days of ECMO therapy in a compact format, giving health care professionals the flexibility needed to provide real high-quality care. In addition to this, we also launched new functionality for our Volista surgical light range. This is a feature that includes a near infrared fluorescence imaging system and is used to identify structures that need to be removed, such as cancer cells, without causing damage to nerves, blood vessels and other [indiscernible]. In the quarter, we also acquired advanced technology in biological indicator from Verrix, an American startup company. This acquisition follows our strategy of strengthening our consumables portfolio in infection prevention and [indiscernible]. And it also is a logical follow-on from our previous acquisition of Quadralene a year ago. The product is in development phase, and it's not yet commercially available. We expect this to happen sometime during 2022. Overall, the improvement journey for Getinge continues. So in the quarter, Getinge completed its remediation work in Hechingen in Germany in accordance with the Consent Degree with FDA. This doesn't mean that we are automatically out of the Consent Decree, but it means that all entities covered by the Decree, which is Hechingen and Rastatt in Germany and Merrimack and Wayne in the U.S., can put all their efforts now into more forward-looking activities linked to customer benefits and driving growth. The project to expand the production capacity of DPTE-BetaBag in Merrimack in the U.S. is also proceeding according to plan. In addition to this, we are also increasing production capacity in Applikon to meet the growing global demand for bioreactor system. So this is another important growth initiative in the company. With that, we can move over to Page #4, please. So we take a look on order intake development in the quarter. We had an order intake increased by 28 -- sorry, 21.8% and net sales decreasing 20.1% organically. And as I mentioned previously, we have a strong order growth momentum at the moment in all regions and all business areas. So that's the reason for the 21.8% organic growth. This is due to a combination of comeback effects, so to speak, here in the wake of the pandemic. So there's a long tail of COVID effects related to ventilators and also new and higher normal level for ECMO therapy [indiscernible] for development and production of biopharmaceutical drugs. From a regional perspective, the Americas and APAC order intake is growing as a result of good performance in all business areas, while EMEA's growth was not as high as a result of challenging comparative figures for ventilators in Q3 of 2020. Net sales decreased, as expected, due to the challenging comparison quarter, Q3 last year. Compared to Q3 2019, our sales increased significantly on a currency-adjusted basis as a result of continued high demand for products for our life-supporting ECMO therapy, bioreactors and products for Sterile Transfer, combined with a continued high sales of ventilators and a general recovery in other parts of the business. And given the robust order momentum that we have across the board, things look very promising for net sales in 2022. We can move over to Page #5, please. So let's talk about the outlook for the rest of the year. So based on what I just said and despite the more negative FX impact than expected, especially in the first half of the year, we choose to keep the outlook for 2020 unchanged at SEK 27 billion in the net sales as a floor for the full year. You might ask, are there risks here? And yes, of course, there are. We are still in a pandemic that we haven't seen the likes of before. With a fast-paced spread right now of the Delta variant in several parts of the world and with negative effects throughout the supply chain when other industries are coming back to normal. We often get questions on the supply chain and how potential constraints could impact our different parts of the business in terms of delays and cost increases. As you've seen in the quarter, we withstood material negative effects from cost increases and supply chain delays very well during the quarter, and very grateful for the team in supply chain and the great work they've done here for 18 months actually now. And this is thanks to a better structure and process to handle these kind of things compared to just a few years ago. So we are benefiting from the overall improvement program that we've been on for a while now. This has materialized in multiple preventive actions mitigated the negative effect for us. At the same time, the same organization is very disciplined on pricing, which obviously also helps the performance. If things worsen though in the coming quarters, we may, of course, be affected negatively from a cost perspective, but also from a temporary net sales perspective, meaning that there can be a phasing of net sales forward into 2022. One example is if the shortage of semiconductors worsened, this could, of course, have an impact on us. Another example on what could happen is that large projects like greenfield hospitals are delayed due to other parties suffering from supply constraints. We see, for example, that constructors, the building industry, is having an impact on new hospital construction and also refurbishment of the existing hospitals. So it may happen that customers say that they're happy with the orders that they have placed but may ask us to postpone the delivery for a while until all the other work is finished. We've seen some tendencies like that in the quarter, and we expect that to be the story for the coming quarters as well. So normally, you will see a Q4 pattern driven by deliveries in Surgical Workflows, especially in December. That is more unlikely to happen this year. So I think the guidance should be seen as more like SEK 27 billion and SEK 27.5 billion at this point. With that, we can move over to Page #6, please. So order intake amounted to SEK 7,079,000,000 in the quarter in acute care therapies. We had 18.6% organic growth. which was SEK 545 million in actual numbers. Order intake remained high in ventilators and products for ECMO therapies in ACT. Other product categories increased their order intake, though the growth in cardiovascular surgery products slowed slightly in the quarter as a result of the spread of the Delta virus in parts of the U.S. primarily. In Life Science, we saw a 29.6% organic increase or SEK 204 million in actual numbers. We saw continued strong order intake growth in [indiscernible] products, which is used in production of vaccines, for example but, of course, also biopharmaceutical drugs in general. We have good growth for bioreactors for development and production of biopharmaceutical drugs as well. And we also had service growing double digits in the quarter. If we then look at Surgical Workflows, we had a 24.6% organic increase, SEK 432 million in actuals. And here, we had strong order growth in all regions from low levels last year, which means that the order book continues to recover at a good in Surgical Workflows. Growth was particularly high in Surgical Workplaces, which includes mostly surgical or operating room product. We can then move over to Page #7, please. Looking at sales then. Net sales amounted to SEK 6,306,000,000 in the quarter. If we compare this with 2019, net sales is up in actuals and significantly so if we adjust for currency. In Acute Care Therapies, we had a 31.6% organic decline or SEK 1.7 billion in actuals. the decrease in Acute Care Therapies is due exclusively to a very challenging comparative figures in Q3 2020, of course, driven by ventilators. Continued growth in ECMO therapy as well and cardiovascular products. All the growth in the latter category slowed in the quarter as a result of the Delta virus spread, mostly again in the U.S. Life Science, we had a 17.5% organic increase or SEK 120 million in actuals. We saw continued high organic sales growth in Sterile Transfer products, in washers and bioreactors, to meet the increased need for efficient and reliable technology in the development and production of biopharmaceutical drugs. Net sales also increased in service and spare parts, although not as much as for the categories that I just mentioned. In Life Science, also, we saw growth in all regions, with particularly good development in the Americas. Looking then at Surgical Workflows, we had a 2.9% organic decline or SEK 73 million in actuals. We had continued negative development in organic net sales despite the recovery in order intake. And this is, of course, explained by the long lead times from order to deliver in this business area, slightly coupled with delays from customers as well. The organization's focus on the customer offering in services and consumables continues and continues to contribute positively to the business areas' turnover, that's also important to keep in mind. Currency had a negative effect -- negative impact on net sales for the group in the quarter, SEK 77 million or equal to about 1%. With that, we can move over to Page #8, please. Looking at the gross profit then. Adjusted gross profit decreased by SEK 1,044,000,000 to SEK 3,334,000,000 in the quarter, where negative FX accounted for SEK 46 million. For the group as a whole, the gross margin decreased as a result of lower volumes compared to Q3 2020, especially in ventilators in Acute Care Therapies. And lower absorption in production here is obviously a big factor. However, the measures implemented to increase productivity partly mitigated the negative volume effect that we see. For Life Science, the adjusted gross margin strengthened by 1.7 percentage points as a result of higher volumes, a favorable mix and also better absorption in production. And if you look at Surgical Workflows, the adjusted gross margin increased by 2.7 percentage points, primarily as a result of increased productivity and also some favorable mix effect. And this was, for example, in the form of increased sales of service, while we had some under-absorption in production that continue to contribute negatively to the margin. So with that, we move over to Page #10, and I leave over to you, Lars.
Thank you, Mattias. Then looking at adjusted EBITA. We decreased SEK 868 million and the margin was down 7 percentage points to 18.4% in the quarter. And adjusted for currency, gross profit had a 1.9 percentage point impact on the margin. And of course, very much impacted by the lower volumes compared to the record quarter last year. OpEx is down year-on-year, but this positive development could only partly offset the negative volume effect on the margin year-on-year. And the OpEx contribution to the margin is consequently minus 3.5%.As you can see, we continue to have lower depreciation and amortization due to less assets in the balance sheet, but the decrease isn't as large as the loss in volume worth here year-on-year. And consequently, D&A, adjusted for FX, is impacting margin by 0.8%. Currency had a negative impact of 0.8 percentage points on the margin. All in all, this resulted in an adjusted EBITA of SEK 1,160,000,000 compared to SEK 2,028,000,000 in Q2 2020. In 2019, we were at SEK 677 million and an EBITA margin of 10.9%. Then let's go to Page 11, please. Free cash flow continues to be strong, amounting to SEK 1.4 billion. This is a result of a healthy operating profit in combination with the positive contribution from reduced working capital. Looking at the working capital days, this has leveled out somewhat but continues to be well below 100. We are now at 90.5 days, down some 39 days from the peak in Q2 2018. We also see a continued strong operating return on invested capital, where we are at 18.8% on a rolling 12-month basis. And we start to see some kind of reversal towards the long-term trend on return on invested capital as net sales has started to move more into, call it, normal territory [indiscernible]. Let's move to Page 12, please. Net debt was positively impacted by the free cash flow, taking us to SEK 4.1 billion. And if we adjust for potential liabilities, we are at SEK 0.9 billion. This brings us to a leverage of 0.6x EBITDA. And if we adjust for pension liabilities, leverage is at 0.1x EBITDA. And cash at the end of the quarter here amounted to approximately SEK 4.7 billion. Then let's move to Page 14 and back to you, Mattias.
Great. Thank you, Lars. So just reiterating the key takeaways from the quarter then. We've had a Q3 with very strong organic order growth, a broad-based recovery across all our business areas and geographies. We continue to have good activity levels when it comes to the progress on strategy implementation as well. And you can see the results, I think, of the 4 years of productivity work that we've done here really coming to the surface now in the wake of the pandemic. Our EBITA margin adjusted for COVID-19 continues to improve very well and with good cash flow, thanks to strong results, of course, but also really good continued work on working capital. So all in all, a very solid financial position going into the last quarter of 2021. And last but not least, we have passed the milestone of completing the remediation work in our Hechingen facility in Germany, meaning that we can focus much stronger now on long-term innovation activities and really creating customer value. So with that said, I open up for questions.
[Operator Instructions] The first question comes from Karl Norén from Danske Bank.
So the first question I have is if you could elaborate and say how many ventilators you sold in the third quarter.
It's a good question, Karl. I don't have the number in front of me. We'll dig it up and come back to you in a moment.
Okay. Then I can go on with some other ones. I have a question regarding...
Sorry, Karl, working quickly here.
So the number of units for the third quarter was some 3,200 units.
So if we move over to the cost side, I think that is quite impressive because I think cost was down for the group 8.5% organically now in Q3. And it was also relatively flat in Q3 '20. Could you please just provide some more info about what the driver is behind the decrease in OpEx and how much is temporarily due to COVID and how much do you think is permanent cost savings?
Yes, 2 main factors. One is that there is still a lingering pandemic effect with less travel, less activities, even if that is going to come back now, so that's part of the explanation. The other one is the effect of the productivity improvement program that has been going on for quite a while now where we are really learning to do things in a more productive way across the company. We don't have any other new guidance when it comes to how much is permanent. We've said earlier that the annual effect is around SEK 300 million and roughly half permanent.
Okay. And then just the last question on the remediation side. When you are finished now, I think everything is -- everything of the costs that you've been taking has been in the acute care side that has been expensed. Can you just say anything of -- I think you previously said that around or a little bit more than SEK 100 million of cost can gradually be phased out once the remediation is finished. Is it possible to give some kind of indicative time line for these cost savings and have some of these savings already been implemented in the organization?
Yes. Some savings have been implemented gradually. That's part of the improvement journey, especially in the sites that have been quicker with the remediation work. So that is a positive contributor already. We have not quantified the effect in the total going forward. And what we've said though is that it's not like a step change. We reached a phase now where we can start to work more with productivity and lean out the system, so to speak but still have an effective quality management system in place. So it's still a significant amount of money, but it's going to be a gradual improvement here now that remediation is over.
The next question comes from Victor Forssell from Nordea.
I'll start with a question on the underlying gross margin in acute care. You've been having gross margins of around 61% now in 2 quarters for this year. Could you give us perhaps some qualitative comments at least regarding what levels are to be sustained? Do you see major COVID impact here still? Or if that impact now decreases over time, should it be offset by other factors in order to sustain current levels?
Yes. Now looking at -- we will come back to discussing, of course, a more long-term view when we have the Capital Markets Day. But if we look at this, we have, of course, some positive impact on the pandemic here with still some high deliveries connected to that. But we also have then the recovery on the elective part that we expect to continue going into next year as well. And then, of course, [ SW ] has been held back quite a bit here during 2020 and also into 2021. And they have, on average, then of course, lower margin. But we see also here the margin improvement. So there are these moving parts here, but we don't see a radical shift going forward here actually. We continue to work with improvement here. And we see that kicking in one by one here in the different product areas where we are active.
And just to sort of follow up on the acute care side. Should we, I mean, experience a reverse effect on gross margins due to lower ventilator volumes?
I think for the full -- where we are year-to-date, yes. But where we are now, we are coming down more and more [closer] to more normal levels when it comes to the margin side. But there will be a further impact on it, but we don't see huge impacts from that actually.
Yes. Okay. So rolling 12 months, yes, but not from -- much more from these levels?
That you can see on the impacts from the [indiscernible].
Great. And on the gross margin side of Life Science then and the cost that you've been taking or related to the Sterile Transfer ramp-up in France, any comments regarding how expensive that has been, i.e., if that has mitigated some part your margin potential from the recently strong growth? And what you foresee in this regard next year when you will have 2 sites.
When it comes to the ramp up there that we have now, it's mainly impacting from the French site in [indiscernible] where we have had a significant ramp-up working almost 24/7 here. Of course, that comes with a cost to bringing in people, et cetera. But then when things come down, that should have a bit of support going into next year. But then we will, at the same time, ramp up in the U.S. side. So all in all, it will not have a significant impact. But of course, we are gradually coming back to more sustained or better margins there in that sense as well. But we have a slight positive impact.
Okay. And just a final one for me, Mattias, I think you alluded to closer to SEK 27 billion net sales for this fiscal year compared to, let's say, SEK 27.5 billion. Could you give some more color on that? The drivers for Q4, I think that you mentioned Surgical Workflows. But any other comments regarding the Q4 net sales?
No, it's mostly that people tend to expect a rather strong hockey stick in the fourth quarter, and that's usually driven by Surgical Workflows. But what we see now with the order intake recovery and the delivery patterns here, it is more support for 2022 in terms of net sales than this year. So the business has kind of inherently longer lead times. And then you have the added effect of customers wanting to delay deliveries because they are managing complex projects where maybe other suppliers haven't been able to deliver their part. So therefore, we think you will not see the same seasonal pattern as maybe that you're used to in this business. It will be a phasing question here between Q4 and the first half of next year.
The next question comes from Kristofer Liljeberg from Carnegie.
Second quarter, is that due to ventilators, the volume being lower or something else?
Sorry, Kristofer, you broke up in the beginning. Can you repeat the question?
I just wonder about the lower gross margins sequentially in the third quarter versus the second quarter. If I look at it on a group level, that might be to simplify things, but group sales is pretty much the same, gross margin 52.9% versus 55% in the second quarter. I just wonder if that difference is lower ventilator sales or other type of mix effects.
I think it is partly then connected to the lower deliveries of ventilators here coming in, but also some other product mixes that are impacting. But looking at each product area as such, we don't see a big impact between the quarters. So more connected to the product mix and was here, as Mattias mentioned. We had a bit lower deliveries in the elective quarter at the end of the quarter here. You could see that in some parts that also impacted here in between the quarters.
And if you don't -- if you will not have this usual positive seasonal effect in Surgical Workflow, which is a lower-margin business, is that something we should see positive then for the gross margin in the fourth quarter?
Yes, it is, yes.
Okay. Second question. Also when it comes to margin for Life Science, seeing a new higher level here in the second quarter -- or in the third quarter. So do you -- is this a new sustainable level or some positive one-off effects?
There are no particular positive one-off of effects related to Life Sciences. This is a gravitation towards more profitable parts of the business. That's really the main explaining factor.
Okay. And my third question, when it comes to Surgical Workflows and the drop-through in margin, pretty good considering the continued weak sales. So do you see potential for this business to be back at the 15% margin when sales are improving, hopefully, next year?
We take this one step at a time. We're very happy that we have a good margin improvement here despite the headwind in net sales. But we -- I want to reiterate that our first milestone here is to make this a double-digit EBITA business, about 10%. And I think that is linked to volume clearly, and we need to be closer to the pre-pandemic level, around SEK 9.5 billion or above to see this [indiscernible]. And then, of course, depending on how successful we are when it comes to portfolio mix rotation towards more consumables, continued better work with service and so on, there's maybe few good opportunities for the longer term as well. But don't want to stick our chin out at this point and say anything more than we have. The double-digit EBITA milestone to clear first.
The next question comes from Rickard Anderkrans from Handelsbanken.
So first looking at orders. So it's stated that ventilator saw significant growth in the quarter for the ACT segment. Can you provide any quantification there and, as you say, any risks for deliveries going into Q4 and perhaps in Q1 as well would be helpful.
We don't disclose order intake numbers for the different product groups here, but it has been an elevated level compared to a normal year, so to speak, here. And we do see risks in terms of delivering going forward. It's a daily fight to make sure that we have enough components, that logistics systems keep operating the way they should there. So it's definitely one of the areas where we are vulnerable to supply chain disruption.
All right. That's very helpful. And looking at the orders for the Life Science segment, we saw significant growth in APAC. Can you talk a bit about developments in China and how we should think about it going forward? Is that sort of a sustainable path there? Was it some type of one-off? Would be just helpful to understand.
China is an important market for us for much of our equipment, both the kind of, call it, the legacy offering in Life Science, but also the bioreactors, an important part for that. So it is a good long-term trend there. I think the main risk regarding China is probably political [indiscernible].
All right. Fair enough. And then a final one from my side. Hospitals being pressured from wage inflation and the constraints with staff, et cetera. How well are you able to mitigate price increases? I'm thinking particularly as we might see rising input costs, et cetera, going into Q4 and then perhaps into first half of next year as well, how well equipped are you for offsetting rising input costs essentially?
I think we are rather well equipped. The organization, both on the supply side, but also on the sales side have done a good job in both mitigating cost increases as such, but also keeping a close dialogue with customers about the need for raising prices in certain categories that are impacted. So far, I think we've done a rather good job here, and it's something that we need to continue for the coming quarters, the way we see it.
All right. All right. So we should think that you should be able to raise prices in most categories then, I guess.
Yes. Well, this is active work and we've been successful so far. No guarantees, and it is a very fluid situation, I would say. But I think we've managed it well so far. And hopefully, we can continue to do so.
The next question comes from Ed Ridley-Day from Redburn.
Just a couple of follow-ups. First of all, on the acute care order book. That's very encouraging. Mattias, you spoke a little to the Rotaflow launch and continuing demand. But can you give more color on that? Because clearly, I think if we all step back a few quarters ago, that's a pretty good clip in terms of your acute care order book as we move out of the COVID period. So if you give some more color on that and how you think that can be sustained into '22, that would be helpful. And just a quick follow-up on the Merrimack expansion on the bags and just remind us when that should come online.
Yes. Yes, sure. No, the ACT order book, I think, as I said, is developing well. We see continued strong demand for our ECMO therapy products and the Rotaflow launch is a good addition to the ECMO -- already strong ECMO portfolio, I should say. And that's something that we expect to continue. The whole elective portfolio has started a recovery in Q2 and continued into Q3. There, we saw some weakness in the second half of the quarter because of the Delta virus. So we expect this to be a continued recovery, but a bit more lumpy than maybe we expected in the beginning of the year. When it comes to the Merrimack expansion, that's going according to plan, and we expect this factory to come online in most likely end of November, beginning of December. So commercial deliveries during next year.
The next question comes from Scott Bardo from Berenberg.
So first question, please, just relates to the full year. I think your sales guidance implies about SEK 8 billion revenues in the fourth quarter, which would make it your largest revenue quarter. And I think historically, seasonally, Q4 has had higher margins or the highest margin of the year. So I guess the question is, would you still expect that to be the case, that seasonally we have strongest EBITA margin this year? Or is there any reason that, that would not be the case? So that's question number one, please. Question 2 on Hechingen, it sounds like a positive update. Mattias, I wonder if you could just help us understand what you mean by remediated here. Has this been approved and agreed by the FDA? Or is that a view of your consultants. I wonder if you can help us understand then what needs to happen to get the Consent Decree dissolved. I think that's been in place for 6 years or so now. So I'll pause there, and I have a follow-up.
Yes, sure. If you look at the fourth quarter, we expect it still to be a strong quarter. But relatively speaking, compared to normal year, a bit weaker, but still strong on EBITDA margin levels, without providing any more granular guidance there. When it comes to Hechingen, the work is done, and it is verified by third-party consultants, but it needs to be very acquired by FDA themselves as well. So we have asked them to have an inspection, and this is something that is likely to happen, hopefully, during the first half of next year.
And on the sort of expectation for consent decree, I mean it's been around a long time now.
Yes, it's very difficult to say. If you look at other companies that have been in the same situation, there have been observation periods ranging from 1 to 5 years. And that's not something that we can answer until the FDA have done their inspection and we see the result of it.
Understood. And a question on Surgical Workflows, please. So I think you've seen very nice order momentum, so 17.6% for the first 9 months, yet your sales are down 1% for the 9 months. And I think you're highlighting that, that bodes well for 2022 growth. Can you help us understand whether this sort of order momentum that we see, double-digit order momentum, necessarily translates into a double-digit top line dynamic for Surgical Workflows? Does the typical lead times hold for 2022 for this division, please?
I think the lead times are a little bit extended at the moment, and they are likely to be so in the beginning of next year as well, as we have already seen delays in the third quarter now and we expect that to continue for some time going forward. And that's probably the best answer I can give you. We've had an average of about 6 months in this before. It's probably a little bit longer right now. But let's say it's a very low moving part and a very dynamic situation. It's difficult to really guide you going forward.
Great. And last question, if I may, just on the balance sheet. Obviously, some great progress in terms of deleveraging. I think now as I look to your leverage position, it's the lowest, I think, it's been now for, well, well over a decade. I don't think it's ever been this low. And I think if I'm right, your Chairman doesn't particularly like inefficient balance sheet. So underlying nature of the question, Mattias. I mean, are you getting more interested in M&A? Are you working on any targets here that you can put your balance sheet to work? Some comments there would be appreciated.
Yes. I think nobody likes an inefficient balance sheet, but it's not that we are more interested in M&A., we've always been interested M&A, also when the balance sheet wasn't that strong. We just have more room to maneuver now. It is a very active pipeline and has been for some time as well. The valuations are very high. So I mean if you're concerned about return on capital, I think one needs to be disciplined in this arena. So Verrix is one of the opportunities that did materialize here in the quarter. We continue to be active. It's the #1 priority, I guess, for deploying cash [indiscernible] balance sheet.
The next question comes from Kristofer Liljeberg from Carnegie.
Just to follow up. Did you comment on the ventilator shipments in the quarter? What do you expect for the full year? And when it comes to ventilators, I'm also a bit interested to hear your view now how that -- how you expect that demand will be after the pandemic when we go into 2022. We have talked before about -- a lot about the potential for doing software upgrades, et cetera.
Yes. No, the number of ventilators delivered in the quarter was 3,200. And the demand has continued to be high. If you look into next year, we do expect the normalization again in the wake of the pandemic. What that means in number of units, it's too early to say, I believe. But we are excited about the opportunities with the installed base now. It's a rather sophisticated electromechanical product that can be connected and there's a number of different services that can be provided, thanks to this. There's also, I think, a much higher awareness right now, the more sophisticated therapies, like our NAVA technology, for example. So this should be a good opportunity to continue to drive growth based on the installed base.
So with 3,200 shipments in the quarter, what do you expect for the full year?
We haven't changed the guidance. We've said it should land about 12,000 this year. That's the latest update on this.
The next question comes from Victor Forssell from Nordea.
Just very quickly on Applikon and the ramp-up that you do there production-wise, if you can provide us any sort of more color on that, what that means for potential output increases into the coming years and a bit more about the short-term performance here. How -- is current growth rates also partly supported by a weaker last year? Or is this sort of a new level you see for Applikon?
Yes. For Applikon, in terms of comparing with last year, we had a very muted first half of 2020 for Applikon, given that they are lab-focused and China is the biggest market. So in terms of comps, you need to think about that absolutely. If you look at the momentum right now though, we do think that the higher growth levels that you see now are more or less sustainable. There is some still vaccine effect in there, of course. But the general trend when it comes to research for new drugs and so on in the wake of the pandemic as well is really strong. So we do -- we acquired this company assuming that it would be around 10% to 12% growth business. We expect this now to be quite a bit higher also for the long term.
And in terms of meeting that with increased output, what does it mean? Yes.
There are some additional investments going on in ramping up capacity. They are not material investment in terms of CapEx or anything for us. But it's really working with the supplier network to a high degree, making sure that we have the parts needed [first].
Currently, we have one further question in the queue. [Operator Instructions] The next question comes from Scott Bardo from Berenberg.
Yes, just wonder if you could talk a little bit about infection control. It seems to me that this is, say, lagging the recovery. I wonder if you consider this business underperforming expectation or can talk a little bit around this. And perhaps extend those comments into where are you with the low temperature sterilization initiative, particularly in the North American market and filings.
I think relative to Surgical Workplace, it's a little bit less momentum, but we're certainly not unhappy or disappointed with the evolution. We still believe that, first of all, we have a very strong position in this business globally. We've seen good progress when it comes to service, for example. And we are continuing to strengthen the offering with more consumables. So we feel that we have good traction. By nature, it's a rather lumpy business. But there's nothing, I think, underlying that is negative or anything for us. I think our strategy hold, and the low-temp offering is under development in full swing. It won't be ready until the end of next year. It won't have any real impact in 2022. But the years from there, we should see a positive contribution from this. It's one of the bigger opportunities in [indiscernible] business.
Very good. And no quarterly update can go without me asking you about the PMA for covered stent in the U.S. So any update here, Mattias. We should have expected it by now, I think.
Yes. We -- yes, continued dialogue. We have a Q&A ping pong with the FDA on this. We do expect this until happen, probably not this year, it's more likely that this will be a Q2 outcome, Q2 next year.
The next question comes from Patrik Ling from DNB Markets.
I have a follow-up question regarding the remediation. And maybe you can shed a little bit light on this, that apart from costs being phased out, are there any other implications from being out of the remediation that you can talk about regarding the operations? I mean, will it be easier for you to get products approved, et cetera?
Yes, absolutely. I think the main positive effect is actually that we can focus all our R&D resources on real R&D going forward. So developing new products rather than remediating the ones we already have. So that's really a key long-term effect from this. So that's the main benefit. And then, of course, you have the possibility of taking down costs from the system. I think the main positive to me is that we can focus our resources on really creating customer value for the long term.
As there are no further questions at this time, I hand over to our speakers for the closing comments.
Good. Thank you very much. I think we have done the summary already. And if we have run out of questions, I interpret that as a good sign here. So thanks for listening in today, and I wish you a good rest of the day. Thank you very much.