GRFS

Business Context and Reporting Period

Company: Grifols, S.A.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: First Quarter 2025 (ended March 31, 2025)
Release Date: May 12, 2025

Grifols, a global healthcare company and leading manufacturer of plasma-derived medicines, reported Q1 2025 results that were ahead of plan. The company reaffirmed its full-year 2025 guidance. Results are presented on a consolidated basis including Biotest. Management highlighted strong momentum in the Biopharma segment, driven by the immunoglobulin (IG) franchise, while noting temporary impacts from the Inflation Reduction Act (IRA) and a planned license renewal process for Albumin in China.

Key Financial Metrics

Note: "cc" denotes constant currency. Liquidity includes cash and cash equivalents of EUR 753 million plus unused credit facilities.

Material Changes vs. Prior Period

• Revenue Growth: Total revenue grew 7.4% at constant currency (cc). On a Like-for-Like (LFL) basis, which excludes IRA and reclassification impacts, revenue grew 10.0% cc.
• Biopharma Performance: Biopharma revenue reached EUR 1,521 million (+6.6% cc, +9.6% cc LFL). Growth was driven by the Immunoglobulin (IG) franchise (+13.2% cc, +17.5% cc LFL), with Subcutaneous IG (SCIG/XEMBIFY) surging +98.9% cc LFL.
• Albumin Decline: Albumin revenue decreased 9.4% cc due to a planned imported drug license renewal in China, causing a temporary phasing of shipments. This process has been completed.
• Diagnostic Growth: Diagnostic revenue grew 5.2% cc to EUR 170 million, driven by Molecular Donor Screening (MDS) outside the U.S. and Blood Typing Solutions (BTS) expansion.
• Profitability: Reported gross margin was 38.9% (40.3% LFL). Adjusted EBITDA margin expanded to 22.4%.
• Balance Sheet: Net financial debt stood at EUR 8,149 million. Leverage improved significantly to 4.5x, a notable deviation from the typical Q1 releveraging trend.

Guidance, Outlook, and Risks

• Guidance: Grifols reaffirmed its 2025 full-year guidance as disclosed at the Capital Markets Day on February 27, 2025.
• Outlook: Management expects consistent growth throughout 2025, citing healthy underlying demand and strong operational execution. The company is on track to launch Fibrinogen in Europe in Q4 2025 and in the U.S. in H1 2026 following FDA approval.
• IRA Impact: The company expects to provide greater detail on the impact of the Inflation Reduction Act (IRA) throughout 2025. For Q1 2025, the IRA impact on revenue was EUR 28 million.
• Risks and Contingencies:
  • Regulatory: Ongoing monitoring of the Inflation Reduction Act and potential tariff impacts (though management currently expects no meaningful impact from tariffs due to vertically integrated operations).
  • Operational: Temporary phasing of Albumin sales in China (resolved) and Rabies phasing.
  • Market: Macroeconomic volatility and policy developments.

Investor Verification Checklist

• LFL Adjustments: Verify the specific reconciliations for the Inflation Reduction Act (EUR 28 million) and Fee-for-Service/GPO reclassification (EUR 15 million) to understand the "true" organic growth.
• China Albumin Recovery: Confirm the timeline and volume recovery for Albumin shipments in China following the license renewal completion.
• FCF Normalization: Review the reconciliation of Free Cash Flow pre-M&A to IFRS cash flow, noting the impact of working capital management and interest payment timing.
• Deleveraging Trajectory: Monitor the leverage ratio trend to ensure the Q1 improvement (4.5x) is sustainable against the credit agreement covenants.
• SCIG Momentum: Validate the sustainability of the 98.9% LFL growth in SCIG (XEMBIFY) given the small base effect.