Recordati (REC) 43rd Annual J.P. Morgan Healthcare Conference 2025 summary

Business Overview and Performance

• Operates two main units: specialty primary care (SPC) and rare disease, with SPC contributing two-thirds of revenue and rare disease approaching 40%, both showing strong growth and margins.

• Achieved a CAGR just under 9% over the last decade, with return on invested capital near 20% and leading total shareholder return on the Italian stock exchange.

• 2024 revenues expected to exceed EUR 2.3 billion, with 2025 guidance above EUR 2.6 billion; rare disease share of revenue is increasing.

• Maintains a diversified, resilient business model with minimal exposure to loss of exclusivity and limited risky R&D.

• Recognized for ESG performance with MSCI A, FTSE4Good, and ISS ESG Prime ratings.

Financial Performance and Outlook

• Achieved 9.3% pro-forma revenue growth to €1,743.1M in 9M 2024, with EBITDA margin at 38.2% and adjusted net income margin at 25.6%.

• Upgraded 2024 financial targets: revenue €2,300-2,340M, EBITDA €845-865M, adjusted net income €560-580M.

• Strong cash flow generation expected to reduce leverage below 2.0x in 2025, supporting a progressive dividend policy.

• Average ROIC of 15-20% over the last decade.

Growth Strategy and M&A

• Growth is driven equally by organic expansion and M&A/business development, with 36 deals and EUR 3.5 billion spent over 17 years.

• Recent acquisitions include Endo, Rare Oncology, and Enjaymo, with a focus on both single-product and larger deals.

• M&A remains a core strategy, with a favorable environment for targeted opportunities and a robust pipeline of potential deals.

• Maintains leverage below two times EBITDA, with capacity for further deals if attractive opportunities arise.

• Focuses on disciplined M&A, cost management, and a strong international management team.