XVIVO; The annual CMD provides an updated five-year objective to 2023-2027

Research Note

2022-09-22

08:52

XVIVO’s financial target is to reach above an EBIT margin of 20% and above EBITDA margins of 30% supported by among other value drivers, the continuous transformation of the Abdominal margin. There is no specific sales guide but the objectives to double the installed machine base, to transform the EVLP penetration and the secure 15% totals sales share from new markets including Saudi, Brazil and China.

No smokes and mirrors, XVIVO is already on track

XVIVIO’s CMD includes the following objectives which will drive sales and margins going forward.

  • Stated target to become a market leader abdominal
  • Stated target to Changing the Paradigm of Heart Preservation
  • Becoming preferred partner in the transplant process (includes advanced integrated services)
  • Accelerating market leadership in Lungs

We point to the fact that XVIVO has already provided thew foundations for achieving these objectives and this includes both the financial objectives and these strategic objectives. During the first 30 months to mid-2025 we can expect more of the same and a step up of the US launch and the US support.
During the second 30 months we can expect considerably support from XVIVO’s heart solution where we expect XVIVO to compete successfully with TransMedics transforming the Heart transplant market. We can also expect support from the next generation of XPS and a larger penetration of XPS where the next generation will include several improvements (user friendliness, automatization, speed). A significant improvement in reimbursement support is already happening gradually and by 2027 we expect a step change in reimbursement support. When it comes to the financial outlook XVIVO aims to reach.

  • At least 70% margins in the Abdominal buisenss
  • At least double the machine installed base
  • 20% EVLP penetration
  • New markets will contribute to 15% of total sales

Again, XVIVO has established a good momentum on all four aspects. When it comes to delays and risks it is still early days to assess if the macro-economic situation will have any impact on the non-publicly funded reimbursement. So far XVIVO seems to have avoided any meaningful impact at this stage.


The ability to secure 15% of sales in new markets at a reduced average price will probably be largely related to securing sizable volume support in countries like China and Brazil. XVIVO has established a respectable presence but the actual ability to secure a step change in volume support will also depend on XVIVO’s ability to secure market approval and the ability to secure public reimbursement and private insurance support. We rate this new market support as the most challenging, especially as we can expect a significant increased level of support from established markets like US and Europe with Heart perfusion, increased level of machine perfusion and abdominal support. Near term there is also a risk of supply and cost of COGS. This is compensated by XVIVO’s ability to increase prices and integrate the customers different needs into XVIVO’s offer.

The machine perfusion transformation is already in play, but the Heart Tx opportunity is probably far from fully appreciated by the market. One of XVIVO’s most relevant competition in Heart Tx is the US listed company TransMedics that also enjoys a steep market valuation. XVIVO’s independent heart study (ANZ) is a good demonstration of the Heart opportunity and the support ahead. Cold heart perfusion (NIHP) is clearly efficiently reducing many risks associated with heart transplants. This includes risks related to distant donors (extended transports and ischemic times), high risks donor’s situations and even risks related to normal donors processed within normal transport times. Cold machine prefusion supported by XVIVO’s disposables achieves very high level of graft survivals and reduced complications. This suggests that once launched the Heart opportunity will be well placed to support and extended period of growth especially as the lung perfusion business will be supported by an improved XPS platform.

Our XVIVO outlook after the 2022 CMD

Compared with our base case to 2027 XVIVO’s targets are distinctly modest in terms of EBIT and EBITDA. We expect sales of SEK 1,873m by 2027E suggesting that new market support should account for SEK 281m or just above XVIVO’s total sales in 2021. This is in our view challenging even if we regard the total sales expectations for 2027E as conservative. We expect Heart related sales support of SEK 409m by 2027E and this is clearly achievable considering the clinical support so far. If XVIVO can secure a timely approval, we regard our Herat sales as conservative.


Our base case ahead of our review is a conservative at SEK 380 per share. Our bear and bull case is 105 and 785, respectively. We find that XVIVO has a distinctly undemanding valuation and the main reason for this is not XVIVO’s fundamental performance lately nor the outlook. The main challenge is probably to digest the multiple valuation during this period of macro-economic unrest. These market conditions also make it difficult to distinguish companies with a sustainable period of high growth and good margin prospects from companies with a shorter period of high growth. In our view it is a good idea to start building a position or to hang on to a position ahead of an emerging positive revaluation.


The CMD supports our base case with an upside in margins over the next 30m and upside in both margins and sales during the next 45-60m (within 5 years). This is balanced by the macro economic outlook. Normally it is a risky business to sit on the side-lines waiting for a better entry point in companies which has proven the ability to deliver excessive growth with considerable operational leverage.

Disclosures and disclaimers

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