Following the publication of Scandinavian Medical Solutions (SMS) H1 2025/26 half-year report on 19 May 2026, we have updated our investment case. The update reflects the H1 results, the maintained 2025/26 guidance, and the six H2 2025/26 focus areas presented by management, implemented to turn the earnings around and improve capital position.

H1 2025/26 revenue came in at DKK 92.3m versus DKK 122.7m last year, a decline of approximately 25%. EBITDA landed at DKK -6.9m against DKK 0.6m in H1 2024/25. The underlying drivers - postponed and in some cases cancelled orders, tighter customer financing, and the broad-based pricing competition in the used imaging market. The same conditions that prompted the guidance revision on 1 April 2026. Despite the operating loss, free cash flow before financing improved to DKK -11.1m from DKK -20.7m in H1 2024/25, and working capital was reduced by DKK 6.4m through inventory and liquidity initiatives.

For 2025/26 as a whole, SMS maintains the revised guidance of DKK 190-220m in revenue and DKK 0-5m in EBITDA. This implies an H2 EBITDA of approximately DKK 6.5-11.5m, broadly in line with H2 2024/25's DKK 9.9m despite a lower revenue base. The improvement versus H1 is supported by a continued high order backlog with sound margins, the full effect of capacity cost reductions (including headcount reduction and warehouse consolidation), more rental revenue, and less currency and one-time drag.

The investment case is anchored in three points.

First, the long-term structural case for used imaging equipment remains intact, supported by hospital budget pressure, a shift towards flexible short-term rentals, and the privatisation of healthcare.

Second, the investments SMS has made since its 2021 IPO in market access, new US and French sales channels, a French subsidiary, an expanded US small/medium customer base, and a local US setup for import, certification, and delivery, as well as keeping high quality standards, position the company to benefit when markets normalize.

Third, H2 2025/26 guidance points to a return to more normalized earnings levels, and management's six H2 focus areas, lean capacity cost setup, inventory reduction targeting positive cash flow by 30 September, an improved free capital position, aggressive sales, a push/pull inventory evaluation, and best-in-class quality, should support both earnings and cash flow into the second half.

The main risks relate to continued macro uncertainty and the Middle East conflict keeping the pricing war alive for longer, the risk of higher capital deployment from a shift towards rental solutions and elevated inventory, reliance on specialised staff that limits the room for further cost reductions, and structural shifts in trade lanes that may require further investment in changing business setups. If working capital is not lowered as planned, dilutive funding cannot be ruled out.

From a valuation perspective, SMS has no listed close peers, and we benchmark against Danish B2B resellers/distributors and larger Swedish healthcare suppliers as a directional reference. On EV/Sales (2026E), SMS trades at 0.7x versus a peer median of 0.8x, which is a more representative gauge given the temporarily depressed earnings base.

The EV/EBITDA multiple of 61.3x on the guidance midpoint is not meaningful in isolation but indicates that the market is not pricing the stock on current earnings. A normalisation of the geopolitical and pricing environment, conversion of the order backlog, and lower capacity costs would be the most direct path to a re-rating, while further progress on working capital could provide additional support.

For further insights into the H1 results and management's H2 focus areas, you can watch the event we hosted with Scandinavian Medical Solutions: https://www.inderes.dk/videos/scandinavian-medical-solutions-praesentation-af-halvarsrapporten-202526

Disclaimer: HC Andersen Capital receives payment from Scandinavian Medical Solutions for a Digital IR subscription agreement. /Michael Friis, 14:15, 20/05-2026.