Getinge 2022 Annual Report

Getinge 2022 Annual Report Introduction Strategy Corporate Governance Annual Report Sustainability Report Other information Contents However, it cannot be ruled out that Getinge might not meet customer expectations and that this could entail a risk of lower sales and lower profitability over time. The medical device market is subject to strict regulatory frame- works and supervision of regulatory compliance. This results in an extensive need for evaluation, quality control and documentation. Getinge invests major resources in ensuring compliance with such regulations. However, it cannot be ruled out that the Group's financial position and earnings may be negatively impacted in the future due to difficulties in complying with the requirements of authorities or changes to them. Furthermore, Getinge is subject to risks related to laws and regulations, mainly pertaining to business ethics. Corruption in particular remains a risk in many markets in which Getinge oper- ates and has ambitions to grow its business. The Group has a zero tolerance policy when it comes to deviations in this area and takes extensive action in business ethics such as responsible leadership and other training courses. The aim is for all employees to undergo training in business ethics every year. Business ethics regulations also apply to external distributors who sell the Group's products in markets in which it does not have its own presence. An offering to customers that, in certain parts, is too diverse could lead to Getinge lacking the critical mass needed to conduct fully efficiency operations in all product categories. However, efforts are being made to enhance the efficiency of the customer offering under the framework of the ongoing strategic activities. In addition, certain products are being selected for EU MDR certifi- cation, which also increases concentration and efficiency. Further information about the Group's financial risk management can be found on pages 50-54. Financial risk management Getinge is exposed to a number of financial risks in its operations. Financial risks principally pertain to risks related to currency risks, interest-rate risks, financing and liquidity risks and credit and counterparty risks. Risk management is regulated by the finance policy adopted by the Board and a Treasury directive decided by the Getinge Executive Team that supplements the finance policy. The ultimate responsibility for managing the Group's financial risks and developing methods and principles of financial risk management lies with the Getinge Executive Team and the treasury function. For more detailed information concerning these risks, refer to Note 28 Financial risk management. Sensitivity analysis Getinge's earnings are affected by a series of external factors. The following table shows how changes to some of the key factors that are important to Getinge could have affected the Group's profit before tax in 2022. Change in profit before tax Price change Cost of goods sold Salary costs Outlook +/-1% +/-1% +/-1% SEK M +/-283 +/-149 +/-103 Organic sales growth is expected to be in the range of 2-5% for the full-year 2023. Events after the end of the reporting period Except what is described below, no significant events have occurred after the end of the fiscal year. The MDL process on product liability for surgical mesh in the US and Canada concluded with over 96% participation On January 30, 2023, Getinge's subsidiary Atrium Medical Corporation concluded the settlement of the previously reported Multidistrict Litigation (MDL) related to product liability for surgical mesh in the US and Canada. Getinge previously announced that Atrium Medical Corporation entered the settlement process on December 8, 2021. The settle- ment process and multidistrict litigation between Atrium Medical Corporation and the plaintiffs ended on January 30, 2023, with over 96% of eligible plaintiffs having opted into the settlement. The overwhelming majority of the settlement amount was paid as from January 30, 2023. The settlement is not an admission of liability or wrongdoing on the part of the company. Getinge and Atrium Medical Corporation will continue to defend themselves against any litigation not covered by this final settlement The surgical mesh products were manufactured by Getinge's subsidiary Atrium Medical Corporation, which was acquired by Getinge in 2011. Since 2018, Getinge has made provisions of SEK 2.4 billion for expected costs related to surgical mesh claims, based on the information available at the time. The settlement payments were made as from January 30, 2023 and are covered by the provisions, and therefore do not affect the reported result for the period. Temporary suspended certificates for Getinge's HLS and PLS sets Getinge announced on February 23, 2023 that the notified body for certification services, DEKRA, has decided to temporarily suspend the CE-certificates for Getinge's HLS and PLS sets from March 1, 2023. Getinge is in dialogue with relevant authorities and working urgently to minimize the impact on patients. As previously commu- nicated, Getinge has identified and announced potential breaches in sterile packaging of the HLS and PLS sets used for extracorporeal respiratory and/or cardiovascular support. Getinge has since then reported progress to relevant authorities on a number of initiatives, such as package design improvements and advanced testing of the packaging to ensure that the products are protected by a sterile barrier according to the applicable standards and requirements. According to DEKRA the documentation related to the initiatives submitted from Getinge does currently not demonstrate compli- ance with the essential requirements according to the Medical Device Directive and applicable standards. As a result, DEKRA will temporarily suspend the certificates for Getinge's HLS and PLS sets from March 1, 2023. Given the information Getinge has today, the financial impact is not expected to be material. Acquisition of Ultra Clean Systems Inc. After the end of the reporting period, Getinge completed acquisi- tion of 100% of the shares in Ultra Clean Systems Inc., a leading US manufacturer of ultrasonic cleaning technologies, used in hospitals and surgery centers to decontaminate surgical instruments. Ultra Clean Systems Inc. is located near Tampa, Florida, US, and gener- ated an annual revenue of SEK 90 M in 2022. The purchase price amounted to SEK 170 M (USD 16 M). The acquisition is not expected to have a material impact on Getinge's operating profit and earnings per share as of 2023. 62 62

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