Elekta Commits to Innovation-Driven Growth but Guides Below Market as Turnaround Progresses
Capital Markets Day, Stockholm, June 17, 2026
Elekta laid out a detailed roadmap for its ongoing turnaround at a Capital Markets Day in Stockholm today, acknowledging the company is "not at full potential" while projecting mid-single digit revenue growth through fiscal 2028/29—a level CEO Jakob Just-Bomholt conceded is "probably over the period, slightly below market." The company expects to reach a 14% to 16% EBIT margin by fiscal 2028/29, up from an adjusted 11.2% in fiscal 2025/26 when accounting for R&D capitalization benefits.
The event represented the most comprehensive strategic update since Just-Bomholt took the helm in August 2025, with management framing the company as midway through a turnaround that began with aggressive organizational restructuring and will culminate in market share gains driven by a wave of product launches over the next twelve months. The candor about competitive positioning and growth challenges marks a notable departure from past company communications, though the below-market growth guidance and questions about execution remain investor concerns.
Aggressive Cost Restructuring Delivered Ahead of Schedule
Elekta's headcount reduction from approximately 4,600 to 4,000 employees represents a more dramatic restructuring than many investors anticipated, though management emphasized the goal was velocity rather than savings alone. The delayering from nine organizational levels to six and shift to a decentralized regional model has already yielded over SEK 500 million in annual net run rate savings, with CFO Klara Eiritz noting that "cost reductions have come through perhaps a little bit faster than what was originally expected."
Critically, Eiritz stressed that cost reductions came "mostly from decentralizing and reducing what used to be group function costs" rather than customer-facing resources, which actually increased during the reorganization. The company reduced selling costs not by cutting sales force but by eliminating central overhead. This distinction matters as Elekta attempts to simultaneously cut costs and accelerate commercial execution in what Just-Bomholt described as making the organization "run faster."
For fiscal 2026/27, Elekta expects revenue growth of 2% to 4% in constant currency with an adjusted EBIT margin of 12.5% to 13.5%. Importantly, this guidance assumes R&D capitalization will match amortization, representing a significant shift from historical practice. Elekta comes from "a history of very high levels of capitalization versus amortization," Eiritz noted, with the company having written down SEK 2.5 billion in Q4 related to inflated balance sheet values. Going forward, the company commits to keeping capitalization at current levels while maintaining gross R&D expenditure at approximately 10% of revenue.
Product Pipeline Positions for Adaptive Leadership but Acknowledges Workflow Gaps
Chief Product and Technology Officer Christopher Busch outlined what he characterized as a "step-up change in the innovation pace," with four major releases planned over the next twelve months that are "not '24, '48 kind of outlook" but rather "committed road maps that we will deliver on very soon." The releases focus on bringing adaptive radiotherapy workflows that currently take 35 to 40 minutes down to 15 minutes, fitting within standard treatment slots and removing a key barrier to adoption in community hospitals.
The roadmap includes next-generation AI imaging called Iris for head, neck and brain applications, building on the pelvis version already deployed. More significantly, Elekta will introduce real-time 3D motion management to CT-Linacs through software rather than requiring hardware modifications. "This is a software-driven innovation," Busch emphasized. "This is going to be available to our existing installed base." The solution uses existing kilovolt cone-beam CT imaging infrastructure, avoiding the expensive x-ray beam additions that competitors require.
For MR-Linac, Elekta unveiled Unity Pro, which reduces typical treatment times from 45-50 minutes to predictable 30-minute slots for bladder and prostate cancer patients. "That makes 2 patients an hour," noted Ardie Ermers, who heads Americas. "For hospitals who are looking at productivity and the number of patients they can treat per day per year, this is doubling the business case." The productivity gains arrive as clinical evidence supporting Unity's efficacy emerges from high-profile trials, with recent studies showing 40% reduction in radiation volumes for glioblastoma and a 2x reduction in erectile dysfunction for prostate cancer.
Busch was notably candid about competitive gaps, acknowledging that "when we talk about some other things like workflow integration, we are catching up and we're honest about it, but we are catching up." The integrated console and 6D table launches represent Elekta reaching parity with existing competitive offerings rather than establishing leadership. The integrated console has CE approval for Harmony with first pilot sites now treating patients, with broader Evo release planned for next calendar year.
U.S. Reimbursement Changes Create Opportunity but Execution Remains Unproven
Ermers framed recent U.S. reimbursement changes as "actually creating a great opportunity for us" despite the chaos they initially caused. The 2026 introduction of simplified billing tiers dramatically reduced reimbursement for conventional IMRT treatments while maintaining attractive rates for stereotactic body radiation therapy (SBRT) and adaptive planning. "If you do this in the right way and you actually get the SBRT code and the adaptive plan built, there is an upside of $10,000 per patient," Ermers explained.
To quote a key collaborator at Kettering Health, a non-academic center: "2026 cuts brought to pain, and Elekta brings the aspirin because we are helping to keep these customers viable and able to grow." The reimbursement pressure is forcing community hospitals and freestanding clinics to adopt complex treatments historically limited to academic centers, creating replacement demand for aging linac fleets. Elekta saw 30% solution order growth in the U.S. last year with double-digit Evo orders and twice as many Iris upgrades.
However, U.S. revenue declined 6% in fiscal 2025/26 as the company "ate its order backlog," in Ermers' words. The region represents just 20% of company revenue, which Just-Bomholt said "should be significantly higher." The company projects mid- to high single-digit revenue CAGR over the next three years for Americas, but this represents recovery from a low base rather than consistent market share gains. When asked about competitive product launches at ESTRO later this year, Ermers argued that "it actually is great for us because it confirms the direction of Elekta," though this optimism remains to be validated by actual win rates.
The book-to-bill on linacs typically runs twelve months, but Ermers noted that "in order to really get access to these new reimbursements, actually the book-to-bill, book to revenue is shortening" as customers accelerate installations. Upgrade offerings like Iris combined with online adaptive software carry "very good margin for Elekta" with three to four month cycles, potentially creating faster revenue conversion than traditional hardware sales.
Europe Sustains Leadership but Faces 1,000-Unit Replacement Opportunity
Arnaud Delhaye, heading Europe, presented the region's 8% growth in fiscal 2025/26 as evidence of successful Evo commercialization, with roughly 70% of placements being Evo systems. The region now represents 32% of Elekta revenue, up from historical levels, driven by both hardware sales and recurring revenue expansion. Service and software now comprise 48% of European revenue, up five percentage points over three years through service contract renewals, pricing discipline, and software attachment to Evo.
The key opportunity Delhaye highlighted is 1,000 linacs in Europe that have reached twelve years of age or older, representing units between twelve and seventeen years old out of an installed base of approximately 3,900 linacs. The typical replacement cycle runs 12.5 years, though some systems in markets like Germany reach twenty years. "We know where they are. We know how they are going to make this acquisition via tenders or via direct procurement," Delhaye noted. "It's a sizable market that we can approach pretty simply for a commercial organization."
Half of Evo systems sold in Europe include online adaptive capability, with the remainder split between advanced and conventional treatments. The upgrade path represents a key selling point, with upcoming releases of integrated console, 6D table, and motion management expected to "give us another boost for Evo," according to Delhaye. Europe targets strong single-digit growth over the three-year period, serving as the largest contributor to group targets.
Commercial execution improvements include simplified portfolio packages that "creates a lot of discipline and control when we price," annual service contract renewals rather than multi-year agreements to capture price increases, and account-based management to "maximize the profitability of every account by upselling, upgrading, securing retention." The region has also reduced order fulfillment time and increased customer satisfaction during the installation journey that previously took significant time between order and clinical availability.
China Leadership Defense Anchors on Localization and Adaptive Position
Anming Gong, presenting via prerecorded video, outlined how Elekta will defend its approximately 40% market share in China despite intensifying local competition. The market is recovering from a two-year slowdown caused by anti-corruption campaigns, with 2025 seeing over 250 linacs sold and 2026 expected to reach 270-plus units representing roughly 10% growth. Model-based procurement is being rolled out more systematically, increasing pricing pressure but allowing more hospitals to adopt radiotherapy while creating lifecycle value opportunities.
China represents about 10% of the global radiotherapy market in value but 25% in installed base, reflecting lower pricing. The market remains significantly underserved with approximately 3,000 installed linacs against an estimated need closer to 5,000 based on population. Elekta's three-pronged strategy focuses on accelerating localization of R&D and manufacturing, strengthening ecosystem partnerships to capture lifecycle value, and delivering China-tailored portfolio offerings.
The flagship example is Harmony Pro, "developed and manufactured in China" as "a one-stop intelligent adaptive radiotherapy solution." Gong emphasized that "Harmony Pro is the only project selected at a national level for this technology, led by Elekta together with leading customers, including Peking University, People's Hospital." The adaptive leadership position provides differentiation as reimbursement improves, with pricing for SBRT, VMAT, and both MR and CT adaptive radiotherapy now included in reimbursement schemes.
Gong acknowledged China saw negative 6% growth in fiscal 2025/26, impacted by anti-corruption effects in the first half before improvement in the second half. The mid-single digit growth target going forward assumes successful defense of market leadership against United Imaging, which Just-Bomholt noted has installations in Europe that Elekta tracks through a "war room." However, he pointed out that Elekta "sold 50% more than they did" in China last fiscal year, providing confidence in competitive positioning on United's home turf.
Gross Margin Recovery Path Relies on Mix and Pricing Discipline
Eiritz outlined a gross margin improvement strategy targeting gradual return toward pre-pandemic levels through five key levers, though she provided no specific timeline or margin targets. Productivity measures and volume leverage will "roughly offset cost inflation," including benefits from the new lower-cost operating model. Product cost reductions from supply chain optimization and redesign represent the second lever, with Busch noting that shifting linac development to Beijing from Crawley brings "by nature, a very strong focus on getting cost down from the beginning."
Price improvements of 2% to 3% represent the third lever, though Just-Bomholt cautioned this varies significantly by market. "It's actually less price sensitive in the U.S. Certain markets, it's more price competitive," he noted, citing India as particularly competitive. The company has introduced a quarterly framework establishing target and floor average selling prices and margins per product category, with deviations requiring escalation. Just-Bomholt described this as "quite a new way of doing it" at Elekta, focusing on ensuring wins are profitable rather than winning at any cost.
Market mix and product mix improvements represent the fourth and fifth levers, driven by adaptive business growth. "Higher share of Evo and Iris in mature markets will improve the market mix, but also the product mix within solutions," Eiritz explained. New product launches in solutions and software, including recurring software sales, will support product mix while driving volume. Increased service attach rates and scaling service sales as the installed base grows provide additional margin support.
The company assumes OpEx will see "continued leverage effect on the new lower cost base" with productivity offsetting inflation. R&D will run at roughly 10% gross expenditure with capitalization matching amortization in fiscal 2026/27, though Eiritz noted that "towards the end of this period, we see amortization going up a little bit due to the product launches that we have in our plan." This represents a significant shift from the inflated capitalization levels that contributed to the SEK 2.5 billion balance sheet write-down in Q4 fiscal 2025/26.
Cash Flow Target of 10% Creates Room for Investment and Returns
The target of 10% free cash flow before dividends as a percentage of sales in fiscal 2028/29 would generate roughly SEK 2 billion available for investment and shareholder distribution. This represents a substantial improvement from recent years, with fiscal 2025/26 marking "the first year in 5 years, we saw a net debt reduction despite SEK 900 million dividend," according to Just-Bomholt. The cash flow target assumes slight net working capital build from higher sales, CapEx in line with depreciation and historical levels, R&D capitalization of 3% to 4%, and finance, net tax, and leases remaining at current levels.
The cash generation would enable Elekta to maintain its dividend payout policy of no less than 50% of net income while having "room to invest further in our innovation-driven growth agenda," Eiritz explained, "or even decide to pursue opportunities, other opportunities to fuel our growth ambitions." The company retains a mandate from the Annual General Meeting to buy back shares when circumstances are right, providing flexibility in capital allocation approach.
The improved cash flow outlook depends heavily on order backlog quality improvements. By applying "a firmer interpretation of the criteria for order recognition," management aims to improve predictability with orders having "a high probability of turning into actual sales" within a reasonable timeframe. The order backlog currently stands at approximately SEK 34 billion, roughly two times fiscal 2025/26 sales. The rolling twelve-month book-to-bill ratio of 1.04 "is fairly aligned with our sales growth expectations for '26, '27," according to Eiritz, though investors noted concerns about Q4 order intake softness.
Emerging Markets Face Intensifying Competition at 40% Discounts
While management focused presentations on Europe, U.S., and China, questions revealed mounting competitive pressure in emerging markets that collectively represent a meaningful portion of revenue. An analyst noted that United Imaging now operates in 85 countries, Shinva is announcing wins in Latin America, and roughly eight new linac competitors are targeting emerging markets over the next two years with approximately 40% price discounts versus Elekta's offerings.
Just-Bomholt acknowledged seeing "intensified competition in the global South" including Latin America, Indonesia, and India. "We are tailor-making our product portfolio accordingly," he said, noting that the company will position Harmony specifically as a productivity engine for India with hypofractionation capability. Busch outlined a hub-and-spoke model where remote collaboration enables highly qualified clinicians in central locations to support regional centers treating patients who cannot easily travel, "leapfrogging maybe a lot of markets when it comes to the adoption of hypofractionation."
Ermers maintained confidence in Latin America specifically, arguing that "customers are looking for the same thing, which is they need to treat more patients more efficiently with less staff. And so the solutions that you can buy in the market from our competitors that are coming do not facilitate those kind of needs." However, the company provided no specific data on pricing trends, competitive win rates, or market share trajectories in these regions.
Just-Bomholt noted that planning assumptions include mid-single digit growth for markets outside Europe, U.S., and China, with the EMEA region expected to show "pretty reasonable growth going forward" after a weak prior year. Management cautioned against over-interpreting the focus on three specific markets as deselection of others, though the lack of detailed emerging market discussion contrasts with previous strategic communications that emphasized these markets as core growth drivers.
Service Revenue Growth Depends on Installed Base Defense
An analyst raised a critical question about service revenue sustainability given that Elekta's current service business runs on an installed base reflecting historical market share "notably above what your new market share sales is." The concern centered on what happens as that installed base churns if Elekta cannot defend replacement business. Management pushed back on the premise, with Just-Bomholt noting that "installed base is actually growing" despite market share losses, as overall market growth has exceeded share declines.
The service attachment rate in the U.S. exceeds 95%, according to Ermers, who argued that the threat from third-party service providers is diminishing. "The old engineers that used to be able to fix our linacs, they're retiring. So those people that were in-house are now basically coming back to us and people sign up for service agreements." The shift toward remote service, remote access, and integrated solutions "that only Elekta can provide" creates competitive moats that in-house maintenance cannot replicate.
Busch reinforced that Elekta is "enabling service with our teams in a much more efficient way" and that workflow integration increasingly ties service to the vendor. As treatments become more complex with online adaptive and motion management, the technical expertise required for service rises, favoring original equipment manufacturers over third parties. Delhaye added that Eastern Europe still offers significant opportunity to increase attach rates, with annual price increases captured more effectively through one-year contracts rather than multi-year agreements.
The service growth story ultimately depends on the installed base continuing to expand, which requires Elekta to at minimum hold unit market share as the market grows. Management projects the installed base will continue growing from the current 7,500-plus units for internal and external beams, but provided no specific targets. The company's ability to monetize that base through higher attach rates, annual price increases, and software-as-a-service offerings represents a key element of the margin expansion story.
Order Backlog Quality Improvements Reduce Predictive Value Near-Term
The stricter order recognition criteria that management highlighted as improving earnings quality may paradoxically reduce the order backlog's value as a leading indicator in the near term. Eiritz emphasized the company wants "orders we take into our backlog to have a high probability of turning into actual sales" within a reasonable timeframe, noting that "the order backlog had to be written off quite substantially in the past 2 years." However, the process of cleaning up order quality makes year-over-year order comparisons less meaningful as a growth signal.
Management partially attributed Q4 order intake softness to both Middle East timing and "being stringent on order intake criteria," though they emphasized the rolling twelve-month book-to-bill of 1.04 as the relevant metric. The SEK 34 billion order backlog represents two times annual sales, though no breakdown by region or product category was provided. Ermers noted that book-to-bill on linacs typically runs twelve months but "is shortening" as U.S. customers accelerate installations to access new reimbursement, while software upgrades run three to four month cycles.
Investors will likely need several quarters of data under the new order recognition standards before the backlog regains predictive reliability for revenue trends. The shift also reduces comparability to prior periods when orders may have been recognized with lower probability of conversion. Management's emphasis on using the metric primarily for validating the 2% to 4% fiscal 2026/27 revenue guidance suggests limited confidence in its utility beyond that timeframe currently.
Innovation Velocity Increases but R&D Spend Declines from Peak
The commitment to 10% gross R&D expenditure as a percentage of revenue represents what Busch characterized as "above medtech average" and "at the right level to ensure that we have enough innovation funnel to drive a market-leading position." However, this marks a decline from the roughly 12% level in recent years, raising questions about how the company simultaneously reduces spend and increases innovation output. Busch outlined five focus areas that enabled the shift: concentrating investment on core products, focusing on true customer requirements rather than nice-to-have features, consolidating development sites, process simplification, and shifting resources toward software development.
The relocation of linac development from Crawley to Beijing brings benefits beyond just labor cost arbitrage. Busch explained that China-based development has "the local supply chain, but they also have, by nature, a very strong focus on getting cost down from the beginning." This design-for-cost discipline now feeds back into U.K. development teams, with all new developments having "a very strong KPI related to cost reduction" encompassing not just bill of materials but installation speed, remote serviceability, and component reliability.
Management emphasized that upskilling the R&D organization in data science and AI alongside core mechanical and electrical engineering enables higher productivity. The shift toward software-driven innovation rather than hardware-centric development also reduces capital intensity. Busch noted that next-generation motion management uses "existing x-ray kilovolt cone-beam CT imaging infrastructure" rather than requiring new hardware, making it "available to our existing installed base" as a software upgrade.
The proof point will be whether the company can maintain the product release cadence Busch outlined—four major launches over twelve months followed by continued semiannual releases—while holding R&D at 10% gross spend and keeping capitalization equal to amortization. The more efficient R&D model requires validation through actual product delivery and market acceptance rather than just stated commitment.