Ambu: Investing in a Leader in Disposable Endoscopy

Ambu is the company that created the world’s first single-use endoscope, and it still leads the market it helped invent. Single-use endoscopes may not sound exciting at first, but they solve some of the biggest problems hospitals face today by making procedures faster, reducing the risk of infection, and lowering costs compared to cleaning and maintaining reusable scopes. Even though this technology has been around for more than a decade, most of the world is still only in the early stages of switching to single-use solutions, which gives Ambu a long runway for growth. As the company expands its product range and supports more types of procedures across respiratory care, urology, ENT, and gastroenterology, it is becoming an increasingly important partner for hospitals dealing with staff shortages and growing patient demand. The question is whether Ambu’s leading position in this fast-growing market makes it an attractive investment.

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me. 

For full disclosure, I should mention that I do not own any shares in Ambu at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Ambu, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Ambu A/S is a Danish medtech company and a global leader in single-use endoscopy, supported by long-standing positions in anesthesia and patient monitoring. Founded in 1937, the company has a long history of developing products that improve clinical workflows and patient safety. Today, Ambu serves more than 100 million patients per year across more than 60 countries. The company’s most important division is Endoscopy Solutions, which provides single-use endoscopes for pulmonology, ENT, urology, and gastroenterology. This business has grown rapidly as hospitals shift away from reusable scopes toward single-use devices that reduce infection risks, simplify workflows, lower costs, and expand access to minimally invasive procedures. Ambu offers the most comprehensive range of single-use endoscopes globally, giving it a strong presence across multiple clinical specialties. Its second division, Anesthesia and Patient Monitoring, includes ventilation tools, electrodes, and other consumables that improve patient care and remain an important, stable contributor to the business. Ambu operates three R&D centers and four modular production facilities in China, Malaysia, Mexico, and the United States, which allow it to innovate quickly and scale manufacturing efficiently. Around 10% of endoscopy revenue is reinvested into R&D, and the company works closely with clinicians, suppliers, and partners to develop products that address real-world needs. Sustainability is integrated throughout the value chain, from responsible sourcing and supplier monitoring to bioplastic endoscope handles, recycling initiatives, energy-efficient operations, and lower-emission logistics. Ambu’s competitive moat is rooted in its pioneering role in single-use endoscopy, where it holds more than 60% market share and the broadest portfolio in the industry. Its leadership position is strengthened by deep relationships with hospitals and health systems, which rely on Ambu’s close collaboration and customer-centric product development. These partnerships create high switching costs, as Ambu’s devices and workflows often become embedded in clinical routines. The company also benefits from a globally scaled manufacturing network designed for high-volume production. This provides meaningful cost advantages, supports attractive margins, and allows Ambu to expand supply as demand grows. Consistent reinvestment in innovation, supported by three global R&D centers, ensures that the company remains ahead in areas such as imaging quality, usability, and workflow efficiency. Sustainability further reinforces Ambu’s position. By transitioning its endoscope handles to bioplastics and offering recycling programs, Ambu aligns with the growing environmental priorities of hospitals and health systems. This leadership is difficult for competitors to match quickly, creating an additional layer of differentiation.

Management

Britt Meelby Jensen serves as the CEO of Ambu, a role she assumed in 2022 after having served on the company’s Board of Directors from 2019. She brings more than two decades of experience in the global life sciences and medtech industries, with a track record of revitalizing organizations, strengthening commercial execution, and leading companies through complex strategic transitions. Before joining Ambu, Britt Meelby Jensen held several senior leadership roles that helped establish her reputation as one of Denmark’s most accomplished executives. She began her career at McKinsey and Company, where she focused on strategy and organizational development, before joining Novo Nordisk. Over more than a decade at Novo Nordisk, she advanced through leadership positions culminating in her role as Corporate Vice President of Global Marketing, Market Access, and Commercial Excellence. Her work spanned multiple therapeutic areas and global markets, giving her deep expertise in commercial strategy, stakeholder engagement, and market shaping within highly regulated healthcare environments. In 2013, Britt Meelby Jensen became CEO of Dako, a global cancer diagnostics company. She led Dako through a pivotal period focused on commercial strengthening and operational improvements. She later served as President and CEO of Zealand Pharma from 2015 to 2019, where she oversaw significant pipeline advancement and guided the company through its listing on Nasdaq in the United States, broadening its investor base and elevating its global profile. From 2019 to 2022, Britt Meelby Jensen was CEO of Atos Medical, a Swedish medtech company specializing in products for people with laryngectomy. At Atos Medical, she drove meaningful growth and strengthened operational performance, ultimately leading the company’s successful sale to Coloplast. Her ability to elevate commercial capabilities and create value has made her a sought-after leader across the Nordic healthcare industry. In addition to her executive roles, Britt Meelby Jensen serves on the boards of Novo Nordisk and the Hempel Foundation, reflecting her standing and influence within the Danish business community. She holds a Master of Science in International Marketing and Management from Copenhagen Business School and an MBA from Solvay Business School in Brussels. Britt Meelby Jensen’s leadership style is widely described as inclusive, transparent, and highly disciplined. She is known for listening deeply, setting clear strategic priorities, and empowering teams while maintaining high expectations for accountability and execution. Colleagues often emphasize her ability to balance empathy with decisiveness, creating cultures of trust while steering organizations through demanding periods of change. In recognition of her leadership, she was named Leader of the Year in Denmark in 2024, an award that underscored her reputation for integrity, resilience, and outstanding performance. Given her breadth of experience, her proven ability to transform organizations, and her strong moral compass, I believe Britt Meelby Jensen is exceptionally well positioned to guide Ambu through its next chapter. She is recognized as one of Denmark’s most capable leaders, and her combination of commercial insight, strategic discipline, and people-focused leadership gives Ambu a meaningful advantage as it continues to scale its global single-use endoscopy business.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. Ambu delivered a ROIC above 10% from 2016 to 2019 because it was entering its strongest growth phase at a time when its business was still relatively small, simple, and highly profitable. Single use endoscopy was taking off quickly, and Ambu had almost no competition. This meant high margins, strong volume growth, and limited investment needs. The company sold more and more scopes at attractive profitability, while its capital base remained light, which naturally pushed ROIC above 10%. From 2020 onward, that picture changed. Ambu invested heavily in scaling the business, adding new factories in several countries, expanding its global sales force, and preparing for large growth in gastroenterology. These investments significantly increased the amount of capital tied up in the business. At the same time, the expected growth in gastroenterology did not materialize as quickly as Ambu had planned. The company spent a lot of money preparing for demand that arrived later than expected. This alone put downward pressure on ROIC because invested capital went up faster than earnings. Ambu also faced execution challenges during this period. The organization became more complex, competition intensified, and operational inefficiencies emerged. Margins weakened just as costs and invested capital were rising. This combination, rather than a single issue, is what pushed ROIC below 10% from 2020 to 2024. In 2025, ROIC returned to around 10% again largely because Ambu had finished its heavy investment phase and had begun to benefit from a simpler strategy, clearer priorities, and better execution under Britt Meelby Jensen. With most production capacity already built, Ambu no longer needed to invest as aggressively, which stabilized the capital base. Meanwhile, margins improved thanks to stronger operational discipline, better use of existing factories, and a higher share of revenue coming from the profitable single use endoscopy segment. Looking forward, ROIC is expected to continue improving. Ambu now has the production footprint it needs, so future growth requires much less new capital. As adoption of single use endoscopy continues to expand across pulmonology, ENT, urology, and eventually gastroenterology, the mix will shift further toward higher margin products. At the same time, Ambu is running the business with more discipline and clearer focus, which supports stronger profitability.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Ambu’s equity has increased every year since 2017 because the company has consistently added to its financial strength through a mix of steady profitability, equity funded expansion, and a reinvestment focused strategy. Throughout this period, Ambu remained profitable, even when margins were under pressure. Those positive earnings flowed directly into retained earnings, which increased equity year after year. During its major expansion phase, Ambu also raised money from shareholders to help finance new factories, a larger commercial organization, and significant R&D investments for its growing single use endoscopy business. Because the company relied more on shareholder capital than on debt to support this growth, equity increased as the business expanded. At the same time, Ambu maintained a modest dividend policy and reinvested the vast majority of its profits, so most earnings stayed in the company and continued to build equity. Importantly, Ambu avoided large write downs or major losses that could have reduced equity, which helped keep the upward trend intact.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins provide a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Ambu’s free cash flow has moved a lot over the past several years because the company has gone through a major transition: from a period of heavy investment and operational challenges to a period of stabilization, discipline, and stronger profitability. The negative free cash flow in fiscal year 2022 was mainly the result of Ambu’s significant transformation efforts. The company invested heavily in restructuring its supply chain, improving production processes, and strengthening commercial execution. At the same time, profitability was under pressure due to slower than expected gastroenterology adoption and various operational inefficiencies. Ambu also chose to build up its inventory to reduce the risk of shortages during a period of supply chain uncertainty. These temporary cash outflows were larger than the cash coming in from the business, which caused free cash flow to turn negative for the year. Free cash flow then recovered sharply and reached a record high in fiscal year 2024. This improvement came from Ambu running its operations more efficiently, producing more consistently, and earning higher profits. The company had also finished many of the major investments it made in previous years, which meant it no longer needed to spend as much money on expanding factories or infrastructure. With less cash going out and more cash coming in, Ambu delivered the highest free cash flow in its history. Free cash flow declined again in fiscal year 2025, but this should not be seen as a warning sign. The year still produced the second highest free cash flow in Ambu’s history, and the drop was mainly the result of deliberate choices rather than any weakness in the business. Ambu chose to build up inventory ahead of important product launches and kept stock levels higher than usual because of geopolitical uncertainties and potential supply issues. These decisions temporarily reduced the amount of cash left over, even though the company’s underlying profitability continued to improve. Ambu is still converting a healthy share of its profits into cash, and management expects this to continue increasing in the coming years. Free cash flow margins have become noticeably stronger compared to the period from 2020 to 2023. The improvements seen in 2024 and 2025 were driven by more disciplined operations, higher sales of single use endoscopes, and the fact that Ambu has already completed its most expensive investment projects. As Ambu continues to use the production capacity it has built over the past several years, these margins are expected to keep improving. Looking ahead, free cash flow itself is expected to rise over time. Ambu now operates with a clearer strategy, stronger earnings, and more stable production. The company also expects to turn a growing share of its profits into cash, helped by continued efficiency improvements and the increasing importance of its high margin single use endoscopy business. Ambu uses its free cash flow to strengthen the company financially, invest in future growth, and return money to shareholders. With its financial position now solid, the company has started to distribute more cash. Ambu has proposed a DKK 110 million dividend and a DKK 150 million share buyback program, both supported by the strong cash it generates. he free cash flow yield is at its highest level in a decade. This does not mean the shares are cheap in an absolute sense, but it does mean they are trading at one of their most attractive valuations in more than ten years.

Debt

Another important aspect to consider is debt. One way to judge whether a company’s debt is manageable is to see if it could repay it within three years using its earnings. In Ambu’s case, this is extremely straightforward because the company currently has no long-term debt. Instead of borrowing, Ambu has funded its growth through its own cash generation, which puts it in a very strong financial position. By the end of fiscal year 2025, Ambu also had a solid cash balance, giving the company a comfortable financial buffer and plenty of flexibility.

Support the Blog

I want to keep the blog free and accessible for everyone. If you enjoy the content and would like to support it, you can buy me a cup of coffee through PayPal. Every little bit helps and is truly appreciated!

Risks

Macroeconomic factors are a risk for Ambu because the company operates globally, sells in many currencies, and manufactures across several regions. This means Ambu is exposed to changes in exchange rates, tariffs, and broader geopolitical developments. These forces are outside the company’s control, and they can affect profitability even when the underlying business is performing well. One of the biggest challenges recently has been foreign exchange movements. More than half of Ambu’s revenue is in US dollars, while its costs are spread across currencies such as the Danish krone, the euro, the Chinese renminbi, the Malaysian ringgit, and the Mexican peso. When the US dollar weakens against the Danish krone, Ambu immediately earns less from its US sales once they are converted back into Danish kroner. The benefit of falling production costs, however, only shows up after several months. This delay means there are periods where currency swings hurt Ambu’s earnings even though the company eventually sees part of the effect reversed. Over the past few quarters, currency movements have been unusually volatile, and this has significantly impacted Ambu’s financial results. Tariffs are another major macroeconomic risk. Ambu manufactures in several countries and ships products into large markets such as North America. Recent years have brought higher global tariffs, and these have increased Ambu’s production and distribution costs. The company is taking steps to reduce the impact, but these changes can take six to twelve months to implement. As a result, higher tariff costs are expected to remain a drag on profitability through fiscal years 2025 and 2026 before gradually becoming less important. If global trade tensions intensify or tariff rules shift again, Ambu could face new cost pressures or have to adjust its production strategy, adding complexity and potential disruption. Broader geopolitical developments also affect Ambu. Tensions between major economies, changes in trade agreements, or new regulatory requirements can make it more expensive or more difficult to move products across borders. These factors can raise costs for raw materials, energy, and logistics, all of which Ambu has experienced recently.

Regulatory risks are a significant concern for Ambu because the company operates in the medical technology industry, one of the most heavily regulated sectors in the world. Every product Ambu develops, manufactures, and sells must meet strict rules designed to ensure patient safety, ethical business conduct, and proper handling of personal data. These rules differ widely across regions, which means Ambu must constantly navigate a complicated and shifting regulatory landscape. This complexity increases the chance that something may go wrong, even unintentionally. Laws covering areas such as healthcare compliance, anti-corruption, and data protection have become stricter in recent years, and authorities are enforcing them more aggressively. Public expectations around ethical behavior and patient safety have also risen. As a result, even minor compliance issues can lead to serious consequences, including lawsuits, investigations, fines, or restrictions on selling certain products. Breaches of healthcare regulations or Ambu’s own Code of Conduct could also damage the company’s reputation and relationships with hospitals and health systems. Regulatory risk also affects Ambu’s operations. Launching a new medical device requires extensive testing, documentation, approvals, and ongoing monitoring. If rules change unexpectedly, Ambu may need to redo approvals, redesign parts of a product, or delay launches, which can slow growth and increase costs. This is especially important for Ambu’s single use endoscopes, which must meet strict clinical and safety standards across the United States, the European Union, Asia, and other markets. A regulatory setback in one region can delay momentum globally. Compliance itself is expensive and resource-intensive. Ambu must invest in legal reviews, internal controls, audits, product testing, and large-scale employee training to ensure consistent compliance across its global footprint. These efforts are essential, but they also add to the complexity and cost of running the business.

Cost pressures and the push for efficiency in healthcare systems is a risk for Ambu because the company sells into an environment where hospitals, governments, and health systems are under constant pressure to spend less while treating more patients. This creates tougher purchasing decisions, slower adoption of new technologies, and more scrutiny of pricing, even when a product can improve workflow or patient safety. In Ambu’s Anesthesia and Patient Monitoring business, these pressures have already been visible for many years. This part of the portfolio consists of more established products, where hospitals often compare many suppliers and negotiate hard on price. As healthcare budgets continue to tighten, Ambu may face even stronger pricing pressure in this area, which could limit growth or reduce profitability. The situation is different but still risky in the Endoscopy Solutions business. Pricing here has been more stable because single-use endoscopes are newer, more innovative, and offer clear advantages in workflow efficiency, infection control, and flexibility. However, even with these benefits, hospitals often struggle to adopt new technologies quickly because the upfront cost per procedure is higher than using an already-owned reusable scope. In systems facing strict budgets, this can delay purchasing decisions, slow down the creation of new markets, or reduce the pace at which hospitals switch fully to single-use solutions. If healthcare systems decide to postpone investments or cut spending, the adoption curve for single-use endoscopy could become slower than Ambu expects. Larger economic and political factors add to this risk. Economic downturns, government cost-cutting measures, and healthcare reform can lead to reduced spending on new medical technology. Changes in reimbursement rules, which determine how hospitals get paid for procedures, can also influence whether hospitals choose newer solutions or stick with older approaches. Even if single-use endoscopes save money in the long run, hospitals sometimes focus on short-term budgets rather than long-term efficiency, especially when resources are strained.

Reasons to invest

Switching to single-use endoscopies is a reason to invest in Ambu because the shift from reusable to single-use scopes is one of the most powerful, long-lasting trends in the global medical technology market, and Ambu is leading it. The company was the first mover in single-use endoscopy and has spent more than a decade building this market, shaping clinical habits, and driving acceptance of this new standard of care. As hospitals increasingly recognize the advantages of single-use solutions, Ambu is positioned at the center of a structural change that is still in its early stages. The core driver is the rapid adoption of single-use technology. Hospitals, clinicians, and health systems are gradually shifting away from reusable scopes because single-use devices solve several of the biggest challenges in modern healthcare. They help hospitals work more efficiently by removing the delays and bottlenecks that come from cleaning, maintaining, and waiting for reusable scopes. Multiple studies now show that hospitals can treat significantly more patients per day when they use single-use devices. As staffing shortages and rising patient volumes continue to strain health systems, this efficiency benefit is becoming increasingly valuable. Single-use endoscopes are also proving to be cost-effective when looking at the full budget impact. When hospitals factor in the cost of cleaning, repairs, maintenance, water, electricity, and the staff required to handle reusable devices, single-use often ends up being cheaper. This trend is reinforced by the steady decline in the cost of optronics and camera technology, which lowers the cost of each individual device. Sustainability is becoming another major catalyst. Hospitals are under pressure to reduce carbon emissions and water consumption, and reusable scopes require surprisingly large amounts of water, chemicals, and energy to clean and maintain. Early evidence shows that single-use endoscopes can meaningfully reduce emissions and resource use, especially in areas such as cystoscopy. This is becoming a strong selling point in Europe and is gaining traction in the United States. All of this supports a market that is growing at more than 20% per year through the end of the decade, far faster than the broader medtech industry. Underlying procedure growth explains only a small part of this. The real engine is the conversion from reusable to single-use, a shift that is expected to continue for many years because current adoption levels are extremely low.

Ambu’s product suite is a reason to invest in Ambu because the company offers the broadest and most advanced single-use endoscopy portfolio in the world at a time when the entire market is still in the very early stages of transitioning away from reusable scopes. This combination, leadership plus an underpenetrated market, creates a long runway for growth across all four major endoscopy areas. Only a small fraction of the global opportunity has been converted to single-use technology. Across urology, ENT, and gastroenterology, adoption today is at just 3–4%, and in gastroenterology it is still below 1%. Yet clinicians themselves believe that far more procedures could already be performed with single-use solutions. In a recent survey, they estimated that around 70% of procedures in respiratory care, urology, and ENT are suitable for single-use devices. This huge gap between what is possible and what is currently practiced shows just how much potential Ambu still has ahead of it. What makes Ambu stand out is that its product suite already covers the full range of endoscopy procedures, from simple, routine workflows to highly advanced interventions. The company started in respiratory care and gradually expanded into the larger ENT, urology, and gastroenterology markets. These newer areas are structurally underpenetrated, high-growth segments with decades of conversion potential. Ambu’s broad portfolio allows it not just to compete in these markets, but to shape them. This breadth also gives Ambu strong commercial momentum. The Endoscopy Solutions business continues to be the company’s main growth engine, with all four endoscopy areas contributing. Respiratory care is the most developed segment, yet even here only 20% of the market has switched to single-use. The momentum is even stronger in urology, ENT, and gastroenterology. Another reason the product suite matters is that it scales extremely well. Because Ambu already has a wide portfolio, each new product benefits from shared technology, manufacturing, and commercial infrastructure. Hospitals also tend to adopt Ambu products more quickly once they are familiar with one part of the portfolio, creating a powerful cross-selling effect. This is why Ambu continues to grow both new customer accounts and the depth of usage within existing customers.

Innovation is a reason to invest in Ambu because the company has built its entire strategy around continuously improving the way endoscopy is performed, making procedures faster, safer, easier, and more cost-effective for hospitals. This commitment to innovation is not just about new products; it’s about creating a long-term competitive advantage in a market that is still in the early stages of shifting to single-use technology. Ambu has repeatedly shown that it can bring meaningful new technology to market. The company has launched advanced solutions such as the aScope 5 Broncho, the Ambu SureSight video laryngoscope, and its next-generation urology scopes, each of which expands what single-use endoscopy can do. These launches typically follow a predictable pattern: adoption starts gradually, builds steady momentum as customers gain experience, and then continues to grow for years. This long tail of growth is why Ambu’s innovation pipeline is so important, it feeds future revenue streams that compound over time. One of Ambu’s biggest strengths is that technology is moving in its favour. Cameras, sensors, and digital components are becoming smaller, better, and far cheaper. This allows Ambu to offer higher-quality single-use scopes at prices that are increasingly attractive to hospitals. As image quality and reliability improve, the clinical argument for single-use becomes even stronger, accelerating the shift away from reusable scopes. Ambu’s innovation isn’t limited to one clinical area either. The company is improving and expanding solutions across respiratory care, urology, ENT, and gastroenterology. These innovations allow Ambu to enter new clinical procedures, serve new hospital departments, and move into more advanced interventions, such as kidney stone management with the new aScope 5 Uretero. Each new product opens the door to additional customers and creates more opportunities for cross-selling across the portfolio.

Upgrade Your Investment Research — Black Friday Deals Are Live

If you’ve been thinking about improving your research process or getting deeper insights into the market, now’s the time.

Seeking Alpha just launched their Black Friday offer — their biggest of the year.

These deals are available until December 10:

·Premium: $299 → $239/year (Save $60) + 7-day free trial for new users

You can try all Premium features — full access to analysis, stock ratings, and data tools — completely free for 7 days.

If you don’t like it, just cancel within the trial period and it won’t cost you anything.

👉 Get the Premium offer here

·Alpha Picks: $499 → $399/year (Save $100)

This service has returned +287% vs. the S&P 500’s +77% since July 2022.

👉 Get the Alpha Picks offer here

·Bundle (Premium + Alpha Picks): $798 → $574/year (Save $224)

Their best-value offer, combining in-depth research and top stock recommendations in one package.

👉 Get the Bundle offer here

I personally find Seeking Alpha’s Premium tools and analysis extremely helpful for company research, portfolio tracking, and discovering new investment ideas.

Take advantage of the offer while it lasts — it’s only available once a year.

Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 2,28, which is from 2025. I have selected a projected future EPS growth rate of 15%. Finbox expects EPS to grow by 21% a year in the next five years but 15% is the highest I use. Additionally, I have selected a projected future P/E ratio of 30, which is twice the growth rate. This decision is based on Ambu's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be DKK 68,40. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Ambu at a price of DKK 34,20 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 791, and capital expenditures were 117. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 82 in our calculations. The tax provision was 146. We have 266,4 outstanding shares. Hence, the calculation will be as follows: (791 – 82 + 146) / 266,4 x 10 = DKK 32,09 in Ten Cap price.

The final calculation is called the Payback Time price. It is a calculation based on the free cash flow per share. With Ambu's Free Cash Flow Per Share at DKK 2,53 and a growth rate of 15%, if you want to recoup your investment in 8 years, the Payback Time price is DKK 39,94.

Conclusion

I believe Ambu is an intriguing company with strong management and a clear competitive moat built through its pioneering role in single-use endoscopy. After several years of weaker returns, the company has once again reached a ROIC of 10%, the first time since fiscal year 2019, and even though free cash flow dipped slightly in fiscal year 2025 due to deliberate decisions to build inventory ahead of major launches and safeguard supply in a volatile geopolitical environment, it still reached its second-highest level ever. Macroeconomic factors remain a risk because currency swings, tariffs, and global political developments can affect costs and earnings in ways Ambu cannot fully control, and regulatory risk is always present in a highly regulated industry where even minor compliance issues can lead to delays, fines, or reputational damage. Ambu also operates in healthcare systems that face constant cost pressure, which can slow the adoption of new technologies even when they offer clear long-term benefits. Despite these risks, the case for Ambu is strengthened by powerful tailwinds. The global shift from reusable to single-use endoscopes is a long-term structural trend, and Ambu, as the market leader, is well positioned to benefit as hospitals increasingly prioritize efficiency, cost savings, infection control, and sustainability. Its broad product suite is another advantage, giving Ambu the widest single-use endoscopy portfolio in the world and allowing it to grow across respiratory care, urology, ENT, and gastroenterology, all of which remain at very low penetration levels with significant room to expand. Innovation further supports the investment case, as Ambu continues to develop new, higher-performing solutions that open the door to new procedures, new customers, and long-lasting growth opportunities. Overall, I believe Ambu is a quality company, and buying shares at the intrinsic value of the Margin of Safety price of DKK 68 would be a solid long-term investment.

My personal goal with investing is financial freedom. It also means that to obtain that, I do different things to build my wealth. If you have some extra hours to spare each month, you can turn a few hours a week into a substantial amount of money in a few years. If you are interested to know how I do it, you can read this post.

I hope you enjoyed my analysis! While I can’t post about every company I analyze, you can stay updated on my trades by following me on Twitter. I share real-time updates whenever I buy or sell, so if you’re making your own investment decisions, be sure to follow along!

Some of the greatest investors in the world believe in karma, and in order to receive, you will have to give. If you appreciated my analysis and want to get some good karma, I would kindly ask you to donate a bit to ADEPAC. It is a charity I know first hand and I know they do a great job and have very little money. If you have a few Euros to spare, please donate here by clicking on the Paypal icon. Even one or two Euros will make a difference. Thank you.