Agfa-Gevaert’s Strategic Pivot: Navigating Declines with Tech-Driven Growth

Amid the relentless decline of legacy film markets and macroeconomic uncertainty, Agfa-Gevaert has emerged as a paradoxical success story: a company thriving by strategically abandoning the past while investing aggressively in the future. For investors, the Belgian multinational’s Q1 2025 results reveal a compelling narrative of resilience—a blend of disciplined cost-cutting, rapid cloud-driven Healthcare IT growth, and a diversified portfolio that offsets cyclical headwinds. Here’s why Agfa now presents a rare buy opportunity, with catalysts poised to crystallize in the second half of 2025.

The Double-Edged Sword of Structural Declines

Agfa’s Radiology Solutions division, its historical core, faces an existential challenge. Medical film demand is collapsing, particularly in China, where hospitals shift to digital imaging. Q1 revenue dropped 15.6% year-on-year, and losses widened to €4.5 million. To combat this, Agfa is executing a brutal restructuring: closing its Bushy Park, South Carolina film plant by year-end to consolidate operations in Belgium. While painful, this move aligns with a €20 million cost-savings target for 2025, expected to lift profitability in H2 once savings materialize.

But here’s the critical pivot: Agfa isn’t just retreating from film—it’s reinvesting in higher-margin tech. The Healthcare IT division, the crown jewel of its future, delivered a staggering 63% surge in 12-month rolling order intake (€186 million vs. €114 million in 2024). This growth isn’t speculative—it’s anchored in real-world wins, including a live deployment of its Enterprise Imaging Cloud with Englewood Health (New Jersey) and a major contract with a Canadian clinic group.

The Cloud Payoff: Margin Expansion and Recurring Revenue

Healthcare IT’s Q1 performance wasn’t just about volume—it was a masterclass in margin engineering. Adjusted EBITDA jumped 288% to €5.0 million, with the margin soaring from 2.5% to 8.8% of revenue. This reflects two strategic bets paying off:

1. Cloud/SaaS Dominance: Recurring revenue now accounts for 61% of total Healthcare IT revenue, up from 48% in 2023. Cloud contracts, which carry higher margins and customer stickiness, now make up 15% of orders.
2. Proprietary Software Leadership: Agfa’s XERO Viewer and VNA (Vendor Neutral Archive) systems won top rankings in the 2025 HIMSS Best in KLAS Awards, underscoring their technological edge.

The result? A division once losing money now contributes meaningfully to the bottom line. Meanwhile, Healthcare IT’s 29% of orders from net-new customers (replacing competitors) signals secular disruption in the healthcare IT market—a trend that’s only accelerating.

Diversification Beyond Film: A Balanced Portfolio

Agfa’s other divisions are no afterthoughts. The Digital Print & Chemicals segment grew revenue 5.8% on strength in specialty films and chemical sales, while Radiology Solutions’ DR business (digital radiography) expanded 4.5%, buoyed by a major order from Qatar’s healthcare system. Even its green hydrogen division (ZIRFON)—stumbling in Western Europe due to regulatory delays—is positioning for growth with a new Belgian production plant opening in October.

This diversification matters. While Radiology Solutions drags on near-term profits, its DR business and emerging markets sales provide a floor. Meanwhile, Healthcare IT and specialty films are the engines of growth, ensuring Agfa isn’t overexposed to any single risk.

Valuation: Undervalued Amid Transition

Agfa trades at just 6.2x 2025E EV/EBITDA, a discount to peers like Konica Minolta (10.2x) and Siemens Healthineers (12.8x). This gap persists because investors are pricing in near-term pain from Radiology Solutions’ decline. But consider the catalysts ahead:

• Cost savings: H2 2025 will see the full impact of restructuring, potentially turning the group’s flat EBITDA (€2 million in Q1) into a profit driver.
• Healthcare IT scaling: With 61% recurring revenue and a pipeline of cloud contracts, the division’s margins could hit double digits by year-end.
• Balance sheet: Net debt of €72 million remains manageable (leverage ratio of 1.4x vs. a 3.0x covenant ceiling), giving Agfa flexibility for R&D or acquisitions.

Risks, but Manageable Ones

No investment is risk-free. Agfa’s path hinges on:
1. Execution: The Bushy Park closure must deliver promised savings without disrupting film supply chains.
2. Macro tailwinds: A prolonged global economic slowdown could delay Healthcare IT’s cloud adoption.
3. Regulatory hurdles: ZIRFON’s hydrogen business needs clearer policy frameworks in Europe.

Yet these risks are mitigated by Agfa’s strong liquidity, its technological differentiation in Healthcare IT, and the structural tailwinds of healthcare digitization.

Conclusion: Buy the Transition

Agfa-Gevaert is no longer a film company—it’s a tech-driven healthcare solutions provider with a disciplined cost structure and a diversified revenue base. The market’s focus on short-term pain in legacy businesses obscures the long-term opportunity: a company poised to leverage its 63% Healthcare IT order surge, 8.8% EBITDA margins, and €20 million cost savings to deliver outsized returns.

For investors with a 12–18 month horizon, this is a buy—ideally ahead of H2’s cost savings realization. The stock’s valuation discount and the Healthcare IT division’s momentum suggest significant upside once the restructuring gains traction. Agfa’s pivot isn’t just about survival—it’s about building a tech leader in a $50 billion global healthcare IT market. The future, it seems, is already here.