EQS Group-Ad-hoc: Medacta Group SA / Key word(s): Interim Report
Medacta Group SA: 2019 Half-Year results
03-Sep-2019 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 KR
The issuer is solely responsible for the content of this announcement.
*Press Release*
*Medacta expands further achieving strong revenue growth and profitability *
Castel San Pietro, 3 September 2019 - Medacta Group SA ("Medacta",
SIX:MOVE), a high-growth, pure play orthopedics company, published its
semi-annual report today. Medacta continued to outperform the market and
achieved revenues of EUR 151.6 million, up by 13.8% in comparison to the
previous year (+11.0% at constant currency). Sales increased in all regions
and across all business lines. The adjusted and normalized EBITDA (as
defined below) reached EUR 47.0 million, corresponding to a margin of 31.0%.
Guidance for the full-year 2019 is confirmed, and Medacta expects sales
growth in the teens range (13-17%) at constant currency and an adjusted
EBITDA margin of 32% +/- 100 basis points.
Francesco Siccardi, CEO of Medacta, commented on the successful first
half-year 2019: "I am pleased with the pace of expansion and the solid
results achieved. Our core business continues to prosper, well sustained by
the global accelerated growth, in particular in the US market. The new
Shoulder business line has been successfully launched on a global scale,
while the Spine growth, especially in the US, did not fully meet our
expectations. We are committed to reach our communicated growth and margin
targets and exploit market opportunities in the best interest of the company
and its shareholders."
+------------------------------------+------------+------------+
|*Key financial figures (Euro |*30.06.2019*|*30.06.2018*|
|million)* | | |
+------------------------------------+------------+------------+
|Revenues |151.6 |133.3 |
+------------------------------------+------------+------------+
|Gross profit |111.6 |99.7 |
+------------------------------------+------------+------------+
|OPEX |94.3 |69.2 |
+------------------------------------+------------+------------+
|EBITDA |33.5 |42.8 |
+------------------------------------+------------+------------+
|Adjusted and normalized EBITDA* |47.0 |43.2 |
+------------------------------------+------------+------------+
|Adjusted and normalized EBITDA |31.0% |32.4% |
|margin* | | |
+------------------------------------+------------+------------+
|Free Cash Flow |(11.4) |(6.7) |
+------------------------------------+------------+------------+
|Adjusted and normalized Free Cash |2.0 |8.0 |
|Flow* | | |
+------------------------------------+------------+------------+
* Adjusted for IPO costs and extraordinary legal expenses (Euro 4.3
million), one-time tax duty (Euro 5.7 million), and normalized for the
M.O.R.E. Symposium Lugano (Euro 4.9 million incremental costs) and positive
effect from IFRS 16 adoption (Euro 1.4 million).
*Strong organic growth in all the key markets*
Medacta is growing significantly faster than the global orthopedics market.
This trend continued in the first half of 2019 as Medacta sales increased by
13.8% compared to the same period last year, from Euro 133.3 million to Euro
151.6 million. The solid growth was driven by increased sales in all regions
and business lines. Currency effects had a positive impact on reported
results, mainly due to the development of the US Dollar and the Swiss Franc
against the Euro, with total sales growth of 11.0% YoY at constant currency.
In a market showing an average growth rate of about 3-4%, Medacta has
outgrown the market in all regions, recording a strong organic growth.
The growth in the US, equal to 17.7% YoY at constant currency and reported
revenue for Euro 45.2 million, was particularly high and higher than prior
period performance thanks to the effective expansion of the sales force in a
country with a low market penetration, supported by a strong execution. In
the course of the first semester, the new US headquarters in
Franklin/Tennessee was inaugurated, with planned investments of around Euro
2.5 million.
In Europe, the largest region in terms of revenues, sales increased by 8.2%
YoY at constant currency to Euro 70.6 million, in line with last year's
growth.
In the APAC region the sales increase was 7.6% YoY at constant currency,
with reported sales of Euro 30.3 million, as a result of a strong growth in
Japan and a temporary weaker development in Australia.
In the other minor markets, the increase of 18.2% YoY at constant currency
was notable due to the revenues generated by successful distributors.
*Core business prospering and successful entry in the shoulder market*
Overall, Medacta's surgical approach is predominantly seen as a substitute
for standard procedures because it offers better operating room efficiency,
better accuracy and ultimately better patient well-being.
The pioneering technology is AMIS (Anterior Minimally Invasive Surgery), a
hip replacement technique that follows both an intermuscular and
internervous path to greatly decrease damage to periarticular structures
while preserving tissue, and which is supported by the industry's most
detailed surgeon training protocol. In May 2019, the AMIS procedure was
successfully applied worldwide for the 350,000th time. As a result of this
strategy, the largest Medacta's Joints product line, Hip, continues growing
significantly faster than the market, achieving sales growth of 6.4% YoY at
constant currency and reported sales of Euro 82.9 million.
In the Knee product line, there was strong growth of 13.5% YoY at constant
currency, with reported sales of Euro 53.7 million. These were mainly driven
by successful geographic expansion, supported by a best-in-class product
portfolio and educational programs on GMK Sphere, Kinematic Alignment and
single-use instruments. The core Hip and Knee business grew by 9% YoY at
constant currency in the reporting period, in line with the previous year's
growth.
The Shoulder business has been successfully launched on a global scale and
is steadily growing in line with management expectations, reaching a growth
rate of around 170% YoY at constant currency and reported revenue of Euro
4.2 million. The whole Joint business grew by 11% YoY at constant currency,
slightly better than last year's performance.
Sales in the Spine business line increased by 11.1% YoY at constant currency
to Euro 10.9 million, but has not yet fully met the company's expectations.
We continue to invest in R&D to support our strategy, and we are glad to
inform you that in 2019 the Minimally Invasive MySpine Midline Cortical (MC)
platform has been recognized as this year's "Best Healthcare
Navigation/Robotics Solution" by MedTech Breakthrough. Medacta is confident
that the reorganization of its Spine sales department that has been
initiated, along with investments to develop its product portfolio, will
yield positive results, especially in the US. This business line is expected
to grow significantly faster in the second half of the year, which we expect
will have a noticeable effect on operating profit.
*High profitability *
For the first time in Medacta's history, Gross Profit exceeded the Euro 100
million threshold. It increased by 11.9% YoY from Euro 99.7 million in the
previous year to Euro 111.6 million in the reporting period due to the
revenue growth achieved. The Gross Profit margin showed a reduction of 1.2
percentage points to 73.6% in comparison to the previous year, due to
expected price reductions that occurred in the second semester of 2018 in
certain European countries, and to the limited growth in the Spine business
line, which only partially offset the negative price trend in the core
business.
*Normalized EBITDA of 31.0%*
Medacta continued to invest in the growth of the company, and this is
reflected in an increase in business-related costs. Operating expenses
increased by Euro 25.1 million, from Euro 69.2 million in the previous year
to Euro 94.3 million in the first semester of 2019. These included onetime
expenses associated with the IPO and extraordinary legal costs of around
Euro 10 million. Excluding IPO costs and pre-IFRS 16, operating expenditures
increased by Euro 15 million, of which approximately Euro 6 million were
related to the 9th M.O.R.E. Symposium in Lugano. The Symposium was a
successful event where more than 1,500 attendees took part in tailor-made
orthopedic training sessions on Medacta's innovative surgical techniques and
implants.
Adjusted for IPO and non-recurrent costs, EBITDA amounted to Euro 43.5
million (H1 2018: Euro 43.2 million), corresponding to a margin of 28.7% (H1
2018: 32.4%). In addition to the adjustments we normalized the June 30, 2019
EBITDA to ensure comparability with prior period. The normalization
adjustments are related to the abnormal concentration of costs for the
Symposium event in Lugano, for an amount of approximately Euro 4.9 million
out of the total Euro 6 million, and the adoption of the IFRS 16 effective
January 1, 2019, which resulted in a positive impact of Euro 1.4 million.
Adjusted and normalized EBITDA, comparable to the previous year, was Euro
47.0 million, equal to 31.0% as a percentage of revenue (H1 2018: Euro 43.2
million or 32.4%). The reported operating income at EBITDA level amounted to
Euro 33.5 million, corresponding to a margin of 22.1%.
*Tax rate reduction*
Net profit amounted to Euro 11.3 million, compared to Euro 24.2 million in
the previous year. The reduction in net profit is mainly due to the
above-mentioned exceptional costs of around Euro 14.9 million, and to net
financial costs of Euro 3.9 million, out of which Euro 3.3 million are
related to unrealized exchange rate losses. The tax rate for the first
semester is significantly lower than the previous year, shifting from 20% to
about 16%. This reduction is due to the revision of the communal tax rate
where the Group has its registered office, Castel San Pietro (CH) and
resulted in approximately 1% reduction in the nominal tax rate at
consolidated level. Further to this reduction we had a one-off additional
positive effect given by the update of Medacta's deferred tax assets and
liabilities.
*Operating Cash Flow*
Cash flow from operating activities amounted to Euro 14.8 million, after
investments in operating working capital of Euro 13.1 million, mainly due to
additional goods in stock to sustain the revenue growth. Adjusted for
exceptional costs, Cash Flow from operating activities was equal to around
Euro 28.3 million.
*Outlook 2019*
Surgeons are at the heart of the Medacta system. Since the technology used -
"how to implant the implant" - is of great importance for realizing the
added value of Medacta solutions, Medacta offers comprehensive education and
training programs for surgeons. It is therefore particularly gratifying that
the positive feedback after the 9th M.O.R.E. Symposium in Lugano is already
generating new customers, which we expect will contribute to further
increase sales growth in the second semester across all our existing
business lines and key markets.
For the full-year 2019, Medacta confirms its guidance with sales growth at
constant currency in the mid-teens range (13-17%) and an adjusted EBITDA
margin of 32% (+/- 100 basis points).
*Detailed reporting*
Medacta's half-year report 2019 can be downloaded via the following link:
https://www.medacta.com/EN/financial-reports [1]
*Conference call today at 02.30 pm (CEST)*
Medacta will present its half-year results 2019 during a conference today at
02:30 pm (CEST). Francesco Siccardi (CEO) and Corrado Farsetta (CFO) will
present the results followed by a question and answer session. The call will
be held in English.
Conference ID: EV00094358
Dial-in numbers: CH: +41 445806522
DE: +49 69201744220
UK: +44 2030092470
USA: +1 8774230830
PIN: 70034258#
To follow the presentation, please use the below webcast link (no audio
signal): https://webcasts.eqs.com/medactaint20190903/no-audio [2]
The conference call can also be followed live as a webcast with audio signal
and presentation via the following link:
https://webcasts.eqs.com/medactaint20190903 [3]
*Financial Calendar*
6 April 2020 Full-year results 2019
19 May 2020 Annual General Meeting
*Contact*
Medacta Group SA
Corrado Farsetta, CFO
Phone: +41 91 696 60 60
investor.relations@medacta.ch
*About Medacta *
Medacta is an international orthopedics company specializing in the design
and production of innovative orthopedic products and the development of
accompanying surgical techniques. Established in 1999 in Switzerland,
Medacta's products and surgical techniques are characterized by innovation.
Medacta is a pioneer in developing new offerings on the basis of minimally
invasive surgical techniques, in particular its Anterior Minimally Invasive
Surgery ("AMIS") technique for hip replacements. Medacta has leveraged its
orthopedic expertise and comprehensive understanding of the human body to
develop the sophisticated "MySolutions" technology, which offers surgeons
highly personalized pre-operative planning and implant placement
methodologies by creating advanced personalized kinematic models and 3D
planning tools for use in hip, knee, shoulder and spine procedures. Medacta
is headquartered in Castel San Pietro, Switzerland, and employs 1'041
people. To learn more about Medacta, please visit www.medacta.com
*Disclaimer *
This press release has been prepared by Medacta Group SA ("Medacta" and
together with its subsidiaries, "we", "us" or the "Group"). The information
contained in the press release does not purport to be comprehensive. Please
refer to the Medacta Half-Year Report 2019 available on our website at
https://www.medacta.com/EN/investors.
*Unaudited Financial Results*
The financial information contained in this press release is unaudited.
*Forward-looking information*
This press release has been prepared by Medacta and includes forward-looking
information and statements concerning the outlook for our business. These
statements are based on current expectations, estimates and projections
about the factors that may affect our future performance. These
expectations, estimates and projections are generally identifiable by
statements containing words such as "expects," "believes," "estimates,"
"targets," "plans," "outlook" or similar expressions.
There are numerous risks and uncertainties, many of which are beyond our
control, that could cause our actual results to differ materially from the
forward- looking information and statements made in this press release. The
important factors that could cause such differences include: changes in the
global economic conditions and the economic conditions of the regions and
markets in which the Group operates; changes in healthcare regulations (in
particular with regard to medical devices); the development of our customer
base; the competitive environment in which the Group operates; manufacturing
or logistics disruptions; the impact of fluctuations in foreign exchange
rates; and such other factors as may be discussed from time to time.
Although we believe that our expectations reflected in any such
forward-looking statement are based upon reasonable assumptions, we can give
no assurance that those expectations will be achieved.
*Alternative Performance Measures*
This press release may contain information regarding alternative performance
measures. Definitions of these measures and reconciliations between such
measures and their IFRS counterparts if not defined in this press release
may be found on pages 9 to 12 of the Medacta Half Year Report 2019 available
on our website at https://www.medacta.com/EN/investors.
.
End of ad hoc announcement
Language: English
Company: Medacta Group SA
Strada Regina
6874 Castel San Pietro
Switzerland
Phone: +41 696 6060
E-mail: info@medacta.ch, investor.relations@medacta.ch
Internet: www.medacta.com
ISIN: CH0468525222
Listed: SIX Swiss Exchange
EQS News ID: 867379
End of Announcement EQS Group News Service
867379 03-Sep-2019 CET/CEST
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(END) Dow Jones Newswires
September 03, 2019 01:00 ET (05:00 GMT)
