Medartis Holding AG / Key word(s): Half Year Results/Personnel
Medartis Holding AG
Medartis announces half-year 2020 results and a change in the Executive Management Board
Medartis will today hold a telephone conference (in English) for the media, analysts and investors at 10:00 CEST.
* Alternative Performance Measure: Due to the latest economic developments, several currencies in which we also operate (mainly EUR, USD, AUD and BRL) have lost value compared to our reporting currency (CHF). We therefore show "FX adjusted" performance measures, calculated with a consistent currency FX rate for 2019 and 2020 (2019 monthly FX rates applied to 2020 figures), whereby Cost of Goods Sold is primarily production costs incurred in CHF. These alternative performance measures are only shown for the half-year 2020 and not for the half-year 2019, as the sole reason for these alternative performance measures is to show the operating performance in 2020 with no major FX influence, which only existed for the period under review.
Medartis generated sales of CHF 57.0 million in the first half of 2020, corresponding to a decline of 7% in local currencies compared with the same period last year. After a good start to the year, March closed slightly below the prior-year level due to the global restrictions in connection with the coronavirus pandemic. A sharp decline in sales was recorded in April and May as elective procedures were not permitted in most countries and trauma cases also declined due to mobility restrictions. In June, most key markets were already showing growth in local currencies compared with the previous year. In addition to coronavirus, the first half of 2020 was also marked by a significant strengthening of the Swiss franc.
On a CHF basis, the decline in sales in the first half of the year was equivalent to 12%; the difference compared with the decline of 7% in local currencies reflects in particular the currency developments against the US dollar, the euro, the Australian dollar and the Brazilian real.
On the cost side, Medartis initiated comprehensive cost-cutting measures at an early stage following the outbreak of the pandemic, including short-time work, not filling positions, and salary and bonus decreases for the Board of Directors and the Executive Management Board. With a view to future growth, however, the company continued to invest in innovation, strengthening the organization and strategic initiatives. Total operating expenses decreased by 6% to CHF 48.4 million in the first half of 2020; on a currency-adjusted basis, operating expenses decreased by 3%. Since the end of 2019, the workforce has been moderately increased by 12 positions to 621 employees.
Profitability at EBITDA level amounted to CHF 5.2 million, compared with CHF 8.7 million in the first half of 2019. The EBITDA margin was 9%, compared with 13% in the same period last year. The currency-adjusted EBITDA margin remained largely stable at 12%. EBIT was CHF -1.7 million, compared with CHF 2.4 million a year ago. Compared with the net profit of CHF 0.7 million in the first half of 2019, the net loss for the period under review was CHF -5.8 million after taking into account total currency losses of CHF 4.3 million (H1 2019: CHF 0.9 million). Cash flow from operating activities was CHF -0.2 million, compared with CHF 0.8 million in the first half of 2019.
Christoph Brönnimann, CEO of Medartis: "Our organization adapted very quickly to the corona situation and our production and supply chains functioned seamlessly. Thanks to the pace of growth at the beginning of the year and a well-prepared return after the lockdown, we were able to largely compensate for the corona-related sales decline and achieve an encouraging half-year result. In June, we already achieved year-on-year growth, and this trend continued in July. The newly launched products are providing momentum for the further course of business. We are confident that most of our key markets will achieve the planned growth rates during the second half of the year, provided the corona pandemic does not intensify again."
Development by region
Medartis' largest region, EMEA, reported a moderate decline in sales of 4% in local currencies to CHF 31.9 million, with higher single-digit growth rates being achieved again in June. In July, the growth trend continued at all subsidiaries except the UK. Overall, distributors were slightly below the previous year, recording a good performance in June and July. Spain again failed to meet expectations, resulting in Medartis' decision to establish its own subsidiary in the country starting in 2021.
North America achieved sales of CHF 9.3 million in the first half of 2020, a decline of 10% in local currency, with a strong start to the year being sharply slowed by Covid-19. However, double-digit growth rates were achieved again in June and July. In April, Lisa Thompson assumed her position as President North America and new Member of the Executive Management Board. She will continue to build and expand the US market as a top priority for Medartis, with a focus on strengthening sales (directly and through distributors) and establishing US-oriented product development capabilities.
In the APAC region, sales in local currencies amounted to CHF 10.8 million, remaining at the same level as in the first half of 2019. The impact on the sales trend was therefore the smallest in this region. The subsidiary in Australia, Medartis' strongest market in the region in terms of sales, slowed down slightly but was on budget in July. The new subsidiary in Japan performed well, recording very dynamic growth. In China, initial clinical cases were conducted in preparation for the start of sales activities planned for the fourth quarter of 2020.
In the first half of 2020, LATAM was the region that was affected most severely and for the longest period by Covid-19, reporting negative growth from March to June. Sales decreased by 26% in local currencies to CHF 4.9 million. The Brazilian subsidiary closed significantly below the previous year. The subsidiary in Mexico achieved a solid result with a lower sales loss, and sales in July were above the prior year.
Development by business segments
Although unplanned operations in trauma remained possible without restrictions during the lockdowns, these too declined in the reporting period due to mobility restrictions for large segments of the population - for example, fewer sports-related accidents were recorded.
The largest segment, Upper Extremities, which has the highest proportion of trauma cases, made the biggest contribution to the overall result with CHF 41.4 million (-6% in local currencies). Medartis benefited from its established position in its core markets and the good, long-standing cooperation with hospitals and surgeons. In the elbow segment, dynamic growth was achieved despite Covid-19 thanks to a training and sales offensive. As planned, Medartis introduced the wrist spanning plates for internal fixation of complex comminuted fractures, initially developed for the US market, in Europe and Asia in June and also launched a new forearm fracture system. The limited market launch of the clavicle system also began in June. With these additions, Medartis has now completed its plate and screw portfolio in the upper extremities.
Lower Extremities, Medartis' newest business segment with a higher proportion of elective procedures, recorded a 5% decline in growth in local currencies after a dynamic start to the year, and generated sales of CHF 8.2 million. Sales in June were again slightly above the prior year and a double-digit growth rate was recorded in July. The addition to the cannulated compression screw portfolio, developed in a period of five months, was launched in June as planned. However, due to the lack of elective cases, a decision was reached to extend the limited market release of the two systems for midfoot and hindfoot corrections and for fractures of the lower tibia and fibula; the full market launch of the two systems is now planned for the first quarter of 2021.
The CMF and Others segment, which comprises solutions for the craniomaxillofacial region as well as instruments and containers, recorded an 18% decline in sales in local currencies to CHF 7.4 million in the first half of 2020. The postponement of elective procedures had the most significant impact on sales in the CMF segment, which has a high proportion of elective procedures. In April, the new MODUS 2 product generation was launched as planned. It includes patient-specific drill and cutting guides and patient-specific implants for mandibular reconstruction, and for the first time, also a digital planning tool for surgeons.
Change in the Executive Management Board
Manuel Schaer has more than twenty years of international experience in the development of medical devices. He joins Medartis from DePuy Synthes Johnson & Johnson, where he held various management positions. Most recently, he was Senior Director responsible for the MDR readiness of the commercial organization. In previous management roles, he was involved in product development, R&D innovation, design quality and supply chains. Manuel Schaer is a Swiss citizen and holds a Master of Science in Mechanical Engineering and Biomechanics from the Swiss Federal Institute of Technology (ETH) in Zurich.
Manuel Schaer succeeds Thomas Tribelhorn, who has decided to take on a new challenge after 16 years at Medartis. The Board of Directors thanks Thomas Tribelhorn for his important, long-standing contributions, which have helped to shape the product development and success of Medartis, and wishes him all the best for the future.
Telephone conference for the media, analysts and investors (in English)
Participant's Link: Telephone conference half-year 2020 results
Participants may call the following numbers, 10-15 minutes before the conference start:
End of ad hoc announcement
|Company:||Medartis Holding AG|
|Phone:||+41 61 633 34 34|
|Fax:||+41 61 633 34 00|
|Listed:||SIX Swiss Exchange|
|EQS News ID:||1119561|
|End of Announcement||EQS Group News Service|
1119561 18-Aug-2020 CET/CEST