Ambu A/S: Interim report for Q2 2019/20 and for the period 1 October 2019 to 31 March 2020
Accelerating commercial investments in GI and urology after submitting the aScope™ Duodeno for FDA-approvalAmbu posted organic growth of 24% in Q2 as COVID-19 pandemic increased the demand for single-use devices. As a result, Ambu grew 19% in the first half of the year. Product launches for this year are progressing as planned, Ambu’s application for FDA-approval of the duodenoscope has been submitted, and further investments in the global sales organization are initiated. Full-year guidance for organic growth is lifted from “16-22%” to “26-30%” as already announced, and EBIT margin guidance for the full-year is resumed at 12-14% including commercial investments.“This has been an extraordinary quarter in many ways. The world faces a global health crisis, which impacts governments, healthcare systems, healthcare professionals and society in general. At Ambu, we have worked tirelessly since the start of this crisis to make our products available globally, especially single-use bronchoscopes and resuscitators, which are used in the treatment of COVID-19 patients. The COVID-19 pandemic has highlighted the value of single-use endoscopy in helping avoid cross-contamination and ensuring patient safety. I would like to thank all of our employees for their professionalism, dedication and engagement throughout this crisis,” says CEO Juan Jose Gonzalez.
Highlights for the quarter and half-yearFor Q2, revenue totaled DKK 989m, yielding a 26% reported growth from last year (DKK 785m). COVID-19 accounted for 14 percentage points of growth or approx. 110m DKK, which should be considered as a one-off event and be excluded from future projections. Reported growth in the half-year was 21%. Organic growth for Q2 and the half-year was 24% and 19%, respectively.EBIT before special items for the quarter was DKK 150m (DKK 195m) with an EBIT margin before special items of 15.2% (24.8%), while the figures for the half-year were DKK 243m (DKK 307m) and 13.9% (21.3%).In Q2, Visualization realized organic growth of 69%, Anaesthesia grew 3%, and PMD (Patient Monitoring & Diag-nostics) declined by -6%. For the half-year, organic growth rates were 49% for Visualization, 5% for Anaesthesia and 1% for PMD.For the quarter, organic growth of 17% was realized in North America, 40% in Europe and 2% in Rest of World. For the half-year, North America grew 16%, Europe 27% and Rest of World 6%.Sales of single-use endoscopes reached 313,000 units for the quarter and 493,000 units for the half-year. Sales volumes were thus up 72% and 49%, respectively, relative to last year.The upcoming launches of aScope™ 4 Cysto, aView™ 2 Advance, and aScope™ Duodeno are progressing according to plan. The aScope™ Duodeno has been submitted for 510(k) approval, and upon approval we will initiate a 500-patient post market study at multiple centers in the US.We have decided to accelerate our investment in the commercialization of new products by expanding the sales organization in US, Europe and Asia Pacific with additional 250 FTEs. The expansion is expected to increase the run-rate of costs in 2019/20 by an additional DKK 115m and be completed by end of Q1 2020/21. For the full-year 2020/21, the cost impact from the expansion is expected to be DKK 375m.Gross margin for the quarter was 61.4% (60.1%). The 1.3 percentage point increase is attributable to a more favorable sales mix from higher-margin products, including a channel mix from transitioning the U.S. distributor and a change in pricing policies back in Q4 2018/19. The gross margin for the half-year was 60.8% (60.0%).Capacity costs for the quarter totaled DKK 457m (DKK 277m), corresponding to a 65% increase. Capacity costs for the half-year were up 47%, mainly driven by the investments in commercial infrastructure.The net working capital to revenue ratio is 23% (25%) based on rolling 12-month revenue.Free cash flows before acquisitions totaled DKK -89m (DKK +11m), and for the half-year DKK -279m (DKK +56m).The sales outlook for the full year was upgraded on 6 April 2020 due to the higher-than-expected growth in Q2. The outlook for organic revenue growth was increased from “16-22%” to “26-30%”, and the guidance on the number of endoscopes sold was increased from “approx. 900,000” to “more than 1 million”.The outlook for the EBIT margin before special items was suspended on 6 April 2020 and is now resumed at 12-14%. This interval reflects our decision to accelerate our commercial infrastructure expansion into GI and urology and ensure the successful launches of aScope™ Duodeno and aScope™ 4 Cysto.The outlook for the financial year 2019/20 is:Organic growth in the range of 26-30%.EBIT margin before special items in the range of 12-14%.Sales of more than 1 million endoscope units.A conference call is held tomorrow, Tuesday 5 May 2020, at 10.00 (CEST). The conference is broadcast live via www.ambu.com/webcastQ22020. The presentation can be downloaded immediately before the conference call via the same link. To ask questions in the Q&A session, please call the following number five minutes before the start of the conference: +45 3544 5577 and enter the following access code: 84679279#.CONTACTS
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