Ortho Clinical Diagnostics Reports Fourth Quarter and Fiscal Year 2020 Results
RARITAN, N.J., March 18, 2021 (GLOBE NEWSWIRE) — Ortho Clinical Diagnostics Holdings plc (Nasdaq: OCDX), one of the world’s largest pure-play in-vitro diagnostics (IVD) companies, today announced financial results for the fourth quarter and fiscal year ended January 3, 2021.
Fourth Quarter 2020 Operational Highlights“We continue to see strong momentum in our base business as reflected in our fourth quarter 2020 Core revenue growth of 9%,” said Chris Smith, chairman and chief executive officer, Ortho Clinical Diagnostics. “This was mainly driven by the continued double-digit growth in our integrated instrument installed base, as well as higher volumes in both the Clinical Laboratory and Transfusion Medicine product portfolios. In addition, the company showed great agility by developing and launching the first high throughput COVID-19 antibody test in Q4, 2020.”“The past 12 months have been foundational for Ortho, as we strengthened our leadership position as an innovator in infectious disease and donor testing,” said Smith. “In addition, we further enhanced our long-term growth profile, completed our IPO in February, strengthened our balance sheet, and established our position as one of the largest pure-play, publicly traded companies in the growing IVD market.”Core revenue, which excludes contract manufacturing and other licensing revenue, increased to $501.0 million dollars in the fourth quarter of 2020, compared with $455.1 million in the similar period last year, or a 9.1% increase on constant currency termsNet loss for the fourth quarter was $40.9 million, or $0.28 per share, compared with net income of $1.6 million, or $0.01 per share, in the fourth quarter of 2019Adjusted EBITDA for the fourth quarter was $133.6 million, an increase of 3.5% as compared to $129.1 million in the prior year periodAdjusted free cash flow for the fourth quarter was $101.5 million, an increase of 185.1% compared with $35.6 million in the prior year period
Results by Segment“Looking at the quarter’s Core revenue by geography, the Americas delivered 15.5% constant currency growth, driven from strategic commercial investments made in this region over the last 12-18 months. Western Europe and many emerging market countries, including India, Brazil and Mexico, showed signs of pandemic recovery especially late in the quarter. Greater China reported limited growth based on distributor decisions to reduce their inventory in response to the pandemic.” said Smith.Our revenues by segment were as follows:Balance Sheet and LiquidityAs of January 3, 2021, the Company had $132.8 million of cash and cash equivalents, compared to
$72.0 million of cash and cash equivalents on December 29, 2019. Total debt at January 3, 2021 totaled $3.7 billion, a 3.3% increase compared with $3.6 billion on December 29, 2019.Subsequent to quarter end:The Company completed its IPO in early February 2021, including full exercise of the over-allotment option by the underwriters, and raised approximately $1.4 billion in net proceeds that was used for debt reductionPro-forma balances at January 3, 2021 after IPO proceeds would have been $203 million of cash and cash equivalents and total net debt would have been $2.3 billionOrtho created additional financial flexibility by amending its revolving credit facility in February 2021 to upsize from $350 million to $500 million and extend the maturity date to 2026The Company received credit ratings upgrades by both Moody’s and S&P Global after reducing debt with the IPO proceedsFY 2021 OutlookOrtho today provided financial guidance for the fiscal year 2021 as follows:“We are starting 2021 from a position of financial strength with solid commercial momentum, which we expect will deliver constant currency Core revenue growth of 7% to 9% for fiscal year 2021. Q1 is off to a strong start and we expect to report year-over-year Core revenue growth of 15-18% constant currency,” said Joseph Busky, chief financial officer, Ortho Clinical Diagnostics. “Our focus as a newly public company is to continue investing strategically in the business to drive accelerated growth and shareholder value.”“After receipt of our IPO proceeds and using the mid-point of our projected FY 2021 Adjusted EBITDA range, our forward-looking net leverage ratio has improved to 4.5x and we expect to reduce our leverage by half a turn per year over the next few years,” said Busky.Conference Call InformationOrtho Clinical Diagnostics will hold a conference call to discuss its fourth quarter and full year 2020 results today, at 5:00pm ET.Interested parties can access the call and accompanying presentation on the “Investors” portion of the Company’s website at https://ir.orthoclinicaldiagnostics.com. Presentation materials will also be posted to the “Investors” portion of the website at the time of the call. Those unable to access the webcast may join the call via phone by dialing (833) 362-0203 (domestic) or (914) 987-7672 (international) and entering Conference ID number 2363936.A replay of the conference call will be available a few hours after the event on the investor relations section of the Company’s website, under the events section.About Ortho Clinical DiagnosticsOrtho Clinical Diagnostics (Nasdaq: OCDX) is one of the world’s largest pure-play in vitro diagnostics (IVD) companies dedicated to transforming patient care.More than 800,000 patients across the world are impacted by Ortho’s tests each day. Because Every Test is a Life™, Ortho provides hospitals, hospital networks, clinical laboratories and blood banks around the world with innovative technology and tools to ensure test results are fast, accurate, and reliable. Ortho’s customized solutions enhance clinical outcomes, improve efficiency, overcome lab staffing challenges and reduce costs.From launching the first product to determine Rh+ or Rh- blood type, developing the world’s first tests for the detection of antibodies against HIV and hepatitis C, introducing patented dry-slide technology and marketing the first U.S. Food and Drug Administration-authorized high-volume antibody and antigen tests for COVID-19, Ortho has been a pioneering leader in the IVD space for over 80 years. The Company is powered by Ortho Care™, an award-winning, holistic service and support program that ensures best-in-class technical, field and remote service to laboratories in more than 130 countries and territories around the globe. Forward Looking StatementsThis Press Release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements reflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such. Without limiting the foregoing, the words as “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. Factors that might materially affect such forward looking statements include: the ongoing global coronavirus (COVID-19) pandemic; increased competition; manufacturing problems or delays or failure to develop and market new or enhanced products or services; adverse developments in global market, economic and political conditions; our ability to obtain additional capital on commercially reasonable terms may be limited or non-existent; our inability to implement our strategies for improving growth or to realize the anticipated benefits of any acquisitions and divestitures, including as a result of difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations; a need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets; our ability to operate according to our business strategy should our collaboration partners fail to fulfill their obligations; risk that the insurance we will maintain may not fully cover all potential exposures; product recalls or negative publicity may harm our reputation or market acceptance of our products; decreases in the number of surgical procedures performed, and the resulting decrease in blood demand; fluctuations in our cash flows as a result of our reagent rental model; terrorist acts, conflicts, wars and natural disasters that may materially adversely affect our business, financial condition and results of operations; the outcome of legal proceedings instituted against us and/or others; risks associated with our non-U.S. operations, including currency translation risks, the impact of possible new tariffs and compliance with applicable trade embargoes; the effect of the United Kingdom’s withdrawal from the European Union; our inability to deliver products and services that meet customers’ needs and expectations; failure to maintain a high level of confidence in our products; significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs; reductions in government funding and reimbursement to our customers; price increases or interruptions in the supply of raw materials, components for our products, and products and services provided to us by certain key suppliers and manufacturers; our ability to recruit and retain the experienced and skilled personnel we need to compete; work stoppages, union negotiations, labor disputes and other matters associated with our labor force; consolidation of our customer base and the formation of group purchasing organizations; unexpected payments to any pension plans applicable to our employees; our inability to obtain required clearances or approvals for our products; failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals; the inability of government agencies to hire, retain or deploy personnel or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner; disruptions resulting from former President Trump’s invocation of the Defense Production Act; our inability to maintain our data management and information technology systems; data corruption, cyber-based attacks, security breaches and privacy violations; our inability to protect and enforce our intellectual property rights or defend against intellectual property infringement suits against us by third parties; risks related to changes in income tax laws and regulations; risks related to our substantial indebtedness; our ability to generate cash flow to service our substantial debt obligations; and risks related to the ownership of our ordinary shares, including the fact that we are a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.Non-GAAP Financial MeasuresThis press release contains financial measures, such as constant-currency growth rate, adjusted EBITDA, adjusted net income, adjusted diluted EPS and adjusted free cash flow, which are considered non-GAAP financial measures under applicable U.S. Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP). Adjusted EBITDA, adjusted net income, adjusted diluted EPS and adjusted free cash flow eliminate impacts of certain non-cash, unusual or other items that that we do not consider indicative of our ongoing operating performance. The Company’s definitions of these non-GAAP measures may differ from similarly titled measures used by others. The Company generally uses these non-GAAP financial measures to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results, comparison to competitors’ operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting the Company’s business. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables accompanying this release. For example, such reconciling items include the impact of unrealized foreign currency exchange gains or losses, gains or losses that are unusual or nonrecurring in nature, as well as discrete taxable events. We cannot estimate or project these items and they may have a substantial and unpredictable impact on our results presented in accordance with GAAP.Investors:
IR@orthoclinicaldiagnostics.comMedia:
media@orthoclinicaldiagnostics.com
Fourth Quarter 2020 Operational Highlights“We continue to see strong momentum in our base business as reflected in our fourth quarter 2020 Core revenue growth of 9%,” said Chris Smith, chairman and chief executive officer, Ortho Clinical Diagnostics. “This was mainly driven by the continued double-digit growth in our integrated instrument installed base, as well as higher volumes in both the Clinical Laboratory and Transfusion Medicine product portfolios. In addition, the company showed great agility by developing and launching the first high throughput COVID-19 antibody test in Q4, 2020.”“The past 12 months have been foundational for Ortho, as we strengthened our leadership position as an innovator in infectious disease and donor testing,” said Smith. “In addition, we further enhanced our long-term growth profile, completed our IPO in February, strengthened our balance sheet, and established our position as one of the largest pure-play, publicly traded companies in the growing IVD market.”Core revenue, which excludes contract manufacturing and other licensing revenue, increased to $501.0 million dollars in the fourth quarter of 2020, compared with $455.1 million in the similar period last year, or a 9.1% increase on constant currency termsNet loss for the fourth quarter was $40.9 million, or $0.28 per share, compared with net income of $1.6 million, or $0.01 per share, in the fourth quarter of 2019Adjusted EBITDA for the fourth quarter was $133.6 million, an increase of 3.5% as compared to $129.1 million in the prior year periodAdjusted free cash flow for the fourth quarter was $101.5 million, an increase of 185.1% compared with $35.6 million in the prior year period
Results by Segment“Looking at the quarter’s Core revenue by geography, the Americas delivered 15.5% constant currency growth, driven from strategic commercial investments made in this region over the last 12-18 months. Western Europe and many emerging market countries, including India, Brazil and Mexico, showed signs of pandemic recovery especially late in the quarter. Greater China reported limited growth based on distributor decisions to reduce their inventory in response to the pandemic.” said Smith.Our revenues by segment were as follows:Balance Sheet and LiquidityAs of January 3, 2021, the Company had $132.8 million of cash and cash equivalents, compared to
$72.0 million of cash and cash equivalents on December 29, 2019. Total debt at January 3, 2021 totaled $3.7 billion, a 3.3% increase compared with $3.6 billion on December 29, 2019.Subsequent to quarter end:The Company completed its IPO in early February 2021, including full exercise of the over-allotment option by the underwriters, and raised approximately $1.4 billion in net proceeds that was used for debt reductionPro-forma balances at January 3, 2021 after IPO proceeds would have been $203 million of cash and cash equivalents and total net debt would have been $2.3 billionOrtho created additional financial flexibility by amending its revolving credit facility in February 2021 to upsize from $350 million to $500 million and extend the maturity date to 2026The Company received credit ratings upgrades by both Moody’s and S&P Global after reducing debt with the IPO proceedsFY 2021 OutlookOrtho today provided financial guidance for the fiscal year 2021 as follows:“We are starting 2021 from a position of financial strength with solid commercial momentum, which we expect will deliver constant currency Core revenue growth of 7% to 9% for fiscal year 2021. Q1 is off to a strong start and we expect to report year-over-year Core revenue growth of 15-18% constant currency,” said Joseph Busky, chief financial officer, Ortho Clinical Diagnostics. “Our focus as a newly public company is to continue investing strategically in the business to drive accelerated growth and shareholder value.”“After receipt of our IPO proceeds and using the mid-point of our projected FY 2021 Adjusted EBITDA range, our forward-looking net leverage ratio has improved to 4.5x and we expect to reduce our leverage by half a turn per year over the next few years,” said Busky.Conference Call InformationOrtho Clinical Diagnostics will hold a conference call to discuss its fourth quarter and full year 2020 results today, at 5:00pm ET.Interested parties can access the call and accompanying presentation on the “Investors” portion of the Company’s website at https://ir.orthoclinicaldiagnostics.com. Presentation materials will also be posted to the “Investors” portion of the website at the time of the call. Those unable to access the webcast may join the call via phone by dialing (833) 362-0203 (domestic) or (914) 987-7672 (international) and entering Conference ID number 2363936.A replay of the conference call will be available a few hours after the event on the investor relations section of the Company’s website, under the events section.About Ortho Clinical DiagnosticsOrtho Clinical Diagnostics (Nasdaq: OCDX) is one of the world’s largest pure-play in vitro diagnostics (IVD) companies dedicated to transforming patient care.More than 800,000 patients across the world are impacted by Ortho’s tests each day. Because Every Test is a Life™, Ortho provides hospitals, hospital networks, clinical laboratories and blood banks around the world with innovative technology and tools to ensure test results are fast, accurate, and reliable. Ortho’s customized solutions enhance clinical outcomes, improve efficiency, overcome lab staffing challenges and reduce costs.From launching the first product to determine Rh+ or Rh- blood type, developing the world’s first tests for the detection of antibodies against HIV and hepatitis C, introducing patented dry-slide technology and marketing the first U.S. Food and Drug Administration-authorized high-volume antibody and antigen tests for COVID-19, Ortho has been a pioneering leader in the IVD space for over 80 years. The Company is powered by Ortho Care™, an award-winning, holistic service and support program that ensures best-in-class technical, field and remote service to laboratories in more than 130 countries and territories around the globe. Forward Looking StatementsThis Press Release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements reflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such. Without limiting the foregoing, the words as “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “targets,” “projections,” “should,” “could,” “would,” “may,” “might,” “will,” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. Factors that might materially affect such forward looking statements include: the ongoing global coronavirus (COVID-19) pandemic; increased competition; manufacturing problems or delays or failure to develop and market new or enhanced products or services; adverse developments in global market, economic and political conditions; our ability to obtain additional capital on commercially reasonable terms may be limited or non-existent; our inability to implement our strategies for improving growth or to realize the anticipated benefits of any acquisitions and divestitures, including as a result of difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations; a need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets; our ability to operate according to our business strategy should our collaboration partners fail to fulfill their obligations; risk that the insurance we will maintain may not fully cover all potential exposures; product recalls or negative publicity may harm our reputation or market acceptance of our products; decreases in the number of surgical procedures performed, and the resulting decrease in blood demand; fluctuations in our cash flows as a result of our reagent rental model; terrorist acts, conflicts, wars and natural disasters that may materially adversely affect our business, financial condition and results of operations; the outcome of legal proceedings instituted against us and/or others; risks associated with our non-U.S. operations, including currency translation risks, the impact of possible new tariffs and compliance with applicable trade embargoes; the effect of the United Kingdom’s withdrawal from the European Union; our inability to deliver products and services that meet customers’ needs and expectations; failure to maintain a high level of confidence in our products; significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs; reductions in government funding and reimbursement to our customers; price increases or interruptions in the supply of raw materials, components for our products, and products and services provided to us by certain key suppliers and manufacturers; our ability to recruit and retain the experienced and skilled personnel we need to compete; work stoppages, union negotiations, labor disputes and other matters associated with our labor force; consolidation of our customer base and the formation of group purchasing organizations; unexpected payments to any pension plans applicable to our employees; our inability to obtain required clearances or approvals for our products; failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals; the inability of government agencies to hire, retain or deploy personnel or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner; disruptions resulting from former President Trump’s invocation of the Defense Production Act; our inability to maintain our data management and information technology systems; data corruption, cyber-based attacks, security breaches and privacy violations; our inability to protect and enforce our intellectual property rights or defend against intellectual property infringement suits against us by third parties; risks related to changes in income tax laws and regulations; risks related to our substantial indebtedness; our ability to generate cash flow to service our substantial debt obligations; and risks related to the ownership of our ordinary shares, including the fact that we are a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.Non-GAAP Financial MeasuresThis press release contains financial measures, such as constant-currency growth rate, adjusted EBITDA, adjusted net income, adjusted diluted EPS and adjusted free cash flow, which are considered non-GAAP financial measures under applicable U.S. Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP). Adjusted EBITDA, adjusted net income, adjusted diluted EPS and adjusted free cash flow eliminate impacts of certain non-cash, unusual or other items that that we do not consider indicative of our ongoing operating performance. The Company’s definitions of these non-GAAP measures may differ from similarly titled measures used by others. The Company generally uses these non-GAAP financial measures to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results, comparison to competitors’ operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting the Company’s business. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables accompanying this release. For example, such reconciling items include the impact of unrealized foreign currency exchange gains or losses, gains or losses that are unusual or nonrecurring in nature, as well as discrete taxable events. We cannot estimate or project these items and they may have a substantial and unpredictable impact on our results presented in accordance with GAAP.Investors:
IR@orthoclinicaldiagnostics.comMedia:
media@orthoclinicaldiagnostics.com
