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12.03.2024 06:31:00 - dpa-AFX: EQS-Adhoc: Medartis increases sales by 21% (CER) and improves its underlying EBITDA margin to 16% (english)
Medartis increases sales by 21% (CER) and improves its underlying EBITDA
margin to 16%
PRESS RELEASE
Release of an ad hoc announcement pursuant to Art. 53 LR. The issuer is
solely responsible for the content of this announcement.
FULL-YEAR 2023 KEY FINANCIALS
rounded Repor- One-off Under- Report- One-off Under- in CHF at CER
EBIT 9.1 (1.8) 10.9 (1.9) (7.2) 5.3 103.8% 237.8%
Headcount 829 866 (4.3%)
EBITDA 15.0% 15.9% 8.9% 12.8% 3.0 PP 3.6 PP EBIT 4.3% 5.1% (1.1%) 2.9% 2.2 PP 3.3 PP
Basel, 12 March 2024: Medartis Holding AG (MED:SW), a leading orthopaedic
company specialising in head and extremity surgery, today reported sales of
CHF 212.0 million for the full year 2023, representing growth of 20.5%
(CER). Internal growth of 17.4% was driven by strong performance in EMEA,
LATAM and the US. The EMEA business made the largest contribution to growth
with an increase of 19.8%, further expanding its strong market position in
both upper and lower limb. In line with its growth strategy, the company is
aiming for mid-teens sales growth in 2024.
The company's sales grew due to the strong performance of existing products
and the successful launch of new products for the upper and lower
extremities. The conversion from the first generation to the 'Modus
2'-system in the head segment (cranio-maxillofacial) additionally
contributed to growth. The remarkable acceleration of KeriMedical, and in
particular the strong demand for the TOUCH saddle joint prosthesis, played a
significant role in the company's success in EMEA. In the important US
market, the expansion of the distribution channel and the launch of the
Field Orthopaedics hand products as well as KeriFlex were the most important
factors.
Thanks to this strong sales growth, Medartis also achieved higher
profitability in 2023. EBITDA totalled CHF 31.9 million, which corresponds
to a margin of 15.0%. In May, Medartis faced an IT attack. This was swiftly
resolved, but the resulting one-off costs lowered the EBITDA margin by 0.9
percentage points. Excluding non-recurring effects in both periods, the
underlying EBITDA margin increased from 12.8% to 15.9%. The decline in the
gross margin was attributable to a less favourable product mix,
characterised by increased third-party business and a higher proportion of
distribution products. However, this was more than offset by strong
operating leverage and effective cost control measures. After taking
financial expenses and taxes into account, net profit totalled CHF 0.6
million.
Medartis' CEO Christoph Brönnimann commented: "In 2023, we completed another
successful business year marked by further share gains and improved
profitability and cash flow. Sales in three out of four regions soared in
the 20% range. In Europe, we exceeded the CHF 100 million milestone thanks
to the rollout of new products and the high acceptance of the KeriMedical
portfolio. In the US, we maintained our momentum and we are heading towards
our medium-term target of USD 80 million by 2025. The groundwork of the past
two years is yielding initial results and provides strong foundations for
our acceleration in 2024. Our focus for 2024 remains on expanding and
strengthening our US sales channel, improving profitability, reinforcing our
commercial teams and capitalising on the partnerships with Keri Medical and
Field Orthopaedics".
PERFORMANCE BY REGION AND PRODUCT CATEGORY
Table: Revenue development by region and year-on-year changes:
The largest region, EMEA, showed a strong all-round performance and achieved
year-on-year growth of 19.8% at CER. This allowed the company to surpass the
CHF 100 million regional sales threshold for the first time. The important
DACH region (Germany, Austria, Switzerland) grew significantly and exceeded
expectations despite already holding a significant market share. France and
the United Kingdom in particular grew rapidly over the course of the year.
The performance in the UK was driven by strong demand across all businesses
and by new customers, many of whom were attracted by the Keri Medical
portfolio. Medartis acquired the distribution rights for Keri Medical
products in the UK in H2 2021. In the third year since the Spanish
subsidiary was founded, the company continued the dynamic growth trajectory
of the previous years and delivered again an impressive increase. Poland and
the distributor markets also saw significant expansion. From a financial
perspective, the traditional EMEA subsidiaries generate strong cash flow
that enables the company to strategically develop new markets, expand
further in existing markets and acquire new customers.
Keri Medical played a pivotal role in the growth of the German, Austrian,
and British subsidiaries and contributed half of the growth in the upper
extremities segment. In addition, the overall growth in the upper
extremities segment was further bolstered by the recent launches of
Clavicle, Ulna Shortening, and Forearm, as well as significant market growth
in Medartis' largest business - the wrist. In 2023, Medartis introduced
several solutions aimed at broadening its product portfolio and
strengthening its position as a leading pure-play extremity company.
Enhancing its upper extremities portfolio, the 'APTUS Distal Ulna System
2.5' offers surgeons a versatile and anatomical solution for treating a
range of distal ulna fractures, from simple extraarticular to complex
intraarticular head fractures. It integrates seamlessly with the company's
distal radius system, the company's best-selling product.
The lower extremities business enjoyed an impressive surge of 41% in EMEA
with strong contributions from the 'Ankle Trauma' and the 'CCS compression
screw' products, especially in Spain and the distributor markets. The
implant portfolio is complemented by the digital and patient-specific
functions of the CMX foot and ankle applications, which has been available
in selected markets since August 2023. Medartis attaches great strategic
importance to the area of lower extremities and aims to increase its market
share in the coming years. Three systems were launched in 2023 and more will
follow in 2024, targeting the treatment of flatfoot deformities and
arthritic feet. The momentum gained from these launches is expected to fuel
further growth in 2024.
In CMF, Medartis continued to successfully migrate existing customers from
'Modus 1' to the next-generation 'Modus 2' system, resulting in an increased
market share. Many countries also sent customers to the new 'IBRA Institute'
in Basel, where participants were able to benefit from real-life training
modules with pre-fractured human bone models. Positive feedback from
attending surgeons confirmed both the necessity and the success of these
training courses.
More than a quarter of growth contributed by new sales agents
Medartis' US business grew by 34.1% (CER) and generated full-year sales of
CHF 51.9 million, including CHF 10.8 million from contract manufacturing
orders for third-party customers. Excluding these, internal sales growth saw
a positive trend and surged by 20.5%. According to independent market data,
this is 3-4 times higher than the market average. More than a quarter of
this growth was contributed by the new independent sales agents who have
joined the Medartis network over the last two years.
The 20.5% growth was recorded across all product categories, but demand was
particularly strong in foot and ankle, wrist, and hand. The contributions
from KeriFlex and Field Orthopaedics supported this positive trajectory. In
the US, the addition of Field Orthopaedics' intramedullary nail portfolio
seamlessly complemented Medartis' hand portfolio. These products,
distributed alongside Medartis' own product portfolio, give surgeons the
option of using different fixation technologies. The company also launched
LapiPrep in Q2 2023, a technology acquired with the former NSI. LapiPrep
offers hands-free, triplanar correction-angle correction for bunion / hallux
valgus treatment cases, promising repeatable treatment results. While
customer feedback is promising, initial experiences underscore the
significance of medical training and education as well as clinical research
and feedback. These elements will continue to be key focal points for the
company in 2024 in order to strengthen its market position in the lower
extremities segment and promote surgeon engagement. In view of current and
upcoming product launches, Medartis plans to further expand its sales
network, which currently boasts 247 sales agents and representatives. In
2024, the company aims to broaden its sales channels even more while
enhancing its medical training capabilities. The recruitment of new talent
in crucial commercial areas, including marketing, training and education,
and sales, underscores the company's commitment to developing the
organisation further.
Following the successful integration of NSI and Medartis US over the past
year and a half, the company has strategically realigned key functions such
as manufacturing, logistics, quality, R&D and finance under global
oversight. Preparations for the production technology transfer from Basel to
Warsaw have concluded. Following validation tests, the inaugural production
of screws began in February 2024, with plates and surgical guides set to
follow later in the spring. This strategic move is aimed at leveraging the
manufacturing and engineering expertise housed in the modern
6,500-square-meter (69,500-square-foot) production facility in Warsaw. The
commercial and R&D departments are now seamlessly integrated into global
functional metrics, bundling capabilities and enhancing mutual support for
both current and upcoming product launches.
As part of early succession planning, the current US President, Rod K.
Mayer, has decided to retire following the completion of the integration of
NSI into Medartis. The company is well advanced in its search for a new
President of Sales & Marketing and sees this as an opportunity to further
expand its commercial footprint in the US market.
In the APAC region, full-year sales increased by 5.6% (CER) and reached CHF
31.5 million. In Swiss francs, however, sales decreased by 2.0% due to
unfavourable currency effects. The Australian market underwent a
transformative phase in 2023. The local authorities have imposed price cuts
of 12 % (affecting H1) and a further 5% (affecting H2), which had a
significant impact on the industry. Thanks to strong volume growth in the
mid-teens percentage range, Medartis Australia was able to compensate for
the effects of the price adjustments and further improve its market
position. To reflect the new pricing landscape, Medartis Australia has
adjusted its organisation and implemented a more adaptable sales model,
wherein certain sales representatives now operate as exclusive independent
agents.
In Japan, Medartis strengthened its direct organisation, achieving high
double-digit growth in the lower extremities segment. This development will
require additional set investments and the recruitment of new sales
representatives, but enables systematic expansion of its market presence
under one single management, with robust backing from IBRA and a
significantly strengthened franchise covering both lower and upper
extremities. Responding to local market needs, the company has also expanded
its in-house capacity for sterile packaging at its headquarters.
PERFORMANCE BY PRODUCT CATEGORY
Table: Revenue development by product category(3) and year-on-year changes:
Sales in in the LATAM region reached CHF 22.2 million, corresponding to a
strong increase of 19.4% at CER. Compared to the very strong growth in 2022,
Brazil experienced a more moderate growth rate in 2023 on the back of
alterations to the Brazilian Health Regulatory Agency (ANVISA) registration
processes and political uncertainty in H1 2023. The regulatory changes led
to a delay in new product approvals which extended into H2 2023. Conversely,
Medartis reported significant growth in Mexico, primarily as a result of the
acquisition of new tenders, selective price increases, and the continuous
optimisation of both direct and distributor sales channels.
Sales in the distributor markets Colombia and Costa Rica grew strongly,
reflecting a more systematic management approach marked by clear key
performance indicators (KPIs) and a strong emphasis on building customer
relationships. In Q4, the newly inaugurated IBRA Institute in Basel welcomed
a delegation of 65 surgeons from Brazil, who took part in intensive CMF
training courses. The region further reinforced its relationships with
regional business partners by inviting 45 sales representatives to the
Medartis HQ in Basel, providing updates on Medartis' strategy, and
conducting thorough training sessions for both existing and new products. In
addition, Medartis Brazil and Mexico received the employer branding label
'Great Place to Work', underscoring the positive workplace environment.
New CHRO appointed in March
Following the merger of Nextremity Solutions Inc. with Medartis US and the
consolidation to a single location, the company has harnessed synergies and
enhanced its regional profitability. Consequently, Medartis' workforce saw a
4% reduction in 2023, resulting in a total of 829 employees. In Switzerland,
where Medartis has its headquarters and main production facility, the number
of employees remained relatively stable and totalled 330 at year-end.
There was also a change at top management level a few days ago, as the Chief
Human Resources Officer (CHRO), Anthony Durieux-Menage, has decided to leave
the company by the end of March 2024 to pursue a new professional challenge
outside the orthopaedics industry. He will be seamlessly succeeded by Inge
Maes, who brings over 20 years of experience in the life sciences industry
from her work in clinical development as well as leading HR positions at
Sandoz and Novartis.
FINANCIAL PERFORMANCE
Improving profitability and cash management as basis for future growth
investments
In 2023, Medartis began enhancing its financial key performance indicator
(KPI) management, shifting towards a more cash-centric framework that
balances sales growth, profitability, and the optimisation of capital
employed. While sustainable growth remains a primary value driver in all
regions, awareness of total cash flow generation has increased in all
countries and functions of the organisation. This has resulted in the
optimisation of inventory levels and improved accounts receivable
management. At the same time, investments in new surgical kits were made
primarily for the launch of new products and customer acquisition. The
financial impact of these proactive measures can be seen in the income
statement, cash flow statement and balance sheet for 2023.
In 2023, the gross margin decreased by 2.6PP to 79.0% due to a combination
of various factors. In addition to unfavourable exchange rate effects, which
accounted for 0.8 PP, the largest impact (2.4 PP) was due to the higher
share of NSI's third-party business, which generates low margins. Excluding
third-party manufacturing, Medartis' gross margin would have remained stable
compared to the previous year at around 82.5%. Demand for NSI's low-margin
contract manufacturing business is expected to decline in 2024.
Medartis is using the acquired manufacturing capacities at its new plant in
Warsaw opportunistically as long as the ramp-up for Medartis own products is
not yet complete. Another factor diluting the margin is the very strong
growth of Keri Medical and Field Orthopaedic's products, which are
distributed by Medartis under a distribution agreement. Selective price
increases, a positive country mix and efficiency gains in manufacturing
protected the gross margin despite higher supplier costs. The IT attack
reported in H1 and the brief business interruption had a minor impact of 0.3
PP on the gross margin.
The reported OpEx ratio of 74.7% has improved by more than 8 PP compared to
the previous year. This reflects the initial cost efficiency improvements
already achieved in the US just one and a half years after the NSI
acquisition. Cost efficiency at the headquarters was also further improved
in 2023. Medartis continued to invest in sales and marketing as well as
medical education in all regions. In 2023, investments totalling 46% of
sales (or 62% of total OpEx) were made for customer-facing activities. A
further 12% of sales (or 16% of total OpEx) was dedicated to product
development, R&D and IBRA education. This reflects the company's commitment
to delivering continuous innovation to itscustomers worldwide.
Earnings before interest, taxes, depreciation and amortisation (EBITDA)
almost doubled to CHF 31.9 million, resulting in a reported EBITDA margin of
15.0%. Excluding the one-off costs of CHF 1.8 million in connection with the
IT attack, the adjusted EBITDA margin would have been 15.9% - 3.0 PP higher
than in the prior year.
The underlying operating profit (EBIT) improved from CHF 5.3 million in 2022
to CHF 10.9 million, corresponding to a margin of 5.1% (2022: 2.9%). The
share attributable to the associate Keri Medical was slightly negative (CHF
-0.6 million), reflecting the additional growth expenses and the expansion
of Keri Medical's production capacity in Archamps, France.
Medartis reported a positive net result of CHF 0.6 million compared to a net
loss of CHF 5.8 million in the previous year. This includes a financial
result of CHF -7.3m (2022: CHF -5.2m), mainly driven by adverse currency
movements as well as interest expenses from the NSI acquisition (contingent
consideration of CHF 1.4 million). Earnings per share increased from -0.49
to 0.05.
The measures implemented with a view to optimising capital efficiency
yielded positive results in 2023, particularly in the enhancement of set and
trade receivables management. Despite strong double-digit growth, trade
receivable saw only a marginal increase of CHF 0.3 million compared to a CHF
7.5 million increase in the previous year. In addition, inventories were
reduced by CHF 1.6 million. Together with improved accounts payable
management and a better operating result, this contributed to the
improvement in cash flow.
Cash flow from operating activities increased by CHF 23.2 million in 2023
and totalled CHF 20.0 million. In 2023, investments in property, plant, and
equipment (CapEx) of CHF 14.9 million included CHF 8.7 million in
consignment set investments to drive future procedure volumes. Set
investments mainly related to the upgrade from Modus 1 to Modus 2 in CMF and
to the expansion of the Keri Medical and Field Orthopaedics products. The
changes in cash outflow used for investing and financing activities was
mainly due to an increase in Medartis' ownership in Keri Medical SA
(current: 47.0%) for CHF 18.1 million, which was financed by net proceeds of
CHF 29.7 million from a capital increase in March. At year-end, Medartis
reported a cash position of CHF 25.2 million, which represents an increase
of CHF 4.6 million compared to one year previously.
Changes to the board proposed
After seven years serving on the Board of Directors at Medartis, Dr. med.
Daniel B. Herren has decided not to stand for re-election as Board member at
the Annual General Meeting 2024. The Board of Directors will propose Martha
Shadan and Jennifer Dean as new members. Both will be appointed as
Independent Non-Executive Directors at the upcoming Annual General Meeting
on 17 April 2024, subject to shareholder approval. Mrs Shadan, who was
previously CEO of the US medical technology companies Miach Orthopaedics and
Rotation Medical (acquired by Smith & Nephew), and has held senior positions
at Zimmer Biomet and Covidien. With her extensive experience of the US
orthopaedic market, she will be very valuable in supporting the management
and the board in the further US expansion. Mrs Dean, on the other hand, is
currently CFO at medmix, a medical technology company listed on the Swiss
stock exchange. She gained valuable international management experience at
Sulzer, GE and Alstom and is currently a Board member of the Australian
Swiss Chamber of Commerce. With her wide international financial experience,
she will be a natural addition to the company's Finance and Audit Committee.
They will both join the Board of Directors as independent members.
FULL-YEAR 2024 OUTLOOK
(barring any unforeseen circumstances)
Medartis is confident that it will continue to gain market share and make
significant progress in the US and its other core markets in 2024.
Management expects market conditions to remain challenging in Australia,
where it will face a further 5% price cut in July due to government
intervention. Taking all this into account, the company is aiming for global
growth in the mid-teens (15-17%). The underlying EBITDA margin at CER is to
be improved by around 1 PP in 2024 by striking a balance between further
operational efficiency improvements and strategic investments.
____________________________________________________________________________________
INTEGRATED ANNUAL REPORT 2023 AVAILABLE
The Medartis Annual Report 2023 including the audited condensed financial
statements and a comprehensive sustainability report was published today on
the company's website. Download PDF.
ANALYSTS' AND MEDIA CONFERENCE CALL
Medartis will present its 2023 full-year results to representatives of the
financial community and media in an audio webcast today at 10.30 am Swiss
time. A webcast of the event will be available at
https://event.choruscall.com/mediaframe/webcast.html?webcastid=aHE9aLN9. The
webcast will be hosted by Christoph Brönnimann (CEO) and Dirk Kirsten (CFO)
and the webcast language will be English. Download the presentation here.
An alternative option for anyone experiencing technical problems is to use
these telephone numbers:
Switzerland / Europe: +41 (0) 58 310 50 00
United Kingdom: +44 (0) 207 107 06 13
United States: +1 (1) 631 570 56 13
Please dial in five minutes before the start of the conference to register.
IMPORTANT DATES AND UPCOMING INVESTOR EVENTS
Date Event Broker Destination
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.
(1) "Internal growth" denotes the increase in sales at constant exchange
rates (CER), excluding the impact of mergers, acquisitions, and divestments.
The NSI's contract manufacturing business is classified as non-strategic and
is therefore excluded from this calculation. Internal growth serves as a
crucial performance indicator for management.
(2) The one-off costs in 2023 are related to the costs of remediating an IT
attack in May. The figures for 2022 exclude the one-off M&A costs for the
NSI acquisition and the discontinued China business in order to facilitate
an assessment of the underlying operational performance
(3) CMF & other product sales in 2023 include a CHF 10.8 million
contribution from NSI's third party manufacturing business.
About Medartis
Founded in 1997 and headquartered in Basel, Switzerland, Medartis (SIX Swiss
Exchange: MED / ISIN CH0386200239) is one of the world's leading
manufacturers and suppliers of medical devices for the surgical fixation of
bone fractures in the upper and lower extremities and the
craniomaxillofacial region. Medartis employs more than 830 people in 13
locations and its products are sold in more than 50 countries worldwide.
Medartis is committed to providing surgeons and surgical staff with the most
innovative titanium implants and instruments, as well as world-class
service. For more information, please visit www.medartis.com.
Disclaimer and forward-looking statements
Medartis product pictures and the company logo are trademarks of the
Medartis AG in Switzerland and various other countries. All other trademarks
are the property of their respective owners.
This communication does not constitute an offer or invitation to subscribe
for or purchase any securities of Medartis Holding AG. This publication may
contain certain forward-looking statements and assessments or intentions
concerning the company and its business. Such statements involve certain
risks, uncertainties and other factors which could cause the actual results,
financial condition, performance or achievements of the company to be
materially different from those expressed or implied by such statements.
Readers should therefore not place reliance on these statements,
particularly not in connection with any contract or investment decision. The
company disclaims any obligation to update these forward-looking statements,
assessments or intentions. Further, neither the company nor any of its
directors, officers, employees, agents, counsel or advisers nor any other
person makes any representation or warranty, express or implied, as to, and
accordingly no reliance should be placed on, the accuracy or completeness of
the information contained herein or of the views given or implied.
Your contact:
Medartis Holding AG
Hochbergerstrasse 60E
CH-4057 Basel
Corporate Communications
Investor contact: investor.relations@medartis.com
Media contact: corporate.communication@medartis.com
+41 61 633 37 36
____________________________________________________________
1856139 12-March-2024 CET/CEST
margin to 16%
Medartis Holding AG / Key word(s): Annual Results
Medartis increases sales by 21% (CER) and improves its underlying
EBITDA margin to 16%
12-March-2024 / 06:30 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this
announcement.
____________________________________________________________
PRESS RELEASE
Release of an ad hoc announcement pursuant to Art. 53 LR. The issuer is
solely responsible for the content of this announcement.
* Demonstrating further market share gains, full-year 2023 sales rose by
20.5%(CER) to CHF 212.0 million
* Internal sales growthF(1) of 17.4% (H2: 18.6%) reached the upper end of
the company's forecasts, with three out of four regions growing by
around 20%
* The EMEA region was the driving force with strong growth of 19.8%,
exceeding the CHF 100 million mark for the first time
* The US continued its momentum in H2 and achieved internal sales growth
of 20.5% (CER) for the year as a whole
* Tight cost management led to a reduction in OpEx of 8%-points (PP),
which increased the company's underlyingF(2) EBITDA margin to 15.9% and
strengthened cash flow and cash reserves
* In 2024, Medartis expects internal sales growth in the mid-teens range
and a further increase in the underlying EBITDA margin of around 1 PP
FULL-YEAR 2023 KEY FINANCIALS
in CHF FY 2023 FY 2022 Underly-
million, ing YoY
change
rounded Repor- One-off Under- Report- One-off Under- in CHF at CER
ted costs2 lying ed costs2 lying Total net 212.0 182.8 16.0% 20.5% sales Internal 201.2 177.8 17.4% net sales1 Gross 167.6 (0.5) 168.1 149.5 (0.2) 149.6 12.3% 17.7% profit EBITDA 31.9 (1.8) 33.6 16.2 (7.2) 23.4 43.4% 54.6%
EBIT 9.1 (1.8) 10.9 (1.9) (7.2) 5.3 103.8% 237.8%
Net 0.6 (5.8) profit / loss
Headcount 829 866 (4.3%)
(31 Dec)
Margins Change
in % of in
sales %-point-
s (PP)
Gross 79.0% 79.3% 81.8% 81.9% (2.6 (1.9
profit PP) PP)
EBITDA 15.0% 15.9% 8.9% 12.8% 3.0 PP 3.6 PP EBIT 4.3% 5.1% (1.1%) 2.9% 2.2 PP 3.3 PP
Net 0.3% 1.1% (3.2%) 0.8% 0.3 PP profit / loss
Basel, 12 March 2024: Medartis Holding AG (MED:SW), a leading orthopaedic
company specialising in head and extremity surgery, today reported sales of
CHF 212.0 million for the full year 2023, representing growth of 20.5%
(CER). Internal growth of 17.4% was driven by strong performance in EMEA,
LATAM and the US. The EMEA business made the largest contribution to growth
with an increase of 19.8%, further expanding its strong market position in
both upper and lower limb. In line with its growth strategy, the company is
aiming for mid-teens sales growth in 2024.
The company's sales grew due to the strong performance of existing products
and the successful launch of new products for the upper and lower
extremities. The conversion from the first generation to the 'Modus
2'-system in the head segment (cranio-maxillofacial) additionally
contributed to growth. The remarkable acceleration of KeriMedical, and in
particular the strong demand for the TOUCH saddle joint prosthesis, played a
significant role in the company's success in EMEA. In the important US
market, the expansion of the distribution channel and the launch of the
Field Orthopaedics hand products as well as KeriFlex were the most important
factors.
Thanks to this strong sales growth, Medartis also achieved higher
profitability in 2023. EBITDA totalled CHF 31.9 million, which corresponds
to a margin of 15.0%. In May, Medartis faced an IT attack. This was swiftly
resolved, but the resulting one-off costs lowered the EBITDA margin by 0.9
percentage points. Excluding non-recurring effects in both periods, the
underlying EBITDA margin increased from 12.8% to 15.9%. The decline in the
gross margin was attributable to a less favourable product mix,
characterised by increased third-party business and a higher proportion of
distribution products. However, this was more than offset by strong
operating leverage and effective cost control measures. After taking
financial expenses and taxes into account, net profit totalled CHF 0.6
million.
Medartis' CEO Christoph Brönnimann commented: "In 2023, we completed another
successful business year marked by further share gains and improved
profitability and cash flow. Sales in three out of four regions soared in
the 20% range. In Europe, we exceeded the CHF 100 million milestone thanks
to the rollout of new products and the high acceptance of the KeriMedical
portfolio. In the US, we maintained our momentum and we are heading towards
our medium-term target of USD 80 million by 2025. The groundwork of the past
two years is yielding initial results and provides strong foundations for
our acceleration in 2024. Our focus for 2024 remains on expanding and
strengthening our US sales channel, improving profitability, reinforcing our
commercial teams and capitalising on the partnerships with Keri Medical and
Field Orthopaedics".
PERFORMANCE BY REGION AND PRODUCT CATEGORY
Table: Revenue development by region and year-on-year changes:
in CHF million, FY 2023 FY 2022 Change Change Internal
rounded in CHF in CER growth (CER)
EMEA 106.5 91.4 16.5% 19.8% 19.8%
US 51.9 41.0 26.4% 34.1% 20.5%
APAC 31.5 32.1 -2.0% 5.6% 5.6%
LATAM 22.2 18.3 21.0% 19.4% 19.4%
Total Group 212.0 182.8 16.0% 20.5% 17.4%
The largest region, EMEA, showed a strong all-round performance and achieved
year-on-year growth of 19.8% at CER. This allowed the company to surpass the
CHF 100 million regional sales threshold for the first time. The important
DACH region (Germany, Austria, Switzerland) grew significantly and exceeded
expectations despite already holding a significant market share. France and
the United Kingdom in particular grew rapidly over the course of the year.
The performance in the UK was driven by strong demand across all businesses
and by new customers, many of whom were attracted by the Keri Medical
portfolio. Medartis acquired the distribution rights for Keri Medical
products in the UK in H2 2021. In the third year since the Spanish
subsidiary was founded, the company continued the dynamic growth trajectory
of the previous years and delivered again an impressive increase. Poland and
the distributor markets also saw significant expansion. From a financial
perspective, the traditional EMEA subsidiaries generate strong cash flow
that enables the company to strategically develop new markets, expand
further in existing markets and acquire new customers.
Keri Medical played a pivotal role in the growth of the German, Austrian,
and British subsidiaries and contributed half of the growth in the upper
extremities segment. In addition, the overall growth in the upper
extremities segment was further bolstered by the recent launches of
Clavicle, Ulna Shortening, and Forearm, as well as significant market growth
in Medartis' largest business - the wrist. In 2023, Medartis introduced
several solutions aimed at broadening its product portfolio and
strengthening its position as a leading pure-play extremity company.
Enhancing its upper extremities portfolio, the 'APTUS Distal Ulna System
2.5' offers surgeons a versatile and anatomical solution for treating a
range of distal ulna fractures, from simple extraarticular to complex
intraarticular head fractures. It integrates seamlessly with the company's
distal radius system, the company's best-selling product.
The lower extremities business enjoyed an impressive surge of 41% in EMEA
with strong contributions from the 'Ankle Trauma' and the 'CCS compression
screw' products, especially in Spain and the distributor markets. The
implant portfolio is complemented by the digital and patient-specific
functions of the CMX foot and ankle applications, which has been available
in selected markets since August 2023. Medartis attaches great strategic
importance to the area of lower extremities and aims to increase its market
share in the coming years. Three systems were launched in 2023 and more will
follow in 2024, targeting the treatment of flatfoot deformities and
arthritic feet. The momentum gained from these launches is expected to fuel
further growth in 2024.
In CMF, Medartis continued to successfully migrate existing customers from
'Modus 1' to the next-generation 'Modus 2' system, resulting in an increased
market share. Many countries also sent customers to the new 'IBRA Institute'
in Basel, where participants were able to benefit from real-life training
modules with pre-fractured human bone models. Positive feedback from
attending surgeons confirmed both the necessity and the success of these
training courses.
More than a quarter of growth contributed by new sales agents
Medartis' US business grew by 34.1% (CER) and generated full-year sales of
CHF 51.9 million, including CHF 10.8 million from contract manufacturing
orders for third-party customers. Excluding these, internal sales growth saw
a positive trend and surged by 20.5%. According to independent market data,
this is 3-4 times higher than the market average. More than a quarter of
this growth was contributed by the new independent sales agents who have
joined the Medartis network over the last two years.
The 20.5% growth was recorded across all product categories, but demand was
particularly strong in foot and ankle, wrist, and hand. The contributions
from KeriFlex and Field Orthopaedics supported this positive trajectory. In
the US, the addition of Field Orthopaedics' intramedullary nail portfolio
seamlessly complemented Medartis' hand portfolio. These products,
distributed alongside Medartis' own product portfolio, give surgeons the
option of using different fixation technologies. The company also launched
LapiPrep in Q2 2023, a technology acquired with the former NSI. LapiPrep
offers hands-free, triplanar correction-angle correction for bunion / hallux
valgus treatment cases, promising repeatable treatment results. While
customer feedback is promising, initial experiences underscore the
significance of medical training and education as well as clinical research
and feedback. These elements will continue to be key focal points for the
company in 2024 in order to strengthen its market position in the lower
extremities segment and promote surgeon engagement. In view of current and
upcoming product launches, Medartis plans to further expand its sales
network, which currently boasts 247 sales agents and representatives. In
2024, the company aims to broaden its sales channels even more while
enhancing its medical training capabilities. The recruitment of new talent
in crucial commercial areas, including marketing, training and education,
and sales, underscores the company's commitment to developing the
organisation further.
Following the successful integration of NSI and Medartis US over the past
year and a half, the company has strategically realigned key functions such
as manufacturing, logistics, quality, R&D and finance under global
oversight. Preparations for the production technology transfer from Basel to
Warsaw have concluded. Following validation tests, the inaugural production
of screws began in February 2024, with plates and surgical guides set to
follow later in the spring. This strategic move is aimed at leveraging the
manufacturing and engineering expertise housed in the modern
6,500-square-meter (69,500-square-foot) production facility in Warsaw. The
commercial and R&D departments are now seamlessly integrated into global
functional metrics, bundling capabilities and enhancing mutual support for
both current and upcoming product launches.
As part of early succession planning, the current US President, Rod K.
Mayer, has decided to retire following the completion of the integration of
NSI into Medartis. The company is well advanced in its search for a new
President of Sales & Marketing and sees this as an opportunity to further
expand its commercial footprint in the US market.
In the APAC region, full-year sales increased by 5.6% (CER) and reached CHF
31.5 million. In Swiss francs, however, sales decreased by 2.0% due to
unfavourable currency effects. The Australian market underwent a
transformative phase in 2023. The local authorities have imposed price cuts
of 12 % (affecting H1) and a further 5% (affecting H2), which had a
significant impact on the industry. Thanks to strong volume growth in the
mid-teens percentage range, Medartis Australia was able to compensate for
the effects of the price adjustments and further improve its market
position. To reflect the new pricing landscape, Medartis Australia has
adjusted its organisation and implemented a more adaptable sales model,
wherein certain sales representatives now operate as exclusive independent
agents.
In Japan, Medartis strengthened its direct organisation, achieving high
double-digit growth in the lower extremities segment. This development will
require additional set investments and the recruitment of new sales
representatives, but enables systematic expansion of its market presence
under one single management, with robust backing from IBRA and a
significantly strengthened franchise covering both lower and upper
extremities. Responding to local market needs, the company has also expanded
its in-house capacity for sterile packaging at its headquarters.
PERFORMANCE BY PRODUCT CATEGORY
Table: Revenue development by product category(3) and year-on-year changes:
in CHF million, FY 2023 FY 2022 Change Change Internal
rounded in CHF in CER growth (CER)
Upper extremities 137.2 123.8 10.8% 15.5% 15.5%
Lower extremities 35.4 28.2 25.5% 31.8% 31.8%
CMF & other products 39.4 30.8 27.8% 33.7% 15.3%
Total Group 212.0 182.8 16.0% 20.5% 17.4%
Sales in in the LATAM region reached CHF 22.2 million, corresponding to a
strong increase of 19.4% at CER. Compared to the very strong growth in 2022,
Brazil experienced a more moderate growth rate in 2023 on the back of
alterations to the Brazilian Health Regulatory Agency (ANVISA) registration
processes and political uncertainty in H1 2023. The regulatory changes led
to a delay in new product approvals which extended into H2 2023. Conversely,
Medartis reported significant growth in Mexico, primarily as a result of the
acquisition of new tenders, selective price increases, and the continuous
optimisation of both direct and distributor sales channels.
Sales in the distributor markets Colombia and Costa Rica grew strongly,
reflecting a more systematic management approach marked by clear key
performance indicators (KPIs) and a strong emphasis on building customer
relationships. In Q4, the newly inaugurated IBRA Institute in Basel welcomed
a delegation of 65 surgeons from Brazil, who took part in intensive CMF
training courses. The region further reinforced its relationships with
regional business partners by inviting 45 sales representatives to the
Medartis HQ in Basel, providing updates on Medartis' strategy, and
conducting thorough training sessions for both existing and new products. In
addition, Medartis Brazil and Mexico received the employer branding label
'Great Place to Work', underscoring the positive workplace environment.
New CHRO appointed in March
Following the merger of Nextremity Solutions Inc. with Medartis US and the
consolidation to a single location, the company has harnessed synergies and
enhanced its regional profitability. Consequently, Medartis' workforce saw a
4% reduction in 2023, resulting in a total of 829 employees. In Switzerland,
where Medartis has its headquarters and main production facility, the number
of employees remained relatively stable and totalled 330 at year-end.
There was also a change at top management level a few days ago, as the Chief
Human Resources Officer (CHRO), Anthony Durieux-Menage, has decided to leave
the company by the end of March 2024 to pursue a new professional challenge
outside the orthopaedics industry. He will be seamlessly succeeded by Inge
Maes, who brings over 20 years of experience in the life sciences industry
from her work in clinical development as well as leading HR positions at
Sandoz and Novartis.
FINANCIAL PERFORMANCE
Improving profitability and cash management as basis for future growth
investments
In 2023, Medartis began enhancing its financial key performance indicator
(KPI) management, shifting towards a more cash-centric framework that
balances sales growth, profitability, and the optimisation of capital
employed. While sustainable growth remains a primary value driver in all
regions, awareness of total cash flow generation has increased in all
countries and functions of the organisation. This has resulted in the
optimisation of inventory levels and improved accounts receivable
management. At the same time, investments in new surgical kits were made
primarily for the launch of new products and customer acquisition. The
financial impact of these proactive measures can be seen in the income
statement, cash flow statement and balance sheet for 2023.
In 2023, the gross margin decreased by 2.6PP to 79.0% due to a combination
of various factors. In addition to unfavourable exchange rate effects, which
accounted for 0.8 PP, the largest impact (2.4 PP) was due to the higher
share of NSI's third-party business, which generates low margins. Excluding
third-party manufacturing, Medartis' gross margin would have remained stable
compared to the previous year at around 82.5%. Demand for NSI's low-margin
contract manufacturing business is expected to decline in 2024.
Medartis is using the acquired manufacturing capacities at its new plant in
Warsaw opportunistically as long as the ramp-up for Medartis own products is
not yet complete. Another factor diluting the margin is the very strong
growth of Keri Medical and Field Orthopaedic's products, which are
distributed by Medartis under a distribution agreement. Selective price
increases, a positive country mix and efficiency gains in manufacturing
protected the gross margin despite higher supplier costs. The IT attack
reported in H1 and the brief business interruption had a minor impact of 0.3
PP on the gross margin.
The reported OpEx ratio of 74.7% has improved by more than 8 PP compared to
the previous year. This reflects the initial cost efficiency improvements
already achieved in the US just one and a half years after the NSI
acquisition. Cost efficiency at the headquarters was also further improved
in 2023. Medartis continued to invest in sales and marketing as well as
medical education in all regions. In 2023, investments totalling 46% of
sales (or 62% of total OpEx) were made for customer-facing activities. A
further 12% of sales (or 16% of total OpEx) was dedicated to product
development, R&D and IBRA education. This reflects the company's commitment
to delivering continuous innovation to itscustomers worldwide.
Earnings before interest, taxes, depreciation and amortisation (EBITDA)
almost doubled to CHF 31.9 million, resulting in a reported EBITDA margin of
15.0%. Excluding the one-off costs of CHF 1.8 million in connection with the
IT attack, the adjusted EBITDA margin would have been 15.9% - 3.0 PP higher
than in the prior year.
The underlying operating profit (EBIT) improved from CHF 5.3 million in 2022
to CHF 10.9 million, corresponding to a margin of 5.1% (2022: 2.9%). The
share attributable to the associate Keri Medical was slightly negative (CHF
-0.6 million), reflecting the additional growth expenses and the expansion
of Keri Medical's production capacity in Archamps, France.
Medartis reported a positive net result of CHF 0.6 million compared to a net
loss of CHF 5.8 million in the previous year. This includes a financial
result of CHF -7.3m (2022: CHF -5.2m), mainly driven by adverse currency
movements as well as interest expenses from the NSI acquisition (contingent
consideration of CHF 1.4 million). Earnings per share increased from -0.49
to 0.05.
The measures implemented with a view to optimising capital efficiency
yielded positive results in 2023, particularly in the enhancement of set and
trade receivables management. Despite strong double-digit growth, trade
receivable saw only a marginal increase of CHF 0.3 million compared to a CHF
7.5 million increase in the previous year. In addition, inventories were
reduced by CHF 1.6 million. Together with improved accounts payable
management and a better operating result, this contributed to the
improvement in cash flow.
Cash flow from operating activities increased by CHF 23.2 million in 2023
and totalled CHF 20.0 million. In 2023, investments in property, plant, and
equipment (CapEx) of CHF 14.9 million included CHF 8.7 million in
consignment set investments to drive future procedure volumes. Set
investments mainly related to the upgrade from Modus 1 to Modus 2 in CMF and
to the expansion of the Keri Medical and Field Orthopaedics products. The
changes in cash outflow used for investing and financing activities was
mainly due to an increase in Medartis' ownership in Keri Medical SA
(current: 47.0%) for CHF 18.1 million, which was financed by net proceeds of
CHF 29.7 million from a capital increase in March. At year-end, Medartis
reported a cash position of CHF 25.2 million, which represents an increase
of CHF 4.6 million compared to one year previously.
Changes to the board proposed
After seven years serving on the Board of Directors at Medartis, Dr. med.
Daniel B. Herren has decided not to stand for re-election as Board member at
the Annual General Meeting 2024. The Board of Directors will propose Martha
Shadan and Jennifer Dean as new members. Both will be appointed as
Independent Non-Executive Directors at the upcoming Annual General Meeting
on 17 April 2024, subject to shareholder approval. Mrs Shadan, who was
previously CEO of the US medical technology companies Miach Orthopaedics and
Rotation Medical (acquired by Smith & Nephew), and has held senior positions
at Zimmer Biomet and Covidien. With her extensive experience of the US
orthopaedic market, she will be very valuable in supporting the management
and the board in the further US expansion. Mrs Dean, on the other hand, is
currently CFO at medmix, a medical technology company listed on the Swiss
stock exchange. She gained valuable international management experience at
Sulzer, GE and Alstom and is currently a Board member of the Australian
Swiss Chamber of Commerce. With her wide international financial experience,
she will be a natural addition to the company's Finance and Audit Committee.
They will both join the Board of Directors as independent members.
FULL-YEAR 2024 OUTLOOK
(barring any unforeseen circumstances)
Medartis is confident that it will continue to gain market share and make
significant progress in the US and its other core markets in 2024.
Management expects market conditions to remain challenging in Australia,
where it will face a further 5% price cut in July due to government
intervention. Taking all this into account, the company is aiming for global
growth in the mid-teens (15-17%). The underlying EBITDA margin at CER is to
be improved by around 1 PP in 2024 by striking a balance between further
operational efficiency improvements and strategic investments.
____________________________________________________________________________________
INTEGRATED ANNUAL REPORT 2023 AVAILABLE
The Medartis Annual Report 2023 including the audited condensed financial
statements and a comprehensive sustainability report was published today on
the company's website. Download PDF.
ANALYSTS' AND MEDIA CONFERENCE CALL
Medartis will present its 2023 full-year results to representatives of the
financial community and media in an audio webcast today at 10.30 am Swiss
time. A webcast of the event will be available at
https://event.choruscall.com/mediaframe/webcast.html?webcastid=aHE9aLN9. The
webcast will be hosted by Christoph Brönnimann (CEO) and Dirk Kirsten (CFO)
and the webcast language will be English. Download the presentation here.
An alternative option for anyone experiencing technical problems is to use
these telephone numbers:
Switzerland / Europe: +41 (0) 58 310 50 00
United Kingdom: +44 (0) 207 107 06 13
United States: +1 (1) 631 570 56 13
Please dial in five minutes before the start of the conference to register.
IMPORTANT DATES AND UPCOMING INVESTOR EVENTS
Date Event Broker Destination
12 March 2023 full-year results publication Webcast
13 March Investor meetings (virtual) Stifel US / UK
14 March Investor meetings Octavian Zurich, CH
17 April Annual General Meeting 2024 HQ Basel,
CH
14 May Investor meetings ZKB London, UK
15 May Pan European Small and Mid-Cap UBS London, UK
Conference
06 Swiss Equity Conference ZKB Zurich, CH
November
20 Healthcare Conference Jefferie- London
November s
---------------------------------------------------------------------------
.
(1) "Internal growth" denotes the increase in sales at constant exchange
rates (CER), excluding the impact of mergers, acquisitions, and divestments.
The NSI's contract manufacturing business is classified as non-strategic and
is therefore excluded from this calculation. Internal growth serves as a
crucial performance indicator for management.
(2) The one-off costs in 2023 are related to the costs of remediating an IT
attack in May. The figures for 2022 exclude the one-off M&A costs for the
NSI acquisition and the discontinued China business in order to facilitate
an assessment of the underlying operational performance
(3) CMF & other product sales in 2023 include a CHF 10.8 million
contribution from NSI's third party manufacturing business.
About Medartis
Founded in 1997 and headquartered in Basel, Switzerland, Medartis (SIX Swiss
Exchange: MED / ISIN CH0386200239) is one of the world's leading
manufacturers and suppliers of medical devices for the surgical fixation of
bone fractures in the upper and lower extremities and the
craniomaxillofacial region. Medartis employs more than 830 people in 13
locations and its products are sold in more than 50 countries worldwide.
Medartis is committed to providing surgeons and surgical staff with the most
innovative titanium implants and instruments, as well as world-class
service. For more information, please visit www.medartis.com.
Disclaimer and forward-looking statements
Medartis product pictures and the company logo are trademarks of the
Medartis AG in Switzerland and various other countries. All other trademarks
are the property of their respective owners.
This communication does not constitute an offer or invitation to subscribe
for or purchase any securities of Medartis Holding AG. This publication may
contain certain forward-looking statements and assessments or intentions
concerning the company and its business. Such statements involve certain
risks, uncertainties and other factors which could cause the actual results,
financial condition, performance or achievements of the company to be
materially different from those expressed or implied by such statements.
Readers should therefore not place reliance on these statements,
particularly not in connection with any contract or investment decision. The
company disclaims any obligation to update these forward-looking statements,
assessments or intentions. Further, neither the company nor any of its
directors, officers, employees, agents, counsel or advisers nor any other
person makes any representation or warranty, express or implied, as to, and
accordingly no reliance should be placed on, the accuracy or completeness of
the information contained herein or of the views given or implied.
Your contact:
Medartis Holding AG
Hochbergerstrasse 60E
CH-4057 Basel
Corporate Communications
Investor contact: investor.relations@medartis.com
Media contact: corporate.communication@medartis.com
+41 61 633 37 36
____________________________________________________________
End of Inside Information
____________________________________________________________
Language: English
Company: Medartis Holding AG
Hochbergerstrasse 60E
4057 Basel
Switzerland
Phone: +41 61 633 34 34
Fax: +41 61 633 34 00
E-mail: info@medartis.com
Internet: www.medartis.com
ISIN: CH0386200239
Valor: 38620023
Listed: SIX Swiss Exchange
EQS News ID: 1856139
End of Announcement EQS News Service
____________________________________________________________
1856139 12-March-2024 CET/CEST
