Ambu A/S : Interim Report for Q2 2020/21 and for the half year (no.13)

Ambu's revenue increased organically by 6% in Q2 and by 20% in the half-year driven by the rapid growth of our Visualization business. The revenue from our portfolio of single-use endoscopes (Visualization) grew 17% on top of 69% growth last year. Full-year outlook maintained.

"Halfway into the financial year, we're in a strong position to reach our full-year expectations. As focus on infection control continues to increase, we're building our superior ecosystem consisting of the most advanced and comprehensive single-use endoscopy portfolio. We're excited with the progress of our recent launches and we have achieved important milestones to strengthen our infrastructure, including the groundbreaking for our new single-use endoscopy plant in Mexico," says Juan Jose Gonzalez, CEO of Ambu.

Highlights for the quarter

Comparative figures for Q2 2019/20 are stated in brackets.

• Revenue for Q2 was DKK 1,001m (DKK 989m) based on organic growth of 6% (24%). Reported growth for the quarter was 1% (26%). Organic growth for the half-year was 20% (19%) with reported growth of 15% (21%).
• Sales in North America grew organically by 6%, while we saw organic growth in Europe of 2% and in Rest of World of 18%. Organic growth rates for the half-year were: North America 9%, Europe 34% and Rest of World 14%. Growth rates are significantly influenced by the high comparables for Q2 2019/20, which was the beginning of the first wave of the COVID-19 pandemic.
• Visualization achieved double-digit organic growth of 17% on top of 69% last year. For the half-year, Visualization achieved organic growth of 48% (49%).
• Sales of single-useendoscopes reached 379,000 units for the quarter and 749,000 units for the half-year. Sales volumes were thus up 21% and 52%, respectively, relative to last year.
• Anaesthesia and PMD continued to be negatively impacted by COVID-19.Anaesthesia declined by -4% (3%), and Patient Monitoring & Diagnostics (PMD) declined by -7%(-6%). For the half-year, Anaesthesia was flat at 0% (5%) and PMD declined by -5% (1%).
• For the aScope™ Duodeno, we have continued our commercial launch and engaged with targeted hospitals including the largest ERCP centers in the USA. The upcoming US reimbursement for inpatient single-use duodenoscopy procedures is expected to accelerate the transition to single-use products. Therefore, we have decided to strengthen our product performance by making rapid upgrades to the aScope™ Duodeno ahead of the expected inpatient

reimbursement approval in October 2021. Half of the upgrades are available in the market now, and we expect the remaining upgrades to be implemented in Q4 2020/21, effectively upgrading the aScope™ Duodeno to a version 1.5.

• Gross margin for the quarter was 62.2% (61.4%). The gross margin for the half-year was 63.8% (60.8%) and is positively impacted by high growth in Visualization, which contributes a margin well above the average for Ambu's portfolio.
• Capacity costs for the quarter totaled DKK 523m (DKK 457m), corresponding to an increase of 14%. The increase reflects our investment in commercial infrastructure and innovation activities. Capacity costs for the half-year were up 26%.
• EBIT for the quarter was DKK 100m (DKK 150m) with an EBIT margin of 10.0% (15.2%), while for the half-year EBIT ended at DKK 248m (DKK 243m) with a margin of 12.3% (13.9%).
• Net working capital-to-revenue ratio was 19% (23%) by the end of the quarter based on rolling 12-month revenue.
• Free cash flow before acquisitions totaled DKK -27m (DKK -89m) for the quarter and for the half-year DKK -25m (DKK -279m).
• Total net interest-bearingdebt (NIBD) was DKK 466m (DKK 1,446m), corresponding to a leverage of 0.7 (2.6). The lowering of debt is the result of the 1.86% capital raise and the sale of treasury shares carried out in January.
• The outlook for the 2020/21 financial year as announced in the annual report on 11 November 2020 is unchanged and as follows:
• • Organic growth in the range of 17-20%
  • EBIT margin before special items in the range of 11-12%
  • Sales of single-use endoscopes of 1.3-1.4 million units

A conference call is held today, Wednesday 12 May 2021, at 10.00 (CEST). The conference is broadcast live via ambu.com/webcastQ22021. The presentation can be downloaded immediately before the conference call via the same link. To ask questions in the Q&A session, please call one of the following numbers five minutes before the start of the conference: [phone] (DK), [phone] (UK), [phone] (US), and enter the following access code: 66323014#

Contacts

Investors

Michael Højgaard, CFO, [e-mail] / [phone]

Nicolai Thomsen, Director, Investor Relations & Strategic Financial Planning, [e-mail] / [phone]

Media

Mikkel Trier Wagner, Director, Corporate Communications, [e-mail] / [phone]

Ambu A/S

Baltorpbakken 13, DK-2750 Ballerup, Denmark, Tel.: [phone], CVR no.: 63 64 49 19, www.ambu.com

About Ambu

Ambu has been bringing the solutions of the future to life since 1937. Today, millions of patients and healthcare professionals worldwide depend on the efficiency, safety and performance of our single-use endoscopy, anaesthesia, and patient monitoring & diagnostics solutions. The manifestations of our efforts have ranged from early innovations like the Ambu® Bag™ resuscitator and the Ambu® BlueSensor™ electrodes to our newest landmark solutions like the Ambu® aScope™ - the world's first single-use flexible endoscope. Moreover, we continuously look to the future with a commitment to deliver innovative quality products that have a positive impact on the work of doctors, nurses and paramedics. Headquartered near Copenhagen in Denmark, Ambu employs approximately 4,500 people in Europe, North America and the Asia Pacific. For more information, please visit ambu.com.

	Q2	Q2	YTD		YTD	FY
DKKm	2020/21	2019/20	2020/21	2019/20	2019/20
Income statement
Revenue	1,001	989	2,014	1,749	3,567
Gross margin, %	62.2	61.4	63.8	60.8	62.0
EBITDA	150	200	348	326	609
Depreciation, amortization and impairment	-50	-50	-100	-83	-181
EBIT	100	150	248	243	428
Net financials	15	-12	-15	-49	-106
Profit before tax	115	138	233	194	322
Net profit for the period	95	104	186	146	241
Balance sheet
Assets	5,318	4,788	5,318	4,788	4,926
Net working capital	728	713	728	713	581
Equity	3,861	2,300	3,861	2,300	2,372
Net interest-bearing debt	466	1,446	466	1,446	1,346
Invested capital	4,327	3,746	4,327	3,746	3,718
Cash flows
Cash flows from operating activities	92	10	198	-100	295
Cash flows from investing activities before acquisitions	-119	-99	-223	-179	-428
Free cash flows before acquisitions of enterprises and technology	-27	-89	-25	-279	-133
Acquisitions of enterprises and technology	-1	0	-300		0	-2
Cash flows from operating activities, % of revenue	9	1	10		-6	8
Investments, % of revenue	-12	-10	-11		-10	-12
Free cash flows before acquisitions of enterprises, % of revenue	-3	-9	-1		-16	-4
Key figures and ratios
Organic growth, %	6	24	20	19	26
Rate of cost, %	52	46	51	47	50
EBITDA margin, %	15.0	20.2	17.3		18.6	17.1
EBIT margin, %	10.0	15.2	12.3		13.9	12.0
Tax rate, %	17	25	20	25	25
Return on equity, %	9	12	9	12	11
NIBD/EBITDA before special items	0.7	2.6	0.7	2.6	2.2
Equity ratio, %	73	48	73		48	48
Net working capital, % of revenue	19	23	19	23	16
Return on invested capital (ROIC), %	8	9	8	9	9
Average number of employees	4,380	3,353	4,290	3,278	3,617
Share-related ratios
Market price per share (DKK)	298	165	298	165	180
Earnings per share (EPS) (DKK)	0.38	0.42	0.75	0.59	0.98
Diluted earnings per share (EPS-D) (DKK)	0.38	0.42	0.74	0.59	0.97

By the end of Q2, we can look back at a full 12-month period influenced by waves of COVID-19: Q2 last year was significantly influenced by the first wave, and the subsequent quarters up until Q1 2020/21 saw double- digit growth rates and high demand for Visualization products, while Anaesthesia and PMD were negatively impacted by the cancellation of procedures. Against this background, our Q2 2020/21 performance was strong with 6% growth driven by our Visualization business, which grew 17% on top of 69% last year.

Over the past quarters, increased awareness of the

contamination risk associated with reusable endoscopes, a stronger focus on infection control and the need for hospitals to be able to handle rapid changes in demand, have driven demand for single-use endoscopes and made the overall value proposition of single-use endoscopy more appealing. For example, on 1 April 2021, the US Food and Drug Administration (FDA) issued a letter to US healthcare providers informing them that the FDA is currently investigating the potential causes and contributing factors associated with reported infections and contamination issues caused by endoscopic urology procedures. This development will help to accelerate the penetration of single-use endoscopy in urology.

We have recently launched aScope™ 4 RhinoLaryngo (ENT) and aScope™ 4 Cysto (urology), and the products are performing well and meet the need for better workflow management as patients start returning to hospitals. Both products offer strong clinical performance and enable physicians to rapidly scale up capacity at an affordable cost.

In Q2, we continued our commercial launch of the aScope™ Duodeno and engaged with targeted hospitals, resulting in invoicing of meaningful revenue in Q2 and for the half-year.

The proposal from CMS (The Centers for Medicare & Medicaid Services) on reimbursement for inpatient single-use duodenoscopy procedures will accelerate the transition to single-use products. Therefore, we have decided to strengthen our product performance by making rapid upgrades to the aScope™ Duodeno ahead of the inpatient reimbursement approval in October 2021. Half of the upgrades are available in the market now, and we expect the remaining upgrades to be implemented in Q4 2020/21, effectively upgrading the aScope™ Duodeno to a version 1.5. Our ability to rapidly upgrade our single-use products by bringing forward technology designed for future product developments is an example of our modular technology engine and is a cornerstone in our strategy.

We expect the revenue contribution from our aScope™ Duodeno to be gradual this year and accelerate in 2021/22 on the back of the expanded CMS reimbursement and aScope™ Duodeno version 1.5.

Sales performance - Regions

Last year's comparative figures are stated in brackets.

For Q2, revenue ended at DKK 1,001m (DKK 989m) corresponding to organic growth of 6% (24%) and reported growth of 1% (26%).

For the half-year ending on 31 March 2021, revenue came to DKK 2,014m (DKK 1,749m), corresponding to organic growth of 20% (19%).

North America accounted for 44% of revenue in Q2 based on organic growth of 6% (17%). Reported growth was -3% (20%), due to the depreciating USD/DKK exchange rate over the same period last year.

In North America, Visualization sales grew organically by 9% (43%) in Q2, thereby maintaining the high sales trend of previous quarters. Revenue growth from Q1 to Q2 in

DKKm	Q2	Q2	Organic	Fx	Reported	YTD	YTD	Organic	Fx	Reported
20/21	19/20	growth	growth	20/21	19/20	growth	growth
North America	437	449	6%	-9%	-3%	828	825	9%	-9%	0%
Europe	447	437	2%	0%	2%	984	740	34%	-1%	33%
Rest of World	117	103	18%	-4%	14%	202	184	14%	-4%	10%
Revenue	1,001	989	6%	-5%	1%	2,014	1,749	20%	-5%	15%

2020/21 was 19%. Anaesthesia and PMD both posted organic growth of 4% over last year, reflecting improvements in elective procedures, but still not back at pre-COVID activity levels.

For the half-year, North America accounted for 41% of revenue based on organic growth of 9% (16%) and 0% (20%) reported growth.

Europe accounted for 44% of revenue in Q2, based on organic as well as reported growth of 2% (40%).

In Visualization the high sales volumes trend continued, and Visualization achieved organic growth of 25% (103%). However, Anaesthesia sales were significantly impacted by lockdowns and the cancelation of elective procedures across Europe resulting in negative organic growth of -33% (16%). PMD sales declined as well with negative organic growth of -15% (1%).

For the half-year, Europe accounted for 49% of revenue based on organic growth of 34% (27%) and reported growth of 33% (27%).

Rest of World, which is comprised of our direct markets in Asia-Pacific and our indirect distribution network in Latin America, the Middle-East and Africa, accounted for 12% of the quarter's revenue and posted organic growth of 18% (2%) with reported growth of 14% (6%). Overall, the markets in Rest of World developed very positively in Q2 despite the COVID-19 situation.

In Rest of World, Visualization achieved organic growth of 16% (79%), while Anaesthesia grew by 27% (-28%) and PMD by 9% (-15%).

For the half-year, Rest of World accounted for 10% of revenue based on organic growth of 14% (6%) and reported growth of 10% (10%).