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MarketScreener Homepage  >  Equities  >  NASDAQ OMX STOCKHOLM  >  CellaVision AB (publ)    CEVI   SE0000683484

CELLAVISION AB (PUBL)

(CEVI)
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CellaVision : Market clearance for CellaVision DC-1 in the US and good profitability in the quarter

10/23/2020 | 02:21am EST

1 April -30 September 2020

  • Net sales decreased by 8% to SEK 88.0 million (95.6).
  • Sales decreased organically by 24% (+8).
  • EBITDA amounted to SEK 24.6 million (25.6).
  • EBITDA margin amounted to 28% (27).
  • Profit before tax amounted to SEK 15.9 million (21.5).
  • Earnings per share before and after dilution were SEK 0.56 (0.72).
  • Cash flow from operating activities amounted to SEK -3.9 million (32.5).

1 January-30 September 2020

  • Net sales increased by 9% to SEK 340.5 million (311.9).
  • Sales decreased organically by 12% (+18).
  • EBITDA amounted to SEK 102.1 million (105.2).
  • EBITDA margin amounted to 30% (34).
  • Profit before tax amounted to SEK 75.8 million (94.2).
  • Earnings per share before and after dilution were SEK 2.55 (3.14).
  • Cash flow from operating activities amounted to SEK 45.6 million (101.0).

Significant events after the periods close

  • CellaVision DC-1 received market clearance by the authorities in the US, which means that the product is now commercially available in USA.
  • Zlatko Rihter will leave the position as CEO on November 28. Pending the appointment of the new CEO of CellaVision, Magnus Blixt, CFO, will be appointed acting CEO.
  • The Chairman of the Board, Sören Mellstig, has informed the Nomination Committee that he is not available for re-election at the 2021 Annual General Meeting.

"The general market situation improved during the latter part of the period and we are now seeing a situation where the number of installations is increasing in most of our main markets.”
Zlatko Rihter, CEO

CEO’s comments
The COVID-19 pandemic had a negative impact on sales in the year’s third quarter, while at the same time we could see signs of recovery in demand on most of our markets. Sales in the quarter were SEK 88.0 million (95.6), corresponding to negative organic growth of 24 percent (+8). Including sales of RAL Diagnostics products, growth was negative three percent. There was substantial variation in development in our different regions. Exchange rate impact was negative, at five percent in the quarter.
CellaVision reacted early to the COVID-19-pandemic and implemented a series of measures on the cost side. In combination with our effective and scalable indirect business model, this has meant that despite negative organic growth, we continue to be a profitable company. Profitability is somewhat lower than in the corresponding period last year, but in the present circumstances we are satisfied with the outcome. CellaVision has shown a great capacity to rapidly adapt its business to unexpected challenges and we are now well-equipped to quickly accelerate our operations when the market situation normalizes. EBITDA was SEK 24.6 million (25.6) in the quarter, corresponding to an EBITDA margin of 28 percent (27) and the Group’s total cash flow for the quarter was SEK -21.2 million (27.7).
After the close of the quarter CellaVision received market clearance for the CellaVision DC-1, for small and mid-size laboratories, in response to the 510 k application submitted to the U.S. Food & Drug Administration, FDA. This is an important milestone for CellaVision, which can now take the next step and sell the CellaVision DC-1 in the USA, our most important market.

Effects of the COVID-19-pandemic
The effect of the COVID-19-pandemic in the hematology segment was considerable in the third quarter of the year, both for CellaVision and our partners. CellaVision's system consists of installation products, which means that our partners need access to hospitals and laboratories to be able to install our products, which has only been possible to a limited extent in the second quarter and part of the third quarter.

Positive signals from the market
The general market situation improved during the period and we now see a situation where the number of installations is increasing in most of our main markets. Our systems that were installed earlier are being used more than ever, which is probably an effect of the remote access possibilities offered by CellaVision that have become even more important in the ongoing pandemic. During the pandemic we have noted that the percentage of laboratories choosing digital analysis continues to be high. Just as expected, sales of reagents were affected by the pandemic to a considerably lower extent than the installation related analyzer sales. The underlying need for digital morphology is the same as before the pandemic.

Market development
The Americas were severely impacted by the COVID-19-pandemic in the third quarter as well, with a 32 percent decrease in sales. Sales were SEK 31.5 million (46.4). The shutdown in the USA and Canada in the second quarter of the year meant that the systems held in inventories at our distributors were not installed, which has had a negative impact on sales in the third quarter. Installation activities have resumed in the third quarter, which is a positive sign. Digital morphology is standard in many of our important markets in the region and we expect to see a normalization of sales as hematology installations are resumed.
EMEA’s sales were on a level with the corresponding period in the previous year, with organic growth of four percent. Including sales of RAL’s reagents, growth was 90 percent. A clear normalization was seen in the quarter as regards installations. We could also note that sales of the CellaVision DC-1 increased after a few months of weak demand. Just as in North America, digital morphology is standard in large parts of EMEA, primarily Western Europe, which means that we expect normalization of sales as hematology installations are resumed.
After two strong quarters, APAC had a weaker quarter with sales declining by 42 percent and amounting to SEK 16.1 (28.0). The weak quarter is related to the build-up of inventories that took place at our distributors in the second quarter of the year and is thus not due to any significant impact of COVID-19. For the first three quarters of the year, growth in the region was 31 percent. Our main markets, China and Japan, have a high level of activity and are developing according to plan, while markets such as Australia and India are still negatively affected by restrictions.

Careful evaluation of activities and investments
CellaVision follows the development of the COVID-19-pandemic carefully and we will adjust our operations as necessary on the basis of global economic development. Just now our focus is on giving priority to the activities we can accelerate. CellaVision's scalable business model allows rapid adjustment of our costs and we continue to invest in innovation. Cost savings have been possible without diminishing any of our organization and our investments in research and development in the quarter amounted to 18 percent of sales, which is higher than ever before.

RAL/Reagents
The acquisition of RAL was completed on October 1, 2019 and since then RAL is an integral part of CellaVision. During the quarter we signed a global distribution agreement for RAL’s reagents with Sysmex. This means that the reagents are now commercially available in all main markets. In other respects, too, the commercial integration of RAL has gone according to plan and we continue to introduce reagents in new countries, while concurrently working further to optimize staining protocols. The previously communicated objectives of acquiring RAL, in the form of a broadened product offer and larger market, effective sales expansion of RAL’s hematology products to new markets and expansion to related analysis areas outside hematology, remain.

Geographical expansion
CellaVision will wait before further establishment of local organizations for market support until the effects of the COVID-19-pandemic have subsided. Establishment of a local organization in Russia is now fully operative and CellaVision currently has local market organizations in 18 countries that deliver a direct presence in 40 countries. Our local market organizations are an important part of the sales successes we have had in recent years.

Innovation
The CellaVision DC-1 received market clearance after the close of the quarter, which means that the product will now be commercially available to the American market. This is an important step in the global commercialization process of the CellaVision DC-1, which is intended for small and mid-size laboratories. The process for market clearance of the CellaVision DC-1 in China is also going to plan.

Our long-term strategy remains firm
Geographical expansion and innovation are CellaVision's core areas. We will continue to increase investments in innovation and geographical expansion to secure our future position in our market segment and to maintain strong growth as soon as the effects of COVID-19 have abated, and the world returned to a more normalized state.
In accordance with our long-term strategy, CellaVision was reorganized into divisions per product area, Reagents and Devices & Software. The reorganization increases the effectiveness in each product area but retains the strength of addressing the same customer in the hematology area with a global marketing and sales function.
This is my 24th and last quarterly report for CellaVision. Pending the appointment of a new President/CEO, CellaVision's CFO, Magnus Blixt, will take on the role of acting President/CEO, which I see as a very good solution in which I feel great confidence. I have been part of an incredibly inspiring and exciting journey that without doubt will continue in the future. CellaVision is a fantastic company with a strong international marketing organization, a gradually increased development organization and an experienced and skilled management team. It is with great pride that I hand over the baton to the next leadership.
Zlatko Rihter,
President and CEO

 Key RatiosJul-SepJan-SepJan-Dec
(MSEK)20202019202020192019
Net sales88.095.6340.5311.9461.8
Gross profit57.072.8227.2236.9336.7
EBITDA24.625.6102.1105.2146.7
EBITDA margin, %2827303432
Profit/loss before tax15.921.575.894.2129.2
Total cash flow-21.227.7-8.348.9-67.3
Equity ratio, %6275627554

Questions concerning the interim report can be addressed to:
Zlatko Rihter, CEO, CellaVision AB, Tel: 0733-62 11 06,
E-mail: zlatko.rihter@cellavision.se

Magnus Blixt, CFO, CellaVision AB, Tel: 0708-33 81 68
E-mail: magnus.blixt@cellavision.se

© Modular Finance, source Nordic Press Releases

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Financials
Sales 2020 483 M 56,8 M 56,8 M
Net income 2020 90,2 M 10,6 M 10,6 M
Net cash 2020 64,5 M 7,59 M 7,59 M
P/E ratio 2020 75,5x
Yield 2020 0,53%
Capitalization 6 812 M 802 M 801 M
EV / Sales 2020 14,0x
EV / Sales 2021 11,4x
Nbr of Employees -
Free-Float 62,7%
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Mean consensus HOLD
Number of Analysts 3
Average target price 325,00 SEK
Last Close Price 285,60 SEK
Spread / Highest target 31,3%
Spread / Average Target 13,8%
Spread / Lowest Target -14,2%
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Managers
NameTitle
Zlatko Rihter Chief Executive Officer
Sven Gustav Sören Mellstig Chairman
Magnus Blixt Chief Financial Officer
Adam Morell Vice President-Engineering
Anna Yvonne Monica Malm Bernsten Independent Director
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