Medacta : 2020 Management Report

MANAGEMENT REPORT

Medacta's Annual ReportManagement2020

Report l Medacta's Annual Report 2020

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INDEX

1.	MANAGEMENT COMMENTARY*	12
2.	MEDACTA GROUP IN BRIEF	22
3.	ASSETS TO COMPETE	24
4.	PRODUCTS AND BUSINESS LINES	30

6	Medacta's Annual Report 2020 l Management Report

2020 HIGHLIGHTS*

• Medacta's year-end revenue at Euro 302.5 million, down only 2.1% on a constant currency basis, despite COVID-19 pandemic;
• Second semester reached 7.6% growth on a constant currency basis. New customer acquisitions and an uptake in demand are reflected in the rebound, limited in part by the second COVID-19 wave starting in October;
• Adjusted EBITDA of Euro 88.1 million, corresponding to 29.1% margin;
• Profit for the year equal to Euro 37.1 million, 12.3% on revenues;
• Adjusted Free Cash Flow of Euro 31.9 million, up 43% vs prior year;
• Tactical changes in marketing and medical education programs, implementing several online initiatives, allowed us to reach over 2'900 surgeons;
• Over 30 new products registered. Innovation continued, culminating with the FDA clearance of our proprietary NextAR Augmented Reality platform technology in July;
• Over 80 new jobs added, including significant salesforce expansion across all geographies;
• In light of ongoing global uncertainty caused by Covid-19 pandemic, Company proposes no dividend distribution to reinvest in future growth plan;
• Outlook FY 2021: We are targeting 2021 revenue in the range of Euro 333 million to Euro 348 million at constant currency and adjusted EBITDA margin to be largely in line with the previous year, subject to any unforeseen events, specifically from Covid-19 pandemic.

REVENUESADJUSTED EBITDA MARGIN 2ADJUSTED EBIT MARGIN 4

EUR 302.5M

29.1%

16.9%

-2.1% before FX effects from prior year1

-2.6% reported growth

1. Is calculated as the difference between the current and historical period results translated using the current period exchange rates.

28.6% Reported EBITDA Margin

EUR 88.1M Adjusted EBITDA3

1. Adjusted EBITDA margin, is calculated as adjusted EBITDA as a percentage of Revenue for the period.
2. Is calculated as EBITDA, adjusted for non-recurring items: provisions on litigations, extraordinary legal expenses and gains realized through the release of prior years provisions.

16.3% Reported EBIT Margin

EUR 51.1M Adjusted EBIT5

1. Adjusted EBIT margin, is calculated as adjusted EBIT as a percentage of Revenue for the period.
2. Is calculated as EBIT, adjusted for non-recurring items: provisions on litigations, extraordinary legal expenses and gains realized through the release of prior years provisions.

PROFIT FOR THE YEARADJUSTED FREE CASH FLOW 7YEAR-END EMPLOYEES TOTAL

EUR 37.1M		EUR 31.9M		1'183
12.3% on Revenues				82 new jobs added in 2020
EUR 1.85 EPS6
[6] There is no effect of diluition, and diluited earnings		[7] Adjusted Free Cash Flow is calculated as IFRS cash flow
per share equals basic earnings per share.		from operating activities plus IFRS cash flow from investing
		activities and adjusted for certain non-recurring items.

• Alternative Performance Measures: This section and other sections of this Annual Report, contain certain financial measures of historical performance that are not defined or specified by IFRS, such as "constant currency", "EBITDA", "Adjusted EBITDA" or "CORE EBITDA", "Adjusted and Normalized EBITDA", "Free Cash Flow", "Adjusted Free Cash Flow", "Adjusted and Normalized Free Cash Flow", "Net Debt" and "Leverage". Reconciliation of these measures as well as "CORE" financial measures is provided in the "Alternative Performance Measures" (APM) section of this Annual Report on page 19. These Alternative Performance Measures (APM) should be regarded as complementary information to, and not as a substitute for the IFRS performance measures. For definitions of APM, together with reconciliations to the most directly reconcilable IFRS line items, please refer section headed "Alternative Performance Measures" of this Annual report.

Management Report l Medacta's Annual Report 2020

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KEY FINANCIAL FIGURES
(Million Euro)	31.12.2020	31.12.2019
Revenues	302.5	310.6
Gross Profit	214.3	223.7
Profit for the year	37.1	11.9
Alternative Performance Measures:
EBITDA	86.5	53.3
Adjusted EBITDA*	88.1	91.5
Adjusted EBITDA margin*	29.1%	29.5%
Free Cash Flow	25.4	0.6
Adjusted Free Cash Flow**	31.9	22.3
(Million Euro)
Total Assets	441.9	412.6
Total Equity	164.7	123.2
Equity Ratio	37.3%	29.9%
Number of employees	1'183	1'101

• Adjusted for provisions on litigations (Euro 0.7 million), extraordinary legal expenses (Euro 3.1 million) and gains realized through the release of prior years provisions (Euro 2.1 million). The reconciliation is provided in the "Alternative Performance Measures" section of the Management Report beginning on page 19.
• Adjusted for extraordinary legal expenses (Euro 3.1 million) and non-recurring investments (Euro 3.4 million). Please see the "Alternative Performance Measures" section of the Management Report for the reconciliation of the "Adjusted Free Cash Flow" beginning on page 19.

8	Medacta's Annual Report 2020 l Management Report

SHARE INFORMATION

The registered shares of Medacta Group SA are traded on the International Reporting Standard of SIX Swiss Exchange and are part of the Swiss Performance Index.

NUMBER OF SHARES

Share capital (in CHF)	2'000'000
Number of registered shares outstanding	20'000'000
Nominal value per registered share (in CHF)	0.10
Number of treasury shares	0
2020 DATA PER SHARE
(Swiss Francs)	31.12.2020
2020 High (in CHF)	92.40
2020 Low (in CHF)	39.80
Closing price (in CHF)	87.60
Market capitalization (in CHF million)	1'752

RELATIVE SHARE PRICE DEVELOPMENT

Index base 100 calculation
Source: Refinitiv
												150
												145
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												135
												130
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												120
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												95
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												85
												80
												75
												70
												65
Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb
	Q1 2020			Q2 2020			Q3 2020			Q4 2020		Q1 2021

Medacta Group SA		SP Swiss Performance Index		SXI BIOMED TR

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