EQS Group-Ad-hoc: Medartis Holding AG / Key word(s): Half Year Results Medartis accelerates sales growth to 29% in H1 2021 and improves profitability 17-Aug-2021 / 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.

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PRESS RELEASE

Medartis accelerates sales growth to 29% in H1 2021 and improves profitability

- Total net sales in the first six months rose by 29.2% at CER^[1] vs. prior year (+20.6% vs. 2019)

- All regions grew by more than 20% - CER growth was strongest in the US (46.3%), followed by APAC (34.9%), LATAM (31.7%) and EMEA (22.3%)

- KeriMedical partnership got off to a promising start - distribution of hand products in selected European markets is on plan

- Gross margin increased by 1.6 PP^1 to 83.6%; EBITDA margin improved by 10 PP from 9.2% to 19.2%

- New Board members nominated

- Full-year sales guidance raised to "at least 20% CER growth" - profitability guidance confirmed

Key Financials in H1 2021 


                          H1 2021     H1 2020   Change vs. 2020 Change vs. 2020 at CER Change vs. 2019^[2] at CER 
in CHF million          as reported as reported 
Net Sales                  73.6        57.0         +29.1%              +29.2%                   +20.6% 
Gross Profit               61.5        46.7         +31.6%              +31.9%                   +20.7% 
Margin (in %)              83.6%       82.0%        +1.6 PP            +1.7 PP                  +0.1 PP 
EBITDA                     14.1         5.2          +169%              +152%                     +81% 
Margin (in %)              19.2%       9.2%        +10.0 PP            +9.3 PP                  +6.4 PP 
Operating Profit (EBIT)     6.3        -1.7          +474%              +584%                    +278% 
Margin (in %)              8.5%        -2.9%       +11.4 PP            +10.8 PP                 +5.8 PP 
Net Profit                  7.1        -5.8          +222% 
Margin (in %)              9.6%       -10.2%       +19.8 PP 
Headcount (30 June)         649         621           +5%

Basel, 17 August 2021: In the first six months of 2021, Medartis registered strong sales growth in all regions despite headwinds arising from the COVID-19 pandemic. ?Net sales climbed year-on-year by 29.2% (CER) and 20.6% vs. the pre-coronavirus situation in H1 2019. Gross profit and operating profit expanded strongly versus the prior year and lifted earnings per share to CHF 0.60 (H1 2020: CHF -0.50).

Medartis CEO Christoph Brönnimann commented: "The first semester grew faster than we expected. I am particularly pleased by the strong results in Australia, most of our European markets and the US, where investments are already starting to pay off. This encouraging performance was driven by customer gains, the rollout of new products and an increase in surgical interventions, allowing us to look more positively into H2 and raise our sales guidance. The loyalty of our customers and the commitment of our dedicated employees helped to cope well with the corona pandemic. This deserves recognition and gratitude. We live and operate in an increasingly complex environment, in which the pace of change continues to accelerate. For this reason, we have recently initiated a global cultural programme, which is crucial for the execution of our strategy."

REGIONAL PERFORMANCE 


in CHF million H1 2021 H1 2020 Change vs. 2020 Change vs. 2020 at CER Change vs. 2019 at CER 
EMEA            39.6    31.9        24.1%              22.3%                  16.9% 
US              12.8     9.3        37.2%              46.3%                  31.1% 
APAC            15.4    10.8        42.6%              34.9%                  34.3% 
LATAM            5.8     4.9        16.7%              31.7%                  -2.0% 
Total Group     73.6    57.0        29.1%              29.2%                  20.6%

The sales trend so far this year was favoured by the decreasing number of COVID-19 cases and the loosening of pandemic restrictions compared to the prior year. Hospitals performed more trauma and elective surgeries than in 2020. However, towards the end of Q2 the positive impact of vaccination programmes was partially offset by renewed COVID-19 restrictions due to the spreading of the COVID Delta variant. Some hospitals and clinics reduced their capacity again, affecting planned and elective orthopaedic procedures, which represent a high share of Medartis' lower extremities and CMF (craniomaxillofacial) portfolio. These factors influenced sales momentum in the different regions and segments, as explained in detail below.

In H1, the EMEA region reported 22.3% of CER growth vs. 2020 (+16.9% vs. 2019). Despite a difficult environment, the company was able to achieve its growth targets in almost all markets, and even exceeded its objectives in France. The important DACH region (Germany, Austria and Switzerland) also showed a gratifying business trend. Medartis' new Spanish subsidiary contributed initial sales. Demand in the UK benefitted from a relatively quick start to its vaccination campaign. Despite this, most NHS hospitals are still not operating at full capacity. The trend in most distributor markets also improved.

In H1, the company's US business increased its momentum as sales expanded by 46.3% vs. the prior year or 31.1% vs. 2019. A more favourable environment has led to an overall increase in business and leisure activities, prompting a rise in the number of accidents and sports injuries. General hospitals and, to a greater extent, ambulatory surgery centres (ASCs) have increased their elective surgeries, and outpatient surgical volumes improved. One of Medartis' key priorities remains expanding its US presence. In order to sustainably gain market share, local management has accelerated its growth plans by hiring additional sales representatives. In addition to the growing sales network, the reallocation of sales territories and the adjustment of the incentive scheme also contributed to the gratifying business trend. Medartis has also started to offer more T&E sessions and has strengthened the newly founded regional IBRA chapter (International Bone Research Association).

The APAC region reported 34.9% of CER growth year-on-year (or 34.3% vs. 2019). Australia was the main contributor to this strong performance. Medartis' largest country in the region benefitted from customer conversion and market share expansion. In Japan, the company made progress with the newly established direct lower extremity business. Medartis China is still in its ramp-up phase, but won several hospital tenders and reported initial sales. Regional distributors performed in line with the company's expectations.

The LATAM Region recovered in H1 by posting 31.7% of CER growth compared to the same period a year ago, but is still 2.0% below the pre-coronavirus situation. Brazil expanded strongly. The smaller Mexican business grew at a low double-digit rate vs. 2020, but was only up 1.0% vs. 2019. Distributor sales were stronger than in 2020, but still clearly below the 2019 level.

BUSINESS SEGMENT PERFORMANCE 


                                        Change vs. 2020 Change vs. 2020 at CER Change vs. 2019 at CER 
                        H1 2021 H1 2020 
in CHF million, rounded 
Upper extremities        52.8    41.4        27.6%              28.4%                  21.9% 
Lower extremities        11.4     8.2        38.8%              39.9%                  33.9% 
CMF & other products      9.4     7.4        26.8%              29.4%                   6.3% 
Total                    73.6    57.0        29.1%              29.2%                  20.6%

Upper extremities, which account for 72% of total net sales, increased by 28.4% at CER compared to the prior year. Lower extremities (15% of total sales) grew by 39.9%, while its craniomaxillofacial (CMF) and others segment expanded by 29.4% year-on-year. Compared to 2019, sales in the lower extremities business increased the most (+33.9% CER).

Wrist, the largest product category in upper extremities, was the principal contributor to growth in H1. Medartis increased its momentum and bolstered its market position. Demand for elbow, shoulder and clavicula implants, as well as the extended CCS (cannulated compression screw) portfolio, grew particularly strong. The company introduced various products from its strategic partner KeriMedical, which offers innovative technologies for hand & finger surgeries. The respective products were successfully introduced in Germany, Austria and the UK, with positive customer responses. Although still at a low level, the distribution business is developing according to plan.

Growth in lower extremities was particularly strong in its US and Australian foot & ankle business, where respective sales surged by 61.0% year-on-year. As contact restrictions made it difficult to showcase, introduce and train our new products in face-to-face meetings, Medartis continued to invest in digital training and online customer events. For the same reason, the company also decided to launch its new midfoot-hindfoot and its lower tibia-fibula fracture system in Q3. In line with its strategy to further increase its segment market share, Medartis also initiated various portfolio expansion projects dedicated to the large US market.

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August 17, 2021 00:30 ET (04:30 GMT)