DGAP-News: SYNLAB AG / Key word(s): Quarter Results 
SYNLAB delivers record growth in Q1 2021 
2021-05-12 / 07:30 
The issuer is solely responsible for the content of this announcement. 
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SYNLAB delivers record growth in Q1 2021 
- Nearly doubling revenue (+96%) in Q1'21 at EUR 938 million 
- Strong SARS-CoV-2 testing volumes in Q1'21, above Q4'20 
- Sustained underlying organic growth^[1] at +3.7% supported by successful "For You" growth initiatives 
- Adjusted EBITDA multiplied by 3.8x at EUR 324 million, margin showing strong volume leverage 
- Record unlevered FCF of EUR 182 million driving major leverage ratio reduction at 2.3x, pre-IPO 
- M&A activity resuming, with 10 acquisitions completed year-to-date (EUR 44 million of EV) 
- Successful IPO, with EUR 400 million raised to further reduce leverage 
- SYNLAB to comfortably exceed EUR 3 billion of revenue in FY 2021 
SYNLAB, (ISIN: DE000A2TSL71, SYMBOL: SYAB) the largest European clinical laboratory and medical diagnostic services 
company, announces SYNLAB Limited's unaudited consolidated (SYNLAB Group) Q1 results. 
"Strong business momentum from late 2020 has continued and even accelerated in the first quarter of 2021. We recorded 
sustained growth in our underlying business, in line with previous quarters, while continuously playing a leadership 
role in the COVID-19 response, with testing volumes in March 2021 at the highest levels since the start of the 
pandemic. Less than two weeks after our successful IPO, these results give us great confidence that we should 
comfortably exceed EUR 3 billion of revenue in FY 2021, giving us increased means to implement our strategy for further 
profitable growth. I am equally proud of the major progress SYNLAB has made in its Environmental, Social and Governance 
agenda, with the publication in March of our first ESG report^[2], which also sets measurable targets for our 
extra-financial performance." says Mathieu Floreani, CEO of SYNLAB Group. 
SYNLAB Group^[3] Key figures (EURm) 
                           Q1 2021 Q1 2020  Growth 
Revenue                     938.2   479.5   +95.6% 
Adjusted EBITDA             324.1   85.0     x3.8 
Adjusted EBITDA margin      34.5%   17.7%  +16.8pts 
Adjusted operating profit   280.3   45.4     x6.2 
Net profit                  188.8  (18.0)   +207m 
Unlevered Free cash flow    181.8   11.3    +170m

Financial update: strong profitable growth in Q1 2021

Q1 2021 revenues increased by 96% compared with Q1 2020 at EUR 938.2 million. This record growth was established against a comparison base which included a very strong March 2020 SARS-CoV-2 attrition impact^[4] in several geographies (total Q1 2020 attrition impact of EUR 46 million), partly mitigated by the strong start to the year (+4.9% underlying organic growth in Jan.-Feb. 2020) and the early ramp-up of SARS-CoV-2 testing capabilities in several countries.

Q1 2021 organic growth was 96% with:

- high demand for SARS-CoV-2 diagnostics across markets, with Q1 2021 volumes exceeding that of Q4 2020. March 2021 testing volumes were at the highest level since the start of the pandemic. SYNLAB carried out 7.1 million PCR tests and 0.8 million non-PCR tests in Q1 2021, for an estimated SARS-CoV-2 revenue contribution of EUR 406 million, of which EUR 430 million from testing revenue and an estimated EUR 24 million attrition impact;

- robust underlying organic growth of 3.7% (excluding SARS-CoV-2 revenue contribution), supported by successful "For You" growth initiatives (Blood collection points network optimization, Hospitals) and positive price in multiple countries;

Excluding SARS-CoV-2 testing, total organic growth was 8.7%.

Currency variations had a small negative impact in Q1 2021, driven by further weakening of emerging currencies against the Euro. M&A had a small positive contribution, reflecting subdued M&A activity in previous quarters.

Q1 2021 adjusted EBITDA rose to EUR 324.1 million compared with EUR 85.0 million in Q1 2020. The EUR 239.5 million organic increase in adjusted EBITDA was mostly driven by i) a surge in volume and overall positive pricing ii) contained inflation of personnel and other OPEX costs and iii) productivity gains related to the SALIX program, in line with previous quarters and annual targets.

The strong volume leverage translated into adjusted EBITDA margin expansion, at 34.5%, increasing materially from 17.7% in Q1 2020 but also higher than the 31.8% EBITDA margin recorded in Q4 2020.

Q1 2021 adjusted operating profit was multiplied by 6.2x to reach EUR 280.3 million, with margin expanding materially. Operating profit grew by the same amount, with slightly lower customer list amortization at EUR 12.4 million offset by slightly higher OPEX adjustments -mostly IPO and acquisition-related- at EUR 9.7 million. Total adjustments reduced materially as a % of adjusted EBITDA.

Q1 2021 net profit reached EUR 188.8 million, driven by higher operating profit and lower financial costs, partly offset by higher income tax from improved financial performance. A residual sale of the A&S business, classified as discontinued operations, had a positive EUR 17.9 million impact on net profit.

Operating cash flow expanded materially in the quarter, driven by profit growth and despite the negative impact of SARS-CoV-2 testing activity on working capital. DSOs stood at 73 days at the end of Q1 2021, compared with 56 days at the end of Q1 2020 (and 77 days at end December 2020).

A moderate increase in net CAPEX, of which EUR 3.6 million related to SARS-CoV-2 testing, and in Lease payments, together representing 5.3% of Q1 2021 revenue, resulted in record unlevered free cash flow of EUR 181.8 million. The cash conversion ratio (Unlevered free cash flow / adjusted EBITDA) was 56%.

Q1 2021 strong cash generation enabled SYNLAB to deleverage organically: at end March 2021, its adjusted net debt^ [5] stood at EUR 2,127 million compared with EUR 2,254 million at end December 2020. Net debt to LTM pro-forma adjusted EBITDA^[6] leverage ratio dropped to 2.3x compared with 3.3x at the end of 2020, the lowest level achieved since the creation of the SYNLAB Group.

Successful IPO completed on the Frankfurt Stock Exchange

On 30 April 2021 SYNLAB was successfully listed on the Frankfurt Stock exchange. The Offering comprised 22.2 million newly issued ordinary shares from a capital increase, and up to 20.7 million ordinary shares from the Pre-IPO shareholders. The total offer volume was EUR 772 million (assuming full exercise of the Greenshoe option), including gross primary proceeds of EUR 400 million used to further deleverage the Group and pursue its value enhancing growth strategy.

Refinancing and further debt reduction post Q1 2021

Capitalizing on its strengthened financial position, SYNLAB issued on 4 May 2021 a new EUR 735 million Term-Loan with a 5-year maturity, a new EUR 500 million RCF, and cancelled its undrawn EUR 250 million RCF. On 5 May 2021, using the proceeds from the new issuance and the IPO, SYNLAB repaid EUR 850 million of outstanding Notes and EUR 300 million of Term-Loans. Following these successful transactions, SYNLAB significantly reduces its debt level, has no debt maturity before 2026, benefits from lower interest rates, in line with guidance given at the IPO, and further diversifies its pool of banking partners.

Business update: delivering on growth strategy

Leadership in SARS-CoV-2 pandemic response

SARS-CoV-2 testing continued at a sustained pace in the quarter, with volumes at levels never seen since the start of the pandemic in several countries. The bulk of tests carried out were PCR tests, with antibody testing rising gradually. In addition, SYNLAB's leading capabilities in sequencing put the company at the forefront of the sequencing campaign in Europe, notably in Germany.

In parallel, SARS-CoV-2 testing services are also growing, as testing is also paramount to the "back to normal" phase. The flagship UEFA partnership signed in 2020 and which covers 55 countries is still ongoing, and SYNLAB has signed more than 7,700 "Safe at work" contracts with corporate clients from program launch to end March 2021. SYNLAB sees continuous traction in this market. Recent partnerships include PCR testing services for Amazon in Italy, Radisson hotels across 15 countries, and for athletes of various disciplines (for example FC Barcelona, Hungarian Olympic Committee). SYNLAB is also active in testing of younger people: testing concepts and focused solutions for schools and kids overall are being implemented in several countries, including France, Germany, and Portugal.

Continuously delivering on growth strategy of customer centric medical excellence

In addition to the major efforts put in fighting the SARS-CoV-2 pandemic, SYNLAB continuously delivers on its growth strategy of customer centric medical excellence, based on four pillars:

1) Superior patient and clinician experience

In Q1 2021, mobilization has started for the South-East London contract, which officially started on April 1^st, 2021 and is set to generate GBP 1.9 billion of revenue over the next 15 years. Key milestones include the signing of the hub lease and the start of the building work to transform an office building into a 65,000ft^2 state-of-the-art laboratory building and associated center of excellence for pathology learning. To manage this major contract, a new executive leadership is now in place with medical leadership appointment also well underway.

Further "For You" growth initiatives were rolled-out in the quarter, including Blood collection points network optimization in France and Italy and the extension of the Net Promoter Score campaign to measure customer satisfaction.

2) Operational excellence

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May 12, 2021 01:31 ET (05:31 GMT)