Ambu delivered 8% organic revenue growth in Q3 with 5% organic growth year-to-date. This was driven by a continued rapid uptake of Ambu’s single-use endoscopes within urology and ENT, as well as pent-up demand for Anaesthesia and Patient Monitoring & Diagnostics (PMD) products. The financial outlook from 3 August, 2022 is maintained.
Britt Meelby Jensen, Chief Executive Officer of Ambu, says: “For Q3, I am happy to see that we continued to deliver rapid growth in our urology and ENT businesses, which are segments that we have entered in recent years. We also saw strong performance for Anaesthesia and PMD. Bronchoscopy was impacted negatively by lower ICU admissions and Covid-19-related inventory as well as a high baseline. However, I am excited about the opportunities in the bronchoscopy market with approval of our new advanced bronchoscopy solution in Europe and the U.S. in May and July, respectively. For GI, we experienced a slower uptake than expected. For the cost reduction program announced on 3 August 2022, we are progressing as planned, with approximately 70% of the reductions concerning our global workforce completed. Looking ahead, we are excited to progress Ambu’s potential as a strong and sustainable high-growth company, creating value for the customers and patients we serve.” FINANCIAL HIGHLIGHTS FOR THE QUARTER Last year’s comparative figures are presented in brackets.
Revenue for Q3 was DKK 1,128m (DKK 973m) based on organic growth of 8% (7%). Reported growth for the quarter was 16% (3%). Year-to-date, organic growth was 5% (16%), with reported growth of 10% (11%).
In Q3, revenue in North America grew organically by 16% (32%), and in Europe by 4% (-10%), while Rest of World declined by ‑4% (7%). Year-to-date, organic growth rates were: North America 15% (16%), Europe -3% (16%) and Rest of World -2% (11%).
Organic growth in Visualization in Q3 was 0% (0%). Year-to-date, organic Visualization growth was 0% (29%). This was driven by continued strong growth in Ambu’s cystoscopy and ENT businesses, increased competition in the U.S., lower ICU admissions and a decline in bronchoscopy due to high comparables with Q3 2020/21.
Anaesthesia delivered organic growth of 14% (‑1%) while Patient Monitoring & Diagnostics (PMD) posted 20% (44%). Year-to-date, organic growth in Anaesthesia and PMD was 7% (0%) and 14% (7%), respectively.
Gross margin for the quarter was 55.8% (62.5%). The gross margin year-to-date was 58.2% (63.4%). The declining gross margin is due to inflationary effects on input prices at Ambu’s production facilities, ramping-up production facilities in Mexico, shifts in product mix and the inventory write-off of Ambu® VivaSight™ 2 DLT.
OPEX for the quarter totalled DKK 587m (DKK 520m), corresponding to an increase of 13% due to higher distribution costs and currency translation effects, primarily driven by the appreciating USD/DKK over the last year as well as depreciation, amortisation and impairment (DA).
EBIT before special items for the quarter was DKK 42m (DKK 88m), with an EBIT margin before special items of 3.7% (9.0%). Year-to-date, EBIT before special items ended at DKK 129m (DKK 336m), with an EBIT margin before special items of 3.9% (11.2%).
Special items for the quarter and year-to-date included a one-off cost of DKK 13m (DKK 0m) associated with the change of CEO in May.
EBIT for the quarter was DKK 29m (DKK 88m), with an EBIT margin of 2.6% (9.0%), and EBIT year-to-date was DKK 116m (DKK 336m), with an EBIT margin of 3.5% (11.2%).
Net working capital-to-revenue ratio was 23% (21%) at the end of the quarter, based on rolling 12-month revenue, driven by higher inventory level by the end of Q3.
Free cash flow before acquisitions totalled DKK 7m (DKK -113m) for the quarter, corresponding to 1% (-12%) of revenue. Year-to-date, the free cash flow was DKK -291m (DKK -257m), corresponding to -9% (-9%) of revenue.
Total net interest-bearing debt (NIBD) was DKK 1,423m (DKK 638m), corresponding to a leverage ratio of 3.5x (1.1x) 12 months of EBITDA before special items.
OTHER BUSINESS-RELATED HIGHLIGHTS FOR Q3 AND THE PERIOD THEREAFTER
In Q3, Ambu’s Board of Directors appointed a new Executive Management. On 19 May 2022, Britt Meelby Jensen took on the role of CEO at Ambu, while Thomas Frederik Schmidt joined as CFO on 1 June 2022.
Ambu’s Visualization business achieved a number of regulatory clearances in Q3:
For Ambu™ aScope™ Gastro and Ambu™ aBox™ 2, Ambu obtained CE mark on 19 April.
For Ambu™ aScope™ 4 RhinoLaryngo Slim, Ambu expanded the addressable market by supporting FEES (Fibreoptic Endoscopic Evaluation of Swallowing) procedures on 19 April.
For Ambu™ aScope™ 5 Broncho and aBox 2, Ambu obtained CE mark on 3 May and U.S. regulatory clearance on 26 July.
On 24 May, Ambu issued a voluntary recall of Ambu® VivaSight™ 2 DLT due to reports of a potential rupture of the bronchial or tracheal cuff. No patient impacts have been reported, and the product is currently being investigated.
On 3 August, Ambu announced an adjustment of its pricing practices to reduce the level of discounts and rebates. This is expected to result in a one-time negative impact on sales equivalent to approximately 1 percentage point (ppt) of full-year growth in 2021/22, which is expected in Q4 2021/22.
Ambu announced a cost reduction program on 3 August to strengthen the company’s free cash flow and improve profitability in order to support future growth, with expected annualised savings from FY 2022/23 of DKK 250m pre-tax. As of today, approximately 70% of the reductions concerning our global workforce have been completed.
Ambu maintains the financial guidance announced on 3 August 2022 at:
Organic growth: no less than 4%
EBIT margin before special items: no less than 2%
A conference call is scheduled for Thursday 25 August 2022, at 09:00-10:00 (CEST). The conference is broadcast live via Ambu.com/webcastQ32022. To ask questions in the Q&A session, please call one of the following numbers five minutes before the start of the conference and enter the following access code: 50077.
U.K.: +44 0-808-101-1183
US (toll free): +1 800-420-1271
After the conference, the presentation can be downloaded at Ambu.com/presentations.
Investors Thomas Frederik Schmidt, CFO, tfsc@ambu.com / +45 2084 0500 Nicolai Thomsen, Director, Investor Relations & Strategic Financial Planning, nith@ambu.com / +45 2620 8047
Media Tine Bjørn Schmidt, Head of Corporate Communications, tisc@ambu.com / +45 2264 0697
Ambu A/S Baltorpbakken 13, DK-2750 Ballerup, Denmark, Tel.: +45 7225 2000, CVR no.: 63 64 49 19, www.ambu.com
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