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2020-08-12

Biohit Oyj: Biohit group half year financial report 2020

Biohit Oyj Half Year Financial Report 12 August 2020 at 9:30 am local time (EET) 

 

SUMMARY

January-June 2020

Net sales EUR 3.0 million (EUR 5.0 million)

  • Net sales decreased by 40 % compared to H1/2019
  • Operative EBITDA EUR -1.0 million (EUR +0.4 million)
  • Cash at the end of the period EUR 1.0 million (EUR 1.3 million 31 December 2019)
  • Fair value of Genetic Analysis AS investment EUR 0.8 million (EUR 3.7 million 31 December 2019)
  • Net sales from international operations 95.6 % (95.5 %) of total net sales
  • Equity ratio 81.0 % (83.9 % 31 December 2019)

BIOHIT GROUP KEY FIGURES

1-6/2020 1-6/2019 1-12/2019
Net sales (MEUR) 3.0 5.0 10.1
EBITDA (MEUR) -1.0 0.4 0.6
Operative EBITDA (MEUR) -1.0 0.4 0.6
Operating profit/loss (MEUR)* -2.0 -0.6 -1.4
Profit/loss before taxes (MEUR) -2.3 -0.5 -1.2
Profit/loss for the period (MEUR) -2.3 -0.6 -1.4
Average number of personnel 44 46 46
Number of personnel at the end of the period 42 46 46
Equity ratio (%) 81.0 % 85.9 % 83.9 %
Earnings per share (EUR), Undiluted -0.15 -0.04 -0.09
Earnings per share (EUR), Diluted -0.15 -0.04 -0.09
Shareholders' equity per share (EUR) 0.64 1.03 0.97
Average number of shares during the period 15,045,593 14,964,245 15,005,253
Number of shares at the end of the period 15,045,593 15,045,593 15,045,593

* In 2017 we capitalized the patent regarding divestment of Biohit Healthcare (Hefei) Co. Ltd. which is depreciated EUR 1.5 million annually until end of 2021.

PRESIDENT AND CEO SEMI KORPELA:

COVID-19 PANDEMIC IMPACTED VERY NEGATIVELY ON THE BUSINESS

At the beginning of the year 2020, Biohit had positive growth outlook towards all key markets. COVID-19 started to impact on Biohit's business in China, Middle-East, Europe and other markets when the healthcare sector focus was shifted to COVID-19 diagnostics instead of gastrointestinal diagnostics. As a result of this, Biohit product sales decreased significantly. Also Gastroscopies were put on hold in several European countries which also had a negative impact on Biohit's Net Sales.

Our Net Sales decreased by 40 % during the first half of the year 2020 due to reasons mentioned above. Net Sales decreased in almost all key markets. During the review period Operative EBITDA adjusted for items affecting comparability decreased significantly to EUR -1.0 million (EUR +0.4 million). We reached EUR 0.5 million savings in fixed costs which mitigated the decreased Net Sales and also decreased Gross Margin (-%) impact on EBITDA. Our cash at the end of the period remained on a good level EUR 1.0 million (EUR 1.3 million) due to the company's effective working capital management.

The COVID-19 pandemic created an extra challenge on the Genetic Analysis AS financing round. Comprehensive income for the period was very negatively impacted by the fair value change in the investment in Genetic Analysis AS EUR -2.9 million. GA's share subscription price which is used as an input value in Biohit's balance sheet valuation decreased due to the pandemic. The fair value change had no impact on the cash flow.

Despite the pandemic we made international distribution agreements for different product groups. We signed an agreement over the distribution of GastroPanel® QuickTest with Concile GmbH in Germany. In Algeria, Hydra pharm s.a.r.l is our new QuickTest distributor. An important achievement during the review period was the new manufacture and licensing agreement with Melon OOO regarding local GastroPanel® production in Russia. Melon OOO is Biohit's long term diagnostics distributor in Russia and the local production enables better utilization of Russia's Ministry of Health recommendation for early detection of gastrointestinal diseases. Business in Russia grew significantly compared to the previous year despite the COVID-19 impact.

The development of the GastroPanel® Quick Test - intended as the first-line diagnostic test for dyspeptic patients and reflux symptoms - has been advanced by extending the specimen types studied to finger-prick blood specimens and examining the usability of the test platform under point-of-care settings. However, a clinical study was suspended due to the COVID-19 pandemic. The study's timetable is dependent on the development of the pandemic and the study can proceed safely when patients entering the hospital have no risk of COVID-19 infection. Our target is to apply CE mark during 2020.

Europe and Middle-East markets have slowly started to recover but the demand is not yet back to pre-pandemic levels. China has also started to recover step by step but the threat of the next pandemic wave and people's general unwillingness to use healthcare services due to risk of infection slows down the market recovery.

Even though the year 2020 is challenging due to the COVID-19 pandemic, we are confident about the future. Impact of the COVID-19 pandemic to our product sales is temporary and demand will return post-pandemic. We take constant actions with our cost structure to mitigate the pandemic's impact on 2020 EBITDA. Biohit has also a strong balance sheet and sufficient financial funds to overcome the situation.

OUTLOOK FOR 2020

We decreased our outlook in the beginning of June (4 June 2020) relating to coronavirus. Biohit latest outlook on 2020:

Biohit expects the 2020 Net Sales to decrease in comparison with 2019 (previous year EUR 10.1 million).

REPORTING

Biohit's product portfolio consists of diagnostic tests, analysis systems, products binding carcinogenic acetaldehyde into a harmless compound, monoclonal antibodies, as well as service laboratory operations. The entire product and service portfolio is reported under a single segment.

NET SALES AND RESULT

January-June

Consolidated net
sales and operating
income
1-6/2020 1-6/2019 Change 1-12/2019
Net sales MEUR 3.0 5.0 -2.0 10.1
Change compared with -39.9 % 0.9 % 1.2 %
the previous year (%)
Operating income MEUR -2.0 -0.6 -1.5 -1.4
Operating income -68.1 % -11.7 % -14.0 %
(% of net sales)
 
NET SALES BY MARKET AREA 1-6/2020 1-6/2019 1-12/2019

EUR million
Asia 0.7 2.0 3.9
Europe, other 1.7 2.0 4.0
North and South-America 0.1 0.1 0.2
Finland 0.1 0.2 0.4
Other countries 0.3 0.6 1.6
Net Sales from contracts with customers total 3.0 5.0 10.1
 

ALTERNATIVE PERFORMANCE MEASURES

 Bridge calculation of operative EBITDA

EUR million 1-6/2020 1-6/2019 Change 1-12/2019
Operating profit/loss -2.0 -0.6 -1.5 -1.4
Depreciation and amortization 1.0 1.0 0.0 2.0
Operative EBITDA -1.0 0.4 -1.4 0.6
 

BALANCE SHEET

On the 30 June 2020, the balance sheet totalled EUR 11.8 million (EUR 17.4 million 31 December 2019). At the end of the reporting period, our equity ratio stood at 81.0 % (83.9 % 31 December 2019).

                                                                             
FINANCING AND OPERATIONAL CONTINUITY

Our financing position is sufficient to overcome coronavirus impact on our business, for continuing critical R&D projects and taking the necessary actions towards strengthening an international distributor network. On the 30 of June 2020 company's financial assets totalled EUR 5.0 million (EUR 5.6 million 31 December 2019) which does not include Genetic Analysis AS shares.

The company has managed to keep its working capital on a good level and the management believes that working capital and company's other financial assets will cover the operations for the next 12 months and the company is not dependent on external financing to be able to guarantee the continuity of its operations. Cash flow from operating activities was EUR -0.2 million during the review period. According to company's management company's ability to continue its operations is good and there are no indications towards events or circumstances that alone or together might give a significant reason to doubt the organisation's ability to continue its operations. 

RESEARCH AND DEVELOPMENT AND CLINICAL STUDIES

R&D operations focus on innovations, as well as product development and improved usability. Biohit also employs external experts and subcontractors in its R&D operations. Development expenditure has not been capitalised. Research and development expenditure excluding depreciation and amortization during the reporting period amounted to EUR 0.5 million (EUR 0.6 million).

The development of the GastroPanel® Quick Test designed for the primary diagnosis of dyspepsia and reflux symptoms has progressed. The results of a multi-center clinical trial are available from one of the hospitals, where the patients' plasma samples were examined by the GastroPanel® Quick Test and the results compared with the ELISA-based GastroPanel® reference test. Subsequently, the external clinical validation studies have been extended to different sample types, including finger prick samples as well as to testing of the applicability of the platform in real-life point-of-care sampling settings. However the clinical trial was discontinued due to the COVID-19 pandemic. The continuation of the trial is pending on the future development of the pandemic. The trial can be safely continued only when the patients entering the hospital have no risk of COVID-19 infection. Our target is to apply CE mark during 2020.

The development of the fecal immunochemical test (ColonView-ELISA) designed for the screening and primary detection of colorectal cancer and its precursors has continued during 2020.

The first analysis of the patient data from a clinical validation study on the unified GastroPanel® test jointly conducted by the Oulu University Hospital Gastrocenter and Department of Internal Medicine has been completed. This clinical validation study was focused on patients with type 1 diabetes mellitus (DM1) and autoimmune thyroid disease (AITD), who are known to have a markedly increased risk of contracting also autoimmune-type atrophic gastritis (gastric mucosal atrophy and dysfunction).

COMMUNITY RESPONSIVENESS, PATIENT SAFETY AND DISEASE PREVENTION

As a result of substantial investments taking community responsiveness as well as due to the innovation- and patenting strategy of Biohit Oyj:n (www.biohithealthcare.com / About Us /History: Aggressive Innovation and Patenting Strategy - the Way to Success and National Well-Being (https://eur04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.bi......

Författare Biohit Oyj

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