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2021-11-04

Optomed Oyj: Optomed Plc: Interim report, January - September 2021

Optomed Plc Stock Exchange Release 4 November 2021 at 9:00, Helsinki

Optomed Plc: Interim report, January - September 2021

July - September 2021

  • Group revenue was steady and amounted to  EUR 3,342 (3,338) thousand
  • Devices segment revenue decreased by 24.1 percent to EUR 1,167 (1,537) thousand, as no camera deliveries were  made to China after the large inventory deliveries in the first half of the year. Sales to North America and Europe continued strong growth, as well as sales to OEM customers
  • The Software segment revenue increased, by 20.8 percent to EUR 2,176 (1,802) thousand, driven by new screening and workflow management solutions and recurring revenue from existing  customers
  • Adjusted EBITDA amounted to EUR -337 (229) thousand corresponding to -10.1 (6.9) percent of revenue. The variance is due to higher operating expenses mainly related to Optomed's US market entry and expansion

January - September 2021

  • Revenue increased very strongly by 26.0 percent to EUR 11,299 (8,969) thousand, as western markets are adapting  to the post-pandemic situation  and the accumulated demand is starting to materialize

  • Adjusted EBITDA amounted to EUR -475 (-671) thousand corresponding to -4.2 (-7.5) percent of revenue

Key figures

EUR, thousand Q3/202 Q3/202 Change, Q1 Q1 Change, 2020
1 0 % -Q3/202 -Q3/20 %
1 20
Revenue 3,342 3,338 0.1% 11,299 8,969 26.0% 13,011
Gross profit 2,250 2,262 -0.5% 8,151 6,146 32.6% 8,955
*
Gross margin 67.3% 67.8% 72.1% 68.5% 68.8%
% *
EBITDA -337 229 -247.2% -475 -671 29.3% -733
EBITDA margin -10.1% 6.9% -4.2% -7.5% -5.6%
*, %
Adjusted -337 229 -247.2% -475 -671 29.3% -733
EBITDA *
Adjusted -10.1% 6.9% -4.2% -7.5% -5.6%
EBITDA margin
*, %
Operating -888 -278 -219.9% -2,598 -2,312 -12.4% -2,906
result(EBIT)
Operating  -26.6% -8.3% -23.0% -25.8% -22.3%
margit
(EBIT) *, %
Adjusted -888 -278 -219.9% -2,598 -2,312 -12.4% -2,906
operating
result(EBIT)
*
Adjusted -26.6% -8.3% -23.0% -25.8% -22.3%
operating
margin (EBIT
margin)
*, %
Net profit/ -833 -299 -178.4% -2,313 -2,525 8.4% -3,177
loss
Earnings per -0.06 -0.02 -171.8% -0.17 -0.19 10.6% -0.24
share
Cash flow -764 -400 -90.8% -2,450 -3,215 23.8% -2,801
from
operating
activities
Net Debt -1,052 -4,381 -76.0% -1,052 -4,381 -76.0% -4,090

Net debt/ 2.0 5.0 2.0 5.0 5.6
Adjusted
EBITDA (LTM)
Equity ratio  62.7% 66.5% 62.7% 66.5% 64.6%
*
R&D expenses 386 248 55.4% 1,354 1,011 34.0% 1,406
personnel
R&D expenses 79 31 156.8% 390 152 157.0% 253
other
costs
Total R&D 465 279 66.6% 1,744 1,163 50.0% 1,659
expenses

*)
Alternative
performance
measures,
see section
Alternative
Performance
Measures
for
definitions
and
calculations.

CEO comments

Our software segment and western markets continued strong growth, no new camera deliveries to China during the quarter.

Optomed's devices segment sales to North America and Europe continued strong growth, as well as sales to our OEM customers. In the comparison period of 2020, the camera sales to China accounted for a significant share of the segment's revenue. During the review period, no new camera deliveries were made to China after the large inventory deliveries in the first half of the year. This resulted in the devices segment revenue being lower than in the comparison period.

Optomed's software segment made another growth record during the quarter, over 20 percent. New screening and workflow management solutions were delivered to hospitals, and the software segment's new solution development project for eye clinics progressed on schedule. These new deliveries had a significant impact on the third quarter revenue growth. Recurring revenue from existing customers grew, as the number of customers and examinations increased.

Optomed's most significant strategic project in relation to AI services is an ongoing clinical trial in the United States aiming for FDA clearance. We are expecting to receive results from the study in the near future. Although revenue from the use of Aurora IQ's AI service is not significant yet, we expect the growing number of users to generate significant new revenue for our software segment in the coming years, particularly in the U.S. market. AI that detects and diagnoses diseases from fundus images is a key technology that, in combination with our cameras, will accelerate the transition of the service towards primary care, improving the quality and accessibility of these examinations and reducing costs.

The coronavirus pandemic continues to affect our business, particularly in Asia and  emerging markets. Our sales in the North America and Europe, as well as to OEM customers, appears to have returned faster to pre-pandemic levels. The outlook for our business in China depends heavily on both the pandemic and how quickly our strategic partner Phoebus Medical, and through them our new distribution channel Sinopharm, manages to expand our sales to new provinces in China. Although this distribution channel reform and cooperation with major strategic partners in general is slow, and volume fluctuations between quarters are large, we believe that the Chinese market will continue to bring significant growth potential for Optomed in the long term.

We believe our products, handheld cameras combined with artificial intelligence, are the right combination to accelerate the transition of eye screening to primary care, starting with the US market. We will focus majority of our commercial resources to capitalize this opening market opportunity.

CEO

Seppo Kopsala

Outlook 2021

Optomed expects its full year 2021 revenue to grow strongly compared to 2020.

(Announced 8 April 2021)

Telephone conference

A telephone conference for analysts, investors and media will be arranged on 4 November 2021 at 11.00 EET, (10:00 CET). The event will be held in English. The presentation material will be available at www.optomed.com/investors 10.00 EET at the latest.

The participants are requested to register for the call-in advance by email to sakari.knuutti@optomed.com.

Please see the call-in numbers below:

FI +358 9 856 263 00

SE +46 8 505 218 52

UK +44 20 3321 5273

US +1 646 838 1719

FR +33 1 70 99 53 92

The conference id is 669 328 826#

Please note that by dialing into the conference call, the participant agrees that personal information such as name and company name will be collected.

Group performance

July - September 2021

In July-September 2021, Group revenue was stable and amounted to EUR 3,342 (3,338) thousand for the period. The main reasons for weak Group revenue growth related to the Devices segment, as no camera deliveries were made to China due to high inventory deliveries in the first half of the year. In the comparison period of 2020, the camera sales to China accounted for a significant share of the segment's revenue.The Devices segment's revenue decreased by 24.1 percent due to China and the pandemic in Asia and emerging markets, while North America, Europe and OEM customers continued strong growth. The Software segment's strong performance continued, and revenue increased by 20.8 percent mainly driven by screening and workflow software deliveries to new customers as well as increase in recurring revenue from existing customers due to a rise in patient volumes.  

The gross margin decreased to 67.3 from 67.8 percent last year. The company received grants and other operating income of EUR 48 (29) thousand, which increased the gross margin of both periods. The gross margin for the third quarter of 2021 adjusted for grants and other operating income would have been 65.9 percent compared to 66.9 percent in 2020.

EBITDA amounted to EUR -337 (229) thousand. The main reason for the negative EBITDA variance versus last year is higher operating expenses while the comparison period last year was affected by the COVID-19 related cost savings and higher operating expenses as a consequence of Optomed's US market entry and expansion as well as the strengthened Group Marketing function.

.

EBIT was EUR -888 (-278) thousand.

Net financial items amounted to EUR 36 (-41) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB and USD to EUR.

January - September 2021

In January-September 2021, Group revenue increased very strongly by 26.0 percent to EUR 11,299 (8,969) thousand. The Devices segment revenue increased by 34.3 percent, mainly driven by continued growth in North America and Europe and high sales to China during the first six month.  The Software segment revenue increased by 21.0 percent showing a continued strong performance.

The gross margin increased to 72.1 percent from 68.5 percent last year. The company's other operating income includes governmental grants of EUR 753 (117) thousand including a waived loan from Business Finland of EUR 538 thousand related to a terminated product development project, which increased the gross margin of both periods. The gross margin for the nine-month periodf of 2021 adjusted for the total amount of the grants and other operating income would have been 65.5 percent compared to 67.2 percent in 2020. 

EBITDA amounted to EUR -475 (-671) thousand and EBIT was EUR -2,598 (-2,312) thousand. EBIT was affected by the amortization of the terminated product development program amounting to EUR 482 thousand in the second quarter of 2021.

Net financial items amounted to EUR 226 (-272) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB to EUR. The positive variance versus 2020 are related to exchange rate profit.

Cash flow and financial position

In July-September 2021, the cash flow from operating activities amounted to EUR -764 (-400) thousand. Net cash used in investing activities was EUR -646 (-398) thousand and relates to capitalized development expenses. Net cash from financing activities amounted to EUR 1,404 (-82).  The third quarter include a new loan of EUR 1,000 thousand.

Consolidated cash and cash equivalents at the end of the period amounted to EUR 7,827 (10,899) thousand. Interest-bearing net debt totalled EUR -1,052 (-4,381) thousand at the end of the period.

Net working capital was EUR 5,298 (3,862) thousand at the end of the period. This increase in working capital is due to  increased trade receivables.

Devices segment

Optomed has two synergistic business segments: Devices and Software.

The Devices segment develops, commercializes and manufactures easy-to-use, and affordable handheld fundus cameras, that are suitable for any clinic for screening of various eye diseases, such as diabetic retinopathy, glaucoma and AMD (Age Related Macular Degeneration).

EUR, thousand Q3/202 Q3/202 Change,% Q1 Q1-Q3/2020 Change,% 2020
1 0 -Q3/20<...

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