[February 06, 2014] |
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Sorin Group Announces Preliminary Results for 2013
MILAN --(Business Wire)--
At a meeting held today and chaired by Rosario Bifulco, the Sorin S.p.A.
Board of Directors analyzed the results for the fourth quarter 2013 and
the preliminary unaudited consolidated results for the year of 2013. The
final draft of the financial statements for the year of 2013 will be
approved by the Board of Directors at a meeting to be held on March 14,
2014.
"In 2013 Sorin Group (News - Alert) (MIL:SRN) successfully recovered from the
consequences of the earthquakes, reported results in line with guidance
and generated a robust cash flow. During the year, the Company launched
new breakthrough products, such as the new InspireTM-
HeartlinkTM- ConnectTM System and KORATM,
the only pacemaker with MRI automatic mode feature, and continued the
successful roll-out of SonRTM and PercevalTM. In
2013, the Company also closed several important deals, including the
acquisition of Brazilian manufacturer Alcard, the joint-venture with
MicroPort for the Chinese CRM market and the greenfield project for
cardiopulmonary products in China, thus executing on its medium-long
term growth objectives," said André-Michel Ballester, Sorin Group's
Chief Executive Officer. "Notwithstanding the anticipated adverse
foreign-exchange impact, the Company is well positioned to drive
top-line growth in 2014 across a variety of new products and geographies
as well as to continue sustaining its longer-term growth strategy with
further geographic expansion initiatives and investments in innovation,"
he added.
CONSOLIDATED RESULTS FOR THE FOURTH QUARTER 2013
In the fourth quarter of 2013, Sorin Group posted revenues of €191.8
million, a 5.3%* increase over the fourth quarter of 2012.
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The Cardiac Surgery Business Unit (cardiopulmonary products for
open heart surgery and heart valve repair or replacement products)
reported revenues of €128.0 million. The heart-lung machine
segment delivered a strong performance in every major market in the
quarter. The oxygenator and ATS system segments also reported a
positive performance, confirming Sorin's full recovery from the
earthquakes of 2012. Strong performance of PercevalTM more
than compensated weak sales of traditional tissue valves in Europe.
Mechanical valves' volume growth in Emerging markets was offset by the
continued shift toward tissue valves in Europe and the US.
In October 2013, Sorin Group officially launched its new InspireTM
family of adult oxygenators and the HeartlinkTM system at the
EACTS (European Association for Cardio-Thoracic Surgery) Annual Meeting,
in Vienna, Austria. During the quarter, Sorin received CE (Conformité
Européenne) mark approvals for the Solo SmartTM stentless
aortic valve, which provides heart valve performance similar to a native
valve with the ease of implantation of stented prostheses, and for the
XL version of PercevalTM, thus expanding the number of
patients that can benefit from a sutureless aortic valve replacement.
Sorin Group also received a dedicated reimbursement for PercevalTM
in Belgium and Germany effective, respectively, 1st November 1st,
2013 and January 1st, 2014.
(Euro million)
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Q4 13 Revenues
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Underlying growth %*
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Heart-lung machines
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31.3
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20.4%
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Oxygenators
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49.2
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16.9%
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Autotransfusion machines and devices
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15.6
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8.5%
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Mechanical Heart Valves
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12.7
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-0.2%
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Tissue Heart Valves
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16.0
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1.1%
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Other
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3.2
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4.8%
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Total Cardiac Surgery
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128.0
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12.2%
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(*) For details, see attached table "Consolidated revenues by
Business Unit"
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The Cardiac Rhythm Management Business Unit (implantable
devices to manage cardiac rhythm disorders) reported revenues
of €63.0 million, a 6.5%* decrease compared to the
fourth quarter of 2012. Low voltage revenues continue to be affected
by a challenging pricing environment in Europe and lower volumes in
Japan due to the penetration of Magnetic Resonance Imaging (MRI)
compatible pacemakers. The high voltage segment also reported a
slightly negative performance, notwithstanding the continued success
of SonRTM in Europe.
During the quarter, Sorin obtained CE mark approvals for the KORATM
100 MRI compatible pacing system and the INTENSIATM family of
implantable defibrillators and CRT-D devices. KORATM
pacemakers feature Sorin's proprietary SafeR algorithm, Sleep Apnea
monitoring and the patented Automatic MRI mode, again demonstrating
Sorin's commitment to advance the state-of-the-art in pacing technology
today. INTENSIATM family of implantable defibrillators and
CRT-D devices features the DF-4 high voltage connector, the new
industry-standard which reduces the number of connections between the
implanted device and the lead, thus facilitating the implant procedure.
(Euro million)
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Q4 13 Revenues
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Underlying growth %*
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High Voltage (defibrillators and CRT-D)
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23.6
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-0.9%
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Low Voltage (pacemakers)
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36.3
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-10.7%
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Other
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3.1
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6.9%
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Total Cardiac Rhythm Management
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63.0
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-6.5%
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(*) For details, see attached table "Consolidated revenues by
Business Unit"
PRELIMINARY CONSOLIDATED RESULTS FOR 2013
In 2013, Sorin Group reported revenues of €738.5 million,
a 4.8%* increase compared to 2012.
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The Cardiac Surgery Business Unit (cardiopulmonary products for
open heart surgery and heart valve repair or replacement products)
reported revenues of €481.8 million, up 12.1%*
compared to 2012.
(Euro million)
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2013 Revenues
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Underlying growth %*
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Heart-lung machines
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96.3
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16.6%
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Oxygenators
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196.7
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18.6%
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Autotransfusion machines and devices
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60.1
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11.5%
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Mechanical Heart Valves
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52.6
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-4.9%
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Tissue Heart Valves
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63.9
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6.2%
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Other
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12.1
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1.7%
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Total Cardiac Surgery
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481.8
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12.1%
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(*) For details, see attached table "Consolidated revenues by Business
Unit"
The heart-lung machine segment posted record revenues for the fifth
consecutive year, further reinforcing the Company's leadership position
in every major market. The oxygenator and autotransfusion segments also
performed positively, confirming Sorin's full recovery from the
earthquakes of 2012. The oxygenator segment benefited from ongoing
penetration in emerging markets and from the significant contribution of
the cannulae business. The autotransfusion segment also reported a
significant growth in emerging markets as well as a continued
penetration of XtraTM in Europe and the US. In 2013 the
Company launched the new InspireTM- HeartlinkTM-ConnectTM
System, the first and only perfusion system that integrates hardware,
disposables and data management.
The mechanical valves segment witnessed a decrease in revenues in line
with the continued shift of the market toward biological valves and
lower volumes in emerging markets during the first part of the year.
Growth in the tissue valves segment was driven by the ongoing
penetration of MitroflowTM, particularly in emerging markets
and Japan, and the positive performance of PercevalTM, whose
annual revenues amounted to €12.1 million. During 2013, Sorin Group
obtained approval from the FDA for the Investigational Device Exemption
(IDE) for PercevalTM, CE mark for the XL version of PercevalTM
as well as dedicated reimbursement for PercevalTM in Belgium
and Germany.
In February 2013, Sorin Group acquired Alcard Industria Mecanica Ltda,
the leading manufacturer of heart-lung machines in Brazil. This
acquisition is strategic for Sorin Group since it represents a gateway
to the Brazilian market and to the entire Latin American region.
In July 2013, Sorin Group signed a supply agreement for the
manufacturing of certain components of the LotusTM Aortic
Valve System, Boston Scientific Corporation's second-generation TAVR
(Transcatheter Aortic Valve Replacement) technology.
During 2013, Sorin Group also initiated a greenfield project for the
local manufacturing of cardiopulmonary disposable products in Suzhou
Industrial Park in China.
In 2013, Sorin Group confirmed its continued commitment to build a new
growth platform in percutaneous mitral valve therapies. In October 2013,
the Company invested a further US$5.5 million in Caisson, a company
focused in the development of an innovative mitral replacement system,
and continued to support the development of Cardiosolutions and HighLife.
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The Cardiac Rhythm Management Business Unit (implantable
devices to manage cardiac rhythm disorders) posted revenues of €253.9
million in 2013, a 6.8%* decline compared to 2012.
(Euro million)
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2013 Revenues
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Underlying growth %*
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High Voltage (defibrillators and CRT-D)
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92.0
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-2.3%
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Low Voltage (pacemakers)
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150.9
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-10.0%
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Other
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11.0
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3.0%
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Total Cardiac Rhythm Management
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253.9
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-6.8%
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(*) For details, see attached table "Consolidated revenues by Business
Unit"
High voltage revenues were affected by a challenging pricing environment
in the implantable defibrillator segment, however the continued
penetration of SonRTM allowed the CRT-D segment to grow by
approximately 5%* in Europe in 2013.
Decline in low voltage revenues was driven by pricing pressure in Europe
and lower volumes in Europe and Japan due to the penetration of MRI
compatible pacemakers. Sorin's new pacemaker KORATM 100,
featuring the only automatic MRI mode, was launched in Europe at the end
of November 2013 only, thus minimally impacting 2013 results.
In 2013, Sorin Group obtained several important regulatory approvals: i)
FDA approval for the Investigational Device Exemption (IDE) of the
RESPOND CRT clinical study and the first SonRTM implants in
the United States; ii) FDA approval and US launch of the SMARTVIEW™
remote monitoring solution for patients with implanted cardiac
defibrillators; iii) CE mark and the European commercial launch of the
REPLY™ 200 family of pacemakers featuring Sleep Apnea Monitoring (SAM);
iv) CE mark and European commercial launch of the KORATM MRI
compatible pacing system; and v) CE mark and European launch of INTENSIATM
family of implantable defibrillators and CRT-D devices featuring DF-4
high voltage connector.
During the year, Sorin also presented the results of the OPTION and
DREAM studies aimed at demonstrating, respectively, a lower rate of
inappropriate shocks in patients with Sorin dual chamber ICD devices and
the innovative capacity of the REPLYTM 200 pacemaker to
provide reliable screening for the risk of severe Sleep Apnea.
During 2013, Sorin Group confirmed its continued commitment to build the
new growth platform in neuromodulation therapies to treat heart failure.
In February 2013, the Company executed a further US$5 million
investment, with option-to-buy, in Enopace Biomedical and continued to
support its "Equilia" internal project as well as the "Intense"
collaborative R&D project.
Finally, after the closing of fiscal year 2013, in January 2014, Sorin
Group signed a joint venture agreement with MicroPort Scientific
Corporation to market and develop CRM devices in China. This agreement
represents a key milestone in Sorin's strategy, enabling the Company to
accelerate its penetration of the fast growing Cardiac Rhythm Management
in China and build a local presence.
Gross profit in 2013 was €436.8 million, or 59.1% of revenues,
compared to 60.6% of revenues in 2012. The decrease in Gross margin is
mainly due to the effect of foreign exchange rates and to a normalized
product mix after the full recovery from the earthquakes, partially
offset by ongoing manufacturing efficiencies.
Selling, general and administrative (SG&A) expenses
were €280.3 million compared to €309.6 million in 2012. At constant
foreign exchange rates, SG&A were substantially flat, notwithstanding
the €2.7 million impact of the US medical device excise tax.
Research and development (R&D) expenses were €73.7 million
(10.0% of revenues) compared to €75.4 million (10.3% of revenues) in
2012. R&D activity was primarily focused on the new product releases of
InspireTM, HeartlinkTM, ConnectTM, the
clinical studies for the PercevalTM and Freedom SoloTM
valves, the development of REPLYTM 200 and KORATM
100 and the internal neuromodulation projects.
EBITDA was €131.1 million, or 17.8% of revenues, up 28.8%
compared to €101.8 million, or 13.9% of revenues in 2012.
EBIT was €70.1 million compared to €36.9 million in 2012. EBIT
before special items was €82.8 million in 2013 compared to €58.0 million
in 2012. Special items, negative for €12.7 million in 2013, included
restructuring charges for €7.2 million, non-recurring charges related to
the earthquakes for €3.5 million, partly balanced by a further
installment of the insurance indemnification for the earthquakes of
€3.75 million received in the second quarter of 2013. The remaining
non-recurring charges refer to business development activities and
litigation costs.
Financial charges amounted to €10.3 million compared to €14.3
million in 2012. The figure incorporates, respectively, a financial
charge of €4.8 million in 2012 and a financial income of €0.3 million in
2013 related to the unwinding of over-hedging positions. On a run-rate
basis, the financial charges in 2013 were lower by €0.6 million
over the same period of 2012.
Net profit was €49.9 million compared to €23.0 million in 2012.
Adjusted net profito was €59.1 million,
up 41.2% compared to €41.9 million in 2012.
Net financial debt as of December 31, 2013 was €68.7 million,
compared to €87.8 million as of December 31, 2012 (€91.3 million as of
September 30, 2013). Special items for the period were negative for
€31.4 million, including €20.5 million for business development
initiatives (see details in the attached table).
In 2013, the Company's free cash flow+ amounted
to €50.5 million.
Guidance for the current fiscal year and for the first quarter of 2014
For 2014, the Company expects revenues to grow by 3-5%*
over 2013 and Adjusted net profito of approximately €55-60
million, equivalent to Adjusted EPS (Earnings per share) of 11.5-12.5
euro cents.
2014 Adjusted net profit guidance includes the unfavorable impact of
foreign exchange for approximately €10 million and the investments in
New Ventures which will have a temporary dilutive effect of around €6-7
million. These factors will be offset by manufacturing efficiencies and
cost containment initiatives as well as by top-line growth across a
variety of new products and geographies.
In 2014 the Company will focus on accelerating long-term growth through
the roll-out of the InspireTM-HeartlinkTM-ConnectTM
system, the continued growth of SonRTM and PercevalTM,
the commercial launch of KORATM and the geographic expansion
in emerging markets, primarily China, Brazil and Russia as well as
through the continued investments in the New Ventures platform.
Finally, the Company's 2014 Adjusted net profito guidance
does not include the income related to further installments of the
insurance indemnification for the earthquakes, for which the final
assessment and closing is expected in 2014.
For the first quarter of 2013, Sorin Group expects revenues to
grow 0-2%* over the same period of 2013.
* * *
Unaudited data
* * *
The corporate officer responsible for the company's financial
reports, Demetrio Mauro, declares, pursuant to Paragraph 2 of Article
154-bis of the Consolidated Law on Finance that the accounting
information contained in this press release corresponds to the
documented results and the accounting books and records.
* * *
In addition to the conventional indicators recommended by the IFRS,
this press release provides alternative performance indicators. These
indicators should not be considered as replacements for the conventional
indicators recommended by the IFRS, but rather as an additional source
of information, representative of the income statement, balance sheet
and financial position parameters used internally in the decision-making
process. An explanation of the meaning and structure of these
alternative performance indicators is provided in the Interim Report on
Operations at June 30, 2013.
* * *
This press release contains forward-looking statements. These
statements are based on the Group's current expectations and projections
about future events and, by their nature, are subject to inherent risks
and uncertainties. They relate to events and depend on circumstances
that may or may not occur or exist in the future, and, as such, undue
reliance should not be placed on them. Actual results may differ
materially from those expressed in such statements as a result of a
variety of factors, including: continued volatility and further
deterioration of capital and financial markets, changes in commodity
prices, changes in general economic conditions, economic growth and
other changes in business conditions, changes in laws and regulations
(both in Italy and abroad), and many other factors, most of which are
outside of the Company's control.
* * *
About Sorin Group
Sorin Group (Reuters (News - Alert) Code: SORN.MI), is a global medical device company
and a leader in the treatment of cardiovascular diseases. The Company
develops, manufactures and markets medical technologies for cardiac
surgery and for the treatment of cardiac rhythm disorders. With 3,750
employees worldwide, the Company focuses on two major therapeutic areas:
Cardiac Surgery (cardiopulmonary products for open heart surgery and
heart valve repair or replacement products) and Cardiac Rhythm
Management (pacemakers, defibrillators, cardiac resynchronization
devices). Every year, over one million patients are treated with Sorin
Group devices in more than 80 countries.
For more information, please refer to www.sorin.com
* At comparable exchange rates and perimeter o
Adjusted net profit: net profit before after-tax non-recurring income
and expenses (special items) + Free cash flow: net
profit + depreciation, amortization and writedowns ± ? working capital -
investments. This account is net of the impact of special items

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