Revised strategy, new financial targets and restated financial information for Getinge (excluding Arjo)

Following the strategic review and the proposed distribution and listing of the business area Patient & Post-Acute Care (now called Arjo), the Board of Directors of Getinge has decided on a revised strategy, new financial targets and present restated historical financial information for Getinge excluding Arjo.

New financial targets
As a result of the proposed distribution and listing of Patient & Post-Acute Care and the related area disinfection flushers, now called Arjo, the Board of Directors of Getinge has decided on new financial targets based on the revised strategy for Getinge excluding Arjo. Focus is on organic growth and Getinge foresees an organic market growth of 2-4% on average during 2017-2020 in the addressable market. Getinge’s organic growth in net sales is expected to increase gradually during 2018 and move closer to expected market growth on a run-rate basis by the end of 2018.

  • Average growth in organic net sales: 2-4%
  • Average earnings per share growth: >10%
  • Dividend policy: 30-50% of net income

The new financial targets are valid from January 1, 2018.

Revised strategy
The priorities for Getinge going forward are to strengthen the product and service offering in prioritized segments for the customers within the business areas Acute Care Therapies and Surgical Workflows and continue to use the global salesforce to penetrate geographically with existing products. Furthermore, the company will put additional focus and continue to develop an attractive offering towards selected parts of the growing value segment. Getinge has also the intention to introduce Life Science as a separate Business Area as from January 1, 2018.

“I am confident that our revised strategy and financial targets will create a more focused business and organization that is better positioned to develop market leading offerings for our customers,” says Mattias Perjos, President and CEO of Getinge. “The Life Science business has many similarities with our Infection Control business when it comes to technology, but given the customized solutions offering within this segment we believe this setup will better realize further growth opportunities”, he continues.

Getinge excluding Arjo

  • A global medtech leader within therapies and workflows, focusing on a well-defined space in hospitals: the operating room, Intensive Care Unit, Central Sterile Supply Department, Cathlab and Endo Suite.
  • Customer offering that enables rapid recovery, shorter average length of stay, higher efficiency and reduced risk of infection in hospital settings.
  • Net sales of SEK 22.6 billion (rolling 12 months, September 2017).
  • Over 90% of sales go to hospitals, and the remainder to customers within Life Science, such as pharma companies.
  • Close to 60% recurring revenues.
  • Sales in over 150 countries worldwide.
  • More than 10,000 employees.

Getinge restated financial information
Getinge provides historical financial information excluding the discontinued operations within Arjo in two appendicies to this press release.

  • Appendix 1: Pro forma restatement of income statement, balance sheet, cash flow statement and key figures. These tables are not financial reports according to IFRS 5.
  • Appendix 2: Restated segment information according to IFRS 5. As a consequence of the planned distribution and listing of Arjo, the historical financial information for Surgical Workflows has been recalculated.

If the Extraordinary General Meeting on December 4, 2017, resolves on the distribution and listing of Arjo, Getinge will publish the results of the operations in Arjo separately, as discontinued operations in accordance with IFRS 5, in its year-end report, January 29, 2018.

Costs for creating an independent Arjo and transaction costs
Getinge has previously communicated that costs related to the planned distribution and listing and costs to create an independent Arjo are estimated to charge the group’s result with SEK 400–500 M for 2017. For the period January to September in the current year, Getinge’s result has been charged with SEK 360 M in respect of such costs. Of these, non-recurring restructuring costs in Arjo have accounted for SEK 144 M and increased operating costs in Arjo have accounted for the remaining SEK 216 M. In addition to the above costs, Getinge’s equity will be charged with transaction costs that are estimated to amount to approximately SEK 147 M excluding tax expenses.  

Telephone conference
A telephone conference with Getinge’s President & CEO, Mattias Perjos, and Arjo’s President & CEO, Joacim Lindoff, will be held at 09:00-10:00 CET, November 10, 2017. Please see dial in details below to join the conference:

Sweden: +46 (0)8 5065 3942

UK: +44 (0)330 336 9435

USA: +1 323 794 2551

Code: 3769823

A presentation will be held during the telephone conference. To access the presentation, please use this link: https://slideassist.webcasts.com/starthere.jsp?ei=1170039

Please join the event conference 5-10 minutes prior to the start time. You will be asked to provide the confirmation code.

A recording of the telephone conference will be available for 90 days via the following link: https://slideassist.webcasts.com/starthere.jsp?ei=1170039

Contacts 

Jeanette Hedén Carlsson,
Executive Vice President Communications & Brand Management
Telephone: +46 (0)10 335 10 03
Email: jeanette.hedencarlsson@getinge.com

Lars Mattsson,
Head of Investor Relations
Telephone: +46 (0)10 335 00 43
E-mail: lars.mattsson@getinge.com

This information is information that Getinge AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on November 10, 2017.


About Getinge
Getinge is a global provider of innovative solutions for operating rooms, intensive-care units, sterilization departments and for life science companies and institutions. Based on our first-hand experience and close partnerships with clinical experts, healthcare professionals and medtech specialists, we are improving the every-day life for people, today and tomorrow.

Appendix 1: Restated financial information – Getinge excluding Arjo
(pro forma, not according to IFRS 5)

The following tables show selected financial information for Getinge excluding Arjo (which represents the remaining business after the dividend), rolling 12 months, by the end of September 2017. Getinge excluding Arjo consists of the difference between Getinge’s and Arjo's financial information adjusted for internal transactions. The information presented in the tables are not financial reports in accordance with IFRS and is thus not necessarily comparable to similar calculations in other companies and has some limitations as analytical tools.

Consolidated   income statement (SEK M)  
September   30, 2017 (R12) Getinge Arjo Getinge excl Arjo
Net sales 1) 30,124 7,794 22,558
Cost of goods sold -15,800 -4,278 -11,750
Gross   profit 14,324 3,516 10,808
Gross   Profit Margin 47.6% 45.1% 47.9%
Selling expenses -6,458 -1,444 -5,014
Administrative   expenses -3,595 -1,191 -2,404
Research and   development costs -728 -136 -592
Acquisition expenses -6 -2 -4
Restructuring and   integration costs -1,175 -326 -849
Other operating income   and expenses 50 39 11
Operating   profit (EBIT) 2,412 456 1,956
EBIT   Margin 8.0% 5.9% 8.7%
Net financial items -651 -91 -560
Profit/loss   after financial items 1,761 365 1,396
Taxes -466 -99 -367
Net   profit/loss for the period 1,295 266 1,029

1) In Getinge excluding Arjo, sales to Arjo amounting to SEK 63 M is included, and in Arjo sales to Getinge excluding Arjo of SEK 165 M is included. In Getinge, all such internal sales are eliminated.

Balance   sheet in summary after reallocation of net debt (SEK M)  
September   30, 2017 Getinge Arjo1) Getinge excl Arjo
Assets
Intangible assets 29,392 6,518 22,874
Tangible assets 4,105 1,079 3,026
Financial assets 1,365 469 896
Inventories 6,173 1,130 5,043
Accounts receivable 6,006 1,7532) 3,9964)
Other current   receivables 3,094 545 2,549
Cash and cash   equivalents 1,521 400 1,121
Total   assets 51,656 11,894 39,505
Equity   and liabilities
Equity 23,755 5,209 18,546
Provisions for   pensions, interest-bearing 2,981 27 2,954
Other interest-bearing   liabilities 16,148 4,841 11,307
Other provisions 2,150 197 1,953
Accounts payable 1,792 5423) 9935)
Other   non-interest-bearing liabilities 4,830 1,078 3,752
Total   equity and liabilities 51,656 11,894 39,505

1) Arjo's balance sheet has been adjusted for the following changes after September 30, 2017:

- One intra-Group transfer to Getinge excluding Arjo, which reduced Arjo's net debt.

- Getinge made a shareholder contribution of SEK 1,203 M to Arjo.

- Net recording of intra-group financial transactions, which will be replaced by external financing at the time of listing.

2) Including SEK 123 M Group-internal receivables eliminated in Getinge.

3) Including SEK 134 M Group-internal debt eliminated in Getinge.

4) Including SEK 134 M Group-internal receivables eliminated in Getinge.

5) Including SEK 123 M Group-internal debt eliminated in Getinge.                                                           

Cash-flow   from operating activities (SEK M)
September   30, 2017 (R12) Getinge Arjo Getinge
  excl Arjo
Operating   activities
Operating profit   (EBIT) 2,412 456 1,956
Add-back of   amortization, depreciation and write-downs 2,670 799 1,871
Other non-cash items 55 30 25
Add-back of   restructuring and integration costs 1) 914 171 743
Paid restructuring and   integration costs -632 -61 -571
Financial items -651 -91 -560
Taxes paid -367 -144 -223
Cash   flow before changes in working capital 4,401 1,160 3,241
Changes   in working capital
Inventories -813 -195 -618
Current receivables -867 -129 -738
Current liabilities 745 -243 988
Cash   flow from operating activities 3,466 593 2,873

1) Excluding write-downs of fixed assets.  

Key   figures
September   30, 2017 (R12) Getinge Arjo Getinge excl Arjo
EBITA 1 1),   SEK M 4,311 891 3,420
EBITA 1 Margin, % 14.3 11.4 15.2
Net debt/equity ratio,   multiple 0.74 0.84 0.71
Equity/assets ratio, % 46.0 43.8 46.9
Net debt, SEK M 17,608 4,400 13,208
Net debt/EBITDA 2),   multiple 2.93 3.08 2.89
EBITDA, SEK M 5,082 1,255 3,827
Cash conversion, % 68.2 47.3 75.1
Earnings per share 3),   SEK 5.23 1.09 4.14
Average number of   shares, thousands 243,073 243,073 243,073
Number of employees 16,631 5,987 10,644

1) EBITA 1: EBITA before acquisition, restructuring and integration costs.

2) EBITDA: EBITDA before acquisition, restructuring and integration costs.

3) The calculation of earnings per share is based on the average number of shares in Getinge. As the average number of shares for Arjo and Getinge is not the same, Arjo reports other figures on earnings per share for the corresponding period.

Appendix 2: Restated segment information – Getinge excluding Arjo
(according to IFRS 5)

As a consequence of the planned distribution and listing of Arjo, the historical financial information for Surgical Workflows has been recalculated. The adjustments mainly concern the disinfection flushers business in Arjo, previously reported in Surgical Workflows. In addition, Surgical Workflows has been adjusted for sales between Surgical Workflows and Arjo (eliminated in Getinge). Getinge will also continue to distribute Arjo products in some minor markets and these sales will be reported in Surgical Workflows.

Order intake SEK M Q4
  2016
Q1
  2017
Q2
  2017
Q3
  2017
Jan-Sep 2017 Full Year
  2016
Acute Care Therapies 3,492 2,975 3,109 2,845 8,929 12,059
Surgical Workflows 3,020 2,404 2,414 2,857 7,675 10,544
Remaining operations 6,512 5,379 5,523 5,702 16,604 22,603

 

Net sales SEK M Q4
  2016
Q1
  2017
Q2
  2017
Q3
  2017
Jan-Sep 2017 Full Year
  2016
Acute Care Therapies 3,649 2,825 3,094 2,621 8,540 11,804
Surgical Workflows 3,785 1,986 2,275 2,323 6,584 10,366
Remaining operations 7,434 4,811 5,369 4,944 15,124 22,170

 

Gross profit SEK M Q4
  2016
Q1
  2017
Q2
  2017
Q3
  2017
Jan-Sep 2017 Full Year
  2016
Acute Care Therapies 1,990 1,635 1,766 1,492 4,893 6,552
Surgical Workflows 1,408 743 818 956 2,517 3,846
Remaining operations 3,398 2,378 2,584 2,448 7,410 10,398

 

EBITA 1* SEK M Q4
  2016
Q1
  2017
Q2
  2017
Q3
  2017
Jan-Sep 2017 Full Year
  2016
Acute Care Therapies 923 557 638 458 1,653 2,326
Surgical Workflows 831 -23 113 148 238 1,173
Group Functions -65 -49 -49 -62 -160 -224
Remaining operations 1,689 485 702 544 1,731 3,275

*EBITA 1: EBITA before acquisition-, restructuring and integration costs

EBIT SEK M Q4
  2016
Q1
  2017
Q2
  2017
Q3
  2017
Jan-Sep 2017 Full Year
  2016
Acute Care Therapies 704 405 12 271 688 1,000
Surgical Workflows 690 -54 80 98 124 885
Group Functions -86 -49 -50 -65 -164 -379
Remaining operations 1,308 302 42 304 648 1,506

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About Us

Getinge is a global provider of innovative solutions for operating rooms, intensive-care units, sterilization departments and for life science companies and institutions. Based on our first-hand experience and close partnerships with clinical experts, healthcare professionals and medtech specialists, we are improving the every-day life for people, today and tomorrow.

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