Össur hf: Össur acquires FIOR & GENTZ

Announcement no. 1/2024

16 January 2024

Össur acquires FIOR & GENTZ

Össur, a leading global provider of innovative mobility solutions, has signed an agreement to acquire all shares of privately owned Fior & Gentz, a leading maker of lower limb neuro orthotic components. Fior & Gentz develops and distributes knee and ankle orthotic joints to create innovative custom-made orthotics for patients with gait impairment due to neurological conditions. Fior & Gentz was founded in 1997 in Germany and employs around 80 people.

In 2023, Fior & Gentz reached total sales of approx. EUR 21 million (approx. USD 23 million), up 16% from the year before, and preliminary EBITDA margin is 30%. In the period 2020 to 2023, sales grew annually 14% on average. The majority of sales are generated in Germany with remaining sales generated across various countries internationally.

The acquisition of Fior & Gentz represents an attractive opportunity for Össur to enter the fast-growing neuro orthotics market. Fior & Gentz’s key markets are estimated to be growing in the range of 10-12%. Sales are expected to exceed the estimated market growth in the near-term and continue to yield a strong EBITDA margin above 30%.

Sveinn Sölvason, President and CEO of Össur, said:

“The acquisition of Fior & Gentz is in line with our Growth’27 ambition and a strong strategic fit for Össur in addition to meeting our strategic objective to address chronic mobility challenges in a broader context. We are entering a new but highly complementary product segment, as individuals with certain types of neurological conditions are already served by our primary customer channel, Orthotic & Prosthetic clinics. With Fior & Gentz’s sales largely generated in Germany today, there are commercial synergies in leveraging Össur’s global sales structure to serve a larger patient population. We are very pleased to welcome the Fior & Gentz team to Össur, and I am convinced that our combined efforts will benefit our customers and patients around the world.”

Jörg Fior and Ralf Gentz of FIOR & GENTZ, said:

“We are excited to become a part of Össur and benefit from its global reach and strong track record of improving people’s mobility. Our product offering is an excellent match to Össur’s broad and innovative product portfolio, and we are looking forward to continuing our profitable growth journey together.”

Purchase price

The purchase price (enterprise value) for Fior & Gentz is EUR 100 million (approx. USD 109 million) plus a contingent additional purchase price (earnout) of estimated EUR 10 million (approx. USD 11 million), maximum EUR 20 million (approx. USD 22 million), depending on sales performance in the years 2024-2026. Today, Össur pays EUR 60 million in cash, financed partly through additional credit facilities, and issues new shares worth EUR 25 million to the sellers of Fior & Gentz. The remaining EUR 15 million will be paid in cash two years after closing.

Share issuance

In connection with the acquisition, the Board of Directors of Össur has resolved to utilize the authorization in Article 5, paragraph 1, of the Articles of Association to issue 6,636,122 new shares in Össur, raising the total share capital in nominal value by 1.6% from ISK 421,000,000 to ISK 427,636,122. The price of each new share is DKK 28.10 and the total value of the share capital increase is thus DKK 186 million (EUR 25 million).

The sellers of Fior & Gentz subscribe for all the new shares. The sellers have also agreed to a one-year lock-up period from closing for all the new shares, and to a lock-up period of an additional year for 50% of the new shares, during which they are not entitled to sell their shares in Össur.

Financial impact

The transaction is estimated to be accretive to Össur’s organic sales growth and EBITDA margin before special items and is expected to have minimal impact on EPS in 2024 and to be EPS accretive from 2025. Össur will expense special items of around USD 1 million as part of the transaction in Q1 2024 and net interest-bearing debt to EBITDA before special items will, all else equal, be temporarily slightly above the target range of 2.0-3.0x.

Össur will publish a 2024 financial year guidance, including the impact of the Fior & Gentz acquisition, in connection with the publication of the 2023 Annual Report on 30 January 2024.

The transaction is not subject to any regulatory approvals and the effective date for the financials of Fior & Gentz is 1 January 2024 although the transaction is signed and closed today. As part of the transaction, Össur will from Q1 2024 be renaming its Prosthetics sales segmentation to Prosthetics & Neuro Orthotics where Fior & Gentz’s sales will be included.

Conference call

Össur will host a conference call regarding this transaction today 16 January 2024 at 11:00 CET / 10:00 GMT / 05:00 ET. A conference call webcast can be accessed here: Össur Conference Call Webcast.

To actively participate in the Q&A session of the call please click on this link: Register here.

Further information

David Hreidarsson, VP of Investor Relations, IR@ossur.com, +354 661 8225

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About Össur

Össur (Nasdaq Copenhagen: OSSR) is a leading global provider of innovative mobility solutions that help people live a Life Without Limitations®. For over 50 years, Össur has had a strong purpose rooted in positively impacting people’s health and well-being. A recognized “Technology Pioneer”, Össur focuses on improving people’s mobility through the delivery of solutions that advance patient care. Significant investment in research and development has led to over 2,000 patents, award-winning designs, successful clinical outcomes, and steady growth. Össur is committed to sustainable business practices and is signatory to the UN Global Compact, UN Women’s Empowerment Principles, and contributes to the UN Sustainable Development Goals. Össur operates globally and has around 4,000 employees. www.ossur.com

About FIOR & GENTZ

Fior & Gentz was founded in Lüneburg, Germany in 1997 and is a leading European provider of functional lower limb neuro orthotic solutions. The company develops and manufactures functional ankle and knee joints utilized in custom-made neuro orthotic devices, especially designed for people with neurological conditions leading to gait impairments, such as stroke, multiple sclerosis, and spinal cord injuries. Fior & Gentz has a strong track record in R&D and customer support, and has direct sales operations in Germany, France, Benelux and Switzerland. Fior & Gentz has around 80 employees. www.fior-gentz.de

Forward-looking statement

This announcement contains forward-looking statements, which reflect the Management’s current views with respect to certain future events and financial performance. Although the statements are based upon estimates the Management believes to be reasonable, there is no assurance that these statements will be achieved.

Statements containing the financial outlook for 2024 and the following years naturally involve risks and uncertainties, and consequently actual results will differ, and may differ materially, from those projected or implied in the forward-looking statements.

The risks and uncertainties may include unexpected developments in the international currency exchange and securities markets, financing, market driven price decreases for Össur’s products, delay or failure of development products, production problems and unexpected cost increases, development of new technologies by competitors, the introduction of competing products within Össur’s core areas, exposure to product liability and other lawsuits, changes in reimbursement rules and governmental laws.