Three month report January-March 2000: Strong sales growth and new launches in renal products

Three month report January-March 2000: Strong sales growth and new launches in renal products · Total revenues up 10% to SEK 5,114 M with a 12% increase in EBITDA to SEK 985 M, a 40% growth in earnings per share to SEK 0.28 and a 21% increase in cash earnings per share to SEK 1.89 · Strong sales growth of more than 4% and significant new launches in Gambro Renal Products · Continued good revenue growth of 14% in Gambro Healthcare · Rapid progress and strong recognition of the development in Pathogen Eradication Technology. First product defined for blood plasma. · For further information please contact: Bengt Modéer, Senior Vice President, Corporate Communications, +46-8-613 65 00, +46-70-513 65 33 Lars Granlöf, Senior Vice President, CFO, +46-8-613 65 00 Anna Augustson, European Investor Relations Manager, +46-8-613 65 35, +46-70-513 65 34 Cindy Lyman or Kerry Schneider, Citigate Dewe Rogerson, New York , tel. +1-212-688 6840 Gambro's financial information is also available on the Internet: www.gambro.com THREE MONTH REPORT JANUARY-MARCH 2000 Overall first quarter 2000 was characterized by good revenues and earnings growth. Gambro Renal Products had a profound increase in revenues due to good sales on European markets and a strong increase in internal sales. Significant launches of new products are underway during the year as part of the ongoing change program. Higher demands for synthetic dialyzers will be met by extended production capacity during this and the coming years. Gambro Healthcare had a continued good growth through a combination of organic growth, establishment of new clinics and acquisition of new clinics. The period included good growth and improved financial performance for the international clinics operations while the US clinics operations had continued good growth but a financial performance that did not meet expectations for the quarter. Gambro BCT sales picked up at the end of the period after a slow start of the year. The Pathogen Eradication Technology (PET) project had a rapid progress with the first product defined and a strong recognition and interest from the scientific community and regulatory bodies. Key data, present structure (excluding nonrecurring items) SEK M Jan - Mar April Jan - 1999 - Dec 2000 1999 March 1999 2000 Revenues 5,114 4,654 20,203 19,743 Operating earnings b. 985 878 3,868 3,761 depreciation, EBITDA % 19.3 18.9 19.2 19.0 Operating earnings, EBIT 432 406 1,778 1,752 % 8.4 8.7 8.8 8.9 Earnings after financial items, 321 263 1,399 1,341 EBT Earnings per share, EPS, SEK ¹) 0.28 0.20 1.48 1.40 Cash earnings per share, CEPS, 1.89 1.57 7.55 7.23 SEK 2) Cash flow from operations 3) 461 -77 2,034 1,496 Net debt 5,169 4,094 5,169 4,632 1) After full tax 2) Net income plus depreciation and amortization divided by number of shares 3) Cash flow before acquisitions and taxes BUSINESS AREAS Gambro Healthcare Total revenues rose to SEK 2,948 M (2,514), an increase of 17% (14% present structure, currency adjusted). At the close of the period the total number of patients treated worldwide in 597 clinics owned, operated or managed by Gambro was about 44,700. In the US Gambro owns, operates or manages 487 clinics in 31 states and the District of Columbia. The total number of treatments given to patients in clinics consolidated by Gambro was 1,546,000. The corresponding average revenue per treatment (excluding non dialysis clinics) was SEK 1,897, corresponding to USD 220. Treatment volumes rose by 15%. The period has included a very good growth and financial performance in the international clinics operations. Also the development in the US clinics operations has included a continued good growth, however the financial performance has not met expectations for the first quarter. Cost and efficiency improvements have been identified and are addressed by the management. In February, Brad Nutter joined the company as new President of Gambro Healthcare. After the period the management has been strengthened by the creation of a new position as President, Gambro Healthcare US, with the responsibility for the US operations. A new person has been recruited for this position and will join the company as of May 15, 2000. On the whole, Gambro Healthcare has continued to show a favorable growth which has been based on good organic growth, establishment of new clinics and acquisitions. Acquisitions are made on a strategically selective base focusing on clinics with high quality and good locations. New clinics have been acquired in Argentina, Spain and in the US and a joint venture was established in the US. In total about 760 patients are treated in these clinics. During the period 5 new clinics have been opened. Gambro Healthcare supports its strategy of being a high quality care provider by key initiatives for improved patient treatment. The anemia management program has continued and focuses on improving the anemia outcomes through special training programs. Also the vascular access program has continued. It aims at taking care of, at an early stage, the problems that can arise with vascular access. The program has been successfully launched at some 50 clinics in the US and will be introduced at all remaining clinics this year and next. In the US the reimbursement from Medicare for dialysis treatment was raised by 1.2% on January 1, 2000. In February a price increase for Epogen was announced by the manufacturer. The productive discussion with US government authorities on billing records of laboratory testing continues. Gambro Renal Products Revenues increased to SEK 1,976 M (1,922). This represents an increase of more than 4% (present structure, currency adjusted). This profound increase is mainly due to good sales on the main markets in Europe where sales volumes have continued to develop positively. Good sales development is also reported for some markets in Asia. Internal sales are up with more than 70% to about SEK 160 M thanks to increased capacity and the increasingly close work with Gambro Healthcare. Both brands, Gambro and Hospal, have shown a good development. Major product categories, including both equipment and disposables, had a good development. Especially monitors for hemodialysis had a very strong demand confirming Gambro's quality and performance leadership in this field. Also synthetic dialyzers and bloodlines have shown a good development. In March, Gambro assumed the business from its former joint venture partner in Mexico representing sales of about SEK 70 M. This is part of Gambro's strategy for increased direct sales presence in Latin America. Significant launches of new products The development of new products is a major component in the change program initiated early 1999. Major investments have been made in new products and the development work is driven in a focused and efficient way. Efforts include new, innovative and platform based product families, new generations of existing products and the phase out of overlapping products. The new products form a base for a more efficient production, procurement and logistics structure. During the year 2000, new products will be launched confirming Gambro´s innovative and quality leadership. As a result of the ambitious investment program in new products these initial launches will be followed by a stream of new products during the coming years. A new machine for hemodialysis will be launched late this year/beginning of next year. The machine includes innovative monitoring tools and biosensor capabilities as well as advanced data capturing enabling connection to Gambro's clinical information management system. The machine is also very user friendly with advanced graphics capabilities. The introduction means that one existing family of machines can be phased out thereby considerably reducing the complexity and costs involved. It also means that, as planned, one production facility for dialysis machines can be closed at the end of the year. The dialysis machine range is also strengthened by a new version of the AK 200 Ultra machine incorporating both the on-line fluid supply system BiCart Select, and a new blood volume sensor thereby making it the most advanced machine on the market. It is capable of giving hemodialysis, hemofiltration as well as hemodiafiltration combined with the Select system which allows on-line tailoring of the fluid to the individual patient. The machine is presently introduced on the market. Also a new machine for automatic peritoneal dialysis, PD 200, is launched during the year. The machine is based on an innovative and unique pressure chamber concept which, compared to existing technology, offers a reduced total treatment time of up to one hour. In addition, there is less stress on the peritoneum meaning less risk for inflammation etc. A new innovative solution for peritoneal dialysis, Gambrosol-trio, has also been introduced. It consists of a polymer bag with an advanced three-compartment design, Unica, enabling solutions with different concentrations to be prepared just as they are needed. This greatly simplifies storage and logistics. It also prevents degradation of the fluids and thus increases the treatment quality. The new innovative peritoneal products are part of Gambro´s expansion strategy for this market which has a total value of about USD 1.7 billion. Quality leadership in synthetic dialyzers The Polyflux filter technology is the base for Gambro´s continued expansion in synthetic dialyzers. A wide range of membrane functions can be produced by phase inversion in one single process. The microstructural arrangement of the membrane mimics that of natures own biological membrane. With unsurpassed removal capabilities and superior biocompatibility Polyflux outperforms all existing filters on the market. To meet the increasing demand for Polyflux dialyzers the output is increased this and next year to reach an extra capacity of almost 1,5 million dialyzers annually. Investments are also made for substantial new capacity of dialyzers based on common technology platforms. The new capacity exceeds 5 million dialyzers annually with deliveries starting late next year. Gambro BCT Revenues amounted to SEK 352 M (310). This represents an increase of 13% (6% currency adjusted). Sales growth picked up at the end of the period after a slow start of the year in the US mainly due to very low blood donations. Sales development in Europe was positive. Strong sales growth was reported in the major markets of the UK, Spain, France and Canada where leukoreduction of all blood products has been mandated. Sales performance in Japan has not met expectations. Gambro BCT is repositioning itself to become a broad-based player within Blood Bank Technology. This includes Automated Blood Collection, Leukoreduction and Pathogen Eradication Technology, while maintaining market leadership in therapeutic apheresis and cell therapy. Sales of the Spectra system and related disposables for blood component collection as well as for therapeutic applications have performed in line with the market. The launch of the Trima Automated Collection system continues to gain market acceptance. The Trima system is a key element in the new strategic approach whereby Gambro BCT addresses a broader market for blood bank technology. The system enables blood banks to take a step into more reliable and efficient ways of collecting and handling blood components. The system can be applied broadly for the collection of all types of blood components - platelets, plasma and red cells. The Trima red cell / plasma protocol received FDA approval for sales in the US. The alliance with Hemasure provides Gambro BCT with filtration technology required for leukoreduction of collected red cells. Gambro BCT is the exclusive distributor of Hemasure leukoreduction filters worldwide (except sales to the American Red Cross). Currently Gambro BCT is working towards incorporating red cell leukoreduction filtration into the Trima system. Rapid progress and strong recognition of Pathogen Eradication Technology (PET) The success of early research using riboflavin and light for pathogen eradication in blood components has led Gambro to invest in a development program to deliver PET products into the blood banking market. Gambro BCT is allocating significant staffing and research funding to position Gambro as a major player in the pathogen inactivation field. If the positive development continues this will be supported by increasing investments in R&D. The global market size for blood component pathogen inactivation could be in excess of USD 2 billion. Fresh Frozen Plasma - first PET product Research using PET for all blood components are underway in Gambro BCT laboratories. Gambro´s strategic interest in pathogen inactivation and the innovative riboflavin technology has led to a decision that Fresh Frozen Plasma (FFP) will be the first development product. There are about 9 million FFP transfusions in the world and today in only 30% some form of direct or indirect viral protection process is used. Gambro BCT supports regulatory guidelines work Gambro BCT was invited to present the PET to the Council of Europe, Commission for Pathogen Inactivation of Cellular Blood Components. Dr Ray Goodrich from Gambro BCT presented the PET and viral and bacteria kill performance, including cell and protein survival data. It was indicated that riboflavin will be included in the recommendations scheduled to be published at the end of the year. Presentation for the Int'l Society for Blood Transfusion Dr Ray Goodrich has been invited to present "The use of riboflavin for the inactivation of pathogens in blood products" at the Int'l Society for Blood Transfusion Conference in Vienna, July 2000. Dr Goodrich is the leader for the PET program at Gambro BCT. He has been working in the pathogen inactivation field for over a decade and has research experience with many of the compounds in clinical trials today. Information from his talk will be available on the gambrobct.com website after the meeting in July. THE RESTRUCTURING PROGRAM The restructuring program initiated mid January 1999 has proceeded according to plan. As of March 31, 2000 about 950 employees had left the group through cutbacks, reorganization and divestitures of operations. Approximately SEK 651 M has been used of the provision of SEK 1,100 M that was made during the fourth quarter 1998. INVESTMENTS Group investments during the period amounted to SEK 269 M (364). ACQUISITIONS Group acquisitions during the period amounted to SEK 287 M (123). Acquisitions included 8 clinics with 760 patients in the US and RoW and buyouts of minorities in partly owned clinics. Gambro also participated in the Hemasure rights issue with about USD 8.9 M (SEK 77 M) and has kept is ownership of 33%. In Mexico, the renal products sales business was assumed from the former joint venture partner. FINANCIAL POSITION Net debt (loans and accruals for pension less cash and short-term investments) amounted to SEK 5,169 M at the close of the period. The equity/assets ratio at the close of the period was 58%. PERSONNEL The total number of employees in the Gambro group increased by 272 during the period. By the end of the period the total number of employees was 17,558. AFTER CLOSING OF THE PERIOD All remaining shares in ABB Ltd. were sold in April for SEK 715 M with a capital gain of SEK 628 M, after tax SEK 468 M. Stockholm, April 26, 2000 Mikael Lilius President and CEO This report has not been subject to examination by the Company's auditors. For further information please contact: Bengt Modéer, Senior Vice President, Corporate Communications, +46-8-613 65 00, +46-70-513 65 33 Lars Granlöf, Senior Vice President, CFO, +46-8-613 65 00 Anna Augustson, European Investor Relations Manager, +46-8-613 65 35, +46-70-513 65 34 Cindy Lyman or Kerry Schneider, Citigate Dewe Rogerson, New York , +1- 212-688 6840 Gambro's financial information is also available on the Internet: www.gambro.com Coming reports and events: Six month report January - June: July 26, 2000 Nine month report January - September: October 26, 2000 Revenues by business area January - March Change Full 1) year 1999 SEK M 2000 1999 % 1999 Gambro Healthcare 2,948 2,514 14 10,828 Gambro Renal Products 1,976 1,922 4 8,059 Intra-Group -162 -92 -503 Total, Renal Care 4,762 4,344 8 18,384 Gambro BCT 352 310 6 1,359 Total, present 5,114 4,654 8 19,743 structure Cardiopulmonary Care 261 Total 4,915 1) Currency adjusted Revenues by market January - March SEK M 2000 1999 +/- % 1) Europe 1,507 1,554 +3 Americas 3,289 2,767 +19 Asia, Pacific, RoW 318 333 +7 Total 5,114 4,654 +10 1) For present structure GAMBRO GROUP INCOME STATEMENT January - March April Full 1999 - year March 2000 SEK M 2000 1999 March 1999 2000 Revenues 5,114 4,915 19,942 19,743 Operating expenses 1), 2) -4,682 -4,505 -17,616 -17,439 Operating earnings (EBIT) 432 410 2,326 2,304 Financial items, net -111 -143 -379 -411 Earnings after financial 321 267 1,947 1,893 items (EBT) Taxes -203 -180 -239 -216 Minority interest -20 -14 -78 -72 Net income 98 73 1,630 1,605 1) Earnings before 985 905 4,393 4,313 depreciation and amortization (EBITDA) 2) Of which, non- recurring items result from 831 831 divestitures provision for -279 -279 repayment of lab. billing 552 552 amortization, goodwill -236 -210 -917 -891 depreciation, other -317 -285 -1,150 -1,118 assets QUARTERLY DATA Present structure 1) 2000 1999 SEK M Q 1 Q Q 2 Q 3 Q 4 Total 11) Operations Revenues 5,114 4,6 4,9 4,85 5,24 19,74 54 90 7 2 3 Operating earnings 985 878 948 921 1,01 3,761 - before depr. 4 (EBITDA) Operating margin 19.3 18. 19. 19.0 19.3 19.0 % 9 0 Operating earnings 432 406 443 429 474 1,752 - after depr. (EBIT) Do. margin % 8.4 8.7 8.9 8.8 9.0 8.9 Non recurring - - 966 -155 -259 552 Financial net Associated 2 -7 7 -5 -11 -16 companies/dividends Interest net -111 - -95 -84 -101 -408 128 Other financial -2 -8 -7 -1 29 13 items Financial net -111 - -95 -90 -83 -411 143 1) Quarter 1, 1999 restated because of the sale of the business area Cardiopulmonary Care during Quarter 2, 1999 GAMBRO GROUP BALANCE SHEET SEK M March 31 March 31 December 31 2000 1999 1999 ASSETS Fixed assets Intangible assets 16,303 15,775 16,410 Property, plant and 5,612 5,550 5,515 equipment Shares and participations 481 244 417 Long-term receivables 772 512 668 Total fixed assets 23,168 22,081 23,010 Current assets Inventories 2,263 2,340 2,217 Trade receivables 5,861 5,821 5,940 Other current receivables 2,003 2,168 2,147 Liquid assets 591 274 606 Total current assets 10,718 10,603 10,910 TOTAL ASSETS 33,886 32,684 33,920 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity 1) 19,588 18,041 19,655 Minority interests 189 146 192 Accruals 3,410 3,537 3,412 Long-term liabilities 3,381 668 2,146 Current liabilities 7,318 10,292 8,515 TOTAL SHAREHOLDERS' EQUITY 33,886 32,684 33,920 AND LIABILITIES NET DEBT 5,169 4,094 4,632 1)Total number of shares outstanding 344,653,288 (of which, Series A: 250,574,090, Series B: 94,079,198) STATEMENT OF CHANGES IN FINANCIAL POSITION SEK M January - March Full year 2000 1999 1999 Operating activities Earnings after financial items (excl. capital gains) 321 267 1,062 Non-cash items 3) 310 46 1,288 631 313 2,350 Taxes paid -127 -53 -1,843 504 260 507 Changes in operating capital: 1) Inventories -46 -58 -205 Receivables 119 277 -193 Liabilities -557 -1,854 -1,179 Cash flow from operating 20 -1,375 -1,070 activities Investment activities Capital expenditure -275 -364 -1,667 Disposals 6 0 138 Acquisitions 2) -287 -123 571 Cash flow from investment -556 -487 -958 activities Financing activities New issue Change in short term loans -716 1,475 817 Change in long term loans 1,235 -514 964 Change in accruals for 3 -4 46 pensions Dividend paid -344 Change in financing activities 522 957 1,483 Cash flow this period -14 -905 -545 Liquid assets opening balance 606 1,169 1,169 Currency effect in liquid -1 10 -18 assets Liquid assets closing balance 591 274 606 1) Of which change in -144 -475 -325 operating working capital 2) For previous periods the figures are stated net of acquisitions and divestitures 3) Of which: - 553 495 2,009 Depreciation/Amortization -251 -456 -727 - Translation 8 7 6 differences - Other ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.bit.se/bitonline/2001/07/12/20010712BIT00140/bit0002.doc http://www.bit.se/bitonline/2001/07/12/20010712BIT00140/bit0002.pdf