Year-end report 2017

Continued organic growth and improved margins

Fourth quarter 2017

• Revenue declined to MEUR 70.4 (71.9)
• Organic growth was 1.4%
• The gross margin increased to 42.1% (40.4)
• Adjusted EBITA increased to MEUR 6.2 (4.6), corresponding to a margin of 8.8% (6.4)
• EBIT rose to MEUR 4.4 (-5.8), corresponding to a margin of 6.3% (-8.0)
• Net debt/ adjusted LTM EBITDA amounted to 3.0x

Full year 2017

• Revenue rose to MEUR 284.3 (244.7)
• Organic growth was 4.9%
• The gross margin increased to 42.6% (40.8)
• Adjusted EBITA increased to MEUR 26.2 (17.2), corresponding to a margin of 9.2% (7.0)
• EBIT rose to MEUR 14.0 (-4.4), corresponding to a margin of 4.9% (-1.8)
• Part of the Puls business unit was divested on 1 August 2017, and reported under divested operations
• Handicare was listed on Nasdaq Stockholm on 10 October 2017
• After the reporting date, a distributor was acquired in Colorado, US with sales of around MEUR 4.2
• Earnings per share before/after dilution amounted to negative EUR 0.1 and the Board proposes SEK 0.50 in dividend be distributed for 2017

For table see enclosed PDF

CEO’s comments

Healthy growth and improved margins in 2017. The internal initiatives aimed at driving growth and improving margins have yielded results. Organic growth was 4.9% and the adjusted EBITA margin increased to 9.2%. During the year, we also focused on the integration of Prism Medical and our listing on Nasdaq Stockholm. A minor yet strategic acquisition was completed in Colorado in early 2018 — of a distributor who will play a key role in our North American hub strategy. 

The fourth quarter — continued growth in Accessibility, lower project sales in Patient Handling
During the fourth quarter, revenue grew organically by 1.4% and the adjusted EBITA margin increased to 8.8% (6.4). The growth we noted during the year continued in Accessibility. The sales trend for stairlifts in North America is continuing, 25% for the quarter and 14% for the full year. Project sales in Patient Handling, North America were lower during the quarter than previously during the year.

Some sales in Patient Handling go to Homecare, but the majority comprise project sales to hospitals and healthcare facilities. Deliveries to the latter can be complete installations of patient lifts, but also replacements — for example, of motors as part of the aftermarket segment. Sales of complete installations may vary between quarters, and sales of complete installations in North America during the fourth quarter were lower than previously during the year, which negatively affected total revenue and the operating margin. Patient Handling Europe developed in line with the previous quarters during the year.

Favourable trend in sales to Homecare
Using a highly automated manufacturing process, we managed to retain short lead times despite higher volumes as a result of strong growth. This is an important competitive advantage in sales to Homecare (stairlifts in particular), which together with our successful utilisation of the Prism Medical distribution network in North America promoted positive growth in sales to Homecare. Growth has been particularly strong for stairlifts; we estimate that we have captured market shares in this area in both Europe and North America.

Market adjustments in Patient Handling and Puls
We are allocating dedicated sales resources aimed at Institutional sales with the aim of strengthening our competitiveness for project sales in Patient Handling in North America. Parts of Puls were divested in 2017. The part of Puls that remains will be adapted to the new conditions, both organisationally and as regards operations.

Acquisition of a strategically important distributor for Handicare in North America
In early 2018, a Patient Handling distributor was acquired in Colorado, with sales in an additional 11 neighbouring states. The acquisition is limited in size — MEUR 4.2 in sales for 2017 — but is of major significance for the development of our sales and distribution in North America. Following the acquisition, we now have 8 hubs, the objective is a total of 18.

Well on the way to our financial goals
Despite lower project sales in Patient Handling during the fourth quarter, we are satisfied with the total trend during the year. The growth rate is tracking our financial targets as regards organic growth, and we are well on the way towards our objective as regards the EBITA margin. Our medium-term financial targets aim at average annual growth of 10%, of which 4–6% organic, with an adjusted EBITA margin exceeding 12%. Macroeconomic trends continue to be favourable, which is particularly conspicuous from the positive trend in sales to Homecare. In summary, we would like to say that Handicare is well positioned for continued profitable growth.

Asbjørn Eskild
President and CEO

Telephone conference
A telephone conference, hosted by Asbjørn Eskild, President and CEO, and Stephan Révay, CFO, will be held at 10:00 CET on 16 February 2018. To participate, please register in advance using the following link http://emea.directeventreg.com/registration/2894038.
A presentation will be available at www.handicaregroup.com/investors.

Dates for financial reports

For more information, contact:
Asbjørn Eskild, CEO, Tel: +47 905 633 04
Stephan Révay, CFO, Tel: +46 729 666 532
Boel Sundvall, IR, Tel: +46 723 747 487

This information is information that Handicare Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 8:00 a.m. CET on 16 February 2018.

Forward-looking statements
To the extent this report contains forward-looking statements based on the current expectations of Handicare’s Group management. Although management considers the expectations expressed in such forward-looking statements to be reasonable, there is no guarantee that these expectations will prove correct. Accordingly, actual future outcomes may differ significantly from those expressed in the forward-looking statements due to such factors as changed economic, market and competitive conditions, changes in regulatory requirements and other policy measures, and fluctuations in exchange rates.

About Handicare
Handicare offers solutions to increase the independence of disabled or elderly people, and to facilitate for their care providers and family. The offering encompasses a comprehensive range of curved and straight stairlifts, transfer, lifting and repositioning aids, vehicle adaptations and medical equipment. Handicare is a global company with sales in more than 20 countries and is a market leader in this field. The head office is in Kista, Sweden and manufacturing is located at six sites distributed across North America, Asia and Europe. In 2017, revenue amounted to MEUR 284 and the adjusted EBITA margin was 9.2%. Employees totalled around 1,150 and the share is listed on Nasdaq Stockholm. For more information; www.handicaregroup.com.

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