Profit growth, stronger cash flow and acquisitions

Fri, Oct 25, 2024 06:30 CET

THIRD QUARTER JULY-SEPTEMBER

The Group’s net sales amounted to SEK 413.1 (364.5) million, an increase of 13 percent.
The Group’s EBITA was SEK 80.1 (66.4) million, an increase of 21 percent. Adjusted for items affecting comparability, the increase was 4 percent or 9 percent adjusted for move related costs.
The EBITA margin was 19.4 (18.2) percent. Adjusted for items affecting comparability, the margin was 16.7 percent.
Profit after tax amounted to SEK 53.3 (38.4) million.
Earnings per share amounted to SEK 3.6 (2.6).
Cash flow from operating activities was SEK 70.2 (61.0) million.

NINE MONTHS JANUARY-SEPTEMBER

The Group’s net sales amounted to SEK 1,332.5 (1,130.8) million, an increase of 18 percent.
The Group’s EBITA was SEK 258.7 (183.9) million, an increase of 41 percent. EBITA adjusted for items affecting comparability amounted to 239.0 (199.3) million, an increase of 20 percent.
The EBITA margin was 19.4 (16.3) percent. Adjusted for items affecting comparability, the EBITA margin was 17.9 (17.6) percent.
Profit after tax amounted to SEK 166.5 (110.0) million.
Earnings per share amounted to SEK 11.2 (7.4).
Cash flow from operating activities was SEK 233.6 (153.3) million.

Third quarter

In the third quarter of the year, the Group continued to deliver growth in both revenues and profit, as well as a stronger cash flow. Revenues increased by 13 percent, which included organic growth of 5 percent. Organic growth was 14 percent excluding the Specialty Pharma business area, which had high comparative figures for the previous year.

The Assistive Tech and MedTech business areas both showed strong revenue growth, driven by excellent organic development as well as acquisitions.. As expected, Specialty Pharma’s high comparative figures meant weaker development than in the previous year. Demand is expected to remain generally favourable for the Group’s companies.

The Assistive Tech business area performed very well. In particular, Abilia continued to experience good demand, and signed an agreement during the quarter to acquire Picomed in Norway and Alert-It in the UK. These acquisitions enable Abilia to broaden its product portfolio and grow in markets where the company is already established. The companies are a good fit for the business area as a whole, where we are continuously working to find collaborations and synergies in the market.

MedTech showed the highest organic growth, as a result of good growth for all companies in the business area. Toul Meditech, the most recently acquired company but also the smallest in MedTech, showed very strong growth. Inpac’s move to a new production facility is complete, apart from a major installation expected to take place around the end of the year, after which the old facility can be closed completely. Costs related to the move had an effect of approximately SEK 3 million on earnings for the quarter. Cardiolex and Multi-Ply made the biggest contribution to the business area’s profit growth for the quarter, as a result of increased revenues and the product mix.

As expected, Specialty Pharma had a weaker quarter than in the previous year due to a lower price level for the out-licensed product Melatonin in the UK market. Several of the company's other major products performed well during the quarter. Business development continued during the quarter, with the signing of a new in-licensing agreement that will eventually add a product to the portfolio as well as progress on a couple of potential out-licensing deals in new markets. These are smaller yet important steps in our intensive work to improve Specialty Pharma’s business and margins.

Overall, the Group delivered a strong third quarter with organic and acquisitive revenue growth and an increase in earnings. EBITA for the quarter increased by 21 percent. Adjusted for items affecting comparability, as well as move related costs in Inpac, the increase was 9 percent. Good cash flow resulted in a strengthened net cash position of SEK 197 million.

Acquisitions and contingent consideration adjustment

MedCap and the Group’s business areas continuously evaluate potential add-on acquisitions and new “platform acquisitions” and, based on the number of dialogues conducted during the quarter, the conditions for making acquisitions are considered good. All three business areas are well placed to make acquisitions, although the markets and acquisition targets differ.

An outstanding contingent consideration, regarding the acquisition of SurgiCube and Toul Meditech, was revaluated during the quarter and reversed to the income statement. As the acquisition is performing well and in line with MedCap's expectations, the revaluation is not negative, but rather the consequence of a well-functioning mechanism to manage differences in forecasts between buyers and sellers of companies.

In summary

The Group has reported a good quarter, with two business areas delivering very strongly and one, as expected, undergoing a period of weaker development.

We remain strongly focused on ambitious business plans and organic growth in each company in the Group, while constantly evaluating business development through both licensing and acquisitions in order to grow the Group and generate returns.

Anders Dahlberg, CEO

Stockholm 25 October 2024

This disclosure contains information that MedCap AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014) and the Swedish Securities Markets Act (2007:528). The information was submitted for publication, through the agency of the contact person, at 06:30 CET on 25 October.

For more information, contact:

Anders Dahlberg, CEO, Mobile +46 704 26 92 62, e-mail anders.dahlberg@medcap.se

About MedCap

MedCap builds successful life sciences companies to improve people's lives. MedCap unites the strengths of a larger the company with the smaller companies' entrepreneurial power, agility, and business acumen. MedCap is publicly listed on NASDAQ Stockholm OMX, with the symbol MCAP. More information is available on the company web site www.medcap.se.