Revenio Group Corporation: Interim Report, January 1 - March 31, 2020

Revenio Group Corporation, Stock Exchange Release, April 22, 2020 at 9.00 am

Revenio Group Corporation: Interim report January 1–March 31, 2020

Figures in brackets refer to the same period in the previous year, unless otherwise stated.

Reasonable quarter; effects of the COVID-19 pandemic began to appear towards the end of the quarter

January–March 2020

• Net sales totaled EUR 11.9 (8.4) million, up 41.5%
• Operating profit was EUR 2.4 (2.6) million, down 5.8%
• EBITDA was EUR 3.1 (2.9) million, up 7.4%
• The currency-adjusted growth of net sales in January–March was 40.3 %, or 1.3 percentage points weaker than reported
• The quarter started off well, but the effects of the COVID-19 pandemic began to be felt towards the end of the quarter
• The comparability of the review period is impeded by major Brexit-related Icare deliveries to the United Kingdom in the first quarter last year, which would normally have occurred in the second quarter
• Sales of the DRSplus imaging device launched at the end of 2019 kicked off better than expected, as a result of which production has not fully been able to meet demand in the ramp-up phase, and several dozen devices are pending delivery to customers
• A significant number of CenterVue product deliveries have been postponed by customers to a later date due to the COVID-19 outbreak, which has affected the profitability and cash flow for the review period
• Product development projects have been continued according to plan throughout the quarter and their expenses corresponded to 10% of net sales
• Cash flow was affected by, also taxes and annual bonuses paid, as well as reduced payables
• CenterVue Inc. was merged with Icare USA Inc. As of April 1, 2020, Revenio Group’s subsidiary in the United States is Icare USA Inc.
• Undiluted earnings per share came to EUR 0.075 (0.086)
• The Annual General Meeting had to be postponed to a later date due to the meeting restrictions caused by the COVID-19 pandemic
• Jouni Toijala, B.Sc., MBA, was appointed as Revenio’s new President & CEO and will take up his position by September 30, 2020
• After the end of the review period, on April 2, 2020, Revenio withdrew its financial guidance for the current year due to the uncertainty caused by the coronavirus outbreak

Key consolidated figures, EUR million

Financial guidance for 2020

On April 2, 2020, Revenio withdrew its financial guidance for 2020 due to the uncertainty caused by the coronavirus outbreak. Due to the uncertainty and general downward economic trend caused by the COVID-19 pandemic, market conditions have become very exceptional, resulting in a significant decline in the predictability of financial development. As it is not yet possible to assess the full impact of the situation towards the end of the year, Revenio Group Corporation withdrew the financial guidance for 2020 issued on February 20, 2020 and will not issue a new guidance for now.

The company's earlier financial guidance for 2020 was:

Revenio Group’s reported net sales are estimated to grow very strongly from the previous year and profitability excluding non-recurring items is to remain at a healthy level.

CEO Timo Hildén:

”Our performance in the first quarter of 2020 was as expected, but the effects of the COVID-19 pandemic began to show in Revenio’s business as March progressed. This was partly due to the decrease in demand as customers temporarily closed down their activities and partly because the pandemic prevented customers from receiving the devices they had already ordered. Our net sales for the period amounted to EUR 11.9 million, which represented a growth of 41.5%. EBITDA was EUR 3.1 million, up 7.4%. It is good to note that CenterVue's figures have not been consolidated into the Group until 1 May 2019.

The COVID-19 pandemic has changed the world rapidly and unpredictably. In our industry, the focus of healthcare is currently on patient-critical tasks and non-urgent matters have been postponed. It is impossible to assess at this stage how long the situation will continue in our different geographic markets. Already in April, we have seen a slight recovery in the Asian market, especially for Icare's products, and we have received larger-than-usual orders from Japan, for example. There are still significant uncertainties in the U.S. market that we are closely monitoring. Sales of intraocular pressure measurement devices have continued to be reasonably good, but it is difficult to estimate the situation in the coming weeks or months. Sales of sterile probes have been brisk, boosted by the hygiene challenges of the competing air-puff technology reported in countries such as China and Ireland. The volume of probe sales has been particularly high in our online store. In contrast, CenterVue’s retinal imaging devices are capital goods, which face a more challenging situation due to the COVID-19 pandemic.

The supply chain situation remains good for now. In Italy, production volumes have decreased somewhat, mainly due to the practical arrangements required by government orders, such as maintaining a sufficient distance between employees’ workstations. In Finland, the production volumes of devices for measuring intraocular pressure have remained at a normal level. No supply chain problems have been identified so far, and the availability of components from all subcontractors has been normal. At the moment, we are working to raise the stock levels of all our products to ensure that deliveries can be started quickly as soon as the situation normalizes.

This exceptional situation inevitably affects our distributors, as in many countries they cannot meet customers face to face neither install previously ordered CenterVue imaging devices. No orders have been cancelled, however; instead, installations have been postponed to a date when they can be carried out again.

For these reasons, the short-term predictability of the company’s financial development has deteriorated significantly. However, it should be kept in mind that our business is highly scalable: variable costs are scaled according to production volumes. If the exceptional situation is prolonged, however, its financial impact would also grow for Revenio. When the crisis eases, I believe that we will be in a good position, as all our products are up-to-date and competitive, some of them have only recently been launched, and our cash position is solid. That is why we are confident that we will come out of this exceptional crisis strong. We will continue to focus on building growth and further strengthening our position in ophthalmology.

We are actively monitoring the progress of the situation and assessing the need for action with particular care. We will react and take corrective action as necessary.

The COVID-19 pandemic has also posed an unfortunate practical challenge for organizing the Annual General Meeting for 2020, and we have decided to postpone the meeting scheduled for March 19, 2020 to ensure the safety of the participants. A temporary amendment to the Companies Act concerning the organization of general meetings is currently before Parliament and the amendment is expected to enter into force shortly. We will hold an Annual General Meeting in accordance with the laws, instructions and official regulations in force, after Parliament has considered a proposal to amend the Companies Act. When we do organize the AGM, we will seek to ensure the safest possible means of participation for our shareholders, personnel, and Board of Directors. It is therefore likely that we will have to appeal to our shareholders not to attend the meeting in person and instead attend the event remotely via an online connection. We will come back to the invitation and further instructions once the situation has become clearer.

The health and wellbeing of our own personnel, customers, and partners is of paramount importance to us, and we are taking the prevention of the spread of COVID-19 seriously. We continue to work normally despite the exceptional circumstances and favor remote working to the extent possible. The tools we use enable flexible and reliable remote working, and we seek to arrange customer meetings primarily virtually. We have also arranged several webinars on topics related to our products with our customers.

As part of the integration work for the CenterVue acquisition, on March 31, 2020, we completed the merger of CenterVue Inc. with Icare USA Inc. At the same time, CenterVue Inc ceased to exist and all assets and debt were transferred to Icare USA Inc.

Jouni Toijala has been appointed as my successor. We already know Jouni from his current position as CEO of Innokas Medical, a contract manufacturing partner for Icare. Jouni is a well-liked and respected team player with proven success in people management and organizational development. Jouni has experience in the health technology sector and prior knowledge of the regulatory and official requirements related to health technology. I am committed to supporting Jouni in taking on his new role and I warmly welcome him as my successor.

I also wish our customers, partners, shareholders and all Revenio employees’ and other stakeholders strength and good health.”

General statement

This report contains certain statements that are estimates based on the management’s best knowledge at the time they were made. For this reason, they involve a certain amount of inherent risk and uncertainty. The estimates may change in the event of significant changes in general economic conditions.

Revenio Group Corporation

Board of Directors

For further information, please contact:

CEO Timo Hildén, tel. +358 40 580 4774

timo.hilden@revenio.fi

Robin Pulkkinen, CFO, tel. +358 50 505 9932

robin.pulkkinen@revenio.fi

www.revenio.fi

DISTRIBUTION:

Nasdaq Helsinki Oy

Financial Supervisory Authority (FIN-FSA)

Principal media

www.revenio.fi

The Revenio Group in brief

Revenio is a health tech group operating on the international market and a global leader in ophthalmological devices.

The Revenio Group comprises Revenio Group Oyj, Icare Finland Oy, Icare USA Inc., Revenio Italy S. R. L, CenterVue SpA, Revenio Research Oy, Done Medical Oy and Oscare Medical Oy.

The common denominators of Revenio's business operations include patient-led screening, follow-up and the global need to make cost savings in health care via preventive measures. Revenio seeks vigorous growth in health technology. Revenio aims to develop even more efficient and easily adopted methods for the early-stage detection of diseases with significance for public health. The goal is to create better quality of life through health technology solutions that enable more efficient diagnostics. The focus of the Group is on the early detection of glaucoma, diabetic retinopathy, and macular degeneration, and the monitoring of these during the treatment process. Revenio Research focuses on the commercialization of systems that support the diagnosis of skin cancer and asthma and planning their treatment.

In 2019, the Group's net sales totaled EUR 49.5 million, with its operating margin standing at 25.5%. Revenio Group Corporation is listed on Nasdaq Helsinki.