Revenio Group Corporation: Interim Report, January 1 - September 30, 2019

Revenio Group Corporation, Stock Exchange Release, October 24, 2019 at 8.30

Revenio Group Corporation: Interim report January 1–September 30, 2019 

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

Revenio acquired the entire share capital of Italian company CenterVue SpA at the end of April. The purchase price of EUR 59 million was paid in cash, for which Revenio had secured debt financing subject to customary conditions. In addition, the parties agreed on an arrangement whereby Revenio will pay an additional purchase price of EUR 1 million if the conditions agreed on by the parties for the additional purchase price are met by the end of 2020.

To carry out the acquisition, Revenio established an Italian subsidiary, Revenio Italy S.R.L., which purchased the acquired company’s shares. In the purchase agreement, Revenio guaranteed the subsidiary’s payment obligations relating to the purchase price. The acquisition was financed with debt financing subject to customary conditions from Danske Bank A/S, Finland Branch (“Danske Bank”) and a share issue. In April 2019, Revenio carried out a directed share issue for a limited number of institutional investors in deviation from the shareholders’ preemptive subscription rights, offering a maximum of 2,350,000 new Revenio shares for subscription.

A separate acquisition cost calculation related to the acquisition is presented on page 10 of this interim report.

Strong quarter again - strategic acquisition has met the expectations 

July–September 2019 

• Net sales totaled EUR 14.3 (7.4) million, up by 93.1%
• Operating profit totaled EUR 3.9 (2.5) million, up by 54.3%
• Operating profit was weighed down by non-recurring acquisition costs amounting to EUR 0.7 million and the impact of the acquisition cost of CenterVue’s inventories
• Operating profit adjusted by non-recurring acquisition costs and the impact of the acquisition cost of CenterVue’s inventories was EUR 4.6 million, an increase of 81.1%
• Adjusted operating profit was 32.2 (34.4) % of net sales
• EBITDA totaled EUR 4.6 (2.7) million, up by 70.0%
• EBITDA was weighed down by non-recurring acquisition costs amounting to EUR 0.7 million
• EBITDA adjusted by non-recurring acquisition costs and the impact of the acquisition cost of CenterVue’s inventories was EUR 5.3 million, an increase of 95.3%
• The currency-adjusted growth of net sales in July–September was 88.5%, or 4.6% percentage points weaker than reported
• Undiluted earnings per share came to EUR 0.117 (0.085)
• The business operations of the CenterVue company acquired in April 2019 have developed well, and integration work is progressing as planned
• Mikko Moilanen, started as the CEO of Revenio Group Corporation on August 5, 2019

January–September 2019 

• Net sales amounted to EUR 34.5 (22.0) million, up by 57.1% from the previous year
• Operating profit totaled EUR 7.4 (7.2) million, up by 2.6%
• Operating profit was weighed down by non-recurring acquisition costs amounting to EUR 2.8 million and the impact of the acquisition cost of CenterVue’s inventories.
• Operating profit adjusted by non-recurring acquisition costs and the impact of the acquisition cost of CenterVue’s inventories was EUR 10.1 million, an increase of 41.1%
• Adjusted operating profit was 29.4 (32.7) % of net sales
• EBITDA totaled EUR 8.8 (7.6) million, up by 16.8%
• EBITDA was weighed down by non-recurring acquisition costs amounting to EUR 2.8 million and the impact of the acquisition cost of CenterVue’s inventories
• EBITDA adjusted by non-recurring acquisition costs and the impact of the acquisition cost of CenterVue’s inventories was EUR 11.6 million, an increase of 53.4%
• The currency-adjusted growth of net sales from January–September was 54.1%, or 3.0 percentage points weaker than reported
• Undiluted earnings per share came to EUR 0.222 (0.239)
• Revenio signed a contract in April 2019 to acquire the entire share capital of Italian company CenterVue SpA. The acquisition was completed at the end of April 2019
• The company carried out a directed share issue for selected institutional investors in an accelerated bookbuild offering, whereby the company collected new capital totaling EUR 41.2 million after costs
• In addition, the company took out a bank loan amounting to EUR 30 million to finance the acquisition

Key consolidated figures, MEUR

* The reference figures for return on investment, % (ROI) and return on equity, % (ROE) have been updated to correspond to the key figures of the review period.  

Financial guidance for 2019 

The company updated its financial guidance in connection with its Half-year Financial Report on August 15, 2019: As a result of the CenterVue acquisition, Revenio’s net sales growth is very strong. EBITDA, adjusted with the non-recurring acquisition costs, is expected to be at a good level. 

The previous financial guidance for 2019, published in connection with the financial statements on February 14, 2019, was: Net sales are expected to grow markedly from the previous year and profitability is to remain at a strong level.

CEO Mikko Moilanen:  

“We have had a strong third quarter after the strategic acquisition in the spring. Our net sales in the third quarter of 2019 increased by 93.1% and amounted to EUR 14.3 million. Our EBITDA adjusted by non-recurring acquisition costs for the same period grew by 95.3%, totaling EUR 5.3 million. Our adjusted EBIT was EUR 4.6 million, an increase of 81.1%. Non-recurring acquisition costs have now been recognized and are not expected to occur in the future.

Revenio Group’s so far the most significant acquisition has been completed, and the integration work has progressed very well at all levels of the organization. The cultural fit of the companies has proved to be excellent as we have started to work together. Our sales and marketing operations were swiftly organized, with work already underway in the new roles. We will continue to further develop the operating models of Revenio's solutions for diagnostics of the eye and exploit the synergy benefits further. The alignment of the operational functions progresses at a good pace towards a model that supports unified Revenio. The ongoing harmonization of the ERP system is also proceeding as planned.

With the acquisition we have built a strategically significant position as a global supplier of solutions for diagnostics of the eye. The new target market for Revenio is considerably larger than the previous market, mainly focused on tonometry, and we will take this into account in the further development of our operating models and synergy benefits further.

Our product portfolio for the measurement of intraocular pressure is comprehensive and enables us to further develop our business in both current and new markets. Our success in the market has made our brands highly respected, which acts as a good catalyst for further development of our business for eye diagnostic solutions.

The key strengths of our macular imaging products are their high quality, ease of use, and the extraordinarily true color of the images. The global market for macular imaging products is quite competitive, but CenterVue products have achieved good product awareness in a market specifically through the high quality, reliability, and user friendliness. We believe that the synergies achieved through the acquisition, especially in terms of sales and marketing and the supply chain, will allow us to further strengthen both our competitiveness and market position.

In addition to our solutions for eye diagnostics, our development portfolio includes the Research function, which is currently working on two product concepts. Cooperation with distributors of the Ventica® system has been intensified during the current year. The goal is to get reference clinics operating in different markets to adopt the system and hence build strong local support and user acceptance for the system. The development work of hyperspectral camera Cutica® is proceeding and clinical trials are ongoing. The use of artificial intelligence in automatic processing of the imaging is still under exploring.

Having started as the new CEO of Revenio in August, I will seek to ensure continued strong product sales while developing the renewed Group into an increasingly important player in the field of health technology. It is vital that after the post-acquisition integration work and combination of the companies, the new Revenio will emerge as more than the sum of its parts. Thanks to our industry-leading IOP measurement products and macular imaging products, we have achieved a strong position in eye diagnostics and now intend to strengthen this position further.

I am extremely pleased that the atmosphere at Revenio is highly inspired, motivated, and committed to goals across organizational boundaries and national borders.”

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:

Mikko Moilanen, CEO, tel. +358 400 742 559

mikko.moilanen@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 solutions for the diagnostics of the eye.

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’s Research function focuses on the commercialization of systems that support the diagnosis of skin cancer and asthma and planning their treatment.

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

In 2018, the Revenio Group's net sales totaled EUR 30.7 million, while its EBITDA stood at 33.3%. Revenio Group Corporation is listed on Nasdaq Helsinki.