Revenio Group Corporation: Interim report, January 1 - September 30, 2020

Revenio Group Corporation, Stock Exchange Release, October 22, 2020 at 9.00

Revenio Group Corporation: Interim report January 1–September 30, 2020

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

An excellent quarter driven by strong sales and exceptionally low expenditure

July–September 2020

• Net sales totaled EUR 15.8 (14.3) million, a growth of 10.5%
• The currency-adjusted growth of net sales in July–September was 17.0%, or 6.4% percentage points stronger than reported
• Operating profit was EUR 3.6 million (3.9), a decline of 7.5%
• Demand for iCare intraocular pressure measurement devices and probes remained strong, and sales of imaging devices picked up slightly from the beginning of the year. Sales success was affected also by some larger-than-usual orders in the United States
• An impairment of EUR 1.9 million was made on the product development costs of the skin cancer camera Cutica due to weakened outlook for future return expectations. Clinical studies and AI development are continued according to plan
• Operating profit for the reference period was weighed down both by non-recurring acquisition costs and the impact of the acquisition cost of CenterVue’s inventories, amounting to EUR 0.7 million
• Adjusted for non-recurring acquisition costs and the impact of the acquisition cost of inventories, the operating profit for the reference period was EUR 4.6 million, while the operating profit for the review period, adjusted with the impairment of Cutica, amounted to EUR 5.6 million. In relation to the adjusted operating profit for the reference and reporting period, operating profit grew by 21.0% in the reporting period.
• Fixed costs during the review period have been over EUR 1 million lower than planned due to the constraints caused by the Covid-19 pandemic, in particular travel and trade fair expenses
• EBITDA was EUR 6.2 (4.6) million, an increase of 35.8%
• EBITDA for the reference period was weighed down both by non-recurring acquisition costs and the impact of the acquisition cost of CenterVue’s inventories, amounting to EUR 0.7 million. EBITDA adjusted for non-recurring acquisition costs was EUR 5.3 million in the reference period. In relation to the adjusted EBITDA for the reference period, EBITDA grew by 18.3% in the reporting period
• Gross margin was EUR 11.4 (10.0) million
• Gross margin in the reference period was weighed down by the impact of the acquisition cost of Centervue’s inventories. Adjusted gross margin in the reference period was EUR 10.4 million. In relation to the adjusted gross margin for the reference period, the gross margin for the reporting period increased by 9.6%
• Cash flow from operations totaled EUR 6.5 (2.0) million, an increase of 226.2%
• After the end of the review period, on October 12, 2020, the company announced its updated earnings guidance for the second half of 2020

• Undiluted earnings per share came to EUR 0.111 (0.117)

January–September 2020

• Net sales totaled EUR 41.4 (34.5) million, a reported growth of 19.8%

• The currency-adjusted growth of net sales in January–September was 22.1%, or 2.3 percentage points stronger than reported
• Operating profit was EUR 9.5 million (7.4)
• Demand for iCare intraocular pressure measurement devices and probes has been strong in the United States throughout the whole review period
• Operating profit for the reference period 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.
• Adjusted for non-recurring acquisition costs, the operating profit for the reference period was EUR 10.1 million, while the operating profit for the reporting period, adjusted with the impairment of Cutica, amounted to EUR 11.4 million. In relation to the adjusted operating profit for the reference and reporting period, operating profit grew by 12.8% in the reporting period
• EBITDA was EUR 13.4 (8.8) million
• EBITDA for the reference period 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 for non-recurring acquisition costs was EUR 11.6 million in the reference period. In relation to the adjusted EBITDA for the reference period, EBITDA grew by 15.4% in the reporting period
• Gross margin was EUR 29.7 (23.9) million
• Gross margin in the reference period was weighed down by the impact of the acquisition cost of Centervue’s inventories. Adjusted sales margin in the reference period was EUR 25.1 million. In relation to the adjusted gross margin for the reference period, the gross margin for the reporting period increased by 18.3%
• The Annual General Meeting confirmed a dividend of EUR 0.30 (0.28)
• Undiluted earnings per share came to EUR 0.283 (0.222)

 Key consolidated figures, EUR million

Financial guidance for the second half of 2020

Financial guidance issued by the company after the end of the review period on October 12, 2020: Revenio expects its business and operating environment to develop in the second half of 2020 as follows:

• The Covid-19 pandemic continues to cause general uncertainty on the market and weakens visibility for the remainder of the year 2020. Under these circumstances Revenio Group Corporation estimates that the company's currency-adjusted net sales for July-December of the present year will grow strongly from the previous year and the profitability excluding non-recurring costs will be on a strong level.

Revenio withdrew its earlier earnings guidance for 2020 on April 2, 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 will revoke its financial guidance for 2020, given on February 20, 2020.

Revenio Group’s reported net sales are estimated to grow very strongly from the previous year and profitability is to remain at a good level without non-recurring items.

President & CEO Jouni Toijala comments on the third quarter of 2020:

"I would like to extend my warmest thanks to all the Revenio Group employees around the world for the excellent work you have done in the exceptional circumstances caused by the Covid-19 pandemic. Together, we again achieved excellent performance, especially in the continued strong demand for intraocular pressure measurement devices and their probes during the review period.  In addition to customer deliveries, our entire organization was kept busy in the third quarter by the global launch of the iCare brand as well as the Group’s strategy work. 

Thanks to the dismantling of restriction measures the gradual recovering of the markets started in May and continuing in July–September. Fixed costs have remained exceptionally low throughout 2020 due to travel restrictions and the cancellation of sales events and fairs because of the Covid-19 pandemic. Opportunities for physical customer meetings have been extremely limited, and important industry conferences were transferred online or cancelled altogether. When assessing the reference figures, it should also be noted that the CenterVue figures were not consolidated until May 1, 2019.

All of Revenio Group’s ophthalmic products have now been combined under the unified iCare brand. With the unified iCare brand, we can offer our customers the full range of ophthalmic products and services even more efficiently and comprehensively: retinal imaging devices, perimeters for visual field tests, and devices for measuring intraocular pressure. We believe that eye care should be easy, accurate, and reliable. Our innovative, high-quality solutions aim to help eye care professionals perform their work faster, more easily and with greater accuracy.

Demand for iCare intraocular pressure measurement devices, in particular, continued to be strong in the third quarter. Our sales success was also influenced by some unusually large orders in the United States. We also responded to the continued strong demand for probes by opening a new probe production line at the end of the review period.

Sales of iCare retinal imaging devices picked up slightly during the review period. Demand for the DRSplus retinal imaging device has been particularly brisk. The Covid-19 restrictions continued to affect sales of imaging devices, however, as they are capital goods and require in-person meetings for both sales and installation. In many countries, clinics and hospitals continue to restrict visits, which makes product presentations and installations difficult. Clinics’ patient flows also remain well below the pre-Covid-19 pandemic level. We expect the situation to continue along the same lines in the near future. In our view, we are well positioned with our iCare retinal imaging devices vis-à-vis our competitors when the restrictions caused by the pandemic are eased.

We are currently updating our strategy, with a large number of employees representing various operations in the Group actively involved. We will publish our strategy priorities and future steps after the turn of the year.

Development of the Ventica® and Cutica® systems is progressing according to plan. Our current view is that Cutica’s go-to-market will take longer than we originally estimated. The delay in Cutica's schedule has been caused in particular by research work on the use of artificial intelligence in the automatic processing of image material. This is why we have recorded a partial write-down, which, however, does not have an impact on the short-term plans with the project. The project was not fully written down, and development work and product validation will continue. The impairment was based on the weakened outlook for future return expectations and project-related uncertainties.

The Covid-19 pandemic is unfortunately still going strong, and visibility into the future is hazy. We work every day to ensure that, even in these exceptional circumstances, we can deliver the world’s leading ophthalmic products to our customers, bring new innovations to market, and ensure our future growth path. In addition to our employees, thanks are due to our customers, distributors, and all our partners who believe in us and make us feel that we are doing valuable work every day.”

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:

President & CEO Jouni Toijala, tel. +358 50 484 0085

jouni.toijala@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. Revenio Group's ophthalmic diagnostic solutions include intraocular pressure measurement devices under the iCare brand, retinal imaging devices and perimeters. The main tools for the detection and diagnosis of glaucoma and its monitoring during treatment are intraocular pressure measurement (tonometry), retinal imaging, and visual field tests (perimetry).

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.

In 2019, the Group's net sales totalled EUR 49.5 million, with its operating profit standing at 25.5%. Revenio Group Corporation is listed on Nasdaq Helsinki with the trading code REG1V.