Sorin Group Announces Results for the First Quarter of 2013
Consolidated results for the first quarter of 2013:
Revenues were €178.7 million;
Adjusted net profit1was €9.1 million.
For the second quarter of 2013, Sorin Group expects revenues to grow 1% to 3% at comparable exchange rates compared to the same period of 2012.
The Company confirms full-year Adjusted net profit1guidance for 2013 at €55 million to €60 million.
Sorin Group receives FDA approval to conduct IDE clinical trial for Perceval™ sutureless aortic valve in the United States.
MILAN--(BUSINESS WIRE)-- At a meeting held today and chaired by Rosario Bifulco, the Sorin S.p.A. (MIL:SRN) Board of Directors approved the results for the first quarter of 2013.
"We are satisfied with the first quarter performance, with revenues in line with the guidance provided to the market, despite particularly challenging industry dynamics and significant and unexpected deterioration of foreign exchange rates," stated CEO André-Michel Ballester. "The Cardiac Surgery business performed significantly better than expected, confirming the progressive restoration of pre-earthquakes market shares in oxygenators and autotransfusion systems. The Cardiac Rhythm Management market however continues to be troubled by a challenging pricing environment. During the quarter, the Company also closed several important deals, including the acquisition of Brazilian manufacturer Alcard and the investment with option-to-buy in Israeli neuromodulation company Enopace, further executing on our medium/long-term growth targets. Finally, we have received FDA approval to conduct IDE clinical trial for Perceval™ in the United States ".
In the first quarter of 2013, Sorin Group posted revenues of €178.7 million, a decrease of 5.0% at comparable foreign exchange over the first quarter of 2012, still due to the negative impact of the earthquakes of May 2012.
The Cardiac Surgery Business Unit (cardiopulmonary products for open heart surgery and heart valve repair or replacement products) reported revenues of €114.9 million in the first quarter of 2013. The heart-lung machines segment achieved excellent performance in every major market. Net of the effects of the earthquakes, the oxygenators and autotransfusion systems segments also recorded positive momentum on all the main markets, in line with the Company's objective to regain 100% of its pre-earthquake market share by June 2013. The oxygenators segment benefited from ongoing penetration in emerging markets, primarily in China, and from the significant contribution of the cannulae business. During the quarter, the Company continued to focus on the manufacturing scale-up of the new family of oxygenators InspireTM. The Company plans to accelerate the roll-out of Inspire globally in the second half of 2013, a slight delay compared to the previous timeline. The tissue valves business posted excellent results, thanks to the positive performance of MitroflowTM in Japan, where the Company is doing a positive debut, in the United States and in emerging markets. Tissue valves also benefitted from the contribution of PercevalTM. In the quarter the mechanical valves segment reported lower volumes in emerging markets, in addition to the continued shift toward tissue valves in developed countries.
During the quarter, Sorin Group acquired Alcard Industria Mecanica Ltda, a Brazilian leading manufacturer of heart-lung machines. This acquisition is strategic for Sorin Group since it represents a gateway to the Brazilian market and to the entire Latin American area.
Sorin Group announced today it has received FDA approval for its Investigational Device Exemption (IDE) application and clinical trial protocol for PercevalTM in the United States. Rakesh Suri (M.D.), Associate Professor of Surgery, Consultant Cardiovascular Surgeon, Mayo Clinic (Rochester, Minnesota) is the Principal Investigator for the PERCEVALTM IDE trial that will involve up to 25 US centers. Primary objective of this prospective, non randomized trial is to demonstrate the safety and effectiveness of PERCEVALTM in support of receiving FDA PMA clearance.
Q1 13 Revenues
Underlying growth %*
Autotransfusion machines and devices
Mechanical Heart Valves
Tissue Heart Valves
Totale Cardiac Surgery
(*)For details, see the table entitled "Consolidated revenues by Business Units"
The Cardiac Rhythm ManagementBusiness Unit (implantable devices to manage cardiac rhythm disorders) reported revenues of €63.1 million, a 7.9%* decrease compared to the first quarter of 2012, reflecting the continued contraction of the CRM market. The decrease in revenues in the low-voltage segment reflects lower volumes in all major markets, in addition to a growing pricing pressure in Europe and the impact of previous reimbursement changes in Japan. The high-voltage segment also experienced a decrease in revenues, despite the ongoing successful penetration of the innovative CRT-D SonRTM device in Europe. The Company estimates that the Business Unit has maintained its global market share in this very challenging environment.
During the quarter, Sorin Group obtained FDA approval for its Investigational Device Exemption (IDE) application and clinical trial protocol for RESPOND CRT. The trial, which will enroll more than 1,000 patients in the United States and other geographies, will study the safety and effectiveness of the innovative SonRTM CRT optimization system in patients with advanced heart failure.
Finally, during the quarter, Sorin Group closed a further investment and an option-to-buy in Enopace Biomedical, a company focused on the development of a neuromodulation system to treat patients with congestive heart failure.
Q1 13 Revenues
Underlying growth %*
High Voltage (defibrillators and CRT-D)
Low Voltage (pacemakers)
Total Cardiac Rhythm Management
(*) For details, see the table entitled "Consolidated revenues by Business Units"
Gross profit in the first quarter of 2013 was €105.5 million, or 59.0% of revenues, compared to 60.1% of revenues in the first quarter of 2012. This decrease is due to a less favorable business mix and the negative impact of pricing pressure in Cardiac Rhythm Management and of foreign exchange rates, partially offset by ongoing manufacturing efficiencies.
Selling, General and Administrative(SG&A) expenses were €72.2 million, compared to €79.0 million in the first quarter of 2012. At constant foreign exchange rates, SG&A decreased by 1.6%. This improvement reflects the initial savings of the cost reduction program2 announced in the fourth quarter 2012, partially offset by the impact of the medical device excise tax, a tax on the US sales of medical devices beginning in January 2013.
Research and Development (R&D) expenses rose by 2.3% to €19.0 million (10.6% of revenues) compared to €18.6 million (9.7% of revenues) in the first quarter of 2012, confirming Sorin's continuous commitment to innovation. In addition to internal R&D, Sorin's commitment to innovation is further demonstrated by its recent investments in two new growth platforms: percutaneous mitral valve therapies and neuromodulation therapies to treat heart failure.
EBITDA in the first quarter of 2013 amounted to €26.3 million, or 14.7% of revenues, compared to €28.3 million, or 14.8% of revenues in the first quarter of 2012.
EBIT was €8.7 million compared to €16.7 million in the first quarter of 2012. EBIT before special items was €14.3 million (€17.6 million in the first quarter of 2012). Special items of €5.6 million in the first quarter of 2013 include non-recurring charges of €1.6 million in relation to the earthquakes and restructuring charges of €2.5 million. These restructuring charges are part of the cost savings program2 announced at the end of 2012 and expected to be completed in 2013. The overall program will include approximately €16 million of restructuring charges, of which €6.8 million were recorded in the fourth quarter of 2012. The remaining non-recurring costs in special items refer to charges for legal fees and associated litigation costs.
Net financial charges were €1.7 million compared to €2.3 million in the first quarter of 2012. On a run-rate basis, the financial charges decreased by €0.6 million in the first quarter of 2013, mainly as a result of lower average debt.
Net profit was €5.0 million compared to €10.6 million in the first quarter of 2012.
Adjusted net profit1 was €9.1 million compared to €11.2 million in the first quarter of 2012.
Net financial debt as of March 31, 2013 was €106.9 million compared to €102.3 million as of March 31, 2012 (€87.8 million as of December 31, 2012). The special items for the period amounted to €20.5 million, including €13.5 million for business development initiatives (see attached table for details).
In the first quarter of 2013, the Company generated free cash flow3 of €1.4 million. The Company's free cash flow was adversely impacted by a seasonal deterioration of payment terms mainly in Southern Europe and some emerging markets.
With regards to relevant events following the closing of the first quarter, Sorin Group closed a $50 million financing with UniCredit Bank AG (New York branch) including a $20 million term loan (maturity as of April 12, 2016) and a $30 million revolving facility (maturity as of April 12, 2016).
Guidance for the second quarter of 2013 and for the full year 2013
For thesecond quarter of 2013, the Company expects revenues to grow 1% to 3% at comparable exchange rates compared to the same period of 2012.
The Company is able to confirm its previously communicated full year revenue guidance, driven by a stronger than anticipated performance in the Cardiopulmonary segments. Cardiopulmonary growth will offset lower than anticipated performance of the Cardiac Rhythm Management Business Unit, now expected to perform for the full year in line with the market at -4% to -5%. Sorin Group confirms full-year Adjusted net profit1 guidance at €55 million to €60 million.
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The Board of Directors also passed a resolution to institute a Compensation and Appointments Committee that will integrate the functions of the Compensation Committee already established and those of the appointments committee as governed by Article 5.C.1 of the Corporate Governance Code. The new Committee will include the following members: Giovanni Pavese (Chairman), Luciano Cattani and Giuseppe Carteni. The members of the Committee are all non-executive directors, and consistent with the recommendations of the Corporate Governance Code, a majority of Committee members is independent.
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The corporate officer responsible for the company's financial reports, Demetrio Mauro, declares, pursuant to Paragraph 2 of Article 154-bis of the Consolidated Law on Finance that the accounting information contained in this press release corresponds to the documented results and the accounting books and records.
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In addition to the conventional indicators recommended by the IFRS, this press release provides alternative performance indicators. These indicators should not be considered as replacements for the conventional indicators recommended by the IFRS, but rather as an additional source of information, representative of the income statement, balance sheet and financial position parameters used internally in the decision-making process. An explanation of the meaning and structure of these alternative performance indicators is provided in the Annual Report as of December 31, 2012.
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This press release contains forward-looking statements. These statements are based on the Group's current expectations and projections about future events and, by their nature, are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future, and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including: continued volatility and further deterioration of capital and financial markets, changes in commodity prices, changes in general economic conditions, economic growth and other changes in business conditions, changes in laws and regulations (both in Italy and abroad), and many other factors, most of which are outside of the Company's control.
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1 Adjusted net profit: net profit before the after-tax treatment of non-recurring income and expenses (special items)
2 This program, once fully implemented, aims to achieve overall savings of approximately €15-17 million per year. For further details see press release dated February 7, 2013.
3 Free cash flow: net profit + depreciation, amortization and writedowns ± ∆ working capital - investments. This account is net of the impact of special items
* At comparable exchange rates and perimeter
About Sorin Group
Sorin Group (www.sorin.com), is a multinational leader in the treatment of cardiovascular diseases. The Group develops, manufactures and markets medical technologies for cardiac surgery and for the treatment of cardiac rhythm disorders. With 3,750 employees worldwide, the Group focuses on two major therapeutic areas: Cardiac Surgery (cardiopulmonary products for open heart surgery and heart valve repair or replacement products) and Cardiac Rhythm Management (pacemakers, defibrillators, cardiac resynchronization devices). Every year, over one million patients are treated with Sorin Group devices in more than 80 countries.
For more information, please visit:www.sorin.com.
Martine Konorski, Tel: +33 (0)1 46 01 33 78
Mobile: +33 (0)6 76 12 67 73
Director, Corporate Communications
Francesca Rambaudi, Tel: +39 02 69969716
Director, Investor Relations
KEYWORDS: Europe Italy
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