Sorin Group Announces Results for the Second Quarter of 2013
Consolidated results for the second quarter of 2013:
Revenues were €187.7 million;
Adjusted net profit1 was €14.2 million.
Consolidated results for the first half of 2013:
Revenues were €366.4 million;
Adjusted net profit1 was €23.3 million.
At the end of the first half of 2013, the oxygenator and autotransfusion system segments recovered from the negative impact of the earthquakes.
For the third quarter of 2013, Sorin Group expects revenues to grow 18% to 20% at comparable exchange rates over the same period of 2012.
The Company confirms its previously communicated 2013 full-year guidance2.
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 half of 2013.
"Our second quarter revenues came in at the high-end of the guidance. The Cardiac Surgery business unit continued to report strong and consistent revenue growth, as it recovers its market shares in the oxygenator and autotransfusion system segments. These solid results, however, were partially offset by continued challenges in Cardiac Rhythm Management, a market still troubled by a difficult pricing environment, particularly in Europe" stated CEO André-Michel Ballester. "In the second half of the year, we expect our CRM business to stabilize along with the market. We will also be launching key new products like InspireTM, while aggressively pursuing our long-term growth initiatives."
In the second quarter 2013, Sorin Group posted revenues of €187.7 million, a 2.7% increase at comparable foreign exchange rates over the second quarter of 2012.
The Cardiac Surgery Business Unit (cardiopulmonary products for open heart surgery and heart valve repair or replacement products) reported revenues of €119.7 million. The heart-lung machine segment had an outstanding performance across all main markets. The oxygenator and autotransfusion system segments also performed positively, regaining market share lost following the earthquakes, in line with expectations. Both segments benefited from ongoing penetration in emerging markets, primarily in China. During the quarter, the new ConnectTM Data Management System was launched at FECECT, the European Congress on Extracorporeal Circulation Technology, in Toledo, Spain and, recently, obtained approval from the U.S. Food and Drug Administration (FDA). In the second half of the year, the roll-out of ConnectTM will be followed by the commercial launches of InspireTM and HeartlinkTM. The tissue valves segment also performed well during the second quarter, mainly due to MitroflowTM growth in Japan and to continued penetration of PercevalTM. The mechanical valves segment experienced lower volumes in emerging markets, in addition to the continued shift toward tissue valves in Europe and the US.
During the quarter, Sorin Group obtained approval from the FDA for the Investigational Device Exemption (IDE) application and clinical trial protocol for PercevalTM and conducted the first implants in the US. The main objective of this prospective, non-randomized clinical trial is to demonstrate the safety and the effectiveness of PercevalTM in order to obtain the FDA Pre-Market Approval (PMA).
Sorin Group also signed a supply agreement for the manufacturing of certain components of the LotusTM Aortic Valve System, Boston Scientific Corporation's second-generation TAVR (Transcatheter Aortic Valve Replacement) technology.
Q2 13 Revenues
Underlying growth %*
Autotransfusion machines and devices
Mechanical Heart Valves
Tissue Heart Valves
Total Cardiac Surgery
(*) For details, see attached table "Consolidated revenues by Business Unit"
The Cardiac Rhythm ManagementBusiness Unit (implantable devices to manage cardiac rhythm disorders) reported revenues of €67.3 million, with a 7.3%3 decrease compared to the second quarter of 2012. Low voltage revenues were hit by pricing pressure in Europe and lower volumes in Japan due to the penetration of MRI compatible pacemakers. High voltage revenues were also affected by a challenging pricing environment, not fully compensated by the continued success of SonRTM in Europe.
During the second quarter of 2013, Sorin Group obtained important regulatory approvals and performed the roll-out of the related products, including: i) FDA approval for the Investigational Device Exemption (IDE) of the RESPOND CRT clinical study and the first SonRTM implants in the United States; ii) FDA approval and US launch of the SMARTVIEW™ remote monitoring solution for patients with implanted cardiac defibrillators; and iii) CE mark and the European commercial launch of the REPLY™ 200 family of pacemakers featuring Sleep Apnea Monitoring (SAM).
During the second quarter, Sorin also presented the results of the OPTION and DREAM studies at the Heart Rhythm Society's Annual Meeting in Denver, Colorado and at the EHRA Europace Congress in Athens, Greece, respectively. The OPTION study demonstrated a lower rate of inappropriate shocks in patients with Sorin dual chamber ICD devices; while the DREAM study showed the innovative capacity of the REPLYTM 200 pacemaker to provide reliable screening for the risk of severe Sleep Apnea.
Q2 13 Revenues
Underlying growth %*
High Voltage (defibrillators and CRT-D)
Low Voltage (pacemakers)
Total Cardiac Rhythm Management
(*)For details, see table "Consolidated revenues by Business Unit"
Gross profit for the second quarter of 2013 was €111.4 million, or 59.3% of revenues, compared to €116.3 million, or 61.8% of revenues in the second quarter of 2012. The decrease is mainly due to the effect of foreign exchange rates and to a different business mix due to the earthquakes in the same period of 2012.
Selling, General and Administrative (SG&A) expenses were €72.4 million, compared to €78.7 million in the second quarter of 2012. At constant foreign exchange rates, SG&A were substantially flat.
Research and development (R&D) expenses rose by 2.8% to €19.2 million (10.2% of revenues) compared to €18.7 million (9.9% of revenues) in the second quarter of 2012.
EBITDA rose by 6.0% in the second quarter of 2013 to €31.2 million, or 16.6% of revenues, compared to €29.5 million, or 15.7% of revenues in the second quarter of 2012.
EBIT was €19.8 million compared to €11.0 million in second quarter of 2012. EBIT before special items was €19.7 million, rising by 4.4% over €18.9 million reported in the second quarter of 2012. Special items in the second quarter of 2013 also include a non-recurring income of €3.75 million related to a further instalment of the insurance indemnification for the earthquakes.
Net financial charges were €2.5 million compared to €6.6 million in the same period of 2012. The figure for the second quarter of 2012 incorporates a financial charge of €4.4 million for the unwinding of an over-hedging position resulting from a lower revenue level following the earthquakes. On a run-rate basis, the financial charges in the second quarter of 2013 were substantially flat over the same period of 2012.
Net profit4 was €14.2 million compared to €7.4 million in the second quarter of 2012.
Adjusted net profit1,4 was €14.2 million compared to €16.4 million in the second quarter of 2012.
Net financial debt as of June 30, 2013 totalled €90.9 million compared to €106.9 million at March 31, 2013 (€80.9 million at June 30, 2012). The special items for the period were favourable for €7.9 million(see detail in the attached table).
In the second quarter of 2013 the Company generated a free cash flow5 of €8.1 million.
Results for the first half of 2013
In the first half of 2013, Sorin Group posted revenues of €366.4 million, a 1.3% decrease at comparable foreign exchange rates over the first half of 2012.
Gross profit for the first half of 2013 was €216.9 million, or 59.2% of revenues, compared to €231.4 million, or 60.9% of revenues in the first half of 2012. The decrease is mainly due to the effect of foreign exchange rates and to a different business mix due to the earthquakes in the same period of 2012.
Selling, General and Administrative (SG&A) expenses were €144.6 million, compared to €157.7 million in the first half of 2012. At constant foreign exchange rates, SG&A expenses were substantially flat.
Research and development (R&D) expenses rose by 2.6% to €38.2 million (10.4% of revenues) compared to €37.3 million (9.8% of revenues) in the first half of 2012.
EBITDA in the first half of 2013 was €57.5 million, or 15.7% of revenues, compared to €57.8 million, or 15.2% of revenues in the first half of 2012.
EBIT was €28.5 million compared to €27.8 million in first half of 2012. EBIT before special items was €34.0 million compared to €36.5 million in the first half of 2012. Special items in the first half of 2013 amounted to €5.6 million, including non-recurring charges related to the earthquakes of €3.1 million, restructuring charges of €4.2 million and other charges of €2.1 million, partially offset by non-recurring income of €3.75 million related to a further instalment of the insurance indemnification for the earthquakes.
Net financial charges were €4.1 million compared to €8.8 million in the same period of 2012. On a run-rate basis, the financial charges declined by €0.6 million in the first half of 2013.
Net profit4 was €19.2 million compared to €18.0 million in the first half of 2012.
Adjusted net profit1,4 was €23.3 million compared to €27.6 million in the first half of 2012.
Net financial debt as of June 30, 2013 totalled €90.9 million compared to €80.9 million at June 30, 2012 (€87.8 million at December 31, 2012). The special items for the period were unfavourable for €12.6 million, including €14.2 million for business development initiatives.
In the first half of 2013 the Company generated a free cash flow5 of €9.5 million.
Guidance for the third quarter of 2013
For the third quarter 2013, Sorin Group expects revenues to grow 18% to 20% at comparable foreign exchange rates over the same period of 2012, which corresponds to a full recovery from the earthquakes for oxygenators and autotransfusion systems.
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Analyst and Investor Day
Sorin Group Analyst and Investor Day will be held in Milan on November 27, 2013, instead of October 1, 2013, as previously communicated. The time and location of the meeting will be published at a later date. The meeting will also be accessible via audio webcast.
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At the meeting held today, the Board of Directors also appointed the independent director, Sergio Gianfranco Luigi Maria Dompé, as Chairman of the Committee for Transactions with Related Parties.
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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 Report on Operations at 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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About Sorin Group
Sorin Group (www.sorin.com), is a global medical device company and a leader in the treatment of cardiovascular diseases. The Company develops, manufactures and markets medical technologies for cardiac surgery and for the treatment of cardiac rhythm disorders. With 3.750 employees worldwide, the Company 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 further information, visit:www.sorin.com
1 Adjusted net profit: net profit before the after-tax non-recurring income and expenses (special items)
2 See press releases dated February 7, 2013 and April 29, 2013
3 At comparable exchange rates and perimeter
4 Taxes include the effects related to the Law Decree no. 76/2013
5 Free cash flow: net profit + depreciation, amortization and writedowns ± ∆ working capital - investments. The amount is stated net of the impact of special items
Martine Konorski, Tel: +33 (0)1 46 01 33 78
Director, Corporate Communications
Mobile: +33 (0)6 76 12 67 73
Francesca Rambaudi, Tel: +39 02 69969716
Director, Investor Relations
Simona Raffaelli, Tel. + 39 02 89011300
KEYWORDS: Europe Italy
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