Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Medartis Holding AG (MDRSF, Financial) achieved a global growth rate of 13.1% year-over-year.
- The company's gross margin significantly improved to 80.3%, with potential to exceed 83% excluding third-party manufacturing.
- The underlying EBITDA margin, excluding one-offs, reached 17.2%, showing strong operational efficiency.
- Successful issuance of a CHF150 million convertible bond increased cash reserves, enhancing financial flexibility.
- Strong performance in the EMEA region with 18% growth, driven by systematic investments in countries like France, UK, and Spain.
Negative Points
- Growth in LATAM and Asia Pacific was weaker than expected due to government-induced price reductions and price erosion.
- The commercialization of NSA products was slower than anticipated, leading to a CHF9.6 million impairment.
- The US lower extremities segment underperformed due to slower channel building and training requirements.
- Australia faced significant price cuts, impacting revenue despite high single-digit volume growth.
- Brazil experienced a 30% decline in CMS business due to price renegotiations with hospitals, affecting overall LATAM performance.
Q & A Highlights
Q: Could you confirm the H1 underlying EBITDA guidance of 14.6% and clarify the full-year guidance?
A: Last year, we had some extra effects, and to make it comparable, we took them out. This year, we had extra costs related to the CEO change and the transition of our Japanese business. We are confident in achieving the 15% full-year guidance, but it depends on growth in the US, Latin America, and Asia Pacific.
Q: Can you discuss the outlook for the LapiPrep procedure and its market dynamics?
A: LapiPrep is a guided procedure for bunion surgery, which is complex and requires significant investment in surgeon education and sales force training. Increased competition and the complexity of the procedure have slowed commercialization. We are focusing on training and supporting existing distributors to build a profitable lower extremities business.
Q: What is a sustainable growth rate for the US market, and what measures are being taken to achieve it?
A: The 21% growth in H1 is at the lower end of our expectations. We are shifting towards more focused distributors, which are growing at 46% year-to-date compared to 16% for multi-line distributors. We expect to accelerate growth in the upper extremities and aim for mid-20% to 30% growth in the US.
Q: How do you plan to launch Keri Touch in the US, and will it involve a dedicated sales force?
A: Initially, we will have dedicated support in the field to ensure thorough training and good outcomes. We are evaluating whether to build a dedicated sales force for Keri Touch or use independent sales agents. Early thoughts suggest a higher dedication to the CMC1 prosthesis.
Q: Can you clarify the 10% volume growth in APAC and the impact of price cuts in Australia?
A: The 10% volume growth refers to Australia, not the entire APAC region. Price cuts in Australia have significantly impacted value growth, but we are increasing our business in volume terms. The waiting list issue mentioned in the press release refers to operational difficulties in the Australian system, not a backlog of demand.
Q: What is the impact of the 30% sales decline in Brazil, and when do you expect a recovery?
A: The 30% decline refers to the CMS business in Brazil, which is elective and affected by price negotiations with hospitals. We expect some improvement in H2 but do not anticipate a full recovery this year. Our new CEO will address strategic opportunities to reaccelerate growth in Brazil.
Q: How much of the strong European growth was driven by Keri Touch, and is it fair to assume mid-single-digit million sales with over 50% growth?
A: We do not disclose product-level growth numbers, but Keri Touch has shown a strong growth trajectory, doubling sales year-over-year in European markets.
Q: Could Touch procedures get US approval in 2024, and when will we see financial impact from the launch in Australia?
A: US approval for Touch procedures is not expected in 2024. In Australia, we prioritize training and good outcomes over immediate top-line growth. Demand is high, but our focus is on ensuring successful adoption and long-term success.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
