DGAP-News: Q2/2022: Sales of EUR 2.7 million and EBITDA of EUR -0.2 million below expectations in persistently challenging macroeconomic environment; growth expected for second half of 2022

The Company's sales in the second quarter of 2022 decreased by 17 % to EUR 2.7 million compared to the same period of the previous year (Q2/2021: EUR 3.3 million). In the first six months of the current fiscal year, sales decreased by 7 % to EUR 5.6 million compared to the first half of 2021 (H1/2021: EUR 6.0 million). Taking constant exchange rates into account, the changes in sales were 21 % (Q2) and 10 % (H1). Looking at the results, the Company recorded EBITDA of 0.2 million EUR (Q2/2021: +0.3 million EUR) in the second quarter and of 0.7 million EUR (H1/2021: +0.1 million EUR) in the first six months of 2022, which mainly reflects the decline in sales, the expansion of the sales infrastructure in Germany and the U.S. as planned, the conduction of the clinical trial for aap's innovative antibacterial silver coating technology as well as the extensive work on processes and documents to meet the increased regulatory requirements of the new EU Medical Device Regulation (MDR).

Q2/2022 and H1/2022 - Key financial figures

Sales Q2/2022 and H1/2022

With regard to the individual regions, the aforementioned effects were felt in almost all markets relevant for aap, albeit to varying degrees. The development in the LATAM region is pleasing, where aap achieved growth of +38 % and +3 % in both the second quarter and the first half of 2022. Here, recovery tendencies are evident in markets such as Mexico and Brazil, but a new sales partner in Venezuela also contributed to the positive development in the LATAM region. In the EMEA region, the second quarter in particular was characterized by a significant decline of 27 %, resulting in a 6 % drop in sales in the first half of the year. Developments in the Spanish, Bosnian and Israeli markets were primarily responsible for more than 2/3 of the negative deviations. In contrast, the market in South Africa developed positively, with significant growth of +65 % in the second quarter and +24 % in the first six months, although this could only partially compensate for the development of the other submarkets in the EMEA region. In the APAC region, aap recorded a 62 % decline in sales in the second quarter and a 50 % decline in the first half of the year compared with the respective comparative period of the previous year, mainly as a result of a reduced volume of business with the Chinese sales partner.

The picture in the USA is divided: While at first glance there is a decline in sales for the region in the second quarter (13 %) and in the first six months (5 %), a non-recurring effect in the amount of EUR 0.2 million must be excluded from sales in the second quarter of 2021. This one-off effect in the previous year resulted from the termination of the contractual relationship with a long-standing distribution partner. Excluding this non-recurring effect results in growth of +14 % for the second quarter and +10 % for the first half of the year. In addition to the development of the USD/EUR exchange rate, the increase in the average invoiced price per surgery performed was also the background to the rise in sales.

Overall, the Management Board remains optimistic about the Company's further development and sees the sales development of the last 12 months compared to the corresponding period of the previous year with LTM sales growth of 7 % as confirming the fundamental orientation of aap.

EBITDA Q2/2022 and H1/2022

With regard to earnings, EBITDA decreased year-on-year to EUR -0.2 million for the second quarter of 2022 (Q2/2021: EUR +0.3 million) and to EUR -0.7 million for the first six months of 2022 (H1/2021: EUR +0.1 million). The following developments were particularly decisive in this regard:

Silver coating technology

With regard to aap's innovative antibacterial silver coating technology, the first human clinical trial surgeries were performed in the first half of 2022 and further trial centers were initiated. In addition, the Company carried out promising test coatings for a leading medical technology company in the reporting period. The aim is to demonstrate the possible application of silver coating technology to non-aap products and thus to create the preconditions for potential joint development projects. In addition, aap is still in talks about possible co-financing of the human clinical trial and further cooperation opportunities.

Outlook

Not included in the following forecast statements:

• A significant tightening of sanctions against Russia or a change in the interpretation of existing sanctions,
• An expansion of the conflict situation outside Ukraine,
• Further additional significant increases in energy and raw material prices above the currently foreseeable level or restrictions on the Company's ability to operate as a result of partial or complete cessation of gas and/or energy supplies due, among other things, to the war in Ukraine or related sanctions,
• Further virus mutations (COVID 19 pandemic) leading to a significant worsening of the infection situation with corresponding lockdown measures or other restrictions in the sales regions relevant for aap or resulting in production stoppages at the Berlin site or at aap's service providers/suppliers.

In the second half of 2022, in addition to stabilizing aap's financial position, the focus will be in particular on the further implementation of the human clinical trial for the innovative antibacterial silver coating technology and the further revision of processes and documents to meet the increased regulatory requirements of the new EU Medical Devices Regulation MDR. On the revenue side, the Executive Board expects an increase for the second half of 2022 compared to the first six months and anticipates a revenue level of EUR 11.5 million to EUR 13.5 million for fiscal year 2022. For EBITDA in fiscal year 2022, the Executive Board expects a value of EUR 2.0 million to EUR 1.1 million, taking into account the full project costs for the further implementation of the human clinical trial for the antibacterial silver coating technology.

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aap Implantate AG (ISIN DE0005066609) - General Standard/Regulated Market - All German Stock Exchanges -
 

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