Sorin S.p.A. (Sorin) has reported net revenues of EUR643.3 million for the full year of 2008, compared with the net revenues of EUR182.9 million in the previous year-end. It reported EBITDA of EUR79.2 million for the full year of 2008, compared with the EBITDA of EUR72.4 million in the year-ago quarter.
Net Result at EUR-38.1 million compared to EUR-82.7 million in 2007. Net Result at break-even before the impact of discontinued operations, versus a net loss of EUR51.4 million in 2007.
Net Debt as of December 31, 2008 was EUR252.8 million, compared to EUR293.3 million as of December 31, 2007. Net Debt/EBITDA ratio markedly improved to 3.2X.
The disposal process of non-core business units was successfully completed in Q4. All financial results for the full year are at or above guidance.
For 2009 the company expects sales to grow 2-3% over last year at constant FX rates. EBITDA margin is expected to improve to 13-14% of revenues and Net Result to be positive. Net financial debt at the end of 2009 expected to be further reduced at EUR220 million.
Q4 2008 Revenues
During Q4 08, Sorin Group posted Revenues of EUR176.7 million, up 2.2% over the same period in 2007. At actual currency rates, Sales grew 5.3%° for the quarter.
The Cardiopulmonary Business Unit (Heart-Lung Machines, Systems for Extracorporeal Circulation and Autotransfusion) reported revenues of EUR84.2 million, up 1.3% from Q4 2007, mainly driven by the Heart-Lung Machines segment (EUR20 million, up 9.7%*), which was fuelled by the S5TM machine sales in Japan. The Autotransfusion product line was up 4.6% in the quarter to EUR16 million. The Oxygenators product line registered a 2.7% sales decrease to EUR49 million, with a strong performance in emerging markets unable to offset soft market conditions in Europe and the US.
The cardiac rhythm management business unit (implantable devices that manage cardiac rhythm disorders) reported revenues of EUR63.3 million, up 1.7% versus last year. Sales rose 8.2% in the High Voltage segment (Ovatio defibrillators and CRT-D) to EUR19 million while the Low Voltage segment (Symphony and Reply pacemakers) was up 3.6% during the quarter to EUR43 million. This encouraging performance was generated by market share gains in key European countries and Japan.
The heart valves business unit (mechanical and tissue heart valves, valve repair products) reported revenues of EUR28.2 million, up 6.0% over Q4 2007, once again driven by the strong performance of the tissue heart valves segment, up 33.1% to EUR11 million, fuelled in particular by the successful market penetration of the MitroflowTM tissue valve in the US. In the mechanical heart valves segment, revenues declined 5.9% to EUR16 million.
2008 Consolidated Preliminary Results
In 2008, Sorin Group posted revenues of EUR643.3 million, up 1.4% over the same period last year.
The cardiopulmonary business unit reported revenues of EUR302.9 million in 2008, stable compared to 2007, consolidating its position as global leader with approximately 40% of market share worldwide. In 2008, the Heart-Lung Machine segment reported revenues of EUR57 million, down 2.6%* versus 2007 and the Oxygenator segment reported revenues of EUR188 million, substantially flat over 2007: both product lines performed in line with the market. The Autotransfusion segment grew 4.9% to EUR58 million thanks to a broader penetration of the therapy among the surgical community. The Business Unit will continue to leverage its strong market presence, targeting under-penetrated segments through technological innovation. To that extent, Sorin Group announced recently that it has acquired the Clearglide endoscopic vessel harvesting (‘EVH’) product line previously by owned Datascope Inc., which will be integrated into the Cardiopulmonary BU. These devices enable less-invasive harvesting of vessels for use in coronary artery bypass grafting.
The Cardiac Rhythm Management Business Unit (implantable devices that manage cardiac rhythm) reported revenues of EUR231.1 million in 2008, up 0.4% from 2007. Sales rose 5.7% in the High Voltage segment (OvatioTM defibrillators and CRT-D) to EUR67 million, while the Low Voltage segment (SymphonyTM and ReplyTM pacemakers) was down 1.0% to EUR154 million. Throughout 2008 CRM growth has been impacted by management decisions to discontinue sales in unprofitable countries and to restructure its US sales force. These negative effects were offset by a strong performance in Europe and in Japan. Leveraging on a robust and innovative pipeline, the Business Unit will continue to pursue its expansion in Europe and in the US as well as in Japan, through its successful partnership with Japan Life Line.
The Heart Valves Business Unit reported revenues of EUR104.9 million, up 8.8%. Tissue heart valves segment revenues were up 40.1% to EUR39 million, fuelled by the rapid expansion of the Mitroflow valve in the US. In the mechanical heart valves segment revenues declined 4.2% to EUR61 million, impacted by a continuing market erosion. In 2009 the Heart Valves Business Unit is expected to further expand its global market share, with a particular focus on the US tissue valves market. The company will also aggressively pursue the regulatory approvals of the unique PercevalTM sutureless valve globally, of the leading stentless valve SoloTM in the US, and of the MitroflowTM tissue valve in Japan.
Gross Profit improved to EUR346.0 million, 53.8% of revenues, against EUR351.9 million in 2007 (53.4% of revenues) despite negative FX impact which was more than offset by efficiencies in manufacturing costs and, to a lesser extent, by an improved geographic mix.
When compared to 2007, as reported on the basis of the old business perimeter, the Gross Margin markedly improved by 240 basis points.
SG&A stood at EUR254.3 million, or 39.5% of revenues, down from EUR270.0 million, or 40.9% of revenues, in 2007. The implementation of a business unit model, the streamlining of the headquarters functions and the migration toward a shared service environment were the key drivers of this significant improvement. The company was also able to allocate more resources to the strengthening of its worldwide distribution network. The company opened a new subsidiary in Australia and substantially reinforced its heart valve commercial operations in the US.
R&D expenses amounted to EUR52.3 million, or 8.1% of revenues, from EUR49.7 million, or 7.5% of revenues, in 2007, confirming Sorin Group’s strong commitment to innovation. Throughout the year, the company focused its development efforts in its core cardiovascular businesses with a special emphasis on the sutureless valve clinical program (PercevalTM) and on the new generation CRT-D platform (ParadymTM).
EBIT in 2008 was EUR44.8 million (7.0% of revenues), compared to EUR-17.7 million in 2007. Special Items accounted positively for EUR5.4 million in 2008 (EUR-49.9 million in 2007). Excluding special items, EBIT in 2008 was EUR39.4 million, compared to EUR32.2 million in 2007, showing a significant improvement as a percentage of revenues, from 4.9% in 2007 to 6.1% in 2008.
Net Debt as of December 31, 2008 was EUR252.8 million, compared to EUR293.3 million as of December 31, 2007 and EUR286.2 million as of September 30, 2008. The significant EUR40.5 million cash generation was achieved thanks to improved profitability and a reduction in working capital. Special items had an impact of EUR22.5 million for the period.
The company is in discussion with its financial institutions in order to reset the financial covenants applicable to its finance contracts to properly reflect the changes to the perimeter of the Group following the completion of the divestiture process during 2008. In particular, as result of the aforementioned divestitures, the covenant which provides for a minimum Net Equity has not been met as at Dec. 31st 2008, while the remaining seven financial covenants were fully satisfied. The Company expects this process to be completed before the approval of the 2008 financial statements.
In the first quarter 2009, the company expects Revenues to grow by 2-3% and EBITDA