CellaVision AB: Stable start of the year with good growth in APAC

2020-04-22 - English

The information was submitted for publication at 08.20 CET on April 22, 2020

January 1 – March 31, 2020

Net sales increased by 29 % to SEK 134.4 million (103.9).
Sales grew organically by 1 % (31).
EBITDA increased to SEK 41.2 million (38.3).
EBITDA margin was 31 % (37).
Profit before tax was SEK 25.5 million (34.8).
Earnings per share before and after dilution were SEK 0.85 (1.15).
Cash flow from operating activities was SEK 15.4 million (51.1).

Significant events due to COVID-19

Due to the COVID-19 has the Board of Directors withdrawn the original dividend proposal and proposes instead that no dividend be paid for 2019 (SEK 1.50 / share) at the Annual General Meeting 2020 (AGM).
The company expects the COVID-19-pandemic to have a significant negative impact on CellaVision's sales and earnings for a number of months.
In accordance with the above, the AGM has been postponed and will be held no later than June 30. CellaVision will issue a new notice to the AGM no later than four weeks before the AGM is due to take place.

CEO's comments

Sales in the first quarter of 2020 were SEK 134.4 million (103.9), representing organic growth of one percent and a positive currency effect of four percent. Including sales of RAL Diagnostics (RAL) products, growth was 29 percent. Sales grew in all regions. In EMEA, growth was 42 percent, mainly thanks to the acquisition of RAL. In Americas, growth was 3 percent, compared to the very strong first quarter of 2019 and in APAC, growth was 99 percent compared to a weak first quarter of 2019. The effects of the ongoing COVID-19-pandemic were limited in the quarter but are expected to be significant in the coming months.

EBITDA was SEK 41.2 million (38.3) in the quarter, corresponding to an EBITDA margin of 31 percent (37). During the quarter we continued to have good cost control and sound gross margins. Our already strong focus on cost control and cash flow has been further sharpened to equip CellaVision for the effects the COVID-19-pandemic will have.

Effects of COVID-19-pandemic

The outbreak of the COVID-19-pandemic is impacting people and businesses world over and is a challenge to us all. CellaVision is following the developments and effects of the pandemic carefully and we will adjust our operations based on developments in the coming quarters.

Measures to protect our personnel and limit contagion

The COVID-19 outbreak entails an enormous challenge to people's lives and health world over. CellaVision has implemented the COVID-19-related safety regulations issued by the authorities in all parts of our business. This means for example that to a great extent we are conducting our operations in a virtual work environment by working at home and meeting digitally.

Significant short-term effects of COVID-19-pandemic

We see considerable short-term effects of COVID-19, not least in a decline of the number of blood tests in most markets, but also due to our systems being installation products that require our partners to have physical access to hospitals and laboratories, which is difficult at present. The current situation means that we expect the COVID-19-pandemic to have a negative impact on CellaVision's sales and earnings over several months. In the first quarter we have seen effects in the form of a lower installation rate in countries that were hit by COVID-19 at an early stage, above all China. As contagion decreased in China, we noted at the end of the quarter that demand for our products in the Chinese market started to approach normal levels, which is very encouraging. We also expect that sales of reagents will be affected to a considerably lesser extent, since this is a consumable that is used for all blood analysis.

No immediate impact on production

In the long term we also see some challenges regarding our supply chain, since we purchase components and raw materials from many countries. In the short term we see good prospects of maintaining production, but if there is a prolonged effect on society and supply chains it will be a challenge for us.

Focus on cash flow and liquidity

CellaVision has an efficient and scalable business model, using distribution and manufacturing partners, which means that our fixed costs for sales and production are limited. Due to the uncertainty about how long the COVID-19-pandemic will last and how far-reaching the effects will be, CellaVision has decided to put extra focus on safeguarding liquidity. We have therefore implemented several carefully considered actions, where among other things, the Board of Directors has withdrawn the original dividend proposal and proposed instead that no dividend be paid for 2019 (SEK 1.50 / share) at the AGM 2020. We have also decided to postpone the AGM until at the latest June 30. We will publish a new notice as soon as the new date is set.

Unchanged great need for CellaVision's solutions

The underlying need for digital morphology is unchanged. Treatment of patients with blood-related diseases such as leukemia, lymphoma and myeloma have high priority. This means that we make the assessment that our market will return to previous levels when the COVID-19-pandemic sounded.

Further focus on digitization

One of the effects of the COVID-19-pandemic could be the further acceleration of the digitization that has been in progress for some time. The pandemic has made dramatically clear the major opportunities and benefits of digitization, which could in the long term have positive effects on our business. This is because our solutions make it possible for healthcare professionals such as pathologists and biomedical analysts to work remotely.

Market development

CellaVision made a stable start to 2020, but the COVID-19-pandemic will impact our sales during the year. We have already seen an initial impact in APAC and the effects will also be significant in Americas and EMEA.

Americas reported a stable first quarter. Sales were SEK 54.1 million (52.5), representing a growth of 3 percent, compared with a very strong first quarter 2019. Sales of analyzers continued to be good in North America and we also see continuously stronger sales of applications and software.

EMEA reported weaker organic growth in the first quarter of 2020. Including sales of RAL’s products, sales grew by 42 percent. Total sales were SEK 54.7 million (38.5). In the past two years we have sharply increased our activities in EMEA, mainly by establishing more new market support organizations. These teams are now becoming operational and during the quarter we also established ourselves in Russia. The CellaVision® DC-1 has now been launched and is available for sale in most European markets.

APAC reported a strong quarter, with sales of SEK 25.6 million (12.9), corresponding to an increase of 99 percent compared with a weak first quarter 2019. We see a continued high activity level in the region, with important marketing initiatives on all our key markets, not least China, Japan and Australia.

The integration of RAL

The acquisition of RAL was formally completed on October 1, 2019 and since then RAL is integrated into CellaVision. CellaVision's and RAL’s offers will step by step be jointly marketed in all markets where CellaVision is represented in the form of market support organizations. We will also integrate CellaVision's and RAL’s offers with each other to enable us to offer optimum staining protocols for digital morphology. This work will continue throughout 2020.

Geographic expansion

During the quarter, we completed our establishment in Russia. In total, CellaVision now has 18 local organizations that offer market support in more than 40 countries.


CellaVision® DC-1 has now entered full-scale series production after a gradual upscaling of production in 2019. Provided that the effects of the COVID-19-pandemic on our supply chain are limited, our focus will now be on meeting our customers’ desired delivery dates. However, an extra production control measure will be retained in the first half of 2020 to ensure high and stable production quality.

During the first quarter of 2020, the CellaVision® DC-1 was commercially approved in several important markets in addition to the EU countries. During the quarter, we also submitted an application to the FDA (510k) for market clearance in the USA for CellaVision® DC-1. The process for market approval in China for CellaVision® DC-1 was also initiated in the quarter.

Our long-term strategy is firm

Geographic expansion and R&D are CellaVision's core areas. When the effects of COVID-19 have abated and the world returned to a more normalized state, we will continue to invest in innovation and geographical expansion to secure our future position in our market segment and maintain strong growth.

Zlatko Rihter,
President and CEO

Key Ratio´s
(MSEK)Jan-Mar 2020Jan-Mar 2019Jan-Dec 2019
Net sales134,4103,9461,8
Gross profit92,377,0336,7
EBITDA margin, %313732
Profit/loss before tax25,534,8129,2
Total cash flow-5,245,0-67,3
Equity ratio, %577554

Questions concerning the interim report can be addressed to:
Zlatko Rihter, VD, CellaVision AB, Tel: 0733-62 11 06,
E-mail: zlatko.rihter@cellavision.se

Magnus Blixt, CFO, CellaVision AB, Tel: 0708-33 81 68
E-mail: magnus.blixt@cellavision.se

About CellaVision
CellaVision is an innovative, global medical technology company that develops and sells its own leading systems for routine analysis of blood and other body fluids in health care services. The products replace manual laboratory work, and secure and support effective workflows and skills development within and between hospitals. The company has leading-edge expertise in image analysis, artificial intelligence and automated microscopy. Sales are via global partners with support from the parent company in Lund and by the company´s 18 local market support organizations covering 40 countries. In 2019, sales were SEK 462 million and the company's growth target is 15 % per year over an economic cycle. CellaVision's registered office is in Lund, Sweden. The share is listed on the Nasdaq Stockholm, Mid Cap list.
Read more at www.cellavision.com

This information constitutes information that CellaVision AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication at 8:20 a.m. CET on April 22, 2020.


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