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CellaVision AB: Strong profitability and positive development in Europe

1 January-31 March 2021
Net sales were flat versus last year, SEK 134.0 million (134.4).
Sales increased organically by 7% (+1), currency effect -7%
EBITDA amounted to SEK 46.2 million (41.2).
EBITDA margin amounted to 34% (31).
Profit before tax amounted to SEK 35.6 million (25.5).
Earnings per share before and after dilution were SEK 1.19 (0.85).
Cash flow from operating activities amounted to SEK 26.2 million (15.4).

Significant events after the period close
CellaVision acquired the exclusive rights to a patent portfolio containing a new microscopy technology, Fourier Ptychographic Microscopy, from Clearbridge BioPhotonics. The acquisition gives CellaVision access to and control over an interesting future technology. The acquisition price amounted to a cash purchase price of SEK 28.7 million.

” Despite the global pandemic the company has increased its strong profitability and generated a strong operating cashflow while not slowing down on R&D investments to keep strengthening the innovation pipeline.”
Simon Østergaard, President and CEO

CEO’s comment
The COVID-19 pandemic continued to affect the CellaVision business in the first quarter of the year, but the impact varied greatly between our different regions. Sales for the Group amounted to SEK 134.0m (134.4), representing an organic growth of 7 percent. In Americas, the development was weak with negative growth of 23 percent, while we had a decline of 6 percent in APAC. EMEA had strong growth of 24 percent, resulting in the region’s best quarter ever. The currency impact was negative by 7 percent in the quarter. EBITDA in the quarter amounted to SEK 46.2m (41.2), corresponding to an EBITDA margin of 34 percent (31). The Group's total cash flow for the quarter amounted to SEK 8.8m (-5.2).

Effects of the COVID-19 pandemic are expected to diminish as the year progresses
The effect of COVID-19 in the hematology segment has been significant since the start of the pandemic. Travel and meeting restrictions have affected sales negatively, and the absence of physical meetings has also hampered the launch of CellaVision® DC-1 (DC1) as well as the introduction of the RAL portfolio of reagents to markets outside of EMEA.
However, in the fourth quarter of 2020, we started to receive more positive signals from the market, and with the progress of vaccination programs we expect to see a gradual improvement of market conditions throughout the year although the normalization is expected to vary across and within the different regions.

Well-equipped to accelerate the business
CellaVision responded quickly to the COVID-19 pandemic and implemented several cost saving measures. This allowed us to continue to run our priority projects with undiminished activity and at the same time maintain a sound profitability.
During the pandemic, we have kept our organization intact, and we are now ready to accelerate our business activities when the markets begin to open up. Our solutions support the accelerated digitization trend caused by the ongoing pandemic, and we see long-term growth opportunities for the DC-1 in satellite laboratories, and for RAL’s reagents in markets outside of Europe.

Market development
For the region as a whole, sales in the quarter amounted to SEK 41,8m (54.1). Our sales in Americas continued to be negatively impacted by the COVID-19 pandemic in the first quarter of 2021, and sales decreased by 23 percent compared to the first quarter of 2020, which was unaffected by the pandemic. The US vaccination program has progressed rapidly in the quarter, and it is now possible to visit customers to promote our solutions within digital morphology, however we still foresee a continued period of time where many customer interactions will take place virtually. The emerging possibility to meet with customers will also have a positive impact on the launch of the DC-1 and the introduction of the RAL portfolio of reagents. In Central and South America, the impact of the pandemic remains strong, but despite this we experienced multiple requests for our digital equipment, and we expect further growth in those areas.
Sales in EMEA grew by 24 percent to SEK 68.1m (54.7) and surpassed the fourth quarter of 2020, which until then was the strongest quarter. This positive development was especially distinct in our two main markets Germany and France, but strong numbers were recorded throughout the region. The expansion of CellaVision’s market support organization combined with a strong performance of RAL products and the renewed activities of our distribution partners led to this record sales. The re-launch of the DC-1 in EMEA helps CellaVision to further strengthen its position within digital morphology as it will open new possibilities for connecting smaller laboratories with the main hospitals. By connecting the laboratories in networks, consultancy advice is enabled via the CellaVision ® Remote Review Software. The most significant uncertainty in EMEA is what impact new lockdowns could have on future sales activities.
In APAC, sales decreased by 6 percent to SEK 24.1m (25.6). Our key markets continue to perform well although slightly lower than last year. Australia, Korea and especially India continues to be affected by the COVID-19 pandemic and our field activities are limited in these markets. The launch of the RAL reagents with ongoing evaluations in different countries continued in the quarter. The launch of the DC-1 was negatively impacted by the COVID-19 pandemic, but positive comments received from the ongoing evaluations, display the value of smaller instruments for countries such as Indonesia, Australia, and India.

Geographical expansion temporarily on hold
Since the start of the pandemic, further establishments of local market support organizations have been put on hold, but we have plans for new establishments that we will execute when the time is right. CellaVision currently has local market support organizations in 18 countries that deliver a direct presence in more than 40 countries.

Throughout the pandemic, CellaVision has continued to invest in its innovation activities. Our latest new product, the DC-1, is now cleared for sales in all of our markets except China, where the initiated registration process is proceeding. During the first quarter of 2021, investments in R&D amounted to 18 percent of sales (16). Our investments in innovation are important to ensure that we are at the forefront of development and are equipped to meet future demands and challenges.

Acquisition of novel microscopy technology
In the beginning of April, CellaVision acquired the exclusive rights to a novel microscopy technology from Clearbridge BioPhotonics. The technology provides a method for creating high-resolution images with low-magnification optics. This enables images of large areas to be acquired at high resolution with higher speed than using conventional digital microscopy. The technology has potential to be used to develop future automated microscopes, with applications in both hematology and adjacent areas. The acquisition is a long-term investment aiming to strengthen CellaVision's innovation opportunities and will have no material impact on sales or EBITDA in the near-term future. The acquired patent rights provide protection in CellaVision's key geographies for more than 12 years. The acquisition has a cash purchase price of SEK 28.7m.
I would like to end this text on a more personal note and reflect on my first impressions of CellaVision. First of all, I would like to thank everybody for the very warm welcome I have received from the entire team and our different partners and distributors. It is very inspiring to join CellaVision and its innovative and driven team. CellaVision has a very strong culture in innovation and performance, and when I look at the company’s history, I see a string of good business decisions. Our mission is to build on the strong position we have established within hematology and continue to expand CellaVision’s momentum via innovation and development, while also expanding our market position via continued adoption and extended use of our digital cell morphology solutions worldwide.

Lastly, I would like to thank our Chairman Sören Mellstig for his contributions during past five years in making CellaVision the company it is today. At the AGM April 29, Sören will leave the Board of Directors.

Simon Østergaard,
President and CEO

 Key RatiosJan-MarJan-MarFull year
Net sales134.0134.4471.4
Gross profit93.092.3313.0
EBITDA margin, %343130
Profit/loss before tax35.625.5112.2
Total cash flow8.8-5.20.9
Equity ratio, %655764

Questions concerning the interim report can be addressed to:
Simon Østergaard, CEO, CellaVision AB, Tel: +46 70 036 37 92 

Magnus Blixt, CFO, CellaVision AB, Tel: +46 708-33 81 68