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Good profitability and stabilization in two regions ended a year characterized by COVID-19

CellaVisions Year-end Bulletin for 2020

1 October-31 December 2020
Net sales decreased by 13% to SEK 131.0 million (149.8).
Sales decreased organically by 6% (+7).
EBITDA amounted to SEK 40.8 million (41.5).
EBITDA margin amounted to 31% (28).
Profit before tax amounted to SEK 36.4 million (35.0).
Earnings per share before and after dilution were SEK 1.20 (1.02).
Cash flow from operating activities amounted to SEK 25.6 million (24.0).

1 January-31 December 2020
Net sales increased by 2% to SEK 471.4 million (461.8). 
Sales decreased organically by 10% (+15).
EBITDA amounted to SEK 142.9 million (146.7). 
EBITDA margin amounted to 30% (32).
Profit before tax amounted to SEK 112.2 million (129.2). 
Earnings per share before and after dilution were SEK 3.75 (4.16). 
Cash flow from operating activities amounted to SEK 71.1 million (125.0). 
The Board of Directors proposes a dividend of SEK 0.75 per share for 2020 (0.00).

" Our solutions in digitization and automation are in line with the accelerated digitization trend caused by the ongoing pandemic.”
Magnus Blixt, Acting President & CEO

CEO’s comment
The COVID-19 pandemic also had a negative impact on sales during the fourth quarter of the year, meanwhile we could see continued signs of recovery in several of our markets. Sales during the quarter amounted to SEK 131.0 M (149.8), corresponding to a negative organic growth of six percent (7). The development varied greatly between our different regions compared with the fourth quarter of 2019. In the Americas, the development was weak with negative growth of 43 percent, while we saw good growth in APAC, increasing by 23 percent. In EMEA, the development was positive with a growth of six percent. The currency impact was negative by six percent in the quarter. EBITDA in the quarter amounted to SEK 40.8 M (41.5), corresponding to an EBITDA margin of 31 percent (28) and the Group's total cash flow for the quarter amounted to SEK 9.2 M (-116.2).
For the full year 2020, sales amounted to SEK 471.4 million (461.8), corresponding to a negative organic growth of ten percent. The currency effect for the full year was negative by three percent and the structural effect from the acquisition of RAL was 15 percent EBITDA amounted to SEK 142.9 M (146.7), which corresponds to an EBITDA margin of 30 percent (32).

Effects of the COVID-19 pandemic
The effect of the COVID-19 pandemic in the hematology segment was significant also during the fourth quarter of the year, both for CellaVision and our partners. CellaVision's product portfolio largely consists of products requiring installation, which means that our partners need access to hospitals and laboratories. The access has been possible to a limited extent during the fourth quarter. In addition to installation products, the product portfolio consists of reagents that have not been affected to the same extent. Travel restrictions have negatively affected the sales process to new customers. It has been particularly clear that the lack of physical meetings has limited the launch of the new product, CellaVision® DC-1 (DC-1).

Well-equipped to accelerate the business
CellaVision responded quickly to the COVID-19 pandemic and implemented several measures on the cost side early on. Despite the cost savings, priority projects have continued with undiminished activity and we have not initiated any short-term allowance for our employees during the year. With the good profitability of 2020, given the circumstances, we will in 2021 be able to accelerate operations as soon as the market situation stabilizes.
Furthermore, DC-1 received market clearance in the USA, meaning that the product is now commercially available. Since 2019, CellaVision has developed the product portfolio, resulting in addition to systems for large laboratories, also includes systems for small and medium-sized laboratories as well as products for sample preparation and reagents, positioning us well for the future.

Positive signals from the market
Due to the pandemic, in 2020 it has been difficult for our partners to gain access to hospitals and laboratories to carry out installations of new hematology systems, which has affected sales. The impact of the COVID-19 pandemic remains clearly negative, but the market has improved during the last quarter of the year.
Our solutions in digitization and automation are in line with the accelerated digitization trend caused by the ongoing pandemic. During the pandemic, we see that the proportion of laboratories choosing digital analysis remains high. The underlying need for digital morphology is the same as before the pandemic because our technology is used to diagnose severe and high-priority blood-related diseases such as leukemia and myeloma. The market is difficult to assess in the near future, but as soon as the ongoing vaccination programs have an effect on the spread of infection, normalization of sales should follow.

Market development
Our sales in the Americas were negatively impacted by the second wave of the COVID-19 pandemic. In combination with challenging comparative figures, sales decreased by 43 percent and sales amounted to SEK 37.6 million (65.6). At the end of the quarter, vaccination of COVID-19 began in the United States, but we expect a continued difficult situation during the beginning of 2021. For the full year 2020, sales decreased by 34 percent.
Growth in EMEA amounted to six percent and sales increased to SEK 64.4 M (60.6) in the quarter. The region is still affected by the COVID-19 pandemic, even though we saw an improvement in the market during the quarter with an increased number of installations compared with previous quarters. For the full year 2020, sales growth amounted to 44 percent. Excluding structural effects, sales decreased by four percent.
APAC had a strong development in the quarter, after a weaker third quarter, with growth of 23 percent compared to the same period last year. Sales increased to SEK 29.0 M (23.6) and it is primarily the key markets China and Japan that have driven the positive development. In other parts of the region, including Australia and India, activities continued to be limited by the COVID-19 pandemic. For the full year 2020, sales growth amounted to 29 percent.

Careful prioritization of activities and investments
CellaVision closely monitors the development of the COVID-19 pandemic and, if necessary, we will adjust our operations based on how the global economy recovers in the coming quarters. Despite the pandemic, in 2020 we will continue our consistent investments in research and development to be able to accelerate when the world situation stabilizes. In order to accelerate quickly, we have chosen to keep our organization intact with clearly described goals and priorities instead of initiating short-term allowance. During the final quarter of the year, investments in R&D amounted to 15 percent of sales. Our investments are important to ensure that we are at the forefront of development and are equipped to meet future demands and challenges.

RAL / Reagents
The commercial integration of RAL is going according to plan and we continue to launch reagents in new countries while we continue to work on optimizing staining protocols. Our objectives with the acquisition of RAL, with a broadened product range, a larger market, efficient expansion of sales of RAL's hematology products to new markets and expansion to nearby analysis areas outside hematology remain. During the quarter, we worked, among other things, on calibrating and integrating our reagents and associated products according to the protocol standard that prevails in Asia.

Geographical expansion
CellaVision is awaiting further establishments of local market support organizations until the effects of the COVID-19 pandemic subside. CellaVision currently has local marketing organizations in 18 countries that deliver a direct presence in 40 countries. Our local market organizations are an important part of the sales successes we have had in recent years.

During the quarter, DC-1 received market clearance in the US, which means that the product is now commercially available for the US market. This is an important step in the global commercialization process of the DC-1, aimed for small and medium-sized laboratories. The registration process for market clearance of the DC-1 in China is proceeding according to plan.

Our long-term strategy remains unchanged
Geographical expansion and innovation are CellaVision's core areas. We will continue to invest in innovation and geographical expansion to secure our position and establish strong growth as soon as the effects of COVID-19 subside.
Since Zlatko Rihter left CellaVision, I have temporarily taken over the role of President and CEO and can state that our new organization with two product divisions and a sales organization is working as planned. I would also like to take this opportunity to welcome Simon Østergaard as the new President and CEO of CellaVision. Simon will take up his position in March 2021.
Magnus Blixt,
Acting President and CEO

Key Ratio´s                                             Oct-Dec                                          Full year
Net sales131.0149.8471.4461.8
Gross profit85.899.9313.0336.7
EBITDA margin, %31283032
Profit/loss before tax36.435.0112.2129.2
Total cash flow9.2-116.20.9-67.3
Equity ratio, %64546454

Questions concerning the interim report can be addressed to:

Magnus Blixt, acting CEO, CellaVision AB, Tel: 0708-33 81 68