Founded in 1997 and headquartered in Basel, Switzerland, Medartis is one of the world's leading manufacturers and providers of medical devices and solutions for the treatment of bone fractures of the upper and lower extremities as well as the head. Medartis employs approx. 830 people at its 14 locations and offers products in over 50 countries worldwide. Medartis is committed to providing surgeons and surgical staff with procedure- and anatomy-specific solutions and world-class services that lead to excellent treatment outcomes.
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Medartis Group Interim Consolidated Financial Statements
+18.0% growth excl. NSI at CER 2)
98 people join us from NSI
Strong growth in EMEA with
Cash & equivalents (end of period)
3 Key Financial Figures
Medartis generated sales of CHF 88.4 million in the first half of 2022 with net sales growth of 20.1% (CER). Europe, the Middle East and Africa (EMEA) made the largest contribution to this growth with an increase of 21.4%, while Latin America grew the most (+47.1%). Sales in APAC (+6.0%) were still impacted by Covid-related restrictions. The US business grew 19.8% from a strong comparable base in the previous year, but did not reach internal expectations during the initial integration phase. .
Medartis' underlying gross profit in H1 rose 18.8%, with the respective gross margin reaching almost 84%. The reported EBITDA margin stood at 11.2% and was impacted by M&A transaction, integration, and US set-up costs (-5.1 percentage points) as well as currency exchange rate effects (-0.8 percentage points). Excluding these, the underlying EBITDA of CHF 14.1 million resulted in a corresponding margin of 16.3%. Mainly due to these NSI costs and the related contingent consideration charges, the company reported only a modest net profit in the first half.
The company commented that the merger of its two US businesses and the transformation into a larger US organisation is proceeding according to plan. The first NSI products will be launched in Q4. Plans call for a limited market release of the 'Lapidus Cut Guide' for the surgical treatment of bunion deformity and 'CalcShift' for displacement osteotomies of the calcaneus. These technologies are just two of several new lower extremity products scheduled for launch in the US in 2023.
In 2022, Medartis continued to invest in its people and markets. Medartis' headcount increased by 28.2% over the year, from 649 to 832 employees. This not only affected the size and capabilities of the sales, T&E and customer service teams, but also other strategic functions. More than half of the employees joined the company as part of the NSI acquisition. In addition, 85 new positions were created, mainly in growth markets to drive future growth. At the company's headquarters in Switzerland, the number of employees remained largely unchanged at 295.
4) To facilitate the underlying comparison between two periods, percentage changes in these tables are always made using the restated values in 2021.
EMEA: Continued market share gains in the wrist segment
In EMEA, Medartis reported H1 revenues of CHF 45.5 million, reflecting year-on-year growth of 21.4% (CER). Adverse currency effects reduced the increase in Swiss francs by more than 5 percentage points. All direct markets in the region recorded strong double-digit growth, meeting or even exceeding expectations. Growth in Spain, which was only established as a subsidiary at the beginning of 2021, was particularly impressive. The team on the Iberian peninsula were about to reinforce their organisation and processes. The regional distributor markets in EMEA lagged behind the strong trend in the subsidiaries mainly due to Covid-related restocking in the previous year. In most European countries, Covid-19 restrictions were largely lifted and did not have any significant impact on business. However, the relatively mild winter and staff shortages in the OR resulted in a lower case volume.
Overall performance in EMEA was driven by continued market share gains in the wrist segment, where Medartis claims to have the most comprehensive portfolio in the market. In hand indications, many new customers were attracted by the innovative KeriMedical portfolio, particularly the TOUCH® thumb prosthesis. The solutions for shoulder fractures and deformities were also well received by customers, while potential in the elbow category has not yet been fully exploited. Lower extremities saw dynamic growth, reflecting the recovery of elective surgery after the Covid lockdown period. The systematic roll-out of the latest CMF generation 'Modus 2' continued in 2022. In that year, sales also benefited from the introduction of 'Modus 2' in the UK. An important component of the overall solution is CMX, the digital service for patient-specific case planning and surgical aids.
US: Fundamental growth drivers remain intact
In the first half of the year, sales in the US grew 19.8% at CER, lifting regional sales to CHF 18.3 million, which is slightly behind plan. This number includes a CHF 1.5 million sales contribution from the acquired NSI business. Organic growth faced strong comparatives in H1 2021 (+46.3%), when the business benefitted from pent-up demand following the normalisation of the Covid-19 situation. While the general pandemic situation returned to greater normality over the course of 2022, many hospitals and outpatient care centres (ASCs) experienced staff shortages in the first six months due to Omicron infections or quarantine. Growth momentum eased as a result of this environment and the management transition, but the fundamental growth drivers remain intact.
Upper extremities, which represent the largest segment of the company's US business, grew at a double-digit pace, with strong contributions from wrist, forearm and shoulder products. In the meantime, the company has also received FDA approval for KERIFLEX®. Lower extremities only advanced at a mid-single digit rate. Growth in 'other products' was driven by cannulated screws. With the launch of NSI's lower extremity products and the increased focus on this segment, Medartis expects a significant acceleration and market share gains for lower extremities in 2023 and beyond.
Roles, responsibilities and the sales distributor network have been reviewed based on their performance and partially adapted. The new US management has also realigned sales execution to improve sales force productivity in future periods. Integration has begun following the merger of the two local organisations. The two R&D teams in Basel and Warsaw have consolidated their product development pipelines. R&A, quality assurance, T&E, logistics and IT processes are being aligned to prepare for the upcoming product launches. To support the many new product launches, training and education capacity has been increased and the regional marketing team has been strengthened to amplify brand awareness and to provide patient information. With the support of senior Group management, the new leadership spent a significant amount of time visiting key customers and KOLs of both companies.
APAC: Growth slowed due to Covid-related restrictions
Sales in the Asia Pacific region (APAC) expanded 6.0% (CER) in H1, lifting revenue to CHF 15.8 million. In Australia and New Zealand, the region's largest business, growth had been impressive in H1 2021, but significantly slowed thereafter due to Covid-related restrictions. Lockdown measures and contact restrictions led to fewer trauma-related accidents and a decrease in elective surgeries, especially in the private sector. As a result, Australia posted the same level of sales as in the same period a year ago. In Japan, the company grew both its direct and distribution business by more than 30% as it benefited from robust demand for hand and wrist products. In Q2, the company hired a dedicated sales manager for the regional distributor markets, who will support growth in APAC in H2 and beyond. In addition, the company also indicated that it will continue to invest in further growth initiatives.
After the Chinese government introduced a centralised procurement system (VBP) for medical device products in H1, selling prices on the market have dropped significantly and leaves Medartis little room to grow profitably in the future. In response, the company has carefully reviewed its strategic positioning and decided to discontinue its local operations in Q3. This decision resulted in product returns from customers.
In APAC, growth in the upper extremities segment was also stronger than in the foot & ankle segment. As the majority of forefoot and metatarsal surgeries are elective procedures, the lower limb area was more affected by the postponement of surgeries than the wrist and upper limb area, where trauma procedures predominate. As a result, demand for elective midfoot and forefoot products in APAC declined compared to the same period last year. The mandible and orthognathic categories advanced rapidly, boosted by strong instrument and implant sales for the 'Modus 2' launch in Japan.
The Latin American (LATAM) region achieved another strong all-around performance in the first six months, with growth of 47.1% (CER). Positive currency effects lifted growth by an additional 6 percentage points, as revenue reached CHF 8.8 million. The performance was fuelled by Brazil and further impetus came from Mexico, where Medartis won an important public tender. In Brazil, the demand for CMF products was especially noteworthy. Regional performance was also characterised by strong orders in distributor markets, which indicates future growth potential.
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Medartis Holding AG published this content on 16 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 August 2022 05:21:06 UTC.