Össur, Reports Full Year 2018 Financial Results, 2019 Outlook

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Össur, Reykjavik, Iceland, has announced its financial results for the full year ended December 31, 2018, as well as projections for 2019.

Highlights for 2018 include:

Gross profit margin in 2018 totaled $387 million, or 63 percent of sales compared to $355 million or 62 percent of sales in 2017. The increase is driven by positive impact from changes in product mix, stable unit cost, and savings from the ongoing efficiency initiatives.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin before special items totaled $115 million or 19 percent of sales compared to an EBITDA margin before special items of $103 million or 18 percent of sales in 2017. The increase in EBITDA margin is driven by positive impact from changes in product mix, scalability in operations, savings from the ongoing efficiency initiatives, and currency movements.

Net profit totaled $80 million or 13 percent of sales in 2018, compared to $58 million or 10 percent of sales in 2017, an increase of 38 percent in the period.

Sales performance

Total sales in 2018 amounted to $613 million compared to $569 million in 2017, corresponding to 5 percent organic growth and 8 percent reported growth.

Operational expenses

Excluding special items, operating expenses totaled $296 million or 48 percent of sales compared to $274 million or 48 percent of sales in 2017.

Cash Flow

Cash generated by operations amounted to $92 million or 15 percent of sales, compared to $90 million or 16 percent of sales in 2017. Cash on hand at the end of 2018 totaled $56 million, compared with $37 million in 2017, or an increase of 19 percent. Cash generated by operations was negatively impacted by NWC investments and a higher income tax paid than in the comparable year.

Capital expenditure in 2018 amounted to $31 million or 5 percent of sales, compared to $19 million or 3 percent of sales in 2017. Capital expenditures were relatively high due to investments related to the ongoing efficiency initiatives in addition to various investments in leasehold improvements and integration of a new CRM software.

Acquisitions

Of the four acquisitions Össur made in 2018, only two contributed to operating income for the fourth quarter 2018. Sales in the four acquired companies on a full year basis amount to roughly $70 million combined. Össur said it expects the acquired companies to have a slightly negative impact on its EBITDA margin in 2019.

Outlook for 2019

Organic sales growth is expected to be in the range of 4 percent to 5 percent. Growth in prosthetics is estimated to be at or above estimated market growth this year. In bracing and supports, the company expects to see a continued good performance in high-end products, and growth is estimated to be in line with estimated market growth in 2019.