Embla Medical posted its interim first quarter (1Q) results during a conference call on April 23.
Highlights included:
- Sales amounted to (USD) $200 million and grew by 10 percent. Organic growth was 7 percent, compared to 9 percent during the same quarter in 2023.
- Prosthetics and neuro orthotics sales grew by 10 percent organic, bracing and supports sales grew by 1 percent organic, and patient care sales grew by 6 percent organic. Growth is attributed to strong volume growth and sales of high-end solutions. Growth was driven by strong sales in Europe, the Middle East, and Africa (EMEA) while sales in Americas and Asia-Pacific were soft.
- Gross profit margin before special items was 62 percent in 1Q 2024, same as in 1Q 2023. Cost reduction initiatives were executed in late in the first quarter to lower unit cost in manufacturing.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) before special items was $33 million and EBITDA margin before special items was 17 percent, compared to 16 percent a year ago. EBITDA margin before special items was positively impacted by scalability in operating expenses while currency movements negatively impacted the EBITDA margin by 70 basis points.
- Net profit was $8 million and net profit margin was 4 percent of sales, compared to 6 percent of sales in 1Q 2023. Net profit was impacted by the expense of special items in the quarter.
- Free cash flow was negative by $7 million in the 1Q. Free cash flow is seasonally low in the first quarter of the year and was impacted by capital expenditure investments.
- Net interest-bearing debt/EBITDA before special items was 3.3x at the end of 1Q (2.9x excluding leases), above the target ratio of 2.0-3.0x as expected due to the acquisition of Fior & Gentz in January.
Other highlights included:
- On March 13, Embla Medical was established as the new name of the parent organization to leading product brands Össur, College Park, and Fior & Gentz in addition to a portfolio of patient care facilities. Embla Medical is listed on Nasdaq Copenhagen and the trade ticker was changed to EMBLA on April 8 (previously OSSR).
- On January 18, the Centers for Medicare & Medicaid Services (CMS) published a draft proposal that would grant K2 (low active) patients access to prosthetic knees and feet previously restricted to K3-K4 (high active) patients. The effective date for these proposed changes has not been announced.
2024 outlook for Embla:
- Organic sales growth guidance is unchanged at 5-8 percent.
- EBITDA margin before special items guidance is unchanged at 19-20 percent.
“Sales growth was strong in the first quarter or 10 percent, and organic growth was seven percent, driven by volume growth in prosthetics and neuro orthotics and patient care,” Sveinn Sölvason, Embla president and CEO said. “Growth was driven by a strong performance in EMEA, but the year started off slowly in Americas and the Asia Pacific region. Financial performance of Fior & Gentz, which we acquired in January, was strong in the first quarter post-acquisition, and work has begun to leverage our global sales infrastructure to harvest commercial synergies.”
