Embla Medical hf: Interim Report Q2 2024

Rhea-AI Summary

Embla Medical reported its highest ever quarterly sales of USD 217 million in Q2 2024, with 6% organic growth. The company's EBITDA was USD 47 million with a 22% EBITDA margin. Strong performance was noted in Prosthetics & Neuro Orthotics and Patient Care, particularly in EMEA. Medicare in the US finalized a proposal granting active K2 patients access to prosthetic knees, effective September 1, 2024. Embla launched two new bionic knee products: NAVii® by Össur and Icon® by College Park. The company narrowed its full-year guidance to 6-8% organic sales growth and ~20% EBITDA margin before special items. Embla also announced plans to unite its Patient Care facilities under a new brand, ForMotion™.

Positive

• Highest ever quarterly sales of USD 217 million
• Organic growth of 6% in Q2 2024
• EBITDA margin increased to 22% from 19% in Q2 2023
• Gross profit margin improved to 64% from 63% in Q2 2023
• Net profit margin increased to 9% from 8% in Q2 2023
• Free cash flow improved to 8% of sales from 5% in Q2 2023
• Launch of new bionic knee solutions: NAVii® and Icon®
• Medicare's proposal to expand prosthetic knee access for K2 patients

Negative

• Soft sales performance in Americas region
• NIBD/EBITDA ratio of 3.1x, approaching high-end of target ratio

Insights

Financial Analyst

Embla Medical's Q2 2024 results are quite compelling from a financial standpoint. The company achieved its highest ever quarterly sales of USD 217 million, with a healthy organic growth rate of 6%. This is particularly impressive given the strong 11% growth comparison from Q2 2023. The EBITDA margin also saw an improvement to 22%, up from 19% last year. This indicates effective cost control measures and an improved product mix. From a profitability perspective, the net profit margin increased to 9% from 8% last year, signaling strong financial health and efficient operations. The free cash flow at 8% of sales, compared to 5% last year, further underscores the robust financial performance. Moreover, the narrowing of the full-year guidance to 6-8% organic growth and around 20% EBITDA margin reflects management's confidence in sustained performance. For investors, these metrics suggest a stable and increasingly profitable company, which could be attractive for both short-term gains and long-term investment.

Market Research Analyst

The market dynamics for Embla Medical are also quite favorable. The company has seen strong performance in its core areas, such as Prosthetics & Neuro Orthotics and Patient Care, which grew by 6% and 9%, respectively. This growth is driven by continued momentum in the EMEA region and strong APAC sales, despite some softness in the Americas. Notably, the launch of new bionic knee solutions like NAVii® by Össur and Icon® by College Park adds a competitive edge in the high active amputees market. Additionally, the finalized Medicare proposal granting K2 amputees access to more functional prosthetic knees and feet could significantly expand the addressable market in the US. This regulatory change is a important driver that could lead to increased sales and market penetration in the coming quarters. For retail investors, these strategic moves and favorable market conditions provide a positive outlook for the company's growth trajectory.

COPENHAGEN, Denmark, July 23, 2024 /PRNewswire/ --         

• Delivering our highest ever quarterly sales amounting to USD 217 million
• Organic growth of 6% for Q2 driven strong performance in Prosthetics & Neuro Orthotics and Patient Care
• EBITDA was USD 47 million and EBITDA margin was 22% for Q2
• Medicare in the US has finalized a proposal that grants active K2 patients access to prosthetic knees
• New exciting innovation launched in bionics with NAVii^® by Össur and Icon^® by College Park

Announcement no. 11/2024
Interim report Q2 2024
23 July 2024

Sveinn Sölvason, President and CEO, comments:

"We delivered our highest ever quarterly sales in Q2 2024 with sales amounting to USD 217 million. Organic growth was 6% for Q2 and local currency growth 9% with continued strong momentum in EMEA, driven by a strong performance in Prosthetics & Neuro Orthotics and Patient Care. In our Bracing & Supports business growth was more modest for the quarter.

Our EBITDA margin came in strong for the quarter at 22%, supported by the cost reduction initiatives implemented in manufacturing in addition to a contribution from positive product mix and scalability. Toward the end of the quarter we introduced two new bionic knee products, NAVii^® by Össur and Icon^® by College Park, and we are very excited about their potential in improving people's mobility.

Medicare in the US has finalized a proposal which will create a pathway for K2 amputees, which account for a significant part of the amputee population, to utilize more functional knee and foot solutions than they have historically had access to. This is great news, and we look forward to helping these individuals become more active and able in their daily activities.

We are executing well on our Growth'27 strategy. We are narrowing our full-year guidance to 6-8% organic sales growth and ~20% EBITDA margin before special items, as we expect continued good progress for the remainder of the year."

Highlights Q2 2024

• Sales amounted to USD 217 million and organic growth was 6%, compared to a strong comparison of 11% in Q2 2023.
• Prosthetics & Neuro Orthotics sales grew by 6% organically, Patient Care grew by 9%, and Bracing & Supports grew by 2%. Growth is attributed to continued strong performance in EMEA. APAC also delivered strong growth while sales in Americas were soft.
• Gross profit margin was 64%, compared to 63% in Q2 2023. The increase in gross profit can partly be ascribed to cost reduction initiatives in manufacturing implemented during Q1 as well as positive product mix and scalability.
• EBITDA was USD 47 million and EBITDA margin was 22% for Q2, compared to 19% for the same period last year. Increasing gross profit margin and cost control contributed to increased profitability despite slight negative currency effect.
• Net profit amounted to USD 20 million and net profit margin was 9% of sales, compared to 8% of sales in Q2 2023.
• Free cash flow amounted to USD 18 million or 8% of sales, compared to 5% of sales in Q2 2023. Free cash flow was strong with solid operating results and increasing profitability.
• NIBD/EBITDA was 3.1x at the end of Q2 2024 approaching the high-end of our target ratio for share buybacks at 2.0-3.0x.

Other highlights

• Medicare in the US has finalized a proposal that grants active K2 patients access to prosthetic knees and feet previously restricted to K3-K4 patients. The finalized policy will take effect on 1 September 2024.
• Launch of new bionic knee solutions for high active amputees during Q2 2024. Icon^®, a new microprocessor-based knee solution launched by College Park featuring responsive sensors and NAVii^® by Össur, a fully waterproof bionic knee featuring a powerful actuator provided to support consistency for stair and ramp descent.
• On 16 July 2024, Embla Medical announced its intention to unite its network of Patient Care facilities under a new common brand identity, called ForMotion^TM. ForMotion will be introduced sequentially, beginning in select regions in the US.

2024 outlook

• The guidance for the full-year 2024 has been narrowed to 6-8% organic growth (previously 5-8%) and EBITDA margin before special items is narrowed to ~20% (previously 19-20%). 

Conference call details

Embla Medical will host a conference call on 23 July 2024 at 9:00 CET / 7:00 GMT / 3:00 ET. A conference call webcast can be accessed here: Embla Conference Call Webcast.

To actively participate in the Q&A session of the call please click on this link: Registration form for Conference Call Q&A.

Embla Medical IR materials and  press releases

Link to our latest IR materials and Corporate Presentation
http://www.emblamedical.com/investors

Here you can also sign-up to receive Embla Medical press releases

Further information
Klaus Sindahl, Head of Investor Relations, KSindahl@emblamedical.com, +45 5363 0134

About Embla Medical

Embla Medical (Nasdaq Copenhagen: EMBLA) was founded in Reykjavik in 1971 with the mission to improve people's mobility. Embla Medical is home to several brands renowned for positively impacting people's health and well-being. They include Össur, a leading global provider of prosthetics and bracing and supports solutions; FIOR & GENTZ, an innovative developer of neuro orthotics; and College Park Industries, creators of custom-built prosthetic solutions. Embla Medical also provides patients with world-class care through a global network of Orthotic and Prosthetic (O&P) facilities. Embla Medical is committed to sustainable business practices and is signatory to the UN Global Compact, UN Women's Empowerment Principles, and contributes to the UN Sustainable Development Goals. The company's climate targets have been verified by the Science Based Targets initiative. Embla Medical operates globally and has more than 4,000 employees. www.emblamedical.com 

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20240723 Q2 2024 EMBLA Company Announcement incl. financials FINAL

 

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SOURCE Embla Medical hf.

FAQ

What was Embla Medical's (EMBLA) revenue in Q2 2024?

Embla Medical reported revenue of USD 217 million in Q2 2024, which was their highest ever quarterly sales.

What was Embla Medical's (EMBLA) organic growth rate in Q2 2024?

Embla Medical's organic growth rate was 6% in Q2 2024.

What is Embla Medical's (EMBLA) EBITDA margin for Q2 2024?

Embla Medical's EBITDA margin was 22% for Q2 2024, compared to 19% in the same period last year.

What new products did Embla Medical (EMBLA) launch in Q2 2024?

Embla Medical launched two new bionic knee products in Q2 2024: NAVii® by Össur and Icon® by College Park.

What is Embla Medical's (EMBLA) updated guidance for full-year 2024?

Embla Medical narrowed its full-year 2024 guidance to 6-8% organic sales growth and approximately 20% EBITDA margin before special items.