Vita 34 sees first signs of stabilization in core business after war-related weaker first quarter

DGAP-News: Vita 34 AG / Key word(s): Quarter Results
Vita 34 sees first signs of stabilization in core business after war-related weaker first quarter
31.05.2022 / 18:30
The issuer is solely responsible for the content of this announcement.

Vita 34 sees first signs of stabilization in core business after war-related weaker first quarter
- Group revenues tripled to EUR 15.5 million as a result of the merger with PBKM FamiCord
- EBITDA amounted to EUR -1.1 million as a result of further investments into new expanding activities and one-off events
- Number of recurring revenues client increased to more than 230.000, contributing EUR 5.7 million of revenues
- Special effect from IFRS 15 in first quarter at forecast level of about EUR 2.0 million with increasingly good prospect of effective countermeasures in upcoming quarters

Leipzig, 31 May 2022 - As expected, Vita 34 AG (ISIN: DE000A0BL849; WKN: A0BL84), the leading cell bank in Europe and third largest in the world, has started the new year 2022 impacted by a weaker market environment. In addition to the peak of the Omicron wave so far, which already had a negative impact on sales development in the final quarter of 2021, the Ukraine conflict in particular led to weakened demand behavior primarily in the Eastern European markets. The special effect from IFRS 15 also had a negative impact on earnings development, as forecast.

Group revenues increased significantly and almost tripled to EUR 15.5 million (Q1 2021: EUR 5.2 million) as a result of the merger with PBKM FamiCord. The reasons for the sales development falling short of the possibilities were mainly a decline in demand from new customers that was still clearly perceptible at the start of the year, which was for the most part due to the Omicron wave. With the onset of the armed conflict between Russia and Ukraine, this decline in demand then intensified significantly once again, as numerous potential customers in Eastern European markets, but also in the DACH region, remained both more cautious in their consumer spending and increasingly reconsidered additional medical services. The significant increase in inflation throughout Europe also reinforced this trend.

To counteract the decline in earnings, cost-cutting and cost-postponing measures were implemented to a certain extent. However, the company deliberately refrained from taking far-reaching measures in the personnel area so that it could quickly return to its growth path as soon as the general environment improved again. Furthermore, Vita 34 continued investments into its new expanding business areas Cell & Gene Therapies and CDMO. Consequently, earnings before interest, taxes, depreciation and amortization (EBITDA) were down year-on-year at EUR -1.1 million (Q1 2021: EUR 0.9 million). The decline was exacerbated by the high special effect from the harmonization of accounting in accordance with IFRS 15 (revenue recognition), as forecast. This amounted to EUR 2.0 million in the first three months of 2022. Furthermore, some one-off costs of EUR 0.5 million related to the business combination and severance payments occurred.

"Everyone of us has been caught cold by the political and economic changes of recent months, so it's only understandable that consumers are reconsidering or even postponing non-urgent spending," explains Jakub Baran, CEO of Vita 34 AG. "Yet we shall also not forget that penetration of stem cell banking is still pretty low in Europe compared to US and selected countries in Asia. The growth potential is there without a doubt. Especially in Germany, the UK and Turkey. Furthermore, these turbulent times shall also shake some weaker competitors off the market trying to compete with us by offering high discounts."

The key figures for business development are as follows:

Against the backdrop of continued investments in the new expanding business areas Cell & Gene Therapies and CDMO cash and cash equivalents decreased by 4.1 percent to EUR 31.9 million compared to year-end 2021. Consequently, also operating cash flow decreased to EUR 0.4 million.

"The current course of business in the second quarter gives reason for cautious optimism that the shock reaction to the outbreak of war in Europe was only a short-term effect from which we will recover reasonably quickly," explains Andreas Schafhirt, the Company's Chief Financial Officer. "On a weekly basis and in selected regions, there are already signs of slight recovery tendencies in new customer business again. However, it is still too early to speak of a clear trend here."

Cash flows from contract renewals continued to develop positively. Including new client contracts, the number of contracts with annual payment terms increased by almost 4,500 to a total of more than 230.000 contracts. Consequently, total recurring Group revenues amounted to EUR 5,7 million as of 31 March.

Given the developments in the first quarter, which were slightly above expectations, and the current business development in the second quarter, the Management Board of Vita 34 AG maintains its forecast for the business development in the full year 2022 in unchanged form.

Against the background of the video conference held only at the beginning of the month on the occasion of the publication of the 2021 annual report and the high number of investor contacts at the spring conference last week, no separate video conference will be held in view of the basically expected course of business in the first quarter. The Investor Relations department as well as the Management Board will of course be available to answer any further questions investors and press may have about the company's performance in individual meetings at short notice.

Contact:
Ingo Middelmenne
Investor Relations
Vita 34 AG
Phone: +49 (0341) 48792 – 0
Mobile: +49 (0174) 9091190
Email: ingo.middelmenne@vita34.de

Company profile
Vita 34 was founded in Leipzig in 1997 and is today by far the leading cell bank in Europe and the third largest worldwide. As Europe's first private cord blood bank and a pioneer in cell banking, the company has since offered collection logistics, processing and storage of stem cells from umbilical cord blood, umbilical cord tissue and other postnatal tissue as a full-service provider for cryopreservation. Based on the expansion of the business model in 2019, Vita 34 intends to also offer the storage of immune cells from peripheral blood as well as stem cells derived from adipose tissue in the future. Endogenous cells are a valuable starting material for medical cell therapy and are kept alive in vapors of liquid nitrogen. Customers from around 50 countries have already provided for their family's health with more than 850,000 units of stored biological materials at Vita 34.

31.05.2022 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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