Q1/2023: Solid start with slight sales growth (+3 %) and unchanged EBITDA; US and LATAM business grow well into double digits

EQS-News: aap Implantate AG / Key word(s): Quarter Results
Q1/2023: Solid start with slight sales growth (+3 %) and unchanged EBITDA; US and LATAM business grow well into double digits
15.05.2023 / 10:32 CET/CEST
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• Sales: EUR 3.0 million (+3 % yoy; CER[1] : +2 % yoy); LATAM (+55 % yoy) and USA (+15 % yoy) with significant double-digit growth; EMEA with -9 % yoy remains below expectations
• EBITDA unchanged year-on-year at EUR -0.5 million in cost- and interest-rate-inflationary environment; operating cash flow +74 % year-on-year
• Silver: Clinical trial resumed with revised study protocol in April; significant acceleration in patient recruitment expected
• Successful capital round: Full placement of capital increase with subscription rights with net inflow of around EUR 3.2 million 

aap Implantate AG ("aap" or the "Company") has made a solid start to the financial year 2023. Even though the first quarter was characterized by inflation-related interest rate and cost increases as well as continuing uncertainties due to the war in Ukraine, the Company was able to slightly increase sales and keep EBITDA constant compared to the previous year. In the process, aap increased sales by 3 % year-on-year to EUR 3.0 million (Q1/2022: EUR 2.9 million) and realized EBITDA of EUR -0.5 million (Q1/2022: EUR -0.5 million). Starting from an unchanged EBITDA, the company was able to significantly improve the operating cash flow (+74 % compared to previous year), which resulted mainly from working capital management measures. In addition, aap successfully carried out a capital increase with subscription rights in the first quarter that was fully subscribed by shareholders or placed with investors by way of private placement, resulting in a net inflow of around EUR 3.2 million.

Q1/2023 - Key financial figures

Sales

Looking at the individual regions, the development of sales in the first quarter of 2023 varied. In the EMEA region (= Europe, Middle East, Africa; -9 % year-on-year), growth was achieved above all in Spain (+15 % year-on-year) and in Saudi Arabia (+23 % year-on-year), although this was unable to compensate for the development in markets such as Germany, Egypt, South Africa and Romania, which were in some cases significantly below the level of the previous year. Overall, the region fell short of the company's expectations in the first quarter of 2023 despite numerous ongoing sales activities.

In the USA, the sales momentum was continued, and double-digit growth was achieved (+15 % compared to the previous year). The absolute increase in trauma cases treated with higher-priced LOQTEQ® plate systems was the background for the sales increase.

In Latin America (+55 % year-on-year), the company also achieved significant double-digit growth, resulting primarily from the central markets of Mexico (+43 % year-on-year) and Brazil (+20 % year-on-year). In the Asia-Pacific region, aap recorded a 44 % year-on-year decline in sales, resulting primarily from a reduced volume of business with the Chinese distributor due to a sharp drop in the price situation.

EBITDA

aap realized in the first quarter a constant EBITDA and an only slightly worsened Recurring EBITDA (EBITDA without one-off effects) of EUR -0.5 million (Q1/2022: EUR -0.5 million) and EUR -0.5 million (Q1/2022: EUR -0.4 million), respectively. The following developments in the first quarter of 2023 were the main factors here:

• Slight decrease in total output (-6 %) due to lower inventory changes in inventories,
• slightly improved gross margin[2] (in %; +0.3 percentage points) with an increased gross margin in absolute terms as a result of the increase in sales,
• virtually unchanged level in personnel costs,
• Decrease in other costs mainly due to lower costs for legal advice and external consulting as well as costs for the termination of legal disputes (previous year: one-time effect),
• reduced net effect[3] from conducting the human clinical trial for aap's innovative silver coating technology,
• reduced non-recurring effects that had a negative impact on EBITDA in the previous year (termination of legal disputes)

Cash flow

aap's operating cash flow in Q1/2023 improved by +74 % year-on-year to EUR -0.2 million mainly due to better working capital management. Cash flow from investing activities showed an outflow of EUR 0.1 million in Q1/2023, with investments in development projects accounting for EUR 25 thousand (Q1/2022: EUR 16 thousand) and property, plant and equipment for EUR 50 thousand (Q1/2022: EUR 85 thousand). In the area of financing activities, there was a cash inflow totaling EUR 1.2 million for the first quarter of 2023, which was primarily characterized by the partial payment from the capital increase in the amount of EUR 1.3 million, taking out a shareholder loan in the amount of EUR 0.1 million, repayment of financial liabilities in the amount of EUR 0.2 million (Q1/2022: EUR 0.2 million) and payment of interest in the amount of EUR 39 thousand (Q1/2022: EUR 84 thousand). As a result, cash and cash equivalents increased to EUR 1.2 million at the end of the first quarter. Net debt (total of all cash and cash equivalents less all interest-bearing liabilities) was EUR 2.1 million on March 31, 2023 (December 31, 2022: EUR 3.0 million).
 

Silver coating technology

In the area of silver coating technology, the focus in the first quarter of 2023 was primarily on completing all preparatory work to be able to continue the clinical study in the second quarter under a modified study protocol. In this context, the study was resumed in the first trial centers at the end of April as planned. Under the leadership of the University Hospital Regensburg, Prof. Dr. Alt, the Company plans to include 17 study centers in Germany in the clinical study by late summer. With the new study protocol, aap expects a massive acceleration of the study so that the necessary number of patients can be recruited within 12 to 18 months.





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aap Implantate AG (ISIN DE0005066609) - General Standard/Regulated Market - All German Stock Exchanges -

About aap Implantate AG
aap Implantate AG is a globally active medical technology company based in Berlin, Germany. The company develops, manufactures and markets products for traumatology. In addition to the innovative anatomical plate system LOQTEQ®, the IP-protected portfolio includes a wide range of cannulated screws. In addition, aap Implantate AG has an innovation pipeline with promising development projects such as antibacterial silver coating technology and magnesium-based implants. These technologies address critical problems in traumatology that have not yet been adequately solved. In Germany, aap Implantate AG sells its products directly to hospitals, purchasing groups and group clinics, while at international level it primarily uses a broad network of distributors in around 25 countries. In the USA, the company relies on a hybrid sales strategy through its subsidiary aap Implants Inc. This involves sales both via distribution agents and as part of partnerships with global orthopedic companies. The aap Implantate AG share is listed in the General Standard of the Frankfurt Stock Exchange (XETRA: AAQ.DE). For further information, please visit our website at www.aap.de.

The figures presented in this press release may be subject to technical rounding differences which do not affect the overall presentation.

Forward-looking statements
This release may contain forward-looking statements based on current expectations, beliefs and projections of the Management Board and currently available information. The forward-looking statements are not guarantees of future performance or results. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in aap's public reports. Forward-looking statements therefore speak only as of the date they are made. We assume no obligation to update the forward-looking statements made in this release or to conform them to future events or developments.



^[1]CER = Constant exchange rates

^[2] Gross margin = sales revenue +/- change in inventories of finished goods and work in progress - cost of materials / cost of purchased services.

^[3] Cost of conducting the clinical trial less grant funding



Contact:
aap Implantate AG; Marek Hahn; Member of the Management Board, CFO; Lorenzweg 5; 12099 Berlin
Phone: +49 (0)30 75019 - 134; Fax: +49 (0)30 75019 - 290; E-Mail: m.hahn@aap.de

15.05.2023 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG.
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