BioMerieux : First-Half 2023 Results

bioMérieux - First-Half 2023 Results

• €1,770 million in first-half 2023 sales, up 8.3% like-for-like; organic growth excluding respiratory panels amounts to +11%, slightly ahead of the full-year sales growth guidance excluding respiratory panels of +8 to +10%.
• Q2 sales organic growth at 9.2% driven by a strong momentum in clinical microbiology (+18%) and BIOFIRE® non-respiratory panels (+23%) combined with a solid growth in industrial applications (+10%)
• Contributive operating income before non-recurring items reached €291 million (16.5% of sales) for the first half of the year, decreasing by 1.5% like for like versus H1 2022, as expected.
• Promising start of the new BIOFIRE® SPOTFIRE®, VIDAS® KUBE™ and VITEK® REVEAL™ instruments and a very positive trend for VITEK® MS PRIME.

Pierre Boulud, Chief Executive Officer, said: "bioMérieux performed well in the first half of 2023, in line with its targets, illustrating the relevance of our product portfolio to support the fight against infectious diseases and antimicrobial resistance. In addition, we have successfully launched several new products,that will reinforce our leadership in the market. We do confirm our annual guidance. "

Marcy l'Étoile (France), September 1st, 2023 - The Board of Directors of bioMérieux, a world leader in the field of in vitro diagnostics, met on August 31st under the chairmanship of Alexandre Mérieux and approved the consolidated financial statements for the six months ended June 30, 2023.

Consolidated data

In € millions

Net Sales

Contributing operating income(1)

% sales

Operating income

Net income, group share

Diluted net income per share (in €)

H1 2023	H1 2022	% Change
		As reported
1,770	1,658	+6.8%
291	322	-9.5%
16.5 %	19.4 %
208	297	-30.1%
162	228	-29.1%
1.36 €	1.93 €

1. Means before non-recurring items, amortization and depreciation of intangible assets linked to acquisitions and related cost

SALES

NB: Unless otherwise stated, sales growth is expressed at constant exchange rates and scope of consolidation (like-for-like).

Consolidated sales amounted to €1,770 million in first-half 2023, a robust growth like-for-like of 8.3% from €1,658 million in the prior-year period including a 2% price increase contribution. Reported growth stood at 6.8% impacted by a €25 million negative currency effect, primarily due to the devaluation of Latin America and Asian currencies, as well as the Turkish lira, partly compensated by the appreciation of the US dollar against the euro.

Evolution of sales

In € millions

SALES - SIX MONTHS ENDED JUNE 30, 2022	1,658
Currency effect	-25	-1.5%
Changes in scope of consolidation	0
Organic growth (at constant exchange rates and scope of consolidation)	138	+8.3%
SALES - SIX MONTHS ENDED JUNE 30, 2023	1,770	+6.8%

NB: A definition of the currency effect and of changes in the scope of consolidation is provided at the end of this press release.

ANALYSIS OF SALES BY APPLICATION

	Q2	Q2	% change	% change
	2023	2022	as reported	at constant
		exchange rates
Sales by Application				and scope of
			consolidation
In € millions
Clinical applications	723.6	687.9	+5.2%	+9.1%
Molecular biology	312.6	303.2	+3.1%	+6.1%
Microbiology	309.6	273.2	+13.3%	+17.9%
Immunoassays	91.6	93.9	-2.4%	+2.6%
Other lines(1)	9.8	17.6	-44.4%	-42.1%
Industrial Applications(2)	140.8	132.9	+5.9%	+9.6%
TOTAL SALES	864.3	820.9	+5.3%	+9.2%

1. Including mainly BioFire Defense and R&D-related revenue arising on clinical applications
2. Including R&D-related revenue arising on industrial applications.

	Six	Six % change	% change
	months	months as reported	at constant
	exchange rates
	ended	ended
	and scope of
	June 30,	June 30,	consolidation
	2023	2022

1,483.9	1,391.7	+6.6%	+8.1%
	623.3	+6.7%
665.2	+6.8%
	542.2	+12.4%
609.2	+14.9%
	198.4	-5.7%
187.2	-2.4%

22.3 27.8 -19.7%-19.9%

286.1 266.3 +7.5% +9.3%

1,770.1 1,658.0 +6.8% +8.3%

• Clinical applications sales (84% of the consolidated total), rose by more than 9% year-on-year to €724 million in the second quarter of 2023, up 8% in first-half to €1,484 million.
• • In molecular biology, sales growth was driven by a 23% increase in the demand for BIOFIRE® non- respiratory panels, while the sales of respiratory panels decreased slightly by 4.5%, in the context of a decline of the COVID-19 pandemic. The BIOFIRE® installed base expanded by 300 instruments, reaching more than 24,300 units at June 30, 2023.
  • The microbiology business delivered a remarkable 18% growth led by strong reagents sales in all key ranges thanks to both volumes and prices increases, as well as high level of equipment sales supported mainly by VITEK® MS Prime and Lab Efficiency WASP® ranges.
• In immunoassays, sales growth resumed in the second quarter, led by routine and emergency assays, partly offset by the procalcitonin downward trend, as expected.

• Industrial applications sales, (around 16% of the consolidated total), increased by nearly 10% year- on-year to €141 million in the second quarter. Growth has been fueled by reagents, especially microbiology and molecular ranges, and by equipments. Around half of the 9.3% growth reported for the first six months of the year comes from price increases.

ANALYSIS OF SALES BY REGION

Q2 Q2

2023 2022

Sales by Region

In € millions

% change	% change		Six	Six	% change	%
as reported	at constant		months	months	as reported	change
	exchange rates
		ended	ended		at constant
	and scope of
			exchange rates
	consolidation		June 30,	June. 30,
			and scope of
			2023	2022		consolidation

Americas	428.5	418.7	+2.4%	+5.7%		883.9	831.6	+6.3%	+6.1%
North America	369.2	366.4	+0.8%	+3.1%		771.9	731.7	+5.5%	+4.3%
Latin America	59.3	52.2	+13.5%	+24.3%		112.0	99.9	+12.1%	+19.2%
EMEA (1)	283.1	267.4	+5.9%	+8.3%		570.7	537.4	+6.2%	+8.2%
Asia Pacific	152.8	134.8	+13.3%	+21.6%		315.5	288.9	+9.2%	+14.7%
TOTAL SALES	864.3	820.9	+5.3%	+9.2%		1,770.1	1,658.0	+6.8%	+8.3%

(1) Including Europe, the Middle East and Africa.

• Sales in the Americas (50% of the consolidated total) reached €429 million in second quarter 2023, a growth of nearly 6% versus the same period in 2022, whereas first-half sales increased by 6% to stand at €884 million.
• • In North America (43% of the consolidated total), the quarterly performance has been led by the strong demand in BIOFIRE® non-respiratory panels and hemoculture reagents, partially compensated by the lower demand for BIOFIRE® respiratory panel. Equipment sales have grown double-digit, driven by VITEK® MS Prime and Lab Efficiency WASP® solutions.
  • Latin America (7% of the consolidated total) recorded an excellent performance in the second quarter with double-digit sales growth for all the key reagent ranges.
• Sales in the Europe - Middle East - Africa region (33% of the consolidated total) came to €283 million for the second quarter with a solid growth like-for-like of more than 8%. In Europe, robust sales growth has been reported in all microbiology key ranges, together with a very strong growth in non-respiratory BIOFIRE® panels sales.
• Sales in the Asia-Pacific region (18% of the consolidated total) came to €153 million in the second quarter of 2023, up nearly 22% compared with the same period in 2022. China is recovering strongly, on a favorable basis of comparison with the lockdown situation last year, and India delivered a solid growth thanks to sustained sales in microbiology and molecular biology.

CONSOLIDATED INCOME STATEMENT

• Contributive operating income
  For the six months to June 30, 2023, contributive operating income decreased by 9.5% year-on-year to €291 million, representing 16.5% of sales. The reported figure includes an unfavorable currency effect of €13.5 million, and a negative perimeter effect of €11.2 million. At constant exchange rate and scope of consolidation, contributive operating income decreased by 1.5% compared with first-half 2022.

• • Gross profit stood at €999 million, or 56.4% of sales, nearly unchanged in percentage from 56.6% in the half-year 2022.
    At constant rate and perimeter of consolidation, the gross profit rate improved by 0.5pp, mainly thanks to the favorable evolution of transport costs.
  • Selling, general and administrative expenses amounted to €502 million, or 28.4% of sales, compared with 26.6% in first-half 2022. On a like-for-like basis, they rose by 14,9%, mainly due to the return to the pre-pandemic levels of sales and marketing expenses as well as employee costs increase, including the impact of the broad success of MyShare, the worldwide employee share ownership plan. Amounting to a total expense for the company of €10 million, the MyShare plan allowed more than 5,600 employees to purchase 300,000 bioMérieux shares.
  • R&D expenses amounted to €227 million, or 12.8% of sales, compared with €207 million and 12.5% one year earlier. These expenses increased by 5% on a like-for-like basis mainly due to the increase in employee costs.
  • Other operating income amounted to around €21 million, down from €32 million in first-half 2022 mainly explained by capital gain on a building disposal in the US last year.
• Operating income
  The amortization and impairment of acquisition-related intangible assets and acquisition costs amounted to €84 million, up from the €25 million in first-half 2022, as a consequence of the impairment recognized on the Hybiome acquisition goodwill for this 67% owned Chinese company specialized in immunoassays.
  As a result, the Group ended the first-half 2022 with an operating income of €208 million, down 30% on the €297 million reported during the same period one year earlier.
• Net income
  Net financial result amounted to +€0.5 million over the period versus -€5.6 million recorded in 2022 thanks to financial interest on cash and lower hedging costs. The cost of net debt came to +€1.9 million in first-half 2023 versus -€2.9 million in first-half 2022, and other financial income and expenses totaled -€1.4 million, compared to -€2.7 million in first-half 2022.
  The Group's effective tax rate stood at 33.4 % on June 30, 2023, versus 22.4% in first-half 2022 mainly due to the impact of the Hybiome acquisition goodwill impairment.
  Net income, Group share amounted to €162 million in 2023, down €228 million in first-half 2022.

CASH MANAGEMENT AND FINANCE

• Free cash flow
  EBITDA1 came to €394 million in first-half 2023, or 22.3% of sales, down 5% from the €414 million reported for the same period one year earlier. The decrease reflects the reduction in operating income compared to the first-half 2022.
  Income tax paid represented €110 million, a decrease from the €145 million paid in the first six months of 2022, primarily due to 2021 exceptional results.
  Working capital requirement rose by €153 million in first-half 2023. The change was primarily a result of the following items:

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inventories rose by €115 million during the period, in preparation for winter season and due to the inventory build-up for the launch of new products.

trade receivables diminished by €64 million mainly thanks to the collection of the US 2022 year-end sales and trade payables came down €15 million in line with the seasonality of the activity.

1 EBITDA corresponds to the aggregate of operating income before non-recurring items, and operating depreciation and amortization.

• other working capital requirement items increased by €87 million, primarily due to annual bonus payment.

Capital expenditures represented around 8% of sales or €150 million in first-half 2023, versus €137 million in first-half 2022. Main capital expenditures were related to manufacturing and automation investments in Salt Lake City and Saint-Louis sites as well as the new manufacturing plant in Suzhou, China.

In light of the above, free cash flow came in at €1 million in first-half 2023, compared to €16 million in first-half 2022.

• Change in net debt
  Dividend of €100 million has been paid in first-half 2023, to be compared with €101 million in 2022.
  As a result, consolidated net debt came to €68 million as of June 30, 2023, versus a net cash of €47 million as of December 31, 2022. This net debt includes the discounted liability related to leases amounting to €103 million (IFRS16).

2023 OBJECTIVES

• In light of its first-half2023 performance, bioMérieux confirms the 2023 full year guidance released in March for both sales and contributive operating income before non-recurringitems.

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▪

As a reminder, excluding respiratory panels, sales growth for 2023 is expected to reach +8% to +10% at constant exchange rates and scope of consolidation, driven by a solid growth of BIOFIRE® non- respiratory panels as well as Microbiology and Industrial applications. Assuming a slowdown for respiratory panels sales, total Group sales would be evolving within a +4% to +6% range on a like-for-like basis.

Contributive operating income before non-recurringitems should be in a range of €600 million to €630 million, at forecasted exchange rates, including a €40 million estimated unfavorable foreign exchange impact.

SIGNIFICANT EVENTS OF THE FIRST HALF

• bioMérieux evolves its governance: Alexandre Mérieux becomes Executive Chairman. Pierre Boulud is appointed Chief Executive Officer and Jennifer Zinn is appointed Executive Vice President of Clinical Operations.
  As of June 14th, 2023, bioMérieux announced that on a proposal of Alexandre Mérieux, Chairman and CEO, the Board of Directors of bioMérieux approved on June 13th, 2023 (effective July 1st, 2023), the appointments of Alexandre Mérieux as Executive Chairman and of Pierre Boulud as Chief Executive Officer. Pierre Boulud has been a member of the Executive Committee for seven years, including the last three years as Chief Operating Officer.
  As of June 27th, the Company announced the appointment of Jennifer Zinn as Executive Vice President of Clinical Operations, effective August 1st, 2023.
• bioMérieux receives US FDA 510(k) clearance and CLIA-waiver for the for the fast and innovative BIOFIRE® SPOTFIRE® System and its BIOFIRE® SPOTFIRE® Respiratory (R) Panel and BIOFIRE® SPOTFIRE® Respiratory (R) Panel Mini
  In H1, bioMérieux announced having received the U.S. Food and Drug Administration (FDA) 510(k) clearance and the U.S. Food and Drug Administration (FDA) Clinical Laboratory Improvement Amendments (CLIA) waiver for its fast and innovative BIOFIRE® SPOTFIRE® System and the BIOFIRE® SPOTFIRE® Respiratory (R) Panel and BIOFIRE® SPOTFIRE® Respiratory (R) Panel Mini. The new BIOFIRE® SPOTFIRE® R Panel Mini detects five of the most common viral causes of upper respiratory tract infections: SARS-CoV-2 (virus associated with COVID-19), Influenza A, Influenza B, Respiratory Syncytial Virus (RSV), and Rhinovirus, in about 15 minutes.