VITA 34 AG QUARTERLY STATEMENT
January to March 2023
Vita 34 Quarterly Statement Q1 2023
LETTER FROM THE MANAGEMENT BOARD
The first quarter of the new fiscal year 2023 continued to be characterized by a market environment that has to be described as weak. In addition to the defining macroeconomic factors such as significantly higher energy prices, a fundamental change in the interest rate environment, and a substantial increase in inflation, it was above all the noticeable drop in birth rates in many European markets that had a considerable impact on our day-to-day business. Nevertheless, we succeeded in holding our own even in this negative environment and closed the first quarter well, given the circumstances.
At EUR 17.9 million, our sales were 15.7% higher than in the previous year. The main contributors to this significant growth were the price increases we successfully implemented so far in several markets, as well as positive effects from contract adjustments in connection with the harmonization of our accounting in accordance with IFRS 15. As already mentioned, this positive development was contrasted by a market environment characterized by continuing declines in birth rates in the core markets of Europe. In our core market of Germany, for example, birth rates in the first quarter were even lower than the lows of the already weak prior year 2022, according to the German Federal Statistical Office. Our organic growth was correspondingly negative. However, thanks to strict cost discipline and the implementation of efficiency enhancement measures, we succeeded in keeping large parts of our cost of sales virtually unchanged or only slightly higher than in the same period of the previous year. Accordingly, our earnings before interest, taxes, depreciation, and amortization (EBITDA) were positive at EUR 0.3 million, following a clearly negative figure in the previous year.
Overall, it is therefore quite positive that the price increases we have established so far have a revenue-increasing effect and that customer response reflects the fact that, even at the new price level, cryopreservation of stem cells is an attractive option for expectant parents to provide for the health of their family. At the same time, we continue to experience a historic decline in birth rates. While there is no question that this negative trend will be overcome, it is impossible to predict when this will be the case, and strict cost discipline accordingly remains the top priority in our day-to-day business.
In addition to adjusting cost structures, we are also focusing our investments in the new business areas Cell & Gene Therapies and CDMO in a more targeted manner. Accordingly, the investments in the current fiscal year 2023 are intended to pursue our subprojects and to run fewer projects in parallel. Just a few weeks after the end of the first quarter, we started enrolling patients ("First Patient In") for the Phase I clinical trial of Tarcidomgen Kimleucel. The drug candidate is an anti-CD19CAR-T, a chimeric antigen receptor, and the first candidate in Vita 34's Cell & Gene Therapy portfolio, putting our entry into the CAR-T market within reach. A market that has immense potential to revolutionize cancer treatment.
Letter from the Management Board | 1 |
Vita 34 Quarterly Statement Q1 2023
With regard to the further course of the year, we assess the general market environment as continuing to be difficult overall and, against the backdrop of falling birth rates, difficult to assess. However, due to the positive impetus provided by the established price adjustments and an optimized cost base, we believe we are well equipped to cope with this difficult market phase in the coming quarters. We therefore stand by our forecast for the full year of sales between EUR 75 and 82 million and EBITDA in the range of EUR 5.5 to 7.0 million.
Leipzig, May 2023
The Management Board of Vita 34 AG
Jakub Baran | Dirk Plaga | Tomasz Baran |
Chief Executive | Chief Financial | Chief Commercial |
Officer | Officer | Officer |
Letter from the Management Board | 2 |
Vita 34 Quarterly Statement Q1 2023
GROUP KEY FIGURES
Statement of Profit and Loss
Sales revenue
Gross profit
EBITDA
EBITDA margin as a percentage of sales Operating result (EBIT)
Net result for the period
Earnings per share
Balance sheet
Balance sheet total
Equity
Equity ratio
Liquid funds
Cash flow
Cash flow from investing activities Depreciation and amortization Cash flow from operating activities
EUR thousand
EUR thousand
EUR thousand
%
EUR thousand
EUR thousand
EUR
EUR thousand
EUR thousand
%
EUR thousand
EUR thousand
EUR thousand
EUR thousand
01/01/2023 - 03/31/2023
17,904
5,681
272
1.5
-1,813
-3,040
-0.18
Mar. 31, 2023
150,453
12,682
8.4
14,697
01/01/2023 - 03/31/2023
-1,226
2,085
1,974
01/01/2022 - 03/31/2022
15,480
3,592
-1,064
-6.9
-3,195
-2,937
-0.18
Dec. 31, 2022
151,508
15,852
10.5
16,290
01/01/2022 - 03/31/2022
-1,072
2,130
423
Business Development and Results of Operations
The Vita 34 Group was able to increase its revenues by 15.7% to EUR 17.9 million in the first three months of 2023. The first significant revenue driver was price effects. Vita 34 succeeded in selectively adjusting prices to market conditions in almost all country markets. These price adjustments contributed approximately EUR 1.8 million to revenue in the first quarter of 2023. The restructured storage contracts in the subgroup PBKM and the associated positive effects in accounting and revenue recognition according to IFRS 15 (expected to be EUR 5.7 million in 2023) also had a revenue-boosting effect in the first quarter of 2023. In the reporting period, significant positive revenue effects amounting to around EUR 1.1 million have now been generated from this for the first time.
The positive effects from the price adjustments and from the revenue recognition in accordance with IFRS 15 for the restructured contracts were almost entirely responsible for the growth. By contrast, demand was very subdued in a persistently weak market environment. The overall environment of a pandemic, the war in Ukraine, inflation, rising interest rates, uncertainty about energy supplies and economic fears had a negative impact on people's willingness to spend in many countries, especially on expectant parents. Demand was also significantly impacted by the continuing decline in birth rates in the core European markets. In Germany, for example, the birth rate in the first quarter of 2023 fell below the lows of 2022. Organic business and revenue development fell short of potential despite interim signs of recovery. The number of contract renewals and corresponding
Group Key Figures | Business Development and Results of Operations | 3 |
Vita 34 Quarterly Statement Q1 2023
applications continues to increase. The integration projects following the merger of Vita 34 and PBKM are largely running according to plan.
The cost of sales increased at a significantly lower rate than sales, by only 2.8%, so that the cost of sales ratio fell accordingly. Gross profit improved from EUR 3.6 million to EUR 5.7 million. The effects from the price adjustments and the revenue recognition according to IFRS 15 had an almost entirely positive impact on the earnings development. At the same time, the Vita 34 Group continued to keep its major cost items strictly under control and implemented further efficiency enhancement measures. Marketing and selling expenses amounted to EUR 2.5 million in the first quarter of 2023 (previous year: EUR 2.3 million). Marketing and selling activities will be deliberately continued at a comparable level despite the ongoing weaker market environment. Administrative expenses fell slightly from EUR 4.9 million to EUR 4.7 million. This figure continues to include significant expenses for the new activities in the areas of Cell and Gene Therapies (incl. CAR-T) and CDMO.
Against the background of pronounced cost discipline and revenue growth, EBITDA, which had still declined significantly in the previous year, improved from EUR -1.1 million to EUR 0.3 million, thus returning to positive figures for the first time since the merger. The EBITDA margin was 1.5%. EBIT increased significantly from EUR -3.2 million to EUR -1.8 million. Financial expenses increased from EUR 0.4 million to EUR 1.1 million. In addition to the general rise in interest rates and exchange rate differences, this was mainly due to additional financial expenses from hyperinflationary accounting triggered by the inflationary environment for the subsidiary in Turkey.
Earnings before taxes after three months of 2023 were EUR -2.8 million (prior-year period: EUR -3.5 million). Due to the absence of the positive tax effects from the previous year, earnings after taxes remained virtually unchanged at EUR -3.0 million (prior-year period: EUR -2.9 million). This results in unchanged earnings per share for the three-month period 2023 of EUR -0.18.
Development in the Segments
In the subgroup PBKM, revenues increased by 27.0% from EUR 10.9 million to EUR 13.9 million The main factor here was the effects of the change in revenue recognition in accordance with IFRS 15. Segment EBITDA amounted to EUR 0.9 million (prior- year period: EUR -1.3 million). This means that this segment was able to continue the turnaround in earnings that had already begun in the third and fourth quarters of 2022. Investments in the subgroup PBKM amounted to EUR 0.8 million (prior-year period: EUR 0.9 million) and, in addition to the new business areas, mainly went into cryotanks and laboratory equipment. In addition to adjusting cost structures in the areas of administration, marketing and sales, the company is focusing its investments primarily on the new business areas of Cell and Gene Therapies and CDMO. Accordingly, the investments in the current fiscal year 2023 are intended to specifically pursue the most promising subprojects, thereby reducing the number of projects running in parallel. Patient recruitment ("First Patient In") for phase I of the clinical trial of Tarcidomgen Kimleucel is currently underway. The drug candidate is an anti-CD19CAR-T, a chimeric antigen receptor, and the first candidate in the Cell and Gene Therapy portfolio.
In the subgroup Vita 34 segment, revenues decreased by 6.4% from EUR 4.5 million to EUR 4.3 million. The weak demand trend was met by first positive price effects, which will not be fully reflected in revenue until the second quarter of 2023 and therefore could not fully compensate for the decline in demand. Segment EBITDA amounted to EUR -0.6 million, compared with EUR 0.3 million in the same period of the previous year. Deliberately slightly increased marketing expenses and the still missing sales effects were responsible for this earnings development. In addition, Vita 34 AG not only forms the subgroup Vita 34 as an operating unit with its subsidiaries, but also assumes the holding function for the Group as a whole. This leads to corresponding cost burdens in the amount of approximately EUR 1 million per year. In addition, there are cost burdens in the subgroup Vita 34, because this subgroup also assumes the holding function for the Group as a whole. Investments continued to be implemented in a very controlled manner and on balance amounted to EUR 0.4 million (prior-year period: EUR 0.2 million).
Development in the Segments | 4 |
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VITA 34 AG published this content on 31 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 May 2023 06:21:06 UTC.
