25 August 2017

Ellex Reports Full Year FY17 Audited Results

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Annual Report Year Ended 30 June 2017

Adelaide, Australia, 25 August 2017 – Ellex Medical Lasers Limited (ASX:ELX), a global leader in medical devices for the diagnosis and treatment of eye disease, today announced profit before tax (PBT) for the fiscal year ended 30 June, 2017 as described in the table below.

FY17 A$ Million – Reported profit before tax.

Lasers & Ultrasound

iTrackTM

2RT

Corporate

Total

Revenue

62.4

8.2

0.9

71.6

EBITDA/(loss)

7.3

(1.3)

(0.4)

(4.1)

1.5

Amortisation & interest

(2.8)

(0.6)

(3.4)

Profit before tax/(loss)

4.5

(1.9)

(0.4)

(4.1)

(1.9)

The results for the year were materially impacted by the decision to expand sales and marketing. During the year a total investment of approximately $2.5m was allocated towards sales and marketing of the company’s transformational products in Ellex iTrack & 2RT.

On an underlying basis (adjusting currency fluctuations and abnormal expense) 2017 earnings in each of its 3 business segments are as follows:

FY17 A$ Million – EBITDA Underlying

Lasers & Ultrasound

iTrackTM

2RT

Corporate

Total

EBITDA reported

7.3

(1.3)

(0.4)

(4.1)

1.5

FX impact

1.2

0.1

1.3

Non-recurring move costs

0.4

0.4

EBITDA Underlying

8.9

(1.2)

(0.4)

(4.1)

3.2

Recap on Strategy

Ellex is a trusted global, ophthalmic brand. Ellex has materially grown shareholder value by leveraging that brand through its investment in Ellex iTrackTM, a minimally invasive glaucoma surgery (MIGS) device. Based on independent data from Marketscope, the annual market for MIGS is expected to grow from approximately US$200 million today to US$1 billion by 2021. To that end, iTrackTM offers a significant growth opportunity for our business.

Ellex iTrackTM 

The sales performance of the Company’s iTrackTM technology was strong during the 2017 financial year, with sales of $8.2 million ($8.5 million in constant currency). This represents 41% annual growth in unit sales compared to the prior comparable period. In the USA, iTrackTM sales were $4.7 million, achieving sales growth of 53% in Q4 FY17. This material growth was driven by the favourable increase in procedural reimbursement, and by the recruitment of sales representatives. As of 30 June 2017, the Ellex iTrackTM business comprised 14 clinical trainers and sales representatives, covering all regions of the USA. This compares to four clinical trainers and sales representatives at the commencement of the 2017 financial year.

Sales outside of the USA were $3.5 million, an uplift of 49% on the prior comparable period. Growth outside of the USA was primarily driven by initial sales into China and investment in additional management and marketing.

In addition to the USA sales force, investment has been made towards improvements in sales support, reimbursement management, production team and production site expansion, enhanced distribution management, tradeshow attendance and symposiums, journal publications and key opinion leader engagement.

Lasers & Ultrasound

Underlying EBITDA in this segment of approximately $8.9m compared to $10.9m in 2016. This small drop in earnings was a reflection of slightly lower revenue, increased investment in additional marketing and additional sales personnel in USA & Germany, and the result of $0.4m non-recurring cost associated with the expansion and move of production facilities from central Adelaide, South Australia to northern Adelaide.

There were two material balance sheet transactions during the year that will benefit the business in the long term:

  • Fitout of Mawson Lakes laser and ultrasound manufacturing facility and construction of precision machine shop ($5.8m). The directors believe that the market value of the building materially exceeds its cost.
  • First payment made for acquisition of future iTrack royalties ($0.9m)In addition, inventory grew by $4.8m during the period as a result of the investment required to facilitate the move of the laser and ultrasound manufacturing site and, to a lesser extent, slower- than-expected sales of retinal lasers in the last quarter of the financial year. This increase will progressively reverse over the 2018 financial year.As a result of these events, the net trading debt (debt excluding mortgage debt) increased to $0.2m at 30 June 2017 compared with a net cash position of $1.2m at 30 June 2016. Mortgage debt increased to $6.1m at 30 June 2017 compared with $2.1m at 30 June 2016.Additional detail on the balance sheet is attached.

 

ABOUT ELLEX

Ellex designs, develops, manufactures and sells innovative products that help eye surgeons around the world to effectively and efficiently treat eye disease. Ellex is a world leader in this field. Headquartered in Adelaide, Australia, Ellex has ophthalmic lasers and devices that treat glaucoma, retinal disease primarily caused by diabetes, secondary cataract and vitreous opacities, as well as age-related macular degeneration. Manufacturing is carried out in Adelaide, Australia and Fremont, California. Sales and service directly to eye surgeons is conducted via subsidiary offices in Minneapolis, Lyon, Berlin and Tokyo. A network of more than 50 distribution partners around the world services other markets.

For additional information about Ellex and its products, please visit www.ellex.com

For further information on Ellex please contact:

Tom Spurling, CEO
Ellex Medical Lasers Limited
3 Second Avenue, Mawson Lakes, SA, 5095
W +61 8 7074 8293 | M +61 417 818 658
tspurling@ellex.com

Maria Maieli, CFO & Company Secretary
Ellex Medical Lasers Limited
3 Second Avenue, Mawson Lakes, SA, 5095
W +61 8 7074 8200
mmaieli@ellex.com

Andrew Angus
Overland Advisers
M +61 402 823 757
andrewangus@overlandadvisers.com.au