6 July 2017
Trading Update for the Year Ended 30 June 2017
- Total group unaudited sales of $71.7 million ($73.6 million in constant currency) for FY17, including strong iTrack™ sales growth to 30 June 2017 of $8.2 million ($8.5 million in constant currency)
- iTrack™ sales growth of 53% in Q4 FY17 in the USA, compared with same period in the prior year; 41% growth in unit sales for FY17
- Laser and ultrasound sales $64.4 million in constant currency representing a CAGR of 8% over the last five years
- Ellex to increase funding in FY18 for major expansion of Ellex iTrack™ business unit
- Growth in FY18 will be underpinned by Ellex’s unique leading global position in non-pharmaceutical treatment of glaucoma
Adelaide, Australia, 6 July, 2017 – Ellex Medical Lasers Limited (ASX:ELX), a global leader in medical devices for the diagnosis and treatment of eye disease, today provided a trading update on sales for the full year ended 30 June 2017 for its Ellex iTrack™ and laser and ultrasound business segments.
Recap on Strategy
Ellex is a globally recognised and trusted ophthalmic brand. Ellex has materially grown shareholder value through its investment in Ellex iTrack™, a single and 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, iTrack™ offers a significant growth opportunity for our business.
Foreign Exchange Impact
Movement in the Australian Dollar in the 2017 financial year materially impacted reported revenues. In total, 90% of Ellex group revenues are denominated in foreign currency. The material appreciation in the Australia Dollar against the US Dollar and the Euro reduced the reported revenue by $2.3 million. This was offset by a $0.4 million gain in reported revenue associated with the devaluation of the Australian Dollar against the Japanese YEN.
The sales performance of the Company’s iTrack™ technology was strong during the 2017 financial year, with sales expected to be $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, iTrack™ sales were $4.7 million, with sales growth of 53% achieved in Q4 FY17. This material sales growth was driven by the favourable increase in procedural reimbursement, and by the recruitment of sales representatives. As of 30 June 2017, the Ellex iTrack™ business comprises 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 are expected to be $3.5 million, which is up 49% up on the prior comparable period. Growth outside of the USA was primarily driven by continued take-up in China.
“Over the coming year we will be looking to strengthen the presence of iTrack™ in the USA and in China, and in the largely untapped market of Europe, where the MIGS class has not been widely adopted.” commented Ellex CEO, Tom Spurling.
Lasers and Ultrasound
Sales of the Company’s laser and ultrasound portfolio remained steady during the 2017 financial year and are expected to be $62.8million ($64.4 million in constant currency). Over the five years to 30 June 2017 Ellex’s laser and ultrasound segment has grown at a CAGR of 8%. Several factors limited the growth of this segment during the 2017 financial period and are described in the presentation attached.
According to Mr. Spurling, the Company’s laser and ultrasound technologies are essential and useful products for ophthalmologists throughout the world and will continue to be in the future.
“Ageing demographics and a growing rate of chronic health conditions continue to create a solid platform the growth of our laser and ultrasound business. We will continue to roll out our proprietary laser technology platforms for the treatment of secondary cataracts and floaters.”
“With SLT and iTrack™, Ellex has the two best non-pharmaceutical treatments for glaucoma in the world. No other company has this combination. We are also looking into opportunities to leverage the expansion of our SLT glaucoma laser technology in parallel with the growing uptake of our proprietary iTrack™ MIGS technology. The synergies between these technologies is very exciting, offering significant growth potential for our business over the coming fiscal year as the market looks to alternatives to pharmaceuticals more blatant treatment of glaucoma,” added Mr. Spurling.
Also of continued focus for the Ellex business in the 2017 financial year was Retinal Rejuvenation Therapy, known as 2RT®. A proprietary, patented laser technology, 2RT® shows promise as an early interventional treatment for macular degeneration. Sales of the Company’s 2RT® technology remain limited until results of the multi-centre clinical trial, “Laser intervention for Early Age related macular degeneration (LEAD)” are made available during the 2018 calendar year. As a result, 2RT® sales in the 2017 financial year were restricted at $0.7 million, down by $0.7m on the prior comparable period.
In the 2018 financial year Ellex will implement an aggressive growth strategy for Ellex iTrack™, comprising significant additional (above 2017 financial year levels) sales and marketing expenditure. This investment is expected to materially accelerate the strong sales growth of 53% achieved in the USA in the fourth quarter of the 2017 financial year. The roll-out of the iTrack™ in China and in Europe is also expected to further bolster iTrack™ sales growth. Key initiatives include expansion of the USA sales team, additional clinical trainers in the USA and outside of the USA, expanded collaboration with key opinion leaders, greater presence at key industry events and a stronger share of voice in the various industry publications.
To support the above-mentioned sales and marketing efforts for Ellex iTrack™, and in order to accelerate sales of its core laser division as well as to improve profit margins on the manufacture of these capital goods, Ellex will implement a number of management updates in its two operating divisions in the 2018 financial year: laser manufacture in Adelaide, Australia and Ellex iTrack™ in Fremont, California, USA. The Company expects to update the market on these developments over the coming period.
These results mentioned above are a preliminary estimate and prior to finalisation of the annual audit by the Company’s auditors. Ellex expects to report its full-year results for the year ended 30 June 2017 during the week beginning 21 August 2017.
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
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