Breaking new ground and strengthening the financial position

Third Quarter (July-September 2015)

  · Revenues amounted to SEK 61.4 (28.1) million. The increase (118 %) compared
to the corresponding quarter 2014 is mainly attributable to the additional order
from C.R. Bard.
  · EBITDA amounted to SEK 33.9 (2.2) million.
  · Operating profit amounted to SEK 25.7 (-5.3) million.
  · Reported net profit for the quarter amounted to SEK 6.1 (-15.7) million,
corresponding to SEK 0.18 (-0.47) per share. Net profit for the quarter has been
negatively affected by market valuation of the bond with SEK -12.5 million (-6.8
million). This effect is of an accounting nature, and has no effect on cash
flow.
  · Operating cash flow for the quarter amounted to SEK 9.5 (-21.8) million,
corresponding to SEK 0.29 (-0.66) per share

Nine-month period (January-September 2015)

  · Revenues for the period amounted to SEK 118.0 (93.8) million, an increase by
26 % compared to the corresponding nine-month period last year. The increase is
mainly attributable to the additional order from C.R. Bard.
  · EBITDA for the period amounted to SEK -2.9 (14.2) million. Provisions and
non-recurring costs have negatively affected EBITDA during the period by SEK
-35.4 million. Adjusted for these items, EBITDA amounted to SEK 32.5 million.
  · Operating profit amounted to SEK -27.4 (-8.2) million.
  · Reported net profit for the period amounted to SEK -36.4 (-79.4) million,
corresponding to SEK -1.09 (-3.17) per share. Net profit for the period has been
positively affected by market valuation of the bond with SEK 5.4 million (-31.1
million).
  · Operating cash flow amounted to SEK -6.9 (-12.4) million, corresponding to
SEK -0.21 (-0.5) per share.

Key events during the third quarter

  · Additional order from C.R. Bard of approx. SEK 28 million
  · New clinical studies strengthen the evidence that  Bactiguard-coated
catheters reduce hospital acquired infections and are cost effective
  · Repurchase of bonds in the market of SEK 44.5 million

Key events after the end of the third quarter

  · Refinancing of the bond loan secured
  · License agreement for orthopaedic implants, a new therapeutic area
  · Revised financial targets

Comments by the CEO
Since I assumed the role as CEO in June, my ambition has been to focus the
business and strengthen our efforts in prioritized areas. One of the main
priorities has been to secure the refinancing of the outstanding bond loan, a
process that we successfully completed in the past few days. This reduces
uncertainty and creates confidence both within our own organization as well as
for investors.
Furthermore, we have allocated more resources to developing new license
businesses. This has now materialized in our first license agreement since the
successful cooperation with C.R. Bard was established. The license agreement
with Vigilenz Medical Devices means that we enter a new therapeutic area, within
orthopaedic implants for fractures.  This is exciting since the implants will
permanently remain in the patient’s body and can benefit from both the anti
-infective and tissue friendly properties of the Bactiguard coating.
Last but not least, it has been my clear ambition to focus our resources to
enable the sales expansion of our own product portfolio. Since spring 2015, we
have strengthened our sales force with a Regional Sales Director for Latin
America and in November we recruited a Sales Director for Europe. The Sales
Directors’ role is to support our distributors with knowledge about Bactiguard’s
unique solution for infection prevention and train their sales forces. This is
time consuming work, which we earlier have not been able to prioritize enough
due to insufficient resources. Our main focus in the Middle East is to generate
more sales and strengthen our position in existing markets.
In August we received and additional order from C.R. Bard intended to increase
their safety stock of Bactiguard-coated Foleys for infection control. The order
of approximately 28 million led to a significant increase in our third quarter
revenues and made a strong contribution to the positive result and cash flow.
C.R. Bard’s sales of Bactiguard-coated catheters have been stable over a long
period of time. It is therefore very encouraging that they need to increase
their safety stock to meet production targets. The underlying volume has also
increased somewhat this quarter, but we do not expect any increase in the
underlying business when we summarize the year. Altogether, this means that the
accumulated revenues already after the third quarter are in line with last
year’s total sales, which means that revenues for 2015 will be higher than in
2014.
During the quarter, sales of our own BIP (Bactiguard Infection Protection)
portfolio have been week and this is a disappointment. Despite this there were a
number of positive results of our focused strategy. The Middle East continues to
generate repeat orders, which lead to direct sales revenues, even if the volumes
were lower in this quarter than in the second quarter. Sweden and Malaysia have
also contributed to the sales volumes.
Our Foleys (BIP Foley) are being evaluated by some 40 clinics in Sweden, in
parallel with a handful of evaluations of our central venous catheters (BIP
CVC), which is an important initial step to implementing our solutions in the
healthcare system. A first order of BIP CVC has been delivered to a hospital in
the south of Sweden. It is also encouraging that a tender committee in the same
region has established a separate category for infection protection Foleys in a
public procurement for patients suffering from recurring urinary tract
infections. This is promising for the future and a token that our strategy
works.
In India, preparatory marketing activities are ongoing and clinical trials at
three leading hospital will start before the end of this year. In Pakistan,
preparations for market launch. A dozen of evaluations are ongoing in Brazil and
Chile and in Mexico we received an approval which means that we are now able to
deliver products to our distributor.
In Iraq, the political turmoil is still challenging and we have been informed
that there will be a re-tender, which will delay our deliveries. In China, the
approval process is also taking longer than expected, but we have received
information that it is approaching the final stage.
The clinical evidence, that the Bactiguard Infection Protection solution is
efficient and tissue friendly (increases patient safety), is becoming even
stronger. In September, two new independent and randomized clinical studies from
Spain and Romania were published. These studies show that Bactiguard-coated
Foley catheters and endotracheal tubes significantly reduce catheter associated
urinary tract infections and ventilator associated pneumonia. The studies also
confirm that the use of Bactiguard-coated catheters is a cost-effective
alternative for preventing catheter associated infections and reducing the
number of patient days in hospital.
When evaluating the financial targets it is evident that we are behind plan. As
we have also come to the conclusion that it is not realistic to achieve the
current targets within the original time frame, we revise them with 2015 as the
base year. The new growth target is an average annual growth of 20 percent over
a five year period. Based on this growth rate, we expect to reach an EBITDA
margin of at least 30 percent by the end of the five year period.
Christian Kinch
CEO
This is information that Bactiguard Holding AB (publ) is required to publish in
compliance with the Swedish Securities Market Act and/or the Financial
Instruments Trading Act. The information was submitted for publication on 12
November 2015, at 08.00.
For further information, please contact:
Fredrik Järrsten, CFO, mobile: +46 725 500 089
Cecilia Edström, Director of Sales and New Business, mobile: +46 722 262 328
About Bactiguard
Bactiguard is a Swedish medtech company with a mission of preventing healthcare
associated infections, reducing the use of antibiotics and saving lives by
developing and supplying infection prevention solutions for the healthcare
industry. The company’s patented coating prevents healthcare associated
infections by reducing bacterial adhesion and growth on medical devices.
Bactiguard®-coated urinary catheters are market leading in the US and Japan, and
in recent years the company has developed its own product portfolio of catheters
for the urinary and respiratory tract and the blood stream. Bactiguard is
currently in a strong expansion phase, focused on new markets in the Europe,
Middle East, Asia, Latin America and Southern Africa. The company has market
presence in some 50 countries and has about 60 employees. Its headquarters are
located in Stockholm and production facilities in Sweden and Malaysia.
Bactiguard is listed on Nasdaq Stockholm. Read more about Bactiguard at
www.bactiguard.com. (http://www.bactiguard.com.)