Q216 results were in line with the upper end of company guidance, with sales of €3.4m and an EBITDA loss of €1.4m. aap Implantate continues to focus on its strategic transition to being a pure trauma company, following the recent sale of its Biomaterials business. As the company continues to drive sales of LOQTEQ in Western Europe and the US alongside the implementation of cost reduction measures, we could see a return to sustained growth.
aap Implantate reported sales and EBITDA in line with the upper end of its guidance. It reported sales of €3.4m (guidance €2.5-3.5m) and an EBITDA loss of €1.4m (guidance loss of €1.5-2.5m). This was achieved against the backdrop highlighted by the company in which a number of BRICS and SMIT states’ markets remain volatile such as China, Russia and Turkey and continue to make no contribution to sales. It is encouraging that aap Implantate delivered on guidance as it announced in Q1 that it had started a number of initiatives to drive Trauma sales in more established markets (Western Europe and the US). US sales were reported at €0.7m in Q2, an increase of 250% from Q215 (€0.2m). In our opinion, the progress of uptake in the US market is key to the success of LOQTEQ.
Key growth drivers in FY16 and FY17 include growing sales in more established markets (Western Europe and the US), increasing LOQTEQ indication coverage, CE marking and submission for FDA approval for its antibacterial silver coating. Management guidance remains at 20% revenue growth for Trauma products in FY16.
Q2 results demonstrate that aap has taken the first step to move back to revenue growth through various initiatives. The company is well funded following the sale of its Biomaterials business in Q2, with reported cash of €32.2m for the group at 30 June 2016. It intends to use part of the proceeds from the sale of its Biomaterials business to drive its pipeline forward and distribute part of it to its shareholders, for example, a dividend payment possibly in FY17. We expect upside potential if the increased initiatives to drive sales in the more established markets (US and Western Europe) continue to prove fruitful. In addition, a final feedback from the EU authorities on the CE mark for aap’s silver coating is expected for late 2016/early 2017. The submission of the documents for FDA is planned for 2017.