DGAP-News: Sales Q2/2020 and H1/2020: Continued dynamic development in the U.S. with double-digit growth rates; international and German business strongly impacted by COVID-19 pandemic

Sales Q2/2020

Sales H1/2020

With regard to the development of sales in the individual regions, it is apparent that, in addition to Germany (Q2: -22%, H1: -26%), international business (Q2: -42%, H1: -45%) was particularly affected by the effects of the COVID-19 pandemic, with a correspondingly significant decline in sales compared to the previous year. Overall, restrictions in public life and sports tourism (lockdown measures) led and continue to lead to a perceptible reduction in relevant fractures in the field of trauma surgery (e.g. as a result of traffic and sports accidents), with the immediate consequence of a significant drop in demand for aap products. Furthermore, one of the Company's main sales channels in Germany and its international partners is based on personal contact between sales representatives and chief physicians and other decision-makers within clinics. Since general access restrictions have been in place in many hospitals since mid-March for persons from outside the clinics and/or decision-makers have no capacity for an exchange of information with sales representatives, business with existing customers has declined sharply and the generation of new orders has come to a complete standstill. In addition, the regular checking routines in connection with the consignment stocks kept in the clinics could not be carried out and therefore existing stocks (and thus the delivery requirements) could not be identified. In addition, the hospitals with which aap has contracts were often converted to treating COVID-19 patients only and accident surgery treatments were bundled in clinics that do not have a contractual relationship with the Company. Last but not least, scheduled orthopedic operations were postponed in order to reserve capacity for COVID-19 patients. In particular, foreign business, which is very important for aap (excluding the U.S.; around 60% of total sales in financial year 2019), has recently come to a virtual standstill. This hits the Company all the harder because the international partners with the highest sales are companies from Spain, South Africa, Brazil and Mexico. These countries are the most affected by the effects of the COVID-19 pandemic worldwide. By contrast, aap was able to generate sales again in China in the second quarter, where business relations with the original distribution partner were resumed. All in all, however, it remains to be said that even with a return to normality there will be no catch-up effects such as in the consumer goods industry, for example, but at most a return to pre-crisis levels.

 

In the United States, by contrast, aap remains on a good growth course and was able to increase sales substantially year-on-year both in the second quarter (+16%) and in the first half (+32%). This is all the more remarkable since the U.S. is the country with the highest number of COVID-19 infections worldwide. Here, the momentum that began in the second half of 2019 continued and the number of operations performed each week was sustainably stabilized at a level of up to 40 procedures. In addition, focused efforts to conclude contracts with nationally active companies that give aap access to a U.S. network of hospitals and surgical operation centers are bearing first fruit. After the first two contracts were concluded in 2019 with nationally active General Purchase Organizations (GPOs) and Integrated Health Networks (IHNs), another contract was added in the first half of 2020. At the time this release was published aap had already concluded contracts with five purchasing associations and health networks and is currently in further negotiations. This will create the basis for further dynamic growth in the USA. Overall, aap is aiming for a sales increase of at least 30% year-on-year in the U.S. in financial year 2020 despite COVID-19.

 

Against the background of these developments, the Management Board now expects sales for the 2020 financial year to be in the upper half of the guidance of EUR 8 million to EUR 10 million. However, it should be noted that the present sales forecast is characterised by a high degree of uncertainty. At this point in time, it is very difficult to assess the further course of the worldwide COVID-19 pandemic. For example, in the second half of 2020 there could be a second wave, feared by some virologists and experts, which in the worst case could lead to a renewed lockdown with corresponding negative consequences for the economy.

 

The figures contained in this press release are preliminary results as of June 30, 2020, which may still change before final publication. aap plans to announce its final results for the second quarter and first half of 2020 on August 14, 2020.



^[1] Source: Own research; the already published Q2/2020 results of four globally operating orthopedic companies were analyzed, whose average y-o-y decline in sales in Q2/2020 was around -28%.
^[2] The disclosure of the other sales revenues still reported in the previous year no longer applies and are now allocated to the individual regions.
^[3] In the previous year, sales to Puerto Rico were reported as part of North America (distributors); from Q3/2019 as part of RoW (= Rest of World).


 

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aap Implantate AG (ISIN DE0005066609) - General Standard/Regulated Market - All German stock markets -

About aap Implantate AG
aap Implantate AG is a globally active medical technology company based in Berlin, Germany. The Company develops, manufactures and markets products for trauma. The IP-protected portfolio includes besides the innovative anatomical plating system LOQTEQ(R) a wide range of cannulated screws. In addition, aap Implantate AG has an innovation pipeline with promising development projects such as the antibacterial silver coating technology and magnesium-based implants. These technologies address critical and unmet needs in trauma. In Germany, aap Implantate AG sells its products directly to hospitals, purchasing groups, and hospital groups, while at international level it primarily uses a broad network of distributors in around 25 countries. In the US the Company pursues a hybrid distribution strategy with its subsidiary aap Implants Inc. Distribution is carried out both through distribution agents and partnerships with global orthopedic companies. aap Implantate AG's stock is listed in the General Standard segment of Frankfurt Stock Exchange (XETRA: AAQ.DE). For more information, please visit our website at www.aap.de.


Forward-looking statement

This release may contain forward-looking statements based on current experience, estimates and projections of the management board and currently available information. They are not guarantees of future performance. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Many factors could cause the actual results, performance or achievements of aap to be materially different from those that may be expressed or implied by such statements. These factors include those discussed in aap's public reports. Forward-looking statements therefore speak only as of the date they are made. aap does not assume any obligation to update the forward-looking statements contained in this release or to conform them to future events or developments.



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