Interim report January 1 – March 31 2022

22-04-2022   Regulatory press release

January-March 2022

Net revenue for the period was SEK 162.4 million (87.7), an increase of 85.1 %. Organic growth was 4.2 %.

Adjusted EBITDA for the period was SEK 21.3 million (8.0)

EBITDA for the period was SEK 21.2 million (8.9)

Adjusted profit/loss for the period was SEK 5.8 million (1.6)

Basic earnings per share for the period amounted to SEK 0.00 (0.02)

Cash flow from Operations for the period was SEK 1.8 million

CEO’s comments

Strong growth and improved margins

Although the start of Q1 was characterized by new disruptions as a result of Omicron, consolidated net revenue increased organically in Q1 by 4.2%. Sales and profitability gradually improved during Q1, with March as a strong closing month. Net revenue during Q1 was SEK 162.4 million, an increase of 85.1%. The adjusted EBITDA margin was stronger too, amounting to 13.1% (9.1%). We will see a gradual improvement in adjusted EBITDA margin during the course of 2022. This improvement is partly driven by operational improvements and partly by consolidation of acquisitions with a higher EBITDA margin than the Group average.

The Group’s annual rate now amounts to SEK 918.0 million in rolling 12 months pro forma net revenue with an adjusted EBITDA of SEK 156.6 million. This gives an adjusted EBITDA margin of 17.1%. The annual rate is based on all acquired companies being included on a pro forma rolling 12-month basis in Q1 2022.

Our two business units, Lab and Healthcare, operate on three continents. Thanks to a combination of organic and acquired growth, we grew strongly in Q1 and will continue to do so during the rest of the year. This growth brings improved profitability. Once our acquisition loan financing is fully employed, we will see cash flows improving. Our cash flows are currently affected by interest expenses for loans intended for acquisitions that have not yet started contributing to EBITDA and positive cash flow.

We have continued to experience disruption to our supply chains during the start of the year, while sick leave in our own production units and at our subcontractors has led to us having to maintain higher inventory safety margins. We have also phased out the Group’s factoring credit limit during the year, reducing current liabilities, but this has also had a slightly negative impact on cash flow. Our assessment is that cash flows will normalize in the second half of 2022, when the effects of Omicron will have subsided and all restrictions will have been lifted.

On April 19, we completed our largest acquisition to date, Surplus Diabetics. Surplus will give us a good platform on the U.S. diabetes market. It is a market that is growing strongly and has great needs. The acquisition of Surplus Diabetics means that we have already achieved pro forma EBITDA of SEK 150 million in Q1 2022, which was one of our financial targets. The Board therefore recently decided to update the financial targets with the objective of achieving pro forma net revenue of SEK 1 billion in 2022 with an adjusted EBITDA margin of SEK 200 million, both pro forma rolling 12 months.

Lab business unit

Net revenue for the Lab business unit was SEK 65.4 million, which is an increase of 72.6% on Q1 2021, when it was SEK 37.9 million.

EBITDA for the Lab business unit was SEK 6.2 million, an increase on Q1 2021, when it was SEK 4.6 million. The increase is mainly due to one large contributing entity acquired in the United Arab Emirates during 2021, MRC Systems.

Healthcare business unit

Net revenue for the Healthcare business unit was SEK 97.0 million, an increase of 94.6% on Q1 2021, when it was SEK 49.8 million.

EBITDA was SEK 15.6 million, an increase on Q1 2021, when it was SEK 4.6 million. The sharp increase has primarily been achieved through several acquisitions in the US market and the acquired companies have contributed with a higher average EBITDA margin.

Acquisitions

We have a highly disciplined acquisition strategy, and only evaluate companies within lab and healthcare. In addition, all companies should have a product and solution aimed at solving structural demographic challenges. This makes our underlying business relatively insensitive to the economic cycles. The starting point for our companies’ operations is to save and extend people’s lives, and we are very proud of this.

We still have a well-filled acquisition pipeline which will enable us to expand our product portfolio through new and interesting acquisitions within both our business units. The pricing of companies in the niches and geographies that we operate within remains attractive. This means that we have good opportunities to continue our growth journey as long as there is a functioning capital market. An equity issue, directed at institutional investors was made in Q1, resulting in SEK 100 million in new equity, before costs. Several of our existing institutional shareholders took part in the issue, and also a number of new ones.

Outlook

We operate in a very large and growing market, and we have a competitive offering. 2022 has started promising, and we have a well-filled acquisition pipeline with opportunities to act on if the price is right.

ADDvise’s long-term revenue growth is driven mainly by a growing and aging population, increased prevalence of chronic illnesses, and greater investment in health and healthcare as well as in research and development. We have a strong market position and continue to deliver on our goals while we are setting new ones.

I firmly believe 2022 will be a great year for ADDvise.

Rikard Akhtarzand, CEO, ADDvise Group AB (publ)

For further information, please contact:

Rikard Akhtarzand, CEO

+46 (0)8-128 766 08

rikard.akhtarzand@addvisegroup.se

Sebastian Robson, CFO

+46 (0)70-441 84 48

sebastian.robson@addvisegroup.se

ADDvise Group AB (publ), Grev Turegatan 30, SE-114 38 Stockholm, Sweden

Important information:

This information is information that ADDvise Group AB is required to disclose under the EU Market Abuse Regulation and pursuant to the Swedish Securities Market Act. The information was submitted for publication on April 22, 2022 at 08:45 CEST.

ADDvise’s financial reports are available on ADDvise’s website,

https://www.addvisegroup.com/investor-relations/financial-and-annual-reports/

The interim report is published in Swedish and English. The Swedish version represents the original.

About ADDvise Group

ADDvise Group AB (publ) is a leading supplier of equipment to healthcare and research facilities. The Group consists of two business areas, Lab and Healthcare. Sales are global. The Group has a clear acquisition strategy with the aim of raising shareholder value and expanding the business – both geographically and product-wise. ADDvise Group’s shares are listed on Nasdaq First North Premier Growth Market and Mangold Fondkommission AB, +46 8 503 015 50, CA@mangold.se, is the Company's Certified Adviser. Additional information is available at www.addvisegroup.com.

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