2019 Paris Stock Exchange annual results: GBT

2019 annual results

• Revenue growth to 816.9 million in line with targets
  • Sales of 816.9 million, up 3.5%
  • Sales of 805.6 million at constant exchange rates, up 2%
• EBITDA of 111.5 million euros, up over one year at constant scope
• Strong improvement in free cash flow to 28.3 million and reduced net debt to 280.5 million (excluding IFRS16 impact) thanks to a significant reduction in inventories
• 2020: Continuation of the value creation strategy initiated by the Group
  • Significant growth in the interventional imaging segment
  • Continuation of the Cost to Win savings plan
  • Finalization of gadopiclenol phase III
  • Continuation of inventory reduction plans
• Outlook for 2020: uncertainty linked to the measures taken to fight the COVID-19 epidemic despite a minor impact on the activity of the Guerbets observed to date

Villepinte, March 24, 2020Guerbet (FR0000032526), ​​a world leader in medical imaging, announces its consolidated annual results for 2019.

On March 24, 2020, the Board of Directors approved the accounts for the year ended December 31, 2019. The audit procedures have been completed and the report of the statutory auditors is being prepared.

Growth of the two business segments

Reported revenue of 816.9 million increased 3.5% from 2018, including a favorable currency effect of 11.3 million. Sales up 2.0% to 805.6 million at constant exchange rates⁽¹⁾. Excluding the impact of the drop in activity linked to a subcontracting inherited from CMDS activities, revenue growth at constant exchange rates would have been 3.7% in fiscal year 2019.

Diagnostic imaging sales increased to 711.0 million at constant exchange rates (+ 3.0%) and 719.5 million at current exchange rates.

– MRI sales⁽²⁾ The segment totaled 271.4 million at constant exchange rates and at constant scope and perimeter (275.0 million at current exchange rates) against a turnover of 272.0 million in 2018. In 2019, activity was suffered from the planned withdrawal of Optimark ^{of the market. Excluding Optimark, MRI sales at constant exchange rates were up 1.6%.}

– CT / Cath Lab⁽⁽²⁾ sales increased 5.2% to 439.5 million at constant exchange rates thanks to double-digit growth in Optiray sales ^{over the period (444.6 million at current exchange rates). This strong growth, combined with the stability of Xenetix sales, illustrates the market penetration of Guerbets in this segment.}

Intervention imagery now represents just over 9% of Group sales. It posted sales at constant exchange rates of 73.5 million, up 12.5% ​​(75.5 million at current exchange rates).

A year marked mainly by spending on future growth

IFRS16 on the accounting of leases for consolidated financial statements came into force on January 1, 2019. Guerbet has decided to apply this standard on a simplified retrospective basis, which does not provide for restatement from the previous year. For comparison purposes, the figures for 2019 are presented after application of IFRS 16 and then before application of IFRS 16 to make them comparable to the figures for 2018.

In millions of euros Consolidated financial statements (IFRS)	2018 Posted	2019 Posted (With IFRS16)	2019 (Without IFRS16)
Returned	789.6	816.9
EBITDA (3)	110.6	111.5	101.8
% revenues	14.0%	13.7%	12.5%
Exploitation product	69.9	51.7	51.6
% revenues	8.9%	6.3%	6.3%
Net revenue	46.8	37.3	37.6
% of returned	5.9%	4.6%	4.6%
Net debt	308.7	296.5	280.5

The published EBITDA amounted to 111.5 million euros, including 9.7 million euros for the elimination of rents due to the implementation of IFRS16.

The evolution of EBITDA must be interpreted in the light of several specific events in 2018 and 2019:

• As a reminder, the 2018 EBITDA includes extraordinary gains related to the revaluation of stocks for 12.8 million, the sale of our distribution activities in Argentina for 5 million and a charge of 8 million for the destruction of obsolete stocks.
• 2019 EBITDA includes:
  • Nearly 12 million additional expenses related to the transition to direct distribution in Japan, the improvement of the resources necessary for the development of the interventional imaging activity and the increase in costs related to phase III of gadopiclenol. The Group indicates that the phase III costs incurred in 2019 totaled around 7 million euros.
  • 9 million extraordinary expenses related to the resolution of supplier disputes, notably with Mallinckrodt, compensation following the departure of the CEOs and the incident at the Dublin site in November. The consequences of this incident should affect inventory levels and therefore sales of Optiray during the first half of fiscal year 2020.
• Finally, EBITDA benefited from strict cost control resulting from the implementation of the Cost to Win plan, saving around 8 million euros. This spending reduction plan is expected to begin to realize its full potential in 2021.

As of December 31, 2019, operating income amounted to 51.7 million.

Net profit amounted to 37.3 million compared to 46.8 million for the 2018 financial year. This figure includes a favorable change in the effective tax rate to 27.1%.

Solid financial structure and dividend distribution of 0.70 per share

Following the application of IFRS16, the Group recognized larger non-current assets by including the rights to use leased real estate assets for a net amount of 16 million, resulting in greater financial debt.

Free cash flow increased significantly in 2019, resulting in particular from the Group’s inventory reduction initiatives and resulting in a decrease in net debt of around 28 million euros in 2019 (excluding IFRS16 impact). Net debt amounted to € 296.5 million, including the IFRS16 impact (€ 279.2 million, IFRS16 impact).

As a reminder, Guerbet signed on February 13, 2019 a credit agreement of 500 million euros over five years to refinance its existing debt. At the end of December 2019, the net debt / EBITDA ratio was 2.75 (excluding the IFRS16 impact). The Group thus has a solid balance sheet and sufficient bank credit lines to cover its liquidity needs even in an environment that is barely visible.

The board of directors will propose a dividend of 0.85 per share to shareholders at the general meeting of May 29, 2020.

Given the quality of the results but also in the context of the health and economic crisis linked to the Covid-19 pandemic, the Board of Directors will propose a dividend of 0.85 per share to shareholders at the General Meeting of May 29, 2020.

2020 outlook

The measures taken to combat the COVID-19 epidemic and their impact on the economy make the 2020 financial year uncertain, although Guerbet has so far found only a minor impact on its activity. The Group’s top priority remains the health of its employees. With this in mind, Guerbet has put in place plans to promote business continuity and maintain all critical activities while ensuring employee safety.

Guerbet focuses all its efforts on the continuity of supply of its specialties on the market, some of which are identified as drugs of major therapeutic interest, while continuing to favor the safety of employees. While the impact in China is expected to be limited, the effects of COVID-19 on the supply chain in Europe are still very uncertain and strongly depend on the duration of the response to the pandemic. However, the current levels of stocks of critical raw materials are sufficient to ensure production in the coming weeks. To date, all of the Group’s production sites around the world are operating normally and all distribution centers continue to ship orders to all customers wherever they are.
Whatever the situation of COVID-19, Guerbet anticipates growth in turnover to benefit from the good performance of:

• Lipiodol^;
• consumables for contrast agent injections;
• digital solutions and after-sales services; and
• the gradual acceleration of sales of precise microcatheters.

Conversely, certain sources of uncertainty should weigh on income growth:

• The introduction of a generic in the United States, which will slow the growth of Dotarem^{, even if this will be partially offset by Dotarem’s growth opportunities in Europe and Asia;}
• The entry into force of two measures in France. The first concerns article 66 of the 2019 finance law, which provides that policyholders are now reimbursed exclusively on the basis of the price of the generic. The second concerns the introduction of a reduction in the public price of iodized agents.

Given the uncertainty linked to the fight against COVID-19 and its effects, Guerbet will communicate more precisely on its 2020 prospects at a later stage when the Group has more visibility on the duration and extent of the response measures put in place. implemented, particularly in Europe.

^(([1]) At constant exchange rates: the amounts and growth rates are calculated by canceling the exchange effect, which is defined as the difference between the value of the indicators for period N, converted at the exchange rate for period N-1, and the value of the indicators for the period N -1.

(2) As a reminder, the MRI and CT / Cath Lab segments now include sales of injection systems and consumables.

⁽³⁾ EBITDA refers to operating profit with the provision for depreciation, amortization and provisions added.

Events to come:

Publication of first quarter 2020 sales
April 23, 2020, after market close

About Guerbet

Guerbet is a world leader in medical imaging, offering a wide range of pharmaceutical products, medical devices, digital solutions and AI for diagnostic and interventional imaging, in order to improve the diagnosis and treatment of patients. A pioneer for more than 90 years in the field of contrast products with more than 2,800 people worldwide, Guerbet is constantly innovating with 9% of its turnover dedicated to Research & Development and four centers in France, Israel and in the USA. Guerbet (GBT) is listed on Euronext Paris (segment B mid caps) and generated 817 million revenues in 2019. For more information on Guerbet, go towww.guerbet.com

Forward-looking statements

Certain information contained in this press release does not reflect historical data but constitutes forward-looking statements. These forward-looking statements are based on estimates, forecasts and assumptions, including, but not limited to, assumptions about the Group’s current and future strategy and the economic environment in which the Group operates. They involve known and unknown risks, uncertainties and other factors which could lead to a significant difference between the Group’s performance and actual results and those presented explicitly or implicitly by these forward-looking statements.

These forward-looking statements are only valid as of the date of this press release, and the Group expressly disclaims any obligation or commitment to publish an update or revision of the forward-looking statements contained in this press release to reflect changes in their underlying assumptions, events, conditions or circumstances. The forward-looking statements contained in this press release are for illustrative purposes only. Forward-looking statements and information are not guarantees of future performance and are subject to risks and uncertainties that are difficult to predict and generally beyond the Group’s control. These risks and uncertainties include, but are not limited to, the uncertainties inherent in research and development, future clinical data and analysis (including after granting a marketing authorization), decisions of the authorities regulatory (such as the U.S. Food and Drug Administration or European drugs (Agency) regarding when and when to approve any drug, process or biologic application filed for these product candidates, as well as their decisions regarding labeling and other factors likely to affect the availability or commercial potential of these product candidates A detailed description of the risks and uncertainties linked to the Group’s activities is given in chapter 4.4 Risk factors of the Group’s Reference Document filed with the Autorité des Marchés Financiers (AMF) under number D-18-0387 on April 25, 2018, available at the groups website (www.guerbet.com).

For more information on Guerbet, please visit www.guerbet.com

Contacts

Jrme Prints Financial director +33 (0) 145915000

Financial communications Benjamin lehari +33 (0) 156881125 [email protected] hurry Jennifer jullia +33 (0) 156881119 [email protected]

• 03242020 – Annual results 2019