MANAGEMENT’S REVIEW – Q3 2022/23
In Q3, Ambu continued to execute on its ZOOM IN
strategy, focused on improving profitability to secure
strong, profitable growth. On the back of the company’s
positive momentum of the strategy launch, the strategy is
strongly anchored within the organisation. Similarly, the
company’s transformation journey is progressing well.
due to backorders and quarterly order movements last
Furthermore, Ambu is focused on optimising its
year. However, Ambu’s additional product areas within
Anaesthesia and Patient Monitoring experienced positive
growth tendencies, as the hospital market shows
continuous signs of post-Covid-19 recovery, with
improved access to hospitals and limited waiting lists.
geographical footprint to zoom in on growth, minimise
complexities and foster a more agile organisational
structure. With current operations across ~100 countries,
Ambu has started to exit ~40 countries, corresponding to
an estimated annual revenue of approximately DKK 20m.
Furthermore, on 1 August, Finn Möhring joined Ambu
and the Executive Leadership Team. Finn will lead
Ambu’s global R&D organisation as Chief Technology
Officer (CTO), applying his customer focus and extensive
track-record within R&D and the medical device industry.
In Q3, Ambu progressed to achieve optimal net working
capital and inventory performance. While the process
requires time, results are starting to show, with a better-
than-expected free cash flow before acquisitions,
totalling DKK 157m in Q3, and free cash flow for the
year-to-date reaching the positive level of DKK 4m.
During the quarter, Ambu continued to decrease its
inventory levels to DKK 985m from DKK 1,222m in Q4
2021/22, and the company’s net working capital has
further decreased to 21% of total revenue. Based on
this, Ambu now expects a free cash flow before
acquisitions to be improved by DKK +500m for the
financial year, compared to the full-year 2021/22.
These strategic initiatives are expected to have a positive
impact on profitability and cash flow mid-term, but will
potentially result in a revenue decline in 2023/24 within
Anaesthesia and Patient Monitoring, combined.
BOOSTING PATIENT SAFETY & EFFICIENCIES
Across hospitals and out-patient clinics, Ambu continues
to see clear indications of concrete patient safety and
efficiency benefits of single-use endoscope solutions,
across endoscopy segments.
As a result of Ambu’s strategy execution and perfor-
mance, the company adjusted its financial guidance on
10 July 2023. Ambu upgraded its full-year EBIT margin
before special items to 5-6% (previously 3-5%), mainly
driven by a better-than-expected gross margin, due to
a strengthened product mix.
Specifically, a new independent 1,000-patient cystoscopy
study1, comparing single-use cystoscopes with reusab-
les, showed that 7.1% of the 494 patients treated with re-
usable cystoscopes returned for an unplanned post-
procedure encounter, while only 2.2% out of 506 patients
treated with single-use cystoscopes returned. As such,
the results of this particular study point to patients
experiencing a heightened level of safety upon treatment
with single-use cystoscopes over reusables.
Q3 FINANCIAL PERFORMANCE
ONGOING TRANSFORMATION PROGRAM
Ambu’s transformation program aims to support the
ZOOM IN strategy and the delivery of strong profitable
growth. While Ambu in H1 2022/23 focused on priori-
tising and defining the scope of transformation projects,
the focus in H2 2022/23 lies on identifying and executing
on initiatives to create momentum and increase profita-
bility. This will build a foundation for Ambu to embark on
longer-term projects and scalability in the coming years.
In Q3 2022/23, Ambu posted organic revenue growth
of 8% (8%), driven by growth in the Endoscopy Solutions
business, offset by the Anaesthesia and Patient Moni-
toring businesses.
Endoscopy Solutions increased 23%, the main growth
drivers being urology and ENT (ear, nose and throat) that
posted high double-digit growth, indicating that Ambu’s
single-use benefits of availability and workflow efficiency
continue to resonate strongly with customers. Also,
pulmonology returned to positive growth, due to increa-
sed procedure volumes, as a result of the healthcare
market recovering from Covid-19, as well as strength-
ened single-use penetration of Ambu’s growing pulmo-
nology portfolio.
Another recently published case study2, in this instance
focused on single-use gastroscopes, highlighted that the
change from reusable to single-use gastroscopes
allowed GI endoscopists to perform an additional
bariatric procedure each week, potentially increasing the
reimbursement revenue in excess of $800K annually.
Ambu plans to improve profitability in the Anaesthesia
and Patient Monitoring businesses by implementing
sizable price increases in selected low-margin areas.
This will enable the company to allocate resources and
focus its attention on higher-growth areas, ultimately
improving profitability and cash flow in the Anaesthesia
and Patient Monitoring businesses.
With studies like the two above, comparing single-use
endoscopy to reusable, the value of single-use endo-
scopy to healthcare systems and patients is proving
increasingly substantial, hereby continuously furthering
the transition towards single-use.
Anaesthesia and Patient Monitoring posted an organic
growth of -7% (14%) and -7% (20%), respectively. The
decrease was driven by high comparables in Q3 21/22,
1 Geldmaker, Laura E, Baird, Bryce A., Timothy, Lyon D., et al (2023): “Conversion to Disposable Cystoscopes
Decreased Post-procedure Encounters and Infections Compared to Reusable Cystoscopes”
5
Company announcement no. 12 2022/23
|
31 August 2023
2 Hoffman D & Cool C (2023): “Single-use Gastroscope Usage and Implications in a High Procedure Volume Facility:
A Case Study” (presented at Digestive Disease Week 2023; May 6-9; Chicago, IL; Accessed May 9, 2023)
