EQS-News: SYNLAB AG: SYNLAB reports strong underlying performance in 9M 2022, confirms 2022 guidance and releases 2023 guidance

• Robust 9M 2022 performance with revenue of 2.5 billion
• Strong underlying organic growth (excluding COVID-19 related revenues): +6.3% in 9M 2022 and +4.1% in Q3 2022, well above our mid-term organic growth target
• COVID-19 testing revenue 720 million in 9M 2022 (105 million in Q3 2022), as expected
• 9M 2022 adjusted EBITDA of 663 million, margin at 26.0% (135 million and 19.3% in Q3 2022)
• Four acquisitions completed in Q3 2022 and highly value accretive disposal of the UK Veterinary business
• Net debt reduced by 217 million to 1,454 million with strong unlevered free cash flow
• FY 2022 guidance confirmed: revenue around 3.2 billion and adjusted EBITDA margin at 24-25%
• FY 2023 guidance: revenue at around 3.0 billion and adjusted EBITDA margin expected at 18-20%

SYNLAB, the leader in medical diagnostic services and specialty testing in Europe, today announced its Q3/9M 2022 results. The Group reports a very robust 9M 2022 performance driven by strong underlying organic growth (excluding COVID-19 related revenues) of 6.3% and COVID-19 testing in line with expectations. Revenue reaches 2.5 billion (9M 2021: 2.8 billion) with an adjusted EBITDA margin of 26.0% (9M 2021: 32.7%). SYNLAB also confirms its FY 2022 guidance with a revenue target at around 3.2 billion and an adjusted EBITDA margin within a 24-25% range. For FY 2023, SYNLAB expects revenue to be around 3.0 billion with an adjusted EBITDA margin at 18-20%.

We are very pleased with our nine-month results performance especially considering the high comparison base from 2021. We continue to see strong underlying growth, which further stabilised in the third quarter and is consistent with our very good base business performance over the past months. We continued to make investments both in our growth initiatives such as retail as well as through further acquisitions across different regions. To navigate through the current inflation-driven environment, SYNLAB uses price adaptations in selective areas and will further increase the focus on cost savings. Based on our strong performance, we are able to confirm our outlook for FY 2022 today and are well-positioned for 2023 said Mathieu Floreani, CEO of SYNLAB Group.

Key figures

Note: The expected decrease in COVID-19 PCR price and volume affects the year-on-year comparison.

Financial performance

Continued strong underlying growth at 6.3% and expectedly lower COVID-19 testing

Compared to the high prior-year base, 9M 2022 reported revenue was down 8% to 2,549 million (9M 2021: 2,772 million). This included a 18% year-on-year decline in Q3 2022, driven by a reduction in the COVID-19 testing activity.

9M 2022 underlying organic growth (excluding COVID-19 related revenues) remains strong at 6.3%, which was mostly volume-driven (6.0% volume growth), while prices were broadly stable at 0.3%. Adjusted for the scope effect from the Southeast London hospital outsourcing contract (The SEL contract) in Q1 2022, 9M 2022 underlying organic growth was a robust 3.5%, in line with our longer-term guidance.

Q3 2022 underlying organic growth was 4.1% as volume growth picked up post the Omicron wave, notably in most countries of South and North & East segments. In Germany, hospital activity remained impacted by the stronger impact of COVID-19 in Q3 2022 compared to last year. Q3 2022 prices were also up 1.0% resulting in a positive effect of around 10 million based on price increases in several countries from the North & East and South segments. The price increases were only partially offset by an expected negative price impact in Switzerland and France. SYNLAB also continued with the implementation of its organic growth initiatives: The Group opened 21 new blood collection points in Q3 2022 as part of its retail initiative. In specialty testing, SYNLAB reached an expansion of its strategic agreement with Microba on an advanced gut microbiome test.

9M 2022 COVID-19 testing revenue was in line with expectations and declined by 39% to 725 million[2] (9M 2021: 1,180 million[3]). SYNLAB performed 16.1 million PCR tests during the nine-month period. The average price per PCR test was around 42 in 9M 2022, down from around 51 in 9M 2021.

The total contribution of the fourteen acquisitions finalised in 9M 2022 was 33 million[4], including around 5 million of COVID-19 testing revenue. This represented a 1.1% revenue increase compared with 9M 2021. The four additional acquisitions in Q3 2022 were bolt-on deals in Italy, Germany, Spain and Ecuador. In Q3 2022 and as part of its continuous portfolio review, SYNLAB sold its UK Veterinary testing business for total net proceeds of 84 million. The UK Veterinary testing business has an insignificant impact on yearly Group revenue and adjusted EBITDA.

9M 2022 adjusted EPS was 1.50[5] (H1 2022: 1.44).

The 9M 2022 unlevered free cash flow generation was strong recording 339 million. Together with the reduced net interest and the proceeds from the sale of the UK Veterinary testing business, it enabled SYNLAB to reduce adjusted net debt by another 217 million during the reporting period. Meanwhile, SYNLAB continued to invest in M&A (92 million cash out in 9M 2022). At the end of September 2022, adjusted net debt was 1.45 billion compared with 1.67 billion at the end of December 2021. The leverage ratio[6] remains at a low level: 1.5x at the end of September 2022.

The conference call with the SYNLAB Management Board for analysts and investors at 3:00 p.m. CET can be accessed here.

For more information:

About SYNLAB

• SYNLAB Group is the leader in medical diagnostic services and specialty testing in Europe. The Group offers a full range of innovative and reliable medical diagnostics to patients, practising doctors, hospitals and clinics, governments and corporates.
• Providing the leading level of service within the industry, SYNLAB is the partner of choice for routine and specialty diagnostics in human and veterinary medicine. The Group continuously innovates medical diagnostic services for the benefit of patients and customers.
• SYNLAB operates in 36 countries across four continents and holds leading positions in most markets, regularly reinforcing the strength of its network through a proven acquisition strategy. Around 30,000 employees, including over 2,000 medical experts, contribute every day to the Groups worldwide success.
• SYNLAB performed around 600 million laboratory tests and achieved revenues of 3.76 billion in 2021.
• More information can be found on www.synlab.com

Financial Calendar

APPENDIX

1. Q3/9M 2022 SEGMENT REPORTING

1. 9M VIEW

1. QUARTER VIEW

The Q3/9M 2022 report has been published on the SYNLAB Investor Relations website.

This document does not constitute or form a part of, and should not be construed as, an offer for sale or subscription of or solicitation of any offer to purchase or subscribe for any securities in any jurisdiction.

Statements made in this document may include forward-looking statements. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believes," "expects, expected, "may," "will," "would," "should," "seeks," "pro forma," "anticipates," "intends," "plans," "estimates," estimated, or the negative of any thereof or other variations thereof or comparable terminology, or by discussions of strategy or intentions. These statements are not guarantees of future actions or performance and involve risks, uncertainties and assumptions as to future events that may not prove to be accurate. Actual actions or results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and SYNLAB undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. It should be noted that past performance is not a guide to future performance. Interim results are not necessarily indicative of full-year results.

Certain data included in this document are "non-IFRS" measures. These non-IFRS measures may not be comparable to similarly titled financial measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with International Financial Reporting Standards or any other generally accepted accounting principles. Although SYNLAB believes these non-IFRS financial measures provide useful information to users in measuring the financial performance and condition of its business, users are cautioned not to place undue reliance on any non-IFRS financial measures and ratios included in this document. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

^[1] Based on 221,919,992 shares in 9M 2022

^[2] Including ~5 million COVID-19 revenue from acquired companies in 2022

^[3] Including ~43 million COVID-19 pre-acquisition revenue from 2021 acquisitions

^[4] Including post-acquisition revenue contribution of 23.1 million and pre-acquisition revenue of 9.5 million

^[5] Based on 221,919,992 shares in 9M 2022

^[6] Net debt to LTM pro-forma adjusted EBITDA

^[7] 9M 2021 AEBITDA, AOP and Adjusted net profit restated by 0.7 million: share-based payment programmes no longer reported as an adjustment component