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19.02.2021

SYNLAB Limited reports non-audited financial results: Revenue reaches EUR 2.6 billion and adjusted EBITDA EUR 679 million in FY 2020


• +38% revenue increase supported by the high demand for SARS-CoV-2 testing and the successful  
   implementation of customer-centric medical excellence strategy
• +71% adjusted EBITDA growth reflecting strong operating leverage
• +65% unlevered free cash flow generation1
• Net financial debt2 to adjusted EBITDA leverage ratio reduced to 3.3x
• Further profitable growth expected over the mid-term: revenue growth of ~10% per annum, including
   organic growth of 3%+ per annum
• CEO Mathieu Floreani: “Diagnostic testing will continue to remain an integral part of pandemic control
  strategies”

SYNLAB Limited, a leading international medical diagnostics provider, announces preliminary, non-audited (and as such subject to change) FY 2020 results, which reflect the sale of the Analytics & Services ("A&S") business in December 2020 (with comparative FY 2019 results restated to reflect the A&S divestment). Complete and fully audited results for the FY ended on 31 December 2020 will be announced as scheduled on 25 March 2021, at the latest.

“We continue to follow our profitable growth path with the diligent implementation of our strategy focused on customer-centric medical excellence,” says Mathieu Floreani, CEO of SYNLAB Group. “Our achievements in this respect have been a clear demonstration of our medical, operational and commercial leadership in Europe. The COVID-19 pandemic has strongly underlined the importance of diagnostic testing services. We are a central part of the medical infrastructure battling the pandemic across Europe, and we continue to leverage our medical expertise, capabilities, and scale to partner with national healthcare systems and governments in the roll-out of tests and procedures. Alongside vaccination programs fortunately ramping up across our key markets, diagnostic testing will continue to remain an integral part of pandemic control strategies in the mid-term.”



Robust underlying business growth and high demand for SARS-CoV-2 diagnostics drove a 38% increase in revenue to EUR 2.6 billion in FY 2020 (FY 2019: EUR 1.9 billion)

In 2020, SYNLAB continued to benefit from its unmatched geographic reach with an extensive lab infrastructure across 36 countries. The consistent implementation of its strategy of medical excellence and its offering of value-add services supported robust organic revenue growth of 3.5-4.0%, excluding the estimated revenue growth contribution related to the COVID-19 pandemic3.
Its scale, operational flexibility and financial strength enabled SYNLAB to create the industry-leading SARS-CoV-2 PCR testing infrastructure across its markets. The Group is a reliable and trusted partner for governments and institutions and provides safe-at-work solutions with more than 6,500 testing contracts with international companies. In addition, SYNLAB has been awarded landmark engagements such as the SARS-CoV-2 testing contract with UEFA.

Adjusted EBITDA increased by 71% to EUR 679 million, showing strong operating leverage
SYNLAB operates a network of highly efficient laboratories, continuously reinforced through its programme of operational excellence. Despite a substantial increase in operating costs to meet the surge in demand for SARS-CoV-2 testing, the Group was able to increase adjusted EBITDA by 71% to EUR 679 million (FY 2019: EUR 397 million).

Strong unlevered free cash flow generation
Profit growth and good cash conversion ratio (despite the impact of SARS-CoV-2 testing activity on working capital) resulted in strong unlevered free cash flow of EUR 272.9 million in FY 2020 (FY 2019: EUR 164.9 million).
The strong cash generation profile of SYNLAB supports continued organic growth and acquisitions, while maintaining a sound capital structure. At the end of 2020, the net financial debt4 to adjusted EBITDA leverage ratio more than halved to 3.3x compared to at the end of 2019.

Mid-term outlook: further profitable growth expected
As the largest medical diagnostics provider in Europe by revenue, SYNLAB is in a strong position to support further growth and consolidation in the industry.
In the short-term, SYNLAB expects the revenue and cash flow-enhancing impacts of SARS-CoV-2 testing to continue as the Group benefits from its leading position for SARS-CoV-2 diagnostics.
In the mid-term, SYNLAB expects revenue growth of ~10% per annum5, including organic growth of 3%+ per annum and M&A growth, supported by approximately EUR 200 million of M&A spending per annum.
Strong operating leverage is expected to support an EBITDA margin of approximately 23%, while a cash conversion ratio of 45-50% is expected to translate into high free cash flow generation.

 

For more information:

Media contact:
Daniel Herbert
FTI Consulting

Investor contact:
Mark Reinhard
SYNLAB

+49 (0) 69 9203 7183
Daniel.Herbert@fticonsulting.com


+49 (0) 170 118 3753
Mark.Reinhard@synlab.com

About SYNLAB

• SYNLAB Group is a leading international medical diagnostics provider. SYNLAB offers a full range of innovative and reliable medical diagnostics for patients, practising doctors, clinics and the pharmaceutical industry.

• Providing the leading level of service within the industry, SYNLAB is the partner of choice for 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. Around 20,000 employees, including over 1,200 medical experts, as well as a large number of other specialists such as biologists, chemists and laboratory technicians, contribute every day to the Group’s worldwide success. SYNLAB carries out ~500 million laboratory tests per year and achieved revenues of EUR 2.6 billion in 2020.

More information can be found on www.synlab.com

This announcement includes certain "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.


APPENDIX

The SYNLAB Limited FY 2020 and FY 2019 (restated) results shown below are preliminary, non-audited (and as such are subject to change). They reflect the sale of the A&S business in December 2020. Complete and fully audited results will be announced as scheduled on 25 March 2021, at the latest.


ALTERNATIVE PERFORMANCE INDICATORS

Operating profit to adjusted EBITDA and adjusted operating profit reconciliation (EURm)

 

2020

2019

Operating profit

315.5

71.9

Adjustments for:

 

 

Restructuring and other significant expenses

17.1

30.1

Acquisitions related income / (expenses)

1.9

(1.6)

Impairment of non-current assets

115.0

91.1

Operating profit before acquisition,
restructuring and impairment of non-current assets

449.5

191.5

Adjustments for:

 

 

Depreciation and amortisation

226.2

196.8

Share-based payments

3.6

5.8

Other non-recurring costs

-

3.3

Adjusted EBITDA6

679.2

397.4

 

 

 

2020

2019

Adjusted EBITDA

679.2

397.4

Other adjustments for:

 

 

Depreciation and amortisation

(226.2)

(196.8)

Amortisation for Customer Relationships

51.4

53.0

Adjusted Operating Profit

504.5

253.6

 

 

 

Cash flow statement (EURm)

 

2020

2019

Adjusted EBITDA

679.2

397.4

Movements in working capital

(154.5)

1.2

Income tax paid

(41.8)

(39.8)

Change in provisions and other

(1.8)

(33.9)

Operating cash flow

481.2

325.0

Net purchase capex

(93.3)

(69.0)

Finance lease

(115.1)

(91.1)

Unlevered free cash flow

272.9

164.9

Net interest

(128.4)

(120.8)

Free cash flow

144.4

44.1

Acquisitions

(15.6)

(79.5)

 

 

 

Net debt reconciliation (EURm)


2020

2019

Total financial debt

2,736.8

2,708.8

Lease liabilities

421.9

377.5

Cash and cash equivalents

(904.9)

(231.7)

Net financial debt

2,253.8

2,854.6

 

 

 

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SYNLAB Limited reports non-audited FY20 financial results.pdf

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1 Unlevered free cash flow pre-M&A defined as cash flow from operating activities of continuing operations, adjusted for purchase of intangibles and property, plant and equipment, proceeds from sale of intangibles and property, plant and equipment, and lease repayments

2 Net financial debt defined as sum of financial debt including senior notes as well as accrued interest and leases less cash & cash equivalents 

3 Revenue growth related to the COVID-19 pandemic is measured as the increase in revenue from SARS-CoV-2 testing minus the attrition impact on revenue from confinement measures, such as closures of blood collection points or patients delaying non-critical medical care, that resulted in temporary decreases in ordinary testing volumes.

4 Net financial debt defined as sum of financial debt including senior notes as well as accrued interest and leases less cash & cash equivalents

5 Using 2019 as the base year

6 Adjusted EBITDA for 2020 does not reflect the EUR 1 million net full-year impact of acquisitions and disposals in the year or the EUR 5 million impact of certain services that the Group will continue to perform for former subsidiaries in its A&S business unit following the sale of that business unit in 2020. Adjusted EBITDA for 2019 does not reflect the EUR 3 million net full-year impact of acquisitions and disposals in the year, the EUR 5 million impact of certain services that the Group will continue to perform for former subsidiaries in its A&S business unit following the sale of that business unit in 2020, or the EUR 12 million impact of amendments to laboratory machine contracts with embedded lease arrangements agreed during 2019. The management of SYNLAB takes the impact of each of these items into consideration when determining its outlook and guidance.