Financial

Implanet Publishes Its Interim 2018 Results

September 19, 2018

BORDEAUX, France & BOSTON–(BUSINESS WIRE)–Regulatory News:

Implanet (Euronext Growth: ALIMP, FR0010458729, eligible for PEA-PME equity savings plans; OTCQX: IMPZY) (Paris:ALIMP) (OTCQX:IMPZY), a medical technology company specializing in vertebral and knee surgery implants, has announced its interim results for the six-month period ended June 30, 2018, as approved by the Board of Directors on September 18, 2018.

Ludovic Lastennet, Implanet’s Chief Executive Officer, commented: “Through our unrelenting focus on costs containment we were able to improve our operating performance in spite of a revenue contraction in the first half of 2018. Jazz® continued to deliver healthy sales growth, particularly in France (sales up 10%) and in the US (sales up 14% at constant exchange rates). We have already begun to replicate this direct sales model by opening a branch in the United Kingdom and a subsidiary in Germany. We have also extended the Jazz® range by introducing Jazz Evo® for the adult degenerative spinal disease market. Finally, we have obtained additional funds by arranging a €5 million1 convertible bond line. The implementation of these actions should continue in the coming months to lift our operating performance that has already begun to improve.”

In thousands of euros – IFRS* H1 2018 H1 2017 Change (%)
Revenue 3,632 4,119 -12%
Cost of sales -1,609 -2,014 -20%
Gross profit 2,023 2,105 -4%
Gross margin 55.7% 51.1% +4 pts
Operating costs -4,772 -5,189 -8%
Operating income/(loss) before non-recurring items -2,750 -3,084 +11%
Other non-recurring operating income/(expense) 0 -456
Operating income/(loss) -2,750 -3,540 +22%
Financial income/(loss) -22 -150 +85%
Net income/(loss) -2,772 -3,690 +25%

*Unaudited data

Jazz® revenue up 10% in France and up 14% in the United States (at constant exchange rates)

Implanet’s sales declined 12% to €3.6 million and fell 9% at constant exchange rates in the first half of 2018. Lower sales performance in the rest of the world segment was the main factor. The strong growth trajectory in Jazz® sales continued, especially in markets in which Implanet has a direct presence: +10% in France to €0.9 million and +14% (at constant exchange rates) to €1.1 million in the United States. Jazz®’s contribution to overall revenue continues to grow. It now stands at 61% of total revenue (vs. 58% in H1 2017).

Significant improvement in gross margin and operating performance

During the first half of 2018, Implanet’s gross margin improved by 4 points to 55.7% (vs. 51.1% in H1 2017). The main factor at work here was the shift in the product mix following the shutdown of the Arthroscopy business.

Implanet has kept a very tight grip on its operating costs, which continues to pay off handsomely quarter after quarter. Overhead declined 8% (or €0.4 million) over the period helping Implanet to cut its operating loss before non-recurring items by 11% and its operating loss by 22% to €2.7 million from €3.5 million in the first half of 2017.

During the first half, Implanet’s financial expenses improved significantly owing to the Company’s lower borrowing costs.

As a result of these factors, Implanet’s net loss narrowed to €2.8 million in the first half of 2018 (vs. €3.7 million in H1 2017).

Cash and cash equivalents

At June 30, 2018, Implanet held €2.0 million in cash and cash equivalents (vs. €4.0 million at December 31, 2017).

In August, Implanet also raised €0.5 million by issuing another tranche of its convertible bonds to the European Select Growth Fund. Implanet can also request the subscription of an additional 350 convertible bonds subject to certain conditions, which would enable it to raise €3.5 million to support Jazz®’s international development.

Significant advances and highlights

Business development: replication of the direct sales model in France and the United States to conquer the principal European markets

  • 155 surgeons using Jazz® technology in France and the United States (vs. 137 at June 30, 2017)
  • finalization of the strategic alliance with L&K Biomed (signature of the cross-distribution agreements covering respective products in Asia and Europe)
  • opening of Implanet’s branch in the United Kingdom
  • establishment of Implanet subsidiary in Germany, the largest market in Europe, to develop a mixed sales network (direct sales staff and exclusive sales agents).

Clinical development, innovation and regulatory affairs: compelling clinical results and strong increases in the uptake of Jazz®

  • encouraging results from the first surgeries carried out in Brazil using Jazz Lock®
  • publication of the results of the clinical in the form of a prospective assessment of Jazz®2 in vertebral column deformity surgery in the American Association of Neurological Surgeons’ Journal of Neurosurgery, supporting the use of the Jazz® platform as a promising alternative in the prevention of proximal junctional kyphosis
  • launch of Jazz Evo® dedicated to treat vertebral fusion indications in adults following CE mark and 510(K) authorization from FDA.

Next press release: 3rd quarter 2018 revenue on October 9, 2018 before the market opens.

About IMPLANET
Founded in 2007, IMPLANET is a medical technology company that manufactures high-quality implants for orthopedic surgery. Its flagship product, the JAZZ® latest-generation implant, aims to treat spinal pathologies requiring vertebral fusion surgery. Protected by four families of international patents, JAZZ® has obtained 510(k) regulatory clearance from the Food and Drug Administration (FDA) in the United States and the CE mark. IMPLANET employs 46 staff and recorded 2017 sales of €7.8 million. For further information, please visit www.implanet.com.

Based near Bordeaux in France, IMPLANET established a US subsidiary in Boston in 2013.

IMPLANET is listed on Euronext™ Growth market in Paris. The Company would like to remind that the table for monitoring the BEOCABSA, OCA, BSA and the number of shares outstanding, is available on its website: http://www.implanet-invest.com/suivi-des-actions-80

Disclaimer
This press release contains forward-looking statements concerning Implanet and its activities. Such forward looking statements are based on assumptions that Implanet considers to be reasonable. However, there can be no assurance that the anticipated events contained in such forward-looking statements will occur. Forward- looking statements are subject to numerous risks and uncertainties including the risks set forth in the registration document of Implanet registered by the French Financial Markets Authority (Autorité des marchés financiers (AMF)) on April 16, 2018 under number D.18-0337 and available on the Company’s website (www.implanet-invest.com), and to the development of economic situation, financial markets, and the markets in which Implanet operates. The forward-looking statements contained in this release are also subject to risks unknown to Implanet or that Implanet does not consider material at this time. The realization of all or part of these risks could lead to actual results, financial conditions, performances or achievements by Implanet that differ significantly from the results, financial conditions, performances or achievements expressed in such forward-looking statements. This press release and the information it contains do not constitute an offer to sell or to subscribe for, or a solicitation of an order to purchase or subscribe for Implanet shares in any country.

1 Conditions detailed in the press released of March 8, 2018
2 Clinical study by Dr. H. Francis Farhadi of the Ohio State University Medical Center (USA).

Contacts

IMPLANET
Ludovic Lastennet, Tel. : +33 (0)5 57 99 55 55
CEO
investors@implanet.com
or
NewCap
Investor Relations
Julie Coulot, Tel. : +33 (0)1 44 71 20 40
implanet@newcap.eu
or
NewCap
Media Relations
Nicolas Merigeau, Tel. : +33 (0)1 44 71 94 98
implanet@newcap.eu
or
AlphaBronze
US-Investor Relations
Pascal Nigen, Tel.: +1 917 385 21 60
implanet@alphabronze.net

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Drue De Angelis

Drue is Managing Partner for The De Angelis Group, Executive Search firm exclusively for the Ortho & Spine industry.

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