2016: A Historic Year for VEXIM

2016: A Historic Year for VEXIM

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TOULOUSE, France–(BUSINESS WIRE)–Regulatory News:

VEXIM (Paris:ALVXM) (FR0011072602 – ALVXM), a medical device company specializing in the minimally invasive treatment of vertebral fractures, today announces its consolidated annual results (IFRS1) as of December 31st, 20162.

« Our 2016 results represent a historic turning point for VEXIM. VEXIM has reached profitability and generated a positive cash flow over the second half of 2016. These excellent results validate our profitable growth strategy. This trend should continue during 2017, as we expect sales growth of 30% to 35%, and full-year profitability. We expect to launch SpineJack® in the United States – the largest market for vertebral fractures – in 2018, further generating strong sales growth. We will decide and announce our business strategy for the US, aimed at capturing market share and building shareholder value, later this year. These achievements demonstrate that VEXIM is on the right track to become a global leader in the market of spine trauma », said Vincent Gardès, CEO of VEXIM.

Strong sales increase, solid gross margin on sales and positive net income in the second half of 2016

For the first time, and in order to comply with international standards, VEXIM issues its consolidated financial statements, in accordance with International Financial Reporting Standards (IFRS). Appendixes, on page 9 of this press release, include the conversion tables from French accounting standards to IFRS for the consolidated income statements of the financial years 2015 and 2016.

IFRS consolidated statement
(in millions of Euros)

As of December 31st Variation First Half Second Half
2016 2015 2016 2016
Revenue 18.5 13.9 33% 8.6 9.9
Gross margin 13.4 9.9 35% 6.3 7.1
Gross margin (% of sales) 72.2% 71.5% 73.8% 70.9%
Operating expenses -16.5 -14.7 12% -9.2 -7.4
Operating loss -3.2 -4.8 -33% -2.9 -0.3
Income tax & finance costs, net 0.5 0.1 0.4
Profit / (loss) for the period -2.7 -4.8 -44% -2.8 0.1

2016 highlights

  • New sales record in the 4th quarter, at €5.2 million;
  • Finalized patient enrollment for the international clinical trial intended to support our 510(k) submission to the FDA – announced on February 21st, 2017;
  • Initiated a medico-economic study comparing the SpineJack® to conservative orthopedic management (bracing) on 100 patients with a 1 and 2-year follow-up;
  • Secured long-term cash position, thanks to a successful private placement of €10.4 million in January 2016;
  • Strengthened our management team with the appointments of François Cathelineau as VP Operations, Sébastien Lemoine as VP International Sales & Market Development, followed by the appointment of Russell Powers as VP & General Manager of the US activities, in January 2017.

€18.5 million in sales: VEXIM continues to expand at a steady pace (+33%)

VEXIM’s sales for 2016 have reached €18.5 million, an increase of 33% compared to 2015. This significant growth underlines the effectiveness of the direct sales strategy implemented by the company for SpineJack® in Europe, as well as the broader adoption of the technology.

The gross margin on sales (“gross margin”) also increased by 35% compared to 2015, reaching €13.4 million (€6.3 million in the first half of 2016), representing 72.2% of sales.

The gross margin maintained itself at a high percentage due to growing sales in Europe and competitive pricing, with the support of our direct-sales strategy. The 70.9% gross margin on sales in the second half of 2016 is explained by growing sales performance in countries with indirect distribution.

Impact of gross margin and cost control: strongly reducing annual losses and generating net profit in the second half of 2016

The second half of 2016 marked a historic turning point for VEXIM, which proved its ability to achieve profitable growth and financial discipline.

Operating expenses only increased by 12% in 2016, up to €16.5 million, while sales grew 33% over the same period. Such control of operating costs contributed to further decrease the operating losses, from €4.8 million loss in 2015 to €3.2 million loss to in 2016. The net loss recorded in 2016, which includes income tax and finance costs of €0.5 million, is €2.7 million compared to €4.8 million in 2015.

For the first time since its creation in 2006, VEXIM recorded a net profit of €0.1 million in the second half of 2016. This major step is the result of the strategy followed over the past two years by VEXIM, with the aim of self-financing:

  • Gained market shares in France and abroad, to drive further revenue growth;
  • Used its technological advance to support competitive pricing and a high gross margin;
  • Drew on productivity gains and effective cost control to maintain the beneficiary’s capacity and generate cash.

Positive cash flows in the second half of the year (+€0.3 million)

As of December 31st, 2016, the Group’s cash position stood at €9.8 million (vs. €9.4 million as of June 30th, 2016), boosted by a free cash flow of €0.3 million in the second half of the year. The current cash position and future cash flows should allow VEXIM to self-finance, in line with its ambitions. VEXIM plans to generate a positive free cash flow from operations over the full year in 2017.

2017 objectives: Perspectives for a strong and profitable growth

Despite an increasingly demanding “baseline” VEXIM aims to keep achieving significant sales growth in 2017, combined with full-year profitability:

  • Expected strong sales growth of +30% to +35%;
  • Achieve profitability on a full-year basis;
  • FDA 510(k) filing in the United States during the last quarter, for an expected market launch in the first half of 2018;
  • Continue to expand abroad with new partnerships in Brazil, Australia and South Korea;
  • Keep on innovating in the treatment of vertebral fractures, by developing new products to extend the current portfolio.

To support VEXIM’s accelerated development, the Board of Directors has approved a “technical”3 project to transfer VEXIM’s listing from Alternext to the regulated market of Euronext Paris.

Financial reporting schedule:
1st quarter sales: April 19th, 20174

About VEXIM, the innovative back microsurgery specialist

Based in Balma, near Toulouse (France), VEXIM is a medical device company created in February 2006. The Company has specialized in the creation and marketing of minimally invasive solutions for treating traumatic spinal pathologies. Benefitting from the financial support of it longstanding shareholder, Truffle Capital5, and from OSEO public subsidies, VEXIM has designed and developed the SpineJack®, a unique implant capable of repairing a fractured vertebra and restoring the balance of the spinal column. The company also developed the MasterflowTM, an innovative solution for mixing and injecting orthopedic cement that enhances the accuracy of the injection and optimizes the overall surgical procedure. The company counts 66 employees, including its own sales teams in Europe and a network of international distributors. VEXIM has been listed on NYSE Alternext Paris since May 3rd 2012. For further information, please visit www.vexim.com

SpineJack®6, an innovative implant for treating Vertebral Compression Fractures

The SpineJack® is designed to restore a fractured vertebra to its original shape, restore the spinal column’s optimal anatomy and thus remove pain and enable the patient to recover their functional capabilities. Thanks to a specialized range of instruments, inserting the implants into the vertebra is carried out by minimally invasive surgery, guided by X-ray, in approximately 30 minutes, which is intended to enable the patient to be discharged shortly after surgery. The SpineJack® range consists of 3 titanium implants with 3 different diameters, thus covering 95% of vertebral compression fractures and all patient morphologies. SpineJack® technology benefits from the support of international scientific experts in the field of spine surgery and worldwide patent protection through to 2029.

Nom : VEXIM
Code ISIN : FR0011072602
Code mnémonique : ALVXM

1 The results have been audited and approved by the Board of Directors of Vexim on March 21st, 2017.
2 Consolidated financial statements presented in Appendix.
3 Transfer of listing with no capital raising.
4 Indicative date, subject to changes.
5 Founded in 2001 in Paris, Truffle Capital is a leading independent European private equity firm. It is dedicated to investing in and building technology leaders in the IT, life sciences and energy sectors. Truffle Capital manages €550m via FCPRs and FCPIs, the latter offering tax rebates (funds are blocked during 7 to 10 years). For further information, please visit www.truffle.fr and www.fcpi.fr.
6 This medical device is a regulated health product that, with regard to these regulations, bears the CE mark. Please refer to the Instructions for Use.

Appendixes

IFRS consolidated financial statements

Consolidated income statements

In thousands of Euros Year ended December 31,
2015 2016
Revenue 13 888 18 504
Cost of sales (3 956) (5 143)
Gross profit 9 932 13 361
Selling and marketing expenses (8 470) (8 744)
Operations expenses (2 839) (3 041)
General and administrative expenses (3 916) (5 165)
Other gains / (losses), net 465 426
Operating loss (4 828) (3 163)
Finance income / (loss), net 2 (28)
Loss before income tax (4 826) (3 191)
Income tax expense (43) 468
Loss for the year (4 869) (2 723)
Attributable to:
Equity holders of the Company (4 869) (2 723)
Earnings per share attributable to the equity holders of the Company
Basic earnings per share (0,77) (0,36)
Diluted earnings per share (0,77) (0,36)

Consolidated balance sheet – assets

As at December 31,
In thousands of Euros 2014 2015 2016
Intangible assets 765 1 029 2 229
Property and equipment 733 935 1 382
Other receivables 231 218 171
Deferred tax assets 522
Non-current assets 1 730 2 182 4 304
Inventories 2 344 3 650 3 675
Trade receivables 2 560 3 606 4 670
Other receivables 1 336 1 829 2 255
Cash and cash equivalents 10 115 4 208 9 765
Current assets 16 355 13 293 20 365
Total assets 18 085 15 474 24 669

Consolidated balance sheet (equity and liabilities)

As at December 31,
In thousands of Euros 2014 2015 2016
Ordinary shares 634 635 762
Share premium 51 027 51 185 61 109
Other reserves (10) 423 1 204
Retained earnings (37 788) (42 658) (45 383)
Equity attributable to equity holders of the Company 13 863 9 585 17 693
Non-controlling interests
Total equity 13 863 9 585 17 693
Repayable advances 867 712 427
Retirement benefit obligations 113 148 111
Non-current liabilities 981 860 538
Repayable advances 106 210 314
Trade payables 1 385 2 586 2 365
Other payables 1 750 2 159 3 541
Provisions for other liabilities and charges 73 218
Current liabilities 3 241 5 029 6 438
Total liabilities 4 222 5 889 6 976
Total equity and liabilities 18 085 15 474 24 669

Consolidated cash-flow statement

In thousands of Euros 6-month period ended
2015 2016 June 30, 2016 December 31, 2016
Net income / (loss) (4 869) (2 723) (2 806) 83
Adjustments for:
Depreciation of tangible assets and amortization of intangible assets 168 289 136 153
Impairment of receivables (12) 74 83 (9)
Impairment of inventories (64) 121 20 101
Share-based payments 438 698 277 421
Change in retirement benefit obligation 35 55 27 28
Variation in provisions for risks 73 145 167 (22)
Income tax 43 (468) 35 (503)
Cash generated by / (used) in operations before changes in working capital (4 188) (1 809) (2 061) 252
Changes in working capital
Inventories (1 242) (147) (12) (135)
Trade receivables (1 033) (1 139) (693) (446)
Other receivables (492) (380) (436) 56
Trade payables 1 201 (221) (518) 297
Other payables 510 1 369 158 1 211
Cash generated by / (used) in changes in working capital (1 056) (518) (1 501) 983
Net cash generated by / (used) in operating activities (5 244) (2 327) (3 562) 1 235
Cash flows from investing activities
Purchases of tangible assets (384) (763) (595) (168)
Purchases of intangible assets (286) (1 164) (443) (721)
Disposal of assets 16
Net cash used in investing activities (654) (1 928) (1 038) (890)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 158 10 472 10 453 19
Direct costs paid related to share issuance (421) (421)
Repayable advance (106) (210) (210)
Treasury shares (83) (55) (55)
Net cash generated by / (used) in financing activities (31) 9 786 9 822 (36)
Net increase / (decrease) in cash and cash equivalents (5 929) 5 531 5 222 309
Cash and cash equivalents at beginning of the year/ period 10 115 4 208 4 208 9 419
Effect of exchange rate fluctuations 22 26 (12) 38
Cash, cash equivalents at end of the year/ period 4 208 9 765 9 419 9 765

Conversion tables from French accounting standards to IFRS

In thousand Euros 2015
French GAAP
presented
under IAS / IFRS

Share-based
payments

R&D projects

Retirement
benefit
obligations

Others 2015
IAS/ IFRS
(1) (2) (3) (4)
Revenue 13 888 13 888
Cost of sales (3 956) (21) (3 977)
Gross profit 9 932 (21) 9 911
Selling and marketing expenses (8 316) (154) (8 470)
Operations expenses (2 788) (32) (18) (2 839)
General and administrative expenses (3 659) (252) (20) 21 (3 909)
Other gains / (losses), net 480 480
Operating loss (4 351) (438) (18) (20) (4 828)
Finance income / (loss), net 2 2
Loss before income tax (4 349) (438) (18) (20) (4 826)
Income tax expense (43) (43)
Loss for the year (4 392) (438) (18) (20) (4 869)
Attributable to:
Equity holders of the Company (4 392) (438) (18) (20) (4 869)
In thousand Euros

2016
French GAAP
presented
under IAS / IFRS

Share-based
payments

R&D projects

Retirement
benefit
obligations

Others

2016
IAS/ IFRS

(1) (2) (3) (4)
Revenue 18 504 18 504
Cost of sales (5 099) (44) (5 143)
Gross profit 13 405 (44) 13 361
Selling and marketing expenses (8 452) (293) (8 744)
Operations expenses (2 985) (56) (3 041)
General and administrative expenses (4 768) (349) (91) 44 (5 165)
Other gains / (losses), net 426 426
Operating loss (2 374) (698) (91) (3 163)
Finance income / (loss), net (28) (28)
Loss before income tax (2 402) (698) (91) (3 191)
Income tax expense 468 468
Loss for the year (1 934) (698) (91) (2 723)
Attributable to:
Equity holders of the Company (1 934) (698) (91) (2 723)
In thousand Euros First half 2016
French GAAP
presented
under IAS / IFRS

Share-based
payments

R&D projects

Retirement
benefit
obligations

Others

First half 2016
IAS/ IFRS

(1) (2) (3) (4)
Revenue 8 564 8 564
Cost of sales (2 226) (21) (2 246)
Gross profit 6 338 (21) 6 318
Selling and marketing expenses (4 787) (140) (4 927)
Operations expenses (1 604) (15) (1 619)
General and administrative expenses (2 772) (122) 21 (2 873)
Other gains / (losses), net 249 249
Operating loss (2 574) (277) (2 851)
Finance income / (loss), net 82 82
Loss before income tax (2 493) (277) (2 770)
Income tax expense (36) (36)
Loss for the year (2 529) (277) (2 806)
Attributable to:
Equity holders of the Company (2 529) (277) (2 806)

(1) Share-based payments valued in accordance with IFRS 2 and relative to BSA and BSPCE plans. Expense allocated to each department based on the employees’ affiliation.

(2) Restatement of year 2015, regarding a project which, activated according to the French accounting standards in the previous years, does not meet all 6 criteria of IAS 38.57, namely of how the intangible fixed asset will generate probable future economic benefits.

(3) Recalculated pension liabilities as of December 31st, 2015, to reveal actuarial gains pursuant to IAS 19.

(4) Reclassifications: depreciation on production equipment, namely mould manufacturing initially recorded under “General and administration costs”, which have been reclassified under “Cost of goods sold”.

Contacts

VEXIM
Vincent Gardès, CEO
José Da Gloria, Chief Financial Officer
investisseur@vexim.com
Tel.: +33 5 61 48 48 38
or
PRESS RELATIONS
ALIZE RP
Caroline Carmagnol / Wendy Rigal
vexim@alizerp.com
Tel.: +33 1 44 54 36 66
Tel.: +33 6 48 82 18 94

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