Safe Orthopaedics 2016 Revenue Down 5.3 Percent

Safe Orthopaedics’ 2016 financial performace was a bit of a paradox.

Its total revenue slid 5.3 percent to 2.36 million euros, but when adjusted for discontinued U.S. operations (as of March 1, 2016), proceeds actually swelled 10 percent compared with 2015 (2.5 million euros), according to the company’s latest earnings report.
 
Revenue continued to grow in France, rising 16 percent to 1.2 million euros in 2016 despite its limited sales and marketing resources. The refocusing drive launched in the first quarter led to the reassignment of certain sales and marketing resources to the region, with new sales staff hired in the second half of the year. Although they did not contribute to FY 2016 revenues, these new staff should have a positive impact in 2017, especially following the recent listing of Safe Orthopaedics’ products in AP-HP’s 39 hospitals in the Paris region, which account for roughly one-quarter of the French market.¹
 
In the Rest of the World (excluding the United States), revenue growth was fairly sedate expanding 3 percent). The recent launch of sales and marketing operations in Germany should boost the company’s growth in 2017, executives claim.
 
Following the withdrawal from the United States in 2016, Safe Orthopaedics unlocked various savings, which led to a 1.1 million euros improvement in operating performance before non-recurring items.
 
After the decline in net financial income due to a negative foreign exchange impact, the FY 2016 net loss totaled 6 million euros versus a loss of 6.6 million euros in FY15.
 
Following its withdrawal from the United States in March 2016, Safe Orthopaedics set about reducing its cash consumption so that it could invest more in expanding its sales and marketing operations, chiefly in France, Germany and other European and emerging markets. As a result, it used 5.8 million euros in cash in FY16, down from 6.5 million euros the previous year. Safe Orthopaedics’ net cash² at Dec. 31, 2016, stood at 2.7 million euros, compared with 5.9 million euros at Dec. 31, 2015.
 
During 2017, based on its projections, the company will need to attract new financing in order to fulfill its funding requirements. The company is working on several scenarios.

During 2016 and since the beginning of 2017, Safe Orthopaedics has continued its realignment from an R&D-oriented company to one focused in priority on marketing its innovative technologies and delivering sales growth.
 
By strengthening its sales and marketing teams, which now account for over one-third of its headcount, Safe Orthopaedics intends to maintain this momentum. Following the recent hires of experienced managers, such as Jochen Esser (head of sales, Germany) and Pascale Davis (global head of marketing), Safe Orthopaedics plans to recruit additional talents in its priority markets during 2017.
 
“2016 marked a change in Safe Orthopaedics’ strategy. Thanks to our decision to withdraw from the United States to refocus in priority on the European market, we successfully managed to reduce our cash consumption in less than a year, while also delivering growth, as demonstrated by our fourth-quarter 2016 performance,” said Pierre Dumouchel, CEO of Safe Orthopaedics since March 2016. “I intend to keep moving firmly in the same direction during 2017. AP-HP’s recent decision to list our products and the commercial launch of our product range in Germany, Europe’s largest market by far, have made me even more confident in our ability to maintain a solid pace of growth and further improve our financial performance in the current year.”
 
Founded in 2010, Safe Orthopaedics is a French medical technology company that aims to make spinal surgeries safer by using sterile implants and associated single-use instruments. Through this approach, these products eliminate all risk of contamination, reduce infection risks and facilitate a minimally-invasive approach for trauma and degenerative pathologies—benefiting patients. Protected by 17 patent families, the SteriSpineTM kits are CE-marked and U.S. Food and Drug Administration approved. The company is based at Eragny-sur-Oise (Val d’Oise department), and has 30 employees.

References:
1. Source: Company
2. Net cash represents cash and cash equivalents less short-term debt