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RaySearch Laboratories
Annual Report • Feb 23, 2021
3101_10-k_2021-02-23_33c9f5b5-a970-4f14-a2d6-c89fec5b8548.pdf
Annual Report
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YEAR-END REPORT 2020
"For full-year 2020, net sales declined 12 percent, mainly the result of lower license sales due to the COVID-19 pandemic. Operating loss totaled SEK -3 M (68) and cash flow was SEK 62 M (-3). Despite challenging market conditions, 2020 was a productive year as we significantly strengthened our product portfolio."
Johan Löf, CEO of RaySearch.
FOURTH QUARTER (OCTOBER-DECEMBER 2020)
- Order intake SEK 239.1 M (277.2)
- Net sales SEK 159.8 M (234.5)
- Operating loss SEK -14.6 M (22.5)
- Loss after tax SEK -14.2 M (18.9)
- Loss per share before/after dilution SEK -0.41 (0.55)
- Cash flow SEK -21.5 M (7.8)
- Order backlog SEK 1,161.3 M (1,155.2) at the end of the period
SIGNIFICANT EVENTS DURING THE FOURTH QUARTER
- The RayStation® treatment planning system was sold to more leading cancer centers, including Centre Eugène Marquis in France, Taipei Medical University Hospital in Taiwan, Dankook University Hospital in South Korea, the Clatterbridge Cancer Centre in the UK, and Riverside Regional Medical Center in the US. In addition, Johns Hopkins Medicine in the US and Centre Antoine Lacassagne increased their existing RayStation installations.
- In December, new versions of RaySearch's software were released the RayStation 10B* treatment planning system, which now supports brachytherapy and offers a speed revolution in Monte Carlo dose calculation for proton therapy, and the RayCare 4B®* oncology information system, which can now connect to Varian TrueBeamTM, offers improved integration with RayStation and supports multiple parallel treatments and workflows.
- In December, the first version of the RayIntelligence* oncology analytics system was released, as well as the RayCommand* treatment control system, which obtained marketing authorization in several European countries.
UPDATE REGARDING COVID-19
- The general market situation is continuously improving with continued recovery in Asia and signs of demand recovery in other regions. At the same time, a second or third wave of the pandemic is being registered in many countries and it is unclear how long it will take before the vaccination program has an effect. RaySearch therefore expects that the negative effects of the COVID-19 pandemic on the company's sales and earnings will continue for some months to come, mainly because orders may be delayed, but that these effects will normalize in 2021.
- Management is monitoring the situation closely and is prepared to take action if needed.
NO SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
FINANCIAL SUMMARY1
| AMOUNTS IN SEK 000s | OCT-DEC | JAN-DEC | |||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||
| Net sales | 159,835 | 234,499 | 651,612 | 741,584 | |
| Operating profit/loss | -14,592 | 22,468 | -3,466 | 68,169 | |
| Operating margin, % | -9.1 | 9.6 | -0.5 | 9.2 | |
| Profit/loss for the period | -14,164 | 18,937 | -9,080 | 50,411 | |
| Earnings/loss per share before/after dilution, SEK | -0.41 | 0.55 | -0.26 | 1.47 | |
| Cash flow from operating activities | 51,505 | 81,139 | 331,508 | 320,145 | |
| Cash flow for the period | -21,498 | 7,777 | 61,890 | -3,385 | |
| Return on equity, % | -2.0 | 2.8 | -1.3 | 7.4 | |
| Equity/assets ratio at the end of the period, % | 54.0 | 55.6 | 54.0 | 55.6 | |
| Share price at the end of the period, SEK | 82.7 | 107.2 | 82.7 | 107.2 |
* Marketing clearance is required in some markets. 1 For definitions of key ratios, see page 20.
TWELVE MONTHS (JANUARY-DECEMBER 2020)
- Order intake SEK 854.8 M (1,046.2)
- Net sales SEK 651.6 M (741.6)
- Operating loss SEK -3.5 M (68.2)
- Loss after tax SEK -9.1 M (50.4)
- Loss per share before/after dilution SEK -0.26 (1.47)
- Cash flow SEK 61.9 M (-3.4)
- The Board proposes that no dividend be paid for 2020
CEO COMMENTS
CONTINUED EXTRAORDINARY MARKET CONDITIONS
In the fourth quarter of 2020, the negative impact of the COVID-19 pandemic on RaySearch's sales continued. Market conditions were particularly challenging in Europe, while continued recovery was noted in Asia. We also began to see signs of recovery in North America towards year-end. It was very gratifying, for example, to receive a major order from the world renowned Johns Hopkins Medicine in December. They have been using RayStation for proton therapy planning since 2017, but have now expanded their RayStation installation to include all forms of photon therapy. Under the agreement, RayStation will be used by five of the Health System's centers.
In the fourth quarter, order intake amounted to SEK 239 M (277), representing a 14-percent decline year-on-year. Net sales declined
32 percent to SEK 160 M (234). The change was attributable to significantly lower license sales, mainly due to the COVID-19 pandemic. In addition, the company did not meet all of the criteria for recognizing license revenue for several large RayStation orders received at the end of the year, nor for two contracts related to our new RayCommand treatment control system, which was launched in December. Instead these revenues are expected to be recognized throughout 2021.
Due to lower sales, operating profit declined to SEK -15 M (22), representing an operating margin of -9 percent (10). In the fourth quarter, cash flow was SEK -21 M (8).
FULL-YEAR 2020
Despite the challenging market conditions brought on by the COVID-19 pandemic, 2020 was a productive year in many respects with a continued focus on product development, cost reductions and efficiency improvements. During the year, we released new versions of RayStation with new support for
brachytherapy and proton therapy planning for eye cancer treatment, significant performance enhancements for proton therapy, and improved ability to generate treatment plans using machine learning in Plan Explorer. We also released new versions of RayCare, with improved integration with RayStation, interfaces for connection with Varian TrueBeamᵀᴹ, and support for multiple parallel patient treatments and workflows.
In December, we released the first version of our RayCommand treatment control system, which also obtained marketing authorization in several European countries. For end-users, the RayCommand system offers uniform management and control of important systems in the treatment room, such as the treatment machine, the treatment
couch, imaging systems and patient positioning devices. Efficient coordination is crucial for the delivery of safe and effective patient treatments. In December, the first version of our RayIntelligence oncology analytics system was also released. That will offer cancer centers the stable data infrastructure they need to accelerate the introduction of machine learning throughout the entire radiation therapy workflow. RayIntelligence has been integrated with RayStation and RayCare to further optimize and personalize patient treatments. This will be based on previous clinical experience and collaboration with leading cancer centers. In summary, RaySearch's product portfolio was significantly strengthened in 2020.
For full-year 2020, net sales declined 12 percent to SEK 652 M (742), and operating loss totaled SEK -3 M (68), representing an operating margin of -1 percent (9). The full-year result was negatively affected by currency translation effects regarding balance sheet items, and adjusted for that, the operating profit had amounted to SEK 26 M (49). Despite challenging market conditions, cash flow remained strong at SEK 62 M (-3) and the company's financial position is highly robust.
OUTLOOK
It is still difficult to say how the ongoing pandemic will affect the coming quarters with any great certainty. The situation has stabilized and begun to normalize in many countries, while other countries are registering a second or third wave of the pandemic. We see continued recovery in Asia and signs of demand recovery in other regions.
In addition, as soon as the vaccination program takes effect we expect sales to start normalizing again since underlying need and demand for effective software solutions for cancer care remain unchanged compared with pre-pandemic levels. Since sales activities have been restricted for some time, however, it may take time before full sales effect is regained. However, we see no major challenges in relation to R&D or the company's delivery capacity. Our production output is virtually unaffected by the pandemic.
Overall, we expect the negative effects of the COVID-19 pandemic on the company's sales and earnings to continue for some months to come, but that these effects will decline in 2021. Due to uncertainty surrounding how long the COVID-19 pandemic will last and the extent of the economic impacts, RaySearch will continue to focus on protecting the company's cash flow and liquidity. RaySearch is monitoring the situation and the effects of the pandemic closely and is prepared to take action and align the company's operations if needed.
Unchanged great need for RaySearch's software solutions.
Despite the short-term challenges, we remain optimistic about the future. The underlying need for efficient software solutions for cancer care remains unchanged and treatment for cancer patients is high priority. We therefore believe that the market and demand for our products will normalize and return to previous levels after the COVID-19 pandemic has subsided.
One of the effects of the COVID-19 pandemic could be an acceleration of the ongoing digital transformation. The pandemic has radically revealed the major potential and benefits of digital technology, which could be positive for RaySearch's operations in the long term because the company's software solutions make it possible for cancer centers to increase their efficiency. As a result, our products can help to mitigate the effects of the current lack or resources.
OUR LONG-TERM STRATEGY REMAINS FIRM
RaySearch's high pace of innovation will continue in order to secure our market segment position and return to strong growth as soon as the effects of COVID-19 have subsided and the world is in a more normalized state. RayStation and RayCare are already the market's leading systems for simplifying and streamlining the highly complex workflows of cancer centers, and we are determined to increase that lead in 2021.
In 2021, more and more cancer centers will introduce RayCare for clinical use andthe interoperability with Varian's linear accelerator, TrueBeam® will significantly increase RayCare's market potential and improve workflows for our existing customers. Our teams are also developing tools to support surgeons when planning and performing surgery to remove tumors. In the long-term, our goal is that RayStation and RayCare will form a single system for planning, optimizing and managing combined cancer care within a range of treatment modalities: medical oncology, surgical oncology and radiation oncology.
Overall, we see both challenges and opportunities – even though we are currently living in a turbulent time marked by an ongoing pandemic.
Stockholm, February 23, 2021
Johan Löf CEO and founder
FINANCIAL INFORMATION
RaySearch operates in a market with uneven order flows where large individual orders can have a substantial impact on revenue recognition between the quarters and, because the company has limited (less than 10 percent) variable costs for license revenue, operating profit is affected by an amount that is nearly as high. For this reason, a longer perspective than a few quarters should be taken.
ORDER INTAKE AND ORDER BACKLOG
In the fourth quarter of 2020, order intake declined 13.7 percent to SEK 239.1 M (277.2). License order intake declined 15.8 percent to SEK 109.7 M (130.3) and order intake for support agreements declined 17.3 percent to SEK 95.9 M (115.9). The change was primarily attributable to the COVID-19 pandemic.
| Full-year | Full-year | ||||||
|---|---|---|---|---|---|---|---|
| Order intake (amounts in SEK M) | Q4-20 | Q3-20 | Q2-20 | Q1-20 | Q4-19 | 2020 | 2019 |
| Licenses | 109.7 | 48.3 | 83.2 | 136.7 | 130.3 | 378.0 | 516.2 |
| Hardware | 26.7 | 8.3 | 11.8 | 22.7 | 21.0 | 69.5 | 81.6 |
| Support (incl. warranty support) | 95.9 | 78.9 | 77.0 | 125.6 | 115.9 | 377.4 | 417.5 |
| Training and other | 6.8 | 3.0 | 5.2 | 14.8 | 10.0 | 29.9 | 30.9 |
| Total order intake | 239.1 | 138.5 | 177.1 | 300.0 | 277.2 | 854.8 | 1,046.2 |
| Order backlog (amounts in SEK M) | Q4-20 | Q3-20 | Q2-20 | Q1-20 | Q4-19 | ||
| Licenses | 127.0 | 112.6 | 105.8 | 130.7 | 119.0 | ||
| Hardware | 50.3 | 36.8 | 38.9 | 43.9 | 36.4 | ||
| Support (incl. warranty support) | 942.6 | 961.0 | 982.6 | 1047.1 | 956.2 | ||
| Training and other | 49.4 | 50.8 | 58.5 | 59.8 | 43.6 | ||
| Total order backlog at the end of the period | 1,169.2 | 1,161.3 | 1,185.8 | 1,281.5 | 1,155.2 |
For full-year 2020, order intake declined 18.3 percent to 854.8 (1,046.2) MSEK. At December 31, 2020, the total order backlog amounted SEK 1,169.2 M (1,155.2), which is expected to generate revenue of approximately SEK 402 M over the next 12 months. The remaining amount in the order backlog mainly comprises support commitments that are primarily expected to generate revenue during a subsequent four-year period.
REVENUE
In the fourth quarter of 2020, net sales declined 31.8 percent to SEK 159.8 M (234.5). The change was attributable to lower license sales, which declined 44.2 percent to SEK 81.1 M (145.4), mainly attributable to the COVID-19 pandemic. In addition, the company did not meet all of the criteria for recognizing license revenue for several large RayStation orders received at the end of the year, or for two contracts related to the new RayCommand treatment control system that was launched in December. License revenue for these contracts is expected to be allocated throughout full-year 2021 instead.
Change in sales at unchanged currencies was -28.5 percent (1.4).
In the fourth quarter, recurring support revenue rose 12.7 percent to SEK 63.9 M (56.7), accounting for 40 percent (24) of net sales. Hardware sales, which have a limited profit margin, declined 61 percent to SEK 10.2 M (26.5). Excluding hardware sales, sales declined 28.1 percent.
| Revenue (amounts in SEK M) | Q4-20 | Q3-20 | Q2-20 | Q1-20 | Q4-19 | Full-year 2020 |
Full-year 2019 |
|---|---|---|---|---|---|---|---|
| Licenses | 81.1 | 40.5 | 86.5 | 132.7 | 145.4 | 340.8 | 449.7 |
| Hardware | 10.2 | 9.7 | 12.2 | 15.9 | 26.6 | 48.0 | 76.6 |
| Support (incl. warranty support) | 63.9 | 60.2 | 61.7 | 58.1 | 56.7 | 243.9 | 198.2 |
| Training and other | 4.6 | 8.8 | 3.3 | 2.2 | 5.8 | 18.9 | 17.1 |
| Net sales | 159.8 | 119.1 | 163.8 | 208.9 | 234.5 | 651.6 | 741.7 |
| Change in sales, corresp. period, % | -31.8 | -17.4 | -13.7 | 20.7 | 6.9 | -12.1 | 18.2 |
| Change in sales at unchanged currencies, corresp. period, % |
-28.5 | -13.7 | -16.0 | 16.1 | 1.4 | -10.3 | 11.8 |
For full-year 2020, net sales declined 12.1 percent to SEK 651.6 M (741.7). The change was attributable to lower license revenue mainly attributable to the COVID-19 pandemic. Change in sales at unchanged currencies was -10.3 percent (11.8).
In 2020, net sales had the following geographic distribution: North America, 37 percent (42); Asia, 25 percent (18); Europe and the rest of the world, 38 percent (39).
License revenue declined 24 percent to SEK 340.8 M (449.7). Recurring support revenue rose 23.1 percent to SEK 243.9 M (198.2), accounting for 37 percent (27) of net sales. Hardware sales, which have a limited profit margin, declined 37.3 percent to SEK 48.0 M (76.6). Excluding hardware sales, sales declined 9.2 percent.
OPERATING PROFIT
In the fourth quarter of 2020, operating profit declined to SEK - 14.6 M (22.5), representing an operating margin of -9.1 percent (9.6). The weaker earnings were attributable to lower license revenue, which was only partially offset by lower costs.
In the fourth quarter, operating expenses declined 17.7 percent to SEK 174.4 M (212.0). The change was mainly attributable to significantly lower selling expenses resulting from canceled trade fairs, business travel and other sales and marketing campaigns due to the COVID-19 pandemic.
In the fourth quarter, the net of these exchange-rate gains and losses amounted to SEK -15.6 M (-14.9) due to a large proportion of the Group's receivables being denominated in USD
and EUR, which weakened against the SEK in the fourth quarter compared with the end of the third quarter. Adjusted for these currency translation effects, operating profit would have totaled SEK 1.0 M (37.4) in the fourth quarter and operating expenses would have declined 19.4 percent.
For full-year 2020, operating profit declined to SEK -3.5 M (68.2), representing an operating margin of -0.5 percent (9.2). The full-year result was negatively affected by currency translation effects regarding balance sheet items, and adjusted for that, the operating profit had amounted to SEK 26 M (49).
Currency effects
The company's sales and earnings are impacted by USD/EUR to SEK exchange rates, since most sales are invoiced in USD and EUR, while most costs are denominated in SEK.
At unchanged exchange rates, the change in sales was -28.5 percent in the fourth quarter of 2020, compared with the year-earlier period. In addition, the company incurred significant exchange-rate losses of SEK -15.5 M (-14.9) for balance sheet items in the fourth quarter. Currency effects therefore had a negative impact on net sales and operating profit in the fourth quarter of 2020.
A sensitivity analysis of the company's currency exposure shows that a 1-percentage point change in the USD exchange rate against the SEK would have impacted consolidated operating profit by approximately +/- SEK 2.4 M in the fourth quarter of 2020, while a corresponding change in the EUR exchange rate would have impacted consolidated operating profit by approximately +/- SEK 1.8 M.
The company follows the financial policy established by the Board, whereby exchange-rate fluctuations are not hedged.
Capitalization of development costs
RaySearch is a research and development-oriented company that makes significant investments in the development of software solutions for improved cancer treatment. At December 31, 2020, some 200 employees (190) were engaged in research and development, corresponding to 49 percent (51) of the total number of employees.
| Capitalization of development costs | Q4-20 | Q3-20 | Q2-20 | Q1-20 | Q4-19 | Full-year 2020 |
Full-year 2019 |
|---|---|---|---|---|---|---|---|
| Research and development costs | 65.2 | 51.5 | 62.1 | 64.6 | 66.9 | 243.4 | 225.5 |
| Capitalization of development costs | -53.1 | -40.7 | -49.4 | -52.4 | -49.7 | -195.6 | -164.4 |
| Amortization of capitalized development costs | 36.9 | 36.3 | 32.2 | 32.0 | 29.7 | 137.2 | 113.6 |
| Research and development costs | 48.9 | 47.1 | 44.9 | 44.2 | 46.9 | 185.0 | 174.7 |
In 2020, RaySearch continued to invest heavily in both existing and future products. In total, research and development costs rose 7.9 percent to SEK 243.4 M (225.5) in 2020, corresponding to 37 percent (30) of the company's net sales. The increase in costs was attributable to a higher number of employees in the research, development and machine learning departments.
Development costs of SEK 195.6 M (164.4) were capitalized, up 19.0 percent, representing 80 percent (73) of total research and development costs. The increase was attributable to a higher proportion of research activities in the research, development and machine learning departments, partly due to more product launches, but also because of canceled conferences and business travel during the COVID-19 pandemic.
Amortization of capitalized development costs rose 20.8 percent to SEK 137.2 M (113.6), and the increase was attributable to the expansion of development activities, and that amortization periods commenced for all products.
Research and development costs (after adjustments for capitalization and amortization of development costs) rose 5.9 percent to SEK 185.0 M (174.7).
Amortization and depreciation
In the fourth quarter of 2020, total amortization and depreciation increased 17.1 percent to SEK 56.1 M (47.9), of which amortization of intangible fixed assets accounted for SEK 36.9 M (29.7), primarily related to capitalized development costs. Depreciation of tangible fixed assets increased to SEK 19.2 M (18.1).
Total amortization and depreciation for the year amounted to SEK 213.8 M (182.5), of which amortization of intangible fixed assets totaled SEK 137.3 M (113.7), primarily related to capitalized development costs. Depreciation of tangible fixed assets amounted to SEK 76.5 M (68.8).
PROFIT AND EARNINGS PER SHARE
In the fourth quarter of 2020, loss after tax totaled SEK -14.2 M (18.9), representing loss per share of SEK -0.41 (earnings: 0.55) before and after dilution.
For full-year 2020, loss after tax totaled SEK -9.1 M (50.4), representing loss per share of SEK -0.26 (earnings: 1.47) before and after dilution.
Tax expense for the year amounted to SEK -2.6 M (-12.2), corresponding to an effective tax rate of 30.5 percent (19.5).
CASH FLOW AND LIQUIDITY
In the fourth quarter of 2020, cash flow from operating activities was SEK 51.5 M (81.1) and the change was mainly attributable to weaker earnings.
Working capital mainly comprises various types of customer receivables, such as accounts receivable and current and long-term unbilled customer receivables in instances where payment plans exist.
In 2020, cash flow from operating activities was SEK 331.5 M (320.1).
At the end of the period, the company's total customer receivables amounted to 50 percent (55) of net sales over the past 12 months. Working capital amounted to 12 percent (26) of net sales over the past 12 months and the decline was attributable to increased payments from customers, including advance payments from customers.
Our payment model
A typical transaction for RaySearch involves various performance obligations, such as the delivery of licenses, hardware, support and training.
When RaySearch has fulfilled its performance obligation to a customer, for example, delivered licenses, and an unconditional right to consideration exists, a revenue and corresponding receivable are recognized.
A number of payment alternatives are subsequently available:
- Payment within an invoice period of 30 or 60 days from delivery.
- Payment over a certain period, normally 6 to 12 months from delivery.
In the vast majority of cases, payment is received for hardware and support within 30 to 60 days. However, RaySearch has a high proportion of new customers and it is common that new customers require up to 12 months to acquire and install separate IT infrastructure to gain maximum performance from our software. Accordingly, many new customers opt for a payment plan for our licenses, resulting in a subsequent delay in RaySearch invoicing the customer and receiving payment.
Irrespective of the payment model, a revenue and its corresponding receivable are recognized when the company has fulfilled its performance obligation. RaySearch has three types of customer receivables: Accounts receivable (current billed customer receivables) and, in the event of a payment plan, Current and Long-term unbilled customer receivables.
The business model is tried, tested and effective. RaySearch assesses that the credit risk is generally low since the customers are institutions with high credit ratings. RaySearch's total credit losses (confirmed and probable) only amount to 0.7 percent of total sales since the start in 2000.
In the fourth quarter, cash flow from investing activities was SEK -64.1 M (-61.0). Investments in intangible fixed assets amounted to SEK -53.1 M (-49.7) and comprised capitalized development costs for the company's products – RayStation, RayCare, RayCommand and RayIntelligence. Investments in tangible fixed assets amounted to SEK -11.0 M (-11.4).
For full-year 2020, cash flow from investing activities was SEK -225.6 M (-212.0). Investments in intangible fixed assets amounted to SEK 195.9 M (-164.8) and comprised capitalized development costs. Investments in tangible fixed assets amounted to SEK -29.7 M (-47.2).
Cash flow from financing activities, mainly attributable to repayment of lease liabilities, was SEK -8.9 M (-12.4) for the fourth quarter of 2020 and SEK -44.0 M (-111.5) for the full-year. The change was due to a repayment of SEK 75 M on the company's revolving loan facility in the second quarter of 2019.
In the fourth quarter, cash flow was SEK -21.5 M (7.8) for the period and SEK 61.9 M (-3.4) for the full-year. At December 31, 2020, consolidated cash and cash equivalents amounted to SEK 168.7 M (113.9).
FINANCIAL POSITION
At December 31, 2020, RaySearch's total assets amounted to SEK 1,285 M (1,264) and the equity/assets ratio was 54.0 percent (55.8).
Current receivables amounted to SEK 408.8 M (463.3). The receivables mainly comprised various types of customer receivables and the decline was attributable to higher payments from customers as well as fewer outstanding accounts receivable as a result of lower license sales, primarily due to the COVID-19 pandemic.
RaySearch's credit facilities comprise a revolving loan facility of up to SEK 300 M and an overdraft facility of SEK 50 M, both maturing in May 2022. Chattel mortgages amounted to SEK 100 M. At December 31, 2020, short-term loans totaling SEK 50 M (49) had been raised under the company's revolving loan facility and SEK 0 M (0) of the credit facility had been drawn.
At December 31, 2020, the Group's net debt totaled SEK -22.4 M (56.9). The change was due to improved cash flow.
EMPLOYEES
In 2020, the average number of employees in the Group was 394 (331). At the end of the fourth quarter, the Group had 405 employees (376), of whom 300 (279) were based in Sweden, and 105 (97) in foreign subsidiaries.
PARENT COMPANY
RaySearch Laboratories AB (publ) is the Parent Company of the RaySearch Group. Since the Parent Company's operations are consistent with the Group's operations in all material respects, the comments for the Group are also largely relevant for the Parent Company.
Differences in profitability between the Parent Company and the Group are attributable to the Parent Company accounting for a relatively high proportion of operating expenses, and to the capitalization of development costs being recognized in the Group but not in the Parent Company. The Parent Company was also not affected by the changes pertaining to lease recognition under IFRS 16, and instead continues to recognize lease payments as operating lease payments. This reduces operating profit compared with if IFRS 16 had been applied.
The Parent Company's current receivables mainly comprise receivables from Group companies and external customers.
SIGNIFICANT EVENTS DURING THE FULL YEAR
RayStation was selected by several leading cancer centers
In 2020, the RayStation treatment planning system was sold to several leading cancer centers, including Banner MD Anderson Cancer Center in Arizona, Miami Cancer Institute, Asante Three Rivers Medical Center, University of Kansas Medical Center, Minneapolis VA Medical Center and National Cancer Institute (NCI) in the US, Oslo University Hospital in Norway, Haaglanden Medical Center, Leiden University Medical Center and Haga Hospital in the Netherlands, Centre Eugène Marquis and Oncorad Garonne (Clinique du Pont De Chaume in Montauban) in France, Clatterbridge Cancer Centre in the UK, Liverpool Cancer Therapy Centre in Australia, Southern TOHOKU BNCT Research Center in Japan, National Cancer Institute in Thailand, and Chungnam National University Hospital in South Korea.
In 2020, the MD Anderson Cancer Center and Johns Hopkins Mediin the US and Centre Antoine Lacassagne in France ordered additional RayStation licenses to replace their existing treatment planning systems.
Interoperability agreement with Varian
In June, RaySearch and Varian Medical Systems concluded an interoperability agreement in order to connect the RayCare oncology information system with Varian's TrueBeam linear accelerator.
Collaborative agreement with TAE Life Sciences
In June, RaySearch and TAE Life Sciences in the US initiated a collaboration regarding treatment planning in boron neutron capture therapy (BNCT) for TAE's AlphaBeam neutron system.
Support for helium ion beam therapy with pencil beam scanning (PBS)
RayStation 9B is the only commercially available treatment planning system in the world that supports helium ion beam therapy, and Heidelberg University Hospital's Ion Beam Therapy Center (HIT) will be first in the world to deliver helium ion beam therapy with pencil beam scanning (PBS).
RayStation 10A and 10B were released
RayStation 10A was released in June, with significant performance enhancements for proton therapy, new support for proton therapy planning eye treatments, and improved ability to generate treatment plans using machine learning in the Plan Explorer module.
RayStation 10B was released in December, the latest version of RaySearch's treatment planning system, with support for brachytherapy and speed revolution in Monte Carlo dose calculation for proton therapy.
RayCare 4A and 4B were released
RayCare 4A was released in June, with new features for dynamic team management, scripting support and an improved patient chart.
RayCare 4B was released in December, the latest version of RaySearch's oncology information system, with interfaces for connection with Varian TrueBeamTM, improved integration with RayStation, and support for multiple parallel treatments and workflows.
RayCommand and RayIntelligence were released
In December, the first version of the RayCommand treatment control system was released, and also obtained marketing authorization in several European countries. RayCommand gathers all necessary data from the oncology information system
and coordinates all resources and actions in the treatment room efficiently. Efficient coordination is crucial for the delivery of safe and effective patient treatments.
In December, the first version of the RayIntelligence oncology analytics system was also released. RayIntelligence help cancer centers gather, structure and analyze data for improved decision-making and personalization, and thereby improved cancer care.
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
No significant events after the end of the reporting period
EFFECTS OF THE COVID-19 PANDEMIC
The COVID-19 pandemic is affecting people and companies all over the world and posing a challenge for all businesses. RaySearch is monitoring the situation and the effects of the pandemic closely and is prepared to take action and align the company's operations if needed.
Effects on RaySearch's operations in the fourth quarter of 2020
Sales. The ongoing COVID-19 pandemic continued to have a negative effect on RaySearch's sales in the fourth quarter due to lockdowns in several countries for some of the quarter. In addition, many hospitals were forced to temporarily re-prioritize and freeze investments in order to manage the COVID-19 pandemic. Market conditions were challenging in North America and some European countries, while the company noted a normalization in Asia.
Delivery capacity. As a software company, RaySearch is well equipped for remote collaboration and both our R&D and delivery capacity have remained relatively unscathed by the COVID-19 pandemic to date.
In the fourth quarter, COVID-19 did not have any major impact on the company's assessment items.
Expected future effects
It is still difficult to say how the ongoing pandemic will affect the coming quarters with any great certainty. The situation has stabilized and begun to normalize in many countries, while other countries are registering a second or third wave of the pandemic. RaySearch acted early and took a number ofmeasures to protect the company's operations and reduce costs. We see continued recovery in Asia and signs of demand recovery in other regions.
In addition, as soon as the vaccination program has an effect we expect sales to normalize again since underlying need and demand for effective software solutions for cancer care remain unchanged compared with pre-pandemic levels. Since sales activities have been restricted for some time, however, it may take time before full sales effect is regained. We see no major challenges in terms of R&D or the company's delivery capacity.
Overall, the company expects that the negative effects of the COVID-19 pandemic on the company's sales and earnings will continue for some months to come, but that these effects will normalize in 2021. However, due to uncertainty surrounding how long the COVID-19 pandemic will last and the extent of the economic impacts, RaySearch will continue to focus on protecting the company's cash flow and liquidity.
Unmet need for RaySearch's software solutions unchanged.The underlying need for efficient software solutions for cancer care remains unchanged since treatment for cancer patients is high priority. The company's assessment is that the market and demand for the company's products will normalize and return to previous levels when the COVID-19 pandemic has subsided.
Continued focus on efficiencies and digitization. One effect of the COVID-19 pandemic could be a further acceleration of the ongoing digital transformation. The pandemic has radically revealed the major potential and benefits of digital technology, which could be positive for RaySearch's operations in the long term because the company's software solutions make it possible for cancer centers to increase their efficiency.
Measures to protect employees and slow the spread of the virus
The COVID-19 outbreak is posing a huge challenge to human health and lives all over the world. RaySearch's highest priority is to protect the health and safety of our employees, while also maintaining and developing our business operations. RaySearch has implemented the COVID-19-related security measures recommended by authorities in all parts of its operations. This includes running the company's operations to a large extent remotely, by working from home and holding virtual meetings.
THE COMPANY'S SHARE
At December 31, 2020, the total number of registered shares in RaySearch was 34,282,773, of which 8,454,975 were Class A and 25,827,798 Class B. The quotient value was SEK 0.50 and the company's share capital amounted to SEK 17,141,386.50. Each Class A share entitles the holder to ten votes, and each Class B share to one vote, at a general meeting. At December 31, 2020, the total number of voting rights in RaySearch was 110,377,548.
SHARE OWNERSHIP
At December 31, 2020, the total number of shareholders in RaySearch was 7,427, according to Euroclear, and the largest shareholders were as follows:
| Share | |||||
|---|---|---|---|---|---|
| Class A | Class B | capital, | |||
| Name | shares | shares | Total shares | % | Votes, % |
| Johan Löf | 6,243,084 | 418,393 | 6,661,477 | 19.4 | 56.9 |
| Oppenheimer Funds | 0 | 4,000,000 | 4,000,000 | 11.7 | 3.6 |
| First AP Fund | 0 | 1,982,448 | 1,982,448 | 5.8 | 1.8 |
| Swedbank Robur Funds | 0 | 1,800,000 | 1,800,000 | 5.3 | 1.6 |
| La Financière de l'Echiquier | 0 | 1,747,176 | 1,747,176 | 5.1 | 1.6 |
| Anders Brahme | 1,150,161 | 200,000 | 1,350,161 | 3.9 | 10.6 |
| Carl Filip Bergendal | 1,061,577 | 139,920 | 1,201,497 | 3.5 | 9.7 |
| Nordnet Pension | 0 | 926,391 | 926,391 | 2.7 | 0.8 |
| Second AP Fund | 0 | 880,942 | 880,942 | 2.6 | 0.8 |
| C WorldWide Asset Management | 0 | 851,612 | 851,612 | 2.5 | 0.8 |
| Total, 10 largest shareholders | 8,454,822 | 12,946,882 | 21,401,704 | 62.4 | 88.3 |
| Others | 153 | 12,880,916 | 12,881,069 | 37.6 | 11.7 |
| Total | 8,454,975 | 25,827,798 | 34,282,773 | 100.0 | 100.0 |
Source: Euroclear, FI and MorningStar.
OTHER INFORMATION
2021 ANNUAL GENERAL MEETING
The Annual General Meeting (AGM) of RaySearch Laboratories AB (publ) will be held on Wednesday, May 26, 2021 at 6:00 p.m. at the company's office on Sveavägen 44, Stockholm, Sweden. Shareholders wishing to have a matter addressed at the AGM must submit a written request to the Board of Directors. Such a request must normally have been received by the Board of Directors not later than seven (7) weeks prior to the AGM.
Proposed dividend
Since the company is in the midst of an expansive and capital-intensive phase, the Board of RaySearch proposes that no dividend be paid for the 2020 fiscal year.
RISKS AND UNCERTAINTIES
As a global group with operations in different parts of the world, RaySearch is exposed to various risks and uncertainties, such as market risk, business risk, compliance risk, operational risk and financial risk. RaySearch's risk management aims to identify, measure and reduce risks related to the Group's transactions and operations. No significant changes have been made to the risk assessment compared with the 2019 Annual Report. For more information about risks and risk management, refer to pages 9–10 and 40–42 of RaySearch's 2019 Annual Report.
A new business risk that has appeared in 2020 is COVID-19. RaySearch assesses that the risk management described in the annual report for 2019 essentially covers the market risks that may arise as a result of the coronavirus. Regarding the risk of increased absenteeism and difficulties in operating the Group in an efficient manner in the event of illness among key persons, contingency plans have been drawn up and access to business-critical systems remotely ensured.
SEASONAL VARIATIONS
RaySearch's operations are somewhat characterized by seasonal variations that are typical for the industry, whereby the fourth quarter is normally the strongest – mainly because many customers have budgets that follow the calendar year.
ENVIRONMENT AND SUSTAINABILITY
Sustainability is a key aspect of RaySearch's strategy and operations, and the company is working actively to become a sustainable enterprise. The primary aim of RaySearch's operations is to help cancer centers improve and save the lives of cancer patients. With our innovative software solutions, we are continuously striving to improve and streamline workflows in clinical environments and to improve treatment outcomes for cancer patients. The customer value we create presents business opportunities for RaySearch, but also major social benefit and economic gains.
The negative environmental impact of the company's products is limited. The company's environmental impact is mainly related to the purchase of goods and services, energy use and transportation. RaySearch aims to contribute to sustainable development and therefore works actively to improve the company's environmental performance wherever this is economically reasonable. For more information about the company's environmental and sustainability initiatives, refer to pages 64-69 of RaySearch's 2019 Annual Report.
REVIEW
This year-end report has not been reviewed by the company's auditors.
Stockholm, February 23, 2021
Johan Löf CEO and Board member
FOR FURTHER INFORMATION, PLEASE CONTACT:
Johan Löf, CEO Telephone: +46 (0)8 510 530 00 E-mail:[email protected] Peter Thysell, CFO Telephone: +46 (0)70 661 05 59 E-mail: [email protected]
TELECONFERENCE
CEO Johan Löf and CFO Peter Thysell will present RaySearch's year-end report for January-December 2020 at a teleconference to be held in English on Tuesday, February 23, 2021 between 4:00-4:30 p.m. CET.
For login details to the teleconference, please register on: http://emea.directeventreg.com/registration/6166079
FINANCIAL CALENDAR
| 2020 Annual Report (published on the website) | April 29, 2021 |
|---|---|
| Interim report for the first quarter, 2021 | May 5, 2021 |
| Annual General Meeting 2021 | May 26, 2021 |
| Interim report for the first six months, 2021 | August 25, 2021 |
| Interim report for the third quarter, 2021 | November 18, 2021 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IN SUMMARY
| AMOUNTS IN SEK 000s | OCT-DEC | JAN-DEC | ||
|---|---|---|---|---|
| Note | 2020 | 2019 | 2020 | 2019 |
| Net sales 2.3 |
159,835 | 234,499 | 651,612 | 741,584 |
| Cost of goods sold1 | -9,554 | -25,862 | -43,374 | -72,365 |
| Gross profit | 150,281 | 208,637 | 608,238 | 669,219 |
| Other operating income | 11,900 | -13,311 | 18,283 | 27,406 |
| Selling expenses | -73,639 | -94,183 | -291,229 | -345,425 |
| Administrative expenses | -26,790 | -30,190 | -106,290 | -100,135 |
| Research and development costs | -48,868 | -46,887 | -185,041 | -174,670 |
| Other operating expenses | -27,476 | -1,598 | -47,427 | -8,226 |
| Operating profit/loss | -14,592 | 22,468 | -3,466 | 68,169 |
| Profit/loss from financial items | 549 | -1,855 | -3,012 | -5,561 |
| Profit/loss before tax | -14,043 | 20,613 | -6,478 | 62,608 |
| Tax | -121 | -1,676 | -2,602 | -12,197 |
| Profit/loss for the period2 | -14,164 | 18,937 | -9,080 | 50,411 |
| Other comprehensive income | ||||
| Items to be reclassified to profit or loss | ||||
| Translation difference of foreign operations for the period | -1,350 | -325 | -2,037 | -433 |
| Comprehensive income for the period2 | -15,514 | -7,538 | -11,117 | 49,978 |
| Earnings/loss per share before and after dilution (SEK) | -0.41 | 0.55 | -0.26 | 1.47 |
1 Comprises costs for hardware and license costs paid, but not amortization of capitalized development costs, which is included in research and development costs.
2 Fully (100 percent) attributable to Parent Company shareholders.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN SUMMARY
| AMOUNTS IN SEK 000s | OCT-DEC | JAN-DEC | ||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Opening balance | 709,865 | 686,853 | 705,468 | 657,453 |
| Effect of IFRS 16 | – | – | – | -1,963 |
| Opening balance after adjustments for IFRS 16 | 709,865 | 686,856 | 705,468 | 655,490 |
| Profit/loss for the period | -14,164 | 18,937 | -9,080 | 50,411 |
| Translation difference for the period | -1,350 | -325 | -2,037 | -433 |
| Closing balance | 694,351 | 705,468 | 694,351 | 705,468 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN SUMMARY
| AMOUNTS IN SEK 000s | Note Dec 31, 2020 |
Dec 31, 2019 |
|---|---|---|
| ASSETS | ||
| Intangible fixed assets | 486,817 | 428,406 |
| Tangible fixed assets | 186,768 | 221,349 |
| Deferred tax assets | 7,226 | 12,193 |
| Other long-term receivables | 26,928 | 20,473 |
| Total fixed assets | 707,739 | 682,421 |
| Inventories | 9,110 | 4,623 |
| Current receivables | 399,309 | 463,322 |
| Cash and cash equivalents | 168,746 | 113,858 |
| Total current assets | 577,165 | 581,803 |
| TOTAL ASSETS | 1,284,904 | 1,264,224 |
| EQUITY AND LIABILITIES | ||
| Equity | 694,351 | 705,468 |
| Deferred tax liabilities | 108,749 | 115,145 |
| Long-term interest-bearing liabilities | 53,788 | 85,796 |
| Total long-term liabilities | 162,537 | 200,941 |
| Accounts payable | 19,864 | 33,202 |
| Current interest-bearing liabilities | 92,519 | 84,931 |
| Other current liabilities | 315,633 | 239,682 |
| Total current liabilities | 428,016 | 357,815 |
| TOTAL EQUITY AND LIABILITIES | 1,284,904 | 1,264,224 |
CONSOLIDATED STATEMENT OF CASH FLOW IN SUMMARY
| AMOUNTS IN SEK 000s | OCT-DEC | JAN-DEC | |||
|---|---|---|---|---|---|
| Note | 2020 | 2019 | 2020 | 2019 | |
| Profit/loss before tax | -14,043 | 20,613 | -6,478 | 62,608 | |
| Adjusted for non-cash items1) | 68,565 | 67,086 | 234,223 | 180,438 | |
| Taxes paid | -7,061 | 16,393 | -28,212 | -7,275 | |
| Cash flow from operating activities before changes in working capital | 47,461 | 104,092 | 199,533 | 235,771 | |
| Cash flow from changes in operating receivables | -88,943 | -40,153 | 52,152 | 45,337 | |
| Cash flow from changes in operating liabilities | 92,987 | 17,200 | 79,823 | 39,037 | |
| Cash flow from operating activities | 51,505 | 81,139 | 331,508 | 320,145 | |
| Cash flow from investing activities | -64,094 | -60,992 | -225,593 | -212,046 | |
| Cash flow from financing activities | -8,909 | -12,370 | -44,025 | -111,484 | |
| Cash flow for the period | -21,498 | 7,777 | 61,890 | -3,385 | |
| Cash and cash equivalents at the beginning of the period | 194,140 | 107,483 | 113,858 | 112,198 | |
| Exchange-rate difference in cash and cash equivalents | -3,896 | -1,402 | -7,002 | 5,045 | |
| Cash and cash equivalents at the end of the period | 168,746 | 113,858 | 168,746 | 113,858 |
1 These amounts mainly include amortization of capitalized development costs, right-of-use assets and unrealized currency effects.
PARENT COMPANY INCOME STATEMENT IN SUMMARY
| AMOUNTS IN SEK 000s | OCT-DEC JAN-DEC |
|||
|---|---|---|---|---|
| Note | 2020 | 2019 | 2020 | 2019 |
| Net sales | 126,235 | 167,690 | 489,623 | 533,127 |
| Cost of goods sold1) | -4,446 | -7,647 | -24,095 | -34,400 |
| Gross profit | 121,789 | 160,043 | 465,528 | 498,727 |
| Other operating income | 11,007 | -13,370 | 9,163 | 26,905 |
| Selling expenses | -43,125 | -53,034 | -167,012 | -202,356 |
| Administrative expenses | -26,848 | -30,111 | -106,702 | -99,691 |
| Research and development costs | -65,302 | -67,074 | -243,950 | -226,089 |
| Other operating expenses | -27,113 | -1,390 | -38,713 | -4,869 |
| Operating loss | -29,592 | -4,936 | -81,686 | -7,373 |
| Profit/loss from financial items | -377 | -50 | 17 | 2,372 |
| Loss after financial items | -29,969 | -4,986 | -81,669 | -5,001 |
| Appropriations | 82,306 | - 4,673 |
82,306 | - 4,673 |
| Profit/loss before tax | 52,337 | -9,659 | 637 | -9,674 |
| Tax on profit for the period | -12,426 | 4,068 | -4,136 | 880 |
| Profit/loss for the period | 39,911 | -5,591 | -3,499 | -8,794 |
1 Comprises costs for hardware and royalties but not amortization of capitalized development costs, which is included in research and development costs.
PARENT COMPANY STATEMENT OF COMPREHENSIVE INCOME
| AMOUNTS IN SEK 000s | OCT-DEC | JAN-DEC | ||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Profit/loss for the period | 39,911 | -5,591 | -3,499 | -8,794 |
| Other comprehensive income | – | – | – | – |
| Comprehensive income for the period | 39,911 | -5,591 | -3,499 | -8,794 |
PARENT COMPANY BALANCE SHEET IN SUMMARY
| AMOUNTS IN SEK 000s Note |
Dec 31, 2020 | Dec 31, 2019 |
|---|---|---|
| ASSETS | ||
| Intangible fixed assets | 808 | 708 |
| Tangible fixed assets | 43,863 | 42,484 |
| Shares and participations | 1,911 | 1,911 |
| Deferred tax assets | 5,879 | 6,011 |
| Long-term receivables from Group companies | 25,426 | 73,136 |
| Other long-term receivables | 9,411 | 13,616 |
| Total fixed assets | 87,298 | 137,866 |
| Inventories | 176 | 2,332 |
| Current receivables | 356,270 | 398,785 |
| Cash and bank balances | 107,711 | 80,262 |
| Total current assets | 464,157 | 481,379 |
| TOTAL ASSETS | 551,455 | 619,245 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Restricted equity | ||
| Share capital | 17,141 | 17,141 |
| Statutory reserve | 43,630 | 43,630 |
| Total restricted equity | 60,771 | 60,771 |
| Unrestricted equity | ||
| Retained earnings | 206,198 | 214,992 |
| Loss for the year | -3,499 | -8,794 |
| Total non-restricted equity | 202,699 | 206,198 |
| Total equity | 263,470 | 266,969 |
| Untaxed reserves | 32,615 | 114,921 |
| Long-term liabilities | 879 | – |
| Accounts payable | 30,156 | 30,127 |
| Current interest-bearing liabilities | 49,649 | 49,532 |
| Other current liabilities | 174,686 | 157,696 |
| Total current liabilities | 254,491 | 237,355 |
| TOTAL EQUITY AND LIABILITIES | 551,455 | 619,245 |
NOTES, GROUP
NOTE 1 ACCOUNTING POLICIES
The RaySearch Group applies International Financial Reporting Standards (IFRS) as adopted by the EU. The accounting policies applied are consistent with those described in the 2019 Annual Report for RaySearch Laboratories AB (publ), which is available at www.raysearchlabs.com This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.
RaySearch Laboratories AB (publ) is the Parent Company of the RaySearch Group. The Parent Company applies the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities. The Parent Company's operations are consistent with the Group's operations in all material respects.
Differences in profitability between the Parent Company and the Group are attributable to the Parent Company accounting for a relatively high proportion of operating expenses, and to the capitalization of development costs being recognized in the Group but not in the Parent Company. The Parent Company was also not affected by IFRS 16, and will continue to recognize lease payments on a straight-line basis over the lease term. This reduces operating profit compared with if IFRS 16 had been applied.
The Parent Company's current receivables mainly comprise receivables from Group companies and external customers.
NOTE 2 REVENUE FROM CONTRACTS WITH CUSTOMERS
RaySearch conducts sales of goods and services in various regions. Revenue from sales of licenses and hardware is recognized in profit or loss at a point in time, while revenue from sales of training and support is recognized over time.
| AMOUNTS IN SEK 000s | OCT-DEC | ||||
|---|---|---|---|---|---|
| 2020 | 2019 | Change | Full-year 2020 |
Full-year 2019 |
|
| Revenue by type | |||||
| Licenses | 81,078 | 145,428 | -44.3% | 340,802 | 449,676 |
| Support | 63,897 | 56,719 | 12.7% | 243,913 | 198,189 |
| Hardware | 10,232 | 26,560 | -61.5% | 48,026 | 76,624 |
| Training and other | 4,628 | 5,792 | -20.1% | 18,871 | 17,095 |
| Total revenue from contracts with customers | 159,835 | 234,499 | -31.8% | 651,612 | 741,584 |
| Revenue by geographic market | |||||
| North America | 43,079 | 103,059 | -58.2% | 241,476 | 313,464 |
| APAC | 53,793 | 50,149 | 7.3% | 162,078 | 135,409 |
| Europe and rest of the world | 62,963 | 81,291 | -22.6% | 248,058 | 292,711 |
| Total revenue from contracts with customers | 159,835 | 234,499 | -31.8% | 651,612 | 741,584 |
| Revenue by date for revenue recognition | |||||
| Goods/services transferred at a point in time | 91,310 | 171,988 | -46.9% | 388,828 | 526,300 |
| Services transferred over time | 68,525 | 62,511 | 9.6% | 262,784 | 215,284 |
| Total revenue from contracts with customers | 159,835 | 234,499 | -31.8% | 651,612 | 741,584 |
YEAR-END REPORT 2020
| AMOUNTS IN SEK 000s | JAN-DEC | ||||
|---|---|---|---|---|---|
| 2020 | 2019 | Change | Full-year 2020 |
Full-year 2019 |
|
| Revenue by type | |||||
| Licenses | 340,802 | 449,676 | -24.2% | 340,802 | 449,676 |
| Support | 243,913 | 198,189 | 23.1% | 243,913 | 198,189 |
| Hardware | 48,026 | 76,624 | -37.3% | 48,026 | 76,624 |
| Training and other | 18,871 | 17,095 | 10.4% | 18,871 | 17,095 |
| Total revenue from contracts with customers | 651,612 | 741,584 | -12.1% | 651,612 | 741,584 |
| Revenue by geographic market | |||||
| North America | 241,476 | 313,464 | -23.0% | 241,476 | 313,464 |
| APAC | 162,078 | 135,409 | 19.7% | 162,078 | 135,409 |
| Europe and rest of the world | 248,058 | 292,711 | -15.3% | 248,058 | 292,711 |
| Total revenue from contracts with customers | 651,612 | 741,584 | -12.1% | 651,612 | 741,584 |
| Revenue by date for revenue recognition | |||||
| Goods/services transferred at a point in time | 388,828 | 526,300 | -26.1% | 388,828 | 526,300 |
| Services transferred over time | 262,784 | 215,284 | 22.1% | 262,784 | 215,284 |
| Total revenue from contracts with customers | 651,612 | 741,584 | -12.1% | 651,612 | 741,584 |
NOTE 3 ESTIMATES
Preparation of the interim report requires that company management make estimates that affect the carrying amounts. The actual outcome could deviate from these estimates. The critical sources of uncertainty in the estimates are the same as those in the most recent Annual Report.
NOTE 4 FINANCIAL INSTRUMENTS
RaySearch's financial assets and liabilities comprise billed and unbilled receivables, cash and cash equivalents, accrued expenses, accounts payable, bank loans and lease liabilities. Long-term receivables and lease liabilities are discounted, while other financial assets and liabilities have short maturities. Accordingly, the fair values of all financial instruments are deemed to correspond approximately to their carrying amounts.
The provision for expected credit losses is a weighted assessment of payment history, reports from external credit rating agencies and other customer-specific information. At the end of December 2020, the credit loss provision was SEK 24.6 M (20.6). The increase was largely due to COVID-19. Historically, the Group's credit losses have been limited. Credit losses have increased over the past five years and amounted to about 1.1 percent of the company's average customer receivables over the past five years. The expected loss provision was 7 percent of total customer receivables.
NOTE 5 RELATED-PARTY TRANSACTIONS
There were no transactions between RaySearch and related parties with any material impact on the company's position and earnings during the period.
NOTE 6 PLEDGED ASSETS IN THE GROUP AND PARENT COMPANY
| AMOUNTS IN SEK 000s | Dec 31, 2020 | Dec 31, 2019 |
|---|---|---|
| Chattel mortgages | 100,000 | 100,000 |
| Guarantees | 14,340 | 6,586 |
The year-on-year increase is primarily attributable to bank guarantees concerning two customer orders.
GROUP QUARTERLY OVERVIEW
| 2020 | 2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| AMOUNTS IN SEK 000s | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Order intake | ||||||||
| Total order intake | 239,125 | 138,480 | 177,133 | 300,018 | 277,217 | 196,793 | 370,612 | 201,617 |
| Income statement | ||||||||
| Net sales | 159,835 | 119,130 | 163,758 | 208,889 | 234,499 | 144,349 | 189,658 | 173,078 |
| Change in sales, % | -31.8 | -17.5 | -13.7 | 20.7 | 6.9 | -4.1 | 63.1 | 49.0 |
| Operating profit/loss | -14,592 | -29,477 | -10,954 | 51,557 | 22,468 | -6,345 | 28,809 | 23,237 |
| Operating margin, % | -9.1 | -24.7 | -6.7 | 24.7 | 9.6 | -4.4 | 15.2 | 13.4 |
| Profit/loss for the period | -14,164 | -26,182 | -9,196 | 40,462 | 18,937 | -7,525 | 21,833 | 17,166 |
| Net margin, % | -8.9 | -22.0 | -5.6 | 19.4 | 8.1 | -5.2 | 11.5 | 9.9 |
| Cash flow | ||||||||
| Operating activities | 51,505 | 78,486 | 135,443 | 66,074 | 81,139 | 51,761 | 136,938 | 50,307 |
| Investing activities | -64,094 | -45,372 | -55,913 | -60,214 | -60,992 | -48,568 | -57,067 | -45,419 |
| Financing activities | -8,909 | -11,394 | -13,618 | -10,104 | -12,370 | -16,668 | -75,740 | -6,706 |
| Cash flow for the period | -21,498 | 21,720 | 65,912 | -4,244 | 7,777 | -13,475 | 4,131 | -1,818 |
| Capital structure | ||||||||
| Equity/assets ratio, % | 54.0 | 57.0 | 56.2 | 55.8 | 55.8 | 55.6 | 55.9 | 52.0 |
| Net debt | -22,439 | -31,476 | 206 | 73,231 | 56,869 | 77,991 | 92,024 | 181,649 |
| Debt/equity ratio | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 | 0.3 |
| Net debt/EBITDA | -0.1 | -0.1 | 0.0 | 0.3 | 0.2 | 0.3 | 0.4 | 0.8 |
| Per share data, SEK | ||||||||
| Earnings/loss per share before dilution | -0.41 | -0.76 | -0.27 | 1.18 | 0.55 | -0.22 | 0.64 | 0.50 |
| Earnings/loss per share after dilution | -0.41 | -0.76 | -0.27 | 1.18 | 0.55 | -0.22 | 0.64 | 0.50 |
| Equity per share | 20.25 | 20.71 | 21.48 | 21.79 | 20.58 | 20.03 | 20.25 | 19.61 |
| Share price at the end of the period | 82.70 | 87.50 | 86.50 | 57.60 | 107.20 | 160.70 | 132.60 | 103.70 |
| Other | ||||||||
| No. of shares before and after dilution, 000s | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 |
| Average no. of employees | 404 | 398 | 390 | 385 | 371 | 339 | 313 | 300 |
GROUP, ROLLING 12 MONTHS
| Jan 2020- | Oct 2019- | Jul 2019- | Apr 2019- | Jan 2019- | Oct 2018- | Jul 2018- | Apr 2018- | |
|---|---|---|---|---|---|---|---|---|
| AMOUNTS IN SEK 000s | Dec 20201 | Sep 20201 | Jun 20201 | Mar 20201 | Dec 20191 | Sep 20192 | Jun 20192 | Mar 20192 |
| Order intake | ||||||||
| Total order intake | 854,755 | 892,846 | 951,160 | 1,144,639 | 1,046,238 | 1,063,910 | 1,042,829 | 878,393 |
| Income statement | ||||||||
| Net sales | 651,612 | 726,276 | 751,495 | 777,395 | 741,584 | 726,528 | 732,658 | 684,039 |
| Operating profit/loss | -3,466 | 33,594 | 56,726 | 96,489 | 68,169 | 87,374 | 106,140 | 103,589 |
| Operating margin, % | -0.5 | 4.6 | 7.5 | 12.4 | 9.2 | 12.0 | 14.5 | 15.1 |
| Cash flow | ||||||||
| Cash flow | 61,890 | 91,165 | 55,970 | -5,811 | -3,385 | 45,594 | 42,038 | -12,355 |
| Cash flow adjusted for repayment of bank loans |
61,890 | 91,165 | 55,970 | 69,189 | 71,615 | 120,594 | 67,038 | -62,355 |
1 IFRS 16 compliance.
2 IFRS 16 compliance as of 2019, and IAS 17 compliance in the remaining quarters.
DEFINITIONS OF KEY RATIOS
The interim report refers to a number of non-IFRS financial measures that are used to provide investors and company management with additional information to assess the company's operations. The various non-IFRS measures used to complement the IFRS financial statements are described below.
| Non-IFRS measures | Definition | Reason for using the measure |
|---|---|---|
| Order intake | The value (transaction price) of all orders received and changes to | Order intake is an indicator of future revenue and thus a key figure |
| existing orders during the current period | for the management of RaySearch's operations | |
| Order backlog | The value of orders at the end of the period that the company has | The order backlog shows the value of orders already booked by |
| yet to deliver and recognize as revenue, meaning remaining | RaySearch that will be converted to revenue in the future. | |
| performance obligations. | ||
| Net sales/Order intake | Recognized net sales in relation to total order intake during the | The measurement is used to monitor the recognized revenue in |
| corresponding period | relation to sales, which is part of the reason for the change in order | |
| backlog. | ||
| Change in sales | The change in net sales compared with the year-earlier period | The measure is used to track the performance of the company's |
| expressed as a percentage | operations between periods | |
| Change in sales at | Change in sales at unchanged exchange rates, i.e. excluding | This measure is used to monitor underlying change in sales driven |
| unchanged currencies | currency effects | by alterations in volume, pricing and mix for comparable units |
| between different periods | ||
| Gross profit | Net sales minus cost of goods sold | Gross profit is used to measure the margin before sales, research, |
| development and administrative expenses | ||
| Operating profit/loss | Calculated as profit for the period before financial items and tax | Operating profit provides an overall picture of the total generation of earnings in operating activities |
| Operating profit adjusted for | Calculated as operating profit less other operating | Operating profit provides an overall picture of the total generation of |
| currency conversion effects | income/expenses | earnings in operating activities excluding currency conversion |
| effects for balance sheet items | ||
| Operating margin | Operating profit expressed as a percentage of net sales | Together with sales growth, the operating margin is a key element |
| for monitoring value creation | ||
| Net margin | Profit for the period as a percentage of net sales for the period | The net margin shows the percentage of net sales remaining after |
| the company's expenses have been deducted | ||
| Cash flow adjusted for | Cash flow for the period less cash flow from changes to bank loans | The measurement shows the underlying cash flow before financing |
| changes in bank loans | activities, but including amortization of lease liabilities. | |
| Equity per share | Equity divided by number of shares at the end of the period | The measurement shows the return generated on the owners' |
| invested capital per share | ||
| Rolling 12 months' sales, | Sales, operating profit or other results measured over the past 12- | This measure is used to more clearly illustrate the trends for sales, |
| operating profit or other | month period | operating profit and other results, which is relevant because |
| results | RaySearch's revenue is subject to monthly variations | |
| Working capital | Working capital comprises inventories, operating receivables and | This measure shows how much working capital is tied up in |
| operating liabilities, and is obtained from the statement of financial | operations and can be shown in relation to net sales to | |
| position. Operating receivables comprise accounts receivable, | demonstrate the efficiency with which working capital has been | |
| other current/long-term receivables and non-interest bearing | used | |
| prepaid expenses and accrued income. Operating liabilities include other non-interest bearing long-term liabilities, advance payments |
||
| from customers, accounts payable, other current liabilities and | ||
| non-interest bearing accrued expenses and deferred income. | ||
| Return on equity | Calculated as profit/loss for the period as a percentage of average | Shows the return generated on the owners' invested capital from a |
| equity. Average equity is calculated as the sum of equity at the end | shareholder perspective | |
| of the period plus equity at the end of the year-earlier period, | ||
| divided by two | ||
| Equity/assets ratio | Equity expressed as a percentage of total assets at the end of the | This is a standard measure to show financial risk, and is expressed |
| period | as the percentage of the total restricted equity financed by the | |
| owners | ||
| Net debt | Interest-bearing liabilities less cash and cash equivalents | This measure shows the Group's total indebtedness |
| and interest-bearing current and long-term receivables | ||
| Debt/equity ratio | Net debt in relation to equity | The measure shows financial risk and is used by management |
| to monitor the Group's indebtedness | ||
| EBITDA | Operating profit before financial items, tax, | The measurement is a way to evaluate the result without taking into |
| depreciation/amortization and impairment | consideration financial decisions or taxes | |
| Net debt/EBITDA | Net debt at the end of the period in relation to operating profit | A relevant measure from a credit perspective that shows the |
| before depreciation over the past 12-month period | company's ability to handle its debt |
CALCULATION OF FINANCIAL MEASURES NOT INCLUDED IN THE IFRS FRAMEWORK
| AMOUNTS IN SEK 000s | Dec 31, 2019 | |
|---|---|---|
| Working capital | ||
| Accounts receivable (current billed customer receivables) | 194,752 | |
| Current unbilled customer receivables | 191,064 | |
| Long-term unbilled customer receivables | 20,370 | |
| Inventories | 9,110 | 4,623 |
| Other current receivables (excl. tax) | 74,980 | 54,334 |
| Accounts payable | -19,864 | -33,202 |
| Other current liabilities (excl. tax) | -312,791 | -238,885 |
| Working capital | 79,115 | 193,056 |
| AMOUNTS IN SEK 000s | Dec 31, 2020 | Dec 31, 2019 |
| Net debt | ||
| Current interest-bearing liabilities | 84,931 | |
| Long-term interest-bearing liabilities | 85,796 | |
| Cash and cash equivalents | -168,746 | -113,858 |
| Net debt | -22,439 | 56,869 |
| AMOUNTS IN SEK 000s | Full-year | Full-year |
| 2020 | 2019 | |
| EBITDA | ||
| Operating profit/loss | -3,466 | 68,169 |
| Amortization and depreciation | 213,293 | 182,497 |
| EBITDA | 209,827 | 250,666 |
| CHANGE IN SALES AT UNCHANGED CURRENCIES | Full-year 2020 |
Full-year 2019 |
| Net sales for the year | 741,584 | |
| Currency adjustment | -40,106 | |
| Adjusted Net sales | 701,478 | |
| Net sales, preceding year | 627,218 | |
| Organic growth | 741,584 -10.3% |
11.8% |
HEAD OFFICE
RaySearch Laboratories AB (publ) Box 3297 SE-103 65 Stockholm, Sweden
STREET ADDRESS
Sveavägen 44, Floor 7 SE-111 34 Stockholm, Sweden Tel: +46 (0)8 510 530 00 www.RaySearchlabs.com Corp. Reg. No. 556322-6157
ABOUT RAYSEARCH
RaySearch Laboratories AB (publ) is a medical technology company that develops innovative software solutions for improved cancer treatment. The company markets worldwide its treatment planning system RayStation and next-generation oncology information system RayCare. In December 2020, the company also launched a new treatment control system, RayCommand, as well as the data anlytics system, RayIntelligence. RaySearch's software is currently used by more than 2,600 cancer centers in more than 65 countries. The company was founded in 2000 as a spin-off from the Karolinska Institute in Stockholm and the share has been listed for trading on Nasdaq Stockholm since 2003. More information about RaySearch is available at www.raysearchlabs.com
VISION AND MISSION
The company's vision is a world where cancer is conquered and RaySearch's mission is to provide innovative software to continuously improve cancer treatment.
STRATEGY
A radiation therapy center essentially needs two software platforms for its operations: a treatment planning system, and an information system. With RayStation and RayCare, RaySearch will strengthen its position and continue to grow with high profitability. The strategy rests on a strong focus on software development, leading functionality, broad support for many different types of treatment techniques and radiation therapy devices, as well as extensive investments in research and development.
BUSINESS MODEL
RaySearch's revenues are generated when customers pay an initial license fee for the right to use RaySearch's software and an annual service fee for access to updates and support. All software systems are developed at RaySearch's head office in Stockholm, and distributed and supported by the company's global marketing organization.
