Quarterly Report • May 8, 2015
Quarterly Report
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INTERIM REPORT JANUARY 1 – MARCH 31, 2015
"Our successes with RayStation® continue and we have started the year excellently. During the first quarter, revenues from RayStation® rose approximately 130 percent to SEK 62.8 M (27.3). In total, revenues rose 62.5 percent to SEK 87.7 M (54.0) and operating profit increased sharply to SEK 33.1 M (6.2), the highest revenue and profit levels ever for the first quarter," says Johan Löf, CEO of RaySearch.
"RaySearch will celebrate its 15th anniversary in June and, in connection with this milestone, I will be able to state that we have an excellent platform for continued successes. We are now embarking upon a journey toward an exciting phase of development with a continuously growing customer base and new strategic opportunities. I look forward to the future with great confidence." concludes Johan Löf.
| AMOUNTS IN SEK 000S | JAN–MAR | FULL-YEAR | |
|---|---|---|---|
| 2015 | 2014 | 2014 | |
| Net sales | 87,731 | 53,977 | 285,217 |
| Operating profit | 33,071 | 6,226 | 79,360 |
| Operating margin, % | 37.7 | 11.5 | 27.8 |
| Profit for the period | 25,023 | 5,934 | 59,832 |
| Earnings per share, SEK | 0.73 | 0.17 | 1.75 |
| Share price at the end of the period, SEK | 72.50 | 30.80 | 53.00 |
The information in the interim report is such that RaySearch is required to disclose publicly in accordance with the Swedish Securities and Clearing Operations Act and/or the Swedish Financial Instruments Trading Act. This information was submitted for publication on May 8, 2015 at 7.45 a.m.
"Our successes with RayStation® continue and we have started the year excellently. Order intake for RayStation® doubled to SEK 69.1 M (34.7), which includes several important orders from proton clinics in Europe and the US that could boost sales in the future. To date, 210 cancer clinics in 19 countries have purchased RayStation® and almost half of these customers have been added in the past 12-month period. I view this as the breakthrough for RayStation®. At the same time, since there are more than 8,000 radiation-therapy clinics worldwide, the growth potential remains very strong.
The reasons for the sales successes for RayStation® include high calculation speed, automated workflow, advanced support for adaptive radiation therapy, unique multi-criteria optimization and radiation therapy interfaces. The keen interest in RayStation® was also apparent at the European radiation therapy fair, ESTRO 2015, which took place in Barcelona in late April.The number of product demonstrations was up more than 50 percent compared with the 2014 fair, and just over 330 people attended our lunch symposium.
We are continuing to build our sales and support organization and in March, for example, we started up a subsidiary in Singapore for the Asian market. During the year, we will also be expanding our already established subsidiaries in Europe and the US, and entering into collaborations with additional distributors in relevant markets.
Volume growth for RayStation® has been high and we are also benefiting from the strong USD. During the first quarter, revenues from RayStation® rose approximately 130 percent to SEK 62.7 M (27.3), at the same time as our partners' sales declined slightly to SEK 25.0 M (26.7).
Overall, revenues rose 62.5 percent to SEK 87.7 M (54.0), and worth mentioning, last year revenues were at all-time high for the first quarter. Moreover, operating profit increased sharply to SEK 33.1 M (6.2). These were the highest ever revenue and profit levels for the first quarter.
2014 was a very successful year for RaySearch. Sales of RayStation® gained real momentum and the system is now well-established in all major markets around the world. Our revenues and profits will continue to vary from quarter to quarter, since outward deliveries are subject to major fluctuations. However, it is with great delight that I state that we have noted record sales for six consecutive quarters compared to the corresponding quarter in the previous year. This provides us with a stable base for continued focus on RayStation®.
One strategically important project that has been under way at RaySearch for some time is the development of an information system for radiation therapy, an Oncology Information System, or quite simply an OIS. The system is called RayCare® and it will contain many new features that will both improve the radiation therapy process and make it more efficient. Essentially, a radiation therapy clinic needs two software platforms to conduct its activities: an information system and a treatment planning system. Through RayCare® and RayStation®, we will be able to provide the entire information management and treatment planning infrastructure for a clinic. The launch of RayCare® will give us new opportunities, clinically and in terms of markets, but it should be noted that it still lies a couple of years ahead.
RaySearch will celebrate its 15th anniversary in June and, in connection with this milestone, I will be able to state that we have an excellent platform for continued successes. We are now embarking upon a journey toward an exciting phase of development with a continuously growing customer base and new strategic opportunities. I look forward to the future with great confidence.
Stockholm May 8, 2015
Johan Löf President and CEO of RaySearch Laboratories AB (publ)
In January 2015, it was announced that RaySearch's CFO, Anders Martin-Löf, had decided to leave the company in April to become CFO at another company. In March, Peter Thysell was appointed interim CFO, and a process to find a permanent successor has been initiated.
In February, it was announced that Westdeutsches Protontherapiezentrum Essen (WPE) in Germany was the first proton center in Europe to use RayStation® for clinical treatments.
In May, it was announced that the Ackerman Cancer Center in Jacksonville, USA, had started to use RayStation® for clinical proton therapy together with Mevion S250 equipment.
In May, it was announced that the Texas Center for Proton Therapy had chosen the RayStation® treatment planning system. RayStation® has also been added as one of the preferred treatment planning systems for The US Oncology Network, a national collaboration encompassing about 100 US radiation-therapy clinics.
During the first quarter of 2015, sales rose 62.5 percent year-on-year to SEK 87.7 M (54.0). Sales consist of license revenues via direct sales and partners, as well as support revenues. The number of licenses sold via direct sales and partners totaled SEK 518 M (510) and license revenues during the first quarter of 2015 amounted to SEK 77.4 M (46.8). The increase in license revenues derived mainly from a rise in revenues from direct sales of RayStation®. Order intake excluding service agreements amounted to SEK 86.3 M (54.8). Of the order intake, the contribution from RayStation® was SEK 69.1 M (34.7). At March 31, RayStation® had an order backlog of SEK 30.6 M. Support revenues rose to SEK 10.4 M (7.2) during the first quarter of 2015.
The company is dependent on exchange-rate trends in the USD and EUR against the SEK, since invoicing is mainly denominated in USD and EUR, while most of the costs are in SEK. During the first quarter of 2015, revenues in USD were recognized at an average exchange rate of SEK 8.34, compared with SEK 6.48 in the yearearlier period. During the first quarter of 2015, revenues in EUR were recognized at an average exchange rate of SEK 9.38, compared with SEK 8.90 in the year-earlier period. Accordingly, currency effects had a positive impact on sales. At unchanged exchange rates, sales would have increased 37.2 percent year-on-year. A sensitivity analysis of currency exposure indicates that the impact of a +/-10 percent change in the average USD exchange rate on operating profit for the first quarter of 2015 was +/- SEK 15.1 M and that the corresponding effect of a +/- 10 percent change in the average EUR exchange rate was +/- SEK 6.5 M. The company pursues the currency policy established by the Board of Directors, whereby exchange-rate changes are not hedged.
Operating profit for the first quarter of 2015 amounted to SEK 33.1 M (6.2), corresponding to an operating margin of 37.7 percent (11.5). Operating expenses, excluding exchange-rate gains and losses, increased SEK 12.7 M to SEK 57.9 M, compared with the year-earlier period. The increase in operating expenses was mainly due to higher marketing and personnel costs for sales and service resulting from the focus on direct sales of RayStation®. Other operating income and expenses pertained to exchange-rate gains with the net of these, in the first quarter of 2015, amounting to a gain of SEK 7.8 M (loss: 0.2). The increase was mainly due to the large proportion of accounts receivable in USD, which strengthened substantially during the first quarter.
At March 31, 2015, some 87 (76) employees were engaged in research and development. Research and development costs include payroll costs, consulting fees and costs for computer equipment and premises. Before capitalization and amortization of development expenditure, research and development costs totaled SEK 28.4 M (23.3).
During the first quarter of 2015, capitalized development expenditure amounted to SEK 16.5 M (14.3). Amortization of capitalized development expenditure during the first quarter of 2015 amounted to SEK 12.8 M (14.4). After adjustments for capitalization and amortization of development costs, research and development costs totaled SEK 24.7 M (23.4).
Amortization of intangible fixed assets in the first quarter of 2015 amounted to SEK 12.8 M (14.4) and depreciation of tangible fixed assets totaled SEK 0.8 M (0.3). Amortization and depreciation during the first quarter of 2015 totaled SEK 13.6 M (14.7) and pertained primarily to capitalized development expenditure.
Profit after tax for the first quarter of 2015 amounted to SEK 25.0 M (5.9), corresponding to earnings per share before and after dilution of SEK 0.73 (0.17).
License revenues in the first quarter of 2015 were distributed as follows: North America 42 percent (19), Asia 18 percent (40), Europe and the rest of the world 40 percent (41).
Cash flow from operating activities during the first quarter of 2015 rose to SEK 38.6 M (11.9) primarily due to improved earnings. Cash flow from investing activities was a negative SEK 30.2 M (neg: 15.3), of which investments in tangible fixed assets accounted for SEK 13.7 M (1.0) and intangible fixed assets for SEK 16.5 M (14.3). Cash flow for the period amounted to SEK 7.8 M (neg: 3.4). At March 31, 2015, cash and cash equivalents amounted to SEK 64.5 M, compared with SEK 34.7 M at March 31, 2014. At the same date, current receivables totaled SEK 173.8 M compared with SEK 89.0 M at March 31, 2014. The receivables mainly comprise accounts receivable, and the increase was due mainly to a sharp rise in sales and to the appreciation of the USD against SEK.
In November 2014, the company's credit facility was expanded from SEK 30 M to SEK 50 M, whereby chattel mortgages were increased to SEK 50 M. The credit facility comprises an overdraft facility of SEK 25 M and a revolving loan of up to SEK 25 M extending until November 4, 2017. Within the framework of the revolving loan, an amount of SEK 25 M was borrowed over three months.
Of the company's credit facility of SEK 25 M, SEK 3.8 M has been blocked as collateral for bank guarantees totaling EUR 0.4 M to MedAustron.
The provision pertaining to the settlement with Prowess was reclassified as a liability during 2014, as a result of the signed settlement. The liability is in USD and it has been discounted since it does not carry interest. Currency and discounting effects during the year had a negative impact of SEK 0.2 M on profit from financial items.
RaySearch's financial assets and liabilities comprise accounts receivable, cash and cash equivalents, accrued income, accrued expenses, bank loans, accounts payable and a liability attributable to the settlement agreement signed with Prowess in April 2014. The liability pertaining to the settlement is discounted, while other financial assets and liabilities have short terms. Accordingly, the fair values of all financial instruments are deemed to correspond approximately to the carrying amounts. RaySearch has not applied net accounting to any financial assets or liabilities and has no agreements that permit offsetting.
Fixed assets primarily comprise capitalized development costs. Investments in intangible fixed assets during the first quarter of 2015 amounted to SEK 16.5 M (14.3) and in property, plant and equipment to SEK 19.5 M (0.9).
At the end of the first quarter, RaySearch had 142 (118) employees. The average number of employees during January-March 2015 was 139 (117).
Since the Parent Company's operations match the Group's operations in all material respects, the comments for the Group are also largely relevant for the Parent Company. Development expenditure and adjustments related to financial leasing are capitalized in the Group but not in the Parent Company.
| AMOUNTS IN SEK 000S | JAN–MAR | FULL-YEAR | APR 2014- | |
|---|---|---|---|---|
| 2015 | 2014 | 2014 | MAR 2015 | |
| Net sales | 87,731 | 53,977 | 285,217 | 318,971 |
| Cost of goods sold1) | -4,533 | -2,385 | -11,627 | -13,775 |
| Gross profit | 83,198 | 51,592 | 273,590 | 305,196 |
| Other operating income | 11,699 | 653 | 16,803 | 27,849 |
| Selling expenses | -24,351 | -14,230 | -78,433 | -88,554 |
| Administrative expenses | -8,905 | -7,510 | -30,736 | -32,131 |
| Research and development costs | -24,728 | -23,435 | -95,069 | -96,362 |
| Other operating expenses | -3,842 | -844 | -6,795 | -9,793 |
| Operating profit | 33,071 | 6,226 | 79,360 | 106,205 |
| Result from financial items | -489 | 62 | -659 | -1,210 |
| Profit before tax | 32,582 | 6,288 | 78,701 | 104,995 |
| Tax | -7,559 | -354 | -18,869 | -26,074 |
| Profit for the period2) | 25,023 | 5,934 | 59,832 | 78,921 |
| Other comprehensive income | ||||
| Items to be reclassified to profit or loss | ||||
| Translation difference of foreign operations for the period | -2,834 | -29 | -4,885 | -7,690 |
| Items not to be reclassified to profit or loss | - | - | - | - |
| Comprehensive income for the period2) | 22,189 | 5,905 | 54,947 | 71,231 |
| Earnings/loss per share before and after dilution (SEK) | 0.73 | 0.17 | 1.75 | 2.30 |
1) Does not include amortization of capitalized development costs. Amortization and capitalization of development expenditure are included in research and development expenses.
2) 100% attributable to Parent Company shareholders.
| AMOUNTS IN SEK 000S | MAR. 31, 2015 | MAR. 31, 2014 | DEC. 31, 2014 |
|---|---|---|---|
| ASSETS | |||
| Intangible fixed assets | 167,786 | 166,554 | 164,081 |
| Tangible fixed assets | 31,744 | 6,303 | 12,951 |
| Financial fixed assets | - | 403 | - |
| Total fixed assets | 199,530 | 173,260 | 177,032 |
| Current receivables | 173,882 | 88,987 | 156,636 |
| Cash and cash equivalents | 64,540 | 34,749 | 56,085 |
| Total current assets | 238,422 | 123,736 | 212,721 |
| TOTAL ASSETS | 437,952 | 296,996 | 389,753 |
| EQUITY AND LIABILITIES | |||
| Equity | 273,737 | 202,506 | 251,548 |
| Deferred tax liabilities | 41,539 | 36,642 | 40,724 |
| Provisions | - | 34,759 | - |
| Long-term liabilities | 48,080 | - | 41,096 |
| Accounts payable | 21,278 | 6,289 | 9,034 |
| Other current liabilities | 53,318 | 16,800 | 47,351 |
| TOTAL EQUITY AND LIABILITIES | 437,952 | 296,996 | 389,753 |
| Pledged assets Contingent liabilities |
53,800 - |
37,500 - |
53,800 - |
| AMOUNTS IN SEK 000S | JAN–MAR | FULL-YEAR | |
|---|---|---|---|
| 2015 | 2014 | 2014 | |
| Profit before tax | 32,582 | 6,288 | 78,701 |
| Adjusted for | |||
| non-cash items1) | 7,018 | 14,313 | 46,315 |
| Taxes paid | -1,808 | -3,799 | -15,247 |
| Cash flow from operating activities before changes | |||
| in working capital | 37,792 | 16,802 | 109,769 |
| Cash flow from changes in working capital | 859 | -4,914 | -59,496 |
| Cash flow from operating activities | 38,651 | 11,888 | 50,273 |
| Cash flow from investing activities | -30,166 | -15,302 | -57,844 |
| Cash flow from financing activities | -696 | - | 24,345 |
| Cash flow for the period | 7,789 | -3,414 | 16,774 |
| Cash and cash equivalents at the beginning of the | |||
| period | 56,085 | 38,231 | 38,231 |
| Exchange-rate difference in cash and cash equivalents | 666 | -68 | 1,080 |
| Cash and cash equivalents at the end of the period | 64,540 | 34,749 | 56,085 |
1 These amounts include amortization of capitalized development costs of SEK 13.6 M (14.7) and exchange-rate losses of SEK 7.5 M (loss: 0.4).
| AMOUNTS IN SEK 000S | JAN–MAR | FULL-YEAR | |
|---|---|---|---|
| 2015 | 2014 | 2014 | |
| Opening balance | 251,548 | 196,601 | 196,601 |
| Profit for the period | 25,023 | 5,934 | 59,832 |
| Translation difference for the period | -2,834 | -29 | -4,885 |
| Closing balance | 273,737 | 202,506 | 251,548 |
| JAN–MAR | FULL-YEAR | |
|---|---|---|
| 2015 | 2014 | |
| Total number of shares (opening and closing balance) | 34,282,773 | 34,282,773 |
| Holding of treasury stock, opening balance | - | - |
| Sales of treasury stock | - | - |
| Holding of treasury stock, closing balance | - | - |
| AMOUNTS IN SEK 000S | JAN-MAR | FULL-YEAR | ||
|---|---|---|---|---|
| 2015 | 2014 | 2013 | 2014 | |
| Net sales | 87,731 | 53,977 | 47,900 | 285,217 |
| Operating profit | 33,071 | 6,226 | 8,110 | 79,360 |
| Operating margin, % | 37.7 | 11.5 | 16.9 | 27.8 |
| Profit margin, % | 37.1 | 11.7 | 17.4 | 27.6 |
| Profit for the period | 25,023 | 5,934 | 5,174 | 59,832 |
| Earnings per share, SEK | 0.73 | 0.17 | 0.15 | 1.75 |
| Return on capital employed, % | 13.2 | 3.0 | 11.8 | 33.7 |
| Return on equity, % | 10.0 | 2.8 | 9.6 | 26.7 |
| Equity/assets ratio, % | 62.5 | 68.2 | 74.8 | 64.5 |
| Adjusted equity per share at the end of the period, SEK | 7.98 | 5.91 | 6.49 | 7.34 |
| Share price at the end of the period, SEK | 72.50 | 30.80 | 31.10 | 53.00 |
For definitions of key figures, see page 48 of the 2014 Annual Report.
| AMOUNTS IN SEK 000S JAN–MAR |
FULL-YEAR | ||
|---|---|---|---|
| 2015 | 2014 | 2014 | |
| Net sales | 74,842 | 52,495 | 250,363 |
| Cost of goods sold | -3,193 | -1,255 | -7,223 |
| Gross profit | 71,649 | 51,240 | 243,140 |
| Other operating income | 11,699 | 653 | 16,803 |
| Selling expenses | -13,904 | -8,220 | -50,669 |
| Administrative expenses | -9,090 | -7,502 | -30,912 |
| Research and development costs | -28,433 | -23,311 | -92,472 |
| Other operating expenses | -3,842 | -844 | -6,795 |
| Operating profit | 28,079 | 12,016 | 79,095 |
| Result from financial items | -387 | 55 | 1,565 |
| Profit after financial items | 27,692 | 12,071 | 80,660 |
| Appropriations | - | - | -21,029 |
| Profit before tax | 27,692 | 12,071 | 59,631 |
| Tax | -6,240 | - | -13,651 |
| Profit for the period | 21,452 | 12,071 | 45,980 |
| AMOUNTS IN SEK 000S | JAN–MAR | FULL-YEAR | |
|---|---|---|---|
| 2015 | 2014 | 2014 | |
| Profit for the period | 21,452 | 12,071 | 45,980 |
| Other comprehensive income for the period | - | - | - |
| Comprehensive income for the period | 21,452 | 12,071 | 45,980 |
| AMOUNTS IN SEK 000S | MAR. 31, 2015 | MAR. 31, 2014 | DEC. 31, 2014 |
|---|---|---|---|
| ASSETS | |||
| Tangible fixed assets | 19,734 | 4,918 | 6,975 |
| Financial fixed assets | 2,493 | 2,669 | 2,493 |
| Total fixed assets | 22,227 | 7,587 | 9,468 |
| Current receivables | 212,231 | 121,361 | 185,239 |
| Cash and cash equivalents | 51,368 | 27,042 | 47,935 |
| Total current assets | 263,599 | 148,403 | 233,174 |
| TOTAL ASSETS | 285,826 | 155,990 | 242,642 |
| EQUITY AND LIABILITIES | |||
| Equity | 157,664 | 102,304 | 136,213 |
| Untaxed reserves | 21,029 | - | 21,029 |
| Provisions | - | 34,759 | 36,853 |
| Long-term liabilities | 38,175 | - | - |
| Accounts payable | 21,861 | 6,424 | 9,823 |
| Other current liabilities | 47,097 | 12,503 | 38,724 |
| TOTAL EQUITY AND LIABILITIES | 285,826 | 155,990 | 242,642 |
| Pledged assets | 53,800 | 37,500 | 53,800 |
| Contingent liabilities | - | - | - |
This condensed interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and the applicable provisions of the Swedish Annual Accounts Act. The Parent Company's financial statements have been prepared pursuant to Chapter 9 of the Swedish Annual Accounts Act, Interim Financial Reporting. The same accounting policies and measurement bases applied in the most recent Annual Report have been used to prepare the Group and Parent Company accounts. New or revised IFRS standards during 2015 have not affected RaySearch during the period and no known changes are expected to affect RaySearch in 2015.
RaySearch's financial policy governing the management of financial risks has been established by the Board of Directors and represents a framework of guidelines and rules in the form of risk mandates and limits for financial activities. RaySearch is primarily affected by exchange-rate risk. The predominant part of RaySearch's net sales is denominated in USD and EUR. In accordance with the established financial policy, no currency hedging is employed. The financial policy is updated at least once annually.
As a result of its activities, RaySearch is exposed to various operational risks, including the following: dependence on key persons, competition, legal disputes and strategic partnerships. For a more detailed description of RaySearch's risks and risk management, refer to page 27 of the 2014 Annual Report. No significant changes have been made to the risk assessment compared with the 2014 Annual Report.
No transactions between RaySearch and related parties materially affected the company's position and earnings during the period.
Preparation of the interim report requires that company management makes estimates that affect the carrying amounts of assets, liabilities, revenues and expenses. 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.
This interim report has not been reviewed by the company's auditors.
Stockholm May 8, 2015
Johan Löf President and Board member
Johan Löf, President Tel: +46 8 510 530 00 [email protected]
RaySearch Laboratories AB (publ) Corporate Registration Number 556322-6157 Sveavägen 44 SE-111 34 Stockholm, Sweden
| Annual General Meeting | May 28, 2015 |
|---|---|
| The Annual General Meeting will be held in Grünewaldsalen in | |
| the Stockholm Concert Hall, Hötorget 8, Stockholm | |
| Interim report for the first six months |
August 28, 2015 |
| Interim report for the third quarter | November 25, 2015 |
RaySearch Laboratories is a medical technology company that develops advanced software solutions for improved radiation therapy of cancer. RaySearch markets the RayStation® treatment planning system to clinics all over the world. In addition, RaySearch's products are distributed through licensing agreements with leading medical technology companies such as Philips, Nucletron, IBA, Varian and Brainlab.To date, 15 products have been launched via partners and RaySearch's software is used by over 2,500 clinics in more than 65 countries. RaySearch was founded in 2000 as a spin-off from Karolinska Institute in Stockholm and the company is listed in the Small Cap segment on Nasdaq Stockholm.
More information about RaySearch is available at www.raysearchlabs.com
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