Hamilton Thorne Reports Revenue for the Quarter and Nine Months Ended September 30, 2023

BEVERLY, Mass. and TORONTO, Nov. 13, 2023 (GLOBE NEWSWIRE) -- Hamilton Thorne Ltd. (TSX: HTL), a leading provider of precision instruments, consumables, software and services to the Assisted Reproductive Technologies (ART), research, and cell biology markets, today reported audited financial results for the quarter and nine months ended September 30, 2023.

Financial Highlights

• Sales increased 16% year over year to $15.7 million for the quarter; sales for the nine-month period increased 17% to $41.8 million; sales increased 12% for the quarter and 16% for the nine-month period on a constant currency basis
• Gross profit increased 18% to $7.7 million for the quarter; increased 21% to $24.7 million for the nine-month period
• Adjusted EBITDA increased 3% to $2.2 million for the quarter and increased 11% to $7.8 million for the nine-month period
• Organic sales growth was approximately 5% for the quarter and 10% for the nine-month period
• Net loss was $785 thousand for the quarter and $1.1 million for the nine-month period, versus net income of $99 thousand and $930 thousand in the prior year periods
• Cash generated from operations was $1.5 for the nine-month period versus $471 thousand in the prior year; total cash on hand at September 30, 2023 was $15.3 million
• After quarter end, the Company completed the acquisition of Gynetics.
  

David Wolf, President and Chief Executive Officer, of Hamilton Thorne Ltd. commented, “Sales grew 16% for the quarter while sales for the year were up 17%. Equipment sales growth was 9% for the quarter, but was adversely affected by a significant decline in equipment sales to China in the quarter due to several factors including economic slowdowns in China, the enforcement of “Buy China” policies combined with the emergence of local competition, and delays in regulatory clearances. While some of this reduction is transient, with orders up for Q4, these trends have been impacting our business for some time; however, we expect we are likely reaching a bottom. Consumables, software, and services grew over 20% in the quarter, reflecting continued strong demand for these largely high margin, recurring revenue categories.”

“Gross profit as a percentage of sales increased to 49.0% for the quarter and to 50.5% for the nine months ended September 30, 2023, versus 48.5% and 49.0% for the comparable periods in 2022 primarily due to increased sales of higher margin proprietary equipment and software, services, and branded consumables combined with increased direct sales of products, partially offset by higher material cost in the third quarter of 2023 caused by the global inflationary environment. Constant currency sales as reported were up 12% for the quarter and 16% for the first nine months ended September 30, 2023. Organic growth was 10% for the nine-month period and 5% for the quarter, with the lower growth in the quarter largely due to the impacts of a consumables product recall by a contract manufacturer, and slower equipment sales in China.”

Mr. Wolf added, “After the end of the quarter, we acquired Gynetics Medical Products, N.V. and Gynetics Services B.V. Gynetics, based in Lommel, Belgium is a leading manufacturer of a wide range of innovative, high-quality devices in the global IVF market. This acquisition enhances our presence in the very attractive European ART market, further diversifies our revenue base, increases our percentage of recurring revenues through the sale of additional consumable products, including Gynetics' ovum pick up needles and embryo transfer catheters, and expands our addressable market from the laboratory into the procedure room.”

Key Financial Data and Comparative Results

All amounts are in US dollars, unless specified otherwise, and results, with the exception of Adjusted EBITDA, are expressed in accordance with the International Financial Reporting Standards ("IFRS").

See the Company’s Management Discussion and Analysis for the periods covered for further information and a reconciliation of Adjusted EBITDA to Net Income.

Outlook

Mr. Wolf continued, “We continue to feel that our company is in a strong position as demand for our products and services remains solid based on the positive trends in our field. We believe that the softer organic growth in Q3 is temporary and the company should return to double digit organic growth both in the short term and through the longer term. Based on these trends, we are expecting fourth quarter reported revenues to grow approximately 15% with organic growth for the quarter between 9% and 10%. While adjusted EBITDA margins were below our expectations in Q3, we expect adjusted EBITDA margin of approximately 19% in Q4. The Company’s recent investments in operating expenses and capital expenditures have been made to facilitate long-term growth and management remains committed to EBITDA margin expansion in the coming years. The Company is also looking at cost containment strategies in light of continued inflationary pressures on other operating expenses. Cash flow is expected to improve as the investment in expanding capacity has been completed and inventory will decrease in the following months.”

Commenting on the Company’s M&A activities, Francesco Fragasso, the Company’s CFO stated, “The Gynetics acquisition was relatively small, but should have a significant positive affect on future margins. For the trailing twelve months ending May 31, 2023, Gynetics had revenues of approximately €4.6 million (US$4.9 million), and Adjusted EBITDA of approximately €2.3 million (US$2.5 million), with gross profit margins well above our historical averages. We continue to have an extensive pipeline and are actively working on multiple acquisition opportunities. With liquidity post-acquisition of approximately $13 million from our cash on hand and unused lines of credit, along with further debt capacity, we are well positioned to continue to execute on our acquisition program.”   

Conference Call

The Company has scheduled a conference call on Monday November 13, 2023 at 9:00 a.m. EST to review highlights of the results. All interested parties are welcome to join the conference call by dialing toll free 1-833-366-1126 in North America, or 1-412-317-0703 from other locations, and requesting the “Hamilton Thorne Call.” The Company’s updated investor presentation and a recording of the call will be available on Hamilton Thorne’s website shortly after the call.

Financial Statements and accompanying Management Discussion and Analysis for the periods are available on www.sedar.com and the Hamilton Thorne website.

About Hamilton Thorne Ltd. (www.hamiltonthorne.ltd)

Hamilton Thorne is a leading global provider of precision instruments, consumables, software and services that reduce cost, increase productivity, improve results and enable breakthroughs in Assisted Reproductive Technologies (ART), research, and cell biology markets. Hamilton Thorne markets its products and services under the Hamilton Thorne, Gynemed, Planer, Tek-Event, IVFtech, Microptic, Gynetics, and Embryotech Laboratories brands, through its growing sales force and distributors worldwide. Hamilton Thorne’s customer base consists of fertility clinics, university research centers, animal breeding facilities, pharmaceutical companies, biotechnology companies, and other commercial and academic research establishments.

The Company has included Adjusted EBITDA, Organic Growth, and Constant Currency as non-IFRS measures, which are used by management as measures of financial performance. See sections entitled “Use of Non-IFRS Measures” and “Results of Operations” in the Company’s Management Discussion and Analysis for the periods covered for further information and a reconciliation of Adjusted EBITDA to Net Income.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedar.com.