• Revenue of €1.06 billion, +13.1% growth vs. Q1 2021
• Non-COVID-19^[1] testing organic revenue growth of +10.8% vs. Q1 2021
• COVID-19 testing revenue slightly higher than in Q1 2021: volume surge more than offset PCR price drop
• Adjusted EBITDA of €357 million, very high margin at 33.6%
• Unlevered free cash flow of €155 million
• Eight acquisitions completed year-to-date in six countries: six bolt-on and two in specialty testing services
• FY 2022 revenue outlook revised upward to €3.1 billion (from €3.0 billion) and adjusted EBITDA margin expected at 24-25% (from 23-25%) to reflect strong start of the year

SYNLAB, the leader in medical diagnostic services and specialty testing in Europe, today announced its unaudited Q1 2022 results. Supported by robust non-COVID-19 testing organic growth and elevated COVID-19 testing levels, SYNLAB exceeded the €1 billion revenue mark in the first quarter. Compared to the previous year, revenue rose by 13.1% to €1.06 billion (Q1 2021: €0.94 billion). Adjusted EBITDA increased by 10.1% to €357 million (Q1 2021: €324 million).

“SYNLAB had a strong start into the fiscal year 2022. We still recorded high COVID-19 revenue, driven by the Omicron wave. After a soft start into the year, the non-COVID-19 testing activity rebounded sharply in March as the Omicron wave receded. Building on the execution of our strategic initiatives, we are well positioned to benefit from mega trends in healthcare and have confidence in the resilience of our activities in the current volatile environment. With our ongoing investments, we are convinced that SYNLAB will continue on its successful growth path,” said Mathieu Floreani, CEO of SYNLAB Group.

Financial performance

Strong growth delivered: +13%

Q1 2022 revenue was up 13.1% to €1.06 billion (Q1 2021: €0.94 billion).

The first weeks of 2022 were marked by the Omicron wave, with COVID-19 testing volumes reaching levels never seen before. The revenue contribution from COVID-19 testing was approximately €450 million (Q1 2021: €434 million). In Q1 2022, SYNLAB performed 10.2 million PCR and 1.5 million non-PCR tests. The average price per PCR test was around €41 in Q1 2022, compared with around €58 in Q1 2021.

SYNLAB recorded strong non-COVID-19 testing organic revenue growth (+10.8%), including the contribution of the South-East London hospital outsourcing contract (the “SEL” contract) which started in Q2 2021.

Overall volume growth largely offset a price decrease of 1.1%. Excluding the contribution of the SEL contract, underlying organic growth was 2.1%. Following a soft start to the year correlated with the Omicron wave, levels in the Group’s non-COVID-19 testing activities rebounded strongly in March with the receding of the wave, with underlying organic revenue growth exceeding 4%.

Despite robust volume growth, the underlying organic growth of France was impacted by lower prices driven by the regulated price decrease^[2] implemented in January 2022 and an unfavorable comparison base as the prior price decrease was only implemented in early April 2021. The South segment had a soft start of the year which can be attributed to the high comparison base in Italy and a phasing effect from a change in the reimbursement schedule in the Campania region. Germany saw robust volume expansion against a soft comparison base, with limited price pressure. North & East growth remained very strong driven by volume and the positive effect of price indexation.

Volume leverage and continued strong cash generation

Q1 2022 adjusted EBITDA (AEBITDA) increased by 10.1% to €356.9 million, the highest level achieved in a quarter. Despite a major decrease in PCR test price (€17 per unit price reduction), the AEBITDA margin stood at 33.6% demonstrating again the volume leverage of the business. Excluding the PCR price reduction impact, the AEBITDA margin would have been around 9 percentage points higher.

Q1 2022 adjusted operating profit (AOP) was €300.1 million (Q1 2021: €280.3 million) with an AOP margin of 28.3% (Q1 2021: 29.9%). Price driven year-on-year variation in the COVID-19 contribution was the main margin driver. Margins were up in Germany driven by a record high COVID-19 testing revenue and down in the other regions. All regions recorded margin expansion compared with Q4 2021.

Q1 2022 adjusted net profit (Group share) grew by 20%, driven by improved financial results and partly offset by a higher tax expense.

At €155.3 million, unlevered free cash flow was strong, but below last year due to the temporary impact of increased COVID-19 testing activity on Days Sales Outstanding (DSO) and increased CAPEX. The cash conversion ratio (unlevered free cash flow / AEBITDA) was 44%.

Return on capital employed at 19%, leverage ratio further decreased

The return on capital employed was 19%, driven by the strong profit expansion.

At the end of March 2022, adjusted net debt was €1.56 billion compared with €1.67 billion at the end of December 2021. The leverage ratio^[3] continues to remain at a low level and declined to 1.23x compared with 1.35x at the end of 2021.

Key Q1 2022 achievements

Organic growth

As part of its retail initiative, SYNLAB opened more than 40 new blood collection points in Q1 2022, mostly in the South region (Italy, Spain, Latin America). Moreover, the Group further reinforced its specialty testing portfolio in Germany with the addition of the OncoDNA tissue-based biomarker test, a comprehensive solution used to predict patient response to a wide range of approved and experimental cancer therapies. The South-East London contract (“SEL” contract) is delivering according to plan. Its contribution will annualise starting April 2022.

Operational excellence

With SALIX, a multi-year efficiency program, SYNLAB aims to reduce its cost base by €20 million each year. The program was on track in Q1 2022, with €5 million of savings delivered. In addition, the SYNLAB core lab program of equipment renewal and automation also continued to progress well and is now more than 90% completed.

ESG

Building on its clearly defined ESG strategy, SYNLAB has published the company’s second ESG report on 29 April 2022. The ESG strategy entails three areas that help drive the Group’s ambitious ESG agenda through concrete actions: the fight against climate change, access to high quality healthcare, and business ethics. Furthermore, SYNLAB joined the United Nations Global Compact initiative – a voluntary platform for the development, implementation, and disclosure of responsible business practices. Together with more than 9,500 companies and 3,000 non-business signatories, SYNLAB will act in support of UN goals and issues embodied in the Sustainable Development Goals (SDGs).

M&A

Since the beginning of 2022 SYNLAB has spent approximately €63 million on acquisitions, completing eight acquisitions in six countries. The acquisitions represent an estimated annualised revenue of around €32 million. The acquisitions of Sistemas Genómicos in Spain and the Institute for Pathology and Molecular Pathology Pforzheim in Germany reflect the focus to further expand in specialty testing services.

2022 outlook

Based on the strong start into the year due to the Omicron wave, and continuous strength in the non-COVID-19^[4] testing activity following the strong March rebound, SYNLAB now expects FY 2022 revenue to be around €3.1 billion (March 2022 guidance: €3.0 billion) compared with €3.76 billion in FY 2021.

The adjusted EBITDA margin is expected to be within a 24-25% range (March 2022 guidance: 23-25%), compared with 32.1% in FY 2021. The year-on-year expected decrease is attributable to lower COVID-19 testing revenue.

The adjusted EBITDA margin range is narrowed upwards to reflect the increase in expected revenue. It factors in: 1) the strategy to maintain COVID-19 response capacity at the level medically necessary and potential lag time before any ramp down 2) the dilutive impact on margin of additional growth initiatives, notably in the Direct to Consumer (D2C) activity and 3) inflation risks.

The pipeline for future acquisitions remains strong and diversified. In line with the longer-term targets set at the IPO as well as the FY 2021 performance, SYNLAB aims to exceed €200 million of M&A spend again in 2022.

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Conference call
A conference call with the SYNLAB Management Board for analysts and investors will take place today at 3:00 p.m. CET. It can be accessed here.

For more information:

About SYNLAB

- SYNLAB Group is the leader in medical diagnostic services and specialty testing in Europe. The Group offers a full range of innovative and reliable medical diagnostics to patients, practising doctors, hospitals and clinics, governments and corporates.

- Providing the leading level of service within the industry, SYNLAB is the partner of choice for routine and specialty diagnostics in human and veterinary medicine. The Group continuously innovates medical diagnostic services for the benefit of patients and customers.

- SYNLAB operates in 36 countries across four continents and holds leading positions in most markets, regularly reinforcing the strength of its network through a proven acquisition strategy. More than 30,000 employees, including over 2,000 medical experts, contribute every day to the Group’s worldwide success.

- SYNLAB performed around 600 million laboratory tests and achieved revenues of €3.76 billion in 2021.

- More information can be found on www.synlab.com

Financial Calendar

APPENDIX

I. Q1 2022 SEGMENT REPORTING

II. QUARTER VIEW

The Q1 2022 report has been published on the SYNLAB Investor Relations website.

This document does not constitute or form a part of, and should not be construed as, an offer for sale or subscription of or solicitation of any offer to purchase or subscribe for any securities in any jurisdiction.
Statements made in this document may include forward-looking statements. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believes," "expects,“ “expected,” "may," "will," "would," "should," "seeks," "pro forma," "anticipates," "intends," "plans," "estimates," “estimated,” or the negative of any thereof or other variations thereof or comparable terminology, or by discussions of strategy or intentions. These statements are not guarantees of future actions or performance and involve risks, uncertainties and assumptions as to future events that may not prove to be accurate. Actual actions or results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and SYNLAB undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. It should be noted that past performance is not a guide to future performance. Interim results are not necessarily indicative of full-year results.
Certain data included in this document are "non-IFRS" measures. These non-IFRS measures may not be comparable to similarly titled financial measures presented by other entities, nor should they be construed as an alternative to other financial measures determined in accordance with International Financial Reporting Standards or any other generally accepted accounting principles. Although SYNLAB believes these non-IFRS financial measures provide useful information to users in measuring the financial performance and condition of its business, users are cautioned not to place undue reliance on any non-IFRS financial measures and ratios included in this document. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
^[1] Also called “Underlying organic growth”: excludes COVID-19 testing revenue contribution
^[2] As per the 3-year agreement with the French health authorities
^[3] Net debt to LTM pro-forma adjusted EBITDA
^[4] Excludes COVID-19 testing revenue contribution