• Robust H1 2022 performance with revenue of €1.85 billion
• Strong underlying organic growth (excluding COVID-19 related revenues): +7.2% in H1 2022 and +4.0% in Q2 2022
• Higher than expected COVID-19 testing revenue: €618 million in H1 2022 (€164 million in Q2 2022)
• Ten bolt-on and specialty acquisitions completed in H1 2022 in seven countries (four more since July)
• H1 2022 adjusted EBITDA of €528 million, margin at 28.5% (€171 million and 21.7% in Q2 2022)
• H1 2022 adjusted EPS of €1.44
• H1 2022 unlevered free cash flow of €244 million (€89 million in Q2 2022)
• Net debt reduced by €62 million to €1,609 million, leverage ratio remains at a low level of 1.5x
• FY 2022 revenue outlook revised upward to €3.2 billion (from €3.1 billion) and adjusted EBITDA margin expected at 24-25% (unchanged) to reflect strong first six months

SYNLAB, the leader in medical diagnostic services and specialty testing in Europe, today announced its Q2/H1 2022 results. SYNLAB reports a very robust H1 2022 performance driven by strong underlying organic growth (excluding COVID-19 related revenues) and higher than expected COVID-19 testing. Revenue reaches €1.85 billion (H1 2021: €1.92 billion) with an adjusted EBITDA of €528 million (H1 2021: €663 million) and an adjusted EPS of €1.44.

“SYNLAB continues to show the resilience of its business model. Despite periodic softness in our underlying business, correlated with the COVID-19 waves, underlying growth is firming up over H1 2022, also supported by a positive price development in the second quarter. As expected, COVID-19 testing revenue is declining compared with 2021 but remains higher than our initial forecasts. Irrespective of this, and as highlighted during our investor day in June, we continue our efforts in key growth areas such as retail, direct-to-consumer, molecular diagnostics and hospital outsourcing to drive further organic growth and sustain our attractive margin profile” said Mathieu Floreani, CEO of SYNLAB Group.

 

Key figures

Note: The expected decrease in PCR price and volume affects the year-on-year comparison in Q2 2022. Furthermore, adjusted figures exclude €173 million of goodwill impairment in Germany in Q2 2022.

 

SYNLAB Key figures (€m)	Q2 2022	H1 2022	H1 YoY var.
Revenue	790.4	1,851.4	(4)%
Operating profit	(79.7)	206.3	(309)
Net profit (Group share)	(94.1)	121.8	(221)
Adjusted EBITDA (AEBITDA)	171.1	528.0	(20)%
AEBITDA margin	21.7%	28.5%	(5.9)pp
Adjusted operating profit (AOP)	110.7	410.8	(28)%
AOP margin	14.0%	22.2%	(7.4)pp
Adjusted net profit (Group share)	93.1	320.1	(51)
Adjusted EPS[1] (€)		1.44	(0.34)
Unlevered FCF	89	244	(184)

 

COVID-19 testing	Q2 2022	H1 2022	H1 YoY var.
Revenue (€m)	164	618	~(30)%
Average PCR price (€, rounded)	42	42	~(24)%
Average PCR volume (m, rounded)	3.6	13.8	~(6)%

 

Financial performance

Strong underlying growth, lower COVID-19 testing

H1 2022 reported revenue was down 4% to €1,851 million (H1 2021: €1,923 million), including a +13% year-on-year growth in Q1 2022 and a 20% decline in Q2 2022.

H1 2022 underlying organic growth was 7.2%, driven by a 7.0% volume growth and a 0.2% positive price impact and including the contribution of the South-East London hospital outsourcing contract (the “SEL” contract), annualising in Q2 2022. Excluding the contribution from SEL in Q1 2022, H1 2022 underlying organic growth was 3.1%.

Q2 2022 underlying organic growth was 4.0%. Volume growth was 2.6%, reflecting some continued softness in the hospital business, some residual impact of the Omicron wave on non-COVID-19 testing activities and some challenging comparison base, mainly in Germany and Italy. SYNLAB continued with the implementation of its organic growth initiatives, opening more than 40 new blood collection points in Q2 2022 as part of its retail initiative. Q2 2022 prices were up 1.4% when compared to the equivalent period in 2021, reflecting the positive effect of price indexations in several countries from the North & East and South segments.

H1 2022 COVID-19 testing revenue was above expectations but declined by ~30% compared with H1 2021 to €618[2] million. SYNLAB performed 13.8 million PCR and 2.1 million non-PCR tests during the semester. The average price per PCR test was around €42 in H1 2022, down from around €55 in H1 2021.

Q2 2022 COVID-19 testing revenue was €164 million, with SYNLAB performing around 3.6 million tests at an average price of around €42.

The total contribution of the ten H1 2022 acquisitions represented a 0.9% revenue growth. The transactions focused on bolt-on acquisitions as well as acquisitions in the field of specialty testing (e.g., Sistemas Genómicos in Spain). Since July, SYNLAB closed four additional deals, bringing the total number of acquisitions to fourteen, in seven countries. SYNLAB has spent approximately €90 million on acquisitions since the beginning of the year, representing an estimated annualised revenue of around €50 million.

FX impact was 0.8% with the strength of the GBP, the Swiss Franc and the Mexican peso more than offsetting the weakening of a few other emerging currencies.

High margins, reducing sequentially due to lower COVID-19 volume and higher inflation

H1 2022 adjusted EBITDA (AEBITDA) decreased by 20% to €528 million, while the adjusted operating profit (AOP) decreased by 28% to €411 million with margins of 28.5% and 22.2% respectively.

Q2 2022 AEBITDA was €171 million with an AOP of €111 million, representing margins of 21.7% and 14.0% respectively.

Margin developments are mainly explained by the reduction in the COVID-19 testing activity in Q2 2022, with margins dropping sequentially from the very high levels of Q1 2022. SYNLAB was able to offset some of the PCR price decrease with procurement efficiencies for reagents, but was impacted, as expected, by the volume drop and the planned lag time before capacity adjustments.

SYNLAB also experienced increased inflationary pressure, mostly from higher fuel and energy prices and a higher wage inflation in some countries. This was partly offset by efficiencies from the ongoing SALIX programme (€12 million of savings overall in H1 2022) and the Q2 2022 price increases. The SEL contract also had a dilutive impact on Group margins, of around one percentage point.

Net profit reflecting improved financial structure, lower tax and goodwill impairment in Germany 

H1 2022 net profit (Group share) was €122 million with an improved financial result and a lower tax expense partly offsetting the decrease in operating profit and a €173 million goodwill impairment recorded in Germany. This impairment was mainly triggered by external factors: the currently high inflationary environment and the increase of the 30-year German government bond, impacting the WACC.

H1 2022 adjusted net profit was down by 14%, to €320 million, equivalent to an adjusted EPS of €1.44. Adjusted net profit and adjusted EPS exclude the €173 million of goodwill impairment.

Return on capital employed at 16.8%, reduction in net debt

Capital employed was €4.06 billion, broadly stable compared with year-end 2021. The return on capital employed was 16.8%, including a 0.8 percentage point improvement from the goodwill impairment.

The strong H1 2022 unlevered free cash flow generation, at €244 million and reduced net interest enabled SYNLAB to reduce adjusted net debt by another €62 million during the period. Meanwhile, SYNLAB continued to invest in M&A (€73 million cash out in H1 2022), paid its first dividend to SYNLAB AG shareholders (€73 million) and implemented a share buyback programme[3] to cover various long-term share plans for employees (€11.7 million).

The decrease in the COVID-19 testing activity started to positively impact working capital in Q2 2022, with Days Sales Outstanding at 60 over the period, down from 69 days in Q1 2022.

At the end of June 2022, adjusted net debt was €1.61 billion compared with €1.67 billion at the end of December 2021. The leverage ratio[4] remains at a low level: 1.5x at the end of June 2022.

2022 outlook

Based on the strong start into the year due to the Omicron wave, and continuous strength in the base business, SYNLAB now expects FY 2022 revenue to be around €3.2 billion (May 2022 guidance: around €3.1 billion) compared with €3.76 billion in FY 2021.

The adjusted EBITDA margin is expected to be within a 24-25% range (unchanged vs. May 2022 guidance), compared with 32.1% in FY 2021. The year-on-year expected decrease is mostly attributable to lower COVID-19 testing revenue, driven by the expected lower volumes and prices.

The adjusted EBITDA margin range factors in: 1) the strategy to maintain the 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 organic 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.

 

***

Conference calls

Starting today at 9:00 a.m. CEST, SYNLAB will hold a media webcast on its Q2 and H1 2022 results, hosted by Mathieu Floreani, CEO of SYNLAB and Sami Badarani, CFO of SYNLAB. Journalists can follow the webcast here.

 

The conference call with the SYNLAB Management Board for analysts and investors at 3:00 p.m. CEST can be accessed here.

For more information:

Media contact: Diana Tabor, FTI Consulting	+49 (0) 151 466 938 56 [email protected]
Investor contact: Mark Reinhard, SYNLAB	+49 (0) 170 118 3753 [email protected]

 

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. Around 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

 

2022 Financial Calendar

Q3/9M Results

10 November 2022 (pre-market)

 

APPENDIX

1. Q2/H1 2022 SEGMENT REPORTING

In €million	Revenue				AOP
	Q2 2022	Q2 2021	Organic Growth	Underlying Growth	Q2 2022	Q2 2021	Margin Q2 2022	Margin, Q2 2021
France	170.9	213.0	-20.0%	-0.4%	28.9	46.6	16.9%	21.9%
Germany	170.8	188.4	-10.1%	-1.8%	26.5	49.4	15.5%	26.2%
South	238.5	281.2	-26.9%	1.8%	25.6	75.3	10.8%	26.8%
North & East	210.2	302.2	-30.9%	14.5%	29.6	117.1	14.1%	38.7%
SYNLAB Group	790.4	984.8	-23.5%	4.0%	110.7	288.3	14.0%	29.3%
	H1 2022	H1 2021	Organic Growth	Underlying Growth	H1 2022	H1 2021	Margin H1 2022	Margin, H1 2021
France	382.4	441.6	-14.2%	-0.8%	82.9	116.6	21.7%	26.4%
Germany	406.0	367.2	10.0%	2.2%	107.8	95.8	26.6%	26.1%
South	538.1	545.5	-15.4%	-0.6%	87.2	139.0	16.2%	25.5%
North & East	524.9	568.8	-8.1%	30.0%	132.8	217.3	25.3%	38.2%
SYNLAB Group	1,851.4	1,923.0	-8.3%	7.2%	410.8	568.6	22.2%	29.6%

1. H1 VIEW

Simplified P&L
In €million	H1 2022	H1 2021[5]	Growth
Revenue	1,851.4	1,923.0	(4)%
Gross profit	1,410.9	1,446.8	(2)%
AEBITDA	528.0	662.0	(20)%
As % of revenue	28.5%	34.4%	(5.9)pp
Adjusted operating profit (AOP)	410.8	568.6	(28)%
As % of revenue	22.2%	29.6%	(7.4)pp
Operating profit	206.3	515.3	(309)
Financial result	0.2	(75.4)	+76
Income tax expenses	(83.5)	(111.8)	+28
Adjusted net profit (Group share)	320.1	370.8	(51)
Net profit (Group share)	121.8	343.2	(221)
Adjusted EPS (€)	1.44	1.78	(0.34)
Simplified cash flow
In €million	H1 2022	H1 2021	Growth
Operating cash flow	384	524	(139)
Unlevered free cash flow	244	428	(184)
Net debt and leverage
In €million	June 2022	Dec. 2021	Growth
Net debt	1,535	1,602	(67)
Adjusted net debt	1,609	1,671	(62)
Leverage ratio	x1.48	x1.35	0.13

1. QUARTER VIEW

Simplified P&L
In €million	Q2 2022	Q2 2021	Growth
Revenue	790.4	984.8	(20)%
Gross profit	605.4	751.6	(19)%
AEBITDA	171.1	337.9	(49)%
As % of revenue	21.7%	34.3%	(12.6)pp
Adjusted operating profit (AOP)	110.7	288.3	(62)%
As % of revenue	14.0%	29.3%	(15.3)pp
Operating profit	(79.7)	257.1	(337)
Financial result	(4.4)	(46.6)	+42
Income tax expenses	(10.7)	(54.3)	+44
Adjusted net profit (Group share)	93.1	181.7	(89)
Net profit (Group share)	(94.1)	155.1	(249)
Simplified cash flow
In €million	Q2 2022	Q2 2021	Growth
Operating cash flow	163	291	(129)
Unlevered free cash flow	89	246	(158)

 

The Q2/H1 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]Based on 222,137,476 shares in H1 2022

^[2]Including €4 million COVID-19 revenue from acquired companies

^[3] At end June 2022, a total of 660,566 shares were bought under this programme, for a total net amount of €11.7 million representing an average price per share of €17.7.

^[4] Net debt to LTM pro-forma adjusted EBITDA

^[5] H1 2021 AEBITDA, AOP and Adjusted net profit restated by €0.7 million: share-based payment programmes no longer reported as an adjustment component