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Össur

Össur

Reykjavik, Iceland based Ossur is a leading innovator, developer and manufacturer of non-invasive orthopaedic products such as prosthetics and braces. Ossur’s core competency lies within working with silicones, carbon composites, textiles and mechatronics to help patients live according to its motto “Life without Limitations”. Best known for its world leading lower limb prosthetics, Ossur is at the forefront in incorporating electronics into prosthetics and thereby creating products that more naturally mimic normal gait, increasing amputees' quality of life.

Underappreciated aspects of Össur’s business include: 1) the company is driving product innovation within high-tech, high margin bionics and thereby higher profitability (currently bionics accounts for ~23% of prosthetics revenue but only ~2% of volume), 2) a further-improved product mix, with the acquisition of less technologically advanced, lower-priced prosthetics which are optimal for high growth, emerging markets and 3) improving efficiencies in the organisation, which is running at structurally excessive cost levels e.g. G&A-to-sales ratio above 10% vs. best of breed at 3-4%.

Primary risks include: 1) competitive product launches, with segments operating in highly competitive industries, 2) the growth in Prosthetics is currently driven primarily by increased units prices as consumers trade up, while the volume growth is minimal. Failure by Össur to prove its products’ value to payors and patients and thereby accept higher prices for innovation leaves Össur vulnerable to growth disappointments. 3) Össur is facing a balancing act, to improve efficiencies in its operations while not disrupting its product quality, and 4) high dependency on reimbursement changes (government and insurance) can trigger reduced spending and change product choices.

USDm 2020 2021e 2022e
Sales 622 685 737
Sales growth (%) -9,3 10 7,6
EBITDA 101 156 178
EBITDA margin (%) 16,2 22,7 24,2
EBIT adj 43 111 134
EBIT adj margin (%) 7 16,2 18,2
Pretax profit 26 106 128
EPS rep 0,05 0,19 0,23
EPS growth (%) -71,4 318,3 20,9
EPS adj 0,06 0,19 0,23
DPS 0,03 0,03 0,04
EV/EBITDA (x) 34,4 21,8 18,7
EV/EBIT adj (x) 79,9 30,6 24,9
P/E (x) 160,7 38,4 31,8
P/E adj (x) 130,3 38,4 31,8
EV/sales (x) 5,6 5 4,5
FCF yield (%) 3 3,7 3,9
Dividend yield (%) 0,4 0,4 0,5
Net IB debt/EBITDA 3,1 1,7 1,2
N/A N/A N/A
USDm 2020 2021e 2022e
Sales 622 685 737
COGS -240 -242 -256
Gross profit 383 442 480
Other operating items -282 -287 -302
EBITDA 101 156 178
Depreciation on tangibles -18 -18 -18
Depreciation on intangibles -21 -9 -9
EBITA 43 111 134
Goodwill impairment charges -5 0 0
Other impairment and amortisation 0 0 0
EBIT 39 111 134
Other financial items 0 0 0
Net financial items -14 -7 -7
Associated income 0 2 2
Other EO items 0 0 0
Pretax profit 26 106 128
Tax -6 -24 -30
Net profit 20 82 99
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 20 82 99
EPS 0,05 0,19 0,23
EPS Adj 0,06 0,19 0,23
Total extraordinary items after tax 0 0 0
Tax rate (%) -23 -22,5 -23
Gross margin (%) 61,5 64,6 65,2
EBITDA margin (%) 16,2 22,7 24,2
EBITA margin (%) 7 16,2 18,2
EBIT margin (%) 6,2 16,2 18,2
Pretax margin (%) 4,1 15,2 17,2
Net margin (%) 3,1 11,7 13,2
Growth rates Y/Y 2020 2021 2022
Sales growth (%) -9,3 10 7,6
EBITDA growth (%) -28,8 54,9 14,5
EBIT growth (%) -60,3 187 20,4
Net profit growth (%) -71,5 317,3 20,6
EPS growth (%) -71,4 318,3 20,9
Profitability 2020 2021 2022
ROE (%) 3,6 15,3 16,9
ROE Adj (%) 4,5 15,3 16,9
ROCE (%) 4,1 11,3 13
ROCE Adj(%) 4,6 11,3 13
ROIC (%) 3,4 10 12
ROIC Adj (%) 3,8 10 12
Adj earnings numbers 2020 2021 2022
EBITDA Adj 101 156 178
EBITDA Adj margin (%) 16,2 22,7 24,2
EBITA Adj 43 111 134
EBITA Adj margin (%) 7 16,2 18,2
EBIT Adj 43 111 134
EBIT Adj margin (%) 7 16,2 18,2
Pretax profit Adj 30 106 128
Net profit Adj 24 82 99
Net profit to shareholders Adj 24 82 99
Net Adj margin (%) 3,9 11,7 13,2
N/A N/A N/A
USDm 2020 2021e 2022e
EBITDA 101 156 178
Net financial items -14 -7 -7
Paid tax 0 0 0
Non-cash items 0 0 0
Cash flow before change in WC 87 149 171
Change in WC 34 -4 -12
Operating cash flow 121 145 159
CAPEX tangible fixed assets -27 -27 -37
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 94 118 122
Dividend paid -9 -11 -13
Share issues and buybacks -15 -29 -29
Other non cash items -115 -24 -30
Decrease in net IB debt -30 53 51
Balance Sheet (USDm) 2020 2021 2022
Goodwill 541 541 541
Indefinite intangible assets 0 0 0
Definite intangible assets 56 47 39
Tangible fixed assets 64 74 93
Other fixed assets 36 38 39
Fixed assets 778 763 756
Inventories 94 103 111
Receivables 82 90 97
Other current assets 54 54 54
Cash and liquid assets 146 200 250
Total assets 1154 1210 1269
Shareholders equity 514 555 612
Minority 0 0 0
Total equity 514 555 612
Long-term debt 360 360 360
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 25 25 25
Other long-term liabilities 14 14 14
Short-term debt 7 7 7
Accounts payable 18 31 34
Other current liabilities 122 122 122
Total liabilities and equity 1154 1210 1269
Net IB debt 315 262 211
Net IB debt excl. pension debt 315 262 211
Capital invested 868 856 862
Working capital 90 94 106
EV breakdown 2020 2021 2022
Market cap. diluted (m) 3156 3149 3141
Net IB debt Adj 315 262 211
Market value of minority 0 0 0
Reversal of shares and participations -9 -11 -12
Reversal of conv. debt assumed equity 0 0 0
EV 3462 3400 3340
Capital efficiency (%) 2020 2021 2022
Total assets turnover (%) 55,5 58 59,5
Capital invested turnover (%) 70,5 79,4 85,8
Capital employed turnover (%) 65,9 68,8 70,5
Inventories / sales (%) 16,5 14,4 14,5
Customer advances / sales (%) 0 0 0
Payables / sales (%) 3,6 3,6 4,4
Working capital / sales (%) 16,5 13,4 13,5
Financial risk and debt service 2020 2021 2022
Net debt / equity (%) 61,4 47,2 34,5
Net debt / market cap (%) 10,6 8,3 6,7
Equity ratio (%) 44,5 45,9 48,2
Net IB debt adj. / equity (%) 61,4 47,2 34,5
Current ratio (%) 255,8 277,9 313,9
EBITDA / net interest (%) 744,7 2224,8 2548,5
Net IB debt / EBITDA (%) 313,6 168,2 118,4
Interest cover (%) 321 1589,1 1912,8
N/A N/A N/A
USDm 2020 2021e 2022e
Shares outstanding adj. 423 422 421
Fully diluted shares Adj 423 422 421
EPS 0,05 0,19 0,23
Dividend per share Adj 0 0 0
EPS Adj 0,06 0,19 0,23
BVPS 1,21 1,32 1,45
BVPS Adj -0,2 -0,08 0,08
Net IB debt / share 0,7 0,6 0,5
Share price 7,03 7,46 7,46
Market cap. (m) 2974 3149 3141
Valuation 2020 2021 2022
P/E 160,7 38,4 31,8
EV/sales 5,56 4,96 4,53
EV/EBITDA 34,4 21,8 18,7
EV/EBITA 79,9 30,6 24,9
EV/EBIT 89,3 30,6 24,9
Dividend yield (%) 0,4 0,4 0,5
FCF yield (%) 3 3,7 3,9
P/BVPS 6,15 5,67 5,13
P/BVPS Adj -37,82 -94,22 98,59
P/E Adj 130,3 38,4 31,8
EV/EBITDA Adj 34,4 21,8 18,7
EV/EBITA Adj 79,9 30,6 24,9
EV/EBIT Adj 79,9 30,6 24,9
EV/cap. employed 3,6 3,3 3,1
Investment ratios 2020 2021 2022
Capex / sales 4,4 4 5
Capex / depreciation 69,9 103,4 139
Capex tangibles / tangible fixed assets 42,5 37,1 39,7
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 38 18,1 22
Depreciation on tangibles / tangibles 28,1 24,4 19,4
N/A N/A N/A

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Media

Össur - Company presentation with CFO Sveinn Sölvason

Main shareholders - Össur

Main shareholders Share capital % Voting shares % Verified
William Demant Invest A/S 51.6 % 51.6 % 31 Dec 2019
The Pension Fund of Commerce 7.5 % 7.5 % 31 Dec 2019
The Pension Fund for State Employees 5.0 % 5.0 % 21 Aug 2020
Gildi 4.6 % 4.6 % 31 Dec 2019
Invesco 4.6 % 4.6 % 18 Aug 2020
SEB Fonder 2.7 % 2.7 % 31 Dec 2020
Lannebo Fonder 2.3 % 2.3 % 30 Nov 2020
ODIN Fonder 1.2 % 1.2 % 31 Dec 2020
Handelsbanken Fonder 0.9 % 0.9 % 31 Dec 2020
Artisan Partners 0.9 % 0.9 % 30 Sep 2020
Source: Holdings by Modular Finance AB