Finance News Network Transcription of Discussion at the ASX CEO Sessions with LifeHealthcare Group (ASX:LHC) CEO and Managing Director, Matt MuscioLifeHealthcare Group
(ASX:LHC) CEO and Managing Director, Matt Muscio discusses FY16 results and outlook.
LifeHealthcare provides Australia and New Zealand clinicians with solutions by partnering with world-class innovators to bring those products to market here. The company was founded in 2006 through a rollup of several medical device distributors. And we’ve gone on to build strong positions in spine and neurosurgery, orthopaedics, cardiology and general surgery. Looking at the business model, LifeHealthcare has a market orientation competitive advantage. So we are focused on this market and we work with Australian and New Zealand clinicians, to identify trends and pick the right technologies. And often to influence the design of those technologies, when they come to market.
We were really pleased with the results for FY16. We had a very strong second-half, realising full year revenue of $114.8 million, which was 15 per cent growth on the previous year. And our EBITDA at $19.3 million was 11 per cent growth on the previous year. Outside of that, we were focused on a number of key objectives for the balance sheet and we delivered those. So we looked at our cash conversion with a 99 per cent cash conversion in the second half, bringing us to 52 per cent for the year. We also brought our working capital and our debt position back in line, bringing the working capital back from 35 per cent, into 31 per cent.
Throughout the year, we integrated two strategic acquisitions in M4 Healthcare and Medical Vision Australia, which gives us an important launching pad, in the areas of point of care ultrasound and interventional cardiology. Throughout the year, we focused on a number of key launches. We had 14 key product launches for the year, which drove $5.5 million in new revenue. And beyond that we signed two critical agreements for our launch into biologics, human tissue biologics. We signed a long-term agreement with RTI Surgical and MiMedx, which will see us moving into human tissue allograft and amniotic products with applications across spine, orthopaedics, sports medicine, abdominal reconstruction, wounds and burns.
So the results were driven by the integration or the consolidation of the revenues from those two acquisitions, which gives us a good launching pad for moving forward into both the interventional cardiology and point of care ultrasound sectors. Our implant divisions grew above the market and that was driven by accelerated new active surgeon numbers. We had 17 per cent growth on that metric, which we see as a key lead indicator for the business, in terms of future growth. That was also done in collaboration with a couple of key product introductions; both in minimally invasive spine and 3D printed materials. Finally, whilst we had a fairly modest result for the year in our capital division, we did have good penetration in spinal robotics, where we deployed two additional Mazor spine robots into the market in the second-half.
So the acquisition of Medical Vision has gone really well. We acquired that business to get a strategic foothold in interventional cardiology. Within that business, we are the exclusive distributor of Philips Volcano technology, which is a diagnostic measure using the interventional cardiology. And it gives us a sales infrastructure that allows us to now look at opportunities in structural heart, or in peripheral vascular therapies.
We had a couple of key product launches in the form of a minimally invasive spine system, Everest XT. We’d identified a gap in our portfolio some time ago and we parted with one of our key suppliers, along with four Australian design surgeons. In putting together this next generation percutaneous spine system, which delivered good growth in the second half, we did 93 surgeries with 21 surgeons in that time. But the other nice thing about this product is it’s highly complimentary with spinal robotics. So we see those two as a powerful product combination, going into FY17 and beyond.
We also expanded our 3D printed material. So we expanded the spine 3D printed portfolio that we had and we are the leader in 3D printed spine implants. We also did 14 patient specific implants. So working with renowned Australian surgeons in limb salvage procedures, where we built 3D printed patient specific implants for those patients. And that certainly gives us a good position to move into next year.
So we’re going to remain focused on our market orientation and our channel optimisation. So that’s looking at additional new products that we’re going to bring into our core channels, to continue to drive penetration and grow above the market. We’re also looking at a number of initiatives around automisation of our operations, in order to optimise the leverage on our revenue position, and to optimise our quality of earnings. Beyond that, we’re also focused on moving forward on some of the biologics initiatives that we have. The key products that we’ll be bringing in from RTI Surgical and from MiMedx and putting them through the TGA, in order to prepare to launch those products in 2018.
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