May 6, 2022
Business Update 1Q 2022: Grifols accelerating plasma recovery while enhancing performance
- Plasma collections accelerate by 16% YTD vs. 20211 and 9% sequentially2
- Revenues grow by mid-to-high single digit driven by the Bioscience Division, underpinned by improving plasma supply; robust underlying demand across key proteins; price increases; and product mix led by subcutaneous immunoglobulin (SCIG)
- Margins sequentially2 improve significantly – with a c.20% EBITDA margin – supported by operational leverage and savings plan offsetting inflationary and labor pressures and still high donor compensation levels
- Grifols fundamentals remain strong, as reflected by 27-28% underlying EBITDA margin
- Grifols committed to rapid deleveraging, aiming to reach <4x in 2023 and <3.5x in 2024
- Completion of Biotest acquisition marks an important milestone: Grifols owns 96% of voting rights and 70% of capital, and concentrate its efforts on the advancement of IgM and fibrinogen clinical trials
Grifols reiterates the acceleration of its plasma recovery, improving its performance in the first quarter of 2022. Plasma volumes are achieving pre-pandemic weekly levels against a backdrop of robust underlying demand supported by pricing and product mix.
Plasma collections reported 16% growth YTD vs. 20211 and 9% sequentially2. The primary engines of growth were recent openings and recently-acquired plasma centers; larger plasma volumes from regular centers; and the achievement of greater efficiencies related to technological, digital and operational enhancements, which are expected to further boost plasma volumes throughout the year.
In the first quarter of 2022, Grifols’ revenues grew by mid-to-high single digit (low-single-digit at cc3) compared to the first period of 2021. The Bioscience Division has leaded the growth, reporting low-double-digit growth (mid-to-high single digit at cc) supported by stronger plasma supply, robust underlying demand, price increases on key proteins, and product mix led by subcutaneous immunoglobulin (SCIG).
The Diagnostic Division was impacted by COVID-19 and Zika testing terminations, while its underlying business showed strength. The Bio Supplies Division was impacted by the ending of plasma sales to third-parties.
Margins improved significantly on a sequential basis as reflected in a c.20% EBITDA margin and a 27-28% underlying EBITDA margin4. The company enhanced its profitability through operational leverage, with OPEX adding 400bps quarter-on-quarter5 despite inflationary and labor pressures and still high donor compensation.
Following completion of the Biotest acquisition, Grifols owns 96% of voting rights and 70% of the share capital. This milestone bolsters the availability of Grifols’ plasma therapies; accelerates the R&D pipeline; broadens the product portfolio; improves geographic footprint; and drives further revenue growth and margin expansion.
The transaction consolidates Grifols’ standing as a global leader in fractionation capacity (20 mL plasma/year) and operator of the largest private European network of plasma centers, significantly improving geographic balance in plasma supply. Grifols currently owns 87 plasma centers in Europe and 401 globally. Moving forward, Grifols’ focus is on advancing the clinical trials of IgM and fibrinogen, two new and currently unused proteins, which remain on track.
Grifols remains staunchly committed to rapidly deleveraging, with the aim of decreasing its net financial debt to EBITDA ratio to <4x in 2023 and <3.5x in 2024. These targets are supported by structural cost savings; lower CAPEX over the next two years; no significant M&A; and no cash dividend payments until the leverage ratio of <4x is attained; while using all available tools, as necessary.
The company’s liquidity position stands at more than EUR 1,000 million. There are no significant maturities or debt repayments until 2025. Currently, c.60% of Grifols’ debt is tied to a fixed interest rate, which increases to 75% considering debt in USD, an optimized financial structure that would mitigate the impact of potential interest rate hikes.
Grifols’ fundamentals and solid commitment to deliver on its long-term vision remain intact.
Looking forward, this quarter paves the way for a further acceleration of plasma volumes and a sequential improvement of Grifols’ performance throughout the year, especially in terms of Bioscience revenues, and for gradual margin expansion.