SYNLAB AG
SYNLAB delivers strong performance in Q1 2024

• Revenue at €682 million
• Strong underlying organic growth at 3.9% (Q1 2023: 10.0%); 5.2% adjusted for working days
• Adjusted EBITDA at €123 million (increased by 4% compared to Q1 2023)
• Strong Adjusted EBITDA margin at 18.0% (Q1 2023: 16.9%), at the upper end of the guided range for FY 2024 of 17-18%
• €8 million of SALIX savings
• Strong unlevered free cash flow at €45 million
• Active portfolio management strategy improving business performance
• Adjusted net debt at €1.25 billion at the end of March 2024

SYNLAB AG (“SYNLAB” or “the Group”, FSE: SYAB), the leader in medical diagnostic services and specialty testing in Europe, today announced its unaudited Q1 2024 results. The Group reports strong financial performance driven by strong underlying organic growth (excluding COVID-19 testing revenue) of 5.2% working days adjusted. Revenue reached €682 million (Q1 2023: €702 million) in Q1 2024 with an adjusted EBITDA (AEBITDA) of €123 million (Q1 2023: €119 million) and a strong AEBITDA margin of 18.0% (Q1 2023: 16.9%) at the upper end of the guided range for FY 2024 of 17-18%.

The Q1 2024 report is available for download on the investor relations website: https://ag.synlab.com

“SYNLAB had a successful start to the year, with steady progress on our strategic priorities and strong underlying organic growth. Our first quarter results show that our portfolio management focus and the densification of our operations have enabled continuous productivity delivery reflected in a stronger adjusted EBITDA margin of 18.0%,” commented Mathieu Floreani, CEO of the SYNLAB Group. He adds: “Following the successful settlement of the public acquisition offer by Cinven on 18 April, we look forward to continue growing SYNLAB as a leading provider for medical diagnostic services together with our long-standing shareholder.”

Financial performance

* Based on a weighted average of 219,775,252 (basic) or 220,943,418 (diluted) shares outstanding in Q1 2024 and 219,705,767 (basis) or 220,241,309 (diluted) in Q1 2023, respectively

Strong underlying organic revenue growth

Q1 2024 revenue was reported at €682 million (Q1 2023: €702 million), reflecting a particularly sharp reduction in COVID-19 testing revenue to €3 million (Q1 2023: €25 million).

Underlying organic growth (excluding COVID-19 testing revenue) amounted to 3.9% in Q1 2024 driven by a price increase of 0.7% and a strong volume growth of 3.2% across the Group’s portfolio. Adjusted for working days (Easter holiday being in March this year vs. in April in 2023), the volume is very strong at 4.5% and the underlying organic growth is at 5.2%.

France (20% of Group revenue) decreased by (1.7)% due to price decreases of (5.6)% more than offsetting strong volume growth of 3.9%.

Business in Germany (21% of Group revenue) grew organically (excluding COVID-19 testing revenue) by 6.9% in Q1 2024 driven by a volume growth of 6.4 % and a price increase by 0.5 %. 

In the South segment (29% of Group revenue), underlying organic growth was (1.2)% due to a weak volume in Spain and despite higher prices. The South segment underlying growth was at 1.0% adjusted for prior year revenue one-off in Italy.

The underlying organic growth in the North & East segment (30% of Group revenue) was very strong at 11.3% owing to strong volume growth and a favorable pricing environment driven by health authorities partially mitigating the effects of inflation.
 

Strong Q1 2024 AEBITDA margin

Q1 2024 adjusted EBITDA (AEBITDA) was €123 million (Q1 2023: €119 million) while adjusted operating profit (AOP) was €65 million (Q1 2023: €61 million) with margins of 18.0% (Q1 2023: 16.9%) and 9.5% (Q1 2023: 8.6%), respectively. The AEBITDA margin was at the upper end of the guided range for FY 2024 of 17-18%.

The year-on-year increase in AEBITDA margin was mainly driven by the 2023 disposals, a strong rebound of the profitability in Germany and cost savings from SALIX initiatives (€8 million) across the portfolio. The inflation in Q1 2024 was at 1.7% (Q1 2023 : 3.8%) benefitting from a 1% deflation in OPEX (mainly lower energy prices compared to Q1 2023).

M&A activities

The M&A contribution was minimal in Q1 2024 as SYNLAB completed one small bolt on acquisition.

The business continues to focus on portfolio management.

Increase of adjusted net profit

In Q1 2024, adjusted net profit (Group share) was €33 million (Q1 2023: €25 million), mainly from increased adjusted Operating profit, lower Net finance cost and lower income tax expenses.

Reduction of adjusted (for covenant purpose) net debt

Q1 2024 unlevered free cash flow (uFCF) was €45 million (Q1 2023: €(7) million) with a cash conversion rate (uFCF / AEBITDA) of 37%.

Net debt of the Group decreased by €56 million to €1,285 million at the end of March 2024 (year-end 2023: €1,341 million).

Adjusted (as per covenant definition) net debt at the end of March 2024 was at €1,249 million (year-end 2023: €1,303 million).

The leverage ratio decreased from 2.90x at the end of December 2023 to 2.75x at the end of March 2024.

SYNLAB hold €260 million in cash at the end of March 2024 (year-end 2023: €221 million).

In April 2024, SYNLAB AG entered into a new loan of €535 million with the related party company Ephios Subco 3 S.à r.l. and has cancelled and repaid in full its Term Loan A Facility. 

Outlook

For 2024 SYNLAB continues to expect revenues of around €2.7 billion (at current perimeter) with an underlying organic growth around 4%.

SYNLAB also continues to expect the AEBITDA margin to improve from its low point in 2023 with a minimum increase of 50bp. The AEBITDA margin is expected to be within the range of 17-18% considering the ongoing effort on the portfolio management, the continuous delivery of SALIX initiatives and the price net of inflation trajectory.

SYNLAB will continue in 2024 its bolt-on M&A strategy with an expected EV spent to be within the range of €50 million to €100 million.

Cinven successfully settled the public acquisition offer to the shareholders of SYNLAB AG and now controls approximately 85% of the SYNLAB share capital and 86% of its voting rights.

SYNLAB Italy has been affected by the cyber security attack on 18 April 2024. SYNLAB has now restored operations and is gradually resuming all services for patients and customers.

Conference call

SYNLAB Management will hold a conference call for analysts and investors today at 3:00 p.m. CET (10:00 a.m. ET). Please register at least 10 minutes before the start of the event by clicking on the registration link on SYNLAB’s website (https://ag.synlab.com/conference-call).

– Ends –

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 medicine. The Group continuously innovates medical diagnostic services for the benefit of patients and customers.
• SYNLAB operates in more than 30 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 27,000 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 €2.64 billion in 2023.
• Ticker symbol: SYAB; ISIN: DE000A2TSL71
• More information can be found on www.synlab.com

Appendix

1. SEGMENT REPORTING

2. P&L, CASH FLOW, NET DEBT AND LEVERAGE

Forward looking statements

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.

Declaration of non-IFRS measures

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.

Organic growth represents a non-IFRS measure calculating the growth in revenue for a given period compared to the equivalent prior year period for the same scope of businesses presented in a uniform currency, i.e. using the exchange rates of the prior-year period.

When calculating organic growth, SYNLAB uses the scope of businesses that have been consolidated in the Group’s prior year financial statement. Revenue contribution from businesses acquired in the prior year but not consolidated for the full year are adjusted as if they had been consolidated as from January of the prior year. All revenues from businesses acquired since 1 January of the current year are excluded from the calculation. The Underlying organic growth is the organic growth excluding COVID-19 testing revenue.

Adjusted EBITDA (AEBITDA) is operating profit adjusted for (by adding back) the following:

• depreciation and amortisation;
• impairment of goodwill;
• expenses related to acquisition and post-merger integration.

Adjusted operating profit (AOP) is operating profit adjusted for the following:

• customer list amortisation;
• impairment of goodwill;
• expenses related to acquisition and post-merger integration.

Adjusted net profit is defined as profit (Group share) adjusted for adjustment items defined in the adjusted operating profit definition including the respective tax effects (and effects from sale of businesses).

Adjusted net debt is defined as per banking covenant, the sum of financial debt including loans and borrowings adding back capitalised transaction costs, adjusted lease liabilities, and adjusted deferred price considerations for acquisitions, net of cash & cash equivalents.

Unlevered free cash flow (uFCF) is defined as the sum of cash flow from operating activities, net CAPEX (defined as the cash outflow from the purchase of intangibles and property, plant and equipment, net of proceeds from the sale of intangibles and property, plant and equipment) and leases (defined as the sum of lease repayments and lease interest).