medmix continued its strong recovery despite continuing disruption and lockdowns in 2021. Revenue increased by 30.2% (21.5% organically), back to pre-pandemic 2019 levels and closing the year with a record order backlog. We reached a profitability of 25.0% adjusted EBITDA margin, fully in line with our guidance, compared to 18.8% in 2020. This marks a return to pre-pandemic levels despite raw material and logistics headwinds and costs related to the spin-off as a stand-alone listed company. Solid free cash flow generation of CHF 55.6 million resulting in cash conversion of net income of 126.4%.
If not otherwise indicated, changes from the previous year are based on currency-adjusted figures.
“In our first year as a publicly listed company, we fully delivered on our financial guidance, returning to pre-pandemic levels for revenue and profitability, despite the continuing turbulence of the pandemic impacting our markets, raw materials shortages and supply chain challenges.”
Jennifer Dean
Chief Financial Officer
Strong revenue growth at pre-pandemic levels
In 2021 medmix delivered revenue of CHF 457.3 million, up CHF 106.0 million from the prior year. The Healthcare business area grew 63.7% over the previous year (34.4% organically), delivering CHF 169.8 million in revenue. Our Dental market segment grew 42.3%, returning to 2019 (pre-pandemic) levels on currency-adjusted basis. In the first full year after the Haselmeier acquisition, our Drug Delivery market segment recorded CHF 40.8 million revenue, compared to CHF 7.4 million in the previous year. Due to a non-recurring project executed in 2020, Surgery market segment revenue was lower by 12.5% in 2021. The Healthcare business now represents 37.1% of medmix’ revenue.
The Consumer & Industrial business area grew 16.1%, with CHF 287.5 million revenue in 2021. Our Industry market segment made a strong recovery and achieved record revenues at 27.6% versus previous year. Our Beauty market segment faced the prolonged impact of the pandemic and continuing restrictions in retail and travel, increasing 4.2% versus previous year.
Significant uplift in business area gross profit
The business area gross profit margin was 48.2% in 2021, up 2.0 percentage points versus previous year. The margin improvement was driven largely by an increased share from the higher-margin Healthcare revenue. Furthermore, strong customer partnerships enabled medmix to mitigate increases in raw material, energy and logistics costs.
The Healthcare business area gross profit margin was down 2.9 percentage points to 60.8%, reflecting the first full year of our Drug Delivery market segment, with increased product development and customization projects.
The Consumer & Industrial business area gross profit margin was 40.7%, up 1.9 percentage points, driven by a better mix and improved margins in the Beauty market segment.
Improved profitability
medmix delivered profitability of 25.0% adjusted EBITDA margin, fully in line with our guidance. This is a significant increase of 6.2 percentage points compared to previous year. This was led by an improvement in the business area gross profit margin, better utilization in our production facilities and adapting our customer collaboration with a tighter control on discretionary spending.
Bridge from operating income (EBIT) to adjusted EBITDA
millions of CHF
2021
2020
Operating income (EBIT)
59.9
18.1
Depreciation
28.7
23.4
Amortization
22.2
19.2
Impairments on tangible and intangible assets
0.9
0.5
EBITDA
111.7
61.2
Restructuring expenses
0.3
3.2
Non-operational items1)
2.5
1.6
Adjusted EBITDA
114.5
66.0
1)Non-operational items include significant acquisition-related expenses, gains and losses from the sale of businesses or real estate (including release of provisions), and certain non-operational items that are non-recurring or do not regularly occur in similar magnitude.
Adjusted EBITDA margin
millions of CHF
2021
2020
Adjusted EBITDA
114.5
66.0
Revenue
457.3
351.3
Adjusted EBITDA margin
25.0%
18.8%
Financial income and expenses
Interest expenses on borrowings and lease liabilities were CHF 8.1 million, up from CHF 7.7 million in 2020. Other financial expenses amounted to CHF 0.5 million in 2021, compared to CHF 0.1 million in 2020.
Income tax expenses
The effective tax rate is 14.3% in 2021, compared to 8.1% in 2020. Income tax expense increased to CHF 7.3 million in 2021, from CHF 0.8 million in 2020, as a result of a higher pre-tax income.
Key balance sheet positions
Total assets as of December 31, 2021 amounted to CHF 974.4 million, an increase of CHF 182.4 million.
Non-current assets decreased from CHF 637.5 million in 2020 to CHF 634.7 million in 2021. Purchases of property, plant and equipment of CHF 29.8 million and higher lease assets of CHF 20.1 million were more than offset by depreciation (CHF 28.7 million) and amortization (CHF 22.2 million). Negative currency translation effects on non-current assets amounted to CHF 15.4 million.
Current assets increased by CHF 185.2 million to CHF 339.7 million, mainly due to higher cash and cash equivalents (CHF 195.0 million). Cash and cash equivalents also increased because of the capital increase by CHF 294.7 million, partly offset by the debt split from the Sulzer group. Current financial assets decreased by CHF 31.2 million after dissolving the Sulzer cash pool. Inventories increased by CHF 16.2 million as medmix rebuilt its stock levels to cover higher demand.
Equity amounted to CHF 533.9 million in 2021, compared to CHF 333.4 million in 2020. This was driven by the capital increase of CHF 294.7 million, partly offset by contributions to the Sulzer group of CHF 104.1 million and dividend payments to shareholders prior to the spin-off of CHF 41.3 million.
Non-current liabilities increased by CHF 1.1 million to CHF 323.1 million, mostly driven by a CHF 17.9 million increase in non-current lease liabilities linked to the medmix factory expansion in Germany.
Current liabilities were reduced by CHF 19.2 million, to CHF 117.4 million. The decrease mostly resulted from the repayment of current borrowings to Sulzer, as a consequence of the spin-off.
Net debt significantly decreased by CHF 175.1 million to CHF 110.9 million. In line with our presentations during the capital markets day and prior to the capital increase, net debt to adjusted EBITDA ratio was 0.97 in 2021, compared to 4.33 in 2020.
Solid free cash flow generation
Cash flow from operating activities was CHF 87.3 million, up from CHF 50.6 million in 2020. This is the result of the volume rebound following the lockdowns and market stall of 2020.
Cash out from investing activities was CHF 3.3 million. The sale of other financial assets related to the Sulzer cash pool of CHF 31.4 million was offset by the purchase of property, plant and equipment (CHF 29.8 million).
Cash flow from financing activities was CHF 111.6 million, as medmix modified its financing structure and replaced borrowings from Sulzer with equity and loans from third parties. The net proceeds of the capital increase of medmix were CHF 294.7 million. Loans of CHF 369.0 million (net) were repaid to Sulzer and term loans were established with our core banks for CHF 250.0 million. Dividends paid to shareholders prior to the spin-off were CHF 41.3 million.
Free cash flow in 2021 was CHF 55.6 million, an increase of CHF 46.2 million from 2020.
Bridge from cash flow from operating activities to free cash flow
millions of CHF
2021
2020
Cash flow from operating activities
87.3
50.6
Purchase of intangible assets
–2.1
–1.0
Sale of intangible assets
–
0.0
Purchase of property, plant and equipment
–29.8
–42.1
Sale of property, plant and equipment
0.2
1.9
Free cash flow (FCF)
55.6
9.4
Outlook
In 2022, we are aiming for a 8 to 10% growth in revenue. Growing revenue in the more profitable Healthcare business area faster than in Consumer & Industrial will drive our adjusted EBITDA margin to 26%.
In the medium term, medmix aims to achieve a CAGR of 8% in revenue and an increase in adjusted EBITDA margin to 30% through continued faster growth in the Healthcare business area. To reach these goals, medmix plans to increase the production capacities in 2022. In addition, medmix will pursue strategic acquisitions in Healthcare and in targeted geographies.
Abbreviations and definition of alternative performance measures (APMs): CAGR: Compound annual growth rate EBIT: Earnings before interest and taxes EBITDA: Earnings before interest, taxes, depreciation and amortization For the definition of the alternative performance measures, please refer to chapter alternative performance measures.
