„We at Össur are dedicated to improving people’s mobility and witnessing the users of our products push their boundaries to reach new heights.“
As a global market leader in non-invasive orthopaedics, Össur maintained its market position as the second largest player in both prosthetics and bracing & supports in the year 2018.
| Actual vs. Guidance | |||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Guidance 2018 | Actual 2018 | ||||||||||||||||||||||||||||||||||||||||
| Sales Growth Organic |
4-5% | 5% | |||||||||||||||||||||||||||||||||||||||
| EBITDA margin Before special items |
~19% | 19% | |||||||||||||||||||||||||||||||||||||||
| CAPEX % of sales |
~5% | 5% | |||||||||||||||||||||||||||||||||||||||
| Tax Effective tax rate |
23-24% | 24%* | |||||||||||||||||||||||||||||||||||||||
*Tax rate has been normalized for the revaluation of previously acquired shares, increasing effects from associates, and impacting net profit. The reported effective tax rate is 18%.“
Reduction in
hazardous waste from 2016
Out of total energy usage
Female in management positions
Incident rate per 100 FTEs
as % of sales
USD 266 million
Organic growth: 3%
FTEs: ~1,200
as % of sales
USD 299 million
Organic growth: 4%
FTEs: ~1,300
as % of sales
USD 48 million
Organic growth: 18%
FTEs: ~150
HQ FTEs: ~450
Sales amounted to USD 316 million and grew by 7% organic.
We continued to see good performance in prosthetics with growth above estimated market growth. High-end innovative products such as bionics and carbon-fiber mechanical feet delivered strong growth in the segment globally. Growth in other product categories was also good in the quarter. Growth was furthermore strong in all market regions; EMEA, Americas, and APAC. Good performance can be attributed to, among others, strong growth of the bionic RHEO KNEE® and Touch Bionic upper limb solutions as well as a good market acceptance of recently launched products such as the Pro-Flex® LP Align and the new bionic PROPRIO FOOT®.
Sales of bionic products accounted for 22% of prosthetics component sales, compared to 21% in 2017. The increase between years is attributed to a strong sales performance of bionic solutions.
New prosthetic products introduced to the market include, among others, the new Pro-Flex® LP Align foot which features heel height adjustability, enabling users to maintain proper alignment across a range of everyday footwear.
Sales amounted to USD 296 million and grew by 2% organic.
High-end innovative products such as the Unloader One® solutions and Rebound® Post-Op Knee were the main growth drivers in the segment globally. Growth in EMEA was impacted by a competitive market environment for compression therapy products in France and rationalization efforts in selected markets. Other regions in EMEA delivered strong growth. Growth in the Americas was strong for high-end products but was negatively impacted by lower sales to a few large distributors. Our own distribution companies continue to perform well after their restructuring was finalized at the end of 2017. Growth in APAC was strong in all main markets, most notably in Australia, Japan and China.
New bracing & supports products introduced include, among others, the Rebound® Post-Op Knee, a versatile knee bracing solution and an array of soft goods products both under the Össur Formfit® and Gibaud® brands.
Innovative products, ground-breaking technology and successful events paved the way for yet another memorable year for Össur
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We are very happy to close yet another good year at Össur. Sales growth amounted to 8% in 2018 and our EBITDA margin before special items amounted to 19%. Growth in the year was driven by excellent performance in our prosthetics segment which grew above estimates for market growth. We also had good growth in our high-end innovative products in both prosthetics and bracing & supports. During the year we increased our investment level in research & development, but also ensured that EBITDA continued to grow faster than sales. The key drivers for increased profitability are positive product mix from strong sales performance of high-end products, scalability in manufacturing and operations, in addition to savings from our efficiency initiatives.
The center of Össur’s business model is its ability to develop and commercialize new innovative products in both prosthetics and bracing & supports. In 2018 we launched a total of 25 new products in addition to several incremental updates to products already in the market.
The highlight on the prosthetic side was certainly the new Pro-Flex® LP Align foot which features heel height adjustability, enabling users to maintain proper alignment across a range of everyday footwear. The product has been very well received by amputees and prosthetists alike. In bracing & supports we introduced the Rebound® Post-Op Knee, a versatile knee bracing solution and an array of soft goods products both under the Össur Formfit® and Gibaud® brands. The Össur Formfit® Pro Knee OA was launched in May in partnership with Iceland’s national soccer team.
More than 750,000 individuals become lower limb amputees each year and current estimates indicate that the average age of the amputee population is between 65-70 years old. However, it is estimated that only a minority of all new lower limb amputees are fitted with a prosthetic solution and out of those that receive a prosthesis, very few receive a bionic solution. This is due to bionic devices currently being withheld from most low active and elderly amputees. It is therefore evident that bionic solutions are currently only being offered to a very small part of the overall amputee population.
Withholding bionic products from amputees is, however, not considered economical as studies show that bionic devices provide excellent value to both users and healthcare systems. Amputees are less likely to fall and be hospitalized when using a bionic solution, and therefore the overall healthcare cost due to the fall can be significantly higher than the cost of the solution itself. A subgroup of Medicare in the United States recently published a document where it was acknowledged that low active amputees could benefit from bionic solutions. We therefore remain optimistic about the future of bionics in the prosthetics industry.
"The center of Össur’s business model is its ability to develop and commercialize new innovative products in both prosthetics and bracing & supports."
Treating patients with osteoarthritis (OA) can be challenging as it is a long-term, incurable condition. Unloader bracing is a clinically proven and less expensive alternative to surgery but there is still a limited overall awareness of bracing as a successful treatment option. This is because bracing solutions available in the market have had varying success but, in the fall of 2018, a study was published that concluded that the Össur Unloader One® Knee Brace was a more effective and better tolerated brace than a placebo. We therefore firmly believe that in time, more and more individuals will begin to acknowledge the healthcare economics that the Unloader bracing has to offer.
Össur has grown with a 20% compounded annual growth rate since its shares were listed on the stock exchange in 1999, with a combination of organic and acquired growth. Operating profit has grown at a similar rate with a continuous focus on operational improvements. In 2017, we identified further opportunities to drive efficiency in our operating model and enable scalability. Consequently, we launched efficiency initiatives within the areas of Manufacturing, Distribution, and Sourcing.
We made good progress with the efficiency initiatives during the year. We began moving certain parts of our prosthetic components manufacturing from our manufacturing plant in Iceland to our Mexico facility. We furthermore closed our distribution site in California in the U.S. and moved the distribution activities to our manufacturing plant in Mexico. Lastly, we made good progress within key spend categories in our strategic sourcing initiative. The combination of these activities contributed to increased scalability and efficiency in our operating model.
We at Össur are dedicated to improving people’s mobility and witnessing the users of our products push their boundaries to reach new heights. This fuels our passion and commitment to the orthopaedic industry. Examples of such triumphs this year include our long-standing Team Össur member Sarah Reinertsen which not only completed the 777-marathon challenge, where she ran seven races on seven continents in seven days, she also completed the iconic Hawaii Ironman and crossed the finish line with her energetic smile. Another memorable moment was seeing double below knee amputee Marko Cheseto, who lost his limbs due to frostbite less than eight years ago, run the New York City Marathon in under three hours. People living with limb loss are gracing the covers of magazines, featured in global brand campaigns and eliminating the stigma often associated with limb difference. We could not be prouder to be a part of this movement.
We have had many accomplishments in the past year that have helped Össur maintain its strong presence in the orthopaedic industry. We invested significantly in our business during the year with increased R&D activities so that we can continue to offer the most technologically advanced prosthetics in the world. However, given that Össur has a strong cash generation, we were also able to return value to our shareholders in the form of dividends and share buybacks as well as investing further in the business.
I would like to sincerely thank our employees, customers, users, and shareholders for making 2018 another excellent year and we look forward to working with you in 2019 as we continue to invest in a bright future.
Jon Sigurdsson
President and CEO
Össur is a global leader in non-invasive orthopaedics; innovating, producing, and providing advanced technological solutions within prosthetics and bracing & supports. Our mission is to improve the mobility of our users, so they can live their Life Without Limitations®.
Össur was founded in 1971 and has since grown through organic development and acquisitions in both prosthetics and bracing & supports. Today, Össur has a strong global position in the industry and key markets, being the second largest player worldwide in both segments and in a good position to leverage future growth opportunities. Össur has been listed since 1999, has operations in over 26 countries and more than 3,100 FTEs.
Every year there are individuals who lose a limb at different stages of their life due to vascular diseases, diabetes, trauma, or are born without one. There are also individuals who develop knee pain, are diagnosed with osteoarthritis in their joints, incur fractures to their ligaments or injure themselves resulting in movement impairment. For years Össur has helped these people focus on new goals rather than limitations by offering comprehensive solutions that are designed with the needs of the user top of mind.
Össur is a pioneer of advanced technology where our brand recognition is based on innovative and scientifically-proven solutions that deliver effective clinical outcomes. By listening and understanding people’s needs and pushing the boundaries of technology, we continue to create some of the best products and services available in the fields of prosthetics and bracing & supports. Every year Össur invests the equivalent of 5% of sales in R&D efforts to work on new innovative products for the benefit of our users. In 2018 we introduced a total of 25 new products to the market.
Össur operates within two market segments of the orthopaedic market: bracing & supports and prosthetics. Prosthetic products include artificial limbs and related products for amputees. Bracing & supports products are primarily used to support joints and other body parts, both for preventive and therapeutic purposes.
Össur’s prosthetics portfolio includes a full spectrum of premium lower and upper limb prosthetic components. The portfolio ranges from solutions to support low active individuals who may struggle to maintain the ideal balance of safety, comfort, and mobility all the way to solutions designed to enable especially active people to engage in high-impact endeavors.
Össur’s osteoarthritis (OA) solutions are designed to enhance quality of life, reduce pain, and improve mobility for people living with osteoarthritis. Össur offers the Unloader One® and Unloader One® Lite knee braces that relieve pain from knee osteoarthritis, as well as the Unloader® Hip which is designed to reduce pain by optimizing load dispersion for patients suffering from mild and moderate osteoarthritis of the hip.
Össur’s injury solutions are designed for people recovering from fractures, ligament injuries or for those in need of post-operative treatment solutions. These solutions are designed to support the healing process of bone and soft tissue injuries. Several of these products come with the Functional Healing seal that signifies a clinically validated healing solution that helps enhance the body’s natural healing process while maximizing mobility.
