Advanced Medical Solutions Group Regulatory News (AMS)

4 September 2023

Advanced Medical Solutions Group plc

("AMS" or the "Group")

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 (as it forms part of Retained EU Law as defined in the European Union (Withdrawal) Act 2018).

Trading update

Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the world-leading specialist in tissue-healing technologies, today announces a trading update following recent events that have impacted financial expectations for the year ending 31 December 2023. 

Organogenesis US reimbursement coverage

As reported in the July trading update, our first half was impacted by reduced royalty income from the patent licencing agreement with Organogenesis Inc. that ends in September 2026. More recently, in August 2023, Organogenesis announced that changes to US reimbursement coverage for the treatment of diabetic foot ulcers and venous leg ulcers has created uncertainty regarding the revenue outlook for some of its key products, including those utilising AMS patents.

Given that Organogenesis has withdrawn its own guidance and that we have no control of, and minimal insight into its sales, we are unable to quantify the financial impact on AMS at this stage. We therefore believe it to be prudent to remove this royalty in its entirety from Q4 2023 guidance onwards. The total 2023 full year impact of the lower royalty is expected to be a reduction of £2 million to adjusted pre-tax profit. In FY24 and FY25, the removal of the royalty is expected to reduce adjusted pre-tax profit by £4 million per annum with a similar pro-rata impact in FY26 until the end of the agreement in September 2026.

US LiquiBand® destocking

As part of its enhanced partner strategy in the US announced in March, the Group has had positive discussions with its partners and has made good progress with new agreements aimed at delivering stronger growth from early 2024 onwards. This process has taken longer than first anticipated and associated destocking has been greater and it is clear that the FY23 impact will be more significant than previously estimated, impacting revenues just in the current year.

The destocking has not affected LiquiBand® end sales demand and the pipeline of evaluations and conversions for LiquiBand® XL continues to grow strongly. As such the Board's expectations for LiquiBand® growth remain high, both short and long term and LiquiBand® sales forecasts for 2024 and future years remain unchanged.

Outlook

The combined effect of these factors is expected to impact the Group's FY23 financial performance with revenues now anticipated to be approximately £124 - £127 million and adjusted pre-tax profit of approximately £25 - £27 million. Reflecting the Board's confidence, with the exception of the adjustment to the Organogenesis royalty, guidance for future years remains unchanged.

Further information will be provided when AMS announces its interim results on 20 September.

Chris Meredith, Chief Executive Officer of AMS, commented: "While the uncertainty in the Organogenesis royalty stream and the higher de-stocking of US LiquiBand® is clearly disappointing, my confidence in AMS's long term growth prospects is stronger than ever. We remain convinced that our new US LiquiBand® partner strategy will drive accelerated growth from early 2024 and that this, in conjunction with other initiatives such as the imminent launch of LiquiBand® Fix8 in the US, will enable AMS to return to strong growth in 2024 and beyond."

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About Advanced Medical Solutions Group plc

AMS is a world-leading independent developer and manufacturer of innovative tissue-healing technology, focused on quality outcomes for patients and value for payers. AMS has a wide range of surgical products including tissue adhesives, sutures, haemostats, internal fixation devices and internal sealants, which it markets under its brands LiquiBand®, RESORBA®, LiquiBandFix8® and Seal-G®. AMS also supplies wound care dressings such as silver alginates, alginates and foams through its ActivHeal® brand as well as under white label. Since 2019, the Group has made five acquisitions: Sealantis, an Israeli developer of innovative internal sealants; Biomatlante, a French developer and manufacturer of surgical biomaterials, Raleigh, a leading UK coater and converter of woundcare and bio-diagnostics materials, AFS Medical, an Austrian specialist surgical business and Connexicon, an Irish tissue adhesives specialist.

AMS's products, manufactured in the UK, Germany, France, the Netherlands, the Czech Republic and Israel, are sold globally via a network of multinational or regional partners and distributors, as well as via AMS's own direct sales forces in the UK, Germany, Austria, the Czech Republic and Russia. The Group has R&D innovation hubs in the UK, Ireland, Germany, France and Israel. Established in 1991, the Group has more than 800 employees. For more information, please see www.admedsol.com.