Coloplast has signed an agreement to acquire Kerecis, an innovative, fast-growing company in the biologics wound care segment, for up to USD 1.3 billion (around DKK 8.9 billion), of which USD 1.2 billion (around DKK 8.2 billion) is an upfront cash payment

• • Kerecis represents an attractive opportunity to strategically strengthen Coloplast’s presence in the advanced wound care market by entering the high-growth, US-centric biologics segment
  • With a mission to improve wound care treatment, Kerecis has developed and patented a clinically differentiated, sustainable, and scalable technology platform based on intact fish skin
  • Produced with minimal processing, the fish skin retains its similarity to human skin, resulting in improved wound healing. The technology is backed by compelling evidence from multiple clinical trials and has already been used to treat tens of thousands of patients
  • Since the launch of its product offering in 2016 Kerecis has become the fastest growing company in the biologics wound care segment, with DKK 510 million in revenues and reaching break-even in FY 2021/22¹⁾
  • Due to a highly cost-efficient production setup, Kerecis has an attractive gross margin level, accretive to Coloplast’s gross margin. Kerecis has strong potential to expand its profitability driven by continued growth and scalability
  • Revenue growth assumptions: Kerecis is expected to grow around 50% in FY 2022/23. The company is expected to continue its strong growth trajectory with an estimated three-year CAGR of around 30% until FY 2025/26
  • EBIT margin assumptions²⁾: Kerecis’ EBIT margin is expected to be around 10% in FY 2022/23 and to continue expanding to around 20% in FY 2025/26. In the following years, the EBIT margin is expected to be in line with Coloplast’s long-term guidance of more than 30%
  • The acquisition is expected to accelerate Coloplast’s group organic growth with around 1%-point contribution as of FY 2024/25. The acquisition is expected to be margin dilutive short-term
  • As a result of the acquisition, Coloplast raises its long-term organic growth guidance to 8-10%, from previously 7-9%. The long-term EBIT margin guidance is unchanged at more than 30%, however, the EBIT margin in the Strive25 period is now expected to remain below 30% and includes around 100 basis points dilution p.a. from Kerecis (incl. PPA amortisation)
  • The transaction is expected to be increasingly EPS accretive from FY 2026/27
  • Following the expected acquisition, Kerecis will operate as a stand-alone business unit under its own identity and brand, with integration focused on business support and other selected areas to support the company’s strong growth outlook and continued expansion
  • The total enterprise value for 100% ownership of Kerecis amounts to up to USD 1.3 billion (around DKK 8.9 billion), consisting of USD 1.2 billion (around DKK 8.2 billion) upfront cash payment and an earnout potential of maximum USD 100 million (around DKK 680 million)
  • The transaction is expected to be financed through an equity capital raise
  • As of today, 77% of Kerecis’ shareholders have committed to sell their shares to Coloplast. Closing of the transaction is subject to customary regulatory approvals and an acceptance threshold of at least 90%, and is anticipated in Q4 2022/23
    
    

Investor and analyst conference call

Coloplast will host a conference call today, Friday, 7 July 2023, at 11.00h CEST. Access the conference call webcast directly here: Coloplast Conference Call

To actively participate in the Q&A session please sign up ahead of the conference call on the link here to receive an e-mail with dial-in details: Register here

For further information, please contact

Investors and analysts

Anders Lonning-Skovgaard
Executive Vice President, CFO
Tel. +45 4911 1111

Aleksandra Dimovska
Senior Director, Investor Relations
Tel. +45 4911 1800 / +45 4911 2458
Email: dkadim@coloplast.com

Kristine Husted Munk
Senior Manager, Investor Relations
Tel. +45 4911 1800 / +45 4911 3266
Email: dkkhu@coloplast.com

Press and media
Peter Mønster
Sr. Media Relations Manager
Tel. +45 4911 2623
Email: dkpete@coloplast.com

Address
Coloplast A/S
Holtedam 1
DK-3050 Humlebaek
Denmark
Company reg. (CVR) no. 69749917

Website
www.coloplast.com

1) For the year ended September 2022. 98% of revenues were generated in the US

2) EBIT margin assumptions for Kerecis are excluding PPA amortisation

 

This announcement is not an offer to sell or a solicitation of any offer to buy any securities issued by the Company and the announcement and the information contained herein are not for distribution or release, directly or indirectly, in or into any jurisdiction where any such offer or sale would be unlawful.

This announcement includes forward-looking statements that involve risks, uncertainties, and other factors, many of which are outside of Coloplast's control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Forward-looking statements include statements concerning Coloplast's plans, objectives, goals, future events, performance, and/or other information that is not historical information. All such forward-looking statements are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. Coloplast undertakes no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law.

The Company has not independently verified and cannot give any assurances as to the accuracy of market data contained in this announcement that

 was extracted or derived from external sources.

This announcement is available in an English and Danish-language version. In case of discrepancies, the English-language version shall prevail.