Tobii Dynavox Interim report for the second quarter 2023

Tobii Dynavox AB (publ) today announced its results for the second quarter of 2023. 

Comments by Tobii Dynavox CEO Fredrik Ruben: 

Our underlying growth continues with undiminished momentum despite facing a tougher comparison quarter from last year's Q2. We see strong momentum in the business across the board, including outside the US. At the same time, profitability continues to strengthen, driven by volume effects, gradually higher reimbursement levels in the insurance systems, and the fact that the pandemic no longer negatively impacts gross margin. We see a clear trend where growth is fastest in markets where we sell directly, boding well for the future. The acquisition of our German supplier Rehadapt has full potential to add profitable growth from day one. We remain optimistic about both growth and profitability going forward and are therefore investing in competencies, systems and tools to further increase scalability.

QUARTER APRIL – JUNE 2023

• Revenue grew 32% to SEK 381 million (288). The currency adjusted growth was 24%.

• Gross margin was 68% (64). 

• Operating profit totaled SEK 29 million (16), corresponding to an operating margin of 7.6% (5.4). The operating margin was 9.2%, excluding non-recurring costs of SEK 6 million.

• Cash flow after continuous investments was SEK 30 million (-30).

• Basic and diluted earnings per share were SEK 0.16 (0.05). 

PERIOD JANUARY – JUNE 2023

• Revenue grew 34% to SEK 716 million (535). The currency adjusted growth was 24%. 

• Gross margin was 67% (64). 

• Operating profit totaled SEK 50 million (33), corresponding to an operating margin of 7.0% (6.1). The operating margin was 7.8%, excluding non-recurring costs of SEK 6 million.

• Cash flow after continuous investments was SEK 47 million (-58).

• Basic and diluted earnings per share were SEK 0.23 (0.15).

SIGNIFICANT EVENTS DURING THE QUARTER

• On June 30, 2023, Tobii Dynavox entered into an agreement to acquire all shares in the German company Rehadapt Engineering for EUR 15 million in cash on a debt-free basis. Additionally, a potential earn out consideration of up to EUR 3.5 million 12 months after closing of the transaction will be paid depending on the continued financial development of Re-hadapt. The transaction is subject to relevant regulatory approvals and other customary conditions, which are expected to be completed in the third quarter of 2023.

• The company launched the TD I-Series, a fast, lightweight and durable eye-controlled communication aid. Specially designed for people with disabilities such as ALS, cerebral palsy, and Rett syndrome, the TD I-Series is equipped with enhanced eye tracking and a wide range of pre-installed applications for simplified communication.

SIGNIFICANT EVENTS AFTER THE END OF THE QUARTER

• Tobii Dynavox signed a partnership agreement with Team Gleason Foundation, the leading provider of technology solutions for people with ALS, to improve access to assistive technology for communication and enable more people to live a more meaningful life.

COMMENTS FROM THE CEO 

Our underlying growth continues with undiminished momentum despite facing a tougher comparison quarter from last year's Q2. We see strong momentum in the business across the board, including outside the US. At the same time, profitability continues to strengthen, driven by volume effects, gradually higher reimbursement levels in the insurance systems, and the fact that the pandemic no longer negatively impacts gross margin. We see a clear trend where growth is fastest in markets where we sell directly, boding well for the future. The acquisition of our German supplier Rehadapt has full potential to add profitable growth from day one. We remain optimistic about both growth and profitability going forward and are therefore investing in competencies, systems and tools to further increase scalability.

Sales growth, denominated in local currency, was well above our long term target at 24 percent. Growth was robust across all product and user groups. US Medicare's increase in the reimbursement level for our products by more than 9 percent will gradually affect revenues in 2023. Our income statement now reflects almost half of these price adjustments. As before, we expect to see the full impact by the end of the second half of the year.

Gross margin increased by 4 percentage points to 68 percent. The main reasons were the normalization of component and freight costs, as well as progressively higher sales prices.

Clearly, the distinct break in the trend toward increased sales growth that we saw just over a year ago was not temporary in nature. Our own large scale investments to educate prescribers and improve our products, along with constantly improving reimbursement systems in many countries, are producing clear results.

Our direct markets, including the recently added Irish and Danish markets, show the strongest growth. The main reason is that we have a much greater ability to effectively educate and support prescribers while gaining a deeper understanding of local requirements, processes and reimbursement systems. Educating the market about the potential of our products is key and critical for us to deliver on our major growth and profitability opportunities.

Our customer offering is highly competitive, and it is gratifying that our recently launched software titles have drawn so much attention. We can see rapid growth in their use. TD Browse, a browser specifically designed for users who control their device with eye movements, has also been nominated for several prominent awards. We continue to invest in development to gradually strengthen our product offering. New hardware, TD I-13 and TD I-16, was launched during the quarter, thereby upgrading our leading eye tracking communication aids in the premium segment to the next level.

The acquisition of our long standing German supply partner Rehadapt, which we agreed on at the end of June, naturally complements our offering while also strengthening our position in Germany. The company offers medically certified “mounts,” a product that either we or our distributors combine with assistive communication devices when fixed, for example, to the user’s bed or wheelchair. The acquisition allows us to create solutions that make it easier for our users to access and use their assistive technology for communication. Rehadapt will be an independent subsidiary within the Group. We expect to close the deal in the third quarter, welcoming around 50 new colleagues.

Fredrik Ruben, CEO 

Webcast 

Today at 09:00 a.m. CET, Tobii Dynavox will host a webcast presentation for media, analysts and investors. 

If you want to attend the webcast click the following link. 

The interim report and a recording of the webcast will be available here. 

This information is inside information that Tobii Dynavox AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out below, at 07.30 CET on July 20th, 2023.