COVID-19 takes bite out of Agfa's Q3 revenues

2020 02 05 19 40 5727 Agfa Rsna 2019 400

The COVID-19 pandemic took a bite out of revenues for the third quarter at Agfa Gevaert, although the company's Agfa HealthCare Imaging IT business has been a bright spot.

For the period (end-30 September), Agfa's HealthCare IT division posted revenue of 54 million euros for the third quarter, down 7.1% after adjusting for currency effects compared with revenues of 60 million euros in the corresponding quarter of 2019. Much of the decline was due to the loss of revenue contribution from the Orbis electronic health record business, which Agfa sold in May 2020 to Dedalus Group. The group's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were 6 million euros, compared with 4 million euros in the third quarter of fiscal 2019.

In discussing the HealthCare IT division's performance, Agfa said the group posted a strong increase in gross profit margin, thanks to targeting high-value revenue streams. It said the outlook for the Imaging IT business within the group is "strongly positive" in spite of the COVID-19 pandemic. The company said its strategy is to target customer segments and geographies for its Enterprise Imaging software, while abandoning or winding down "less desirable" revenue streams. This has helped gross profit margin rise to 46.4% of revenue, from 41.6% last year.

In the company's Radiology Solutions segment, revenues for the most recent quarter were 119 million euros, down 7.2% after currency fluctuations compared with revenues of 132 million euros in the same period of 2019. Adjusted EBITDA was 16.5 million euros, compared with 22 million euros in the corresponding quarter of 2019.

In this business, Agfa said that its digital radiography (DR) products continued to grow, driven by mobile DR systems. Agfa has gained market share during the COVID-19 pandemic, and its ability to provide services remotely has improved profitability.

Revenues for its computed radiography (CR) business continue to decline, as private practices in India, Latin America, and other geographies are postponing their investments in CR equipment. Agfa noted that in early November it announced changes to its CR manufacturing activities, moving some of them from Germany to China.

The profit margin in the Radiology Solutions business saw a decline, from 34.9% of revenue last year to 33.1% most recently, as improved service efficiencies in DR could not compensate for a decline in medical film sales due to COVID-19's impact on procedure volume.

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