Thank you for standing by, and welcome to the Somnimed 2021 Full Year Results I would now like to turn the conference call over to and I'll refer to Austin, CEO. Sir, the floor is yours.
Well, good morning, ladies and gentlemen, and welcome to Somnimed's webcast of the FY 'twenty one results. As said, my name is Neil Verdel Austin, and I'm the CEO of this extraordinary company. We also trust that everyone is well and doing all that you can do to remain safe during this very difficult time. Fiscal year 2021 was certainly a challenge, not only for Somnimed, but for everyone throughout the world. The fiscal year began 4 months to a global pandemic that created much uncertainty and unfortunately continues to do so today.
Somnimed, I'm pleased to say, has managed through this initial COVID-nineteen period extremely well. And after the usual disclaimer slide, it gives me great Pleasure to start at slide 4, our financial and fiscal year 2021 highlights. Starting at the revenues, our revenues posted were just short of $63,000,000 and up 9% over the same period last year. That's up 15% in constant currency. For us, really impressive results, full year impressive results from both Europe and APAC, With North America turning the year around in quarter 4 to deliver the same full year revenues as FY 2020 in constant currency terms, For us, an amazing final position considering the year we had in North America.
The EBITDA is $3,900,000 and down 17 percent on the same period last year and will be explained in more detail in the financial slide. However, we are very impressed and Pleased with the gross margin from oral appliance product our product range, which was maintained at the 70% level. Our costs were very well managed within the context, of course, of the cautious COVID situation, but the second half Investment of EBITDA has begun and is aligned with our technology projects for the future and the future success of this company and more on that a little later on the presentation. Cash was at $21,000,000 at June of this year and again very well managed throughout conference call with purposeful allocation against these technology projects that are now underway. Slide 5 highlights the strategic and operational highlights for the year.
And just in some sort of summary for you, the patient centric multidisciplinary approach of somnolimed continues. We are more than just a treatment company providing a treatment solution. Sales and marketing remain our focus, An ongoing focused investment in these growing teams globally. And the reimbursement foundation continues and Developed in all aspects of the world wherever that is necessary and is important as a foundational piece to a medical device company. Medical education, of course, remains a cornerstone of what we do in all markets.
And we believe the product differentiation within our range It's critically important and has stood the test of time even through this pandemic. Our digital manufacturing platform Encourages efficiencies and with that brings better margins, which again we will see in the financial and fiscal slides later on. Moving to the market opportunity in Slide 7. It's clear that the obstructive sleep apnea market is large And the disease affects many, many people globally. The disease is progressive and that means it doesn't get any better if left untreated.
The various classifications that they have between the severity of OSA normally drive treatment options that are given by sleep professionals. And all that can be seen from this slide is the significant opportunity that even exists in the mild and moderate category for Somnimed moving forward. As we move to Somnimed itself and we move to Slide 9, our vision is clear. We are a patient centric organization. We care about the treatment of patients who suffer from obstructive sleep apnea.
Our mission is also very clear. We aim to do that in a multidisciplinary approach by engaging with all parties necessary to achieve that vision. And Somnimed will become through that vision and mission more than just a supplier of an oral appliance treatment. Slide 10 shows what Somnimed has basically achieved over the last 14 to 15 years. Somnimed as a company Has always had a global footprint in mind and from the start have been instrumental in building the oral appliance industry Within the fleet community across the world, our reach is unparalleled actually across 28 countries And now having treated over 620,000 patients globally.
Somnolimed hallmark has always been clinical, Evidence based research and education, Somnimed has actually set that standard across the world. And importantly, as we are concerned about patients, We also track and survey our patient base to ensure that the comfort provided by our product range means that our patients remain in treatment and more about that a little later on. Slide 11 speaks a little bit about the Somnimed product difference. The difference that somnolimed makes around is around our mantra, treatment focused and technology driven. Our focus revolves around our product innovation, comfort and retention.
And the technology driven means that SonneMed has advised on Specific transformational technology investments, not incremental, transformational technology investments that will build a smart product ecosystem in the very near future. At the forefront of this It's the Somnadentivant, our flagship, digitally milled oral appliance that provides improved comfort because of the b flex in aligner and improved efficacy. Slide 12 elaborate on the 3 3 main treatment options, if you like, offer to patients that are all quite different when it comes to an interesting perspective on 2 core methods: In general, oral appliance treatments And that option is very easy to fit and wear. It's generally preferred by most patients. It's definitely less invasive and Slide 13 really gives you the concept of what Somnimed may name in the sector.
It's to grow the oral appliance sector itself. Growing that share of oral appliances Within the total number of positively diagnosed patients worldwide is the main aim. And today, that's around 8% to 10% are not really representative of the true patient choice opportunity and treatment compliance that our products offer. Somnimed's plan and this has been openly communicated for some time now is to grow that sector such that a far greater number of patients are treated All their OSA and that they remain in treatment. Too many are offered CPAP irrespective of severity And simply cannot tolerate that treatment.
Remember, this is a long term disease that comes with Very severe comorbidity is left untreated. And as such compliance is more critical to the equation than perhaps efficacy when looking at long term effective treatment solutions. And I think slide 14 tries to show conference. CPAP is highly efficacious, no questions about it, but it does suffer from ongoing and Pretty much well documented low levels of compliance. Oral appliance therapy is slightly less efficacious, All severe patients are treated effectively, but enjoy significantly higher levels of compliance.
Therefore, patients remain in treatment. Therefore patients get effective long term treatment. And when patients are treated in that manner, they avoid the comorbidities including the cost savings over many, many years. We believe this is a compelling argument for all our sleep medical professionals around the world. And with that introduction, I'd now like to hand over to Vivek Thierve, our CFO, to cover the financial slides for you.
Thank you, Neil, and good morning, ladies and gentlemen. Without further ado, let's have a look at this graph on Slide 16 that shows the total group revenues by half year. While the first half was affected by the end of the first wave of COVID and down by 7% versus PCP. The second half, even in spite of further waves of COVID, Showed a rebound by 33% versus last year, especially on Q4, which bodes well for FY 2022. This led us, as Neil mentioned previously, to growth of 9% versus FY 2020 or 15% at constant exchange rate to almost Starting by North America, that was more heavily affected on the first half of the year due to then pre election and general Health context as well as a comparison with Avant launch during PCT.
But that recovered during the second half And it is to be noted that at constant exchange rate, the minus 9% versus previous year becomes flat. As for Europe and APAC, not affected by the effects previously mentioned during the first half, the excellent recovery during the second half, Notably pulled in Europe by core investment markets like France, Germany and Switzerland has led to growth of 20% for Europe, up 23% at constant exchange rate and 17% for APAC. The Slide 18 It's about gross margin. It is really to emphasize the ability of the group through this difficult context to maintain its main product Gross margin at 70% of sales, which enabled to deliver all the value of the revenue increase to the P and L. This was achieved by efficiencies driven by an acceleration of the adoption of digital impression scanning that represents, for instance, the most 60% of orders in North America combined with an increased demand of our digitally made devices.
So Slide 19, talking about the EBITDA now. While there was an positive contribution of the gross margin and savings due to cautious cost management and increased digital meeting. The EBITDA has eroded versus FY 2020 by 17%. This was driven by our commitment to our start during COVID-nineteen, The reduction in government support team during successive waves of the pandemic and the beginning of the investment in needed resources line to the technological transformation that will drive future growth. On Slide 20, This summarized version of the P and L illustrate clearly the investment in key roles across digital and R and D channels Support the technological transformation in both the regions with an increase by 11% of G and A expenses and centrally with an increase by 54% of the corporate and head office legal expenses in critical IT resources, clinical affairs and reimbursement.
This also happened while the government support scheme dropped by 71%. These effects were partially made up by savings on mid teens induced by COVID-nineteen prospects as well as the gross margin contribution to only show an EBITDA reduction by 17%. So now Slide 21. While the gross cash level shows a drop by $9,100,000 over the period, it is actually the result of a principal action to We repaid the bank liability of $4,900,000 with HSBC. The remainder is due to the $1,600,000 reduction of of government support as well as an increase of capital expenditure by $1,500,000 on transformational projects as mentioned by Neil previously and $1,000,000 increase in working capital as our growth continues in our key markets.
And while we were in this context of investments, A very careful cash management of all the other line items resulted in maintaining a net cash position of about $19,000,000 This confirms the strength of our balance sheet at the end of FY 2021, ahead of the year of investment to achieve category leadership as Neil will now detail. Neil, over to you.
Thank you, Hebei. I think the next few slides really show that Somnimed It's very well positioned for this upcoming opportunity and has a very clear idea of the future horizons that will require investments for the company's future growth. Slide 23 starts to show how we are positioned for this growth. Somnimed Has built a strong foundational platform over the years and underpins the next steps for the future growth we anticipate. Somnimed is world apart when it comes to the systematic building of a long term medical device company, which will now enter its next phase for growth.
Slide 24 shows how somnolimed recognizes That to achieve this opportunity, a focus on awareness, acceptance and adoption is critical in building that medical device company. Somnimed will now also invest in technology and innovation to be that category leader. Our transformational technology investment is progressing well at this stage and is now entering the beginnings of the clinical trial phase. This investment is critical to the future of this company and has come about by truly listening to the market. We have researched, consulted and reflected on the key barriers that exist to prescribing more oral appliances and are as such committed to delivering those solutions to overcome these barriers.
Somnolimed is quite unique in this industry as we are truly again patient centric in thinking multidisciplinary in approach and technology driven in execution. We've always been more than just an oral appliance treatment company and will be even more so now. Somnolimed will bring to the industry a smart product ecosystem and unfortunately that's about as much as I can say for now that will drive the further acceptance and adoption of oral appliances in the OSA market, where proof of Somnimed's long term effective Slide 25, which I think you've seen before, shows you a little bit more about what the smart Ecosystem will mean really an integrated and automated technology platform that creates a data driven ecosystem. This will lift Somnimed into a new category of oral appliance treatment, unique and on our own, and redefine how the industry will view Somnimed oral appliance ranges in the future. Slide 26 shows how we're going to be doing this and to maintain the oral appliance market category leadership.
We will deploy the financial framework, strategy as noted before in previous presentations and again in this presentation this morning. Somnimed will purposefully invest Our current EBITDA into these future horizons to accelerate future growth and market penetration globally. This is exactly what the company now needs to do. Only slowed by COVID-nineteen, but certainly nothing more. Our opportunity is now and we intend to bring you that opportunity.
So moving to the outlook for FY 2022 And our final slide, it clarifies that view and the year ahead. Even during a COVID affected world, Somnimed will now provide some guidance. Our revenues will be at least 15% growth for FY 2022, assuming that COVID does not get worse in any of the 28 markets in in which we trade. But however, to achieve the long term opportunity for Somnimed and for its investors and for all its shareholders, We will also fully invest this year's EBITDA. Also to note, we will use around $8,000,000 in cash towards the 2 main projects that drive this transformational technology change.
This investment and the new technology will herald in a new chapter, a new era for the company and we are almost there. Your patience will be worth it and I will be able to disclose the details of this more fully towards the end of 2021. To conclude, Somnimed has an incredible vision, talented, engaged and passionate people, distinct competitive advantage, Best in class products, a global footprint and a purpose driven investment plan for the future. Thank you, ladies and gentlemen, for your attention this morning. We are extremely excited about the journey ahead.
This ends the fiscal 2021 results presentation and we will now move to questions. Thank you.
And the first question we have will come from Melissa Benson of Rawson. Please go ahead.
Hi, Neil. Hi, thanks for taking my questions. I just had a question, firstly, around the U. S. Market geography and the trading you've seen.
So we saw a good shift It's in momentum in the Q4 after kind of a slower first three quarters. Are you able to comment at all on the trading in the last kind of 1.5 months or so In the U. S, are you kind of seeing that same 4th quarter momentum? Or is there being some pullback in that run rate thus far?
Melissa, thanks for the questions. You always ask great questions. I think the U. S. Is starting to see a rebound and a change.
So the first three quarters are not indicative of what we see, of course, in the 4th and what we've now seen so far into July. There's no doubt that there's been a rebound and a shift and a change. Equally so, just to note, Of course, this quarter is the holiday season as it is always in the U. S. Every time this year.
And equally so, we have a A Philips recall that has caused an opportunity for sure, but also a little bit of chaos, if like where patients have been asked to either remain persevering with set treatment unfortunately by some physicians in DMEs, but others are saying, look, we now need to find you an alternative and it's taking some time to see that really come through into the oral appliance market. But to answer your question, we're seeing a rebound in the U. S. It's certainly much, much better than we've seen before and we're hoping that of course as we progress with our initiatives and our medical initiative that this only gets better as the quarters progress.
Thanks, Neil. And if I might ask a second follow-up question relating to your FY 'twenty two guidance. So you've guided to 15% revenue growth. Just wondering what your kind of thoughts are around What's supporting that? Is it one key market or geography in particular, noting that we're going to see some weakness in Just due to lockdowns, just kind of any commentary on your internal thoughts there would be great.
Thanks.
Yes, no problem at all. I think what we're trying to indicate, Melissa, is that we feel pretty confident in our own abilities and in Somnimed's The ability to do pretty well this year, even under the current maybe COVID rules, restrictions and lockdowns if they don't Get worse. So what we're seeing in terms of current results and current trends and the programs we want to roll out in the next quarters is that we should be able to achieve those revenue results. So we want to be able to provide a little bit more conference and confidence around the revenue number for as we invest the EBITDA into the transformational technology that we'll be able to talk about in December.
Great. Thank you. That was all for me.
Thanks,
At this time, there appear to be no further questions. I will hand the conference call back over to the management team for any closing remarks. Gentlemen?
Thank you very much. Thank you, ladies Ladies and gentlemen for attending. Thank you for listening to our incredible story. This is an extraordinary company and I think we're very, very excited about the year ahead. Thank you.
Thank you.
And we thank you, sir, and to the rest of the management team for your time also today. Again, the conference call has now concluded. At this time, you may disconnect your lines. Thank you. Take care, everyone.