Ossur Annual Report 2008
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key figures total sales research and development sales by geography 350 25 Asia 300 4% 20 250 Americas US Dollars in Millions 15 US Dollars in Millions 46% 200 150 10 100 5 50 EMEA 0 0 50% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 ebitda eps & cash eps sales by segment 15 80 Other 12 Compression 2% 70 therapy 6% 60 Prosthetics 9 50 US Dollars in Millions US cents per share 41% 40 6 30 3 20 10 Bracing 0 2004 2005 2006 2007 2008 & supports 0 51% 2004 2005 2006 2007 2008 EPS Cash EPS table of contents overview 2008 annual report 2008 the year was characterized by internal focus. in 2008, focusing on processes and profitability was 02 CEO’s address one of ossur’s Main tasks. twenty products were discontinued and profits increased. 04 Strategy 06 Market and environMent the total sales aMounted to usd 350 Million, representing a 4% growth. no acquisitions were 10 prosthetics Made in 2008. earnings before interest, tax, depreciation and aMortization (EBITDA) aMounted to 11 Bionics usd 79 Million or 23% of sales. earnings increased by usd15 Million. 12 Operations 18 locations growth in the sales of prosthetics continues, increasing 9%, which confirMs ossur’s strong 20 Bracing and supports & coMpression therapy position in this Market segMent, and the coMpany’s technical leadership. growth in the sales of 22 TeaM ossur bracing and supports was 1% and sales of coMpression therapy products grew by 5%. 24 Research and developMent 28 HuMan resources working capital froM operating activities increased by 32% and net cash provided by operating 30 Corporate social responsibility activities increased by 16% between years. 38 ManageMent & ceo 39 Board of directors the equity ratio at the end of the year was 41% coMpared to 39% at the end of 2007 40 Risk factors 44 Ossur stock in March, ossur divested its advanced wound care product line to BSN Medical Gmbh. the 51 PerforMance overview divestMent affects ossur‘s 2008 incoMe stateMents by usd 8.4 Million, included in other incoMe. this past year, internal processes have been strengthened and nuMerous initiatives have been set, building a platforM that will fuel sales growth in 2009. consolidated financial stateMents 2008 56 Financial ratios operating prospects 57 Report by the board of directors The Company will continue to be profitable and create strong cash flow going forward. Ossur has a strong 58 Auditor’s report balance sheet and secured long term financing, which makes the Company well positioned in case of a 59 IncoMe stateMent prolonged economic downturn. Management estimates, based on the assumptions that Ossur’s core 60 Balance sheets markets stay relatively unaffected, a modest growth in local currency and similar EBITDA levels as 2008. 62 StateMents of cash flows The Company´s strong market share, infrastructure and its sound financials makes it well equipped to 63 StateMents of changes in equity take advantage of potential market opportunities that might emerge from recent turmoil. 64 Notes solid steps This past year the world witnessed extreme economic turmoil. While not immune to slowdowns, Ossur operates within the healthcare sector, which has limited sensitivity to economic fluctuations. Our operational environment is rather stable and therefore the negative developments in the financial markets have not had a significant impact on our underlying business. In fact, Iceland’s much publicized economic woes have had little impact on our operations. However, if we see a continued economic downturn, it’s impossible to predict if and how the economy will affect the healthcare sector. But our commitment to the Company’s main principles will help us thrive. Ossur’s corporate structure is characterized by initiative, ambition, drive and cooperation. The Company’s core values honesty, frugality and courage are the foundation upon which we build our work. Our objective is to continue as a leader in the non-invasive orthopaedics market. To maintain our reputation as a market leader and to achieve Company goals, we must not only stay focused on all aspects of the orthopaedics industry, but seek out opportunity and innovation. annual report 08 2 solid steps In 2005, Ossur became a significant player in the bracing Ossur invests in Research and Development to make Enabling people to live life without limitations is not and support market of orthopaedics. Three years later, we sure we continue to produce cutting-edge products. just a phrase. It’s a commitment. So it brought us great are a market leader in bracing and supports. Ossur has This investment can open new doors to opportunities. pleasure to watch the Paralympic Games, hosted by seen sales grow on average 30% annually over the past One new opportunity is advanced wound care, which in Beijing this past September. As usual, members of Team five years. To continue growing successfully, we must the first quarter of 2008 was divested. Our R&D saw an Ossur returned home with countless medals and lasting make sure Company fundamentals are solid, because opportunity and using the material know-how we have memories of an amazing event. All of us at Ossur are it is our values that inspire us, and ensure company with silicone technology, created a new wound care extremely proud of them. One of those heroes also made growth, which not only increases profitability, but also product. To be able to design and manufacture a new it onto another high-profile platform. Oscar Pistorius achieves our overriding mission: enabling customers to product line, not in the core area of our business, further was named as one of the most 100 influential people in live life without limitations. confirms the strength of our research and development the world by TIME magazine, and he continues to inspire team and underpins our commitment to invest in R&D and motivate people all over the world. Like a child, a company often grows faster than it matures. activities. Ossur has experienced rapid growth, which is why in 2008 we took time to mature by focusing on internal A steady pipeline of products and sustained technological projects and processes. After acquisitions within the leadership in our core competencies are on our agenda Jon Sigurdsson President & CEO Americas division, Ossur had over 300 new employees. for next year. Continued investment in our patented and We needed to reorganize our sales team and practices, proprietary know-how – silicone, carbon composites, make sure everyone was in tune with Company values. textiles and cutting edge bionic technology – will produce While we still have some growing pains, by focusing new and better products as we advance towards the new on product rationalization and by using the synergies decade. And we will take care to ensure our innovations created through our acquisitions, profitability increased fit within current reimbursement systems, broadening dramatically in 2008. We will continue to focus on our access to these effective solutions. internal projects and position ourselves to be able to exploit future opportunities that await the Company. 3 annual report 08 strategy - Main focus areas 2009 Mission vision we iMprove people’s Mobility leading coMpany in non-invasive orthopaedics custoMer Ossur’s objective is to offer high quality products and a high level of service to customers. PROFITABILITY Ossur strives for constant improvements and believes a profitable operation is the key to success. culture Ossur believes it nourishes its culture by recruiting, training, motivating and rewarding ambitious employees. The foundation for successful cooperation is that all employees honor Ossur values in their relations with colleagues as well as customers. INNOVATION The Company will continue to invest significantly in research and product development. Ossur’s goal is to be a source of innovative, high-quality orthopaedic products and services. annual report 08 4 core values honesty frugality courage We show respect by adhering to facts and We use resources wisely. We aim to minimize We are open to change and constantly strive reality, fulfilling promises and claims, and cost across all areas of our business through for improvement. We challenge unwritten admitting failures. We nurture honest effective communication, preparedness, rules, show initiative and take risks, while at communication throughout the company planning and optimized processes. the same time taking responsibility for our by sharing information and respecting each ideas, decisions, and actions. other’s time and workload. 5 annual report 08 ������������ �������� ������������ ������ ��������� ����������� ��������� Government O&P Workshops Trade & Patients/end-users reimbursement medical Doctors associations Retail Insurance Hospitals companies Physical therapists Schools Families Private payers – Pharmacies end-users Podiatrists O&P users associations Market and environMent Ossur operates within the orthopaedic industry of the technological evolution industry, as an aging society increases the frequency of medical device market. The segment the Company focuses Technological advances continuously bring forth im- vascular diseases and diabetes, the two main causes on is non-invasive orthopaedics, including prosthetics, proved products that offer increased quality of life and of amputation. According to the Amputee Coalition of bracing and supports, and compression therapy. mobility to patients and users. Such technological ad- America, approximately 1.2 million, or over 80% of all vances lead to market growth by opening up new cus- amputees in US (excluding fingers and toes), are over industry dynaMics tomer segments and stimulating demand for more tech- 65 years of age. Technological developments, demographics, lifestyle nologically sophisticated solutions. issues and the regulatory environment are industry dy- An aging population also means an increasing amount namics that influence the orthopaedic market. Some deMographics of fractures, joint instability and joint afflictions, such dynamics are influenced by market players, such as An aging population, a rise in disposable income, in- as osteoarthritis, causing the increased demand for technological evolution.