Results

Grifols SA

07/29/2021 | Press release | Distributed by Public on 07/29/2021 09:51

Material Event (Form 6-K)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

Grifols, S.A.
By: /s/ David I. Bell
Name: David I. Bell
Title: Authorized Signatory

Date: July 29, 2021

First Half 2021 Results

The Bioscience Division grows 5.1% in the
second quarter and raises first-half revenues
to EUR 2,537 million

Net income increased by 22% to EUR 267 million

Revenues in the second quarter grew 5.3% cc1to EUR 1,352 million due to solid performance of the Bioscience, Diagnostic and Hospital Divisions.
Bioscience revenues increased 5.1% cc in the quarter and increase first-half revenues to EUR 1,986 million. Of note is the positive contribution of new products and the increase in prices of certain proteins.
The Diagnostic and Hospital Divisions recorded double-digit growth, attaining EUR 395 million (22.9% cc) and EUR 68 million (19.5% cc) in revenues, respectively.
EBITDA totals EUR 635 million (a 9.4% increase), 25.0% over sales.
Grifols' financial debt ratio decreases to 4.9x. The strategic agreement with GIC will further reduce it by 0.6x.
Plasma collections in the U.S. continue to rise, while collections in Europe exceed pre-pandemic levels leveraging on recent acquisitions and multiple initiatives.

Barcelona, July 29, 2021.- Grifols (MCE: GRF, MCE: GRF .P, NASDAQ: GRFS) reported 2.3% cc (-5.3% taking into account exchange rate variations) growth and EUR 2,536.6 million in revenues in the first half, a period marked by the gradual recovery of plasma donations, debt reduction, and significant investment efforts to further consolidate plasma supply levels and innovation.

In the second quarter of 2021, revenues grew by 5.3% cc to EUR 1,351.9 million, fueled by the solid performance of the Bioscience, Diagnostic and Hospital divisions.

The Bioscience Division recorded notable 5.1% cc growth, reversing the 5.6% cc decline recorded in the first quarter. First-half revenues totaled EUR 1,986.0 million (-0.1% cc; -8.0%).

1Operating or constant currency (cc) excludes changes rate variations reported in the period.

The division's growth was driven by robust demand for all major plasma proteins - immunoglobulins (IVIG and SCIG), albumin, alpha-1 and specialty proteins - coupled with mid-single-digit price increases and the contribution of new products.

The Diagnostic Division delivered EUR 395.5 million in sales in the first six months of 2021, growing by 22.9% cc (16.3%), mainly due to sales of the TMA (Transcription-Mediated Amplification) molecular test to detect the SARS-CoV-2 virus, as well as underlying growth of NAT technology (Procleix® NAT Solutions) solutions, used to screen whole blood and plasma.

Hospital Division revenues increased for the third consecutive quarter as hospital investments and treatments normalize. The division registered revenues of EUR 67.7 million in the first half, an operational increase of 19.5% cc (17.1%).

Bio Supplies Division's sales totaled EUR 107.3 million, a 8.5% cc decline (-15.4%) mainly as a result of lower third-party plasma sales and Bio Supplies Commercial phasing.

The gross margin in the first half was 43.9%, compared to 38.8% reported in the same period last year. The gross margin for the second quarter stood at 43.0%.

EBITDA reached EUR 634.5 million (EUR 337.7 million in the second quarter), a 9.4% increase during the first half. The EBITDA margin is 25.0% over revenues (25.1% in the first quarter).

Grifols continues to execute its EUR 100 million per year operating expense containment plan, enabling the company to optimize its financial performance without impacting on its innovation efforts.

Throughout the first six months of 2021, Grifols has continued working on expanding its long-term plasma supply to meet current market needs and the anticipated robust demand.

Today, plasma collections in Europe exceed 2020 levels and pre-pandemic levels. U.S. plasma collections continue its upward trend. Currently, the capacity is 16.5 million liters per year. Recent strategic acquisitions increased Grifols' plasma collection capacity, providing access to an additional 1.4 million liters per year. In parallel, the company plans on opening 15 to 20 new centers in the second half of 2021.

The company reaffirmed its firm commitment to innovation, combining its extensive experience in plasma-derived medicines while progressively developing a complementary portfolio of non-plasma therapies. In this context, total net investment in R+D+i amounted to EUR 155.3 million, representing 6.1% of revenues. These results underscore Grifols' ongoing efforts to integrate and develop cutting-edge projects as those of Alkahest and GigaGen.

Grifols allocated EUR 117.3 million (EUR 145.6 million in the first half of 2020) to CAPEX.

The financial result in the first half of 2021 stood at EUR 119.4 million (EUR 132.4 million in the first half of 2020 excluding the positive EUR 56.5 million impact from the closing of the Shanghai RAAS transaction registered in that period).

Share of results of equity-accounted investees mainly includes the updated value of Grifols' GigaGen stake (EUR 34.5 million), following the agreement signed in the first quarter of 2021 to acquire the remaining capital.

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The reported net profit totaled EUR 266.8 million, a 22.3% increase over the EUR 218.2 million recorded in the same period of 2020. This figure includes part of the COVID-192 impact. The adjusted net profit amounts to EUR 279.1 million.

Excluding the impact of IFRS 163, the net financial debt reached EUR 6,475.5 million. In recent quarters, the leverage ratio has increased due to strategic acquisitions totaling USD 1 billion to secure plasma supply, reinforce innovation and support global expansion.

Decreasing leverage remains a priority for the company. In the first half of 2021, Grifols reduced the net financial debt over EBITDA ratio to 4.9x, down from the 5.1x reported until the first quarter of the year.

The GIC, the sovereign wealth fund of Singapore, agreement will also further reduce leverage by 0.6x, since the capital will be allocated in full to repay senior debt. GIC will become a long-term strategic investor for the next 30 years as a result of this transaction.

As of June 30, 2021, Grifols' cash position totaled EUR 398 million, bringing its liquidity position to EUR 813 million.

The efforts to increase plasma capacity, business optimization, global expansion, innovation and financial discipline leave Grifols well positioned to respond to current needs and fulfill its commitments and growth strategy.

2 In the first half of 2020, Grifols recognized an estimated impact of EUR 205 million for the entire 2020 financial year to adjust inventory value as a result of COVID-19.
3 As of June 30, 2021, the impact of IFRS 16 on total debts stands at EUR 783 million.

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About the Strategic investment from GIC in Biomat

In line with Grifols' commitment to reduce its leverage levels, the company takes a step further and welcomes GIC as a strategic investor. Grifols' leadership in the manufacture of plasma-based medicines, extensive expertise in the expansion and management of plasma centers, market know-how, and outstanding reputation were all key factors in GIC's decision to invest in the company.

As previously announced, Grifols S.A. has signed a corporate transaction by means of which an affiliate of GIC, the sovereign wealth fund of Singapore, have entered into a definitive agreement under which GIC will invest US$990 million in Grifols' wholly-owned US subsidiary Biomat USA, Inc. ('Biomat'). In exchange, GIC will receive an aggregate of 10 Class B common shares of Biomat and 9 Class B common shares of a newly-established sub-holding company ('Newco'). These common shares, which will represent directly and indirectly an aggregate of 23.8% of the equity of Biomat, will be non-voting but will have annual preferential dividends of US$4,168,421.05 per share of each of Biomat and Newco. Beginning with respect to 2023, holders of these shares may request, subject to certain limitations, the redemption of up to one share of Biomat or Newco per year, as applicable, at a redemption price of $52,105,263.16 per share (the 'redemption price'), provided that following the 15thanniversary of the closing of the transaction, holders may request redemption of up to all their then outstanding shares. The shares will have customary liquidation preference rights (in an amount per share equal to the redemption price plus unpaid dividends) that would trigger in certain circumstances, such as in the case of a liquidation, dissolution or winding up of Biomat, if Grifols ceases to control or have at least a 75% voting interest in Biomat, or upon the exclusive licensing of all or substantially all intellectual property of Biomat. In addition, in the event of a default in the payment of dividends or redemptions, there would among other things be monetary penalties or holders of the shares could opt to exchange them for shares of Grifols S.A.

Biomat (together with its subsidiaries) holds a plasma collection business with 296 plasma collection centers throughout the territory of the United States. Grifols will continue to control all aspects of the day-to-day management of Biomat and, through a long-term plasma supply agreement, all plasma collected by Biomat and its subsidiaries will continue to be supplied to Grifols for the further manufacturing of plasma derived products. Grifols intends to apply all net proceeds from GIC's investment to repay debt.

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Investor contact:

Investor Relations and Sustainability

[email protected] - [email protected]

[email protected] com - [email protected]

Tel. +34 93 571 02 21

Media contacts:

Raquel Lumbreras
[email protected] Grifols
Borja Gómez Media Press Office
[email protected] [email protected]
Duomo Comunicación - Grifols Press Office Tel. +34 571 00 02
Tel. +34 91 311 92 89 - 91 311 92 90
+34 659 57 21 85 / +34 650 40 22 25

About Grifols

Grifols is a global healthcare company founded in Barcelona in 1909 committed to improving the health and well-being of people around the world. Its four divisions - Bioscience, Diagnostic, Hospital and Bio Supplies - develop, produce and market innovative solutions and services that are sold in more than 100 countries.

Pioneers in the plasma industry, Grifols operates a growing network of donation centers worldwide. It transforms collected plasma into essential medicines to treat rare, chronic and, at times, life-threatening conditions. As a recognized leader in transfusion medicine, Grifols also offers a comprehensive portfolio of solutions designed to enhance safety from donation to transfusion. In addition, the company supplies tools, information and services that enable hospitals, pharmacies and healthcare professionals to efficiently deliver expert medical care.

Grifols, with close to 24,000 employees in 30 countries, is committed to a sustainable business model that sets the standard for continuous innovation, quality, safety and ethical leadership.

In 2020, Grifols' economic impact in its core countries of operation was EUR 7.5 billion. The company also generated 140,000 jobs, including indirect and induced jobs.

The company's class A shares are listed on the Spanish Stock Exchange, where they are part of the Ibex-35 (MCE:GRF). Grifols non-voting class B shares are listed on the Mercado Continuo (MCE:GRF.P) and on the U.S. NASDAQ through ADRs (NASDAQ:GRFS).

For more information about Grifols, please visit www.grifols.com

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LEGAL DISCLAIMER

The facts and figures contained in this report that do not refer to historical data are 'future projections and assumptions'. Words and expressions such as 'believe', 'hope', 'anticipate', 'predict', 'expect', 'intend', 'should', 'will seek to achieve', 'it is estimated', 'future' and similar expressions, in so far as they relate to the Grifols group, are used to identify future projections and assumptions. These expressions reflect the assumptions, hypotheses, expectations and predictions of the management team at the time of writing this report, and these are subject to a number of factors that mean that the actual results may be materially different. The future results of the Grifols group could be affected by events relating to its own activities, such as a shortage of supplies of raw materials for the manufacture of its products, the appearance of competitor products on the market, or changes to the regulatory framework of the markets in which it operates, among others. At the date of compiling this report, the Grifols group has adopted the necessary measures to mitigate the potential impact of these events. Grifols, S.A. does not accept any obligation to publicly report, revise or update future projections or assumptions to adapt them to events or circumstances subsequent to the date of writing this report, except where expressly required by the applicable legislation. This document does not constitute an offer or invitation to buy or subscribe shares in accordance with the provisions of the following Spanish legislation: Royal Legislative Decree 4/2015, of 23 October, approving recast text of Securities Market Law; Royal Decree Law 5/2005, of 11 March and/or Royal Decree 1310/2005, of 4 November, and any regulations developing this legislation. In addition, this document does not constitute an offer of purchase, sale or exchange, or a request for an offer of purchase, sale or exchange of securities, or a request for any vote or approval in any other jurisdiction. The information included in this document has not been verified nor reviewed by the external auditors of the Grifols group.

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