Image Credit: DMS Imaging Booth, JFR 2018
On April 20th, Diagnostic Medical Systems Group, the French-based healthcare technology company, published its financial results for Q1 2020. These show that the company continued to deliver explosive sales growth during the first-quarter, despite challenging market conditions due to the Coronavirus pandemic. The companies sales revenue reached €7.6m, compared with €6.5m during Q1 2019, an increase of approximately +16% year-on-year. These figures reflect the sales performance of the DMS Group, which comprises of three operational segments, DMS Imaging, DMS Wellbeing and DMS Biotech. The first quarter sales growth was driven by higher sales from DMS Imaging, partially offset by lower sales from DMS Biotech.
The DMS Imaging segment is responsible for the development and manufacture of medical imaging solutions for radiology, osteodensitometry and posturology. The sales revenue originating from DMS Imaging reached €7.5m during the first quarter, compared with €6.4m during Q1 2019, an increase of approximately +18% year-on-year.
DMS Imaging trades under four brand names; DMS and Medilink for bone densitometry systems, Apelem for radiology systems and AXS Medical for 3D modelling and posturology systems. The first quarter double-digit sales growth was driven primarily by higher sales of radiology and bone densitometry systems. Total sales originating from radiology solutions were approximately +16% higher year-on-year. The Q1 press release noted that the companies distribution agreements with Carestream and Fujifilm Europe supported this strong sales growth as well as solid demand from the purchasing groups UniHA and UGAP. The order book for radiology solutions was not materially impacted by COVID-19, although some customer deliveries and installations were deferred due to quarantine and safety measures. While some orders were deferred, the company reported that it received a request from one of the largest hospital systems in Europe, AP-HP, to support with the supply of emergency chest digital radiography imaging systems in the fight against COVID-19. DMS Imaging has mobilised resources from across the business in order to deliver quickly on any surge orders from April onward.
Total sales originating from bone densitometry solutions were approximately +36% higher year-on-year. Although sales were significantly higher, the Q1 2019 comparable result was a weak quarter. This was due to several weeks of interrupted customer deliveries at the start of 2019 as a result of operational disruption relating to a third-party supplier. The company noted that its commercial agreement with Fujifilm Europe contributed to continued sales growth. The agreement with Fujifilm enables for the distribution of the DMS Stratos and Stratos DR systems under the brand name FDX Visionary-DR across Europe as well as the MEA region.
The DMS Biotech segment forms a core part of the companies longer-term development strategy in the field of biotechnologies. The business unit is primarily involved with the research and development of adipose tissue and regenerative medicine solutions for both human and veterinary medicine. The sales revenue of the segment is essentially from the sales lipofilling Adip’Sculpt devices. Total sales from the segment were approximately -28% lower year-on-year. The lower sales activity during the quarter was driven predominately by disruptions caused by the Coronavirus pandemic. The virus also delayed the reporting of a clinical trial related to using adipose tissue cells in the treatment of osteoarthritis which has temporarily delayed market development within this area.
The DMS Wellness segment is involved with the manufacture and sale of the companies CELLISS device aimed at the physiotherapy, beauty and aesthetic markets. This product has recently been commercialised with sales of €0.1 million during 2019. The first product shipments were mainly to luxury hotels and spa centres within China. The company has also secured commercial deals with customers based in Japan, although DMS is still awaiting regulatory approval. During Q1 2020, the segment remains a small contribution to overall company sales revenue.
Sales results by geography
The Group is currently present on all continents through a network of distributors, subsidiaries and joint ventures. The sales results by geography for the first quarter were not published within the Q1 press release. Historically, sales origination from customers based in Europe has accounted for approximately 1/2 of total company revenues with a significant proportion from the companies domestic market, France. The company also has significant sales from customers based in the Middle East, North and South America as well as Asia. The Q4 2019 earnings release noted that the distribution agreement with Carestream has recently supported sales growth within the United States.
Construction of a new factory
During June-19 the Group began the construction of its future industrial production and assembly unit which will be located in Gallargues, Montueux. Built on a total area of 16,800 m², this future production unit will represent a floor area of 5,500 m², of which approximately 50% will be office space, 25% production space and the remaining 25% dedicated to storage and shipping. The site will have 115 parking spaces and will accommodate around 150 employees. The land also benefits from a land reserve of the order of 2,000 m² allowing to realise a project of extension according to the subsequent needs of the group. The delivery of this future production facility was planned for Q2 2020, however, construction has been interrupted since the middle of March due to the Coronavirus pandemic. The delivery of the new facility is still scheduled for the second quarter although this is somewhat dependent on the duration of quarantine and public health measures.