May 26 2010  |  Press Release 

Nucletron strengthened its market position in 2009 due to a strong performance under challenging market conditions 

2009 Highlights
• Continued growth and increased market position
• All time high EBITDA of EUR 20 million
• Margin increase from EUR 73 million to EUR 77 million
• Increased awareness of brachytherapy
• Enhanced geographic spread
• Effective cost management

2010 Outlook
• New offices in Brazil and United Arab Emirates
• Outperform expected market growth of 7%
• Continue debt reduction

Veenendaal, the Netherlands — Nucletron, a global leader in radiation oncology, today announced their full year results for 2009. Despite challenging global economic conditions, sales grew to EUR 113 million. EBITDA increased by 18% to EUR 20 million. Nucletron strives to continue to outperform the market growth in 2010 and expects profitability levels to reach 20% (EBITDA as % of sales) in the medium term.

Jos Lamers, CEO of Nucletron, comments: “Improving patient care requires innovation, teamwork and reliability. With our sharpened focus on brachytherapy, streamlined corporate structure and continued growth despite difficult global economic conditions we have delivered an excellent 2009. I look forward to another successful year ahead for Nucletron.“

Operational Highlights

Strengthened market position
Nucletron strengthened its market position in 2009 due to a strong performance under challenging market conditions. Nucletron enhanced its geographical spread, increased its focus on brachytherapy and established an international collaboration with Isodose Control.

Nucletron realised a healthy growth in emerging markets (Middle East, Latin America) and delivered a satisfactory performance in Europe and Asia.

In the United States Nucletron faced a decline in revenues because of the financial crisis, as healthcare institutions depend on loan financing for capital expenditure. The uncertainty created by the debate surrounding the Obama healthcare plan also caused a delay in capital investment.

By joining forces with Isodose Control, a new company established by Eric van 't Hooft who founded Nucletron in 1975, Nucletron has become the undisputed market leader in brachytherapy, with a global market share of 60%. In addition, Isodose Control’s innovative power has provided a significant boost to the company. Eric van 't Hooft joined Nucletron’s Executive Management Team in the position of founder.

In 2009 significant changes were made to the Executive Management Team, including various new appointments. The new team members – who are responsible for areas such as R&D, Marketing and Medical Affairs – all have extensive experience at major blue chip companies.

Enhanced geographic spread
A major part of Nucletron’s growth strategy for 2009 was to enhance the market position in key geographic markets by starting up the creation of new offices under our own name. From these offices, Nucletron intends to further expand the market for brachytherapy by directly ensuring that the therapy is introduced by professionals with clinical experience. By raising awareness among doctors and patients, Nucletron is assuming its responsibility as a global market leader.

Nucletron opened a new office in Russia in 2009. It is set to continue this strategy in 2010 with the opening of an office in Brazil from where it intends to increase its position in the fast-growing Latin American market. Nucletron will also open a regional office in Dubai, in order to develop the market in the Middle East.

Over the next few years, Nucletron will continue to open new offices in a number of other key countries to support its growth ambitions. As Nucletron already has an installed base in all of these target countries, establishing its own office with a small team is a relatively simple operation.

Focus on brachytherapy
A key focus for Nucletron in 2009 has been to enhance the position of brachytherapy as an effective and attractive form of treatment. Brachytherapy is currently most frequently used in the treatment of gynaecological cancers, such as cervical cancer. Application in other types of cancer, including breast, prostate and skin, is growing. Nucletron is effectively responding to these clinical developments, and is positioning and developing brachytherapy as an effective treatment method for patients.

As the global market leader in brachytherapy, Nucletron is aware of its special responsibility to support the increase in the use of brachytherapy worldwide. In addition to targeting healthcare providers, Nucletron also aims to reach patients, media and policy makers, with the objective of demonstrating the effectiveness of brachytherapy as a treatment.

Research has shown that 75% of cancer patients are unaware of the existence of brachytherapy as a treatment for cancer. In 2009, Nucletron decided that, in addition to focussing its marketing strategy on existing customer groups, it would assume a leading role in increasing knowledge and awareness of brachytherapy. March 2010 saw the launch of the website http://www.aboutbrachytherapy.com/ by the well-known English rugby player, Matt Dawson, the purpose of which is to inform patients and their families, medical professionals, and the media about brachytherapy.
 
Side-by-side with this website launch, Nucletron continues to educate healthcare professionals with a three-pronged strategy of evidence, awareness and infrastructure. Nucletron has developed educational toolkits, and regularly meets with oncologists and radiologists, to increase awareness of the scientific evidence that brachytherapy is effective in the treatment of cancer, has improved quality of life outcomes and is cost-effective.

An important initiative in 2009 was the launch of our new product AccuBoost. Nucletron partnered with Advanced Radiation Therapy (ART) to offer a revolutionary solution for treating breast cancer. AccuBoost allows clinicians to use image guidance, as used in standard mammography, to accurately target radiation directly to the tumour site while protecting the patients' healthy organs during treatment. 
At the end of 2009, 30 AccuBoost systems had been installed in the United States. In 2010 we will further roll out the system in other parts of the world, most specifically Europe, with systems already installed in Italy and Spain.

Product development
Nucletron invests more than 10% of sales revenues in R&D, supported in part by a number of innovation subsidies. The R&D department employs almost 20% of the workforce. The key objective is to improve brachytherapy by making the procedure simpler and more efficient, while continuing to provide a safe and precise treatment for different tumor types.

In 2009 Nucletron implemented several new programmes, including a new afterloader programme with the Flexitron from Isodose Control, which is now a high-end option in the treatment delivery portfolio. Nucletron has also developed new software to optimize clinical workflow and provide safe and highly precise treatment-planning options. The combination of advances in afterloader and treatment-planning software allows tumors to be precisely treated, sparing surrounding healthy tissue and organs, and minimising side-effects, resulting in a faster return to regular activity and an overall improved quality of life.

Recent studies have investigated the use of alternative radiation sources that deliver radiation with a lower energy. This will allow treatment in lower-shield environments compared to current external beam or high-energy radioisotopes, enabling the use of brachytherapy outside of traditional radiotherapy bunkers and this, in turn, could also reduce infrastructure costs to healthcare providers.

Financial Highlights

Sales
Nucletron achieved strong financial results in 2009, with sales of EUR 113 million, compared to EUR 112 million in 2008. The company realised a also record-high EBITDA of EUR 20 million, up from 17 million in 2008.

When revenue is analysed by category, it is clear that sales from services provide a strong foundation for Nucletron’s business model, accounting for 46% of total sales, while products represent 54% of sales. The sales breakdown by product group shows that brachytherapy is the company’s main activity, accounting for 60%. Brachytherapy includes the afterloading platforms that contain the radioactive source, the applicators that are connected to the afterloaders and applied in or close to the tumor, seeds that are used for LDR brachytherapy, and the supporting treatment planning software solutions.

However, Nucletron has also managed to benefit from market opportunities in external beam radiotherapy (15%) and imaging (15%). External beam radiation therapy is primarily focused on software products that are used to plan the treatment of a tumor. Nucletron’s products in the imaging area help identify the shape and size of the tumor, and the relationship between the tumor and the surrounding tissue and organs. Nucletron successfully operates in the external beam market as an independent treatment planning software supplier and is recognised for its state of the art product offering and innovation. Third party products accounted for 10% of sales.

The company generated 40% of sales in Europe in 2009, with North America accounting for 28% of total sales, Asia-Pacific for 22% and emerging markets for 10%. This geographical breakdown shows that Nucletron is perfectly positioned to capitalise on the global growth of the market for cancer treatment.

Costs
Over the past two years, Nucletron has successfully implemented effective cost management schemes. Based on a globally implemented enterprise resource planning system, the company was able to determine the added value of its various operations and product groups. This led to the decision to cancel the development, manufacture and sale of two product groups in early 2009, and has resulted in strong budgetary discipline with respect to expenditure levels.

Through a system of activity-based costing, we are now able to assess the profitability of products and customer groups in all geographies, which provides us with the data we need to establish a consistent pricing policy. The increase in gross margin indicates that creating transparency with regard to the added value of the various products has already produced clear results. The increased share of R&D (which is estimated to account for 12% of sales in 2010) highlights the company’s strong focus on innovation.

Profit
Nucletron’s EBITDA for 2009 was EUR 20 million, up nearly 18% from 2008. The strong result was facilitated by an increased focus on product profitability, the pruning of the product portfolio and stringent cost control.

Cash Flow and Debt
The strong cash generation for 2009 allowed Nucletron to further reduce its net debt. While the company is not committed to any repayments, it redeemed more than EUR 7 million on its outstanding loans on a voluntary basis in 2009. By this strengthening of the balance sheet the company is providing a solid foundation for further growth steps.

In addition to the substantial increase in profit, the further formalisation of the company’s cash management operations has also contributed to this strong cash position. Improvement measures for all components of the working capital (i.e., stocks, accounts receivable and accounts payable) were introduced in 2009 and will be further implemented this year. Key priorities of these measures include centralisation of the stock function, improving suppliers’ payment terms and further specifying the credit management function.

2010 Outlook
For 2010 Nucletron anticipates a growth in revenues that will exceed the 7% growth forecast for the radiotherapy market. This growth in revenues will, in turn, increase profitability in real terms and as a percentage of revenues. We expect profitability levels to reach 20% (EBITDA as % of sales) in the medium term. Strong cash-flow generation will enable continued reduction in debt in 2010.

Our objectives for 2010 are focused on increasing the availability of brachytherapy to patients. In 2010 Nucletron will further expand the distribution network by opening offices in Brazil and the United Arab Emirates, and focus on launching our newest products (such as Accuboost) in these markets.