Sorin Group: Solid Start to 2012: Underlying Revenue Growth of 2.8%* in the First Quarter

MILAN--(BUSINESS WIRE)--Consolidated results for the first quarter of 2012:

• Revenues of €191.7 million, a 2.8%^* increase (5.1% as reported) over the first quarter of 2011;
• Adjusted net profit^○ up 10.3% to €11.2 million, 5.8% of revenues (5.6% in the first quarter of 2011).

For the second quarter of 2012, Sorin Group (MIL:SRN) expects revenue growth of approximately 2%^* over the same period of 2011.

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Unaudited data

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At a meeting held today and chaired by Rosario Bifulco, the Sorin S.p.A. Board of Directors approved the results for the first quarter of 2012.

"We are satisfied with the start of 2012. Revenues grew 2.8% on a currency neutral basis and adjusted net earnings increased 10.3%" stated Sorin's Chief Executive Officer André-Michel Ballester, "In light of these positive results and our innovative product pipeline, we believe we are well positioned to achieve our short-term and long-term objectives."

In the first quarter of 2012, Sorin Group reported revenues of €191.7 million, up 2.8%^* (5.1% as reported) over the first quarter of 2011.

• The Cardiopulmonary Business Unit (heart-lung machines, extra-corporeal and autotransfusion blood circulation systems) posted an excellent performance with revenues of €89.3 million, a 6.3%* increase over the first quarter of 2011. The growth was led by the heart-lung machines segment which leveraged its unique leadership position in all markets. The autotransfusion systems continued to report important revenue growth, mainly in Europe and the United States, where Xtra^TM was launched in 2011. The oxygenators segment benefited from ongoing penetration of emerging markets and from the significant contribution of the cannulae business. During the quarter, the Company continued to focus on the development and manufacturing scale-up of the new family of oxygenators Inspire^TM, whose European roll-out is taking place during 2012.

^* At comparable exchange rates and perimeter
^○ Adjusted net profit: net profit before non-recurring income and expenses (special items), net of the related tax effects

(Euro million)
	Q1 12 Revenues	Underlying growth %*
Heart-lung machines	18.9	22.2%
Oxygenators	52.7	2.5%
Autotransfusion machines and devices	16.5	3.6%
Others	1.2	nm
Total Cardiopulmonary	89.3	6.3%

(*) For details, see the table entitled "Consolidated Revenues by Business Unit"

• The Cardiac Rhythm Management Business Unit (implantable devices to manage cardiac rhythm disorders) reported revenues of €70.0 million, a 1.7%^* decrease compared to the first quarter of 2011. In the first quarter of 2012, the Business Unit re-adjusted the high-voltage inventory of its Japanese distributor in preparation for the reimbursement reduction expected in April. Excluding such negative impact, high voltage sales grew more than 5% reflecting the positive results of the innovative SonR^TM system roll-out in Europe. The Company expects this positive trend to continue in the second quarter. In 2012, the Group remains focused on the commercial launch of the Remote Monitoring system and on the continued roll-out of SonR.

^* At comparable exchange rates and perimeter

(Euro million)
	Q1 12 Revenues	Underlying growth %*
High Voltage (defibrillators and CRT-D)	23.0	-6.4%
Low Voltage (pacemakers)	44.5	0.8%
Others	2.5	nm
Total Cardiac Rhythm Management	70.0	-1.7%

(*) For details, see the table entitled "Consolidated Revenues by Business Unit"

• The Heart Valves Business Unit (mechanical, tissue and sutureless heart valves and valve-repair products) realized revenues of €31.8 million, a 3.4%^* increase compared to the first quarter of 2011. The mechanical and tissue heart valve segments both performed well: the former benefited from ongoing penetration of emerging markets, while the latter enjoyed the growing contribution of the Perceval^TM valve in Europe. The Company also reported a strong performance in annuloplasty rings. Sorin expects to receive CE mark approvals in the second quarter of 2012 for the Perceval MIS introducer (a unique holder to allow minimally invasive procedures) and extended indications (for patients over the age of 65). In the first quarter 2012, the Company also initiated the US investigational device exemption (IDE) study for its Freedom Solo^TM stentless valve, an 8-center and 300-patient US trial, and executed the first implant in February.

^* At comparable exchange rates and perimeter

(Euro million)
	Q1 12 Revenues	Underlying growth %*
Mechanical Heart Valves	14.7	2.0%
Tissue Heart Valves	15.2	2.8%
Others	1.9	22.9%
Total Heart Valves	31.8	3.4%

(*) For details, see the table entitled "Consolidated Revenues by Business Unit"

Gross Profit for the first quarter of 2012 rose by 6.5% to €115.2 million, or 60.1% of revenues, compared to 59.3% of revenues in the first quarter of 2011. The improvement is mainly attributable to ongoing manufacturing cost reduction programs.

Selling, General and Administrative (SG&A) expenses were €79.0 million, or 41.2% of revenues, compared to 40.5% of revenues in the first quarter of 2011. The growth as a percentage of sales is attributable to the impact of hedge accounting. Excluding such impact, the SG&A expenses decreased slightly to 40.0% of revenues, compared to 40.4% of revenues in the same period of 2011.

Research and Development (R&D) expenses rose by 8.6% to €18.6 million, amounting to 9.7% of revenues (9.4% in the first quarter of 2011).

EBITDA grew by 3.0% to €28.3 million (14.8% of revenues), compared to €27.5 million (15.1% of revenues) in the first quarter of 2011.

EBIT was €16.7 million (8.7% of revenues) compared to €21.0 million (11.5% of revenues) in the first quarter of 2011. The first quarter of 2012 incorporates restructuring costs of approximately €0.8 million, whereas the first quarter of 2011 benefited from a €3.8 million extraordinary income, mainly related to the sale of the former CRM production plant in Montrouge (France). Therefore EBIT before special items was €17.6 million, or 9.2% of revenues, compared to €17.2 or 9.5% of revenues in the first quarter of 2011.

Net financial charges decreased to €2.3 million from €2.8 million in the first quarter of 2011, mostly as a result of the reduction of the average debt.

Net profit amounted to €10.6 million, or 5.5% of revenues (€12.8 million, or 7.0% of revenues in the first quarter of 2011).

Adjusted net profit^○ rose by 10.3% to €11.2 million, or 5.8% of revenues, compared to €10.1 million or 5.6% in the first quarter of 2011.

Net financial debt at March 31, 2012 was down to €102.3 million, compared to €115.8 million at March 31, 2011 (€105.9 million at December 31, 2011). Net debt was reduced by €13.5 million in the 12 months ended March 31, 2012, with the decrease mainly due to growing profitability, partially offset by the €25.2 million unfavourable impact of special items (see attached table for details).

In the first quarter of 2012, the Company's free cash flow^● was negative for €4.2 million, impacted by a one-off increase in inventory to support new product launches. In the last 12 months, the Company’s free cash flow^● was also impacted by a deterioration of payment terms in Southern Europe.

Sorin Group expects revenues to grow by approximately 2%^* in the second quarter of 2012 over the same period of 2011 and confirms 2012 full-year guidance^■.

^○ Adjusted net profit: net profit before non-recurring income and expenses (special items), net of the related tax effects
^●Free cash flow: net profit + depreciation, amortization and writedowns ± ∆ working capital – investments. This account is net of the impact of special items.
* At comparable exchange rates and perimeter
^■ Ref. Sorin press release dated February 9, 2012

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The Corporate Officer responsible for the company’s financial reports, Demetrio Mauro, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the documented results, books and accounting records.

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In addition to the conventional indicators recommended by the IFRS, this press release provides alternative performance indicators. These indicators should not be considered as replacements for the conventional indicators recommended by the IFRS, but rather as an additional source of information, representative of the income statement, balance sheet and financial position parameters used internally in the decision-making process. An explanation of the meaning and structure of these alternative performance indicators is provided in the Report on Operations at December 31, 2011.

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This press release contains forward-looking statements. These statements are based on the Group’s current expectations and projections about future events and, by their nature, are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future, and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including: continued volatility and further deterioration of capital and financial markets, changes in commodity prices, changes in general economic conditions, economic growth and other changes in business conditions, changes in government regulation (both in Italy and abroad), and many other factors, most of which are outside of the Group’s control.

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About Sorin Group
Sorin Group (www.sorin.com) is a global company and a leader in the treatment of cardiovascular diseases. The company develops, manufactures and markets medical technologies and innovative therapies for cardiac surgery and for the treatment of cardiac rhythm disorders. With 3,750 employees worldwide, the Group focuses on three major therapeutic areas: cardiopulmonary bypass (extra-corporeal circulation and autotransfusion systems), cardiac rhythm management, and repair and substitution of heart valves. Each year, over one million patients are treated with the devices of Sorin Group in more than 80 countries.

For additional information, visit: www.sorin.com