Image Credit: RiverSide Medical Supplies, http://www.rsmedic.com
On February 21st, Arcoma AB published financial results for its fourth-quarter. ending December 2019. These results show that sales revenue continued to grow during the quarter, although at a slower pace relative to the first nine months. The overall net sales revenue reached SEK 34.8 million during calendar Q4 2019, compared with SEK 34.0 million in Q4 2018, an increase of approximately +2% year-on-year. This took full-year 2019 cumulative sales revenue to SEK 133.7 million, compared with SEK 119.5 million in 2018, an increase of approximately +12% year-on-year. This is a very solid sales result for Arcoma as the company has been able to maintain growth on top of the explosive growth during H2 2018. It is also the second year the company has topped SEK 100 million.
Sales results by geographic region
Sales revenue originating from customers based in Europe grew strongly throughout 2019, which is the continuation of a longer-term regional growth trend for the company. Europe accounts for over 50% of total company revenues and remains the companies primary market. Arcoma continues to expand its market presence within Europe and during Q1 2019, it entered into distributor agreements to sell its systems in Slovakia and Hungary. From a product perspective, the company has recently evolved into selling complete digital imaging solutions which include the Precision and Intuition platforms. This has been strategically important as it gives Acroma a stronger market position, which in the longer term, is expected to contribute toward increased commercial opportunities and revenues.
Sales revenue originating from customers based in the United States did not meet full-year growth expectations, although the company views the North American market as its greatest potential for future growth. This is in part due to the fact that its technology and imaging platforms are well-aligned to meet the needs of customers within this demographic. The company also has an OEM partnership with Canon in North America, which is anticipated to help drive higher sales from this market.
Sales revenue originating from customers based in Asia began to grow during the third and fourth quarters, following a weak start to the year. Although the overall revenue contribution from Asia remains low, the business envisages that this market will become increasingly important in the longer-term. In order to drive greater sales activity from the region, Arcoma hired the well-credited senior executive, Alexis Soh, as business director, to lead the companies growth within this region.
OEM partnership with Canon Medical Systems
Arcoma currently generates sales globally through distributors and partnerships with large OEMs, one of these being a long-standing relationship with Canon Medical Systems. From Arcoma’s perspective, this partnership helps enable the delivery of completely integrated systems to its clients predicated upon Canon’s imaging software and x-ray detectors. It also provides the company with a greater global market presence through leveraging Canon’s sales and distribution network as well as the opportunity to participate in multi-modality transactions where Arcoma can deliver on the x-ray systems component. From Canon’s perspective, the partnership has helped to strengthen its product line-up within the diagnostic x-ray segment, particularly for fixed premium solutions. For example, the Canon-branded Aceso+ platform incorporates Arcoma’s auto-positioning technology with an ergonomic design, helping toward efficient workflow and maximizing patient throughput, desirable characteristics for many customers of premium diagnostic x-ray systems. In Europe, the two companies entered into a reseller agreement allowing Canon to sell Arcoma’s premium x-rate systems across Europe with a focus on expanding into central and southern Europe. Most recently, Turkey was subsequently included within an additional distribution agreement. The firm has reported a positive impact on business volumes following this collaboration. This has led to further distribution agreements between the firms, covering North America and Asia. The firm has reported that these reseller agreements have had a positive impact on sales activity within the United States, although notes that these agreements are still “in the start-up phase”. Within the Q3 results, Jesper Söderqvist, CEO, commented: “I am very pleased with how the collaboration with Canon in the US and Canada developed during the year, although we have not yet seen the full result in sales figures. We have joint forward-looking activities that create a strong foundation for the future.” Within the Q4 results, Jesper commented: “Canon’s sales are not increasing at the rate we want, but the level of activity is high and we remain optimistic to see results in the near future”.
OEM partnership with Konica Minolta
During August 2019, Arcoma entered into a ‘development cooperation’ with Konica Minolta Europe on a development project for two products based on Arcoma’s technology and KM’s image detectors (AeroDR series) as well as software for image processing and image management. The initial target is for sales to being within Europe during H1 2020 under the KM brand and the comments within the Q4 results indicate that the two firms are approaching a commercial launch. This relationship is another example of Arcoma delivering against its growth strategy; to grow through partnerships, expand its product portfolio as well as establish additional sales channels. The two firms also entered into negotiations on a supplier agreement where Arcoma would become the manufacturer of these products, although limited additional information has been disclosed publicly since this announcement.
The new facility opened along with streamlined production
The development and production of x-ray systems have been taking place at the company’s premises in Växjö, although the company has been in the process of constructing a new bigger premise which was completed during January 2020. This new premises will provide a bigger office for staff and visitors as well as enable the further streamlining of production processes. This forms part of the companies ongoing program to reduce production costs, delivering greater profitability and returns for its shareholders. These costs reductions are expected to be fully realised by mid-2020.